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July 25, 2014

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GAMING:

As slots get tighter, so do some retirees

Locals casinos say they’re bucking statewide trend; many customers disagree

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Sam Morris

During a mah-jongg game at the Anthem community center in Henderson set up for the Sun, from left, Barbara Becker, Joyce Servello, Sharon Kalvert and Dottie Randesi have a laugh. The women say they’re opting for games such as mah-jongg more often because of slot machines that seem to pay out less than before.

Gamblers playing penny slots pay a price

Nevada’s slot machines are tighter than in past years, according to state figures.

Gaming Control Board numbers show that many properties have replaced dollar and quarter machines with penny slots, which generally return a smaller percentage of wagers.

Payback percentages define how much a slot machine returns to players over a long period of time. A machine with a 93 percent payback, for example, is designed to pay back 93 percent of every dollar wagered. The percentage is a theoretical figure realized over millions of wins and losses and generally doesn’t reflect the experience of individual players, whose results are largely random.

In order to change a machine’s payback, a casino must switch out a computer chip in each device — a process that can take several hours for an entire casino floor.

A casino that tightens a machine must use a payback percentage previously approved by the Gaming Control Board for that particular game.

In Nevada, payback percentages are generally much higher than the minimum payback threshold of 75 percent required by law.

Nevada’s tracking of slot machine paybacks includes video poker machines as well as regular slot machines.

On a weekday afternoon, the Anthem community center in Henderson is filled with the sounds of retirement: laughter and gossip circulate as mah-jongg tiles clack, cards snap and pool balls click.

There are no TVs blaring news of the turmoil on Wall Street or the foreclosure crisis. Those troubles seem distant. And in fact, thanks to pensions, investments and Social Security benefits, for many of the valley’s middle- and upper-class retirees, life isn’t much different from before the downturn.

Unfortunately for the casino industry, some retirees — a sweet spot for locals casinos, which depend on their discretionary dollars — say they’re spending less of their disposable income on slots because their money doesn’t seem to go as far as it once did. Casinos, they say, have tightened their machines to boost the bottom line.

Casino executives have explained the precipitous decline in Nevada’s slot revenue in recent months as a reflection of the economy. If people’s homes and investments are worth less and they are spending more for gas and other staples, they have less for gambling.

Unnoticed, or at least unmentioned, are people such as Barbara Becker. Between plays of mah-jongg at the Anthem center, she explained she drops only a few dollars in the slot machines each week — a lot less than in years past. She’s spending more on shopping and movies.

“It’s not as much fun anymore,” Becker said of the slots. “Your $20, or more than that, only lasts 15 minutes. There’s very little give and take — it’s all take.”

Nevada slots are indeed tighter than they were a few years ago, according to the Gaming Control Board. Over the past eight years, the data show a gradual increase in casinos’ slot hold, or a lowering of the percentage of wagers returned to players. The board publishes percentages for slots by region, though casino-specific data are confidential.

Much of this can be explained by the fact that casinos have replaced many of their traditional dollar and quarter machines with new “penny” machines. Penny machines, which can cost as much to play as higher-denomination slots, allow players to wager as little as a penny per spin and offer more paylines, or chances to win. The trade-off is they pay back a lower percentage of wagers, on average, than higher-denomination machines.

Officials of several locals casinos say they haven’t tightened their machines to shore up shaky profits. In general, casinos have reported a drop-off in play from casual gamblers more than regulars, who make up most of their customer base. Casual gamblers are customers who come to a casino mainly to see a movie or eat at a restaurant rather than gamble, Boyd Gaming spokesman Rob Stillwell said.

Anthony Curtis, publisher of the Las Vegas Advisor newsletter, said he is hearing more complaints from players about tighter machines.

Casinos “are in a tough spot right now” because it’s difficult to assure players that they haven’t tightened games, Curtis said. “The word of mouth is going to be painful for them.”

Neither Curtis nor local casino consultant Jeffrey Compton has seen any evidence that casinos have fitted their existing slots with new computer chips to tighten them, though they acknowledged that’s a growing perception among players.

Tightening machines “takes hours of work and more hours of paperwork,” Compton said. “It’s a serious strategy that isn’t done on a whim.”

It would be poor timing for any casino to tighten slot machines during a downturn, when customers are already watching their budgets and especially sensitive to corporate profit-boosting measures, he added.

What these retirees want more than anything is more time with their favorite slot machine rather than a quick kiss and go.

“They can have all the money we walk in with,” Las Vegas resident Bob Coch said. “We just want to spend some time in the casino.”

“It’s kind of a slap in the face,” he said. “I can remember when my money lasted longer. Each year you get less and less for it ... We can go out and have a meal that lasts longer than the money” spent on slots.

Some gaming executives and experts say customers are likely imagining that casinos have tightened their machines. Players are more aware of — and bothered by — their losses when times are bad, they say.

Players have raised concerns about slot tightening that turned out to be unfounded, yet were triggered by certain events that raised suspicion, such as an expensive upgrade at a casino, Compton said.

The tightening theory makes some sense during this downturn. Raising prices for things such as rooms, buffets and steak dinners is difficult for locals casinos, where consumers expect deals and watch prices. The “price” of a slot machine, however, is hidden from the public. Why not lower the payback percentage, a theoretical number that has little effect on an individual’s short-term return yet can improve the casino’s profit over millions of spins?

Experts say, however, that lowering payback percentages is foolhardy because it can backfire.

“A customer will forgive you if you tighten up on comps during a slowdown,” Compton said. Not so with tighter machines.

“During waking hours, some of your customers are spending more time at the slots than with their husbands,” he said. “This is something that people pick up on.”

Michael Gaughan, who owns South Point, said it makes more sense to loosen machines during a downturn. He said he’s done that to certain machines at his casino.

“If it takes an hour more to lose your money, it might cost me two or three extra drinks, but it’s worth it,” he said. “People will have more fun.”

Some players say Gaughan is benefiting from the belief — whether perception or reality — that his casino’s payback percentages are higher than those of some of the other big locals casinos.

“It’s not by accident that you go down to the South Point and you can’t find a seat,” said Las Vegas resident John Darcy, a retired banker who says his money has been relatively insulated from the downturn. “I don’t mind losing. But don’t abuse me along the way.”

Still, Gaughan said the casino may look busy, but customers are spending less overall.

While many locals casinos are looking like ghost towns during the daytime, when seniors generally gamble, the Anthem senior center is crowded.

At the mah-jongg table, Sharon Kalvert said she and her husband will go to dinner and a movie at a casino and leave without glancing at a slot machine.

“That’s more than you’d win at the casino,” quipped Kalvert, eyeing her pile of quarters.

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