Casino Talks

Posted by: DrHoCasinoManager at February 8, 2002, 8:43 pm

Topic: more Crazy Vegas..... Forum: Winner Online

To contribute a iew from the House perspective (I am a casino manager) ---

The crux of the bonus hunter and casino anti-hunter policies really boils down to a marketing issue. Right now, players are offered the same games at almost every casino. Moreover, even though the industry reports say that there are 1400 online casinos, most of them are using software from one of 4 major software providers or 6 or so "second tier providers." If you line up screen shots of a game like blackjack produced by these 10 licensors against each other (which we do when speak at conferences and with investment analysts), they look pretty much the same, since the licensors don't do much else but change the "skin" of the games (e.g. the color of the felt) and the websites. Bottom line -- the playing experience is the same at most honest casinos.

Basic economics -- a commodity product with lots of competition means that as Q (quantity) goes up, P (price) goes down. In our business, that means the cost of acquiring customers goes up every year, because if you can't offer something "special," you have to use money (i.e. bonuses) to attract people.

As a casino operator, you end up in a icious cycle where every year you pay more and more to "buy" customers that are fickle and move on to the next casino as soon as a better bonus is offered. To put this in perspective, two years ago, casinos used to be able to acquire customers for <$50 each. Now, at industry conventions, I hear stories about some casinos acquiring customers for $250-$500+. Some of this cost goes to media buys (like banner ads) that are ineffective, but much of it goes to the bonus programs (too low a playthrough requirement means negative ROI on a campaign).

From the House point of iew, the terms and conditions are the only way to "weed out" the players who are playing only for the free money. When we used to set lower playthough requirements, we saw a ton of new players who came, got their free money, left, and never came back. We found that by setting the playthrough requirement higher, we got a much smaller number of new players, but they wanted to play for "real" (and inevitably exceeded the playthrough requirement) and then when they came back, we could give those good customers special bonuses that didn't have the same harsh playthroughs. Think of it like the real Vegas -- without showing you're a player, you don't get comped.

In our opinion, this concept of solely using bonuses to attract first time players will ultimately result in a rationalization of the industry, and a shakeout amongst the smaller players who have no differentiating reason to exist. The trick is for casinos to offer that differentiating marketing feature which attracts players for reasons other than money. That special feature may be a brand name which connotes trust or honesty (e.g. our namesake has operated land casinos for 35 years in Asia, so people in that part of the world want to play with him because they know that if he doesn't pay, or if he gets caught cheating on his online casino, he has much more to lose in his land casino business) or a special game that no one else has (e.g. the Ladbrokes "balls" game), or a special feature (like our live games) that no one else offers (although it's inevitable that someone will ultimately copy that feature). In fact, in our first live online casino incarnation -- which really was lacking in a number of areas, including a ridiculously massive 70 MB download (hence the launch of www.drho888.com which is Flash based, no download) -- we actually didn't even offer bonuses, and we still did fantastic numbers.

We don't blame players for going after the free money. If this is what competition has wrought, then consumers absolutely have the right to take advantage of it. But as long as a casino clearly posts the T&Cs of the bonus -- and doesn't change them in midstream, or engage in other "move the cheese: behavior -- we're not sure that the people who complain on this board about harsh playthroughs are gamblers in the traditional definition, or merely people who are trying to get the free money. We seek the former and seek to avoid the latter.

This message does not seek to knock anyone on this board who is a bonus hunter, or uses the bonus to reduce the house edge. It's all fair game as I said before. But try to understand that from the operator perspective, we are motivated by the good old fashioned profit motive. We make decisions that are in the best interest of that goal, and that sometimes includes setting conditions that are not well liked by some people. As long as those conditions are clearly disclosed up-front, and not changed mid-game, we don't see what all the uproar is about.

Casino Manager
www.DrHo888.com www.DrHoLITE.com www.drho.com

[This message has been edited by DrHoCasinoManager (edited 02-08-2002).]

[This message has been edited by DrHoCasinoManager (edited 02-08-2002).]

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