The past five years have been a back-to-school era for those charged with keeping slot floors fun and profitable in the face of squeezed customers and declining revenues. At G2E in September a session focused on just how much learning has taken place. Plenty, it turns out.

In an aptly entitled session called “Changing Your Slot Floor on a Dime,” Claudia Winkler, president of G.H.I. Solutions, led a panel of operators and manufacturers through a series of real-world issues such as how to determine when to eliminate a game; the perils of relying on win-per-unit as the be all/end all metric; how to re-configure existing product to boost profits; how to revitalize particular areas of your floor to create excitement and attract new layers; and much more.

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MOHEGAN SUN  

MULTIMEDIA GAMES

CASINO Du QUEBEC

BALLY TECHNOLOGIES

The participants were Frank Neborsky, vice president of slot operations, Mohegan Sun; Patrick Ramsey, chief executive officer, Multimedia Games; Marie-Josée Parent, senior manager, new product development,  Société des Casinos du Québec; and Mark Gilbert, senior director, corporate analysis and research, Bally Technologies. A summary of their comments and feedback from the fellow slot managers follows.

 

MOHEGAN SUN: NEW PATHS TO FUN AND PROFIT

Mohegan Sun, like many operators around the country, has been confronted with additional regional gaming supply at a time of decreased demand. The property now has 5,500 slot machines, down from a peak of 6,800 prior to the downturn. Staff had peaked at well over 600 people; including slot attendants, managers, and technicians. When the economy changed, revenues dropped by about 30 percent. Visitations also decreased until they started to see a rebound in the economy in 2010-2011.

“We looked for ways to adjust the floor,” said Neborsky. “One thing we didn’t need was capacity; our volumes were lower and our visitations were lower. What happens when you have a big floor with a lot of machines that are empty? You don’t drive that feeling of energy, excitement and winning. So we strategically moved things off the floor, which in turn raised our win-per-unit and gave us the ability to downsize our staff and look at ways to more efficiently provide service and support the needs of the floor, be it through technology or changing employee tasks and responsibilities.”

Because Mohegan has three casinos, it has relationships with many restaurants and retailers, and the property would have run the risk of alienating a big chunk of them if it closed a casino wholesale. The size of the slot floor was reduced; moving 12- to 14-game banks and putting in carousels of three or five. The floor plan was adjusted to lessen the number of pieces on the floor but at the same time creating a more open, relaxed and enjoyable environment to play in. 

“When Massachusetts comes on line to compete with Connecticut, we’ll probably be at about 5,000 games,” said Neborsky. “On a Saturday night, we’ll probably have about 4,000 to 4,500 games in play, which sounds like a lot. We have a lot of people moving around, good flow and an open floor plan. It gives people a more comfortable feeling and the people who are playing and winning translates that excitement.”

Drilling down into the games themselves proved fertile ground as well. Mohegan drew from resources in its financial and budget analysis department along with some SAS business tools and general knowledge of the floor to unearth new sources of profit that players could financially tolerate.

“Sometimes you’ll find that your game configurations are not optimal,” said Neborsky. “Suppliers want to sell you games that play 300 credits or 500 credits; that may not work for your particular demographic. Your players may be more comfortable with a game that they can play for $1, $1.50 or $2. They may be shying away from the $4 and $5 game. By changing your play configuration, it allows you to maximize your profit per-hand pull because now you’re using the product the way it was designed. If you’re expecting people to play $5 and they’re only playing $2, giving them too many choices may not be the thing to do.”

So Mohegan looked at the number of lines, coins and credits per bet, seeing what worked, depending on whether the game was high- or low-volatility. “When you look at your floor, look at the games that are performing well now, look at the configuration, not the title of the game,” Neborsky said. “If you walk around competitors’ floors, see how games are priced. You may find there are a number of different products on the floor that are the same titles with different betting configurations. It may be a fluke, something the manufacturers or the operators are not aware of, but you need to look at your analytics because some areas may be better than others. This is information that sits within the systems, but unless you go into each game and understand what those bet limits are, you may not be able to optimize your floor.”

