Electronic Table Games: present and future impacts
ETGs were among the topics at The Cutting Edge Table Games Conference, where it was clear that the category has multiple ways to grow
Electronic table games (ETGs) are no longer just a substitute in jurisdictions that prohibit live product.
ETGs have proved more effective in attracting younger players than skill-based slots and social gaming initiatives. Their operational benefits are driving growth as well, but the games are a bit of technological hybrid so they bring with them operational complexities as well.
These were among the points made at a session covering ETGs at last November’s Cutting Edge Table Games Conference in Las Vegas. Deana Scott, Raving CEO, led a panel consisting of Ryan Bevens, director of gaming operations for Colorado-based Eldorado Isle Casino Hotel Black Hawk and Lady Luck Casino Black Hawk; Noah B. Dean, senior mathematics researcher, Gaming Laboratories International (GLI); and Kevin Parker, gaming operations manager, western region for Interblock. A full account follows:
Why are we seeing growth of ETGs?
BEVENS: In my view it’s because ETGs are a gateway into real table games. It’s a way for a player who is too intimidated by a live table to sit down and learn something. They may not have had the opportunity to play because they were nervous. We’re seeing a major spike in terms of knowledge about able games. We use the phrase, “knowledge is power,” the same applies to gamblers. The more they know about something, the more likely it is they will play that game. I believe we’re in the middle now of bridging that gap between slots and tables.
PARKER: I think it comes down to replacing lower-value tables so that you can use the dealers that you have on your higher-yield games. ETGs are not a solution for replacing your entire staff; they shouldn’t be looked at like that. People should ask what are the tools that they have within an ETG that allow me, as an operator, to watch my yield. We can set the hands, so the number of hands-per-hour can stay consistent. That’s a big value to operators. The chances of colluding go way down because of the anti-collusion technology that’s within the games. It is still a table game, so you’re able to introduce side bets very easily.
Going back to the intimidation factor, there’s that, but I think there are a lot of people who just play ETGs.
How are ETGs seen from a regulatory perspective?
DEAN: ETGs are new territory for a lot of regulators. You have this history of rules and regulations that are developed on the one side with electronic platforms—gaming machines—and on the other side, live table games. Here you have something in the middle that doesn’t quite belong to one or the other; there are shared elements of both. It’s definitely new ground and something that is very active right now.
Who’s playing ETGs?
BEVENS: In our jurisdiction, the demographic is extremely young. We unfortunately don’t have a big base of players who are playing both ETGs and traditional table games. It seems they start on ETGs and, once they move into actual tables, they don’t go back. What I’m seeing is players using ETGs as a gateway game to acclimate to the social aspect of games like roulette and craps. With ETGs, once they get the knowledge, they say, “OK, I’m going to jump in.”
That demographic for us is much younger than our average player by quite a few years. These are new players; we just got some interesting data on new card sign-ups: 21- to 24-year olds. It was up over 90 percent, and it amounts to a large number. I took it as I’ve got this many more players coming into my property and they’re interested in learning how to play table games.
PARKER: We’re also seeing younger players. Of course, we have core players, meaning females between 40- and 60-years-old. There are a lot of younger player, but it depends if we’re looking at our standalone games or our stadiums. These are a totally different animal, where we can offer a number of games with a limited amount of necessary dealer support. It’s a charged environment. People are having fun, playing with their buddies, but they’re still able to have a unique, individual gaming experience.
BEVENS: From a corporate perspective, the demographics depend on the market. In one of our markets, they’re using ETGs as a $2 or $3 game that’s much cheaper to play. They can advertise $3 blackjack or $5 roulette while their live table games are $10, $15 or $20 minimums. We see them attacking a different demographic and trying to get people to play both kinds of games, electronic and live.
Where I’m at now—a lot of the casinos have slots and table, we want our players to be comfortable at our spot, and ETGs represent an opportunity to do that. As for stadiums versus standalone games, I can’t do stadiums in the space I’m in but the standalone options are fantastic for me.
We’ve talked a lot about bridging the gap with the next generation through skill-based gaming or social gaming. How do you see ETGs working toward that end?
