Gaming executives remain bullish on slot machines as an integral part of the casino floor, although properties need fewer of them these days.
Recent gaming numbers show slot revenue on the Strip flat to slightly up, even with casinos devoting less space to slot machines. In many casinos the total number of slot machines is down 20 percent from its peak, executives said. The height of slot play was 2007 and 2008 with the bottom of the market in 2010.
“For slots, I have a very positive outlook,” said Steve Sirianni, vice president of slot operations and marketing at MGM Grand Las Vegas, adding that he doesn’t expect there will be another big reduction in slot machines as some predict.
“I think it’s healthy, and it’s growing. We haven’t quite reached the 2007 numbers yet, but we’re seeing positive growth year-over-year, and it’s been consistent,” he said.
Sirianni was part of a panel discussion last week at a seminar at the University of Nevada, Las Vegas, focusing on slot machines, their future role in casinos, and how to lure millennials to gaming. The seminar was the first in an educational series this year as part of a partnership between UNLV’s William F. Harrah College of Hospitality and Casino Connection Intl., publishers of Global Gaming Business; and Applied Management Strategies. More than 40 people attended.
Some of the numbers highlighted was the decline in slot machines some 20 percent from their peak on Strip properties. MGM Grand fell 21 percent from 2,102 games to 1,650 games; Treasure Island was down 21 percent from 1,559 machines to 1,225 machines; Las Vegas Sands declined 20 percent from 2,388 devices to 1,906 devices; Aria was down 19 percent from 1,943 to 1,566; and Bellagio fell 18 percent from a peak of 2,238 to 1,834.
“For 30 years, (slots) were the cash cow of the casinos, and they had to put in as many as possible, and the more machines they put in the more profits they made,” said Frank Legato, editor of Global Gaming Business. “Something happened about 10 years ago. Even before the recession, fewer people were playing slot machines. The economy recovered but the slot revenue did not, and people are looking into how to bring new players into the casinos, particularly younger players who have shown they don’t like traditional slot machines.”
Sirianni said on the Las Vegas Strip “the utilization on the floor is less than 30 percent,” which means the games aren’t full of players. In regional markets, where there might not be much competition, “you might have incredible utilization at 80 percent.” In that case, a casino can have as many games as it wants, he said.
“When you do that, it ends up looking like a warehouse, and you have rows and rows of games, which is great for those properties and those sites,” Sirianni said. “Here in Vegas, we don’t need that. We are finding other opportunities that we want to make the areas more fun and interesting to explore. I think it’s very important to maintain a good game library and have a good selection of games. If you are going to cut games, you don’t want to eliminate a lot of popular games or themes your competitors offer because you still want to provide that to your guests.”
The Cosmopolitan of Las Vegas has among the fewest slot machines on its floor than many of its competitors because it’s smaller than other Strip properties. The resort had 1,478 games at its peak, a figure that has dropped 8 percent to 1,365 games, a smaller decline than other casinos.
“We are all operating with less machines on our floor right now and in my personal opinion, that has created a better gaming environment for us,” said Kevin Sweet, vice president of slot operations and marketing with The Cosmopolitan. “To all of the slot manufacturers in the room, it’s not as good for you guys filling less spaces on our floor, but we’re creating pockets where people feel comfortable. To me gaming is a social environment where I want to be around people, but I don’t want anybody next to me. And it’s fascinating. I will go sit next to somebody, and they will look at me with disgust thinking why are you sitting right next to me.”
Sweet said his crew recently did an analysis of games at the end of rows and those in the middle and learned those at the end performed on average between 15 percent and 40 percent better. They’re now installing games in circles and triangles and have seen “an incredible performance from that,” he added.
“We just don’t flat out need as many games,” Sweet said. “In today’s capital restrained world, we can’t make mistakes with our capital and having less games, but higher performing ones has proven to be successful.”
Melissa Price, senior vice president of gaming for Caesars Entertainment, said her company continues to aggressively focus on how it innovates and attracts younger customers. She said a study of those customers aged 21 to 39 show the group has as much propensity to gaming as older generations, she said.
“That was astounding,” Price said. “You hear all of the rhetoric that they don’t game, don’t have the money and are not going to game because they grew up differently. When you get down to the core segment and spend time and research all kinds of focus groups and surveys with the players, you find out that they have a propensity to game. The key for us is figuring out what that thing is. We’re experimenting with all kinds of things from esports to drone races to virtual reality. We are working to understand what they would like to do to game with us.”
The company’s customer base grew across the country for those aged 21 to 39, and Price said she was surprised that it grew 16 percent in slots and 10 percent in table games.
“I think that’s an interesting testament to new kinds of slots coming out,” Price said. “We’re dissecting that number a little further, but I think we will find it will be branded games and big curve arc games.”
Some 10 percent of retail game inventory is under trial looking for the next poker derivative family of games that changed table games eight to 10 years ago, Price said. There’s a focus on enhancing apps to enhance their casino experience and on skilled-based games of course, she said.
The most drastic and surprising change over the last 10 years is the spread of penny games, which are now 60 percent of the floor, Sirianni said.
“I will never forget the day that 50 percent of Diamond Seven Star handle pulls started happening on penny games outside of the high limit room,” Price said. “What is happening is they love and enjoy the experience so much more. We went from 20 percent of the floor to almost 70 percent of the floor from a 5-to-8-year period because players wanted that game.”
The next educational session is set for April 24th and will feature a discussion on non-gaming revenue and attractions.
