An Interview with Mr. Casino
A look at what really goes on behind the scenes
by Basil Nestor
Maybe we’ll put something there that is really a poor performer because it would make it get some play because it has a captive audience.
I’m saying our tightest machines are near the door because they are the most popular.
Where are the loose slots? Which games pay back the most? Which games should I avoid?
Casino executives are notoriously tight-lipped about how they set paybacks on their slot machines. And they’re absolutely Sphinx-like when it comes to talking about strategies for slot layouts. Who can blame them? Payback and placement strategies are company secrets. Casinos don’t want you to know these secrets because it might help you beat the house.
That’s why the following interview is so rare. It’s a conversation with a person who I will call “Mr. Casino.” He is a highly-placed executive with a major gaming company, and he has firsthand experience with slot operations at multiple properties.
Getting to Know Mr. Casino
Mr. Casino doesn’t mince words. He’s not toeing a PR line. Why does he talk with me? I think he is as interested in hearing my questions (understanding what is important to players) as I am in hearing his answers.
You’ll notice that Mr. Casino’s philosophies of game selection and slot placement don’t always jibe with “the usual strategies.” That’s because the casino industry is not a monolithic business. There are a lot of people with various views jostling for supremacy. Mr. Casino is one of them, and he freely admits that not everybody sees it the way he does. Mr. Casino is a proponent of what I would call a “tight philosophy.” He and like-minded executives represent a major trend in the gaming industry. During our conversation, I challenge him on this subject, and I ask him to justify his policies from a standpoint of profitability. His answers are very revealing.
Indeed, Mr. Casino’s answers (and similar answers from other casino executives that I have interviewed) are so revealing; they form the basis of the advanced slots strategies you can find in my book The Smarter Bet Guide to Slots. A longer version of this interview with even more in-depth strategies will be in Playboy Guide to Casino Gambling coming to bookstores in the spring.
As you read this conversation, remember that Mr. Casino is speaking from his own perspective. Other executives may do some things differently.
My only requirement of Mr. Casino was that he tell me the truth (and I checked his statements against other sources just to be sure).
His requirements of me are that I keep his identity a secret, and that I write nothing to identify his company directly.
Mr. Casino and I spoke in multiple interviews. What follows are excerpts from our conversations.
Loosest vs. Tightest
BN: Let’s begin with game settings, specifically five-dollar machines. In your casinos, how tight would they be on average?
Mr. Casino: Five dollars would range anywhere from 3 to 6 percent [hold]. And this isn’t to say that this is all that they’re available in. There are absolutely going to be exceptions. But this is how you would typically have them.
[Mr. Casino often refers to “hold.” This is the mirror-opposite of payback. Thus if a machine holds 8 percent, that means it has a 92 percent payback.]
Okay, dollars. What is the range loose to tight?
It does vary by state because of market factors and stuff like that, but for the most part the tightest dollar would be 7 or 8 percent. The loosest dollar machine might be at 4 or 5 percent.
You never would have a dollar game that is paying back 98 percent or 99 percent?
Never say never, but you’d need a really good reason.
What would that really good reason be?
I don’t know. I can’t even imagine.
So you wouldn’t normally ever have a 98 or 99 percent one-dollar machine?
Right. You would need to have some strategy, and there is not one I can think of that fits in my company’s culture, where you would say, “Let’s make a big loud deal with this machine.” Why you would do that with a dollar? I can’t imagine.
What is your standard payback for quarters?
Quarters probably range from six- to ten-percent hold.
Nickels?
Now you’re getting up there. Now your hold is somewhere between nine and fifteen percent.
In an average bank of dollar machines, what would be the mix in your casino, loose to tight?
It’s probably five and five. They’re probably different by two points.
Would the range ever be eight points in the same denomination in the same bank?
No. We’re not talking about big ranges. There are other factors that decide what games go next to each other, what games go in the same section. We’re never making a decision that the game holds this, so it can’t go next to that game. [For dollars] it’s somewhere between 4 and 8 percent, and then the games are put into banks and sections based on other factors. The holds end up where the holds end up as far as what is next to what.
Are progressive games of the same type all set at the same payback? If you have 10 Wheel of Fortunes, they are all set the same. Yes?
That is true.
And if it’s a dollar progressive, it’s going to pay back in the range of 88 to 91 percent. Yes? Whereas if it was not a progressive game, it would be in the range of 95 percent payback. Is this correct?
Yes.
“Video poker is a discipline unto itself. Video poker is priced lower [pays back more] because it’s visible to the player how it is going to play. You can look at the pay table and say, ‘Why would I play this, when I can play this?’”
—Mr. Casino, casino executive
Where Are the Tightest Slots?
Are slots near tables tighter?
Probably, yes. Nobody is seeking those games out. It’s something that a table player is going to play because he is waiting for a seat to open or something like that. It may be at a blackjack table where they are playing five dollars a hand, so we would typically put dollars and sometimes five-dollar games, something that has a comparable average bet to the mindset they’re in. And they’re probably priced [hold] a little higher because we know it’s an audience that is going to play it because it’s there. They may never become a slot player, and they’re not going to come back the next day because they loved playing that machine, so at that point it is not our priority to give them a great slot experience. We just want them to have something to do while they’re standing there.
