Ask the average slot player where Las Vegas went wrong, and they’ll tell you it’s not the poor economy or increased competition from the casinos that are sprouting like mushrooms around the country.
No, they’ll insist the big problem is that slots are too tight. Sure, slot machines are negative expectation games, and if the casinos paid out more than they took in, they’d go out of business. But in the old days, they insist, it took you longer to lose.
The folks running downtown’s Las Vegas Club hotel-casino think the slot players are right. PlayLV, which operates the club for the multinational investment group Tamares, has embarked on an ambitious course of slot-loosening—and a pull-no-punches campaign to let downtown gamblers know about it.
“Fremont Street was founded on value,” PlayLV consultant Steve Rosen says. “But most places have gotten away from that, particularly when it comes to their slot machines. They’ve just gotten tighter and tighter. Most places today are interested in squeezing the player’s gambling budget out of them as quickly as they can. I think that’s the wrong model.”
The slots weren’t loosened with one fell swoop. Instead, starting in January, it started lowering the hold percentage on selected banks of machines, 40 percent at a time. A machine that once held 6 percent would now hold, on average, 3.6 percent.
“There shouldn’t be any mystery about this,” says Rosen, so he created signs for the newly generous bandits:
This machine has been loosened by 40 percent.
Week after week, the signs appeared over more machines, and as word of mouth spread, action on the once-moribund casino floor has picked up.
Slots manager Jack Budde says that players have overcome their initial skepticism.
“The early reactions were, ‘Are they really looser?’” Budde says. “I got calls from some players who had gotten the mailer. I told them to come in and see for themselves. Within a week, they realized the machines really were looser, and started spreading word of mouth.”
1. The Mathematics of Loose
In the parlance of slots players, machines that return more money to the player are “loose.” Those that keep more for the house are “tight.” This is all, of course, relative. In 2010, for example, the average downtown slot machines held 6.4 percent for the house; its counterpart on the Las Vegas Strip retained 7.2 percent; and machines on the Boulder Strip, a locals haven, kept an average 5.2 percent of all money played.
Casinos can tighten or loosen machines by adjusting their programming; while they can’t dictate when individual jackpots happen, they can set the parameters that determine what percentage of coin-in the machines will keep over their lifetime.
Hold percentage varies by denomination: As the units get smaller, hold tends to go up. In 2010, Nevada quarter machines averaged a hold percentage of 5.7. By contrast, penny machines held 10 percent of all money played.
Partially because of the growing popularity of penny machines, Nevada slot hold percentages have been creeping up since the mid-1990s: In 1996, the state’s slots had an average hold of 4.9 percent. In 2010, that number soared to a 6.2, a historic high.
But the increasing stinginess of the state’s machines is also due to operators’ conscious decisions: When faced with declining revenues, some choose to tighten their machines. Historically, this has been an effective way to boost revenues—but only short term.
“Every now and then, someone gets the bright idea to tighten up the machines,” says Rosen, “and it works well for a few months. Then word gets out, people stop playing, and the revenues start to fall.”
Over the past 15 years, downtown Las Vegas has seen its slot machines tighten from a 1996 average of 4.8 percent to 2010’s 6.4, a “cost” increase of almost 32 percent. That means, on average, players see fewer jackpots and spent less time on their machines. In short, they’re not getting a lot of bang for their slot buck.
In every other part of the operation, casinos are pitching bargains—discounted hotel rooms, cheap buffets, two-for-one show tickets. Why not, Rosen thought, extend that to the casino floor? “We thought we could do a good job of giving them just as a good a deal on the gaming floor,” Rosen says. “It’s something I learned in Atlantic City a long time ago: for most slot players, time on device is just as important as their budget.”
2. The Selling of Loose
When the neighboring Plaza, also owned by Tamares and operated by PlayLV, closed its hotel for renovations late last year, the Las Vegas Club was left without more than 1,000 potential feeder rooms. To make matters worse, with Fremont Street hotels pursuing new identities—Shark slides! Hipster concerts!—the 80-year-old Vegas Club didn’t have a new shtick, just the old man-cave sports theme. Tamares wasn’t prepared to make new investments, so it was going to take some old-fashioned gaming horse sense to keep the club relevant. Hence the loosening of the slots, and the throwback, comically in-your-face, comic-strip marketing campaign.
Budde says the response to the loosening regimen has been measurable: Seven weeks in, he’s seen coin-in just about triple. That doesn’t mean the casino’s revenues have tripled; because the machines are paying back more, that’ll take an even bigger increase in play. But in a short time, with no advertising but the outdoor and indoor signage at the casino itself and a mailer, the level of activity on the casino floor has skyrocketed.
The Las Vegas Club’s approach really is a study in contrasts. Locals powerhouse Station Casinos is currently wooing serious slot players back with an ambitious “We Love Locals” campaign, featuring extensive billboard and television advertising and large-scale car and cash giveaways. The Las Vegas Club only has a few posters on its outside walls, and they look like they might have been drawn by a bored student goofing off during homeroom.
