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Slot Futures Revisited

How market conditions-and marketing innovations-have changed the industry's evolution to server-based gaming

Slot Futures Revisited

A decade ago, it was the next  big thing. It still is.

Just around the time ticket-in/ticket-out payment technology was erasing coin-handling from the casino industry, the slot machine supply sector was beginning to talk with slot operations executives about the next evolution on the slot floor—a move toward a central server-based floor.

The benefits of storing all slot game content—graphics, program math, hold percentages—for every slot game on a central server and downloading games of all manufacturers to the floor using a standard protocol was already well-known in Europe. Bringing the server-based culture to the U.S., proponents said, would lower costs and increase profitability.

Under a server-based system, profit would be maximized by providing the games most popular with each player demographic, altering the mix in real time as the dynamics of the groups in the casino change. Demands from high-rollers to have a certain game at a certain time in a certain area would be easy to accommodate.

A decade after the introduction of the idea, the original vision of server-based gaming has not been fulfilled in a single major U.S. casino.

“I don’t see the original intent of server-based gaming becoming a force out there,” says Roy Student, who as president of Cyberview Technology was one of the first major promoters of bringing the European server-based model to the U.S. “No one has taken the floor with server-based and looked at the return on investment the way it was intended. Outside of promotional events, no one is using server-based gaming to get ROI from switching games around at different times.”

Student, who is now president of Applied Management Strategies, has been advising operators on the potential of server-based gaming for years.

“You can have all the games loaded at will to the floor, and analysis will show you what games are hot,” he explains of the basic advantage of server-based gaming as it was envisioned a decade ago. “Let’s say analysis shows that ‘X’ machine is doing $300 a day, and I don’t have enough of them. ‘Y’ machine is doing $92 a day. What if I flipped a switch and they become the $300-a-day machines after 6 p.m.? That’s where the original intent was to server-based gaming, and I think we lost sight of it.”

He adds that no properties have taken advantage of another basic benefit of the server-based floor—fewer physical machines are needed, so idle machines can be eliminated, and the space used to generate revenue with higher-yielding games or non-gaming offerings.

“What is the utilization of a slot machine?” Student says. “You’ve got a floor of 2,000 slots. Are 1,800 being played at any one time? Or is it 1,000? You’ve got excess machines that are not being played, so you can have games you know are revenue producers switched to other banks and put other activities on the floor.”

Operators may not have lost sight of the potential of a server-based floor, but the basic technology has instead leaned toward making money from networked promotions. Operators with floors equipped for server-based gaming have embraced programs like IGT’s Intelligent Bonusing Suite and Bally’s iVIEW Display Manager to create floor-packing bonus events that can range from a bank of machines to the entire floor.

That doesn’t mean the industry is giving up on the original potential of server-based gaming. But the realities of business during the Great Recession spawned a much more cautious approach among operators, and a detour in the previously predicted evolution of the slot floor.

 

Money and Paradigms

Paul Tjoumakaris, slot operations veteran and longtime senior vice president of gaming operations for the Seminole Tribe of Florida, says the detour in server-based implementation was not only due to limited capital, but to a slot operations status-quo.

“Server-based didn’t evolve according to the original purpose, but there were certain things in the environment that created that development,” Tjoumakaris says. “One was the recession—the trending of the technology has slowed in pace. But in my opinion, the sophistication of slot management was not there, not only to leverage the technology but to convince the hierarchy that this is the wave of the future.

“Slots have to evolve. You just can’t expect the slot guy of yesterday to do the kinds of things required in yielding the downloadable games of tomorrow. You need sophistication and analysis. There’s no sense in changing the percentage or theme of that game on the floor unless you know it means something, and you have a reason to do it.”

Tjoumakaris says the evolution of server-based gaming must be a combined effort of the slot and marketing departments, the seeds of which are in place with the implementation of loyalty-based bonusing and property-wide events being done in conjunction with the slot manufacturers. But, he adds, this function can coexist with downloadable gaming.

“Server-based gaming hasn’t totally gone away; it’s just evolved in a different format,” he says.

