PAUL'S POINTERS: CASH OR COMPS: WHAT ARE YOU PLAYING FOR?
by Paul Wilson
BJI contributing writer Paul Wilson is a quasi-Renaissance man and graduate of Millsaps College. Some of his interests and hobbies include finance, consulting, travel, photography, and rock music. He's an avid baseball fan. Paul has done freelance writing and editing for gaming publications and takes blackjack, video poker, and sports betting very seriously. As we learned in the November 2014 issue, he also might have a "thing" for Wonder Woman.
Why do you gamble? Have you ever asked yourself that question? Is it to make money, get comps, or just because it's fun? Maybe you've never thought about it. The answer is lot more complex than it appears at first glance isn't it? It certainly is for me. I've been engaged in this topic off and on for a lengthy period with a few gambling friends that visit Las Vegas and other gambling destinations on a regular to semi-regular basis; not to mention, with myself for many, many years. This month we are going to take a look at that seemingly simple question. I challenge you to keep an open mind and be honest with yourself in thinking about this month's topic.
THE DUEL MANDATE DILEMMA
I call the "Cash or comps" question the "Fed problem." By "Fed" I am referring to the Federal Open Market Committee (FOMC). They've been in the news a lot since the Great Recession and just this week voted against an interest rate hike. Without turning this into an economics lecture, remember that in simple terms the Fed is charged with the duel mandate of keeping interest rates low and full employment (measured by a low unemployment rate). Generally when rates are low, more borrowing occurs putting more money into play and causing the economy to grow. This leads to more jobs and higher wages. However, higher wages and more dollars splashing around in the system can lead to inflation which drives up the cost of goods and services which tends to lead to a downturn in sales and economic growth which in turn causes people to lose their jobs and spending in the economy decreases.
The Fed's dual mandate is a tricky balancing act and in simple terms can be thought of as a circular problem or merely as a dog chasing its tail. Granted there is a lot more that goes into the equation than I've outlined above. As I write this, the United States' economy has historically low interest rates and low unemployment. How's that working out for you? For many Americans, the answer is "not so well." In gambling terms it's like winning $5 and getting a free drink for a few hours of action. I'll take it, but...
How does all this Fed mumbo jumbo econ-speak relate to our topic you might be asking at this point? Well, every gambler would rather win money than lose it. That's pretty much a given. If you left the blackjack table or you favorite gaming machine every time you were ahead, you'd be a winner, both in the short-term and long-term if you did this consistently. However, you might not play many hours or put much money into action and you certainly won't earn many or any comps. If you are a consistent loser in the eyes of the casino, they want you to continue to play at their property, so they may offer you more "free" stuff to keep you coming back. Also, if you give them a shot at your money by playing for an extended period, they will probably want you to come back as well and may provide some incentives. These comps, short for complimentaries, are desirable for many reasons. They can help us feel better about our losing sessions, but they can also save us a few dollars or a lot of dollars that can be used to build our gambling bankroll. In a perfect world you can win money and get your fair share of comps. Like the Fed's dilemma, it's a balancing act and in the current casino playing environment it's getting tougher to balance. In the next section we'll examine some reasons why.
DO COMPS REALLY MATTER?
If you are a serious gambler they should. Even if you are an amateur or it's your first time visiting a casino destination, the answer is the same. Comps have financial value - they are worth dollars to you. Subsequently, in casino math they cost the house money. In your math, they keep money in your pocket.
The origin of the comp system goes back to the days when the Mob ran the Las Vegas casinos. In those days casino gambling was still a relatively new concept for most Americans. Gambling had a negative stigma and most people realized the odds were against them and they would probably lose, so what's the fun in that? Why go all the way to that town in the desert (where it's really hot) just to lose money? Casino operators used to run "junkets" that often included air transportation and rooms at a low cost, often free if you gambled enough. People were enticed to visit the Las Vegas casinos with free drinks, lavish dinners, great entertainers, and hotel rooms. All they had to do was gamble. The early gambling pioneers and casino operators knew the house held the edge on all its games, they just needed customers to gamble a certain amount of money and the profits would come pouring in; and they did.
The casino operators in the current environment have a different view and are generally...
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