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My analogy: Who makes more money? Wal-Mart or the Foo-Foo-La-La Boutique? Certainly the Boutique has a higher profit margin, but they dont make more money.


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Well, which of the two generates more revenue per square foot? This is how casinos view poker rooms. The powers that be know that the average slot machine makes $X/year and that you can fit so many machines in Y square feet. So then the poker room director has to try to defend why the space he uses for his room is worth having when it brings in so much less revenue than a group of slots. This is why so many rooms get closed or neglected, even though they are profitable in and of themselves.

Of course, we all see the ancillary business that a room can create. Staying at the hotel, going to shows, spouse plays slots while you’re in the poker room, etc. I just remembered a Card Player article Sklansky wrote a number of years ago when a lot of Vegas rooms were being closed. He argued that, as slot machines are added, their marginal value drops steeply and so some casinos were probably overestimating the profit potential of additional machines.