by Adam Tanner
John Acres, the innovator who devised the first slot player tracking systems in 1983, says slot machines of the future must incorporate far more personal data and involve friends to make them more social. He wants to take data he can instantly glean from third-party sources, such as income level, age, gender, and club memberships, and adapt the machine to suit the player’s profile. The overall plan is to change the machine characteristics based on what it perceives about the user.16
Acres has done well as an entrepreneur over the years. He says he sold his last business for $143 million. His share was about $50 million. He has spent $23 million, about a third of that from his own pocket, in recent years trying to revolutionize casinos. His slot machines of the future would introduce bonus rounds and winnings based on who the player is. So the basic cycle of spins would still have the same odds as before and would not turn a winning spin into a loss. But he would supplement the natural cycle with player-specific bonus winnings built into the natural cycle of the game. “Gary Loveman is going to mail you $100 in free play. So I’m saying, ‘Why do we have to pay homage to the postal service? Why don’t I just give it to you right here?’” he says. Both cases constitute marketing costs by the casino; Acres thinks his scenario will engage gamblers more.
Authorities would have to change the rules for Acres to realize his vision. He fully realizes he may fall completely flat on his face. “I claim that I can see the future. The difference between being a visionary and being delusional is impossible to tell without seeing how the future unfolds. It could be absolutely delusional,” he says.
Acres’s vision of the future is intriguing. With white hair, white beard, and powerful biceps, he has the aura of a prophet—a data prophet. He wants to learn even more about customers by purchasing large amounts of information from data brokers. Might gathering all that data to operate a casino game appear a bit creepy? “It’s absolutely creepy. It depends on how you use it,” he says. “If I creep you out or discourage you from a relationship with me, I’ve crossed the line. If I have encouraged you or improved the relationship with me, I haven’t. . . . We will never have the anonymity that we once had. That is part of the price of living in modern society. It’s not an option,” he continues. “Creepiness changes with time. Over time you will come to accept it. It’s not going away.”
John Acres at his Las Vegas office in front of some of his casino innovations, including Madame Fortuna. Source: Author photo.
16
Casino Adventures in Three Cities
Your Casino Dossier in Real Time
The day before Christmas is another busy day for Tom Cook, manager of Harrah’s in North Kansas City. Unlike in Las Vegas, where people journey specifically to gamble, casinos in smaller cities rely on locals to fill the seats at slot machines and gaming tables. Keeping regulars happy is vital to Cook’s business on the banks of the Missouri River.
He scoops a smart phone out of his pocket and launches an app called RTCM—real-time casino marketing. A stream of emails starts arriving, telling him intimate details about his best customers playing at that moment, including exactly where they are sitting scattered among 1,600 slot machines in the cavernous casino.
The first email updates the manager about Richard. The gambler has gathered 165,000 loyalty points for the year—equivalent to roughly $82,500 in annual spending. He is one of just three hundred or so top-level Seven Stars members in the Kansas City area. Such players make up the top 0.5 percent of gamblers at the world’s largest casino company, but they account for $1.3 billion of Caesars Entertainment’s more than $8 billion in annual revenue. The company rewards such top-tier members every year with a complimentary dinner worth $500 and a cruise ship voyage, along with access to elite lounges.
On this day so far, Richard has cycled $4,940 through the machines. Since Harrah’s Kansas City sets the machine to keep an average of 10 percent of slot bets, he should have lost $494 by now. However, the email tells Cook that as of 12:05 p.m., Richard is down $688. On his last visit four days before, he lost $1,390. The update also reminds the manager of Richard’s birth date and year, and notes he lives in the Kansas City area.
Cook navigates toward Richard between the long banks of slot machines. An orchestra of sound pours forth, a chorus of ka-ching and excitement emitting from the bellies of the machines. Themes and catch phrases from old television shows and movies compete for attention. The manager arrives before an unusually complex series of spinning video images called Li’l Red. There he greets a solidly built man sporting a white mustache and a long-sleeve T-shirt. The two chat amiably, although Richard keeps playing most of the time. He says he has lost about $200 so far—a far rosier assessment than his real loss. Cook does not correct him. They trade stories of gym routines, diets, and a new food delivery service. Richard jokes that he likes the Li’l Red machine because the female cartoon character on top has larger-than-average breasts.
