Analysts and critics were urged to be patient before they dismiss skilled-based games as a failure and a desperate attempt to break through to millennials, gaming executives told an educational conference on slot machines.
Caesars Entertainment introduced skilled-based games at properties in Atlantic City in late 2016 and removed them about six months later after they didn’t generate enough revenue to pay vendor fees. The company introduced skilled-based games at Planet Hollywood on the Strip in 2017.
Melissa Price, senior vice president of gaming for Caesars Entertainment, said the skilled-based games are a work in progress. The company has no plans to ditch the experiment because customers aged 21 to 39 are drawn to the games three times higher than they are to traditional slot machines.
Price said it took five years to cultivate electronic table games, and she recalled how an executive questioned why they were on the floor when only generating $80 a day. She appeared on a panel session last week on the future of the casino flooring during at a gaming educational series at UNLV.
“I said patience because we’re growing a customer base here,” Price said. “We’re only a year-and-a-half in, and we’ve only had a few to try. I’m disappointed with the media and headlines over skilled-based games ‘being a failure and how they were taken out and they’re bad.’ I just think that’s irresponsible. We’re trying to evolve, and we have to be more patient than that.”
Steve Sirianni, vice president of slot operations and marketing at MGM Grand Las Vegas, echoed Price’s sentiments about the overreaction to skilled-based games. There are hundreds of thousands of regular slot machines. The majority, he said, aren’t successful because the modeling doesn’t work, or people aren’t interested in them.
“There are a lot of games out there that work now,” Sirianni said. “We need the time and the volume of skilled-based games to see if it’s going to come to fruition. It’s very early to stay if they’re going to be successful. I’m optimistic about it.”
It’s important the games have a mix of both skill and chance, and some games have been too challenging, Price said. A positive is that players have a long engagement with the games of 10 to 15 minutes, but the downside is they’re not repeating their visits during their trip. It’s at a 5 percent clip compared to 15 percent to 25 percent for popular slots.
“They enjoyed it and are having a good experience, but they’re not seeing it for that second trip,” Price said. “It’s not monetizing enough. The product still needs to be tweaked. There’s more evolution needed.”
Price said feedback from customers on any games that feature vs. player aren’t resonating, which has been a surprise to manufacturers and others who thought players would be competitive. They don’t want to take money from their friend, spouse and or even the person they don’t know, which is more of a mindset of poker players, she said.
Initially, Price said the expectation was the skilled-based games would be placed into bars or off the casino floor, but those players want it on the main casino floor where all the action is.
“It doesn’t mean they are in the sea of slots,” Price said. “They can be segregated and have their own space, but not put off somewhere different from the casino floor.”
Price said it takes “a mass of skilled based games in one spot to make a difference,” and they haven’t built up that level yet. She said she had expected by the middle of 2017 to have enough games to fill 30 to 40 seats and marketing it, but today they have 12 to 18 seats. There’s not enough games that are “successful, ready or approved,” which has been challenging, Price said. She said the company has been marketing interactive games by passing out fliers on the Strip.
“You have to have enough of a mass product there to make it feel like a destination, but I will stay bullish on this until someone throws me out of the building,” Price joked.
Sirianni said there’s a lot of chatter about millennials and whether they gamble less than previous generations at that age and doesn’t buy it. He said this generation has less to spend, but there’s an opportunity to “capture more of that wallet.” While they grew up with video games, it doesn’t have to be that format or be a complex guy to get them to gamble, he said.
“A lot of people will still be entertained by traditional games, but unique games are being created to develop a new market,” Sirianni said. “I think this is a new segment of business. I don’t think it’s an issue right now we’re losing customers or will lose customers in the future. If you have the time and can prioritize to focus on this group, I think it’s worthwhile. If you have a lot of work to do in your high limit room, then maybe you should focus on that first.”
Sirianni said while older millennials are fine with traditional gaming, the group wants an “approachable environment and social engagement,” and staff that relates to them more.
“They wanted to go to a space with a group of friends with different interests and could break apart and be in close proximity and all be in the same fun environment,” Sirianni said.
That was the thought process for creating the LEVEL UP adult arcade with skill-based gaming at MGM Grand. It opened in September in the former Rain Forest Café between the Hakkasan Nightclub and sports book.
“This was an experiment that we were not sure how successful it would be,” Sirianni said. “It wasn’t replacing a cash cow, but we wanted to make sure it had good exposure in the Rain Forest Café space. It wasn’t a huge cost to convert that space.”
It gets good foot traffic from the Strip and attracts the younger demographic that goes to the nightclub, Sirianni said. It wasn’t focused exclusively on millennials, but casino operator wanted to provide an interactive gaming experience for any age even though it skews younger.
In addition to skilled-based games, there’s virtual reality, mini bowling and a bar. It hosts esports tournaments every weekend.
“I was in there a couple of weeks ago and there were so many different people congesting in one space,” Sirianni said. “You had a group of guys playing NFL games on Play Station and you had some older groups playing mini bowling, a club crowd hanging out at the bar and some random people playing arcade games. That was cool and fun to see. That’s what we were going for, and we’re happy with the space.”
MGM Grand also placed skilled-based games on the casino floor, but there is more incremental play on them at LEVEL UP, Sirianni said. The skilled-based games in the casino are getting players flowing over from other games, he said.
“It’s important to create a unique environment to capture this totally different customer,” Sirianni said.
MGM even partnered with the nightclub to manage the space and get staff who relate more to the customers at LEVEL UP than ones who service the casino floor, Sirianni said.
Sirianni said he agreed with Price that there needs to be more product out there. It’s not going to be one mass model that’s the answer but many mass models as there is with traditional slots, he said.
“We just need more time, and we’re anxious to get more games on the floor,” Sirianni said. “I don’t think long term skilled-based games will be the majority on your slot floor, but they will be a meaningful segment just like video poker and electronic table games. But I don’t envision it to being the answer to designing your new casino floor and dedicating the majority of your space for that.”
Sirianni said people get frustrated that it takes a while for skilled-based games to be released, especially when there’s technology available in the open market. He said it’s good that the industry is highly regulated to protect casinos, customers and the reputation of gaming.
“If there are fault and bugs, people won’t trust us, and it could damage our industry,” Sirianni said.
