Breakage

I first heard the word "breakage" in the context of casino operations during a discussion with a slot manager at the Palms.  Concluding a rant about the undesirablility of video poker players (as opposed to reel slot players) he said, "and there's no breakage."

What he meant, in a gross overgeneralization, is that video poker players use their players cards, take advantage of free play offers and promotions, and use all the points they earn.

Breakage occurs whenever a casino doesn't have to provide something a player has been offered or is entitled to. It's a huge source of casino profits.

Much, perhaps most, breakage is the "fault" of players. The casino sends out room offers, dining credits and free play that can be used only on certain dates. The customer can't make it to the casino while the offers are valid, so they go unused. Breakage.

But another kind of breakage is, in my opinion, manipulative at best and deceptive at worst. This occurs when casinos set things up so it's almost impossible for them to give players what they promise.

A simple example is a drawing or tournament with an advertised prize amount. But the time frame for claiming the prizes is so restrictive that the casino knows a percentage of the money will be forfeited. A few years ago, many casinos would mail prizes to guests who couldn't personally claim them after a drawing or tournament. Now it's not uncommon to require winners to claim within as little as half an hour.

Another way to create breakage is to design a drawing or promotion so that the biggest prizes do not have to be awarded. An easy want to do this is to provide more prizes than there are winners, and have each winner pick a prize. Let's say a casino advertises a drawing with 10 winners and a top prize of $10,000. But each winner has to select an envelope from a total of 20, only one of which contains $10,000. In my opinion a casino operating such a drawing should be allowed only to advertise the top prize guaranteed to be awarded as the top prize. In this case that would be the 11th-highest prize, because the 10 highest prizes might not be selected. The top potential prize ought to be allowed to be mentioned in advertising only if it is made clear that this prize might not be awarded. The usual "win up to $10,000" in a case like this is at best misleading.

There are ways to set up a promotion so that the creation of breakage is achieved with great subtlety. Let's look, for example, at the weekly seniors drawings at the Silverton.

The casino holds three drawings each Monday for players 50 and older, at 2, 4 and 6 p.m. There are 15 prizes at each drawing, ranging from $50 free play to $1,000 cash. A player can win at one, two or all three drawings each week. Tickets are earned on Mondays only based on amount of coin-in. All tickets remain in the drum for all remaining drawings that day.

But every senior is entitled to a free entry. Part of Silverton's seniors day promotion is a half-off buffet or entree at the cafe. To get this discount, players have to swipe at a kiosk. With the discount they automatically get an entry into the drawing.

Players need not be present to win, but must claim their prize within two hours of each drawing. Those who are serious about these drawings time their play on Mondays to end just before 2 p.m., wait for the results of that drawing, come back just before 6 p.m. to check the results of the 4 p.m. drawing and wait for the results of the final drawing.

How many people who come for a cheap lunch and have one ticket in the drum are going to check the results of all three drawings? Not many, I'm sure. I wouldn't. Same for casual players who might earn a few tickets. And plenty of people are going to have things to do that keep them from checking, even if they have good reason to do so.

I participate in these drawings almost every week and usually win at least a couple of times a month. Winners have to sign a sheet of paper on which all the winners' names are listed. Signing for the 4 p.m. drawing just before the end of the two hours claiming period, I often have seen that only a few of the 15 winners have shown up to get their prizes.

It's important to understand that even a promotion designed to create breakage, and even one that's deceptively advertised, can be an advantage play. And the Silverton, for example, undoubtedly would provide a much smaller prize pool on Monday if the rules provided that all prizes had to be awarded.

Nonetheless, I agree with Michael Gaughan, owner of South Point, whose philosophy is that casinos ought to give away what they say they are going to give away.

Random thoughts ...

Pie Oh My
In Vegas, the day before Thanksgiving ought to be declared a new holiday -- Pie Day. Almost every locals casino gives away pies on that day. Typically, regular players get a free pie; others get a pie after earning a set number of points. At some places, players can get both a free pie and an earned pie. Although we got a late start and pies weren't our priority, my spouse and I managed to pick up five pies on Wednesday. If we had planned our day around pies instead of point multipliers, we easily could have gotten at least five more.

One casino, South Point, gave out turkeys before Thanksgiving instead of pies. Players had to earn 1,100 points during certain days to get a certificate good for a turkey and serving platter. Points at South Point are earned at a rate of one per dollar of coin in. The video poker at quarters through $2 is excellent, including games paying back 99.73 percent. The expected loss on $1,100 coin in on such a game is $3 and change, a pretty good price for a 13-pound turkey.

Coupon Clarity
The night before Thanksgiving, I went through my "food stamps" to see which ones could be used on Thanksgiving. Food stamps are what we call the coupons for dining credits that casinos include in their mailers are that are obtained through promotions. Often these have restrictions, such as "not valid on holidays."

