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Gary Loveman on CNBC Squakbox this morning

Discussion in 'Casino Industry & Development' started by Huddler, Sep 12, 2013.

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  1. Huddler

    Huddler VIP Whale

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    CET CEO Gary Loveman was in studio at CNBC for an appearance on Squakbox this morning and he made the following observations. Vegas is doing much better. Revenue are now in favor of non gaming but profit margins are much higher in gaming. Its something like a 60/40 split between non-gaming vs gaming. Whales from China still come to Vegas as Macaw and other venues really are not diverting them. Of the worlds 500 top gamblers, 400 are Chinese and the vast majority of them play baccaret. Baccaret has a 2% hold. The Ling is to attract more people since people didnt need another casino experience. Retail/dining will open around Christmas and rest if ling project should be completed by 2nd quarter. We have plenty of people in town but it would be nice if they spent more money. They are much more careful with money these days. If its legal in Clark County we will provide it. The rest so far is mostly dumb questions by the typically pretty good panel, with a couple of Hangover references eq "Would you bring me a tiger if I asked for one:.

    Atlantic City will never be like Vegas. Business is contracting because of increase in competition. There is no organized crime in Atlantic City. Atlantic City needs other activities like conventions and entertainment. Boardwalk has changed and its a good experience. AC needs alot more people there. The governor is doing a great job helping Atlantic City. more after the break...
     
  2. Huddler

    Huddler VIP Whale

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    Sports betting is coming to New Jersey and Loveman would like to see it other places as well. Christie is an advocate and will continue to push it. The leagues will see that sports betting is in their interest eventually. Online betting would be great too and he supports it, especially poker. Vegas is gambling and adult, not really a family destination. Families dont have time or disposable money to spend. Grandparents and before kids are the target. Families as a target failed and that is not their target market. Thats I recall from the interview!

    Loveman is as dry as 3 day old toast but he seems fairly straight forward. Unfortunately, they didnt ask him the tough questions around servicing their debt and eventual bankruptcy so I am really disappointed in the interview. I dont follow them or their stock but wanted to hear more hard numbers rather than Godfather/Hangover references. Oh well...
     
  3. jackincols

    jackincols Guest

    Kinda....no...really surprised nobody asked about CET's financial situation. Perhaps that was named as "off limits" by Loveman before the interview?
     
  4. Huddler

    Huddler VIP Whale

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    I am not sure but typically when CEO's come on the show, they dig into financials at least to some degree. While talking about Vegas is more interesting than discussing numbers on a spreadsheet, this is CNBC and the focal point is financials, stock price, etc. So, not sure if they just werent aware of the looming debt issue with CET, or if they just wanted to talk about Vegas Baby! Not sure the guests can demand "off limits" topics as the financials are a matter of public record anyway. Not saying they should have put him on the spot, but at least bring up the topic and let him give his spin. The only talk around numbers was about visitors being up and non-gaming being a larger piece of the revenue pie. They might have the interview up on their site later but I havent checked. No real substance for those concerned about financials.
     
  5. mjamesp

    mjamesp High-Roller

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    I thought Loveman was a bit frustrated at the end with all of the mob and Hangover questions and references. Squakbox could have done a much better job talking about the business. Joe just looked like a goof and was disinterested in the subject.
     
  6. Kickin

    Kickin Flea

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    What? Squawk Box didn't ask any hard questions? You gotta be kidding me! :poke:

    Seriously, that show and that entire channel is a joke. At this point I don't really think they even try to hide the fact that they are essentially PR vehicles for their guests. They've essentially admitted it by defending their need to not ask tough questions so they can keep their "access" to CEOs and bankers.

    David Faber is an exception. He's a bright guy and I've met him a few times and he's bright in person as well. Other than him I can't really think of anyone else among the regulars.

    I wouldn't post it here online but I'd tell you in private about a couple of CNBC panelists who I personally knew were regularly unemployed and unqualified salesguy/broker types on the street but because they have the right looks and can spew bs landed gigs on CNBC where they're labeled as "fund managers" or other types of experts. A panelist on one of their popular shows that knew some of my colleagues back in the day calls me one in a while for a few quick sentences on some news in Asia. Then goes on the air and regurgitates those lines and pretends to be an expert, even answering questions with complete nonsensical bs. He laughs about it and says they do that stuff all the time.

    Ok, sorry to derail. Now back to Loveman...
     
  7. Chuck2009x

    Chuck2009x VIP Whale

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    The house edge in Baccarat is a little over 1%

    But the hold is way higher.

