Predicting Player Wallet: Understanding the True Worth of Your Guests

Ken Kuwabara: I’m Ken Kuwabara. I’m a Senior Account Manager at Synergy Information Solutions. We do player development CRMs, but more importantly, I have about 16 years of experience in player development, both on the commercial side and the tribal side. To my left is Ms. Hannah Lehti.

Hannah Lehti: My name is Hannah Lehti. I have about 23 years of tribal casino experience, anywhere from food and beverage all the way to casino host and then marketing. I’ve done a little bit of everything within the casino realm. Now I’m the founder and CEO of Nishway Leadership. I do branding alignment for small to mid-size casinos.

Ken: This whole conversation today is around predicting player wallet, and I’ll also say predicting and driving player wallet. I know we had a discussion earlier that was kind of biology-based. We’re going to have a math class here. At the end of it, we’ll do a quick little quiz and be done with it. I’m kidding, we’re not doing anything like that.

What I do want to do is start with a quick story. I know a lot of people here have their own stories to share, but I’d like to share mine. Mine is about a lady named Mary.

Mary was about 80 years old. She was worth about $70,000 a year to the casino when I got to Choctaw. This was about eight or nine years ago. I got there, and on the very first day I hit the casino floor, I was given a host change request for this lady. They said, “She doesn’t get along with our host, would you mind taking her?” I said, “Absolutely, why?” She was still in the casino, so I walked up to her, sat down with her, talked to her for a little bit, and exchanged contact information.

Eighteen months later, she was running a $350,000-a-year deal, year after year, for the remainder of the time I was there. A little caveat to that: she actually did not request any comps. She was already maxed out on what she could receive from an offer standpoint, so I really didn’t have to do a lot on paper for this lady.

I got a call into my director’s office about Mary, and I’m thinking, “Alright, I’m going to get a little bit of credit here, right? Five times the amount, you’d think.” No, I got sent to the principal’s office. I got sent to the gaming commission that day, because they thought there was no ethical way this person could possibly get someone to five times what they were, and actually lower their reinvestment ratio at the same time.

So I walked in and said, “Hey, what’s going on here?” And they said, essentially, “Just come play when you do it, what’s going on?” I said, “Well, the guest is a diabetic.” They said, “No HIPAA violations here.” I said, “That has nothing to do with a violation. She called me two weeks after I met her, in a panic from high limits, and said, ‘I need you to come out here right now, I feel like my blood sugar is bottoming out.'” I said, “Alright, I got you.” I walked out with a pack of peanut butter crackers, handed them to her, and made sure she was okay.

Three weeks later, she did the same thing. Called me and said, “Hey, it’s happening again.” I said, “I got you.” After the third time, I thought, why don’t I just take her a pack every time I see her on the casino floor? So I spent about $78 that year, out of my own pocket, because they were a dollar apiece. That was probably where I got it wrong, I should have written an actual comp, but for a dollar, it wasn’t really worth my time, so I just paid it out of pocket.

That’s the end of the story. That 78-cent pack of crackers is exactly what caused a 5x lift in play, because she felt safe at our casino. She felt like somebody was there to take care of her.

Earlier backstage, Janet was talking about a much more elderly guest where she said, “If you’re here past midnight, you need to start packing the bag in the car, because I’m going to get you a hotel room, and I’m not letting you drive home.”

This whole week, we’ve talked about a lot of transformative interactions. Who was here on Tuesday? Everybody remember Joe Pine’s talk at lunch? He talked about transformative interactions, that every interaction you have is a chance to have this transformative moment.

I’ve saved these stories because I want to ask all of you: how many people here, raise your hand if you know in your heart of hearts that you’ve done something like that for a guest, and you know you’re the reason that lift happened. Raise your hand. Look around. Most of you, right?

You’re from all over the country, all different casinos and sizes, all different marketing programs. Some of you have teams of two, some of you have teams of twenty, and yet all of you have these moments, and you know you drove the trip.

The part that gets really difficult about this is that it’s really hard to measure these moments on paper. A lot of times we get discouraged by finance, or whoever, questioning why we keep doing these things, because they think we could be doing something more efficient.

