Video Poker: Bridge At The Divide by Linda Boyd

You really don’t have to ask too many questions if you want to know which casinos are thriving and which ones need to be put on a respirator. Just check out their parking lots. Some establishments manage to give patrons what they want yet still make a solid profit while others can’t seem to find a pathway over the gap between players and the house. They sway too far in one direction and then dangerously back the opposite way. It makes no sense to attract a large base with costly enticements that are unsustainable and then expect to keep your regular customers after making dramatic changes.

The Divide: The natural divide between players and management creates the need for many decisions that often are mercurial. For example, most casinos award cash as an incentive to get players off of their cloud (the couch) and into the casino. The big differences come in the form the cash is offered as well as the amount. In the beginning it was cold hard cash (the good old days), but that evolved into free play, later it had to be run through the device at least once and finally (the straw that broke the camel’s back) it was only good on “certain machines.” Most casinos realized that they had gone too far when they required customers to deposit their free play in “special” machines and then back-pedaled. The trick is to provide affordable but real reasons for players to come; otherwise visits will be “one trip wonders.”

Player’s Point of View (POV): From the player’s POV the casino should offer more value for their gambling dollars because money is tight and there’s so much competition for their business. Not only that, but I’ve heard people complain that their casino host pressures them to play higher denominations and many devices are multi-lined so a quarter machine may require you to bet $6.25 per hand (5-play) to be eligible for the top prize. In the past casinos offered better odds to high rollers since their theoretical loss will be more than the nickel bettors. Casinos are wise to include some decent pay schedules on machines that require more money per bet.  

Casino’s Perspective: Sometimes I honestly believe that management teams simply follow any advice rendered by their consultants. Sure they’re always on the PA announcing their latest incentive followed by the gratuitous words “good luck,” but nobody takes them seriously. My mom, a literalist, used to say “now how can all of us have good luck?” Some decision-makers mindlessly want to find any way to separate players from their money as soon as possible. If they stopped to think about it for a moment they would have to conclude that the result will be an empty casino and little likelihood of return visits.  

Bridge: At first glance it might appear that the material to construct a connector between the divergent interests of casino owners and customers simply does not exist. However, that’s not the case at all. Management can use a combination of free and inexpensive incentives that will be valued by their players.

Virtual Tickets: I have long wondered about the intelligence of management that churlishly denies players cost-free incentives. For example, sometimes you’ll see signage on full-pay video poker devices (those with the best returns) indicating if you’re playing that machine you’re ineligible for promos. I can understand not accumulating points for comps, but not excluding players from earning contest entries. The number of entries submitted for a drawing carries no additional cost to the casino. Does casino staff think it will have any impact whatsoever on other players eligible for the drawing? If patrons considered equity in a promotion then they would be playing the machines with the best pay schedules themselves. It does, however, give a subtle message to people choosing the best video poker games. Management is letting them know their business is not appreciated and they are creating an unnecessary divide for no good reason at all. What kind of thinking is that? You’re going to antagonize your most savvy players with no gain possible from this behavior. Casinos are free to not offer any games with good odds and suffer the possible consequences but they are foolish to have good video poker choices on their casino floor while acting angry and resentful towards people who decide to play them.  

Some Comps: Some comps cost the casino money while others do not. For example, tickets to a popular show can be sold and therefore the casino may not want to offer them gratis to all players. I can understand management saving those for gamblers choosing games like keno, that have a huge house advantage. On the other hand, buffet food that will be tossed out or comped rooms that would otherwise be unoccupied are a different matter. I’m not suggesting that they say leftover food or vacant rooms go to cheesy players or anything like that. Just color code comps and include things like “late night” freebies in this category. Honestly, it’s not so difficult to do. Gary Loveman (Caesars Entertainment Corp.) actually said at a conference that the best managers would have to come up with comps that were appreciated by customers but of no cost to the casino. In other words, find ways to do more on a smaller budget. Truer words were never spoken.  

Special VIP Room: Recently a huge casino operator stopped offering a decent VIP lounge to their best customers. This action caused a major flap on casino blogs and an unpleasant surprise to those unaware of the change when they visited the VIP lounge.

