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Slots Massive Slot Hold Percentage Change Month Over Month

Discussion in 'Slots' started by tacallian, Jul 27, 2012.

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  1. tacallian

    tacallian Low-Roller

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    I brought this up in another thread and wanted to try to generate some discussion on it. It has been mentioned prior how much of a pain in the butt it is for casinos to change a slot machine payback percentage. They have to take the machine down, display the change on the screen, blah blah blah.

    Take a look at the following report.
    http://gaming.unlv.edu/reports/6_month_NV.pdf

    Note the correlation between slot hold percentage and slot revenue. The hold percentage increases as the income increases in a quasi-proportional fashion. It indicates that not only are percentage changs occuring, they are frequent and significant.

    Now, what are the implications of all of this? the most obvious answer would be that when higher numbers are expected that the hold would be increased, but this stands somewhat stark when compared with the negative year over year value for January.

    Comments?
     
  2. Chuck2009x

    Chuck2009x VIP Whale

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    I'm not sure what you are reading into those numbers.

    Looking at the slot numbers for the Strip for January:

    Slot Revenue: 258,290
    Y/Y Change -0.44%
    Slot Hold % 8.71

    When I look at those numbers, and the other months that are reported in that section, all I see is:

    The hold % was about 1% higher than all the other months, but the Revenue was down about 0.5% from the same month in the prior year.

    That doesn't really tell me anything.

    You need to know what was the hold % in January of the prior year? If the hold was higher in the prior year, then the same amount of coin in this year would result in lower revenues.

    January 2011 Coin in: $100
    Hold: 9.11%
    Revenues: $9.11

    January 2012: Coin in: $100
    Hold: 8.71%
    Revenues: $8.71

    Y/Y change in revenues: (-0.40/9.11), or -0.44%

    It's true that in the Strip section of that report, 8.71% was a relatively high hold %. But in comparing Y/Y, it's meaningless, you have to know what the prior period hold % was.

    I found a chart that showed the Strip slot hold for Jan 2011 was 8.67%

    So now we know that slot revenue was down by half a percent Y/Y while the hold percentage was about the same.

    So it basically means coin in was also down about a half a percent Y/Y.

    What does a high hold % for a given month in relation to other months tell you?
    a) just variance
    plus possibly
    b) more than the usual number of low rollers who bust out fast

    Mostly a). If I was looking for any pattern, I suppose I'd expect heavily booked convention months to have the highest holds, because of b).
     
  3. leo21

    leo21 VIP Whale

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    It is a PITA to change the percentage of a game already on the floor. But that's not what they are doing. They are adding in new games that that are designed to pay less overall compared to the games they are replacing. Look at the WMS community games. Each new iteration is harder to win on then the one it replaced. It seems to me that it's also harder to win on the newer SATC games than the original and that was a streaky game to begin with. But people flock to games like that because of the themes. At the end of the day, they even found a way to create a 6:5 effect on slots and that leads to some of the holds that are out of line with coin-in. It seems like two or three months of the year, the casinos are making way more profit even though revenue is flat or down.
     
  4. Auggie

    Auggie Dovahkiin

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    Well, it could also indicate that you don't know what you are reading and just trying to hammer a concept in to set your own mind at ease.

    First we will start off by saying: hold percentage is not equal to payback percentage or house edge. The house edge is a part of the hold percentage but there are other outside factors.

    Next, we will go right to blackjack, a game renowned for its low house edge and even if playing crappy rules for the player (IE: 6/5 payout on blackjack) its actually pretty hard to get the house edge up to 2-3%

    If you look at the gaming reports over the last two or three years you will see that the casinos' hold percentage on blackjack usually runs around 11-15% but some months can actually get up in to the 20-23% range

    And that is where your whole argument falls apart: a game with, on its worst case scenario, having a 2-3% house edge being able to have a hold percentage up in the 20 percentile range? There is no computer chip in a deck of cards that they can swap out to make more money off blackjack... that would mean there must be other outside factors involved.


