by Adam Tanner
The data gathering begins soon after a gambler walks into the cavernous casino lobby. A slight haze may linger from smoke (in the United States most casinos are among the last great refuges for those who enjoy cigarettes). A subtle perfume scents the air, pumped in to create a specific memory sensation. The gambler looks for her favorite slot machine and plops down. She reaches into her wallet and pulls out her Caesars Total Rewards loyalty card. She reaches toward a card reader surrounded by dotted orange lights. It turns green after she inserts the plastic card. From that moment, the casino records everything, starting with how much cash and paper ticket value she puts into the machine (coins were phased out more than a decade ago).
Caesars know exactly how many times she pushes the button triggering the electronic wheels to spin in random combination. They know how much she is losing (or, less often, winning) from the moment she starts. The law of averages means that everyone will lose over time. Yet the casinos want her to keep returning, so they will do everything they can short of rigging the machines to mitigate a particularly bad day. If she loses far more than she traditionally wagers and far worse than the game’s mathematical odds predict, a host, tipped off by a message to a smart phone, might arrive with a coupon for a free buffet to cheer her up. The logic? A bad day could inspire a gambler to defect to another casino to change her luck.
From time to time a host will greet elite-status slot machine players. At Caesars Palace, that might be Holly Danforth, a striking six-foot-tall blonde in her late twenties who aspires to become an actress or model. She introduces herself and addresses the player by name, which she knows from the data on her cell phone. “Most of the time they are very shocked,” she says. “They ask, ‘How do you know that?’ I tell them it’s by their participation in Total Rewards.” She then gives out a business card and invites the player to contact her for any future assistance. If the player is a man who makes a pass at her, something she says happens all the time, she tries to gracefully extract herself and continue toward the next VIP.
Taking a break in the action, the gambler heads to one of the casino’s many restaurants. The maître d’ asks if she is a Total Rewards member. The waiter hands her a menu with two rows of prices, with a few bucks off each item for loyalty members. Or she could sign up for six all-you-can-eat buffets within a twenty-four-hour period at the discounted price of $47.99.1 Caesars record exactly what she orders and over time chart her favorite foods. Capping off the evening at a show, she hands in the card to buy tickets, giving the management insights into what kind of entertainment she prefers.
In a fast-moving table game like craps, a supervisor notes down bets by visual observation, less precise monitoring than with slot machines. A player can later check credited points on a casino computer. If the gambler feels shortchanged, management can review a videotape of betting.2 The supervisor also keeps a close eye out for players trying to game the system. Some bet especially heavily when the supervisor comes into view, hoping they will be credited with more loyalty points. Others quietly pocket some of their own chips to exaggerate their losses (casinos are especially keen to lure back losers with generous future offers). The company is considering spending tens of millions of dollars to buy chips embedded with radio-frequency ID transmitters, which would allow the casino to track bets to the exact dollar.
In all, Loveman says, Caesars casinos know: “Did you respond to an offer when you came to the facility? Are you a resident with us at the hotel or not? When do you come? How long do you stay? What game do you play? How intently do you play it? What’s the average wager? What sort of success did you have in the game? Were you a big winner, a big loser, an average winner, an average loser? Did you eat when you were with us? Did you go to the show? What kind of dining habits do you have? Do you shop?”
Rod Serling’s old Twilight Zone episode, titled “The Fever,” portrays a slot machine that knows the elderly husband’s name, Franklin, and beckons him in an ominous voice. His obsession eventually drives him mad.3 Today Franklin might receive a direct solicitation for his business by mail, email, or smart phone. A host might also call him up to see how he is doing.
Some critics say all this clever marketing exploits those with a particular weakness for gambling, especially those who suffer from gambling addiction. Loveman responds that while gambling addiction is a real issue, 98 percent of his clients can dispassionately decide whether to take advantage of a marketing promotion. These clients can rationally decide to buy or not in the same way they might review a new offer for books or products from Amazon.com.
