INTRODUCTION TO HOSPITALITY

Seventh Edition, Global Edition

CHAPTER 11
Gaming
Entertainment

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 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
1. Outline the history of modern casinos.
2. Describe the various components of
modern casino hotels.
3. Explain how casinos have been
integrated into larger hospitality
operations.
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 Chapter Objectives

• After reading and studying this chapter,

the student should be able to do the
following:
4. Understand the basic principles of
casino operations.
5. Discuss the different positions within
the gaming industry.

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 Gaming Entertainment

• While the gaming entertainment

industry is a global industry, there are
five types of legal gambling in the
Unites States.
• This includes charitable gaming,
commercial casinos, lotteries, Native
American gaming, and pari-mutuel
gaming.

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 Gaming Entertainment

• Some form of legal gaming exists in 48

of the 50 states, with commercial
casinos representing the largest part of
the domestic gaming market.
• While gaming revenues vary by state,
the industry contributes billions of
dollars in tax revenue to these local
governments on an annual basis.

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 Gaming Entertainment

• The gaming entertainment industry has

seen development not only in the
United States, but also internationally,
particularly in the Asian destinations of
Macau and Singapore.
• The size and scope of the global
gaming industry are expected to reach
$117.9 billion dollars in 2015.

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 Gaming Entertainment

• Gambling is playing a game of risk for

the thrill of the action and the chance
of making money.
• This product, gaming entertainment,
has evolved over the past decade.

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 Gaming Entertainment

• Gaming entertainment serves a

customer base of social gamblers,
customers who play a game of risk as a
form of entertainment and social
activity, thus combining gambling with
other activities during their visits.

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 Gaming Entertainment

• Social gamblers, by this definition, are

interested in many gaming
entertainment amenities and take part
in many diverse activities during a stay.

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 Gaming Entertainment

• Gaming entertainment refers to the

casino gaming business and all its
aspects, including hotel operations,
entertainment offerings, retail
shopping, recreational activities, and
other types of operations, in addition to
wagering on the gaming floor.

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 Gaming Entertainment

• Gaming entertainment is the business

of hospitality and entertainment with
its core strength in casino gaming.
• According to this definition, a gaming
entertainment business always has a
casino floor area that offers various
games of risk that serve as the focal
point for marketing to and attracting
guests.
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 Gaming Entertainment

• Next in importance to the guests are

high-quality food and beverage (F & B)
operations.
• Gaming entertainment offers a place
where guests can gamble (the casino
floor), eat and drink, sleep and relax,
and maybe do some business.

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 Gaming Entertainment

• But there is much more—the

entertainment ranges from live
performances by the most famous
entertainers to production shows that
use high-tech wizardry.
• Gaming entertainment includes theme
parks and thrill rides, museums, and
cultural centers.

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 Gaming Entertainment

• The most popular gaming

entertainment destinations are
designed around a central theme that
includes the hotel and the casino
operations.
• Nongaming revenue comes from
sources that are not related to
wagering on the casino floor.

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 Gaming Entertainment

• As the gaming entertainment concept

continues to emphasize activities other
than gambling, nongaming revenue is
increasing in importance.
• This is what gaming entertainment is
truly about—hospitality entertainment
based on the attraction of a casino.

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 Gaming Entertainment

• Casinos are also operated by Native

American tribes on their reservations
and tribal lands.
• These are land-based casinos and are
often as complex as any operations in
Las Vegas. Gaming entertainment is
also popular on cruise ships.

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 Gaming Entertainment

• There is strong support for gaming in the

marketplace as an entertainment
activity.
• Patrons are required to be 21 years of
age to gamble in the United States, and
research shows that more than a third of
Americans have visited a casino in the
last 12 months, and 32% of them have
actually gambled in those 12 months.
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 Gaming Entertainment

• According to the market research, more

than 85% of U.S. adults say casino
entertainment is acceptable for
themselves or others.
• 86% of Americans report having
gambled at least once.

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 Gaming Entertainment

• Commercial casinos account for 36% of

gaming revenue. Indian casinos and
state lotteries tie for second place at
26%.
• The demographic makeup of the typical
gaming entertainment guest has
remained consistent during the past
several years.

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 Gaming Entertainment

• In comparison to the average

American, casino players tend to have
higher levels of income and education
and are more likely to hold white collar
jobs.

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 Historical Review of Gaming
Entertainment
• The precise origin of gambling is still
unknown today.
• However, according to Chinese records,
the first official account of the practice
dates back to as far as 2300 B.C.
• The Romans were also gamblers: they
placed bets on chariot races,
cockfights, and dice throwing.

