Recently, I polled a group of casino executives concerning questions they had regarding table games operation and management. I was amazed at the number of replies I received, as well as the different inquires into topics regarding the management, operation and protection of live games. Following are a few of the questions I received based on topics I thought were the most important, especially during this time of economic woes. Some questions are a combination of similar questions submitted by different executives. Unfortunately, I can’t answer them all in this article, but I believe you will find several of these questions similar to those you and your organizations have faced during this last year.
Q: How do you maintain the highest quality of service for your guests and still maintain the game protection needed in an environment that has your help spread thin due to budget reasons?
A: It isn’t game protection that is affected by understaffing your gaming pit, it’s customer service and effective player ratings. Requiring floor supervisors to cover six to eight games will decrease the accuracy of player ratings during busy periods. The supervisors will be hard pressed to accurately note average bet, time played and amount a player walks with because they are overloaded. In addition, they are physically removed from the immediate vicinity of some of the games.
Customer service drops because there is no one present to answer player questions, satisfy the concerns of upset customers, and referee game mistakes or ruling disputes. The position of pit boss or manager has disappeared in most major casinos. This management reduction places more needed “pit time” on the shift manager, who also has to deal with problems that arise outside the confines of the pit.
This leads to a second important point: The floor supervisors are not in a position where they might catch the occasional dealer mistake. This is especially important in casinos that hire novice or break-in dealers. Spreading supervisors between six to eight table games reduces their effectiveness to 25–30 percent since they cannot be expected to see mistakes made on a gaming table several yards away from their floor position.
Game protection has evolved to a point where the supervisor doesn’t have to physically observe advantage play, cheating or theft in order to catch it. The fact that surveillance records games 24/7 takes a lot of responsibility off the floor supervisor’s shoulders. The floor supervisor’s need to participate in game protection has been greatly reduced over the past 15 years.
Q: Would it be better to have all automatic shufflers on blackjack instead of manual shuffles? Would the ROI be justified due to more hands per hour?
A: Placing either a batch or continual shuffling machine on your blackjack games will increase hand decisions, which increases revenue. Gains in decisions are achieved because the dealer spends less time shuffling and more time delivering cards and settling hand outcomes. The gains from the increased hand production will cover the cost of buying or leasing the machines on tables that are open on a regular schedule. This statement can comfortably be made without considering any other less tangible gains from increased shuffle procedure integrity (game protection).
Batch shufflers increase hand production through decreasing the time of the actual shuffling process. Based on a standard six-deck shoe shuffle of 1.5 minutes, shuffle time can be reduced by an entire minute if the dealer can complete the deck transfer in approximately 30 seconds. If the dealer is required to shuffle his six decks four times per hour, the batch shuffler will allow the dealer to gain up to four rounds per hour. Mathematically, one could argue that the batch shuffler will pay its monthly cost in less than a week based on 16 hours of use per day.
Continual shufflers increase production because they eliminate the time it takes to either manually shuffle the cards or transfer shuffled decks between the batch shufflers and the dealing shoe. It goes without saying that continual shuffling machines will increase hand production and game decisions at a greater rate than batch shuffling machines.
It needs to be noted that there is one downside to continual shuffling machines: For some reason the dealers have a tendency to slow down. It’s not certain whether the slowdown is a result of the machine itself or the dealer’s “shuffle break” being eliminated and some subconscious reaction to the continual dealing process. Management needs to develop a strategy to keep dealers at a desired game pace if they are utilizing a continual shuffling machine.
It would be advantageous for the executive to examine revenue gains achievable by the shuffling machines based on levels of play and utilization. While it would be optimal to install a machine on your main blackjack games, it might not be feasible install them on tables that are opened only during weekend evenings.
Q: I would be very interested in understanding how various casino executives target customers and come to a conclusion on where to set their table limits. What are the criteria that they want their managers looking at when establishing table limits?
