In a groundbreaking study conducted by Anthony Lucas, a researcher at UNLV’s Harrah College of Hospitality, the impact of casino free-play promotions has come under scrutiny. These promotions, which offer gambling money on the house, have long been a dominant incentive in the gaming industry. However, Lucas’s research suggests that their effectiveness may be waning for certain player groups.
The Purpose of Free-Play
Free-play campaigns serve two primary objectives: to increase visitation and to boost spending per trip. Casinos use loyalty programs based on free-play incentives to achieve these goals. The idea is simple: encourage players to visit more frequently and spend more during each visit.
Surprising Findings
Lucas’s study analyzed performance data from a tribal casino in the Western United States over several years. The results were unexpected:
- Minimal Impact on Spending: Reducing the amount of free-play had little to no effect on visit-level spending. Contrary to expectations, spend per trip did not decline significantly.
- Visitation Patterns: While the group that lost all free-play benefits experienced a 20% decline in visitation, those who received reduced free-play allotments ($5, $10, or $15) maintained their visitation frequency.
Ballooning Expenses
Casinos invest heavily in free-play campaigns, often spending tens of millions of dollars annually. However, this study challenges the conventional wisdom that free-play consistently drives increased spending. Lucas suggests that casinos should explore alternative strategies to achieve their objectives.
