Glimmers of hope for AC this summer?

[Southpaw]

Inflation has done away with the viability of $5 full-pay blackjack.

I have access to $5 LS, 3:2 BJ, DAS, DOA2, H17, 6D where you can play 3 spots at the minimum. I guess it helps that many of the players play like fools, though.

Spaw

 

[Dyepaintball12]

AC is hugely popular gaming market > Business begins to drop off > Casinos make games worse to make more money > More people stop coming > Casinos make games even worse to make more money > etc. etc. etc.

 

[21forme]

AC is hugely popular gaming market > Business begins to drop off > Casinos make games worse to make more money > More people stop coming > Casinos make games even worse to make more money > etc. etc. etc.

It's like that old joke:
I lose 10 cents on every widget I sell.
How do you make a living?
I make up for it with volume!

 

[Gamblor]

I have access to $5 LS, 3:2 BJ, DAS, DOA2, H17, 6D where you can play 3 spots at the minimum. I guess it helps that many of the players play like fools, though.

Spaw

There's also S17 games out there.

 

[StudiodeKadent]

Raising tax rates always comes out of the consumers pockets. The corporation either cuts the pay, benefits, and/or the number of employees or they pass the increased cost onto the consumer in order to pay for the higher taxes. No matter how you slice it increased corporate tax rates comes out of the peoples pockets who can least afford it. It either squeezes the influences that would help the economy grow like higher wages, better benefits or higher employment or it comes directly from the consumer. Most of the time it is a mixture of all of these.

I agree, but you're missing the underlying point I was making.

The underlying point I was making was that corporate tax rates aren't the only relevant factor in economic analysis; they're one of many factors and need to be looked at within the context of the overall market and regulatory structure.

This is not to be construed as a defense of raising corporate tax rates or an attack on lowering corporate tax rates. It is merely saying that you can't myopically look at one factor and think that's the only relevant factor.

That said, cutting corporate tax rates would, in an environment with sufficient competitive pressure, result in the corporation passing the tax reduction onto consumers (ceteris paribus).

 

[tthree]

Your last point certainly is the exception to my generalization. As long as there is one smart operator out there willing to use the lower overhead from the tax cut as a way to undercut the competition and raise his profit through increased market share at smaller/unit profit, there is pressure for his competition to follow suit.

 

[aslan]

Your last point certainly is the exception to my generalization. As long as there is one smart operator out there willing to use the lower overhead from the tax cut as a way to undercut the competition and raise his profit through increased market share at smaller/unit profit, there is pressure for his competition to follow suit.

The truth is, you can't tax corporations. They pass on all costs including taxes to their customers. People don't seem to realize this. It is the individual taxpayer who bears the brunt of all taxes. But by taxing corporations, you can certainly affect the business climate-- cause job layoffs, higher prices, slower growth.

 

[ColorMeUp]

3) A player base that's sufficiently educated about blackjack to differentiate good from bad games.

The player that knows the difference between 3-2 S17 games and 6-5 H17 games probably also knows enough basic strategy to keep the casino's win rate low. If players became educated and everyone played perfect basic strategy at a 3-2 S17 table they couldn't afford to keep the table open. The casino wants and needs the uneducated people that play the bad games. APs do as well; if there are no ploppies for the casinos to make money off of there will be no money for APs to make!

 

[tthree]

The truth is, you can't tax corporations. They pass on all costs including taxes to their customers. People don't seem to realize this. It is the individual taxpayer who bears the brunt of all taxes. But by taxing corporations, you can certainly affect the business climate-- cause job layoffs, higher prices, slower growth.

The worst part is the bean counter called in to pay for the tax increase by cutting jobs and benefits gets a 6 or 7 figure bonus for his contribution to corporate profits at the biggest companies.

 

[bigplayer]

This last weekend the boardwalk was bustling with activity and the number of people in the casinos was seemingly more than it's been in a long while with the warmer weather. Is there hope that AC will get it's share or a more reasonable share of visitors due to the beach and boardwalk this summer even though so much competition has opened up in neighboring states or does this mean more beachgoers than gamblers?

