Frank Floor Talk: Jackpots — Do casinos win when players hit it big?

Frank Floor Talk: Jackpots — Do casinos win when players hit it big?

  • John G. Brokopp
May 19, 2022 2:00 PM
  • John G. Brokopp
  • Other

The most high-profile presence on gaming floors are slot machines and the people who play them.

It would make sense, therefore, that the ultimate experience for players, and the properties themselves from a marketing standpoint, is hitting a jackpot.

According to a study conducted by Marketing Science, which uses quantitative approaches to study all aspects of the interface between consumers and firms, a slot jackpot may not be the advertising juggernaut it is cracked up to be.

The study, which was published in INFORMS, an international association for the decision and data sciences, revealed that, among other things, hitting a jackpot only benefits the casino half of the time and rarely brings in extra money for the casino from subsequent advertising initiatives.

The other key takeaways from the study included:

  • Hitting a jackpot increases gambling and frequency of plays by the jackpot winners, who increase their bet amount by about $39 per play. Their play increases by 33 percent in the two hours after hitting a jackpot.
  • The friends of jackpot winners increase their play by 21 percent in the same time period.
  • The effects of a jackpot win on bystanders are weak and dissipate after about an hour.

The study, titled “Social and Spatiotemporal Impacts of Casino Jackpot Events” was conducted and co-authored by Hee Mok Park, a professor in the Asper School of Business at the University of Manitoba, and Joseph Pancras, a professor in the UConn School of Business at the University of Connecticut.

They concluded that using the “big check” presentation and photographs of significant jackpot winners is an ineffective advertising tool.

“Most jackpot events are not profitable for the casino, and the advertising impact of jackpots on people nearby is weak and transient,” Park said. “Jackpots on slot machines make loud and exciting sounds and flashing lights. However, how people react to it did not seem obvious to me.

“Some people might feel lucky and bet more (hot-hand myth) while others might bet less thinking that luck is in the past (gambler’s fallacy). We find that return on investments for jackpot events are only profitable for the casino 49 percent of the time.”

The authors gathered their data from several casino locations on user slot machine jackpots and subsequent behavior of the winners, their friends or partners, and bystanders.

The slot segment is in a class by itself. By the very nature of slot play, success or failure is founded upon pure luck. Try to explain that that to the participants themselves.

Players can be a study in concentration, their eyes riveted on the reels that spin before them. Many employ their own particular button pushing technique in an attempt to lock in a winning rhythm.

They can tap the button or pound it. Players have been observed rubbing their hands across the video screen as if cajoling fortuitous symbols to appear.

Some insist upon wearing a glove on their playing hand as much to protect their precious digits as to be armed with a gauntlet for combat. They are the warriors of the casino, veritable pugilists determined to outsmart the computer program they’re up against.

Players may opt to surround themselves with lucky charms of all types and descriptions in an effort to entice Lady Luck to smile kindly upon them.

They may even engage in mystical rituals, such as wearing their lucky clothing, eating special foods, or doing anything the very same way they did the last time they hit a jackpot in fervent hope of a repeat performance.

For slot players, the “one-arm bandit” can be their best friend or their worst enemy, their source of unlimited joy or taunting frustration, their ticket to riches or the road to ruin. When they win, they feel like hugging or kissing their machine. When they lose, the urge to kick it must be suppressed.

Be that as it may, the study’s authors were intent upon using a unique data set (differences in differences method) to measure the impact of a slot jackpot on subsequent gambling behavior on the winner, their friends, and bystanders.

The conclusions were that winners increase their bets and the number of plays during the two-hour time period after hitting the jackpot. Their friends increased their play 21 percent during the same period of time. Bystanders were impacted the least. An hour after witnessing the jackpot it’s forgotten.

The authors also discovered that “the underlying mechanism of winners’ response favors the hot hand rather than the house money or gambler’s fallacy effects”.

They claim that their findings promote advertising strategies that are dedicated to a short lag time of minutes or hours, rather than days, weeks, or months. Such strategies would apply most favorably to social media platforms.

“We find that rather than taking risks only from winnings (the house money effect), belief in continued success (the hot-hand effect) seems to be driving betting behavior of players once they win a jackpot,” said co-author of the study, Joseph Pancras.

“Casino managers need to look closely at the profitability of jackpots,” Professor Park noted. “They need to examine alternative mechanisms if they want jackpots to influence bystanders in a tangible and somewhat sustained manner.”