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Are Low Rollers Overcomped? Or Not?

Discussion in 'Comps' started by Polemarch28, Aug 13, 2012.

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  1. Polemarch28

    Polemarch28 Tourist

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    I've read several threads in which the concept that "low rollers are overcomped" is made repeatedly.

    The argument is generally that smaller players tend to get fairly generous room offers relative to their play, and when combined with the other costs they generate (free drinks, overhead, opportunity costs of other patrons), low rollers are not particularly profitable for the casino.

    I've been thinking through that argument, and I noted a few objections that don't typically seem to come up:

    • Comp Value: "Comp Value" of a room is not the same as the Actual Value of a room. Depending on occupancy, volume of tourists, and comparable market rates of other properties, the value of a room is a variable that fluctuates constantly. If a hotel has hundreds of unoccupied rooms for the night, it could be argued that a room is worth very little - perhaps just the cost of overhead and housekeeping. If a property is near 100% occupied on a busy weekend or holiday/event, the value could be much higher than the rack rate. Comp Value is typically an inflated number - essentially a profit center for the casino - in the sense that it evaporates potential comps at a higher rate than the market would typically bear in cash.
    • Other Profit Centers: There is more value to a potential player than simply their gaming theo. Many properties feature several other profit centers, such as restaurants, shopping, and nightlife, that can in some cases exceed gaming revenue. Having a fairly small player on property still might be profitable, if those players are prone to spend their budgets elsewhere in the house. Consider the profit margins on a top dance club or restaurant. Even McDonalds turns a decent profit.
    • Atmosphere: Part of what draws higher players to a property is the degree of benefits they get over the common man. Some may not admit this, but others are open about the fact that they enjoy being treated like a VIP. However, VIPs don't exist in a vacuum - they need a backdrop to compare themselves to. My point is that constructing a business model solely around high rollers is flawed - because in order to be a successful property, the house needs to fill itself with large numbers of people. Even if those people are not generating significant gaming revenue, the appearance of volume and busy-ness is critical to the image of the resort.
    While I agree that some of the offers to low rollers are not justified in terms of comp value and theo, I just want to raise discussion about an alternate way of looking at comps, in which it makes perfect sense.

    It also should be noted - comps are not drawn from a fixed institutional budget that exists as a percentage of gaming revenue. When low rollers are "overcomped", this does not result in mid or high players being "undercomped". This is a divisive way of thinking, that pits players against other players. You are not competing for comps - at least not the same comps.

    The reality is that the business model of a property needs to reflect all revenue streams and costs, and make decisions designed to maintain or increase the value of their asset, either in terms of profits or long term value. I would agree with many - that some short sighted executives tend to sacrifice the long term value of the property in exchange for short term profits and bonuses. But I do not believe that "overcomping" low rollers contributes to that - nor do I believe that a decision to decrease comps for larger players is necessarily driven by shortsightedness either. There is no obvious way to ensure that all levels of player are comped "appropriately" - because comps only exist as an incentive to player choices, and it is impossible to accurately gauge the preferences and tendencies of every individual player well enough to comp them in the most efficient manner.

    Everyone has choices, and the market should ultimately respond to changes in preferences, and bear out the best solutions - or at least ones that work. The only real limits to an effectively functioning market, even in comps, are the high barriers to entry for a casino, and the high degree of industry consolidation. But there are still enough choices to force casinos to adapt to what works.
     
  2. wlt

    wlt Tourist

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    Great post, some real food for thought, I find I agree with much of what you said.
     
  3. Pinny Long

    Pinny Long High-Roller

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    I never really get involved in the overcomp/undercomp debate because it's always seemed pretty silly to me.

    The first poster of this thread actually makes a lot of sense, but I think ultimately people really overthink the whole topic.

    Ultimately, comping is a "marketing" expense. And these comping decisions are not made with the intent of losing money. Quite the opposite. I assure you that the decisions to mail out offers for rooms, buffet coupons, show tickets, etc. all have, ultimately, one goal in mind . . . profit. Maybe it's direct profit from the individual player or maybe it is indirect (i.e. filling the house to make the property more attractive to other players.)

    Are players being overcomped? As long as the casino is turning a profit and meeting their goals . . . no, they are not overcomped.