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 Historical Review of Gaming
Entertainment
• Since the state of Nevada legalized
gambling in 1931, Las Vegas has been
transformed into one of the most
elaborate cities in the world and one of
the hottest vacation spots.
• From the early 1940s until 1976,
Nevada, and predominantly Las Vegas,
had a monopoly on the gaming
entertainment business.
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 Historical Review of Gaming
Entertainment
• Casinos had no hotel rooms,
entertainment, or other amenities.
• The hotels that existed were just places
to sleep when guests were not on the
casino floor.
• Las Vegas is rich with tales of Benjamin
Hymen Siegelbaum, better known as
Bugsy Siegel.

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 Historical Review of Gaming
Entertainment
• After developing criminal associations
his entire life, Siegel moved on to build
the well-known Flamingo Hotel and
Casino in Las Vegas.
• During the 1970s, Atlantic City was in
an impoverished state, with high rates
of crime and poverty.

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 Historical Review of Gaming
Entertainment
• In an effort to revitalize the city, New
Jersey voters, in 1976, approved casino
gambling in Atlantic City.
• Later casino gambling was legalized in
the state of New Jersey by the Casino
Control Act.

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 Native American Gaming

• In California v. Cabazon Band of

Mission Indians, et al. (1987), the
Supreme Court decided 6 to 3 that
once a state has legalized any form of
gambling, the Native Americans in that
state have the right to offer and self-
regulate the same games without
government restrictions.

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 Native American Gaming

• Congress responded to these court

decisions by passing the Indian Gaming
Regulatory Act of 1988 (IGRA).
• The IGRA provides a framework by
which games are conducted in a way
that protects both tribes and the
general public.

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 Native American Gaming

• There are over 400 gaming facilities on

reservation lands in 28 states, and
Native American gaming has been one
of the fastest growing sectors of
gaming in the United States.

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The Casino Resort: A Hospitality
Buffet
• Twenty of the 30 largest hotels in the
world are casino resorts on the Las
Vegas Strip.
• The size and scope of the global
gaming industry is expected to reach
$117.9 billion dollars in 2015.

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The Casino Resort: A Hospitality
Buffet
• Today, many casino resort presidents
and key executives have come up
through the lodging or F & B side of
operations.

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 What is Gambling?

• In its broadest definition, gambling is

the act of placing stakes on an
unknown outcome with the possibility
of securing a gain if the bettor guesses
correctly.

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 What is Gambling?

• To be considered gambling, an act

must have three elements: something
wagered (the bet); a randomizing
event (e.g., the spin of slot reels or the
flip of a card); and a payoff.
• Some of the best-known games, poker,
blackjack, and baccarat, are played
with cards, and craps with dice.

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 What is Gambling?

• Slot machines, which were originally

mechanical (but now are electronic)
devices, award prizes based on the
random stopping of reels, are also
popular, and are typically the most-
played games in most casinos today.
• There are two basic categories of
gambling: social gambling and
mercantile (or commercial) gambling.
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 What is Gambling?

• Social gambling is conducted among

individuals who bet against each other;
mathematically, each player has the
same chance of winning.
• In mercantile, or commercial gambling,
players bet against “the house,” a
professional gambler or an organization
that accepts wagers from the general
public.
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 What is Gambling?

• Mercantile games have a mathematical

advantage for the casino, or a house
edge, that lets professionals profit from
them while still offering fair games.
• The house edge is what makes casinos
possible; without it, the only way to
offer games of chance to the public that
can generate an income would be to
cheat.
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 What is Gambling?

• The house edge allows casinos to offer

their customers honest games that are
fairly dealt, and still remain in business.
• The “handle” is the total amount of
money bet at a game.
• The “win” is the handle minus the
money paid out on winning bets—
essentially, what the casino keeps.

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 What is Gambling?

• The “hold percentage” is the

percentage of the total handle that is
retained as win.
• As a manager of a casino resort, it is
important that you have an
appreciation of the nature of volatility.

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 What is Gambling?

• Just because the casino department is

reporting a net loss for a shift does not
necessarily mean that the department
is inefficient or incompetent; it may
just be an expression of volatility.
• Over time, gaming wins will tend
toward their historical average.