“For the 2 percent of the people who are addicted, there is no evidence to suggest being good marketers is really the issue. The addiction has to do with lots of other issues, and there are mental health circumstances,” Loveman says. “It’s not whether or not the guy who runs the casino is especially capable or incapable of offering them things that they care about.”4
Catching Whales
By tracking a gambler’s last visit, a casino has information that can help lure him back in the future. Such logic motivates many companies far from Las Vegas to collect our personal data. Whether it is a local restaurant, airline, or online retailer, businesses want to know as much about us as possible, hoping to gain an edge in marketing. Some firms are more successful than others in using customer information, and that’s why many have studied Caesars for insights.
Caesars give customers a choice to share their data, and patrons like Daniel Kostel do so willingly and enthusiastically. A salesman at an asset management firm in Los Angeles, Kostel visits Las Vegas about once a month. The bachelor loves blackjack and typically wagers $100 a hand. On a good night, he wins a few thousand dollars. If things go less fortuitously, he heads out the door that much poorer. He is not a huge gambler—what the industry dubs a “whale”—but he spends a lot more than a retiree cautiously playing penny slot machines. For years, Kostel alternated between casinos along the Strip, making him what the industry labels “promiscuous.” One night he dropped by Caesars Palace at the Strip’s fifty-yard line.
People still rave about the glamour of Caesars Palace in its heyday. Former Las Vegas Mayor Oscar Goodman can wax lyrical about the old Caesars Palace: “They had a restaurant called the Bacchanal where you sat in this beautiful ornate room with Filipina waitresses who would give you a back rub and peel grapes and toss them down your gullet. I mean, that was pretty neat.”
Hollywood has long portrayed Caesars Palace as a den of excitement and adventure. Robert Redford, dressed in a purple cowboy suit dotted with flashing lights, slowly rides a horse across the casino floor to the bemusement of patrons in The Electric Horseman, then proceeds down Las Vegas Boulevard. Dustin Hoffman and Tom Cruise win so much money at blackjack in Rain Man that management becomes alarmed. George Clooney and Catherine Zeta-Jones flirt over a meal there in Intolerable Cruelty. Mobster Tony Soprano, played by James Gandolfini, stays at Caesars Palace after the death of his nephew Christopher Moltisanti. In the first and third Hangover comedies, the guys drink on the roof, recover from a wild party in their suite, play blackjack, and engage in other high jinks there.5 And in an example of life imitating art, some of the movies and series filmed at Caesars Palace, such as The Hangover and The Sopranos, eventually become themes for slot machines.
In terms of history, no Las Vegas casino can outshine Caesars Palace. But in a city changing as rapidly as Las Vegas, the hotel casino is no longer the unrivaled belle of the ball. Trendsetters have migrated to more luxurious rivals. The crowd at some of these newer, more upscale casinos often appears more refined and perhaps a bit younger, more likely to wear designer evening clothes.
Dan Kostel typically favored more elegant hotels such as the Bellagio, but one December weekend he decided to try his luck at Caesars Palace. He had joined Total Rewards about fifteen years before, but only patronized the casino from time to time. When he signed up for the loyalty program, he gave his name, address, date of birth, and other information.
He reasoned that such details were already out there in the public realm. The casino would also know how much he had won or lost at the tables, something he did not consider particularly private.
Kostel sat down at the blackjack table and handed in his Total Rewards card. A supervisor swiped the card through a computer reader. The scan showed that Kostel had previously shared financial details with Caesars to get a line of credit. The supervisor returned with a few thousand dollars in chips, which he placed onto the green felt table, and recorded Kostel’s initial purchase on a touch-screen computer tilted away from bettors. The screen also included notes on customers on preformatted fields that included sex, race, build, and age. The supervisor, moving around a cluster of tables, kept returning to note how much Kostel was betting and how well he played a game where skill can enhance—or at least mitigate—the luck of the draw. When the thirty-nine-year-old player cashed out twelve hours later, the program calculated his total earnings and time at the table. Kostel proved an excellent client: the house made thousands of dollars off him that night. Management definitely wanted him back.