    I've heard Steve Wynn on conference calls say their expected hold on bacc is around 25%. It usually comes up when they have either good or bad results for a quarter due to the hold from various games deviating from the expected.
     
  8. alanleroy

    alanleroy Tourist

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    Mark Haines never backed away from the tough questions. RIP.
     
  9. grosx2

    grosx2 VIP Whale

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    No. The player and banker bets each have a house edge of slightly over 1%. The 2% overall hold comes from the small percentage of tie bets placed, at a house edge of about 14%. One casino could deviate from this in the short term due to the success, or lack thereof, of several whales, but over time the house hold will regress to the mean. You said it yourself...."good or bad results"....baccarat is essentially a coin flip, so how could it tilt so far in the casinos favor (25%) over the long term? It can't.
     
  10. NickyDim

    NickyDim VIP Whale

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    If each hand has a house edge of over 1% but the player plays for 2 hours, that 1% gets compounded over and over and over and the players original buy in/cash out could easily reflect 25% losses.

    Slots are a great example. You put a $20 in a slot machine that has a 10% rake. If you went thru that $20 once you could theoretically have $18, put that $18 through and you now have $16.10...and so on until you have nothing left.

    House edge and expected hold (house take) are too different references.

    In August 2013, Bally's AC Blackjack handled $16,276,819 but shows a win of $2,314,370 or 14.2% but everyone tells you BJ is a 2% game. source
     
  11. Chuck2009x

    Chuck2009x VIP Whale

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    Because people bust out.

    This is Steve Wynn on the 2Q2012 conference call, explaining why their results were so bad compared with the same quarter in the previous year. After that earnings release, the stock dipped into the mid 90's, which also happened to be during a Vegas trip, and I bought some.

    Stephen A. Wynn - Founder, Chairman, Chief Executive Officer, Chairman of Wynn Macau Limited and Chief Executive Officer of Wynn Macau Limited

    Hello, and good afternoon, everybody. I appreciate Linda staying up so late in Macau. I think we have everybody here to answer questions. I'll make a couple of summary remarks. First, Las Vegas.

    Last year, we -- I've mentioned before, we enjoy a great deal of very high limit Baccarat business. And that high play tends to be volatile. In the long run, not so much. But in the short run, it can be. For example, last year, during the 6 months, the first 6 months of the year, winners. That is to say, people who won money from the casino were outnumbered by the losers. The losers were outnumbered by the winners. And that is to say, the amount of money we paid to people who beat us, compared to the amount of money of folks who lost money to us was a positive for the company of $150-odd million.

    This year, the people who won money in the casino were much more, and the people who lost money to the casino were less, and the delta was $38 million. That is to say, there was $112 million difference in 6 months in the win of the casino associated with high limit Baccarat.

    Last year, we held 37% or something like that. And this year, it's 17%. Normalized, it's about 26% for that gain. So when you normalize everything, the trend in Baccarat, Marc will remind me, in 2010, high limit Baccarat won how much, Marc?
     
    Last edited: Sep 13, 2013
  12. tringlomane

    tringlomane STP Addicted Beer Snob

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    As others have mentioned, you are confusing "house edge" with "hold". Hold = table drop / chips bought at table. Casinos use hold because tables aren't electronic enough to track all wagers.

    For table games, this is often between 15 to 30%. It varies based upon the game's house edge plus how much players buyin at the table and how long they play on their stake.

    For example, if you play $10 blackjack with an average 1% house edge for 120 hands on a $100 buyin, then the casino's average hold on that buyin would be: $10*0.01*120/$100 = 12%. Play twice as many hands on that $100, then the average hold doubles to 24%.
     
  13. grosx2

    grosx2 VIP Whale

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    So then Loveman misspoke, and meant to say that the house edge on bacc is about 2%?
     
  14. 4Eyes

    4Eyes Low-Roller

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    Hold % = win/drop -- not to be confused with that house PC inherent with any particular game.

    I watched the Loveman interview. It appears he has finally discovered the use of a comb.
     
  15. tringlomane

    tringlomane STP Addicted Beer Snob

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    I would think so, but I watched two snippets of the interview and missed the baccarat convo. Baccarat has a hold comparable to blackjack. It's usually a bit more because of the higher edge.

    For the last 12 months at big (>$72M annual revenue) strip casinos:
    Blackjack: 10.41% hold
    Baccarat: 12.30% hold
    Craps: 13.17% hold

    The "carny" games all hold over 20%, closer to 25 to 30%.
     
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