Question of the Day - 14 June 2018

We consulted an unimpeachable source, the University of Nevada-Las Vegas Center for Gaming Research, which publishes a “Nevada Gaming Footprint.” It shows 19,653 machines on slot routes (i.e. restricted licensees) and 197,568 in casinos in 2001. That was a total of 217,221.

Fast-forward to 2017, when there were 18,719 machines in slot routes and 147,699 in casinos, a total of 166,418 -- 31,150 fewer than 16 years ago. 

So what would cause casinos to remove more than 30,000 machines from their gaming floors? We asked two experts for their opinions on the subject. One, Las Vegas Advisor Publisher Anthony Curtis, points to the diversification of the resort experience: “Other things, probably non-gaming, like restaurants and clubs, have claimed space from the casinos.”

The second, David G. Schwartz, director of the Institute for Gaming Research at the University of Nevada, has two more theories. One is that casinos have closed, “particularly in areas outside of Las Vegas.” And the other, which seems to go to the heart of your question, is, “Multi-denom multi-game machines are also responsible. Instead of having a penny, nickel, quarter, 50-cent, and dollar version of the same game, casinos can have one cabinet that does them all.” In other words, one slot machine does the work of five. Which frees up a lot of space on the casino floor. (Interestingly, table-game inventory has stayed pretty much the same.)

Whatever the reasons, the installed slot base is now at its lowest since 1995. Two years earlier, the Las Vegas Strip had seen the subtraction of the Dunes and the openings of Treasure Island, Luxor and MGM Grand, bringing the installed base to 182,183 one-armed bandits in '95. In 1997, inventory leapt upwards to 190,833 with the openings of Stratosphere, Monte Carlo, and New York-New York. Heaven knows how high the slot count would have been had the Landmark, Hacienda, Sands, and Vegas World not been removed from the board. 

Bellagio opened in late 1998, soon followed in 1999 by Paris, Mandalay Bay, and the Venetian, bringing a dramatic increase in slot inventory to 210,624. The following year’s opening of the ill-fated Aladdin lifted the slot count to 213,798. Despite the erasure of the Desert Inn in 2001, Nevada casinos continued to add slots, reaching their high-water mark at 217,221. There were no additions or subtractions of consequence until 2005, when the Westward Ho (and its small sister property, the Ho) closed and Wynn Las Vegas opened. In 2006, some closures (Klondike, Stardust, Lady Luck) dropped their numbers to 206,648.

The following year slot numbers took another tumble to 201,015, a turn of events merely coincidental to the closure of the New Frontier.

In 2008, Encore, Palazzo, Aliante Station, and Eastside Cannery all opened, but cutbacks in slot inventory were on in earnest. Not only did the four new casinos fail to move the dial upward, slot inventory actually declined to 199,055. In 2009, despite the opening of Aria, there was a deep cut in slot inventory, to 193,944, while the next year’s debut of The Cosmopolitan of Las Vegas coincided with yet another drop to 191,445. The more casinos were added, paradoxically, the fewer slots there were. In 2011, the Sahara closed and statewide slot counts slipped to 187,372. By the time the Downtown Grand opened in 2013, the installed slot base in Nevada stood at 179,837.

Two small casinos were added the next year — SLS Las Vegas (much faulted for the diminutive size of its gaming floor) and the Cromwell, formerly the Barbary Coast — but the installed base continued to fall sharply, to 175,464. Another 4,000-plus slots were removed the next year, one that saw the closings of the Las Vegas Club and Riviera (the latter representing a large chunk of slot inventory). The opening of the Lucky Dragon, in 2016, failed to stem the tide, as roughly another 4,000 slots got wheeled away. The pace of decline finally slowed last year, with slot inventory down only 1,200 machines or so and only one casino closure of little consequence, the Max at the Westin Las Vegas.

In addition to having been made redundant by more flexible slot technology, there are other elements to take into account for the decline of the once-almighty slot machine. Casino operators are moving toward more-open casino floors. The jam-packed inescapable racks of slot machines you  find at Excalibur, say, are a thing of the past. Also, the casino industry has become fixated on Millennials, who find slots to be a downer, especially when compared to table games. 

Slots will also have to compete with the coming thing, wide-area electronic table games. Sheldon Adelson has experimented with these stadiums, with great success at Sands Bethlehem (in Pennsylvania) and there is no reason to believe they won't start popping up on the Las Vegas Strip.

Finally, with the casino representing only 35% of the overall revenue stream at a Bellagio or Caesars Palace, it will be harder for casino managers to justify the slot floors of yore. The slot machine is still relevant, but it’s hard not to think that its best years are behind it.