A story in the Las Vegas Sun on Friday gives me a jumping-off point for a somewhat-extended discussion of slot hold:
Longtime gamblers have been saying it for months: If you want people to play in your casino during the recession, reduce the hold on your slot machines.
A panel of marketing experts validated that strategy at last week’s Casino Marketing Conference and Player Development Summit, sponsored by Raving Consulting Co. at Paris Las Vegas.
About 200 casino marketing executives, mostly from tribal casinos and commercial properties outside Nevada, attended the event. Organizers called it “the recession edition” of the annual show, and many of the panels and presentations dealt with how to draw crowds in tough economic times.
In a session on what a casino’s best players are saying and doing during the recession, panelists concurred that many of them are staying home. But panelists said one strategy to get people in the door is to drop their traditional hold percentages to keep gamblers playing.
“Casinos have become far more interested in getting the money as quickly as possible to satisfy Wall Street,” said panelist Michael Meczka, president of Los Angeles-based MM/R/C Inc., and a 30-year member of the American Marketing Association and the Marketing Research Association. “Casinos no longer care about providing a great time, every time.”
via Marketers: Reduce slot hold to attract more customers – Las Vegas Sun.
It’s an easy point to make, and one that’s hard to argue against. All the same, let’s take a closer look at the actual numbers here.
I’m in the middle of a study on slot hold percentages and slot mix, 1992-2008, and it’s quite an education. I’m comparing statewide, Strip, and Boulder Strip stats to get a sense of how the numbers for high-margin tourist-oriented casinos and lower-margin locals-oriented ones have changed, and there are some definite patterns. For now, I’ll stick to the statewide averages.
Back in 1996 the state of Nevada recorded its lower average slot hold from 1992 to the present: 4.91%. The average “cost” of $100 in play was a little less than five dollars. That’s an average for all denominations, so while it has value as a comparative tool, it doesn’t do the real situation justice. So let’s try to put ourselves in the shoes of the average Nevada slot player, circa 1996.
Considering quarter machines were the most common slot then, consider this: the average person playing three quarters on a Double Diamonds machine (this was one of the most popular games abck then, IIRC), would be betting 75 cents a spin. They’re probably averaging ten spins a minute, which means that, each minute they play, they are betting $7.50. An hour of plays means $450 cycled through the machine. In that year, the average quarter machine had a hold of 5.18%. An hour of slot play, then, would cost the player $23.31.
A hundred dollars could give them about 3.5 to 4 hours of time on device, on average. Factoring in a less-than-robotic ten spins/minute pace and time out for bathroom breaks or waiting for slot attendants to fill empty hoppers or handpay a big jackpot, you get an even longer time on device.
Fast forward to 2008. The average hold for all Nevada casino slots is 6.16%. Big deal, you might think. That’s only a 1.25% increase. That’s the total arithmetic increase, true, but proportionally, it’s a 25% increase. With the growing prevalence of lower-denom, higher-hold, higher-bet games, the change is quite apparent. There are more penny machines (35,842) than any other denom, besides multi-denom games, which can be anything from a penny to dollar, or more, so we’ll use pennies for our new typical slot experience.
There’s no standard on a max bet for a penny machine, since they can have dozens of paylines with dozens of credits bet on each. For the purposes of a quick demonstration, we’ll take a machine with an average max bet of 200 credits.
Each spin, then, costs $2.00. That’s $20.00 a minute cycling through the machine, and $1,200 an hour. The average statewide hold for pennies was 10.22% in 2008, so the average “cost” per hour of penny slot play is $122.64.
The same hundred dollars that could buy a player, on average, about four hours of entertainment in 1996 would get them barely 45 minutes of time on device in 2008. Factoring in less down time because of ticket-in ticket out technologies (no hopper fills), and quicker play because of push-buttons probably would give the player even less time with that $100 bill.
That’s a major change, to say the least. Of course, the players are choosing to play machines with higher hold. This seems counter-intuitive, but there’s no other explanation. In 2003, there were so few penny machines in the state that the Nevada Gaming Revenue Report just lumped them into the “other” category. Five years later, one in five slots in Nevada casinos was a penny slot. Casinos wouldn’t replace 20% of their slot inventory with pennies unless people were playing them.
Why are they so popular, if they pay back worse than old-fashioned quarter machines? Probably because they are more fun–a game like WMS’s Star Trek line that offers numerous bonus rounds, video clips, and “sensory immersion” just blows Double Diamonds out of the water, particularly for novice or occasional gamblers.
The solution won’t be to throw out all the multi-line video reels and go back to mechanical steppers, but to offer games that combine the excitement of the new slots with superior time on device.
I’m not trying to tell anyone how to spend their gambling dollars or run their business. I’m just saying that, looking at the numbers and drawing a few very reasonable inferences, it is clear that players, on average, get much less time for their slot dollar today.