Casino Yield Management Panel at G2E Asia 2017

May 30, 2017

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G2E Asia hosted the ‘Revenue Management: Casino Yield Optimization’ discussion panel, moderated by Alidad Tash, SVP of Gaming and Strategy at Benchmark Solutions with Varun Nayak, Tangam’s SVP of Gaming Strategy as one of the panelists. The discussion was split into two parts:

  1. Alidad focused on the latest trends in gaming optimization with, at times, counter-intuitive solutions, and
  2. A panel in Q&A format, focusing on technology and table games, featuring industry experts and manufacturers.

Table Games Optimization Presentation

Alidad began by reviewing Gross Gaming Revenue across various gaming jurisdictions with Macau peaking at $44B in 2014 and stabilizing at $27B in 2016.

Next point of discussion was optimal utilization and how spreading patrons, depending on their average bets, can, in fact, improve revenues and profits despite increased labor cost.

A common oversight in this type of analysis is the topic of time-constrained vs. budget constrained players. Analysts typically assume that players will play for the same duration regardless of occupancy which data suggests does not hold true for all segments. Once time on device is factored in, optimal utilization changes for the various segments.

Alidad then introduced Hold% and how various companies report hold in their quarterly financial reports. The last section focused on tactics to improve win, with the same drop hence improving Hold:

  • House edge: Better game mix e.g. no commission baccarat vs. traditional baccarat
  • Game speed: Improve game speed by optimizing the number of operational tables and table minimums, training and rewarding faster dealers, faster card change process, decreasing buy-in time and reducing the number of gaming positions
  • Average bet: Increase average bet by optimizing table minimums
  • Time played: Increase time played by offering more complimentary rooms and a better environment (e.g. temperature, lighting, music, comfortable seats)

The presentation concluded with a Hold% comparison. Alidad showcased the results achieved at COD Macau from these initiatives where Hold% steadily increased from 21.5% in 2010 to 37% in 2016 – the best Hold% in Macau.

Panel Discussion

Once his presentation was over, the Q&A panel discussion began. The panel featured industry experts:

  • Varun Nayak, SVP of Gaming Strategy at Tangam Systems
  • Ken Jolly, VP and Managing Director at SG Gaming Asia Ltd
  • Charles Cohen, VP of Mobile and Interactive at IGT

One of the hottest topics at the panel, and G2E overall, was replacing dealers with robots. This idea might sound far-fetched, but rising employment costs are becoming problematic. Alidad highlighted that in some jurisdictions, monthly dealer salaries had risen 150% in the last decade.

There has been experimentation with automated betting/bet settling, dealer avatars, and even robotic arms. However, Ken Jolly argued that he doesn’t foresee this option being popular with Asian players. They enjoy ‘beating’ the dealer at the game.

Charles Cohen also stated that gambling is a form of entertainment and that he doubts a robotic dealer would enhance the patron experience. If a robotic dealer could deal at twice the rate of a human, the game pace would increase quite a bit, but it would be exhausting for the patrons.

Varun Nayak, SVP of Gaming Strategy at Tangam and an expert in data analytics, suggested that the technology to create robot dealers already exists; a more relevant question is whether the market will accept it, and whether or not the right economics exist for whatever part of the market that chooses to support robot dealers.

The next question in the panel asked, what is an example of an operational practice that makes sense intuitively but is not good from a yielding perspective?

Varun raised the practice of dropping limits when a table goes dead as an example of something that is quite common but may not make sense. As an illustration, he gave the following example:

“I see a dead table HKD 1000 at a moment in time and reduce the limit to HKD 500. Now, that decision is based on a momentary snapshot and is likely to suboptimal because it is too localized (one or few tables) and based on one moment in time. Before changing the limit it is important to understand the expected play pattern for the hour i.e. if I am expecting action for 40 minutes from two sets of high-value players, I may end up crowding them out.”

He suggested that the operator believes they are enticing players to move to that table by dropping limits and, as a result, improve performance. But it’s worth asking the question, where are those people coming from? If they are coming from another part of the casino that is not incremental demand – dropping limits on the middle of Venetian floor, does not make people playing at COD go, “hey Venetian just dropped limits, let me go there”.

Varun concluded the example saying that “broadly speaking, in terms of quality of such decisions, it is useful to understand that operators walking the floor and making ad-hoc decisions are psychologically biased to take action based on a snapshot in time. By dropping limits not only do we increase the chance that a high-value player may get yielded out but also risk affecting the brand of the area, the expected user experience, and the service players would get – all of which are detrimental to long-term player retention and profits.The good news is analytics/technology now exists to make good decisions based on data across the whole floor and across time.”

These discussion points sparked many questions following the panel. We had several attendees stop by Tangam’s stand for follow-up conversations. If you didn’t have a chance to ask a question or if you’re interested in more information on the panel or yield management, contact us.

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