Don't Gamble On Casino Stocks Jeff Macke Jul 13, 2009 12:10 pm |
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Casino P&Ls are driven by the crowds. Casinos make their loot at the tables, but the ideal customers are packing the attractions all day, convincing themselves “Bambi” really thinks he’s special, then hitting the tables, and playing slots that night. Why? Because those rubes are going to get slaughtered at the tables later, riding high from eating at Nobu and getting drunk in the sun all day.
Step one is exploring how hard it is to get perks and reservations at the high end. Out of spite, a busy casino will turn down any regular Joe looking for a spa treatment or table. And due to the fact that Michael Jordan and Charles Barkley may show up and ask for what Joe's trying book, they may throw in a 100% tip just to keep the match simple. Celebrities are 100% likely to tip better than I or Mrs. Jeffmacke would. They bring cachet with them, and they don't bring home free spa bags stuffed to the brim with complimentary water and apples like Mrs. Jeffmacke does.
Getting easy reservations at the higher-end attractions means a dearth of high rollers. My ability to get Mrs. Jeffmacke in for a deluxe 90-minute treatment at the Atlantis with a mere 15 minutes' notice is great for her, a push for the Atlantis, and (arguably) an "investment” in my research -- and nets me a happy wife. To relax, you want it empty as Dubai. To invest, you want elbow to elbow. The Atlantis was very relaxing.
Step 2: Eyeballing the Crowd You Have
Talk to the workers -- not the front men and women. Ignore dealers, managers, the guy checking you in, and waiters. They all benefit from telling you business is cooking with gas. “Michael Jordan was sitting at this exact table hours ago,” they’ll tell you at Nobu (where Mrs. Jeffmacke and I ate 2 nights in a row, and didn’t even bother booking in advance on the second night ). “Those tables are only open by reservation but when I look at you, I see a big shot on the rise,” they’ll tell you on the casino floor.
Know up front that those folks aren’t telling you the truth.If you don’t like the idea of being lied to, think of the faux compliments as “bluffing.” Either way, you aren’t sitting at Michael Jordan’s special seat; dealers look at you and see nothing but money. Casinos are like parties; if the place is empty, it’s going to get emptier. The casino’s goal is to get you to stay and play, whatever it takes, provided you're losing.
Instead, talk to the guy lugging your bags. Ask the nice dude working the bar in the empty late-night club -- if midnight's late night -- if that's a negative “tell” for business. Those folks will “bluff” you to enhance their tip, but they mostly just like to to chat to customers who don’t treat them with disdain. Casually ask how business is these days after you’ve tipped them generously. Then they have no reason to fib and, if you do it right, you’ve made a new friend.
My new friends told me they spent most of their days talking about track stars from the island. I didn’t have high expectations but, given the pure misery of the New York summer until recently, I expected better than that. If rich guys sitting in cash aren’t throwing their money away at places like Atlantis by now, they aren’t spending it anywhere.
As far as crowd density, I'd give the Atlantis a C-. It wasn’t empty, but they weren’t making money. Put it this way: Hurling my daughter down an enormous, potentially dangerous slide is free. Having a dealer pull a 4-card 21 against your 20 can be insanely pricey, and takes 5 or 6 years off your life. The slides were crowded. The casinos weren't.
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