Turning a toothpick-sized bankroll into a lumber yard of greenbacks is the dream of everyone with an itch to gamble on the turn of a card or some other foray with Dame Fortune. With the exception of states with legalized pari-mutuel wagering, placing a bet in days gone-by meant knowing the secret door knock or being friends with the neighborhood newsstand proprietor or cigar store owner.
Today, it’s a whole new card game, if you will – a gambler’s dream come true. Depending upon the state, there’s regional state-sanctioned casino gambling, tribal gambling, sports betting, and, for those who still care, horse racing. Heck, even the old-time numbers racket that flourished in city neighborhoods back in the day was hijacked by legal state-run lotteries with enough betting options to make a numbers player’s head spin.
For many Americans, the inclination to gamble in a riverboat or land-based casino is a short drive away from home, or as convenient as a cell phone, tablet, or laptop. As far as gambling has entered the mainstream American life, there exists yet another market in many states across the country that has flown under the radar to become a gambling option of considerable significance: The so called “convenience locations” with electronic gaming devices (EGDs) in the forms of video lottery terminals and video gaming terminals in non-casino establishments.
Sitting down to play a slot machine in the states which permit them is as easy as running to the convenience store for a hot cup of coffee, having a meal at your neighborhood restaurant, a cold one at your favorite watering hole, or fueling up your car or 18-wheeler at the gas station or truck stop.
According to the State of the States 2022 report, the American Gaming Association’s analysis of the commercial casino industry, EGDs in non-casino locations across six reporting states generated revenue of more than $4.34 billion in 2021, an increase of 39.1 percent over the previous year.
Illinois, which is home to one land-based and 10 riverboat commercial casino destinations, is far and away the leader among the states which offer convenience locations in both the number of sites and the number of EGDs installed in those locations. As of December 2021, the Land of Lincoln was home to 7,841 convenience locations state-wide, in which 41,826 machines were available for play. Compare that figure to the 8,603 machines located at the commercial casino properties.
The total revenue from Illinois’ convenience slot market in 2021 was more than $2.47 billion, an increase of 58.1 percent over 2020. The figure was more than two times the total revenue generated by commercial casinos.
The numbers tell the story that convenience locations occupy a dynamic presence in the gaming world, begging the question of just where this component fits into the scheme of the more high-profile commercial casino and sports betting industries.
Among the other reporting states, including Oregon, Louisiana, West Virginia, Montana, South Dakota, and New Mexico, none come close to the size and scope of the convenience location slot market that exists in Illinois. The greater Chicago area’s close proximity to the thriving Northwest Indiana gaming market, and the commercial casinos in East St. Louis which compete with the properties in eastern Missouri, places Illinois in an extremely competitive environment.
The Greater Chicago and Northwest Indiana commercial casino markets are combined under the category “Chicagoland” and rank third in the nation’s gaming industry in terms of revenue behind only the Las Vegas Strip and Atlantic City.
A distant second behind convenience destination kingpin Illinois comes Louisiana. The state’s more than 12,000 electronic gaming devices installed in bars, restaurants, truck stops, and off-track betting parlors produced revenue of $839.2 million in 2021, an increase of 50.9 percent over COVID-ravaged 2021.
The third strongest performer was Oregon, a state which has no commercial casinos but offers sports betting conducted through the Oregon State Lottery and at 10 tribal casinos.
The Oregon Lottery also operates EGDs at bars and other retail locations around the state. Wagering on EGDs based on the outcome of historical horse races is also permitted. In all, the state’s lottery division saw $860.3 million in revenue in fiscal year 2021, an increase of 7.9 percent over the previous year.
Returning to Illinois, in addition to electronic gaming devices as a component of established businesses in the state, there are also “storefront” locations opened specifically for the purpose of hosting what are known as “slot cafes”.
All of these businesses are limited to the six slot machine installations that the convenience locations must adhere to by state regulation. The only difference is that customers go to the slot cafes strictly to play slots and perhaps enjoy the beverage menu that is offered. Their “time on device” is considerably longer than at the convenience stops and many become regulars.
Given the impact that the convenience slot component has demonstrated in the states in which its presence is most felt by the commercial casino industry, just how does this “hybrid” demographic fit into the big picture?
It isn’t like the burgeoning sports betting industry in which participants are a customer base unto themselves. People who bet on sports are more likely to engage in the activity fairly exclusively with little crossover into the slot component of the gaming industry.
This columnist’s empirical observations of the Illinois market, which is perhaps an indication of the convenience component on a national scale, indicate that the gaming rooms located in established businesses attract the “hit or miss” gamers. Oh, they may want to try their hand at some slot machine entertainment, but it’s not the reason they’re there. Rather, it’s breakfast, lunch, or dinner at their favorite restaurant, having a beer or two with friends at the neighborhood bar, or stopping off for gas, snacks, or a pack of smokes.
Crowded restaurants and bars frequently have machines sitting vacant. The regular crowds know they’re there, but the novelty has worn off and customers would rather spend their money on the next round and save the gambling for a visit to a commercial casino.
Convenience EGDs are under tighter restrictions imposed by the state, including how bonus rounds play out and the max award that can be won for hitting a jackpot.
The strong commercial casino market encompassing Greater Chicago and Northwest Indiana offers the full dining and entertainment experience to the more sophisticated gaming audience which doesn’t take the convenience component as a serious option.
Is the convenience slot market a thorn in the side of the commercial establishments by siphoning off gambling dollars, or is it a wolf in sheep’s clothing by creating a new base of fans who will eventually make their way to the “big time”?
Perhaps a little bit of both, with the understanding of course that a gas station or restaurant area with six machines is never going to take the place of the full commercial casino experience for established casino-goers.