Management wants to keep a balance between showing special friendliness to big spenders and not bothering them too often. So after the conversation, the casino manager sends a quick email to the system noting that he has spoken with Richard. The rest of the staff will now wait at least a week before singling him out again for a special greeting. Cook then moves to say hello to Janet, playing at machine CC02. She typically loses $600 a day, but today she is up $286. Her profile also says she has accumulated $455 of freebies—for items such as show tickets or meals, to which casino hosts can throw in another $33 at their discretion. By the time he arrives, Janet has moved to machine GD03. Although the machines are all wired, they transmit data on a low-speed network, so it can take a few minutes for the email to arrive in Cook’s phone. Another email soon shows her latest location, but by the time Cook arrives she has risen from her seat and is briskly walking away. Rather than stop her midstride, he says nothing.
The next email gives a profile on John at slot machine UB01. He has to accrue just a few thousand more points to remain a Seven Stars elite member for the following year. “I’m sure that’s why he’s here,” Cook thinks.
When the manager arrives to say hello, John barely glances away from his slot machine. They exchange few words; the manager moves on. Cook knows that many players just want to zone out and escape into their favorite machine. He carefully gauges who is talkative, who loves bawdy jokes, who prefers a quick hello. He knows John is a man of few words, and besides that, he knows John is enjoying a good streak: he is up $59 although the odds suggest he should be down $145 by then. And he is enjoying an especially good day compared to his last outing, five days before, when he lost $772. A three-letter “behavior segment” code in the email also shows that John has been coming less frequently than he had in the past and has been spending less.
Cook comes from the old school of hospitality championed by Las Vegas pioneers like Benny Binion, who wandered through his casino wearing a wide-brim hat from his native Texas as he glad-handed his guests. Cook, who earlier in his career worked at casinos in Atlantic City and Arizona, says hello to pretty much everyone even as he makes a special effort to linger with his top customers. He does have one limitation different from most casino managers: he cannot offer his guests free drinks because he is barred by Missouri gaming regulations.
The staff at Caesars’ headquarters love Cook’s devotion to customer service and to his employees and have used some of his innovations elsewhere in the company. They appreciate his plainspoken opinions, which often contain a lot of wisdom, but sometimes dissent on important issues. Cook feels that headquarters—mostly staffed with people with elite university degrees—does not always appreciate the wisdom of a manager in the trenches or the value of the human touch. He once thought the attraction of being a general manager was making big decisions about how to run and promote his property. But that time has passed; data crunched at a central location now dictate strategy. “We’ve lost that creativity, that uniqueness, because we are trying to do things across multiple properties,” he s
ays. “I don’t begrudge the brainiacs at all that are up there, but the arrogance that their work is more important.”
Such attitudes have created some tensions with high command. Back in Vegas Loveman has supported Cook, even when they have a difference of opinion. He knows that Cook has an MBA from UCLA, and recognizes that local executives pick up on trends and insights about gamblers unseen in raw data. “That’s all true and that’s a perfect tension,” Loveman says about Cook’s “brainiac” remark. “You never want that tension to go away. That’s hard for people to get their head around.” Loveman knows that Cook and his fellow managers have to deal with thousands of people every Saturday night at midnight. “The propeller heads that are working around here are pushing ideas out at Tom, and Tom is pushing back saying it’s impractical, it’s not fast enough, it’s too hard to execute. That’s where the magic happens, that’s exactly what we want,” Loveman insists.
Dan’s Big Night Out
In Vegas, Dan Kostel had started going to Caesars regularly after they sent him an offer for $1,000 in free chips. He kept getting similar offers for a while, until the figure went down to $300. He stayed away for five months, hoping Caesars would increase its offer. After some time the amount did rise back to $1,000. When I met him in June 2013, he was ready to collect $850 in free play and a free room at Caesars Palace.
