Customer Power

            There were two different articles that appeared today that on the surface appeared only marginally related.  Yet, to someone like me, I found that they were far more important to one another than meets the eye.  The first article discussed the upcoming building boom here in Las Vegas.  Several major casino building projects are in the planning stages and Las Vegas may, in a few years, welcome its first major new casinos in several years.  One of the sub-plots of this article was some local columnists discussing what they felt was needed to build a perfect casino.

            In reading these suggestions, I can't say that I have a lot of hope that many (any?) of them would be implemented.  One of the suggestions dealt with the idea of putting the attractions near the front of the casino and the casino way in the back.  Another dealt with moving the restaurants closer to the self-parking garages.  Yet another suggested that casinos go smoke-free (I'm all for this one!).  The one that got my attention was the one that requested that casinos do away with blackjack that pays only 6 to 5 (instead of the traditional 3 to 2).  This one also mentioned better paying slots, but the focus was on blackjack.

            For those who have read my column over the years, you know I'm all for 3 to 2 blackjack and do my best to warn people about playing 6 to 5.  Roughly, 1 in 21 hands will be a blackajck.  That's about 2 hands per hour.  If you're a $5 player, this will cost you about $3/hour.  This may not seem like a lot, but it will increase your loss rate by about 300%!  A 99.5% game quickly becomes a 98% game and now you're playing a game that requires a great deal of strategy with a payback that is in the same range as many of the table games with little strategy.

            That brings me to the 2nd article I read today.  It talked about how gaming revenue in Las Vegas was WAY UP compared to last year, for the month of February.  A significant portion of this was due to the Chinese New Year occurring in February of this year vs. January of last year.  But, even when this is accounted for, revenue was still up.  Revenue on the strip was up even more than the rest of the city.  It is on the strip that we find virtually all of the 6 to 5 blackjack tables.

            6 to 5 blackjack was created because over time blackjack Players were getting better and better and the hold at blackjack tables was dropping.  Casinos have a lot of overhead to cover - from Dealer salaries to the massive electricity bills.  While every business should run efficiently, this is not exactly the case of they should keep the customer happy at all costs even if it means eking out a small profit.  Casinos are expected to make huge profits at the tables and slots to help offset many of the things they provide at low cost or free.  I have no idea what the cost is to present the pirate ship battle at the Treasure Island, but they've been doing for about 20 years for free every night.  The money to do these performances comes from the gambling side of things.

            So, the casino decided to come up with a way to greatly increase the house edge on blackjack.  They could have tweaked the rules a bit - use larger shoes, limit when the Player can double, etc..  But, these have limited practical impact to the house edge.  One of the most common Player errors is not doubling on soft hands when they should.  So, eliminating this as an option doesn't really help the casino at all.  So, they chose to pay blackjack at 6 to 5 and take a bit out of the bankroll of the good and bad player alike.

            Now, if you've been going to a buffet on the strip that give you free drinks included with the price of the buffet and all of a sudden they tell you that they're going to start charging you for your sodas, you might think twice about where to eat.  Yet, for some reason, paying 6 to 5 didn't have much of an impact to the amount of money people wagered on blackjack. 

            However, if we look at the report about Las Vegas gaming revenue for February, we find that the biggest spike occurred on the Strip.  If you head out to the casinos in the 'suburbs' where you find more local Players, you'll find almost NO 6 to 5 blackjack.  Local players tend to be better players (or they don't stay local very long) and the better player knows that playing 6 to 5 blackjack is very hard on your wallet.   You need to learn a complex strategy just to be able to earn a 98% payback?  A Player can sit and play a relatively simple game like Three Card Poker and earn the same payback and have a chance for a larger single payoff (with Trips of a 3-Card Straight Flush).  And, if you're not an accomplished blackjack Player, your real payback could easily drop to 95-96% which leaves a Player with very little chance of having a winning session.

            But, if nobody complains about having to pay for the soda, AND they have the same number of customers this month as they did last month (or more!), then there is little reason for the casino to go back and give out free drinks at the buffet.  This is even more true at the tables.  If a Player is just going to sit and take his 6 to 5 payout with little regard to the impact to his wallet, who can blame the casinos for making this their basic offering.