Rebates vs Comps - Always Take Cash Back Over Comps

Folks who gamble in casinos with any consistency face two distinct uphill climbs if they hope to reach the realm of profitability. First, you’ve got to beat the games, or break even at the very least. This is incredibly difficult to do, of course, given the fact casinos are in the business of offering negative expectation gambles. A few skill-based games out there – blackjack and video poker come to mind – can be played strategically as to nullify the house edge, but overall, beating the games is a tall task.

That’s where the second steep climb comes into play, as regulars chase comps and cash back offers that serve to subsidize their losses. Casino comps are an age-old method of keeping lucrative losers on the floor, dating back to the old days when Las Vegas casinos would reward blackjack winners with a free chicken dinner. Over time, the informal doling out of comps from pit bosses to their preferred players has evolved to include Player’s Clubs and trackable cards – but the concept remains the same. If you spend enough time – and enough money – playing in a casino, they’ll be happy to ease your pain with a few well-placed freebies.

In today’s corporatized casino climate, comps typically come in the form of free meal vouchers, discounted room rates, tickets to the in-house show, and other incentives to keep your business on property. Comps are awarded largely based on in-house formulas and algorithms, but at their core, these systems are designed to award more comps the more you play.

And it’s not just about how long you play, but how much you wager, and on which games. Casinos obviously prefer players to risk their money on the lowest expectation gambles, so comp programs invariably award more points to slot players (who face a 6 to 13 percent house edge) than they do video poker specialists (1 percent or lower).

On the other hand, cash back (often shortened to “cashback”) is a more traditional method of rewarding regulars that had its heyday decades ago. The concept of casino cash back is deceptively simple. Rather than reward you with goods and services when you lose money gambling, casinos just give you a small slice of those losses back in the form of cold hard cash. You might receive a mailer every month listing your losses and corresponding cash back voucher, or the casino can let you know right there at the cashier’s cage.

In a 2008 edition of the Global Gaming Business (GGB) magazine – an industry outlet written for casino operators – cash back was defined under the following terms:

“Cashback is a cash rebate going to the players based on their play.

It can be based on the same formula across all machines in the house, have two distinctive categories (slots versus video poker, where video poker receives less cashback due to its lower house edge), or numerous categories based on theoretical loss or other factors.

In Las Vegas and most regional casinos, the amount of cashback is usually based on a percentage of coin-in, whereas in Atlantic City, it is usually based on a percentage of each machine’s theoretical hold.”

At one point back in a bygone era, cash back was the casino industry’s preferred method for keeping regulars in the building. Every gambler knows they’ll stand to lose over the long run, so receiving a direct rebate on those losses serves as a safety net of sorts.

The beauty of cash back is readily apparent. Instead of finding yourself saddled with a buffet coupon or concert tickets – both of which will come with built-in expiration dates – actual currency can be kept for as long as you like. Cash back also offers “real world” flexibility, meaning you can use the funds outside of the casino when need be.

Just try paying your electric bill with a voucher for the Caesars Palace seafood buffet and see how far that gets you…Unfortunately though, the advent of comp programs based on Player’s Club points has slowly replaced cash back offers. You can still get cash back on losses of course, but not to the extent that casino gamblers enjoyed just a few years ago. Instead, casinos are becoming increasingly reliant on the “captive audience” phenomenon created by comps.

In other words, by giving players comps over cash back, the corporate casino overlords ensure you have nowhere else to spend that dough. It either stays in house, or it evaporates into the ether upon expiration – but the money can never be moved to a competitor’s coffers.

For this reason, casinos began shifting away from the cash back model in favor of comps right around the turn of the century. In an article published by the Las Vegas Sun in 2001, both sides of the cash back versus comps debate were presented after Station Casinos abandoned its cash back program.

At the time, Las Vegas casino consultant Andrew Klebanow – who previously served as vice president of marketing for the Sam’s Town casino and Santa Fe Gaming – described cash back programs as long-term losers for the “local” casinos, two of which were sold to Station Casinos after facing financial crisis:

“If you think you can make money off those (customer) segments, look at the former owners of the Reserve and Santa Fe.

Station has the fewest number of full-pay (high-payback machines), and it has no cash back.

They also have the highest hold percentage gaming floor (among locals casinos in Las Vegas) … and yet they’re the dominant player in this market. Players go there because it’s a great gaming experience, and that’s what it’s all about.” (Quote)

Anthony Curtis – publisher of the popular Las Vegas Advisor newsletter – offered a nuanced take predicated on compromise between the two camps:

“I believe the locals want cash back and the tourists want comps.