Those exterior signs, as modest as they are, represent a bone of contention with at least one of the Las Vegas Club’s neighbors. Usually, casino advertising blandly promotes “looser slots” without answering the question, “Looser than who?” The Las Vegas Club, in boasting “Downtown’s loosest slots,” is taking on its neighbors, if not by name then certainly by innuendo.
The ads, which were all done in-house, have a simple message; there’s loose slots here. This might come as a shock to some visitors who are used to esoteric approaches like CityCenter’s:
The Center of [entertainment/pleasure/excitement] has shifted.
The Las Vegas Club, reasonably enough, decided against a fill-in-the-blank marketing campaign and focused on something simple and tangible—looser slots. With a bit of an edge.
One ad (pictured on Page 22) shows two crudely drawn faces, one frowning, one smiling, each with their own thought bubbles:
THEIR PLAYERS: Swim with sharks? Expensive drinks? I LOST!!
OUR PLAYERS: Loose Slots! I WON!
For players heading to the Golden Nugget, whose $30 million pool complex, The Tank, allows them to literally swim with the sharks (albeit separated by Plexiglas), the implication is clear: They will have a better chance of winning in the run-down Las Vegas Club.
“We just wanted to have fun with it,” Rosen says. “We really think that if you give people a better chance to win, they’ll respond. This isn’t a promotion: This is where we’re headed to stay. We’re not giving away steaks, or hiring mermaids. We’ve changed the product.”
Since the slots started being loosened, Budde says that machines that haven’t been loosened yet have also seen increased play, as have table games.
“There’s a real buzz here that wasn’t before,” he says. “Even grave shift is busy. We haven’t seen that for a while.”
Rosen is particularly proud that employees of downtown casinos have been stopping by the Las Vegas Club to play after their shifts end—a sign that the new strategy isn’t a gimmick, and that it’s passed muster with people who know the business.
3. How to Lose Friends and Irritate Neighbors
Not everyone’s a fan of the Vegas Club’s new approach. “The marketing attempt with stick figures is so feeble, we had a hard time taking it seriously,” says Derek Stevens, owner of the Golden Gate. “The other dues-paying casinos and I had a good chuckle out of it really. We did find it ironic the Las Vegas Club would put out an advertising piece like this while they are in the middle of a lawsuit for not paying their Fremont Street dues.”
Rosen doesn’t mince words in responding: “Mr. Stevens is obviously more concerned about some lawsuit which has nothing to do with this campaign, which always has two sides to it. His strategy seems to be having people drink outside and listen to loud music; we would rather have people play loose slots and have fun inside. We obviously measure success differently. We hope he sells lots of drinks while we pay out jackpots to happy people and keep them inside.”
Stevens, whose addition of a street-front bar is lampooned by an ad directly across the street (Outdoor bars? Dancing Girls? I LOST!!), suggested that the Gaming Control Board might get involved, since “it doesn’t look like the statement” that the Las Vegas Club has loosened its slots “has been verified.”
By a strange coincidence, a Gaming Control Board enforcement agent did stop by the Las Vegas Club last week. Budde says the agent didn’t challenge the claim that the casino had loosened its slots, but investigated the ancillary claim that the Las Vegas Club has “downtown’s loosest slots.”
As a result of the visit, the Las Vegas Club is adding small print to its ads noting that the Gaming Control Board affirms that, as of 2010, its slots were 15 percent looser than the downtown average. Budde thinks this is only going to get better.
“Yes, before we started, we were 15 percent looser than the average, but once we’re finished loosening them all, it’ll be much more dramatic.”
Even Stevens concedes that the promotion might be right for the Las Vegas Club, damning his neighbor with translucently faint praise. “Loose slots make sense [for them],” he explains, “because they have no entertainment and shut down all their food operations.”
The gamblers who are discovering the newly loosened slots certainly don’t seem to mind. On a recent weekday afternoon, Jake, a Las Vegas Club slot player, offered his opinion.
“I think it’s great,” he said. “I’m staying longer than I did before.” All of which is surely music to PlayLV’s ears.
For his part, Rosen doesn’t feel at all proprietary about the looser machines. “I hope everyone down here starts doing it, and we can really bring Fremont Street back.” With more than $30 million invested in renovating the Plaza (set to re-open later this year), PlayLV’s hoping for a turnaround that goes beyond the Las Vegas Club. Offering loose slots as a distinct part of the downtown brand might be a key to revitalizing the area.
In the end, casinos are for-profit enterprises; the recent announcement that the Sahara is closing is a poignant reminder that the house doesn’t always win. If the Las Vegas Club ends up seeing its bottom line improve, odds are that we’ll see downtown casinos competing for the title of “loosest slots” the way Strip casinos duel over the latest batch of celebrity nightclub hosts.