Session Title

Session 1-3-E: Gambling and Risk Taking

Presentation Type

Paper Presentation

Location

Park MGM, Las Vegas, NV

Start Date

23-5-2023 1:45 PM

End Date

23-5-2023 3:15 PM

Disciplines

Economics

Abstract

Know when to hold’em

Unpacking the determinants of table player win / loss and the elasticity of table house advantage

Overview

There is significant disagreement about the role of house advantage (HA) in player value. For instance, the operations team often seek to introduce games with high HA, under the assumption that marginal improvements in HA translates into higher house win. By contrast, many casino marketing professionals argue that higher HA only reduces playtime and that a player’s budget is generally fixed. Leveraging over 300m individual player decisions from a major online Asian operator, we explore the role of HA in players win / loss. More specifically, we leverage high HA propositional side-bets in order to estimate the point elasticity on a player’s win / loss. In addition, we estimate the ‘change-point’ where the mechanical reduction in hands played outweighs the benefit of higher HA. We found that a player’s HA elasticity varies notably across three dynamics:

- Different cultural background generally have differing elasticities and corresponding ‘change-points’.

- Player’s elasticities and change points are situation specific and vary according to accumulated daily wins and losses.

- Much like how financial derivatives help traders express a view on an underlying asset; propositional side-bets are often ‘strategic’ for the player.

- Elasticities further vary according to traditional segmentation like bankroll value, wallet-or-time constrained, incliner or decliners

Implications

This analysis will help resolve the controversy around the role of higher edge games. Marketing professionals, should adjust discount programs and rebate programs based on prop bet preferences. Marketers should further take-care when designing promotions to encourage propositional bet utilization. Lastly, operators should consider target market preferences when optimizing the floor game mix or introducing new games.

Keywords

Casino

Author Bios

Author

Clayton Peister

Managing Director – differential labs

720-281-7958

clayton@diffgaming.com

About

As the Managing Director of Differential Labs, Clayton uses analytics and artificial intelligence to solve many of the casino industry’s most difficult problems including marketing automation, fraud detection and regulator assurance. Differential Labs works with many of the largest gaming companies globally.

Clayton has held senior strategic roles at casino companies in Las Vegas, Macau and Australia with Wynn, Las Vegas Sands, Melco Entertainment and Crown Resorts. Clayton is a recognized leader in casino analytics with numerous published articles in industry and academic journals; and is a frequent speaker on casino analytics and artificial intelligence.

Clayton holds a degree in Hotel Administration from University of Nevada, Las Vegas.

Funding Sources

None

Competing Interests

None

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May 23rd, 1:45 PM May 23rd, 3:15 PM

Know when to hold’em Unpacking the determinants of table player win / loss and the elasticity of table house advantage

Park MGM, Las Vegas, NV

Know when to hold’em

Unpacking the determinants of table player win / loss and the elasticity of table house advantage

Overview

There is significant disagreement about the role of house advantage (HA) in player value. For instance, the operations team often seek to introduce games with high HA, under the assumption that marginal improvements in HA translates into higher house win. By contrast, many casino marketing professionals argue that higher HA only reduces playtime and that a player’s budget is generally fixed. Leveraging over 300m individual player decisions from a major online Asian operator, we explore the role of HA in players win / loss. More specifically, we leverage high HA propositional side-bets in order to estimate the point elasticity on a player’s win / loss. In addition, we estimate the ‘change-point’ where the mechanical reduction in hands played outweighs the benefit of higher HA. We found that a player’s HA elasticity varies notably across three dynamics:

- Different cultural background generally have differing elasticities and corresponding ‘change-points’.

- Player’s elasticities and change points are situation specific and vary according to accumulated daily wins and losses.

- Much like how financial derivatives help traders express a view on an underlying asset; propositional side-bets are often ‘strategic’ for the player.

- Elasticities further vary according to traditional segmentation like bankroll value, wallet-or-time constrained, incliner or decliners

Implications

This analysis will help resolve the controversy around the role of higher edge games. Marketing professionals, should adjust discount programs and rebate programs based on prop bet preferences. Marketers should further take-care when designing promotions to encourage propositional bet utilization. Lastly, operators should consider target market preferences when optimizing the floor game mix or introducing new games.