Accounting for casino
comps, other rewards

Nov 27, 2006 3:10 AM

For many years, I’ve seen the debate rage on about comps and cashback and where this fits into the grand equation of overall payback. Obviously, when performing the analysis on a game, the comps and the cashback are completely left out of the equation. This does not mean from the player perspective that they should be completely ignored, however.

It seems as if the folks at the extreme ends of the topic handle a good deal of the debate. There are those who feel that much of the comps and other prizes given out for frequent play is just a pile of junk that has little value. At the other end there are those that treasure every item they receive and in their mind, consider it to be worth every penny the casinos list as the retail value.

As is frequently the case, the truth lies somewhere in between. Clearly, any cashback earned is quite real and should be part of the equation. This doesn’t mean that you should spend 20 hours a day in a casino trying to reach certain goals.

It simply means that if you spent six hours in the casino today and lost $30 gambling, and then the casino hands you cashback of $40, you DID come out $10 ahead. If the cash must be used for future gambling in the same casino, then it needs to be discounted slightly, but depending on what you play, not by much.

On the other side of the spectrum are the gifts that you can win while playing. I’m not referring to cash prizes for a contest, but the promotions where you win a specific item from a casino.

Usually, it’s something that allows you to become a walking billboard for the place. These items are far more subjective. If you really, really want a leather jacket from the Hard Rock Casino & Hotel, perhaps there is some real value in the item. If you have a closet full of hats and t-shirts that say "What happens in Vegas”¦", then perhaps

one more shirt simply doesn’t have much value to you.

For the most part, these are the items whose values need to be significantly discounted. Certainly, don’t use the casino’s value on the item (even if just for your own internal bookkeeping). Even if you wanted the leather jacket, it simply may not be worth the $295 value the casino says it is. Nobody pays list prices anymore!

In the middle of cashback and prizes are the comps. As these items tend to be of a more useful nature while on vacation — hotel rooms, food, shows, etc. — they need to be looked at a bit differently yet.

You still can’t use the casino’s version of the value. Last week when I was in Las Vegas for the gaming expo, we stayed at the Excalibur. We paid about $80/night for the room, yet the "rack rate" for the room was shown to be $800/night.

Room rates in Las Vegas vary greatly from one night to the next. What might be a $300 room one night, may be a $30 room the next.

You have to consider how much you would have actually paid for the room to determine its value. If your comp includes some form of upgraded room, you have to decide how much the upgrade is really worth to you. If you spend 18 hours a day out of your room and do little more than sleep in your room, having a gigantic room with a big screen TV may have little value to you.

Food comps must be treated in a similar manner. You may get two free buffets, but if every magazine on the Strip has a buy one get one free coupon in it, it’s not worth the full price of two buffets. The casino may give you two tickets to see "Mamma Mia," but if you hate Abba’s music, then they have little value.

The bottom line is that you should be smart enough to take advantage of comps, cashback and prizes and not to let them take advantage of you. If you’re going to gamble more than you really wanted to and perhaps lose $1,000 more than you would have, so that you can get what appears to be $1,500 worth of hotel rooms that you probably could’ve paid $500 for, you didn’t wind up ahead.

At the same time, if by using comps and cashback wisely, you can get a free hotel room and free food in a place that you like to stay in and eat at, and when your vacation is done, you realize you paid $200 for a week in Las Vegas, you may have just used the system to your advantage.

There is nothing wrong with that!