6 November, 2023

The yielding of players: How much is too much?

Fresh off his Huddle interview with us at G2E Las Vegas, regular Gambling Insider contributor Paul Sculpher explores the ‘yielding’ of players. Will operators ever go too far? Have they already?

With G2E 2023 in the books, it felt like time to reflect on the show, the exciting new developments, products and rumours. However, the overriding feeling was of the bruising we’ve all taken from the pricing of – well – everything in Vegas.

Many show attendees may have been fairly well protected from the pricing strategy by virtue of expense accounts and sales budgets; but for those of us paying our own way, it’s an expensive proposition.

As I was thinking about this piece, I had a little Déjà vu and sure enough I’d written something about the financial piracy afoot in Vegas before – seven years ago! Re-reading it now seems almost quaint, with my moaning about resort fees and prices in the casino shops.

Little did I know then that I’d seen nothing by then. Truly ferocious table minimum increases, surge pricing in some of those shops now, with the same item costing more on a Friday night than a Tuesday afternoon, penalty charges for having the temerity to put a non-casino item in your fridge and so on.

My conclusion back then was that sooner or later they’d stretch things too far and face a backlash. Well, I could not have been more wrong. Seven intervening years, including a devastating Covid-19 pandemic and Las Vegas is making more money than ever, certainly judging by gaming revenues stats.

Other income must be through the roof too. Part of me still wonders if the backlash is coming now, but if I’d been in charge of Vegas Inc back in 2016 and throttled back on aggressive pricing, I’d have missed out on literally billions of revenue.

Yielding as a concept is nothing new, but of course when automation is involved, everything gets a little sharper. We’re all familiar with hotels and flights getting more expensive as supply runs out and of course casino gaming has a vast amount of data to analyse, in order to make a pit (and casino resort) as efficient as possible.

There has to come a point where the Emperor’s new clothes start looking a bit transparent – for me it was paying the same for two glasses of booze as I’d pay for three litres of the same drink in a supermarket

Table management systems ensure that there’s a type of entropy, where every limited resource (whether that’s staff hours, playing positions or willing customers) is stretched as far as possible.

The simple truth is that once you have a customer on site you can push them around a lot more than you think, price wise. It doesn’t feel comfortable to most older school casino people, because you spend your entire career trying to make customers happy, not force them begrudgingly to play a slightly higher stake than they wanted – but they still play.

There are a couple of wider questions surrounding the pricing model – and bear in mind this is written by someone who was mildly surprised, to say the least, to be presented with a bill for $92 (inc tax and tip) at a bog standard casino bar for two gin and tonics recently.

Those questions are wondering how this affects the staffing in the casino world and what happens if and when the customer eventually does rebel.

On the first point, it hasn’t escaped the notice of plenty of team members in Vegas, that while the house is making increasingly crazy money from visitors, they as employees are not.

In my experience, while dealers in Vegas have, to put it generously, a mixed approach to service standards, the F&B teams are absolutely exceptional. That exceptional performance can certainly be assisted by top-notch training, but it most certainly is also assisted by fat stacks of (tip) cash.

When teams are being asked to do more with less and guests are taking a view on tips when the base prices are so salty, staff maybe start similarly taking a view on how hard they want to work to keep players happy.

Servers I’ve spoken to certainly aren’t seeing the kind of crazy money they used to receive and it’s absolutely the case that staff turnover rates have increased of late. Some of that relates to the pandemic and a general re-assessment of working life, but I’d argue some of it is also because the money isn’t quite as plentiful as years gone by.

I’ve certainly never seen as many trainee bar people as I have this trip and speaking to operators confirms staff turnover is very high.

I do also wonder what happens when the music finally stops and the operators push the pricing too far. Perhaps they’ll react to analytics and pull back – certainly, for example, room rates post Covid-19 were lower to re-start the Vegas economy – but I’m thinking more of the “frog in the slowly boiling pan of water” situation.

It’s always easy to find something on which to blame a faltering top line that doesn’t sound like “we got greedy and got our fingers burned”, but there has to be a limit, right?

Strip occupancy rates are still incredibly strong, even at very high room rates, so there doesn’t look to be any red flags yet and as long as incredible new attractions, like Formula 1, the Sphere and NFL football keep generating reasons to visit, who knows where the limit lies?

But, but, but…. There has to come a point where the Emperor’s new clothes start looking a bit transparent – for me it was paying the same for two glasses of booze as I’d pay for three litres of the same drink in a supermarket.

I now take a view on accommodation location in Vegas, splitting my time between the Strip and further afield. Operators won’t care right now – in the same way as there’s someone right behind me who’ll play $50 6/5 Blackjack when I decide it’s too volatile, there’ll be someone right behind me to take my exorbitant room when I decide to go off Strip. But what about when there isn’t?