Casino House Advantage & Trends

[MountainMan]

Informative article on casino house advantage and trends:

http://www.scrippsnews.com/content/slots-looser-blackjack-revenue-down-vegas (Archive copy)

 

[Tarzan]

Increasing house edge, increasing house profits

It's interesting to read an article that points out and mirrors what has been talked about on here for quite some time, casinos changing rules to increase the house edge and thereby figuring this will increase overall profitability and having it backfire in their faces when it turns away customers and causes them to lose even MORE MONEY instead. They are just now figuring this out? Marketing genious I tell you!!!!

A huge chain sells "widgets" and is making a good buck with a nice cash flow in the "widgit" business for many years. A marketing genious decides to jack the price of "widgits" up considerably to appease the greed of the stockholders and board of directors and hopes that this will get him noticed, promoted and look like a hero, especially since the economy is slipping a bit and profits are down. He is going to make that all up in a HURRY! (Are you reading this, Gary Loveman, you douchebag you? Hang with me a bit longer here, Gary... I am trying to keep this simple so even the feeble-minded can understand it.)


Unfortunately, it has the opposite effect. "Widgit" sales by volume go down considerably and drastically more than ANY price increase can compensate for. "Widgits" have now become unaffordable for many and those who can afford them are so appalled over the price increase that they threw away most of their "widgit" collection and flat out refuse to buy any more. One disgruntled former "widgit" customer even goes so far as to say, "What the f*ck do I need a stupid "widgit" for ANYWAY?!? I think I am going to spend that money on a nice golfing trip instead!"

Plenty of "widgit" customers that would have continued to buy "widgits" would have caused the declining "widgit" profits to level off at a given point but now a snowball effect is occurring and profits plummet much worse than they would have without the price increase, due to the loss of volume of business. Previously devoted "widgit" customers are now really and truly pissed off at the "widgit" manufacturers and feel the "widgit" manufacturers are only out to screw them for all they can.

To make matters worse, the biggest and boldest "widgit" manufacturer that raised the price of "widgits" finds out that someone is opening up a "WidgitMart" in a neighboring State and will be in direct competition for what remains of the already sparse "widgit" market.

I am hoping that any of you out there thinking of opening up "WidgitMart" learn something here...

 

[shadroch]

Actually, your example is very flawed. Harrahs in Atlantic City didn't lose market share to better games, it lost it's market share to worse games that were closer to the morons playing them. The lesson to be learned is don't worry about the quality of your games, just be the closest place for the suckers to get to.

 

[Tarzan]

Assimilated by the Borg

Borgata offers a slightly better game of blackjack than ANY Harrah's owned casino. Do you know how many people I see and talk to that USED to play blackjack at Harrah's or Caesar's there? How much closer to those "suckers" are they, Shad? 1 mile? This is but one example. Seasoned players will seek a better quality game over loyalty to a particular casino and assuming that ALL players are too stupid to know the difference or care might not be the best call here.

If I were to hear that Pennsylvania, West Virginia, Delaware or NY games were more fair, would I go and travel the extra distance? OF COURSE! Away from AC I play all over the country as it is. I go where there is a good game of blackjack if I am outside of AC. When in AC, I go to wherever the best quality games are and just to give you a clue, there are no Harrah's owned casinos on THAT list...

Even the most casual of recreational players will have the misfortune to be sitting there with 20 and have that dealer smack that 4 down on top of their soft17 a few times too many, leaving a permanent little jolt to their casual player brain. Upon hearing that there are casinos that don't do that they aren't going to flip like a switch, feeling that they have given quite enough of their gambling dollars to Harrah's? Perhaps go someplace that at least lubes you up a bit before they bend you over?

You are right, there's a lot of players that are clueless and don't know the difference but it's not 100% of the players. Those clueless individuals might not stay clueless forever, either. One of the secrets of running a successful casino is to let someone actually win once in a while so they keep coming back; Mounting up on the house odds cleans them out quicker and they will become quickly disillusioned or seek greener pastures, one or the other.

 

[Blue Efficacy]

Many players realize H17 is bad for the player, but many more like the fact that the dealer now has a chance to bust out their seventeen. Fact is, if you are sitting on a stiff and the dealer has an ace under, it's not an automatic loss anymore, and unfortunately many players remember this better than when the dealer outdraws them hitting their soft 17.

 

[Sucker]

Harrahs in Atlantic City didn't lose market share to better games, it lost it's market share to worse games that were closer to the morons playing them.

All this tends to do is REINFORCE Tarzans' statement. This is the EXCUSE that Harrahs' uses. They STILL don't get it. They screw their customers to the point that they lose a significant amount of them, and instead of asking "Could we possibly be doing something wrong?"; they prefer to blame the rest of the world.How stupid.

If this statement were true, then how do they explain the fact that when California first opened casinos on the Indian reservations, Vegas experienced a boom like it had never before seen? (Until the recession hit, of course)

Fact is, if you build a better widget, they will come. The public is not QUITE as stupid as the CEO of Harrahs' seems to think. I guess when he loses his job he could always run for Congress....... :laugh:

 

[shadroch]

My BJ in AC is pretty limited these days, but whenever I play, the table is mostly manned by players who play once or twice a year. If you were to tell these people that there is a game on the other side of town that the dealer didn't hit his soft 17, it would be met with a yawn.
I'm not trying to defend Harrahs, but I'm ot sure why people try to tie Harrahs financial problems to its poor BJ when every major casino is in the same boat. MGM nearly declared bankrutcy last year, Wynn is hurting, Stations is in bankruptcy, Boyd is on its doorstep, Tropicana is all messed up. and Terrible Hurst, which derives almost all its income from slots is in reievership.