The first Las Vegas Casino, Hotel, what is now the Golden Gate, dates all the way back to 1906 when it was known as the Hotel Nevada and rooms cost a now unheard of $1 per night. The casino is still open for business today, after being closed again in 2012 for a massive renovation.
Poker first became legal in Nevada, even earlier than casino games. Poker first became legal in Las Vegas, as well as other parts of Nevada, in 1901. However, in 1909, the State of Nevada passed another law overriding it. The 1909 ruling made it illegal not only to deal and play poker, but to run virtually every other existing form of gambling, including craps, slot machines, horse racing, and even flipping a coin for the price of a drink. By 1910, casinos were banned in the State of Nevada, and by 1913, all forms of gambling were barred in the State.
The ban did not mean that no one in Nevada gambled anymore, just that the activity became relegated to illegal backrooms. In 1915, there was a slight relaxation in the law, permitting some gambling, but limiting it to slot machine betting under $200. However, gambling did not become fully legal again in Nevada until 1931. The legislation was finally passed because gambling was seen as a way to raise needed taxes for public schools in the State.
The Nevada Hotel was closed the entire time that gambling was banned in Las Vegas, but reopened in 1931 when gambling in Nevada was legalized, under a new name, Sal Sager (Las Vegas spelled backwards). The casino subsequently became known as Golden Gate.
The Golden Gate, although technically the first casino in Las Vegas, was not the first licensed casino in Las Vegas. That distinction belongs to the Boulder Club, also in downtown Las Vegas.
Since then, many more casinos were built, not only in Las Vegas, but throughout Nevada. While a handful of the old casino hotels still exist, others have been torn down, making way for the construction of bigger, more appealing vacation destination casinos with many more amenities. The building of the Mirage Hotel Casino on the Las Vegas strip, 50 years ago, in 1964 marked the beginning of the era of the mega resorts, facilities where more than half of the revenue comes from non-gambling items.
Las Vegas has shifted from being just a gambling mecca to a vacation, party, and convention destination. While gambling is still an important activity for most Las Vegas visitors, the notion that there is nothing else to do in this town is far from the truth. The typical visitor today spends more money on shows, shopping, dining, and drinking than on slots and table games.
Online gambling was not even an option until the 1990s and did not really start becoming a popular alternative to going to casinos to play until this century. One person who singlehandedly popularized online gambling, and poker in particular, for millions of people, was amateur poker player turned 2003 WSOP Champion Chris Moneymaker. His remarkable win gave countless numbers of other people from every walk of life the hope that they, too, could become overnight millionaires betting online. And so the poker sites proliferated.
Then, on 10/13/06, a new law was passed, the Unlawful Internet Gambling Enforcement Act of 2006, which banned American financial institutions from processing most transactions with online gambling operators. As major sites stopped taking action from U.S. players, the online gambling industry took a huge hit.
What the UIGEA of 2006 did not address was whether or not it was legal for U.S. citizens to gamble online. The law was also unclear as to whether or not was intended to apply to poker or if poker was exempt because it was supposedly a game of skill. Accordingly, some online poker sites continued to let Americans play.
In 2009, the U.S. Department of Justice seized almost $35 from online poker accounts, and on 4/15/11, the three largest offshore sites accepting U.S. players were shut down completely. But in a dramatic turn of events, later in 2011, the Court of Appeals ruled that that since the 2006 law was based on the Federal Wire Act of 1961, it should have only applied to online sports betting. In addition, the Department of Justice ruled that whether or not online gambling should be legal was a matter for the individual states, not the federal government, to decide. Thus far, legislation allowing state-run online gambling has been passed in three states, Nevada, Delaware, and New Jersey, with more expected to follow soon. Of the three, Nevada was the first to have online gambling up in running, but for poker only, in April, 2013.
On February 25, 2014, the first legal interstate Internet partnership agreement in the U.S. was signed between Nevada and Delaware. The agreement will allow online poker players from the two states to play against one another at the same virtual table. Presence in one state or the other at the time of play is required. Nevada and Delaware each currently have three operating poker sites. The three in Nevada are UltimatePoker.com, WSOP.com, and SouthPoint.com. Caesars Entertainment, in conjunction with 888 Holdings, operates the three licensed poker sites in Delaware.
