There are multiple use cases for low-revenue-earning casino games. They act as an entry point for new players who might be uncomfortable with higher-risk games but want to participate in the experience. They drive traffic, which is essential to maintaining a high-energy vibe. They provide opportunities to upsell winners into higher-stakes games. The problem is that when you manage a casino floor to optimise its square footage for revenue, math excludes them from the party.
Changes to the modern casino floor have been incremental but steady for decades. Long-time Las Vegas visitors may remember the massive and relatively elegant central keno pit at the original MGM Grand before the infamous fire on 21 November 1980.
Players sat in a huge orchestra-style tiered ring of upholstered seating, facing a multi-tiered bank of up to a dozen keno writers and their supervisors. The keno players marked their favourite numbers with a black keno crayon and then took the cards, cash and chips to the keno writers. The keno writers made the player’s marks official by covering them with perfect, graceful swooshes using brushes hand-dipped in glass bottles filled with permanent india ink and returned the ticket to them to wait for the next drawing.
If you weren’t in the live keno pit, you could still play Keno while you were in bars or restaurants, as keno runners would circulate through those locations, take your bets and tickets, and run them up to the keno pit, officiate them and bring them back to you before the next drawing
MGM Grand’s live keno operation is an extreme example of a labour-intensive game. Still, it had a very high house edge – between 25% and 40%, depending on the types of bets, and it could scale across the pit and other casino amenities, as long as you had the bodies to do it.
When the MGM Grand reopened on 31 July 1981, only eight months after the fire, that massive keno pit was gone, and you could comfortably house the property’s keno operations in a space the size of the average Las Vegas living room.
These labour-constrained games, with their player-friendly rules, have always been a problem for casinos.
In Las Vegas, the single-deck 3:2 blackjack game and its slim house edge were tremendously popular with players for obvious reasons. If you paid that blackjack dealer twelve dollars an hour in base pay with a 35% payroll burden, that’s $16.20 per hour in labour. During off hours, with a minimum bet of $5.00, with all six positions filled, that table earns around $11.25 per hour. With just two players at the table, it loses $12.45 per hour solely against payroll, not considering other distributed operating and opportunity costs.
Casino floor yield management has never stopped. Most recently, on Sunday 28 April 2024, the El Cortez Hotel and Casino converted the last live 3:2 single-deck blackjack game (0.15%-0.5% house edge) in Las Vegas into double-deck blackjack(0.4%-0.6% house edge with less frequent reshuffling).
Now, let’s introduce new dealer technology to this scenario. Live dealer systems can scale a single dealer across a limitless number of players within a jurisdiction. That same low-margin, low-cash-handle game that loses money with six players now breaks even at eight players and is pure incremental revenue as the number of players increases.
On 29 August 2024, SCCG Research will publish its latest brief on how businesses use technology today to scale humans profitably in win-win scenarios for the operator and the customer.
