The Eternal Question: When to Pull a Box?

November 14, 2010

It’s the perennial question of the industry, and no idle one at that because it can make or break your charity — when do you pull* a box** from play? Often, especially to a new gambling manager, it can seem like a riddle wrapped in a mystery inside an enigma. It’s time to clear up some of the confusion.

* or “close” (the state’s official terminology) or “deposit”…
** or “deal” (the state’s official terminology) or “game” or “jar” depending on your house lingo

Now, of course, how you approach this problem will depend on your charity’s protocols: whether sellers can pull games at their discretion or whether the gambling manager or some other employee must make the decision. If only the gambling manager can decide, you had better make sure that you’re keeping close enough tabs (no pun intended) on your boxes so that you don’t miss the right opportunities. If the sellers are given that responsibility, you had better make sure that you provide them with clear instructions as to what your policies or guidelines are. It is also advisable to ask them to contact you for final approval for questionable situations.

In order to make good, informed decisions, you need to have detailed, accurate information about your games from shift to shift. Check out our Pull-Tabs Resources page for some improved forms that can help you collect that information. Also check out our Charitable Gambling Manager application, which puts this information at your fingertips.

Unfortunately, there are very few hard and fast rules. In fact, there are exactly two: when a game has just been opened and when there are not tickets left. Between those two extremes, everything is a matter of degrees — and there are a lot of interrelated variables to consider. Let’s discuss a few.

Fair Play

It is very important to make sure that your players feel like they’re getting a fair shake. Pulling a box too early and they might feel like you took the money and ran before they got a shot at the winners. Leave it sit too long and they might feel like you’re just begging them to clean out your “dead wood.” Remember that the odds are in the house’s favor. Always. The more they play, the more the charity will make. The players know this, but if you treat them fairly, they will enjoy playing with you, even though the odds are that they will end up “donating” more than they win in the long run.

Reputation

Intimately connected to your sense of fair play is your reputation. A reputation is hard won and easily lost. Protect and nurture your reputation. There are probably other places to play pull-tabs a short drive (or even stroll) from your site. You may be able to squeeze a few more dollars out of your boxes, but you can far surpass those few dollars with the sales volume you’ll build and maintain if you nurture your reputation as a fair and honest operation.

Further, I don’t know of any stand-alone pull-tab parlors. Every operation, whether booth or bar op, whether owned or leased by the charity, needs a place to sell tabs. Your reputation reflects on the establishment where you sell tabs. What’s good (or bad) for the pull-tab operation is good (or bad) for the bar and vice versa. Bar owners don’t have much patience for a pull-tab booth that’s earned a bad reputation. If your organization owns its own bar and your pull-tab operation’s reputation is driving away bar customers, you’re just robbing Peter to pay Paul.

Nurturing your reputation helps the bar, so don’t be afraid to (gently) make sure the bar owner knows the care you take to ensure a good reputation. He will appreciate it, value your presence, and take care to do his part to bring in and keep good customers.

Sales Volume…

…sales volume, sales volume! This is one of the most important (and sometimes overlooked) variables to focus on. Some games will have a huge deposit and some will take a loss. The house may have the odds, but remember that the house doesn’t have the odds on every ticket — some ticket sales will be profitable and some ticket sales will be a terrible loss (“a $200 payout on a $1 ticket?!”). The same holds true for entire games. Not every one will yield the “Ideal Profit.” The important thing is that, the more games and the more tickets you sell, the more the profit percentage will converge on the “Ideal Profit.”

Don’t fret too much about maximizing every deposit or avoiding having to pull a game at a loss. Given that a loss will sometimes be inevitable, the only way to make up the loss is to cut your loss quick and get back to a game that will attract players. A losing game that sits for a long time sustains not only the lost deposit, but also the lost time that a better game could have been in play.

The Appearance of the Board or Flare

Pull-tabs is a funny game and, in fact, it’s a fairly unique form of gambling. Unlike many games — where any roll of the dice, spin of the slots, deal of the cards, or spin of the wheel offers the same odds — the odds of getting a big pull-tab winner changes over time and can be estimated by the player.

This fact can, in turn, make pull-tab players seem like a funny breed. Some like a full box, some like an almost-empty box, some like something in between. Some like having big winners left and some like having lots of winners left. Some like to try every box and some like to stick with one.

Thus, it becomes important to try to always have a good variety of games. You want to have something available for every type of player. Here again, sales volume is the key. Remember that the house has the odds. You want every potential player to quickly become a player upon looking at the board or flares.

Another thing to consider is that, often times, a bar full of potential players can sit and eye the board over their shoulders for hours…until somebody starts playing, at which point they all want to play. A variety of games will help ensure that somebody sees something that intrigues them, enticing everyone to give it a shot.

