Casino Enterprise Management

There’s an elusive “perfect mix” that exists for your casino floor. It’s out there somewhere, perhaps in a complicated algorithm, perhaps hidden in an analytical piece of software, or perhaps only in the imaginations of those who seek it. But the reality is there is no perfect mix. If you were ever to get close to obtaining a perfect mix of slots, it would be short-lived; surely this mix is extremely dynamic, varying as your customers’ likes, dislikes and emotions change. So how do you plan and implement the perfect floor when it doesn’t exist? By trying to get close, and by making well-informed decisions that will help you maximize your investment and secure the highest return possible.

Studying the dynamics of your floor allows you to fine-tune the mix of slots to make it more appealing to your players and more appealing than your competitors’ mixes. Manufacturers are, of course, keenly aware of this dilemma as well. But what exactly makes the perfect slot machine? Whether it is a stepper-reel, video-reel or hybrid machine, new features are constantly being added to machines to make them more appealing to the player — and more profitable to the operator.

Of all the content-based innovation to hit the floors in the past several years, perhaps none are more widespread and rewarding as the bonus game. Consider the bonus game: You instantly think of a video slot with a second-screen bonus game. Many stepper-reel games, however, also feature bonus games. Whether it is with a fancy manipulation of the reels like WMS Gaming’s Hot-Hot Super Jackpot, Bally’s Hot Shots, a top-box based bonus game from AC Coin & Slot, or Barcrest, all forms of slots can have bonus games. Even table games can offer bonus features through side-bets or various innovations.

Certainly, in the end, you will likely find that bonus rounds generally increase revenue and play levels, even when considering the idle time associated with the rounds. However, some rounds are incredibly long. Is it necessary to have a five- or six-minute bonus round? While manufacturers want to show off their capabilities in imagination, audio and visual representation, and ingenuity, how much is too much? Surely there is a break-even point where just the right length of bonus round intersects with just the proper amount of multimedia bliss. This, however, is akin to the elusive perfect slot mix. If you do manage to find it, it will only last a short period of time.

Bonus games, like anything else that can be found on your floor, offer benefits. However, they are benefits with a cost. Consider Wilson’s Law of Bonusing and from where the payout originates. Wilson’s Law states that game payouts can neither be created nor destroyed — they have to be transferred from other payouts. In essence, if you want to pay more of one award, it’s at the expense of another. If your hypothetical machine pays 98 percent to the player, you have a finite amount of wins that can be awarded to the player. If you have a 1 percent progressive jackpot, you only have 97 percent remaining. Free spins and bonus games take some of that payout. What remains is your standard payout from base-game payouts in combinations of natural symbols, mixed symbols, multipliers, etc. In short, a high bonus-game payout means you will pay less in your base game. Is this tradeoff beneficial? Will the players continue playing for the bonus game if they are receiving fewer wins during normal play? Or will the bonus game take little away from the base game but give disappointing awards — or no award at all?

The Cost of Bonusing
While they may appeal to many players and encourage game play, bonus rounds can be costly. During the bonus rounds there are two problems. First, the game is in a negative-revenue mode; while the bonus round is running, the player is receiving awards and the machine is not taking in revenue. Second, play levels at surrounding games may also stop. People sitting at nearby machines may stop playing to watch the bonus round. Persons walking by may also stop to watch the bonus round. This secondary affect is compounding — and it has a cost, although it is difficult to determine. Proponents of bonus rounds will argue that this idle time will encourage nearby players to play for bonus rounds, perhaps generating a short-term increase in wager. But regardless of your thoughts on bonus rounds, they do have some cost.

For the most part, the cost of the bonus round can be calculated. Let’s examine how to determine the lost revenue.

Our first order of business is to mark down the standard information about the game. We need to know the average wager made by players, which includes denomination, number of lines, credits per line, theoretical payout and our theoretical hold. These figures can be approximate. As you are aware, some players cover all the lines and some wager more than one credit per line.

In order to facilitate our calculations, I have created a small software utility. We’ll step through the program and explain the calculations as we proceed.

Free Software
The software shown in this article is available at http://downloads.slot-math.com. It is available as a compressed ZIP file. Download the file to your computer, and then open it in Windows. (Windows XP and above will allow you to extract the files into a folder.) Double click on SETUP.EXE and follow the instructions on your screen. Also included with the software is an uninstall ability, although for the life of me, I can’t understand why you would want to do that. The software utility is a basic means of studying bonus game costs. If you have any suggestions or recommendations for further additions, please e-mail me at jwilson@icsgaming.com.

[Note: The progressive calculator discussed in a previous article was modified to allow mystery progressive jackpots to be included. As a result, the release of this software has been delayed. It will be available at http://slot-math.com shortly.]

