IMPROVING TABLE GAMES PROFITS THROUGH INNOVATION

by Terry Oliver

BACKGROUND

In the casino industry since 1973.
- Advertising/public relations
- Marketing
- Casino operations
- Chief Operating Officer
- Casinos: Harolds Club; Nevada Club; Sands Hotel/Casino; Fitzgeralds Reno, Las Vegas, Tunica and Black Hawk; Turning Stone Casino in Verona, NY; Cliff Castle Casino in Camp Verde, Arizona.
- Chairman of the Board for Mikohn Gaming Corporation
- Consultant and board member for Mikohn Gaming Corporation

Although I've run casino departments and table games departments, I've never been a dealer or a pit supervisor. My expertise has been marketing and financial--how to make money in casino departments. As I did throughout my career, I will rely upon your technical expertise and experience to fill in where I am either ignorant or am out of date. My objective in my portion of this class is to provide a framework to help you apply your technical expertise so that you can improve the profits in table games through the use of innovation.

THE PROBLEM

Let's spend a few minutes defining the problem for table games departments:

- Loss of revenue share and floor space to slots. 
- Declining departmental profitability. (Depending upon your casino, departmental profit percentages used to be in the 30-40% range. Now it is often in the 20% range.
- Lack of technical advancements. 
- Stagnant product line--still predominantly blackjack, craps, roulette and baccarat, the same as it has been for decades. However, this is beginning to change.

What other challenges are being faced by table games departments?

SLOT COMPARISON

Lets look at slots to see why this product line has improved so dramatically. When table games was the dominant product, slots were mechanical machines with certain key deficiencies:

- No coin-in information.
- No game result information.
- Susceptible to cheating.
- Labor intensive.
- No player information.
- Limited game variety due to 22 mechanical stops that only provide 10,648 different reel combinations.

What happened to change the way slot departments operated?Improved technology! By applying electronics to slots here's what happened:

- Precise coin-in information provides a true measure of volume and popularity.
- Precise game result information tells the casino exactly what happened on every handle pull.
- Difficult to cheat. Game outcome is determined by an electronic random number generator.
- Automation of hoppers and bill acceptors has reduced the need for change and jackpot payoff labor. Fewer moving parts have reduced the need for slot mechanics.
- Player tracking has provided the casinos with exact information of individual player worth and has dramatically expanded the ability to use complimentaries, tournaments and promotions to develop profitable slot play.
- The ability to have 255 stops per reel now gives casinos up to 16.6 million reel combinations to better configure payouts, manipulate house advantage, experiment with hit frequency and provide $20 million progressive jackpots.
- Increased game speed has resulted from the spin button and the use of credit meters and "play max coin" buttons.
- Slot bonusing and merchandising has freshened the product.
- Linked and wide area progressives have added excitement and "life-changing" reasons to play.
- Video poker has created an entire new segment of players.
- Video slots are dramatically increasing the coin-in per pull.

Now, what's happened to table games? You still have no record of coin-in or what is truly bet on your tables. You have no record of the results of a hand. You are still labor intensive. Your inventory is uncounted cash/chips. You continue to be vulnerable to cheating. Player tracking relies on sporadic observation and manual data entry. Not enough new games and game enhancements to take back floor space.

What innovations can you point to that address these issues and help table games to compete with slots?

- Shufflers provide the table games version of a random number generator.
- Coin-in acceptors on tables for Caribbean Stud. Not widely adopted elsewhere.
- Progressive meters are used occasionally, but jackpots are lower than are available in slots and security is an issue.
- Game variety is improving somewhat, particularly with poker-style table games, but blackjack, craps and roulette are still the most frequent offerings.
- Player tracking has been automated somewhat. LGS has product installed at the Silver Legacy and Fitzgeralds Reno. Mikohn is introducing player tracking through rail readers and embedded radio frequency transmitters in betting chips. Digital Biometrics and Grips have prototypical systems in isolated locations. Again, no industry wide adoption.
- Management information systems still rely on manual data input.

Your customers use technology in their jobs, at home and for entertainment. Table games is behind the curve.

GAME REVENUE PRODUCTIVITY STANDARDS

Innovations are coming, however, and table games departments need to develop strategies and analyses in order to determine what innovations to introduce and test, and what standards new innovations must achieve in order to decide whether to keep an innovation permanently.

First, let's identify the fundamental elements of how you generate revenues at table games:

1. House advantage--theoretical win percentage. This is the price you charge for your product.
2. Average wager--what the player bets per hand.
3. Game speed-- decisions per hour.
4. Length of play--how long player stays in action.
5. Number of players--average table utilization.
6. Game integrity--how well is your game protected from manipulation, fraud or theft.

Can you think of anything else not covered by these six items that is fundamental to the generation of revenues at table games?
On the daily report for table games for your casino, what information on these basic elements is provided? 

A MacDonalds burger shop provides more information for its manager than any multi-million dollar casino table games department! MacDonalds knows how many people they served; the average price per customer; how much of each product they served; shortages in the cash registers; when every sale was made; etc., etc., etc. In a table games department, until you

Date Posted: 30-Apr-1999