Joined: Nov 14, 2009
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September 3rd, 2010 at 12:16:55 PM permalink
Interesting article on the topic here: http://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1314&context=refereed

"This study reports the results of a field experiment that assessed the relationship between free-play coupon
value and a player’s slot wagering volume. Customers in the player database of a Las Vegas hotel casino were
assigned to either a $50 free-play incentive (control offer) or a $100 free-play incentive (experimental offer).
Results indicated little effect of free-play coupon value on slot gaming volumes."

Original question context:
Quote: Kelmo

Hi Wizard,

Here's one that you could sink your teeth into, and it probably would be of interest to both the players and the casinos:

There is a growing debate amongst casino operators and slot machine vendors about the cost of freeplay. The IGT system, for instance, allows casinos to credit a player's account with x amount of freeplay, which they can wager just as real credits. When they lose, they lose. However, when they win the get the freeplay and the win returned as real credits. This is my understanding of freeplay (I'm actually a Table Games guy), but was asked the question of cost.

Here's how I see it:

If it was a matchplay on tables, per $1 value the player would gain probabilityofwin * return (not considering the matched wager). So for roulette even-money 18/38 * 1 = 0.47 and single number 1/38 * 35 = 0.92.

If it was a non-negotiable chip that had to be played until lost, then the value would increase asymptotically to a higher value, due to the possibilities of repetitive wins.

The difference between the two is that a player can walk after the matchplay, but is obligated to play out the non-negotiable.

However, for free play the player not only recieves his winning credit, but also recieves his freeplay back as a real credit (unless I misunderstood how it was explained). If that was the case, the value would be probabilityofwin * (return + 1). In the case of a roulette freeplay (if there was such a case), the gain would be 1-HA for any wager on the layout.

In the case of a slot machine freeplay, the player is allowed to cash out once all freeplays have been played, but in reality, most players would keep playing. So the value of that freeplay is probabily somewhere between the two values. There is also the caveat of multiple payoffs (if that makes a difference) and the length of play of the customer. Some casino managers argue that giving free credits takes time away from actual play.

These freeplays are given sometimes as rewards, sometimes based on play, etc. What value is this to the player and what cost is it to the casino?

"Dice, verily, are armed with goads and driving-hooks, deceiving and tormenting, causing grievous woe." -Rig Veda 10.34.4

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