Rewards systems taking hold
By Cole Boehler
John Wanamaker, considered by many to be the king of the modern department store business and advertising, said, “I know that half of my advertising dollars are wasted … I just don't know which half.”
Unfortunately, many Montana gaming operators might offer the same lament, to the effect: "I know half of my promotional dollars are wasted ... I just don't know which half."
Most casinos – the 15-20 machine locations – invest substantially in marketing and promotions designed to attract customers and keep them, just as do all other businesses.
Since the price, or cost, of the machine gambling product in Montana is fixed in law (a gaming credit is worth 25¢, a wager is limited to $2 and a win is limited to $800) those aspects cannot be manipulated for any purpose, let alone for promotion.
Thus, gaming businesses can't offer discounted prices or enhanced prizes, so are limited to offering customers rewards, though never based on a win, which is also prohibited by law. Coupons for free or matched play, free snacks and beverages, drawings for merchandise or cash prizes are all typical of the promotional rewards gaming businesses offer customers, and are typical of the promotional concepts employed by any customer-driven business.
Rewards for the best
Most licensed gaming businesses reward their best customers – those who play frequently with some duration – using one-on-one interaction between customers and staff. They might manually conduct drawings for regular customers who may – or may not – be required to be present to win.
Manual methods are comparatively primitive, but simple, inexpensive and proven worthwhile. The trouble is, they can be inefficient in that promotional expenses may be rewarded too randomly with less valuable customers being rewarded the same as – maybe even better than – the most valuable.
These systems are also subject to abuse by dishonest staff who may conspire to award promotional prizes to their personal friends or, we have been told, even to themselves. The automated customer rewards systems are also subject to a degree of abuse, but red flags can be incorporated within system programming to stop it.
More casinos are opting to introduce a degree of automation – which implies efficiency and accuracy – in conducting promotions using any one of a number of computer driven player rewards systems that are available and currently in use in several hundred stores statewide.
The Pegasus, Freeno, iRewards and now PMS (Player Management System) are fairly familiar player rewards systems found in locations throughout the state. Fleetwood Gaming has said they have a system ready but has not decided how, or even if, to market it. The Town Pump locations have proprietary player rewards systems. All the systems operate on similar principles but also have important differences.
In essence, the idea is to direct more promotional rewards to the best customers and reduce the rewards given to the "bargain hunter" players – those who only visit to obtain the freebies and goodies, the high-cost/low-returns customers.
Proponents of the systems say they are able to get more bang per buck from promotional investments. They also say they are able to keep promotional costs under better control.
There are some who believe the systems simply ratchet up the promotional competition and will ultimately force more owners to spend more money trying to keep up with the competition's promotional spending.
Either way you see it, the systems have been around Montana for at least 10 years and are here to stay. Indeed, their adoption seems to be coming more prevalent and their sophistication is quite startling as the Montana Tavern Times discovered during April when we visited with the makers and marketers of four such systems.
Common components
These systems rely on common off-the-shelf computer hardware and printer components, as well as operating systems. The differences lie in the software development as well as in conceptual factors. User friendliness, learning curves, levels of product support and built-in promotional games and events are also important considerations for the retail tier.
Montana law prohibits wide-area "player tracking" networks such as those in use in the wide-open gaming jurisdictions like Nevada and Atlantic City where player data is gathered directly from the machines they play, is stored in central computers and is available from location to location when under the same ownership.
In those cases, a player registers at a casino and uses a magnetic card to swipe through a reader on the machines, which then logs the player onto the system and that particular machine, then records and analyzes his or her play activity. The "house" knows which machine was played by whom, which games on that machine were played, how frequently bets were placed and what amount was wagered and how it was bet ... and what amount was won.
Big play, big bonuses
In theory, the high rollers who bet often and big will receive bigger bonuses in the form of free or matched play, entry into higher stakes games, merchandise, comped rooms, meals and show tickets and so on. These automated "player tracking" systems also tie into the cashless gaming technologies – "ticket-in/ticket-out" – employed there.
In Montana, where all things gaming related are of smaller scale, so are the concepts and the technologies behind the player rewards systems. Devices such as card readers cannot be added to the machine to allow a player to log themselves onto and off of the system or machine.
Montana even prohibits sharing player rewards, usually tallied as points, from one location to the next.
The only actual play information that is gathered is when a player begins and when they stop (what the machine meters read at the time) and at which machine they played. Other peripheral information is often noted, though, such as a birthday, food or beverage preferences and so on.
So far, play-time data is entered into a rewards systems manually, but that may change as some companies are looking at advancing to the next stage of automated reporting and auditing for the State of Montana.
‘Tier I’ here, not used
Under the law that authorized the Automated Accounting and Reporting System (AARS) for Gambling Control (GCD), the most advanced data collection method would be to utilize "Tier I" reporting, which means machines on site would automatically send play data to an on-site computer which would then relay that information to the GCD database on a timely basis, most likely daily.
The law, for the first time, allowed peripheral communications devices to be hardwire into the machines themselves in order to fully automate the data collection process for reporting to the state's mainframe and database. That's Tier I reporting.
At present, no company is reporting using Tier I standards or methods. Most have said they have refrained from doing so due to high costs associated with the system interface boards (SIBs) that would translate machine data, which is manipulated using the nationally standardized SAS communications protocol, into something a typical computer can understand.
Then there is the cost of an on-site data collection device (a computer hard-drive) as well as the cabling and programming, not to mention installation expense, required to tie it all together.
Integration possibility
By devising on-site communications systems to gather and report machine play automatically, some companies envision that player rewards systems can also be integrated, reducing the labor required to acquire meter readings and manually log a player onto the rewards system.
The geographically far-flung nature of the gaming business in Montana also offers additional efficiencies for full automation as machines in Bainville and Darby – 600 miles apart – can report play data (coin-in and coin-out) to the machine's owner in real time as frequently and at any time desired without having to have an agent collect meter readings and calculate machine revenues and taxes owed.
Some player rewards systems can be purchased outright for a flat fee. Others are paid for with a monthly lease fee. Some providers may charge for support, others do not. Manufacturers of the systems say the entry cost and the volume of gaming in a licensed premise will determine if the systems make sense from an economic point of view.
The idea of rewarding the best customers the most generously has been around forever. High volume customers often expect – even demand – better deals than their low-volume counterparts.
The trick is knowing for sure which customers make you money and deserve your promotional rewards, and which do not.
We invite you to read the following profiles of the various automated player rewards systems and determine if any of them makes sense for your operation.