Perceived value -- Vegas style

 Mark Evanier, who used to be a serious blackjack player, shares an interesting anecdote about casino economics.

In Las Vegas casinos, they have these things called "comps" which are not unlike the parting gifts you get just for showing up on a game show. If you gamble long enough, you can usually ask a hotel employee for a freebie: A free meal, a free show, a free t-shirt. If they get to know you as a frequent player/loser, you might be able to achieve an "RFB" comp, the "RFB" standing for "Room-food-beverage."

Let me explain how comps are dispensed. The folks who deal Blackjack (or run the crap games or spin the roulette wheels) work at groups of tables — usually four-to-six — and one low-level exec of the casino keeps an eye on the gaming at those tables and makes whatever decisions have to be made. Dealers never make decisions of any kind about anything.

In most hotels, the execs are officially called Casino Hosts but no one calls them that. They're usually called "Pit Bosses," hearkening back to the days when they were Pit Bosses. The difference between a Casino Host and a Pit Boss is basically the same as the difference between a sanitary maintenance engineer and a janitor.

One of the many responsibilities of a Casino Host is to keep an eye on who's losing and who's winning and to award comps to guests who are giving the hotel a lot of "action." If they start offering you "RFB" comps, it's because they figure to make a lot of money off you if you gamble in their establishment. They are usually not wrong.

...
Actually, comps create a strange situation in the fancier Vegas hotel restaurants, at least for those who are dining there and intending to pay. At any given time, most of those eating there are on comps. This means that the eatery has no incentive to price its meals fairly. There is, in fact, every reason to overprice. The higher the listed price of a comped meal, the bigger a "gift" it seems.

There's a story that has made the rounds of the gaming industry: One evening, following a rousing bout of losing at the Hacienda, a high-rolling outta-towner was comped to the dining room. He ordered, as most do, the most expensive item on the menu — a steak-and-lobster combo for $25.00.

A few weeks later, a Hacienda exec called the guy in his home town, inviting him to fly in again — all at the hotel's expense, of course. "We'll fly you in first class, put you up in one of our finest suites, comp all your meals, arrange ringside seats for the show…" (That should give you some idea how much they expected this fellow to lose.)

The high roller thanked him but said he was already flying in soon — as the guest of the Marina, across the street. "But why?" the Hacienda exec asked. "Didn't we treat you right when you were here? Remember that great steak-and-lobster dinner we comped you —?"

"Yes," he said. "But over at the Marina, they comped me to a thirty dollar steak-and-lobster combination."

That afternoon, the story goes, the price of the steak-and-lobster combo at the Hacienda was raised to $32.00. There was no change in the portion. They just raised the price.

I don't know if this is true, nor do I know the names of the hotels involved. I just stuck in the Hacienda and the Marina arbitrarily and because they're both defunct. But that kind of thing goes on with comps and the restaurants that redeem them don't care half as much about paying customers as the non-paying kind.