    For the really simplistic example:
    Lets say a casino installs a brand new slot machine set to a 5% payback on the casino floor and nobody has played it yet.

    Since nobody has played it yet if they call up the status report it would list its data like:
    coin in: $0
    coin out: $0
    expected payback percentage: 5%
    actual payback percentage: 0%
    hold: 0%

    You walk up to the machine and put in $20 as its first player... and you play and play and play until your $20 is all gone.

    Now if they call up the status report on the machine it would probably look like:
    coin in: $20
    coin out: $0
    expected payback percentage: 5%
    actual payback percentage: 8.4%
    hold: 100%


    Going back to that report you linked to the reason why those numbers change is because:
    a) A slot machine's payback percentage isn't really static, especially with video slots. It can be estimated but it can change slightly over the course of being played.
    b) The reason those numbers get bigger in other months is because more people are playing in those other months.
    December is a very slow month for Las Vegas so its no surprise that their slot revenue is waaaaay down that month.
    January is overall kind of slow but it does start off with New Years and some massive conventions. February slows down again because its another quiet time of the year for Las Vegas.
    March gets busier but not really with the slot playing crowd (college kids are on spring break to drink and party, sports bettors are there for March Madness).
    And then you have April and May where the numbers climb up and thats because thats when the traditional tourists are coming back.
     
  5. numeno

    numeno VIP Whale

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    So there were more penny slot players in May than there where in April. Do you have an explanation for this beyond randomness in travel?


    Of course the hold % is going to go up. The only reason this would is because they get an extremely high % of high roller slot players in town that month. When I see slots holds of under 10% I see a ton of people playing $1+ slots. No penny slots pays under 10%.
     
  6. Auggie

    Auggie Dovahkiin

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    Its not really random, just when more people go on vacation than other months.

    Like Las Vegas might have 3.5 million visitors in the month of May but only 2.5 million in December excluding NYE... thats not "random" just that a lot of peole don't travel in December.
     
  7. JillyFromPhilly

    JillyFromPhilly Tourist

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    If I recall correctly, in his latest quarterly earnings report, Steve Wynn mentioned the baccarat hold, and I believe remarked that it was normally somewhere in the 20-30% range - and that's for a game with a HA of about 1%. They also regularly describe players as being lucky or unlucky - so more than HA figures into it - some quarters the players get lucky, some quarters the house does [and again, if I remember correctly, Wynn was lamenting that the house had done so well he was actually disappointed, because losing customers aren't happy & returning customers - so even though they had a very high hold on baccarat the one month or quarter, he actually saw it as a negative - but then acknowledged that over time, things even out, even if they swing dramatically one way or the other in any given month or quarter].
     
  8. Chuck2009x

    Chuck2009x VIP Whale

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    I listened to that WYNN call because I had bought some WYNN shares a week or so earlier.

    Wynn was explaining high vs low hold in bacc in the context of the quarterly results. He was comparing I think it was May, 2011 vs 2012.

    These numbers might not be exactly right, but I believe he said their normal expectation for hold on bacc was 24% - 27%. And that in May 2011, it was something like 37%, which was the highest he had ever seen, while in May 2012, it was something like 18%.

    So he explained that they don't like to see that, for some pretty obvious reasons:

    1. They don't need a higher than usual hold, they do just fine with an average hold, with the assumption that activity increases.

    2. A big hold means players lost more than usual, which is discouraging for players and can depress activity for a while.

    3. It comes back to bite them in the ass because things do even out in the long run, and you have the potential to have horrible year over year comparisons, which is exactly what happened here. About a 20 point swing year over year for a particular month in the bacc hold.

    Somebody did a calc which I didn't really check the numbers on, but said that the deviation from the expected/average hold for the quarter amounted to 42 cents a share on their EPS.

