A recent news story reported that slot machines aren't very popular with younger gamblers and you've previously mentioned the introduction of machines more like video games to attract the millennial crowd. How are these machines working out? What is the outlook for casinos if slot machines, the bedrock of gambling income, sit idle in future years?
[Editor’s Note: This answer, the first part of a three-part series, is provided by Andrew Uyal. Regular QoD readers are hopefully familiar by now with Andy, who’s been contributing from the casino’s point of view; he’s an ex-dealer and current pit boss who’s also a full-fledged Millennial, being 30 years old (the oldest Millennials are 31). Here’s what he has to say about skill-based slots.
Skill-based gaming is an exciting topic in the casino business these days. The first of such machines debuted in Las Vegas in late March this year, on the Strip at Planet Hollywood.
First off, despite all the buzz on this topic lately, skill-based machine gaming is hardly a new idea. A friend of mine is a games inventor and has been in on skill-based games for a long time. He works in a jurisdiction that has strict laws on what types of machines can be offered by casinos—no mechanical reels or "games of chance." So what did they do?
Instead of reels, the screens displayed closed barn doors that opened on a random graphic, producing an end result that looked much like video slots of today, without the reel effect. The twist was, the player pushed the "Skill Stop" button to open the barn doors on command. Using this technicality, the machine was no longer a game of chance, but skill-based.
Similarly, you can find slots with bonuses that require you to tap the screen in a certain way or certain area—another primitive implication of skill. This concept has come a long way, evolving into what we see today as skill-based games.
Slot companies such as Konami and Scientific Games are now producing their takes on classic games like Frogger, Space Invaders, and even Battleship. Gamblit is rolling out multi-player games with takes on poker and blackjack, like the ones now on the floor at Planet Hollywood.
How do these games differ from traditional slot machines?
Traditional slot machines have a blanket payout rate that must remain the same, no matter who sits down to play. This has a lot to do with the denominations being played, traditionally. For example, penny slots may have a payback rate of 90%, while the rate for five dollar slots could be 98%. Now, thanks to a bill passed in mid-2015, Senate Bill 9, slot companies have the right to change payback rates based on different variables, namely skill. They’re allowed to do this as long as the payback rate is disclosed to you. Payback rates may also be affected by things like your birthday. Maybe a game that typically pays out 90% may recognize your birthday (from your players card) and give you 98% payback for the day.
How do these machines work? Take the classics like I mentioned before. A large portion of skill-based games is still in the format of a regular slot. You still spin the reels, but when it comes time to play the bonus round, you'll have an option to go for a luck-based bonus (like virtually every bonus on the floor today) or a skill-based bonus. Your skill in these bonus rounds determines your payback rate.
Gamblit’s skill-based games are a little different. Gamblit poker, for example, pits players against one another. How does the house make money in a pokeresque game? Say two players play $5 against each other. The pot for such a hand may only be $7.50, with a $2.50 rake to the casino/game maker. It may sound unfair, but it's just a new format of lower than 100% payback rates. They have to take it right off the top for this style of play. These games do offer jackpots for big hands and such, so the allure is still there.
The large investment in skill-based games comes from research into the theory that Millennials, including myself, don’t play traditional slots. And what better way to capture the video-game generation than to get them to play “video games” for real money? If you're wondering why these companies are trying to capture Millennials with kids’ games like Frogger and Space Invaders, you're not alone. I wonder the same thing. However, games do exist that are based on Guitar Hero, Angry Birds, and many others that might intrigue young gamblers.
That said, I wish I could better answer the question about how these machines are doing. They aren't live in very many places yet, so the sample size is just too small to tell. However, preliminary research into the games at Planet Hollywood show that the majority of players that play the Gamblit games aren’t Millennials at all. Instead, they’re regular slot players who see something new on the floor. It's too early to know whether that’s due to lack of advertising, being lost on the casino floor among the thousands of other machines, or any number of variables. But the implication is that Millennials who do play are hit-and-run players, playing $20 and moving on. Which is exactly the problem they're trying to solve.
To answer your question about slots sitting idle in the future, we’re a long way from that problem, as slots still dominate the revenue source for most casinos. But in the meantime, casinos and slot machine companies are certainly scrambling with utmost urgency — to be ready to cater to this next generation of gambler.
Tune in tomorrow for a deeper look at how skill-based slots are faring.
