What Stays in Vegas (31 page)

Cook comes from the old school of hospitality championed by Las Vegas pioneers like Benny Binion, who wandered through his casino wearing a wide-brim hat from his native Texas as he glad-handed his guests. Cook, who earlier in his career worked at casinos in Atlantic City and Arizona, says hello to pretty much everyone even as he makes a special effort to linger with his top customers. He does have one limitation different from most casino managers: he cannot offer his guests free drinks because he is barred by Missouri gaming regulations.

The staff at Caesars' headquarters love Cook's devotion to customer service and to his employees and have used some of his innovations elsewhere in the company. They appreciate his plainspoken opinions, which often contain a lot of wisdom, but sometimes dissent on important issues. Cook feels that headquarters—mostly staffed with people with elite university degrees—does not always appreciate the wisdom of a manager in the trenches or the value of the human touch. He once thought the attraction of being a general manager was making big decisions about how to run and promote his property. But that time has passed; data crunched at a central location now dictate strategy. “We've lost that creativity, that uniqueness, because we are trying to do things across multiple properties,” he says. “I don't begrudge the brainiacs at all that are up there, but the arrogance that their work is more important.”

Such attitudes have created some tensions with high command. Back in Vegas Loveman has supported Cook, even when they have a
difference of opinion. He knows that Cook has an MBA from UCLA, and recognizes that local executives pick up on trends and insights about gamblers unseen in raw data. “That's all true and that's a perfect tension,” Loveman says about Cook's “brainiac” remark. “You never want that tension to go away. That's hard for people to get their head around.” Loveman knows that Cook and his fellow managers have to deal with thousands of people every Saturday night at midnight. “The propeller heads that are working around here are pushing ideas out at Tom, and Tom is pushing back saying it's impractical, it's not fast enough, it's too hard to execute. That's where the magic happens, that's exactly what we want,” Loveman insists.

Dan's Big Night Out

In Vegas, Dan Kostel had started going to Caesars regularly after they sent him an offer for $1,000 in free chips. He kept getting similar offers for a while, until the figure went down to $300. He stayed away for five months, hoping Caesars would increase its offer. After some time the amount did rise back to $1,000. When I met him in June 2013, he was ready to collect $850 in free play and a free room at Caesars Palace.

I invited Joshua Kanter to join us that Friday evening. Quite busy beforehand, Kanter had recently committed most of his free time for the next two years by enrolling in the Wharton MBA Program for Executives in San Francisco. Encouraged by Gary Loveman, he would travel there every two weeks for two years of weekend classes. He spent his evenings and weekends studying, and on that Friday was already en route to San Francisco. He conceded his work-life balance was, as he put it, overdeveloped in one aspect and underdeveloped in the other.

Before starting the program, Kanter allowed himself one indulgence: a weeklong cruise. The Total Rewards chief oversees the Caesars partnership with Norwegian Cruise Line that includes free annual trips for Seven Stars members, so he wanted to experience it himself. He had just broken up with a girlfriend after a year, so he went alone.
Reflecting on the cruise, he said a David Foster Wallace essay he had recently read pretty much summed up his feelings: “A Supposedly Fun Thing I'll Never Do Again.”

I met Kostel not at Caesars Palace but at the Cosmopolitan Hotel, two mega-hotels away. The Cosmopolitan had offered him a free suite for the weekend, so he actually slept there (he would do some gambling there too, hoping to be comped in the future). The hotel draws a far younger and hipper crowd than Caesars. Women in short, formfitting dresses wandered through the lobby. The elegant suite consisted of two bathrooms, a bedroom, a living room, and a super-modern kitchen. A long balcony overlooked the massive fountains of the Bellagio and Caesars Palace. From the balcony, Kostel noticed a woman on the balcony of the parallel tower performing some kind of intimate dance for a seated man. It was all very Vegas.

