LVA ? OF THE DAY: Do casinos make more money from whales or from $200 slot players?


A: For this answer, we turned to Deke Castleman, senior editor of Huntington Press and author of Whale Hunt in the Desert.

There are two kinds of casinos: those that cater to whales and those that don?t.

A casino cannot, all of a sudden, put out a whale shingle. Casino Royale can?t, in an executive meeting, decide that it?s now going to accept $100,000 bets at blackjack. It doesn?t have the supporting infrastructure to make such a move. No limos, fancy restaurants, or penthouse suites. No domestic hosts. No international marketing department. No accounting department that understands the economies of whale. No cage personnel familiar with international transacting. No dealers who can handle millions with aplomb.

And, of course, no bankroll that can withstand the huge swings of fortune seen in the megaroller business. Thus, by design, Casino Royale makes most of its money (apart from the occasional high roller who might wander into the place) from pikers.

The MGM Grand, on the other hand, is in the megaroller business. The MGM can fulfill all of the above whale requirements. And I can tell you that the MGM would much rather take $20 million off of one Japanese industrialist than win $1 off of 20 million customers, or $20 off of a million customers, or even $200 off of 100,000 customers.

It makes sense. Although the MGM has to put up Mr. Kawasaki and his entourage of eight in five Mansion suites with butlers, private chefs and chauffeurs, plus pony up for shopping sprees and trips abroad, etc., and has to give him a 15% discount on losses over $5 million and a couple $250,000 chips as walking-in-the-door money, it?s just one guy in the high-limit baccarat pit -- with a dealer, a boss or two, a cocktail waitress, and maybe a security guard. The MGM might have to spend a couple million for its shot at Mr. Kawasaki?s $20 million (and it also has to gamble that luck won't swing his way, though as my book shows, almost all whales are net losers), but it?s quick and clean.

On the other hand, the low-limit slots and blackjack and crap tables require a mind-boggling amount of infrastructure. Thousands of machines. Hundreds of tables and dealers. Four or five levels of operations bosses. Dozens of cocktail waitresses. Cage and soft-count personnel. The slot club. The buffet. A big marketing department promoting to a database of millions. Taking that same $20 million, but only $200 at a time, is slow and messy. The bottom line is that the casino has to invest less to take a lot off of one player than it does to take a little from tens of thousands of players.