Tightening Slot Games Result in Dipping Casino Revenues

Casinos have been facing a number of complaints from regular slot players that the games have become uncomfortably tighter over the last 10 years or so. Casino representatives are unlikely to admit to this charge upfront, but statistics released by the Association of Gaming Equipment Manufacturers provide a better indication of what has really happened.

A study conducted by Applied Analysis, a Las Vegas-based firm, indicates that slot machines have indeed become tighter over the past decade without resulting in a corresponding increase in casino revenues. The study analysed slot machine hold percentages (the percentage of wagered amounts retained by the casino) from casinos across the United States. It showed that the hold percentage had increased 14.5% overall, whereas the revenues from the same games had gone up only by 1.1%.

An average slot machine hold in 1990 in the United States was only 5.96% and this was when gambling was permitted in three states only. The slot machine hold is now 7.7% across 12 different states in the US. While one factor that determines slot hold is no doubt the payout percentage fixed by the casino, the amount of money gamblers wager on slot games is another factor.

Slot hold reduces when fewer gamblers play on slot machines or reduce the amount of money they wager every time. Furthermore, players will stay away from a machine or even a casino entirely in case they have a bad experience when they play there. Another factor, which cannot be disregarded is tightening spend brought upon by recession.

According to the Association of Gaming Equipment Manufacturers executive director Marcus Prater, many casinos are facing a problem of revenues not increasing satisfactorily because they have maintained very tight hold percentages. In fact, the very reason that the association commissioned the study was because they were getting complaints from customers over a period of many years and felt that it was necessary to investigate this. While there has been informal knowledge about this problem for more than a decade, it was considered necessary to conduct an official study to get to the root of the problem.

The hold percentage for slot machines is determined by games manufacturers and each game has a computer chip that determines how it behaves. Manufacturers offer these machines with many options of hold percentages so that casinos can buy the ones that seem to be the most suitable for their business model. In fact, casino operators even share slot machine revenues with game manufacturers. Therefore, insufficient growth in revenues affect all the companies concerned.

Not surprisingly, Nevada seems to have the best attitude towards gambling since it maintains the lowest hold percentage when compared to the other parts of the United States. Even so, slot machine revenues in the state reduced from $7.09 billion to $6.74 billion in a 10 year period. It is very clear that the gaming industry has to put a plan of action into place to bolster up sagging slot machine revenues.

Leave a Reply

Your email address will not be published. Required fields are marked *