The Center for Gaming Research is rolling out a new feature: the Occasional Papers Series. Drawn mostly from research conducted by visiting fellows and UNLV students, this series is going to discuss research into gambling and related issues.
The first paper is out: Seeking Value or Entertainment? The Evolution of Nevada Slot Hold, 1992-2009, and the Slot Players’ Experience. It’s a look at how slot hold patterns have changed over the past 18 years that looks beyond the games themselves to changing technologies, player preferences, and the overall gambling experience.
I volunteered this paper to be first in the series because there were several bugs to work out along the way, and I didn’t want to subject any of the talented authors who are contributing to them while we found our feet. Look for the next paper to come out within the next few weeks, and for several others in the months to come.
I started writing this paper after listening to people claim that the reason gaming revenue was plummeting was that the casinos had tightened the slots too much. That seemed to make sense, so to back up these subjective arguments I did a little bit of statistical research. I learned that yes, slot hold percentages had increased quite a bit since the mid-1990s, but found that there seemed to be more factors in play than executives tightening the machines. There were two big bumps in hold percentage–in the late 1990s and a few years later–that coincided with two major shifts in slot technology, and the changes in the slot mix–low-denom, high-hold games pushing out high-denom, low(er)-hold games were a complicating factor.
Also, slot hold didn’t respond to consumer demand the same way that hotel room rates did. After several years of rising rates, occupancy fell in 2007-08. In 2009, rates started to lower, and occupancy went up. There’s nothing that direct in slot hold trends that suggests casino managers have the same deliberate strategies in managing “price” as hotel managers. Instead, the best explanation in looking at why slot hold continued to rise in a recession is that the most popular machines continued to be the ones with the highest hold. Generally, slot managers look for a slot mix that optimizes their revenues, so they listen to players: they’ll take out under-performing machines and add more of ones that get more play.
We’ve got some interesting papers coming up, including one on the legend of Bugsy Siegel, so stay posted.
Now that I’m done with slot hold for a while, I’ve got three other projects I want to work on. The first is a look at capital expenditures in Atlantic City casinos. Since they track this by casino, as well as revenues, it will be possible to investigate whether companies that invest money into their properties are better off than those that don’t. My hunch is that the answer is yes, but to my knowledge no one has actually looked at the numbers to see if this is true. The second is a study of casinos and labor. With so much become mechanized, casinos have become less labor intensive. It would be nice to quantify this, because proposals to legalize casinos frequently highlight job creation, and it’s important for people to know just how many jobs might be created. The third is casino debt. It seems obvious that casinos have taken on too much debt, but it’s important to see exactly how and why this happened so we’ve got some way of preventing it from happening again. This is in addition to the work that the fellows are doing, and the statistical abstracts that are being posted, so the Center will continue to be busy in the coming months.