So, all of that to say: when it comes to predicting player wallet, AI predictive models have become really, really good at getting it pretty darn close. You’ve all probably already worked with one, if not multiple. But they don’t get the entire picture, because there’s still this small portion they don’t understand, and that’s the “why.” That’s the relationship you’ve built with your player that completes the service.

So why don’t we take the next thirty minutes to talk about a couple of metrics that will actually give you an idea of which players are worth that time, and pair it with how your relationship can potentially create that lift. Sound good?

We’re going to do a real quick math lesson, you don’t have to do any math, just follow along for a second. We’re going to do a quick recap of what theoretical is.

Hannah: So, we look at theoretical. How many of you understand the formula for theoretical?

Ken: How many people, is this the first time you’ve ever seen this before? Okay, nobody’s raising their hand, that’s fine.

Hannah: So, the theoretical formula is the average bet, times the decisions per hour, times hours played, and the house edge. Typically it’s mostly average bet and house edge, but there are other factors involved.

So we’re looking at a high roller, typically someone betting $25 to $30 per spin. They’re playing for about an hour, and they’re going to look like a really, really good player. You want to make sure you grow that player, but they’re a little bit slippery, you can’t quite catch them, they’re in and out as fast as possible.

Then you have the consistent players, $5-per-spin bets, five to eight hours at your casino. They’re looking for more of an experience versus just a quick win or loss.

Ken: What did Steve Bronze say the number one metric was?

Audience Member: Trips.

Hannah: So when you’re looking at that, the consistent player is actually your more valuable player over time than the person who comes in for an hour.

Ken: And I’d also point out, since somebody said trips, the other big thing is time on device, which we’ll get into here in a bit.

When it comes to ADT, average daily theo, that’s the amount of theo done over a course of time, divided by the number of days. That’s a metric a lot of casino marketing teams use regularly when building out offers.

The thing is, somebody much smarter than me, a dear friend of Raving’s named Mike Vanier, has debunked a lot of these things when it comes to ADT and ADW, average daily worth. We’ll get into what goes into that number shortly. I don’t want you to completely scrap ADT, there are very good applications for it, it’s just not going to apply across the board every time. Every casino is different.

In this particular case, ADT will likely predict the next trip’s value, but that’s not necessarily the case if you’re within that eight-to-twelve trip count, because the curve will go up and down before it starts to smooth out around that eight-to-twelve mark. That’s part of how ADW came about, either ADT or 40% of the actual loss.

I’m sure most of you have seen somebody get their theo checked and then leave within five minutes. Anybody seen somebody lose $1,000 in five minutes? Not fun, right? How much theo did that person put up?

Audience Member: Not much.

Ken: Right. So once the curve smooths out, which we’ll show you in a second, ADW does hold true, but it’s actually been proven that over the first two or three trips, ADW is a worse metric than ADT itself. Once the curve starts to smooth out, it makes a little more sense, but we want to identify these players before we get to that point.

Hannah: The thinking goes: higher free play drives more business. That’s true, to a certain degree, there’s going to be a lift. But over time, you’re not going to get the loyalty you’re looking for, and you’re not going to retain the players you want overall.

Then you get into low ADT, low-value players, or the assumption that low ADT equals low value. But when you’re looking at low ADT, high-frequency, high-visit players, they’re not actually low-value at all, they’re one of your most valuable players. If you have a player in six days a week over a calendar year, and I’m sure we all have one, they’re not low-value, they’re one of your best players. But how much time you spend with them is something you need to be careful of. Step away a little, make sure they’re taken care of, but don’t spend all your time with them, because everybody talks about it, they’re the usual suspects.

Audience Member: I’d like to make one mention about leverage. Leverage is huge.

Hannah: Right, so we can’t just look at the player. Getting to know that player, understanding your relationship with them, is paramount. I’ll give you a quick example. One of my guests was the administrative assistant for the Grand Exalted Ruler of the Elks organization. He and I had a really good relationship, and when he’d go to conferences in every state, before he left he’d ask for a sleeve of my cards. I trained him to be a host. He’d go to these conferences and say, “You like to gamble? Go see my girl.” One year, he brought me an additional $3.7 million. He was a low-ADT, low-value player on paper. Am I going to give him a suite? Absolutely.

