Coin and Currency in the Casino Industry
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FINAL 11/15 Design.ps - 11/15/2005 4:25 PM Coin and Currency in theCasino Industry FINAL 11/15 Design.ps - 11/15/2005 4:25 PM FINAL 11/15 Design.ps - 11/15/2005 4:25 PM big business – or parts of bigger business- an accommodating home in Las Vegas by Bright blinking es. Gambling is still the main draw, but the the 1930s. Nevada has remained the nexus industry is seeking to broaden its appeal of gambling in the United States, but casi- lights. Flashy floor and attract more people with big-name nos have emerged in other areas across shows. entertainment, high-end shopping and the country, notably in Atlantic City, N.J., celebrity chef restaurants. Casino opera- and along the Gulf Coast of Mississippi. The whirring wheels of a slot machine, the tors want to bring in new customers, a click of chips on a blackjack table and the younger and hipper crowd lured by Since money is the business of the Federal rattle of a ball as it skips round and round vibrant nightlife. At the same time, the Reserve, what do the changes in the casi- on a spinning roulette wheel. games are changing. Poker has emerged as no industry mean for the Fed? This report a popular part of the casino experience seeks to understand the use of currency The sights and sounds bring to mind the and new electronic games are incorporat- and coin by the casino gaming industry. stereotypical image of an American casino ing innovative technology that relies on We will discuss growth in the casino – bustling, loud and exciting. And central the latest ways to manage money. industry, examine the impact of techno- to it all is money – the coins spilling from logical advances on the casino industry’s a slots jackpot, the chips piled up by card- Gambling’s history in the United States use of currency and coin and seek to players and the cash every gambler wants dates to Colonial times and has evolved understand the impact these topics will to walk out the door with. along with the country, affected by have on financial institutions and the changes in political, social and geographi- Federal Reserve Districts that service the But that classic picture is changing. Just as cal boundaries. Over the centuries, various industry. the iconic Hollywood vision of Vegas has forms of gaming have seen their populari- been updated – with a new “Ocean’s ty rise and fall, including lotteries, race- Change has already occurred. The coins Eleven”crew replacing the Rat Pack of the tracks, casinos and riverboat gambling. that fed slot machines are rapidly being 1960s – the gambling industry is undergo- Once centered in the East, and later along replaced by bills. And the winnings from ing a remake. Casinos are no longer just a the Mississippi River, gambling moved hitting the jackpot are paid out first on a place to come to bet. They have become westward with the Gold Rush and found bar-coded slip of paper, not with the FINAL 11/15 Design.ps - 11/15/2005 4:25 PM rattling jingle of coins falling into a hopper. Since that time, the industry has explod- A study that analyzed discretionary The money is the same, but the payout is ed. Commercial casinos now number spending showed that, for Americans, different, both symbolically and in reality. more than 445 and are found in 11 states. casino gambling ranked fourth, following And, Native American tribes have opened the amounts spent on fast food, Internet A rapidly growing more than 400 gaming establishments and cellular phone services, and cable industry. in 28 states since Congress first approved television. In 2004, commercial casinos tribal gaming in 1988. Five states allow and Native American casinos generated In recent years, the gambling industry has “convenience gambling” in places other more than $47 billion in gambling undergone phenomenal growth in the than casinos, such as bars, restaurants, revenue. Over the past decade, commer- United States. Looking back only as far as convenience stores and racetracks. Poker cial casinos reported an increase in this 1978, the landscape of gambling appeared is enjoying new popularity and there are benchmark figure – known in the industry lonely. The only places with legal casinos more than 446 card rooms in five states as gross gaming revenue – from $16 were Las Vegas and Atlantic City, which that have no commercial casinos. Forty- billion in 1995 to $28.9 billion at the end began operating its casinos that year in an one states operate lotteries and 43 states of 2004. At Native American casinos, effort to revitalize its seaside resorts. There allow pari-mutuel wagering. Another the growth was even more dramatic, was no Native American gambling and 11 