HOLD % AS A HEDGE TO DROP IS BREAKING DOWN

The offsetting relationship between Strip table hold percentage and Strip volume appears to breaking down. If sustained that is bad for Las Vegas. Hold percentage has served as sort of a hedge when table volume dries up. Both important metrics are now in descent.

The first chart graphs Las Vegas Strip table (excluding Baccarat) hold percentage, drop, and US retail sales. As expected, US retail sales and table volume move pretty much in tandem. Surprisingly, table hold percentage actually tracks inversely to the other variables. Moreover, the relationship of all three is statistically significant (see the correlation table).


  • I have to say I was surprised and almost shocked at the correlation. Table hold percentage is not really “statistically derived” like slot hold percentage. Obviously, a slot machine is computerized and can measure exactly how much is wagered. A table game cannot. The table hold percentage is calculated dividing casino win or revenue by drop. Drop is simply the amount of chips exchanged for cash regardless of how much is actually wagered. I had posited that gamblers are less likely to wager as much when times are tough. They still may take out as many chips but would actually spend less time at the table wagering those chips. This would have the effect of lowering the hold percentage during an economic slowdown. Moreover, in order to attract more gamblers in difficult times, casinos could provide better payouts on blackjack or even offer more single deck table games. I guess I was wrong.
  • Possible explanations for the counterintuitive relationship between volume and hold %? Discounted room rates attract a lower end customer that plays less but plays stupid and plays more “house” games (lower odds). Another potential answer is more psychological. Players may be more disciplined in limiting chips to how much they are willing to lose which likely gives them the security to play longer. Volume down, hold percentage up.


  • These explanations are only possibilities. What is interesting is that there are more factors at play than just “luck”. Think about that the next time an analyst justifies a string of bad months based on low hold percentage. What is disconcerting now is that hold percentage and volume have been moving down in tandem as of late. Maybe I’ll be right after all.
Historical hedge between volume and hold % breaking down
Economy drives volume, hold % inversely correlated to both

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