Tuesday, August 09, 2022

Delivering high yields

Managing and optimizing the yield on the casino floor is essentially the science of maximizing revenue from players by offering them the right product at the right time, whilst keeping operating costs to a minimum.

This conundrum is more or less ‘solved’ with electronic gaming machines (EGMs) as there is just one player at a time with his or her transactions and play constantly being logged. The gathered data then helps with pricing, game popularity and other insights in order to maximize yield per machine. Yet optimizing yield for table games is much more of a complex problem, particularly when you have the costs associated with employing a dealer and multiple players placing various wagers, including side bets, and varying their stakes. Casinos will often have a lack of accurate and timely data on dealer speed, the time it takes to play each game, the gap between games, number of active players and types of bets being placed.  

Despite these challenges, the aim shouldn’t be to maximize yield from players, but instead to segregate demand based on willingness to play table games at a price so that the casino can make appropriate trade-offs when needed, says Varun Nayak, SVP of gaming strategy at Tangam Gaming. “For instance, when there is a capacity or labor constraint for a given level of demand, yielding table limits will allow casinos to prioritize the availability of seats to the most valuable segments, which not only enhances the guest experience for the most profitable segments, but also improves the casino’s bottom line in the process.”

Nayak uses booking a hotel room as an analogy. “We intuitively understand that there is higher demand on the weekend, so we expect to pay more for the same room on weekends versus weekdays. In the same way, when we are running short of tables or dealers because of higher demand in our casino, players should expect to pay more to buy a seat at the table – literally as well as figuratively.” Nayak highlights how data volumes today are exploding, with more data created in the past two years than the entire history of the human race. By 2020, about 1.7MB of new information will be created every second for every human being on the planet, he says. The natural response of most organizations has been to generate more reports. “In our experience,” he says, “what most operators crave is not reports but rather the knowledge of what the data means for their business and, more importantly, what they should do differently now.”

The traditional systems for gathering data on the casino floor can be broadly categorized into a handful of different options. Automated data gathering is where RFID chips replace regular chips and tables are fitted with RFID readers. While this is an accurate solution that also assists with security, it isn’t suitable for all types of table games. Surveillance cameras installed at the table are also used for automated data collection but, like RFID systems, can be a somewhat expensive solution to deploy. The cheapest option is traditional manual data gathering whereby pit supervisors periodically (usually every hour) input data for each table. Yet this is “non-real time, error-prone and not smart,” warns Subhash Challa, CEO of SenSen Networks.

Instead, SenSen has developed algorithms with deep-learning AI technology to use low-cost cameras inside Android smartphones and tablets to deliver real-time data on play on the casino floor. “Our deep learning technology learns and understands layouts and betting activity as if there is a human standing there and taking notes continuously,” Challa explains. “Since Android phones and tables are so cheap, yet of very high quality, the cost to get this data is minimal compared to other systems. And since the data is collected for every table and every game for every player and dealer, we can support data-driven approaches to manage the floor and optimise yield as opposed to model-driven approaches to yield management.”  

In Macau, it is particularly important to maximize the yield from each gaming table as Macau controls the number of tables that a concessionaire can have on the casino floor, says Alidad Tash, SVP of gaming and strategy at 2NT8 Ltd. “The most profitable players are premium mass players who – at around 40 percent profit margin – are four times more profitable than junket players. This disparity is because of the additional 42% junket commission, which is on top of the 39% in gaming taxes applied to all gaming segments. So, improved yield leads to a much healthier bottom line since it brings more of the profitable mass players.”

Whilst employed by City of Dreams in Macau, Tash increased the mass table games hold percentage from an industry average of 21 percent to an industry-leading 36 percent. “Increasing the hold involves improving a combination of three factors: operational efficiencies, improved customer service, and better casino marketing, which respectively increase hands per hour, total time played, and average bet. I was fortunate to be part of the team that devised strategies that helped maximize all three factors, which led to the very high hold percentage – 36 percent over my last 13 quartets – and which correlates with the premium mass success enjoyed by City of Dreams through 2016.” In fact, Tash describes Macau as the “ultimate table games laboratory” since it isn’t a monopoly and there are hundreds of tables in the larger casinos. “This makes it ideal for technologies that improve and track gaming efficiencies to thrive,” he concludes.



Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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