    What is so special about Casinos? When I get a coupon emailed to me from Johnny Rockets I don't fret over whether or not I've ever purchased enough burgers (I assure you I have not) to warrant this gift. I just use the coupon. And if go to Cheesecake Factory (it's near my house and I've been there hundreds of times) and find out someone was given a coupon for a free meal, I'm really not going to care because I still know what I'm in for and what it costs me.

    I think it's pretty silly if high-rollers are complaining about low-rollers getting comped. Is such a person really that much of a "high-roller" if s/he's pissed off that they didn't get the big penthouse suite this time and I just got a buffet and $100 free play for only dropping $300 at the property? Or if these comps are really that significant to them, perhaps they should drop down to a lower tier and have fun slumming it up with the rest of us bottom feeders.

    I don't play for comps and I don't really question them. When I get 'em, I'm stoked. I'm going to gamble and spend money anyway, so getting a little "customer appreciation" here and there is pretty nice . . . and if I feel like I could be getting treated better at a different property, I'll go there. But never have I sat and blamed the system on other players (big or small) getting overcomped. That just seems kind of silly to me.
     
  4. leo21

    leo21 VIP Whale

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    I agree with most of what you are saying, especially on hotel comps. The way rooms are doled out on TR bears this out. For a low roller, you're best chance at a free room is when they anticipate being dead.

    I keep hearing about how things used to be. It seems to be based on the perspective of how comps were done when they only comped tables and slots were just for the little ladies to play while their men where at the tables. It's also based on the perspective of a time before the casinos realized that even though a person is a low roller, all those $200 losses add up. Harrah's past successes were based on flipping the switch on that thinking. Mlife appears to be a failed attempt to capitalize on that thinking.

    If I am gauging things correctly, it appears that it's most mid rollers complaining about low roller comps. But the behavior of the casinos as of late suggest that they are the customers being overcomped. If that's not the case, then the casinos are gambling that these customers will continue to come back even if their comps are reduced.

    I just want to ask the question again that I can't seem to get an answer to: If a casino rebates a low roller an amount based on their actual play, provides other comps based on their actual play and gives discounts as a courtesy or free rooms to gin up business when they are dead, how is this taking away from other player? They only way it would is if you are operating from the perspective that some players deserve to get nothing and that bothers me. We are talking about multi million dollar corporations and we should be sticking together as gamblers instead of letting them play us off each other.
     
  5. Pinny Long

    Pinny Long High-Roller

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    I used to work in a diner and we would participate in those coupon books programs and have 2 for 1 coupons in them. There were always restrictions on the hours of when they could be used. One time the owner told me that the only purpose of the coupons (at least according to him) was to get more bodies in the restaurant because no one typically feels like trying out a restaurant that no one is eating in.
     
  6. keno60

    keno60 VIP Whale

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    Very insightful!!!:ssst:
     
  7. Auggie

    Auggie Dovahkiin

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    I think two important factors in all this are also:

    1) To the hotel it is better to have somebody in a room, than nobody in a room.
    Using Total Rewards and Caesars Entertainment as an example: I believe they have around 43,000+ rooms in Las Vegas. If they want to maintain a 95% occupancy rate thats 41,000 rooms they need to fill each night, which works out to more than 14,000,000 per year.

    2) Low rollers...
    I almost want to say "...see gambling as entertainment" or "...are more accepting of losing their money" but neither of those really and could apply to mid or high rollers too.
    But what you can say is that low rollers generally will have a higher risk of ruin, much higher.
    Like if a low roller goes to Las Vegas with $150 a day to gamble what will likely happen is they will play and play and play until they lose all their money and then call it a night. If they happen to win they will likely just cycle that money back in to casino through more play or carry the winnings over and just add them to the money they have allocated for the next day.
    The end result being: that $150 a day, its extremely likely the casino is going to get that whole $150 per day out of the player... and from the casino point of view its great to have something that reliable.

    In the end, when you actually combine the two points: if you have a low roller that you know is good for $150 a day and your room is worth $50 a day... its pretty simple math to figure out that its a $100 per day profit to stick them in one of your rooms.

    Now in the end obviously the casinos would love to fill their rooms with nothing but high rollers and whales but thats not a realistically attainable goal.