It's pretty clear that Thanksgiving is a holiday, but what about Mothers Day? or Columbus Day? I've often wondered why the casinos can't list the specific dates on which these offers are not valid.

The food stamps from Caesars Entertainment are the worst in this regard. They say there may be blackout dates, inclding holidays and during conventions. Am I supposed to know when the big conventions are taking place, and which ones trigger invalidity of a dining offer? And if I call the casino or even the restaurant I want to go to, am I likely to reach an employee who can give me an accurate answer?

I understand that some offers are going to come with restrictions on when they can be used, but a guiding principle of casino management should be not to disappoint customers unnecessarily. If exclusions are stated with specificity and clarity, people are not likely to be disappointed; if they are, they have only themselves to blame for not reading the offer.

Note to Caesars management: Why not set up a Web site with accurate information on when and where customers' dining offers can be used, if they can't be stated on the actual coupon?

Multiplier madness

Thanksgiving is approaching, and many casinos are offering point multipliers for play on the holiday, meaning it will be a very long workday for me.

Point multipliers are one of the most common casino promotions. They can be quite valuable for both the casino and for players who know how to take advantage of them.

To understand point multipliers, you first have to know what points are, and that isn't as easy as it might seem. Basically, points are a form of reward for play given by casinos. But what they can be used for and how they are earned vary considerably among casinos.

What follows is a look at the Station Casinos point system, which is very similar to the Boyd Gaming casinos system. These are the to major chains of locals casinos in the Las Vegas area.

At Station properties, which include the Fiesta and Wildfire properties, points are earned (technically)  at a rate of one per dollar of coin in on most machines. I say technically because all players are entitled to three times points all the time. Chairman, president and platinum players get this multiplier automatically; gold and preferred players must swipe their player card at a kiosk to activate it. Points on 100 percent payback games are earned at a rate of $1 coin in per point. These games are inelgible for multipliers.

Points may be redeemed at a rate of 1,000 per dollar for comps, free play or cash. Players get a discount at the buffet when paying with points of up to 50 percent, depending on card level.

The video poker game I usually play at Station and Fiesta properties is "not so ugly" deuces wild, which pays back 99.7 percent. This game is basically break even with the usual three times points, which add 0.3 percent to the return.

Stations offers various point multipliers besides the every day three times. Some are available to anyone who shows up and swipes a player card; others are for invited guests only. Some are "mystery multipliers," the value of which is revealed when the the player's card is swiped at a kiosk.

In my experience, these multipliers range from four times to six times points on video poker. "Public" multipliers on reel slots range up to 10 times. I don't know what multipliers reel slot players get from their mailers, but I wouldn't be surpised if someone who plays penny slots exclusively were to get more than 10 times points. These games hold at least 10 percent of money played through, and 10 times points at Stations is worth 1 percent.

Any multiplier above the everyday three times must be activated at a kiosk. The multiplier is based on a 0.1 base, not on 0.3. So a six times multiplier is worth 0.6 percent. This makes the not so ugly deuces worth 100.3 percent instead of the usual 100 percent even.

What this is worth is dollars depends on the denomination you play and on how fast you play. Let's say you play dollars (the highest denomination of this game at Stations properties) at max coin, meaning you're betting $5 a hand. Let's further assume you play a fast 800 hands an hour, meaning you put through $4,000. Multiplying this amount by 100.3 shows that you're earning $12 an hour from this play, not counting other benefits the casino may give you, such as future free play in a mailer, gifts, food coupons, drawing entries, etc.

One good thing about Station multipliers is that there is no limit on the amount of points you can earn. The Boyd casinos, Station's main competitor, offers higher multipliers (as much as 50 times on reel slots and 30 times on video poker), but with limits. At Boyd downtown properties (the California, Fremont and Main Street Station) the limit is usually 100,000 total points, with the multiplier. At Boyd's Coast Casinos (the Gold Coast, Suncoast, Orleans and Sam's Town), the limit is usually 10,000 base points multiplied.

But the good news is that some of these properties offer games that can be positive with multipliers at much higher denominations than Stations, including not so ugly deuces at up to $5 at the Fremont and full pay jacks or better (99.5 percent payback) at up to $5 at the California, Gold Coast and Sam's Town.

At some other locals casinos, including the M, South Point and Silverton, base points are worth 0.3 percent. At these casinos, two times points is equal in value to six times points at Station and Boyd properties. South Point doesn't offer point multipliers very often, but when it does, there is no limit on points earned and there are some good games, including $2 not so ugly deuces, to earn them on. Tbe M offers very frequent multipliers of two times on video poker and, in my experience, 12 times on reels. The problem here is that the games are tight, the best return before points being 99.4 percent on Ace$ bonus poker. Silverton has not offered multipliers on video poker for some time but goes to at least 10 times on reels.

