US – AGEM report shows slot hold has increased 1.5 per cent in the USBy Phil - 20 August 2015
The Association of Gaming Equipment Manufacturers (AGEM) has issued a comprehensive report titled Building Better Business – Assessing the impact of hold percentages on overall slot revenue that reviews the impact of tightening hold percentages in key gaming states across the United States.
It showed that blended slot hold in key states has increased 14.5 per cent over 10 years with no material increase in win, suggesting that rising slot hold ‘may be contributing to (slot revenue) decline.’
AGEM engaged respected Las Vegas-based firm Applied Analysis to assess a variety of factors impacting slot revenues and to focus on the states with published slot hold percentages and the corresponding revenue and report the results going as far back as 1990 from Colorado, Connecticut, Delaware, Florida, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey, Ohio, Pennsylvania, Rhode Island and South Dakota.
During the past decade, since 2004, 10 of out 12 states, 83 per cent, reported slot hold percentage increases whilst seven out of 12 states, 58 per cent, reported slot win declines. Slot win among the surveyed states reached a peak of $26bn in 2007 and finished at $22bn in 2014. Blended slot hold hit a low of 5.96 percent in 1996 and hit an all-time high of 7.70 percent in 2014.
Iowa at 9.37 per cent had the highest slot hold in 2014; Nevada at 6.40 per cent the lowest. New Jersey experienced the biggest slot-win decline from 2004-14, falling 47.3 per cent. Iowa showed the highest slot hold increase, tightening 32.9 per cent from 2004-14.
Florida hold loosened by 9.2 per cent from 2004-14 and revenue increased 153.8 percent during the same time period.
The report concluded: “While economic conditions appear to be a material factor in slot performance trends, there may be other factors impacting the industry’s overall performance, most notably following the conclusion of the most recent recession. Consumer spending has improved in most major gaming markets throughout the United States in recent years, while gaming volumes continue to contract.”
“While statistical correlations on a state-by-state basis vary due to any number of factors, the broader, aggregate trends would suggest a rising hold percentage has not translated into incremental gaming revenue for operators during the post-recession era,” it added. “In fact, they very well may be contributing to its decline.”
Commentary on the slot hold topic is included from respected gaming industry experts and progressive thinkers such as Buddy Frank, Charlie Lombardo, Andrew Klebanow, Bruce Rowe, Roger Gros, Allon Englman, Steven M. Gallaway, Daniel Mitchell and Louis Ross.
“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 US. 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.”