Times have changed in the world economy from this same time last
year. It seems that one bleak day we woke up to the news that America
had catapulted into a major recession without our media bleeping the
requisite disaster warning we’ve all heard on both radio and
television airwaves. Even industry insiders were caught off guard on
this one. What are casinos and players to do now? Honestly, there’s
no crystal ball, but we’re all trying to make smart decisions.
Players still want to get out of the house and have some fun and
casinos must make decisions that will keep their ship afloat while
they ride out the storm.
There is definitely a “best way” formula that will provide fun for
customers at an affordable price and still keep casinos solvent
during the hard times. Those businesses that come up with the right
combination will be around when the recession ends and we’re back to
business as usual.
Slots/Video Poker
Video poker machines are still categorized with slots even though
many aspects are quite different. I have noticed some interesting
changes with both as far as disclosure to customers is concerned.
Seems the casinos are much less secretive about revealing information
and letting players in on how comps, bounceback cash and especially
discretionary comps are
determined.
Traditional Slots: I’m calling them traditional, but they’re nothing
like the bar and lemon one-armed-bandits that were first rolled onto
the casino floor in the 1940s. The latest are in fact great fun,
especially with the creative bonus rounds, player interaction and
other whistles and bells. The most surprising thing for me lately is
seeing ads that new chips have been placed in slots so that they
return more to the customer.
Decision-makers realize that trying to gouge people with miniscule
payouts is very bad for business. Instead, they are allowing greater
theoretical returns so that people have longer playing sessions and
are more likely to come back. Seems this is working since I see more
crowds than at the beginning of the recession and definitely more
winners than at the start of the downturn. Of course, since we can’t
actually see the chip, these are impressions from observations and
the ads I’ve seen on promotional literature.
Video Poker: Here’s where the biggest dilemma for casino brass
exists. It’s fairly easy to determine the theoretical payback on a
video poker device. Just check the “see pays” page on every machine
and match it with one of the pay schedules in my book, “The Video
Poker Edge” (removable pay schedules located in the appendix) or use
software that is available. Either way, the pay schedule alone
determines the expected long term return, assuming accurate play.
Video Poker Stimulus
Unlike traditional slots, there is a big range in players’ skills
that accounts for differences in long-term results. For example, a
9/6 Jacks or Better Game (9/6 JOB) has an expected return (ER) of
99.5439% with accurate play. This means a good player could have an
ER of 99.54% plus added cashback and comps from the casino. In other
words, they could have the long-term edge over the casino, preventing
any profit. On the other hand, a poor player may only have a
theoretical ER of 94% and the cash plus comps may bring their
theoretical return to 94.5%, which is acceptable to the casino. So,
the hurdle for management is different for video poker than for
classic slots as a result of the skill component. They have an
objective of offering a few good games so they can advertise that
they have some video poker choices paying over 100% and at the same
time not give away the ranch.
Realistic Skill Assessment: First of all, management tends to over-
estimate the skill level of the average player. All they have to do
is check the actual data gathered on their own devices and they’ll
notice a major disparity between the theoretical ER and the actual
results. Yes, there will be a few recreational players and even fewer
pros who feed off the house.
The majority of players, however, are just there to have a good time
and have no idea how to play mathematically correctly. In fact, many
will argue about whether using the software is even worthwhile. I
constantly hear people giving bad advice to each other or if the
correct play is suggested respond by saying, “but how can you know
which cards will be dealt?” This very question demonstrates the best
reason casinos shouldn’t worry about the overwhelming majority of
their players coming too close to the theoretical ER; plus their very
own data bears me out. They should be glad there are some winners and
there’s no way casinos have the proprietary software to evaluate
individual skill-levels of their players. Management can best
stimulate growth to their bottom line by trusting in their own
accurate data and not being concerned about the few exceptions that
prove the rule.
Advantage Recreational Players
It’s absolutely true that there are recreational players who have
read the latest video poker books and have practiced on the software.
They play as good as most pros even though they’re just out to have a
good time on an inexpensive vacation or night out. These players
constitute a tiny minority of casino patrons. Even frequent players
rarely use the software or buy the books needed to study the games.
More do for felt games, in fact, than for video poker or slots.
Most recreational players are spending money on entertainment and in
restaurants. Not only that, they bring less skilled family and
friends who are profitable to the house. It’s true that their exact
value can’t be determined and varies from group-to group. However,
the number crunchers know for sure that the casino increases its
overall profits when there are throngs coming through the doors
rather than an echo permeating throughout their facility.
