Impact of Casino Free Play on the Wagering Behavior of Light- and Medium-User Groups: The Importance of Winning at the Bottom of the Database

Document Type

Article

Publication Date

10-9-2020

Publication Title

Cornell Hospitality Quarterly

First page number:

1

Last page number:

11

Abstract

This study examined the extent to which free-play credits affected spend-per-trip levels in slots, with a focus on contributions from the loyalty program’s (LP) light- and medium-user tiers. These user groups represent the bulk of LP members, and also comprise the area of the database for which spending gains are most important and equivocal. Daily, tier-level performance data were collected from four different casinos, which were owned and operated by a common parent company. Analysis of player performance data failed to indicate group-level differences in the spend-per-trip results produced by free-play redeemers and non-redeemers, within each of two tiers. These findings were produced by both parametric and nonparametric measures. The free-play group (FP) recorded a mean daily T-win that was significantly greater than that generated by the no-free play group (NFP) on a maximum of 2 days (out of 365), across all four properties and both tiers. Given that the players in FP were staked with free credits, it would appear that these awards served as bankroll substitutes, rather than sources of incremental play. With respect to own-money wagering, the lack of significant increases in win on free-play trips may be most aligned with the prospect-theory-with-memory effect. While our work expanded the literature by examining decision-making under risk, beyond two stages, our results did not generally support the house-money effect. For management, our findings signaled the need for a program review, as these expensive annual campaigns comprised a substantial percentage of the casino marketing budget.

Keywords

Loyalty programs; Prospect-theory-with-memory effect; House-money effect; Free play; Casino marketing

Disciplines

Gaming and Casino Operations Management

Language

English

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