Another issue for casino regulators in New York

April 10, 2013

Casinos often run promotions to boost attendance and gambling activiy at their properties.  Often, these consist of free gifts, “point multipliers,” coupons offering free play in a certain amount, or the like.  Other common promotions include “tournaments” with prizes for the top finishers.  Usually, the cost to the casino of a promotion can be projected, so that it will not exceed (or at least not exceed by much) the extra business it should bring in.

Sometimes, however, things go very wrong.  A few years ago, for example, Mohegan Sun ran a promotion for 24 hours during which a blackjack player could triple any bet (and receive one more card) up to $250 per hand (usually, the most a player can increase a bet is to twice the original amount).  By tripling bets in advantageous situations, a player could easily achieve a theoretical advantage over the house.  Many well-financed players, including me, descended upon the property for the 24 hours, and many of us were successful.  During my play, I heard that the casino had suffered losses in the millions, but, despite the usual “weasel words” in the advertising for the promotion warning that it could be discontinued or canceled at any time, Mohegan Sun, to its great credit, allowed the promotion to run the full 24 hours.

Not so recently at the Palms in Las Vegas, where, for four consecutive days starting on a Monday, from noon to 5:00 pm, the house was offering a 6:5 payout on all initial winning hands (winning double and split hand bets were excluded) of up to $100 on its single deck blackjack games.  This usually terrible game (where blackjacks are paid at 6:5 and all other winning hands are paid at even money) became, for the promotional period, very advantageous for the player.  Fortunately, I was in Las Vegas during this promotion, and it was brought to my attention before it began.  I was able to play through the first full day, and I managed, despite terrible luck that would have bankrupted me without the promotion, to turn a small profit.  The next day, I returned but could not get a seat (unlike the Mohegan Sun promotion, which applied to all that property’s dozens of blackjack tables, the Palms promotion was limited to two tables).  I was unable to return on Wednesday and Thursday, but I heard from a player who tried to take advantage of the promotion that Thursday that it had been shut down some time the day before.

No doubt the reason it had been shut down was that the casino suffered greater losses than it had expected.  The question is whether, having advertised a promotion of given duration, and possibly having enticed players to incur large expenses in time and money to take advantage of it, the casino should unilaterally be allowed to pull the plug when it realized it had made a mistake.

I don’t know whether Nevada requires gaming commission approval before a promotion like the Palms’ can be run.  I suggest that, in New York, it should, and that, once approved, the promotion be required to run its full advertised course unless the commission grants permission for it to be discontinued.  Requiring permission to run promotions would provide a check on casino stupidity (I can hear the staffer in charge of processing promotion applications asking a casino boss, “Are you sure you want to do that?”), but would also protect the player who, having identified a potentially valuable opportunity, forgoes others and incurs costs to take advantage of it.  Allowing the casino to petition for permission to discontinue a promotion — if such permission is granted sparingly — would protect casinos from truly egregious mistakes that could hurt their ability to continue in business.  Absent an impending disaster, however, a casino should be stuck with its poor bets, just as it requires its customers to be stuck with theirs in the ordinary course of business.