IS A DEALER PHASE OUT POSSIBLE?

The Excalibur is trying an interesting experiment with important ramifications for the industry, both good and bad. The poker floor at the casino is now completely automated (no dealers). In no way am I predicting a dealer free casino environment any time soon. However, it is conceivable at some point. Remember, people thought a coinless slot floor couldn’t exist until SunCoast opened with 100% ticket in/ticket out machines. Shuffle Master, IGT, and Aristocrat all offer electronic blackjack, roulette, craps, etc. These electronic table systems (ETS) are completely interactive; patrons actually play at the same table together, just without dealers. SHFL is on an annual revenue run rate of almost $30m from ETS so it is already a real business.

So what are the benefits? The clear positive to the gaming industry of ETS is reduced labor costs. To get an idea of magnitude, roughly half of MGM’s revenues goes to labor. The employee base is not comprised of all dealers, of course. But could MGM improve EBITDA margins by 10% by eliminating dealers? Holding everything else constant, maybe.

The key, as always, is the consumer. If the consumer doesn’t embrace ETS then it won’t happen, no matter how much labor it saves. The cost benefits of cashless gaming were apparent long before SunCoast proved the consumer would adapt. The second hurdle may already be tripping up Excalibur. Nobody wants to lose their job. New technology always displaces and disrupts and ETS would be no different. As the Las Vegas Review-Journal reported, some dealers are vocally not happy with MGM. A total of 40 dealers were let go, although the company did promise to find them jobs at other MGM casinos. I’ve written extensively on the growing influence of labor unions on the gaming industry, particularly if Obama wins the presidency. ETS would be one more issue for the labor bosses to pounce on.

Poker ETS at Excalibur

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