Is your casino marketing department offering match play coupons to your table game customers? Best estimate, over 80 percent of casinos in North America that offer table games, give away match play coupons to their casino customers as “game starter” promotions. What percentage of those casinos make a bottom-line profit by offering match play? Again, best estimate, probably none of them are making a profit or getting close to breaking even from this promotion. Then why are marketing departments authorizing match play coupons’ use?
From my experience, most marketing departments do not accurately determine the cost of the promotion. They also use the “monkey see, monkey do” approach. “XYZ casino is using match play coupons to attract customers to their blackjack games, why don’t we do the same. It has to be working or they would not be using them in a table game promotion”.
Do not assume that the XYZ casino has done their due diligence and correctly, calculated the cost and results of the promotion. Always conduct your own analysis and put together a detailed proforma of cost and estimated revenue brought in by the promotion. If the marketing department does not already conduct a proforma, management should insist on it.
How Are Match Play Coupons Used?
Generally, match play are given away as table game incentives attached to other casino promotions. The most common promotional item to include a match play coupon is the casino “Fun Book.” The Fun Book is given out to prospective casino customers and includes a number of coupons for various items that are used as an incentive for the person to gamble, dine, and enjoy the amenities of the casino resort.
Some match play coupons are included in publications such as casino information newspapers and magazines. Match play coupons can also be mailed directly to the casino’s “players club” members or sometimes they are sent to unknown but potential customers in a flyer used to canvas certain neighborhoods.
The problem is that not all marketing departments operate under the premise that the coupons need to be targeted towards a specific table game or a specific customer market. In many cases the release of match play coupons is a result of the general manager directing marketing to come up with a strategy for increasing table game revenue. In answer to the general manager’s request, marketing sees the easiest solution to increase table game business is to open the match play coupon “spigot” and saturate the general market with these coupons. Typically, this is done without determining a targeted market of customers.
Another mistake marketing normally makes is to underestimate the costs associated with coupons. The cost usually attributed to coupon promotions is the cost marketing pays for printing and distribution, but not the actual cost of the coupon when it is used on the gaming table.
What Does Each Coupon Cost The Casino?
Match play coupons have been traditionally referred to as “two-fers” since they indicate a 2-to-1 bonus payment on the matching wager. Because these coupons double the payoff of a winning wager, a rough estimate of cost is approximately a little less than half of face value. This is a fair rule of thumb when wagered on bets that pay even money. But what happens when they are used in conjunction with multiple payoff bets?
Following is a short list of Match Play coupon actual calculated costs based on “face value” of the coupon:
Average Blackjack Player 48%
Basic Strategy Blackjack Player (Liberal Rules) 57%
Average Baccarat Customer 48%
Roulette Even Money Bets 42%
Roulette Single-Number 87%
Craps Pass/Come And Don’t 48%
Craps 30:1 Hop Bet 70%
By reviewing the face value cost of the previous list, one can see that any winning wager which is paid in multiples is much more costly than its “even money” counterpart. For example, the game of roulette is subject to a mathematical house advantage (H/A%) of 5.26 percent on both the even money and single number wager. However, the cost of a match play coupon played on the single number wager is double the expense than if it is played on an even money wager (87 percent versus 42 percent).
Why Are The Casinos Failing To Profit From Match Play Promotions?
What most casino marketing departments get wrong is the gambling habits of the match play customer. In most cases, the customer will buy-in and play their coupon, but after the coupon has been used, the customer is more likely to terminate play. The main purpose for approaching the table was to “wash” the coupon in hopes of winning back part of their restaurant bill or hotel room cost. Extended playing time, or at least enough time for the casino to recoup the cost of the coupon, usually does not occur.
How long would it take to win back the cost of the coupon? Following is a mathematic model that breaks down the cost of a $10 coupon and the amount of additional $10 casino value chip wagers that are necessary to “breakeven” with the coupon cost:
|Coupon/chip face value||
|T-win per decision||
|Decisions until breakeven||
Note that the cost of the $10 match play coupon when played by the average blackjack customer is $4.82. Also note that any additional $10 casino value wager will earn the casino approximately 13 cents per hand. In order to cover the $4.82 cost of the coupon, the blackjack customer will have to continue to play about 37 additional hands of blackjack. How likely is that to happen?
For example, if “Mr. and Mrs. Restaurant customers” decide to play a match play coupon they received when they paid for their meal, they will buy-in and play just long enough to use the coupons instead of staying around and play the required 74 hands (37 hands time 2 coupons used). That means that the next person that comes to the table with a coupon must play an additional 111 hands (at $10) in order for the casino to breakeven for the three coupons used. As one can see, as the day progresses, the casino gets further and further behind in the “breakeven” hand requirement, and when that occasional customer does stay and play, he or she will not make up for the previous cost. After looking at the mathematics of this process, how can any casino executive expect a Match Play coupon promotional program could make a profit?
For additional information on match play and free bet programs, please contact me email@example.com. Currently, I am presenting a Zoom virtual session on this subject that covers the subject in much more detail.