For blackjack players, Pennsylvania rules are better and AC is still pushing the same old crappy Hit 17, 6to5, etc. a la Harrah's origin out there that will quickly clean them out and send them looking to play elsewhere... permanently. Will AC try to be competitive or will they cling onto the extra little gouge they make for dear life even if it means losing business and putting the building blocks in place for financial suicide? Only time will tell but with summer kicking in and the tourists starting to pack in the boardwalk, it might be time to think about keeping AC competitive and to hope that the boardwalk and beach serve as added incentive to retain business.

Unfortunately h17 is rapidly becoming the defacto standard in non-competitive market situations. In AC as on the strip there isn't much competition between casinos for low roller action thus they get bad rules to play against. My problem in AC is that many $25 and $50 games are h17 (Caesars). There should be more competition for these players, but then that might explain why Caesars AC is a ghost town during the week.

 

[bigplayer]

I agree, but you're missing the underlying point I was making.

The underlying point I was making was that corporate tax rates aren't the only relevant factor in economic analysis; they're one of many factors and need to be looked at within the context of the overall market and regulatory structure.

This is not to be construed as a defense of raising corporate tax rates or an attack on lowering corporate tax rates. It is merely saying that you can't myopically look at one factor and think that's the only relevant factor.

That said, cutting corporate tax rates would, in an environment with sufficient competitive pressure, result in the corporation passing the tax reduction onto consumers (ceteris paribus).

BALONEY After Tax net income would be either retained or distributed as dividends. Has Exxon passed on their huge after tax profits to consumers...Nope! Effective Corporate Tax Rates in the U.S. are very low...note that no corporation actually pays the published rate due to all of the loopholes...many very profitable companies pay zero in taxes. Direct gaming taxes on the hold (before expenses) does affect the rules but NJ and NV both have very low tax rates but this is all negated by the consolidation of ownership over the last 10 years.

If you REALLY want to improve the rules in AC and Vegas you need to enforce anti-trust laws for companies like Harrah's and MGM/Mirage and force them to sell off a few of their key properties in each market.

 

[StudiodeKadent]

BALONEY After Tax net income would be either retained or distributed as dividends. Has Exxon passed on their huge after tax profits to consumers...Nope!

First, you're committing a very common error; you're looking at absolute profits and not profit margins. The oil industry is a volume business, they face extremely high fixed costs and make a relatively small profit margin from each transaction.

Sources:
http://money.cnn.com/2008/04/29/markets/thebuzz/
https://everydayecon.wordpress.com/2006/04/26/oil-profit-margins-vs-other-industries/
http://mjperry.blogspot.com/2011/05/oil-profit-margin-ranks-114-out-215.html

Basically, the "oil companies make excessive profits" meme is false because it looks at absolute profit rather than marginal profit. It also fails to note that a lot of what drives oil prices is not "corporate greed" but rather OPEC greed (the greed of the governments of oil-producing nations).

Effective Corporate Tax Rates in the U.S. are very low...note that no corporation actually pays the published rate due to all of the loopholes...many very profitable companies pay zero in taxes.

You aren't taking compliance costs into account. And the ludicrously complicated tax code makes these compliance costs (even those for tax avoidance (since accountants and lawyers cost money!)) somewhat substantial.

Direct gaming taxes on the hold (before expenses) does affect the rules but NJ and NV both have very low tax rates but this is all negated by the consolidation of ownership over the last 10 years.

If you REALLY want to improve the rules in AC and Vegas you need to enforce anti-trust laws for companies like Harrah's and MGM/Mirage and force them to sell off a few of their key properties in each market.

I'm all for competition but if you think that simple anti-trust will solve problems, you need to look at empirical reality.

First, the gambling market isn't a free market; it is a very tightly regulated market with massive entry and exit costs as well as licensing requirements etc etc. So simply applying basic "we assume perfect competition" economic theory to the gambling market will not work.

Second, Macau has lower house margins than Vegas and most people play table games there (Vegas is mostly slot-based). It also has an oligopoly of only 6 gaming providers with massive tax burdens. Macau is tougher (regulatory-and-tax-wise) than Vegas and AC; the American markets are freer AND have more competition! Yet Macau has lower aggregate house edges (although yes, granted, they have dumber gamblers who gamble a lot more).

In other words, consolidation doesn't necessarily negate the chance of getting good games.

Third, consolidation can in some cases LOWER costs. Its called Economies of Scale.

Fourth, you don't necessarily need active competition to lower costs; merely easy entry and exit to and from the market (Contestable Markets theory). Vegas is, compared to other gambling markets around the world, relatively contestable.