Dan Kostel at a blackjack table at Caesars Palace. Source: Author photo.
By allowing Caesars to gather a significant amount of data about his casino activities, Kostel hoped to receive benefits much as an airline frequent flyer earns free flights. That is exactly what happened. A few months later, the world’s largest casino company mailed a letter to Kostel, offering him a free room and $1,000 in free play during his next trip.
Kostel liked luxury. He liked to feel he was staying someplace special. At Caesars Palace, he had noticed some gamblers with extensive tattoos, and even a few guys wandering through without a shirt, escaping the desert heat. Many of his fellow gamblers were retirees, long into their golden years. He preferred a more refined ambiance. The offer of a free room was nothing special, Kostel thought; other casinos do that for big spenders. But $1,000 in chips to kick off the trip made it worth returning to Caesars Palace. “It’s older and the crowd is not as sophisticated and as upmarket as some of the newer hotels, but if I have a choice to stay at one place and they give me a thousand bucks, or stay next door and they won’t, I’ll stay at a place that won’t be as nice and keep that money,” he thought.
By signing up for Total Rewards, Kostel agreed to share an intimate view of his activities on the company’s properties. Caesars know that he appreciates a visit to the hotel spa and that he likes southwestern food as well as blackjack. They record that he sometimes dines alone. Yet unlike many transactions in the current world of personal data-gathering, this process lets him know who is gathering the data and what they are gathering, and he receives clear benefits in return. Anyone who does not want to share their data can decline to enroll in the program and gamble anonymously. “The complimentaries that you can get can be considerable, and you are not going to get anything if you don’t use the card,” he says. “A substantial part of what makes gambling somewhat worthwhile in terms of its cost are the complimentary room, food, beverage, etc. that they can give you.”
Kostel could afford to stay at any Vegas casino, but the generous $1,000 in free chips lured him back to Caesars Palace. About a month later, Caesars sent another $1,000 in free chips, followed by another grand the month after that. He became a regular, visiting every month. By the time he felt enmeshed in the loyalty program, Caesars lowered their offer to $300. Kostel liked the $1,000 offers better, but he kept coming regardless.
Kostel is just one guy, of course, but Caesars target millions of customers to come again and again. Maybe you think Jerry Seinfeld is hilarious. Caesars may invite you out to Las Vegas for one of the handful of days a year the comedian performs stand-up at Caesars Palace. Or maybe Caesars know that you are a fan of Elton John, or Rod Stewart. If they know a bachelor party might lie in your future, they may serve up a promotion for a Hangover-themed package. Many people respond to such offers. Overall, the company says its personally targeted offers have generated billions of dollars over the years.
Even if you have never set foot in a casino, many businesses—credit cards, banks, alarm companies, magazines, divorce lawyers, you name it—are trying to serve up individualized offers based on their interpretations of your personal data. You don’t get a pile of free chips from those companies, of course. But you might get a free flight, meal, or other benefit based on your value as a customer.
When gamblers such as Kostel sign up for the loyalty program at Caesars, they know who is collecting the information. The casino does not sell the information to anyone else. Management could, however, buy data about the gambler’s activities outside the walls of their hotel casinos to learn even more about their customers and help persuade them to gamble more with Caesars. Who are the person’s friends and relatives? Does he or she make a lot of money? Does the person have an arrest record? What else does he or she spend money on?
If you are a business trying to understand customers, it certainly is tempting to look at this kind of information. The company was reluctant. Like a professional baseball slugger shunning steroids even after the drug became widespread, it watched from the sidelines as the use of third-party data grew. It only collected information about its own clients, within its own walls, with their permission. The know-it-all data brokers would call from time to time to try to sell additional information. How about details about customers’ income level, job status, or friends, family or work associates? they would ask. The answer was always no. Caesars steadfastly refused.
