Casinos have no business sense... sometimes.

[Alan Mendelson]

An interesting comment from our newest forum member mickeycrimm:

As far as documenting history goes I'll tell you something I've seen many times. A casino installs $1 FPDW (100.76%) in a dozen machine bank. New players show up, exactly what the casino wants. All the machines get action. The bank is generating $50,000 an hour is action through the heart of the day. This goes on for two weeks. Then slot operations cuts the payscale to Ugly Ducks. The new players disappear. The bank is a ghost town not even generating $10,000 a day in action.

I've never seen even one casino go "oops, we messed up" and put the FPDW back in. The question is: Why would they run off all that business? It's a pretty simple answer. They were losing money.

From time to time I am invited to have dinner with the executives of various casino companies. I have also done some marketing work for certain casino companies. When I get the chance I ask them why their video poker pay tables are so weak? I suggest to them that if they improved their pay tables they would generate more gross revenue and might even increase their net revenue. In case you are interested, these were pay tables on negative expectation games and improving them would still keep them at negative expectation.

What I found was not an argument against my suggestion -- but that there was no reaction at all to the idea. It was as if it floated by either through, over or around their brains.

I tried to reason with them this way:

"Guys you have 20 machines out there with no one playing them. Improve the pay tables and you are likely to get more players and you'll still be making money and maybe more money than you'll ever earn with empty seats."

We all believe casinos have everything figured out with their MBAs. But I doubt they do. I think if they gave customers (including hotel customers) a better deal it would result in more business, more revenue and more profits.

Every empty seat in a casino is lost revenue.

[Dan Druff]

I am confused. If a 100.76% machine is constantly busy with grinders who play perfectly, how does the casino make money in the long run? They will end up losing money, so I understand dumping those machines.

However, I don't understand killing paytables in the high limit section, as that DOES tend to drive away people from machines that are still profitable.

[Alan Mendelson]

He didnt say the casino was making money with the 100.76% machines. He noted the cash flow. Remember, not everyone will get a personal return of 100.76% which is why the casino is more concerned with cash flow.

He also indicated that they were losing money. But by removing the machines they also reduced their cash flow. Cash flow is very critical for a casino operation.

[Dan Druff]

I don't understand.

Why do they need cash flow?

They are required to have enough money on hand to pay all chips and jackpots, so what good does it do them for money to flow in and out of machines, at a loss?

[Alan Mendelson]

What makes you think they lose money on games with a positive pay table? Especially on deuces wild, players make mistakes and while the paytable might be positive, if the players don't play it correctly -- or if the RNG does not cooperate -- you won't win on that positive paytable.

What the casinos actually bank on is "cash flow" because cash flow pays the bills. And even if they do lose money on a limited number of games they hope to make it up on other games and other things such as restaurants, shops, hotel charges, bar, etc. Think of those few machines as "loss leaders."

When there is a drop in cash flow at those machines it is not a good sign for other revenue sources. If people aren't playing those deuces machines any more they also arent going to the restaurants or staying in the hotel or seeing shows or going to the gift shop, etc.

[mickeycrimm]

One trick some casinos use when they know they are going to sell the property is put in strong video poker at high denom. The pros flock in and give tons of action. What the execs are doing is driviing up the casino action/handle to show to potential buyers.

[mickeycrimm]

One casino promotion that I still laugh about today occurred at Harvey's Lake Tahoe in the summer of 1999. They announced in all the newspapers that royals would pay double all summer long. I jumped in on the play along with a lot of smart players. They had 9/6 Jacks in the bartops. The promotion did not survive the summer. It lasted about ten days. I lost money on the promotion simply because I didn't hit a royal in the 10 day window. But a lot of players did hit royals and the casino took a beating.

[Rob.Singer]

This is so dumb. I've documented in my GT columns many times why the positive machines disappear. The most visual of these was when I got Wynn to put in 25c/50c/$1 FPDW, 10/7 DDB, 10/6 DDBP, FPJW, 8/5 BP, & 9/6 JoB machines.

Immediately, the know-it-all "AP's" crowded them, playing all 3 denominations mostly on FPDW 24/7. After two weeks of this takeover by locals, complaints by out-of-town hotel guests, and obnoxious noodle-slurping at the machines by Chinese families (yes, that's exactly how management reported it to me and exactly how I published it) even though the machines were generating an avg. of $10,000 per machine per day, the decision was to change all games to below 100%. Less daily profit, but better integrity overall and far less complaints. At the time, I interviewed the casino manager of Wynn about this, and he went on record AND SHOWED ME P&L STATEMENTS from those machines.

Similarly, I interviewed both casino managers of the Reserve and the Suncoast after each downgraded all of their huge selections of 100%+ ma Hines. The reports were both the same. The machines were overall profitable, but (Business 101 Mickey and too bad you have no education) the suits required higher MARGIN, and lowering pay tables did just that. Few gamblers ever stay away from their local favorites when pay tables get lowered. Both casinos remain in business to this day, and both are very successful operations. The Reserve sold, but it was years after the reductions. Suncoast is still a pull for AP's with their multiple points days.

