Bringing scrutiny to table games, part 2
May 14, 2008
The article I wrote a
couple of months ago titled ‘Bringing scrutiny to the tables’ drew a lot of responses.
It seems a great many of us table games managers are in the same financial
boat, and the boat is barely afloat.
The article dealt with the fact that so many of our table games departments are
being over-encumbered with lease fees, costs and charges, all with the
intention of making our departments more productive. The cost of this
technology, and the added financial burden it is putting on table games departments,
is out-weighing the benefits of these products, creating an economic hardship.
Are these lease fees really a benefit? Do we need a shuffle machine on every
game? Do we need them at all? How about all those new table games? How about
all those side bets? Do we need any or all of them?
The cost of technology and the inherent fees that come with this technology are
placing an economic hardship on table game operations. Where does the cost of
doing business, especially with technology and lease fees, overcome its net
worth?
Managers' responses
Table games managers told
me the same thing I have heard for years at gaming shows, at my seminars and in
all my correspondences.
The biggest issue: Lease fees, royalties, maintenance and repair of leased
items are encumbering an outlandish portion of the table games department
operating budget. This, coupled with rising costs of labor, makes profitability
sometimes impossible.
Here is a response from a table games manager at a large casino who asked that
I not print his name or his casino’s name:
“Dear Vic,
I wanted to follow up with you on your article in the January 2008 edition of Casino
Journal. In your article titled, ‘Bringing scrutiny to the tables,’ you stated,
‘But if your casino has a low limit and lower average bet, if your games are
not going full bore most of the time, should you be adding to the
un-profitability of your department by paying a monthly fee for a machine to
shuffle your cards?’
“I love this question. I am a new table games director, and I would love to
learn the best way to answer your question. What do you think is the point of
equilibrium to have machines or not have machines? It puzzled me to see that
Venetian pits do not have BJ shufflers. There was a point in my mind that, when
you have a card room, you purchase shuffler products. That this is a direct complement to their marketing program. But is
it?
“So, how do I determine if I am wasting money? As it stands, repair and
maintenance, lease fees and royalties account for almost 40 percent of my
operating expense budget. This is a six-figure number that I would love cut. In
addition, this is my biggest budget piece on the expense
side.
“Thanks for your time.”
The part that struck me was the 40 percent of operating budget going toward all
these fees. Add payroll costs, and what does that leave for profit? This seems
way out of hand.
My response
The point of equilibrium,
while being hard to define, can be looked at a number of different ways.
Vendors use these numbers for their own benefit, and numbers, like the ones
used to define value of shuffle machines, can indeed be skewed. A number of
factors in this scenario raise cause for alarm and revision. Forty percent of a
budget devoted to these items is something that needs to be addressed
immediately and should be the biggest equilibrium
number. Adjustments have to be made immediately to get this number down to
single digits.
Here is an important question in making decisions on these items: “How much
business and revenue does this 38 percent of the budget bring in?” The answer
here should make a determination on throwing most of this stuff right out of
the window.
A standard thought process of most new table games managers (and departments)
is that leased items like shuffle machines are a mandatory part of a table game
department. The thought process is, “my department must have these and cannot
run successfully without them.” Who do you think has put this thought process
in place? The vendors themselves? Game protection gurus who will show off
elaborate scams that mandate these devices so they don’t happen contribute to
this also.
Operators do not need shuffle machines on all of their games. Unless the games
are going full bore and there are high limits, they probably aren’t needed at
all. What is the break point? Start with how many hours per day the games stand
dead. Then, look at how many hours per day the games go full bore. The equilibrium
point comes with how busy the place is. Games dead more than eight to 12 hours
per day or games at less than full capacity for the same amount of time
dictates removal, or at least, adjustments.
The writer’s thoughts on the Venetian hit the nail on the head. Most casinos
run by old school casino managers, especially in Las Vegas, have a lower percentage of costs
devoted to these issues. Nowhere near 40 percent. The most successful table games joints, much less.
Put emphasis on staff retention, training interaction with the customer, and
less emphasis and revenue devoted to leased items. Only way to go
here.
I hope that this response helped the writer, and I hope it helps my readers.
Technology is great, and in some cases, it’s needed. But let’s work on defining
cost effectiveness here. Especially in relation to value and added revenue.
This issue, I am sure, will be addressed again.
Vic Taucer is
president of Casino Creations,
a Las Vegas-based educational, training and consulting company, which
specializes in table game evaluations, customer service training, dealer
training and managerial training for table games operations. A former professor
of casino management for the University & Community College System of Nevada and a long-time casino
manager at many resorts, Taucer can be reached at (702) 595-7800 or
vic@casinocreations.com.
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