Estimating the impact of entertainment on the gaming volume of Las Vegas hotel casinos

This study addressed the indirect effect of entertainment on gaming volume (i.e., coin-in). Specifically, this study attempted (1) to gain an understanding of the relationship between show patronage and gaming volume; and (2) to estimate the magnitude of incremental revenue for each show attendee. Conceptual models to examine the indirect effect of daily show headcounts on gaming volume were proposed, including other variables previously found or theorized to influence gaming volume. Secondary data (i.e., show headcounts, daily coin-in and daily cash drop) were collected from two different Las Vegas Strip properties. This study employed multiple regression models with the appropriate autoregressive (AR) and moving average (MA) errors, to adjust or correct for autocorrelation present in time series data. Hypotheses associated with the show headcount variables were tested at a .10 alpha level, given the exploratory nature of this research; In regression models associated with the first subject property, the show headcount variable had a significant effect on both coin-in and cash drop. This finding supports conventional wisdom that shows drive gaming volume. Despite the positive linear correlation between show headcounts and gaming volumes, the economic significance of the incremental win per show attendee was not substantial. For the second subject property, the impact of show headcounts on coin-in was not statistically significant, whereas show headcounts had a significant influence on cash drop. In general, the results of this study suggest that show-goers are not necessarily avid gamblers; The findings of this study point to the importance of careful selection, investment and management of entertainment options. If the purpose of a show is to complement casino gaming, it should produce a strong spillover effect on gaming volume. If not, the show should be profitable on its own. It also better position itself as a necessary component of a full-service resort. With the findings of the current work, casino operators could further evaluate whether show attendees produce sufficient returns on investment. Additionally, this study adds valuable empirical results to the limited literature base associated with the impact of entertainment on gaming volume. Finally, it provides a platform for future research in this area.