Acres decries lack of human contact in modern casinos
The UNLV Gaming & Hospitality Education Series officially kicked off on March 22 with two sessions—one featuring some of the top gaming executives in the business and the other featuring a legendary gaming technology innovator—examining what operators need to do to sustain the gaming floor as a new generation of customers arrives.
Produced by Global Gaming Business magazine along with Applied Management Strategies and the William F. Harrah College of Hospitality at the University of Nevada, Las Vegas, the education series is designed to provide detailed examination and discussion of the top issues facing the casino and hotel sides of the industry. The first episode, titled “Casino Games: Spanning Generations,” featured a panel including Melissa Price, senior vice president of Caesars Entertainment; Steve Sirianni, vice president of slot operations and marketing for MGM Grand Las Vegas; Kevin Sweet, vice president of slot operations and marketing for the Cosmopolitan of Las Vegas; and Charlie Lombardo, the longtime slot operations vice president of Caesars’ Las Vegas Strip properties and Seminole Gaming who is now an industry consultant.
The panel, moderated by GGB Editor Frank Legato, examined the progress of new operational experiments such as skill games, console-style video games and fresh approaches to the design of gaming floors.
The panel discussion was followed by a presentation by gaming legend John Acres, with Q&A conducted by GGB Publisher Roger Gros, in which Acres issued a warning to operators that technology that removes human contact with their customers threatens to render the casino industry obsolete.
Close to 50 attendees peppered speakers in both sessions—sponsored by Gaming Laboratories International—with questions in a display of audience participation that producers hope will be a common feature at all UNLV Gaming & Hospitality episodes, one that differentiates the series from most trade-show seminars and roundtable discussions. While audience questions at industry roundtables are typically reserved to the end of the session after moderator questioning of panelists is complete, attendees at the first UNLV sessions engaged in discussion with panelists throughout—the audience essentially driving the progress of the sessions.
The first session drilled down into how the gaming floor has changed over the past decade, reasons for the overall decline in slot revenues, and what operators will need to do to cater to the millennial generation. Panelists also gave a progress report on what they have done so far to usher in the next generation of gamers, including both the creation of new floor areas and experimentation with placement of the first games incorporating an element of skill.
Caesars properties were among the first to incorporate skill games from GameCo and Gamblit beginning in 2016, as well as skill-based and other non-traditional slot-floor offerings from IGT, Scientific Games and Konami. While the first skill-based games did not achieve success, Price told attendees that the incorporation of skill and variable-payback-percentage games is still very much a “work in progress.”
Price offered the U.S. spread of electronic table games as analogous to skill games, noting that it took five years from introduction for ETGs to really catch on. “I said patience, because we’re growing a customer base here,” she said. “We’re only a year and a half in, and we’ve only had a few to try. I’m disappointed with the media and headlines over skilled-based games being a failure, and how they were taken out and they’re bad. I just think that’s irresponsible. We’re trying to evolve, and we have to be more patient than that.”
Sirianni, who oversaw the creation of MGM Grand’s millennial-friendly Level Up lounge, agreed that the industry is in the very early stages of trying skill-based games. “We need the time and the volume of skilled-based games to see if it’s going to come to fruition,” he said. “It’s very early to stay if they’re going to be successful. I’m optimistic about it.
“There are a lot of games out there that work now. We need the time and the volume of skilled-based games to see if it’s going to come to fruition. It’s very early to say if they’re going to be successful. I’m optimistic about it.”
Sirianni added that the casinos are also still working at solving the puzzle of how to monetize skill games so they return at levels closer to traditional slot machines. He noted that while customers in Level Up have enjoyed the skill-based offerings such as Gamblit’s four-player competitive offering, “they’re not seeing it for that second trip. It’s not monetizing enough. The product still needs to be tweaked. There’s more evolution needed.”
The games themselves are only part of the equation, panelists said. The other element needed to bring new players to the casino floor is the casino environment itself, which is moving from the old slot-warehouse look to a more spacious area with room for more interesting spaces. For instance, Sirianni keeps Level Up stocked not only with skill-based gaming machines, but video games (including a giant Pac-Man), a pool table, bubble hockey and other activities around a central sports bar.
“I was in there a couple of weeks ago, and there were so many different people congesting in one space,” Sirianni said. “You had a group of guys playing NFL games on PlayStation and you had some older groups playing mini-bowling, a club crowd hanging out at the bar and some random people playing arcade games. That was cool and fun to see. That’s what we were going for, and we’re happy with the space.”
The Cosmopolitan’s Sweet has been tweaking his floor with new configurations since he took over slot operations and marketing in early 2015, and he has gotten great revenue results. One of those tweaks is the area in front of the casino surrounding the property’s sports book, which has been reworked to attract younger customers.
Sweet commented on the panel that he is not sold on the value of the millennial generation as gamblers, but he nevertheless sees the value of bringing them to his property.
