Bringing scrutiny to table games, part 2
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' responsesTable 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:
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 responseThe 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 firstname.lastname@example.org.