Harrrah’s Low Rollers Account for 80% of Revenue & 100% of Profits | Hacker News Reader

Harrrah’s Low Rollers Account for 80% of Revenue & 100% of Profits

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16 pointskimboslice8 comments

I think they've got the cause and effect backward there. Harrah's low rollers account for so much of their overall action because their casinos are so bad that high rollers avoid them. You can't simply assume that because all of their action comes from low rollers, they are pursuing some sort of brilliant strategy that nobody else is by not courting the high rollers (when they could easily go after both).

I'm guessing the 30% of low rollers that return very frequently are largely locals or near-locals (Harrah's has casinos in damn near every gaming jurisdiction in this hemisphere). Harrah's does a great job of catering to them.

Much of the other 70% would probably be mid-rollers, who I'd call value gamblers. They give the casinos just enough action to get some good freebies and nothing more. They end up spending less than if they had just booked the hotel and paid for food like a low roller does.

Harrah's does comp those two groups much better than anyone else. That also makes them the easiest to abuse comp program on the strip.

You can't simply assume that because all of their action comes from low rollers, they are pursuing some sort of brilliant strategy that nobody else is by not courting the high rollers (when they could easily go after both).

Sure, they could, but then they'd have to spend money to target that group. Is this any different to the high-end/low-end market segmentation of any other business?

I guess one of the reasons that they can open a Harrah's in damn near every gaming jurisdiction (New Orleans and South Lake Tahoe spring to mind as the two Harrah's I've been to) is that they can afford to build a fairly cheap casino without tainting their brand image. Compare that to, say, The Venetian, which can only open a new branch (in, say, Macau) if they're willing to spend the billions it takes to build something comparable to the Venetian in Vegas.

Harrah's has locations in every jurisdiction mostly due to merger and acquisition. They're basically a number of small gaming operators that got rolled into one.

Also, most of their casinos were not cheap when they were built. They are just old. The Imperial Palace (now the laughing stock of that part of the strip and soon to be bulldozed) was one of the nicest hotels around 50 years ago.

In fact, I don't think they've actually built a single casino since Loveman took over.

Not even a surprise--thats how the casino biz works. High rollers are there for the resort to create buzz and bring people in. Just like Mercedes puts an SL convertible on the showroom to bring in gawkers, and some of them leave with a C class. Amex spreads rumors about a black card---it increases the wannabes signing up for credit cards.

That's not true at all. The casinos that cater to them make fortunes from high rollers. The average person on the Vegas strip blows something like $20 a day in gaming and has a total gaming budget of about $600 per trip. High rollers bet big enough that an unusual winning or losing streak can shift a casino's quarterly results by 5% or more.

And Amex does have a black card, it's not a rumor (though there are many untrue rumors about it). I know a holder, who not coincidentally is how I know so much about comp programs and how casinos treat high rollers.

Wow...my points were missed completely. Everybody knows the BC is real, but Amex does not advertise it. Info is leaked, they create buzz, and they allow people to gossip about it--its far more clever marketing to neither confirm or deny its existence as Amex did in the 90s--esp when it was by invite only and many people werent sure if it was real.

And I didnt suggest that casinos don't make money off the high rollers. But they definitely make a greater and more stable cashflow from masses of low rollers than handfuls of high rollers. A smaller scale example would be the high end dept store in your city, like a Saks or a Neimans--their avg purchase is probably in the high 3/low 4 figures while at the same time at least once or a few times a day a high roller spends 10k+ on clothing. Probably with their Black Card. XD

http://en.wikipedia.org/wiki/Centurion_Card

My brother (through his company) does in fact have a black AMEX card.

It is made of metal instead of plastic, and to his annoyance, does not always fit in machines that take credit cards because it is a little thicker and slightly larger.

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