Native Americans & First Nations

Rethinking the Premium Players Lounge

Premium player lounges have become a fixture in many casinos in North America. These lounges provide higher worth players with a place to take a break from the gaming floor, catch up on text messages, and sit in a relaxed, non-gaming environment. They also offer hosts a place to connect with their customers. At some properties, the lounge may provide players with some form of food offering, yet rarely, if ever have they been considered part of a casino’s food & beverage strategy. In fact, in most player lounges food is treated as an afterthought, usually comprised of packaged snack foods or some items from the central kitchen that, after sitting out for a couple of hours, have lost their gastronomic appeal.

What is rarely recognized is that the premium players’ lounge, properly designed and maintained, can help the casino property provide its best customers with precisely the kinds of dining that they prefer for their everyday gaming experiences while reducing comp expense and the time gamblers spend off the gaming floor.

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The Road to Sports Betting

When the Supreme Court struck down the Professional and Amateur Sports Protection Act (PASPA) last May, casino operators across the United States were euphoric, envisioning crowds of enthusiastic bettors flocking to newly constructed sports betting lounges, holding exciting events during major games, and attracting a younger clientele to
their properties. Several states moved quickly to permit sports betting in some form. While casinos in some states were able to quickly build betting counters and initiate sports betting
activities, most others, particularly in Indian gaming, have come to realize that they must first navigate through a maze of obstacles before taking their first bet.

Sports betting is currently available in some form in eight states: Nevada, Delaware, New Jersey, Mississippi, Rhode Island, Pennsylvania, West Virginia, and New Mexico. Each of these states offers some form of sports wagering, but the products offered and where bets can be made vary by state.

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An Introduction to Sports Betting Operations

With the repeal of the Professional and Amateur Sports Protection Act (PASPA), Indian casinos, commercial casinos, state governments, lotteries, and racetracks are all examining the feasibility of offering sports betting in their jurisdictions and creating legislative paths to bring sports betting to fruition. Sports leagues are also taking an active role, lobbying state legislators and even trying to get Congress to pass legislation that would federally mandate that they receive a cut of total wagering handle.

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If PASPA is Repealed, Then What?

Much has been written about the Professional and Amateur Sports Protection Act (PASPA) and its possible repeal. To summarize, there are three possible outcomes. The first is that the Supreme Court of the United States (SCOTUS) rules PASPA is unconstitutional. In that case, it will be up to individual states to decide whether to allow sports betting and the various forms it might take. The second scenario is that SCOTUS lets PASPA stand in its current form. In this scenario it would be up to Congress to decide if it wants to repeal or amend PASPA. Given the current political climate in Washington D.C., passage of such a bill might take some time. The third scenario is that SCOTUS takes a completely different route, either issuing a partial repeal or
potentially invalidating the four state exemption that currently exists.

Should the Supreme Court rule in New Jersey’s favor, one can expect sports betting to be available in a number of jurisdictions in fairly short order. Five states, outside of the four that
already had legislation in place prior to the passage of PASPA in 1992, have already passed legislation authorizing sports betting, and approximately fifteen others are considering enabling legislation or studying the issue. The question now becomes, should PASPA be repealed, what are the challenges that America’s tribes face in creating sports betting products that are competitive with what various states with commercial casinos and lotteries will ultimately offer.

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Marketing Strategies That Get Results

The effects of the recession continue to linger. While some gaming operators have begun to enjoy a modest amount of gaming revenue growth, for most that growth has been tepid. To grow market share many operators have resorted to the same tactics that have been used for years in the gaming industry: drawing drum promotions, hot seat promotions, point multipliers and increases in the amounts of free play that players receive as part of their monthly mailers. While many casinos have employed new technologies such as kiosks and electronic drawing drums to better manage these promotions, they essentially use the same tactics that previous generations of casino marketers have done to get bodies in the door.

What the recession has taught casino operators is that tactical offers that are created without sound strategies are rarely effective. They may increase traffic, shift play from one time
period to another but they rarely have an impact on profitability. The following are some of the best marketing strategies of 2013 that astute gaming operators have implemented..

