Are Tight Slot Machines Hurtful for the Casino Industry?

In the United States, many states have tightened their slot machines. Based on a research that was performed a year ago, tightened slot machines can be hurtful.

 

Research Results- Last year, The Association of Gaming Equipment Manufacturers asked the Las Vegas based Applied Analysis to perform an investigation on the slot machine industry. The result of the investigation determined that slot hold percentages have went up to an all-time high, even though the slot revenue and wagers have stayed bellowed their peak from before the start of their recession. For those who are not familiar, the slot hold percentages shows how much of the gambler’s money is kept by the machine. Slot machines are not being played as much as they use to in the states and casinos have been making a decreasing amount from them. However, they take a larger share of the wagers being placed. The Applied Analysis report shows that the recession has hurt the slot market. Results from their report shows that tighter machines are not helping the casinos.

 

Revenue Casinos In A lot of States Have Earned From The Machines- The Applied Analysis report states that, “While statistical correlations on a state-by-state basis vary due to any number of factors, the broader, aggregate trends would suggest a rising hold percentage has not translated into incremental gaming revenue for operators during the post-recession era”, according to http://vegasinc.com/business/gaming/2015/aug/20/slot-revenue-drops-machines-get-tighter-industry/. It continued by stating that, “In fact, they very well may be contributing to its decline.”

Applied Analysis studied different casinos in 16 states. One of those states included Nevada. Their report showed that there has been a decline in the amount gamblers wagered and slot machine revenue for the casinos. It declined by double digit percentages between the years 2007 and 2014.

Slot Hold Percentages- While there has been a decline, the slot percentage went up 6.2 percent. Some of the states have went away from the trend overall. The hold percentage in Florida decreased from 9.5 percent in 2006 (the year the slot machines began to operate in the state) to 6.41 percent in the year 2014, based on the report. Nevada’s 6.4 percent percentage slot hold was higher than when their slot revenue peaked in the year 2007. However, according to the report, it was still lower than any other state.

The Relationship between Hold and Revenue- Those who are against higher holds is that the customers lose money quicker because of that. Due to this, they spend less time gambling. However, the relationship between hold and revenue is complicated to understand. Last year, there was an article in Global Gaming Business magazine that stated slot revenue has been declining because of a change in game style, increasing minimum wagers, faster play, the economy, and free play replacing cash coupons. Editor Frank Legato wrote, “slot hold is both a cause and result of the factors affecting revenue.”

 

The Recession- The report focuses on how large of an impact the recession had. Applied Analysis called it a “triggering event that shifted the spend profile of consumers.” Also according to the report, “consumer spending has improved in most major gaming markets throughout the United States in recent years, while gaming volumes have continued to contract,” according to reports.

 

Marcus Prater, who is the executive director of the manufacturers association stated that the report was not formed to settle a debate, but was meant to add more information to the industry’s continuing conversation.

 

This is an issue that might take a while to solve. Even though the casino market in a lot of states might be going through a challenge right now, it is good to believe that there might be some changes made in order to make some type of improvement. While thinking this, it is crucial to realize that Nevada is a state that legalizes online gambling. The online gambling world has been doing well in Nevada. Nevada is one of the few states that has legalized online gambling. There is a lot to think about when it comes to this type of issue some casinos are facing.

 

Economy has a large effect on different businesses. When an economy is not doing well, a lot of businesses located in that community struggle. At times they even have to close down. A lot of people who live in a community in which the economy is doing bad, have a harder time being able to spend a lot of money because of jobs being lost. In order to be able to gamble, you must able to afford to lose some money. When an economy is doing badly, the casino located in the community often takes a hit from receiving less guests.

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