    I'm always a little skeptical when gaming cos blame hold for bad results; it's kind of like retailers blaming bad weather. But the numbers are crunchable. It's one reason gaming stocks are so volatile; gaming analysts should understand variance, but it seems like it doesn't get as much weight as it should. They just say, a miss is a miss is a miss.
     
  9. vegasgirl101

    vegasgirl101 Tourist

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    Not a PITA to change anything with the Bally Command Center and server based gaming. Google it.

    Every casino on the strip is now server based. And no server based does not just relate to machines with multiple games.
     
  10. nostresshere

    nostresshere Mr. Anti Debit Card

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    Please clarify this statement. I do not think all those old 3 reel machines are server based.
     
  11. nostresshere

    nostresshere Mr. Anti Debit Card

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    I keep hearing this, but not convinced. Even if it takes a tech an hour to swap out the chip... seems that they would get that back quickly.

    I have no idea how much a machine can take in, but let's say the coin in is $500 a day, or $2,500 a week. If they go from a 8% hold to a 11% hold, that would be $75 in just one week. ??
     
  12. leo21

    leo21 VIP Whale

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    It's not the hardware work. It's the paperwork. The casinos have to notify the gaming commission to make the change and from what I understand the NGC has to retest the slot to put it back in service. Why bother when you can put a crappier game in place of one you are retiring anyway. Not all casinos are server based yet (that's a real expensive move for a debt laden industry recovering from the recession) and even for the ones that are, they can't just switch a game at the blink of an eye. There are still a lot of regs for that, too.
     
  13. Ben Jammin

    Ben Jammin VIP Whale

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    Savvy Advantage Gamblers don't play slots as a rule. The percentage or house advantage is just too high.

    Expected loss rates per hour run into the hundreds of dollars on dollar slots.

    Penny slot revenues account for a huge jump in casino profit, as the paybacks are the worst of any reel game, and the proliferation of them is a phenomenon.

    Even a less that optimal pay schedule on any Video Poker machine is usually better than the best return you can find on a slot, not to mention you have no way of knowing the exact payback percentage on a slot machine, unless it is posted on the machine or bank of machines, and beware of the catch phrase.."Up To" such and such a percentage.
     
  14. ardee

    ardee VIP Whale

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    Actually, I believe leo is the one who is more correct here. The paperwork regs are rather strict, most machines are not server-based.
     
    Last edited: Jul 29, 2012
  15. tacallian

    tacallian Low-Roller

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    I have sincere doubts that slot machines have required a physical removal of hardware (this mysterious chip everyone keeps talking about) to change payback percentages in probably the last 30 years.

    Why do I say that? Well, for starters even video game arcades back in the 80's had switchable difficulty levels via dials or switches inside the machine. Slot machines will be no different. Indeed it would actually be quite arduous and silly to require hardware change because you lose the aspect of fine tuning unless of course the casino has a giant room somewhere full of 75.5% 75.6% 75.7% and so on chips for every iteration of slot machine (any chip you may have had would be obsolete every time the tech changed). All computers use chips of some kind, but very rarely are they removable.

    It will be done via a menu within the machine itself. Older machines may require a dial or hard switch inside but at this point, be careful thinking that just because a machine has three old looking reels that there isn't a sofisticated computer inside running the show. The insides will not look anything like they did 20-30 years ago.

    I'd like to suggest that the definition of server based everyone is using is incorrect as well. Slot machines have been networked since the advent of players club cards. Or for example any wide area progressive because the machines have to be networked and coordinated so as not to pay something twice and to keep the tally updated. Server based means that an element of the actual base function would be run on a server and without the server the game ceases to function. So for example the random number generator, or even the software of the machine itself. After all, the screen could in theory just be streaming from a server blade in the back room. (I'm not saying it is, but the capability certainly is there).

    Remote adjustment of settings is available to them. WMS and others would be terrible tech companies if they didn't include such basic options in their products. To provide context, I have remote access to an air conditioner.