I invited Joshua Kanter to join us that Friday evening. Quite busy beforehand, Kanter had recently committed most of his free time for the next two years by enrolling in the Wharton MBA Program for Executives in San Francisco. Encouraged by Gary Loveman, he would travel there every two weeks for two years of weekend classes. He spent his evenings and weekends studying, and on that Friday was already en route to San Francisco. He conceded his work-life balance was, as he put it, overdeveloped in one aspect and underdeveloped in the other.
Before starting the program, Kanter allowed himself one indulgence: a weeklong cruise. The Total Rewards chief oversees the Caesars partnership with Norwegian Cruise Line that includes free annual trips for Seven Stars members, so he wanted to experience it himself. He had just broken up with a girlfriend after a year, so he went alone. Reflecting on the cruise, he said a David Foster Wallace essay he had recently read pretty much summed up his feelings: “A Supposedly Fun Thing I’ll Never Do Again.”
I met Kostel not at Caesars Palace but at the Cosmopolitan Hotel, two mega-hotels away. The Cosmopolitan had offered him a free suite for the weekend, so he actually slept there (he would do some gambling there too, hoping to be comped in the future). The hotel draws a far younger and hipper crowd than Caesars. Women in short, formfitting dresses wandered through the lobby. The elegant suite consisted of two bathrooms, a bedroom, a living room, and a super-modern kitchen. A long balcony overlooked the massive fountains of the Bellagio and Caesars Palace. From the balcony, Kostel noticed a woman on the balcony of the parallel tower performing some kind of intimate dance for a seated man. It was all very Vegas.
To receive his $850 in chips, Kostel had to appear to be staying at Caesars. Hotels reckon you gamble more if you sleep there. It would have been a ten-minute stroll from the Cosmopolitan, but with the temperature outside hovering at 119 degrees, at least according to my car’s thermometer, we drove over. He checked in at a special reception area for Total Rewards Diamond-tier members, just a notch down from the top Seven Stars status. They gave him a large, well-appointed room overlooking the Bellagio fountains and the Cosmopolitan Hotel beyond that.
Later that night Kostel met an acquaintance, another blackjack player who had accepted free rooms in three separate hotels, taking advantage of various offers intended to lure his business. Such antics illustrate that by putting point values on everything people do in the casinos, Caesars and its rivals have conditioned people to seek freebies at every turn. Gamblers are always bargaining for perks—demands some frontline staff sometimes find a bit tiresome.
“They think they shouldn’t have to pay for their hotel room; they think they should eat at the steakhouse, not the buffet; they think they should have free drinks, not paid drinks; they should get four tickets to Celine, not two tickets; and they are always talking to our people about this,” Loveman says. “That’s been in the industry for a long time at the high end, but we certainly made it a pervasive notion that everybody has something available to them, and people are naturally always pressing that envelope.”
Kanter, hearing about Kostel’s multiple rooms, affirmed that Caesars did care if comped clients do not spend the night. It means that they spend less: “When someone stays in our hotel versus visits us from another hotel, on average the difference in their play is something north of 30 percent,” he said.
After checking in at Caesars Palace, Kostel stopped by his room for a brief visit. A housekeeper knocked at the door, carrying a fancy box of gift nuts, a recognition of his Diamond status. After an appointment at the hotel spa, he was ready to gamble. He stepped up to the cage off the casino floor, where, after a small delay, he received a series of computer-printed paper tickets worth $850. Usually Kostel prefers to play in the high-limit room, which offers slightly better odds and rules on blackjack and a more elegant ambiance than the expansive casino floor. With the better odds, he says the house has only a 0.26 percent advantage over the player, meaning that over 1,200 hands of cards he had a 46 percent likelihood of emerging as a winner. “I believe that I have a reasonable chance of leaving a winner,” says Kostel, who earned an MBA in Spain.
