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Chapter 12 PRICING: COMPS AND CREDIT

Jeff L. Voyles MGM Grand

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Pricing

Pricing – represented by the house advantage; the price the player is charged to play •     Fairness – responsibility of regulators, operators

Management needs to:

Offer the right price mix to attract and maintain guests without taking unfair advantage Find a balance that allows player to extend time played, enjoy their experience, and permit casino to make a profit Regulations allow for a broad range of payback percentages, allowing the casino to fluctuate house advantages throughout the casino floor.

Casino Comps and Player Ratings

       Complimentary – something given free, or as a gift; often known as a “comp.” A casino comp strives to maintain a balance between profit and customer reward.

History

Offered to

known

guests with little research Method was inconsistent, unprofitable, unreliable Casinos realized importance of analyzing player’s betting, determining their worth for comps Now, floor supervisor is responsible to examine play of every qualified player Hashimoto: Casino Management: A Strategic Approach © 2008 Pearson Education, Upper Saddle River, NJ 07458.

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Player Ratings

Process by which a table game floor supervisor monitors the gambling routine of a patron. A gaming device monitors a player’s action through a computerized rating system.

Data produced determines value of a player.

Table Game Ratings

Once required betting limit is met, supervisor asks if guest cares to be rated. At conclusion of play, floor supervisor

closes out

rating, calculates average bet, records time played, total amount in/out, and the win or loss.

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Casino Expected Win / Theoretical Win

Average bet and player rating. length of play – important aspect of Data used to determine player’s worth by calculating theoretical win, determining comps the casino can offer.

Theoretical win – expected win by casino throughout a length of play. The longer the session, the closer actual win is to the theoretical win. The Central Limit Theorem states that over a large number of independent trials, the casino will see a normal probability distribution.

THEORETICAL WIN = HOUSE ADVANTAGE x GAME PACE x AVERAGE BET x DURATION

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Computerized Systems

     Designed to provide constant source of information; accessed for review at any time. Digital ratings on every table game; player’s card swiped to generate accurate ratings. Future of comps will rely greatly on advancement of technology. Interested in players self-comping, possibly through a computerized kiosk system Casinos must find a balance between the use of too much technology and personal attention. Hashimoto: Casino Management: A Strategic Approach © 2008 Pearson Education, Upper Saddle River, NJ 07458.

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Challenges and Concerns

Casinos must rely on tremendous amounts of labor for evaluating and inputting the data necessary for a casino to administer comps. Customers may also experience frustration if they are new to a gaming property. An unknown player to the casino who asks for a complimentary may be placed on a

qualifying basis

status. Casinos must be cautious when requesting information from a player.

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Advantage Players

Individuals with sophisticated skill levels that reduce, and sometimes eliminate, the house advantage by exploiting certain opportunities. Some request to not be rated, they value their anonymity and longevity more than receiving comps. Managers must be familiar with a normal theoretical expectation of all games, and recognize when a player’s action falls outside the normal standard deviation. The standard deviation tells how much deviation can be expected when large numbers of independent trials (wagers) are experienced. Hashimoto: Casino Management: A Strategic Approach © 2008 Pearson Education, Upper Saddle River, NJ 07458.

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Human Error

Errors in ratings create inconsistencies, which result in disagreements with players.

False Ratings

Consist of a rating that represents a gambling session that never took place. Created to generate artificial theoretical win, gain comps without having to gamble. Can be entered with relative ease because of the large number of rated players an employee is responsible for, therefore allowing the false rating to go unnoticed. Hashimoto: Casino Management: A Strategic Approach © 2008 Pearson Education, Upper Saddle River, NJ 07458.

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Inflated Ratings

Actually took place, but reveals larger average bets and longer time played than actual. Very difficult to monitor and prevent. Guests are sometimes very generous, offering their comps to other guests or employees. Extremely difficult to identify due to the sheer volume of players and comps distributed. Vital to the success of a gaming company to identify their market and adjust the complimentary system to fit their specific region.

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Slot Ratings

Slots encourage higher gross handles (total amount wagered), volumes of players, lower costs, and less risk than table games. Data tracking system out-performs all data collection efforts in table games.

Technology allows vital performance data to be collected from slots while tracking pertinent player information for the marketing department. Each guest is evaluated for the potential value they bring to the casino. For a guest to be rated on a slot machine, the guest must place his or her card in the slot designated for player tracking.

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Player’s Group

Early 1980s – slot clubs (and later, table games) began to reward players for frequently visiting the casino.    Includes all players who sign up to have their play tracked and evaluated through table games or slots to receive promotions, rebates, comps. Strength of casino is how well they manage the database of players they have created. Casinos must continue to reinvent the way they present themselves to the customer and how they respond to their needs.

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Casino Credit

Closely associated and coordinated with the complimentary systems that casinos use to attract players to the property.

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Types of Credit

Most common – casino-issued counter check, or

marker

Rim card

– document used on table game to track credit transactions of a high roller who requests multiple credit transactions; eliminates need for player to sign multiple documents throughout session. Hashimoto: Casino Management: A Strategic Approach © 2008 Pearson Education, Upper Saddle River, NJ 07458.

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Credit Process

Player fills out a credit application.

Amount of credit is requested; casino credit department reviews application. Customer must sign a signature card; represents legal signature. Guest with established credit line is the only person eligible to use the account. Amount is determined by evaluating many different factors: amount of credit already established at other casinos, guest’s credit score, bank balances, past delinquent accounts.

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Credit Distribution

Floor supervisor verifies player has credit available before dealer is instructed to distribute amount. Player signs marker; given to the pit clerk to match the signature against a digital signature.

If the signature matches, marker is filed. Floor supervisor and dealer must also initial portion of the marker with player’s name, amount, table number, and time the marker was generated.

Slip is put in drop box on the game. Supervisor and dealer also sign table card and put it back on the game table, concluding issuance of the marker.

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Credit Extension

A casino marketing executive must first evaluate how the player lost the credit line.  The credit extension is coded as a TTO, meaning “this trip only.”  Casino hosts are able to grant or extend credit to a guest if they are authorized to do so.  It is the responsibility of the marketing executive to determine whether the player is fit to continue or should refrain from gambling for a moment to reevaluate his or her situation.

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Credit Hold

Casino can require guest to use casino credit only after front money or winnings are exhausted. Long periods of time between visits require a player check-in and new signature card to release the hold on the account. A player may also have

bad debt

or no pay from previous trips.

from slow pay If players attempt to obtain credit and use the money for non-gaming related activities.

If a patron cashes out an entire credit line with one marker.

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Collections

Credit department must evaluate how and when they will attempt to collect a gambling debt. Applicant can designate payment when application is completed. Statement may be sent requesting payment in 30 days, or pay at the conclusion of stay. Third-party collection service may be used. May offer special arrangements for guests who have difficulty paying debts. The “write-off” must be presented and approved by the executive level; at that time debt can be considered irretrievable, or written off.

Slide 1

Transcript Slide 1

Chapter 12 PRICING: COMPS AND CREDIT

Jeff L. Voyles MGM Grand

Pricing

Casino Comps and Player Ratings

known

Player Ratings

Table Game Ratings

closes out

Casino Expected Win / Theoretical Win

Computerized Systems

Challenges and Concerns

qualifying basis

Advantage Players

Human Error

False Ratings

Inflated Ratings

Slot Ratings

Player’s Group

Casino Credit

Types of Credit

marker

Rim card

Credit Process

Credit Extension

Credit Hold

bad debt

Collections

Directory