how casinos mine data with rewards program loyalty schemes

The casino industry has been growing year-on-year since its inception, both in the US and globally. The principal contributing factor to its steady rise is laxer legislation from governments who seek additional tax influxes. However, the premium service that most gambling venues provide also has done its part. While the sector did experience a dip in revenues due to the unpredictable occurrences of 2020, experts predict that it will quickly get back on track, as the global market should expand by over $200 billion in the next six years.

Gambling is a pastime that most people hope to keep private, but the one party that knows everything connected with you enjoying this activity is your chosen operator. We all know that once we step onto a gaming floor, we become a subject of the famous eye in the sky video surveillance system. A security team in a small room somewhere observes every one of our moves on a wall of monitors. While being under this kind of scrutiny is mandatory, giving up mountains of personal information and our preference is not. Yet, about 70% of casino customers do it with the belief that there are getting something extra for their patronage.

How Do They Work?

Rewards and loyalty programs are the marketing ploy of the 21 st century. Nowadays, everyone is using them, from supermarkets to movie theaters. However, casinos have been using similar systems before most businesses, dating back to the early 1960s. If you have ever visited a gambling establishment, you have likely heard of the term comps. It is a complimentary item or service given out by the venue to encourage you to gamble more.

You can see an unofficial casino loyalty system in play in Paul Thomas Anderson’s 1996 movie Hard Eight. In a scene from the film, Philip Baker Hall’s character Sydney teaches John C. Reilly how to use $150 on slots to get a free room. The process begins with John C. Reilly getting a rate-card from a floor manager under the guise that he is a compulsive player who must keep track of his betting activity. Then he exchanges $150 for 150 slot tokens. For his first session, Reilly plays 20 of them on a slot machine. Then exchanges the rest for cash. He then goes back to the token purchasing counter and uses the remaining $130 for new tokens, and again, plays only 20 of these on slots. Reilly repeats this process until he runs out of cash. In reality, he only spends $150, but due to the continuous purchasing of tokens, his rate card notes that he has spent a lot more. Thanks to his activity, the floor manager decides to award him a free room, hoping that he will stay the night and gamble the next day.

In essence, the system described above is how modern-day loyalty schemes work. The casino gets you to fill out an application, in which you provide them with your data, such as a physical address and a phone number, and agreeing to their privacy policy. Then, they issue you a plastic card with an identifier that you can scan whenever you make a purchase at their venue or play any of their games. Every time you do each one, you rack up a specific amount of points on your card. You can, later on, use these to claim promotional offers. Legit online casinos do the same thing. Though, they feature no card as they track all your activity via your account use. You agree to this on sign-up or when you opt to become a member of their loyalty scheme. The principles by which both sectors operate are the same. User activity leads to perks.

Guidelines

While almost all casinos have a rewards/loyalty program, each one utilizes a different system that best suits their needs. In general, a point-collecting scheme is the industry standard. The casino notes everything you do on their property via scanning your card when you complete an action, which leads to point accumulation. Note that spending the same amount of money on different activities will not lead to the same amount of points. For instance, at Caesar’s properties, you get one point for every $10 spent playing video poker. Yet you get that same point for only spending $5 on slots. That is because slot machines feature a higher house advantage, so you are less likely to win money playing them. Thus the casino incurs less risk when you play those machines, and they are more generous when giving out points. In the online sphere, lower overhead costs have led to operators featuring reel-spinners with far better odds than physical machines.

Each rewards program consists of tiers or levels, and you move up this ladder via point collecting. We mentioned Caesars’ properties, so we will keep using their system to illustrate this concept. Caesars has a six-level program, and in the entry-level one titled – Gold, for every 5,000 points, you get a one-night free stay in Caesars Entertainment hotels in Atlantic City and Las Vegas. If you manage to accumulate 125,000, within a year, you reach the Seven Stars tier, and you get perks such as $1,200 in air-fare credit, room upgrades, and more.

Remember, in most casino rewards programs, staying in a specific tier requires that you continuously spend money. Some of these schemes even have a reset switch once a year passes. That means you lose your collected points and have to earn them back again to maintain your level. If you do not, you will lose some of the perks you currently enjoy.

What Info Do They Mine And How They Use It?

First off, all customers agree to give gambling operators the ability to collect information regarding their gaming/spending habits. As mentioned, to receive a rewards card, you must supply personal identification such as a government-issued ID and your contact information. So, right of the bat, the operator knows how old you are, where you live, and your email address. Online casinos gather this same data, but the difference is that they request documentation once you make a withdrawal request and not on sign-up. They do this because they have to comply with KYC (Know Your Customer) procedures, a mandatory legal requirement that helps prevent money laundering.

Each time you do something on the casino property, employees have to scan your rewards card. That includes when you book a room, make dinner reservations, purchase items from their gift shop, play games, and more. Even when you sit at the blackjack table, casino staff will walk up to you every couple of hours, swiping your card, recording how much you are spending. Some slot machines have this feature built-in.

On account of all this scanning, casinos know what you have done at what time. They know which games you like to play, how much you spend on them, your max bet, and how long you will tolerate a losing streak. They also know what guests bunch together, who loves promo deals, how much players will lose in a given period, and so on. So, how do operators use this information? Well, for example, MGM’s Aria Resort & Casino has server-based slot machines that are customizable to satisfy individual players’ needs. Such games can inform you of upcoming events that you may be interested in and even wish you a happy birthday.

All this data accumulation gets fed into predictive data analytics software, which then tells operators the best spots for placing specific games, who to market their products to, what demographics are most likely to claim a promotional offer, and more. You give away your preference to the casino via your activity, helping them provide better service to you and the masses. That’s the trade-off.

To Sum Up

Today, data harvesting is standard. Google, Facebook, Amazon, Apple, and every other corporate giant do it. If anything, casinos have somehow avoided public scrutiny for this practice, despite widespread concern for the side-effects of gambling. However, operators are not doing anything novel. Such information collection has become the backbone of modern marketing and is here to stay. Operators are not forcing anyone to give up this data. Players are doing so willingly. In reality, they are paying for the obtained perks, but that is not how most people see it.

Artificial intelligence is in full swing in the business world these days, and the gaming sector is no exception. Currently, venues can predict at what table you are likely to sit and your gambling budget, but soon, they may be able to do a whole lot more. Let us hope that gambling brands will incorporate the same deposit/loss limit measures as online casinos, which heavily promote responsible gambling. So, whenever lady luck turns her back on you for an extended period, the machine you are playing at will warn you that maybe it is time to call it a day.

Shelly Schiff has been working in the gambling industry since 2009, mainly on the digital side of things, employed by Online United States Casinos. However, over her eleven-year career, Shelly has provided content for many other top interactive gaming websites. She knows all there is to know about slots and has in-depth knowledge of the most popular table games. Her golden retriever Garry occupies most of her leisure time. Though, when she can, she loves reading Jim Thompson-like crime novels.

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