What kind of hypocrisy is it when your casino host is telling you to go up a denomination as if money grows on trees and then glibly informs you that it’s too expensive to keep the VIP rooms supplied with snacks? On the other hand, I’ve noticed a growing number of Native American casinos offering hosted players a room with light snacks and non-alcoholic beverages. The rule of thumb is basic psychology 101; if you upgrade, even slightly, then you’re a hero to players. If, instead, you downgrade, say pretzels and chips instead of wings and dips, you’re sending a negative message to your best customers. We’re tightening our budget but you should increase your per hand wager.  

Room Comps: This has been a slippery slope for some time now. Just like with VIP perks, casinos are cutting back on the free rooms. First they tried the added “resort” fees for things you may not want. Here management was extremely creative and there was no standardization. One would charge for “luxuries” like clean linens while another for the use of the pool, whether or not you planned on using it. They tried to act like a $35 per night add-on for unwanted perks (newspapers, use of facilities, etc ...) was simply too trivial a mater for either you or them to mention. But, as they used to say, that didn’t play in Peoria, and for a good reason. The bloggers went to town lambasting them for the nervy cheapskate-type move and people suddenly didn’t feel too embarrassed about complaining to casinos about the deception. So did casinos cry uncle and cut the resort fee comedy? Some did, others didn’t. The recent trend is for some casinos, notably high-end Vegas Strip spots, to limit room comps to those placing truly exorbitant wagers. If you don’t qualify as a whale in the classic sense of the word then you’re not getting a free room. Even those bankrolled for several thousand dollars a day no longer make the cut at some posh Vegas casinos. We’ll have to see how this move plays out, but I think it’s going to backfire. Many find it insulting, just like pulling away the snack platters from VIP rooms. In addition, many Indian casinos have beautiful lodging facilities and will even offer comps or special rates to better players. If you want people to come to your fancy Vegas casino you must give them a reason. Sure, you can fill a few rooms with people paying $500 per night and not have to worry about the gambling, but you’re killing the goose that laid the golden egg. People visit Vegas because it’s a happening town; not much is “happening” on deserted casino floors. I did notice Freemont Street (located under the electronic canopy in Downtown Las Vegas) was jumping as usual on a recent Friday night. The casinos were not full, however, and I don’t think they were taking in a lot of money. On the Vegas Strip, especially on the casino floors, things were quiet and not the least bit exciting.  

Video Poker: There are many video poker games that are good for both management and players. The problem is too many decision-makers have a feast or famine mindset. First they offer full-pay games like Full Pay Deuces Wild (FPDW), 9/6 JOB, 10/7 Double Bonus (10/7 DB) and so on. Next thing you know they completely downgrade their entire inventory. There’s plenty of room in the middle to bridge the divide and no need to make customers jump across a deep and too wide chasm.

Games Fitting the Bill: Instead of FPDW, casinos can easily offer Not-So-Ugly Deuces (NSUD) and progressive Illinois Deuces (ID). They’ll definitely make a profit, but the players will get enough playing time to want to come back. Table 1.1 shows the pay schedules as well as the relevant statistical data for each of these games. For those who prefer non-wild-card games, Table 1.2 shows some viable options.

Analysis of Table 1.1:  

You can see that all four games have similar variances, or risk to your bankroll; however, the big story is the ER (expected return). Very minor differences in frequent hands have a huge impact on the ER. You can compare the worst game (CD) versus the best (FPDW) to demonstrate my point. Given a 5-coin wager, CD pays an extra 5 coins for 5OAK and 20 extra coins for a SF, but shorts 4OAK by 5; however, FPDW is significantly better than CD. Does anybody think casino management can figure this out on their own? Absolutely no way in the world. Instead they rely on ER figures supplied by the manufacturers (players can easily do this as well by using the software) and make very bad decisions as a result. They could and should include middle-of-the-road games like NSUD and ID (even progressives) and forget about CD and even uglier deuces games. The majority of players will never in a million years play close to computer-perfect and the casino even profits from the miniscule number who do. Nobody outruns the numbers and these games have theos less than 100%. The overwhelming majority of players won't even earn close to the theoretical ER over time. NSUD, ID and other deuces games bridge the divide--they're good for players and even better for the house. After all as Abe Lincoln pointed out in 1858 an empty house cannot stand. (Okay, so it was actually a house divided against itself cannot stand.)  