The bottom line is, well, the bottom line. Casinos are faced with taxes, fees such as participation or daily fee structures, and, of course, promotional costs. So it’s not how much a property wins on a game per day, but what the facility’s profit is at the end of the day. If players are wagering $1.50 per spin, how much of it actually came to the resort’s bottom line?

“By making some minor changes to the way that game is configured; it can be the number of lines that you are offering or the number of credits you offer per line, you can add five cents or six cents profit per pull,” said Neborsky. “That doesn’t sound like a lot, but when you apply it to 1,000 or 2,000 games over the course of a year, it can make a big difference.”
 

MULTIMEDIA GAMES: FOCUS ON THE NEED FOR MORE PLAYERS

These are heady times for Multimedia Games, which is currently operating 12,000 games in a recurring revenue model. The company’s market cap has grown from $100 million to over $1 billion in the three years that Ramsey, who oversaw the slot department at Caesars in Atlantic City earlier in his gaming career, has been CEO.

One of those lessons was not over-relying on win-per-unit as a decision making metric when deciding whether or not to pull a game. “Win-per-unit is so commonly discussed by manufacturers, but it could be one of the most misleading metrics in gaming,” said Ramsey. “Working at a casino, there are two ways to increase revenue: Bring more people in, or get the people who come in to spend more money. A lot of times, that latter group is budget-constrained and it’s tough to get another $10 or $20 out of them. So it’s really about bringing more people into your casino. And that has nothing to do with win-per-unit. You could actually remove a number of games and win-per-unit stays constant.”

Ramsey’s Atlantic City experience provides a case in point. There he fell into the “typical habit” of examining all products in terms of win-per-unit. When he focused on a bank of old machines that was doing $130 per day compared with the floor average of $300, he agreed with his GM to remove the games. “Our slot director said, ‘Hang on. There’s a group of women who come here and they only come and play that game. If we pull that, we’re going to lose revenue,’” recalled Ramsey. “It was an ‘aha!’ moment when I realized I don’t really care about win-per-unit; I’ve got to know my customers well. That’s revenue that would have walked out my door and gone somewhere else. Even though those games were among the most inefficient on the floor, they drove people into my casino.”

The same reliance on win-per-unit can make it difficult for new games to get a fair hearing. “Diversity is good, whether it’s a supermarket or a casino,” said Ramsey. “As a manufacturer, I will hear from customers trying new games, ‘It was doing $50 per day and my floor does $200.’ My answer is if you pull out some of those machines are you losing any customers? If you’re not, you’re just reallocating them to other machines and that frees you up to try some new product that may look like it’s less efficient but it may actually draw new revenue to your casino.”

Looking forward, Ramsey is concerned that the younger generations are not attracted to today’s slot floors, and that the entire industry, including regulators, would do well to find new solutions. “We have a lot of great ideas with a lot of bright people in Austin, [Texas, the headquarters of Multimedia Games] but sometimes from a technical or regulatory perspective we can’t build them because they have to be defined a certain way as a slot machine, and that can be discouraging,” said Ramsey. “If we want this thing to grow over the next 10 or 20 years, then operators, manufacturers and regulators need to get together and figure out a way to put out a product that matches approved standards but doesn’t fit a random number generator slot machine as it is so strictly defined today in so many markets.”

 

CASINOS Du QUEBEC: ZONED FOR YOUNGER PLAYERS

In researching its overall gaming business, Casinos du Quebec concluded that customers are not getting that same perceived entertainment value through gaming as they do with restaurants and shows. Another point of concern was that the demographics are changing and the younger players don’t seem to be attracted to the wagering product.

The company looked to solve the problem with its existing product, starting with its casino in Lac Leamy, where the Zone, a new multimedia-rich, networked gaming environment, debuted in June. “The Zone has been described as a mini-casino, or a multi-game multimedia environment,” said Parent. “It focuses on our two main objectives; to get more players and to create a true social environment. It resembles a sports betting room, but instead of having sports displayed via multimedia, you basically have game outcomes displayed.”

The Zone occupies an area of the casino where there were 100 slots that were performing at house average or a little bit below. These games were replaced by 50 Novomatic gaming terminals, offering customers blackjack, baccarat and roulette, live and virtual, and slot games. On the wall there are 46-inch LCD screens that display game outcomes.