The locals are just over-comped. They get too many things in the mail (from casinos) already.

“I think the casinos have put themselves in a position where they have to do (cash back), whether they like it or not.”

As a casino gambler for all of my adult life, I’ve seen the transition from cash back to comps take place firsthand. And as a video poker pro who used to rely on cash back incentives to subsidize inevitable downswings, I can definitely tell you where my loyalty lies. On that note, read on to learn about the three main reasons why cash back offers are a better bet than Player’s Club comps.

1 – Club Based Comp Programs Can Be Confusing and Complex

Gambling expert and author Jean Scott has been known as the “Queen of Comps” ever since her 1998 book The Frugal Gambler was published.

Scott’s penchant for exploiting comp programs to the maximum extent is legendary among casino regulars. She’s known for calculating the exact volume of play needed to hit certain “tiers,” scouring the country for the most generous comp programs, and essentially subsidizing her lifestyle as a professional video poker player. Suffice to say, Scott will do whatever it takes to score every comp on the table.

But even she admits that modern comp programs have become a labyrinth of terms, conditions, and fine print.

In an essay penned for the American Casino Guide titled “Use – Don’t Abuse – The Comp System,” the Queen herself explains how to decipher opaque corporate casino policies:

“The comp system is multi-tiered, based mainly on the amount of money you put through the machine (whether by feeding coins or bills, or playing credits). Obviously, a nickel slot player with four hours of action shouldn’t expect nearly as many comps as a slot player with four hours of dollar play.

In addition, many casinos take into consideration other, more complicated factors.

Video poker players often earn half the comps slot players earn; some casinos cut the comp rate on multi-line video poker; and many base comps on the player’s theoretical loss assigned to each machine.” (Quote)

As Scott makes clear, understanding exactly what you’re earning for each spin on the slot machine, hand of video poker, or roll at the craps table is akin to advanced calculus. Don’t take her word for it though, just try to make sense of the Total Rewards comp program – which is used by Caesars Entertainment’s network of dozens of casinos nationwide:

“To earn Reward Credits, use your Total Rewards card for all your gaming at Total Rewards locations.

You will earn 1 Reward Credit for each $5 you play on reel slot machines and $10 for video poker. Additionally, you may earn extra Reward Credits throughout the day based on the type of game you are playing, your average bet, and your length of play.

For table play, be sure to hand your Total Rewards card to the dealer or pit supervisor as soon as you sit down to play and ask to be rated. Reward Credits are earned based on length of play, average bet and type of game.” (Quote)

If you’re a Total Rewards member playing at a Caesars property, you know you’ll get 1 Reward Credit for every $5 wagered on slot machines. Of course, you need to wager $10 on the lower house edge gamble of video poker to claim a single Reward Credit. But as the fine print specifies, additional Reward Credits may be earned based on game type, average wager size, and session length. Unfortunately for players, the metrics used to determine these additional comps aren’t clarified in any way, shape, or form.

Same goes for table game play, which produces comps based on the pit supervisor’s subjective “rating” of your play. Pit bosses are expected to monitor your play throughout a session, tabulating various bets at various junctures until an average wager size can be determined. Then, based on that average wager and your time spent at the table, you’re supposed to receive the commensurate comp rewards.

But as gambling expert Nicholas Colon – a former member of the famed MIT Blackjack Team and head of the Alea Consulting Group gaming firm – revealed in an article on comps published by 888 Casino, pit bosses are hardly model employees:

“Pit bosses are lazy and they all pretty much hate their lives so fooling them is straight forward.

Generally pit bosses are pretty busy pretending they are actually doing something, but this is just a ruse. They often just watch the first 2 or 3 bets of your action and fill it in this as your average bet.

They will then forget about you until you leave.”

That may seem like a tongue in cheek description of pit bosses and their duties, but blackjack aficionados like Colon regularly report discrepancies between their actual wagering volume and comp rewards. When the system is reliant on subjective review – rather than a hard and fast mathematical formula like that used in cash back programs – players can easily see their deserved rewards glossed over or forgotten.

2 – Comps Usually Come with Several Strings Attached

Remember that article published by GGB cited earlier? Well, that publication is written expressly for casino operators – and not players – which means it can often provide valuable insight into how the house approaches certain situations. We all know casinos depend on losing players, and even confusing them as you learned in the previous entry.

But as the GGB reveals, casinos intentionally set their comp programs up to include as many strings as possible:

“Comps may be based on actual loss rather than theoretical loss. Sometimes comps are ‘trip only,’ and sometimes they are ‘lifetime,’ assuming some minimum amount of ongoing play.