Pros
Once upon a time a living could be made playing video poker; those
days are pretty much gone. That’s because most games have been
downgraded, so that few positive plays remain. Not only that, but the
few still around are for smaller denominations, like quarters instead
of dollars. One of the best games available, for example, is full pay
deuces wild (FPDW, ER of 100.76%), but you’d only make a long-term
gain of around $7 per hour with computer accurate play, hardly a
living. You can still find some good video poker plays that slip
through the cracks now and then, but you’d have a very uncertain and
low income relying on those. There’s just no incentive for video
poker pros in today’s climate and the market could only support a
handful at that.
So, concerns over putting a few good plays on the floor because the
pros will swarm like locusts and leave casinos barefoot and broke are
totally unfounded. In fact, pros make out better on higher
denomination, positive progressive plays even though they have to
wait around for them to become a positive play. Not only that, but
it’s a high-risk venture given that the odds of achieving a
progressive royal are about one in 40,000 depending on the game. The
meters set by casino staff already account for a house profit.
Average Joes
This is by far the largest group of players and the people that are
most important to stimulate in order to increase the house’s profits.
I always wonder why so much energy is spent on worrying about “pros”
considering the nickel and dime good plays remaining on the casino
floor. Every time I hear somebody bragging about a bone-headed hold
that has a good outcome I shake my head over why so many borderline
games are being downgraded. You know, a guy says I kept a single Five
in 9/6 JOB instead of a pair of Jacks and got four fives; the icing
on the cake is the person expects respect for this decision.
Awarding Cash: Here’s a category that concerns casino executives and
for good reasons. Nobody seems to have as much of this commodity as
they did a year ago and adding too much to the base game’s ER can
definitely be a disaster. Still, there’s more than one way to define
and even hand out cash since most casinos use free play and cash
synonymously.
Real Money
Many casinos have already resolved this problem by placing signs on
positive banks of machines indicating that they’re ineligible for
slot club cash. Sounds good and it definitely will limit the
possibility of giving much if any edge to players, even with computer-
perfect play. The downside, however, is that this action defeats the
purpose of issuing casino slot cards. In reality, casinos are buying
something from the players when they award slot club points, and that
is information. Why should I bother using a card if I’m not getting
anything back? As the adage goes, “there’s no such thing as a free
lunch.” So casinos must make decisions that balance their quest for
player-information with the objective of turning a profit for the
business. That’s why using alternatives like comps or free play
rather than giving nothing will work for positive plays.
I really think management must focus more on actual results, which
they definitely have, instead of worrying about short-term results of
individual players. Everybody gets to sit on a horseshoe now and then.
Free Play
Some casinos go crazy and over-react to the current recession by
limiting free play to “special machines.” This translates to the old
“Vegas World” scam where you get ten cents on the dollar and word
spreads quickly that it’s only for those who are mad at their money.
Casinos are better off offering nothing than trying a bait and switch
with free play.
Casino management may want to limit free play to video poker with
bad paytables or just slots, but they must be realistic. The more
limitations they place on free play, the less attractive they become
to players. If they get too greedy, like the “special machines” scam,
then people simply won’t use their cards or will go to another casino.
One other thing I’ve noticed lately is the increased number of
casinos outside of Nevada that use free play instead of cash. The
problem is many video poker players are older and not computer savvy.
If the system is too complicated, many will just give up accessing it
in frustration and then have bitter feelings toward the casino. This
means that casinos must have a user friendly system for free play as
well as a staff that’s trained to show players and be patient with
customers who don’t understand.
It Pays to Advertise: P.T. Barnum, one of the all-time geniuses of
promotion, said it best, “Without promotion something terrible
happens ... Nothing!” That’s why it really stood out in my mind when
so many people told me that they read an ad stating that a local
casino had put better paying chips in their slot machines. Not only
did the casino get the attention of the original readers, but this
was a unique ad and was passed to many others by word-of-mouth.
Reasons to Come: If you want to have lots of people flock to your
casino, then you have to give them good reasons to come and make sure
you get the word out to your target players. Gambling used to be
relegated to Nevada, either Reno or Vegas, and low-rollers were
looking for dollar shrimp cocktail or free trinkets. Sure, people
with deeper pockets stayed on the Strip in Vegas and were willing to
spend more for upscale dining as well. The average Joe, however,
could stay off-the beaten-path or downtown and still have a great
time. Most people from both groups focused more on activities and
less on gambling. Those were the days of one-armed-bandits and “real
gamblers” headed for the tables.
