Editorial

Are Las Vegas Casinos Wasting Their Time Trying to Bring In the Millennial Gambler?

Steve Ruddock October 7, 2015

Jeff Hwang’s latest column at Motley Fool tackles the interesting, and to some confounding, topic of why millennials aren’t gambling in Las Vegas casinos. As with all of Hwang’s columns, he presents a very compelling case, with plenty of food for thought, and I found myself agreeing with most of what Hwang says. If you’re interested in the science an psychology behind gaming, I highly recommend you read the article.

I definitely agree with one of his key takeaways: “… if millennials weren’t spending their money partying in Las Vegas, they wouldn’t be coming to Las Vegas at all.”

However, there is one aspect of the discussion that Hwang didn’t explore in-depth in the column, a question first broached by Chris Grove on Twitter: Have Las Vegas casinos historically been able to attract twenty-somethings of previous generations to their gambling tables?

Without doing any research, I immediately guessed — with a great level of certainty — that twenty-somethings have never been a demographic that has significantly contributed to the gambling take at Las Vegas casinos. On top of guessing, I also did do a little research on this, and the data I found backs up my initial gut feeling.

Hwang is dead on; casinos have a difficult time getting millennials to gamble, and they are probably wasting a lot of time and resources trying to get them to gamble. But I would add that this failure to engage isn’t exclusively a millennial problem, it’s an age problem that has likely always existed.

Anecdotal evidence

As someone who was drawn to poker at a relatively young age (around 22) and before the poker boom, I can tell you that very few of my friends were interested in playing poker or gambling on a Friday night. They’d rather drink and party. If they did gamble, it was only occasionally, for small stakes, and done BEFORE actually going out.

There are a couple reasons for this.

First, let’s be realistic about the financial situation of most people in their early twenties. Few are in any kind of position to spend a few hundred or a thousand dollars vacationing in Vegas, and then gamble away a few hundred, let alone a few thousand dollars. A twenty-something would rather spend that money at a club, or on an upgraded room designed to impress.

I’m often reminded of the scene in Swingers, where Jon Favreau and Vince Vaughan go off to Vegas with only one thought running through their head, and they use gambling as a way to further their other agenda, and are actually intent on gambling as little as possible.

Beyond that, the twenty-somethings with money to burn are likely to be more discerning with how they spend their money, and gambling is probably pretty low on their list of things to do. Your uber-responsible 24-year-old friend with the great job didn’t get to that point by being a degenerate gambler who throws his money around.

This is all generalized, but think back to when you were 21 to 25 (whether it was 5 years ago or 35 years ago) and why you and your friends and acquaintances would be going to Vegas. At 21, the idea of going to Vegas was very appealing, but gambling was only a small part of the experience you were hoping to have.

Historical evidence

The data I’ve found seems to back this theory up.

Interestingly, even though the casino industry constantly talks about its player base “dying off,” the percentage of Las Vegas visitors in the 21-29 demographic isn’t declining; it’s on the rise according to the Las Vegas Visitor Profile Annual Reports (page 81, page 81, page 80, and page 87). Particularly over the last three years:

1998: 12%
1999: 12%
2000: 10%
2001: 12%
2002: 14%
2003: 11%
2004: 13%
2005: 13%
2006: 12%
2007: 11%
2008: 10%
2009: 11%
2010: 10%
2011: 12%
2012: 19%
2013: 15%
2014: 17%

After holding steady at 10-14%, from 1998 through 2011, with an 11.6% average, the visitation rates of the 21-29 demographic averaged 17% from 2012 through 2014.

The breakdowns seems pretty consistent across the board, with the trend leaning towards Las Vegas visitors becoming slightly younger. In addition to more 21-29 year old visitors, the mean age of a Las Vegas visitor has dropped from 49.2% in 1998 to 45.2% in 2014. This sort of flies in the face of the overall narrative we are being sold about millennials and Las Vegas, but as Hwang notes, millennials are simply there for different reasons.

To corroborate the trends from the Las Vegas Visitor Profile Annual Reports, findings from a 2010 theses paper at UNLV titled, “Las Vegas visitor demographics: Be careful what you wish for,” by Joseph Akinsete, and a 1996 report by the Las Vegas Convention and Visitors Authority also indicates the city’s visitor demographics have been steady. Akinsete’s data indicates 21.1% of visitors were 65+, while the 1996 report places the 65+ age bracket at 22%. The Las Vegas Visitor Profile Annual Reports indicate a similar visitation rate for this demographic.

It should be noted that there is a seeming discrepancy between the data sets, but it’s easily explained away. Akinsete compiled data on the demographics of Las Vegas visitors from 2006-2008, and according to his research (relevant data is on page 23), Generation Y, AKA millennials, accounted for just 4.4% of adult visitors during that time period. However, the discrepancy with the Las Vegas Visitor Profile Annual Reports can be explained by Akinsete limiting Generation Y to the ages of 21-24 and not 21-29.

So, if all of the evidence is in agreement, and indicates more younger people are coming to Las Vegas, then why aren’t they gambling?

Why millennials go to Vegas

This is where Hwang is spot on in his analysis and his general takeaway that it will be difficult to market gambling to this demographic, and casinos would be wise to focus on Hwang’s suggestions in their marketing efforts to millennials.

In fact, Hwang might not go far enough in his analysis of why millennials go to Las Vegas, and what to do about it.

In Akinsete’s paper, only 6% of the 21-24 year old visitors to Las Vegas listed “gambling” as the purpose of their trip, and a whopping 72% said night clubs were important in deciding to visit. For a comparison, no other demographic listed night clubs above 28.5% on this metric.

Additionally, millennials gambled far less (mean average 3.39 hours vs. millennials 1.65 hours) and budgeted less money to gamble with (mean average $556 vs. millennials $220).

So it seems that Las Vegas casinos have less of a problem with attracting millennials than they do attracting millennials who are looking to, or are willing to, gamble. But the real problem is this: It doesn’t appear twenty-somethings have ever been big-time casino gamblers, and the data clearly shows that this is the toughest age demographic to penetrate.

So my question is: Why should casinos focus gambling marketing on a demographic with an absurdly high customer acquisition cost?

Trying to force-feed millennials a gambling product they have little interest in is probably the wrong approach, and likely costing the casinos a pretty penny in marketing efforts. Especially when there are plenty of older gamblers with a desire to gamble and who have more money to gamble with, and other activities millennials would like to engage in.

The better approach, in my opinion, is for casinos to continue to devote floor space to night clubs with massive markups on bottle service, and figure out what methods of gambling appeal to the Generation X’ers and Baby Boomers. Creating a “millennial-friendly” gambling environment isn’t bringing millennials to the casino floor and it might be turning off the people who are, in fact, at your Las Vegas casino to gamble.

Upshot

Casinos might be better off waiting 10 years (until the millennials are 30+) before they market their gambling options to millennials. Unfortunately, they’ll probably disregard the “old” millennials in 10 years and be busy working on ways to bring Generation Z into the gambling fold… and getting frustrated at their lack of penetration.

You don’t want to ignore this younger demographic, but you should also realize what they’re in town for, and for the most part, it isn’t gambling. Let the millennials spend their money where they want to; don’t try to steer them to another product.