Profitable Casino: Eric Swallow’s Royal Flush

Your heart races, thud-thud thud-thud thud-thud. You can feel salty-sweet sweat dripping from your forehead onto your stiff denim jeans. You coach yourself not to flinch as you steal another peek at your cards. Finally, as you go all-in, the real rush takes hold.

You know that brimming pot is yours. This is your day. Your royal flush has come.

If you’ve ever been dealt that win-all of win-all hand, you know the adrenaline rush that comes with it. It takes over your body from head to toes. It’s a feeling that no one forgets and many never experience.

And although Eric Swallow, CEO, and co-owner of the Garden City Casino card room in San Jose, Calif., has never been dealt that suited straight, he knows all about the ecstatic sensation of the ultimate win.

He might have felt it vicariously through a handful of his players at Garden City, but for Swallow, a self-professed IT nerd, that once-in-a-lifetime win has come not from a string of cards, but from a string of factors that led him to develop a technological royal flush of his very own.

And unlike cards, Swallow’s winning combination wasn’t based on luck or chance. It was based on years of business acumen, practiced skill and the foresight to bring technology into a space it had never been before. Going All-In When Swallow and his business partners, Peter and Jeanine Lunardi, first heard that the then-bankrupt Garden City Casino was on the market more than three years ago, it took little to convince them they should go“all-in” on the venture.

Although none of the three had a background in gaming, it was obvious to them that with a city cap on tables and a steady rise in population and game popularity, supply would not be able to meet the demand—and that equaled dollar signs. What they didn’t know about was the incredible lack of operational efficiencies on Garden City’s floor and the complete lack of technological options to solve them.

“At the time (2005), Garden City literally had no operational technology involved in its business operations,” Swallow recalled. “Everything was being done with pencil and paper. Whether it was scheduling, payroll, cage counts, break times or rotations, it was all By Eric Swallow CEO and Co-Owner, Garden City Casino CEO and Founder, being done by hand or was stuck in someone’s head.

It was eyeopening to see there was no system or technology to optimize all the day-to-day business functions in place.” The list of inefficiencies may sound familiar. First, there was the overstaffing, which caused unreasonable amounts of payroll expenses, and the understaffing, which decreased revenues due to lost gameplay.

Then there was what Swallow likes to call“the slime factor”— the rampant practice of table game dealers bribing the manager in charge of floor rotations for the prime-toke tables—not to mention California’s litigious employment climate, which made class action lawsuits an almost constant occurrence.

And let’s not forget the cage’s inability to deliver real-time counts and drops. But the problems didn’t stop Swallow and the Lunardis. During the two years that it took to get licensed in California, the three went to work finding a solution. The first place they looked?

The biggest gaming event of the year, of course: G2E. “Back in 2006, I headed to Las Vegas for G2E, literally planning to purchase software to optimize payroll, optimize the efficiency of the dealers and all of the floor personnel who run the casino,” Swallow said.“I just assumed the technology was out there and available.”

As industry professionals know all too well, there wasn’t a technological solution on the market to fix Garden City’s back-end operational deficiencies. While at G2E, Swallow discovered why: Nobody believed it could be done, and the floor personnel was extremely resistant to help find a better solution. He left the biggest gaming show of the year empty-handed and stunned by the lack of solutions—and the industry resistance to develop them. (Although he will admit there were many highly advanced solutions for front-end operations.)

Finally, the reality of the situation set in. If he wanted to optimize his staffing, HR functions and revenues through technology, he would have to step up to the table himself. With a background in technology, a slew of experience with Internet development companies, and years spent working with IT industry giants like SBC Pacific Bell/AT&T, PeopleSoft/Oracle, Chiron, Fidelity, First American, and LandAmerica, Swallow knew he had the skills to design a solution.

All he needed was the perfect team to help him build it.“I realized early on I needed to bring in management and people who were experienced in this particular field of the industry,” he explained.“One of the first things I did was bring in Scott Hayden from L.A.’s Commerce Club to be the casino’s general manager.”

