Hospitality And Tourism Management
C h a p t e r 11
L E A r N i N G o B J E C T i V E S
after reading and studying this chapter, you should be able to:
• Outline the history of modern casinos.
• Describe the various components of modern casino hotels.
• explain how casinos have been integrated into larger hospitality operations.
• Understand the basic principles of casino operations.
• Discuss the different positions within the gaming industry.
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One of the most significant developments in the hospitality industry during the past three decades has been the astounding growth of the casino industry and its convergence with the lodging and hospitality industries. With its rapid expansion in North America and throughout the world, new opportunities have been created for hospitality careers within casino resorts.
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 gam- ing, commercial casinos, lotteries, Native american gaming, and parimutuel gaming. Some form of legal gaming exists in 48 of the 50 states, with com- mercial casinos representing the largest part of the domestic gaming market. While gaming revenues vary by the state, the industry contributes billions of dollars in tax revenue to these local governments on an annual basis. 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.
When a customer places a bet in any type of gaming activity and the casino guest wins the game, he or she receives a cash payout; if the guest loses the game, the money is wagered. the total amount of the bets is called the handle, and the net amount spent by the guest is called the win by the gaming entertainment industry.
What is the difference between gambling and gaming? Gambling is play- ing a game of risk for the thrill of the action and the chance of making money. true gamblers spend a great deal of time learning and understand- ing a favorite game of risk and enjoying the subtle attributes, and, in par- ticular, they find an enjoyable challenge in trying to beat the house, or win more than they lose from a casino. a gambler has little interest in anything other than a casino floor and the games it offers. It is true that of the nearly 40 million visitors who go to Las Vegas, the approximately 27 million peo- ple who go to atlantic City, and the hundreds of thousands who frequent other casino operations, they love the green felt table, the whirling roulette wheels, the fall of the chips, the lottery-like game of keno, and the thrill of the game. the rows of colorful slot machines sounding out musical tones and flashing lights, the distant sounds of someone hitting the jackpot, and the ringing bells and shouting guests create an environment of excitement and anticipation that can be found only on the casino floor. the gaming industry has exploded from just two jurisdictions in 1976 to some form of legal gambling in 48 states.
Not long ago, the presence of slot machines or blackjack tables was all that was needed to lure visitors. however, with the rapid spread of casinos through North america, this is no longer true. the competitive nature of casino business has forced the creation of a bigger, better product to meet
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the needs of its guests. this product, gaming entertainment, has evolved over the past decade.
Games of risk are only part of the total package of entertainment and leisure time activities found in 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 gam- bling with other activities during their visits. Social gamblers, by this defini- tion, are interested in many gaming entertainment amenities and take part in many diverse activities during a stay. Gaming entertainment refers to the casino gaming business and all its aspects, including hotel operations, enter- tainment offerings, retail shopping, recreational activities, and other types of operations, in addition to wagering on the gaming floor. the heart of gaming entertainment has been dubbed the “entertainment megastore” with thousands of rooms; dynamic, interesting exterior architecture; and nongam- ing attractions.
Gaming entertainment is the business of hospitality and entertainment with its core strength in casino gaming. according to this definition, a gam- ing 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. Next in importance to the guests are high-quality food and beverage operations.
Gaming entertainment is one of the last hospitality concepts to sup- port the full service, tableside gourmet restaurant, in addition to the lavish buffet offerings that many casino locations offer. the number of foodservices is wide and diverse—from signature restaurants featuring famous chefs to ethnic offerings to quick service, franchised outlets. the gambling entertainment industry offers unlimited career opportunities in restaurant management and the culinary arts that were unheard of just a decade ago.
Gaming entertainment also goes hand in hand with the lodging industry because hotel rooms are part of the package. Full service hotels are part and parcel of gaming entertainment. rooms, food and beverage, convention ser- vices, banquet facilities, health spas, recreation, and other typical hotel ame- nities support gaming entertainment. Most of the largest and complex hotels in the world are found in gaming entertainment venues, a number of which are described in detail later in this chapter.
