Casino Execs Debate the Math Behind Free Play and Loyalty Offers
At the Casino Marketing & Technology conference in Temecula, casino marketing leaders broke down how free play, reinvestment rates, and loyalty math can make or break a promotion's profitability.
The Math Has to Work, Not Just the Idea
A flashy promotion might fill a casino floor on a slow Monday. But if the numbers behind it are fuzzy, the whole thing can quietly bleed money. That tension sat at the center of a session called “The Modern Executive Leader Agenda: Revenue Today. Reinvention Tomorrow” at the Casino Marketing & Technology and Host Player Development Conference, held this week at Pechanga Resort Casino in Temecula, California.
Scott Eldredge of Golden Acorn Casino and Travel Center put it plainly. “We have to always stop and take a step back and look at the casino math,” he said, according to CDC Gaming. “That comes in a variety of forms and fashions, but in the marketing world, I think a lot of it is about on the reinvestment side. What is our reinvestment concern? We have a great idea, but how does the math work to make sure that it’s going to be profitable, not just popular?”
That last phrase is worth sitting with. Popular and profitable are not the same thing. Casino marketing teams can spend years learning that the hard way.
Free Play Is Powerful and Easy to Misuse
Free play sits at the heart of most modern casino loyalty programs. It converts a player’s theoretical loss into redeemable value, giving customers a reason to return and feel rewarded. But the mechanics of it are more delicate than they appear from the outside.
Michael Michaud of the Navajo Nation Gaming Enterprise explained that free play costs get subtracted directly from a player’s average daily theoretical, or ADT. That has ripple effects across the entire promotion calendar. “Essentially I send out an offer for one day, they get this bonus free play, I black it out on the weekly offer,” Michaud said. “So their weekly offers don’t start on Monday, it starts on Tuesday. And I drive people to the property on that Monday.”
The timing matters, but so does the volume. “Understand that free play impacts your whole percentage,” Michaud added. “You give away too much, everybody’s going to hit jackpots off your free play, and your hold percentage is going to drop. You have to be careful about the use of free play.”
He also offered a specific observation about timing that has apparently become something of a quiet rule of thumb in the industry: bonus free play on holiday Mondays tends to perform especially well.
Eldredge echoed the concern about excess generosity. “If you’re giving players too much free play, they never have to come out of pocket,” he said. “If you’re having a prize drawing and somebody wins $1,000 in free play or $500 in free play, they never have to come out of pocket while they’re playing.”
That might sound like a win for the player, but it is a problem for the property’s bottom line.
Higher Segments Need Room to Breathe
The math gets more complicated as you move up the loyalty tiers. Johana McNulty, Senior Director of Marketing Strategy and Loyalty for Agua Caliente Casinos, said free play decisions become a real conversation once they touch a promotion directly. But the issue goes beyond any single offer.
“You have to watch for that at all your different segments, especially when you get into your higher segments,” McNulty said, as reported by CDC Gaming. “You need to leave room for leverage for your PD team as well. And if you’re over-investing in the higher segments and they’re already getting what they need from regular offers, bonus free play, et cetera, you’re not leaving your hosts any room to manage those guests.”
That point about host teams is easy to overlook. A VIP player who is already maxed out on automated offers gives the host very little to work with when it comes to personal outreach or relationship building. Over-engineering the math at the top of the pyramid can actually reduce the human touch that high-value players often respond to most.
Moderator Deana Scott, CEO of Raving Next, framed the broader challenge facing anyone in a general manager or promotions role: cost, return on investment, and the specific math of free play all have to be weighed together before a campaign ever launches.
Michaud put it simply. “You have to understand the basics of casino math to build your promotion to be successful.” It sounds obvious. According to the people in that room, it still gets overlooked more often than it should.
What is average daily theoretical (ADT) in casino marketing?
According to speakers at the Casino Marketing & Technology conference, average daily theoretical, or ADT, represents a player's expected loss over a given period. Free play costs are subtracted from this figure, which affects how casinos calculate the true cost of their promotional offers.
Why is free play considered risky if given out too generously?
As explained at the conference by Michael Michaud of the Navajo Nation Gaming Enterprise, giving away too much free play can cause a casino's hold percentage to drop, because players end up winning jackpots off the free play rather than wagering their own money.
What conference did these casino marketing discussions take place at?
The discussions took place at the Casino Marketing & Technology and Host Player Development Conference, held at Pechanga Resort Casino in Temecula, California, as reported by CDC Gaming.