A: Unfortunately, only a handful of casino executives put any energy into developing a strategy that adjusts minimum table limits based on business, regulates table limit spreads, or sets table maximums based on available bankroll or volatility risk. There is more information available in casino management books and online for adjusting maximum limits for dealing with high-end players than lower limits and spreads. This is due to the expensive nature of losing money (and reinvestment costs) to players considered “whales.” This doesn’t help 95 percent of the rest of the casino world that considers a $500 bettor a “big player.”
Based on my research efforts, the most important area for establishing table limit guidelines centers around minimum limits. Adjusting the table minimums affects average player bets and seat utilization. These two issues have a huge effect on gaming revenue and cannot be taken lightly by management.
Managing the limits to increase the player’s average bet, and the availability of seats from which to make these bets, is known as “yield management.” Yield management has been closely associated with strategies used by airline and hospitality businesses to increase revenue and bottom line profit. For example, the two biggest metrics studied in the hotel industry are average daily rate per room (ADR) and room occupancy percentage. The successful hotel manager understands the importance of how to adjust his ADR to achieve the best occupancy percent and give him the best revenue return. If the ADR is too high, occupancy drops too low and revenue declines. If the ADR is too low, occupancy climbs but the return on revenue is not maximized. This becomes a very fine balancing act at which the manager needs to become proficient.
In many situations, the casino executive finds himself in a position where he gets locked into an inflexible table minimum strategy. He then has very little interest in developing a yield management strategy that would allow him to achieve greater returns during both busy and slow business periods. Time is spent on other issues, such as investigating and explaining decreases in game hold percentages that are caused by nothing more than standard statistical fluctuation.
Q: What is the optimal ratio when establishing table maximums relative to the table minimum? Would this ratio be different based on the type of guest each casino is hoping to attract?
A: This is an interesting question: What is the optimal limit spread on a specific game? First, let me dispel one popular myth about limiting the spread of minimum and maximum bets. It’s believed that a narrow table limit spread will increase the casino’s hold percentage. I have never seen any information that backed this assumption. It’s believed that the casino should limit the players’ ability to exploit their temporary winnings by offering a narrow range between the minimum and the maximum. But if a player goes on a temporary winning streak, why would you want to limit what he wagers? Sure, he can exploit the situation and wager a higher average bet than before, but doesn’t the casino want to win the money back at some point? Remember, the more a customer wagers on the table, the more revenue the casino will generate. Some executives still get lost when separating the forest from the trees. Let the players bet what they want as long as it doesn’t surpass the casino’s maximum established limit.
Another issue regarding narrow limit spreads is the belief that it keeps the progression system player from continually doubling up on losing wagers. I know a number of casino executives that limit the spread so a progression player cannot double after losing six wagers in a row. But what keeps the progression player from picking up his chips and moving to another game, with a higher limit, once he has reached his maximum bet on the previous table? The most important issue is for the casino executive is to accommodate his customers and provide them with game limits they are comfortable playing.
Adjusting the minimum game limits is important when considering seat availability during busy periods. This is the first step of a yield management strategy for table games. Raising table limits during busy or peak periods will provide your better players the opportunity to find the game limits they desire. Spreading low limit games during busy periods will restrict the level of blackjack’s average customer wager and diminish potential revenue returns. In addition, 100 percent seat yield is not your target. The smart executive knows he needs to keep seats available so that his better customers have some table variety. This executive does not want a higher wagering player standing idle, looking for an open seat.
Q: How do casino executives determine a base level to measure fluctuation on hold percentage and when to investigate those variances in hold?
A: Nevada uses a 3 percent variance (up or down) in the normal hold percentage of a game type as need for a detailed explanation from the licensee. Why they use 3 percent is beyond me, especially as a standard percentage for all game types. This concept fails to provide enough range to indicate problems on jackpot games where the maximum jackpot may hit only a couple of times each year. For example, Caribbean Stud Poker is always listed on the monthly game variance report. During the months that the royal flush and straight flush don’t hit, Caribbean Stud Poker is above the 3 percent mark, and during the months the jackpots do hit, it’s below the 3 percent mark.
