INSIDE LOOK AT CASINO JUNKETS

How they Work and Are They For You

By Henry Tamburin

Casino Junkets began in the mid-50’s as a way to entice players to Las Vegas to gamble. Junket programs in those days were pretty straightforward. Casino operators would hire junket reps to fill a plane with qualified gamblers. These players would get free airfare, free hotel accommodations, free meals, free shows (and just about anything else they wanted) in exchange for their commitment to gamble a specific number of hours per day at an explicit average bet size. The casinos of course were gambling that the players would lose more than their out of pocket expenses for bringing, housing and feeding them.

That was the past. To get a fresh look at how junkets operate in 2005 and what benefits they provide players, I interviewed junket rep Sandy Crammer, owner of S&S Casino Tours, and Jeffrey Hoss, Director of National Casino Marketing, for Harrah’s. What I learned about junkets might surprise you (it did me).

So let’s begin by defining what exactly does a Junket rep do?

Jeffrey Hoss: First off, in the Harrah’s organization we refer to our third party reps as Independent Agents rather than Junket Reps. Independent Agents send us customers (i.e. players) and in return they get a commission based on a player’s theoretical. We have about 185 Independent Agents representing 47 states and 5 international countries that have a specific territory that they can market and promote our properties to their customers. In total our Independent Agents have scheduled about 300,000 customer trips annually to Harrah’s properties.

I’d like for you to explain “theoretical” to our readers but before you do, let me ask Sandy how she got started in this business.

Sandy Crammer: Before I started my own company, I ran a junket office as in-house employee for many years and I decided it was something I liked and wanted to try on my own. So my husband, Scott, and I started our own business and thankfully, Harrah’s decided to take a shot with us four years ago to represent them. We have three employees in our company and currently we are one of the top 5 Independent Agent producers for Harrah’s.

What areas do you represent for Harrah’s?

Sandy Crammer: I currently represent Harrah’s in Boston, MA; Providence, RI; Detroit, MI; and I’m expanding to Grand Rapids, MI.

How many package trips do you typically offer your clients?

Sandy Crammer: On a monthly basis I usually schedule into Atlantic City 2 flights from Boston (except 3 to 4 flights in the summer months), one flight from Providence, RI, and one from Detroit, MI. These are flights on a 120 seat chartered plane. Also every month we contract commercial airfare to Harrah’s properties in New Orleans, Las Vegas, Reno, and Lake Tahoe. We usually do about 20 seats per month from our markets to those areas. We also run about 6 charter flights a year (130 passenger planes) to Laughlin and Reno/Lake Tahoe. In an average month we probably have 800 or more customers flying somewhere to Harrah’s properties.

What are the play and front money requirements for a junket?

Sandy Crammer: There are no front money requirements. The play requirements depends upon what our guest is looking for, e.g. do they want to go on a charter flight, do they want their airfare comped, or are they driving to their destination and only looking for a room comp. We offer different packages in which some are totally comped and others it’s buy one get one free or we charge the customer a nominal fee for the air and accommodations.

What would be the play requirement to get free airfare and free accommodations?

Sandy Crammer: As a rule of thumb, to get free airfare and accommodations, a quarter machine player is expected to play 5-6 hours per day (less time if playing dollar or higher machines) and for table game players its 5-6 hours per day at an average bet of $75+. If a player historically meets those requirements he or she would qualify for comped airfare and accommodations on one of our packages.

What if a player doesn’t quite meet those requirements?

Sandy Crammer: They would have to pay a nominal fee for the air and room. For example, we recently offered our Boston and Providence customers the following 3 day/2 night discounted Atlantic City package that included round trip airfare from Boston (or Providence) airports, room accommodations, and transfers to and from the hotel for only $179 per person.

So how do you go about scheduling the trip you just mentioned and getting the plane filled with qualified players?

Sandy Crammer: I work with the marketing folks at Harrah’s Atlantic City casino that support junket programs. They send me a schedule usually months in advance of dates that are available for me to bring in my customers. I decide which dates I want and Harrah’s then charters the plane for me.

Jeffrey Hoss: Outside of Atlantic City, we have an individual dedicated to scheduling the 6 rotations in service for our casinos in Laughlin and Reno/Lake Tahoe. The schedule is determined in advance of three to four months and we work collectively with independent agents on dates and how they will market to them.

So now you are responsible to fill the plane with 120 qualified players. How do you do that?

Sandy Crammer: I have an extensive list of 20,000 or so casino players in our computer database. For each player I know their past play history as far as how many trips they have taken, how long they play, what their average bet size is, how much they won or lost and their theoretical. I then mail out about 7,000 letters per month to those players that have in the past met the play requirements that Harrah’s is looking for. The qualified players that respond to our mailings get a seat on the plane. If I can’t fill the plane completely with qualified players then I invite players on the next tier that would have to pay the $179 fee for air and room.

Jeffrey Hoss: It is actually working so well with Sandy’s customers and others that we have made a commitment to bring in a 150-seat MD-83. Sandy has done such a wonderful job in marketing to her customers, we are confident that there is demand for additional seats.

How do you get all that play information on your customers?

Sandy Crammer: Every player that I send to a Harrah’s property gets coded to me. At the end of each of my packaged trips I get a report from Harrah’s that summarizes for each of my customers their entire play history during their trip. This information for each player in put in our database and it’s how we determine which customers qualify for different packages that we might offer.

Do you have the power of the pen in a casino?