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Comps: A Usual Part of an Unusual
Business
• Comps are complimentary goods and
services offered to casino patrons in
order to attract their business.
• The value of comps varies; generally
speaking, higher-producing players are
given higher value comps.
• Casinos, with thousands of guests on
any given day, rely on customer loyalty
programs to track patron play.
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Comps: A Usual Part of an Unusual
Business
• Patrons who wish to receive comps and
other offers join the casino’s player
loyalty club.
• Casinos use the information they gain
about a player’s gambling patterns to
offer him/her comps, based both on
theoretical wins by the player and
his/her expected levels of play.

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Comps: A Usual Part of an Unusual
Business
• Loyalty programs are an essential part
of casino marketing; many guests base
the money they spend gaming around
where they receive the best comps, so
good casino managers know they must
send out good offers to qualified
players.

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Comps: A Usual Part of an Unusual
Business
• Recently, some casinos have begun
tracking and rewarding nongaming
spending as well, a reflection of the
broadening of the casino resort revenue
stream.

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 Types of Casino Operations

• At one end of the spectrum is the

Nevada-style gaming tavern, which is a
typical bar and restaurant that has less
than sixteen electronic gaming devices.

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 Types of Casino Operations

• At the other is a fully-developed casino

resort, with (on average) a 100,000-
square-foot casino featuring thousands
of slot machines and dozens of table
games, approximately 3,000 hotel
rooms, at least a dozen bars and
restaurants, meeting and convention
facilities, entertainment venues, retail
shopping, and pool and spa facilities.
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 Types of Casino Operations

• Stand-alone casinos are not very

common in the United States or
elsewhere in the world.
• Where they are found, they usually
consist of only slot machines; this type
operation might be called a slot parlor.

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 Types of Casino Operations

• In the United States, casinos on Indian

reservation can take many forms, from
bingo parlors in prefabricated buildings
to fully functional casino resorts with
lodging, dining, and entertainment that
are indistinguishable from resorts on
the Las Vegas Strip.

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 Types of Casino Operations

• Some states allow gambling only on

riverboats; other states allow slot
machines at racetracks (called
“racinos”); and finally, many cruise
lines have casinos as part of the
amenities for guests on their ships.

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Components of Casino Resorts

• Destination resorts in Las Vegas are

centered on casinos that have several
types of games available: slot
machines, table games, race and sports
books, poker rooms, and live keno
games.

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Components of Casino Resorts

• In most parts of the United States, slot

machines produce the bulk of the
revenue; on the Las Vegas Strip, it is
closer to a 50/50 split.
• Among table games, blackjack is most
popular nationally, while on the Strip
baccarat has recently become a
favorite.

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Components of Casino Resorts

• In Macau casinos, nearly all revenue

comes from high-stakes baccarat.
• Casino resorts also include lodging,
F&B, entertainment venues, retail
shopping, convention facilities,
nightclubs, pools, and spas.

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Evolution of Gambling and Casinos

• Gambling is among the oldest of human

behaviors; archaeological evidence of
gambling stretches back into
prehistory, and purpose-built dice have
been discovered at sites dating back to
7,000 years before the present.

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Evolution of Gambling and Casinos

• Gambling developed in nearly every

ancient civilization of consequence and
has been part of Western life since the
days of Ancient Greece.

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Evolution of Gambling and Casinos

• Casino resorts, as they are currently

operated, are much younger, dating
back only to 1941, though the casino
industry has its antecedents in several
earlier developments, both legal and
illegal.

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Evolution of Gambling and Casinos

• Legal public gambling in casinos dates

back to 1638, when the Grand Council
of Venice awarded a franchise or a
single legal casino in that city.

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Evolution of Gambling and Casinos

• In the United States, public gambling at

cards and dice was legal intermittently
during the nineteenth century in
several states, including Louisiana,
California, and Nevada, but by 1910
this kind of gambling—and playing at
slot machines—had been outlawed
everywhere in the United States.

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Evolution of Gambling and Casinos

• Yet the tide soon turned toward

legalization, at least in Nevada.
• When legislators authorized “wide
open” commercial gambling there in
1931, the state was in the throes of the
Great Depression.
• By allowing taverns and hotels to
conduct games of chance, they hoped
to increase tourism slightly.
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Evolution of Gambling and Casinos

• The real creation of the modern casino

came in 1941, with the opening of the
El Rancho Vegas, the first casino resort
on what would become the Las Vegas
Strip.

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Evolution of Gambling and Casinos

• These casinos were superior to

gambling halls because, with rooms
and a full range of amenities, they
offered a diverse set of options for
travelers—gamblers and non-gamblers
alike.
• By the mid-1950s, the casino resorts of
the Las Vegas Strip had changed
Nevada.
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Evolution of Gambling and Casinos

• Now numbering more than a dozen,

they became an integral part of the
state’s economy.
• The industry grew, and with the
entrance of publicly traded corporations
in the 1970s, it became more
integrated into the national economic
mainstream.