Gaming entertainment offers a place where guests can gamble (the casino floor), eat and drink, sleep and relax, and maybe do some business. 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, muse- ums, and cultural centers. the most popular gaming entertainment destina- tions are designed around a central theme that includes the hotel and the casino operations. Unlike its predecessor, the casino business, the gaming entertainment business has numerous revenue-generating activities. revenue is produced from casino wins, or the money that guests spend on the casino floor. the odds of any casino game are in favor of the house, some more
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than others. a casino win is the cost of gambling to guests, who often win over the house in the short run and are therefore willing to place the bets and try their luck.
Nongaming revenue comes from sources that are not related to wager- ing on the casino floor. 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 casino.
What form does gaming entertainment take? the mega-resorts of Las Vegas and atlantic City garner the most publicity as the meccas of the gam- ing entertainment industry. however, there are smaller properties through- out Nevada, and other casino-based businesses in 48 states and seven Canadian provinces. these casinos take the form of commercially operated businesses, both privately and publicly held. Some are land based, mean- ing casinos are housed in regular buildings. Other are in river boats that cruise up and down a river or on barges moored in water and do not cruise, called dockside casinos. 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.
there is a strong support for gaming in the marketplace as an entertain- ment 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 percent of them have actually gambled in those 12 months. according to the market research, more than 85 percent of U.S. adults say casino entertainment is acceptable for themselves or others. eighty-six percent of americans report having gambled at least once.
Commercial casinos account for 36 percent of gaming revenue. Indian casinos and state lotteries tie for second place at 26 percent. the demo- graphic makeup of the typical gaming entertainment guest has remained consistent during the past several years. 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. the customer profile of Las Vegas is a younger demographic of guests who spend money in search of total entertainment experience.
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.e.! the romans were also gamblers. they placed bets on char- iot races, cockfights, and on dice throwing. this eventually led to problems: gambling, or games of chance, was banned except for during the winter festival of Saturnalia.1
LearNING OBjeCtIVe 1 Outline the history of modern casinos.
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In the seventeenth century, casino-style gaming clubs existed in england and Central europe. a public gambling house was legalized for the first time in 1626 in Venice, Italy, and one gambling establishment, in Baden- Baden, Germany, opened in 1948 and is still open today.2 Soon the upper class met in so-called casinos to socialize and gamble. In the first half of the nineteenth century, organized gaming casinos started to develop.
Las Vegas—the name alone summons images of neon lights, extravagant shows, outrageous performers, and bustling casinos where millions are won and lost every night. Las Vegas is all of that and much more. this city repre- sents the american dream. 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.
the gaming entertainment business in the United States has its roots in Las Vegas. From the early 1940s until 1976, Nevada, and predominantly Las Vegas, had a monopoly on the gaming entertainment business. 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. Siegel was born February 28, 1906, in Brooklyn, New York, to a poor jewish family. It is said that he began his career at a very young age by extorting money from pushcart peddlers. eventually he turned to a life of bootlegging, gambling rackets, and murder-for-hire opera- tions. In 1931, Bugsy was one of four men who executed Giuseppe “joe the Boss” Masseria. Several years later, he was sent out West to develop rack- ets. In California, Siegel successfully developed gambling dens and ships. he also took part in narcotics smuggling, blackmail, and other question- able operations. after developing a nationwide bookmaking wire operation, Siegel moved on to build the well-known Flamingo hotel and Casino in Las Vegas. the casino ended up costing over $6 million, which forced Siegel to skim profits. Siegel subsequently died in Beverly hills in june 1947, hit by a barrage of bullets fired through the window of his home. the day after his death, three mobsters walked into the Flamingo hotel and announced that they were the new owners.3
During the 1970s, atlantic City was in an impoverished state, with high rates of crime and poverty. In an effort to revitalize the city, New jersey vot- ers, in 1976, approved casino gambling in atlantic City.4 Later casino gam- bling was legalized in the state of New jersey by the Casino Control act. the state looked to the casino industry to invest capital, create jobs, pay taxes, and attract tourists, thus revitalizing the economy and creating a financial environment in which urban redevelopment could occur.
