Math is a critical facet of any casino, from the slot machines on casino floors to tallying up food and beverage receipts.
But it’s also critical when it comes to marketing.
“We have to always stop and take a step back and look at the casino math,” said Golden Acorn Casino and Travel Center’s Scott Eldredge. “That comes in a variety of forms and fashions, but in the marketing world, I think a lot of it is about on the reinvestment side. What is our reinvestment concern? We have a great idea, but how does the math work to make sure that it’s going to be profitable, not just popular?”
Eldrege spoke this week during the session “The Modern Executive Leader Agenda: Revenue Today. Reinvention Tomorrow” at the Casino Marketing & Technology and Host Player Development Conference at Pechanga Resort Casino in Temecula, California.
Michael Michaud of the Navajo Nation Gaming Enterprise said it’s important to be aware of competitors when it comes to reinvestment, especially regarding points. Points are how casinos convert a player’s theoretical loss into redeemable value inside the loyalty program.
“You have to think in terms of how that slot map permeates across all the promotions, events, VIP events, that you do, and entertainment that you do,” Michaud said. “And I think that’s something that I talk constantly about in the country that people just don’t understand is that you have to understand the basics of casino math to build your promotion to be successful.”
Moderator Deana Scott, CEO of Raving Next, noted that when people are serving as General Manager, or as the person conducting promotions, there are many considerations that need to be weighed. The cost and ROI of any promotion needs to be considered, especially the math of the free play.
Michaud said the cost of free play is subtracted from the average daily theoretical (ADT).
“Essentially I send out an offer for one day, they get this bonus free play, I black it out on the weekly offer,” Michaud said. “So their weekly offers don’t start on Monday, it starts on Tuesday. And I drive people to the property on that Monday.”
“Understand that free play impacts your whole percentage. It’s going to impact it,” Michaud added. “You give away too much, everybody’s going to hit jackpots off your free play, and your hold percentage is going to drop. You have to be careful about the use of free play. But just a little tip again, bonus free play on holiday Mondays really, really is a game changer.”
Johana McNulty, Senior Director of Marketing Strategy and Loyalty for Agua Caliente Casinos, says the use of free play is always a consideration.
“If free play is applied to your promotion, this is a discussion,” McNulty said, adding that player entitlements are also concerning.
“You have to watch for that at all your different segments, especially when you get into your higher segments. You need to leave room for leverage for your PD team as well. And if you’re over-investing in the higher segments and they’re already getting what they need from regular offers, bonus free play, et cetera, you’re not leaving your hosts any room to manage those guests.”
Free play is enormously popular with players. But finding the right amount to give to patrons is tricky.
“If you’re giving players too much free play, they never have to come out of pocket,” Eldredge said. “If you’re having a prize drawing and somebody wins $1,000 in free play or $500 in free play, they never have to come out of pocket while they’re playing.”
