The practice dates back to the earliest days of player tracking systems For many of the earliest systems point multipliers were in fact the only bonus mod ule available Today all casino management systems offer some form of point multiplier promotio ID: 45760
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April 2008 ule available. Today, all casino management systems offersophisticated bonusing modules, such as free play, electroniccoupons, random free play jackpots as well as large progres-promotion to implement. The recent downturn in the U.S.without giving the house away. As such, point multipliers areneed to market more aggressively. One need only scan the printads from the recent President'stage of the better offer. The thirdday to another. The fourth, and most dangerous assumption,point promotions are in essence, a cash rebate program andthere are very real costs associated with them. Without be very expensive with little incremental revenue associated withthem. Moreover, in casinos that offer video poker games withattract professional gamblers who will use such promotions tomake a proÞt from the casino. All Bonus Points are Not Equal The most elementaris that all bonus points are not equal. One casino in the market may require $10 in coin handle to generate 1 bonuspoint and offer $1 in cash back for 100 bonus points. Anothercasino may require $7.50 in coin handle for a bonus point and The Complexity of Bonus Point Multiplier Promotions CUSTOMERSERVICE by Andrew Klebanow d Club Rebate Rate HandleRebate $ Penny Reels *Rebate Rate assumes player coming to the game with $100 and losing the entire amount.Additional Assumptions: Optimum strategy is employed when applicable and max bet is always played.Example: Penny Reels $100 / 8% hold = $1,250 in average slot handle.$1,250 in handle / 500 points = $2.50rebate.$2.50 / $100 slot win = 2.5% $1 handle = 1 point500 points = $1 cash$8.00$1,250.00$2.502.50%$97.50 $1 handle = 1 point500 points = $1 cash$5.00$2,000.00$4.004.00%$96.00 Standard Video Poker $1 handle = 1 point500 points = $1 cash$3.00$3,333.33$6.676.67%$93.33 Low Hold Video Poker $1 handle = 1 point500 points = $1 cash$1.50$6,666.67$13.3313.33%$86.67 able 2.3x Bonus Point Rebate Theo Win per $100 Penny Reels *Rebate Rate assumes player coming to the game with $100 and losing the entire amount.Additional Assumptions: Optimum strategy is employed when applicable and max bet is always played.Example: Penny Reels $100 / 8% hold = $1,250 in average slot handle.500/3500/3rebate.$7.50 / $100 slot win = 7.5% $1 handle = 3 point500 points = $1 cash$8.00$1,250.00$7.507.50%$92.50 $1 handle = 3 point500 points = $1 cash$5.00$2,000.00$12.0012.00%$88.00 Standard Video Poker $1 handle = 3 point500 points = $1 cash$3.00$3,333.33$20.0020.00%$80.00 er $1 handle = 3 point500 points = $1 cash$1.50$6,666.67$40.0040.00%$60.00 place. In reality, the vast major-they play. They are in fact, the casino's least profitable ßour, are commodity products that are indistinguishable excepte of business. In reality,casinos are highly differentiated, each one offering a differentplayers, in order to shift loyalty, a casino that offers point e Not Chea make regarding bonus point promotions is that they are a lowimpact that point multipliers will have on proÞtability.Table 2 shows the effect when a 3x bonus points are offered.results of this are detailed in Table 3. While a gamer on anpromotions require thoughtful analysis prior to implementa- Andrew Klebanow is Principal of Gaming Market Advisors. He can be r702702andrew@gamingmarketadvisors.com Indian Gaming Table 3.3x Bonus Points with 20% Expanded Budget Rebate Rate Win per $120 enny Reels er coming to the game with $120 and losing the entire amount.Assumptions: Optimum strategy is employed when applicable and max bet is always played.xample:Penny Reels $120 / 8% hold = $1,500 in average slot handle.$1,500 in handle / (500/3) points= $9.00rebate.$9.00 / $120 slot win = 7.5% $1 handle = 1 point500 points = $1 cash$9.60$1,500.00$9.007.50%$111.00 $1 handle = 1 point500 points = $1 cash$6.00$2,400.00$14.4012.00%$105.60 Standard ideo Poker $1 handle = 1 point500 points = $1 cash$3.60$4,000.00$24.0020.00%$96.00 Low Hold Video Poker $1 handle = 1 point500 points = $1 cash$1.80$8,000.00$48.0040.00%$72.00