“There’s lots of sound and light for entertainment value and the key aspect is the Game Master, who operates the live games and manages them as well so that they are adaptable to the customers, depending on time of day or day of the week or if there’s a special event going on.,” said Parent. “There’s an instant communication with the customers through the Game Master to make sure they’re having fun. What we’re seeing is that we’re able to get that 21-35 generation into our casino. They’re walking in with their friends, they’re playing and they’re coming back with new friends.  They staying together, creating groups, interacting.”

The end result is a slot floor that was not performing that well has been transformed into a space that creates a new dynamic in the casino. “Those younger people are not really interested in the slot product but having them on the terminals is a way for them to get comfortable with the games,” said Parent, who noted that the Zone’s 50 terminals are generating twice as much revenue as the property was doing with 100 slots.

BALLY TECHNOLOGIES: THE SUPPLIER AS BUSINESS CONSULTANT

In addition to selling games and systems, Bally sees itself as a business partner with its customers, said Gilbert, and the company is engaged in a broad range of consultative relationships with slot managers across the globe. The conversations touch on everything from game mix decisions to game configuration to floor layout, just to name a few.

“Operators have to look at floor decisions from the standpoint of profitability and popularity,” said Gilbert. “Normally, a casino operator takes the bottom 10 percent performers off the floor. Our response is to see if there’s something we can do to align the product with the sweet spot on the floor.”

Understanding average bet and its impact on overall profitability is one area of focus. When one southern riverboat wanted to remove some Bally games, the company walked the floor and found a competitor’s popular game configured at 10 cents, nine lines and five credits, whereas the Bally game was at nine lines, nine cents with a 45-cent maximum bet.

“The profitability on that is horrible,” said Gilbert. “At max bet 45 cents you’ll never get enough pulls to make it average floor profit. We always know that on the low denoms; penny and two cents, to an extent, the average bet is always going to be two to two-and-a-half times the minimum bet. If that game is a nine-cent minimum, it will be an average bet of about 25 cents. There cannot be enough handle pulls in a day to make that a floor average game.”

 Operators who are thinking of changing denom need to look at the overall game configuration. Gilbert pointed to an analysis Bally did at a casino in California of a 30-line, two-credit nickel game with a $3 max bet and $1.50 minimum. “You can get away with having a $1.50 minimum bet game in Southern California,” he said. “They re-denommed it to a penny, making it a 30-cent/60-cent game. A 60-cent max bet game in Southern California is like cutting your legs out from under yourself. You’re leaving money on the table. But this was part of a lot of game and floor changes and it was something that they missed.”

Other slot pricing innovations include 32-line games, which “we hear are doing quite well,” said Gilbert. “We’re seeing that a slight change can have a huge impact. 30-line games have a 65- to 67-cent minimum bet on average. You throw a 32-line game out there with great play dynamics. Average bet goes from 60-65 to 70 cents. If you have a 15-unit casino you do about 2,000 handle pulls per day, if you can move average bet up one cent, that’s $876,000 a year. Minor increments get you bug results.”

With machine placement, Bally is a huge advocate of end caps and odd-side banks of fives or threes. “Are you wrapping your pillars and are you letting your architects dictate that?” asked Gilbert. “There’s resistance because these are central focal pieces and ‘we’re great architectural designers so we’re not going to put slots around them.’ Those are the perfect places to put slots because they create space. People don’t like to play next to each other.”

 By way of example, an 11-by-11, 22-unit bank only gives you four premium locations out of 22. In that case, Bally recommended was to take two banks of six; 2-by-1 by 2-by-1, add 2-by-2s with end caps. “It takes up almost as much floor space, but now you have 12 games with 12 premium locations, as well as freeing up 10 brand-new games to be dispersed elsewhere throughout your operation,” said Gilbert. “One school of thought is to put new product in places where you don’t normally have product. The converse to that would be, we’re going from 22 to 12 games and we’re losing all that slot space. My argument to this is, on Saturday at 9:00 p.m. are you a 90 percent utilized casino? If not, you’ve got plenty of space in your casino to reduce the number of games.”