Summary

In this episode, Nick & Don speak with Dan Schrementi, President of Gaming at Incredible Technologies (IT). Learn about IT's history as a pioneering arcade game supplier, its move into gaming, its design & commercial philosophies, its recent strategic rebuild, its product roadmap, and its "Teed Up" initiative. Also in this episode, how free play reductions impact visitation & spend.

Transcript

Nick Hogan:

Good morning, Don. How are things in your neck of the woods today?

Don Retzlaff:

Morning, Nick. Everything’s fine, drying off. We had the hurricane roll through St. Louis yesterday and dumped about three inches of rain on us, but other than that, it’s back to be 95 degrees here before we know it.

Nick Hogan:

Okay, so I take it the surf was pretty gnarly there in St. Louis?

Don Retzlaff:

Yeah, surf around the Mississippi is always fun.

Nick Hogan:

All right, well so today Don, I wanted do something a bit different. So, I wanted to combine just at the top here, a listener question with a news item. So, let’s go ahead and start with the listener question but before I read it, let me say that we love to tackle any questions anybody listening may have, if you have a question about what we’re presenting or something you’d like us to present, please drop us an email at reelcast@reelmetrics.com. Again, that’s R-E-E-L-C-A-S-T@reelmetrics.com. Our policy is to keep all questions anonymous, so please speak directly and don’t worry about us revealing your identity, that’s not something we do.

So, this question actually came in several months ago and it was from an operator in the American Northeast and it reads, “Hi, guys. I’m operating in a highly competitive market, which in my view has gone way overboard with free play. I’m curious if you’ve done any research related to how dialing back free play impacts player visitation and spend. Thanks, and keep up the great work.”

So first thanks to the listener for that question, much appreciated. Sorry it took us a while to get to it, but Don, I remembered that question earlier this week when I spotted a new study in UNLV’s Gaming Research and Review Journal, and for anybody who’s unfamiliar with the journal, you can find it online at digitalscholarship.unlv.edu/grrj for Gaming Research and Review Journal. So this study was just published and has the self-explanatory title, Measuring the Impact of Reduced Free Play Offers on Casino Loyalty Behavior. It’s published by Anthony Lucas at UNLV, a name we know, he’s done a lot of interesting studies, and Katherine Spilde from San Diego State University.

So they opened the study by quantifying the scale of the practice and they cite three markets on this front. In essence, how much free play is being issued these days? So, three stats. In 2021, Pennsylvania accepted 425 million of free play wagers, which represented 25% of total state slot win for the year. 2020, Resorts World New York reported 117 million in free play wagers, which represented roughly 18% of total annual slot win. And in 2020, a Vegas strip reported that free play was roughly 24% of its total annual rated slot wins. So that’s around a fifth to a quarter of the win, which I’d say sounds pretty standard. Don, would you concur on that one?

Don Retzlaff:

Yeah, usually we see between 15 and 25%.

Nick Hogan:

Okay. All right, great. So the experiment basically went like this, so they selected a tribal property in California and dove into the loyalty program. They selected 400 lower tier players who had standing free play awards of $15 per week. So I guess we’re talking about, that’s a pretty low ADT, but it gives you an idea, 15 per week. Okay, and so those 400 players were then broken into four groups. So group one stayed at $15 weekly free play, group two was demoted to $10, group three demoted to five and group four demoted to zero. So from there they monitored the visitation and spend of each group over a 180 day period.

Fast forward to the results, nothing happened. So regardless of the change to the free play levels, visitation and spend remained completely unaffected. So it didn’t surprise me in the slightest, and Don, I’m guessing you’re not overly surprised either by that. But as we both know and as the researchers themselves acknowledge in the study, it would’ve been more interesting to conduct this test in the loyalty program’s upper tiers, obviously where the bulk of the free play is rewarded. But realistically, of course, as we’ve talked in here many times about, nobody’s going to experiment on those players, they’re just too few of them and they’re way too valuable, so there was that.

But I suppose what’s really most interesting to me here, Don, is that in all the research and experiments that we conduct, free play is never a factor because it’s one of the first controls that we impose. We say no monkeying with free play levels while we’re testing or you’ll contaminate our data here, so, but what sticks with me here is how we visualize to our clients the impacts of these experiments when we finish. So invariably we have this, it’s a line graph that’s essentially flat for let’s say two to three years, pre-test. There’s some kind of marker showing where our experiment started and then blamo, there’s this hockey stick jump in going to a new plateau. So, let’s say we work on this stuff where we modified inventory so we just made these very modest, highly targeted inventory modifications and then we saw Theo win incrementing 30 to 150%. It was just kind of like, that’s the way that this went.

However, in those flat lines preceding our experiments, we know full well that they were monkeying with free play levels throughout those periods, and what do we see in those lines? Well, the occasional three or 4% blip, maybe something like that but to me this really tees up the question. It’s, what exactly are we trying to achieve with free play? Because when I see the impacts of our inventory mods and compare those to the impacts of the free play mods, I can’t help but feeling that what we’re doing here is just like