Oneidas building cashless slot machines, out to alter gambling habits

William Kates

Monday, Aug. 14, 2000 | 9:31 a.m.

VERNON, N.Y. - The Oneida Indian Nation wants to change the way people gamble.

In an aging, one-time lawnmower plant, the Oneidas are building a new advanced cashless gaming system that allows patrons to make dinner reservations, go shopping or set a golf tee-off time even as they play for the big jackpot. It also can give casino operators a profile of their customers and a way to better tailor their business.

"What we are trying to do is bring the entire resort to the person in the most convenient way," said Frank Riolo, president of the Oneida's new enterprise, Standing Stone Gaming.

"In the process, we get to know our customers," said Riolo, who also serves as chief operating officer of the Oneida's hugely successful Turning Stone casino-resort hotel-convention center complex, which has more than 3 million visitors annually.

"You need to know your customers, why your customers came to you and what you need to do to bring them back," he said.

The Oneidas envision their gambling machines one day replacing the traditional coin-operated machines that fill mainstream casinos in Las Vegas and Atlantic City, America's gambling meccas.

At a minimum, the Oneidas outlaw conventional slot machines.

The machines look like a video game terminal and record credits and debits like an ATM, offering dozens of games, including keno, lotto and draw poker. Instead of pumping quarters into slots, customers are issued identification cards to access the machines and gamble. Unlike other slot machines, which each operate independently, the Oneidas machines are all hooked to a central computer that controls the results and collects the data.

The Oneidas have already struck a deal to furnish 45 machines for the Swinowash Indians' casino in Washington state. More orders could come from Washington's Lummi Indians, who have reached a tentative pact with the Oneidas to serve as consultants for their 35,000-square-foot casino.

Representatives from three other Washington tribes, a California tribe and two Las Vegas slot machine manufacturers have visited Turning Stone to assess the Oneida II system, Riolo said.

According to the National Indian Gaming Association, there are 198 tribal governments running 326 gaming operations in 24 states - all potential customers, as Riolo sees it. In California alone, which recently approved the cashless video games, Native Americans operate more than three dozen gaming operations.

"Nickel in the slot" type machines first appeared in the mid-1800s and awarded cigars and free drinks. The first coin-operated counter-wheel machine was patented in 1892 by Gustave Schultz of San Francisco.

Since then, the basic machine has gone through many innovations until it reached its contemporary form where each machine is operated by an internal computer. The last big advancement in slot technology was the bill acceptor first introduced in the early 1980s, a concept borrowed from the vending industry.

When it was first suggested, critics suggested it would never catch on because most slot players are low-level coin gamblers and would never put $20 in a machine at one time, Riolo said.

The success of the bill acceptor is why the slot machine has become the most popular casino game, accounting for as much as 50 percent to 80 percent of a casino's business.

Although the Oneidas believe the proliferation of ATM machines has conditioned people to readily use a card, there has been resistance to the idea of cashless slot machines, said an industry analyst.

"It's when the player decides it will catch on," said Stuart Linde, who follows the gaming industry for Lehman Brothers. "If you put two machines side by side, they like to hear the coins. They like to feel it. They like to have control over it."

Certainly, the industry would like to see the change, added Linde.

"Going cashless really reduces costs. Handling money is expensive," he said. "You have to pay people to come in and fill the hoppers. Sometimes, that takes as much as 45 minutes - time that machine isn't making any money."

The Oneidas are the first Native American tribe to build their own cashless gaming machines, according to the National Indian Gaming Association. Several of the industry's top companies - Aristocrat, Bally, International Games Technology and Universal - sell comparable systems.

Riolo, however, believes the Oneida system will flourish because it can be used with any brand of game terminal. Other manufacturers sell software that supports only their own terminals, he said.

The Oneidas invented their cashless video gambling machines out of necessity in the mid-1990s while negotiating a gaming compact with New York state, which has outlawed the traditional coin-operated slots. Under New York law, a slot machine is defined as a machine that takes something of value (coins or tokens) and returns something of value (coin, tokens or receipts).

The first machines were a collaboration between the Oneidas, computer manufacturer Stratus Computer, software company S2 Systems and game terminal manufacturer U.S. Games, now Leisure Time.

The Oneidas started with 350 of their original video machines on the floor at Turning Stone. Today, the casino has nearly 1,200. The Oneidas will place 50 of the new machines in the casino next month.

The tribe also plans to market its system to golf resorts and horse tracks.