states have approved legislation to although the numbers were not as large. only a couple of states operated lotteries. A permit racinos, racetracks with electronic During the same period, gross gaming few states allowed pari-mutuel gaming, gaming devices. Just two states – Utah revenue at those establishments more where the winner’s share is paid from the and Hawaii – do not allow any form of than tripled, from $5.5 billion in 1995 pooled wagers. gambling. to $18.5 billion in 2004. The days of coin as king in the casinos are gone and while cash may be king for now, it won’t be long, maybe 5-10 years, before plastic and other forms of electronic currency become the dominant form of exchange. FINAL 11/15 Design.ps - 11/15/2005 4:25 PM With such an increase in gambling The economic boom experienced by opportunities and venues, the number of casinos makes it plain that gambling has Gambling markets people taking part in various forms of been transformed into a major American gambling is growing at a rapid pace, too. industry, generating revenue for the Of the three areas that lead the nation The American Gaming Association report- companies that own casinos, jobs for in gambling activity – Las Vegas, ed more than 51 million casino visitors in the employees and a very substantial – and Atlantic City and the Gulf Coast of 2004, each one averaging about six visits. welcome – tax base for state and local Mississippi – the most popular is Overall, 35 percent of Americans took part governments. But the same money that Las Vegas. The city is home to 14 of the in casino gaming that year, which was lures gamblers looking for a bonanza 15 largest hotels in the United States nearly one-third more than the previous payday also prompts some to worry about and they average a 92 percent occupancy year. Interest in poker increased, too, from a potential downside to gambling’s growth. rate. In all of Nevada, more than 12 percent of Americans betting on a hand Opponents of gambling characterize it as 180,000 electronic gaming devices and of casino poker in 2003 to 18 percent in the a vice that contributes to deviant social 5,300 table games are in operation, following year. And the most popular form and criminal behaviors. Others see value contributing more than $10 billion in of gambling in the in gambling as a gross gaming revenue in 2004. Nearly country, the lottery, Percentage of Americans Participating way for people to 200,000 people work in the state’s casino showed growth as in Gambling socialize, be enter- industry with an annual payroll of 60% well. In 2004, the tained and try to win $7.3 billion. What lies ahead for 50% 2003 2004 study showed that money. This report Nevada is likely to be further mergers 40% 53 percent of does not attempt to among leading casino corporations, 30% Americans played a explore any real or an increased emphasis on poker and 20% lottery game, which perceived social or other card games, and the development 10% was up from the economic impacts of of broader-based casino resort “comm- 0% unities” that include hotels, residential 2003 figure of 46 Lottery Casino PokerPari-mutuel Internet gambling on prob- percent. Gaming wagering wagering lem or pathological units, shopping and entertainment. Source: The AGA gamblers. FINAL 11/15 Design.ps - 11/15/2005 4:25 PM FINAL 11/15 Design.ps - 11/15/2005 4:25 PM Atlantic City is the second-largest caused by Hurricane Katrina in August commercial casino gaming center in 2005. The research and interviews The movement of the country. The city is home to conducted for this report occurred earlier currency 14 commercial casinos, including a in the year. At that time, Mississippi Bally’s complex that takes in three had 29 commercial casinos, 11 of Understanding the volume of currency that separate casinos. More than 41,000 elec- which were located in the area of flows through casinos and the amount that tronic gaming devices and 1,700 table Biloxi and Gulfport. Patrons could is recirculated is vitally important to the games operate in Atlantic City, where choose from nearly 40,000 electronic Federal Reserve System. This dynamic can casinos employ 45,000 people and pay games or more than 1,000 table games. be hard to track, given the scarcity of pub- wages of $1.3 billion a year. Just as the More than 29,000 people were employed lic information on the subject. But the initial casino openings in the late 1970s by the casino industry, earning total magnitude of the currency used for gam- were meant as an economic spark for wages of about $1 billion a year. At bling can be assessed based on an under- the city, a new revitalization is in the time of the hurricane, plans were standing of the way money passes through progress.