March Madness: You Betcha'
Never mind the office pool. If you really want to get caught up in March Madness, it’s all about Vegas, baby, Vegas.
Thousands of basketball fans and tourists flock to “Sin City” for the first four days of the NCAA men’s basketball championship tournament -- running from March 15-April 2 -- and sports book executives are bracing for their busiest season of the year.
“The event gets bigger and bigger every year,” says Chuck Esposito, assistant vice president for race and sports books operations at Harrah’s-owned Caesars Palace. “People are camping out to get the best seats in front of the big screens. It’s the four-day equivalent of New Year’s and the Super Bowl.”
More than 1,100 fans alone are expected to pack into Caesars’ sports book, which boasts six theater-sized screens, 15 big-picture plasmas and several 15-inch TVs. Even more will jam into 30,000 square feet at the Las Vegas Hilton, the world's largest race and sports book with more than 60 viewing monitors.
“The sports world is growing tremendously. Every casino has to have a sports book because it attracts so many people,” says Jay Kornegay, the Hilton's executive director of race and sports book. “Fans want to watch the games on giant screens, have a cocktail and feel like they’re at the game.”
And place bets ranging from $10 to $10,000.
March Madness betting -- legal and illegal versions combined -- is estimated at some $7 billion, eclipsing the Super Bowl, which generates about $6 billion, making it the biggest sports gambling event of the year, says sports betting expert RJ Bell, president of sports gambling Web site Pregame.com. That’s because the tournament is spread over nearly three weeks and involves 65 schools, as opposed to being a single-day, two-team event. The tournament is also very aggressively marketed and the gambling aspect is in your face at the office, Bell said.
The majority of betting is done illegally; more than $3 billion changes hands in office pools across the country and billions more are wagered in online and offshore sports books or with local bar room bookies.
The only legal U.S. sports books are in Nevada, which is home to the $2.4 billion regulated industry. About 4% of March Madness betting goes through the state’s 170 sports books, taking in some $80 million to $90 million each year.
That amount grows 5% to 6% each year, Hilton’s Kornegay estimates.
The sports book itself doesn’t make up much of a casino’s revenues -- only about 3%. And just 1.5% of overall gaming revenues each year come from betting on sports. That's evident when you visit a sports book on a regular day.
But casino executives and analysts say big sporting events like March Madness, the Triple Crown of horse racing and high-profile boxing matches do more than just bring in wagers.
“The value to sports books is not the bets that run through it, but is in the extent it brings people to Las Vegas to spend a lot of money on a lot of other things,” like hotel bookings, restaurants, bars, entertainment and gambling in other parts of the casino, says Robert LaFleur, a gaming, lodging and leisure analyst with Susquehanna Financial Group.
The Las Vegas Convention and Visitors Authority estimates that Super Bowl weekend this year drew an estimated $109.5 million in non-gaming revenue and 287,000 visitors. Vegas insiders expect a similar impact from March Madness.
"We're an amenity for guests," says Robert Walker, race and sports book director for MGM Mirage, which operates seven of the largest sports books in Nevada, including those at the Bellagio, Mandalay Bay and MGM Grand casinos. "We wouldn't be able to justify these big rooms if it was based on dollar-for-dollar, but these are the times when we show our value."
While the Super Bowl still brings in the big five- and six-figure wagers, March Madness draws more individual bets, albeit in lower-denomination bets.
And the nature of the tournament allows for more creative bets, like whether Jackson State will ever have the lead against Florida over the course of their game or whether a 14-, 15- or 16-seed will win the tournament.
Offering a wide range of propositions is one way gaming companies are leveraging the hype around March Madness to boost business at their sports books and properties.
“The casinos want to have this amenity to draw people in. But they also want to run it as efficiently and as profitably as possible,” says Susquehanna’s LaFleur. “From a purely business standpoint, each square foot of casino space is optimized for revenue.”
Over at Wynn, oddsmaker John Avello entertains sports book patrons with fantasy odds on big names in pop culture, such as participants on the TV shows "American Idol" and "Dancing with the Stars." As of Wednesday, he has 7-2 odds on Melinda Doolittle and 4-1 odds on Lakisha Jones.
"Our guests get a kick out of it," says Avello.