Slot managers ‘apathetic’ over new games

Nov 8, 2005 3:17 AM

Most of the nation’s casino operators are "apathetic" right now about buying new slot machines, although they would like to see more local progressives as opposed to wide-area progressive slots like Megabucks and Wheel of Fortune.

Moreover, those same operators, while generally optimistic about the advent of downloadable slots or server-based gaming, are "skeptical" about system costs, actual benefits and how manufacturers’ systems will coordinate with other slots.

Those are the sentiments of a consensus of slot managers who oversee 75 U.S. casinos, according to a new report released by The Goldman Sachs Group.

"Although there were a few positive comments concerning particular products, generally these decision makers were very apathetic to buying large numbers of machines and felt the rollout of downloadable slots is far off and manufacturers should be more coordinated," Steve Kent, an analyst with Goldman Sachs and author of the survey.

Downloadable slots, unlike traditional slot machines, use generic "terminals" that look like slot cabinets, but contain no game computers, EPROM chips or random number generators (RNGs).

Instead, slot games are downloaded into the terminals from a central server system. The technology allows the casino operator to choose from a library of hundreds of games, as well as a multitude of denominations and payback percentages.

Some systems even allow the operator to pre-schedule what games he wants on the slot floor, depending on the time and day of the week, and what the player demographics are at various times during the week.

Nevada is currently evaluating a set of regulations that would govern server-based gaming, and manufacturers have submitted their systems for review.

Several downloadable systems were unveiled at the recent Global Gaming Expo (G2E), and some companies are hawking their wares to casino operators.

Kent said many of those operators "do not seem overly pleased" with the way slot manufacturers are developing the technology individually, rather than collectively, which could delay its commercialization as well as increase its costs.

"The operators seem very skeptical," Kent said. "They acknowledge the technology makes sense from a theoretical standpoint — it lowers costs on changing games, makes the floor more efficient, etc. — but from a practical standpoint they are still not convinced if it’s going to work."

Kent added that slot managers are still in the dark about how much change would be required in their operating systems to accommodate downloadable slots, and they still don’t know what the pricing will be like.

On the issue of adding new slot games, most operators said they were content with their existing systems and would most likely buy new games only to replace out-of-date ones.

Coming out of G2E, operators had positive responses to most of the new video slot games, including those produced by WMS and Aristocrat, specifically.

Also receiving high marks were the 5-reel mechanical slot games from IGT, and games that trended away from licensed games like "Elvira" and "Austin Powers," because of the higher leasing or participation costs for games that are branded or require licensing fees.

The desire for more local progressives — banks of games that are linked within the casino — reflects a peaking in the desire for wide-area progressives — games that are linked to multi-casinos statewide.

Wide area progressive slots, such as Megabucks and Wheel of Fortune, appear to have reach a peak as they occupy about 6 percent of casino floor space.

The decision to devote space to progressives is based on the perception that people like to play them: about 55 percent of slot managers said these slots are more popular than non-progressives, as opposed to 48 percent who felt that way last year.

One of the reasons for the recent desire to include more local progressives is the lower cost than wide-area progressives, as well as additional ways for the player to win jackpots.

"Generally, the cost to the casino operator for a local progressive is only 20% to 30% of the net win compared to the 30% to 40% cost of the wide-area progressive," Kent said.

Kent added that some of the popular local progressives that received high marks at G2E included Aristocrat’s Millioniser, WMS’s Jackpot Party and IGT’s Fort Knox.

Overall, Kent said, operators were satisfied with the new games, especially the high-tech video slots with their elaborate themes, bonus rounds, multiple pay lines and attractive graphics.

"They liked the technology that is getting so good that the video slots are beginning to look and play more like video games, with better graphics, more entertainment and communal games," Kent said.