Calculate Your Bonus Cost
First, reference a PAR sheet for the particular bonus game you are interested in studying. Enter the game’s name at the top and its theoretical payout percent. (You can also include the game program number and the machine’s identification to be printed with the report.) Select the denomination by clicking on the various values shown. For the bonus game particulars, enter the hit frequency of the bonus game, which is how many base games occur between bonus games. Also enter the average paying award from the bonus game, located on your PAR sheet. (See illustration 1.)

The game play values go in the fields in the green section. Enter the average wager, in credits, as reported in your system. You can also try using various values to see how they affect the calculations. We next must determine the “game velocity,” or how many games are played during any particular time period. This will also vary widely due to occupancy, time of day, player type present in the casino, etc. You’ll likely have less people, and perhaps smaller wagers, made on a Monday morning as compared to late Friday night. You can calculate your bonus costs for varying time periods if you want to study this in more detail. (See Illustation 2.)

The theoretical game velocity is quite easy to determine. Simply time the length of one game in seconds. Divide 60 by this number to get the games per minute. Multiply this value by 60 to get games per hour. Multiply this number by 24 to get games per day. This is the maximum number of games that can be played if there is no idle time on the machine. You will receive a percentage of this value in actual play, as this theoretical maximum could never be reached. By entering a percentage into the software tool, it will calculate the actual games played. Alternatively, you can enter actual games played from your meters or system software. Whatever value you enter, click the “Calc” button to calculate the alternate value. The daily frequency of the bonus game will be calculated as well, displaying under the bonus game average pay value on the left-hand side of the form. (See Illustration 2.)

Once you have this information entered, you’re ready to calculate the cost of the bonus round. The program makes this easy; simply click on the blue “Calculate” button. The blue section contains complete statistics based on the values you have provided.

Basic game revenue is reported on the left-hand side. The average wager is based on game denomination and average credits wagered per game. Underneath that, you’ll find the hold and payout amounts per game. In the sample report, for each $2.25 wagered, $0.23 is held. Below this area are the daily statistics, based on a 24-hour period. We can see the hold per day and per hour. Use this to compare the cost of the bonus game to your daily hold. (See Illustration 3.)

The right-hand side shows costs based on bonus-game length. The first column takes the potential credit-in for the length of time the bonus game is running. During this time period the player cannot wager, but we can determine how much potential wager you have lost. The second column also adds in the average paying amount of the bonus game to indicate how much you’re paying out as well.

The next columns show the same statistics based on a 24-hour period. These values become more meaningful when you compare them to the machine hold. Let’s study the sample report. (See Illustration 4.)

The game holds $215.83 per day. With a five-minute bonus round occurring 2.82 times each day, we will lose $20.38 in revenue. If we break this down further, considering a 10.37 percent hold, we’ll lose $20.38 x 10.37 percent, or $2.11 in hold. Two dollars seems pretty insignificant, but applying this to 10 games and extrapolating for the year, you’ll lose $7,713.93 due to this long bonus round. Performing the same calculations on a 30-second round, you’ll lose $772.15 for the year. In the end, you’ll make an extra $6,941.78 by reducing the bonus round from five minutes to 30 seconds on 10 machines.

When talking about machines that take wagers in pennies, $6,941.78 is considerable. With tight budgets, increasing competition and potentially lower profit margins, every opportunity to generate more revenue and reduce costs is important.

However, micro-analyzing bonus games is possible. This loss of revenue may be offset by an increase in game play levels, a value that can be hard to determine. Or it may just be a cost of doing business. While you could line your floor with the least expensive machines on the market, you certainly want to include some more expensive machines that have great player appeal. In the end, you may find that a game with a five-minute bonus round generates more revenue than a similar game with a 30-second bonus round.

Is It Worth It?
Bonus games cost money. They put the machine into a negative revenue mode where they not only are paying out money, but are leaving you unable to take money back in as well. This cost may or may not be significant depending upon the game, your floor, your patrons and a number of other factors. You may determine that a five-minute bonus game is too expensive. You may also determine that the appeal of the bonus game will increase play on the machine as players try for the bonus game. In the end, there’s a tradeoff. The best thing that you can do is be aware of the costs and benefits and come up with a tangible value to indicate the results of long bonus rounds. I’m not suggesting that all long bonus rounds are bad. And I’m not suggesting that short bonus rounds are good, either. But by being informed, you can make better decisions about your floor, which will ultimately benefit your players. And happy players are what bonus rounds are all about.

John Wilson is the Owner of ICS Gaming, providing slot consulting services and game design. He has designed several slot games in both Class II and Class III markets.  He can be reached at jwilson@icsgaming.com.