The company first adopted the “no outside data” policy in the mid-1990s as it ramped up its own data collection. In 2000, it published a public code that pledged to conduct the business “with honesty and integrity, and act in accordance with the highest ethical and legal standards.” After Harrah’s bought Caesars Entertainment in 2004, the company reconfirmed its “no outside data” policy. To gather outside information from third-party data brokers would violate the trust Harrah’s had established with its clients, officials felt. “We were not going to overlay external information that is really potentially intrusive even if a vast majority would not find it intrusive,” recalled John Boushy, who worked as an executive at the company from 1979 to 2006.
But not everyone agreed, especially rivals who envied Harrah’s lead among casino loyalty programs. Over time, competitors caught on and established alternatives. Eventually some newer Caesars executives began to wonder: was the company voluntarily shackling itself when everyone else was going data hunting?
5
A Celebrity, a Private Eye, and a Hit Man
Finding a Hollywood Star on Holiday
Former US President Gerald Ford died shortly after Christmas in 2006. I was working at the time in San Francisco as a wire service reporter. When news broke, I often had to find people quickly to interview. For a follow-up story the next morning, I wanted to talk to veteran comedy actor and writer Chevy Chase, star of the National Lampoon’s Vacation and Fletch movies. Through his portrayal of Ford during the first season of Saturday Night Live in 1975–76, Chase had helped cement the public image of the unelected president as a bumbler.
To reach celebrities, journalists typically must penetrate a barrier of agents, publicists, and lawyers. A formal request for an interview can take days or even weeks. Celebrities often refuse when they have no movie, CD, or book to promote. A data broker website I used did not have a phone number for Chase, but a search for others at his address did produce a number in his wife’s name.1
Chase’s daughter answered the call on what turned out to be her cell phone. She chirpily explained she was skiing with her dad in Colorado. She said he would call back after they glided to the bottom of the hill. Within the hour, the actor was sharing his recollections of how Ford once took Chase and his wife on a tour through Grand Rapids, Michigan, and proved a genial and welcoming host.
Back at the ski lodge that evening, Chase called again, this time angry and upset. He had realized that decades of filtering o
utside contact had not exempted him and his family from appearing in data broker files. How had someone found his daughter’s cell phone, he wondered? “I’m just a guy who made some fun of Gerald Ford in 1976 and I prefer to be left alone, really,” he said bitterly.
Old-Style Private Eye
In the era before computers, unlisted phone numbers and public records were hard to come by. People had to travel to the courthouse or the county clerk’s office to see important documents, and if one company learned such information, it was hard to share with others. Only insiders could quickly assemble a dossier on any particular person. A scene in Guess Who’s Coming to Dinner, the 1967 film about interracial marriage, illustrates the way such techniques were deployed half a century ago. Spencer Tracy, playing a wealthy newspaper publisher, calls up his office to learn more about his daughter’s fiancé, played by Sidney Poitier.
“Call the library and see if they’ve got any dope on a John Wade Prentice. Prentice. He’s a doctor of medicine. Fellow about thirty-five, thirty-six. Oh, Matt. He’s a colored fellow,” the publisher tells his assistant. “If they haven’t got anything, call up the medical association and see what they’ve got. Get anything you can, will you, Edie? All right. Hurry and call me back.” Edie does call back a few minutes later with Prentice’s year of birth, education, and professional details, as well as the year of his first marriage, which ended when an accident killed his wife and son.
Of course, that was just Hollywood’s version. In real life, 1967 marked a banner year for Las Vegas public records. Elvis and Priscilla Ann Beaulieu got married at the Aladdin Hotel—but only after driving to the county courthouse to get their marriage license at 3:30 a.m. Billionaire Howard Hughes bought the Desert Inn, bringing a new face to casino ownership in the city. Both events are typical of the kind of activity captured in public records. But in the rough-and-tumble world of old Las Vegas, long before the era of Gary Loveman, personal data was much harder to come by. And sometimes it was a matter of life and death.
