Cost Factors for BJ Games (re: Stealth Bomber)

[toddler]

Regarding Stealth Bomber's lastest post in Eliot's "Your thoughts please" thread, SB floated the idea of a low overhead casino. Here's a snip...


Maybe we need a new type of casino. Somebody needs to start a casino with low overhead. It makes a small profit on a large amount of people. Costco or Home Depot style. Designed just for players. Nothing is very fancy or plushy. Even the floor is concrete. Basic lighting. People would come to it if it was located properly and marketed correctly.


As part of my never-ending education of non-BJ casino related material, I recently received a question from a good friend asking if I knew the cost factors involved in keeping a blackjack game opened and fully staffed. A very good question indeed and one that stirred the synapes. I have my list and am curious what *you* think are the cost factors? Once you think you have those factors, consider which ones could be cut to produce a low overhead casino.

 

[Tom]

Who cares?

I think you're at the wrong website. What I do know is casinos pay the dealers virtually nothing per hour and it's a dead end job. Talk about low cost,if casinos paid them any less they should be arrested for being a sweat shop, in essence many already qualify.

 

[Stealth Bomber]

I don't know the cost factors. However, I'm sure there are people reading this board who could shed some light for us on the subject.

I started thinking of this a long time ago. But recently it surfaced again in my mind when I walked into the Peppermill in Reno. I'm wondering what their electric bill is. I don't know how they could ever allow anyone to leave with having won some $ from that place.

Is it possible to draw enough ploppies into a casino that's designed just for playing with better odds? I remember when the Price Club wholesale shopping warehouse first opened. It was the first of it's kind in my area. My point is; that it was packed with loads of shoppers. Even though, it was a crewed looking place with concrete floors and you could see the steel beams and trusses in the ceiling.

I'm thinking there is a market out there for this type of casino. There must be plenty of people out there who don't really care about paying for a fancy plushy environment while they are gambling.

 

[revereman]

Several years ago, I went to an Indian casino in CA (I think in the Palm Desert area) that had conditions like you guys are describing. It was player banked and I think each player paid 50 cents or a dollar each hand. I quickly figured out that was a heavy price to pay low limit (even high limit) BJ. The place was pretty crowded.
Like everything else, I'm sure there is a market for casinos with few, if any, amenities. It would probably attract compulsive gamblers (good for the house), APs (bad for the house), and some locals (probably good for the house). No matter how spartan, there are still costs involved with any business. I don't know what the licensing requirements and costs are in each state, but this sounds like a good entrepreneurial opportunity for an AP.

 

[toddler]

My current list

Here is a list of everything I could conjure as well as a couple items provided by my good friend. These are straight casino factors, nothing hotel related. Consider all these costs then attempt to 1) Cut costs and 2) Offer $5 games on a regular basis.

Prorated Costs:
Pit Supervisors - Salary and Hourly Labor
Accounting
Legal
Security
Beverages
Servers
Floor Space
Utilities (Electrical, HVAC)
Surveillance
Technical
Marketing Salaries and Assoc Cost.
Health Care Plans
Other Expensed Benefits
Cage personnel
Maintenance
Doubtful Casino Accounts Receivable (Marker Play)
Early Retirements of Debt
Interest Income (can exist)
Write Downs

Straight Costs:
Dealer Hourly Wage
Licensing and Rental (No-peek, SMs, CSMs)
Interest Lost on Idle Cash to Cover Chips in Float

 

[Stealth Bomber]

Are chips really backed $1 for $1?

Interest Lost on Idle Cash to Cover Chips in Float

I have always thought that regardless of how many chips are out there floating around, they were not actually costing the house anything. Isn't it correct to assume that a house may have 10M worth of redeemable chips but only needs to have a portion of that ready to pay out to the people who actually make it to the cage?

 

[toddler]

Re: Casino Bankroll Requirements

I don't believe that they have to cover every chip dollar for dollar. Although, I still believe there is interest lost which would be prorated. Here is the bankroll requirements section from the Nevada Gaming Commission and State Gaming Control Board's Regulations...

