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For slots, it’s a Brave New World

Aug 21, 2007 7:28 AM

(Editor’s Note: This is the first in a two-part report on server-based gaming. This week we look at how the system works and what it means to the casino and the player. Next week, we’ll examine the products that will soon be available, their pricing and where the technology is headed.)

Slot machines have come a long way since Charles Fey introduced his cast-iron Liberty Bell slot in 1887.

From a mechanical device that dispensed candy and cigars to electronic marvels that pay out astronomical cash awards, slots have evolved from novelty toys to sophisticated, high-tech revenue centers.

But the most dramatic era of slot machines’ evolution will probably occur over the next six to 12 months, when manufacturers begin to roll out server-based slot systems in casinos around the world.

While the gaming manufacturing industry is generally optimistic about their acceptance, server-based slots are still an enigma to some casino insiders, who are taking a wait-and-see approach.

"The big question mark is whether our customers will want to play on a new system like this," said the slot manager of a downtown casino. "There will probably be a pretty steep learning curve, and perhaps reluctance from many customers at first."

Casinos don’t need a system that will deter players. There are already signs that slot play in Nevada casinos has flattened over the past five years.

For instance, for the fiscal year ended June 30, the total amount played into Nevada slot machines was $138.6 billion, a mere 1.3 percent more than the $136.7 billion gambled the previous fiscal year.

By contrast, the amount wagered at the tables increased a whopping 22.8 percent over the same period.

One factor that might be slowing slot play is the casinos’ hold percentage, which reached an all-time high of 6.02 percent for fiscal 2007. That’s 11 percent higher than the hold percentage five years ago.

The ultimate effect of server-based slots is unknown, but at the upcoming G2E gaming conference in November, IGT and other manufacturers will be able to provide a clearer look at what the casinos in the near future will look like.

At this point, manufacturers like IGT and analysts such as Goldman Sachs emphasize that server-based slots are not simply a computerized inventory of dozens of games that can be quickly downloaded onto a generic slot machine.

Instead, they say the technology is a revolutionary way to offer package deals to players, multi-level games that can be accessed from different locations and times, casino-wide slot tournaments to better use "down" time, and changing games’ denomination and make-up to match varying demand and demographics.

"The real life benefits to the casinos and end consumers of this slot technology will be increasingly visible," says Steven Kent in a Goldman Sachs report on server-based slots. "It should become clearer over the next six to 12 months that central server slots could make it possible to change the way casinos interact with their customers and the way customers entertain themselves at casinos."

Kent adds that the first server-based systems from IGT has begun to appear in Station casinos throughout Las Vegas, and that at least one of the seven major casinos currently being developed on the Las Vegas Strip will "open with a server-based slot floor."

What will this Brave New World of slots look like?

Because every machine will be linked to a central computer system, the casino’s slot floor will become a networked environment in which the casino can offer and player can access a variety of games, packages, and other features of the system.

Communal games

One of the first applications of a server system is the expansion of "peer-to-peer" games. Currently, games such as Wheel of Fortune Super Spin and Monopoly Big Event allow players at a fixed carousel of slots to participate in the bonusing when one machine hits the award.

Through a server system, the entire slot floor could participate in such peer-to-peer games.

In the same manner, the entire slot floor can participate in casino-wide slot tournaments, which are ordinarily held on a fixed bank of machines.

Guaranteed play

The first application of "guaranteed play" has begun to appear in Station casinos throughout Las Vegas (see accompanying story in Slots Today section). In its simplest form, guaranteed play will allow a customer to purchase a fixed number of slot spins or video poker hands, assuring customers a certain amount of play time without the risk of exhausting their bankroll.

The guaranteed play can be packaged with other offerings, such as a meal, show or other amenity.

Reconfiguring the slot floor

The slot manager can easily reconfigure the games on the slot floor based on the demand, demographics or special occasions.

For instance, the denominations or games available can be changed, depending on whether it’s a busy weekend or a slow weekday.

Customer recognition

With a server system, a slot customer could be "recognized" when he inserts his player card, thus allowing the system to activate his favorite game of choice, or offer special bonuses, comps or other incentives.

Customer convenience

Perhaps the greatest benefit of server slots to the player is convenience. No longer will they have to shift from machine to machine in order to play a different game.

Instead, they can just download the game they want into their existing machine.

The process would not only save time looking for a specific game, it would also eliminate wandering the casino floor, searching for a specific machine.

Next week, we’ll take a closer look at server systems, how they work, who makes them and what they will cost.