Casinos need to rethink free play promos, UNLV study says

A new study by UNLV’s Harrah College of Hospitality researcher Anthony Lucas is up to some interesting conclusions about the usefulness of free play promotions in the land-based casino sector, and how the money going into these promotions could potentially be used to get casinos a bigger bang for their buck.

Free play promos hit the mark, but casinos need to take a few notes

The study by Lucas, himself a gambling industry insider for more than four decades, tapped into the performance data provided by a tribal casino property based out of the Western United States.

The research, which was also prepared with San Diego State University Katherine A. Spilde’s help, essentially looked at how free play promotions, and the amounts awarded to individual players affected their decisions to revisit the property, and whether there was any specific threshold that would yield diminishing returns, making showering customers with free play unsustainable.

Lucas spoke with understanding, citing concerns that casinos are by nature a skittish sort, and corporations are generally risk averse. Why break it if it works even if it costs a little more than it should, the thinking goes?

The UNLV’s study tries to give companies a range to work with. The research tracked 400 casino-goers and offered them loyalty free play ranging from $0 to $15, every week, to see if this would change their behavior or desire to play.

Spending too much on free play? Casinos may yet save a dime

"We wanted to understand how the spend per trip and number (sic) of visits changed. What we found out was that there was no decline in spend per trip after reducing the awards. I don’t think there is anyone in the industry who would have predicted that," Lucas explained.

He also added that players themselves will not necessarily revisit the same property time and again, citing the normal practice of eating out at different restaurants for most people, for example.

The study concluded that the only group of visitors who were swayed by changes to their free play were those who were deprived of their promotions completely. The group that would get $0 in weekly free play promoswouldsee 20% of its members stop visiting. The other groups, though, i.e. those who received $5, $10, and $15 experienced no declines in their visitations.

What this could mean is that companies may be overspending on free play promotions. The only marked difference is when players are not offered any free play at all, whereas even token free play of $5 could be as impactful as the $15 offered to customers, with both groups just as likely to visit and spend roughly the same amount of money already.

So, are casinos overspending on the free play offers? They most likely are, but fear for missing out on new patrons is making them hesitant to lower these promotions. Are they going to take note of this research? They may, but they would need more input and participants to advocate for greater free play change of their own.

Image credit: UNLV