Here are all the secrets to make a casino profitable, revealed by the world-famous gaming consultant Bill Friedman.
by Anna Maria Rengo
Appearance matters, a golden rule to which gaming products and gambling environments are certainly no exception. We wanted some answers about how to achieve the most inviting casino for gamblers, so we contacted one of the world’s leading experts in casino interior design, Nevada’s Bill Friedman.
What are the aims that usually arise when designing the interior of a casino?
“Casino architects and interior designers typically propose three goals to potential casino clients. They recommend a barn setting, which is a huge, completely-open gambling room, with high ceilings, and everything visible from the entrance. They promote the newest technology for bright ceiling lighting. They use it to create enormous, glaring, colorful light displays that attract visitor’s attention up at the ceiling way off in the distance. They like pretty, eye-catching decor on the far walls”.
Do you share them, or do you think another approach is possible?
“I am solely interested in satisfying the players, so all my efforts are to focus visitors’ attention on the enticing gambling action surrounding them nearby below eye level. This means everything else in the casino should be bland, almost invisible.
This is how you maximize player counts, and casino win and profitability, subjects I never hear architects and interior designers mention. In fact, casino remodels rarely have a significant effect on profitability, unless new amenities and new marketing programs are added in the project to attract players. Yet, a casino restyling that does not produce a large annual return on investment is a waste of company assets.
When I work with an architectural designer, I provide the conceptual goals, and he blows life into my ideas. I have worked with five really great architects in five different countries. I sketched my goals for them, and three hours to three days later, each laid their drawing down in front of me. Each one proudly said, 'Now that I know what you want, mine is better.' I instantly knew they were right, as I visualized the thrilling gambling atmosphere each produced.
The casino design principles I use are the exact opposite of today’s completely-open barn style. Every time these two approaches have competed in the same marketplace anywhere in the world, the casino using my player-appealing principles have attracted far more players and achieved much greater wins and profitability.
When I meet with prospective consulting clients, I do not debate the merits of these casino design approaches in the abstract. Instead, I take them on a tour to see the great competitive advantages of my principles. I walk with them through four adjacent high-rolling resort casinos in the heart of the Las Vegas Strip - the Venetian, Palazzo, Wynn, and Encore. All four of these casinos’ interiors are the exact opposite of my design principles.
For a way of comparison, I became manager of two longtime losing casinos in the heart of the Strip - the Castaways and the Silver Slipper. Both had almost no players, and I produced the highest win per slot machine in the state, along with impressive table wins. On the rare occasions that my slot player occupancy dropped below 90% during the busy evening hours, I studied the accounting results to make sure that no type of machine, and no area in the casino was losing popularity.
I take casino owners and executives on these walking tours during the early evening hours on nights the town’s hotel rooms are sold out, so we can observe these casino’s at their busiest. I begin by telling them that if the total slot-machine player occupancy at these four resorts is 5% or higher, they should not hire me. Not once has these four casinos combined slot occupancy reached 5%. At the end of these tours, the casino owners and executives are always in a state of shocked disillusionment at all the empty machines. Everyone hired me, and also admonished me, “I want you to promise that you will not do one thing like them.”
How can interior design help dominate the competition in the casino world?
“The powerful impact of adapting the player-appealing design principles was demonstrated by three worn-out Las Vegas Strip casinos in the 1970s and '80s. Two of these were the longtime losing Castaways and Silver Slipper casinos. They were owned by Howard Hughes’ Summa Corporation, which was the world’s largest privately-owned company, with a huge corporate office complex. After my interior design transformations, these two smaller casinos impressive profits paid the company’s total operating expenses, so the profits from the many other subsidiary companies went directly to the bottom line.
Local players drive to the nearest and quickest casino, unless a more distant competitor offers something special. The restyled Castaways and Silver Slipper drew large numbers of local residents past their neighborhood casinos to fight the busy Strip traffic, because of their player-appealing designs. These local players visited these two casinos an average of six days a week, and they recommended their favorite hangout to any tourist who they came into contact with. Thus, three quarters of the players at the Castaways and Silver Slipper were tourists staying at nearby Strip resorts, who walked over because they had heard about the better gambling experience.