So don’t just look at it in black and white, because what do we work in?

Audience Member: The world of gray.

Hannah: The other thing to consider with a low-ADT player: if you can’t get their trip count up, can you at least get their daily up? Those are things you can consider on top of leverage, and they’ll be your biggest fans.

This is why ADT and ADW aren’t necessarily great, the data’s all over the place early on. Anybody who gambles knows this, wins and losses bouncing around. Once you have a bigger sample size, by the time you get to eight to twelve trips, it starts to mirror reality more, and by the year mark, it really starts to mirror it, but the sample size has to be relatively big. This is also how Mike Vanier comes up with his ADT predictive model, it helps smooth out that curve earlier. Am I expecting you to know the math behind it? Absolutely not, Mike can talk circles around any of us on that. But you need to know these models exist.

What I want you to take from this, since this is the player development portion of the conference, is what kind of questions you can now ask when approaching your guests.

So, what are some of the factors you already consider when looking at what a player’s worth is?

Audience Member: Who are you here with? I want to know their company, because sometimes they’re not the big player, their mom is.

Ken: Yeah, association, that’s a great one. Anybody else?

Audience Member: Occupation.

Ken: Occupation, so income level, the amount of potential. Anything else?

Audience Member: Trip drivers.

Usually the trip drivers dictate the allowable time on device. For example, someone coming in during the day just to pick up a continuity gift might only allow thirty minutes to an hour and a half of play, which completely changes the level of theo they provide, versus a day that’s their primary play day, like a weekend when they’re not working and the spouse isn’t expecting them home by seven, which gives you a larger stretch of theoretical, their true potential theoretical.

Ken: Absolutely, especially with those short visits. If anybody wants to ask about theo per hour specifically, go talk to Matthew about that.

Audience Member: Where they game, and what level of player they are elsewhere.

Ken: So, where else they play, right? All of these external factors.

Hannah: Yes, all these external factors are valid. We’re also looking at frequency. Twenty visits a year is always going to beat somebody who’s here two to six times a year, even accounting for time in action, how many hours they play when they’re at your property. It could be a half-hour visit one day, an hour the next, but it’s the overall average, how long they’re able to stay in action.

Another one we look at is loss acceptance, how fast a player returns to your casino after a significant loss. That one tended to live more with the host, at least what I oversaw, because you’re the ones on the floor dealing with these guests, and you notice the changes in pattern. You’ll notice one of your carded players suddenly isn’t back for two weeks, or you see them every Thursday and they’re not there this Thursday. You can jump into action a lot faster than the marketing team can.

Ken: So to pair these with the outside factors, I’ll go into the loyalty part in a second. When you’re thinking about frequency, internally you might see twenty trips a year, but when you ask the guest directly, you find out whether they actually have forty trips’ worth of time, or whether twenty really is their max. You need to pair the internal metrics with that outside question.

Time on device, did they only have an hour because of the gift, or did they get mad and leave, or was that all they had for the day? Loss acceptance is the same idea.

The difference between a good gambler and a loyal gambler, anybody know the difference? You can have a loyal gambler come to you every single day, but if they’re spending $50 and drinking your free Coke, is that a good gambler? Not necessarily. Meantime you might have somebody spend $100,000 in one day, some of you have seen that happen, but that same person is spending four other trips that month at a different casino bringing in that same amount. That brings you back to loyalty. When you ask those questions, you can understand what’s in their bank, and based on that behavior, what those cycles look like. All of this is available on the TG&H article page under Mike Vanier.

Then there’s the relationship itself, which is where that leverage comes in. You can say, “I probably have three or four more trips I can pull out of this guy, let me strengthen my relationship with him to do that.” That’s been the theme of today, and yesterday, building that relationship.

With that, let’s go into a couple of theories around wallet. Just a couple of math things. Hannah, I’m looking for you to talk about this one, it’s done by a gentleman named Miguel Mora, former casino executive at Hard Rock Punta Cana, now has a popular podcast called Check Plays.

