national hbpa summer meeting national hbpa summer meeting “table games at racinos”© dr. richard...
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National HBPA Summer MeetingNational HBPA Summer Meeting
“Table Games at Racinos”©
Dr. Richard Thalheimer, PresidentThalheimer Research Associates
Lexington, [email protected]
July 2, 2009
How Do Tables Affect Gaming Revenue?
+ =?
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The Effect of Table Gameson Racing and Gaming Revenue
Results of Statistical Analyses
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Statistical Analysis 1Statistical Analysis 1“The Demand for Casino Gaming”“The Demand for Casino Gaming”
by
Thalheimer, R. and Ali, M.M.
Applied Economics
2003
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Study Objective
• The objective of this study was to develop a statistical model to measure the effect of factors accounting for changes in slot machine wagering at Midwestern riverboat casinos and racinos.
• The effect of each factor affecting slot machine wagering can be determined statistically “holding constant” the effects of all other factors affecting wagering.
Subjects of Study
• 24 riverboats and 3 racinos in:24 riverboats and 3 racinos in:
• IllinoisIllinois
• IowaIowa
•MissouriMissouri
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Slot Machine Handle Factors
• days of operation
• access (distance) of market area customers to site
• access of market area customers to competing
Indian, racino and riverboat casino sites
• slot machine win%
• number of slot machines
• number of table games
• government restrictions
• market area per-capita incomeThalheimer Research Associates
Relationship of Table Games to Slot Relationship of Table Games to Slot Machine HandleMachine Handle
“Holding constant” changes in other factors, including inflation, affecting slot handle:
•slot handle decreased 13% with tables.
•slot handle decreases as tables increase.
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Statistical Analysis 2 Statistical Analysis 2 “An Economic-Statistical Analysis of“An Economic-Statistical Analysis of
Racing and Slot Machine Wagering atRacing and Slot Machine Wagering atPrairie Meadows Racetrack and Casino”Prairie Meadows Racetrack and Casino”©©
byThalheimer Research AssociatesLexington, KY ([email protected])
forIowa Thoroughbred Horsemen’s Benevolent and Protective
Association (IAHBPA)Iowa Thoroughbred Breeders and
Owners Association (ITBOA)Iowa Quarter Horse Racing Association (IQHRA)
Iowa Harness Horse Association (IHHA)
August 18, 2008
Study Objective
The objective of this study was to measure the effect of factors accounting for changes in slot machine and horse race wagering at Prairie Meadows racino over time.
Of particular interest was the interrelationship between the racing and gaming sides of the racino operation.
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Study MethodStudy Method
•Two monthly statistical wagering models were developed, one for slot machine betting and one for on-track horse race betting.
•The effect of each factor affecting slot machine or parimutuel wagering can be determined statistically “holding constant” the effects of all other factors affecting wagering.
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Factors Included In Both Slot and Horse Factors Included In Both Slot and Horse Race Wagering Statistical ModelsRace Wagering Statistical Models
• gaming factors:
• number of slots at Prairie
• slot machine win percent at Prairie
• number of tables at Prairie (Dec. 2004)
• parimutuel factors:
• number of live horse race days
• number of import simulcast horse & dog races
• average daily purse, quality races
• market area per capita personal income
• competition from off-site Indian and riverboat casinos
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Relationship of Table Games to On-Track Relationship of Table Games to On-Track Parimutuel Handle – Prairie MeadowsParimutuel Handle – Prairie Meadows
“Holding constant” changes in other factors, including inflation, affecting on-track handle:
•parimutuel handle decreased 33% from combined slots and tables effect.
•parimutuel handle decreases as slots and/or tables increase.
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Relationship of Table Games toRelationship of Table Games toSlot Handle – Prairie MeadowsSlot Handle – Prairie Meadows
“Holding constant” changes in other factors, including inflation, affecting slot handle:
•slot handle decreased 8% as a result of tables.
•slot handle decreases as tables increase.
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SummaryStatistically Estimated Effect of Tables
• Slot revenue
•Tables reduce slot revenue 8%-13%
•note: WV racinos now have enough info for a statistical analysis of the effect of tables
• Total (slot+table) revenue increases with tables
• Parimutuel handle
•Tables reduce on-track parimutuel handle
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States That Currently Permit Table Games at Racinos
• Iowa 2004
• West Virginia 2007
• Delaware 2009*
*not yet operational
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Treatment of Revenue Shares to Stakeholders from Slots and Tables
• No difference in stakeholder share between slots and tables:
• Iowa racinos
• U.S. casinos
• Difference in stakeholder shares between slots and tables:
•West Virginia racinos
•Delaware racinosThalheimer Research Associates
Effective Shares of Slots and Table Revenue at Mountaineer to All Stakeholders 2008
Slots Tables*
Racetrack 44% 66%
Government (and other) 44% 29.5%
Horsemen Purse Breeder Awards
10.6%1.5%
2.5%2.0%
*State tax of 35% is 29.5% after payment of purses/breeder awards and 1% to racetrack employee pension. Racetrack share includes racetrack employee pension fund. Admin. expenses, state debt reduction, local gov’t, tourism also in state share.
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Comparison of % Change in Revenue to Stakeholders at Mountaineer
Calendar 2006 - 2008 - Adjusted for Inflation
Slots Slots+Tables
Gross Revenue -26% -8%
Purses + Breeder Awards -23% -16%
Government and Related -27% -15%
Racetrack -25% 1.5%
•Note: Statistical analysis needed to separate VLT impacts such as from competition and introduction of tables.
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Potential Consequences of a Lower Share of Table Revenue to Purses and
Government in West Virginia
• If slot revenue decreases, purses and/or gov’t may lose revenue, even if total revenue with tables increases, since purse & government shares from tables are significantly less than from slots.
• A decrease in purses directly affects race horse owner and trainer revenue for operations and resulting jobs.
• A decrease in purses affects race horse breeder revenue, agriculturally related jobs, and preservation of “green space”.
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