Momentum building for coinless slot technology

David Strow

Wednesday, Oct. 18, 2000 | 11:15 a.m.

Rick Scheer likes to say there's a new baby taking its first steps in the gaming industry, about 10 miles west of the Las Vegas Strip.

The baby is "coinless" gaming, a slot machine technology that allows patrons to receive payment in tickets rather than coins. When the Suncoast opened last month, it became the first casino in Nevada where virtually every slot machine had coinless capability.

"We have a big baby called Suncoast walking around, and she's doing really well," said Scheer, vice president of slot operations at the Venetian resort on the Las Vegas Strip. On opening night, Scheer said he was amazed at the Suncoast -- with nearly every slot machine filled, not a single change attendant light was lit.

"They looked like veterans of 10 years," Scheer said.

Though the Suncoast is succeeding -- and Strip resorts, including the Venetian, are looking carefully at coinless technology -- it still isn't clear what form coinless technology will take along the Las Vegas Strip, or when it will arrive, Scheer said.

"If I don't make the change, will I lose my customers?" Scheer said. "What we don't know yet in Las Vegas is ... if I do change, will I lose my customers?"

Scheer, along with a panel of gaming industry executives, spoke Tuesday at the Slot Manager Institute, a one-day seminar preceding the World Gaming Congress & Expo.

At the Venetian, Scheer is looking at a coinless technology called "Electronic Funds Transfer." Where the Suncoast's slots use negotiable tickets as an alternative to coins, EFT would use a slot player's card as a payment method. Players would establish an electronic account at the casino, and the card would keep track of wins and losses on a slot machine.

A card-driven payment system, Scheer believes, would be better accepted by high-end slot players than tickets -- and could help drive up the number of players using players cards.

Though the technology is in place to run such a system at the Venetian, the system is still awaiting approval from the Nevada Gaming Control Board, Scheer said. But even once the system is approved, Scheer plans to ease into coinless technology with test machines, rather than rolling it out across the casino. That's because many questions remain unanswered about coinless technology, Scheer said.

Cost is an issue, but so is uncertainty about the direction of the technology. Though tickets are being rolled out at Las Vegas locals' casinos with success -- and tickets have proven quite convenient for customers -- Scheer wonders whether tickets will soon be replaced by smart cards. Though it saves money by cutting coin handling costs, Scheer wonders whether the coin should be considered a fundamental part of the gaming experience.

"Is it the customer driving this, or are manufacturers driving this?" Scheer said. "We will be one of the guys testing it, but we will wait to see where it's going."

Still, player experiences in other jurisdictions show that coinless technology probably has a future in the gaming industry.

At the Barona Casino near San Diego, more than 700 slot machines operate without coins. By year's end, that number will reach 2,000.

Eager to see if its customers would prefer coins, Barona officials took 60 of their best players to Las Vegas to play on machines that paid only with coins -- "real" slot machines, as they called them. Their response was unanimous.

"All these people who couldn't wait to play coin didn't like it," said Lee Skelley, assistant general manager of casino operations at Barona. "Not one person wanted to play with coin at Barona. It was zero for 60.

"We concluded the future of gaming was not down the path of coins."

Ray Heidel, a consultant working with JCM American, agreed that customers are ready for tickets, despite fears that coins are fundamental to the slot-playing experience.

"Players don't care as long as they get paid," Heidel said. "They want to be paid when they win, not when the casino gets around to it."

But electronic funds transfer -- or "smart cards" -- have also been a resounding success in other jurisdictions.

One example came at a new resort in Johannesburg, South Africa, operated by Sun International. At that casino, one-half of the machines operated with smart cards, using a system developed by GRIPS, an Austrian company. The other 50 percent of the machines accepted coins.

On the first day, 40 percent of the casino's slot revenues came from coin players, shocking casino officials. Why had they made such an investment in an expensive technology, they wondered, if players wouldn't use it?

Within a year, coin play fell to just 3 percent of casino revenues, said Ralf Mittermayr, director of marketing and sales for GRIPS. Now, Sun International is committing to use smart card technology at all of its South African properties, Mittermayr said.

One way the casino weaned players from coins was by offering features they couldn't get with coin machines. One of the more unusual features was "Auto Play," which allow players to simply insert a card in two or three machines. The machines then literally play themselves; all the player does is watch.

Though players like the feature because it allows them the ability to relax or to do other things, Mittermayr admits the casino likes it even more.

"With a 20-line machine, the money just gets sucked out of that smart card," Mittermayr said.

Still, a UNLV professor warned that player concerns still remain about different types of coinless technologies.

Researchers from UNLV met with 14 focus groups from different gaming jurisdictions around the world, ranging from Las Vegas and Iowa to Australia and Germany. Stowe Shoemaker, a professor at UNLV's College of Hotel Administration, said a number of issues emerged.

Players expressed concerns that technologies like "smart cards" would invade their privacy, providing casinos and government officials with details about their betting habits. Convenience was also a concern -- if players couldn't convert their winnings into cash, how could they buy a drink or tip a waitress? Another concern was player distrust of technology -- what happens, for example, if credits are simply wiped off a player card?

Shoemaker also said players were concerned about self-control. With payouts coming in the form of a ticket slip or credits on a card, players said they weren't sure they'd be able to keep themselves from gambling more than they should. Players also said coinless technologies lacked perceived value -- a printed ticket, they said, just didn't seem to have the same perceived value of cash, though the two are essentially identical.

Players also said they would miss the sound of coins dropping, which they associated with winning.

Given all these concerns, will coinless finally take hold in the gaming industry? Shoemaker believes it's inevitable, particularly as younger, technology-savvy players start playing slot machines.

"It's certainly coming," Shoemaker said. "But we're still a few years away from total market acceptance. It will be three to five years before people will abandon cash."