Slot hold and the recession

I’m currently hip-deep in a study of slot hold percentages for Nevada and on the Las Vegas and Boulder Strips for the period 1992-2009. Originally, it started with a question: how have casinos reacted to the recession? Have they raised or lowered their slot holds?

There’s some anecdotal evidence that casinos have tightened their slots–if you consider people complaining that slots are tighter anecdotal evidence. Were the players complaining about tighter slots right? Well, the answer (since late 2007, at least) is…yes and no. I decided to take a look at how each financial quarter since 2007 broke down for the state, the Las Vegas Strip, and the Boulder Strip. This way, I figured I’d have a good gauge of how casinos catering to tourist (LV Strip) and local (Boulder Strip) crowds responded. Here’s a chart that sums up what I found:


From the 4th quarter of 2007, slot hold statewide has bounced around slightly, with a tiny net decline, going from 6.08% to 6.02%. The Strip saw a bigger raise in hold percentage, from 6.73% to 7.01%. The Boulder Strip saw a net decline, from 5.35% to 4.96%.

Bear in mind that much of this isn’t just casino managers pulling a giant lever and making all the machines pay back more or less. The slot mix itself has changed, with higher-hold pennies becoming more popular. That complicates things, but doesn’t change the overall effect, which is that slots are paying back slightly better for locals than they were 18 months ago, and slightly worse for tourists.

What does this all mean? Well, we can theorize that locals casinos have responded to the recession by loosening the machines slightly, although nowhere near mid-1990s levels. Strip casinos don’t seem to have changed much–the hold has been fluctuating around 7 percent since 2007.

In June. slot revenue on the Strip declined 16.08 percent from the previous year. In the Boulder Strip reporting area, slot revenue declined by 17.86 percent, despite adding about 2,500 new machines with the opening of M (the Las Vegas Strip, by contrast, lost 755 machines). This is not exactly a ringing proof of the “lower slot hold–watch the customers come back in droves” theory. Of course, one might argue that the slots simply haven’t been loosened enough, or that the slight loosening of the slots prevented an even bigger decline. But then we’re getting into counter-factual arguments that are impossible to refute.

I cannot put into words the satisfaction that comes with devoting a great deal of time to an important question and arriving at an answer that basically boils down to: “Answer unclear–concentrate and try again.”

You can see the chart–with quarterly slot hold data–on a handy pdf right here.

I’m thinking of making this the first in a series of 1-page responses to statistical queries that I’ll post here and at I’m not looking to supplant the Las Vegas Advisor’s Question of the Day or anything, but since I get a lot of questions about this sort of thing, I figured that this might be a more efficient way of answering them.

So…any statistical questions that I can answer with a little numbers-checking and eighth-grade math?

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