It’s not a myth; players can detect slot machine hold percentage

I have met and debated Dr. Anthony Lucas several times in the past. I generally applaud his efforts in gaming education at UNLV and his authorship of multiple informative articles about the gaming world. However, his recent studies (done with colleague Katherine Spilde of San Diego State University) proclaiming that it’s a myth that players can’t detect tighter slot machines, in my opinion, can cause significant harm to the gaming industry.

This is not because I doubt any of the data, nor the conclusions they have drawn from that limited data. Using their numbers alone, it seems to prove that their selected group of machines will earn more, without a decline in play levels, if the hold percentages are tightened for a period of time.

However, I’m convinced they they’ve made an elemental error that many slot directors learned to correct years ago. They are looking only at data from the machines and not what’s happening with the players. I agree that a player cannot “feel” the hold percentage one way or another in a short period of time. Manufacturers openly certify this condition on every official PAR sheet proclaiming that slots only hold true as they approach 10 million handle pulls.

Examining only machine data, as this study did, will often show a game with a high win index like 1.2. In other words, a machine that is doing 20% more win than the house averages. Before having player data, we looked only at that index and/or the trending of that index.  If a machine went from 1.2 initially, then 1.4 a month later and 1.8 a month after that, we thought we had a winner. Not surprisingly, many of those machines continued growing and became superstars like “Buffalo” and “Dancing Drums.”  While some did great, others surprisingly (and rapidly) fell in the toilet. There was simply no way we could predict the future hits from the misses. At least until we started looking at player patterns.

The folly was that we really didn’t know if one player, or hundreds of players, were pulling those handles or depositing those coins or credits.  Once we started combining machine and player data (for our carded play) we could see how long individual players stayed on a game (time on device) and, more importantly, how often they came back to that machine (repeat play).

Looking at performance in this new way was very revealing. We could spot a strong game very early and eliminate those with false starts quickly. Often, a new machine was so attractive, it was almost impossible to resist giving it a try. But, if it had shallow bonus rounds, poor hit frequencies or just boring game mechanics repeat play was near zero. Often, the indexes stayed strong only as long as your supply of “virgin” players lasted.

By using this player data, combined with machine data, we often had a truck waiting to remove future weak games just after they hit the tipping point. It saved us weeks and months of having poor performers on our floor. It was something previously impossible.

In the recent “myth” article, the writers said, “The results (of our studies) showed no evidence of players moving away from higher-coin-in percentage machines to their lower percentage counterparts.” Lucas and Spilde don’t know that. They only know what happened at the machine, not what the player experienced. That exclusion could be fatal.

In the CDC Gaming Reports interview, Lucas said, these tightened machines could generate up to $100 per day more. If that came from 1,000 players, it’s only 10 cents each. But what if it were just one or two players. Again, Lucas and Spilde don’t know that. From a subjective perspective, would you notice $50 to $100/day difference in your entertainment budget? For most medium sized casinos, that $100/day/machine would amount to $200,000/day or more in revenue. Sounds good, but are you sure your customers would be delighted to cough up an extra $200,000 each day for the same experience?

Staying subjective, slot manufactures (off-the-record) are clearly with me on this issue. Privately, they hate it when a game designed for 8% is put on a floor at 13%. Through the Association of Gaming Equipment Manufacturers (AGEM), they’ve even sponsored studies to show that tightening holds has not benefited overall revenues. Remember, manufacturers are on our side. They want us to make more profit and want their games to work today and tomorrow. I’ve heard one say, “let’s hope they don’t destroy the goose that’s been laying our golden eggs.”

In the CDC article, Lucas also says that “PAR has almost nothing to do with time on device.” #!@@!##!  Say what? Here the authors again mix player and machine perspectives. Variance can give wildly different time-on-device numbers for individual players on the same PAR game losing the same amount. But the machine statistics will reflect quite different actual game hold percentages.

All that aside, there is a direct mathematical correlation between PAR and play time if you add the caveats of “average” and “play over time.” Remember, “play over time” is exactly what casino marketers seek to accomplish with every campaign. Strong repeat play is the Holy Grail of marketing success. Mathematically, moving a 7% hold game to 9% will reduce “average” visit length. Are you so busy that you’re tired of having guests stay in your building? A six-hour entertainment experience will go to just over four hours. No one will notice? The gift shops and restaurants won’t be less full and team member tips won’t decline? Really?

Want some empirical evidence? If you examine the just released numbers from the Nevada Gaming Control Board for the last 12 months ending in June 2019; you’ll see that the Las Vegas Strip added 1.4% more machines this year and tightened all their games to a record high of 8.16%. As the new study surmised, their revenues rose 3.95%.  But across town in North Las Vegas, where the slots are much looser (6.66%), revenues grew 5.00% with 1.4% fewer machines. Loose, not greed, is good.

I’m somewhat surprised that casino owners are not bothered by this. I know that many of the corporate financial types have adopted this strategy wholeheartedly and love the short-term returns. It seems right in line with charging higher parking and resort fees. But doesn’t anyone think that revenue hungry legislators might also see this as an excellent opportunity to boost our gaming tax rates? They’ll ask, “What harm could it do, just crank up your hold again.” When operators argue in protest, they may seem a bit two-faced since many of them are now supporting this argument that “players can’t tell.”  Nevada has fought off past attempts at raises, and Oklahoma operators are battling an effort to stop a proposed increase of their taxes now. This study certainly won’t help either of them.

I once suggested to Lucas, that if players don’t notice, why not take the hold to 90% or 100%?  He looked at me like I was an idiot, because he knew that players would leave. It was my assumption that he believed that bleeding to death slowly was much better than killing the “goose” all at once. Why not prevent the bleeding in the first place?