    And when you try to factor in things like overhead and such the problem there is: a multi millionaire coming to Las Vegas isn't going to be happy in something like a "Fab" room at The Flamingo and the level of comps that they get versus what a low roller gets goes up based on what they are worth to the casino.

    IE: the low roller gets a cheap room for free for 3 nights and thats probably it. The high roller gets a limo pickup at the airport, a fancy pants room at the hotel, VIP check in, VIP treatment and they can pretty much eat and drink whatever they want and its all on the house.

    Now if everybody was getting that, the low rollers are picked up by limo at the airport, are treated like VIPs everywhere they go and can eat at restaurants that charge $1000 a meal then yes thats really eating in to the casino's overhead and it doesn't make sense at all.

    But when you get right back down to the basics: if you have a hotel with 2500 rooms and you can fill 1000 of them each night with people that you know you are going to make $150-200 a day off of, thats really not a bad deal in the end for the cost of a $50-60 room.
     
  8. eloisegirl

    eloisegirl Low-Roller

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    I am going to MB for my second Vegas trip. I would be considered a low roller and my travel friend possibly a lower-midlevel roller. We are really hoping to get room offers in the future and some comped meals. That would be enough for us. We are also thinking of a longterm relationship with the hotel. If they send us three free nights and some FP a couple of times a year, that's pretty great, in my book. The longview is, keep lowrollers happy, get your bodies in the rooms and asses in the casino seats, and you will have some loyal clients. Everyone, high or low, wants to feel valued. It is human nature to want a little something extra, and a wise business owner makes sure their clients get that feeling.

    Boy, I sure do hope casino execs read these threads! :)
     
  9. blackjacknut

    blackjacknut VIP Whale

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    I have to agree with much of what was said by the OP. I'm not a low roller but given the casino business model all streams of revenue need to be considered. I would argue that the low roller to mid roller patrons are those that keep a steady stream of income flowing. Higher rollers are fewer and far between. Very insightful post.....:thumbsup::thumbsup:
     
  10. Bubbavegas

    Bubbavegas VIP Whale

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    Same here, well done!
     
    Cosmo Christmas
  11. earth-3

    earth-3 High-Roller

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    Since marketing has no benefit in reducing mid and low roller comps, why are they? Strickly for the shareholder/investor dividends? Of course a stronger financial would go over better with the lenders as well.
     
  12. wishman35

    wishman35 VIP Whale

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    It seems like most of the low rolling people getting comped are happy about a standard room at Ballys/IP/Flamingo. I assume they are not taking much loss dishing out a few weekday nights (that they will likely be low on occupancy anyway) to take a chance on people coming in a bleeding a few hundred more into their casino.

    Now on the other hand if you have a Slickdealer who gets the comped room off of strategic play, lost little, goes back, doesn't gamble and uses coupon after coupon.. but honestly how many of those are there.

    Most will come back, feed their hundy's into the machines, eat the overpriced food, buy the overpriced drinks at the pool, and go home on the overpriced flight.
     
  13. C0usineddie

    C0usineddie VIP Whale

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    I think everyone is overcomped.
     
  14. RWDPeanut

    RWDPeanut Low-Roller

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    If low-mid rollers are not comped/"over" comped then Vegas becomes much less appealing as a vacation destination for that group and that ultimatley hurts everyone.

    If low-mid rollers had to pay full price for Food, Beverages, Rooms, etc. then the cost starts to become comparable to taking a 7-day carribean cruise, all inclusive Mexican resort, or other great vacation destinations.

    I agree this debate is petty and I am tired of constanty reading some variation of this thread.
     
  15. JillyFromPhilly

    JillyFromPhilly Tourist

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    ^First off, I agree with this 100%

    Now, are "low rollers" overcomped? It would help if we could define "low rollers", since what makes a "low roller" or a "high roller" is a very subjective standard of criteria. But anyway...

    As one of the proponents of the idea that many [not all] low rollers are indeed overcomped, I'll step in and offer a counter-argument to the OP's thesis since no one else seems to have stepped up & done it yet.

    Earlier, someone brought up the concept of comps being like coupons, and said that all businesses give out coupons, and they're not dependent on how much a customer spends. This is really not true. Many coupons are of the "on a purchase of $20 or more" or "Buy two, get the third free" variety. So not only is a minimum purchase involved, but there is also often a sliding scale - coupons offer bigger discounts on bigger purchases [get $10 off of a $100 purchase, but get $25 off of a $200 purchase, etc.].

