Sports books feeling pinch in tough economic times
Los Angeles Times
LAS VEGAS — Gamblers know going in that the bright lights, marble tile floors and hospitable employees in this city are paid for on the broken dreams of bettors. That’s part of the pull that keeps them coming back — the challenge of beating the man.
However, on Oct. 25, Week 7 of the NFL season, the corporate types running the mighty Las Vegas sports books found themselves trapped in the unpleasant reality many have experienced in Sin City — paying out far more than planned and begging for mercy.
Most gamblers bet favorites in NFL games, and that Sunday almost every favored team covered the point spread. “Every sports book director in this town was on their knees crying uncle,” said Jay Kornegay, director of the Las Vegas Hilton’s race and sports book. “Black Sunday,” he called it, his worst in 22 years, noting he paid $3,000 to a 65-year-old woman holding five $2 NFL parlay bets.
All told, the city’s sports books lost about $8.5 million that day, said Jay Rood, director of the city’s largest sports and race book, MGM/Mirage. The losses could have been twice as big, he said, except the underdog Arizona Cardinals beat the New York Giants that Sunday night. “One of the worst NFL weekends in the history of Nevada,” Rood said.
Football is basically the make-or-break sport for Las Vegas sports books, with NFL bets accounting for about 28 percent of their business each year, and college football next at about 19 percent.
The last three NFL weekends have featured “some good Sundays,” Kornegay said, without giving his casino’s profits.
And Las Vegas was busy last weekend, too, thanks to the Manny Pacquiao-Miguel Cotto fight. Boxing, college football, the NFL, the NBA, the start of the college basketball season and an Ultimate Fighting Championship card all gave the Vegas sports books their busiest Saturday of the year, Kornegay said.
But overall, the recession is hurting the Las Vegas sports books, with their revenue down about 10 percent from 2007. Rood said he took two $250,000 bets on Pacquiao, but in most cases, “the $300 bettor is now a $200 bettor.”
Las Vegas has suffered greatly during this economic downtown, with visitor traffic, hotel occupancy and gambling revenues tumbling, atop a major housing crash. In 2007 the city lured 39.2 million visitors, who filled 90 percent of its hotels and motels, gambled $6.8 billion on the Las Vegas Strip (sports accounts for about 4 percent of all gaming), and paid an average room rate of $132, according to the Las Vegas Convention and Visitors Authority. It’s been downhill since then. Last year Las Vegas’ occupancy fell to 86 percent, room rates dropped to $119, and gambling revenues fell 10.6 percent. And through September of this year, occupancy rates are down to 82.8 percent, even though average room prices are $92, and gaming revenue is off another 12.5 percent.
When the football season started, Las Vegas’ 2009 sports betting volume was below its 2008 levels, Kornegay said, because horse-racing betting is down and baseball and hockey interest remains flat.
Some veteran gamblers say Vegas sports books are hurting because they won’t compete with the lower fees and more creative betting options offered by Internet gambling operations. Typically, Vegas sports books charge $10 for every $100 bet, versus about $5 by online gambling sites.
“They could do a better job,” said veteran gambler Richard Dunberg, 53, of Las Vegas. “Why do they deserve the action from the locals when they ask us to lay $110 to win $100, when we know online it’s $105? At the end of the year, that difference is enormous.”
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Rood said Vegas books charge more because “we only get to draw from the people who come to Vegas and step into the casino, versus the larger pool going (online) to the offshore operations.”
Do Las Vegas books need to offer more specialized bets? “We’ve tried,” Rood said. “Then no one bets it.”
He cites Thursday’s proposition bet on the Phoenix Suns-New Orleans Hornets game: Which team will score 15 points first? He got only six bets. “It’s not that we’re afraid to do it, but the interest doesn’t seem to be there,” Rood said.
However, Johnny Avello, executive director of the Wynn Las Vegas race and sports book, said the reason why sports books first flourished in casinos is why they’re helping the industry weather the recession.
“They bring customers in,” Avello said. “A lot of events that draw people here revolve around the book: the Super Bowl, the Final Four, college bowl games, the Kentucky Derby.”
Last weekend’s Pacquiao-Cotto fight attracted lots of visitors, and it was profitable for the sports books because they took a lot of proposition bets about when the fight would end.
The over/under for the fight was 9.5 rounds; most bettors expected a shorter fight. Pacquiao won on a 12th-round TKO.
Avello said he hopes his boss, Steve Wynn, pursues his reported interest in constructing an outdoor 30,000-seat venue to host a Manny Pacquiao-Floyd Mayweather Jr. super-fight, should the boxers agree to terms.
“That fight needs to be in this town,” Avello said.
Meanwhile, the Vegas sports books stick to their bread and butter in the fall: football.
The Cowboys, Steelers, Packers, Patriots and Colts are the most popular because of gigantic fan bases. There’s also the “Favre factor,” with the ageless quarterback boosting gambling action on the Jets last year, and Brett Favre is doing the same for the Vikings this season.
Parlay bets are also a big part of the NFL betting action. Vegas offers 80-1 odds for those who can pick all eight winners in an eight-team parlay card. Four- and five-team parlays offer 10-1 and 20-1 prices, respectively.
Team loyalty also drives heavy betting on the top 25 college football teams.
“There’s always three or four (college football) games that are the big ones on any given Saturday, and they usually involve teams competing for a national or conference championship,” Avello said. “Plus, where the pro game is more precise, you’re more likely to see 70-yard, big plays in college. The players like betting when a good team plays a bad one, they like the mismatches.”
A full recovery from the country’s financial crisis hasn’t happened yet, but Rood is still upbeat.
“Sports is sort of like an escape,” he said. “It’s like a movie but better. You get to watch for three hours and you can bet $50 and get free cocktails. You might even win $50 — more if you parlay it.”