Thursday, Aug. 24, 2000 | 10:47 a.m.
It may be the beginning of the end of Nevada slot players' love affair with coins.
When the Suncoast opens its doors in September, slot players will encounter a system most have never seen -- a system that allows payoffs with a printed ticket, rather than streams of coins. All but 200 of the 2,100 slots at Suncoast will have these systems, making the Suncoast the first Nevada operator to rely on the system as a standard feature of its slot floor.
"This test could go down in history as one of the most significant events in the history of the casino industry in Las Vegas," said Andrew Hatherley, executive vice president at Las Vegas Investment Advisors. "This could be a milestone event."
Often referred to as "coinless" or "cashless" machines, the Suncoast machines won't eliminate coins for now. Coins or bills can still be inserted into the machine, and payouts of less than 200 credits will still be made with coins. Anything above 200 credits, however, will be paid with a ticket slip. This ticket slip can be redeemed for cash at the cashier's cage, or can be inserted into the bill acceptor of another machine.
This system will remain in effect for several months while the Nevada Gaming Control Board reviews the system. Once a final OK is given, the Suncoast could alter the system to leave the choice between coin and ticket entirely to the customer.
"This is the future of the industry," said Suncoast General Manager David Ross, tapping one of the "coinless" machines.
Though not the first deployment of ticket systems, the Suncoast will be by far the largest use of the systems so far. The Fiesta in North Las Vegas has been testing about 50 ticket-enabled machines since March, while a casino operated by the Barona tribe near San Diego features nearly 700 machines with the ticket dispensers.
George Maloof, president of the Fiesta, said the hotel-casino is converting 30 more machines to the ticket dispensers. Long-term, he believes the system will be far more widespread, both on the Fiesta's slot floor and at other casinos.
"So far, it's worked well ... we've just been getting people used to the process," Maloof said. "It definitely cuts down on the coin, and people like that.
"One thing about the casino business ... if something works, people expand on it really quick. As people become used to it, that'll become the standard."
One huge motivation for casinos could be the savings from eliminating coins from the slot machine mix, particularly as "multi-line, multi-coin" nickel slots gain more and more casino floor space. Las Vegas Investment Advisors estimates more than $400 million per year is spent by Nevada casinos on coin handling costs, and that so-called coinless systems could eliminate a big chunk of those costs.
"In an era where new buildings aren't going up, this is an excellent way of generating some same-store cash flow growth," Hatherley said.
But Ross said savings on coin-handling costs were secondary in the decision to go with the ticket dispensers. Customer service, he said, is the priority.
"(Customers) are constantly waiting for hopper fills ... this eliminates that," Ross said. "Our customers will dictate what they want."
One of the biggest beneficiaries of a successful debut at Suncoast could be International Game Technology of Reno, whose "EZ Pay" ticket system is installed on the machines. The computer system that tracks and verifies the tickets was installed by Casino Data Systems.
"We think (the Suncoast installation) is monumental," said Ed Rogich, vice president of marketing at IGT. "We're excited about the possibility, and to have it in an environment on such a widespread basis allows us to get a feel for how this technology is accepted by the customer and the casino operator."
If Suncoast's trial is successful, "it will definitely expedite (other operators' interest), that's for sure," Rogich said.
And that has the gaming industry and investors watching the Suncoast test closely, said Bear Stearns gaming analyst Jason Ader.
"We are closer today (to market acceptance) than we were five years ago," Ader said. "I still think it's going to be several years before a cashless environment exists, but everyone's watching this Suncoast opening very closely. I view it as one of the most exciting prospects for (IGT's) future growth."
Market acceptance of the coinless concept is still hotly debated. While most observers say the sophisticated locals market is probably ready for coinless play, there's still hesitance to install such machines on the tourist-oriented Strip. Many still remember the failure of the MGM Grand to generate interest in coinless machines when it first opened in 1993.
The reason tourists resist the machines, conventional wisdom goes, is that a tourist needs to hear the coins dropping into the pan and handle coins to make the slot-playing experience complete. To overcome this to some degree, the IGT system contains speakers that can be used to play the sound of coins dropping when a player receives a ticket.
Marcus Suan, vice president of slot marketing for Suncoast owner Coast Resorts Inc. of Las Vegas, said he'd like to convert 5 to 10 percent of machines to ticket pay at Coast Resorts' two other locals-oriented properties, the Gold Coast and the Orleans.
But, Suan adds, "I'd never try this at the Barbary Coast (on the Strip). That's 10 years away. (But) the locals don't care."
But Hatherley rejected this argument, saying that Strip players don't like getting their hands dirty any more than locals. He likened the argument to that made a century ago, when people predicted that automobiles wouldn't amount to anything because people liked horse-drawn carriages.
"That's absolute nonsense," Hatherley said. "There will be a learning curve, but the tourist is becoming an ever more educated slot player because of all the new gaming jurisdictions around the country.
"We'll see a gradual phasing in of coinless at Strip casinos. Sections of the casino will maintain the novelty of coin until it loses all appeal."
The big experiment by Suncoast isn't as much of a gamble as one might think. If there are problems, or customer resistance is impossible to overcome, the entire slot floor can be converted to coin-only payment within 12 hours, Suan said. Suncoast may also adjust the payment threshold up or down, depending on customer demands.
"This is the test of the company's future here," Suan said. "Everybody's looking at us. If this works, the whole world of gaming will follow us. IGT's praying."
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