Once the new arrangement takes effect, the larger size fields should draw in many more players. Delaware online poker has been struggling due to the very small number of players so having a shared player pool should help immensely. Nevada is expected to benefit as well.
Las Vegas Gambling Today
Even though there are other places in the world, such as Macau that is currently ranked #1 for revenue it is still not Vegas. Las Vegas is hot and it isn’t because it is in the middle of the desert. It is because it is the original place to go for adult entertainment. There are immense renovations planned for 2018 and with it all eyes are on the “City of Lights!” Table 1 shows the number of visitors each year from 2004 through 2015 which supports the reality that a town of 600,000 regular residents can play host to over 42 million annually and not blink an eye.
No. of Visitors to Las Vegas by Year
Despite economically troubling times in the United States it appears as though the country is rebounding based upon the past 6 years of Vegas tourism. Las Vegas celebrated a year when they finally surpassed the 40 million visitor mark. Much of this phenomena is because Vegas has become not only a place to gamble but a vacation hotspot for families. Additionally the network of casinos and casino operators from Vegas to the east coast has created a network of promotion and incentives that have enabled casino enthusiasts to economically perk their way to the strip.
From all indications, the Las Vegas economy is continuing to recover nicely from the recession and, understandably, Las Vegas is still be called by many people the gambling capital of the world. But unlike Macau, the now No. 1 mecca for gambling worldwide, people also visit Las Vegas for a variety of reasons other than for gambling.
The Las Vegas Convention and Visitors Authority published a report comparing people’s reasons for visiting Las Vegas and their activities and spending while there each year from 2009 to 2013. Some interesting findings emerged about the 2013 visitors compared to previous years.
Las Vegas is experiencing this major increase in number of visitors and accompanying improved gaming revenue even with the increased national and global completion. However, the most notable finding is that more and more people are coming to Las Vegas for other reasons than primarily to gamble. There has been a heavy influx of young tourists spending tremendous amounts of money on clubs. High end restaurants and shopping are also popular. In 2013, gambling accounted for just 36% of the spending on the Strip.
Furthermore, although the biggest beneficiary is the Las Vegas Strip, which is by far the town’s major tourist area, the downtown area has also been trying to reinvent itself and improve its image to attract more visitors. Improved cash flow has resulted not only in several aging properties being torn down, but also in a lot of new construction as well as renovation of existing facilities, both on the Strip and downtown.
Caesars now owns an entire contiguous section of the Center Strip stretching ¾ mile, including multiple properties starting with Harrah’s and continuing through the Planet Hollywood. One of them, the former Imperial Palace, which was clearly showing its age and far from palatial, has been generating a lot of buzz with a major transformation and upgrade, initially being renamed the Quad and subsequently the Linq. Several casinos in the downtown area have similarly undergone massive renovations. In addition, new high-end restaurants and clubs, catering to a younger crowd, are popping up everywhere.
Interestingly, though, as mentioned, despite the improved economic climate bringing in more visitors than ever, the amount spent on physical and online gambling has not increased to the extent that might be expected. In comparison, restaurant, beverage, and nightlife spending has gone way up.
UNLV researchers have tabulated the yearly total gaming revenue for the entire State of Nevada, as well as separately by region. The published reports provide a wealth of information, not only on how Las Vegas and other area of the State are faring with respect to how much money is being generated from gambling, but also which forms of gambling are proving most popular and profitable.
In addition, with the introduction of legal state-run online gambling in 2013, but for poker only, other states are also looking into the possibility of legalizing online gambling. They are following what is happening in Las Vegas closely for a better idea of whether the venture is likely to be worth the gamble.
Tables 2 and 3 presents the Total Gaming Revenue Statewide and for the Strip for each year from 2010 to 2015. The Strip is especially significant because it provides approximately 55% of the total revenue for all areas of the state combined.
