Casino Operations Management

Complete guidance to the ins and outs of gaming operations

Management personnel need a thorough understanding of thebusiness side of the casino industry to ensure profits and toavoid losses. It s a sure bet that Casino OperationsManagement, Second Edition will help current and future gamingmanagement professionals better serve any casino.

Written by experts with over 65 years of combined experience inthe field, this Second Edition offers all the critical skills andknow–how to equip gaming and casino operators with the knowledgeneeded for the management office, cage operations, and table gameand slot operations. This updated edition features detailedcoverage of:

Current high–roller marketing tactics and their effect onprofitability The effect of popular money management systems on casinoprofits The initial development process of an Indian casino Studies designed to identify the patronage motives of gamblers,including those of riverboat customers Slot club design: player rating issues, point accumulationschemes, and more Principles of casino floor design: managing table game and slotlocation Studies designed to measure the profit contribution of popularslot promotions

Casino Operations Management, Second Edition usessimplified mathematics and statistics throughout, and providesreaders with a thorough understanding of all aspects of the casinoindustry business. It is a must–have reference for students andcasinos that develop managers internally.

Preface ix

Chapter 1 THE HISTORY OF MODERN GAMING 1

Nevada: The Birthplace of Modern Gaming 1

The Wide Open Gambling Bill 2

The Bull Pen Casino 3

The Grandest Club in Southern Nevada 4

Big–Time Gambling 4

The Birth of the Las Vegas Strip 5

Bugsy 5

Howard Hughes 7

Modern–Day Las Vegas 8

Steve Wynn 9

Sol Kerzner 10

Chapter 2 GAMING CONTROL 13

History of Gaming Control in Nevada 13

Atlantic City Gaming 21

Indian Gaming 24

Chapter 3 GAMING TAXES 35

Gaming Taxes 35

Internal Control Systems 39

Differences Between Nevada s and New Jersey sInternal Controls 41

Chapter 4 CASINO MANAGEMENT 43

The Management Pyramid 43

Casino Organizational Structure 43

Casino Hotel Systems 49

Staffing 53

Chapter 5 CURRENCY REPORTING 61

History 61

Nevada s Regulation 6A Model 63

Title 31 Reporting 74

Currency Transaction Reporting in Nongaming Areas 81

Chapter 6 CASINO CAGE, CREDIT, AND COLLECTIONS 83

Casino Cage 83

Casino Credit 84

Collections 103

Chapter 7 SLOT MANAGEMENT 107

Slots 107

Video Pokers 120

Floor Configuration 129

The Slot Floor Layout and Consumer Behavior 133

Elements of a Successful Slot Servicescape 134

Determining Slot Win 134

The Importance of Hit Frequency 135

Random or Pseudo–Random? 139

Chapter 8 INTRODUCTION TO TABLE GAMES 141

Dice 141

Roulette 150

Blackjack 151

Baccarat 156

Keno 158

Caribbean Stud 161

Let It Ride 163

Pai Gow Poker 165

Chapter 9 TABLE GAME OPERATIONS 167

Table Game Operations 167

Revenue and Profit per Square Foot 179

Betting Limits 184

Chapter 10 CASINO ACCOUNTING 193

Table Drop and Count 193

Slot Drop and Count 195

Key Control 197

Internal Audit 199

Casino Audit 201

Statistical Reports 204

Chapter 11 MATHEMATICS OF CASINO GAMES 207

Dice 207

Roulette 214

Blackjack 214

Baccarat 214

Keno 216

Chapter 12 ELEMENTS OF AN EFFECTIVE PLAYER RATING SYSTEM219

Importance of Player Rating Systems 220

Actual versus Theoretical Win 220

Estimation of Average Bet and Time Played 221

The Player Rating System 221

Establishing Guidelines 233

Player Rating Systems 233

Chapter 13 TABLE GAME HOLD AS A MANAGEMENT TOOL 241

Uses of Table Game Hold 241

Determinants of Hold 241

Theoretical Win and Hold 245

High Table Occupancy May Be Hazardous to Profit 250

Chapter 14 CASINO MARKETING I 255

The Cost of Match Plays and Nonnegotiables 255

Match Play: Problems and Solutions 259

Gambler s Spree 260

Dead Chips and Chip Warrants 267

General Slot Marketing 276

Consumer Choice Factors 279

Chapter 15 CASINO MARKETING II 283

Rebates on Loss 283

Player Action Criteria 294

Table Game Rule Modification as a Marketing Tool 295

Chapter 16 CASINO MARKETING III: THE PREMIUM PLAYERSEGMENT 301

Defining the Premium–Play Segment 302

Acquisition Costs Keep Going Up 302

Deconstructing the Premium–Play Segment 304

The Hidden Cost of Discounting 304

The Net Effect of a Premium Play 307

Quick–Loss Rebate Policies 308

Costs of Competing for Premium Play 310

Discounts for Twenty–one Players 311

Discounts for Craps Players 312

Testing a Minimum–Play Constraint 312

Rationale Behind Discounting 313

Baccarat Discounting Recommendations 315

Dangers of Discounting 318

Chapter 17 SPORTS BOOK OPERATIONS 319

History 319

Sports Betting 322

Money Lines 324

Point Spread Betting 334

Chapter 18 RACE OPERATIONS 343

Betting at the Track 343

Types of Races 345

Types of Bets 346

Racing Terms 346

Regulatory Requirements 347

Race Book Operations 349

Chapter 19 CASINO STATISTICS 357

Population 357

Sample 358

Parameters and Statistics 358

Average or Mean 358

Median 359

Mode 360

Measures of Dispersion 360

Range 360

Variance 361

Standard Deviation 361

Weighted Average 364

Probability Distribution 365

Expected Value 365

Calculating the Standard Deviation with Uneven Betting 367

Sample Game Probabilities, Variances, and Standard Deviations371

Our Worst Fears Realized A Money Manager 372

Appendix: Z Table 377

Glossary of Casino Terminology 379

References 391

Index 397

JIM KILBY is the Boyd Professor of Gaming at the Universityof Nevada, Las Vegas. He has more than 35 years of experience inall facets of casino operations and has served as a consultant tocasinos throughout the United States, the Caribbean, Malaysia,Australia, and South Africa. JIM FOX is the Director of NevadaDestinations for Jefferson Wells International. A CertifiedInternal Auditor and Certified Fraud Examiner, he has over 20 yearsof experience in the gaming industry and is the instructor for theAuditing in the Gaming Industry class at the University of Nevada,Las Vegas.

ANTHONY F. LUCAS, PhD, is a professor of gamingmanagement at the University of Nevada, Las Vegas. Drawing on his10 years of casino industry experience, Dr. Lucas has producedaward–winning research articles in the area of casino marketing. Hehas also served as a consultant to many leading casinocompanies.