ATMs in casinos

by on July 12, 2009 at 6:15 am in Economics | Permalink

Should the service fee by high or low?  It could cut either way.  A low service fee encourages withdrawals and thus gambling, which is profitable for the casino.  A high service fee takes in money from the desperate and those with high time preference.

It was $4.99.  (Of course that is n = 1.)

On the other hand, they let you take out up to $1000, well above the average.

Another user told me you are especially likely to get $100 bills from the machine.  Perhaps the hope is that you will buy $100 in chips rather than trying to break the bill.

1 Dirk July 11, 2009 at 7:14 pm

Paying a service fee for an ATM, Tyler? I’m surprised anyone with a brain would let himself get so short of cash he would be forced to do that. And then be unashamed of it enough to post the story on the internet.

2 Leigh Caldwell July 11, 2009 at 7:46 pm

ATM service fees are a classic situation for bringing out “irrational” behaviour, but not only in the way you suggest, Dirk. Rich people are just as likely to spend more than $4.99 worth of time finding an alternative ATM so as not to feel ripped off, as are poor people to spend the fee when there is a cheaper alternative available to them.

I suspect Tyler’s time saving is worth more than $4.99 – given the likely distance to an alternative ATM in Las Vegas. Therefore it could well be rational for him to use the ATM. Especially if he is on a hot streak at the craps table.

3 Marcelo July 11, 2009 at 8:33 pm

I would also note that in my experience is very hard to find a regular bank ATM (Chase, BofA, Wells Fargo…) near the strip in Vegas. Forget about it inside the casinos.

4 Alex Segura July 11, 2009 at 9:09 pm

I imagine the reason for the relatively high ATM fee is that users will be more likely to take out larger sums of money in order to justify the ATM fee. And even if they are originally only planning on spending a certain amount, there will be a higher probability of them now spending more than that predetermined amount if they actually have the cash in their pocket.

5 SQF July 11, 2009 at 9:42 pm

My bank refunds 100% of my ATM fees. When I was in a Vegas casino and needed cash from an ATM, I didn’t bat an eye when the machine proposed a $5 fee.

6 ZBicyclist July 11, 2009 at 10:08 pm

@Leigh: “Tyler’s time …is worth more than $4.99… Therefore it could well be rational for him to use the ATM. Especially if he is on a hot streak at the craps table.”

I’m guessing Tyler doesn’t believe there’s such a thing as a hot streak at the craps table.

In addition, wouldn’t a hot streak mean you were winning, and therefore would be betting out of your winnings?

7 babar July 11, 2009 at 10:42 pm

so what you are saying is that the ATM is not the fairest bet in the house?

8 borninlasvegas July 11, 2009 at 11:31 pm

“I imagine the reason for the relatively high ATM fee is that users will be more likely to take out larger sums of money in order to justify the ATM fee.”

That is giving entirely too much credit to people who are already throwing their money away and are most likely drunk.

9 Emperor Norton July 11, 2009 at 11:54 pm

While we’re on the subject of Vegas, can somebody give me a brief rundown of what the appeal of casino gambling is? I’m an avid poker player, but I don’t like to lose, which makes playing any game that’s -EV feel like self-abuse. I’m not saying casino gambling is wrong or that people shouldn’t do it, but it’s rare that the appeal of something so popular escapes me completely, so I’m interested in other people’s subjective feelings on the subject.

10 Jacqueline July 12, 2009 at 1:29 am

The high fee encourages you to withdraw more at one time. 🙂

11 SheetWise July 12, 2009 at 5:12 am

“Perhaps the hope is that you will buy $100 in chips rather than trying to break the bill.”

Break the bill? You have to be kidding. Anything under 100 is pocket change to most players — and any buy-in under 100 looks like desperation gaming to the clubs (playing your change — the case bet).

12 Kyle July 12, 2009 at 10:45 am

I was talking to my friend who spends a lot of time at casinos (mostly poker). He was saying it takes a long time to count up 20s and while in the real world 100s are illiquid, in casinos they are the most liquid bill.

13 JEF July 13, 2009 at 11:03 am

There is also an issue (and therefore a marginal cost) associated with security.

If a customer takes cash out at a free bank ATM and then carries it to the casino, then there is a security risk during transportation. This risk is reduced/eliminated if the withdrawal is in the casino where you will be on camera from the time the money is withdrawn to when it is used at a table game.

14 Brent July 13, 2009 at 3:46 pm

Since the casino is more likely to see all of the ATM money in the form of additional gambling, why don’t the casinos actually subsidize the ATM’s? If they were trying to encourage higher withdrawals, they should set the fee at 5% for the first hundred and nothing thereafter.

15 Cletus Shirley January 12, 2011 at 3:08 pm

The withdrawal policy for ATMs in microgaming casinos is different than usual. It’s all designed to encourage gambling, from the amount you can withdraw to the high value bills the ATM hands out.

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