Slot machine rent on the rise
New York’s governor races often feature cause candidates who are more often than not eminently forgettable, but the 2010 race gave us Jimmy McMillan of the Rent is Too Damned High Party, whose platform basically consisted of saying “the rent is too damn high” two or three times whatever the question was.
It was funny, in an ouch-that’s-true sort of way. So was McMillan, who once said of sexting scandal victim Anthony Weiner: “We’re all freaky. He just exposed his freaky-ism in the wrong way.”
Rent, of course, is something we all pay at some point in time. Anyone who uses anything for a period of time in exchange for a fee or price is renter, and slot machines are a great example. Frequent gamblers don’t expect to beat the house; they want time to play and they are willing to pay for it. The problem for the gaming industry is slot machine rents have grown as fast as Manhattan apartment prices in recent years, and the costs have become just as outrageous.
This was made resoundingly clear at a general session at G2E 2014, where Mark Yoseloff, former head of ShuffleMaster and current executive director for the UNLV’s Center for Gaming Innovation, said that the traditional cost of playing quarter slot and video poker machines was $20 per hour whereas today it’s $250 for two hours or $125 per hour. That’s a six-fold increase, and, of course, the games themselves have something to do with it. Average spin time has decreased from six seconds to four, and the multi-line, multi-denom games that have grown to occupy huge chunks of the floor offer volatility players like but at the cost of higher average bets that eat away player bankrolls more quickly.
I’m not the target audience here, but the 20-year time-frame is interesting to me because that’s when I started this job and started spending lots of time in Vegas where, back in the day, you might have had ESPN in your room and not much else. So slots were a pretty inexpensive way to alleviate the boredom. Twenty bucks in a quarter game with a 75-cent max bet did go a relatively long way back then, and I actually miss those games, which have become very difficult to find. Fast-forward to today and you need at least $100 to get the same kind of time-on-device, which is what Yoseloff is saying. And, no, I am not making five times more money today than 20 years ago. And yes, a lot of other things have gone up in price too along the way.
Which brings me to my “aha” moment: there’s something positive here for the industry. People are bleeding at the slot machines but revenues are still holding steady. To me at least, that shows the enduring appeal of for-money gaming. There’s nothing quite like it, and a lot of people love it, to the point where they’re willing to deal with 600 percent price increases over the last two decades to keep in play, even though they know that slot machine rents are “too dam high.” I wouldn’t go so far as to say it’s like Manhattan, which is a maddening but fun and interesting place to live even if you can’t afford it, but you get the point. Hopefully.
The implications for the industry are profound and far reaching. For all the talk about free play, new types of games that would incorporate skill and the need to prepare for customers who grew up in the digital age, it’s hard not to conclude that the basic matter of price is the key issue. I’m going to paraphrase my friend Mike Meczka here, with whom I spoke at the show, and who said, “free play is just giving people more of an experience they do not enjoy,” that experience being losing their money too quickly. Cooler games won’t help either, if the price isn’t right.
It was noted at the same session that manufacturers have heard the message and that games which are designed to deliver more time-on-device have been put on floors in recent years and they have underperformed. The only proper response to that is to keep trying. The average raise nowadays is 3 percent, and even that is skewed upwards by raises at the top end. Most players are dealing with flat bankrolls; they could use a break, and, having absorbed a 600 percent price increase over the past two decades, you can’t say they haven’t earned it.