Blackjack Promotions and "Hold"

Beating casino promotions has been the bread and butter of savvy players since promotions began back with casino junkets in the early 1960’s.   Players have beaten up free play, match play, multiple point days, cash for points, loss rebates, non-negotiable chips, RFB, and so on. Books from Anthony Curtis’ “Bargain City,” Jean Scott’s “The Frugal Gambler,” and Max Rubin’s “Comp City” lay out the principles of advantage play against promotions.

As Max Rubin said: “Many gamblers believe that the casinos have tightened the screws on comps. They haven’t. Why not? Because they can’t.” The marketing battle for customer acquisition, retention and loyalty has driven a market where free stuff is given away like never before. And when mistakes are made, advantage players will be there to devour the goodies.

Some remarkable examples of ill-conceived promotions have come to pass.  One of the most famous was the “Father’s Day Bonanza” offered by the Imperial Palace in Biloxi on June 15, 2003. I thank Ken Smith for sharing his account with me. The promotion was simple: for 24 hours, all blackjacks at all six-deck tables would pay 2-to-1 instead of the usual 3-to-2.  The promotion was valid for player wagers up to the table limit of $2,000.  This rule change added 2.3% to the player side and turned a 0.5% house edge into a 1.8% player edge. A 1.8% player advantage is a great gift to give your dad. Apparently, a lot of dads heard the good news.

Playing $2,000 per hand, at a game pace of 60 hands per hour, gives the player an expected theoretical win of about $52,000 for 24 hours of play. There were 98 seats available, giving a theoretical loss of just over five million dollars for the promotion.

Every seat in the casino was full at the six-deck tables more than five hours before the promotion was set to begin. With three hours to go, players roamed the aisles in search of seats, a few offered to purchase seats for up to $3,000 – there were no takers.  With an hour to go, players were lined up behind the tables just to watch the show. At ten minutes to midnight all the players who were playing table minimum took out enormous cash bankrolls and bought up every $100 (black) and $500 (purple) chip available in the racks.

And then, at midnight, players everywhere started flat betting $2,000 per hand – four purples. In short order there weren’t enough chips left in the rack. Players quickly emptied fill after fill.  Meanwhile, pit and shift management continued to follow the orders handed down from marketing and upper management (who were nowhere in sight to authorize modifications).

At 3AM, after frenzied phone calls and hasty meetings, table limits were dropped to $500. At 8AM, table limits were lowered to $200. At 10AM management started closing tables. By 11AM only one six-deck table was open, with a maximum bet of $200. The limit on this one remaining table was later lowered to $50. According to an inside source, in the span of a few hours, the Imperial Palace lost over $800,000 on this promotion.

One AP stated: “Everyone showed up … Greeks, MIT, you name the player and they were there …We had a team assembled of 14 players and a $500K bankroll and only 3 out of 14 players got a seat …”

The lesson here is that math errors can have serious consequences. In the case of the 2-to-1 blackjack example given above, the loss was due to misunderstanding a single word: “hold.”

To explain further, in slots, “hold” is a synonym for the house advantage. A game that holds 12% simply returns $88 out of every $100 in player coin-in. That is, the casino wins 12% of all coin-in. By contrast, in table games, “hold” means the ratio of win to drop. To say that blackjack holds 12% is to say that of every $100 in chips the player buys in for, on average he leaves with $88. The difference is that the blackjack player will churn his original $100 by playing through it several times before leaving with his $88.  In this way, a 1.5% house advantage for the typical player turns into a 12% hold.

A promotion that gives back 2.3% in slots turns a game that holds 12% into a slot that holds 9.7%. A promotion that gives back 2.3% in blackjack turns a game that holds 12% into an $800,000 disaster.

This may seem like old news now, but the lesson was not learned. In July of 2010, the Mohegan Sun ran a blackjack promotion where players could triple down instead of the usual double down rule.  This rule change added over 3% to the player’s side. But that’s okay, or so marketing thought – they would still hold 9%, right?

News quickly spread. Michael Shackleford posted the revised basic strategy to beat the game on his website www.wizardofodds.com .  Discussions about bankroll, travel time and accommodations littered the Internet. And, at the appointed time, a congregation of advantage players convened at the Mohegan Sun. Unlike the Imperial Palace, the Mohegan Sun stuck to their promise and let the promotion run a full 24 hours.  After it was over, players told the story. One advantage player stated on a social media site: “Did we kill it? Well the six of us made around $90,000 … I regret we didn't pump up the wagers as we won, and I guess even the couple of hours walking or eating have to be considered wasted. But nobody's perfect.”  Rather than holding 9%, conservative estimates from other players on site place the loss at well over one million dollars.

Often marketing departments focus on subtleties in their promotions, like giving something back to loyal customers or casino brand awareness.  So often, it’s the big thing that staring us in the face that we can’t see.  All the marketing goals in the world can’t make up for bad math. Borrowing a quote from Vince Lombardi, in the world of casino gaming, math isn’t everything, it’s the only thing.