Richard Munchkin and I received the following question for our mailbag show on Gambling with an Edge. I think my complete answer is too involved to answer on the podcast, so I’m going to attempt it here. The question was:
Both of you were active APs (I think, anyway) during one of the worst recessions of the last century, in 2008. What meaningful effect did this have on casinos and on your work? Did games tighten up? Comps? Do you have any advice for APs in the event of a deep recession (hypothetically of course…)?
Since my expertise is primarily video poker, I’m going to address that here. But most of what I have to say would apply to any game.
It’s easy to understand why our listener wishes this information. After all, if we know exactly what’s coming, it’s easier to prepare. It’s like a lawyer knowing exactly what the other side is going to say. That’s simpler to prepare for than if the opposition can say anything they want. Unfortunately, life doesn’t work that way.
The 2008 recession you mention was caused primarily by a failure in the sub-prime housing market. There may well be another recession soon, but it very likely won’t be caused by that. In other words, next time will be different than last time.
The 2008 recession hasn’t been the only recent shock to the system. There was 9/11 back in 2001 and restarting after the pandemic in 2020. Casinos made huge adjustments for those situations too. There have been other such situations in the past, and we’re guaranteed to have more coming. We just don’t know exactly when, how severe, and the exact nature of the next such situation.
You have to assume that casino executives are trying to do well for their casinos. They tried things in 2001, 2008, and 2020. Some worked. Some didn’t. These executives attempt to learn from that experience.
Added to this uncertainty, it’s a fair guess that different casinos will try different things — and that most of them will make adjustments on the fly depending on how things worked for them initially.
So, while we can safely conclude that we don’t know exactly what’s coming, there are some things we can do to prepare. Some of my suggestions may be controversial, especially the first one. You are welcome to disagree.
Here’s how I’m preparing:
- Maintain a cash bankroll sufficient to last several months. This will go against the grain for people who believe that since we’re in an inflationary period, we’re losing money if our assets are in cash. That’s true, of course, but assets in the stock market, real estate, crypto, NFTs, etc., can easily lose a lot more. Especially in a recession. There will be casino opportunities. You don’t want to be shut out because your money is tied up.
- Up your game. Some casinos will remove their loosest games. That’s the go-to move for some casino executives when facing hard times. So examine the second-best and third-best games in the casino now. If they’re still positive considering everything, start to learn them. At least obtain good strategies and practice. You may not need to go to a lesser game, but you might. And the more you know, the more you can exploit different promotions.
- Upping your game does not have to be limited to staying in video poker. Whether it’s poker, blackjack, sports betting, slots, or any other game, there are plenty of opportunities to exploit. The more arrows you have in your quiver . . .
- Start reading promotion rules more closely. During a recession, promotions will very likely be different than they are today. Possibly better. Probably worse. If you assume things are staying the same, you’re going to be taking the worst of it.
In addition, the people in charge of rewriting the rules may not give the job the attention it deserves. They will probably start with the rules they already have and make adjustments. This is not as easy as it sounds. Sometimes they don’t change everything they want to change. If you know the rules inside out, occasionally you can talk them into something extra when they goof up.
- Scout. This should always be part of your game plan, but over time you’ve decided that Casino A is good and Casino B is bad, and have stopped looking at Casino B. During recessions, things change. Maybe Casino B will make an adjustment in your favor.
Other casinos loosen up things during the recession because they still want players and players will have less disposable cash. You won’t know until you check.
- Finally, don’t blow your bankroll on lousy games. Don’t play unless a game is worth playing. The recession won’t last forever. Things will change again. If you lose your entire bankroll during the recession, you won’t have any left after it’s over.