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Slot Seminar
1. Presented by â Rich Lehman
Slot Seminar
* Proprietary and Confidential
Â
Presented By
Dicentric Solutions, LLC
MYPLAYERSCARD.COM
Rich LehmanÂ
NOTICE: This document contains confidential and proprietary information of Rich Lehman and may be protected by patents, trademarks, copyrights, trade secrets, and/or other relevant
state, federal, and foreign laws. Its receipt or possession does not convey any rights to reproduce, disclose its contents, or to manufacture, use or sell anything contained herein. Forwarding,
reproducing, disclosing or using without specific written authorization of Rich Lehman is strictly forbidden.
2. 2Proprietary and Confidential
⢠GAME SELECTION
⢠WEIGHTED HOLD PERCENT
⢠FLOOR DESIGN
⢠EVALUATING GAME PERFORMANCE
⢠BONUS VS. TITO REVERSING EFFECT
⢠MOVING THE CASINO HOLD
⢠SLOT BUDGETING AND BUSINESS
PLANNING
SCOPE OF SEMINAR
3. 3Proprietary and Confidential
Mr. Lehman has over 34 years of gaming experience working as Vice President of Slots and General
Manager for gaming operators such as, Boyd Corporation, Caesars Palace, Park Place Entertainment,
Horseshoe Gaming, and most recently Navegante Gaming.
He is a former educator in developing gaming operations assisting the University of Nevada to gain its
accreditation for gaming curriculum and has authored a book called Slot Operations: The Myth and
the Math through the University of Nevada, Reno.
He is acknowledged as an expert in slot operations, game development, marketing and has written
numerous articles on player tracking, computer system design and database development for various
trade magazines.
Mr. Lehman has experience with Tribal Gaming operations working as the General Manager for the
Yakama Nation Legends Casino in the State of Washington.
INTRODUCTION
4. 4Proprietary and Confidential
⢠The operator has the following requirements to maintain a competitive slot product:
â The right mix and quantity of each manufacturers games, and
â Appropriate payback percentage per denomination, and
â Adequate supply of various cabinet styles complimenting the aesthetics of the casino.
GAME SELECTION
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⢠Manufacturer â Each manufacturer owns certain proprietary intellectual properties that
makes them different in game titles, cabinet styles and electronics.
⢠Model â The age of the electronics is detailed in the model series of the manufacturers
equipment. Manufacturers frequently improve the electronic capabilities of their product
requiring a new model number or name.
⢠Game â The titles of the games displayed to the public are described as the game. The game
title plays an important role in making the decision as to what value the device will have on
revenue once installed.
⢠Denomination â The selection of denomination is based on floor analysis determining either
under-saturation or over-saturation of those denominations offered for play and for the game
selected. Many games developed today are engineered denomination specific.
⢠Hold % - The percentage of payback is determined mathematically through the
manufacturers and selectable by the operator. Determining the appropriate hold% requires an
analytical review of the current offerings on the casino floor to maintain the overall hold%
for the casino floor to stay on budget.
⢠Cabinet â The shape of the cabinet changes by manufacturer supporting unique floor
designs. The design changes such as slant tops versus uprights supports the operators desire
to provide customers with machines designed to fit the mass market.
GAME SELECTION (CONT)
6. 6Proprietary and Confidential
Hold % Coin-in %
=
When hold % declines, coin-in % must increase to
compensate at an equal rate for everything to be equal!
GAME SELECTION (CONT)
7. 7Proprietary and Confidential
⢠Establishing hold percentages by denomination is a traditional approach for casinos.
⢠One common fact to remember is that âNot all machines will generate the same amount of coin-
inâŚtherefore, not all things are equal!â For a slot machine to contribute its hold percent equally to
the others requires it to have equal coin-in.
⢠The process of reporting on a property weighted hold percent can be simplified through many slot
tracking systems today.
⢠The manufacturers hold percent is a mathematical calculation that determines the payback percent
over the period of handle pulls necessary to complete one or many cycles.
⢠Explanations related to the decline in revenues is easily explainable when an operator reports the
earning potential of the casino based on weighted hold percentages than on the actual hold, which
fluctuates daily, while the weighted hold percent is less sensitive to a large jackpot hitting on a
particular day.
⢠PAR â Payout and Retention â Each manufacturer provides PAR sheets for each game they
develop supporting the math associated to the games hold percent and frequency of pays to its
cycle.
WEIGHTED HOLD PERCENT
8. 8Proprietary and Confidential
For example, the casino posted the following revenue for the day in this simplistic view:
The casino has 3 machines and on this day with financial records reporting the following:
⢠1 nickel machine with a PAR of 10% and a hold of 12% today,
⢠1 quarter machine with a PAR of 5% and a hold of 6% today, and
⢠1 dollar machine with a PAR of 3% and a hold of 3% today.