To receive his $850 in chips, Kostel had to appear to be staying at Caesars. Hotels reckon you gamble more if you sleep there. It would have been a ten-minute stroll from the Cosmopolitan, but with the temperature outside hovering at 119 degrees, at least according to my car's thermometer, we drove over. He checked in at a special reception area for Total Rewards Diamond-tier members, just a notch down from the top Seven Stars status. They gave him a large, well-appointed room overlooking the Bellagio fountains and the Cosmopolitan Hotel beyond that.

Later that night Kostel met an acquaintance, another blackjack player who had accepted free rooms in three separate hotels, taking advantage of various offers intended to lure his business. Such antics illustrate that by putting point values on everything people do in the casinos, Caesars and its rivals have conditioned people to seek freebies at every turn. Gamblers are always bargaining for perks—demands some frontline staff sometimes find a bit tiresome.

“They think they shouldn't have to pay for their hotel room; they think they should eat at the steakhouse, not the buffet; they think they should have free drinks, not paid drinks; they should get four tickets to Celine, not two tickets; and they are always talking to our people about this,” Loveman says. “That's been in the industry for a long time
at the high end, but we certainly made it a pervasive notion that everybody has something available to them, and people are naturally always pressing that envelope.”

Kanter, hearing about Kostel's multiple rooms, affirmed that Caesars did care if comped clients do not spend the night. It means that they spend less: “When someone stays in our hotel versus visits us from another hotel, on average the difference in their play is something north of 30 percent,” he said.

After checking in at Caesars Palace, Kostel stopped by his room for a brief visit. A housekeeper knocked at the door, carrying a fancy box of gift nuts, a recognition of his Diamond status. After an appointment at the hotel spa, he was ready to gamble. He stepped up to the cage off the casino floor, where, after a small delay, he received a series of computer-printed paper tickets worth $850. Usually Kostel prefers to play in the high-limit room, which offers slightly better odds and rules on blackjack and a more elegant ambiance than the expansive casino floor. With the better odds, he says the house has only a 0.26 percent advantage over the player, meaning that over 1,200 hands of cards he had a 46 percent likelihood of emerging as a winner. “I believe that I have a reasonable chance of leaving a winner,” says Kostel, who earned an MBA in Spain.

He strolled past a series of blackjack tables in the high-limit room that required a minimum of $200 per bet, above his comfort zone. So he proceeded to a table with a lower limit outside the high-limit room. His luck was out at first—it seemed like he might quickly cycle through the $850 in voucher tickets and end up with nothing. But then he won a series of hands, and by the time he had used his last voucher, $800 in chips sat in a pile before him. He promptly returned to the cage and cashed in. So far he had received a free room, some gift nuts, and $800 from Caesars.

On his last visit to Caesars Palace Kostel had seen a pair of Prada sunglasses in the Forum Shops. Now he decided he wanted to buy them. The shops are not owned by Caesars, but when he mentioned he was a Total Rewards member, he received an unadvertised 15 percent discount. As he paid, the manager asked him to fill out a form giving
his address and email for the store's marketing list. He volunteered just his email and clicked a box asking not to be sent offers.

Before dinner, Kostel stopped by the sports betting desk to wager $90 on the Belmont Stakes the next day. He did not give his Total Rewards number, because he did not want Caesars to know he would still be in town the following day. The program rates you on each day of play, and just picking up any winnings without doing any fresh gambling could lower the daily average Caesars uses to calculate future offers.

We dined at the Mesa Grill Southwestern Restaurant, one of his favorites, where he had reserved a table. When the waiter arrived, he asked, “Are you joining us for the first time?” Kostel was annoyed. “The whole personalization thing does not work as Gary Loveman tells you it does,” he said. “It makes me feel like I'm some dumbass that has never been here before.” About eighty thousand people come through Caesars Palace in a day, creating a daunting task for the staff to greet even their most valuable Total Rewards members at every turn. “I'm highly demanding, I get that,” he said.

After dinner Kostel returned to the high-limit room. The minimum blackjack bet remained at $200, not the $100 he had hoped to find. At $200 a hand, he realized he could lose the $3,000 he was ready to risk in just a few minutes. But he liked the ambiance and the odds there. Even though it was more than he wanted to spend per hand, he asked a supervisor for the $3,000 in credit. The supervisor checked his credit history and returned with a pile of $100 chips.

