Slot managers told to focus on win, not percentages

John Wilen

Tuesday, Dec. 22, 1998 | 11:46 a.m.

Casino and slot managers should forget about slot hold percentages and focus on slot win.

That's the advice Jeff Payne, slot operations director at the New Frontier hotel-casino, gave a recent Casino Management Association seminar.

"You can't build a place based on hold percentage," said Payne. "You can start there, but it's going to change."

For example, the new penny slot machines may not hold a high percentage of their coin-in. But because they're popular they generate high win -- about $100 per day, said Payne. As long as win is good, managers shouldn't care about hold percentages, Payne said.

"Win is what's going to drive everything," said Payne.

Coin-in is the amount wagered in a machine over a period of time, and win is the amount of that coin-in the machine keeps after paying out jackpots. The hold or win percentage is used to show how successful a game is.

Payne argues that while win percentage is important, the actual dollar amount won is more important. Even if a machine's win percentage is low, that machine should be kept on the casino floor if it is bringing in good money.

Payne turned to his own experience for examples. The New Frontier, a Strip resort, generated about $2.6 million in slot win in 1997 on coin-in of $62.3 million, said Payne. That's a hold percentage of 4.17.

In the same period the Fiesta hotel-casino, where Payne used to be slot director, generated about $4 million in slot win on coin-in of $142 million -- a 2.82 percent hold.

The New Frontier may hold more of its coin-in, but the Fiesta's looser hold percentages actually attracted more players, resulting in higher win.

Payne returned to this point several times in a two-hour presentation that included an overview of the history of slot machines, and advice on various ways to increase slot win. Payne said he was drawing on his experience working in 15 casinos over the past 30 years.

Slots have undergone a long journey from curiosity to dominant revenue generator, Payne said. In the early days, slot machines were not taken seriously. Slot managers paid little attention to machine placement, and in many cases the slot manager position was filled by a friend of the casino owner who knew little about gaming.

As late as the early 1970s, slot machines mostly accepted low-denomination coins and slot tracking and analysis was virtually unheard of.

According to Payne, putting banks of similar machines together was an innovation in those days. And the linking of machines via computer networks made today's machine-by-machine analysis possible.

"Computers have really helped us," said Payne. "You don't have to read (reports) with today's systems. They just show you what you need to know."

Computers also led to progressive jackpots. Progressive systems pool coin-in from several machines, allowing much larger jackpots. This innovation dramatically increased the popularity of slots, said Payne.

"People started to believe you could win money in a casino," said Payne.

The advent of $1 slots was also an innovation, said Payne. In the old days, slot managers didn't believe anyone would wager as much as a dollar on a single pull of a slot handle. When they realized dollar machines make money faster than lower denomination machines, they started adding more to their slot mix.

"You make money faster with dollars," said Payne.

Indeed, according to state Gaming Control Board figures, dollar slot machines were second only to quarter machines in win in the 12-month period from Oct. 1, 1997, to Sept. 30, 1998. Dollar machines generated $1.4 billion in win, compared to $2.4 billion for quarter machines. The next closest denomination, nickle slots, generated $761 million in win.

Video poker was also viewed with suspicion when introduced in the 1970s. At first, casinos had separate video poker rooms. But, again, once the casinos realized how much money they could make from video poker, they moved the machines onto the main floor.

Ultimately, it was the realization that slots could generate as much or more win than table games that led to their wide acceptance, said Payne.

According to Gaming Control Board figures, slot machine win in the period from Oct. 1, 1997 to Sept. 30, 1998 was $5.2 billion. Over the same period, win from table and other casino games was only $2.7 billion.

Today, most Strip machines make about $100 a day, while machines in locals joints make $100 to $150 per day, said Payne.

In the course of the slot industry's dramatic growth, it got past a number of "bugaboos" that at the time experts predicted would turn people off on slots, said Payne. These included the phasing-out of the importance of the machine handle and the addition of bill validators.

Payne predicts the industry will eventually go cash-less, despite the ongoing debate over whether people will play slots if they can't hear coins dropping into a hopper.

In response to a question about how to decide where to place different types of machines on a casino floor, Payne said it's almost easier to randomly place them than to attempt any grand plan. The only rules of thumb he suggested were to place dollar and quarter machines in high traffic areas, and to place tall machines against walls.

A casino can't really tell whether its slot placement plan will work until it tries it out, Payne said. That's where computer analysis should be used to determine which machines to move, which to trash, and which to buy.

The most important thing to remember is not to end up without a machine that's drawing people into your competitors' establishments, said Payne.

"You're forced into your mix," said Payne. "It's not necessarily what you want to do. It's what the guy across the street's doing."

Any machine that, upon analysis, is bringing in less win than the house average should be scrapped, said Payne.

Payne also emphasized service, and said he thinks slot managers could vastly increase their coin-in if all the money currently spent on marketing was instead spent hiring more change people and cocktail waitresses.

"Service is the key to this business," said Payne.