At G2E 2007, I sat on a panel called “Giving Them Credit: Developing a Sound Casino Credit Policy,” that touched on a topic that has been a longtime battle within the gaming industry: the vanity line of credit.
A vanity line is when a casino credit customer wants more credit than his or her theoretical and actual play dictates, but let me explain further. We all have the casino credit customer whose play is $75 average bet, whose high action is $2,500, and whose line of credit is a whooping $50,000. I also call this an “ego line,” as the property is running a credit risk in order to boost the player’s personal ego. When the relationship between a customer’s credit and his actual play history is out of proportion, we are walking the vanity/ego line. The question now is, how can we avoid it?
One of the members of the panel at G2E was my former boss from many years ago. We started to talk about this and that, and then he reminded me of the 20/25 Rule. This is an old-school philosophy, but it really works. The 20/25 Rule involves taking a customer’s known average bet and multiplying it by 20 or 25. The result will give you a baseline amount from which to determine an appropriate amount of credit.
To update this old rule for the new-school, a friend of mine and I took its basic premise a bit further, adding a couple of bells and whistles. Our formula is illustrated in Tables 1 and 2.
[Note: The hold percentage and hands per hour will vary from property to property. Substitute your actual figures to make this formula accurately reflect your casino’s floor.]
We added the total number of hours played, the hold percentage, and the average hands per hour to the formula to show the theoretical impact this player has made on the house win. In these examples, the guest’s average bet is $707 and he has played a total of 4,069 hours.
According to the 20/25 Rule, when calculating a factor of 20, his line of credit should be in the $14,000 range. (See Table 1.) Assuming this guest meets my financial requirements, I would probably round this figure up, giving this customer a $15,000 credit line.
Table 2 shows the same guest, but illustrates the formula with a factor of 25. As you can see, at 25X the average bet, the baseline for issuing credit is $17,675.
Personally, I prefer using the 25X base instead of 20X, but that doesn’t mean I would never raise the line of credit from there. In addition to the 20/25 Rule, one of my mentors used to say, “Let play determine a higher limit.” A good way to keep vanity/ego lines under control is to implement the 20/25 Rule, but let guests know that you are willing to increase their credit based on play.
Currently a Director of Cage and Credit Operations at Cache Creek Casino Resort, Al Zayas has 27 years of experience in banking, finance and casinos. He can be reached at alzayas@netzero.net.
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