Nevada casinos find that profits from penny slots really add up

By Liz Benston (contact)

Friday, March 7, 2008 | 2 a.m.

High rollers are helping the Strip weather the economic downturn but lower rollers might just be keeping Nevada’s entire economy afloat.

And these folks don’t wager millions at baccarat. Their game is “penny” slots — devices with countless “paylines” that allow wagers of as little as a penny per spin, although most players bet on more than one payline and more than one coin per line. Not a bad option for people on a limited budget, although penny machines generally pay back a lower percentage than higher-denomination machines.

Penny slots have caught on in locals casinos and have replaced many of the older 25-cent and dollar machines. They’re now taking over the Strip and raking in record revenue.

With 2,481 fewer slots in December than a year ago (in part because of the closure of the Stardust and New Frontier casinos), Strip casinos still offered 1,205 more penny slots at year-end. And they offered 985 additional multidenominational slots, which can typically be played for dollars, quarters or pennies.

Statewide in 2006, penny slots represented 16 percent of all slot revenue; a year later, the share had grown to 19 percent.

Penny slots on the Strip won $498.6 million from gamblers in 2007, 29 percent more than a year earlier and a greater percentage increase than for any other kind of slot or table game. Multidenominational slots won $1.3 billion, a 6 percent increase.

Statewide, penny slots won $1.6 billion, a 25 percent increase from 2006, while multidenominational slot revenue increased by 4 percent to $3.6 billion. That topped baccarat’s monster win of $908 million and even good ol’ blackjack, which won $1.4 billion last year.

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The Jan. 25 fire at the Monte Carlo hotel cost MGM Mirage about $90 million, most of that covered by insurance.

By other accounts, the incident had a successful outcome, involving an orderly, floor-by-floor evacuation of a 3,002-room hotel.

Gamblers took their chips off the table and were able to cash them at the company’s nearby properties. Hosts were on hand to identify players with higher-value chips so they could cash them. Slot customers received tickets that they were able to cash in elsewhere or redeem by mailing them to an address listed on each ticket.

Although the hotel’s warning system of e-mails and voice mails to thousands of company employees worked as expected, MGM Mirage is considering adopting new technology that would speed up the notification process and inform even more employees.

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With investors approaching Florida’s wealthy Seminole tribe with casino proposals, you can bet they’re also trying to talk to the Mashantucket Pequot Tribe in Connecticut.

The owners of the massive Foxwoods casino resort complex were on the list of tribes floated as investors in a proposed CityCenter-like development at the southeast corner of Interstate 15 and Windmill Lane.

The Connecticut tribe has a business partnership with MGM Mirage that will open an MGM Grand resort next to Foxwoods in May and has entered a joint proposal to build a resort in Kansas. But the tribe isn’t discussing any developments in Las Vegas, spokesman Arthur Henick said.

The Pequots, like many other established gaming tribes, have rejected the idea of creating “reservations” outside of their historical tribal territory for the purpose of building more lucrative, tax-free casinos in densely populated urban areas.

A new Interior Department policy in January essentially killed that possibility by requiring that land for development be located within a “commutable” distance from the tribe’s historical reservation, tribal law expert Heidi Staudemaier said.

The policy makes it “very difficult, if not close to impossible” for a non-Nevada tribe to establish a reservation in the state, she said.