If you want a glimpse into the mind of a casino manager, listen to Jim Kilby, who literally wrote the book on running a casino:
• "Rule No. 1: You shouldn't offer a game where you've got no casino advantage."
• "Your job in management is to maximize profitability for the amount of real estate that you have to offer."
• "You can actually increase the (house) advantage in slots. and players will not even know it."
Kilby, a consultant and analyst based in Escondido, Calif., started as a dealer in 1969 and has held a variety of casino management positions. He was Boyd professor of gaming at the University of Nevada in Las Vegas for eight years and co-wrote "Casino Operations Management," a textbook considered a must-read by many in the business. His third how-to book is to be released soon.
One gambling adage holds that as soon as you walk in the door, the casino claims all the money in your pockets — you just happen to be holding it temporarily.
That's a bit overblown, perhaps, but Kilby leaves no doubt about a casino's aim.
"What we often do in gaming is we look at revenue. That ain't the number," he says in a phone interview. "Your job (as a manager) is to maximize profit."
Casinos don't "beat" players to make money, Kilby says; they "earn" it through the house advantage on every game from craps to slot machines.
That's why he foresees a time when slot machines might push table games out of the picture.
"No one's going to keep a game in there because it 'ought' to be in a casino. It's not going to happen," he says. "Back in the '30s, you could find faro games. You don't find them any more. You'd find fan tan games. You don't find them anymore.
"Why⢠Because they could not compete with the other table games," he continues. "Before long, it's going to be the table games that can't compete with slots."
It's a matter of numbers. With a craps player betting the pass line and taking full odds, the house edge is less than 0.1 percent. A good basic-strategy blackjack player faces a house edge of less than 0.4 percent with Pennsylvania rules.
With slots, Pennsylvania casinos enjoy an advantage of about 10 percent, which Kilby calls "a big number." That means that, over time, the house wins $10 of every $100 bet. Even in more generous Las Vegas casinos, the house edge on slots is 3 percent or more.
"A blackjack table occupies about the same real estate as 10 slot machines," Kilby says. "After a while, the coach is going to say 'table out, slot in.'"
Kilby says a casino's slot machine payback rate depends mainly on the competition, but casinos have little reason to reduce their edge.
"They could (offer a higher return), but if you're in management, there's no reason to," he says. "Individual players are not going to know any difference."
A study published in the May edition of the UNLV Gaming Research & Review Journal supports that view. Two faculty members painstakingly arranged a test involving 10,000 "virtual players" and four sets of machines that were identical except that their house edge ranged from 3 percent to 12 percent.
The study found that few players would be able to tell that any two machines had different payout rates. That means casinos might want to think twice about reducing the house advantage on machines in hopes of being known for "loose" slots, the study said.
"It is very unlikely that a player would be able to legitimately detect a 1 to 2 percent change in the payback percentage," the study said. "The findings of this study fail to support concerns that frequent players will detect changes in (house advantage) over time."
Kilby says that while managers with access to the revenue numbers could see the long-term difference between a slot with 90 percent payback and one with 92 percent payback, for example, players wouldn't have enough time on the machines to distinguish.
"There's a lot of money we're leaving on the table," he says.
State renews Rivers license
The Gaming Control Board voted Wednesday voted to renew the license of Holdings Acquisition Co., which operates Rivers Casino on the North Shore. The new license is good for three years.
Casino officials told the board that employment totaled 1,756 this month and will top 1,800 by year-end. Minority employment is 19.9 percent, compared with a countywide minority population of 18.8 percent, they said.
Money trail
Slot players lost $46.3 million in Pennsylvania's 10 casinos during the week ending Sept. 11, the Gaming Control Board reported. That's up from $42.8 million in the comparable week last year, when nine casinos were open.
The state takes 55 percent of that in taxes.
Statewide, slot machines have posted a 90.09 percent payout rate since the fiscal year started in July. For every $100 bet, the machines return an average of $90.09.
Payout rates for Western Pennsylvania casinos:
89.87 percent
Rivers; gross slot revenue for the week was $5.62 million, up from $4.7 million last year.
89.73 percent
The Meadows in Washington County; gross slot revenue for the week was $4.91 million, up from $4.9 million last year.
90.43 percent
Presque Isle in Erie, gross slot revenue for the week was $3.54 million, up from $3.52 million last year.
Where can I get gambling advice in person?
Here's a flip answer: from the stranger sitting next to you, who will gladly explain how you messed up. Here's a better answer: Attend the free Player's Advantage presentation from 12:15 to 1 p.m. Oct. 13 at the Downtown branch of the Carnegie Library, 612 Smithfield St. I'll give an overview of casino gambling and answer questions.