What about restaurant lines, check in-lines and other places where people are waiting?
For the same reasons they may be priced [hold] a bit higher, but depending on the operator, it might also be a place where they choose to debut new slots or new technology. You have people stuck there. Why not give them a little bit of entertainment while they’re standing there, and have them play something that they typically wouldn’t. Maybe we’ll put something there that is really a poor performer because it would make it get some play because it has a captive audience. Maybe we bring something in there that is a brand-new concept in bonusing, so people play it and say, “Oh, that’s cool. Never saw that before.”
As far as lines go, or people standing around the table game, it’s all kind of the same. Are people standing there for some reason? If so, let’s give them something special or something priced a little higher.
Where would you put loose machines?
There are a couple of schools of thought here. You cannot make a rule because you want people to see people winning. You also want to see machines busy. What we try to do is that anywhere there is an entrance, any major entrance to the casino floor, you want to have a lot of noise and every seat full. Those should be the first places to fill up so that as people enter they get a sense of excitement and anticipation. Other people are playing and having fun, so it might be about having the newest machines, the most popular themes.
On a macro level, when you look at the popularity in the last few years of penny and nickel slots, primarily video, these are significantly higher priced than the quarter and dollar reels of yesterday, but that is what people love to play. So it’s not necessarily that people are always going with the game that has a lower hold. We have penny machines at every entrance because that is where all the butts are in seats.
I don’t understand. Are you saying loose machines are near the door?
No. I’m saying our tightest machines are near the door because they are most popular. The important thing is to just get the crowd, and the important place is a very visible area, a crosswalk, a major pathway through the casino, an entrance to the casino. Attractive and loose are kind of two different things.
You’re saying the tightest machines are the most popular machines. This is a major shift from the traditional paradigm that loose machines are more popular. Does that mean the strategy of having any loose machines on the floor is fading away?
I don’t know if it’s gone forever, but my thought is if I have a game out there that is really fun to play, people are clamoring to play it, even though it is holding sixteen percent….You know what I mean? You put the popular games where you want crowds. It’s a separate issue from hold. Right now these penny machines hold like 12 to 16 percent. They are really up there, but people can’t get enough of them. You don’t hold back on how you are pricing them because it’s supply and demand. It’s like anything else. If everyone in the world tomorrow wanted a Ford Taurus, Ford would raise the price. These penny machines, they’re so much fun to play. It is constant action, and the bonus rounds are so much fun, people are willing to pay that price. They [the penny games] are dribblers. You’re constantly winning something, and you’re constantly losing something, so over the long haul it’s holding more, but you’re having a much better time than a boring old quarter reel that is only holding six percent.
Why don’t you just rip out all your loose machines and make them all tighter nickels and pennies?
Well, most floors at this point are 50 percent nickels and pennies, or more. That has happened over the last couple of years.
Will penny and nickel games become so popular that in five or six years all games will be pennies and nickels and pay back only 90 percent?
It’s hard to imagine there wouldn’t be a floor with a three-reel quarter on it.
But regardless of denomination, you said that your tightest machines are your most popular machines. Why not make all your five-dollar machines multiline and set them at 90 percent?
For the same reason that a five-dollar game isn’t set at 90 percent today. A player can tell the difference between a 10-percent hold and a 3-percent hold, and traditionally we’ve given a five-dollar player a better experience by having it only hold 3 or 4 percent.
Okay. But I’m seeing a contradiction. Even though penny machines with high holds are extremely popular, you’re saying five-dollar machines with low holds are a “better experience.” Here’s what I think. In spite of the current popularity of high-hold penny and nickel machines, I think savvy players prefer games with a lower hold. They see the effect on their bankroll. Do you agree?
Between three and ten? I agree with you. You’d absolutely have a better chance of feeling it, if you’re playing a lot. It’s a seven-point difference.
We have as much trouble with it [hold] as I can tell you do….There is always someone who is like, “Let’s try it at nine and see if it makes a difference.” And I’m like, “Okay, we’ll move it to thirteen later on.” There’s always a question. This is fairly new research. It’s only been a couple of years. You’re kind of like, “Well, what if…?”
The Strategy of Slot Layouts
Okay. Let’s talk about machine placement. At one point you said that hold was not a factor in positioning games, but you also said that games were tighter in some areas. Please explain that. By what criteria do you position games?
The way they play, the kind of game, the average bet, the kind of player who will play it.
You’re not thinking about hold when you’re positioning games?
That’s right. Except what we talked about where you’re putting stuff that holds a little higher in places where you have a captive audience—next to table games, or next to the lines at the buffet, where no one needs to like the game. They don’t need to like the way that it plays. They just play it.
And when you’re designing a slot layout, you have no thought as to a machine’s hold? You’re just thinking I want to put Reel ’Em In next to I Dream of Jeannie?
