Casinos Start Courting the Poker Crowd

Poker A site many in Atlantic City have rarely seen; Borgata's poker room, completely empty

"We've seen an explosion in the popularity of poker here in the state," says Roberts, who notes that the state generates most of its revenue from a 10% tax on monthly gross receipts. "When the bill was proposed, we thought it would generate about $870,000 [from card rooms] in revenue for the year. We've already exceeded our estimates."

A Tough Flop to Make

But while the burgeoning poker craze could prove irresistible to an Atlantic City looking to court younger, hipper crowds, capitalizing on the trend won't be as easy as it looks. The irony is that while poker is becoming enormously popular, casinos will be hard-pressed to make any money off of it. Unlike other table games, such as roulette, in which the house edge provides a constant take, a casino's poker rooms are grind-'em-out affairs where gamblers play for hours and the house takes the rake -- a small percentage normally around 2% -- from the winner's take.

"Poker has always been sort of popular, but it just doesn't generate money," says Don McGhie, president of McGhie Consulting, a Las Vegas-based firm that provides services for gaming operators. "You have a dealer to pay, and it's expensive to run. Poker is more of a convenience-type gaming, and when the casino gets busy, they put slots in and take the poker rooms out."

Over the last decade, casinos have turned to high-margin slot machines as a larger source of revenue, causing standard forms of poker to fall from favor as a casino game. Instead of featuring table poker, casinos have either turned to video poker or poker variations with better profit margins, such as pai gow and Caribbean stud.

In September, the Mohegan Sun casino in Connecticut removed its poker room, a move that added $6 million a year to the casino's earnings, and replaced it with a $1-a-pull slot lounge, and the casino expects to double that take. While Mohegan Sun officials said the move cost it $1.2 million in lost business, there are cost savings, because the poker room employed 200 people.

Smaller outfits, however, have found ways of making poker work. In California, poker rooms cater to a young, hip crowd and charge players between $10 and $20 an hour for the privilege of using the tables. By collecting a fee instead of a percentage of the winning pot, casinos are assured a steady, dependable profit margin.

In markets where slot machines and promotions aren't able to drive big revenue gains, poker is coming back. In October, the Reno Hilton poker room, which hosts the World Poker Challenge and is a frequent venue for the World Poker Tour, was moved to a better location, replacing the keno lounge near the main ticket box office. To entice gamblers to come in, the casino hosts a number of weekly tournaments.

"They're putting poker rooms back into casinos in Reno, now that the market is down, the theory being they want to attract the locals back into the casino, rather than deal with tourists," says McGhie.

Fifth Street on the Boardwalk

In Atlantic City, poker's popularity is rising among players and operators alike.

The Borgata is already using its gleaming new poker room to attract young people, holding daily tournaments and televised World Poker Tour events. Business is so strong that the Borgata plans to convert its charter bus waiting area into a poker room, so it can host a tournament for Cigar Aficionado magazine. And when the Borgata expands, casino CEO Boughner says the company will make poker a significant part of its plans.