| The Law of Large Numbers implies that the more | | | | many are uncomfortable with the risk of investing in |
| times you play a game, the more likely it is that your | | | | technology simply because it is a change or because |
| net gain, divided by the total amount you have bet, will | | | | they would be the first on the block to do so. |
| be close to the game's expected value. In other words, | | | | Stockholders, owners and tribal members want high |
| if a game can be repeated many times, good luck and | | | | rate of returns, but use 1970's technology. Most |
| bad luck tends to wash out. Can this be done with the | | | | operators employ generation that has grown up on the |
| decisions of technology in the gaming operations? Or | | | | X-Box and knows technology inside out, but the |
| running the business? | | | | C-level management may have an issue turning on a |
| What happens, though, if the game isn't going to be | | | | computer. |
| repeated over and over? What if the game - | | | | Many C-level operators cannot answer the questions |
| purchasing technology, for instance - is played only | | | | of how they are using business intelligence tools, what |
| once or just a few times? That's when risk aversion | | | | they are doing with their data warehouse, how they |
| comes into play. | | | | are leveraging payroll or business analytics. Would your |
| Being "risk averse" means that you are willing to pay | | | | CFO be able to give you a real-time cash value? |
| money to avoid playing a risky game, even when the | | | | Probably not. Many casinos may have educated |
| expected value of the game might be in your favor. | | | | employees that are stymied because the technology |
| Let's consider the "risk" of investing in technology. Why | | | | to answer these questions is either not available or not |
| do a few casino operators are willing to take the | | | | being used. |
| option that the other operators are not willing to take | | | | Most successful businesses in corporate America |
| with technology? Why don't some casinos purchase | | | | have learned that when technology is used correctly, |
| technology unless there are 20 other casinos that | | | | real business value is delivered. They have clear insight |
| have done it, even though those that are leveraging | | | | into business intelligence, have multiple systems |
| technology are doing well in this current economic | | | | integrated, and have full visibility of their data |
| slump? | | | | warehouse and business analytics. Most importantly, |
| As I visit with both commercial and Native American | | | | these companies can measure the ROI of their |
| casino operators, I encounter many who are not willing | | | | technology systems and how they contribute to the |
| to calculate the rate of return or use a return on | | | | bottom line. |
| investment (ROI) calculator to justify investing in | | | | I suggest that casino operators follow the lead of |
| technology. I can prove on paper how such an | | | | corporate America and adopt the technology |
| investment would result in efficiency gains, lower labor | | | | advances that have already been proven to be critical |
| costs and better visibility into casino operations. But, | | | | in running a profitable operation. |