⢠The nickel machine generated a $1000 of today's coin-in, while the quarter machine generated
$2000 and the dollar machine $3000.
Actual Hold-
⢠The nickel revenue at $1000 x .12 = $120, while the quarter revenue is $120, and Dollar revenue
is $90 for the daily average. When you divide the daily revenue by the daily coin-in ($330 /
$6000) we get a hold percent of 5.5%.
Weighted Hold â known as expected hold
⢠The nickel revenue is $1000 x .10 = $100, while the quarter revenue is $100, and Dollar revenue
is $90 for the daily average. When you divide the daily revenue by the daily coin-in ($290 /
$6000) we get a weighted hold percent of 4.83%.
WEIGHTED HOLD PERCENT (CONT)
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Weighted hold percent calculates a variety of numbers for their total value.
⢠Below is an example of 7 machines with varying hold percentages. As noted the group of
machines generated an actual win of $600 yet has an expected win of $628.37 once the
weighted hold is applied.
House # Coin-in Win Hold % PAR % of CI % of Hold
1001 $899.90 89 9.89% 11.01% 15.74% 1.73%
1002 $794.87 62 7.80% 6.89% 13.91% 0.96%
1003 $413.22 45 10.89% 10.55% 7.23% 0.76%
1004 $1,000.00 150 15.00% 10.22% 17.50% 1.79%
1005 $1,221.22 122 9.99% 14.00% 21.37% 2.99%
1006 $977.53 87 8.90% 12.00% 17.10% 2.05%
1007 $409.09 45 11.00% 9.89% 7.16% 0.71%
Total $5,715.83 $600.00 10.50% 10.65% 10.99%
Expected Revenue $628.37 with a weighted hold of 10.99%
WEIGHTED HOLD PERCENT (CONT)
11. 11Proprietary and Confidential
â˘Floor design requires accurate measurement in the placement of games and equipment in order to
maximize the space permitted for gaming.
â˘Adequate aisle spacing is important for the handicap and necessary foot traffic to support the slot
product. The example below does not support either.
FLOOR DESIGN (CONT)
12. 12Proprietary and Confidential
⢠When measuring the floor for creation of a properly balanced slot floor design, the following
basics should be observed:
⢠High traffic patterns supporting large groups of people need to have a minimum aisle
space of 6 feet.
⢠Medium traffic patterns 4 feet.
⢠Slower traffic patterns at 3feet 6 inches.
⢠As a rule of thumb, add the measurement from the back of the slot machine to the back
of the chair (allowing 2 feet from the back of the chair to the front of the machine for a
person to sit in the chair). Add 3â6â to the separating aisle before starting the
measurement for the adjacent row of machines.
⢠Utilize one footprint for all machines, which will support future changes to the casino
floor without having to create extensive redesign for the change.
FLOOR DESIGN (CONT)
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⢠As noted in the earlier slide, the slot machine dimensions measure to 4â0â from back of chair
to back of seat . Adding the aisle space of 3â6â suggest that the back of machine to back of
machine will measure 11â7â. Keeping measurements as this throughout the casino will assist
in maximizing the casino revenue per square foot.
FLOOR DESIGN (CONT)
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Individual and group game performance is a critical function of the Slot Department often
performed by a dedicated performance manager.
Several variables are involved in the daily, monthly, quarterly, and annual evaluation such as:
â Game Model
â Hold Percent
â Denomination
â Progressive Addition
â Manufacturer
EVALUATING GAME PERFORMANCE
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⢠The capability to perform a proper game performance analysis requires historical
data.
⢠Historical data needs to have a strict set of guidelines, such as per day, week, or
month.
⢠Segregation by location is necessary since all locations in the casino will not have
the same earning potential.
⢠Game characteristics such as cabinet style, denomination, hold percent, maximum
bet, top jackpot amount, video versus reels, or progressive versus non-progressive
and more needs to be reviewed in order to give a proper comparative analysis.
⢠Actual revenue versus theoretical revenue. Theoretical revenue uses the attributes
of coin-in multiplied by hold percent. Theoretical revenue removes the volatility
from trend lines when performing trend analysis.
⢠Saturation reviews assist in game performance analysis. Saturation by model,
manufacturer and denomination are the top three key characteristics of the casino
make-up requiring special reviews on a periodic basis and prior to the addition or
deletion of slot machines.
EVALUATING GAME PERFORMANCE
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Increasing the Entertainment value
⢠Slot machines have slowly evolved over time becoming the missing link to entertainment â or
are they?
Increasing âTime-on-Deviceâ
⢠Marketing and slot operations work cooperatively for one common goalâŚto increase the
time-on-device through changing hold percentages and aggressive promotional campaigns
tailored to excite elongated play periods from their guests.