Fifth, its not as if Vegas lacks competition. Lets restrict ourselves to the Strip alone just for the purpose of the example... how many competitiors are on the Strip?
1) MGM
2) Caesars
3) Cosmopolitan
4) Wynn
5) Sands (Venelazzo)
6) Tropicana
7) Phil Ruffin (TI)

You are right that MGM and Caesars dominate the market but they clearly aren't a duopoly. There's more competition on the Vegas Strip alone than there is in all of Macau (and then, if we go beyond the Strip there are more players in the market... Penn National (M), Boyd, Station, Landry's (Golden Nugget) etc. etc).

In short, even if Antitrust might conceivably help (which itself is questionable), the market isn't sufficiently consolidated to justify Antitrust action in the first place (and speaking as an economist, I don't approve of Antitrust in the first place).

 

[aslan]

First, you're committing a very common error; you're looking at absolute profits and not profit margins. The oil industry is a volume business, they face extremely high fixed costs and make a relatively small profit margin from each transaction.

Sources:
http://money.cnn.com/2008/04/29/markets/thebuzz/
https://everydayecon.wordpress.com/2006/04/26/oil-profit-margins-vs-other-industries/
http://mjperry.blogspot.com/2011/05/oil-profit-margin-ranks-114-out-215.html

Basically, the "oil companies make excessive profits" meme is false because it looks at absolute profit rather than marginal profit. It also fails to note that a lot of what drives oil prices is not "corporate greed" but rather OPEC greed (the greed of the governments of oil-producing nations).



You aren't taking compliance costs into account. And the ludicrously complicated tax code makes these compliance costs (even those for tax avoidance (since accountants and lawyers cost money!)) somewhat substantial.



I'm all for competition but if you think that simple anti-trust will solve problems, you need to look at empirical reality.

First, the gambling market isn't a free market; it is a very tightly regulated market with massive entry and exit costs as well as licensing requirements etc etc. So simply applying basic "we assume perfect competition" economic theory to the gambling market will not work.

Second, Macau has lower house margins than Vegas and most people play table games there (Vegas is mostly slot-based). It also has an oligopoly of only 6 gaming providers with massive tax burdens. Macau is tougher (regulatory-and-tax-wise) than Vegas and AC; the American markets are freer AND have more competition! Yet Macau has lower aggregate house edges (although yes, granted, they have dumber gamblers who gamble a lot more).

In other words, consolidation doesn't necessarily negate the chance of getting good games.

Third, consolidation can in some cases LOWER costs. Its called Economies of Scale.

Fourth, you don't necessarily need active competition to lower costs; merely easy entry and exit to and from the market (Contestable Markets theory). Vegas is, compared to other gambling markets around the world, relatively contestable.

Fifth, its not as if Vegas lacks competition. Lets restrict ourselves to the Strip alone just for the purpose of the example... how many competitiors are on the Strip?
1) MGM
2) Caesars
3) Cosmopolitan
4) Wynn
5) Sands (Venelazzo)
6) Tropicana
7) Phil Ruffin (TI)

You are right that MGM and Caesars dominate the market but they clearly aren't a duopoly. There's more competition on the Vegas Strip alone than there is in all of Macau (and then, if we go beyond the Strip there are more players in the market... Penn National (M), Boyd, Station, Landry's (Golden Nugget) etc. etc).

In short, even if Antitrust might conceivably help (which itself is questionable), the market isn't sufficiently consolidated to justify Antitrust action in the first place (and speaking as an economist, I don't approve of Antitrust in the first place).

So you're in favor of monopolies?

 

[Automatic Monkey]

The player that knows the difference between 3-2 S17 games and 6-5 H17 games probably also knows enough basic strategy to keep the casino's win rate low. If players became educated and everyone played perfect basic strategy at a 3-2 S17 table they couldn't afford to keep the table open. The casino wants and needs the uneducated people that play the bad games. APs do as well; if there are no ploppies for the casinos to make money off of there will be no money for APs to make!

Exactly! They cannot make money off players who know the difference between a good game and a bad one.

Here's what the casinos might want to do: provide some puzzles for everyone with a players card to do, just a simple math and logic test.

Everyone who passes the test gets a $10 free play voucher.