Sandy Crammer: No, I can’t approve comps for my players nor do I have access to Harrah’s computers to review player information. But what I will do is contact the marketing department and tell them so and so in my group wants a comp to a specific restaurant. They would look up the playing history of that player in their computer database to see how many comp dollars the player has in his account. In most cases our players have accrued more than enough comp dollars based on their play to cover the cost of meals.

Jeffrey Hoss: Our Total Rewards program allows the customers to decide when and where they want to spend their comps. This alleviates the Independent Agent from making those decisions.

What benefits can an Independent Agent provide their customers?

Sandy Crammer: Besides providing travel arrangements for them, we provide our customers with just about anything else they need such as making reservations for dinners, shows, casino events, golf, ground transportation, you name it. Our guests know that they can call us for all their bookings at all of Harrah’s properties. Plus someone from my office will travel with the group to assist them in their needs.

Jeffrey Hoss: A player who wants to visit multiple Harrah’s properties can benefit from the services of an Independent Agent. They not only can provide the customer with services for say our property in Laughlin, NV but also our properties in New Orleans, Atlantic City, or elsewhere.

Are there different types of Independent Agents and do they have to be licensed?

Sandy Crammer: Yes, some are responsible for full charter aircrafts (which I am) while others Agents might only send a property an individual reservation (they are known as splinter reps). Independent Agents have to be licensed in all jurisdictions that they represent. For example, in the Atlantic City market we have to be licensed every 4 years and it costs $3,000. We must go through a detailed licensing process to obtain and maintain our Enterprise License. Other gaming jurisdictions that we do business in have a similar,but not as expensive, licensing procedure.

Jeffrey you mentioned that Independent Agents get paid a commission based on theoretical. Can you explain what that means?

Jeffrey Hoss: Our Independent Agents get a commission based on each player’s theoretical or their expected long-term value to the casino. The latter is dependent on the players average bet size, length of play, and the casinos mathematical advantage over the player in whatever game he or she is playing. We track these variables for each player either through the use of a player’s card if the player is playing slots or video poker or in the case of table play, our floor supervisors will rate the player and input the above information in our data base. We can then compute the theoretical for each player or roll the numbers up to a theoretical for all the players coded to Sandy. An Independent Agents commission is based upon a percentage of the groups theoretical with a sliding scale depending upon the total group expenses so the more expenses incurred by the group, the lower will be the Independent Agents percent commission. This way our Independent Agents would get penalized if their players didn’t play up to their expected playing levels or were over comped for their play.

Why would a casino player use the services of an Independent Agent rather than a casino host?

Sandy Crammer: We consider ourselves one-stop shopping for all our customer needs and we have the ability to get it all done at more than one property. Because we represent a company like Harrah’s we can offer our customers many more options. For example a player doesn’t have to have a casino host in Atlantic City, another in Las Vegas, New Orleans, Reno, etc. They just call us for all their travel needs regardless of the destination.

Jeffrey Hoss: Our Independent Agents can market more than one Harrah’s property to their customers. People like to travel more and visit different parts of the country. Harrah’s owns or manages casinos in 12 different states including Arizona, California, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nevada, New Jersey, and North Carolina. Our casino hosts and their staff at each property also provide support to our Independent Agents. So using the services of an independent Agent makes sense if you like to travel and visit more than one property.

Sandy, is there a turf issue for players between an Independent Agent and a casino host?

Sandy Crammer: Let me put this way. Our customers are coded to us internally in each property and it is how we get paid. If one of our guests starts dealing with a casino host we could lose that code and our commission payment. We spend thousands of marketing dollars every month for mailings to our customers to keep them informed of our upcoming trips and special events that are not reimbursed by the casino.

Jeffrey Hoss: We view this relationship similar to that of a pitcher and catcher, using a sports analogy. A property host will treat an Independent Agent’s customer just as they would treat one of their own. Harrah’s Entertainment prides itself on customer service and once they visit a casino, whether it is an invitation by Sandy or by a property host, we will do everything in our power to make their stay an enjoyable experience.

Have you ever had an issue with a customer not playing up to his or her expectations?

Sandy Crammer: It’s rare when this happens and when it does it’s usually because the player wasn’t feeling well. You’ve got to remember that the players who get invited on our packages have a history of playing at a certain level over a certain time period. They usually maintain that playing level from one trip to the next.

What if they don’t? What do you do?

Sandy Crammer: The player is dropped from our qualified list of players and if we invite them on another package trip they would have to pay the nominal fee we charge for air and room.

Do you have to be a high roller to go on one of your junkets?”

Sandy Crammer: As I mentioned, there are specific play requirements if you want your air and accommodations comped. However, we offer Tour and Travel packages to different Harrah’s properties that require a nominal charge for air and hotel. We find that a lot of customers start out through our Tour and Travel packages and then if their play warrants, get qualified for comped airfare and accommodations.

Can a qualified player bring his spouse on a junket?

Sandy Crammer: In most cases, yes. However, we would review the play history of the qualified player to be sure it’s enough to cover the added expenses of his spouse.

Jeffrey, can you give some examples of some recent trips your Independent Agents have scheduled for their customers to different Harrah’s properties and their cost?

As an example, Sandy has a trip that is going out of Detroit on June 23^rd for five nights for $449 to Tahoe or $419 to Reno.

Here are a couple of other dates and costs:

6/2-6/7 Peoria, IL for $369 to Tahoe or $339 to Reno

6/4-6/8 Atlanta, GA for $379 to Laughlin

6/21-6/25 Columbia, SC for $399 to Laughlin

Jeffrey, how can a player contact a local Independent Agent?

Jeffrey Hoss: You can call our call center at 1-800-HARRAHS and ask for the name and phone number of the Independent Agent closest to where you live.