The profitability of poker for casinos

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American poker players have limited options when it comes to playing online and only those who reside in Nevada, Delaware and New Jersey can play legally. This means that they need to settle for what they’ve got, namely to participate in live tournaments and cash games hosted by land-based casinos. Las Vegas remains the hotspot for this sort of entertainment and poker is a popular game, but the question is how profitable poker actually is for brick-and-mortar casinos.

Peter Chi who is an assistant professor of statistics at Cal Poly and teaches Probability Theory made a compelling case in an article posted at PokerNews. Table games and slot machines generate the vast majority of revenue for casinos, usually more than all the other games combine. While poker revenue is dwarfed by the aforementioned games, poker professionals and the author agree that many players spin the reels of slots and try other type of games, after leaving the poker table.

While they enter a land-based casino primarily to play poker, they are sometimes willing to gamble a bit, something that they wouldn’t normally do. Apparently, the guys at UNLV Gaming Research and Review Journal undertook some research on this matter and found no rock-solid evidence that there is such a relationship. In a nutshell, the research concluded that there is no indissoluble link between the number of poker players at the premises and the increase in the slot machines revenue.

The professor focuses on the distinction between winning and losing poker players, while emphasising the importance of factoring in those who break even. Even those who don’t win a lot of money generate rake with each hand they play, which means that the casino enjoys a constant flow of cash. Compared to slot machines, where the payout ratio is usually revolving around 90%, poker tables revenue is not that impressive, but they are still profitable.

Furthermore, the slot machines occasionally need maintenance and this will also eat into the profit margin, and the operating expenses associated to running them also matter. With the studies showing that a 10% increase in slots revenue as a result of poker tables attracting customers, the sheer amount collected by the casino is nothing to frown upon. The researchers performed six tests and concluded that there is a slight increase in the outcome variable, which means that a relation between the traffic generated by the poker room does exist.

The researchers came to conclusions that are a bit demoralizing to poker players, as they are concerned about the future of the game. With slot machines generating most of the revenue and the study claiming that poker tables traffic doesn’t help too much, it could happen that fewer land-based casinos will run poker games. Peter Chi’s interpretation of these results and the fact that he has both practical and theoretical experience in this line of work gives them a reason to be optimistic.