I want to publish this article from a friend of mine, Bill Zender. Bill is an accomplished author and casino operations expert. There are always two side to every business deal. As a casino player who wagers large sums of money, and casino operators manage those wagers, let it be known that this is certainly a business deal.
As an agent for the player, Gore Gaming is always negotiating the best deal for our players. With these negotiations education is always key. Understanding the value of comps, hard cost such as airfare or outside tickets expenses and promotional chips is the key to getting the best deal for the player. However, the casino must also be in a position to not have a negative expectation about the patron’s expected amount of play. Below is Bill’s article about the issue of “bad promotions” as it relates to promotional chips. Enjoy the read and feel free to comment with questions.
Promotional Chips: The “New” Advantage Play
I’ve been getting a lot of emails lately on questions about promotional chips used to attract players to specific properties. In order to be more competitive, a number of casinos are offering customers “promotional chips” equal to a percentage of dollars those players place on deposit in the casino cage. Sometimes the programs do not “pencil out”, and represent a negative expectation for the casino. For example; one casino ran a promotion where any player placing $50,000 or more on deposit would receive (immediately) 10% in single play promotional chips. The only restrictions were, the customers had to play no less than two baccarat shoes (about 150 to 160 hands) at a $1,000 minimum. Is this a good promotion or a bad promotion?
- The cost of single play promo chips in baccarat (Player bets) is 0.493 X amount of chips issued. In this case it would be, $5,000 X 0.493 = $2,467.
- Based on a $1,000 minimum bet and the maximum number of hands of 160, the total handle for the required two shoes would equal $160,000. At a Player bet H/A of 1.23%, the theoretical win (T-Win) is equal to $1,968 ($160,000 X 1.23%)
Even if the promotion attracted customers that played every possible hand in the two baccarat shoes, the casino does not stand a chance of recouping their cost if the player sticks to the exact terms of the agreement. Many casinos agree to this promotion because they feel the “real” baccarat players will wager a higher bet and play longer. The knowledgeable customers play to scalp the casino for the $500, and think nothing of moving from casino to casino collecting their ill gotten gains. The bottom-line: Be sure the terms “pencils out” before agreeing to offer the promotion.