|The Bahamas Investor Magazine
June 23, 2009
June 23, 2009
The guy who invented gambling was smart enough, the saying goes, but whoever invented chips was a genius. The rationale is that, freed from the psychological constraint of playing for “real” money, gamblers will happily run through their entire bankroll.
This would seem like a casino owner’s dream scenario, but it’s more complex than it first appears. “I don’t want to break someone,” says Roderick Colebrook, director of casino marketing at the Atlantis Paradise Island resort. “If somebody comes here and blows through a $50,000 credit line, and then asks to extend it, I have to think carefully about how I’m going to manage that situation. Because I don’t want all the money he’s got now. I want a customer for life.”
Developing the market
A cold, hard truth of gambling is that the house has an edge in every game, and over time will always win. So in the face of economic uncertainty and the vagaries inherent in running any game of chance, locating a reliable, loyal playing demographic is the gaming industry’s Holy Grail.
Atlantis has three full-time “player development” representatives in New Jersey, two in Georgia, seven in Florida and one in Texas, whose role it is to liaise with potential customers and offer them incentives to visit the casino in The Bahamas. There are another 43 active freelance reps in the US, and nine internationally, doing the same work on a commission basis.
The offers made by the reps can be as inexpensive to the casino as an invitation to a blackjack tournament or they may include return flights on a private jet and accommodation in one of the palatial Royal suites. It all depends on the size of the player. A credit line of $50,000 dollars brings with it two or three nights in an “ordinary” suite at the Royal Towers. Anyone playing at this level is already officially a high roller.
The true big-money players, or “whales,” take at least a $500,000 credit line and expect a Presidential Suite, free meals, a fully stocked bar and a private butler.
“It’s not just the amount of credit,” says Colebrook. “You also consider whether your million dollar player plays like a million dollar player or is he only averaging a thousand dollars a bet?” To be taken seriously, and comped to the max, a player should be betting roughly one hundredth of his available credit every hand of blackjack or baccarat he plays.
“We have what we call a theoretical,” says Colebrook, “the amount we expect the player to lose based on the edge in the game, bet size, bet frequency, and how long he plays.”
The casino is willing to invest 35 per cent of the theoretical in getting a player to Atlantis, and keeping him happy while he is there—a task that falls to five full-time hosts, one of whom privately described his job as being like “a glorified babysitter for grownups.”
The hosts may be called on to play golf at the crack of dawn, escort wives and partners to the Mandara Spa or take the family of a Saudi prince on a private flight to Eleuthera for lunch.
Few guests of Atlantis have ever needed as much minding as the late Roger King, the TV executive credited with distributing Wheel of Fortune and launching the career of Oprah Winfrey. King would grab croupiers by the throat and turn over the dealer’s cards at blackjack, says one casino employee “and it was tolerated because we knew how much he would lose anyway.”
Sometimes a host’s work topples over into the surreal, as in the case of the guest who wanted to bring his pet chicken to the tables. To stop it wandering about, the bird was found a collar and tethered to a railing, until a representative of the Gaming Board spotted it and insisted it be removed. To keep everyone happy, the casino hired a limousine for the chicken to sit in until its owner was finished gambling.
Taking the gamble
Colebrook acknowledges the problems and risks associated with big-money gamblers—at time of writing, Atlantis is suing one Australian “whale” who left without settling a $1.4 million debt—but nevertheless estimates that 30 per cent of his casino’s profits come from high rollers.
However, not everyone is convinced that they are worth the trouble. “Every company has its own philosophy with respect to attracting and holding the high rollers,” says Gary Armentrout, president of Foxwoods Development Company, the commercial arm of Foxwoods Resort Casino in Connecticut.
Foxwoods, owned by the Mashantucket Pequot tribe and boasting the third largest casino by floor area in the world, has the contract to develop and manage the gaming at the Royal Oasis Resort on Grand Bahama, which has been closed since the hurricanes of 2004.
“You have to be large enough to withstand the high volatility,” says Armentrout, “because one customer can, in eight hours play, make or break a month of the casino’s profit or loss. We will not go after that ultra-high-end market [at Royal Oasis].”
