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May 22, 2019

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More games per machine means fewer slots in Nevada casinos

Number of slot machines in nation grows, but in state, there are 20,000 fewer than at 2001’s peak

While the number of slot machines nationwide continues to grow with the spread of tribal and nontribal casinos, one-armed bandits are decreasing in Nevada — a trend that has more to do with new technology than the recession.

Roughly 833,000 slot machines are in play in the United States, up from about 600,000 machines in 2005, according to a report this month by the American Gaming Association.

When adjusted for inflation, gamblers are spending only slightly more on slots than a decade or more ago, according to the report, which examined states that long have had gambling, including Nevada, New Jersey, Iowa and Illinois.

In Las Vegas, visitors spent on average just under $70 per visit on slots in 1992 compared with just under $80 per visit in 2008, when adjusted for inflation, the study said.

It’s no secret that in the aggregate, slot players in Nevada are wagering millions less than they were during the boom years.

What’s less known is that many fewer machines are still in operation.

As of June 30, there were 168,504 slots in Nevada casinos, about the same number that were operating in 1997. The number of slots in Nevada peaked in 2001 with 188,705 machines in “nonrestricted” locations, excluding bars, grocery stores and other noncasino businesses that may offer up to 15 machines. The decline in slots over the past decade seems to contradict the growth of the industry over most of that period, which yielded more elaborate casinos that in some cases replaced smaller properties.

The trend is mostly explained by the transition to machines that offer multiple games to choose from, such as several varieties of video poker and keno, said Frank Streshley, chief of the Gaming Control Board’s tax and license division. By purchasing slots offering a menu of games in one machine, casinos no longer need to offer as many individual machines, he said.

The change has been dramatic in some of Las Vegas’ bigger casinos. The Rio, MGM Grand and Circus Circus each have about 1,200 fewer slots than they did in 2001, Control Board figures show.

On a much smaller scale, some casinos have removed selected machines from their floors to cut costs, as rarely used machines may not justify the taxes and other maintenance costs required to keep them on the floor, Streshley said.

Nevada casinos pay a tax of $250 per machine each year on top of a quarterly fee of $20 per machine.

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Click to enlarge photo

Phil Satre

Phil Satre, who catered primarily to retirement-age gamblers when he was CEO of Harrah’s, recently got a tour of a big moneymaker with little relation to gambling or gray hair.

Steve Wynn’s $68 million Beach Club and adjacent Surrender nightclub at Encore are expected to pay for themselves within two years, Satre told a group of managers at a recent casino marketing conference.

The club is an “enticing, sexy environment” with plenty of free “volunteer entertainment” from its bikini-wearing patrons, he said.

“The people who are entertaining there aren’t being paid by the casino,” Satre said. “I don’t think there was anyone in that place in a bathing suit who was over 30.”

That helps explain a new local milestone: Wynn and Encore, with four nightclubs between them, generated about as much revenue from food and beverage sales as from gambling. The Encore clubs, which opened in May, helped prop up results at Wynn’s Las Vegas properties, which in general are performing poorly along with the rest of the Strip. Food and beverage revenue at the properties rose 12 percent in the second quarter to $111.5 million. Gambling revenue — still the largest chunk of the business — fell 6 percent to $117.2 million.

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A study published last month by Cornell University’s Center for Hospitality Research set out to prove the logical yet supposedly unconfirmed theory that customers spend more money at hotels they rate highly.

After surveying more than 20,000 guests of an undisclosed upscale hotel chain, researchers at J.D. Power and Associates concluded that:

• Customers who gave hotels high marks spent $21 more, on average, during their stay than dissatisfied guests. They spent an average of $32 more on their next visit.

• Increases in guest recommendations led to higher occupancy rates, with about 8 percent of hotel occupancy tied to the number of recommendations received.

• Customer satisfaction is tied to four key areas: accurate reservations, check-ins completed within five minutes, no problems during the stay and no billing errors.

Researchers blasted hotel customer satisfaction surveys, saying they are usually poorly designed, with vague questions and few specifics to help improve service.

Some properties spend little time and money dissecting customer satisfaction surveys or other rating methods in the quest to fix problems or improve operations, perhaps doubting that such efforts affect the bottom line, the study found.

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