Sometimes a certain percentage of comps are redeemable only in November and December.

Sometimes there are different rates to use comps at restaurants owned by the casino as opposed to restaurants owned by someone else.

Sometimes there’s a discount if a player uses comps instead of dollars to buy things.

Sometimes there is a maximum of comps that can be redeemed at one time.” (Quote)

As a wise man named Gump might’ve said, comps are like a box of chocolates, so you never know what you’re going to get. An offer for a free two-night stay might sound amazing at first glance, but then you discover that it’s only good for Wednesday and Thursday – meaning you’ll have to take two days off work to enjoy the trip.

You might receive a lavish coupon book in the mail unlocking hefty discounts at your favorite retail outlets and restaurants. But you better hurry, because those expire by the end of the month. Oh, and be sure to research the restaurants onsite, because the maze of parent companies overseeing the operation might just determine how much of a discount you receive.

Unlike comps, cash back comes with no strings at all. Once you’re rate has been calculated based on previous losses, the casino simply hands you a gaming ticket, or in the case of some older casinos, a handful of chips. From there, it’s up to you how, when, and where to spend that cash.

Sure, the casinos want you to keep it in-house by gambling even more, but that’s where cash back trumps comps in every way. Instead of creating a captive audience – wherein you have no choice but to stick around and spend your comps in the same casino that awarded them – cash back sends you on your way. You can head across the street to explore a competitor’s gaming floor flush with “free” money, ortuck the cash away for a rainy day.

3 – Cash Back Favors Skill-Based Games like Video Poker Over Slots

I alluded to this point earlier, but comp programs are designed to revolve around slot enthusiasts and other long-term losers. I don’t mean that to come of as derogatory in any way, it’s just a basic mathematical fact. With a house edge averaging between 6 and 13 percent for the most part, slots are simply the bigger money-maker for casinos when compared to skill games like blackjack (0.50 percent house edge) and video poker (0.46 percent).

When you participate in a Player’s Club comp program as a slot player, all you can do is spin away and wait to see which comps the algorithms decide you should receive. It’d be better if you knew exactly how many comps your play was producing, but because of the undefined nature of slot machine payback percentages – which can vary based on make, model, and manufacturer – comps are a guessing game for slot specialists.

The casinos aren’t making this preference a secret by any means either. That GGB article includes a particular damning passage which illustrates exactly how comp programs put video poker players at a disadvantage:

“In general, video poker players care a lot more about cashback than slot players do.

The reason is simple. A strong video poker player can analyze the return of a machine at a glance (i.e., one machine returns 99.54 percent; another 97.30 percent; etc.) It is easy for these players to add the return on the machine to the cashback rate to get the total return.

Slot players can’t do this, because they usually have no idea of how much the game returns. If a player can’t know (and for the most part does not care) whether a machine returns 92 percent, 94 percent or 96 percent, knowing whether the cashback rate is 0.20 percent or 0.80 percent is largely worthless.”

Remember, this article was written for an audience consisting of casino managers and operators. This is the playbook they’re using to get over on skill game players who generally stand a much better chance of walking away a winner. As a video poker pro, I can still count the times my comp card has produced a woefully disappointing return. I’ll play all day, betting $5 per hand while grinding hundreds of hands per hour, just to score a few Tier Points or some other intangible comp.

That’s a far cry from the old days, when I could calculate my running cash back account to a tee based on the machine’s payback percentage. They say peace of mind is an invaluable resource, and you never really know what it’s worth until it’s gone. That’s definitely the case for advantage play gamblers, because grinding the best games without any clue as to your eventual comp award allotment can be painful to say the least.

Conclusion

Whether you enjoy cash back or comps, getting a return on your casino gambling investment is always a welcome reward. Winning isn’t easy, far from it in fact, so regular players need every helping hand they can get to reach the breakeven or profitability plateaus. And when it comes to helping hands, cashback offers will always beat comps, in this gambler’s humble opinion anyhow. I like to think of the divide between cash back and comps in the simplest terms possible.

If you had the option between free tickets to a random ballgame, or money to spend on the sporting event of your choice, which would be the better option? With comps, you’re forced to do business with a particular operator, even when more attractive options can be found just across The Strip. Throw in expiration dates, fine print, and other conditions, and comps become a burden shackling you to a particular property or operator.

Cash back, on the other hand, is as good as gold. You can bring it with you to another casino, loan it to a pal, or pocket the dough and ensure yourself a “win” when the trip ends. In my experience at least, cash back is king for gamblers in the know – which is exactly why comps became the casinos’ new cash cow.