Talk to any casino executive, and they will all tell you how important the millennial generation is for the future success of the casino industry. As the generation continues to grow, and contribute more to the overall economy, the industry seems to be scrambling to crack the mystery of this not-so-simple demographic.
Obviously, whomever it is that figures out the solution or solutions to this problem will have their name and legacy immortalized in the industry. As operators, analysts and entrepreneurs search for the answer, there does not seem to be a consensus as to what exactly the industry needs to do moving forward to win over the younger generations.
Jeff Jordan, principal consultant of Jordan Gaming Consulting Group, has clients in both the casino and video gaming industries. He says the majority of companies seem to be focused on the millennials, who are struggling to earn income at the same rate as previous generations, while completely ignoring Generation X. The Gen-Xers bridge the gap between baby boomers and millennials, and as Jordan says, “have more disposable income. The industry should focus on creating products they enjoy.”
Jordan finds Gen-Xers have a proclivity towards playing video games, since they were the first generation to play them.
Jordan points out that an obvious solution would be for operators to find the commonalities between the two demographics, and focus on them. With gaming revenue generated by pit games, slots, race books, sports books and poker, several advancements have been made to grow revenue. But has it been enough?
Poker Possibilities
As it stands, very little has been done with poker. The world of poker had several serendipitous things go its way in the early 2000s to help catapult its popularity to unthinkable heights. Unfortunately, it didn’t take even a decade to see the popularity of poker decline. The bad players and whales have become scarcer, and the accessibility of high-level poker knowledge has become as easy as ever to attain.
This has led to a narrowing of the gap between the great players and amateurs, thinning out the edge the top players once thrived on.
Over the past few years, the top players have had to think outside the box to continue on with their living. This has included them moving outside of the U.S. to continue playing online. Several high-stakes players have moved to Macau, where they play private poker games with whales, with $1 million pots as the norm. With the sharp decline in Macau gaming revenue, the future of this is also in the air.
Another trend over the past few years has been the integration of poker variants such as pot-limit Omaha, Omaha hi-lo and Razz into more casinos. For years, people thought pot-limit Omaha might have been the shot in the arm the poker world needed, and while it has grown slightly through the years, it remains relatively niche due to the complex nature of the game.
The problem for casinos is that poker, with few exceptions, is essentially a loss leader. High labor costs and a progressive decline in interest have led to over a dozen poker rooms in Las Vegas closing over the past five years, with revenue declining slowly but steadily since 2007.
From a business perspective, the point of poker has always been to bring in players who want to spend their winnings on table games, slot machines or other amenities, and with few exceptions, that simply hasn’t been the case. The best bet for the future of poker with millennials lies in tournaments. The opportunity to turn a single buy-in into much, much more continues to appeal to younger crowds.
Unfortunately, poker is far down the list of political priorities, and by the time all parties reach an agreement for federal legislation, it might be too late. Without federal legislation for online poker, in addition to regained consumer confidence after events such as the Full Tilt and Ultimate Bet fiascos, this boom is all but a dream.
Race & Sports Reliance
The decline of race books and the race industry as a whole over the past few years has been nothing short of depressing. Just on the Las Vegas Strip since 2008, race book revenue has dropped from $45 million to $22 million. Racetracks across the country are closing left and right, leaving owners scrambling for a solution. On top of that, younger demographics seem to have little interest, as it stands, with racing in general.
Two advancements have been seen recently, with one being “instant racing machines” in a few states, which offer gamblers a chance to bet on a historic horse race. Lawmakers claim they play too much like a slot machine, and controversy has swirled around their legitimacy, leaving their future in jeopardy.
For race books to stand any chance, it is imperative for the new virtual simulated race betting to succeed, even more than optimists hope for. Just as it sounds, these races are simulated through virtual technology, and while there is no intent for these to upend live race betting, the hope is to give gamblers, especially younger ones who may not normally bet on racing, something to wager on between live races, providing much-needed filler content.
Even as such, with race books contributing a paltry 0.4 percent of total gaming revenue on the Las Vegas Strip in 2014, betting on races will all but assuredly remain a minor industry segment at best, for some time to come.
Sports books have experienced a boon to their segment with regards to technology. The younger demographic has gobbled up sports betting, in fact. Mobile wagering in the state of Nevada combined with in-play wagering have helped sports betting grow rather steadily over the past few years.
One area of sports betting which has grown astronomically over the past few years, primarily among younger bettors, is parlays. The attraction of the chance to turn a $2 dollar ticket into $1,000 or more has heavily driven traffic in sports books recently. Technology and the world of sports entertainment have helped assist in sports betting among the younger demographic.
Tables Topping
“Table games in general are more popular with millennials than their parents’ generation,” says Ray Pineault, president and general manager of Mohegan Sun. “Blackjack continues to be the most popular game of choice for table games players in general as well with the millennial generation.” It makes perfect sense, too, as blackjack is a game where the players work together to beat the house.
Author Jeff Hwang states the main issue with the decline in table game revenue is that players are not rewarded enough for strategic plays. This lack of a reward for smart play has led many people to believe the younger generations grow bored quickly with table games.
Hwang goes on to use a concept which he calls the “skill-free rate,” and how this must be applied to games moving forward. He analyzed several table games, and tiered them according to the amount of skill necessary to play the game optimally. What was determined was that the game with no skill involved, that offers the best odds for a player, is the banker bet in baccarat, which only has a 1.06 percent house edge, or skill-free rate.