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Evolution of Gambling and Casinos

• As a result, by 2000, Las Vegas Strip

casinos accounted for well over half of
all state gambling revenues.
• In 1976, New Jersey voters legalized
casino gambling in Atlantic City by
referendum, and two years later the
first legal casino on the East Coast
opened.

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Evolution of Gambling and Casinos

• Riverboat gaming, which permitted

games of chance on boats, debuted in
Iowa and Illinois in 1991, and soon
spread throughout the Midwest and
South, with a robust presence in
Mississippi.

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Evolution of Gambling and Casinos

• In the 1987 Cabazon decision, the

Supreme Court affirmed that if a state
allowed betting on bingo or card
games, Indian tribes could offer these
games without limits imposed by state
regulators.

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Evolution of Gambling and Casinos

• The following year, the Indian Gaming

Regulatory Act codified the rules under
which Indian tribes could open “Las
Vegas-style” casinos with slot machines
and bank games.
• To do so, the tribes needed to sign a
compact, or treaty, with the state in
whose land the reservation sat.

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Evolution of Gambling and Casinos

• As of 2010, over 200 tribes in more

than thirty states have some form of
gambling operation, with combined
annual revenues of more than $25
billion.

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 Working in a Casino

• Hotel Operations
– The career opportunities in gaming
entertainment hotel operations are
much like the career opportunities in the
full-service hotel industry, with the
exception that F & B can be a division of
its own and not part of hotel operations.

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 Working in a Casino

• F & B Operations
– Gaming entertainment has a foundation
of high-quality F & B service in a wide
variety of styles and concepts.
– Some of the best foodservice operations
in the hospitality industry are found in
gaming entertainment operations.

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 Working in a Casino

• Casino Operations
– Casino operations jobs fall into five
functional areas; gaming operations,
casino service, marketing, human
resources, and finance and
administration.

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 Working in a Casino

• Retail Operations
– The increased emphasis on nongaming
sources of revenues in gaming
entertainment demands an expertise in
all phases of retail operations, from
store design and layout to product
selection, merchandising, and sales
control.

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 Working in a Casino

• Entertainment Operations
– Because of the increased competition,
gaming entertainment companies are
creating bigger and better production
shows to turn their properties into
destination attractions.
– Some production shows have climbed
into the millions-of-dollars range and
require professional entertainment staffs
to produce and manage them.
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 The Mirage Effect

• Since the 1990s, rooms have become a

major revenue center.
• In 1992, Wolfgang Puck opened Spago
in the Forum Shops at Caesars Palace—
leading to an explosion of both
gourmet-dining opportunities for
patrons and an increase in restaurant
revenues for casinos.

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 The Mirage Effect

• Headliner concerts and installed shows

(Cirque du Soleil alone has five) raised
their production values and their prices.

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 The Mirage Effect

• And with the growth of full-fledged

shopping malls inside casinos, ranging
from the Canal Shops at the Venetian
to the Miracle Mile at Planet Hollywood,
retail spending has climbed—as well as
the ascendancy of nightclubs, ultra-
lounges, and day clubs.

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 Sustainability in Gaming
Entertainment
• Gaming entertainment companies
continue adapting their operations and
practices to fit “green” standards.
• Caesar’s Entertainment Corporation has
undertaken a sustainable initiative in
several areas of operation, including
energy, waste and water conservation,
as well as climate control.

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 Sustainability in Gaming
Entertainment
• Hospitality Green LLC, an
environmental consulting firm, has
taken on the task of creating a model
for “green” standards that will set a
precedent for which existing and future
initiatives will be measured.

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 Career Information

• People choose to work in the industry

because it is known to place people
first, whether they are employees or
customers.
• Most careers include impressive
benefits packages and offer many
career advancement opportunities.

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 Career Information

• Knowledge of all areas of the industry

is essential for advancement.
• To get a job in the gaming industry,
one must have very thorough
knowledge of the legal, regulatory, and
compliance issues related to daily
operations in the casino.

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 Trends in the Gaming
Entertainment Industry
• Gaming entertainment is depending less
on casino revenue and more on rooms, F
& B, retail, and entertainment. Other
trends include; an emphasis on loyalty
player smartcards, universal gaming
machines, a new generation of gamblers
(including Millennials and Generation X),
Candid Sky Camera technology, and more
emerging markets around the world.

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