October 18, 2013

Although some of my marketing friends have taken sides in the casino battle for Medford, I’m staying on the sidelines. Although I am not a big fan of gaming, if you do gamble, I like the idea of you leaving your money with Native Americans instead of Donald Trump, given the way we’ve treated Indians for 200+ years.

One of the misconceptions about gaming is that every customer loses big time. The truth is casinos, like almost every business, live by the 20-80 marketing rule I cover in my marketing book; i.e. a small group of customers create the majority of profits (in this case, losers).

A recent two year study of 4,222 Internet gamblers using a European online company, which was reported in the Wall St. Journal, clearly supports this 20-80 rule. Of course, online gamblers are different from U.S. casino users, but their win and loss patterns should be roughly similar according to Robert Hannum, a University of Denver specialist in gambling mathematics.

On any given day, gamblers win money on 30% of the days they wagered. Of the top 10% of bettors—those placing the largest number of total wagers — about 95% ended up losing money, some dropping tens of thousands of dollars. Of the 4,222 casino customers, just 2.8%—or 119 big losers—provided half of the casino’s take, and 10.7% provided 80% of the take.

So, like all businesses, casinos are extreme reliant on a small number of gamblers. Casinos don’t like to talk about this fact. Again, I don’t have a dog in this fight, but a new casino would create new jobs and it would dramatically impact a small number of people that are addict to gambling.


  1. I have actually studied the effects of gaming on communities at UN, Reno. As you demonstrated, the 80/20 is an apt way to look at it (that’s why the limos and penthouse suites in Vegas). On a smaller scale (a Medford casino) the negatives on the social structure (addiction et al) possibly out-weigh any benefit in jobs. The money spend in the casino is the same money that would have been spent somewhere else in the community (a bar? state lottery?)

    It works out to be a tax on bored people who are bad at math.

    • Excellent point, that’s why I am not taking sides on this debate. It is interesting to note that we have 15 Purple Parrots in Southern Oregon that offer the same level of gaming as the proposed casino.

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