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Slots, Tables, and All That Jazz

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by

Thuon Chen

on 16 March 2015

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Transcript of Slots, Tables, and All That Jazz

Situational Analysis
the real business of the casino property is not just gambling
with onset of the mega-resorts that cater to a wider demographic, non-gaming amenities have become important businesses as well
Circus Circus offered non-gaming amenities, such as free entertainment, low price hotel rooms, and buffets at rock-bottom prices, as loss leaders, because the casino made money on gambling
nowadays many non-gaming amenities are profit centers in their own right
"We are not going to accept sustained losses from a restaurant. It has to be profitable by itself."
MGM believes their restaurants must stand on their own, must make a profit on their own.
Problem Statement
how to grow MGM's non-gaming amenities to be not just profit centers in their own right, but to be profit powerhouses on the same level as slot machines or hotel rooms?
John Shigley realizes he doesn't understand his customers as much as he would like. If MGM wants to use their understanding of customers to improve overall profits, John needs to decide how to better capture non-gaming customer profitability by teasing out how much of the profitability in the non-gaming sectors is driven by gamblers and their families, and how much profitability is driven by the non-gaming customer segment.
Strengths and weaknesses
the recognition that MGM must know who our customers are, both gaming and non-gaming
differentiating between distinct types of gamblers within the property: whales, high rollers, above the line & below the line comp players
largest gaming company in the world with unparalleled presence on the Las Vegas Strip
able to offer customers unique non-gaming amenities, such as world-class boxing matches, theme park, lion habitat

only able to get dense, reliable, real-time information about gaming customers who use players club card in the slot machine
non-gaming expenditure data of MGM customers is less exhaustive than gaming information
Alternatives
Hotel Folio
Pros: tracks spending at non-gaming amenities such as shows, restaurants, and events, but only if the hotel guest uses the point-of-sale system in the hotel room tv to make those purchases
Cons: only 60% of the food, beverage and entertainment revenues were captured by this database, and no costs of the services provided are assigned to the customer

Human Tracking at table games and slots
Pros: using humans to identify high value customers who don't have a players club card
Cons: information won't be as reliable or as dense or complete as players club card data

Marketing and sales department for hotel and entertainment
Pros: List of customers who are hotel guests and/or buy tickets to shows and events
Cons: incomplete, possibly outdated information about these customers
Solution
Creation of a comprehensive Rewards Program for all aspects of the property, gaming and non-gaming
Hotel key card is also a players card in order to flesh out the hotel folio data
Exclusive offers, such as premium seating at shows and events, rub shoulders with celebrity DJs in the VIP room at the nightclub, food-tasting events at MGM restaurants, free play and match play at the tables and slots for nightclub regulars
Highly trained waitstaff at the night clubs, who know how to identify and track customers who are whales and high rollers in the club, who buy premium high-profit alcoholic beverages and/or who reserve expensive tables and rooms
For non-gaming amenities that have identifiably high numbers of customers who don't gamble, such as possibly the nightclubs, creation of a host program to encourage patronage of other high-profit areas of the property, such as slot machines and hotel.
Opportunities and threats
explosive growth of non-gaming amenities revenue in Las Vegas
willingness of people to share their information in exchange for recognition, and in order to qualify for exclusive offers and complimentary benefits
undeniable trend among young people (generation Y and millennials) to frequent Las Vegas for non-gaming leisure and entertainment, such as nightclubs with waitstaff who dance on tabletops

attracting the wrong kind of customer, such as "below the comp line” players who expect to be given comps out of proportion to their expected contribution to the property's bottom line, or the customer who tries to game the system or find inefficiencies and exploit those inefficiencies to the property's disadvantage
people who are concerned about being tracked and who are worried about the privacy of their data
Slots, Tables, and All That Jazz
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