From this, it was theorized what happens is that players are essentially being punished for thinking and using strategy on any game which offers odds worse than the skill-free rate. The solution for the future, he says, is to have games which, when played optimally, have a house advantage of less than 1 percent, offset by forcing multiple units to be bet. Games such as Mississippi Stud and Ultimate Texas Hold ‘Em are used as examples of games which utilize this concept.
The concept of multiple betting units in play when combined with a smaller overall house edge could be something that brings success to new table games in the future.
Skill Sets
While table game skills rely on understanding odds, slot developers are looking to add more skill into machines, but skills which rely more on hand-eye coordination. It has been said on countless occasions that slots of the future will play more like the video games of the past. There seems to be a high level of hope this will take slots to a higher echelon of total of revenue, but it is still, at this point, speculative.
Slot machines, more than any other form of gaming, will prove to be the most difficult for the industry to integrate moving forward. When it comes to the “casino of the future,” there is a near consensus that casino floor design will need a radical shift.
This shift will undoubtedly affect slots more than any other form of gaming. With more revenue coming from non-gaming, you have seen more companies looking for ways to blend gaming with non-gaming amenities.
Tom Mikulich, senior vice president of business development for MGM Resorts International, says MGM has done just that. At the Mirage, Bellagio and MGM Grand, dozens of interactive cocktail tables, which will one day feature gaming, have been implemented in lounges and bars throughout the properties. These games are not offered for real-money play, but are allowing operators of the casinos to understand what type of games drive action from the younger demographics.
“I think the one thing we need to do to bring more millennials is to let them consume the game how they want, the way they want, on their device,” Mikulich says.
The big question will revolve around exactly how digital devices are incorporated into the gaming experience. Convenience is a large, contributing factor. It is highly likely down the road that player’s cards will feature currency, much like you would see at an arcade.
The implementation of social gaming into the casino format is all but a sure thing in the years to come, as well. It will be more common to see games which link players together, perhaps on their own devices, which see them work toward a common goal. Needless to say, over the next few years, it will be common to see big operators take a nearly trial-and-error approach by using research to take well-calculated chances, and see what sticks in the end.
The question which still plagues manufacturers and operators alike: What style of games will the younger generation sit down and pump hard-earned dollars into?
When it comes to themes, Mikulich says, “Baby boomers are a bit more nostalgic, and tend to play stuff they used to consume from an entertainment standpoint.” Gen-Xers and millennials, on the flip side, tend to gravitate towards what is currently relevant in pop culture in terms of slot machine themes. This gives games with themes that draw in younger demographics a much shorter shelf life.
As far as the games themselves, Pineault says, “Millennials are looking for games that are more interactive and that they can share with their friends.” When it comes to what he feels the gaming industry should do moving forward, he says it “needs to continue to develop more interactive gaming opportunities, gaming that uses more technology that is more participatory and perhaps includes elements of skill.”
In Nevada, Senate Bill 9 became law. It allows slot machines to offer elements of skill, something they have not been able to do in the past. The industry hopes that these elements of skill will help revolutionize slot machines, and appeal to both millennials and Gen-Xers.
Time-Sensitive
One area operators obsess over and correlate to slot success is time on device. Many operators want games which will put patrons in seats and keep them there for much longer periods. With fewer people visiting Las Vegas with gambling as their primary motivation, combined with the countless non-gaming amenities offered, less focus should be aimed at time on device, but rather on understanding how much time, on average, the younger people are dedicating to gaming, and going from there.
One metric that seems to be undervalued, and rarely discussed, is what determines a player’s exit criteria when gambling. Only a fraction of people, compared to the past, sit down at a table or machine with the intention of playing until their money is gone. Understanding when, and what it is that draws someone away from their game would prove helpful in determining what could drive revenue in the future.
Contrary to people’s preference for personal space, it has been suggested this generation looks for situations to place themselves into where they can experience social “collisions” or interactions. This begs the question of how a casino can optimally provide ample space and breathing room for guests, yet still provide opportunities for these social interactions.
Casino floors must be re-examined and changed to adapt to the needs of the younger crowd as well. This will more than likely involve more open and communal space. The key seems to be for operators to strike a perfect balance, and weave in gaming and non-gaming amenities.
More Than Games
Going back 40 or 50 years, a person’s visit to Las Vegas was often planned with gambling as the main purpose. A recent study by GLS Research showed that only 12 percent of tourists in Vegas come with gambling as the main reason. The study also showed some non-gaming trends such as visitation to spa and wellness facilities. In 2010, only 3 percent of people who came to Vegas visited a spa or wellness center, while in 2015, that number climbed to 7 percent.
One area of tourism that is growing is that of food destinations, where people visit cities specifically for their restaurant and bar scene. Las Vegas has done its part to satisfy these cravings by offering countless dining options, in addition to a burgeoning downtown scene laced with fun and unique restaurants.
While millennials may not come to Vegas in droves to gamble at the tables, they are here partying like never before. The electronic dance scene in the city is like nowhere else in the world.
If you want to be a competing resort on the Strip, it has become necessary to cater to this. In 2014, 11 of the top 14 U.S. nightclubs, by revenue, were in Las Vegas.
As this next generation is ushered into the world of gambling, a paradigm shift in the industry is necessary to accommodate the sometimes high demands of these consumers. The traditional casino experience is commonly considered boring by many patrons under the age of 35, and clearly needs to be re-assessed before it is too late.
While it is not clear whether table games which reward strategy or slot machines which play like video games will be the shot in the arm the industry needs, the one thing that remains clear is that standing idle will only leave the longstanding industry in the dust.