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How to Catch and Keep the Big Fish

Executives in the casino industry have long used euphemisms to describe various types of customers. One term often coined to describe a premium player is a whale. The term originated in Las Vegas and was used to describe gamblers who wagered very large amounts on each hand. As casinos proliferated throughout the United States the term began to be used more broadly to describe each casino’s best customers. All casinos have a few players that make an outsized contribution to the property’s gaming revenue. They may not be whales in the traditional sense, but they are still pretty big fish and every casino operator wishes they could find a few more. To this end, they build luxurious hotel suites, offer fine dining along with other amenities and employ hosts to service their most valued customers.

To better understand how some of the largest casino operators identify and capture big fish, a rather expensive research project was conducted. Two markets comprised of ten casinos were selected. These markets contained some of the nation’s most recognized casino brands. At each property a researcher joined the casino’s rewards program, requested two players’ club cards
and asked the rewards program representative for directions to the high limit slot area. The researcher then was required to find two $5 slot machines (reels) with medium to low volatility, and play them simultaneously at $10 a spin for two hours or until the researcher generated $10,000 in coin handle.

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Rethinking the Three-Tiered Rewards Program

The tiered rewards program has emerged as a valuable tool to acknowledge loyalty among the casino’s most valuable players and allows the casino operator to bestow certain privileges on them. Tiered rewards programs are based on the Pareto Principle, also known as the law of the vital few, which states that 80% of the effects come from 20% of the causes. Applied to business, it means that 80% of business volume comes from20%of customers. In reality, an examination of most casino databases shows that upwards of 85% of business comes from 15% of customers and it is for this reason that tiered rewards programs are created: to provide higher levels of service and amenities for the casino’s most important customers and to publicly acknowledge their loyalty.

When embarking upon a tiered rewards program, most casino operators initially employ a three-tier model consisting of a base tier, a middle tier and a top tier. There is no qualification
required for the base tier while the latter two premium tiers require substantial amounts of gaming activity in order to achieve premium tier status. The base tier normally contains
the bottom 90% of the total database. The middle tier contains the 90%-98% segment and the top tier contains the top 2% of the database.

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How to Increase Gaming Revenue in an Economic Downturn

The economic downturn continues to impact gaming revenues in markets throughout the United States. In the face of declining or stagnant revenues, casino operators continue to look for new ways to grow gaming revenue. Some have allocated resources to new media such as social networks, yet none have been able to monetize these new channels of communication. Others have simply turned up the volume of promotions, offering more drawings for cash, vehicles or simply giving away stuff to get people into the door. While those efforts often increase foot traffic, they don’t necessarily have a positive impact on profitability. So what new methods are there for a casino operator to grow revenue? The answer often lies within its own database.

Casinos have long recognized the value of their databases. With the advent of newer slot system technologies casinos have over the last decade introduced tiered reward programs to better acknowledge the value of higher value customers. Caesars Entertainment has long been at the forefront in utilizing a tiered reward program to acknowledge those customers and develop them into very loyal customers. Customers in those premium tiers, referred to as Platinum, Diamond and Seven Star levels, receive a suite of benefits so great that they often gamble exclusively within the Caesars brand family of casinos. They would rather aspire to the next higher tier than spend their gaming dollars at another casino.

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Putting Problem Gambling in Perspective

The success of gaming development on Indian lands has allowed many tribes to explore the feasibility of replacing their aging, temporary buildings with new, amenity rich facilities. Despite the recession, tribes are moving forward with plans for future development. These developments, often in more accessible locations closer to population centers, often spark debate among various constituencies in the local community.

Any public debate on the pros and cons of casino development inevitably brings up the topic of problem gambling and its economic and social costs on the host community. Often these debates take place without a reasonable understanding of what problem gambling is, how prevalent it is and how significant the problem is when compared to other pathologies. These debates are frequently led by those who are morally opposed to casino gambling and it is that moral opposition that often clouds reasonable discussion. It is essential to clarify what problem gambling is, explore its prevalence in society, and compare its social and economic costs to other forms of aberrant behavior caused by what many see as more benign industries.

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