Dennis Conrad put it bluntly during a discussion on whether players can tell “loose” slot machines from games considered “tight.”
“We thought free play was a hot-button contentious issue,” said Conrad, the president emeritus at Raving Consulting Company. “I suggest how fast we take our slot player’s money is even a bigger issue. I just love talking about these issues that strike to the heart of our business.”
At last week’s Casino Marketing & Technology Conference at Caesars Palace in Las Vegas, experts said the proper pricing of the slot playing experience may be the single most important operations and marketing aspect of the modern casino hotel.
If slot games are too loose, an operator may miss out on revenue, especially in tourist markets where slot players have limited time to gamble to focus on other resort amenities like entertainment. They don’t care about how slot games are priced.
In the locals gaming markets, if slots are too tight, their brand may take a hit and lose customers to neighboring competitors.
(Left to right) Anthony Lucas and Buddy Frank
“Slot holds are a big mystery,” Conrad said.
Decisions on hold percentage – the house advantage on a slot machine – are often made by the by the property’s top executives, he said. In Indian casinos, the senior level of tribal government is involved.
Conrad added that sometimes games are tightened slightly to make a few million dollars.
He said most casino marketers are not asked about slot machines being tightened.
“There’s nothing more from a marketing perspective in our industry of how fast we take our player’s money,” Conrad said. “You have to live with that.”
His point? If you take it too fast, you must roll out more free play. Casinos must have the new and improved “giveback” to make it seem like the games are loose. Casinos also need a marketing campaign to highlight “new and improved loose slots” when the games have actually been tightened.
“It speaks to our guest experience and how we position our product,” Conrad said. “It’s different in Vegas with resorts on the Strip, but for most casinos that’s where we make the vast majority of our profits. There hasn’t been an awful lot of science behind it.”
Meczka Marketing Research Consulting President Michael Meczka said players want “escapism” and their definition of that is to spend more time in the casino on the devices.
Casinos will get the money from players if they let them play longer.
“I recommend they better understand their player’s expectations in the casino,” Meczka said. “Players are there for escapism and not there for a life-change event. They will take it, but if they had the option to have $500, $700 or $300 jackpot that keeps them in play for the two, three or four hours they expect to play. They would be better off than having large bonuses or progressives that don’t hit with any degree of frequency.”
Buddy Frank, a principal consultant with Slot Strategies, said loose slots are important but perception matters just as much. A mistake could cost a casino millions of dollars on a marketing effort to repair the damage.
Frank cited a Reno casino he was working with that had looser slots than a competitor. A study showed customers didn’t share that opinion. A better offer on rooms and food and beverage drove the perception.
“It showed me that you have to the perception of loose slots along with loose slots,” Frank said. “You have to match your marketing and your slots.”
Theoretically, a player can play twice as long if a casino had a 10 percent hold compared to a 5 percent hold, Conrad said.
“Over the long haul they are going to be more satisfied,” Conrad said. “Why wouldn’t do that.”
Ashok Singh, a professor at the Department of Resort, Gaming & Golf Management and UNLV’s International Gaming Institute, said a player spending $500 would not be able to tell a difference between a tight and loose slot.
(Left to right) Anthony Lucas, Michael Meczka, Ashok Singh
Anthony Lucas, a professor of casino management with UNLV’s William F. Harrah College of Hospitality, said studies done by Cornell University show that even frequent players have a hard time telling tight slots from loose slots over six months.
Casinos will lose business, Lucas said, if they maximize short-term profitability at the expense of long-term market share.
“Even if the short-term works, we can still sink the ship in the long term,” Lucas said. “If players start to tell a difference, we can damage our brand. It’s hard to recover from that. As Buddy said, once you get labeled as a tight floor, it’s hard to walk that back and expensive.”
According to Frank, experienced players can figure hold percentages on video poker and some forms of keno. But short-term players can’t figure regular slot machines hold percentages.
“You can have the loosest slot machine in the world and lose all of your money, which I do on a consistent basis, or you have the tightest machine in the world and hit the jackpot,” Frank said.
Frank said Conrad’s take that a slot hold percent change could boost revenues by $2 million is more akin to $20 million to $50 million. That matters over time.
“The casino wins $50 million, but you think it doesn’t matter to the other side, the player, and that no one will notice.” Frank said. “In my mind, they will notice.”
Frank said no one doubts the power of the attraction of the Strip. But he claimed the casinos have the tightest slots in Nevada. Recently, hold percentage hit a record of 8.14 percent compared to 5.34 percent in Reno. The most recent data from the Nevada Gaming Control Board showed the coin in for the Reno market over the last 12 months went up $402 million. In Las Vegas with three times more machines, it went up only $200 million.
“Reno outdid Las Vegas tremendously,” Frank said. “My silly conclusion is the players got more time on the device because they enjoyed it more because they were paying less for the experience.”
Slots are tighter, Frank reasoned, because penny machines have a great volatility and high-hit frequency.
“Do you really think people are in Indian casinos because they have the best restaurants in the middle of nowhere?” Frank asked. They are there because they like gambling and have the possibility of winning. If you are going to tighten your slots, be very careful. Don’t let any host tell people you have tightened your slots. It will take you years to get that back.”