Hannah: So, as Ken said, this is a framework by Miguel Mora. The theoretical reveals the bank. His theory is that theoretical, what they lost, times four, is their qualified bankroll, what they’re willing to risk and spend on entertainment, whether that’s casinos or anything else. That’s their fun money.

For example, a $1,000-theoretical player will typically have $4,000 for discretionary funding. A $25,000-theoretical player will typically have $100,000 in the bank for gambling.

Ken: Now, this can scale in or out, a day, a week, a month, whatever.

Hannah: Yes. Of course, that multiplier of four isn’t an exact law, it does fluctuate a bit, but based on his research, he was able to land on that as the overall average. If somebody drops $25,000, they probably actually have about $100,000 in their pocket, something to keep in mind.

Audience Member: When you guys look at theo as a measure, how far back do you typically go? I have a report that shows me 30, 90, and a year for theo. What do you guys typically look at when assessing a player’s potential?

Ken: At a player’s potential, I’d look at their immediate trip and then scale outward, continuing to scale out until you see either an abnormality, or on the flip side, an actual pattern.

Hannah: Yes, exactly what I was going to say. Once you start seeing the actual pattern, that’s when you can decide this is genuinely where they’re comfortable. You won’t necessarily know this from one trip, because people do irrational things, they could sell a house and spend all of that money at your casino in one visit, and you might think they have $100,000 in the bank when they don’t.

Audience Member: That just happened to me last month, unfortunately.

Hannah: We’ve all had to deal with it.

Ken: Let me ask, how did you find out about it?

Audience Member: I went out to her, she was spending all this money and got upset with another guest over a machine she wanted to play, and had to get up to grab dinner. She caused a scene, I went and spoke with her and asked what was going on. She said, “This is the wildest thing I’ve ever done in my life, I just sold a house and decided I’m gambling with the money.” I said, “Well, I’m happy you chose our casino for that, and I hope you have a wonderful time.”

Ken: Here’s the thing, ethics. If we’re not ethical in our decisions, we’re just used car salesmen. We are not in this business to drain every nickel out of these people. We have some responsibility, we have to have integrity. It’s about time, and I tell hosts all the time, if you find a good player in February or March, it’s probably because of a government check, tax refund time. They’ll call and maybe have a $1,500 ADT for a bit, but then they settle back into their normal $20 ADT, which is normal. You have to sit and watch, maybe they had a life event, sold a house, and decided to see what they could do, that’s not sustainable. We’re looking for sustainable revenue, which means we have to have patience. You’ve got a big enough database, you don’t have to nail every single “hot player” moment, get that out of your head.

Audience Member: Patience isn’t really a thing anymore though, is it? Instant gratification.

Audience Member: This theory was theo times four to find the qualified bankroll, but that’s confusing to me because theo isn’t a measure of value, it’s a measure of play. Are you sure you don’t mean actual times four, or drop times four?

Ken: We’re actually out of time here, but yes, he does specifically say theo in the framework. I got a little confused by that too, in fact I fact-checked it, and it does say theo.

Real quick, moving to the second point: checking what their average bet per spin is, especially with brand-new players or inactive players freshly coming back, people you may still be unfamiliar with even if they’ve been around a while. What’s really interesting here is that the average VIP will spend about 1% of their bankroll per decision, per spin, which is actually a third of what a recreational gambler would do. A recreational gambler bringing in $100 might spend $3 a spin, while a VIP would spend closer to $1, because they’re there for a different reason, chasing the experience and the jackpot, not just trying to make a quick buck. I was a little surprised by this one, but the research holds up.

The other thing to measure here, which Hannah touched on earlier, is quick loss pattern detection. If a guest comes in and loses $2,000 in twenty minutes but only puts up $100 in theoretical, that’s a fairly good indication of where they’re going to stop, because they’re not going to buy back in. But if over the course of the day they’re there for the rest of the evening and they do buy back in, maybe they took a break, had dinner, rethought their strategy, that’s different. If that was clearly the end of their trip, that’s a good signal.

Hannah, I want you to talk about the next point, since your specific market was really interesting, it was a heavy local market.

Hannah: It was local, we had locals, but we were also a seasonal destination location. We segmented the database, and with the locals market specifically, we found it was actually higher than what you’d expect post-COVID. What we discovered was that 34% of players had just one visit over a year, and 60% had fewer than three. After COVID, that number jumped to about 80%.

