Video slots taking over casino floors

Gary Thompson

Tuesday, Sept. 14, 1999 | 11:31 a.m.

Video slot machines offering multiple pay lines, bonus features and "cashless" payouts are crashing through traditional age, economic and social barriers to take over America's casino floors.

Players ranging in age from the 20s to the 70s are deserting three-reel mechanical slots and flocking to video machines, drawn by simplicity of play, high-definition graphics, stereo-quality sound effects and, most important of all, the sheer "fun factor" of playing, slot executives said Monday.

The move to video slots is proceeding at warp speed, slot makers and casino slot managers agreed, with nickel games -- long scorned by casino operators -- leading the way.

"A nickel game isn't a nickel game when you're betting 90 coins at a time," John Giobbi, director of game design at WMS Gaming, told several hundred casino and manufacturing executives at a Slot Managers' Institute Monday. The day-long session preceded the World Gaming Congress & Expo that runs through Thursday.

Giobbi and several other panelists discussing the future of video slots noted the explosive growth of the games has forced casino operators to rethink some long-held beliefs about their customers.

"I was originally worried about video's appeal among older and less technology-oriented customers, but we're seeing 60- and 70-year-olds and 25-year-olds playing the same games," Frank Neborsky, vice president of slot operations for the Mohegan Sun casino in Connecticut, said.

"We have video reel slots that have been embraced by our older bingo clients, who also like the ticket printer so they don't have to wait for a fill," Brenda Boudreaux, vice president of slot operations for Palace Station, said. Ticket printers issue certificates redeemable for cash so players can avoid the inconvenience of waiting for coins to drop from a machine if they have a big payout.

Stuart Bull, marketing director for Aristocrat Inc., said the original video games appeared in Australia 15 years ago and didn't begin gaining acceptance in the United States until two to three years ago.

"Australian players typically visit gaming venues two to three times a week, whereas for a long time America had just a few gaming resort destinations such as Las Vegas and Atlantic City, where players visited once or twice a year for three days or so," Bull said. "They didn't want to read a manual to learn how to play the 'Aussie-style' games."

Such games feature multiple pay lines and allow players to bet up to 225 coins per spin. They offer a much higher hit frequency, providing entertainment value to players. But they whittle away at a player's bankroll as efficiently as more traditional slots.

As gaming expanded into new jurisdictions domestically, Bull said, "players became more accustomed to slot machines and demanded more entertainment value."

Giobbi said the best new video games are the ones that provide value to the player. And that value can take the form of entertainment, time on machine or even social interaction among players at a bank of similar games.

"It comes down to the fun factor and the entertainment factor," Kathleen McLaughlin, director of slot operations for Harrah's Entertainment, said.

McLaughlin said that in just the past two years, Harrah's has seen increases of 7 percent to 44 percent in video game representation on its casino floors in different parts of the country.

Video slots allowing bets of nine coins or more now comprise 36 to 40 percent of the games in Harrah's Midwestern casinos, she said. The numbers range from 15 percent to 35 percent in Atlantic City to 25 percent in the South, 22 percent in Northern Nevada and 23 percent to 38 percent in Southern Nevada.

Boudreaux and Neborsky said that such video slots will make up 65 percent to 75 percent of the games in American casinos within five years. Penny and nickel games will play a big role in that transformation, in large part because of the economics involved.

"It's a radical shift to think about a dollar player who is now playing nickels, but that player may still be leaving $400 a day in the casino," McLaughlin said.

"Nickel machines in multiline configurations return as much as traditional $1 machines," said Bull.

Boudreaux said higher-denomination video doesn't work as well, especially in locals' markets, where players demand more time on a machine and a higher hit frequency.

In another panel discussion, Charles Anderer, publisher of International Gaming & Wagering Business magazine, said new video slots account for 18 percent of all machines in Nevada's casinos and the number is growing rapidly.

Traditional three-reel slots still make up a fast-fading 60 percent of the market, while video poker games represent an also-declining 16 percent and revenue-participation games another 6 percent, he said.

There's still debate among slot makers and casino operators over whether the new games are generating new customers or "simply moving money from one slot to another," Randy Adams, marketing director for Anchor Gaming, acknowledged.

"We haven't seen any evidence that the new games are increasing slot revenues overall," Bruce Rowe, vice president of slot research and development for Harrah's, said.

Slot makers are eager to provide such evidence by developing games that appeal to people who haven't played slots before.

"Our job as game developers is to create as much revenue per square foot of casino space as we can by drawing new players," Adams said.

"It's all about software, but the games don't last as long, so you'll have a constant turnover of games," he said.

"Software really is what the industry will be about," Gregg Solomon, senior vice president of operations for Mandalay Resort Group, said. "But we need standard architecture that will play that software so it's less painful for operators to change games."

That "standard architecture" -- in the form of a common communications protocol among all slot manufacturers -- should drive down prices, speed the delivery of new games to the market and help leverage operators' investment in technology that supports their customers, Solomon said.

Bob McMonigle, executive vice president of International Game Technology, said a protocol that will allow machines developed by different slot makers to communicate with each other will be critical as the industry moves toward "cashless" transactions in which players receive tickets for their credits.

Ultimately, Solomon said, all slots will be "browsers" similar to personal computers hooked up to the Internet, allowing players to pick from a wide menu of games and choose the denomination of coins they want to wager.

"Our job," said Charlie Lombardo, senior vice president of slot operations for Bally's and Paris Las Vegas, "is to provide the maximum entertainment value to our customers and bring as much as we can to the bottom line."