⢠The process of extending time-on-device through internal and external processes continues to be
an on-going "works in progressâ, as recognized during the past 15-20 years through the use of:
⢠Changing payouts, which would increase the gaming customers chances of winning and keeping
him/her at the gaming seat longer.
⢠Developing marketing programs tailored to accomplish the same goals through enhanced rewards
for increased coin-in.
BONUS VERSUS TITO
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⢠Relational characteristics of slot win:
âWhen coin-in declines by 20 percent, the hold percent must increase by 20
percent to compensate.
âTITO (Ticket-in/Ticket-out) improved the downtime on slot machines by
removing hopper fills and a majority of hand paid jackpots allowing
increased coin-in.
âBonus rounds added to slot machines increase the time on device through
entertainment.
âAdded time on device increases slot win â or does it? (Can we count the
time in a bonus round as time on device?).
âIncreased coin-in or hold percent improves slot win.
BONUS VERSUS TITO
18. 18Proprietary and Confidential
⢠Casino hold percentages change on a daily basis from the following sources:
â Gaming customers based on game preference change the casino earning potential
⢠The customer base of the casino and new games offered for play often have an effect on the
casinos hold percent. When gaming customers gravitate from lower hold games for new higher
hold attractive bonus games the average hold percent in the casino begins to climb.
â Slot Directors change casino hold percentages through changes made to the games.
⢠Management continues to make changes in the casino to operate with increased efficiency
through floor designs. Change in game models to attract mass market for the facility and
denomination changes are a few of the ways Slot Directors create hold percent changes for the
building.
â Average wager on a gaming device changes the game hold percentage.
⢠Nearly all machines that award a bonus amount to customers that wager the maximum wager
have higher hold percentages for those wagers less than maximum.
â Adding Progressive payouts change the casino hold percent.
⢠Adding progressive payouts lower the hold percent of the casino through increased jackpot
amounts returned to the customer.
CASINO HOLD PERCENT
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⢠How does the casino move hold percentages when necessary?
â Evaluate casino floor game structure
â Segregate mix of games by denomination
â Weight value of each denomination
â Prepare popularity analysis by denomination and game type
â Make necessary changes to the product mix
â Schedule new hold percent
â Prepare analysis of changes supporting change
â Analyze results making any further necessary
CASINO HOLD PERCENT
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⢠Proper
Setting the correct template will assist in the development of the business plan.
⢠Planning
Through historical data, a plan will have more validity and reflect thought.
⢠Prevents
Plan failure can be mitigated by careful analysis
⢠Poor
Outdated or incorrect figures lead to failure
⢠Performance
Performing due diligence with each aspect of the plan ensures success.
THE 5 PâS PRINCIPLE
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⢠Slot / Electronic Gaming Devices
⢠Slot Player Tracking Systems
⢠Slot Information Systems
⢠Progressive Systems
⢠Mystery Jackpot Systems
⢠Player Bonus Systems
⢠Player Predictive Modeling Systems
⢠Slot Bases
⢠Slot Chairs
⢠Staff Uniforms
⢠TITO Tickets / Tokens
PRODUCTS / DEFINITION
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⢠Slot / Electronic Gaming Devices
A proper slot or electronic gaming mix consist of variety.
âVariety of manufacturers
âVariety of denominations
âVariety of cabinet styles
âVariety of hold percentages
âVariety of game titles
âVariety of progressives
âVariety of specialty machine banks
PRODUCTS / DEFINITION
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⢠Take the 5 Pâs approach to developing an solid plan â Proper Planning Prevents Poor
Performance.
⢠Creation of the slot budget requires good statistical information that supports revenue
forecast.
⢠Statistical data such as unit counts by denomination and expected hold percent by
denomination will aid in developing the revenue forecast.
⢠Utilizing state, county, or city gaming historical records will assist in forecasting expected
revenues through past performance
⢠The slot business plan is a complex document describing each aspect of the internal and
external elements intended to drive revenue.
⢠Designing the perfect business plan requires resources from multiple departments, such
as Hotel, Marketing, and Finance.
SLOT BUDGET AND BUSINESS PLAN
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⢠Key characteristics of a business plan include:
â Executive Summary
⢠Objectives, Mission Statement, and Keys to Success
â Property Summary
⢠Company Ownership
â Services
⢠What services are offered
â Market Analysis
⢠Market segmentation, Target Market, Service business analysis, Competition
â Strategy and Implementation
⢠Competitive edge, Marketing strategy, Revenue strategy, Revenue forecast, Milestones
â Management Summary
⢠Personnel plan
â Financial Plan
⢠Important assumptions, projected profit and loss, income statement, projected cash flow,
projected balance sheet, cost of equipment and depreciation, debt and interest, capital
improvements.
SLOT BUDGET AND BUSINESS PLAN