Dealing with High Rollers
Posted on 26th Nov, 2009
How often in the last few years have we heard of a gaming company blaming lower than expected table game hold for its poor quarter or half year result?
The MGM, Mirage, Hilton and most recently Harrah’s (or The Rio more particularly) have all fallen foul of low hold percentages. Poor win rates brought about by dealing high limit Baccarat to a select few (predominantly Asian) customers.
Win rate volatility is however only one aspect of volatility that operates in this area to make the business of dealing with high rollers an even riskier proposition.
Volume: Not just of customers but also of total amount wagered. One player I know of turned over $850 million in wagers in one visit to a particular casino. Another turned over in excess of $1.25 billion in the course of a year. Add these players in or out of the equation and volumes can vary dramatically from year to year even though total player visits might remain relatively constant. Analysts and many casino executives often neglect this factor when reviewing results or drawing up next year’s budget.
Win Rate: Baccarat is a game of chance and so fortunes can, and do, pass both ways across the gaming tables. The house advantage on Baccarat averages a very low 1.3% to make this close to a true even money bet every time the cards are drawn for a new hand. (or coup as it is known) An interesting statistic is that 14,981,640 hands need to be played for there to be a 95% confidence interval of results falling between a win rate of 1.25% and 1.35%. If you multiply this number by a bet of $100,000 you require $1,498,164,503,243 in turnover for win rate “certainty”. An astounding number in any ones view!