These casinos' point systems are all similar in that points can be used for cash back, free play or comps. In some other systems, points can be used only for cash back or free play, and comps are earned separately from points. Such systems are used by several downtown Las Vegas casinos, including the Golden Nugget, D and Four Queens. Also at these casinos, points are generally earned at a rate of one per $10 of coin in and redeemed at a rate of 100 points per dollar, for a rate of 0.1 percent.

Before taking up a casino's offer of a point multiplier, it's a good idea to read the fine print in your mailer or at the players club. Write down your points balance before you start playing, and the number of base points earned. Then check on the machine or a kiosk or at the players club to make sure you got the proper multiplier.

A final word of advice: Some casinos, including South Point, do not look kindly at those who play only on point muliplier days. Over the years, some who made that mistake at South Point found when they returned that their player card no longer worked.

Video poker progressives: When to start playing, when to stop

Let's begin with the premise that we want to play video poker progressives to make a long-term profit. We've discussed how to determine when a progressive is at break-even, using the Video Poker Scouting Guide, the Video Poker for Winners software or Bob Dancer's rough rule of thumb. The only time we would want to play a game that's below break-even is when incentives supplied by the casino make the total return above 100 percent.

Aside from this basic rule, when to start playing is mostly a matter of personal preference that depends upon a player's answers to these questions:

1. What alternatives are available, in terms of other video poker plays, other gambling opportunities and other uses of time?

2. What is the player's long-term expectation of hourly earnings from playing progressives?

3. How fast is the meter rise of the progressive in question?

4. At what point is there a danger of being shut out of the action by other players?

The first question, I think, is pretty self-explanatory.

As to the second, here is how to figure earnings per hour from a particular play, progressive or not. First, determine the payback of the game. Let's say it's a progressive is at break even. The casino awards points at a with a value of 0.1 percent, but today is offering five times points. Playing today also earns drawing tickets and is helps satisfy the requirements for future offers. Let's guess the value of these benefits at 0.2 percent. So the total return of this game, assuming, as always, playing accurately according to the proper strategy, is 100.7 percent.

A moderately fast player plays about 700 hands an hour. Multiply that or the actual number of hands you play by the amount wagered per hand. For a dollar player, that's $5, or $300 an hour. 0.7 percent of that amount, of $21, is the long-term hourly earning expectation from playing that progressive with the jackpot at the amount upon which we figured the return of the game.

But the nature of progressives is that the jackpot grows. Question 3 refers to the rate of that growth as a percentage of the money played through. Usually, the only way to find this rate is to determine it yourself. For progressives on more than one machine, this must be done when no one else is playing. Simply keep track of how much the meter moves with, say each two hands ($10 on a dollar progressive) or eight hands ($10 on a quarter progressive) played.

The actual rate at which the meter will rise when more than one machine is inolved depends not only on the meter rise, but on how many machines are being played and how fast they are being played. But meter rise is an important factor in comparng progressives. All other things being equal, a progressive with a faster meter rise is more desirable than one with a slower meter rise.

The existence of meter rise means that, in the above example, $21 is only that starting hourly rate for playing that progressive. As it is being played, the hourly rate of return will increase steadily. So it makes sense to start playing when the hourly rate is somewhat below the average you want to make.

My final question, No. 4, can be answered only on the basis of experience with particular progressives, or with accurate information obtained from someone with such experience. Observing once or twice when a particular progressive begings to fill up might not be enough because interested players might not always learn immediately that a progressive has reached their strike point. What you want to figure out is the minimum amount on the meter that is likely to attract a crowd.

That's my basic approach to determing when to start playing. What about when to stop?

If I'm playing a progressive "early," before getting a seat is a concern, I play until I haver something better to do. But at some point, you want to make a commitment to stay until the progressive is hit or you physically can't play any longer.

When to do this is basically a matter of guesswork. The key thing to keep in mind is that there is no way to predict when a progressive will be hit. Progressives are often found at casino bars, and bartenders, trying to be helpful, have told me more than once that, based on their experience, a progressive should be about to pop or is overdue to be hit.

This is nonsense. When the royal comes is determined by a random number generator, which has no knowledge of how long it's been since the last royal flush or what amount is showing on the meter. The liklihood of a player getting a royal flush on a particular hand is exactly the same whether he or she got a royal on the previous hand or hasn't had one in months.

 Often a juicy progressive will last longer than one person can stay awake. Having an arrangement to trade of with one or more other players can keep you in the game longer than going it alone. Just be sure you have a complete agreement with your teammates on all relevant terms.