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Bob Dancer writes a video poker column for beginners to experts. He also writes a column with Jeffrey Compton, "Player's Edge", featuring information on promotions at various Las Vegas casinos. Player's Edge is published each Friday in the Neon section of the Las Vegas Review-Journal. Click here to send Bob Dancer an e-mail.

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Oct. 30, 2007

Hidden Benefits to Palms "Presents for Points" Promotion

As is traditional at the Palms in the autumn, this year they are offering gift cards for newly earned points. The kicker this year is that you can buy Visa gift cards at a rate of $100 per 44,000 points. Last year you had a variety of gift cards (Albertsons, Trader Joes, Lowes, Fry's, etc.) Since all of these stores take Visa cards, the Visa cards are MUCH more flexible. This makes it a sort of a 0.23% "cashback" slot club.

A Visa gift card isn't exactly the same as cash, of course. There is a learning curve to using them, but I don't think it's very difficult. I don't know for sure how difficult it is because I haven't used the cards. All I know is that Shirley happily takes all that I can provide. In some ways, however, these cards are significantly BETTER than cash. More about that later.

Insofar as I'm concerned, the best way to earn these cards is by playing NSU Deuces Wild. Played well this becomes a 99.95% game including the gift cards. Since the casino offers a number of 100% games, how can NSU be the better play?

The first way deals with the monthly mailers. Players who regularly play the 100% games receive small monthly mailers. Players who play NSU Deuces Wild receive up to $600 per month. The mailers add up to $400 a month but three or four times a month you receive email "bonus" days. These bonus days are for $5 or $10 dollars each if you usually play 100% games. They are $50 each if you play a significant amount of NSU.

The second reason to play NSU is the stakes. If you can only afford to play for small stakes, then 25¢ FPDW is your best play. But if you can play $1 or higher (up to $25 single line or $5 Five Play), you can generate significantly more coin-in. The higher coin-in will yield benefits.

How much do you need to play to get the top mailer? Frankly I don't know. The numbers are secret and likely keep changing. I suspect $250,000 - $440,000 a month is sufficient. (I've forced the higher amount to come out evenly with the promotion. Use another number if you want.)

Even with the higher estimate (which is likely higher than necessary), your expected loss is less than $1,200, which is offset by $1,000 in Visa cards. For this $200 expected loss (treating the Visa cards as cash), you're getting $600 in monthly mailers and email free play day. Not bad. I'll certainly be playing at least that much for October, November and December.

The more subtle benefit arises only if you are a winning player. That benefit is that the $3,600 I'll lose (if things go as expected --- which we know won't happen exactly but it's the best guess going in) is tax deductible against my winnings this year. That's worth $1,200 as I'm in the 33% bracket. The $3,000 I'll receive in Visa cards in not taxable. This $1,200 in tax savings adds up to $400 per month of real winnings.

I showed a draft of this article to a friend who commented, "So you want people to lose so they get a tax loss?" Not at all. I hope to win playing this promotion. But when you're playing an "even game" and part of the benefits come in a non-taxable format but all of the losses are tax deductible, this shifts the balance from being an even game to being a positive game.

Also note that I balanced "expected loss" versus actual Visa gift cards. I could easily lose $20,000 or more playing this promotion to earn a few thousand in gift cards. Or I could win big. That's the nature of gambling. If you're not comfortable with big swings both ways, this promotion is less attractive.

A number of readers are not ahead this year so generating a gambling tax loss has no value. That's okay. If you're any good at this game, sometimes you will be ahead and owe taxes. Gift card promotions are not that rare. Understanding how they give you a tax advantage is a basic concept of winning video poker.