    And all coupons are essentially discounts - which is also what comps are. And in pretty much every other business I can think of - including my own - except for the casino industry, I can't think of many others that offer the same % discount on purchases for the $100 customer as the $1million customer gets. Even airline miles, credit card cash back, etc. all usually is on a sliding scale so that the bigger customer gets a higher % back than the smaller customer does. True, if you get 100 people coming through the door, you can make 1/10 as much in profit off of each of them than you could if you only got 10 people through the door. However, when a business has a customer who in one purchase is willing to spend a very large sum, they will often cut the profit margain much lower than they would for any other "normal" customer who comes through the door. Why? Because if you can lock in that one $1million customer at a 2% profit margin, it takes away the insecurity of having to worry about whether or not one thousand $1,000 customers will eventually walk through the door at a 3% profit margin. It's not that the business doesn't value the $1,000 customers - it's just that securing the business of the $1million customer provides a motivating factor for the business owner to accept a smaller profit margin on that $1million customer's business.

    However, in the world of casino comps - at least how it is presently structured - the penny slot player is getting comped back 30-40% of theoretical loss, and so is the $100,000/hand baccarat player. So there's a strong argument to be made that the penny slot player [or $5 BJ player - I don't want to make this a table vs. slot argument, because IMO it's not] should really be getting comped at a lower % of theo than a whale is getting comped at.

    Now, as for the idea that things in Vegas were better back in the "old days" when comps were reserved mainly for higher-end players and lower-end players got little or nothing in comps - I would argue that the changeover from this system to the present system - where every player big or small gets the same % back in comps via a players club - is actually the reason behind why back in the "old days" Vegas provided both better service and better value.

    Back in the "old days", the average person could come to Vegas and get personalized customer service and a $1.99 steak with a shrimp cocktail, etc. - those of you not old enough to remember them have heard about them - and it was true. But why was it true? Because the casinos were cash cows - the huge profit margin on gambling subsidized the cost of everything else - rooms, shows, meals - that Vegas had to offer. And like any other business, steep discounts were only given to the biggest customers - i.e., the "high rollers".

    However, today the big discount - 30-40% by most estimates - is given to every customer who walks through the door. Likewise, a lot fewer of those customers who do walk through the door even gamble - and now, customers are clamoring for comps on non-casino spend, too [but that's another complication I'll leave out for now].

    So the cash cow that subsidized those cheap rooms, shows & meals - the gambling - can no longer afford to bear the burden of running a strip mega resort. So the cheap meals went away. And for a time before the "great recession", even the cheap rooms went away [and if it hadn't been for the recession, the cheap rooms would still be gone].

    So, you want to complain about the fact that every restaurant is ridiculously expensive now? Well, that's because of the 30-40% in comps being given out to every Tom, Dick & Harry who walks into the casino & signs up for a player's club card at least as much, if not more, than it can be blamed on "celebrity chefs" or outsourced restaurants - [but again, a topic for another conversation]. The profit margin on those low-end players - which is what used to keep the Steaks & shrimp cocktails priced at $1.99 - is now getting soaked up by comps - and the casino needs to make that profit margin up somewhere, so they've just shifted it to the prices for everything else - and this actually gives the "low roller" an even rawer deal - because what they used to get back in "actual value" by being able to buy a $1.99 steak dinner is now costing them the same or more, but in "comp dollars" - which makes it harder for the average joe to realize just how much he's being fleeced.

    So really, the "low roller" needs to ask themself - what would they rather have? "Gold" or "Silver" tier status and a free room & one or two other perks, in exchange for comp points that get hoovered up by over-priced restaurants & shows - or would they rather show up, stay in a $499 value room at a $49 price and have the freedom to be able to buy themselves a $1.99 steak dinner anywhere in town, without having to "owe" anyone anything for it in terms of a minimum amount of play or property/chain allegiance? Because that is essentially the exchange the casinos have made - sure, everybody wants a comp? That's fine - but we're no longer going to offer you cheap food & top-shelf free drinks all day long like we used to. But hey, at least you're "gold" tier now & get a free gift basket & $100 in freeplay every time you show up - hopefully that will keep you from noticing how much the price of everything has gone up & how shitty the service has gotten.