6.150 Minimum bankroll requirements.
Each nonrestricted licensee and each person licensed as an operator of an inter-casino linked system shall maintain, in such manner as the chairman may approve or require, cash or cash equivalents in an amount sufficient to reasonably protect the licensee's or operator's patrons against defaults in gaming debts owed by the licensee or operator. The chairman shall distribute to licensees and operators and make availableto all interested persons a formula approved by the commission by which licensees determine the minimum bankroll requirements of this section. If at any time the licensee's or operator's available cash or cash equivalents should be less than the amount required by this section, the licensee or operator shall immediately notify the board of this deficiency. Failure to maintain the minimum bankroll required by this section, or a higher bankroll as required by the chairman pursuant to this section, or failure to notify the board of any deficiencies, is an unsuitable method of operation.
(Adopted: 10/87. Effective: 1/88. Amended: 11/90; 5/00.)

 

[eyesfor21]

they already had a no frills casino in Vegas

it was called silver city
it had sd and db deck,with great rules
it was the only non smoking casino.
and always had loads of counters in it who all we give
each other the smirk hello
the pit would just let you do your thing..

it did fold and now sits empty across from the circus

 

[Automatic Monkey]

Re: Casino Bankroll Requirements

There's that word "reasonably" in there. All that means is that it has to be reasonable to a Nevada judge who's salary is ultimately paid by casinos.

This wouldn't be an issue at a table game like BJ because he wagers are limited and the payout per wager is at best 3:2. Nor is it a problem with progressive jackpots because these are funded by the players as you go. I could see it becoming a problem with certain games like Let It Ride, Roulette, or Carribean poker that have some very high ratio payout, variance could make a small house unable to honor a debt in cash.

 

[Abraham de Moivre]

Re: Casino Bankroll Requirements

Crazy amount of misinformation in this entire thread.
To get real answers to many of these questions, go to some stock boards.
Look up actual Casino Companies Financial Statements.
Divide the balance sheet and income statements by the number of tables.
You will start getting a picture of costs per table and overheads.

To answer the specific question about bankroll requirements:
The Gaming Commission sets the amount of bankroll a casino has to have on hand at all times. They use a formula that takes into account the number of tables, table limits, number of slots, size of jackpots, etc., etc. Combines it with the Standard Deviations of all the above, and the chances of several big winners at the same time, etc., etc. They assure that a big jackpot winner, will get paid, and the casino has cash on hand to do so. It would look bad for the entire industry if that didn't happen, and news of a big winner not being able to get paid immediately became public.

That is the whole reason Binion's shut down a while ago, the IRS seizure of their cash made them fall short of their Gaming Commision cash on hand requirements. The Gaming Commission actually shut down Binion's, not the IRS.

 

[toddler]

Re: Casino Bankroll Requirements

Look up actual Casino Companies Financial Statements.

That is what I did. Because of that and some common sense, I found you cannot use the following formula: Divide the balance sheet and income statements by the number of tables.

You will start getting a picture of costs per table and overheads.

You would only get that cost if the corporation was only a casino (no other profit center data in the mix) and only offered blackjack games, no other table games.

My original post stated: the cost factors involved in keeping a blackjack game opened and fully staffed.

 

[Abraham de Moivre]

Re: Casino Bankroll Requirements

Simple. Most financials have the income broken down by cost center (ie. table games). Find the percentage of table gross income vs overall gross income and you can start breaking down the overheads with that factor.

Concentrate on some of the purer casino compaines: PNK, AGY, ISLE, STN.

 

[toddler]

Re: Coming at it from both ends

AM - Understand your perspective which is working backwards from ending numbers. The result could possibly provide an approximate average per table, but only as a starting point. My belief is that if you really dug deep, there's much more to it.

I was looking at it from the perspective of if I was going to build a casino and how would I structure my accounting to determine a fine grain resolution of BJ related expenses. The luxury of already knowing my revenue and expenses would take all the fun out of it.

Appreciate your input. Although, to what misinformation are your referring?

 

[Abraham de Moivre]

Re: Coming at it from both ends

Yes, coming at it from the back end helps you with seeing expenses like building depreciation and maintenance, etc. Then you see what you are missing when trying to add it all up from the front end.

