Slot Seminar

Presented by – Rich Lehman

Slot Seminar

* Proprietary and Confidential

Presented By

Dicentric Solutions, LLCMYPLAYERSCARD.COM

Rich Lehman NOTICE: This document contains confidential and proprietary information of Rich Lehman and may be protected by patents, trademarks, copyrights, trade secrets, and/or other relevant state, federal, and foreign laws. Its receipt or possession does not convey any rights to reproduce, disclose its contents, or to manufacture, use or sell anything contained herein. Forwarding, reproducing, disclosing or using without specific written authorization of Rich Lehman is strictly forbidden.

2 Proprietary and Confidential

• GAME SELECTION

• WEIGHTED HOLD PERCENT

• FLOOR DESIGN

• EVALUATING GAME PERFORMANCE

• BONUS VS. TITO REVERSING EFFECT

• MOVING THE CASINO HOLD

• SLOT BUDGETING AND BUSINESS PLANNING

SCOPE OF SEMINAR


Mr. Lehman has over 34 years of gaming experience working as Vice President of Slots and General Manager for gaming operators such as, Boyd Corporation, Caesars Palace, Park Place Entertainment, Horseshoe Gaming, and most recently Navegante Gaming.

He is a former educator in developing gaming operations assisting the University of Nevada to gain its accreditation for gaming curriculum and has authored a book called Slot Operations: The Myth and the Math through the University of Nevada, Reno.

He is acknowledged as an expert in slot operations, game development, marketing and has written numerous articles on player tracking, computer system design and database development for various trade magazines.

Mr. Lehman has experience with Tribal Gaming operations working as the General Manager for the Yakama Nation Legends Casino in the State of Washington.

INTRODUCTION


• The operator has the following requirements to maintain a competitive slot product:

– The right mix and quantity of each manufacturers games, and

– Appropriate payback percentage per denomination, and

– Adequate supply of various cabinet styles complimenting the aesthetics of the casino.

GAME SELECTION


• Manufacturer – Each manufacturer owns certain proprietary intellectual properties that makes them different in game titles, cabinet styles and electronics.

• Model – The age of the electronics is detailed in the model series of the manufacturers equipment. Manufacturers frequently improve the electronic capabilities of their product requiring a new model number or name.

• Game – The titles of the games displayed to the public are described as the game. The game title plays an important role in making the decision as to what value the device will have on revenue once installed.

• Denomination – The selection of denomination is based on floor analysis determining either under-saturation or over-saturation of those denominations offered for play and for the game selected. Many games developed today are engineered denomination specific.

• Hold % - The percentage of payback is determined mathematically through the manufacturers and selectable by the operator. Determining the appropriate hold% requires an analytical review of the current offerings on the casino floor to maintain the overall hold% for the casino floor to stay on budget.

• Cabinet – The shape of the cabinet changes by manufacturer supporting unique floor designs. The design changes such as slant tops versus uprights supports the operators desire to provide customers with machines designed to fit the mass market.

GAME SELECTION (CONT)


Hold % Coin-in %

=When hold % declines, coin-in % must increase to compensate at an equal rate for everything to be equal!

GAME SELECTION (CONT)


• Establishing hold percentages by denomination is a traditional approach for casinos.

• One common fact to remember is that “Not all machines will generate the same amount of coin-in…therefore, not all things are equal!” For a slot machine to contribute its hold percent equally to the others requires it to have equal coin-in.

• The process of reporting on a property weighted hold percent can be simplified through many slot tracking systems today.

• The manufacturers hold percent is a mathematical calculation that determines the payback percent over the period of handle pulls necessary to complete one or many cycles.

• Explanations related to the decline in revenues is easily explainable when an operator reports the earning potential of the casino based on weighted hold percentages than on the actual hold, which fluctuates daily, while the weighted hold percent is less sensitive to a large jackpot hitting on a particular day.

• PAR – Payout and Retention – Each manufacturer provides PAR sheets for each game they develop supporting the math associated to the games hold percent and frequency of pays to its cycle.

WEIGHTED HOLD PERCENT


For example, the casino posted the following revenue for the day in this simplistic view:

The casino has 3 machines and on this day with financial records reporting the following:

• 1 nickel machine with a PAR of 10% and a hold of 12% today,• 1 quarter machine with a PAR of 5% and a hold of 6% today, and• 1 dollar machine with a PAR of 3% and a hold of 3% today.

• The nickel machine generated a $1000 of today's coin-in, while the quarter machine generated $2000 and the dollar machine $3000.

