Cash Back

Introduction | Cash Back Example | Conclusion |

“Cash is King” from both the Casino Operations and the players point of view.

To determine what maximum level of expense needs to be budgeted annually it is a simple case of establishing the proportion of total play from the Slot Club and multiplying this by the derived or calculated theoretical maximum cost. For example if approximately 40% of turnover was derived from Club members this then equates to 1.87% (40% x 4.67%) of total Slot revenue being budgeted as the cost of cash back for our cited examples.

Similar calculations may be performed if a percentage of theoretical win is returned to the player rather than a percentage of turnover.

The point is that giving cash back to players may generate growth over pre-existing results in its first year of operation which is a matter which needs to be considered when analysing results. Also while the cost of providing cash back may be simple to calculate if no incremental play occurs from those funds it is possible that the real cost to the company is as little as the gaming tax paid if the funds are played as total incremental revenue and the recipient plays until ruin. In jurisdictions where gaming tax is a relatively low percentage of revenue the potential is for the real cost to likewise be low if incremental re-investment does occur.

In reality the real cost will lie somewhere between these extremes and this factor should be realised in the design phase of Slot Club rewards. Improving cash back rewards over your competitors by recognising this fact may provide an operation a competitive advantage. Or, it may result in a switch from a gift redemption list to cash back where the opportunity exists to gain a lower “real” cost structure.

Hopefully this information will have been of use to some Slot Club managers or for Casino marketing executives looking at cash back programs.