This situation has the added benefit of having many players playing for the same winners. When this happens there will be winners and there will be losers as everyone tries to get to the winners first or pick the right box first. When only one person is playing, they have the advantage of knowing right when to stop. With many simultaneous players, somebody is usually left “donating.”

Additionally, a booth full of almost-empty boxes with no winners looks pitiful and a booth full of brand new boxes full of tabs can look daunting. When there is a variety of boxes, a player has a lot to consider. They will compare a full box to a half-empty box to an almost-empty box, study the board, and try to figure out which one is going to produce a big winner and pay for their dinner!

Type of Game

We all have our house-favorite boxes. Whether its Fun Fair, Shoot the Moon, or something else, there are boxes that you know will get steady play almost regardless of their condition. Obviously, it’s probably a good idea to let these game play a little longer if they’re getting played. On the other hand, when a game that has no name recognition and no particular draw looks ready for a deposit, it’s probably a good idea to go ahead and make the deposit.

The considerations are also different for posted vs. non-posted games. Posted games give the player the advantage of knowing which winners are left and they can decide if they think it’s worth a shot. Un-posted games leave that information out of the equation (and it is illegal for your sellers to divulge it). While it is a terrible policy to play a dead game (one without at least one first- or second-tier winner), an un-posted game can sometimes be left to play longer than a posted one.

Buying Tip: Since posted games give the players a bit of an advantage over non-posted games, it can be a good idea to play higher percentage games when a box is not posted and lower percentage games if they are going to be posted. This helps to balance out the advantage and add variety. The players get a higher payout, but don’t get to know what’s left or they get to know what’s left, but have a tougher payout to compete with.

Age of the Game

The age of the game is closely related to sales volume. You should have a good idea of about how long a game typically plays. If a game usually gets pulled after about a week, and it’s been in for two weeks, it might be a good idea to yank it. Your players have passed it over for two weeks, what’s going to make them suddenly re-consider it in the third week? By not playing it, they’re indicating they’d be more interested in something new.

Of course, a reasonable age for a game will depend heavily on the type of game. A paper, one-pull, “jar-tab” game with 10,000 tickets will certainly need to be in much longer than a high-playback, lower-ticket-count game. With experience and close attention, you will eventually get a feel for what’s right.

Current Trends

If there’s anything certain about gambling, it’s that there’s no certainty. What worked 10 years ago, 1 year ago, or last month is not guaranteed to work today. As we all know all-too-well, things change. The state outlaws smoking in our bars. The economy tanks. Demographics change. People’s habits change. Don’t get stuck in a rut thinking that you can’t change your approaches because a particular strategy was working so well before. Maybe a game needs to stay in a little longer, or perhaps it should come out quicker. Maybe players are getting tired of an old favorite and a different type of game should be tried. Learn your lessons from the past, but don’t ignore what’s happening now and don’t be afraid to try new things.

Your Site

Just as times are always changing, each location is unique. Don’t limit yourself to thinking that you have to run all of your sites the same or that your operation has to run exactly like the one down the road. Each establishment and each crowd is different. Play to your customers and to your own strengths and you will maximize your sales while establishing a niche and a solid reputation.

The Number of Winners Remaining

Winning tickets are the reason that people play pull-tabs. Conversely, winning tickets are a charity’s biggest expense. Don’t get blinded by just looking at the cash bank and potential deposit. Be mindful of how many winners are left in play. If you pull a game that has a lot of winners left, especially big winners, your players might start to resent it.

Many games have one or a small number of top-tier winners. Once these are gone, many players will become disinterested, because there’s no longer a chance of getting one of these. You will often see the sales volume drop once these are gone. It’s a good time to start thinking about pulling it.

On the other hand, a lot of big winners can be a big liability. You may have a good deposit if you pull a game now, but, with a lot of big winners left, it could turn sour quickly. This is especially true of games with the really big winners: $500, $599, $888 or more. If one of these games is close to being ready to deposit, giving out one of these winners can ruin a deposit in a hurry and make the game unattractive to players. In these cases, you might want to consider pulling it between shifts or when nobody is playing. Never pull a game out from under someone who’s interested in playing it.

Also, make it a policy that you don’t play a dead box. If there aren’t winners worth playing for, the game should not be played. This will vary depending on the type of game, but it generally means having winners in the first or second tier.

It is also a great policy to establish, if a player loses big one night and indicates that they will return the next day, that you will keep that box open for them to continue to play. This goes a long way towards establishing trust and a good reputation of fair play.

The Number of Unsold Tickets Remaining

Sometimes a box can play very hard at the beginning, giving out nothing but “dead wood” and small playbacks for hundreds of dollars. If you just focused on the deposit, you might think, “Wow, this looks like a great deposit!” Be cautious of pulling a game with lots of tickets. It appears to players as if they aren’t being given a fair chance and will quickly become turned off, hurting your reputation. It might be a good idea to adhere to a guideline whereby, all things being equal, you generally don’t pull games with much more than half of the tickets remaining. Anything below that becomes fair game, depending on all the other factors.

