Poker’s Perilous Perch

Nevada poker is in an odd place. On one hand, poker room revenues have declined by 21 percent since 2007, and several casinos have downsized or closed their poker rooms, including the Tropicana on Sept. 11 . On the other hand, some are counting on online poker to revitalize Nevada’s gaming industry. As summer slides into fall and we get ready for online poker to go live next month, where is poker in the Silver State heading?

First, let’s recap where we’ve been. Poker, in the big scheme of Nevada gambling, is pretty small. Last year, poker tables in Nevada casinos brought in about $132 million. That seems like a nice bit of money, but it was only 1.2 percent of the $10.7 billion Nevada casinos earned from gambling. Few would argue that poker is an essential part of a casino operation. Nearly two years after its opening, the Cosmopolitan still hasn’t gotten around to offering the game, and in the past three years 11 casinos statewide have closed their poker rooms.

The reason is simple economics: The average Nevada poker table, in 2011, made about $414 a day. That’s about the take from three average slot machines, which take up less space and don’t call in sick. Unlike other casino games, where the house bets directly against the player, casinos only extract a portion of each pot contested—the rake—in poker. They’d much rather players tempt fate firsthand with their table games and slot machines.

Nobody gets on ESPN playing slot machines, though; poker brings a certain cachet to casinos. And poker players can drop significant amounts of their winnings on other casino games—and they might bring along slot and table players with them. The impact of events like the World Series of Poker, which brings thousands of players to town, almost goes without saying. So even though poker hasn’t made much money directly for casinos, it remains a focus.

Now, despite its second-tier status within the casino, poker is being hailed as the potential savior of Nevada’s beleaguered economy. That’s not just someone who studies gambling getting hyperbolic. On the same day the Tropicana folded its poker room, Sen. Harry Reid sent a letter to Sen. Dean Heller, excoriating him for not lining up the requisite votes to “legalize and regulate” online poker. Doing so, he opined, might be “the most important issue facing Nevada since Yucca Mountain.”

Holy hold’em! That’s a lot of responsibility for a game that’s had a negligible impact on Nevada to date. But, leaving aside for a moment that online poker is already legal and regulated in Nevada (only for players within the state’s borders, though), it’s not hard to see where Reid was coming from.

Reid—and the casino and tech companies that have invested considerable sums in creating systems for online play—are betting that Nevada, if dealt the right federal cards, will win big. Estimates of how much providers would make from online play are all over the place, but most agree it will be in the billions if U.S. players have legal sanction to bet.

It’s important to be online because, increasingly, that’s where the players are. According to a 2011 University of Hamburg study, there were, in 2010, more than 6 million online poker players throughout the world. Getting a share of the rake those players paid—an estimated $3.6 billion in 2010—would have an immediate impact on the state.

And if Nevada doesn’t go to meet those players, it’s likely they’ll go elsewhere. Poker historian (and WSOP final-table player) Jim McManus believes that the international growth of the game and the ambiguous status of online play in the U.S. have taken 21st-century poker far from its cowboy roots.

“The center of the poker world,” McManus says, “is now a lot closer to the Prime Meridian than to Fremont Street. Benighted American laws banning the game online are a major factor, but poker’s beauty and appeal as a mind sport in the rest of the world shouldn’t be surprising to those of us who love it.”

This wouldn’t be the first time Nevada casinos pivoted to meet the future. Until the 1970s, tables constituted the bulk of casino win. With advances in slot technology—and a broadening of the gambling base—that shifted, and in the next decade slot machines became dominant.

It’s not so far-fetched that, with the explosion of social and online play, we’re now on the cusp of a similar transition. Nevada rode the slot machine wave for 30 years and continued to dominate American casino gaming long after craps gave way to Megabucks. Getting online poker right could mean the same for the next generation.

Suggested Next Read

Meet the (future) Mets


Meet the (future) Mets

By Phil Hagen

Next spring when Jerry Seinfeld performs in Las Vegas, the comedian can get a first-hand look at the future stars of his favorite baseball team. The Las Vegas 51s announced a two-year Player Development Contract with the New York Mets today, which will extend until the 2014 season. The affiliation will mark the fourth MLB franchise that the 51s, which just finished their 30th season in Las Vegas this summer, will serve as the top feeder team for—having just completed a four-year deal as the Triple A affiliate for the Toronto Blue Jays.