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Top 5 KPIs Every Table Games Executive Should Evaluate to Measure Performance

Mar 6, 2019

4 min read

Rewarding Decisions vs Rewarding Outcomes

In a previous blog post, we discussed Drop, Win and Hold %, and why they fall short as effective KPIs to evaluate table games performance.

Drop, Win and Hold% are good in measuring the financial health of a table games operation, but they lack transparency into the quality of decisions made to arrive at the financial outcome.

A bad decision could lead to a great outcome. For example, does buying a lottery ticket that wins a jackpot make buying lottery tickets a great decision? Good decisions could also lead to an undesirable outcome in the short run. Warren Buffet has built his empire by following simple fundamental investment principles to measure and reward good decisions.

Tables games revenues are no different from investing, with short-term uncertainty in the financial outcomes. Perhaps not as exaggerated as the lottery ticket example, but good and ill-informed decisions made by management can easily be masked by short-term fluctuations of revenue.

We’ll illustrate with a fictitious example.

Casino Hippopotamus

Table games revenues are flat for a number of years at this property, while competitors are growing. The board decides to bring in a new management team and sets a 20% EBITDA growth budget for the 2019 to catch up to the market.

The Decision

The new management decides is to slash table open hours by 17% to meet the EBITDA growth budget.

The Outcome

After a full quarter of the cost-cutting initiatives, here’s the Casino Hippopotamus’ P&L statement:


Operational KPIs

Analysis

With a staggering 27% increase in EBITDA, the new management believes they are on the right track to hit the 20% budget while still growing revenues.

Should the shareholders be satisfied with the new management’s decisions? After all, they grew EBITDA by 27% and are well on their way to meet budget for the year.

The answer: it depends. Was a 17% reduction in operating costs the right number? What if they were understaffed and they actually needed to add 5% in additional labor to improve top-line revenues?

Layering in 5 New Operational KPIs

Digging a little deeper into the management team’s decisions, let’s look at these five additional operational KPIs (or levers) that the management team can control. These KPIs directly influence table games revenues and management has full control over them. More detail on the levers can be found on this and this blog post.



Operational KPIs

Table Capacity - no change in the number of tables on the floor

Table Open Hours - open hours were 17% lower than the previous year

Weighted House Edge - no change in the game types or game rules

Weighted Average Table Minimum - limits were reduced by 32%

Average Table Occupancy - net impact of fewer open hours and lower limits resulted in 31% higher occupancy


Every savvy table games operator knows what this means for the property in the long run. Reducing open hours and table minimums, without offsetting the house edge, will result in lower revenues and Hold %.

It turned out that the revenue was boosted by a single high limit player who lost $1.1M that quarter, and when the results are segmented by Mass and VIP, then they don’t look as stellar. Furthermore, when segmented by Game, Blackjack games revenues are on a much steeper decline compared to other games.

Conclusion

In this fictitious scenario, which frequently happens in table games operations around the globe, the new management played lucky and their lottery ticket decision paid off. Unfortunately for that team, the full financial impact of their decision will be felt in the longer run. The new management may continue to blame the weather for a bad quarter, and take credit for a new promotion if results are good.

As executives, we need to measure, evaluate, and reward good decisions. The five KPIs outlined in this post are a great start to truly understand the impact of the decisions that the management can control.

Of course, there are many more KPIs as operators get more sophisticated such as game pace, under-capacity hours, under-spread hours, over-spread hours, under-priced hours and over-priced hours. We will delve deeper into this in a future blog post.

Our suggestion is to strike a healthy balance between rewarding the financial goals (outcomes) and the decisions (controllable levers) to motivate management to make the right long-term operational decisions that will result in EBITDA growth.

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Author(s)

Maulin Gandhi

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.

Ari Mizrachi

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.

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The Star - Sydney

“Due to our ongoing success with Tangam at Sydney, we’re able to deliver the right product at the right time, leading to improvements in efficiency, transparency, decision-making and our bottom line.”

David Croft

,

General Manager Product & Strategy

View Press Release

Mohegan Sun

“We’d like to thank the exceptional team at Tangam Systems for what has been a very successful implementation that we undertook together. We immediately saw positive returns and an improved guest experience. Our team is very much looking forward to continue leveraging Tangam and all it has to offer from a floor optimization standpoint.”

Kevin Lowry

,

Vice President and CFO

View Press Release
Read All Testimonials

What Clients Say About Us

Caesars Entertainment

“[Tangam’s] real-time data gives us a deeper insight that allows us to quickly adjust to customer needs, while also establishing new business goals and tracking the success of our strategy.”

Melissa Price

,

SVP of Corporate Gaming

View Press Release

Mohegan Sun

“Reporting alone doesn't provide answers. We chose SODA for its highly differentiated offering that provides a clear set of actionable recommendations, which maximize gaming performance and the guest experience.”

Jeff Hamilton

,

President and General Manager

View Press Release

Sycuan Casino Resort

“During our initial trial, it was amazing to see how quickly we were able to get to the answers in our data through the lens of SODA. This truly made analytics available to anyone - with intelligent recommendations, intuitive visualizations and seamless drill-downs. We are equally excited about the product roadmap over the coming months.”

Sierra Weyer

,

Director of Enterprise Analytics

View Press Release

Mohegan Sun

"Extending our partnership with Tangam to our full gaming operation, including tables and slots, was a no-brainer given Tangam's proven track record of business support."

Jeff Hamilton

,

President and General Manager at Mohegan Sun

View Press Release

Sycuan Casino Resort

"Sycuan is dedicated to providing an enhanced gaming experience for our patrons. By deploying powerful prescriptive analytics tools such as TYM and SODA, our operations and analytics teams are able to get data-driven insights at the right times to drive value to our business."

Douglas Vogelei

,

Senior Vice President of Casino Operations

View Press Release

The Star - Sydney

“Due to our ongoing success with Tangam at Sydney, we’re able to deliver the right product at the right time, leading to improvements in efficiency, transparency, decision-making and our bottom line.”

David Croft

,

General Manager Product & Strategy

View Press Release

Mohegan Sun

“We’d like to thank the exceptional team at Tangam Systems for what has been a very successful implementation that we undertook together. We immediately saw positive returns and an improved guest experience. Our team is very much looking forward to continue leveraging Tangam and all it has to offer from a floor optimization standpoint.”

Kevin Lowry

,

Vice President and CFO

View Press Release
Read All Testimonials