My biggest casino competitor on the Las Vegas Strip was not the fine resorts, but a little hotel casino called the Holiday Queen, which is now named Harrah’s. It opened in 1973, three years before I took over the Castaways and Silver Slipper. The casino was in a separate building in front of the Holiday Inn. The slots were laid out on meandering walkways, so they created many small, private nooks and crannies. The casino had a low-ceiling. A number of offices on the second floor were filled with slot machines, and the doors on the opposite walls were removed. There could not be a more unattractive gambling setting than these undecorated square-box offices, but many local players drove to the Strip to enjoy these small, congested, private playing areas”.
In your work, you value each reality as unique. On the basis of what parameters?
“The easiest way to understand the impact of various design qualities is to look at the incredible differences between the two eras of the Nevada casino industry. Prior to the current megaresort period that began in 1990, we had what is for me the 'Golden Era'. Then, the resort’s total focus was on gambling and entertainment. Almost every tourist came primarily to gamble. The casino was the only profitable department, beside the hotel rooms. Entertainers typically appeared for three weeks in the state’s showrooms and large lounges, so serious gamblers could visit every weekend to see new stars advertised on the huge marquees.
During this Golden Era, the vast majority of Nevada casino owners and operators were serious players. Thus, they instinctively knew what their patrons wanted in a casino experience. In contrast, virtually no megaresort-era corporate or casino executive has ever gambled or associated with a serious player. The only time they enter their casino is when they are walking through, while talking to someone, on their way to a food, beverage, or entertainment facility. Despite having no clue what their gambling clients like, they decide what they will get. So, today’s casinos are only an amenity facility, with very low slot player occupancies.
Contrast this with the casinos of the Golden Era. From the beginning, the superstar entertainers appearing at the Las Vegas Strip high-rolling resorts received all the glamorous publicity about Nevada in the 1940s and ’50s. But the reality is that the four casinos producing Nevada’s biggest annual casino wins during these two decades were Harolds and Harrah’s in Reno, and Harveys and Harrah’s at Lake Tahoe.
All four were built in a series of adjacent, small store-front buildings with very low 8-feet high ceilings. For many years, all four remained divided into separated small gambling rooms, which were connected by doorways, with the doors removed. Despite this cruddy appearance, their popularity was extraordinary. To achieve the state’s biggest annual wins, these four low-rolling casinos had to draw in many multiples more players than any of the high-rolling Strip resorts. They accomplished this despite having to face the impediment of winter’s snowy and icy mountainous highways that connected Reno and Lake Tahoe to their northern California markets.
Despite their seemingly awful interiors, these four casinos had an attraction for table players that I have never encountered in any other casino in the world. When players hit a long losing streak, they often get up and move on to another casino. For reasons I have never figured out, during a long gambling session, players who are not losing often develop a need to change tables, so they frequently move on to another casino.
This was not true in these four casinos. From the 1940s through the 1980s of the Golden Era, all four had some separated gambling areas with different carpeting, wall covering, ceiling height, and lighting. This produced totally different appearances and atmospheres between areas. It was only in these four casinos that most players, who developed an itch to move, simply walked to an area with a totally different ambiance to continue playing there.
Enormous numbers of players are attracted to gambling centers, because they occasionally like to move from one casino to another. An individual casino can produce this kind of popular appeal by offering separate gambling rooms, with totally different decors and atmospheres, like these four super-popular casinos.
Incidentally, regarding casino designers’ concern about 'pretty', the most popular and occupied casinos in Nevada history were also the ugliest. I have a number of other examples, like the Club Cal-Neva in Reno, the distant Nugget in Sparks, the isolated El Cortez in downtown Las Vegas, and Barney’s at Lake Tahoe, where I was a dealer in the 1960s. We do not have space here to describe their great successes, but they are in my book Designing Casinos to Dominate the Competition.
To show the similarities between gamblers’ interests around the world, I introduced slot machines and American table games to the historic high-end casino in Monaco in the 1980s. Summa allowed me to do this on my vacations there. The casino was gorgeous. Beautiful frescos and a fortune in rich gold-leaf patterns adorned the ceiling. But it was a completely-open, high-ceilinged barn, so I begged management to let me put additional slots in a low-ceilinged storeroom. We gave it a new coat of gray paint, and I crammed it with machines. Its door along the walkway was left open, but I was not allowed to identify the room or promote those slots in any way. While the men gambled at the tables, their wives in their finery lined up to play the slots in this seemingly terrible setting, so its average machine win was four times more than for those in the main casino”.
What would you suggest to a company that wants to open a casino from scratch, or that wants to renovate an existing location?