ADT became unreliable, so we reached out directly and asked why people weren’t coming. What we found was they weren’t getting the experiences anymore. After COVID, everything opened back up extremely slowly, and the world wasn’t what we were used to. People weren’t just looking for the experiences they once had, they somehow had even higher expectations. I think it’s because everything slowed down and people wanted to enjoy life more, they were looking for real experiences, and we couldn’t meet that for a while, so our numbers went down. It did turn around eventually, but we ended up relying less on locals and more on the destination, seasonal guests.

Ken: What kind of things did those seasonal guests enjoy, up where you were?

Hannah: It depended on the season. Where I was, we weren’t just competing with other casinos for that wallet, we were sharing that space with other entertainment: skiing, snowboarding, snowmobiling, ice fishing, and in summer, fishing and golfing. Those are expensive hobbies, and not just expensive, they take a lot of time. Ice fishing isn’t a twenty-minute excursion, it’s an all-day event, depending on how serious you are about it. That took time and play away from the casino entirely.

Ken: Those sound like expensive hobbies.

Hannah: Absolutely.

Ken: The point I’m showing you this for is that Hannah nailed it on the head, you’re not just competing with other casinos, you’re competing with other forms of entertainment. People with money have expensive hobbies, a boat, a lake house.

Hannah: Cabins.

Ken: Right, none of that is cheap. Even golf isn’t cheap.

So when you’re looking at that 20% spread-player and 80% loyal-player split, they could actually represent the same amount of money, but you need to understand how much of it you’ve actually captured, and you can use the questions we talked about earlier to find out.

I know we’re running a little close on time, but the exact point we just made is that a guest’s wealth is not always equal to their worth. If they tell you they’re the CEO of Amazon, bad example, that doesn’t mean they’ll always have time to come to your casino. But it starts with asking those questions in a very casual way. You just walk up and ask what’s going on, and they’ll tell you.

Okay, we’re supposed to talk about reinvestment a bit, so we’ll touch on it. This gets a little tricky specifically because of the theoretical-versus-actual model. As we talked about earlier, if somebody tells you they’re a $2,000 player, it most likely means they walked into your casino with $2,000. If they lost all $2,000 of it on their card, which almost never happens exactly that way since people pull their card in and out, what are they worth to you out the gate? About 40% of that.

If you’re looking at early trips, their theoretical could be significantly lower, and now you’re not able to offer them what they think they’re worth, which brings you right back to that gap between expectation and reality.

Hannah, you dealt with more of the marketing side at Fortune Bay. Can you talk about perceived value, and why it matters so much?

Hannah: Yes, perceived value is one of those things I went head-to-head with a few GMs and CEOs about more than once. If we can give away a hotel room for its internal cost, a soft cost, versus the hard retail cost, we’re able to make so many more players happy and give them the experience we actually want them to have. They become more loyal customers, and overall it’s just better for us. If you have the ability to do it, the soft cost of perceived value is always going to be worth more to you in the long run.

Ken: We should probably start inviting finance people who understand this side of things to these sessions.

So, with offers and the comps that show up in the mail, that’s not always a static number, right?

Hannah: No.

Ken: What was it typically based on?

Hannah: We’d base it off a rolling calendar, typically three months for locals, six months outside of our local budget.

Ken: It was a holding average, never a fixed target, always moving.

Hannah: Correct.

Ken: So when you think about comping a guest, especially early on, or with a bit of X-play, here’s a good example. When you look at a player like this, blue is their play, green is their offers, orange is their discretionary comp. Would most people feel fairly comfortable comping this person?

Audience: Yeah. Yes.

Ken: Okay. What about this person?

Audience: Maybe a little less.

Ken: Some people might have a bit more tolerance, that’s fair. If you zoom out, you’ll see they’re actually the exact same player, just two weeks apart.