However, he does want the casino to target customers who are “more upscale, more affluent, than in the past. We intend to go after much more of a midweek, convention and corporate retreat market. To that end we want to improve room quality, [and] convention space. We think the golf courses are an under-utilized asset, and we want to add a world-class spa facility.”
In line with this model, Royal Oasis is projected to open with a higher table-to-slot ratio—40 table games to about 350 slot machines—than in many casinos (for example, Foxwoods itself has more than 7,000 slots to 380 tables).
In today’s casino marketing, says one industry analyst, there is a fine line between appealing to the wealthy and appealing to those who dream of wealth. American casinos have historically made big profits from the latter clientele, while The Bahamas has tended to follow European venues in catering to the former.
Now, with so many dreams of wealth having gone sour, it appears that the whole gaming industry is trying to move upmarket. “If you look at the venues being built now in Las Vegas,” says Armentrout, “like Fountain Blue, or the Encore Tower at Wynn, [upmarket] seems to be the trend.”
Given the general air of fantasy that they strive to create, perhaps it should be no surprise that casinos are responding to straitened times by becoming ever more lavish. This is a business, after all, that relies on dreams.
How to talk casino
call bet – any bet made verbally
carpet joint – slang for a luxury casino
comps – complimentary gifts offered by the casino to induce customers to gamble
drop – the money lost to the casino
edge – the casino’s anticipated statistical advantage over the player
floorman – casino manager
front money – deposit made with the casino to establish a line of credit for a player
George – a big tipper
juice (or vigorish) – the commission taken on a bet (usually in sports betting)
pit – the area reserved for casino employees, around which the tables are arranged
pit boss – the supervisor of the pit
rack – the container used to carry chips
sawdust joint – non-luxury casino (see carpet joint)
tapping out – losing everything, so the player has to leave the table
theoretical – a gambler’s anticipated drop, calculated by multiplying the house edge at his favourite game times his average bet times his typical number of wagers per hour times the number of hours he can be expected to play
whale – a player willing to risk thousands of dollars on a single bet
Odds at a glance
The house edge varies from game to game. So a compulsive roulette player is a more valuable guest than one who wagers the same amount per hour at baccarat. These are the percentages of the total money bet that a casino expects to win for some of the most popular casino games:
baccarat (betting on the banker) 1.17
baccarat (betting on the player) 1.36
blackjack (single deck) .0.04
blackjack (six decks) .0.60
Caribbean stud poker 5.22
craps (betting with the roller) 1.41
craps (betting against the roller) 1.40
roulette (European style, single zero) 2.70
roulette (American style, double zero) 5.26
Big play, big players
On May 28, 1989 a Hawaiian called Stanley Fujitake walked into the California Hotel and Casino in downtown Vegas and earned himself the nickname of “Golden Arm.” Over the course of three hours and six minutes he never lost a roll, and netted $750,000 in the process. As his streak continued, the news spread and gamblers flocked from all over Vegas to share in his success. Afterwards, the casino manager had the craps table taken out into the back alley and set alight.
When Greek-born Archie Karas left Los Angeles for Las Vegas in 1992 he had $50 to his name. In three years of poker, dice and baccarat he turned it into $40 million, and then lost it all back again—$30 million of it in one disastrous three-week blitz. “I would have played even higher if they’d let me,” said Karas.
The Australian media tycoon Kerry Packer was a flamboyant “whale” who once tipped a cocktail waitress the value of her house. One time he was irritated by a Texan millionaire, bragging about his wealth, and asked the man just how much he was really worth. When the Texan told him “About 60 million bucks, buddy,” Packer pulled a coin from his pocket and replied: “I’ll toss ya for it.”
A proposition gambler is someone who invents his own bets, and finds someone to take him up on them. No one has ever done it better than Amarillo “Slim” Preston, a man who beat the Chinese world table tennis champion at his own game by playing with coke bottles instead of bats, and beat Minnesota Fats (immortalized in the movie The Hustler) at pool by playing with broomsticks.
He took Willie Nelson for $300,000 at dominoes, and Larry Flynt for $2 million at poker, a game he also played against Lyndon Johnson and Richard Nixon. Slim describes himself as the greatest gambler who ever lived, because: “I don’t go looking for a sucker. I look for a champion, and make a sucker out of him.”