In the evolution of gaming, systems and data management have become more and more sophisticated. In the beginning, slot systems could barely report coin-in. But even that allowed casinos for the first time to accurately calculate the win percentage on the machines. Prior to the electronic collection of coin, drop was the measure of volume. When the hopper, the device that collected coin during play, was full, the excess coins fell into a bucket. Those coins, called the drop, were then counted. The gross gaming revenue, the win, was compared against the drop. It was the only measure available; not much could be done with it. It was neither an accurate measure of play nor a way to test the integrity of slots.
That remained the case until casinos found a way to use computers to track machine activity. In the late 1970s, the slot machine manufacturer and distributor, Bally’s, developed a system called Bally’s Slot Data System (SDS). Now, slot machines could be tied to a central computer system and data collected. It was relatively expensive and casinos were slow to adopt the new technology. Eventually, Nevada wrote electronic data collection and coin-in reporting into regulations.
After most slot machines were connected to a central computer, a new set of concepts emerged. The systems companies, of which there were several by the mid-1980s, started to sell programs for analysis. They could be used to keep track of maintenance and game integrity and analyze performance. Prior to that time, slot salespeople said things like, “This is a hot one.” With coin-in information, slot machines could be sold on performance: “This game does very well in other casinos.” With the new information, casinos could manage their slot inventory by performance and poor performing slot machines were taken off the floor, to be replaced by a game that was already a proven success.
Following the performance analytics, the marketing guys came along. Selling systems to track players and slot clubs followed. Casinos could begin to understand their players and create appropriate reward systems. Harrah’s embraced the concept wholeheartedly. The heir to that legacy is Caesars. It has more than 65 million players in its database. The corporation markets to those customers according to their play and other characteristics. Harrah’s spent most of the 1990s and early 2000s buying properties and acquiring their databases. Other corporations were slower to combine the data from separate properties and even more so from separate jurisdictions. But today, most corporations recognize the value of a single customer database.
Another benefit from the combined databases is slowly emerging. It is possible to do better game-performance analysis with a larger dataset. Companies providing systems-analysis software can combine the data from multiple companies and if the client list is large enough, much deeper analysis is possible. The value of big data has become a cliché, but it also holds a truth. It is said that in just a few years, medical diagnosis will be made by computer systems with a worldwide database.
With hundreds of millions, if not billions, of patient histories to examine and analyze, diagnosing diseases will become faster, easier, and more accurate. The same case can be made for slot machines. Finding which slot machines perform best and under what circumstances can and will become more sophisticated as more data is accumulated and made available. Besides identifying the best games, the data can be used to design more popular games.
It will also allow for more in-depth player tracking, analysis, and marketing, including, according to a recent article, identifying and rooting out advantage players. An advantage player is one who understands the mathematics of a game and seeks to exploit opportunities — like a good poker player or the card counters of yore. Slot machines would seem to be opportunity poor, but not always.
As long as there have been video poker games, there have been advantage players. They play faster, make better decisions ,and have a higher win rate. And in some casinos, they get a lot extra in complimentary services. The opportunity in the article I read had to do with progressive slot machines, retitled as “persistence, variable state, and accumulation” games. Those are slot machines that take a portion of the wagers and put them toward a jackpot that grows as the game is played. The rate of growth of the jackpot is determined by the volume of play. It was devised as a way to create larger and more attractive jackpots.
The progressive concept has been expanded into many different types of games. Those games that do best are linked to more than one slot machine. The more slot machines linked together on a single jackpot, the faster the jackpot can grow. Think of Mega Millions or Powerball. Jackpots in any one state were limited, but when every state joined in, the jackpots could grow into the billions.
Back on the ranch, a linked-progressive jackpot with a limited number of machines becomes somewhat predictable. When the jackpot begins to approach the range value at which in hits, it is possible to guarantee not only winning, but doing so at a profit, never an easy proposition on a slot machine. That is if the player can control all the possible winning locations — that is, play every game on the link. Under those circumstances, the winners are rarely loyal players. The advantage player cashes out and moves on to another opportunity, leaving behind disappointed loyal players who had built up the jackpot.
With the new technologies, it is becoming possible to identify those players. But what is to be done? Understanding the mathematics of a game is not a crime. It is not possible or legal to control the outcome of a gambling game. Gaming regulation requires that games be open to the public, not just preferred customers. At least in Nevada, a casino is a public business and open to all. The only viable solution that I see is to make it more difficult for a player or group of players to control the games on a link by adding more games.