Positive machines do not equate to casino losses. Period. Machines that lose money for the casinos because of too many jackpots are the only ones that are ever pulled.

[Alan Mendelson]

Machines that lose money for the casinos because of too many jackpots are the only ones that are ever pulled.

There is some truth in this. Rincon pulled out its $100 video poker machines (all were negative expectation) because too many royals were hit in a short period of time. I discussed this with some of their executives and I said to them "but you will get it back," and they said it didn't matter -- that they had too many losses in a short period of time. This is why there are no longer $100 video poker games there.

[Rob.Singer]

Of course such machines are pulled. While the majority of the chatter on forums is about how casinos are reducing pay tables, slot card benefits and other such rewards, the only thing the casinos care about is what machines are making money at what margin, and which ones, if any, are losing. Why doesn't matter. They get pulled. The most important point in all this is that pay tables are ONLY reduced to improve margin, which management then counts on that translating into increased profitting asap.

The $10,000 per machine per day I referred to above at Wynn was the profit rate. They showed me the margin, which was at or slightly below 1%. So these things were getting TONS of play and would have lasted had it not been for a collection of greedy locals who thought theory trumped reality. Too bad they lost quite a bit overall anyway.

[regnis]

Reminds me of years ago when the "Sport of Kings" opened across from the Las Vegas Hilton. It was basically operated by horseplayers. Their idea was to offer fixed odds rather than pari mutual odds on horses. We murdered them and they had to close. It was a great concept but you could not offer the pros that kind of payoff. Now horse racing is a game of skill---VP relies more on luck. So I would tend to agree with Rob on positive VP games. But it definitely did not work for horse racing.

[mickeycrimm]

This is so dumb. I've documented in my GT columns many times why the positive machines disappear. The most visual of these was when I got Wynn to put in 25c/50c/$1 FPDW, 10/7 DDB, 10/6 DDBP, FPJW, 8/5 BP, & 9/6 JoB machines.

Immediately, the know-it-all "AP's" crowded them, playing all 3 denominations mostly on FPDW 24/7. After two weeks of this takeover by locals, complaints by out-of-town hotel guests, and obnoxious noodle-slurping at the machines by Chinese families (yes, that's exactly how management reported it to me and exactly how I published it) even though the machines were generating an avg. of $10,000 per machine per day, the decision was to change all games to below 100%. Less daily profit, but better integrity overall and far less complaints. At the time, I interviewed the casino manager of Wynn about this, and he went on record AND SHOWED ME P&L STATEMENTS from those machines.

Similarly, I interviewed both casino managers of the Reserve and the Suncoast after each downgraded all of their huge selections of 100%+ ma Hines. The reports were both the same. The machines were overall profitable, but (Business 101 Mickey and too bad you have no education) the suits required higher MARGIN, and lowering pay tables did just that. Few gamblers ever stay away from their local favorites when pay tables get lowered. Both casinos remain in business to this day, and both are very successful operations. The Reserve sold, but it was years after the reductions. Suncoast is still a pull for AP's with their multiple points days.

Positive machines do not equate to casino losses. Period. Machines that lose money for the casinos because of too many jackpots are the only ones that are ever pulled.

Well, Rob, uneducated Mickey would have solved the problem by putting the FPDW in a lot more machines, not less. There is no way in hell I would have run off all that business if I were making money.

[mickeycrimm]

If locals versus out of towners is the problem, Rob, then talk one of the locals casinos into putting in 50 $1 FPDW. I guarantee you they will get a lot of new customers....and their slot handle will shoot sky high. See how long it lasts. Two weeks maybe. Then the casino will downgrade the payscale and run off all that new business. And the reason they will do it is because they are losing money.

[Rob.Singer]

Business sense Mickey. I got them to put the games into 16 machines to start. We talked every day, and they started having some regret after about a week only because of the trouble Wynn's hotel guests were giving the casino over travelling but never able to play the machines because of all the local slugs hogs. It got worse when someone took videos of the gross slurping of noodles at machines by a Chinese family, and spilled soup/tuna sandwich droppings on the machines as passers-by were disgusted. On top of that, Wynn would not budge from their policy of holding a machine for anybody for four hours for whatever reason. The money they were making did not take precedence over guest satisfaction.

All this was clearly identified in several of my columns afterwards. I even posted an apology from Wynn. This is what really happened. Your theories and guesses are just that.

[Dan Druff]

There is some truth in this. Rincon pulled out its $100 video poker machines (all were negative expectation) because too many royals were hit in a short period of time. I discussed this with some of their executives and I said to them "but you will get it back," and they said it didn't matter -- that they had too many losses in a short period of time. This is why there are no longer $100 video poker games there.

They were actually correct to do this.

The $100 machines were too much variance. The Rincon band of Indians is not rich enough to afford big hits like the CET corporation is.

Their refusal to keep $100 machines is the same reason I wouldn't play in a $1000/$2000 poker game, even if I felt I was a big favorite in the game.