the act initiated a number of fees and taxes specific to the casino hotel business that would provide revenues to support regulatory costs, fund social services for the disabled and the elderly through the state, and pro- vide investment funds for the redevelopment of atlantic City. the Casino Control act created the Casino Control Commission, whose purpose was not only to ensure the success and integrity of the atlantic City casino industry, but also to carry out the object of reversing economic futures of cities.5
Sensing that the objectives of the Casino Control act were being fulfilled in New jersey and wanting similar benefits for its state, but not wanting
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land-based casino gambling, Iowa legalized riverboat casinos in the early 1990s. Illinois, Mississippi, Louisiana, Missouri, and Indiana followed suit in rapid succession. as the casino industry spread throughout the United States and Canada, its competitive nature created a need for what is now known as gaming entertainment and added to non casino attractions. Gaming enter- tainment is, therefore, a natural evolution of the casino industry.
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. this ruling came about after the state of California and the county of riverside sought to impose local and state regulations on card and bingo clubs operated by the Cabazon and Morongo bands of Mission Indians. the Court clearly recognized the rights of tribes with regard to certain gaming activities.6
Congress, which some observers say was alarmed by the prospect of losing control over tribal gaming, 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. For example, the IGra outlines criteria for approval of casino management contracts entered into by tribes and establishes civil penalties for violation of its provisions. the act is clearly a compromise in that it balances the rights of sovereign tribal nations to conduct gaming activities on their lands with the rights of the federal and state governments to regulate activities within state and federal borders.7 the three objectives of the IGra are as follows:
1. provide a statutory basis for the operation of gaming by Native american tribes as a means of promoting tribal economic development, self-sufficiency, and strong tribal governments;
2. provide a statutory basis for the regulations of gaming by the Native american tribe adequate to shield it from organized crime and other corrupting influence;
3. establish an independent regulatory authority, the National Indian Gaming Commission (NIGC), for governing activity on Native american lands.8
IGra defines three different kinds, or classes, of Native american gaming activities:
• Class I gaming, consisting of social games played solely for prizes of minimum value or traditional forms of Native american gaming
• Class II gaming, consisting of bingo, games similar to bingo, and called games explicitly authorized by the laws of the state
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• Class III gaming, consisting of all forms of gaming that are neither class I or class II gaming, and therefore including most of what are consid- ered casino games.9
the significance of the definition of class III gaming activity is that it identifies the games that must be located in a state that permits such gaming for any purpose by any person, organization, or entity and are conducted in conformance with compacts that the states are required to negotiate “in good faith” with the tribes.
While the federal gaming law precludes state taxation, the tribes in sev- eral states have voluntary payments and also negotiated payments to state governments under certain circumstances. Often tribes give local govern- ment voluntary payments in recognition of services the tribe receives, and some pay revenues in exchange of permissions to maintain a casino gam- bling monopoly in a state. In Michigan, Connecticut, and Louisiana, tribes have agreed to make payments to the state as a part of their comprehensive compact for casino gambling. In almost all the states, the tribes make pay- ments to the states for costs incurred by the states in regulating the casinos as provided in the negotiated agreements.
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 gam- ing in the United States. Foxwoods resort Casino in Ledyard, Connecticut, operated by the Mashantucket pequot Indian reservation, is one of the larg- est casinos in the United States with more than 6,300 slot machines and 380 table games.10
the Casino resort: a hospitality Buffet today, casino resorts are among the most visible hospitality businesses in the world. twenty of the 30 largest hotels in the world are casino resorts on the Las Vegas Strip.11 the size and scope of the global gaming industry are expected to reach $117.9 billion dollars in 2015. those aiming for careers in hospitality, even if they have no special interest in working on the gambling side of the operation, may find themselves considering a position in a resort that has a casino, but also a full spread of lodging, food and beverage, enter- tainment, and retail offerings.
even if you don’t plan on working on the casino floor itself, a rudi- mentary understanding of the nature of gambling—and the specifics of casino gambling—is an essential tool for those who want to pursue careers in casino resorts. today, many casino resort presidents and key executives have come up through the lodging or food and beverage side of opera- tions; a solid understanding of what’s happening in the casino—and how casino guests are different from other hospitality patrons—makes advancing through the ranks that much easier.