Everyone who fails the test gets a $100 free play voucher, plus free rooms, transportation, show tickets, etc.

 

[21forme]

Exactly! They cannot make money off players who know the difference between a good game and a bad one.

Here's what the casinos might want to do: provide some puzzles for everyone with a players card to do, just a simple math and logic test.

Everyone who passes the test gets a $10 free play voucher.

Everyone who fails the test gets a $100 free play voucher, plus free rooms, transportation, show tickets, etc.

Here's the test:
True or False - 6/5 > 3/2

 

[StudiodeKadent]

So you're in favor of monopolies?

No.

The word "monopoly" used to refer to a government-granted monopoly, i.e. only one entity was legally allowed to sell in a specific market (the kind of thing Stanley Ho used to have over Macau; now its a government-granted oligopoly).

I'm entirely against those kinds of monopolies.

If by "monopoly" you mean a market with only one seller, it depends. When someone creates a new good and sells it, they are by definition monopolists; they created a new market and for a time are the only people selling in that market (until other competitors arrive). This kind of monopoly (a monopoly created via innovation) is one I do not oppose; its a Schumpeterian monopoly.

However, I THINK (correct me if I'm wrong here) that you're referring to an established market wherein which there is only one seller and this seller has driven all other competitors out of business. Is this what you mean by a monopoly?

If so, then I don't think this kind of monopoly is sustainable in the long term in the real world, except in highly-controlled markets with extremely large start-up costs and huge barriers to entry. Another possibility is natural monopolies and/or network externalities.

But lets take the hypothetical highly-controlled markets with extremely large start up costs as an example. Basically, I think the best way to prevent monopolies in these sectors is to open them to competition by loosening regulations and controls in order to lower barriers to market entry and exit. Antitrust treats the symptom rather than the cause.

If you wish to discuss economic policy and the like with me, I think its best we take it to PM and avoid derailing this thread any further. Feel welcome to message me if you'd like.

 

[aslan]

No.

The word "monopoly" used to refer to a government-granted monopoly, i.e. only one entity was legally allowed to sell in a specific market (the kind of thing Stanley Ho used to have over Macau; now its a government-granted oligopoly).

I'm entirely against those kinds of monopolies.

If by "monopoly" you mean a market with only one seller, it depends. When someone creates a new good and sells it, they are by definition monopolists; they created a new market and for a time are the only people selling in that market (until other competitors arrive). This kind of monopoly (a monopoly created via innovation) is one I do not oppose; its a Schumpeterian monopoly.

However, I THINK (correct me if I'm wrong here) that you're referring to an established market wherein which there is only one seller and this seller has driven all other competitors out of business. Is this what you mean by a monopoly?

If so, then I don't think this kind of monopoly is sustainable in the long term in the real world, except in highly-controlled markets with extremely large start-up costs and huge barriers to entry. Another possibility is natural monopolies and/or network externalities.

But lets take the hypothetical highly-controlled markets with extremely large start up costs as an example. Basically, I think the best way to prevent monopolies in these sectors is to open them to competition by loosening regulations and controls in order to lower barriers to market entry and exit. Antitrust treats the symptom rather than the cause.

If you wish to discuss economic policy and the like with me, I think its best we take it to PM and avoid derailing this thread any further. Feel welcome to message me if you'd like.

You know what I meant. And corporatism is ruining this country. Too big to fail is too big to exist IMHO. Size is of the essence, and unbridled growth does not lead to efficiencies in the end, it leads to tyranny. You may have a better way of phrasing it, but that's what it amounts to. In other words, four mega farm corporations is not necessarily better than the millions of farmers they replaced. You have to know where you are going in order to get there. We march blindly in whatever direction the marketplace takes us and we end up where human greed will always take us, to a place where we are at the mercy of giants too big to fail, unresponsive to human need, without ethical underpinnings. Welcome to the modern world. We can do better.

 

[Thunder]

Exactly! They cannot make money off players who know the difference between a good game and a bad one.

Here's what the casinos might want to do: provide some puzzles for everyone with a players card to do, just a simple math and logic test.

Everyone who passes the test gets a $10 free play voucher.

Everyone who fails the test gets a $100 free play voucher, plus free rooms, transportation, show tickets, etc.

And I, possessing some form of intelligence, would see through this scheme and choose to fail the test.