Blackjack Performance Series I
(This is an article that was printed in the November 2005 issue of the Casino Enterprise Management Magazine)
Increase Profits at Blackjack: Importance of Time and Motion Issues
What one single element in the game of blackjack is most important to the casino executive regarding revenue? Is it game protection procedures? Would it be front line employee demeanor? Or could it be the employee’s game skills and experience? Or, possibly the element of luck? All of these elements are important and have a great deal to do with blackjack’s revenue flow; however, over the long run no one element influences the profit and profit potential of any gambling device or game like time and motion. In other words, the number of decisions the game of blackjack achieves over a given period of time. Your defenses could be weak, your dealers sullen, and your staff inexperienced, but nothing amplifies your game strengths and weaknesses as much as the increase or decrease in the amount of hands your casino achieves during its period of operation. As this article will point out, the increase (or decrease) of one round of blackjack over an hour period will make (or cost) your casino thousands of dollars annually. More important, the result produces a direct affect to your organizations bottom-line.
Time and motion issues in blackjack are best described as the combination of game procedures, dealing mechanics, and theory application that maximize (or minimizes) the number of results achieved per table during a specific period of operational time. By understanding and utilizing these performance issues the casino’s live game manager can notably increase blackjack revenues without incurring additional operational costs. For example; think of a hand of blackjack as a sales transaction. For each hand that is sold (i.e. dealt), the transaction will produce a theoretical amount of income for the casino. Since it’s safe to assume that an average house advantage in casino blackjack can be calculated in the neighborhood of 1.5%, it can also be assumed that for each $10 wager the house will theoretically win 15 cents. This means that every time a dealer achieves a pace of 400 hands an hour (average wager of $10), he or she in theory earns $6.00 in revenue for the house. This figure might not look like much, but just multiple it by twenty four hours, and then by the average number of tables open, and then again by 365 days, and you will see how much revenue your games will generate even with a conservative average wager of $10.
The Advantage of Gaining Additional Rounds
The casino executive may have a difficult time getting the players to wager more and play poorer, but the executive does have the ability to tweak the operation and squeeze out more outcomes. At this point the challenge to the knowledgeable gaming executive is, “how can I increase our hourly round production from 55 to 60”. To better illustrate the effects realized from time and motion issues, the executive first needs to establish some type of operational bench mark that honestly depicts their existing blackjack for measuring and comparing procedural and game pace options. This can be accomplished by constructing a time and motion generator using a spread sheet program like Excel. The elements that need to be considered are;
1. Number of average BJ tables open during a twenty four hour period
2. Average number of players at an open BJ table
3. Average wager of all players
4. Estimated house advantage in blackjack at the target casino
The number of average tables open can be determined by using an educated guess or by breaking down utilization by shift and by days of the week. I’ve found it easier and just as accurate to poll my shift managers and come up with an estimate based on their input. The average number of players and average wagers can also be deduced through the same process if more detailed information is not already kept by accounting or an in-house financial analysis. Establishing your blackjack house advantage will be more difficult. The normal range to consider is between 1.8% to 1.0% depending on the education level of your players, game rules, and number of decks utilized.
Once these metrics have been establish the executive can construct a workable model. For this example I’m using 12 BJ tables, 4.5 players, $18.00 wager, and 1.5% house advantage as my metric inputs. This represents a medium size casino that is more likely representative of a Native American or Midwest riverboat casino.
Table 1 – Estimated Win per Each Round
Average number of tables open 12.0
Average number of players 4.5
Average bet of each position $ 18.00
Estimated house advantage 1.50%
Estimated win for each round $ 14.58
Table 1 indicates how much one round of blackjack is worth to the casino in theoretical win. This number is important because it establishes a benchmark for comparing the effect of time and motion and the importance of achieving additional rounds dealt in the game of blackjack. For example; using the estimated gain from one round dealt, what would be the theoretical increase in revenue for gaining one additional hourly round, per day, month, and year?
Table 2 – Estimated Win per Day, Month & Year
Estimated win per round $ 14.58
Estimated win per round - Day $ 350
Estimated win per round - Month $ 10,673
Estimated win per round - Year $ 128,071
Isn’t that interesting? What started out as a meager $15 gain for one additional round turns out to increase the casino’s annual win figure by $128,000! These revenue figures in Table 2 generally can be obtained without increasing operational expenses by one cent, meaning any increase in revenue goes directly towards the operations bottom-line profits.
Using the estimated annual figure the executive can easily see the advantage from increasing the number of additional rounds dealt in the game of blackjack. A figure of $128,000 seems like a big number, but in most instances it’s only a starting point for revenue gain potential. In most cases casinos do not put much impetus in achieving more gaming results as compared to other concerns, and have created several areas in their game procedures, utilization of gaming equipment, and protection policies that supply a great deal of deadwood that bogs down their hand and round production. From my experience as a gaming consultant I can safely predict that most gaming operations can be improved to produce between three to seven additional rounds per table per hour. Based on this assumption the average mid-size casino has potential to increase blackjack revenue from existing business in the neighborhood of $400,000 to $900,000 annually. Just think what the major casino operations could produce!
Understanding the Difference between Rounds Dealt and Total Hands Dealt
Casino operators look at either rounds or hands dealt as an indicator of production. Unfortunately, most executives have a difficult time converting from one measurement to the other, similar to the confusion cause when converting the metric system to inches and feet. Since both methods of measurement are related based on certain assumptions, a simple calculation can be applied. The measurement “rounds” takes into consideration one complete game or round dealt to all players and the dealer. In the example given in this section, a round would consist of 5.5 hands; 4.5 player hands and 1 dealer hand. However, the most widely used numbers are not derived from this small a sample, but from one hour of play on a given table game. For instances; the industry uses 60 dealing rounds per hour as the standard number of rounds that should be dealt. If we then insert the multiple of 5.5 representing the number of hands dealt per round the calculations indicate 60 rounds is equal to 330 hands dealt. Please don’t confuse this figure with the estimated hands dealt figure calculated during game pace audits. This metric will be examined later in this blackjack performance series.
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