One idea is to base a variance limit equal to the average hold percentage of each game type at one standard deviation from the norm. For example, calculate the mean and standard deviation of a game’s hold percentage on the previous 36 months. If the hold percentage mean is 14.5 percent and the standard deviation is 1.3 percent, the casino’s gaming analyst could establish a reasonable threshold for game-type analysis at 13.2 percent within one standard deviation, or 11.9 percent within two standard deviations. Remember, one standard deviation from the norm takes into consideration 66 percent of all possible results, leaving the analyst to investigate 34 percent of the remaining possibilities (17 percent if only negative results are investigated). Using the second deviation limits as the warning flag would greatly reduce the number of months investigated, since two standard deviations takes into consideration 95 percent of all possibilities.
Realistically speaking, conducting game investigations based on game-type statistics is a waste of time. Even conducting investigations on more specific targets like individual losing games and winning players based on statistical analysis is futile. Accurate variance numbers require a large number of hand decisions. In many instances, before the necessary number of decisions can be obtained on a player or specific game, any monies obtained by the advantage player, cheater or thief have left the building and are sitting in an offshore bank account in the Caribbean. For example, the accuracy of an electronic device is measured based on 10,000 handle pulls. This may take several weeks to occur. For a customer to play 10,000 hands of blackjack, it might take several months (if ever).
The best game protection method is to forget about hold percentage and focus on player and table “win” thresholds to initiate an examination of the recorded play. Hold percentage changes can be used successfully to examine the effect of game procedure and rule changes over a period of time such as six month to a year. Once again, be aware that a statistical analysis of hold percentage variance will provide the casino executive with inaccurate and vague information when considered during a short period of time.
Q: Do casino executives use the database of player counts, hotel occupancy rates, in-house events, etc., to predict periods of likely increased table games business? How much revenue is lost by under-scheduling peak times? How much payroll is wasted by over-scheduling shoulder and off-time periods?
A: I combined these questions together as one since they are all asking for the same information: What data does the casino executive use for determining the number of table games that need to be open to properly service the customers and maximize table game revenue?
There are a number of tools the savvy casino operator can use to help project table game demand. These tools will better prepare him for preparing weekly table game and dealer/supervisor schedules.
First, let’s review the basic events the executive considers:
• Time of day (shift)
• Standard daily peak periods
• Day of the week
• Time of the year (season)
• Holidays (New Years, Thanksgiving, etc.)
It goes without saying that all executives are aware of the influences on business brought on by the clock on the wall and the calendar on the desk. Business levels vary based on the before mentioned events on a regular basis, and everyone schedules their staff and games according to these common events or times.
Following are several influences that the executive can use to help forecast table game demand more accurately. It’s important for the executive to determine each category’s effect based on data gathered on past experiences. It would also be wise to note any noticeable short- or overstaffing situations during these events or situations. This information will be extremely useful the next time this scheduling situation arises:
• Projected hotel occupancy (up or down from a certain point)
• Casino special events
• In-house special events (other than casino-related events)
• Community- or city-wide special events or conventions
• In-house meetings or conventions (involving good gamblers or non-gamblers)
• Three-day holiday weekends
• Local and state holidays
• Ethnic holidays (including holidays certain employees will need to be scheduled off work)
Another factor to consider is periods when the hotel reservations include a high number of table game players. These reservations are usually submitted by casino marketing and are a good indicator as to the level of table game play that can be expected over a given period of time. This factor could also involve the need for raising table minimums on certain game types.
One more factor to consider when scheduling is periods when your employees may be sidelined with family illnesses, especially during flu season. It might be beneficial to schedule more staff than necessary to absorb the last-minute call-ins. Remember, it’s much easier to find people who want to go home during overstaffed periods than it is to get people to come in to work at the last minute when you’re understaffed.
Remember, failing to plan is planning to fail. It’s important that every casino executive use a data-based strategy to help forecast the number of required gaming tables and schedule the optimal number of pit staff. Intelligent forecasting and scheduling will increase an operation’s profit potential and increase profit margins by reducing overstaffing waste.
Bill Zender is a former Nevada Gaming Control agent, casino operator, professional card counter and present gaming consultant. He has been involved in various areas of gaming and hospitality since 1976. He can be reached at wzender[at]lastresortconsulting.com.
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