Saturday, May 14, 2011

Lower Base Wager = High Handle

In today’s Daily Racing Form, Steve Anderson brings to light that the .50 cent Pick 5 wager has supplanted the Pick 6 as the wager of choice at Hollywood Park – at least when patrons are chasing the carryover.  Aside from the goofy ‘single winner’ requirement of the Rainbow Six at Gulfstream Park this winter, that bet, with a .10 minimum was also very popular with bettors.
While this may be a surprise to some, I think to folks that have been involved in the gaming business over the last ten years, this is no surprise at all.  In my thirteen plus years on the supplier side of the casino industry I’ve seen this trend developing over time.

Twenty years ago the undisputed king of the slot machines was the quarter slot machine.  You could bet up to five coins, but usually two or three, spin the reels and test your luck.  In the 1990’s the multi-line nickel machines started to become more popular.  You were able to play nickels before, but usually it was just the same quarter machine “denomed down” to a nickel.  Casinos provided some of these games as a courtesy to their players, but at .25 a spin, there was not a lot of profit in them, but you needed to have something for the wives of the high rolling craps players to play (that was the theory anyway).
Aristocrat Technologies, an Australia based slot machine manufacturer, is generally credited with being the first company to take advantage of new electronics technology and started launching the higher line count nickel games using video reels instead of the traditional mechanical reels.  Now there were nickel games that had nine lines and you could bet up to 10 coins per line.  The maximum wager on a nickel game went from .25 to $4.50 and the average wager started moving north of the .50 and .75 maximum wager allowed by the classic .25 slot machine.

As time moved forward, other manufacturers followed this trend and over the past 5 – 8 years, the emergence of penny slot machines coincided with the advent of ticket-in, ticket-out technology to enable players to cash out thousands of coins worth of winnings onto a single ticket and move to another machine.  This made penny games more playable and more profitable for the players and casinos, respectively.  These penny games now have up to 100 lines and the ability to wager as many as 10 credits per line.  Your “penny” game became a $10 game when played at maximum credits.  Where these penny games, when first introduced, were only a small percentage of a casino floor, they now command over 50% of the floor space in most properties with some as many as 60%.  And the average wager of these slot players, once at approximately .37 cents twenty five years ago, now hovers at closer to .78 cents.  Lower base wager amount = higher handle.

Oh, and their takeout only averages about 9% - maybe that lesson is the next one that racing will learn…eventually.

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