Promotional Chips
| The marketing cost associated with matchplay tokens. Paper prepared for the Ninth International Conference on Gambling and Risk Taking. By Andrew MacDonald Gaming Manager, Casino Operations, Adelaide Casino, 1993 |
Casino Analyser Reference Project |
Introduction | Match Play Tokens (with exchange) | Conclusion |
| Cost Assessment | ||||||||||||
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Terms
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= pw probability of player winning | |||||||||||
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r
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= standard returns (payout + bet) | |||||||||||
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$
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= value of match play tokent | |||||||||||
| Match Play Cost = $ pw (r-1)
Example One For even chance game where pw = 0.4925 |
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Cost
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= $ . 0.4925 . (2-1) | |||||||||||
| = $0.4925.1 | ||||||||||||
| Example Two
For single zero roulette where pw = 1/37 |
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Cost
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= $ 0.027 . (36-1) | |||||||||||
| = $0.027 . 35 | ||||||||||||
| =$0.945945 | ||||||||||||
| Benefit due to requirement to match the value of the token with an equal or greater value of cash chip. | ||||||||||||
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Benefit
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= $ – $ pwr | |||||||||||
| = $ (1 – pwr) | ||||||||||||
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Therefore sub total cost
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= $pw (r-1) – $ (1-pwr) | |||||||||||
| = $ (2pwr-pw-1) or ${{pw (2r-1)}-1} | ||||||||||||
| Example One expanded
= $0.4925- $0.015 Example Two extended = $0.945945- $0.027027 A tax implication exists due to the fact that all tokens (face $ value) will be treated as drop. Tax in South Australia at 20% of the net win. |
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Tax
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= 20% (1- Subtotal Cost) | |||||||||||
| = 0.2 – 0.2 Subtotal Cost | ||||||||||||
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Therefore Grand Total Cost
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= Subtotal Cost = (0.2 – 0.2 . Subtotal Cost) | |||||||||||
| = 0.8 Subtotal Cost + 0.2 | ||||||||||||
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Therefore Grand Total Cost
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= ${0.8 (2pwr – pw – 1) + 0.2} | |||||||||||
| Example One continued | ||||||||||||
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Grand Total Cost
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= $ (0.8 . 04775 + 0.2) | |||||||||||
| = $0.582 | ||||||||||||
| Example Two continued | ||||||||||||
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Grand Total Cost
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= $ (0.8 . 0.918918 + 0.2) | |||||||||||
| = $0.9351344 | ||||||||||||
| It is important to note this detailed analysis does highlight some areas of concern if the tokens are used on non even payoff games. In such a case the implied cost of the token can rise from 58.2% of the dollar value of the token to 93.5% of the value if played on single numbers on roulette.
This may potentially cause problems in that the discounting value of the match play when associated with a retail purchase is not then constant, which if the upper value is used, limits the marketability of the product. To overcome these concerns it is possible to implement one of the following:- · Restrict usage to even money bets only The simplest alternative and the one generally adopted is to restrict usage to even money bets only. Having done this, it is now possible to structure an off peak package which includes match play tokens using a 60% cost element on the value of the tokens provided. A multitude of options exist to package not only room, food and beverage items but these could be extended to incorporate a travel component. It must be remembered, however, that the primary objective is to increase profits not just revenue or headcount but PROFIT. Therefore, any package should be structured to attain at minimum play levels a breakeven result after all costs are considered, or preferably a level of profit which does not impinge upon the marketability of the service given that it is already impeded by off peak restrictions etc. An example of a breakeven package is the following:- Cost assessment:- Revenue = $300 |
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Costs =
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$180 Match Play at 60% | |||||||||||
| + $60 room marginal cost | ||||||||||||
| + $10 marginal meal cost | ||||||||||||
| + $20 advertising/ marketing allocation | ||||||||||||
| + $20 labour/ administration allocation | ||||||||||||
| + $10 sales commission | ||||||||||||
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Net =
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0 | |||||||||||
| The difficulty here is that the advertising and labour allocations are volume based which means that if the package is unsuccessful, the advertising allocation will increase dramatically, whereas the labour allocation may only reduce to zero. It is therefore important to structure the package so that it is appealing to the potential market. To accomplish this it may be necessary to conduct market research prior to advertising the package. | ||||||||||||
