Slot slowdown

Jun 5, 2007 4:35 AM

NEVADA GAMING WIN

1997-2006

(% of total)

Year

Tables

Slots

1st Q2007

34.1%

64.5%

1st Q2006

33.1%

65.5%

2006

32.9%

65.8%

2005

32.1%

66.6%

2004

31.8%

67.2%

2003

32%

67.3%

2002

32.9%

66.4%

2001

33.9%

65.5%

2000

34.8%

64.4%

1999

35.2%

64.1%

1998

34%

65.3%

1997

36.5%

62.7%

For the past three decades, slot machines have carried the load in Nevada casinos, out-winning table game revenue by a nearly 2-1 margin.

But lately, slots seem to be losing their appeal as table games progressively take bigger bites of the gaming pie.

Over the past two years, table games have increased their share of Nevada gaming win from 31.8% to 32.9% of the total, while slots’ portion has slipped from 67.2% to 65.8%.

That trend has continued into 2007, as the first quarter revenue for table games was 34.1 percent of the total, and slots’ share was down to 64.5%.

"Table games have become more popular, partly because of the influx of younger players into the casino," says Joe Awada, owner of Gaming Entertainment Inc., a Las Vegas-based firm that manufactures table games and poker tables. "These new players seek interaction with other players, plus they feel they have more of a fighting chance to win against a live opponent than they do against a cold computer chip."

Awada added that the rising popularity of poker has fueled more interest in table games.

"Many poker players find they’re not suited to the relatively slow pace of the game, which sometimes go for long stretches before a player participates in a hand," Awada said. "Table games offer a lot more action in a shorter period of time."

The increasing popularity of table games doesn’t mean players have stopped playing slots. Over the past four years, the amount players poured into slot machines increased an average of 4.7% per year. But during that same time span, the amount tables handled increased an average of 11.8% a year.

Nonetheless, an impromptu survey among players in several Las Vegas casinos reveals that many players are simply waiting for something new and exciting to hit the casino floor.

"When the Monopoly series of slots came out, I played them every day," says Darlene Lowe, who splits her time between the Gold Coast and Orleans. "But there hasn’t been anything new in a while, and I don’t really like all those new penny machines. They have a lot of sound effects and bonus screens, but even if you win it isn’t much."

Penny games have indeed had a significant effect on gaming revenue. Most of the newest games are penny and 2¡ denomination games, and they are the ones with all the new "bells and whistles."

Unfortunately, they are also the games that pay the least to players.

According to Nevada revenue reports, penny machines in the first quarter of 2007 returned only 90.1 percent of money bet to players, the lowest of any machine except for Megabucks, which returned only 88% of all money bet.

By contrast dollar slots collectively returned an average of 94.5% to players and quarter slots returned 93.7%.

Casino operators agree that their slot inventory, while not stale by any standard, is in a kind of "holding pattern" while waiting for the next big craze, such as the Monopoly or Cleopatra series of slots.

"A good percentage of our machines are ready to be phased out in favor of something new," said the slot supervisor of a Strip casino. "These machines cost to much to simply turn the inventory over frivolously."

Slot machine manufacturers acknowledge that the next big revolution in slots — downloadable slots or server-based gaming — is still about two years away.

In the meantime, they’re betting on upgrades and new systems to keep players’ interest piqued.

For instance, IGT is planning to parlay the popularity of its "community" slot machine, Wheel of Fortune’s Super Spin with a new release this fall.

Super Spin seats players around a giant Wheel of Fortune, and they often collectively participate on a neighboring player’s spin.

IGT’s upcoming "Indiana Jones" game will also feature bonus rounds in which other players can interact and compete.

The slot giant is also cranking out electronic versions of table games, such as blackjack, roulette and baccarat.

Bally Technologies has also tapped into high technology for innovations on its slots. The Reno-based manufacturer recently unveiled "wide body" slots with 20-inch and 26-inch high-definition screens that create much sharper graphics and sound effects.

More important, Bally has used the wider screens to add up to two more reels, thus creating a 7-reel slot machine, as well as add more bonus features and touch-screen controls.

Bally sales reps at last month’s Gaming Technology Conference said the 7-reel slot will appeal to players who like the increased combinations made available and, hopefully, the increased number of jackpots.

But perhaps IGT’s chief executive T.J. Matthews said it best in his keynote speech. "This is a strange universe where people interact with a single computer. People want to interact with each other."