Las Vegans warming up to coinless slot systems

Tuesday, June 18, 2002 | 11:21 a.m.

Las Vegas residents who have tried new "cashless" slot machines generally like them, indicating that acceptance of such devices may be happening sooner than expected, a survey by a Wall Street investment firm revealed Monday.

In a survey by Goldman, Sachs & Co. of 300 local residents who gamble at least four times per year, 60 percent of respondents said they had played cashless machines. Of the 60 percent, 59 percent said they preferred the machines to traditional, coin-only slots.

"This high degree of customer acceptance suggests that cashless gaming will be the norm in the next few years," Goldman Sachs gaming analyst Steve Kent said.

"With the average age of machines at six to seven years old, the casinos really need to turn over the floor. And cashless will force them to do it."

The latest type of coinless machines were first tested in Las Vegas at the Fiesta casino about two and a half years ago. Less than three years earlier, the MGM Grand rolled out the machines, then pulled them off the floor when customers didn't take to the technology.

Still, cashless machines -- generally called "ticket" machines because they can accept cash yet dispense credits with tickets -- only represent about 50,000 of the 560,000 slot machines in use domestically, said industry leader IGT.

Over the past couple of years, several casinos have begun testing and offering the machines and new locations, such as Station Casinos' Green Valley Ranch Station Casino and the Maloof family's Palms casino have embraced them. Last year, Park Place Entertainment Corp. became the first major casino operator to enter into a long-term contract to offer ticket machines from IGT across its properties.

The Greenspun family, owner of the Las Vegas Sun, is an investor in the Green Valley Ranch and Palms properties.

The results are important indicators of future demand because Las Vegas is the only market where almost every major casino has installed cashless gambling devices, Goldman Sachs analyst David Small said. Las Vegas residents also are considered "early adopters" who are among the first nationwide to try and critique new casino technology, he said.

Current game sales estimates for equipment makers International Game Technology and Alliance Gaming Corp., both of Las Vegas, could be off by 10 to 20 percent if cashless games accelerate faster than expected, Kent said.

IGT may reap bigger rewards than its competitor, the survey found. When asked which machines they preferred, nine of the top 10 games cited by customers were made by IGT -- results in line with a separate Goldman, Sachs survey of casino slot managers.

Las Vegas residents gamble more often than locals in other gaming markets, they stay close to home and are loyal -- three factors that make locals "ideal customers" for IGT, Alliance and Station Casinos Inc. -- the dominant operator of locals casinos in Las Vegas, the survey concluded.

"In Vegas, going to one of these mini-entertainment sites, with movie theaters, restaurants and a casino, is the leisure activity of choice," Kent said.

Local customers are profitable not only because they gamble frequently but because they like to play video poker and slot machines, which yield the most profit and most stable cash flow for casinos, he added.

Among other findings:

Station Casinos and IGT are on Goldman Sachs' recommended list. The firm initiated coverage of Alliance in October 2001 with a "market outperform" recommendation.