I guess most of the mis-information was in regards to bankroll requirements and license fees.

Some things you missed:

I assume the patrons will be wagering with chips. A set of chips aren't free, and occasionally need replaced, unless you want your greens to turn brown like the El Cortez.

Cards. How many decks of cards are you going to go thru every day?

Tables themselves. After a few drunks spill drinks on them, the layouts need replaced, until the tables are so beat up they need refurbished.

Besides dealers, pit crew, bartenders, cocktail waitress, janitor, etc.
Are you assuming some cross-roaders aren't going to come and cheat you blind? You probably need some Dustin Marks type undercover survelliance to catch the cheats. Security guards so your bankroll doesn't get robbed, or in case a drunk gets rowdy.

 

[Stealth Bomber]

I think we all should care

I don't think toddler or I are advocating cutting dealer wages. I personally think they should be paid the same or slightly more especially if they are fast, and have a good personality. I think the point is that a whole lot of money is going for unnecessary extravagance. Not all gamblers want or need to always be in LV Strip type casinos that put so much $ into comfort and appearance.

I don't understand why somebody can't just accept running a casino much the same way and with similar net financial returns as does a wholesale warehouse type grocery outlet. Hell, why not a whole chain of wholesale warehouse type casinos? Let the players have a little more $ going in their direction.

 

[toddler]

Re: Who cares?

The entire point of this post is this... the real world of AP is not written in all these books and posts we read. The public information is just an initial substrate on the long road to true AP-dom. The amount of information *not* discussed on these public forums dwarfs that of which is written. Knowing who your adversary is as well as their inner-most functions is crucial to a complete understanding of the microcosm we inhabit.

I'm not defending the casinos here whatsoever. All I'm doing is providing some information for you all to chew. Consider all these costs, the rising cost of everything and possibly some mismanagement here and there and you may be able to understand why it is becoming more difficult to find those $5 tables at some of the nicer stores. The issue of casino cost factors was posed to me because I wanted a bone to chew for a while, to get me to think outside the everyday container.

Perhaps some of you think this is all just a load of snake squeeze. Could be. Personally, I would rather walk into a casino with a more complete understanding to foster longevity than blindly ramping bets out only to get the quick tap.

This is all IMHO.

Caveat emptor.

toddler

P.S. - Welcome back Mayor.

 

[The Mayor]

Re: Who cares?

>The amount of information *not* discussed on these public forums dwarfs that of which is written.

Almost every day I want to write something about something on this site and I decide not to do it. All I can say is OPEN your eyes and mind ... positive EV is everywhere in casinos.

Thanks for the welcome back.

--Mayor

 

[Tom]

Re: Who cares?

In the real world most card counters could not care less about the nitpicking of discussing what it cost a casino to run a blackjack table. The expenses you speak of is the fundamental cost of running a casino(not only a a blackjack table). Yet,you make it appear as if blackjack is to blame for ALL casino expenses you listed.

One could ask me,"How much does it cost to keep a tire on a car rolling?"

Well,here's the list of expenses.

1) rotor
2) axle
3) transmission
4) frame
5) steering wheel
6) engine
7) distributer
9) battery
10) blah,blah,blah,etc.

As you can see I've blamed the car tire for the fundamentenl expenses it takes to build a car. The tail does not wag the dog.

Who cares? Oh,Stealth does,he's gonna open up a car lot

 

[Rob McGarvey]

I Was Replaced by an Internet Dealer

All the glitz and glamour, staff wages, etc are history online. That is why they have so much money to give you when you walk thru the "front door." The Mayor is right, AP is all around you, but not just in a casino. You are only limited by your own expectations, and the math that goes with the game you play. Seen the price of gas lately? Goes from 65 cents a litre up to 80 in one day. I'm sure everyone that logs in here can figure out a way to retire in no time using this information and a pocket calculator.

 

[gehrig]

before the silver city...

it was the castaways. a couple of the dealers would count (aloud), along with you.

and, fwiw, the silver city was imploded about a week ago.