Vegas Casinos Fold on Poker Rooms

By HANNAH DREIER
|  Thursday, Feb 28, 2013  |  Updated 6:18 AM PDT
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Vegas Casinos Fold on Poker Rooms

AP

FILE - In this May 31, 2011 file photo, players compete in a Heads-Up poker tournament during the World Series of Poker at the Rio hotel and casino in Las Vegas.

The Tropicana hoped to step back into the big leagues when it opened its poker room in the heart of the Las Vegas Strip, touting it as the coolest in town.

But that same morning, federal agents shut down the three biggest online poker sites on the Internet. Last September, less than a year and a half later, the iconic casino quietly swapped out its green felt tables for slot machines.

It's a story that's become increasingly common as the crackdown on Internet gambling weakens poker's appeal, and the casinos that once competed to lure fans of Texas Hold 'Em abandon the waning game in favor of more lucrative alternatives.

Poker has never been a big moneymaker like slot machines or roulette. But when the game's popularity soared during the 2000s, casinos were willing to forgo the extra dollars to get players inside their buildings.

Now the calculus is shifting. In Sin City, epicenter of the poker craze, at least eight rooms have folded in the past two years. The trend is also playing out in Mississippi riverboats, Indian casinos and gambling halls near big cities from California to Florida.

Poker's proponents insist the game remains as popular as ever, and some larger casinos say their rooms are bustling.

In a statement this month announcing the World Series of Poker lineup, executive director Ty Stewart said the summer bonanza in Las Vegas would be an "affirmation about the strength and global appeal of the game."

But the spate of poker room closures on the Strip has some wondering whether the largest gambling trend to sweep the country in 25 years may be losing momentum.

"I just think the allure of poker is lessening," said William Thompson, author of the encyclopedia "Gambling in America" and professor of public administration at the University of Nevada, Las Vegas. "That's one reason the smaller casinos would just say, 'Hey it's not worth all the time to set everything up. A slot machine would do a lot better.'"

Poker revenue has been falling in Nevada since 2007, the year after the federal government first cracked down on virtual gambling and forced online companies to close or relocate offshore.

The recession hobbled casinos across the board, but while winnings from other games began to pick back up in 2010, poker revenue continues to slump by an average of 6 percent a year, according to annual reports from the state Gaming Control Board.

Poker revenues stacked up to $123 million last year, down from a high of $168 million in 2007.

Entries in the World Series of Poker's main event also took tumble in 2007, falling by 28 percent from a high of 8,773. Entries have only topped 7,000 once in the years since.

On April 15, 2011, the federal government took its strongest stand yet against the semi-legal world of internet poker, blacking out three major sites on a date later dubbed "Black Friday."

No longer could fresh crops of poker players develop their games online.

The Tropicana hotel-resort, which was remaking itself with several major renovations at the time, opened its new poker room the same spring day.

"Poker had gone through a dramatic popularity phase. It grew really quickly. And we jumped on board," said Fred Harmon, chief marketing officer for the casino that sits on a busy Strip intersection opposite the MGM Grand and New York New York.

The decision to replace the room with slot machines last fall was pure economics, Harmon said.

"I think every company over the last several years have had to look at what they do and what makes money," he said.

Casinos across the country are making the same calculation.

Sam's Town in Tunica, Mississippi, closed its poker room in January, citing the economy. The Seminole Casino Hollywood near Fort Lauderdale, Fla., replaced its room with slots in September.

Indian casinos in states like Minnesota and the Dakotas are also pulling their rooms, according to marketing consultant Theron "Scarlet Raven" Thompson.

"What you're seeing is the mom and pop-sized poker rooms are closing. The larger properties are monopolizing the poker crowd," he said.

Several smaller Las Vegas casinos decided they no longer wanted to bet on the game in 2012, including Ellis Island, which closed its room just two months after opening it. Casino bosses also removed rooms from the Silverton south of the Strip, Aliante to the north, and Fitzgerald's, which eliminated its room when it rebranded as the D.

The Gold Coast, the Plaza and Tuscany casinos closed their rooms in 2011.

Poker has never been a high-profit game for casinos is because players exchange money with each other, not the house. Rooms must employ a dealer for every table and can only collect portion of what players put down, usually about 5 percent.

Yet at the height of the craze, casinos scrambled to install rooms for a new generation of fans.

The game's meteoric run is generally attributed to the rise of Internet gambling, new technology that let viewers see players' hidden cards in televised tournaments and a watershed moment during the 2003 World Series of Poker when an amateur with the unlikely name Chris Moneymaker claimed the $2.5 million first prize in front of a million television viewers.

After Moneymaker's win, the MGM Grand on the Las Vegas Strip reopened its poker room, which had been closed for years, and Caesars Palace announced plans to open its first room in more than a decade. The Venetian followed suit in 2006.

Mega-casinos continue to invest in the game. The Venetian added 17 tables to its room in September, making it the biggest game in town, Caesars Entertainment added a slot-style progressive jackpot element to its games earlier this year, and the expansive room at the Bellagio is still packed most nights.

Venetian poker director Kathy Raymond said the expansion, which was part of a larger casino floor renovation, has drawn more players to the already popular room.

"I think that the love people have for poker hasn't subsided," she said. "It may be part of the economic environment, but I don't think the interest has subsided at all."

She acknowledged that smaller casinos are struggling to claim their piece of the market.

"You really need volume to operate a successful poker room," she said. "The overhead can't be absorbed by just a few tables."

In the end, the very thing that made poker so appealing — its air of tradition and class — may be its undoing, at least on the gambling floor, William Thompson said. After all, casinos make their billions by giving people new and stimulating ways to lose money.

While slot machine developers can roll out a new "Family Guy" or "oodles of poodles" game ever few months, poker remains unchanged.

"With slot machines, you can keep reinventing them, so it's going to last longer. They're throwing new wrinkles in all the time," he said.

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