Casino operators are rethinking their cashless strategies, tweaking systems to fit needsWhen bill validators were adapted to slot machines in the mid-1990s, some casino operators scoffed at the idea, thinking the technology would not fly with their valued patrons. Yet validators proved themselves to be a valuable asset, and it wasn't long before every casino had them.
In the late-1990s, forward-thinking technologists found a way to replace coins with tickets, cutting down on labor expenses and giving casino patrons more time to play their slots of choice rather than waiting for hopper assistance or cashing out. Again, some casino operators scoffed. Again the technology proved its worth. And it won't be long before every casino goes coinless.
But as cashless/coinless technology continues to develop, operators are now trying to find ways to separate themselves from their competitors. Sure, they can adopt the latest cashless technology that slot manufacturers are providing across the board to casinos. Or they can customize their operations to give a their cashless environment a truly unique feel-making it seem like the cashless transition was one that the casino had carried out, and the casino taking credit.
But how-if manufacturers control the cashless patents, create the popular games and dominate the casino landscape with their logos and trademarks-can casinos accomplish this task?
The answer may lie with how casino operators collaborate with manufacturers to create customized cashless solutions that fit their properties' specific needs; how creative operators are in terms of new technology advancements that may lie ahead; and how many risks they're willing to take.
"Our strategy as a rule of thumb, at least as it relates to IT stuff are things we call capabilities, which are kind of a joint business development/IT effort. We try to select commercially available stuff. But we and most others find that it rarely does all the things you want it to do," said Tim Stanley, chief information officer for Harrah's Entertainment. "So what we end up doing is what I call an ingredient strategy. Where our forte lies is in integrating things together and creating value where it doesn't exist."
Harrah's and a handful of other casino operators haven't settled for the off-the-shelf versions of cashless slot machines. Instead, they have worked in conjunction with manufacturers to create systems that, while appear similar on the surface, provide additional advantages to both gaming patron and casino.
Market realizationHarrah's, Stanley said, wanted its cashless systems to resonate the value of its marketing functions-specifically, the company's popular Total Rewards program. But with cashless functions one of the most heavily regulated and scrutinized advancements in the gaming industry, Harrah's had to be mindful of what the industry would and wouldn't accept.
The opportunity, however, was within reach and Harrah's partnered with Bally Gaming & Systems-the two companies already had a long-term relationship-to integrate cashless slots with Total Rewards.
"Now what happens is that we have Total Rewards and all these fairly sophisticated central systems and we are now able to use them to communicate back and forth to each individual slot machine. That not only gives us the power to do the basic ticketing transactions on the floor-which are very regulated and very specific about what has to happen-but also to do some marketing reinvestment activities," Stanley said.
After evaluating all of the cashless options, Harrah's felt a "single-wire" approach, where the cashless functions are integrated with casinos' slot accounting, management CRM and other functions, was better-suited for the company than a "two-wire" approach, where ticketing functions are "bolted onto" a slot machine and operate through separate hardware on a separate network.
"Our primary ticketing stuff is a Bally SDS product with e-ticketing," Stanley said. "We did some special work with the printers and brackets so the tickets print out at the eye level of the customer. That's the basic we have in place-a Harrah's-ized version of a Bally SDS system.
"We tie all this back to our Total Rewards program, allowing us to do a program called RL Rewards. That allows us to create offers and campaigns, just like we do with our direct mail and e-mail and Web site-creating same offers for same customer segments across the country-and deliver them at the slot machines. We can send you a coupon in the mail, which you can redeem right at the slot machine."
With the customized system, Harrah's also has the ability to create targeted or triggered offers to patrons while they are playing the machine. Using decision science tools, Harrah's can recognize if it's a particular customer's first visit to our property, or that it's their birthday. Or, they can tell if a person is having an unlucky day, and perhaps extend them an offer with additional cash or a free meal.
