Inside Asian Gaming

INSIDE ASIAN GAMING | October 2008 34 optimal utilisation of tables in a casino. One more area of consideration is the existingstructuresandcustomsinaparticular gaming market.For baccarat tables in Macau for example, almost all tables currently have nine boxes, even though optimal utilisation—using the principles developed in this analysis—might suggest optimal numbers of players varying from one to nine players per table, depending on average wager size and speed of the game. This may be difficult to manage, partly because of typical player behaviour in Macau. Players tend to bet together against the house and seek situations where they feel they are on a run—or a hot streak—and cluster around a single table betting sometimes three deep, so that a nine box table might have 27 wagers with back betting, all riding on the same outcome. While it may be optimal to eliminate that situation from a profit maximisation perspective, it may not be in keeping with the motives or desires of the players, and thus any attempt to do so must be balanced carefully with how players might react. One lesson that comes from this exercise is the importance of segregation of gaming tables by the average wager size. If the optimal number of players for high limit wagers is one per table and for low limit wagers is six per table, there is no circumstance where the casino should permit low limit players from slowing the rate of play at high limit tables. Where one draws the line really depends on the cross-over points on the “optimal number of players per table” for a given set of parameter values, and it might be hard to get to that actual result. It is also crucial for accurate management reporting and analysis to not aggregate and average data from tables with different price points. All of these complications noted, one can still conclude that management’s manipulation of the size, shape, and congregation patterns around higher limit tables and its control over the average number of players per table at various wagering levels should allow the casino to increase profitability. That is better than allowing a lot of potential wagering to go unharvested by being too cautious in controlling the casino floor’s labour costs. Andrew MacDonald is founder of urbino. net and is also Executive Vice President of Genting Berhad. He can be reached at andrew. macdonald@genting.com Bill Eadington is a professor of economics and director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno. He is an internationally recognized authority on the legalization and regulation of commercial gambling, and has written extensively on issues relating to the economic and social impacts of commercial gaming. Eadington can be reached at eadington@prodigy.net relative change in game speed that occurs when additional players are added to a single gaming table. For example, in Macau Baccarat,there will be substantial differences for squeeze or no squeeze games and for commission versus no commission variants. Within theMacau gamingmarket,baccarat is far more relevant to consider—compared to blackjack—because of the high preference for the game amongst players. To illustrate the situation, and apply a slight variation of the model for Macau baccarat, the following assumptions might be made: Gaming Tax = 40% Labour cost = MOP$100 House advantage = 1.35% Decisions per hour = 55 decreasing by 3 for each additional player (to 37 then decreasing at a lower rate as player numbers increase). Squeeze game with standard payout structure Average Bet Optimal Number of Players MOP$100 6 MOP$200 5 MOP$300 4 MOP$ 500 3 MOP$ 1,000 2 MOP$ 5,000 1 This would suggest that if game speed declines in the manner assumed—as more players are playing on the same table— then, as with Blackjack, it is better to spread players out across a greater number of tables.Depending on the tax rate and labour costs per hour, the minimum average wager to make the game profitable is increased by the slower play with multiple players. For such games, this suggests that rituals that slow the game, such as squeezing the cards, might need to be eliminated for relatively low limit games in the interest of efficiency. As with the earlier discussion, this also suggests that some higher limit Baccarat tables in Macau should be redesigned to cater to fewer players per table; smaller tables with more comfortable and luxurious chairs and better player services might produce greater returns.What is also evident is that one needs to incorporate a number of important variables in order to approach the In Focus