“Our sports book is truly an innovative design—it’s how I interpret what we’re going to do for millennials,” Sweet said, adding that he is “bearish” on their potential as gamers. We removed 160 slot machines, because no matter what we put back there, we couldn’t get the games to work. We have a leased sports book; I put 23 bar-top video poker games in, and they do 80 percent of the revenue the 160 games had been doing, which is an incredible stat.
“Then, we have low-limit blackjack, ETGs, and we just put in the Fortune Cup horse-race game from Konami in there. We have free shuffleboard and pool tables. It’s really a place to hang out, and from my perspective, that’s not a bad thing, as we target the younger generation. That 25-35-year old probably has student loan debt, is probably underemployed, probably makes less money than their parents did at that stage of their career. It’s not really my target (gaming) demographic… but have a spot for them. We want them to think casinos are cool. They can go watch March Madness.”
He said one recent week included two of the busiest days in the casino’s history, thanks to a ballroom viewing party for the NCAA basketball playoffs, with between 1,000 and 2,000 customers in the sports book throughout.
“We have 40 million visitors to Las Vegas every year,” Sweet said. “We don’t need every one of them to play slots.”
One reason casinos have the space to evolve their casino floors is that most of them have fewer slot machines than they did five or 10 years ago.
“We are all operating with less machines on our floor right now, and in my personal opinion, that has created a better gaming environment for us,” said Sweet. “We’re creating pockets where people feel comfortable. To me, gaming is a social environment where I want to be around people, but I don’t want anybody next to me.”
Sweet said reconfiguring his main floor into circular and triangular banks, after a study by his staff showed end-cap games perform anywhere from 15 percent to 40 percent better than those in the middle of rows, and overall performance is up as a result. It’s one way casinos are doing more with fewer slot machines.
“We just don’t flat out need as many games,” Sweet said. “In today’s capital-constrained world, we can’t make mistakes with our capital, and having less games, but higher performing ones has proven to be successful.”
Sirianni and Price both agreed that casinos are making nearly as much with fewer machines. “The utilization on the floor (on the Strip) is less than 30 percent,” which means the games aren’t full of players, he said—compared to regional markets where utilization can be 80 percent or more.
“When you do that, it ends up looking like a warehouse, and you have rows and rows of games, which is great for those (regional) properties,” Sirianni said. “Here in Vegas, we don’t need that. We are finding other opportunities that we want to make the areas more fun and interesting to explore. I think it’s very important to maintain a good game library and have a good selection of games. If you are going to cut games, you don’t want to eliminate a lot of popular games or themes your competitors offer because you still want to provide that to your guests.”
All of that, said the panelists, means they are optimistic about the future of the slot floor—even as it pertains to the millennial generation. Price said Caesars did a study that showed the 21-to-39-year-old age group has as much propensity to gamble as older customers.
“That was astounding,” Price said. “You hear all of the rhetoric that they don’t game, don’t have the money and are not going to game because they grew up differently. When you get down to the core segment and spend time and research all kinds of focus groups and surveys with the players, you find out that they have a propensity to game. The key for us is figuring out what that thing is. We’re experimenting with all kinds of things from eSports to drone races to virtual reality. We are working to understand what they would like to do to game with us.”
“For slots, I have a very positive outlook,” said Sirianni. “I think (the market is) healthy, and it’s growing. We haven’t quite reached the 2007 numbers yet, but we’re seeing positive growth year-over-year, and it’s been consistent.”
One point of disagreement among panelists was the root of declining slot revenues. Lombardo, who witnessed the decline at the Seminole properties, said the recession was not entirely responsible for the drop in slot play, and attributed part of the reason to the rise in operator slot holds and the disappearance of comps for slot players.
Twenty years ago, said Lombardo, “If you were to drive down the Strip, almost every casino would have a sign that advertised 97 percent payback. When I was at Bally’s, our house hold was 95 percent, all in. I don’t know what it is (there) today, but I guarantee that if you put one of those 97 percent signs out there today, a lot of people would come running in your door.
“A 97 percent payback was not abnormal; it was normal.”
As far as payback goes, Price countered that the real reason holds went up was the rise of multi-line penny games, and the reason those multiplied was simple: Players demanded them.
“I will never forget the day that 50 percent of Diamond Seven Star handle pulls started happening on penny games outside of the high limit room,” Price said. “What is happening is they love and enjoy the experience so much more. We went from 20 percent of the floor to almost 70 percent of the floor in a five-to-eight-year period because players wanted that game.”
Price also commented that players, in general, do not notice a difference in house hold of a few percentage points—another point disputed by Lombardo. “We’ve taken too much of the base percentage and put it into the bonus,” he said. “We’re asking the player to risk more for less reward. If you tell me the player won’t notice the difference, in the short term that may be true, but in the longer term, it is not. They have less time on device, they earn fewer point, and get fewer comps.”