By this point of the night Kostel was more animated, having started with rum and coke in his room and progressed to a couple of margaritas at dinner. “Bust!” he cried out a few times, wishing the dealer would draw cards putting him over twenty-one so Kostel would win his hand. Other times he called out the card numbers he hoped to receive. Yet he remained sharp in his play. Over twenty years, he had learned the mathematical odds for when to take a new card depending on what he had and what cards the dealer showed. One other gambler at the table, playing two simultaneous hands of up to $800 each, said little during the play.

Kostel's luck started strong and continued. After about half an hour, he picked up his chips for a break. He was $1,000 ahead, and also had the $800 in cash he had won earlier. So far he had spent $200 on a pair of sunglasses and signed a $70 dinner bill to his room. We sat down in a nearby lounge. A man without a shirt on wandered by. Others wore shorts or frumpy clothes. Some giddy bachelorettes sauntered past. The Cosmopolitan, where he was in fact staying, had a more elegant crowd, he thought. But he wanted to continue playing that night at Caesars Palace, hoping that Caesars would send him generous offers for free play in the future, and comp his meal and visit to the spa that afternoon. For Kostel, winning comps was part of the overall game.

He returned to the blackjack table for a few more hours, playing until after midnight. At the end, his total blackjack winnings reached $4,700. The next day he learned that his horse bets—a sport in which he says he has little knowledge—had hit big. He had placed three $20 bets on a long shot called Palace Malice to win, place, and show. The horse won, transforming that $60 into $475. He also placed another three $10 bets for a different horse to win, place, and show. It came in second, winning $80 from a $30 wager. He picked up his winnings anonymously so that Caesars would not know he had stopped by without placing new bets.

Overall, it was one of those trips where everything went right for Kostel. At the end, Caesars even comped him for the meal, spa visit, and drinks he had charged to his room. After such a winning streak, his incidental expenses would not have made a dent in his total winnings. But the casino wanted him to leave on a high with a strong desire to return. Caesars succeeded on that score. They know in the long term the odds are on their side to gain back anything Kostel won that night.
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“If they didn't have a system of marketing to you, I'd never be there. I'd be at the Wynn or Bellagio,” Kostel said. “I would never be here if they were not offering—not some stupid reward like a bowling tournament and a banquet—but $850 or $1,000 in free play.” Although far from flawless, Caesars' mining of personal data had worked. By knowing a lot about Kostel, they had kept his business.

Opening Night

On a late winter's day in 2013, Loveman, Kanter, and other top officials traveled to the Midwest to attend the opening of the latest property in the Caesars family, Horseshoe Casino Cincinnati. Before the mayor and local dignitaries arrived to inaugurate a twenty-four-hour establishment that, short of natural disaster or emergency, would never close again, staffers anxiously prepared for zero hour. Uniformed poker dealers, most of whom had not worked in a casino before, crowded around tables to play one another in final practice rounds. They wagered play money.

Inside the cavernous open casino floor, cleaning staff dusted off the two thousand slot machines, each costing as much as an economy car and collectively worth tens of millions of dollars. Eager patrons would soon spin them about seven times a minute, and, by the law of averages, 9 or 10 cents of each dollar bet would disappear into the machines. Melissa Price, the company-wide vice president of gaming, toured the floor. Experience told her each machine would bring in about $350 to $400 a day in revenue. The Horseshoe Cincinnati faced a major obstacle: Ohio bars smoking on casino floors, and many slot players like to smoke. Jamie Papp, who bought and set up the slot machines, said gambling, smoking, and drinking were all habits that went well together. He said slot revenues at casinos without cigarettes typically fall short of revenues at smoking casinos by 15 to 18 percent.

Behind the scenes technicians checked the flow of data through more than three hundred miles of Ethernet cables—enough to stretch from Washington, DC, to New York and beyond—linking every slot machine spin and transaction to a basement IT server room. A long array of tubes and vents kept servers cool, and backup power stood at the ready, just in case. Even bartender stations were wired so staff could rush drinks ordered directly from slot machines.