On the flip side, a game with comparatively few tickets, but not many winners, looks like a big pile of losers. It’s bad advertising. Get it out of there.

The Ideal Profit

Every game has an “Ideal Profit,” or the profit that you would get if you sold out every ticket, gave out every winner, and there were no mistakes. While this is a good piece of information to know, especially when purchasing games, it is probably a bad idea to use it as a hard-and-fast rule for when to pull a game. Here again, you must consider all of these interrelated variables and determine what is the best decision, based on all of them.

Remember that, if you focus on sales volume instead of individual deposit size, you will have some small deposits, some big deposits, and some deposits right around the ideal profit, but, most importantly, you will be selling more tickets — and in the long run, the odds lie with the house.

Cost of the Deal

It is important to consider the sales volume, the profit percentage, and the actual size of the deposit, but remember that games aren’t free. Since games usually cost somewhere around $50 per deal (and a lot of taxes), if you pull your games too early too frequently, this cost-of-game expense will start to take a bigger bite out of your profits, since each game has this constant expense associated with it.

Your Operational Expenses

In addition to purchasing your individual deals, it is never free to pay rent, open the doors, turn on the lights, stock the booth, and staff the booth. These things all cut into your profits. Be mindful of this, but don’t make the mistake of trying to ensure that every game covers its own expenses. This kind of stubbornness can lead to a lot of stale boxes just waiting around to be played up to profit while your potential players lose interest and go down the road.

Tax Refund on Unsold Tickets

Having paid $50+tax for a game, it may seem wasteful to pull a game with lots of tickets left, only to have to count them, store them for three and a half years, and then destroy them. While these costs will never be fully recouped, remember that you can (and should!) get a refund on the taxes paid for unplayed tickets. This helps to offset the costs of pulling a game with a lot of unplayed tickets and can amount to a sizable refund check.

Combined Receipts Tax

This factor tends to have more to do with your buying policies than your depositing policies, but it is definitely worth considering. Unfortunately, the state imposes a very harsh progressive tax structure whereby you pay sharply increasing taxes the more you make in gross profits.

This tax keeps many charities from playing high-percentage games because it gets them quickly into the higher tax brackets while minimizing their profit margins. While this is a very critical consideration, it’s important to remember that the taxes are paid on gross receipts above the given amount. If you’re focused on trying to stay in the lower tax brackets, you’re only limiting your profit potential.

It is a tough balance to maintain, and you’ll have to watch carefully how your profitability is effected throughout the year (perhaps even budgeting for high profits early on and sharply decreased profits the rest of the year), but artificially limiting your gross sales or turning off your customers is not often a good business model.

The Audit and Associated Paperwork

It’s always easiest to audit a game that was completely sold out. Count the cash, count the winners, fill out the paperwork, and be on your way. No blisters, no hand cramps, no fighting with rubber bands, no stacks of unplayed tickets to lug around. By that logic, it’s even easier to not run a charity at all! Don’t be afraid of the work. Develop good processes to support your actual work load, not what you wish it was. Don’t let an aversion to counting tickets keep you from making the right business decisions and being profitable.

If your operation sells pull-tabs during the day and at night, chances are that your evening shifts do a lot more selling than the day shifts. This also means that the employees working the day shifts will likely have to spend more time closing games, doing paperwork, and restocking the booth. Establish this expectation up front and don’t tolerate complaints from the day shift sellers that they have to do all the busy work while the night shift sellers get to sell more and do less busy work. To address these concerns, you might want to consider having different pay rates for the day and night shifts.

Prizes and Tips

Pull-tab selling can be a very sought-after job because, when times are good and the players are lined up, the tips can be quite good at times. Your sellers will love having hot boxes full of winners to give out. Everybody likes winning and the sellers want to make their customers happy. They get to know their regulars, develop a relationship with them, and want to be the favorite seller in town. This is all well and good, but you should be creating this situation by fostering a policy and a reputation of fair play and by having attractive boxes at all times.

If you entrust your sellers with the responsibility of deciding when to pull games, be careful to watch out that they aren’t playing boxes just to give out winners, make tips, and earn favor — while giving away the business. Remind them why the operation exists at all: for charitable donations. Remind them that there must be a consistent policy across all boxes, all sellers, and all players. Above all, remind them that steering players to or away from any boxes is illegal, period.

Profit for Your Charitable Causes!

This brings us to the bottom line: profit for your donations. It’s why we’re in business at all. Balance all of the above factors correctly and you will maximize your donations while providing a great source of fun, entertainment, and winnings for your customers, a valuable asset to your lessor, a rewarding work environment for your staff, and a welcomed addition to your community.

Do you agree? Disagree? Have something to add? Let us know in the comments section.

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