    Which brings up the other aspect of why things were better in the "old days" before everyone got comped equally - customer service. On this level, I compare the "democratization" of comping via the players clubs to the "wal-mart-ization" of America. When you offer every customer, big or small, the same deep discount on everything you sell - sure, you gain customers - and in the process, put all the mom & pop shops [or, in our Vegas example's case, the "independent" strip casinos] out of business - because your profit margin & business model becomes dependent on volume business and economies of scale. So sure, now every customer is getting 40% off of every purchase - but in return, they've traded away personalized, customer service in the process.

    Essentially, Wal-Mart & the "mom & pop" store offered the same product - but the "mom & pop" store needed to charge a little bit extra - at least to everyone but their biggest customers - in order to make the shopping experience a pleasant one, and to maintain a certain level of customer service. In our Vegas comparison model, the way the "mom & pop" [independent, "old days" Vegas casino] "store" charged that little extra to help maintain the level of customer service was by offering little or nothing in comps to the average "low roller". But then Wal-mart [read: MGM, CET, etc.] came along and put all the "mom and pop" casinos out of business.

    And when you're the Wal-Mart of casinos & you've run everyone else out of town, there become only one way to continue increasing your profits to keep the shareholders happy - and that is to lower the quality of your product [read: cheap, crappy imports from China] - and that's how you wind up with the impersonal, poor-service, poor-quality, over-crowded, mega-resort Vegas strip of today.

    So the next time you hear one of us older-timers talking about how better Vegas used to be in the past - or if you remember it yourself - ask yourself why that is? Personally, I blame the "comps for everyone" business model the casinos have adopted [and more specifically, the 40% of theo in comps for everyone model] - and I think it is realistic to believe that if comps were still only given out to the top players - or at the very least, only given more generously to the top players, with the smaller players not getting nearly the same % of theo back in comps - that Vegas would still be much more like it was in the old days - with excellent customer service & good, cheap food for all.

    But in their greed to get every comp dollar they can get their hands on, their rallying cry of "me too!" when it comes to perks - it's the players themselves - and the mega casino companies like CET and MGM who've pandered to them - who are to blame for why Vegas is full of bloated resorts with poor customer service and over-priced food. Just like America used to be full of independent stores that sold quality products and provided good customer service, but is now full of soul-less big-box stores offering cheap crap from China, huge crowds & horrible customer service to go along with it.

    And that's why I think that yes, "low rollers" are indeed over comped. Personally, I don't care if a "low roller" gets a free room - but I just think as a business practice, it has lowered the quality of the Vegas experience for all, and duped a lot of people into thinking that getting a 40%discount on a crappy, over-priced $100 product for free is somehow better than if they just paid $70, $80, $90 or even full price - for a high-quality one.
     
    Last edited: Aug 14, 2012
  16. Polemarch28

    Polemarch28 Tourist

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    Petunia Penny Slot vs Harry High Roller

    Jilly, you make some very compelling points - I want to acknowledge that.

    (In fact you always do - you're certainly one of the more articulate and cogent posters on this board.)

    I do agree that the value proposition of old Vegas - free drinks, inexpensive food, nice rooms at a bargain price - has gone away. However, I do not blame the change in comp system.

    For one, you are equating low roller comps to high roller comps. You acknowledge that it is the percentages that are equal - 40% to 40% - not the actual nominal cash value - yet you still equate them, as though Petunia Penny Slot is getting the same comps as Harry High Roller. But they aren't.

    40% of a $200 theo is not equal to 40% of a $50,000 theo.

    In fact, it's baffling to me that anyone would argue that low rollers deserve a significantly lower percentage of their gaming losses as a comp than a high roller.

    This almost sounds like a tax argument. It's as though the 1% have swooped into the thread to explain why they should pay a lower tax rate than the middle class.

    Secondly, the hotels have chosen to expand their comp systems, democratizing them, because it's profitable. They've run the numbers, far more efficiently and with more accurate information than we have available to us, and they've determined that comping low rollers is to their benefit.

    In your business example, you explained why you might agree to a lower profit margin for a larger customer. You want to secure the business, so you don't have to sweat several smaller transactions to reach the same operating revenue.

    But there are two flaws in that reasoning:

    Elasticity: By accepting a lower profit margin for the larger customer, the business is potentially leaving money on the table. The business should attempt to secure whatever the highest profit margin the market can bear. If in today's world, that means 40%, so be it.

