Skill-Based Slots Part 2: How are these machines doing so far?
Gambling machines that look like video games are called “skill-based slots,” and the jury’s still out on those.
For one thing, their sheer newness means that little hard data is available. They were first installed in Caesars, Harrah’s, and Bally’s, all in Atlantic City last November, closely followed by the Tropicana Atlantic City. They made their Vegas debut at Planet Hollywood and were recently rolled out in the Level Up room at MGM Grand.
Also, at present there are only two relatively small firms in the skill-based-slots (SBS) arena: GameCo and Gamblit. The big boys, like Scientific Games, will enter the arena eventually, but they’re taking their time.
There are some problems with the first games that have been rolled out. Mainly, they’re more like table games than slots. Dr. David G. Schwartz of UNLV’s Institute for Gaming Research went to Planet Hollywood to try the new games and found no one else on them, meaning he couldn’t play. (You can’t play solo.) Similarly, VitalVegas.com’s Scott Roeben discovered that you can’t swipe your players club card on the machine and accrue points. Slot players of any age are unlikely to be pleased with that.
“A smaller annoyance, but one that’s undeniable,” Roeben added, “is the surfaces require constant cleaning. Nobody wants to touch a screen that has hand smudges all over it, so attendants have to continually spritz and wipe the screens.”
Also, curiously, although SBS machines are targeted at Millennials, who shun standard slots, Roeben spoke with a Gamblit representative who told him that the majority of play was coming from established slot players.
At this point, most of the measurement of SBS’ progress is anecdotal. Observers in Atlantic City have seen the games garnering relatively little action. But Gamblit CEO Eric Meyerhofer told the Nevada Gaming Control Board that he saw younger people playing, crowd enthusiasm, and in some cases, 90 minutes’ worth of time on machine (the average, according to Meyerhofer, is 45 minutes). But even he agrees that it’s too early in the game (SBS is basically in the top of the first inning) to make any sweeping pronouncements.
Word among industry insiders is that we’re three to six months away from the first real wave of SBS machines, at which point there will be considerably more data to crunch.
The challenge, says casino consultant Dennis Conrad, is “finding the unique measurement for these new games. Gaming executives, especially slot executives, are prone to compare them against existing slot products that they might be replacing, but that’s a tough comparison. Skill-based games will probably never earn at the rate of traditional slots, as they take longer to play (especially for a skillful player). The skill-based companies are trying to gather the appropriate analytics to make their case to the industry.
“That’s why, in my opinion, skill-based games should be evaluated as a new revenue stream on their own, with the understanding that it’s (hopefully) new business instead of displaced business from slots. I believe that skill-based companies should be making the case that they’re adding revenue to dead casino areas, rather than taking from valuable slot floor space. That’s the challenge in getting trials for these games, and it may take awhile for industry executives to understand a new model like this and the new potential it creates, especially with Millennials.”
Concerning regular slot machines — which are expected to win $200 per slot per day — Conrad says, “As far as a cost to a casino having a machine sitting idle on the floor, it’s only the cost of the electricity serving the machine and the opportunity cost of having a revenue-generating activity in its place while it’s idle.
“Casinos, especially slot directors, are obsessed with monitoring individual slot performance, and that’s sometimes to their detriment, as sometimes they may make a move to cull the herd too soon,” Conrad concludes. “Those decisions will typically be based on an individual slot’s performance against the house average, although my personal belief is that many machines typically aren’t given a lengthy enough trial or adequate marketing to see if they really would be popular with slot players.”
So, at this point, regular and skill-based slot machines are an apples-and-oranges comparison. Our prediction is that the two will co-exist for a while, but that the attraction of the traditional slot will, in time, give way to the new breed of video gambling games. Some pundits would probably argue that today’s typical machine will remain at least until the Baby Boomers are too old to play (sometime around 2060 when the last of the bunch are in their early 90s). On the other hand, it doesn’t take a futurist to imagine that the casino itself won’t go through indescribable changes in the next 40-odd years, if it even exists by then.
Tune in tomorrow for a radical look at the "casinos" of the future.
