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Where’s the Money? Part 7: Finding the Money in Jackpot Wharf, Part 1

Article Author
Andrew Cardno, Dr. Ralph Thomas and Jada Evans, with Salinda Conklin
Publish Date
January 3, 2012
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Author: 
Andrew Cardno, Dr. Ralph Thomas and Jada Evans, with Salinda Conklin

Authors’ Note: This is part 7 of our 18-part series on “Where’s the Money.” This is part 1 of a two-part series on Jackpot Wharf. The second part will look into customer displacement and scientific control. This article digs deeper into the measurement of success of gaming mix optimization in the Jackpot Wharf area of the Silverton Casino in Las Vegas. The objective of this project was to create a destination-style gaming area the builds on the high level of non-local customers in the property. From a very high level, the task was to identify games that had high levels of non-local play and cluster them together around the mermaid tank. This analysis applies metrics such as spend per hour (SPH), utilization and percentage of non-local while considering yield per square foot. One important attribute of the analysis was taking into account what was a significant reduction in the number of gaming devices.

Silverton Casino is a locals casino. However, they have a unique source of tourists—a Bass Pro Shops store that is literally connected to the casino. Heavy foot traffic can be observed between Bass Pro and one area of Silverton, as Bass Pro patrons are drawn into the casino to view the 10,000-gallon salt water aquarium that occasionally features live mermaids.

This area was recently named Jackpot Wharf. The initiative was to transform it into an area that would convert the mostly tourist foot traffic to gamers through strategic product placement, a revamped layout and aggressive use of participation games.

Jackpot Wharf is situated on the eastern end of the Silverton Casino, which has long been a low-performing area of the casino. This mini casino optimization is the third step in the ongoing optimization of the gaming floor. (The first step was described in the CEM series on Penny Alley, and the second was the recent Seasons optimization described in the November 2011 issue).

Mini Casino Strategy
To implement the mini casino strategy, there are a number of critical requirements. Without these requirements, it is quite simply not practical to implement a mini casino strategy.

1. Naming of areas. While this seems like a simple step, it is in fact one of the most difficult tasks in building a strong mini casino strategy. The name is key to unifying the slot management and marketing groups. Unified operations and marketing are key elements of the success of the mini casino strategy. In implementing this strategy, it is recognized that it is neither slots that generate revenue, nor is it patrons. It is patrons spending money on slots.

2. Spatial management of physical spaces. The definition of physical spaces is a traditional mapping problem. The challenge is not the initial definition, which is what at least one of us authors thinks is a relatively straightforward process; rather, the challenge is the ongoing management of the relationship. Consider moving slot stands on the gaming floor. What is needed is a system where the slot stand moves (not to be confused with asset moves, where no further information is required), automatically updating the mini casino that they belong to based on the spatial relationship.

3. Locational intelligence and spatial data query. As people use locationally enabled mobile devices to do things such as make restaurant reservations or find the nearest bathroom, this data becomes interaction data, showing how customers interact with us in our business. It is reasonable to contemplate this interaction data being many thousands as times as large as the transaction data we currently analyze. In the brick-and-mortar business of casinos, understanding where these interactions take place requires spatial query, and mini casino regions are a key part of this.

4. Seamless integration into relational data using implicit data relationships. The modern relational database seamlessly blends relational and spatial data. It is now possible to write queries such as “show me every patron who has played within 5 feet of a host who did not give them a drink” or “show me all the high card tier players who turn left when they enter the main door.” This seamless integration of both spatial and relational data into one database opens some analytical doors that resided firmly domain of a select few specialist tools.

The War Room
The war room at Silverton Casino is a central part of its observation process. From time to time, the whole team gathers in this room and collaborates to define new initiatives and assess the results of current initiatives. The war room consists of a large number of plotter-sized printouts covered in hand-written notes and letter-sized graphs of results. The goal is to bring the analytics into central focus, with all the numbers on the wall and all the team members focused on creativity-finding initiatives.

In addition to its collaborative benefits, the war room provides the ability to leverage a new kind of analytics—mega-sized data visualization. In the past, we have been restricted to 8.5-inch x 11-inch sheets of paper that are pressed together in a binder. With mega-sized data visualization, we can essentially “zoom out” and see larger chunks of analytics in a single view, allowing for observations across the data that normally would not be seen. Instead of flipping and searching through that binder, we stand and browse the data across the walls of the war room.

Observations
The initial retention rate in Jackpot Wharf was very low, and financial performance was mediocre at best. The silver lining was that rated non-local financial performance was off the chart.

It was noticed in observing the play patterns in Jackpot Wharf that it has a very high level of non-local players and a high level of non-carded play. In examining the data further, we noticed that Strip-style games were heavily played, and that the locals-style gaming products were under-performers.
The low retention rate indicated that customers were dissatisfied with the product, the layout, or both. The fact that we saw high non-local performance further indicated we had a product imbalance. The first step to balance the product was to find out who was playing what product, where else they were playing, and how similar products were faring elsewhere on the floor.

