Casinos increase percentage from slots, revenue drops

video poker photo
Photo by midom

A cautionary tale about being greedy and treating customers badly, casinos across the county have been increasing their hold, the percentage they keep, on slot machines. This has the contrary effect of lowering slot revenue because customers feel cheated and go elsewhere or stop gambling. The industry is now reconsidering higher holds. Instead, lower the hold percentage, then business and revenue will probably increase. Treat your customers well, give them a good experience, and they’ll come back.

From the Las Vegas Review Journal (the comments are illuminating and confirm what the article says.)

Slot hold — the percentage of wagers held by the casino — could be associated with the amount of money gamblers bet on the games, or lack of it.

“If players have a bad experience, they might not come back,” said Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers, which hired Las Vegas-based advisory firm Applied Analysis to compile the statistics.

According to the study, tighter slot machines have not meant increased gaming revenue. Actually, the hold percentages could be a reason for the declines.

Nevada slot machine hold percentage is the lowest in the nation at 6.4%, up from 5.72% in 2004. Slot machine revenue has dropped 5% in that same period. That’s not a coincidence.

From the comments:

As a former video poker designer/programmer, I used to tighten up video poker machines quite often. And it’s done by… you guessed it (and said it!), changing the pay scale. Tiny alterations to the pay scale change the end payout percentage and change the amount the house keeps. Look at the pay scale on video poker machines as you move from casino to casino to gas station. They’re different, based on what percentage each location is choosing to keep.

Also, the official payout percentage is based on if the player plays absolutely perfectly, so really the people who ‘only’ lose that 6.4% (over the very long haul) on video poker are quite rare. Most people don’t play the odds perfectly and therefore lose even more. Video poker tricks people into believing it’s a game of skill, but slots gives the same payout with less effort.

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