Casinos: think ‘thrice about players

Aug 1, 2006 1:22 AM

A Gretzky hat trick; Crosby, Stills and Nash (but no Young), Marsha, Jan, and Cindy Brady (but especially Marsha, Marsha, Marsha), they’re all perfect groupings of 3.

Yes, De La Soul nailed it, "3 ”¦ it’s the magic number."

As with many industries where consumers patronize more than one locale, it has been discovered that casino gamblers follow the mythical "Rule of 3."

Research reveals that a customer on an average gaming trip will visit three casinos and provide roughly 60% of his wallet (i.e., gambling money) to the first property, 30% to the second property, and only 10% to the last property visited.

Please note, these proportions are approximate and can change depending on the nature of the competitive market, but the paradigm remains true (e.g. 50%, 30%, 20%).

Gamblers are promiscuous and they share their wallet amongst multiple locales, thus the trick for the marketing department is to assure that their property is the first one visited.

The rule of 3 suggests that the early bird marketing department that lures with the most succulent bait not only catches the worm, but catches the significantly largest and juiciest worm.

As noted, even though three properties will be visited, the first location will receive the majority of the share of wallet (SOW). The difficult part is to understand what drives the gambler to make casino X the first visit (and subsequent recipient of the largest deposit of discretionary income) rather than casinos Y and Z.

In the Black Hawk and Central City market, a customer might choose his three locations by geography or proximity (i.e., they are across the street from one another, within walking distance), type or atmosphere (e.g., full service, high end), or a more ephemeral factor such as experiences with good service or feeling lucky.

These difficult to account for variables are what make exploiting the rule of 3 arduous for a casino’s marketing department.

For comparison’s sake, imagine there is an easily accessible suburban "big box" shopping center with a Wal Mart, a Home Depot, and a Target all adjacent to one another. If one needs a toaster, and all three stores carry the particular model sought, then, most likely, the purchase will be made at whichever store offers the lowest price.

Let’s say that Wal Mart has the toaster for $22, and Target and Home Depot are each selling the identical item for the higher price of $24.25.

One would assume the purchase would be made at Wal Mart, but maybe there are other forces at play (e.g., consumer does not like Wal Mart’s labor practices, appreciates Target’s good corporate citizenship, or knows he will receive quick service at Home Depot).

The assumption of the consumer following price as the sole deciding factor may not be valid.

How does this phenomenon translate to Black Hawk, Colorado? If a gambler chooses to play at The Lodge, Riviera, and Isle of Capri, is it because of their proximity to one another, the similar levels of service and gaming experiences offered, or an X factor?

Assuming the patron will visit all three properties and does not have a predetermined order of visitation prior to arriving in Black Hawk, whichever casino has the superior loyalty program, whether that is measured in best perceived value (an X factor), opportunity to earn the greatest number of points or cash back earned (i.e., the element of reward), or the hosting of a special event or give-away will capture the superior first visit distinction.