Come Together

Slot makers and casino operators need to work together to resolve the slot hold issue

As with all things rooted in technology, change is constant, and this evolution has been clearly evident in the casino space as the games people play continue to evolve along with the look and feel of the gaming floor. There have been a number of influences that have resulted in the programmatic changes in the way we operate our marketplaces.

The “rise of the machines” has resulted in a shift in which guests spend their money (particularly domestically) as more revenue is yielded through slot machines and video lottery terminals versus traditional table game products. And to that point, we have seen a migration from more strategy-based games like video poker, where outcomes could be marginally influenced, to a higher preponderance of play on reel games, and specifically video reel.

At the same time, both gaming operators and slot manufacturers have looked to keep the experience fresh and the floors optimized, and this has resulted in content that is more engaging and appealing to patrons.

But two of the biggest changes over the last 20 years have been the guests’ appetite for penny games and the increased use of participation games that have altered the way we look at hold percentages and the results we have seen with payouts. Penny games were a tidal wave of product that took the industry by storm. Australian math-based games and the multi-line slot product were enchanting to players and profitable for both operators and manufacturers.

Although pennies were the primary denomination, the games’ multi-line aspect generated far larger average bets that rivaled higher-denom games and yet allowed those volumes to be predicated on par settings that were typically higher in nature.

At the same time, game manufacturers were continuing to push the limits and invest in R&D, as well as bringing entertainment flavor to the modern floor via theme-based participation games. Every movie or musician, celebrity or reality TV fad has had its day in the sun and pull of the handle.

These games have a high floor turnover rate and even higher license fee structure, so it is critical that the vendors keep the product fresh and yet pay the bills. The lease scenario allows operators to do the same. The result is a larger quantity of this style of game on casino floors around the world, coupled with an increased appetite by gaming patrons—and the high hold strategy in place to pay for this product. Thus, this shift in product and customer appeal has resulted in an escalating par setting strategy that has changed the way we operate the entire business model.

Operators and manufacturers need to sit down together (as this too has changed) and collectively look at the product and experience we deliver, in order to both understand this change and its genesis—but more importantly, to keep the customer in mind as we design and deliver new gaming experiences to our patrons.

This must be the next evolution in the gaming industry.

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Mark Birtha is vice president and general manager of Station Casinos. A highly regarded gaming and hospitality executive, Birtha has over 19 years of experience in both operations and development at leading casino and hotel companies including Mirage Resorts, Las Vegas Sands, Marriott International and Starwood. He has worked domestically and internationally as well as in commercial and Native American gaming. A graduate of the Cornell Hotel School, Birtha has written numerous articles, spoken at multiple conferences, and is an advisory board member of G2E, RD&E, Cornell Hotel School and the Henderson Commission on Cultural Arts &Tourism.