Free-play impact by customer segment

Little is known about the effectiveness of casino free-play campaigns, despite hundreds of millions of dollars in annual redemptions. These costly play incentives are awarded to individual players, based largely on management’s evaluation of their historical play. Extant campaign-level research suggests these incentives may not be effective in driving spend per visit, but there has been no attempt to examine efficacy across player tiers (e.g., light, medium, and heavy users). Analysis of 365 days of performance data from a Las Vegas Strip casino produced varied results across tiers, but all tier-level findings indicated a failure to recover the face value of the free-play incentives. While no support was garnered for the house money effect, the results were consistent with the notion of loss aversion. The methodological approach outlined herein provides the means to critically evaluate free-play offers at the tier level, fast-tracking campaign optimization via more targeted revisions.