Slots Licensed Slot Machines

I've always been curious, what with the talk of lower tier credit values for licensed slots versus otherwise. What kind of license fees do the casinos pay the slot manufacturers? I'm sure something like the Michael Jackson slot would have a higher license cost than something like Zeus, or do they buy Zeus outright since it's a machine entirely created by the company without any outside elements.. Just wondering if anyone knows the ballparks.

 

I think you are confusing two different issues - licensed slot machines and leasing slot machines.

I don't think the casinos pay ANY license fees for the rights to a intellectual property. That will be up to the slot manufacturer who creates the slot. Then at that point it's up to the manufacturer on handling the relationship with the casino. I think it's true that most "liscensed" games are leased to the casinos, probably as a benefit to both parties. My guess is that due to those previously paid licensing fees, these machines are more expensive to lease to cover the additional costs entailed to produce them.

Obviously a game like Zeus doesn't have licensing fees, since I don't think it is linked to a specific intellectual property.

 

Yes, I'm sorry. I meant leased. The licensed machines would as you mention simply cost more on the lease.

 

I am not sure about that train of thought.

While it seems reasonable to think that highly contemporary slots, which require outside licensing, are leased instead of bought outright by casinos, this, in my opinion, has nothing to do with the lower tier credit for those types of slots.

The reason is simple: If the games were a little more expensive, it would make more sense to lower payout by .25 or 0.5% instead of changing some tier credit that is way easier calculable for the player. As we see every day in forums like this, it is a major annoyance to (more informed) players. Casinos could easily circumvent this by lowering payout and giving the (formerly) normal tier credits for slot coin-in.

The real reason probably is more along the lines of this: (Casual?!) players are more inclined to play very contemporary games since they have prior experience with the IP. Therefore, marketing payout (tier credits) can be lowered for games that draw in players on their own merit (IP), without having to provide further incentives to players in form of tier credits.

Basically the argument is:
It is not about higher cost for the games, but about lowering marketing budget at slots that draw in enough customers without providing full incentives in form of tier credit.

 

I don't disagree with any of this. I think you are touching more on the first part of the OPs idea - about lowering tier credits earned on IP specific slots.

This is obviously a casino company by casino company policy. MGM throttles tier scores on newer machines, and CET does not. Which makes this not a IP-vs-non-IP debate, nor a leased-vs-owned debate at all. Until at least this applies to other programs. (I don't follow other programs that closely other then the two previously mentioned.)

As for lowering PB%, I truthfully don't think there is much room for this. It seems that manufacturers ship machines with several different pay-out schemes that slot managers can select. For the games we are discussing, especially on the strip, I would assume that they are already set at the lowest PB% available, so I don't think the "just adjust it down a little more" is an option.

This whole principle appears to affect free play as well. There are plenty of casinos (M Resort, for instance) that doesn't allow promotional free play to be used on certain, usually newer, machines.

My hunch is that, overall, casinos expect leased games all have a limited shelf life, and play probably peaks and then falls gradually during the lease before the game departs. This is a simple way for their to squeeze a little more juice out of the lemon while it's ripe, so to speak.

 

It does apply to other programs, just with MLife they are more transparent about it.

In the case of Total Rewards they don't affect your actual Tier Credits, you always get 1 TC for each $5 played through slots and you get 1 RC for each TC earned, but most of the licensed slots don't give out bonus rewards credits or give out only a fraction of the rewards credits other machines would for a like amount of play.

 

Does licensed slots also mean limited edition release or lease? I only know of one, the konami titan 340 game that has only 6 in the world and are only at popular casinos (I heard more are being made, a rumor going around). I do not know of any others that are limited like this one because it is expensive and not easy to build. You can tell by looking at how big it is and all the physics and math stuff the manufacture had to work through.

The one at the Venetian got moved to San Manuel in Highland, CA from a non-crowded place to a crowded place without having to make more as an example. I also think this is the most expensive machine to be made because of how many there are and the size. I wonder what is going to happen when this thing ever breaks down, which I have not seen yet except at the Quad if this counts when I went memorial weekend where the machine was still working where the bonus was on the big screen because the wheel was turned off out of service. Hopefully it got fixed already after memorial weekend, but it does not look easy and I wonder what went wrong to stop the wheel from working.

