The penny ante
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The penny ante
Penny slots are in high demand and casinos are making space for them on their gaming floors
By Howard Stutz
Despite its recognition as a form of American currency that doesn't really have much of a place in society these days, the casino industry has embraced the penny. Many of the major slot machine manufacturers have dedicated much of their 2005 marketing efforts this year to penny slots.
Gaming customers are also behind the penny push, asking slot directors where penny machines-both penny-only and multi-denominational games-can be found on the casino floor on a more frequent basis. As such, casinos are adding more and more of these games.
"By the end of the day, there are only going to be two segments in the slot machine industry, pennies and $1 games," said Kent Young, vice president of marketing for Aristocrat Technologies.
Aristocrat, which now has a significant presence in the North American gaming market, dominates the Australian market, which is rich with penny slots. The company is bringing the same exuberance to the United States.
"There is a shift across North America and penny games are continuing to grow and increase in popularity," Young said. "In reality, quarter games are shrinking and the lower denomination games are expanding."
Konami Gaming, a Japanese-based manufacturer, is also finding penny slots as a way to grow its North American customer base, offering many of its titles in a penny format.
"Penny slot machines is the growth market this year for the manufacturers," said Deron Hunsberger, director of slot sales for Konami. "Went you went to the Global Gaming Expo (last October in Las Vegas) that's main thing you saw from each manufacturer. It's an exciting time for us because pennies have been a big market outside of the United States, such as Japan, for us. We believe we know the product and that gives us an advantage."
One-cent revival
Randy Reedy, director of slot operations for the Valley View Casino in Escondido, Calif. (Northern San Diego County), said of his gaming floor's nearly 1,250 machines, roughly 700 are multi-denomination types that include pennies. Also, a bit more than 100 games are penny-only units, manufactured by Aristocrat.
Customers, he said, want penny products.
"Seven, eight months ago, of the five casinos in the valley, we were the only place to have pennies," Reedy said. "Now, it's gotten very competitive because everyone has penny products."
Even on the venerable Las Vegas Strip, where free-spending gamblers mix with weekend tourists and novice players, penny slots have become the hot commodity. Juan Hernandez, director of slot operations at the Stardust, said penny slots-normally found in the neighborhood casinos frequented by local residents as well as Native American and riverboat casinos that dot the Midwest-have moved onto the main casino floor.
"Almost 200 of our 1,200 slot machines have a penny game component," Hernandez said. "We found that our customers like the option; they believe they are getting a bigger bang for their buck. We do a lot of benchmarking and we have seen some of the casinos up and down the Strip begin to offer pennies."
He agreed that penny slots have reduced the amounts wagered at machines with 25 cent and even the nickel denominations, but he's still a proponent of one-cent machine technology.
"It's kind of like the thought that MTV was going to kill off radio or video slots were going to eliminate spinning reel slots," Hernandez said. "There's always going to be a market for different products.
Indeed, from a casino operator's perspective, lower denomination machine popularity is revenue benign since all the slot does is allow customers to wager the same amount in different increments. Casinos don't really mind if a player bets $1 per spin, be it four quarters, 10 dimes, 20 nickels or 100 pennies. It's still a $1 wager with the only difference being number of credits a player can win based on the number coins in.
Better odds increasing play
That said, customers are pulling penny slot handles more frequently these days. Part of the reason: The ability to play pennies at the same pace and excitement levels as other denomination slots gives customers a feeling of making their bankroll last longer, thus increasing time played on a machine.
In return, the games must also offer a reward that can be accessed, somewhat frequently during that particular gaming session.
"In order to have a successful low denomination penny product, a player needs to have wide scale credit volatility in the bonus round instead of bonus events with nominal payouts," said Dean Ehrlich, general manager of gaming operations for WMS Gaming. "If the bonus takes awhile to trigger, and the credit amount awarded is anti-climatic, a player could be lost on that respective theme from that point forward."
Video technology has helped to solve this dilemma by increasing the number of combination lines on a particular machine, thereby offering customers a better chance to win and a more exciting game. Aristocrat, for example, now offers a 50-line penny slot (dubbed "50 Lions'), which gives customers unlimited ways to maximize their time on the game. With this type of penny game, the average handle might resemble a quarter slot or even a dollar game.
"It's all about the average amount per bet or spin," Young said. "Whatever the denomination happens to be, the player is pretty much wagering the same amount. It appears the quarter players are wagering the same amount, but in the penny denomination. The difference is in the jackpot. One of the integral parts of the penny game is having the ability to offer those life-changing jackpots."
Aristocrat currently has a penny game concept on the market called "Millioniser"-the first penny slot with the potential for a $1 million jackpot. Others manufacturers could soon offer similar jackpots on their own penny machine concepts. For example, Ed Rogich, vice president of marketing for International Game Technology, said IGT is moving forward with a planned 100-line penny game and will soon offer a penny version of its Mega Jackpot format. He added that video poker could also handle the penny format.
"The denomination is going to run the gamut," Rogich said. "We're never going to ignore the $1 player or the high-end customer, but the penny games give us a tremendous amount of flexibility to mix things up and change the dynamics on the casino floor."
Jackpot size matters
Reedy has seen Valley View customer stay a bit longer on the penny machine because more pay lines on a game increases the variable chances to win. He said the possible penny jackpots of $200 or $500 increases the customers' interest.
"That's not a bad reward for playing pennies," Reedy said. "Without ticket-in/ticket-out, we couldn't offer those type of jackpots with a penny. Probably the most would have been $10."
The growth in the number of winning combinations is geared toward the lower denominations, said Mickey Roemer, Alliance Gaming's senior vice president of game development. He said customers are still playing typical quarter machine wagers-75 cents to $1.50-but there is a much higher hit frequency.
"The customer gets smaller wins, but they occur more often," Roemer said. "It definitely keeps them on the machine for much longer periods of time."
Some manufacturers believe playing pennies will lead to customers moving up to higher denominations. Roemer believes manufacturers will introduce options or incentives when a player moves up to a higher denomination on a multi-line, multi-denomination game.
"It seems that pennies will be around for awhile," he said. "It also seems like there is plenty of room for pennies to grow."
Survival story
Technology brought penny slots back from the brink
Current hype aside, penny slots are not a new concept for casinos and have been a part of the machine mix for decades. Indeed, during the 1960s and 1970s, penny slots had a place in Las Vegas casinos on the old mechanical, handle-pull reel slots, where a penny might lead to whopping $1 or $2 jackpot.
By the 1980s, however, penny slots had practically vanished, relegated to the seedy, rundown casinos in the depths of Fremont Street in downtown Las Vegas.
But 21st century technology has brought the games back to life.
Cashless gaming-better known as ticket-in/ticket-out-has increased the number of multi-denominational machines. It's much easier to offer pennies on a machine than in the past. A $200 penny jackpot (20,000 credits) is observably more manageable to payout via a printed ticket rather than several buckets full of coins.
"There is obviously no question that video gaming and ticket-in/ticket-out was the catalyst toward lower denomination games," said Ed Rogich, vice president of marketing for International Game Technology, which is offering many of its popular slot machine titles in pennies. "When you look at some of the Midwest casinos and see the demographic of customers, they are having a tremendous amount of success with penny machines. In some places, 30 percent of the casino floor is penny games."
Most of the penny machines have maximum wagers of 300, 400 and sometimes 500 coins, made possible by cashless gaming. Ticket printers are necessary on these games where cashing out thousands of credits in coinage would lead to huge machine downtime.
-Howard Stutz
