Casino Promotion Gone Wrong
Introduction: Casino Promotion Gone Wrong
As Rubin points out, “Many gamblers believe that the casinos have tightened the screws on comps. They haven’t. Why not? Because they can’t.” That’s because casinos are constantly trying to find ways to acquire new customers. There’s a whole market place with regard to playing acquisition, retention, and loyalty, where free goodies, bonuses, and promotions feature as rewards. So when the casino gets its math wrong, then there are sharp advantage players ready to swoop down and make a killing.
Father Day Bonanza…But For Who?
One of the most famous took place at the Imperial Palace in Biloxi on June 15, 2003. The casino decided to run a “Fathers Day Bonanza” but didn’t think the math through before offering the casino promotion. Some bright spark at the casino thought it would be a great idea to offer this: for 24 hours, all blackjack tables would payout at 2 to 1 instead of the more usual 3 to 2. The promotion was valid for all players wagering up to $2,000, which was the table limit. The problem for the casino was that this rule change adds 2.3% to the player’s side. It turned a 0.5% house edge into a 1.8% player advantage. As you can imagine, a lot of fathers found the time to come on down and grab a seat at one of the tables. Back then, there were no online jackpot sites.
A Costly Casino Promotion
Now, playing those odds at a game that normally has 60 hands per hour, is going to yield a theoretical win of $52,000 for the whole 24 hours. Not bad at all! As there were 98 seats available, that means the promotion had the potential to cost the casino just over $5 million. Gulp!
Casino Ran Out Of Chips
More than five hours before the casino promotion began, every one of those seats was full. Some players even offered up to $3000 to take over seats from other players. With just 10 minutes to go, all the players took out huge bankrolls and bought up every $100 and $500 chip in the building. At the stroke of midnight, the games began. Within minutes the casino ran out of $500 chips. To their credit, the floor and pit managers followed through on the promotion in spite of seeing the results first hand. Apparently the marketing department was at home unaware of what they had sown.
Reducing The Table Limits
Three hours in and after a number of worried phone calls, the table limit was dropped to $500. Then again at 8 am in the morning, table limits were dropped again, this time to $200. By 10 am the management started to close tables. By 11 am only one table remained open and the table limit was now running at just $50. At the end of a disastrous night, the casino ended up losing around $800,000. As one of the players later said, “Everyone showed up … Greeks, MIT, you name the player and they were there …We had a team assembled of 14 players and a $500K bankroll and only 3 out of 14 players got a seat …”
Casino Promotion: Bad Math And Ignorance
Should of checked the math. The actual error was more of a misunderstanding of casino terms. The loss really stemmed from a total misunderstanding of the term, “hold”. In slots terminology “hold” means the house edge.So…a game that holds 12% means that it will return only $88 out of every $100 put in. In other words, the casino wins 12%. Now in blackjack, the term hold means the ratio of win to drop. To say that blackjack “holds” 12% is another way of saying that for every $100 in chips the player buys, on average he’ll be leaving with $88. But the problem here is that the blackjack player will churn his original $100 several times over. That’s why the house advantage of 1.5% jumped up to a 12% hold.
Could It Happen Again?
Following on, a casino promotion that returns 2.3% on a slots machine will turn a game that holds 12% into one that holds 9.7%. But a blackjack promotion that gives back 2.3% turns the game into a 12% hold…and a disastrous day for the casino. Now you would imagine that this would be a lesson that would be taught at every casino school throughout the world. But no, in 2010 there was another costly math outrage.
Oh Yes!
The Mohegan Sun casino decided to run a blackjack casino promotion whereby players could triple down instead of the usual double down. This simple rule change added a 3% advantage to the player. The marketing department must have thought that the players would still hold 9%. Wrong!
The Casino Takes It On The Chin
The news concerning this tournament spread quickly. Thanks to the internet, flights, and hotels were booked as a huge group of advantage players descended onto then Mohegan Sun, all ready to take advantage of this crazy casino promotion. But unlike the Imperial Palace, this venue was sticking to its guns and allowing the whole 24 to run. When the dust settled a day later, many of the players had made significant amounts. As one player recounted, “Did we kill it? Well the six of us made around $90,000 … I regret we didn’t pump up the wagers as we won, and I guess even the couple of hours walking or eating have to be considered wasted. But nobody’s perfect.” All told, the casino lost around $1 million. We can imagine that someone was let go the next day.
Maybe this is what happens when the guys in marketing are not players. Or simply have no idea what they are actually promoting. Of course, it’s very nice and all to give something back to the players. But there are levels and then some. As Vince Lombardi once said, ” in the world of casino gaming, math isn’t everything, it’s the only thing”.
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