 

Using the Tool

This analysis is borne out when examining casinos that have opened with Ethernet floors and the capability for full-blown server-based systems. That includes the first casino so equipped, the Aria at CityCenter in Las Vegas.

Aria opened at the end of 2009 as the first major Strip casino with a fully server-capable floor. Its IGT sbX server-based system, though capable of linking the entire floor, has only been used for downloading IGT games so far—meaning just over half of the floor, according to Michael Volkert, vice president of slot operations at Aria.

For the first two-plus years, Volkert says he has seen some definite benefits to the server-based setup. “You’re definitely able to react more swiftly to market forces,” he says. “As new product comes out, as customer tastes shift, we can react very swiftly, and we can bring that new content to the floor. Now, saying, ‘Would I have lost this dollar vs. kept this dollar’ becomes a difficult exercise. But we know that we have access to content before our competitors. You can put a value on that.”

Like Tjoumakaris, though, Volkert says the long-term value of the system will be realized through marketing. “Long term, the real value of a server-based system and this environment is going to be a marketing play,” he says.

To that end, Volkert’s team at Aria has collaborated with IGT on many of the networked loyalty-based games in IGT’s Intelligent Bonusing suite. The first application developed at Aria has been one of the most popular—an automated system for logging and recording reportable jackpots in the high-end room. Normally, play must be stopped for any slot jackpot of $1,200 or more, and the player must sign a federal W2G form. The Aria’s application allows play to continue while keeping a record for tax purposes.

Among the promotional games designed by Aria is “Random Riches,” which enables a promotional bonus game on the slot’s video service window for reaching point triggers. “We continue to work with IGT on others,” Volkert says.

The same types of benefits of server-based gaming are noted at the newest installation of the full-blown sbX system, the Revel in Atlantic City, opened in April. According to Revel Slot Operations VP George Mancuso, the casino activated the downloadable function only on an initial 100 IGT games, but the first two months of operation show three distinct benefits of the system.

“First of all is customer requests,” Mancuso says. “If we don’t have a particular game or enough of a popular game, at a customer’s request, we can add more immediately. From a central server, we’ve got access to over 450 titles, all popular. In some cases, when we might not even have that game on the floor, we can immediately react to a guest’s request.”

Secondly, he says, he can beat his competition when new games come out. “As new games or themes are developed, we can be first to market,” he says. “We don’t have to wait to order the game or order a conversion kit.

“The third benefit is (managing) performance on your floor. IGT represents 40 percent of our floor, and there are certain themes or models outperforming other games. In the past, you would either order another game or a conversion kit. That could take anywhere from four weeks to a couple of months, to react with popular games that you need more of.”

Mancuso says these three factors alone show the value of a server-based system. “We’re just testing 100 games, and are still evaluating the return on investment,” he says, “but we know right now that being first to market, being able to react to customer requests, and being able to react based on performance numbers—all those things have value.”

Though the pace has been slow, the advantages of downloading are becoming clear to some operators. Tjoumakaris notes that full conversion to server-based gaming will require something else—a switch from proprietary systems that each require a server to a universal game-to-system setup.

“The industry has not really pushed hard enough to spend the kind of money for the technology to go all the way,” Tjoumakaris says.

Aria’s Volkert says WMS games will soon be added to the casino’s download-and-configuration setup—with a server separate from the one running the IGT games. “The challenge is that it’s not a fully integrated solution,” he says. “You don’t have one dashboard to control everything.”

Everyone agrees that total integration of server-based among all brands will happen eventually.

When is anybody’s guess.

 

Frank Legato is editor of Global Gaming Business magazine. He has been writing on gaming topics since 1984, when he launched and served as editor of Casino Gaming magazine. Legato, a nationally recognized expert on slot machines, has served as editor and reporter for a variety of gaming publications, including Public Gaming, IGWB, Casino Journal, Casino Player, Strictly Slots and Atlantic City Insider. He has an B.A. in journalism and an M.A. in communications from Duquesne University in Pittsburgh, PA. He is the author of the books, How To Win Millions Playing Slot Machines... Or Lose Trying, and Atlantic City: In Living Color.