[Rob.Singer]

They were actually correct to do this.

The $100 machines were too much variance. The Rincon band of Indians is not rich enough to afford big hits like the CET corporation is.

Their refusal to keep $100 machines is the same reason I wouldn't play in a $1000/$2000 poker game, even if I felt I was a big favorite in the game.

More evidence that Dan tries so hard to "belong" but just can't make the grade.

The only "variance" involved is based on what games are included in the menu. And how foolish is it to claim Rincon Indians couldn't afford to pay out any big wins on their machines....

Pay attention Dan and learn from what Alan says actually occurred instead of constantly throwing out your own theories just to make it appear you've got the #1 handle on what's going on within the industry. If you finally get it, when he & I are gone someday you might not look so dumb anymore.

[Rob.Singer]

I looked up an old e-mail I sent around three years ago about the Wynn machines. The more accurate numbers & facts are: they initially put in 16machines with the aforementioned games. After 2 weeks they lowered pay tables on 8 of them. After 3 they reduced 4 more. After 5 it was over, but they did install a DW pay table I suggested on 8 machines that has a pay back of 99.96%. They may or may not still be there, I don't know because I don't play DW games.

Wynn's plan before starting was to pay players the .33% cash back but to not give discretionary comps or send out offers to those playing the positive games. The free buffets after receiving X amount of points were honored. So there were no special rules posted for the machines.

The correct profit take on the machines were an avg. of just under $10k per 10 days per machine, not $10k per day. This came out to just under $1000/day per machine or 1% overall--which was much less margin-wise than their other vp machines but acceptable dollar-wise. They were borderline happy with all this along with the massive amount of attention they were getting, but the commotion and the complaints did them in.

[mickeycrimm]

Business sense Mickey. I got them to put the games into 16 machines to start. We talked every day, and they started having some regret after about a week only because of the trouble Wynn's hotel guests were giving the casino over travelling but never able to play the machines because of all the local slugs hogs. It got worse when someone took videos of the gross slurping of noodles at machines by a Chinese family, and spilled soup/tuna sandwich droppings on the machines as passers-by were disgusted. On top of that, Wynn would not budge from their policy of holding a machine for anybody for four hours for whatever reason. The money they were making did not take precedence over guest satisfaction.

All this was clearly identified in several of my columns afterwards. I even posted an apology from Wynn. This is what really happened. Your theories and guesses are just that.

I flew down from Ely for the Wynn opening. I walked in the door 8 hours after they popped the doors. I rented a weekly at the Budget Suites behind the Stardust and went to Wynn every day and played 15-30 holdem. I was there when the FPDW got put in. I never got to play the game because the machines were taken everyday in the time frame I was in the casino. I didn't see any "local slug hogs" on the machines. They were all well dressed nice looking people. And yes some of them were Chinese but I didn't see any "noodle slurping" going on. If there was then a simple "no eating at the machines" rule would have sufficed. All your excuses hold no water, Rob. I certainly don't believe any of you fraudulent stats.

[Rob.Singer]

That right there shows what a forum liar you are and, like arci, you'll say anything when your AP ego gets rightfully hammered.

The machines were not put into Wynn--and in fact were not even introduced by me--until after their FIRST year in operation.

This is the kind of hack who feels they have to go to any length to try to make believe what they don't want to be happening, does not happen. Why'd you even bother coming over here Mickey? We've already got a world class pathological liar with a messed up home life in arci, and a dumb-as-a-rock wannabee in Dan. If you're going to post phony stories like this, better go back to Wizard's and tell stories of transgender acceptance, homo marriage values, and the benefits of equal opportunity & affirmative action.

[Dan Druff]

More evidence that Dan tries so hard to "belong" but just can't make the grade.

The only "variance" involved is based on what games are included in the menu. And how foolish is it to claim Rincon Indians couldn't afford to pay out any big wins on their machines....

Pay attention Dan and learn from what Alan says actually occurred instead of constantly throwing out your own theories just to make it appear you've got the #1 handle on what's going on within the industry. If you finally get it, when he & I are gone someday you might not look so dumb anymore.

Rob do you have any idea what "variance" is?

Sounds like you don't understand the term, which surprises me given that you've been part of the gambling world for decades.

The $100 machines are indeed very high variance. When a royal hits on these machines, it costs the casino a fortune. It takes a ton of play on the lower machines to negate a single royal on a $100 machine. If a few more royals hit than expected, it can be incredibly expensive for the casino. Of course, the reverse can occur (a long dry spell of no royals), and the casino will make a whole lot of money. But it's just too much risk for them to feel comfortable taking.

You need a deep-pocketed corporation in order to withstand such variance. The Rincon Indians are not that deep-pocketed.

Believe it or not, casinos don't like gambling. They like when YOU gamble, but they don't like gambling themselves. They much prefer low-variance, low-risk games where they can easily count on a slow profit without worrying about customers spiking an unexpected streak of jackpots.

Rob, why do YOU think they took the $100 machines out? Because geniuses like you figured out how to beat -EV games, and they couldn't take the punishment?