Let’s take a look at yield management
Are you managing your table games to produce the best possible revenue results? As a break-in dealer in 1995, I recall the supervisors on my shift believing the best way to manage their table games was to kick the dealers in the ankles to keep the game pace where they felt it needed to be to maximize revenue. Besides the obvious issues with corporal punishment on the gaming floor, the abuse did not appear to produce an increase in either drop or win.
These supervisors had previously opened several properties yet they clearly did not understand yield management. Sure, game pace is essential, but it is only one in a series of factors that must be managed to obtain optimum results. In this piece, I’ll cover several variables that require managing.
Getting more butts in seats is the goal but how do we go about getting and keeping players on tables as long as possible? Have you considered utilizing yield management as a part of your procedure? Yield Management is the process of frequently adjusting the price of a product in response to various market factors, as demand or competition fluctuates.
Yield management variables at a casino:
- Managing table minimums is necessary when it comes to maximizing your revenue. Minimum limits should be raised when your pit has high occupancy. As patron volume rises, a scarcity of betting opportunity is created. Raising the limits will increase opportunity by utilizing a pricing theory called the scarcity principle. This suggests that the pricing for a scarce good should rise until an equilibrium is reached between supply and demand. When the minimum on a table is increased from $10.00 to $20.00, or a full unit, the players advantage is decreased by 50%. If the house advantage on a game of roulette is .0526, your average theoretical win for a $10.00 wager is 52.6 cents per spin. When we raise our limit to $20.00 the average theoretical win increases to $1.05. Conversely, we should lower our limits during period of low play to ensure we are allowing our value player the opportunity to wager.
- The number of decisions per hour is an important part of the equation. The more hands that are completed on the game, the more money the game will produce. Before you put the game on the floor, you will need to calculate the necessary hands per hour to achieve the hold you require from the game. Ensuring your dealers are maintaining the correct game pace will help keep your numbers on track.
- Maintaining your average bet is also important. While you can offer a lower minimum bet during the day time to maximize spend from your value players, you must raise your limits in the afternoon and evening to compensate for the lower daytime yield.
- Player engagement on the game is also a key factor. The time a player spends at the table is directly related to the dealers ability to provide decisions. If there is no one at the game, or the players only stay at the table for short periods of time, both the drop and win on the game will be affected. If the table is dead, or closed, the game cannot make money.
- Take a look at your staffing and ensure that you are adequately utilizing your resources appropriately. What I mean by this is to study historical data from the previous year(s) or season’s to get an idea of the traffic flow and head counts. After gaining an understanding of your needs, schedule your staff so that you can open and close games based on predicted business volume. Remember that scheduling can be a slippery slope if you allow outside variables to play a factor. Say a dealer needs to get an early out to catch the big game or the day off because they have seniority; while you might go go down as the best boss in the eyes of the EO kings but you will likely leave the pit short handed, ultimately leaving revenue that you could have in the dropbox still in the pockets of the players. If bingo starts at 7PM every Monday through Thursday and the busses start arriving at noon and they completely fill your three open tables, you need more dealers to cover those times. A good rule of thumb would be to count the players on like games and divide that by the number of games you have open. If the number is higher than three on a seven spot layout, open another game.
While some players like to play on a full game, most will move to a less populated game to comfortably continue their gaming experience. Comfortable players equal longer sessions, higher drop and increased win. Good luck!
