Insight US SLOTS ASSESSMENT - AGEM
understand how slot win has trended relative to personal incomes.
Throughout the majority of the 1990s, slot revenue expanded at a faster pace than overall personal incomes suggesting a higher share of consumers’ wallets were being dedicated to gaming activities. These trends moderated somewhat through the 2001 to 2007 timeframe as gaming revenue growth more closely approximated gains in personal income. From 2008 forward, there has been a clear and consistent trend that consumers are simply spending less of their earnings on slot activities.
In addition to reviewing aggregate slot win relative to personal incomes, an analysis of win per capita demonstrates a similar trend. Total win per capita expanded throughout history until the peak of $85.41 in 2007, with contraction in the 2008 to 2014 period. Throughout history, the number of casinos and slot machines continued to expand (adding capacity), and gaming play (slot win) had outpaced the growth in the number of players (population base) or their spending potential (personal income).
SLOT HOLD PERCENTAGE SUMMARY The ratio between the amount of slot win and slot
handle reflects the slot hold percentage. This ratio is not a figure that is simply randomly determined based on the play of the game. Rather, slot machines are programmed with targeted hold percentages that are designed to be achieved over a long period of play.
4 0
Marcus Prater, AGEM Executive Director.
The actual hold percentage, the inverse of which is referred to as the RTP, has reported consistent increases over time. Aggregate slot hold percentage reached a low of 5.96 per cent in 1996, and it has posted increases generally throughout the period ending 2014.
“While it is clear there are a wide variety of factors impacting gaming revenues, this report is important for both suppliers and operators and gives additional perspective on the effect of slot holds on the player experience,” said Marcus Prater, AGEM Executive Director. “It is understood that there is a delicate balance between giving players a fair entertainment value while maximizing revenues for casino operators. It is also important to note that the industry needs to consider all new ideas to stop the erosion of slot revenues in markets throughout the U.S. With that in mind, AGEM is committed to the idea of business development for its members, who in turn are committed to ensuring casino operators have the games and technology to attract and entertain their players.”
In addition to analysing the historical trend in hold percentage, a review of the annual change in hold percentage indicates the gains in hold percentage were generally greatest during the 2001 to 2007 timeframe, reporting an average annual increase of 0.16 percentage points. From 2008 to 2014, the average annual gain was nearly one- third of the previous period change at 0.06 per cent points. During 2013, the industry reported a decline in aggregate slot hold percentage followed by a year of increase in 2014.
It is worth noting that not all states follow the aggregate market trends. One market that appears to be moving in an opposite direction from the broader market is the emerging Florida gaming market. Since inception (2006), Florida has reported a declining trend in slot hold percentage, while revenues have continued to escalate in the post-recession era; supply-side expansions were also occurring. Rhode Island has also reported continued revenue expansions since slot hold percentage remained relatively flat to down since the 2007 timeframe. Also noteworthy is the fact that slot win both increased and decreased during periods when slot hold percentage was increasing.
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