"The reasons we went the path we did are twofold," Stanley said, "Ticketing is extremely regulated. It's been a bear frankly and you have to keep certain things you do from a ticketing/cash transaction basis separate from things you do marketing-wise. We believe that the strategy we've taken-with the basic Bally SDS system with some tweaks to it-allows us to have the best of both worlds. The ticketing stuff is regulatory approved and we can use the infrastructure to do some marketing stuff."
"Two-wire" solutions, like International Game Technology's EZ Pay don't allow for ticketing systems to conduct marketing functions, Stanley said. Though Acres Gaming, which IGT recently acquired, has systems that can create their own marketing advantages.
"Most casinos don't have the level of sophisticated stuff we have on the back-end," he said. "Acres is part of their solution to do that. You buy the IGT EZ Pay, you put in your own slot system, or an Acres system, and usually at a local property basis, you can make that work."
Harrah's has rolled out its new system in several of its Midwest properties, where player frequency tends to be higher, to examine how well it works. Stanley equates it to a real-time marketing campaign.
Group effortWhile Harrah's experiments with the single supplier, "single-wire" approach, the Barona Valley Ranch Resort & Casino near San Diego, Calif. has taken a multilateral approach to customizing its cashless functions.
Lee Skelley, assistant general manager of casino operations, said the property has three different systems that interface to form its cashless systems. Barona's casino accounting system is run on Bally's SDS. The casino management system is ACSC (a division of Bally). The ticketing system in place is Sierra Design Group's.
"The reason for that is there wasn't a ticketing system available when we wanted to do ticketing," Skelley said. "SDG developed a ticketing system before anyone else. The problem was then, how to integrate it, which the tech people were able to do. They all worked together, which was necessary in order to get the information you needed."
Barona has been considered the first casino to implement coinless slot machines from a commercial vendor. Skelley said the decision to go with tickets was made in late 1998. SDG had eight prototype machines on Barona's casino floor by 1999. The casino went live with a full-fledged ticketing system the next year.
"Our casino consultant is a company called Venture Catalyst. The CEO of that company is Don Speer. He and Bob Luciano, the CEO of SDG, had a discussion about the future of gaming floors and I think they came to the realization, long before the rest of the industry did, that they needed to go with ticketing," Skelley said. "No one else was ready for it, so they decided to make it happen first. Now, as you know companies like IGT and Bally have ticketing systems, but we weren't willing to wait. We feel that having it sooner greatly benefited us because our customers liked it and who knows what revenue we wouldn't have captured had we stuck around with everyone else and just done coins."
The customers, Skelley said, were a driving force behind going coinless. Barona's older machines-those in place before the tribe signed a compact with California allowing casino-style gambling-only did tickets. In 1999, Barona took a group of its best customers to Las Vegas to see which games they liked. The overwhelming response, he said, was that they hated coins that Las Vegas gamblers were used to.
So coinless Barona went, and while the system is different on the back-end in that it's linked through different operations systems, it is the same to the customers as almost any cashless/ticketing option available today.
"Because we were first, and there weren't really a lot of options, our casino marketing department and casino accounting department both worked diligently for a couple of years, actually customizing the system to get it to do things we wanted it to do," Skelley said.
Now Skelley said he wants to offer his customers everything available in the cashless realm-from coins and tickets to smart cards and electronic funds transfer. "Whatever a customer has in his pocket, we want him to be able to use it. I don't think there is a single system out there today that can do all of that."
Truly cashlessWhile most of today's machines replace coins with tickets, the Oneida Nation-owners of the Turning Stone Hotel & Casino near Verona, N.Y.-has been operating a truly cashless system for over a decade.
"When the Oneida Nation negotiated its compact with the state, there were stipulation in there about how you could run a Class III operation," said Sue Kesel, vice president of operations for the Oneida-owned Standing Stone Gaming, a company formed to commercially market the tribe's cashless concept and games. "At the time, things were restrictive, but there were some very creative people in the IT department here. In conjunction with Stratus and S-2, they took an ATM-type banking application, modified it and in a nine-month project, put a cashless system on the floor at Turning Stone."
