Acres Manufacturing co-owner Noah Acres told gaming executives Wednesday that they’re blowing $37 billion a year in free play to woo players, and suggested groups scamming casinos out of free play can be derailed by digitalization.
Acres spoke during the World Gaming Protection Conference at the Rio Las Vegas.
Acres, whose eponymous company is a casino-loyalty and technology developer, talked about the company’s 2023 position paper surveying nearly 200 U.S. casinos on the effects that player-loyalty reinvestment have had on casinos’ profitability as a result of existing, antiquated legacy Casino Management System technologies. The survey found that many loyalty programs provide player-reinvestment rates approaching or even exceeding 100% when exploited optimally, becoming profitable only through breakage caused by unredeemed rewards or players who don’t take full advantage of the program.
Casinos’ net reinvestment in player loyalty conservatively hovers above 35%, or roughly $25 billion, and free play is the largest single cost contributor. Free play takes up a significant portion of available play time, eviscerating profitability on novice or time-limited players.
“The biggest problem I see with free play is it doesn’t grow play,” Acres said. “It doesn’t bring new players.”
In 2006 in the U.S., Acres said 57 cents of every $100 of income was spent on gambling, but by 2024 it fell to 39 cents.
“In the last 15 to 20 years, we’re on the decline,” Acres said. “GDP is going up and people are making more money, but our revenues are stagnant and even declining. When free play is the primary driver, we’re not growing.”
Acres said the $37 billion is based on publicly available data from states and pointed out that not every property issues free play at the same rate. Of those that report, free play is in the low- to mid-20% of gross gaming win.
“We know slot win nationwide is about $71 billion, so 20% is getting to that $37 billion,” Acres said. “What we’re not calculating yet is the time value of the player consuming the free play.”
Acres said that when casinos issue free play, the first money players spend is on the house. By contrast, when a pizza place has a buy-one-get-one-free offer, money is exchanged before there’s something free.
“If we calculate an average player of $2 per spin and a 10% hold and 10 games per minute, every minute is worth $2,” Acres said. “Most people don’t have an unlimited period of time to play. If a player spends 20 minutes consuming $20 of free play, that $20 of time value is lost on that player, who probably would have spent that time spending his own money, giving you revenue.”
Moderator Willy Allison, host of the conference, said Acres’s report is backed up by a report put out by the University of Nevada Las Vegas. “Far too much money is given away to players who don’t deserve it.” The question is how to stop it when some customers are addicted to it.
“The alternative has to be in new technology,” Acres said. “The predominant loyalty systems that serve gaming have free play as their main tool. What could the answers be to that? Look at what they’re doing on the slot machines themselves. You enter a bonus round and you get super powers. The reels expand. Sometimes you get free games and payouts are multiplied. You need to develop the same type of tools in video games and slot machines to get players to play more.”
Casinos often rely on slot players who are aging and Acres questioned how long the properties can count on them, instead of attracting new players. “That’s a big part of the reason we’re seeing that decline (in slot spending over the last 15 to 20 years).”
Acres would change how customers sign up for loyalty programs in a casino. Players don’t want to stand in line and provide their identification and email address. The enrollment process to get a card is painful, something they don’t need to do for non-casino loyalty programs.
“Casinos have done a really good job of serving the games and maybe not as good a job of personalizing the experience as some of our competition, which is frankly any other form of entertainment,” Acres said. “Look at what TikTok or YouTube is doing in serving you content you like. If you hit a bonus round in a casino, it doesn’t know who you are. The experience doesn’t change whatsoever for you. The big part of the answer is in personalization.”
Acres next discussed advantage play. Groups bring players to sign up for loyalty programs to get promo dollars. If there’s free play on a bounceback, the group might be getting it from 20 people.
“We see guys setting up P.O. boxes in certain locations close to a casino to get the best offers and they’re getting it times 20 and times 50, because they have so many ways of registering people and getting control of their accounts,” Acres said.
While that’s one way to exploit slots, Acres said the other way is persistence games that have a must-hit-by. People are making a living on that.
“That’s what you call slot vultures,” Allison said. “It’s getting (gang-like) out there. There’s violence and intimidation and it’s a concern.”
Casinos love their high win per unit and people are making a living predicting when games’ bonus rounds will hit, while taking money from the ecosystem, and operators would rather pay real players who will play it back, Acres said.
Allison asked how properties can stop these free play scams. Acres’s answer was “digitalization.” He said mobile apps are a solution and suggested casinos get away from a physical card and pin number and prevent those 50 people from going and signing up and having control over their accounts. “Having it on their phones is much more secure. We have to rush to this digitalization of the casino loyalty experience.”
Acres said people could create an account with a phone number instead of having to walk to the desk and stand in line and provide that information.