He strolled past a series of blackjack tables in the high-limit room that required a minimum of $200 per bet, above his comfort zone. So he proceeded to a table with a lower limit outside the high-limit room. His luck was out at first—it seemed like he might quickly cycle through the $850 in voucher tickets and end up with nothing. But then he won a series of hands, and by the time he had used his last voucher, $800 in chips sat in a pile before him. He promptly returned to the cage and cashed in. So far he had received a free room, some gift nuts, and $800 from Caesars.
On his last visit to Caesars Palace Kostel had seen a pair of Prada sunglasses in the Forum Shops. Now he decided he wanted to buy them. The shops are not owned by Caesars, but when he mentioned he was a Total Rewards member, he received an unadvertised 15 percent discount. As he paid, the manager asked him to fill out a form giving his address and email for the store’s marketing list. He volunteered just his email and clicked a box asking not to be sent offers.
Before dinner, Kostel stopped by the sports betting desk to wager $90 on the Belmont Stakes the next day. He did not give his Total Rewards number, because he did not want Caesars to know he would still be in town the following day. The program rates you on each day of play, and just picking up any winnings without doing any fresh gambling could lower the daily average Caesars uses to calculate future offers.
We dined at the Mesa Grill Southwestern Restaurant, one of his favorites, where he had reserved a table. When the waiter arrived, he asked, “Are you joining us for the first time?” Kostel was annoyed. “The whole personalization thing does not work as Gary Loveman tells you it does,” he said. “It makes me feel like I’m some dumbass that has never been here before.” About eighty thousand people come through Caesars Palace in a day, creating a daunting task for the staff to greet even their most valuable Total Rewards members at every turn. “I’m highly demanding, I get that,” he said.
After dinner Kostel returned to the high-limit room. The minimum blackjack bet remained at $200, not the $100 he had hoped to find. At $200 a hand, he realized he could lose the $3,000 he was ready to risk in just a few minutes. But he liked the ambiance and the odds there. Even though it was more than he wanted to spend per hand, he asked a supervisor for the $3,000 in credit. The supervisor checked his credit history and returned with a pile of $100 chips.
By this point of the night Kostel was more animated, having started with rum and coke in his room and progressed to a couple of margaritas at dinner. “Bust!” he cried out a few ti
mes, wishing the dealer would draw cards putting him over twenty-one so Kostel would win his hand. Other times he called out the card numbers he hoped to receive. Yet he remained sharp in his play. Over twenty years, he had learned the mathematical odds for when to take a new card depending on what he had and what cards the dealer showed. One other gambler at the table, playing two simultaneous hands of up to $800 each, said little during the play.
Kostel’s luck started strong and continued. After about half an hour, he picked up his chips for a break. He was $1,000 ahead, and also had the $800 in cash he had won earlier. So far he had spent $200 on a pair of sunglasses and signed a $70 dinner bill to his room. We sat down in a nearby lounge. A man without a shirt on wandered by. Others wore shorts or frumpy clothes. Some giddy bachelorettes sauntered past. The Cosmopolitan, where he was in fact staying, had a more elegant crowd, he thought. But he wanted to continue playing that night at Caesars Palace, hoping that Caesars would send him generous offers for free play in the future, and comp his meal and visit to the spa that afternoon. For Kostel, winning comps was part of the overall game.
He returned to the blackjack table for a few more hours, playing until after midnight. At the end, his total blackjack winnings reached $4,700. The next day he learned that his horse bets—a sport in which he says he has little knowledge—had hit big. He had placed three $20 bets on a long shot called Palace Malice to win, place, and show. The horse won, transforming that $60 into $475. He also placed another three $10 bets for a different horse to win, place, and show. It came in second, winning $80 from a $30 wager. He picked up his winnings anonymously so that Caesars would not know he had stopped by without placing new bets.
Overall, it was one of those trips where everything went right for Kostel. At the end, Caesars even comped him for the meal, spa visit, and drinks he had charged to his room. After such a winning streak, his incidental expenses would not have made a dent in his total winnings. But the casino wanted him to leave on a high with a strong desire to return. Caesars succeeded on that score. They know in the long term the odds are on their side to gain back anything Kostel won that night.1
