5 Yielding Questions Every Table Games Executive Needs to Ask Themself in the Wake of COVID-19
Like many other businesses, casino operations have faced a major disruption. Ask any operator and they’ll tell you COVID-19 has put them in uncharted territory when it comes to table games planning for reopening, the reopening itself and post-opening fine-tuning.
Social distancing recommendations from various gaming jurisdictions have meant that properties are operating under very strict guidelines. Apart from safe sanitation and hygiene, many casinos are operating under limited capacity, a limited number of betting positions, or both. For example, in Maryland, casino operators were required to open every other table and reduce their number of spots by 50%, resulting in a 75% reduction in total betting positions.
In the world's largest gaming destination, Macau, where ~95% of revenue is driven by table games, year-over-year revenues are down over 90% and properties remain open while the borders remain closed. In other regional jurisdictions that have opened up and don’t rely as much on cross-border visitation, there have been lineups out the door to secure a seat at a table or slot machine.
While the COVID-19 pandemic itself is projected to fade over time, this crisis will likely have long-lasting effects on table game planning and performance. Operators are faced with the same challenge: how to maximize revenues with limited resources (labor, table capacity, betting positions, etc)? Here are five yielding questions table games operators should be asking themselves right now as operations around the globe restart.
Over the past few years, table games business have rapidly grown and those that didn’t evolve have become victims of their own success. The ones that pulled away and evolved are better structurally set up to leverage their data, be more dynamic and rapidly adapt to changing demand conditions.
1. What Data are We Collecting and How Will We Measure Performance?
This is a critical element and change has been happening progressively in the industry. Leadership is starting to look for more sophisticated KPIs to evaluate their table games performance because the existing KPIs such as Win, Drop and Hold % fall short as effective KPIs to manage the rapidly evolving business.
Table games Hold % was up 10% in the first week after reopening. Was that because we got lucky? Or was it because our games were operating much faster with fewer players per table? Or was it because we priced 30% higher to offset the reduced capacity? Or was it because our game-mix was disproportionately higher hold games? How will I convince my CFO that we need 40 more dealers to meet the demand?
With short-term fluctuations in Hold % and Win, we encourage operators to pay much closer attention to the variables that they can control. Operational KPIs will offer deeper insights into the business. If you’re not already leveraging your table management system to measure and analyze table minimums, occupancy and average wagers, start now. Revisit your optimal number of guests per table based on the segment: game type, table minimum and average wager.
Once you start assessing operational performance such as table open hours, pricing and average occupancy and segmenting it by game type or area, you’ll quickly be able to troubleshoot any changes in financial performance or find opportunities to course-correct if any of the KPIs are out of line. We delve deeper into this topic in this blog post and in our Reopening Best Practices webinar.
2. How Are We Going to Plan Open Hours and Prioritize Staffing?
All table games have an open hour strategy, which impacts table occupancy and the guest experience. With a limited capacity or a limited number of betting positions, how is the open hour strategy going to change? Fewer betting positions mean that we should open more tables to service the same level of patron demand.
But what is the expected patron demand and how many tables should we open to optimally service them? Is there a shift in the patron demand after reopening and do we need to adjust our plan?
As dealers report back to work, there is also an abnormally high number of call-outs. The open hour plan may not always work out and a decision will have to be made on which table open hours will be sacrificed.
Our suggestion would be to increase the frequency of planning open hours and table spread. Any missed opportunity to open more games or reallocate labor to busier times is lost revenue and will lead to a poor guest experience. We have developed free tools to allow your property to plan for the right level of staffing.
3. Do We Need to Adjust our Game-Mix?
It’s fair to state that most properties will not be able to open all games or will be constrained by labor during reopening.
What are the games that need to be prioritized to be opened first? The historical financial KPIs such as Win and Drop will offer a good indication of the performance of the various games offered on the floor, but that alone is not sufficient.
What are the operational KPIs such as Occupancy and Win per Open Hour for the various game types on the floor? Would you rather open all the tables that historically had a high Win per Open Hour? What if some of these games had a very low occupancy? How many tables of each game type should we open?