“The company’s casino should offer players the most satisfaction possible in order to maximize its profits. This can be accomplished by incorporating the player-appealing principles explained in my book. This means the casino should be physically segmented into separate gambling areas. Views from everywhere in the casino should be limited to a very short distance, including having a maze layout with many short, narrow aisles that frequently change direction. The gambling areas should be secluded, intimate, and tightly-packed. The ceilings should be as low as is comfortable, so there is little empty space above the gambling activity. There should be no decor or other elements to distract visitor attention from the gambling activity, which should always be the central focus. Popular and busy slots or tables should be as close to every casino entrance as possible to thrust the gambling action in front of visitors the moment the door is opened.
In addition, the company should buy totally different types of slot machines from those the casinos have been primarily using for the last three decades. Most casinos replace all their slot machines every three years. Yet, the daily win of practically every new type of machine introduced during the last three decades has fallen below the slot department’s average win, before it has won enough to pay for itself.
During the Golden Era, the casinos replaced their slot machines an average of every five years. After the death of Howard Hughes, Nevada state law required businesses to be sold if there was more than one heir, so the Castaways and Silver Slipper had to be closed and sold. However, they were such big profit makers that both sale agreements gave me complete control over the casino property for an additional year, at which time I closed them and turned the properties over to the new owners.
When I closed the Castaways and Silver Slipper, they had the highest average slot win in the state of Nevada. Yet in what seems like an incredible incongruity, the state’s hottest machines’ average age was 13 years old. I had eliminated the standard annual investment in new machines, greatly enhancing profitability.
It took a great deal of statistical analysis to achieve this result. Players do not care about a machine’s expensive facade. They only care about the gambling experience, and that is solely determined by the payoff schedule. I went back through the history of the Nevada gambling industry from 1931 and compared the payoff schedules of every type of machine that had been a top money maker for at least a decade. I determined what the hit frequency, hold percent, and volatility statistical ranges were for all these super popular machines. Then, I only offered machines that fit within these three ranges.
Slot players are looking for a good gambling experience, so they stick with the type of machine that has reliably offered it. However, today’s casino decision makers, who do not gamble, naively think players are constantly looking for a new type of machine and gambling experience. They developed this misguided viewpoint, because when they test a few machines of a new type in their casino, they get big play. This is mainly because players are dissatisfied with the available machines, and partly out of curiosity. Thus, a lot of players test out a few new machines on the floor to create a big win, but by the time the casino buys banks of them, the players have already learned they do not like them either. Thus, these machines’ win falls below the house average before they are paid for”.
Are there any substantial differences between American, European and Asian casinos in terms of design?
“Every country and culture has a unique interior decor and lighting style, but ever since the Strip’s megaresort era began, practically every casino around the world has adopted its open barn style and very bright, colored ceiling-light displays”.
Have you ever worked for Italian casinos? What kind of experience was it?
“I consulted to the Casino de la Vallée in Saint Vincent, Italy, with its beautiful surrounding mountains. I advised on a major remodel and expansion of the casino areas in 2009. Many employees spoke fluent English, so it had a very homey atmosphere for me”.
WHO IS HE?!
Bill Friedman is president of the Friedman Management Group. The firm specializes in solving management, design, marketing, operations, and internal controls problems for the hospitality industry on a worldwide basis.
Mr. Friedman has consulted for thirty-seven years to casinos throughout the United States and Puerto Rico, England, Russia, Asia, South Africa, Australia, Canada, and the Caribbean.
As a long-term advisor to the Societe des Bains de Mer, in the principality of Monaco, Bill has advised Monte Carlo's most prestigious hotels, exclusive high limit casinos, and slot operations.
For thirteen years, Mr. Friedman was president and general manager of the Castaways Hotel and Casino (now the site of the Mirage Hotel and Casino) and the Silver Slipper Casino in the heart of the Las Vegas Strip. During this tenure, he transformed both casinos from perennial losers into remarkable successes. Both casinos were consistently ranked among Nevada's highest win in profit-per-square-foot.
Prior to leading these casinos to exceptional profitability, Mr. Friedman wrote the seminal book for succeeding in the casino business. For twenty-five years, Casino Management, was the "bible" used by most casino executives.
Prior to executive management on the Strip, Mr. Friedman taught the pioneer course in casino management for the University of Nevada Las Vegas's College of Hotel Administration for a decade.
His latest book, Designing Casinos to Dominate the Competition, is the culmination of twenty years of research, and has been hailed in gaming circles as a true masterpiece.