Study: UNLV professor calls it a ‘myth’ that players can detect an edge on slot machines Buck Wargo, CDC Gaming Reports · July 28, 2019 at 8:00 pm A series of studies led by the University of Nevada, Las Vegas said regular slot players can’t tell the difference between the house edge from one game to another. Anthony Lucas, a UNLV Hospitality College professor behind the effort said some casinos around the world are already using the information to boost their revenue. Anthony Lucas. William F. Harrah College of Hotel Administration faculty / UNLV Photo Services The studies have already generated controversy over the long-held belief by casino operators and consultants about a player’s ability to detect differences in how much – and how often – a slot machine pays. Lucas, a blackjack dealer in his youth and former gaming industry operations analyst, worked on the studies with Katherine Spilde, a gaming professor at San Diego State University. The study was funded by the SDSU’s Sycuan Institute on Tribal Gaming. Researchers went to multiple casinos frequented by local residents in Mexico, Australia and the U.S., including Las Vegas and unnamed tribal casinos. In their latest of three published studies, the research team compared two pairs of spinning reel slot games over a nine-month period at a locals casino in suburban Sydney, Australia. The study looked at different pars – the percent of coin-in that the machine keeps over time. Researchers compared the daily performance of pairings for the games “Tokyo Rose” and “Dragon’s Fortune X.” Coin-in within each pairing ranged from 7.98 percent on the low end to 14.93 percent on the high end, Lucas said. The results showed no evidence of players moving away from higher-coin-in percentage machines to their lower percentage counterparts. The higher percentage games posted substantially greater revenues Lucas said. Lucas declined to say what casinos in the three countries were used in the studies but said “they’re buying” the results as have others based on comments he’s heard since the three studies were published in 2019. The latest study is consistent with findings from the team’s previous research, which analyzed 11 pairs of games over 180 days at gaming properties. “The research is changing the industry practice,” Lucas said. “They’re interested in increasing pars and make more money. They realize they can. There’s room to move games up. The pushback is getting smaller, and the interest is getting greater.” The studies go against long-held concerns in the casino industry that short-term gains from higher pars could lead to long-term losses as players leave perceived tight slot floors for their competitors. “Slot players can definitely tell differentiation in hold amount,” said Mike Meczka, president of MM/RC Inc., a consultant who appeared on a panel discussion on slot marketing at the Casino Marketing & Technology Conference in Las Vegas last week. “Some may be more dramatic than others, but over time frequent players, the top 20 percent that give you 80 percent of your revenue, can definitely tell the difference between a 7 percent hold and 9 percent hold.” Meczka said he doesn’t believe the study will have an impact on the house edge because “casino directors have their own mindset.” ‘Struck a nerve’ Lucas said coin-in percentage is an important factor for casinos looking to optimize revenues, as the bulk of slot revenues come from reel slots, and a lion’s share of a casino’s overall profits come from slot operations. He said their studies have “struck a nerve” among consultants and some casino operators but have consistently showed the same results in analyzing even larger gaps in hold percentages over a longer period of time. “If players could tell, we would expect to see all of this migration from the high-edge game to the low-edge game, but we don’t see that,” Lucas said. “We look at the difference over time, and it’s as flat as an ironing board. Not only that, but the high par games make the operators a lot more money. I’m not talking about a little, but a lot. It’s $100 per day per unit (leaving on the table) and $40,000 a year in our current studies. In some of the later studies that haven’t come out yet, that’s like $60,000 a year per game for that little six or seven square feet of floor space. It’s a huge difference percentage wise of two or three times. There’s no operator that would leave that money on the table.” The difference between a low percentage and higher percentage slot game can be $100 a day, Lucas said. Fifteen percent games are safe, and casinos can move more games up and not “lose out on a tremendous amount of money,” he said. “I would increase the pars gently and monitoring the results,” Lucas said. “I think they may be leaving a lot of money on the table. We don’t have evidence of brand damage in terms of people leaving a casino to go play somewhere else. The games are performing in a steady fashion over time. I don’t know where the worry comes from.” Lucas has presented his findings across the world and recently attended a conference in Korea where he did the same. He said he’s found there are two camps — one that find it interesting and want to see the study and another that doesn’t like it and questions how that can be. “They ask where does the money come from?” Lucas said. “They said players have to notice the difference. They don’t want to accept it and fight back against it. Maybe they’ve been in the industry for 20 years, and it’s discomforting to have that mental model disrupted so they will try to hang onto it. The second thing is more political If you’re a consultant and telling people to the contrary, it doesn’t make them look good so they will argue vehemently that there’s something wrong with the study, but there’s not. These studies have to pass through an Ivy League journal so we have to jump through peer reviews and people picking at the implications. All they have to do is say it out loud.” Lucas said the house edge varies by market. The Las Vegas Strip has the highest edge about 8.5 on average. Locals casinos in Las Vegas are around 5.5 and downtown Las Vegas is about 7 percent, he said. The more frequent someone plays, the lower the par such as in neighborhood casinos, he said. Changing the house edge Which casinos are more ready to increase the house edge? Australia, Mexico and tribal casinos in the U.S., Lucas said. “I think the Vegas will eventually have to (increase par),” Lucas said. “As these studies keep coming out, the results get more and more compelling, and the counter arguments get shut down one-by-one. I think at some point someone is going to do it, but I think they probably are in Vegas and just don’t want to say it. You see the billboards in town that say, ‘we have the loosest slots.’ You can still say that even though it’s not true.” In Nevada, the state regulation limits par to 25 percent, but Lucas said about 15 percent is usually the highest end for games made today for penny slots. Operators aren’t going higher for now. “It’s fear because many people feel like if they put that out there, players can tell right away, and they will go gamble at my competitor that has the same game at a lower par,” Lucas said. “I have heard some slot makers have said they won’t make a game above 15 percent because it’s ‘just unethical.’ Then you have others that have reached out to me that this is great.” Slot manufacturers are watching Lucas said game makers have read the studies and are putting their games for out for trial pushing for a higher par because they know the machines will win more, thus, they look better than the house average and more likely to get their slots purchased. Many in the industry believe par affects time on the device and that a 5 percent game has twice as much time on the slot than a 10 percent game. Slot managers believe players notice that aspect. “That’s not true at all,” Lucas said. “Par has almost nothing to do with time on the device. It’s the variance on the pay table that drives time on the device, but you can’t get these guys to understand that. By changing the variance in the pay table, you can completely dispatch the theory that it’s par that is driving time on device. It’s tragic. You spend all this time and effort to position your floor and expense of marketing and making promises to players who expect to have a different result than play at other casinos based on having the loosest slots. The reality is they don’t have a different experience. That’s not good for building trust because you feel you’ve been lied to and duped by a billboard. That’s the risk of brand damage.” The other perception is that players walk in with $100 and gamble until they lose it, Lucas said. Many stop instead because they run out of time. It’s bad for the bottom line for casinos to assume they will get that money on a repeat trip. “Gaming budgets are fungible,” Lucas said. “They’re not earmarked. When you get people in there and have a shot at their gaming budget, it makes a big difference.” Lucas said he isn’t afraid of controversy. He said the book “Moneyball” changed how baseball looks at its players with statistical analysis. “I have taken a lot of heat over freeplay over the years,” Lucas said. “We don’t see a strong evidence that it increases spend per trip but seen evidence that it decreases spend per trip. You can imagine the push back from that.” The recent study was published online in the International Journal of Contemporary Hospitality Management.