For the past 20 years or so, we’ve thrived on pent-up demand. Legal barriers artificially restricted the supply of gaming machines, and any casino with open doors and electricity was met with a flood of customers and piles of profit. Not anymore.



Her name is Diane. She carries a ticket worth $76.25, wanders about the Pechanga Resort & Casino’s gaming floor, and perhaps holds the key to your future. Her odyssey began 23 minutes ago with Coyote Moon and a crisp $100 bill. Losing $11.50, she cashed out, walked halfway across the casino to settle at an older, single pay-line Bally machine. Down another $24.25 after four and a half minutes, Diane moves to an Aristocrat game, followed by quick stops at IGT, Bally, IGT and Konami games. She never studies pay tables and doesn’t seem to care much about artwork. Her cash-out ticket serves as a kind of divining rod for choosing the next potentially lucky game.

I know Diane because I’m a stalker. For the last three decades, I’ve secretly watched people gamble. My goal is to figure out what players want and design games, systems and promotions to deliver satisfaction.  In her late fifties, Diane is special exactly because she’s not. She behaves as do most, spending little and searching a lot. Pechanga’s games do not satisfy Diane, and it is doubtful the games of other casinos would fare much better.

That’s because, though Diane is like the majority of players, Diane isn’t considered valuable. Her play is unmeasured and perhaps too infrequent. Pechanga, like other casinos, specialize in hosting players that happen to like what is currently offered and play in high volume. Trouble is, there aren’t enough of these players to go around. Certainly the Pechanga slot floor is successful. Certainly it is well managed-they don’t come any better than Buddy Frank and his crew.

Certainly too, Pechanga’s revenues are suffering this year-just as all casinos in competitive markets are suffering. Whether you choose to blame obscene energy prices, the housing fiasco or too many casinos with too many machines, revenues in 2008 are down and falling.

For the past 20 years or so, we’ve thrived on pent-up demand. Legal barriers artificially restricted the supply of gaming machines, and any casino with open doors and electricity was met with a flood of customers and piles of profit.

Not anymore.

Today there are so many casinos in so many places that most of us can reach at least one within a couple hours drive of our home. Yet American Gaming Association surveys show only a quarter of the adult U.S. population gambles even once annually. In other words, most adults want nothing to do with casinos. Only a small minority-estimated at around 15 percent-is morally opposed to gambling. The rest-some 60 percent of our adult population-just don’t find casino gambling compelling.

For a long time now, we’ve only cared about serving the people that are already players. Generally speaking, just 5 percent of players are responsible for 50 percent of wagers. In other words, if you have 100,000 people coming into your casino, half of all revenue comes from just 5,000 of them. And just 5 percent of that 5,000, provide half of that revenue. In other words, in a casino with 100,000 visitors, just 250 players provide one-quarter of all revenue.

Find these numbers hard to swallow? Check out your own player tracking records for proof. You’ll find most accounts with little or no play. These people were in your casino, waited in line to give personal information for a card, and then decided they did not like to play what you offer. Why? Diane stops at a Bally Hot Shots bank, where she settles one spot away from the left-most position. I take the machine on her right and insert a $20 bill. (I’m a stalker, not a big spender.)

“Is this a good game to play?” I ask.

“We’ll see,” she replies.

As I am also well over 50 and long past gray, it is easy to initiate conversation without invoking the nervousness or suspicion those same questions brought 30 years ago. Diane and I are soon on friendly terms. We exchange names, and I confess my professional interest in her play habits. I learn she doesn’t come to casinos often but finds herself bored at home, 45 minutes away.

Diane only plays games that “are lucky.” I ask how she recognizes such games. “You know-they just feel right.”

“Do you prefer video screens or spinning reels?” Her blank stare confirms my suspicion: she’s not interested in things many game designers consider important, and I decide not to even ask her volatility preferences. Diane has Pechanga’s “The Club” card in her purse but doesn’t use it. “They watch you, you know. If you win a big jackpot, they can see it and they won’t pay you another one for a long time.” Such paranoia is common and cuts across all classes of players at all casinos. I don’t bother explaining how the game or the system really works because Diane’s belief is far more powerful than my reality. In other words, she’d never believe me.

As we play, Diane strikes wins on three successive wagers. Though none much exceeds the wager made, her delight is obvious. “This might be my machine!”

Six minutes after beginning, my $20 is extinct, and my questions exhausted. I pause for a moment to sincerely wish Diane the best of luck, then walk away, wondering what it all means.

