According to the American Gaming Association (AGA), by 2012, there were more than 979 casinos in the United States (counting land/river based, racetrack and tribal casinos) with more being added every year.  This compares with a total of 932 casinos in 2007. So the number of casinos grew by 5 percent over the five-year period.

In the same period, total gaming market revenue in the U.S. declined 5 percent from $37.52 billion at the peak in 2007 to $35.64 billion in 2012.  Of course, the combined effect of more casinos and less aggregate gaming revenue results in the average revenue per casino declining by a whopping 9.6 percent in the five-year period.  More casinos competing for fewer dollars in the aggregate are a clear prescription for a competitive fight to stay alive. In the economic challenge of a maturing market, some properties will survive, others will be absorbed, and some will cease operations. Darwin would suggest the next five to 10 years could be characterized as a period where only the fittest casinos survive. But what does it mean to be fit in this environment? And how does a property get “fitter” so that it is more likely to survive and prosper?

Due to casino industry expansion, there are realistically very few unknown or new customers left to build upon. Survival will be based upon the customers that are currently known. Survival means understanding the market reality in such a way that you can be both pro-active and reactive. To succeed, an active, learning process is required.

With more competitors scrambling for gaming dollars, less discretionary money in the hands of customers, and a very modest (less than 1 percent a year) growth in the number of customers visiting a property even once, fitness will be measured by the ability to get, keep and retain profitable customers. The key here is understanding which customers can be retained under the umbrella of the current brand, resource base and available incentives. A deep, detailed look at the customer base is absolutely imperative.   

The work you must do is clear—you must understand your customers.  You have enough information about your customers to make a good start at understanding them and refining your approach through on-going experimentation with that information. You can do it yourself or you can get help from those vendors outside the door in all or in parts. 



To better understand your customer base, each of the following steps must be taken.  It will then be possible to evaluate potential solutions, external and internal, relative to that necessary work and likely price tag, and finally make a decision.

Collect data about your customers. You can think of this as the data stored in your installed casino management software system (CMS, whatever its brand). That data is nearly always available (possibly needs help, but it is there) and is the place to start. If available, it is beneficial to add information from your customer relationship management (CRM) system (if you have a supplemental one), your hotel system, kiosk systems, POS systems, credit systems and even your machine database.

Integrate this data together as a dimension of the customer. This means more than the obvious idea of merging hotel folio stays and offer data to customers, but lies in disassembling and re-assembling information about customers to speak to the customers themselves and not the different aspects of behavior one at a time. Often this data is stored in many separate tables that are organized by day, transaction, or offer, rather than collected together to address each unique customer by itself. The data must exist in this form to actually assess what’s important to the customers who have been on property and what’s important to their profitability. 

Update hardware. This entails secure, sufficient and dedicated computer power to be able to do the work without dragging the systems upon which you depend to their knees or, alternatively, require all the work to be done between the end of the gaming day or accounting day and the beginning of the work day.  Doing this work in the middle of the night in a batch fashion will slow down the process considerably.  This hardware must have some serious CPU and RAM capacity. You don’t want to put your IT staff in the position that they must sacrifice understanding to keep the floor operational.

Update tools.  Acquire a tool or set of tools that allows data to be reviewed or reported. These basic tools, such as MS SQL, are usually matched with the environment on property. What is your native data environment, for instance? Look there for the raw database tool to select, move and transform data. These are not expensive and are different from business intelligence tools in general.

Describe your customers. Hire and train someone who can thrash through data with basic tools and who is able to describe the customers and business situation. This does not have to be a statistician, but rather someone who knows how to operate the basic tools described above.

Measure your customers. Hire and train someone who knows what questions to ask about the customers in the first place. This needn’t be the same person identified the step above—in fact, it is not likely to be the same person. Getting meaningful assessments of player value means that someone has to understand the fundamentals of gaming operations well enough to establish what is worthy among customers. What cannot be measured, cannot be improved, or, if improved, cannot be evaluated.

Construct profitability plans appropriate for your business goals. Hire and train someone with enough expertise to more than report on the data or ask interesting questions. You will need someone who can discover relationships in and among the customer data elements. The employee mentioned above may have identified some factors that the property believes are salient to performance, but does not necessarily have any idea about how to evaluate the factors in the data itself. This individual understands the language of inference and statistics and their application to gaming. Such a person can tell the difference between cause and effect and coincidence in the data and can come up with a profitability algorithm for customers.

Update software. Make sure that there is software, process or code available, whether developed in-house or acquired, that the constructive analyst mentioned above can use to evaluate the algorithms and get the prescriptions delivered. This is likely going to be a statistical software tool set, either inside another application, available as an add-in, or a separate free-standing application. This software absolutely must work with the tools otherwise available in the property’s lexicon and on the dedicated hardware.

Test. Specific testable recommendations must be created or adduced to create measurable progress toward the goal of improved profitability. Each of the steps in this list provides an opportunity for some unexpected issue or challenge to creep into the process. This is a necessary part of progress, not to be feared, but rather to be expected and anticipated. What is sought here is not a “big bang” theory of progress, but rather a steady course to profitability, a continuous improvement process. If things change tomorrow, and they certainly will in a maturing market, what is needed is a process that can adapt. Testing will allow change to take place at minimal cost and maximal gain.

Believe. There must be support within the organization that provides the ability and willingness to act and react to the measurements, algorithms and recommendations about customers, the deployment of tests based on the recommendations, and the results of attempts at change. This individual must have some clout in the organization, be able to take responsibility for change and stay the course. Therefore, someone of courage must exist in an executive management position; someone who is passionate about customers and dedicated to operating from actual metrics, in addition to gut feel.



Perhaps the best way to think of these 10 steps is as a checklist for evaluating the status within the organization. How many of the boxes can be checked in the “Got It Covered” column?  More importantly, what is not checked and is still needed going forward? These items represent your shopping list for inside or outside resources.   

To be successful, you must get all the work done, not just part of it. While every part of the work represents progress, getting only part of the work done will cost money and fail to yield the competitive edge that requires you take on the work in the first place.

 The clock is ticking. It’s time to get started.