Right. What does the average bet tend to be? Is this a progressive game that will influence a player to play max bet? There are nickel games where the average bet will be forty-five cents, and other nickel games where the average bet will be $3.95. So which one makes more sense in a bank next to a bank of dollars? You’re not going to put a game where most people play forty-five cents a spin next to a game where most people play $2.50 a spin. There are all kinds of things you’re lining up, but hold is not one of them.
You tend to group manufacturers because Aristocrat plays differently than Williams, and if you like this Aristocrat, you might like that Aristocrat. So you’re grouping by denom, definitely by manufacturer, definitely by max bets.
At whatever end of the casino I started at [when designing a layout], I had a reason for each next bank of games. So it’s not that I go out and say, “Now we’re at the table games. We have to surround this with the higher hold games.” It’s not my primary motivation, but if you’re redoing a table area, and you’re going to disrupt a bunch of slots around it, you say to yourself, “We have to put them [tight slots] somewhere.” It’s not that you say, “Oh these are a point or two higher, they need to be next to a captive audience.” I would think about it more in terms of the math profile and the volatility. If this is a game that doesn’t pay often, that doesn’t play fun, we’ll put it somewhere where you have people standing. They can enjoy it because it is something to do.
Why would you ever have a game like that on your slot floor?
You never would on purpose, but I never have enough capital to replace everything this year that I don’t like. If one game that sucks is only a year old, and we didn’t know it when we bought it, I have to wait until it is fully depreciated, and I have other bigger fish to fry. I have to find somewhere to put it.
Buying slot machines is very difficult. You would be shocked at how little information and how little market-testing data manufacturers give you to buy slot machines. Every year you buy stuff that six months later is a dud. You have to live with it. Slot machines depreciate over five years.
If what you’re telling me is correct, then why are some casinos still positioning machines with a greater emphasis on their payback?
Because there are so many casino operators, you’ll never get them all to agree.
So some casino operators do believe that loose machines can be perceived by the player, and those loose machines attract players?
Absolutely. I am sure that I am in the minority, and I’m sure my company is in the minority.
“You’re always going to push the envelope if you’re an aggressive operator. You’re always going to say, ‘How high can I price this before it starts to negatively affect my business?’ But maybe I want to be able to say for perception ‘loosest quarters.’ I think it’s just a balance.”
—Mr. Casino, casino executive
Setting the Payback on a Game
How do you decide the payback of a particular game?
You do it based on what else is on your floor, what has been accepted, whatever the market will bear. It’s like you price any other product in America.
Would you ever make a game looser?
No. We do not tend to react to machine performance by hold changes. We don’t say this machine isn’t doing very well, let’s loosen it or tighten it.
You just pull the machine off the floor?
Yes. We think of that as a theme-based thing. Because if you were to try to manage hold that way, you’ve got the interest of the casino and the player at odds. If a machine is not doing well, I would probably want to make it tighter so I could get more money out of it. If you’re arguing that the customer could perceive it, then the right action would be to make it looser, so more people would play it. So if it’s not cutting it, then that’s because it’s not a good theme. It doesn’t play in a fun way….
In a perfect world, the first thing I’m worried about is the popularity of the game. I don’t want to manage a game by its hold. I don’t want to have it make enough money by changing how much it is holding. I want it to be a game that people love to play, and then I want to keep my fair share of that.
So machines rarely are made looser?
That’s right.
Thank you for the interview. Is there anything else you want to say?
I think people should play slots for fun [laughs]….You could stack all the circumstance in your favor and still lose $20 in 20 minutes.
Analysis of the Interview
On the broader issues, Mr. Casino confirms what we already know. Games near tables and waiting areas tend to be tight. Progressive games pay back less than non-progressive contests. Games are looser in higher denominations. Popular games are placed in areas of high visibility.
But it’s on this last point that Mr. Casino and his company have a unique direction. For them, popular means tight. His company is competitive on looseness when it’s necessary, but Mr. Casino and his associates mostly see looseness as something to be remedied rather than celebrated or promoted. Essentially, Mr. Casino feels that if he gives you a good enough gaming experience, you’ll gladly risk more money and tolerate spending more.
Many casinos follow this “tight” model. There’s nothing wrong with playing in those casinos, but remember that your long-term prospects for winning go down dramatically as the casino’s hold goes up. Even if you prefer penny and nickel games, it makes sense (from a bankroll perspective) to choose properties with looser games, or at least be aware that you’re playing in a tight casino and adjust your strategy accordingly.
Specifically, be extra careful when playing penny and nickel machines. You may be getting only 85-percent payback rather than a 90-percent payback that CP slot charts indicate as standard.
Also, in tight casinos, expect less payback spread between loose and tight games.
Whatever you play, remember to follow Mr. Casino’s advice: Be sure you have fun!
Basil Nestor is author of The Smarter Bet Guide to Slots and Video Poker, The Smarter Bet Guide to Blackjack, and other comprehensive gambling guides. Got a question? Visit SmarterBet.com and drop him a line.
