Casino dystopia

November 12, 2013

During a visit to Montreal this week, I stopped by the casino on a rainy Sunday night.  The casino, run by Loto Quebec, enjoys — and I do mean enjoys — a monopoly in the Montreal metro area.  It’s in a good location, convenient to the city, but off the beaten track on a small island, but its monopoly status allows it to offer 7/5 Jacks or Better video poker.  The gold standard, 9/6, returns an average of 99.54% with perfect pay — pretty close to break even for a good player who uses the full extent of player’s club perks and other offers.  The 7/5 version, on the other hand, pays back an average of 96.14%, which, though better than most slot machines, is guaranteed to lead to large losses over the long run.   Denominations were mostly a quarter and a dollar, mitigating the negative effects of the high house edge somewhat.  Blackjack games similarly were poor — those I saw were eight decks, with dealer hitting soft 17 and only five decks being dealt out before the shuffle.  Also, there were no free alcoholic beverages offered, though soft drinks were.  There is a player’s club, though I didn’t sign up and don’t know what benefits are offered.

While the lack of competition allows a casino to get away with offering poor games, I do give the Montreal casino a tip of the hat for banning smoking, and for offering free parking and admission, which not all government-run casinos do.

Here in New York, I am not optimistic that a state that offers lottery games like Quick Draw will see any need (at least initially) to offer games better than 7/5 video poker.  If that’s the case, I will continue to spend my gambling dollars in neighboring states that do, instead of repatriating those dollars as the expansion of gambling here hopes to achieve.

Where shall it be?

November 7, 2013

Now that a casino is coming to the Capital District, where shall it be located?  The present favorite appears to be the Saratoga racino, but I wouldn’t put it there if it were up to me.  Here are the siting criteria I’d employ:

1.  It should be as close as possible to major population centers of the area, but not too close, and located a little bit out of the way, so that people don’t usually pass it on their way to and from work, shopping and other regular errands. It should have plenty of on-site parking.  Look to the Casino de Montreal for an appropriate location in an urban area.

2.  It should be accessible by public transit, both to limit its environmental and traffic generating impact, and so that the service jobs it provides will be accessible to the urban residents who need them and who may not own their own cars.

3.  It should be located in an area with as much existing infrastructure as possible, and it should not be built in an undeveloped area where it will gobble up open space.

4. It should be located in an area where it is wanted by the local population and where it will not adversely impact existing local business.

I propose the Port of Rensselaer, which meets all the above criteria.  Rensselaer County, unlike Saratoga and Albany counties, voted for Proposal 1, indicating it would welcome a casino.  Rensselaer is centrally located, near Amtrak and Megabus, and is served by CDTA.  It can use the increased property tax revenues a casino would bring, and the Port location would impact few local residents and businesses,  Its central location and existing road structure would minimize the traffic and environmental impacts caused by travel to the casino.  Shuttles between the rail station and the casino could help make it an attractive destination for gamblers from the New York City area, and existing CDTA routes could be slightly modified to make casino jobs accessible to Albany, Troy and Rensselaer residents who rely on public transit.  If the City or County owns a parcel in the port area that could be developed and placed back on the tax rolls, so much the better.

The existing racino in Saratoga does have the basic infrastructure in place and, as an existing gambling venue, is less likely to attract local opposition, especially given the area’s historical acceptance of all sorts of gambling.  However, taking the path of least resistance would forgo a tremendous opportunity to provide jobs where the people who need them most, and where potential customers from the largest population center in the State, could actually get to them, to give a struggling city a chance to get back on its feet, and to minimize the environmental impact of a venue to which many people will travel by automobile.

The four horsemen of the gambling apocalypse

November 1, 2013

In oral and written discussions of the respective merits of casino gaming options, one perennial topic is which games are “best.” Such discussions usually focus on the percentage advantage, or “edge,” with low edge games generally considered better for the player and higher edge games better for the casino. If edge were the sole criterion, why would players patronize high edge games (some with a house advantage of over 20%), and why would casinos offer low edge games (some, with proper play, offering edges of a fraction of a per cent)?  The answer is complex, and much of the explanation lies in history and consumer preference, not math.  But, stripping away those non-mathematical factors, is edge the sole determinant of the value of a game?  If not, what other factors are relevant?  I suggest there are four factors that gamblers should, and good casinos do, take into account in evaluating a game.  In addition to house edge, these are bet size, speed and, especially for the player, volatility.  Let’s discuss each:

House edge – the basic premise of the gambling business is that the house enjoys a mathematical advantage on each game.  House edge refers to the long-range percentage of every dollar gambled that the house, on average, retains.  For example, a slot machine with a 10% house edge will, over the long run, retain 10 cents out of every dollar run through it by players, returning 90 cents to the players.  In the short run, especially from an individual player’s point of view, the machine might return a lot more or a lot less than 90%, but that should be the average return to the casino in the long run.

The next two factors bring to mind the old TV commercial for a discount house offering extremely low prices. “How do we do it?” asks a guy in a loud checkered coat.  The answer:  “Volume!!”
Bet size and speed determine the amount of money a player must expose to a given house edge in a given period of time. A player betting the minimum at a $100 blackjack table will expose ten times more money per hour to the house edge than a $10 player, yielding ten times more profit to the house. That’s why lower limit tables usually have rules that are less favorable to the player than high limit tables. Slot machines, especially those at lower denominations, combine high edge and high speed, ensuring house profits even from penny players. If you are a low level horse bettor or keno player, these slow games will expose little of your bankroll to a high house edge, and could be less dangerous than faster, lower-edge games like slots.

Volatility refers to the ups and downs of a game. One going for big gains on long shot propositions faces high volatility, and needs a much larger bankroll, than one playing games in which the player experiences many low denomination wins. Many players switching from blackjack to video poker, particularly the bonus or loose deuces varieties, has learned this the hard way. Volatility is not as big a concern for the house as for the player, unless a baccarat whale gets really lucky.

Many “sophisticated” gamblers look down on those who play high house edge games. But the dollar keno player may be exposing his bankroll to a lot less potential harm than the blackjack or video poker player. To each his own.