Total Nevada Gaming Revenue Statewide by Year
Total Gaming Revenue for the Las Vegas Strip by Year
As can be seen from these tables, Nevada casino total win for 2013 of USD $11.1 billion and Las Vegas Strip win for 2013 of USD $6.5 billion mark the 4th consecutive year of increased gambling revenue over the previous year. 2014 saw a bit of a decline overall with a slight increase into 2015. It is believed that next year will represent yet another major boom for Las Vegas as casinos have entered deeper into a collective marketing movement. As LV continues to grow as not only a great place to play for adults but for the whole family. The all exclusive casino resorts provide the perfect getaway for people of all ages.
Las Vegas Poker
Moreover, when the results for poker, both in the casinos and online, are examined separately, a very different picture emerges from the upward trend exhibited for gambling as a whole. Between 2003 and 2006, Nevada poker experienced unprecedented growth. Then, another big jump in revenue occurred in June 2007, coinciding with the WSOP, after which Nevada casino poker revenue has steadily plummeted. As with the other forms of gambling, Nevada poker revenue dropped during the 2008-2010 recession period, but unlike the other forms of gambling, poker revenue, instead of rebounding post-recession, continued to decline each year since.
Nevada, unlike the other two states which have legalized state-run online gambling to date, allows online wagering on poker only. Nevada, the first of the three states to have the program operational, opened its first site, UltimatePoker.com (in partnership with Station Casino) on 4/30/13. On 9/19/13, Caesars interactive Entertainment, in partnership with 888 Holdings, launched the state’s second licensed online poker room, WSOP.com.
The monthly reported online poker for Nevada for February through May, 2014 is shown in Table 6. Also shown is the total poker revenue for Nevada during the same time periods. Online poker, which in Nevada is being taxed at the same 6.75% rate as casino games but is only averaging about $850,000 revenue per month, accounts for about 9% of Nevada’s total poker revenue.
Even though Nevada’s return to the state from online poker is lagging way behind New Jersey’s, analysts are encouraged by the increased revenue in May as well as the expectation of additional revenue being generated both from the summer’s WSOP events and the forthcoming combined player pool for Nevada and Delaware. There is also the possibility that Nevada may create combined player pools with New Jersey and/or other states that in all likelihood will also be launching online gambling soon.
Problem Gambling in Las Vegas
Las Vegas is a place where the action never stops, and unfortunately, for many people, visitors and residents alike, the temptation is too great, and, for them, the action doesn’t stop until they literally have to stop because they run out of money. Another related problem is the ease with which gamblers can get credit, frequently much more than they can afford to pay back. In more extreme cases, gamblers wind up declaring bankruptcy as their debts continue to mount with no way of paying them. Also, Las Vegas Strip casinos have had more of a problem with bad debts than casinos in other areas of the state, which is not surprising, since that is where heavy gambling is far more prevalent and where large lines of credit are granted to more people. During the recession, the percentage of bad debt fell, but increased again in 2013. The 2013 percentages of bad debt that were written off by Las Vegas casinos are 2.4 for Strip casinos vs. 1.4% for the State as a whole.
According to the Nevada Council on Problem Gambling, 6% of Nevada adults and 2% of adolescents in Nevada may already be problem or pathological gamblers. Another 10% of the teenagers in Nevada are at risk to develop a gambling problem.
The problem is compounded by the widespread prevalence of out of control drinking by young people in Las Vegas. Under the influence of alcohol, it becomes all too easy to lose one’s inhibitions in the casino. Although there is a legal minimum age of 21 for both drinking and gambling in Las Vegas, in practice, the regulations are not strictly enforced, between fake IDs and many people who are supposed to monitor underage gambling and drinking looking the other way. With slot machines being played in locations other than full service casinos and with online gambling, there is even less scrutiny.
While young people with a gambling problem may be the most visible in Las Vegas, they are by no means the only segment of the population in need of help. Local gambling addiction centers are also seeing greater numbers of senior citizens seeking help. Many of them are lonely and bored, with nothing to occupy their time but spending hours on end in the casinos gambling away their life savings and social security money. Some of them have even lost their homes.
The problem is not confined to lifelong residents of the area. Las Vegas is one of the fastest growing retirement spots in the country. Individuals with a problem can contact the Nevada Council on Problem Gambling or Problem Gambling Center for treatment referrals.