Editor's Note: This is the third in a series of articles looking at the changing face of Atlantic City's gaming industry.At 3 p.m. on a Thursday afternoon, 23 of the 34 poker tables at the Borgata -- Atlantic City's hot new hotel and casino -- are packed with customers, with a line forming near table No. 24, which is about to open for business. The crowd around the poker tables is a boon for the Borgata. Casino critics, who also like to take the occasional jab at Atlantic City's aging clientele, believe poker is the game to revitalize the city's fortunes. Poker is popular, especially among men between the ages of 25 and 54, a demographic that Atlantic City craves. The bet behind poker isn't that young men will lose their shirts at casinos like the Borgata, but that they'll come -- wallets packed with cash and credit cards -- and stay overnight, eat dinner and throw a few back at the casino bar. Poker has become so popular that gaming experts hope it will actually attract card enthusiasts who haven't played the game in years, if at all. Poker manuals and books such as Positively Fifth Street are on the best-seller list. There are now three regular poker TV programs: "The World Series of Poker" on ESPN, "Late Night Poker" on Fox Sports Net and the "World Poker Tour" on the Travel Channel, which is the network's highest-rated show. "Five years ago there were zero programs on television that dealt with poker," says Bob Boughner, CEO of the Borgata, a joint venture between MGM Mirage ( MGG) and Boyd Gaming ( BYD). Poker is really a part of our table games operations, and we see a tremendous interest in poker." The stars are literally shining on five-card. At the end of 2003, "Celebrity Poker Showdown," a tournament featuring Ben Affleck, Don Cheadle and other celebrities, had a six-episode run on Bravo, with the finale netting 1 million viewers in the 25-to-54-year-old demographic. Hoping to capitalize on its breakout hit, Bravo recently laid plans for a second season with twice the number of episodes and a new host. In August 2003, Florida changed its laws governing card rooms at racetracks, removing a $10-a-hand pot limit on games, hoping to help boost business. And while the new laws continue to limit the bets that players can make, leaving a maximum pot size in the hundreds of dollars, business is booming. In the fiscal year 2002-03, the state generated $351,000 in tax revenue from card rooms. Nine months into the new fiscal year, the state has generated $920,689 in revenue, with its total take expected to reach $1.2 million by year's end. Operators are taking an interest, too. There were only 10 card rooms in the entire state in August, but, according to David Roberts, director of the Florida Division of Pari-Mutuel Wagering, there could be as many as 16 by the end of 2004.
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
A Tough Flop to MakeBut 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