Foxwoods fights to stay afloat

March 14, 2012 1:32 pm

Michael Sokolove has a great piece in The New York Times Magazine about the financial struggles facing the Foxwoods casino in Connecticut.

The sprawling casino on an Indian reservation printed money for years, giving members of the tribe annual checks of $100,000. But Foxwoods grew too big too fast and took on a pile of debt to grow some more just before the economy tanked. That and increased competition from other states that are using gambling as a way to finance government operations has cut into Foxwoods’ bottom line. (Just wait until Massachusetts and New York open commercial casinos. The two Indian casinos in Connecticut could be in real peril then.)

The piece does a fine job of capturing the state of the gambling industry these days and how lawmakers and casino operators view the gambling public. Scott Butera, the new head of Foxwoods who was brought in to turn around the casino, is honest about how lawmakers view gambling.

“Few governors or senators or House members want to say, ‘I absolutely love having casinos in my market,’ ” he said. “It’s more like: ‘We can manage this. And here’s what we’ll do. We’ll put it in the right place, it won’t impact our society too much and we’ll make some money.’ ”

Butera also explains how casinos suck gamblers in and almost always win over time.

“The more hands a player is dealt, the better it is for us,” he said. Butera, who has an M.B.A. from N.Y.U., invoked a gambling term — “vig,” short for “vigorish,” meaning the house’s cut of the action. “The math is the math,” he said. “Over time, we’ll make our vig.”

Meanwhile, casino operators know that slot machines are even better bet for the house.

As Sokolove writes: “The difference between table games and slot machines is that slots are entirely predictable. They’re like A.T.M.’s, but in reverse — programmed to take money from players, usually about 9 cents of every dollar wagered, while producing frequent near misses, the illusion that a big jackpot was at hand if only, say, just one more overstuffed burger had landed on the pay line. The lower the house’s hold on a slot machine — and the higher the number of small payouts — the longer a player’s T.O.D. (time on device). It’s a fine balance. Casinos want customers to lose their money, but not so rapidly that they’ll feel the whole experience was a bummer and not want to return.”