How About a Comp System that works?

            A lot of noise was made recently by Las Vegas Sands announcing that they were making significant changes to their comps program.  They were going to greatly reduce the number of free rooms and other things they give out to the masses.  A couple of months ago, I wrote a column about this, expressing that under the conditions that the Sands operates, it really may not be a bad move on their part.  While I think it is a bad idea for casinos that cater to locals to cut back on things like this, I think that the casinos that rely on the out-of-town tourists should have a very different model.

            A few weeks ago, I saw an article that talked about how the Sands was changing its cashback as well.  If I recall correctly, they would now be giving video poker Players back 8% of the theoretical house advantage.  So, if the machine you’re playing has a 1% house edge (99% payback), you be getting back 0.08% of your total wager.  If you’re a max-coin quarter Player, playing 800 hands per hour, you’ll get 80 cents back for each $1000 you drop into the machine.  The expectation is that you’ve lost $10 of that $1000 over the hour.

            I saw a tweet that commented on this, using a full-pay jacks or better as an example.  With a house edge of just 0.4%, the Player will be getting back 0.032% of his total wager.  In my prior example – 32 cents per hour or just under $1 for a 3-hour session.  So, if you go to Las Vegas and play at the Sands, you’ll get back just over $6 if you play every night for 3 hours per night.   I responded to the tweet that this case was non-existent.  Las Vegas Sands does not offer full-pay machines, so their Players will get back far more.  This really is not a good thing, on the whole, for Players.  I’d rather play a full-pay machine then get 3 times the cashback by playing a poor machine.

            That said, I have to go on the record as saying that I think this is the most ridiculous way to calculate cash back.  I’m not blaming the Sands.  Casinos have used ‘cash in’ as the deciding factor for years.  They combine this with a more generic ‘payback’ of a game to determine a percent of ‘cash in’ that Player should receive as a rebate.   To figure out a better system, we should first ask, what is the point of such a rebate?

            Over the past decade or two, many companies have instituted similar such rebates of one type or another.  I have a key ring full of ‘loyalty cards’ that I carry – from my supermarket, drug store and other retailers.  One drugstore gives me a 2% rebate on most of my purchases.  Does this really make me go there for my purchases?  I don’t think so.  But, once a quarter, I get a coupon for a couple of dollars and I feel compelled to use it before it expires.  If I’m disciplined, I buy only things I truly need or buy something that costs only the amount of the coupon.  Of course, we know that it doesn’t always work out so well.  The goal of this cash back is to get me back into the store at a time when I may not really need much of anything and then spend more than the coupon is worth.  This would seem to be similar to the casino model.

            There is, of course, one major difference.  When I buy something in a store, I bring home something tangible.  In the casino, it is not quite the same.  I hope you all enjoy the entertainment you get there, but you’re not bringing a specific item home.  Also, the need for discipline is far greater in the casino.  $2 is $2 in the drugstore.  In the casino, some can make their money last much longer than others.

            So, if we have two players who play identical video poker machines and one plays it ‘Expertly’ and plays at 99% and the other plays it rather poorly and plays only 95%, why should they receive the same cashback.  Mind you, I’m not talking about how they ACTUALLY do with their bankroll.  I’m talking about the theoretical payback of how they play each hand.  The machine can be easily programmed to keep tabs on this.  In this scenario, the Player who plays poorly will actually receive more money than the one who plays properly.  From a casino perspective, I would think this would be a no-brainer!

            Let’s be real, here.  If I’m playing the machine, why would the casino want to give me much money back?  I’ll drop $30 in 3 hours and then they’ll give me $2.40 cents back.  Realistically, they can’t give me much more.  Also, if I’m a good Player, I’m losing relatively little and just how much incentive do I need to come back?  Will $2.40 really bring me back to this casino?

However, if I’m a bad player and my play would dictate that I should lose $150 in those 3 hours, I would now get back a $12 rebate.  If I’m that casino, I want to bring back this Player more than the Expert Player.  Give him $12 to play with.  He’ll likely lose far more than that while playing at 95%. 

            So, yes, I AM advocating that bad Players get more cashback than good Players.  However, I’d still rather be a good Player getting less in cash back than a bad Player getting more.  Some of you may wonder about a system that pays cashback based on how much the Player actually wins or loses.  In a future column, I’ll discuss my thoughts on that.

            I’d like to hear what you have to say about this, so PLEASE feel free to leave comments – but let’s all be civil!