Nickel slots carry load in Nevada

Wednesday, Dec. 26, 2001 | 11:03 a.m.

CARSON CITY -- It's the nickel slot machine player, not the high rollers, who is producing for Nevada casinos through the tough times.

While the gross win from major table games and most slot machines fell in the past year, the revenue from the 5-cent "one-armed bandits" jumped 18.4 percent to $1.7 billion for the period ending Oct. 31.

Only at the casinos on the Las Vegas Strip and at South Lake Tahoe does a game such as 21 or baccarat generate more revenue than the nickel slot.

"It reflects the type of player," said Don McGhie, a former Las Vegas casino executive who now tracks the trends in the gaming industry. "Las Vegas has marketed to the kiddies crowd," referring to young parents and their children.

In addition, the recession is keeping away the high-end players, said McGhie who runs a consulting business in Reno.

Frank Streshley, senior research analyst for the state Gaming Control Board, said casinos are changing their mix of machines. "They are taking quarter and dollar machines off the floor and putting in the (multi-coin) nickel machines," he said.

Last year the number of 5-cent machines stood at 60,704. That has risen to 64,282 units as of Oct. 31. During the same period the number of 25-cent slots fell from 82,003 to 75,452 and the $1 machines dropped from 32,527 to 31,061.

The 25-cent slot still produces the most annual gross revenue computed before taxes and business expense -- $2.3 billion -- but that was a 7.1 percent drop from the prior year, while the nickel machines posted a double-digit increase.

While the nickel machine is gaining popularity, the high rollers are getting the most attention. The Nevada Resort Association, the organization of major Las Vegas casinos, was in Carson City last week pushing a regulation to open International Gaming Salons or private rooms.

They would allow those customers with a big line of credit to gamble in private, without rubbing elbows with the public.

McGhie said casinos don't make as much money on the slot machine player. The win percentage, or "hold," on the nickel slots was 7.2 percent in the last year, compared with 18.7 percent on baccarat or 12.8 percent on blackjack games.

But outside of Megabucks, it keeps the highest percentage for the house of any of the other slot machines.

On his regular visit to Las Vegas last week, McGhie said he noticed more 5- and 6-year-olds in resort areas.

"That depresses gambling," he said. "The parents won't stay up late and gamble," because they have to get up early with the children, he said.

The downturn in the national economy and the fear of flying also account for the slow performance on table games, he said. "I walked through the casinos during the day in midweek, and most of the table games were not open," he said. But he noted it was December, traditionally a slow month.

The emergence of the slot machine and the decline of the games aren't new to Nevada's gambling, he said. "The same thing happened in the early 1990s," when the Gulf War was under way, he said. "It happened in 1982-83 when there was a big recession."

Slot machines now account for 65 percent of the gross revenue produced in Nevada casinos. Nickel slots make up 18 percent of the total win.

The growth of the 5-cent machine has accelerated in the past three years, Streshley said. All of the new machines allow patrons to insert a $10 or $20 bill, then select the number of nickels for each play.

It allows play to go faster, because a player doesn't need to stop for change or to have the machine refilled. A customer can play 50 hands at a time betting up to five nickels on each hand, he said.

That also helps the casino, he said, since it requires less staff to give change on the floor. And it's easier for the casinos to count bills than coins.

Figures from the state show gross revenue from blackjack fell by 0.6 percent in the 12-month period ending Oct. 31; craps fell 8.4 percent; roulette declined 6.9 percent and baccarat was off 8.1 percent. The sports pool posted a 21.9 percent gain but produced only $122.3 million in revenue.

Gross win from dime slots fell 20 percent; the quarter machines produced 7.1 percent less revenue; the 50-cent machines were down 3.6 percent; the $1 machines declined 5.9 percent; and Megabucks revenues fell 7.1 percent.

Along the Las Vegas Strip, blackjack, baccarat and the 25-cent and the $1 slot machines each produced more revenue than the nickel slot. In downtown Las Vegas, the 5-cent slot accounts for 21 percent of the total gaming revenue. And on the Boulder Strip and North Las Vegas, it makes up one-third of the total gaming revenue in both locations.