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Sports books lose some juice

Las Vegas remains relatively busy, but the city's gambling strongholds are feeling the effects of the country's economic downturn.

November 22, 2009|By Lance Pugmire
  • Las Vegas was busy last weekend because of the fight between Manny Pacquiao, left, and Miguel Cotto, but revenue at sports books is down about 10% from 2007.
Las Vegas was busy last weekend because of the fight between Manny Pacquiao,… (Mark J. Terrill / Associated…)

Reporting from 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 the key sport for Las Vegas sports books, with NFL bets accounting for about 28% of their business each year, and college football next at about 19%.

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 Las 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% 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 downturn, with visitor traffic, hotel occupancy and gambling revenue tumbling, atop a major housing crash. In 2007, the city lured 39.2 million visitors, who filled 90% of its hotels and motels, gambled $6.8 billion on the Las Vegas Strip (sports accounts for about 4% of all gaming), and paid an average room rate of $132, according to the Las Vegas Convention and Visitors Authority. It has been downhill since then. Last year, Las Vegas' occupancy fell to 86%, room rates dropped to $119, and gambling revenue fell 10.6%. And through September of this year, occupancy rates are down to 82.8%, even though average room prices are $92, and gaming revenue is off another 12.5%.

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 Las 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, Las 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."

Rood said Las 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."

The 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 technical knockout.

Avello said he hopes his boss, Steve Wynn, pursues a reported interest in building an outdoor 30,000-seat venue to stage a Pacquiao-Floyd Mayweather Jr. super fight, should the boxers agree to terms.

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