    Ive not read the Nevada rules on HA changes. Can someone paste or link them? Everyone quotes the large amount of paperwork required, but if its just notifying the gaming board and testing the machine as mentioned earlier in the thread, then don't forget the computer system can do all of that in several very short automated moments. I don't doubt there are steps they must go through, but there seems to be this general view that the steps are too much to bother with, when we know that a 0.1% change can result in a significant amount of money.
     
  16. Auggie

    Auggie Dovahkiin

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    You have to be pretty naive to be comparing adjusting the difficulty level of a game like Space Invaders to changing the payback of a slot machine...

    With server based slots the casino or slot manager can change the payback percentage of a machine (as well as its denominations accepted) from a master terminal... though they do have to follow some pretty strict procedures.

    However, not all slots are run off a server - in Las Vegas Aria is the casino that has the largest percentage of server based slots and they only passed the 50% point earlier this year.

    For machines that are not server based how it works is the software that runs the machine is on an e-prom chip that is encased in a box inside the slot machine and has NGC seals keeping it closed - the seals can only be broken, and thus the chip changed, in the presence of an NGC agent.
     
  17. Ike

    Ike Low-Roller

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    You're thinking about things incorrectly. The reason you see such a discrepancy between house advantage and hold percentage on a table is due to the (flawed) method casinos use to calculate table hold. This calculation does not take into account money risked which is why over time slot hold will approach theoretical hold (HA) and table hold will not.

    Table Hold % = Table Win / Table Drop(amount cashed in for chips)

    Slot Hold % = Slot Win / Coin In (Total $$$ Risked)
     
  18. tacallian

    tacallian Low-Roller

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    Precisely why do I have to be naive to compare the two? A slot machine is no more complex in design or purpose, and the technology is no less available to both mediums. Of course, given that I was arguing at the time of that particular comment against the use of "chip" replacement to change payback percentage. I am curious where the e-prom info came from though as I've heard reference to but never read anything credible on it still being used. It would be an archaic method even 20 years ago.

    Could you link to something saying that server based means remote access? A remote access menu for changing settings is NOT the same as running from a server.

    I'm confused on the agression Auggie. You're usually so mild tempered. Have I pissed you off somewhere?
     
  19. joaks

    joaks Low-Roller

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    I think we are splitting hairs by misusing certain terms.

    Real server based gaming like Aria has is basically this: multiple dummy terminals with a graphics card, display, some limited circuitry that gives it a unique ID within their network, RAM, etc. Those terminals do not contain the electronics that make decisions on the outcome. That is all contained in the main server.

    As far as the "old" reel spinners, subtract the fancy displays and you still can have server based gaming.

    That said, I saw where someone said all slots have been networked for 20 years or more and have always been server based. This is only partly true. The EPROM as we are calling it, or the chip, is independent of the network in its decisions. The networking was and is a monitor for players cards, points, money in and out, alarms for jackpots, tilts, tampering, LAN or WAN jackpots like WOF, etc. I point out the EPROM because there are several methods of storing the firmware in a slot machine, not just EPROMs.

    The above info doesn't apply to class II gaming places, like a few states and many tribal casinos use.

    Comparing these machines physically to arcade games might be accurate, if overly simplistic. But the regulations, testing, and paperwork on these babies far exceeds the cost of PAC-Man or Frogger.
     
  20. joaks

    joaks Low-Roller

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    Back to the OP, 1 or 2 people hitting a large jackpot on a $25+ slot or a large progressive hit could easily skew the numbers, especially in the smaller markets like downtown.

    I get Casino player mag, and every month they show a detailed report for most casinos or areas on payback for slots. It even goes do far as to break down how many machines of a particular denomination each casino or area has. It's interesting because if a casino only has 5 slots that are $50 denomination, one month the payout might be 80% and the next month it might be 210%. I think it's safe to assume that month to month is sort of useless to look at. A year by year trend going back 5-7 years would be much more accurate. I don't really want to think that casinos "adjust" their paybacks day by day or month by month. It may be climbing up slowly over time, but the growth in penny slots may have a lot to do with those averages.
     
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