Smart Video Poker Players Hamper Casino Profits, Says Study

Posted on: March 21, 2024, 06:29h. 

Last updated on: March 22, 2024, 10:27h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

A small cohort of video poker bettors known as advantage players (APs) have the skills to be a drag on casino profits, according to a new study.

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A video poker machine at a Stations casino. Technology could help gaming companies limit loss from highly skilled video poker players. (Image: STN Charms)

Acres Manufacturing Company, which manufactures next-generation customer loyalty technology and services for casino operators, leveraged its Video Poker Analyzer tool to examine how APs can beat the house more often than not while commanding an outsized share of loyalty rewards.

Collectively, these players caused a loss to the casino equivalent to 25.64% of its carded win on video poker during the period of the study,” according to Acres. “Furthermore, over two-thirds of the APs profited from their play during the period. Because the group accounted for 26% of video poker coin-in, the casino’s loyalty program rewarded each AP significantly more than higher margin players.”

Fortunately for casino operators, such players comprise just 1% of guests. The Acres survey examined three million hands played by 1,000 APs in the Las Vegas locals’ market.

Video Poker Still Profitability Fixture for Casinos

In fiscal 2023, Nevada casinos generated nearly $30 billion in sales, and on the gross gaming revenue (GGR) side of the ledger, slots and other gaming machines — the category in which video poker resides — were major contributors, as is usually the case.

Gaming devices are more profitable for casino operators because there’s less labor cost and overhead involved than with table games. Those are among the reasons the industry has added gaming devices, including video poker machines, in recent years, sometimes at the expense of table games.

In Las Vegas, video poker is a staple at locals’ casinos. Operators know as much, and while 99% of players don’t fall into the advantage category, it could be beneficial to “the house” to mitigate the impact of too many tier credits and points being allocated to select players. After all, those points can be redeemed for freebies on other profit generators, including food and beverage and rooms.

Tech Important in Identifying Video Poker APs

As is the case with nearly every other industry, casino gaming is increasingly technology-centric, and tech can be pivotal in terms of operators leveling the playing field with highly skilled video poker players.

Acres said its Video Poker Analyzer analyzes players’ decisions against the optimal strategy for each hand dealt. It then identifies players’ mistakes, assigning those errors a dollar value, which helps operators better predict profit and loss created by a particular bettor.

“A casino operator deploying Video Poker Analyzer may see more than a 45% upside to its video poker profits through a combination of excluding and reducing unprofitable APs from the active player base and through the redeployment of valuable marketing dollars to those players with the highest upside potential,” concluded Acres.