Actual Hold-• The nickel revenue at $1000 x .12 = $120, while the quarter revenue is $120, and Dollar revenue is $90

for the daily average. When you divide the daily revenue by the daily coin-in ($330 / $6000) we get a hold percent of 5.5%.

Weighted Hold – known as expected hold• The nickel revenue is $1000 x .10 = $100, while the quarter revenue is $100, and Dollar revenue is $90

for the daily average. When you divide the daily revenue by the daily coin-in ($290 / $6000) we get a weighted hold percent of 4.83%.

WEIGHTED HOLD PERCENT (CONT)


Weighted hold percent calculates a variety of numbers for their total value.• Below is an example of 7 machines with varying hold percentages. As noted the group of

machines generated an actual win of $600 yet has an expected win of $628.37 once the weighted hold is applied.

House # Coin-in Win Hold % PAR % of CI % of Hold

1001 $899.90 89 9.89% 11.01% 15.74% 1.73%

1002 $794.87 62 7.80% 6.89% 13.91% 0.96%

1003 $413.22 45 10.89% 10.55% 7.23% 0.76%

1004 $1,000.00 150 15.00% 10.22% 17.50% 1.79%

1005 $1,221.22 122 9.99% 14.00% 21.37% 2.99%

1006 $977.53 87 8.90% 12.00% 17.10% 2.05%

1007 $409.09 45 11.00% 9.89% 7.16% 0.71%

Total $5,715.83 $600.00 10.50% 10.65% 10.99%

Expected Revenue $628.37 with a weighted hold of 10.99%

WEIGHTED HOLD PERCENT (CONT)


Floor design is an art!!! Floor design supports slot revenue!!!

FLOOR DESIGN


•Floor design requires accurate measurement in the placement of games and equipment in order to maximize the space permitted for gaming.

•Adequate aisle spacing is important for the handicap and necessary foot traffic to support the slot product. The example below does not support either.

FLOOR DESIGN (CONT)


• When measuring the floor for creation of a properly balanced slot floor design, the following basics should be observed:

• High traffic patterns supporting large groups of people need to have a minimum aisle space of 6 feet.

• Medium traffic patterns 4 feet.

• Slower traffic patterns at 3feet 6 inches.

• As a rule of thumb, add the measurement from the back of the slot machine to the back of the chair (allowing 2 feet from the back of the chair to the front of the machine for a person to sit in the chair). Add 3’6” to the separating aisle before starting the measurement for the adjacent row of machines.

• Utilize one footprint for all machines, which will support future changes to the casino floor without having to create extensive redesign for the change.

FLOOR DESIGN (CONT)


• As noted in the earlier slide, the slot machine dimensions measure to 4’0” from back of chair to back of seat . Adding the aisle space of 3’6” suggest that the back of machine to back of machine will measure 11’7”. Keeping measurements as this throughout the casino will assist in maximizing the casino revenue per square foot.

FLOOR DESIGN (CONT)


Individual and group game performance is a critical function of the Slot Department often performed by a dedicated performance manager.

Several variables are involved in the daily, monthly, quarterly, and annual evaluation such as:

– Game Model

– Hold Percent

– Denomination

– Progressive Addition

– Manufacturer

EVALUATING GAME PERFORMANCE


• The capability to perform a proper game performance analysis requires historical data.

• Historical data needs to have a strict set of guidelines, such as per day, week, or month.

• Segregation by location is necessary since all locations in the casino will not have the same earning potential.

• Game characteristics such as cabinet style, denomination, hold percent, maximum bet, top jackpot amount, video versus reels, or progressive versus non-progressive and more needs to be reviewed in order to give a proper comparative analysis.

• Actual revenue versus theoretical revenue. Theoretical revenue uses the attributes of coin-in multiplied by hold percent. Theoretical revenue removes the volatility from trend lines when performing trend analysis.

• Saturation reviews assist in game performance analysis. Saturation by model, manufacturer and denomination are the top three key characteristics of the casino make-up requiring special reviews on a periodic basis and prior to the addition or deletion of slot machines.

EVALUATING GAME PERFORMANCE


Increasing the Entertainment value• Slot machines have slowly evolved over time becoming the missing link to entertainment –

or are they?

Increasing “Time-on-Device”• Marketing and slot operations work cooperatively for one common goal…to increase the

time-on-device through changing hold percentages and aggressive promotional campaigns tailored to excite elongated play periods from their guests.

• The process of extending time-on-device through internal and external processes continues to be an on-going "works in progress“, as recognized during the past 15-20 years through the use of:

• Changing payouts, which would increase the gaming customers chances of winning and keeping him/her at the gaming seat longer.