We found that the non-locals were primarily playing the participation games in Jackpot Wharf, followed by other small segments of house product. Locals who played in Jackpot Wharf spent a small part of their overall time there, preferring other areas of the floor. Understandably, product that was suffering in Jackpot Wharf was generally product that locals preferred and that was thriving in other areas.

The second issue we wanted to address was layout. We wanted the new participation games in prime locations—essentially showcasing them—with the intent of attracting as many impulse purchases as possible. We improved the grocery-aisle style layout by introducing several rounds. This was especially effective by the front doors; where patrons used to immediately walk into two banks of machines, they are now drawn into the area through the use of a shaped bank, which has improved traffic flow to the games along the wall.

The Mini Casino
The character of a mini casino is critical and is a key part of the final result. To quote Barry Thalden, “Character of the casino floor is a huge factor in casino performance. We have seen same-slot revenue increased by 30 percent to 300 percent in areas that are intelligently redesigned.”1

This leads to further opportunity for architectural innovation where the character of the mini casino is further enhanced to drive significant revenue. In our CEM series on horizontal innovation, we defined horizontal innovation as “innovative technologies on the gaming floor that apply broadly across multiple gaming devices,” in the September 2011 issue.

Character vs. Function
To explain character, let’s consider the fundamental difference between function and character. As an abstract example, let’s consider a vehicle. The function of a vehicle is “any means in or by which someone travels or something is carried or conveyed.”2 This functional description of a vehicle defines what the vehicle must do to be classified as a vehicle. However, the character of the vehicle can be anything from a spaceship3 to a motor vehicle. Clearly, the characteristics of the vehicle are extremely important in defining what it is; otherwise, we can confuse space ships with motor vehicles.

Character of Jackpot Wharf
In the world of mini casinos, all mini casinos are functionally similar, if not identical. It is the character of how this function is delivered that is important. The character of Jackpot Wharf was driven by its customer base: a little taste of the Las Vegas Strip with games that are not popular with locals, including heavily themed games like The Hangover and Sex and the City.

The Results
The results from Jackpot Wharf are another validation of the mini casino strategy. While the final results are yet to be determined after a longer period of analysis, the initial results look very promising.

Figure 1 shows how the net revenue has increased substantially. Overall, the results show an approximately 25 percent increase in net revenue for the mini casino. What is more remarkable is that the casino overall has seen a small increase in net revenue in the same time frame. This increase poses questions, such as if the character of the Jackpot Wharf mini casino increased the overall performance of the property.
[Note: In Figure 1 and Figure 2, the tick marks on the X axis indicate weeks.]

Jackpot Wharf
Looking at Jackpot Wharf itself, we see a dramatic upward swing in all metrics in the area. (See Figure 2.)

Conclusion
The results from Jackpot Wharf have, at least so far, been nothing short of spectacular. Clearly it is a further validation of the mini casino strategy. Furthermore, from the Silverton’s perspective, it shows how the casino can design an initiative that focuses on the unique competitive advantages of the property. The jackpot wharf initiative shows how we can cater to different market segments in one property and that cannibalization from a mini casino focused on one market, for example Penny Alley, to a second mini casino, Jackpot Wharf, can be—and in this case was—quite minimal.

Each step of advancing the Silverton property has resulted in a refinement in its mini casino initiatives. What is truly exciting is to see how the marketing and slots groups are cooperating so closely and how this cooperation is delivering bottom line results.

With the continued success of these revenue-increasing yet low-capital initiatives, it is the choice of the operator to apply mini casino-based optimization—a choice that may be hard to say no to in many markets.

Footnotes

1 Barry Thalden, quoted with permission November 2011.
2 Extracted from http://dictionary.reference.com/browse/vehicle December 2011.
3 At least one of the authors loves space ships.
4 The axis of this graph has been left of deliberately to obfuscate the data.       
5 The axis has been deliberately left off to obfuscate the data.

Andrew Cardno has more than 16 years of experience in business analytics, ranging from modeling health care drive times to casino gaming floor analytics. He often presents on the future of analytics across the world and has spent the last seven years living in the United States and working with corporations around the world. He can be reached at andrewcardno[at]yahoo.com.

Dr. Ralph Thomas is Vice President of Strategic Analytics and Database Marketing for Seminole Gaming. During his years in the casino industry, Thomas has focused on maximizing profitability by applying statistical analysis to the company database. Previously, Thomas spent 15 years in academia, as both a student and a lecturer of mathematics. He can be reached at ralph.thomas[at]stofgaming.com.

Jada Evans is the founder of MindSight Analytics and works with gaming companies to provide analytics and help develop strategies for a variety of topics including game performance, marketing, food & beverage, hotel & labor. She can be reached at jevans[at]mindsightanalytics.com.

Salinda Conklin is a seasoned slot operations and performance professional who has worked in properties in Iowa, Illinois, California and Nevada. Conklin brings a wealth of knowledge and over 20 years of experience to Silverton Casino Hotel as the Vice President of Slots. She can be reached at salinda.conklin[at]silvertoncasino.com.

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