From there, Swallow added more star players to his team, including Compliance Director Robert Lytle, the former director of the California Division of Gambling Control, and CFO Kathy Reiner, a financial management and gaming operations professional with more than 18 years of industry experience.

Taking the information they uncovered regarding the sorry state of operations at Garden City, Swallow developed the aptly named Profitable Casino, a real-time, Web-based software solution that encompasses optimizing efficiencies in three of the most important areas of operations: the gaming floor, HR and payroll, and revenues.

The Sweet Suite The entire Profitable Casino system is built into a bar-coded card-scanning system that monitors every employee’s scheduling and staffing information. As employees enter the building, they swipe their barcoded name badge into the system, which works like a digital signature for in and out times, including lunch and breaks.

From there the system monitors for compliance with company rules and state and federal labor laws. If employees are late for their shift or miss a break, for example, it automatically writes them up for company policy noncompliance, ensuring the employees are responsible for their actions and not the employer (thus leaving the chance of a class action lawsuit slim to none).

The system also automatically suspends and terminates employees using patent-pending technology, and monitors vacation, PTO and sick pay accrual. Once employees get to their stations, they must also swipe their badge into a scanner at the table that monitors where, when and why they are at a given table on the floor. By swiping their badge at the table, the system monitors their speed of play, dealer stops, drop counts, palm shows and customer service levels, with the help of Garden City’s digital surveillance system.

As casino manager, Hayden was particularly concerned with staffing, scheduling and complying with state employment law. Lucky for him, Profitable Casino’s Gaming Floor Module took out the guesswork needed in many of those areas. Based on artificial intelligence, the system forecasts how many tables and dealers should be open to accommodate demand, based on past history.

“We basically put together a technology that predicts outcomes based on past history, the number of games, and by the hour of the day and the type of games that are played,” Hayden said.“With the Gaming Floor Module, the efficiency in scheduling is just incredible.” The Gaming Floor Module has also eliminated the slime factor. Gone are the days of dealers bribing floor managers for prime tables. Now the system automates rotations based on performance metrics that management has established, ending the long-standing tradition of pit bosses taking tips and kickbacks from dealers in search of lucrative rotations and tables.

“With Profitable Casino, there are no longer biases involved in rotations,” Hayden explained.“No longer is a human telling dealers where and when to go based on appearances, kickbacks or tips. Swallow has created a system that virtually thinks like a human and tells the dealers where to go based on performance, which is really revolutionary for our industry.” gaming management innovation Kathy Reiner CFO, Garden City Casino Employees use their bar-coded badges to swipe into the Profitable Casino System.

“We created a system that enables us to eliminate the pit boss from telling the dealers where to go while optimizing rotation so it’s fair and equitable among the employees, and maximizes the dealers’ time at the tables,” Swallow added.“Now when they are here at the casino, they are able to maximize their earnings.” In order for artificial intelligence to equitably deliver rotations, management determines what performance metrics need to be outlined to get the best results from the system and the employees.

For Garden City, management has set up metrics based on customer service levels, hands per hour, palm shows before drops, attendance and complying with company policies. This part of Profitable Casino, like many others, is flexible, as each operator may have different performance objectives. The other benefit of the Gaming Floor Module is its real-time, Web-based functionality, a feature that spans the entire suite of Profitable Casino. Now management can access a real-time graphical view of its Combine the Gaming Floor, HR/Payroll and Revenue/Chip Counting Modules, and you have Profitable Casino, the gateway to a more efficient, profitable and pleasurable casino.

Employee Benefits For employees, Profitable Casino means a fair and equitable system for tracking work performance and table rotations, while at the same time minimizing limbo time, giving employees the maximum deal time at the tables for the maximum amount of tips. Management Benefits For management, Profitable Casino greatly reduces time and money invested in payroll, and virtually eliminates the risk of class action lawsuits related to tip-sharing and employee lunch and break issues.