The system is account-based. Players make a deposit with the casino. Then they are given a card with an account number on it. The card itself and the information on it are nothing of value. But once inserted into the Turning Stone's machines, it would display credits the player can use, which are deducted from, and added to his account depending on the result of his game and wager.
"One of the other plusses with this system that a lot of other operators haven't been able to get their hands around the value of knowing every transaction made," Kesel said. "Normally, in the slot world, when you put your card in, play for 30 minutes or so, then remove your card, you generally only see a snapshot version of how much the patron is gambling. The systems then credit points according to those snapshots. We literally capture every transaction. On our multi-game machines, we know which game you played and for how long. When we market to a player, we really do know what they like. From that standpoint, we can really target market to people. That can be a big expense in other casinos."
Standing Stone has received a lot of interest-both from other tribal operations and commercial casinos-in the cashless system. But largely, the industry as a whole is still showing concerns of customer acceptance, Kesel said.
"Having said that, we decided several years ago that we would go toward that interim step-almost a step back. We now offer a coinless piece and cashless system with a SAS interface."
And, like Harrah's, Standing Stone is tapping into the power of linking other functionalities to the games that are played.
"We have prototyped and developed what we call 'Resort Services' on our own line of terminals," Kesel said. "From the same display where your game is presented, you can order a drink, make a hotel or spa reservation, get a tee time, etc. It's configurable by location, so if you had a high-roller area, you could tailor it for that, or configure it by player level."
Can casinos claim their customized cashless systems are truly proprietary?
Harrah's Entertainment is one of a handful of casino companies that can claim their cashless system, though based on readily available Bally Gaming & Systems products, is truly unique to their properties. But, while heavily customized to fit Harrah's mold, can the system really be considered "proprietary?"
"Where the proprietary nature of this comes in is the way it's been implemented and the stuff we're doing on top of it," said Tim Stanley, chief information officer for Harrah's Entertainment. "Acres, brilliantly, a couple of years ago, went in and [got patents on] a few of the marketing functions they do in their system. We rarely patent technology."
However, Stanley is quick to point out that as the customized product evolves, opportunities may arise for a casino to protect some unique aspect of the altered system it may have had a hand in developing.
"It's usually about the way things are implemented or integrated. What we've actually done-and there are some patents pending on this-is the concept around the real time CRM stuff and the way it's implemented through several systems we have."
Future growth for 'proprietary' cashless systems far from certain
Will more casinos be creating "proprietary" cashless systems? Count Lee Skelley, assistant general manager of casino operations for Barona Valley Ranch Resort & Casino near San Diego, Calif., among those who believe there is a need for casino operators to become more involved with slot technology innovation and development.
"I think that if someone doesn't break ground in this industry-it's not the fastest-moving industry-no one else will go out and do it," Skelley said. "The people who make decisions on the slot floor in our industry tend to drag their feet."
But whether that means more casinos will be developing their own in-house systems, or heavily customizing cashless options, Skelley isn't so sure.
"I think that would be more an aberration than the general trend," he said. "I think the general trend will still be that there are a couple of good systems out there, and they will have 90 percent of sales to the casinos."
Cashless gaming doesn't end maintenance issues, it creates new ones
Going cashless does not necessarily mean an end to all maintenance issues. Indeed, although ticket-in/ticket-out systems have been readily accepted by customers, the addition of a printer and paper to a slot machine will create new and unexpected customer service issues, according to Sue Kesel, vice president of operations for the Oneida-owned Standing Stone Gaming.
"Our machines are very clean on the inside. When one of our attendants visits a machine, it's normally a friendly visit," Kesel said. "It's not because a customer needs a hopper filled before he gets paid, or his ticket was printed wrong. It's generally because there's a win that prompts special services like a need for a W2G."