In the 80s and 90s the mobsters were replaced by more respected
corporations and American Casino Guide data clearly indicates that
gambling has become a socially acceptable form of entertainment by
mainstream Americans. These attitude changes account for casinos
mushrooming all over the country and most being quite lucrative.
That’s until the deep recession of 2009 caused major belt-tightening
and casino executives had to go back to the drawing board. Now there
are differences in what will draw the masses to casinos and those
establishments providing people with the most viable reasons to get
off the couch and into their favorite casino will have the best
bottom lines.
Positive Video Poker
Clearly, very few players are a threat to any casino’s bottom line
as a result of their playing expertise; most customers are just
average Joes. Still, casinos will attract more people if they can
truthfully advertise some positive games. In fact many casinos, the
Edgewater in Laughlin, Nevada, for example, make it a point to
announce the specific positive video poker games on their P.A.
system. I’ve seen signs over banks of machines in other casinos
touting the expected return of the game. (You’ll see small print on
the same signs saying something about accurate play required.)
Definitely this is a smart move by management.
Comps People Want
Not too long ago a friend was telling me about a casino column with
an interesting point of view. A case was made that back in the 40s in
the good old mobster days casinos gave away plastic gifts, hot dogs
and used playing cards. They made a killing (so to speak, may Bugsy
rest in peace) on entertainment and renting rooms. Later it evolved
that the big bucks came from gambling as the mob moved out and anti-
trust defying corporations moved in. Now, the writer said, the
pendulum is swinging back to the days of the glittery showgirls, and
ninety-nine cent buffets.
I think this is only partially true. Once you give something away
it’s hard to stop without some major backlash. In this case charging
top dollar for rooms won’t fill them, especially when people are used
to comped or discounted accommodations. I do, however, think that
casinos will have to lower the theoretical losses expected from each
player. There are simply fewer moderate and high rollers, especially
given today’s economic climate.
Deciding what to comp is the area where many casinos are just
missing the boat. They could be giving away things that cost them
little or nothing but are valued by players. In fact this is the most
fertile ground to make the razor’s edge profitable for both players
and management.
Food/Restaurants
If it’s a casino-owned restaurant or food court, then generously
allowing players to earn comps, even on machines with close to even
money ERs is an excellent incentive. So what if you don’t make money
on a few good men (and women)? You’re not losing anything either on a
game like 9/6 JOB if the bonus is food that has a low cost to the
casino. These non-profitable players have family and friends who
probably aren’t such hot shot players. Truthfully, even smart players
often get the itch to toss some coins at roulette or on the craps
table on their way out the door. Gamblers tend to be a quirky group.
Free Rooms
This is one of the best ways to reward players, especially if there
are vacancies. If it’s a Vegas casino LVCVA (Las Vegas Convention and
Visitor’s Authority) will be jumping for joy, since they’re paid an
amount for each occupied room and it’s an inexpensive way to
stimulate business. The minimal cost comes to the price of
paying
for the maid and a few toiletries. Cheap indeed, but a great perk for
players and an excellent reason to return.
Other
Unsold show tickets, slot tournaments, multiple slot card points,
prize drawings, differentiated gifts (better ones for players who are
most profitable to the house) are all effective. The best marketing
staffs are finding incentives that are low cost to the casino but
valued by players.
Final Thoughts:
I think a happy medium can be found that both stimulates casino
profits from video poker and gives players a fair shake. Initially,
the knee jerk solution from management was to simply downgrade pay
schedules and reduce both comps and cash to frequent players. I
noticed a dramatic increase in the volume of mail along with a
decrease in the value of each offer. It didn’t take long for casino
brass to discover this approach resulted in empty rooms and less
weekday business. Gone were the crowds and party-like chaos that are
a major reason for people looking forward to a future visit. If
fewer people walk through the doors, the mood is much more sobering
and if your stay is significantly shortened because greedy owners are
trying to grab your entire bankroll too quickly, then money-making
goals won’t be achieved. Since casinos don’t have bottomless pockets
nor can they just print money like our Federal government, their
stimulus package has to be the real thing. Realistically evaluating
and rewarding frequent players, offering desirable comps and
reasonable cash back, and making sure there are good reasons to come
back, will invigorate a business that’s here to stay.
— Linda Boyd, a long-time table game player before turning to video
poker, writes for many gaming publications. Look for Linda’s story in
the 2009 edition of American Casino Guide. Her book, The Video Poker
Edge, includes free removable pay schedules and her free strategy
cards for the most popular games. Available at
amazon.com, bookstores
or www.squareonepublishers.com.