When it comes to comps, Lombardo lamented the replacement of hosts bearing giveaways with self-service rewards—namely, free play. “Nothing drives me more nuts, personally, than all the self service we do out there today,” Lombardo said. “There’s nothing better for a customer than to see an employee with a smile on their face, and there’s not a lot of them out there today… When I hear the business is down and we’re not making as much money as we used to, those are the things I think about. We don’t pay out, we don’t have the same number of employees.
“We found reasons to give comps, especially rooms or meals. We felt it didn’t cost us much, so give it away; give away as much as you wanted. And in today’s world, everything based off points, but it’s twice as hard to get a point and the point is worth half as much as it used to be. You take that into consideration, it’s really 25 percent of the value those points used to be.”
One reason this happened, Lombardo said, was the consolidation of the industry, and the resulting easing of competition. “Back then, we were all independent casinos. Now, for instance, MGM owns more than half the Strip, so they are their own competition.
“We had to find ways to be better than the guy next door. We had to do things that were different. So, from that aspect, the whole way we operated and performed, we found reasons to hire people, to give better service. Today, we seem to find reasons to get rid of people, and do more with self service. So, when I hear the slot business is going down, I say we find as many reasons to chase people away as we do to bring them in.”
Lombardo found agreement in this respect from the second session of the UNLV seminar, in which John Acres, CEO of Acres 4.0 and the man who invented player tracking systems, bonusing and more, blasted current operators for replacing human contact with self-service cash back, payment kiosks, automated drink service and other technology.
Acres went right at the practices of the executives on the first panel in the area of customer service. “Candidly, there’s no better example of how not to please a customer than how MGM and Caesars handle their slot departments,” Acres said. “It’s not that we’ve gone through a change; it’s that the rest of the world has changed and we have not.”
Acres compared casinos to businesses like Blockbuster Video in the 1990s, calling them “obsolete.” “There was a time this worked. But they got lost in the process by which they manage things.” Noting that Blockbuster decided to make their money from late fee for videos—annoying customers and hastening their exodus to Netflix—Acres said, “Late fees on a video cassette are like resort fees and parking fees are now in hotels—something you do for revenue, but is not necessarily pleasing to the customers… If you forget the customer, you’re doomed.”
Acres said casinos need to be “fanatical” about customers. “I don’t think casinos are being fanatical about customers if they say ‘I don’t know you, but if you put enough money in this machine, I’ll give you a coupon for a drink. I think that’s a lousy way to create a relationship. I think it’s doomed. It makes spreadsheet sense, but it doesn’t make emotional sense. And gambling is an emotional business. If we forget that, we’ll be just like Blockbuster.”
Acres said exorbitant fees will lead to customers abandoning casinos, particularly as online gaming grows—they can play casino games online with no fees. More importantly, he said, casinos have abandoned the main advantage they had over iGaming—personal service.
“Our surveys show that human contact—which has greatly diminished since we took the change person off the floor—is very important.” He pointed to Barona casino near San Diego, which has removed kiosks from the floor and employed staffed redemption booths and more hand pays. “They’ve put more people on the floor, creates more human contact, and they’re doing quite well,” he said. “Most people lose. What makes me go back? If it’s supported by a warm, embracing experience—someone asking about your welfare—it becomes a different kind of game.”
Acres plugged what he calls the “Hero’s Journey”—the creation of human interaction to make customers feel like heroes, even if they have lost money. Acres 4.0 developed a system in which hosts are alerted on their mobile device when good players come in, customers’ names, their favorite drink, etc. “We’ve become a business of equipment and processes and services instead of experiences. That’s how we’ve missed the boat.”
He said just greeting by name has increased revenue by 7 percent by itself where it’s been tested. “Human contact, human engagement—It starts with the casinos becoming fanatical about the players.”
The next episode of the UNLV Gaming & Hospitality Education Series, titled “Non-Gaming Revenue: The ROI Details,” will take place April 24. Moderator Stowe Shoemaker, dean of UNLV’s William F. Harrah College of Hospitality, will moderate a panel including Doni Taube, vice president of international marketing or Resorts World Las Vegas; Tom Soukup, senior vice president and chief systems officer for Konami Gaming; Elena Shampaner, vice president of strategic initiatives for Pinnacle Entertainment; and Oliver Lovatt, founder and managing director of Denstone Group.
The April 24 episode will kick off with a session featuring Bob Boughner, principal of Global Market Advisors and a board member for Boyd Gaming—and former president of the Borgata in Atlantic City—who will address the diverse elements of non-gaming attractions in the casino market.
To view the webcast of Episode I or to register for any of the five remaining 2018 episodes of the UNLV Gaming & Hospitality Education Series, visit UNLVGHES.com or contact Gros at rgros@ggbmagazine.com.