BEVENS: We see ETGs as a pocket of energy. We’re using them to get people to a certain part of our floor and make it louder, more energetic and more fun. You used the term lower-level players; I do something different. If I see you playing an ETG during certain times of the day, I give you two-times value in free play for table games. You’re earning two-times value at the ETG to come and sit down and play at a live table.
[Audience question:] I was an early adopter of ETGs when I was still an operator. Five years ago, we never got more than 20 percent of rated play. Hardly anyone ever used a card, so we had to use our intuition on player demographics. Has that changed over time?
PARKER: We’re seeing rated play at over 70 percent. It’s one of those deals where as long as the property is giving some sort of points incentive, it’s a lot easier to get carded play. A lot of properties do still say, “wait a minute, I’m going to end up upside down on this” But these are actual table games with actual table game holds and with actual side bets bolted on top. Instead of looking at 1.8 percent on a blackjack game, you’re looking at between 4 and 6 percent on the hold.
SCOTT: As we add promotions to any game we bring to the floor, that’s where it’s important from a marketing perspective and a player investment perspective to go back and re-evaluate. We have a tendency, at least from what I’ve seen, to just keep adding on top. So now you’ve got a loyalty club, two-times points and all of those things on top of a new game where you don’t quite understand the player yet. So be very careful not to just throw out a program. I’m a big advocate for testing to see what it does before you just throw a new promotion out. As you know, once you give something to them, it’s tough to try and get it back.
How do you see operators dealing with the question of whether to put them under slots or tables?
DEAN: I have to say ETGs are not a monolith—they go from a gaming machine that’s fully electronic with a table game theme to a live dealer who isn’t handling the bets, with the game action hooked up to terminals and everything in between. It’s a broad spectrum.
PARKER: Who owns the product is an issue that’s holding back the growth of ETGs. The people in this room are the ones who understand table games and I didn’t see one hand go up when you were asked if you have control of ETGs. I think a lot of that is because it has a validator and a printer on it, and if it has a validator and a printer it must be a slot machine. The thing with ETGs falling strictly under slots is that they’re looked at as a premium product. When I put in a premium slot product such a Wheel of Fortune with an 80/20 revenue share, what I’m looking for is at least 1.5-times house average. That’s not how an ETG works.
Nobody understands a table game like a table game operator. So, for me, I would love if the table games department took control over ETGs. But it would be far more comfortable if ETGs were almost their own department with input from both slots and table games. ETGs are more of an advantage for the table games operator, who is also used to leasing things like shufflers and games. These are costs of doing business that we take out of overall win to get our net. On the slot side, there’s a whole different perspective on what that game should be doing rather than what’s the purpose of that game. ETGs allow you to put players on a product that frees you up to put dealers on higher-yielding games with higher-value players.
BEVENS: We’re experimenting with ETGs as their own entity—its own department if you will. If you state that they are a slot they won’t perform to the level that Kevin is talking about—1.5-times or two-times house average—because the hold is different on a slot machine. I tried that first, then I tried comparing it to a table game and I was laughed out of several meetings because you have to pay for each spot with an ETG, and for each spot it’s much more expensive than compared with a live game. I caution anyone who says slots, “take ETGs,” because if you do, it could be problematic for your team—they’re not going to know how to manage it like a table game. You need your table folks to have input.
How do you work the crossover aspect between ETGs and live games?
BEVENS: In one property we have two roulette ETGs with live games directly across the aisle. One thing we have to think about is what the future of this business is and where does the physical casino bring unique value to the player. A lot of that is social interaction with the dealers, with each other, and playing in a community environment. That’s something that I think table games are uniquely suited to do well. But they do struggle sometimes from the intimidation factor for new players. Even though the ETG revenue might be the same as a slot, you are potentially introducing an entertainment experience to new players that may stay with them for their entire lives because it’s something they end up enjoy doing.
Since we all do get asked how games are performing, how do you measure the success of an ETG?
BEVENS: When I was looking at which bucket to compare it with, tables or slot, I fell into a video poker analogy more than anything else because of what it cost per seat and per square foot. When I compare this game to others, in order to keep it on the floor, it’s competing with video poker on a much stronger level. It has its own bucket, its own threshold; if you compare it to a table game I don’t think it will be favorable to you. But if you go toward a video poker-type discussion you’ll be better off.
