Penny slots continue to post big profits

Jun 9, 2009 5:06 PM
by David Stratton |

Revenue from penny slot machines in Nevada climbed to $160 million in April, a 5.5 percent increase from April 2008.

The increase was a rarity in the state’s casinos; none of the table games posted an increase over last year, and the only other slot to post an increase was $100 slots, whose revenues climbed 40 percent to $3.3 million.

Moreover, penny slots are raking in a larger share of the slot revenue pie. The $160 million represented 27 percent of all slot revenue statewide, while penny slots accounted for only 22 percent a year ago.

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Of course, most players realize the term "penny slots" is a misnomer; the machines are like dollar slots with all the multiple pay lines, even though they’re played in units of one cent.

While the numbers might be a bright spot for casino operators, they also might be construed as a sore spot for players.

The reason? The casino hold on penny slots is more than double the rest of the slots in the state, and it’s climbing.

The casino edge on true dollar slots hovers around 5 percent in the state, meaning casinos return about 95 percent of all money wagered on the games to the players.

The same figure for penny games ranges from 10.5 percent to 12 percent, depending on where you are playing in Nevada, which means players as a whole receive far less return while the casinos generate far greater profits.

Recent polls indicate that penny games, on average, extract the greatest percentage of slot players’ collective bankrolls among all the slot denominations. And its grip on those bankrolls is getting tighter.

And the trend is expected to continue. Recent gaming industry trade shows, where manufacturers display their newest products, have been a showcase of technology at its best – mostly for the deployment of penny denomination slot machines.

Expect to see plenty of them at this year’s Global Gaming Exp (G2E) in November.

Question? Comment? E-mail me at: David Stratton