Summary:
- Casinos lose approximately $37 billion annually due to free-play promotions, which fail to attract new players.
- Fraudulent groups exploit outdated loyalty systems, maximizing free play rewards through multiple sign-ups.
- Noah Acres advocates for digitalization, recommending mobile-based loyalty programs to enhance security and profitability.
During the World Gaming Protection Conference at the Rio Las Vegas, Noah Acres, co-owner of Acres Manufacturing, shed light on a major financial drain in the casino industry.
Namely, he revealed that casinos collectively lose around $37 billion annually in free-play giveaways designed to attract players.
Acres explained that these types of promotions are inefficient at boosting revenue. He also suggested that digital solutions could curb exploitation by organized groups.
Acres, whose company specializes in casino loyalty and technology solutions, referenced findings from a 2023 position paper.
This survey, which included nearly 200 U.S. casinos, explored how player-loyalty reinvestment impacts profitability.
The study found that outdated casino management systems often lead to reinvestment rates reaching or exceeding 100% in a scenario where casinos only profit through unclaimed rewards.
Free Play “Doesn’t Grow Play”
The same research revealed that the gaming industry’s overall reinvestment in player loyalty goes over the 35% mark, amounting to roughly $25 billion. Free play is at the top of the list as the most significant expense.
Acres argued that this system lowers profits, especially for inexperienced players who do not play long enough to offset the cost.
The biggest problem I see with free play is it doesn’t grow play. It doesn’t bring new players.
Highlighting a concerning trend, Acres noted that in 2006, Americans spent 57 cents of every $100 in income on gambling. By 2024, that figure had dropped to 39 cents.
“In the last 15 to 20 years, we’re on the decline”, he further explained while also arguing that while GDP is rising and people are making more money, casinos’ revenue remains “stagnant and even declining”.
Mobile-Based Loyalty Programs Offer More Security
Acres explained that free play accounts for roughly 20% of gross gaming win at properties that report such data, translating to the $37 billion figure.
A critical issue, he argued, is the lost time value when players use free play instead of spending their own money.
Acres’s proposal was aimed at shifting away from physical loyalty cards and PIN-based systems, which are vulnerable to abuse.
Fraudulent groups exploit casino promotions by signing up multiple players to collect free play incentives, sometimes setting up P.O. boxes near local casinos to maximize rewards.
Moderator Willy Allison also acknowledged that the University of Nevada Las Vegas had agreed to Acres’s findings, stating, “Far too much money is given away to players who don’t deserve it.”
To fight this problem, Acres is now advocating for digitalization, recommending mobile-based loyalty programs that, he believes, offer greater security and streamline player enrollment.
About the Author
