How do slot directors analyze their slot floors after the addition of bonus features in slot machines? The simple addition of extra entertainment, which provides customers with increased opportunities to experience a winning event, has created a new form of math. Traditional analysis dealing with the over-saturation of a particular manufacturer, hold percentage, model or cabinet takes on a new twist as we examine the addition of bonus features.
With the introduction of bonus features, operators enjoy increased play on their gaming devices; this supports the development of more second-chance winning events. Traditional non-bonus games have begun to diminish in numbers, while bonus games continue to flourish.
What used to be a simple process of mapping the cycle time of a reel spin — or average number of decisions per minute — has become more complex with bonus rounds added to the equation. We are all now forced to have a better understanding of what economic changes may have occurred that were not fully, if at all, recognized.
A traditional slot machine with spinning reels has regularly been calculated at one spin every five seconds, while traditional video poker is one spin every three to four seconds, depending on skill. Taking into account the average wager per handle-spin and hold percentage of the game, operators maintained a fairly accurate account of gross revenue per spin. Over the course of time, the evaluation of coin usage in slot machines continued to be debated in regards to time-on-device losses due to jams in the coin acceptors and hoppers, or the amount of time it took to refill a hopper once it was empty.
Time is Money
Time is an enemy of any operator that knows customers don’t have unlimited opportunities to gamble and that any loss of time on device is a loss of potential revenue. A welcome solution to the time-wasting aspects of coins came in the form of TITO (Ticket-in/Ticket-out). TITO promised to improve time on device by eliminating the downtime associated with coin issues and hand-paid jackpots. While the approximate time required to perform the functions of hopper fills and jackpots varies from casino to casino, as does time lost per event, some key downtime characteristics are more closely comparative, for example, the time between wagering on slot machines and video poker.
To look at this more closely, we might set a standard equation for events per minute, which is then multiplied by the down time for each event. In the case of reel-spinning slot machines with a ballpark average of one spin every five seconds, the average number of spins per minute is 12. If the average wager on a quarter machine is 50 cents, the average wager per minute is $6. When this is multiplied by the game’s programmed hold percentage — let’s say 6 percent — the expected gaming revenue per minute is 36 cents (6 x .06 = .36).
With this example, we can now predict the amount of lost revenue a casino might realize each time a slot machine is out of service — meaning the customer is unable to make wagers for one reason or another.
In the event that a hopper fill is required, the timecard might look similar to this:
• 12:00 – Machine runs out of coin and goes into tilt mode.
• 12:07 – An attendant arrives at the machine to verify the problem.
• 12:20 – Attendant returns to fill the machine with coins.
• 12:22 – Machine completes payout and is back in service.
The above scenario assumes that a hopper fill takes an average of 22 minutes to perform. Armed with this information, we can now calculate the expected revenue loss due to the restricted play activity on the machine. With 22 minutes of downtime to perform the hopper fill and a calculated 36 cents of potential revenue lost per minute, the theoretical gaming revenue loss from each hopper fill is $7.92. A casino with 700 machines, each requiring an average of one hopper fill per day, might realize a loss of $5,544.
With the introduction of TITO, operators soon realized reduced downtime on gaming devices and improved gaming revenues. Additional bottom-line savings were also realized in the reduction of service staff through the elimination of coin and hand-paid jackpots. While the industry was reaping the rewards of spending capital dollars on adding ticket printers to slot machines, a slow but powerful change was beginning to happen: the addition of bonus payouts.
Bonus Innovation
TITO had effectively sped up play time — TITO was doing its job! But now the gaming community had to search for ways to counteract the TITO effect — customers were now spending less time in the casino while spending the same amount of money. It began with a request for an increased supply of gaming devices tailored to increase time on device and provide more entertainment. What came out of that request? Bonus play! The bonus component had been a part of the industry for many years in the form of progressive payouts and promotional events; it eventually led to machines additions such as spinning wheels, secondary bonus features related to game outcome and systems that provide mystery bonuses through coin-in. The move was on to develop more and more bonus events that would provide time on device and entertainment. The customers loved it! (And by customers, I mean both gaming patrons and operators.)
But have we truly understood the bonus effect? A manufacturer might say a slot machine bonus round has no effect on revenue; it just provides more time on device. The operator’s thought of time on device typically supports more coin-in. While the manufacturer is correct in saying that a bonus round has no positive or negative effect on game revenue, the operator will soon witness a loss of coin-in based on the frequency rate of a bonus round and the length of time a customer spends in a bonus round.
Decrease in Coin-in Time
The question raised is this: Now that the bonus round has disrupted regular play on the machine, is the bonus round equivalent to the down-time normally associated with a coin machine requiring hopper fills and jackpot pay outs? Is revenue increasing or decreasing with the addition of bonus features in these machines? More and more bonus games hit casino floors on a daily basis, and the effect seems to be positive … or does it? Bonus rounds occurring on a frequent basis extend time on device, which is good, but we have failed to address the fact that time, for a player, is not something that can be extended through a machine.
In each waking day, we know that there are 24 hours, not 25 or 27 or more. With this and the fact that bonus rounds reverse the TITO effect in mind, if we assume that by extending time on device, we provide an increased revenue opportunity through the bonus round, we would be overlooking the fact that the casino generates no more revenue during a bonus round than it would have without it. Casinos must realize that a gaming customer has a pre-defined amount of time for gambling, just as he has for work, sleeping, eating, and all the other events in each day.
Some years ago, before Las Vegas had a casino named The Mirage offering a free volcano show every hour, customers flocked to Las Vegas for the sole purpose of gambling and relaxing by pools. A typical customer itinerary at that time might have included eight to 10 hours per day gambling, with the remainder of the day spent eating, sleeping or relaxing by the pool. As slots became more popular, moving players away from table games, innovators began to develop family entertainment in the form of free shows located right on the Las Vegas Strip, competing for market share. This move prompted a change to visitors’ itineraries; they now add must-see free shows to their agendas, and subsequently something had to give. This began the downturn in available gaming time, forcing the gaming-centric operations to rethink their internal strategies in hold percentages and adding more slots, thus reducing table games and even gaming space for lucrative retail facilities focusing on the family traveler. Time is an important equation that must be remembered as we continue to invest in the addition of non-revenue generating bonus events.
The addition of TITO, with its opportunities to reduce downtime on a gaming device, has always been touted as a positive revenue generator through increasing coin-in by an average 20 percent. Bonus games are still being analyzed for their value as they continue to reduce coin-in opportunities through the length of the bonus round. But let’s not forget extended time between jackpots, due to the increased frequency of bonus rounds.
Rich Lehman is VP of development for the Las Vegas-based Navegante Group.
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