So the question to ask yourself, when you see one of these much-larger-than-normal comp values, is whether they received a comp within that same window, since people can end up on comp exception reports, as Steve mentioned earlier. If you know a big day of play is going to fall off the report in two days, because it happened two months and twenty-eight days ago, do you really want to issue a comp based purely on what the system currently shows, say 19% reinvested, when three days later it’ll show 50%? On the flip side, you might deny somebody a comp because they appear over-reinvested, and end up upsetting them, when waiting a couple more days, or just explaining the situation, could have defused it entirely.

I know we’re going to run a little over, forgive us, we’re almost done. All of that to say: none of this happens without your intervention in this space. You being on the casino floor, you being in places like this to sharpen your tool set, that’s what makes these relationships mean more.

We talked about how these moments are hard to measure, so let’s talk about a couple of things you can measure. Show of hands, how many people here like getting cold calls?

Hannah: How many people like making them?

Ken: This is so surprising, nobody likes getting or making cold calls. You’re not alone in that, it’s not a casino-specific thing.

Warm calls are 15% more effective. You get about a 1 to 3% conversion rate on cold calls, that jumps to 15 to 30% for warm calls. We’ll get to what a “warm call” means in a second. 80% of cold calls go straight to voicemail, and 85% of people won’t answer an unfamiliar number. Most of you have probably experienced this, especially early in your careers.

This gets even worse with new player retention. You have about a 30% chance of keeping a player after day one, and that number tanks to less than 8% by day seven if you’ve made no connection with them at all. But if you get them to trip a third time and it’s a great experience, you now have a 70% chance of retaining them. Pretty wild, right?

So how do you get a person to that third trip? It means that when you make those handshakes and warm greets out on the casino floor, meeting them where they are, that single interaction accounts for almost 8 to 12 cold calls you could have otherwise made to that same person over time. They generate 40% more revenue on average too, that’s not a casino-specific stat, it’s a study from McKinsey. I’ll let that one sit for a second.

So, wrapping up, what if you took the time to greet the guest and paired that with your next cold call to the person you’re trying to reach? You now have a warm-in with them.

Let’s say you can contact thirty people a week. We pulled data through our Recon integration, a residential marketing data company. One particular host, anonymized, had almost 400 players in their book, but 5% had no phone number on file, and 65% had no valid email. Anybody else run into this? Hannah, did you see this across your whole database too?

Hannah: Mm-hmm.

Ken: So when we had this host make 240 phone calls, about 20 calls a day, three days a week, not a huge volume, they got a 1% conversion rate, about average, which led to three incremental trips. That’s a lot of work for a very small amount of lift.

On the flip side, we had them greet the guest in person first, then follow up with a call within five days. That produced 36 incremental trips in a month, for the same amount of time spent on property, just doing what you were actually hired to do.

At a churn rate of about 10 players a month, roughly 30%, which is normal for casinos, you’re already starting from behind if calls are the only tool you’re using. But you still have to make the calls.

So, layer these things one after another. I know we talked about definitions, you’ll be getting those sent out later. But I want to hand it to Hannah, since I’ve completely taken over this conversation, to share a story that really hits home for everyone in the room today.

Hannah: So, when I started as a casino host, this was a long time ago, I had a player who kept showing up on my reports. I tried calling them three or four times, nothing. So I decided to wait until they came in, they visited about once a year, and that time was approaching. I found them on the floor, greeted them, got to know them, got to know their kids, just talked to them. I knew their birthdays, their anniversary. They went from a once-a-year player to a four-times-a-year player. It wasn’t just one person either, it was a couple, both on the report. It was a great outcome, and that was the first time I really experienced growing an actual player relationship like that.

Ken: Did they stay at that level once you left?

Hannah: They did not. That’s a mistake I made, and it’s really important for you all to avoid: write down and pass on your information. Your coworkers are your best resource in this space, take care of them, and pass along anything you can, because that information is valuable to the property as a whole. When I didn’t pass it on, those players fell right back down once I moved to another position. So what you do is extremely important.

Ken: In conclusion, what you do, whether you measure it or not, matters. Those touch points, those transformational interactions, logging things so your teammates can pick up right where you left off without a break in service, all of it matters. The relationships you build absolutely matter, and I can prove it, because the same person who came up with that curve I showed you earlier also said this: people, relationships matter.

With that, thank you all so much. I know we ran a little long. Thank you.