28 September, 2022

We love penny slots

Gambling Insider contributor and industry marketing veteran, Alex Czajkowski, discusses how macroeconomic indicators can influence the determination of optimal wager amounts. Our industry’s main job is to sell experiences, he argues, not just to maximise revenue generation...

Miss Hach, my fifth grade teacher a hundred years or so ago, used to fine us a nickel for every week we were late returning a book from her library. “To use on the nickel slots in Vegas,” she used to say. That puts her in the minority of Vegas players, right? After all, Vegas is about high rollers, table games, VIP sections and limos. Like we see on TV and in movies… She would be in a minority sitting there sticking nickels in a slot machine. Right?

In 2021, table games in Las Vegas accounted for $4.8bn in revenue, $1.29bn in blackjack and baccarat $1.2bn. Sports betting was $432.1m. That’s impressive – and it was Vegas’ best year ever in fact. And yet slots generated $9.83bn in total revenue. Penny slots, meanwhile, generated $3.8bn, almost three times the revenue of those suited-and-booted baccarat players.

Penny slots

I hear my intelligent colleagues at various firms talking about setting the optimal default bet on their slot machines. But what are they trying to accomplish? “Maximum revenue generation from players.” I disagree. Our job is to make sure our players have a positive experience and get their money’s worth.

Nothing is worse than dropping in $50 and losing it in 10 spins at $5 a spin. “I can’t win at that casino,” the player says, followed up by a much stronger-worded response in less polite company... These factors don’t add up to a positive experience.

Newbies may or may not know how (or when!) to adjust their price per spin. So we set our slots at the minimum bet. The numbers work out the same, the RTP is the same; sure there is (online at least) an infinitesimal cost of powering that game for 50 spins instead of 10. But the player has a better time.

Experienced players know what they want to spin at initially. They know their bankroll and that to get that possibly high-returning feature they’ll need 100-200 spins; so they plan accordingly – and hope. But they play at a level and for sufficient time that, win or lose, they had a positive experience.

That’s what we sell. Positive experiences. The failure to do so is what gives you churn. Let’s say we’re in a country with a low GDP and a large, younger demographic like Indonesia. We set the default spin to the lowest possible price per spin. Or a country with a high GDP and a declining, ageing population, like Japan. We set the default spin to the lowest possible price per spin. These macro-economic factors will change the lifetime value of your players (lower GDP, lower player values; higher GDP, higher player values).

But there is no KPI that we use on how fast we get those revenues. Give your players a positive experience, point them at games you think they might enjoy (low to medium-volatility slots). If they prefer to play 21 or baccarat, they’ll find those tables. If they prefer the rush of a bigger bet and greater return on a higher volatility slot, show them;give them a taste. What we get paid for is delivering a positive experience to all of our players. Do that and the money will come. Just look at penny slots in Vegas.