    But to assume that smaller customers are somewhat expendable, and can be charged a higher profit margin, relies on the specifics of the market. The elasticity of the good, for example. Casino entertainment is highly elastic, particularly for low rollers. Non-gambling addicts, who see Vegas as an entertainment destination, not a fix, are highly willing to spend their money elsewhere. Assuming that comps are irrelevant to them, or that they won't notice (either consciously or subconsciously) a decrease in comps is unwise.

    Stop offering low-rollers comped rooms, and they will take an Apple Vacations trip to the Dominican Republic instead. They are negotiating with their husbands and wives, and have to compromise on things like this.

    Risk Aversion: Casinos are - ironically - risk averse. They prefer certain, consistent revenues and profits to uncertain, riskier propositions. High rollers are risky. They potentially are more profitable and more rewarding, but they also have the potential to wildly impact the 10Q.

    Low rollers, in their voluminous unwashed hordes, represent a more predictable stream of revenue. All things considered, public corporations would rather deal with manageable expectations than volatility and a stock panic.

    I think the reason why higher rollers tend to repeatedly bring up the "low rollers are overcomped" argument is something I stated in my OP.

    High rollers get a kick out of feeling superior. They realize their gambling habit is incredibly expensive, and get off on feeling treated like a VIP. The more exclusive the accommodation, the more ridiculous the comps, the more extravagant the bottle of wine, the better they feel about their experience.

    And that's perfectly fine. The casinos are happy, and the players keep coming back. Everyone wins.

    But when the high rollers complain about the way low rollers are "overcomped" - I think the biggest reason is: When low rollers get comps, it devalues the comps the high roller receives. Not in actual monetary value. But emotionally. High rollers can't feel quite as superior when Petunia Penny Slot has a Seven Stars Card.
     
  17. JillyFromPhilly

    JillyFromPhilly Tourist

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    I agree with your points except that the reason I [and/or presumably other] high-rollers are griping about low rollers getting comps is because it somehow deflates my ego or devalues my experience. That is not the point I was trying to make - or thought I was making - at all. Let's face it, even if Petunia Penny Slot has a Noir card, she's still never getting all the same perks the guy who earns Noir in one trip is getting. And the "high rollers" - at least the "true" high rollers - are still getting all the same quality of customer service that they got back in the old days - in the form of casino host ass-kissing, better service in the "tower suite" or "sky suite" section, etc. - they're still moving about in their rarified environment - staying in a suite, dining at Robuchon, playing in the HL room, etc. - and let's face it, the true "high roller" has never cared about the price of the menu at dinner, either. Seriously, I really don't feel that a $100 player getting a comp room cheapens my personal experience in any way - I also don't think a $100 player who visits every day & works their way up to Noir getting to stay in a suite effects my experience as a high roller, either.

    But rather, the point I was trying to make, is that the "over comping" of the $100 player has actually made the experience worse for the $100 player, by essentially reducing the overall profit margin on low-end players, which has now opened the door to the operators charging them the same - or more - for an experience that has overall degraded in quality - all in the name of giving them "something" for "nothing" - and degrading the profit margin in the process. True, volume business is larger-profit business even if the margin per customer has decreased - but I think it's hard to argue that volume business also provides a higher-quality product to the consumer. It might be great for the corporate bottom line - but is it really better for the consumer?

    Perhaps some of my argument is flawed - somewhere along the way I kind of got mixed up in an argument about profitability and an argument about quality of product & service that muddled the argument I wanted to make - and I think the argument I'm trying to put forth is actually a somewhat populist one, even if people don't want to see it as such because of who it is coming from - and that argument is that overcomping of the "low roller" has contributed to an environment that actually provides a lower quality experience to that same "low roller" than they got when they weren't being comped at all.