It also eliminates all dealer complaints related to personnel directing table assignments and table rotation assignments by assigning tables based on a patent-pending system that adapts to the casino floor in real time and makes a fair and equitable table rotation system. Management also has the ability to view what’s happening on the floor at any given time on any given day and receive e-mail alerts regarding revenues, HR issues, staffing, and scheduling.

Customer Benefits

And your customers, the most important part of the whole mix, will experience better service, quicker seating on gaming tables, efficient table pushes (dealer changeovers) for non-stop gaming, and better quality dealers through game stoppage tracking and hands per hour tracking. Profitable Casino’s real-time, Web-based functionality allows management to view its gaming operations from anywhere in the world, while for example, sipping vino tinto in Montefrío (or anywhere else in the world).

The system also allows for real-time revenue tracking, e-mail alerts, and a customizable dashboard. “Profitable Casino enables us to track what games are in play at every second, every minute and every hour of every day,” Hayden noted. While that might be the biggest priority for Hayden, Reiner is most impressed by the HR Module.“I’ve been in gaming all over the place, and I’ve never seen anything like it,” she said.“I’ve actually done payroll from outside the office—and state—several times now. That’s a luxury I’ve never had before.”

That’s because Swallow built the system with an exportable payroll file component that seamlessly delivers all the payroll information to any third-party payroll services. For Swallow, perhaps the most important aspect of Profitable Casino is the Revenue/Chip Counting Module, which allows him to track each game, table and dealer both hourly and daily in real-time and on the Web. It also tells him game revenues by shift, game type versus costs by shift, game type, and game revenue averages by shift, day, week and month, allowing him to track the most profitable games.

In fact, the system is so intelligent, it sends him e-mail reports based on his preferences.“It tracks our revenue so that we know in real-time what’s going on,” Swallow said.“In the count room, if we have a situation where the counters don’t match their counts in the box, an e-mail is sent out to the shift manager and lets them know there is a discrepancy.” This is key, as one of the team’s top priorities was to ensure managers took responsibility for anything that happened during their particular shift.“I wanted to make each management level accountable,” Swallow said,“and so each department, staff member and shift is accountable for what they do, not only with the procedure, but also with policy.

This system automates and makes that happen.” With Profitable Casino in place, management can now address operational issues in a much timelier manner. It also forces the manager on duty to input what happened in the system and what they did to resolve it. “We solidly practice retrain, coach and counsel when there is an issue with an employee,” Swallow noted.“With our system, a shift manager is now accountable for the bottom line of his shift—everything from the personnel costs to the revenue to how the games are put down and so forth and so on.”

And setting the system up is literally plug-and-play. All you need is an Internet connection, scanners on the tables and barcoded badges. The data is stored on an offsite server.“We’ve made it very simple,” Swallow said.“No hardware.No IT staff dedicated for support. It’s literally put the bar code scanner at the table and drop in what we call a dumb server that sends all the information to a hosted site where we have very large expensive servers that house the information.

The time-consuming part is determining how to organize operations from a procedure standpoint; the technology is the easy part.” Royal Flush Before Swallow and his team took over operations in March 2007, Garden City had suffered in bankruptcy for eight years. Since 1998, more than two dozen creditors had been anxiously waiting to recoup their losses. With the help of Profitable Casino, it took only three months to pay back the property’s $22.5 million debt.

And within the first year of operations, Garden City reduced its floor staff payroll by 25 percent without layoffs and experienced a 35 percent increase in revenue. It also eliminated three-and-a-half full-time jobs, which amounted to $180,000 in savings per year. Developing Profitable Casino was truly a once-in-a-lifetime opportunity for Swallow to drastically change the way Garden City Casino operated.

And Swallow, much like the players who have drawn that winning combination at his California card room, still gets that winning sensation every time he sees his technological royal flush optimizing the floor’s operations inside Garden City’s newly remodeled doors (hey, gotta spend those profits somewhere, right?).

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