"Short-sighted policies, like raising slot takeout, blamed for much of casino revenue losses" - Stratton
Las Vegas casinos have had a tough time lately, and all of it is not economic related. According to a three part study on gaming today, a good deal is self-inflicted, because of poor customer service, and squeezing customers out of more and more money, inhibiting their enjoyment.
"Casinos are far more interested in getting the money as quickly as possible, to satisfy Wall Street projections or make interest payments on overvalued loans," said Michael Meczka, president of Los Angeles-based MM/R/C Inc. and a 30-year member of the American Marketing Association.
Just like in racing, where we have seen signal fee squeeze from places like Tracknet, and takeout increases at places like Los Alamitos, casinos are treading on dangerous ground according to Meczka:
"How can we extract more revenue from our customers?" he believes is a wrong headed policy.
One of the major items was an increase in takeout on slots.
"Increas[ing] the hold percentage by 1 percent, decreases the playing time by 17.5 percent"
Although a short term bump can occur, in the long term this hurts customers.
The "success" of these policies, however, will eventually doom the casinos, Meczka said. "Ultimately, customers will have less satisfaction with the casino experience," he said, adding that customers will eventually reduce their frequency of visits, cut back on the amount spent and, eventually, stop coming to the casino altogether.
Interestingly, these losses have not hit the poker tables; but a couple casinos have tried to mess that up, by charging more. In time, it backfired. One casino tried to increase limits and it failed. They had to go back to old limits.
The author contends that gambling should follow poker, and make sure the squeeze does not happen any longer; customers can be brought back if so. It is all based on one simple premise - that customers have to win money, think they can win money, and if they do they will come back and play.
He recommends: 'The hold on slot machines should be reduced, so that players have "more time on the device." he said. "Implementing these strategies will positively reinforce the player’s experience, resulting in greater satisfaction, a higher likelihood of returning."
Help people win by offering them a chance to win, you will thrive. Do the opposite (i.e. raising takeout) and over time you will fail. Simple isn't it? So why does racing keep squeezing customers in the face of 35-40% handle losses the last decade?
Your guess is as good as ours.
(ht to John G at Paceadvantage.com)