    The high rollers - again, at least the "true" high rollers - aren't really affected by the changes - the same way, it could be argued, that the richest people really aren't affected by their income tax rate - let's face it, the guy who makes $100 million a year is going to be living well whether you tax him 1% or 50% - likewise, the super "high roller" is going to have a thoroughly exclusive, ass-kissing experience in Vegas whether the micro roller gets a free room or not. It's the micro-roller, though, who inadvertently sold out a part of his or her experience in exchange for a freebie that is essentially a bait-and-switch who is getting screwed. Now that the casinos have gone from operating boutiques to Wal-Marts, the regular customer is the one whose quality of service and experience has diminished - and it's because they're cutting off their own noses to spite their faces in terms of wanting to feel like the big shots. And the casinos have figured out that if they have to serve 10 times as many customers at a much lower profit margin, they can no longer offer the same quality - and they're ok with that, because the bottom line keeps getting bigger even though the profit margin has gotten smaller.

    And now that they've shifted the costs that used to be subsidized by gambling onto the list price of everything else - and gotten the customer to get used to those prices - and more importantly used to paying those prices with their comp dollars - they can keep jacking those prices higher and higher - and the little guy - and especially the littlest guy - gets less and less value for each dollar spent in Vegas that they used to.

    The big guys are still fine. So again, to be clear - I don't think "over comping" of the little guy diminishes the "high roller" experience in any way - I think it diminishes the experience of the little guy, but in a way they often don't even realize.
     
  18. JillyFromPhilly

    JillyFromPhilly Tourist

    Joined:
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    Gwynedd Valley, PA
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    Let me go back to the oft-used example from the movie Casino - where Ace Rothstein insists on the same number of blueberries in every muffin - which is often used as an example of how "old vegas" was better than "new Vegas".

    Ace could afford to do that because he was making 100% profit on everyone who came through the doors except the really high rollers. So he could put out an expensive, quality muffin & sell it cheap - most likely below cost - to every customer in the place because the casino was making so much money it didn't matter what he charged for a great muffin.

    Nowadays, though - to get a muffin of that quality, the low roller has to earn up enough comp dollars to pay a huge mark-up at a celebrity chef restaurant to get the same muffin that he otherwise would've gotten on the cheap if he wasn't getting 40% of his loss comped back to him - the gambling would still subsidize good muffins for all, regardless of how much they gambled, or if they even gambled at all.

    Meanwhile, the high roller - who is getting breakfast at the Mansion at MGM, or Bouchon, or wherever the high-roller is eating - well, he's still getting that same awesome muffin that he always got in Vegas - and he's not affected at all by the fact that the same muffin that used to cost $.99 now costs $9.99 - because he's always had more than enough comps to cover it regardless - so in the big scheme of things, how much the muffin "lists" for on the menu is really irrelevant to him.

    So who's the one getting screwed by the "little guy's" comps? The high roller? Hardly - little to nothing has changed for him in his Vegas experience. But the low roller? If he wants to get the same quality experience he used to get, he's now got to gamble a certain amount to get the comps to pay for his now over-priced muffin - or pay through the nose "list" price now on the menu - whereas before, the little guy would've gotten that muffin dirt cheap whether he gambled or not - because all the other little guys' little losses in the casinos made that muffin cheap for everyone. But now that the casino is giving the little guy 40% of his theo back in comps, the price of everything else has to go up to compensate - and this is where the little guy gets screwed in the long run/big picture.

    That's why the little guy is being "over" comped, and why it's bad for the little guy that he is - because if the casinos gave the little guys less or nothing in comps, then all the little guys would get and could still afford better quality at lower prices because the casinos wouldn't have had to shift the profit-generating machine to other areas of the operation - that then affects the price of - and reduces the quality of - a visit to Vegas for everyone who comes for a visit, gambler or not.
     
  19. dfalk

    dfalk VIP Whale

    Joined:
    Mar 7, 2011
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    I know I am!! I was very surprised to get 3 nights comped at PH (could of had 5) for my upcoming trip. I play about 5 hours of BJ at $15 avg bet, and about $100 in slots a day.
     
  20. Bookoo1

    Bookoo1 Low-Roller

    Joined:
    Oct 13, 2010
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    San Diego,CA
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    I think most low rollers are over comped at least once in their life's.weather it's a "feeler" offer,or birthday offer etc.I definitely know when I'm over comped.lets say I go to Vegas for a weekend and use the CET calendar,and stay at Caesars,I'll probably have to pay only 100 bucks total.I feel that's fair for my play,but if I use one of my $300 free play offers,and stay at caesars in a octavius,Augustus or even palace room,I'm waaaay over comped.I think in the end,everyone's offers catch up to their play level.
     
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