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Yield Management: Theory & Practice at NIGA 2018


Tangam attended NIGA’s Annual Indian Gaming Tradeshow and Convention a few weeks ago in Las Vegas. The event had over 60 sessions with 13 different educational tracks ranging from emerging gaming, regulation, security, and more. Tangam’s SVP of Operations and Casino Strategy, Ari Mizrachi, presented a session entitled, Yield Management: Theory & Practice, in the Casino Operations track.

The focus of this session was to explain the building blocks of yield management and how it can improve an operator’s table games followed by real-life examples and answers to frequently asked questions on how operators can optimize their approach.

The session started with an introduction to yield management for tables. In a nutshell, it’s providing the right product, in the right quantities, at the right price, at the right time. Ari provides a ‘day in the life of a casino’ example with varying types of customers and some insight into their needs/wants.

 

Introduction to Yield Management

 

How does Table Games Fit into your Strategy?

 

The session aims to answer the question, how does yielding fit into your strategy? Ari discusses how yielding is an iterative process that requires collaboration across multiple functions. In order to yield, four components are required: data collection, creating a strategy, executing that strategy and adapting. Then the process loops back to data collection.

 

The Importance of Data Collection

 

To create a strategy, Ari discusses five components that need to be considered: game mix/floor allocation, player demand segmentation, player demand forecasting, number of deal shift starts and cycle time. All of this data is available to an operator and as the chart below shows, the type of yielding strategy an operator has based on how they’re managing these five components.

 

 

Once a strategy is in place, an operator can control five levers to increase profits:

  • Table capacity – how many tables should you have? Are you servicing your demand? Is there a better game mix based on operational and financial data?
  • House edge – offering side bets and progressives, rule variations i.e. non-commission vs traditional baccarat
  • Table open hours – Player demand segmentation and optimize dealer shifts; multiple dealer shifts
  • Table pricing – usually done by Pit Managers, however, they can supervise up to 50-60 tables in some casinos. Do they have the tools they need to succeed?
  • Game pace – what is the ideal game pace for the game type and table minimum? Do the dealers need to be trained better? Dynamic vs static pricing.

 

The last part of the iterative yielding process is adapting. Demand can change suddenly and making changes in real-time is crucial. Depending on the strategy, a casino can adapt to changes in real-time very differently (or not at all).

 

NIGA Blog

 

By having a yielding strategy, operators can focus on the right questions about player experience, resource allocation and profits i.e. “are we yielding in a way that is consistent with our players’ expectations?” This is key to being able to provide the right product, in the right quantity, at the right price, at the right time.

To demonstrate how a yielding strategy and data analysis can impact table games, Ari reviews an illustrative blackjack example and shows the results when he implements all of the components mentioned above.

 

Key Takeaways

  • Yielding is having the right product in right quantities at the right price at the right time
  • To yield effectively, it requires attention from a large number of people who are already short on time as it’s a complex process
  • By having a yielding strategy, it focuses attention on the right questions but without a specialized software getting an organization to execute effectively is a challenge

 

For all of the videos from this session, check out Tangam’s video page. If you would like to learn more about yielding management, check out some of Tangam’s available resources such as the blog and Tangam Academy.