The Association of Gaming Equipment Manufacturers announced that it is commissioning a study to examine whether the general decline in slot revenues throughout the U.S. can be attributed to operators increasing slot holds—“tightening” the machines.
AGEM’s study will attempt to validate its opinion that instead of earning more revenue, high slot holds do the opposite, and revenues are declining because of the erosion of the player experience.
AGEM announced the following “points to consider:”
• “One school of thought supports a lower Return To Player (RTP) (say 85 percent); another school of thought supports a higher RTP (say 93 percent). The difference is massive; a player staking $100 on an 85 percent game will statistically have about $23 of their stake remaining after 10 games, while a player on a 93 percent game will have about $48.”
• “Proponents of a lower RTP will argue that they seek efficient usage of assets by increasing the player churn rate.”
• “Proponents of a higher RTP will argue that they seek to elevate entertainment levels and therefore player interest and participation.”
• “The purpose of the proposed research inquiry is to review the impact on player response of lower and higher RTP in order to provide a reasonable RTP band as guidance for venue operators. The industry objective is to provide players with value for their entertainment dollar in order to encourage their ongoing patronage.”
• “AGEM proposes a study that matches slot revenues state-by-state with the published hold percentages in each of those markets using publicly available information dating back to the beginning of the riverboat era (matching state reports on hold percentages and revenue with individual casino operator revenue numbers). States that publish their hold percentages include New Jersey, Colorado, Connecticut, Illinois, Indiana, Louisiana, Mississippi, Missouri, Nevada, Ohio and Pennsylvania.”
• “AGEM also contemplates using the sales data base from several large slot manufacturers to show clearly that over the past 10 years in particular that operators are ordering tighter and tighter percentages when buying games and machines.”
• “AGEM understands there are many variables involved in slot revenues, including casino expansion/saturation, special events and marketing, overall economic considerations, local market conditions, free play and the popularity of specific game segments such as pennies, among many others.”
• “AGEM is seeking a comprehensive study of the issue and the ultimate publication of a colorful, graphic-intensive document that will be distributed to slot directors and casino operations decision-makers throughout the world.”
• “AGEM has an existing partnership with the Gaming Technologies Association (GTA) on this topic and the GTA shares AGEM’s concerns that the player experience is generally eroding worldwide. The GTA will assist in this effort and can provide certain data related to hold percentages impacting play in the Australian club market.”
??In an 18-page report, Brian McGill of Buckingham Research said that regional gaming business has been permanently hurt by the rise in slot holds over the last decade. ??Rising slot holds have reduced the time players spend at machines as they lose money faster, damaging the customer experience, McGill said.
??In 2004, a gambler could spend $100 and play for 3.2 hours on a 75-cent-per-spin bet, but higher holds have reduced that playing time to 2.6 hours with everything else being equal, he said.?? While casino operators are partially to blame, McGill also pointed to the proliferation of penny slots as a cause of higher holds.??
Higher slot holds have in turn affected suppliers, as casino operators reduce budgets to make up for the revenue declines, therefore hurting game sales, he said.