• Developing marketing programs tailored to accomplish the same goals through enhanced rewards for increased coin-in.

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BONUS VERSUS TITO


• Relational characteristics of slot win:–When coin-in declines by 20 percent, the hold percent must increase by 20

percent to compensate. –TITO (Ticket-in/Ticket-out) improved the downtime on slot machines by

removing hopper fills and a majority of hand paid jackpots allowing increased coin-in.

–Bonus rounds added to slot machines increase the time on device through entertainment.

–Added time on device increases slot win – or does it? (Can we count the time in a bonus round as time on device?).

– Increased coin-in or hold percent improves slot win.

BONUS VERSUS TITO


• Casino hold percentages change on a daily basis from the following sources:– Gaming customers based on game preference change the casino earning potential

• The customer base of the casino and new games offered for play often have an effect on the casinos hold percent. When gaming customers gravitate from lower hold games for new higher hold attractive bonus games the average hold percent in the casino begins to climb.

– Slot Directors change casino hold percentages through changes made to the games.• Management continues to make changes in the casino to operate with increased efficiency

through floor designs. Change in game models to attract mass market for the facility and denomination changes are a few of the ways Slot Directors create hold percent changes for the building.

– Average wager on a gaming device changes the game hold percentage.• Nearly all machines that award a bonus amount to customers that wager the maximum wager

have higher hold percentages for those wagers less than maximum.

– Adding Progressive payouts change the casino hold percent.• Adding progressive payouts lower the hold percent of the casino through increased jackpot

amounts returned to the customer.

CASINO HOLD PERCENT


• How does the casino move hold percentages when necessary?– Evaluate casino floor game structure– Segregate mix of games by denomination– Weight value of each denomination– Prepare popularity analysis by denomination and game type– Make necessary changes to the product mix– Schedule new hold percent– Prepare analysis of changes supporting change– Analyze results making any further necessary

CASINO HOLD PERCENT


SLOT BUSINESS MODELING


Marketing Operations

Finance

The Plan

Defining the Key Players

SLOT BUSINESS PLANNING


Marketing

Internal Resources

External Resources

Operations

Finance

The Plan

Defining Additional

Key Players

•Human Resources•Food •Beverage•Table Games•Other Games•Hotel

•Air Transportation•City Wide Events•Holidays•Gaming Abstracts•Seasons

ADDED SUPPORT GROUPS


• Proper Setting the correct template will assist in the development of the business plan.

• PlanningThrough historical data, a plan will have more validity and reflect thought.

• PreventsPlan failure can be mitigated by careful analysis

• Poor

Outdated or incorrect figures lead to failure

• Performance Performing due diligence with each aspect of the plan ensures success.

THE 5 P’S PRINCIPLE


• Slot / Electronic Gaming Devices• Slot Player Tracking Systems• Slot Information Systems• Progressive Systems• Mystery Jackpot Systems• Player Bonus Systems• Player Predictive Modeling Systems• Slot Bases• Slot Chairs• Staff Uniforms• TITO Tickets / Tokens

PRODUCTS / DEFINITION


• Slot / Electronic Gaming Devices

A proper slot or electronic gaming mix consist of variety.

–Variety of manufacturers

–Variety of denominations

–Variety of cabinet styles

–Variety of hold percentages

–Variety of game titles

–Variety of progressives

–Variety of specialty machine banks

PRODUCTS / DEFINITION


• Take the 5 P’s approach to developing an solid plan – Proper Planning Prevents Poor Performance.

• Creation of the slot budget requires good statistical information that supports revenue forecast.

• Statistical data such as unit counts by denomination and expected hold percent by denomination will aid in developing the revenue forecast.

• Utilizing state, county, or city gaming historical records will assist in forecasting expected revenues through past performance

• The slot business plan is a complex document describing each aspect of the internal and external elements intended to drive revenue.

• Designing the perfect business plan requires resources from multiple departments, such as Hotel, Marketing, and Finance.

SLOT BUDGET AND BUSINESS PLAN


• Key characteristics of a business plan include:– Executive Summary

• Objectives, Mission Statement, and Keys to Success– Property Summary

• Company Ownership– Services

• What services are offered– Market Analysis

• Market segmentation, Target Market, Service business analysis, Competition– Strategy and Implementation

• Competitive edge, Marketing strategy, Revenue strategy, Revenue forecast, Milestones– Management Summary

• Personnel plan– Financial Plan

• Important assumptions, projected profit and loss, income statement, projected cash flow, projected balance sheet, cost of equipment and depreciation, debt and interest, capital improvements.

SLOT BUDGET AND BUSINESS PLAN

Slot Seminar

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