Nevada regulators changing method of tracking slot win

David Strow

Friday, May 18, 2001 | 11:12 a.m.

Nevada gaming regulators are in the process of changing the way the state's casinos must track their slot winnings, a top official with the state Gaming Control Board said Thursday.

Gregory Gale, chief of the board's audit division, said his division has been working on drafting the new slot regulations for about seven months. Public hearings and a vote of both the board and Nevada Gaming Commission are required before the drafts could become official regulations. Gale spoke at the National Gaming Conference, held by the Nevada Society of Certified Public Accountants Thursday and today at the Aladdin.

For as long as slots have been regulated in Nevada, the board has determined slot machine gross revenue by a slot machine's "hold" percentage -- that is, what percentage of bets a slot machine will win over a long period of time. Revenue is determined by multiplying the machine's coin-in by the hold percentage, and the casino must pay 6.25 percent of this revenue to the control board as a gaming tax.

This method was used by control board auditors to detect theft and cheating. If a machine's hold percentage dipped suddenly, it served as an alert to agents that someone could be skimming from the machine.

But that method is quickly becoming a very unreliable method for determining slot machine win or catching skimmers, Gale said.

New video slots, Gale noted, may have a library of as many as six slot games a player can play, each with a different hold percentage. And hold varies on a game based on the size of the player's bets, as larger bets usually reduce the game's hold. And a player's skill at games like video poker can drastically alter hold as well.

Since two-thirds of gaming win now comes from slots, "it's a very major issue that slot machines are (properly) controlled and audited," Gale said. "It's getting more and more difficult to validate that the slot win figure is accurate."

Rather than hold percentage, Gale said the new regulation will focus on using automatic meters to verify gaming win. Electronic meters will be required to verify a slew of slot machine figures, such as coin-in, payouts, bills in, hand-paid jackpots and credits put on a machine by electronic fund transfers. These meters will need to be read each day.

"These meters will be able to prove to all of us that there's no skimming, that all revenues are being registered properly," Gale said.

Larger casinos will be required to connect these meters to a central computer system, which will save employees the trouble of opening up each machine each day to check meters. Most large casinos have such systems already, Gale said.

But Gale said the new regulation will also save time in other areas. For example, casinos must now remove coin buckets from slot machines and weigh them individually to assure that the bucket contains the amount of cash indicated by the meters. With automatic meters tracking all of a slot machine's functions, casinos will simply have to verify that coins from all of its slots match the amount indicated by the central metering system.

"This isn't going to be a Nevada-only idea," Gale said. "(Other states) are waiting to see what we implement in Nevada ... and it will probably be emulated around the country."