BRINGING SCRUTINY TO TABLE GAMES PART 2: THE OUT OF CONTROL COST OF DOING BUSINESS!

by Vic Taucer

The cost of technology and the inherent fees that come with this technology are placing an economic hardship on table game operational costs

It seems that the last article on this subject found great interest in table game world. I generally get good response and feedback from articles I write, especially if they are on controversial topics. Feedback from e-mails and call, some good, some bad. The article I wrote a couple of months ago titled Bringing Scrutiny to Table Games drew a lot of responses. It seems a great many of us Table Games managers are in the same financial boat and some of these boats are barely afloat!

The article dealt with the fact that so many of our table games departments are being over-encumbered with lease fees, costs and charges, all with the intention of making our departments more productive. The costs of this technology, the added financial burden it is putting on table games departments is out-weighing the benefits of these products, creating an economic hardship.

Are these lease fee’s products really a benefit? Do we need a shuffle machine on every game? Do we need them at all? How about all those new table games? How about all those side bets? Do we need them all? Or any?

These are the questions I asked in that article. The cost of technology and the inherent fees that come with this technology are placing an economic hardship on table game operational costs. Where is the point where the cost of doing business, especially with technology and lease fees is overcoming its net worth? This is the question that Table Games must answer to succeed in gaming today.

Table Games Managers Responses:

The responses to the last article were common in what was said. Table games managers told me in direct response the same thing I have heard for years at gaming shows, at my seminars, in all my correspondence.

The biggest issue: “Lease fees, royalties, maintenance and repair of leased items are encumbering an outlandish portion of the table games department operating budget. This coupled with rising costs of labor makes profitability sometimes not possible!”

Here is a response from a Table Games manager at a large casino who asked that I not print his name or casino’s name ,its indicative of the responses I received. Sadly all my responders asked to be incognito here…in today’s casino environment table games managers want to stay under the radar!

Dear Vic:

I wanted to follow up with you on your article in the January 2008 edition of Casino Journal. In your article titled, “Bringing scrutiny to the tables” you stated, “But if your casino has a low limit and lower average bet, if your games are not going full bore most of the time, should you be adding to the un-profitability of your department by paying a monthly fee for a machine to shuffle your cards?”

I love this question. I am a new Table Games Director and I would love to learn the best way to answer your question. What do you think is the point of equilibrium to have machines or not have machines. It puzzled me to see that Venetian pits do not have BJ shufflers. There was a point in my mind that when you have a card room, you purchase shuffler products. That this is direct compliment to their marketing program. But is it?

So, how do I determine if I am wasting money? As it stands, repair & maintenance, lease fee’s and royalties account for almost 40% of my operating expense budget. This is a six figure number that I would love cut. In addition, this is my biggest budget piece on the expense side.

Thanks for your time,

Mr. X
Director of Table Games

THE PART THAT MADE MY HEAD BLOW UP WAS 40% OF OPERATING BUDGET TO THIS STUFF! ADD PAYROLL COSTS, WHAT DOES THAT LEAVE FOR PROFIT? WAY OUT OF HAND HERE!

Here is my response:

Hi Mr. X

The point of equilibrium, while being hard to define, can be looked at a number of different ways. vendors use these numbers for their own benefit and numbers like the ones used to define value of shuffle machines can indeed be skewed...a number of factors in your scenario raise cause for alarm and revision...40% of your budget devoted to these items is something that needs addressed immediately and should be your biggest equilibrium number ..Adjustments have to be made immediately to get this number down to single digits!!

Here is an important question in making decisions on these items..." How much business and revenue does this 38% of your budget bring in?” The answer here should make your determination on throwing most of this stuff right out of the window...

A standard thought process of most new table games managers (and departments) is that leased items like shuffle machines are a mandatory part of a table game department. The thought process is “my department must have these and cannot run successfully without them"...Bulls***!! Who do you think has put this thought process in place? The vendors themselves? definitely!!...game protection gurus who will show you elaborate scams that mandate these devises so they don't happen contribute to this also....

You do not need shuffle machines on all your games...unless your games are going full bore and you have high limits, you probably do not need them at all!! What is the break point? Start with how many hours per day do your games stand dead. The look at how many hours per day your games go full bore. How busy is your place is your equilibrium point...games dead more than 8-12 hours per day or games at less than full capacity for the same amount of time dictates removal or at least adjustments...

Your thoughts on the Venetian hit the nail on the head...most casinos run by old school casino managers ( like me!), especially in Las Vegas have a much less percentage of costs devoted to these issues. Nowhere near 40%! The most successful table games joints, much less...

Put emphasis on staff retention, training interaction with the customer...less emphasis and revenue devoted to leased items...only way to go here...

I hope that this response helped Mr. X. I hope it helps you. Technology is great and in some cases it’s needed but define cost effectiveness here. Especially in relation to value and added revenue. This issue, I am sure will be addressed again.

Date Posted: 04-May-2008

Vic Taucer is president of Casino Creations; a Las Vegas based casino educational, training and consulting company. Casino Creations specializes in table game evaluations, customer service training, dealer training and managerial training for table games operations. A former professor of casino management for the University & Community College System of Nevada and long time casino manager at many resorts, Vic can be reached at 702-595-7800 or vic@casinocreations.com

Look for Vic Taucer’s new book, Table Game Management, available at www.casinocreations.com and at booksellers nationwide