Recently I visited the East Coast and did a lot of rental car driving. Listening to the radio, it sounded as if Armageddon had finally arrived. Housing defaults and budget deficits: up. Employment, income and overall business: down. Las Vegas, they said, was doing 15 percent less business than last year. “No one can afford to drive to Las Vegas anymore,” one announcer said. “No one can afford to drive anywhere anymore,” remarked the other.
Given I was moving at 5 mph on an interstate and surrounded by rush hour traffic, that last remark surprised. I decided to switch radio stations, pressed the button marked “seek” and instantly tuned to another station. Not being fluent in Spanish, I had to press a couple more times before finding a station I could enjoy. As a recovering engineer, I marveled at how nice the seek button idea is. In the old days, the process of finding another station was tedious, tuning up the dial a bit at a time while listening for a signal. Now a computer does all that for me-and I’m glad.
Thoughts drifted back to that remark about Las Vegas, where I live. I knew business was down, but 15 percent sounded especially steep. I knew from talking to managers in Southern California, business has dropped there too. Over the decades, I’ve seen these cycles before. The economy drops because of energy prices, interest rates, inflation or any of a dozen other fears. Eventually we rally through, and good times return. I wondered though, could this time be different, at least for the casino business?
For the past 20 years or so, we’ve enjoyed stunning growth as legal barriers to gambling fell away and released a vast reservoir of pent-up demand.
Whether caused by a poor economy, higher energy prices, too many casinos or just casinos that are too big, we’re seeing significant profit drops, even as new properties continue to be built. We no longer have large populations hungry for any gambling opportunity offered. Three-quarters of our adult population chooses not to gamble at all. The remaining fraction has a wide choice of gambling venues, each offering more loyalty points, bigger buffets and better décor than the last.
Which brought the thought: Why do gamblers gamble? Certainly it isn’t to win money. Most regular gamblers lose, yet continue to return week after week to play again. It must be that the thrill of winning is worth the cost of losing. I tried to picture some of the players I’ve watched on slot machines over the past three decades. Boredom came to mind. Players often seem almost catatonic when playing as they trudge past loss after loss after loss in hopes of that one win that brings an emotional high-not to mention weeklong bragging rights to friends and family.
If players play to achieve wins, and if players are bored by losses, why not remove, or at least minimize, those losses? Is there a way to do that and still retain casino profits?
Just then I realized the radio station was running a seemingly nonstop series of ads for a variety of magical pills and medications guaranteed to improve or remove or enhance whatever physical issues I might have-and wherever in the body they may be-if only I’d pay shipping and handling and immediately call their toll-free number.
I pressed the radio seek button to obtain even more immediate relief and thought, “Hey, what if we put a seek button on a slot machine?”
That old-fashioned tuning dial on a radio tunes up one notch and lets you hear what’s there: radio station or static. Isn’t that a lot like the spin button on a slot machine? You play one game and see what results-a win or a loss.
The radio’s seek button does that boring work for you. A computer bumps tuning up a notch and tests to see if a signal is there. If not, it bumps up another notch and tries again. The process is repeated until a good signal is encountered and then lets you listen.
A slot machine seek button could do much the same thing, tuning to wins instead of radio stations. Insert a $20, choose a wager size and press seek. The game plays. If a loss results, additional games automatically play until a win occurs. When the player is ready, she presses seek and the process repeats.
Players don’t have to keep pressing the spin button over and over. Press seek once and a win results, guaranteed. Seems like a good idea.
I pressed the radio’s seek a few more times just to imagine how the game would play and soon realized the radio not only automatically skipped over empty frequencies, but it also did so very quickly. Hmmm, what if the slot machine button did the same? After all, who likes to spend time losing?
So what if a slot machine barely spins when the outcome is a loss? After all, modern electronic games determine outcome as soon as play begins. Imagine, in this new system, that reels start spinning and you simply hear a ding or see a flash each time a losing outcome results. Reels only stop on winning outcomes. Full price is charged for each game. Games are simply played faster-not a bad thing from the casino perspective. What about the player’s? Since returning from my trip, I’ve spent a couple of days thinking about just that.
Danger: math aheadWarning: Some math is involved in the following discussion. The calculations are minimal, and, while dizziness has been reported among a few test subjects, no evidence suggests they cause cancer, heart disease or contribute to ED. If interest remains piqued for more than four hours though, seek immediate medical attention.
To imagine the player experience, presume a win frequency of one-fifth and each losing outcome takes one quarter of a second, while each winning outcome lasts 6 seconds. Average total games speed is 1.4 seconds. Now presume wager size is $1 and hold is 5 percent: Each game costs the player 5 cents.
In a typical hour of play, about 2,571 games are completed, for an average player cost of $128.57. If that cost is too high, it can be managed by either reducing the average wager or lowering the hold percentage. Early tests lead me to prefer the latter, as it offers players more of what they’re looking for - wins!
There’s a bit of conventional wisdom to challenge before proceeding, and that’s hold percentage. Too often, slot managers believe that lower hold percentages invariably lead to lower profits. Here’s why that’s not true.
Slot machine profits are measured as win/day. The formula is wager size * games played * hold percentage. As you can see, the hold value is just one of three equally important elements. Since the techniques described here considerably increase play speed, don’t automatically turn your back on the idea of decreased hold percentage. It is how much you win over a period of time that matters.
Let’s now drop hold to 2 percent and keep win frequency the same (we decrease hold percentage by raising average award size) and retain the $1 wager. Now we’re earning $51.43/hour, and players are getting about the same time on machine as with traditional games.
In comparison, a traditional game turns about 600 games per hour in busy times. Again presuming a $1 wager, we need a hold of 8.57 percent to earn that same $51.43.
Consider now the player experience. Both game implementations offer $1 wagers. Both have a win frequency of one in five games. The traditional game has the player staring at losing outcomes for 48 minutes of the hour and pressing the spin button 600 times, all to enjoy only 120 winning events. No wonder players look bored!
This new design, let’s call it “Play to Win,” delivers more than four times as many wins-514-during that same hour. Of course, there are more than four times as many losses too, but the player spends just nine minutes to get through them all. The remaining time, 51 minutes, is spent enjoying games that culminate with wins.
This is a young idea, and the mortality rate of young ideas is unfortunately high. Nevertheless, Play to Win offers many, many more winning experiences while retaining the same profit for casinos. That’s an equation for increased play volume, more frequent visits from existing customers and perhaps a draw strong enough to bring in new players too.
Hmmm. Maybe it’s time to visit the patent office.