Casino marketers have traditionally used Free Play to reward players, but it may not be as effective as we thought.
Free Play: The Traditional Marketer's Choice
Casinos have been leveraging Free Play for decades, giving players free credits to play slots. The amount of Free Play given to a player usually depends on the player's ADT and the casino's calculated reinvestment rate. Casinos usually consider Free Play a good tool for player retention because it's a relatively low-risk investment. However, a recent study found that casinos lose over $37 million annually on Free Play.
While it will probably remain an integral part of a casino's marketing strategy, there are opportunities to reduce the amount of Free Play players receive and improve profitability for many properties.
Free Play's Fatal Flaws
Free Play’s several downsides can be summarized in three main issues: its limited value, financial risks, and lack of emotional significance.
Definitive Value
The same reason many casino marketers love Free Play is also its biggest downside. The exact value of each guest and the corresponding offer reflecting their value is easy to track. Which means it is also easy for guests to figure out. Free Play’s major downfall is its definitive value. There’s no perceived value, so what guests see is what they get.
When guests consistently receive a $15 Free Play offer, their behaviors adjust to match. Their number of trips, spend per trip, and average trip duration are all based on the offer they receive, in this case, $15. Reduced guest play or changes in casino value calculations can lead to a decrease in this number, and guests notice. This phenomenon is particularly widespread in higher-tiered members, as their offers fluctuate more dramatically.
On the other hand, if a guest's value to the casino changes slightly, they are still likely to qualify for a gift, which minimizes any friction that might arise from changes in their offers. Gifts hold a high perceived value and can cater to a broader range of guests. For example, a guest who usually receives a $30 Free Play offer could receive the same gift as a $10 Free Play guest. This gifting approach helps guests feel valued rather than focusing solely on a specific number. As a result, it can enhance their perception of both their worth and their favorite casinos.
Financial Liability
Over the years, Free Play has become a massive part of casinos’ player retention strategies. For example, one New York casino found that Free Play makes up almost 19% of their slot machine revenue. Another casino in Las Vegas found that Free Play was more than 24% of the total win from slot machines in a year. Some casino marketers might not realize that Free Play counts toward the revenue taxes casinos pay, meaning Free Play offers have a secondary actual charge to the casino.
On the other hand, gifts don’t count towards this gaming revenue. Some states, like Pennsylvania, actually give rebates for gift purchases. Add in the benefit of wholesale pricing; suddenly, a gift is half the price of the corresponding Free Play offer. For the casino marketer who wants to ensure profitability, it may be time to consider reducing free-play offers.
Lack of Emotional Significance
The psychology of receiving a gift is so expansive that studies have been conducted, and books have been written about it. Cash incentives tend to be taken for granted. The nature of tangible gifts is that they feel more like awards than entitlements. Players burn through Free Play quickly, while physical items remind players of the casino and their experience. Your guests may not recall the amount of Free Play you've given over the years, but they will appreciate the gifts they've received from you for years to come.
Why Gifting Is Better For Guests
In incentive programs, physical gifts offer many advantages over Free Play, cash, or gift certificates. Guests can leave feeling like they received much more with a gift than their Free Play offer. Gifts are often more aspirational and motivating – when participants focus on a particular prize to earn, they are usually more motivated to reach their goal. Tangible gifts can seem out of the ordinary or even glamorous. Gift cards and Free Play? Not so much.
Ready To Switch It Up?
Many challenges faced by Free Play can be effectively addressed through a strategic gifting program.
If you're a marketer who wants to make the switch and add more gifting to your marketing mix, contact Global Promotional Sourcing today.
