Casino industry needs to adapt to quicker slot machine play
This column begins with a childhood story about television.
Are you one of those 50-or-more-somethings who remembers your first color TV? My family’s was a Sylvania, and what a formidable piece of furniture it was. We got it in place for a Sunday night back in the mid-1960s, the Walt Disney show with its splashy intro, but, even more important, the NBC peacock that preceded it. I got to see that peacock in color. Amazing! So there we were, three generations of Americans, some more enthusiastic than the others, sprawled across the living room waiting for the peacock. It did not disappoint.
What’s pretty cool is that you can have a similar experience today, at least if you’re a verging-on-old-age type like me, with the current TV technology. I finally broke down this summer and upgraded my flat screens, spending basically as much as I had six years ago on the new product, which, I have to say, blew me away. Yes, there’s the sports, but if you’re into films and TCM (things can never be that bad as long as we have TCM), watch, say, a John Ford western from the 1950s on one of the new LED screens. The long shots look like paintings. Or watching a lifelike Paul Newman in Harper, which looked like it was filmed yesterday.
We seek to be amused and technology keeps coming through for us. Moore’s Law makes it so; the economics are still working in our favor. Those TV’s get thinner and thinner and the pictures are prettier than ever. It’s a fair deal, one that can take your mind off of all those other things in life that might not be trending positive.
When technology takes more than it gives, sales fall. Take the rising price of slot machine play, which is the topic of our cover story this month and of a spanking new study from the Association of Gaming Equipment Manufacturers which found, indeed, that machines got tighter as the economy got worse.
Of all the points made in the story, none is more important than this: Speed not greed is the primary culprit. Technology has sped up the game from one pull every 10-12 seconds to one pull every three seconds, noted market researcher Mike Meczka, a four-fold increase. At last year’s G2E, Mark Yoseloff, former head of Shuffle Master and current executive director for the UNLV’s Center for Gaming Innovation, said that the cost of playing quarter slot and video poker machines was $20 per hour 20 years ago, whereas today it’s $250 for two hours or $125 per hour, a six-fold increase, so, putting two and two together, most of the rising cost of game play has to do with speed of play, but tighter machines are making things worse than they would otherwise be.
What to do about that? The same technology that eats into time-on-device is giving players something they like; better production values across the board, from sound to light and to comfort. If the games played slower, would they stand for it? It’s hard to opt out of progress.
Rather than push back at technology, value might be provided in other ways. Meczka (pleasantly) surprised me when he said the following, “It bridles me that casino owners are allowed to be able to think about shareholder equity. In every market except Nevada and Mississippi, having a casino is a privileged license. You’ve been granted something no one else can do. I don’t want to hear comparison to Macy’s, you have a privilege and you have a social and moral responsibility to your stakeholders. Those are our customers; people who come to a casino with great frequency, expect a fair return on their investment, and expect a reasonable return for you to take to your stakeholders, be it a board of directors or tribal chair.”
That was positive, if a little “big picture.” As for the here and now, another panelist, Anthony Curtis, who publishes the Las Vegas Advisor, talked about high-value rebate-on-loss programs in downtown Las Vegas; one at The Grand for $1,000 and another at The Plaza for $500. “Makes a pretty good parlay; you come to town, join two slot clubs and you get a $1,500 free roll,” he said, and outlined some sensible ways for players to optimize their excepted value.
It’s hard to think of a bigger issue facing this industry than providing more value for casino players. Meczka’s point about shareholder value was focused on operators, but what about vendors, who are constantly explaining to investors how technology will drive the replacement cycle, like ticket-in/ticket-out did! But TITO provided actual value to players, even if it cost them time-on-device. They saw the peacock, and they’re hoping they can see it again.