EDITORIAL: The price could be more right
July 6, 2012
It’s always fun to get Michael Meczka’s perspective on slot players, because no one talks to more of them. Over the lifetime of his firm MMRC, the company has conducted more than 1 million individual interviews and more than 1,500 focus groups, so when he says certain things on the slot floor could change for the better, it’s probably worth considering.
We focus on marketing to high-end slot players in this month’s cover story. The one part of the marketing mix we don’t address in the story is price, a topic that Meczka has zeroed in on during the Great Recession and its aftermath with eloquence. He believes more responsiveness to the player is needed using significantly lower volatility and lower hold games, otherwise players at all levels eat through their money and the gambling experience is either unsatisfactory or not justified.
“The primary independent variable continues to be and always will be the gambling,” said Meczka. “The only time the customer is going to stop is when they run out of money too quickly. Not just when they run out of money, but when they don’t get the appropriate time/price/value equation. They’re saying, ‘I’m going to give you $10,000, but keep me in play Friday and Saturday so when I go home Sunday, I feel like I got some value. Don’t make me go through this at $15 a hand and, lo and behold, I’m gone Friday night.’”
One thing Meczka does not recommend is encouraging the high-end to play high-denom machines, which can chew through money pretty quickly, particularly if the slot director doesn’t adjust the games proportionally. “They routinely adjust hold by denom and loosen as they get higher. That’s great, but if you’ve got a guy playing a penny machine for $5 and you hold 12 percent of that, you’re holding 60 cents every pull. You’ve got a guy playing a $25 game and you’re holding 4 percent, you’re holding $2 every pull. You play that game just as fast and you’re out of your bankroll quickly.”
Players, of course, are often their own worst enemy. Meczka likes to talk about the “myth of max coin and max lines.” In video poker, for instance, every pay table except for one is directly proportional to the number of coins played. If you are playing one coin and get a full house you get six back, two coins bring back 12, three pay 18 and so on. The only exception is the royal flush, which occurs once in every 45,000 to 55,000 hands, yet the patrons continue to play max coin all the time in video poker out of fear that they will miss out on the royal. “It makes absolutely no sense,” said Meczka. “Even if you do get the royal on one coin, you get paid 500:1. You could play for one-fifth of your budget and last five times as long.
Operators have altered the hold for high-end players but nothing significant. Meczka thinks holds should be 1-1.5 percent. “A basic $3 a pull game that is extremely volatile and takes 3-4 seconds per pull can be played at a rate of 15 pulls per minute. At $45 per minute, you’re up to $2,000 pretty quickly. At 4 percent hold, you’re getting $80 an hour to play.”
The bottom line for VIP’s is they love casinos and they don’t want to leave before they’re good and ready. “They would love to have lower hold games that would keep them in play longer,” said Meczka. “They don’t expect to win every time, just occasionally, just to give themselves more ammunition to continue the fight. They recognize that they’re playing a negative proposition game. When they play a slot game, their only reward is time in a casino and enjoying the casino. They say, ‘I know I’m going to lose, I’m not going to have anything to build to, and those bonus rounds are bogus and random, but I’m here to enjoy the casino and the atmosphere.’”