Scott Boylan, a professor at Washington & Lee University, presents “The Evolution of Gaming Revenue in Nevada” at 3 p.m. April 20 in the Goldfield Room at Lied Library. Boylan is among the 2015-16 class of Eadington Fellows at the UNLV Center for Gaming Research, a residency program that enables researchers from around the world to dig into the unique archives in UNLV Libraries Special Collections. Here, Boylan shares some of the work he did examining how casino revenue generated from table games and slots has evolved over time.
Slots and table games coexist in casinos, each with their own distinct appeal. But while slots have undergone numerous changes due to advances in technology, table games have remained largely unchanged in terms of their form and function.
As an Eadington Fellow, I am conducting research on the evolution of gaming revenue in Nevada. Examining the relative contributions of slots and table games presents a natural quasi-experimental setting in which to examine this issue.
I have examined the papers of C.J. Hirsch, chief accounting officer and controller for Golden Nugget, Inc. from 1950-1970. This storied casino opened in 1946 as the self-proclaimed “largest casino in the world,” putting it at the forefront of the development of the modern gaming industry in Las Vegas.
Hirsch’s papers are housed in UNLV Libraries Special Collections and include his speeches on casino financial management. He considered himself a pioneer in developing accounting and control procedures in the casino industry, many of which are still in use today. He viewed gaming as a national leader in financial management, and his speech promoted the use of statistical analysis as a tool for financial management and control to accountants and managers in other industries.
Hirsch’s papers document the fact that in the 1950s and 1960s table games were the central feature of casino operators’ business models. Slots, on the other hand, were marginalized. Moreover, his papers provide insight into why he, and others in the industry, dismissed slots as insignificant and viewed them with derision.
While Hirsch can be viewed as an innovator in terms of casino financial management, William “Si” Redd, another historical figure in the gaming industry, led the transformation of the slot machine business from a sleepy, largely ignored afterthought, to one of the gaming industry’s most important engines of financial growth. UNLV’s Oral History Research Center includes an extensive interview with Redd, whose company eventually became the giant International Game Technology, better known now as IGT.
The interview shows how Redd foresaw ways to use emerging technology to improve the form and function of slot machines, which had remained largely unchanged for decades. Redd’s ideas and actions triggered a series of milestones in slot machine development and eliminated many of the weaknesses that led people like Hirsch to dismiss them. These milestones have helped propel slots from the periphery of the casino’s business model to its leading source of gaming revenue today.
I also drew on the empirical evidence on gaming revenue from UNLV’s Center for Gaming Research, an outstanding resource for gathering, compiling, analyzing, and publishing vast amounts of financial data on gaming operations from jurisdictions around the world. My quantitative analysis charts the revenue growth of slots and compares it to table revenues, both on the Las Vegas Strip and elsewhere in Nevada. I also examined the fundamental drivers, such as capacity and revenue per unit.
Taken together, the data and the narrative stories of the people behind them, found together only in UNLV’s Special Collections, offer insight into the evolution of gaming revenue in Nevada.
About Scott Boylan
Scott Boylan is a professor of accounting at Washington and Lee University in Lexington, Virginia. His research focuses on the role of uncertainty, risk, and information complexity in financial decision making. His published work has addressed issues such as unconscious bias in financial forecasting, errors in investment decisions, and taxpayer compliance.
He became interested in gaming research as an outgrowth of a course he recently developed on casino accounting. His current research project examines the evolution of gaming revenue in Nevada, and is influenced by his prior research, which models investment and tax compliance decisions as gambles.
Boylan earned his Ph.D. from Ohio State University in 1995 and was a faculty member at the University of Wisconsin-Madison prior to joining Washington and Lee.