PARKER: Basically, what we do is rate it by win per unit per seat, so we know exactly what that is and what the hold percentage is. It’s very easy for me to have a conversation with a table game person and say what we’re brimming in per seat per day and look at the hold percentage compared with the hold percentage of your live games.
The big thing about ETGs and their value is replacing real estate that isn’t currently being used. I don’t know how many of you have weekend pits and staffing issues. I was talking to an operator this morning who was thinking about getting rid of two entire pits—not because they wanted to get rid of labor, but because they just can’t find the bodies to be able to do it.
On the regulatory side, what issues should people who are thinking about bringing in ETGs think about?
DEAN: In advance, you need to recognize that ETGs are going to be viewed in one of those two buckets [slots and table games]. Even though we’ve been talking about viewing ETGs as a table games, regulation-wise a lot of it hinges on what the source of randomness is. If it is a live-dealer game with terminals, and the source of randomness is players throwing dice and dealers dealing cards, then it will be viewed from a regulatory standpoint as a table game. There will still be validator testing and all those types of things that need to be done which won’t bother you from an operator standpoint. But we do see in hybrid games systems where you sometimes staff the game with live dealers and then you flip a switch and all of a sudden it will be electronic. At that point, it does become a different product in terms of the way regulations and the gaming control board will see it; namely the way it’s metered, the way it’s taxed, IRS lockups, all of those types of things.
What about the impact of mixed configurations on the game protection side?
DEAN: In terms of verifying the identity of the game, there will be a lot of similarities with slots, taking the signatures and all that. But one of the benefits you get with an electronic game is you don’t have hole carding or edge sorting when you’re playing multi-deck games. You can actually shuffle that entire show between every game if you want, so you don’t have card counting.
PARKER: It also depends on the jurisdiction. For instance, Arizona doesn’t allow live-dealer ETGs, so everything is automatic and electronic in a jurisdiction like that. But there are advantages to that approach. In Arizona, you can have up to 12 seats for any one generator. Stadiums do a very good business there. We do have a hybrid system that can switch automatically with a reporting function that makes the tax reporting of that action seamless.
On the staffing side, there is a fear that ETGs will eliminate staff. But on the other hand, many operators face a staffing shortage. How do you see ETGs in relation to those issues?
BEVENS: Dealers and ETGs are oil and water for obvious reasons. The argument is they’re threat to tokes, which is a big piece of their income. If you have a weekend pit that’s not yielding as it should and you build an ETG pit there, the buy-in from your team is darn near impossible. For us, I don’t use ETGs as labor savings in table games.
The other side of the spectrum, the complete opposite for me, is using ETGs to get players to learn the games and come on over to live tables. The teams don’t have to worry about losing a job to a computer. I asked some random young players why they play live roulette instead of the electronic game. The first answer I got was the social aspect. The second, which was strong, was, “I can’t beat a computer but maybe I can beat a dealer.”
PARKER: A lot of properties that we serve at Interblock have stadiums with over 100 seats. So when you think of having two baccarat dealers, a blackjack dealer and automated roulette, they’re able to take care of 100 customers at any given time. There’s a value in that. Now a lot of those players may be lower-yielding players, but this is a great way to service them.
I will say, however, that my average bet in the western region, even on a quarter roulette game, is somewhere between $14 and $17, and it’s considerably higher on the East Coast. It’s not unheard of to have a blackjack game with a $30 average bet. I don’t want you to think that ETGs are only picking up lower-value players. We have stadiums with huge video walls and DJs and dancers along with the games that we offer. It becomes more than just a table game or a slot, it becomes a venue.
What about stadiums from a regulatory perspective?
DEAN: Stadiums are generally going to be viewed the same way as a live table game with a dealer, but with betting terminals. Whether it’s a whole lot of tables in a stadium configuration or centered on a single table, it’s basically going to be viewed in the same way.
To the earlier point about the slot people not caring what the table game people are doing and vice versa—you also see that on the gaming control board side. For a lot of these jurisdictions, there are actually two different teams that are involved in enforcement and they have had to come together and have many of those same discussions on how they view ETGs.