 

When people say "licensed slots" they usually mean games that have a trademark license to them, like Spider Man, Pawn Stars, Monopoly, Wheel of Fortune, etc.

However as far as what machines are considered "special" nowadays goes beyond the license aspect: originally licensed games were just standard slot machines, like the Monopoly machines were Monopoly themed games in a standard slot cabinet, the Wheel of Fortune machines were just normal three reel slot machines in a normal cabinet with a little wheel up top...

But today "specialty slots" still includes pretty much anything that is licensed, but now it mostly encompasses the big slot machine setups you see in casinos. Most of these big machines are licensed (IE: Batman, Wheel of Fortune, Monopoly Big Event, Deal or No Deal) but they don't have to be licensed products to be a "specialty slot" (IE: Goldfish Race to Win, Reel 'em In community, Leprechauns Gold, Jackpot Party Progressive)


Why it is done, which will hopefully address the OPs original question:

A typical video slot machine, like the previously mentioned "Zeus", will cost about $5-10K for the casino to buy - they own it and any money it makes is all theirs.

A standard slot machine with a license attached to it, like "Wizard of Oz" or "Monopoly", can cost an extra $5-15K - the cost of the licensing fee.

Then the rights holders for "Wheel of Fortune" realized that even with the hefty licensing fees the casinos and slot manufacturers were making a mint off their license and they were probably leaving some money on the table, so they came up with the idea of leased licenses where the casinos had to lease the machines and pay a percentage of the machines take to the license holders... and now more and more licensed games do that.

And then there are the big machines: these are often focal points of the casinos and they make lots of money, but they cost a lot to make. These behemoths can cost anywhere from $20-45K per player station so something like the big Batman slot machine might cost $75K and the big Deal or No Deal setup might go for $100K. The casinos can't afford that - at those prices those machines could take up to a year just to break even and pay for themselves before the casinos would start seeing any money our of them and then the risk there is going to be: who knows if those machines are still going to be popular a year from now? So for these things what the slot manufacturers do is lease them to the casinos for a split of the profits the machine makes and that way as long as its popular it stays on the casino floor and everybody makes money and when the machine is no longer popular the manufacturer takes the machine out.


And thats the whole idea on why MLife, Total Rewards, Club Grazie, etc all give out less points on some machines: even if machines have the same payback percentage they make less off some machines and the ones they make less on they pass the less on to the customer in the form of reduced points they give out. IE: if they had a Zeus machine at 90% payback and a Wheel of Fortune at 90% they make 10 cents off every dollar on the Zeus machine, but they might only make 4 cents off each dollar on the Wheel of Fortune machine even though the two machines have the same payback... and as they make less, so they give out less.


Edit to add:
And yes, the Titan 360 is going to be a leased machine and with a price tag up in the area of a quarter of a million dollars it'll likely have the heftiest licensing fee of any slot machine out there.

 

Let's be really clear. It is more expensive for the casino to lease a popular license game. In the past the slot companies were getting their lease PLUS a cut of the coin in before the casinos revolted. I don't know if the arrangement is the same today but it does cost the casino more to offer the latest tiles. And because the payback is generally brutal on some of these licensed games, a casino that intentionally offering lesser tier accumilation for playing them is screwing you over twice.

Also, the casino do own slots outright which explains why some titles are the floor forever. The cost of keeping something out there you've already paid off is going to be cheaper than a new lease. For this reason I understand why the comp rate may be better on a game like that compared to WOZ and the like,

 

I just do not get it. For the sake of argument, lets say a casino generally sets a slot to 89% payout. And some machines cost them 1% more in fees back to whomever.

So, they have three ways to take care of that extra 1% cost.

A) Casino just pays the 1% as a cost of doing business.
B) Casino changes payout on those machines to 88% vs the 89% (again, these numbers are only for argument's sake)
C) Casino gives less tier points to player to cover that 1%


Why would anyone in their right mind think it is a good idea to piss off their customers by picking option C?

What am I missing here?

 

I'm with you. Never understood why people always treated MGM like the smartest guys in the room. Even CET came up with option D and just tends to comp slower on those games instead of making it harder to earn tier points.