Are there any game-mix opportunities that existed prior to the closures and is it a good time now to reassess those opportunities? A small change can make a massive impact. For example, swapping a low performing Blackjack game that generates $120 in Win per Open Hour for a high performing Poker derivative that generates $250 in Win per Open Hour can easily result in an incremental $250K+/year in your bottom-line (assuming 50% dilution and 12 open hours per day).
In our first webinar from the Bouncing Back from COVID-19 Series, we discussed a framework to assess table games performance to make better decisions. Along with the need to understand financial performance, it is equally important to pay attention to the operational KPIs to find opportunities to adjust game-mix or prioritize games based on your guest demand and market conditions.
4. What is our Pricing Strategy?
The table minimum is one of the easiest ways to control the occupancy, average wager and play time on a table game. It’s also arguably one of the most difficult to get right because it depends on the actual patron demand which fluctuates throughout the day, the quality of play and the number of tables currently open for that segment. Furthermore, it’s in the hands of the floor managers that may all have varying opinions on the right minimum for the table as well as limited capacity and number of betting spots.
What should be our pricing strategy? What will be the entry-level pricing for the various games on the floor? Will we be able to generate the same revenue if we can only offer three seats per table? Are our floor managers equipped with the right tools to make the right decisions?
Reducing the number of spots on an individual table and keeping all other factors constant will only result in higher overall revenues if the total spot count doesn’t change i.e. we are able to open more tables. But if we halve the total number of spots, in order to maintain the same overall revenue, either the pricing or house edge of the game has to be adjusted; that’s the math of table games. We discuss this in greater detail in this blog post. We also discussed this at length in our COVID-19 Panel Discussion Webinar that featured operators from different jurisdictions offering their insight into this topic.
5. What Operational Changes Do I Need to Make to the Floor?
One of the overarching themes across the globe has been to focus on doing more with less. In the same spirit, the goal is to increase the efficiency of our operating procedures and minimize any downtime or waste on table games operations.
For example, in many North American casinos, buy-ins of $100+ need supervisory approval. In today's climate, supervisors may be spread thinner across the gaming floor. Is it worth stopping the game for a $100 buy-in? We have been to casinos recently and have watched a dealer and a guest wait for 5 minutes for a $200 buy-in. Should we increase this buy-in threshold?
As another example, many casinos have their cards spread across the layout on an empty Blackjack table. When a player comes up to the table, they must now shuffle, which can take up to 3 minutes. Shouldn’t we complete this when players are not there to eliminate the downtime?
Have we introduced any new operating procedures in light of the new conditions that reduce the game pace? What is the true cost of these procedures to our operation? Are there any existing operating procedures that I need to revisit to maximize efficiency?
In our second Bouncing Back from COVID-19 Webinar Series, we discuss examples of operating procedures for Baccarat and Roulette that have been successfully implemented in other gaming jurisdictions. We also recently published a blog post that discusses a grandfathering in policy.
Now is the Time to Change
COVID-19 has resulted in a mass temporary disruption in operations. It’s too early to measure the true impacts to table games and it varies by jurisdiction. Operators that have reopened are still struggling to explain why they are seeing an increase in metrics like Hold % with the reduced number of seats or why it hasn’t increased for them. Without a detailed analysis, it’ll remain just a guess.
Most of the answers can be found in the data and now is the time to change if you’ve not already done so. More effective and data-driven planning can help revise and better align table capacity, open hours and pricing to the expected demand as restrictions are lifted or added to ultimately accomplish the overarching goal: to do more with less.
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As one of the founding executives, Maulin currently serves as the President of Tangam Systems. With over fifteen years of experience helping operators improve business performance with data science, Maulin has overseen Tangam’s growth to the global leader in Table Games analytics. He received his Computer Engineering Bachelor’s and Master’s from the renowned McGill University in Montreal, specializing in Artificial Intelligence.
As SVP and Head of North America Business, Ari brings over 15 years of operations experience across multiple jurisdictions in North America including Las Vegas, Atlantic City, Florida, Pennsylvania, and Connecticut. Ari oversees Tangam’s global client base and helps operators adopt yield management best practices.