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Report Says Free Play Is Negatively Impacting The Bottom Line Of Casinos

Written By Marc Meltzer on September 14, 2023 - Last Updated on October 6, 2023
Woman Playing One Handed Casino Slot Game with free play

Casino operators use loyalty rewards programs to incentivize customers to return to the property. Some reinvestment offers from casinos can be for hotel rooms, dining, or entertainment.

The most popular casino rewards perk to bring gamblers back to the casino is free play. The idea is that a little free play used in a slot machine will translate to more spending by the guest.

The main source of revenue from free play can be increased gambling after it runs out. There’s also ancillary revenue from guests spending money at non-gaming revenues like restaurants.

Free play has become more important over the years. Spending on non-gaming amenities continues to increase at casinos around the country.

Free play isn’t as profitable for casinos as some think

Even though some casinos have reduced their spending on marketing to gamblers, Acres Manufacturing Company (Acres) says they might not be profiting from free play as much as they should be.

Still, free play is the single largest expense reinvestment in player loyalty for casinos, according to Acres, a casino loyalty and technology developer.

The company recently released a whitepaper detailing the economic impact of player reinvestments like free play on the bottom line for operators. Noah Acres shared the following statement:

“The casino industry’s continued reliance on free play to incentivize player loyalty is impacting industry slot profitability by more than $37 billion every year, with smaller casinos typically bearing a larger relative percentage of this impact.

The industry’s strategy of using free play to buy loyalty is completely misaligned with player preferences, as the potential to win is what truly drives loyalty, not free play.”

According to the Casino Loyalty Technology report, casino revenue could jump drastically by completely removing free play from their rewards program. Acres says that casino operators would not see any negative impact on loyalty programs.

The company says revenue for slot machine operations would “more than double.”

Outdated technology is a major issue

The report from Acres states that the biggest problem with casino rewards programs is technology. Technically, the problem is outdated technology at many casinos.

“The technology behind casino loyalty is stuck in the 1990s and geared to a time before TITO became prevalent across the slot floor. As most other industries have deployed modern technology to deliver personalized, data-driven customer experiences, casino loyalty technology has not evolved beyond the outdated tier-driven direct mail model.”

The problem isn’t just using new rewards program technology to improve the customer experience. Slot machine manufacturers are improving their technology at a faster pace than casinos.

Casino rewards programs can’t keep up with customer demand and slot machine technology. At the same time, the casino operators might be stuck between a rock and a hard place with slot machine technology.

Slot players are older but casinos need younger players too

According to the report, approximately 30% of slot machine revenue comes from players 70 or older. This isn’t the most technology-savvy demographic.

Graph of Slot Coin-In Revenues By Age Group
Source: Acres Manufacturing Company

This isn’t a new problem for casinos. Slot machine players have been part of the older demographic for years.

Casino operators have to draw a fine line to appeal to younger players without alienating the existing players. This topic has been discussed annually during the Global Gaming Expo (G2E). Casino operators do understand the problem.

Finding a solution that satisfies their bottom line as well as all customer demographics isn’t as easy as it sounds.

Visitors to a local casino around the country are vastly different than say, those visiting Las Vegas. Even then, Las Vegas has different customer segments on the Vegas Strip, downtown, and the surrounding areas.

There’s no one-stop solution to appropriately market to all casino visitors. This issue will likely continue to impede US casino gambling profits.

Photo by PlayUSA
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Marc Meltzer

Marc grew up on the mean streets of the South Bronx. He's the rare combination of Yankees and Jets fan which explains his often contrarian point of view. Marc is a freelance writer and social media consultant. Writing about steak, booze, gambling and Las Vegas is a tough job but somebody has to do it.

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