Analysis of Table 1.2:

There is a big difference with these four games’ ER but, except for the progressive 8/5 JOB, little difference with their variance or risk. (Be aware that all progressive versions of video poker games have significantly higher variances than the core game. That’s because a larger percentage of the return relies on the long-shot royal.)

Casino management should concern themselves more with the ER and less with the variance. The risk of losing bankroll is a big deal to individual players if part of their criteria is the “fun factor,” since it’s not enjoyable to run out of money after a short-session. Management, however, cares about their bottom line (profit) so only needs to worry about the ER and player volume. So as long as there are lots of players and a house edge it works for casinos; if the house advantage is small, then it will be good for players as well. Clearly, the bridge can be built with 9/6 JOB (advertised) and progressive versions of 8/5 JOB. Crowding the floor with 8/5, 7/5 or 6/5 JOB games is a mistake. Why? Because players talk about how the casino “tightened” their games so they can’t play as long even if the exact cause, namely the downgraded pay schedules, elude them. This sort of conversation is not good for casinos because it leads to empty banks of machines. Another excellent connection for both patrons and owners is 8/5 BP with an ER of 99.1660 (assuming computer-perfect play) and a variance of 20.90408.  

Apples and Oranges:

Judge Judy said it best in her book, “Don’t Piss on My Leg and Tell Me That It’s Raining.” Vegas Vic, a member of my video poker forum Boyd’s Eye View, (www.midwestgamingandtravel.com, follow the prompts for free sign-up) makes this very point. He describes a casino that offered 9/6 JOB (Jacks or Better) in the smoking room with a 4,000 coin payout for a royal flush with a 5-coin bet. However, in the non-smoking room the 9/6 JOB game only paid 2,500 coins for a 5-coin royal. Vic’s observation led to forum members, myself included, mentioning that this was a typical practice. Casinos say we have video poker in a non-smoking rooms but it remains empty. How about offering bread and water in a smoking room and a sumptuous spread in a non-smoking room? Next you could surmise that most smokers prefer to dine in a smoke-free environment.

Although I don’t smoke, I have never complained about those puffing in an area that allows it. I may just leave when it gets too thick, but I don’t turn my hand into a fast-moving fan. The real problem for me is the disingenuous practice by management teams of not having a level playing field and then making inaccurate assumptions. First they should put video poker games with the exact same pay schedules in smoking and non-smoking areas and then they can hypothesize.

Summary:

Bridges have always fascinated me, some by their sheer beauty and others with their functionality. The swinging pendulum types are great for artists with a colorful palette or adventurers looking for a thrill. They’re not too wise, however, for bean-counters trying to maximize casino profits, yet the extremes are precisely what I find.

First management tries to get big crowds through their doors by offering and advertising extremely good deals for players and then they swing dangerously back in the opposite direction offering nothing but games with a huge house edge. Instead they should construct well-planned structures that will stand the test of time. I’m referring to decent games with a reasonable house edge (even though they offer bigger rewards to skilled players) as well as a variety of creative comps, perks and promos. It makes no sense at all to lure players with options that are too costly to sustain, like free gourmet buffets as a sign up bonus to one and all, and then yank it all away from your entire base. It’s absolutely possible to build a bridge over the divergent goals of the house and casino player that will stand the test of time; in fact, those establishments where it’s tough to find a parking spot have already done so.  

— Linda Boyd, a long-time table game player before turning to video poker, writes for many gaming publications. Her book, The Video Poker Edge, includes free removable pay schedules and her free strategy cards for the most popular games. The 2010 Second Edition is now available at amazon.com, bookstores or www.squareonepublishers.com. Kindle edition available.