I think about falling revenues, how casinos cater to only a relative few proven players and how little effort is spent developing new recreational gamblers. I know how hard that work will be, and I think about what sorts of tools might be required for the job.

Before we can develop new players though, we have to figure out what they really want. It is too much to guess what a player who never visits a casino wants, so I decide to start with those that visit at least occasionally.

Whether named Diane or Vicki, Tabitha or Tom, each player seeks a winning experience-and each defines winning differently.  Only a minority use loyalty cards. Reasons for not include “I don’t want my wife to know I gamble,” “The club rewards aren’t worth much” or simply, “I forgot my card.”

Diane’s fear-that casinos actually control the behavior of games-is common too. If we’re to understand Diane, we have to better track her behaviors. We need Diane to use her card. The problem isn’t signing up-one already lives in Diane’s purse, and thousands more abandoned each day on casino floors everywhere. The problem is a card’s perceived worth combined with suspicion of what happens when it’s used.

Which got me thinking, if players already believe casinos can change game outcomes, what if they actually could?





Gambling 2.0

Imagine the casino floor not as a collection of games monitored by a system, but as a unified entity where the game is part of the system. Don’t limit yourself to the idea of downloadable games because that doesn’t incite new play-it simply saves the cost of changing program chips.

I propose making the loyalty card a key that unlocks parts of each game’s pay table. In simplest form, certain pay combinations are only available with a card inserted-kind of like buy-a-pay games-except one level uses a card instead of credits. Even better, let’s add features such as nudges, holds and respins, that  are only earned with carded play. (For those who don’t remember, nudges allow movement of a reel up or down by one position, holds carry a current reel position into a subsequent game and respins give player’s the chance to replay one or more reels while holding the others. These ideas were successful in games of the 1970s and can be successful again.)

Each feature is paid as bonuses and randomly awarded. Features won have an expiration date-a nudge may be useful for 200 games for example but only good for the next two days. Expirations add a layer of strategy and mobility to game play and make useful game math possible. Players must decide whether to spend a nudge to collect a small award or hold out for a more valuable opportunity-at the risk of bonus expiration.

Play features are stored with the card. Players with 185 games left on a nudge can remove the card, have lunch, and then resume right where she left off. Plus, she can play at any comparable game and have the bonus automatically transferred there.

Uncarded players will feel distinctly disadvantaged-exactly the goal because we want high volumes of carded play. And since players already believe the system controls game outcome, we have only to convince them it is for their benefit, not disadvantage.

How to pay for these new awards? Payback percentages are already maxed out, so the only way is to lower payables for uncarded play. Yes, some players will protest but, explained correctly, most will see the benefits and get a card-which is the goal. Think grocery store cards: show your card and get a discount, though deep down we know prices are simply marked up and then reduced for card-carrying customers. Uncarded shoppers pay more.

Does this work? Judge for yourself: Try to find a grocery store that doesn’t use them.

Why work so hard to drive carded play? For two reasons: to learn precisely what individual play patterns are and provide more personalized gambling experiences. Individual patterns include not only which machines are played and for how much but every detail of every game played from insertion of money to cash out. Example: Does Diane cash out after five successive losses, after a win or for another reason? Does the appearance of a near-miss stimulate her to play longer? Such measurements, accumulated and correlated across many players, will lead to new understandings of player behavior.





Personalization

Once a profile of play patterns is created, we can personalize the play experience itself. Suppose Diane has low tolerance for volatility. If she has 10 consecutive losing games, the system gives her a bonus to renew interest. When the system sees Diane initiate play on a game, it instantly downloads a lower-volatility version, without changing the symbols, apparent pay table or overall payback percentage. Diane gets the game experience she wants. You get the hold percentage your casino needs. Everyone wins. 

The system watches Diane as she plays and tests her limits to further tune offerings. When she cashes out, Diane is presented a discount if she’ll try a new game in another casino area. The bonus is encoded right on her card or cash out ticket. If she visits the new game within a designated time, she gets her full ticket value plus additional credits as a reward for trying the new game. If she doesn’t, the bonus expires and nothing’s lost.

Everyone gets a truly personalized experience, which will lead to more play from more players and more profits to you.

These are among some of the new concepts being tested, but, just as there was when player tracking, progressive jackpots and bonuses were introduced, much more work is in store before these ideas make it onto a slot floor near you. Stay tuned.