Ask the Slot Expert: Why do casinos replace popular slot machines?

Question: Why do popular slots that receive consistent play over the years disappear from the casino floor? When they disappear, the replacements tend to not be popular, have low frequency of play, and disappear quite quickly — in my observation. It makes you wonder why the switch was made.

These are recent observations of slots that seem to be consistently popular to play and they represent examples of frequent play over the years at the casino we have visited for the last 15+ years. Ruby Slippers, Sinbad, Jackpot Party, Texas Tea, Haunted House, Star Trek, Caddy Shack, Avatar, Pirates (dueling pirate ships).

Economics is a likely factor, but cash flow does not seem to be the priority. Is the main reason for replacing desired games on the casino floor a matter of incentives from the game manufacturer or agent? Can the terms and incentives cover a potential loss of cash flow or profit? Or, for example, could it be that increases in union wage scales are a driving factor for replacement of iconic slot games in order to increase the take/square foot on the floor? What drives these decisions?

Answer: Economics is the primary reason that casinos remove slot machines. When a machine no longer earns enough money to justify its place on the slot floor, the casino will replace it with a machine that it hopes will do better.

Another economic reason that a casino may replace a machine is because it is adjusting the hold on its slot floor and the machine pays back too much (and, rarely, too little) for the new hold philosophy. Rather than order a new payback percentage chip for the machine, a slot director told me that they usually just wait until it's time to remove the machine and just replace it with one that pays back the desired percentage.

Sometimes machines haven't been removed, just moved. Casinos, for example, usually have designated areas in which they put new machines. These areas are usually near the main entrance. After machines have spent their time in the new machine area, they may be moved to other areas of the casino.

A casino, in addition, may have some areas that do not get as much play as other areas. The casino may move some popular games into the underperforming area to try to increase the amount of play in that area. A slot director once said that he puts his "appointment" machines — machines that players make a point of playing, like Megabucks or Wheel of Fortune — in the slow areas to drive more traffic there. Just today I had to go on a treasure hunt in a casino to find 007-themed slots that were part of a promotion. They were tucked away in a corner that in my observations, at least, usually doesn't have as many players in it as other areas of the casino.

Casinos may also let manufacturers place their machines on some spots on their slot floors and split the earnings with the manufacturer. When the manufacturer thinks a machine is underperforming, it will replace it with a new machine. These machines usually have a notice saying that you can't redeem free play on them.

Another thing to consider is that you're not in the casino 24/7. You may think you have an idea of how much play machines get, but you don't know what is happening when you're not there. Your unpopular machine may actually get a lot of play when you're not watching. Conversely, your popular machine may not really be all that popular.

A few years ago, before I moved to Las Vegas, I used to spend hours playing a Star Trek slot machine at what is now the Westgate. I was heartbroken when I returned and my beloved Star Trek machine, which had been there for many months, was replaced with a Monopoly machine. I eventually found out two reasons why my machine was replaced. First, I was pretty much the only person playing the machine. Sure, there were plenty of lookie-loos who would drop a few coins in it, but I was the only one who would settle in with an iced coffee and a raisin bagel with cream cheese and make a morning of it. Second, the casino let Scientific Games decide which machines to put in this spot, so sometimes a machine might be there for many weeks and sometimes a machine would only last a few weeks.

As for manufacturer's incentives, hard data on them is difficult to come by. I suspect the slot market is much like the airplane market. Boeing has a list price for a 787, but no one pays the list price.

Finally, increasing costs can have an effect on machine replacement, but more so on video poker today than slots. The popularity of relatively low-payback penny machines was a dream come true for slot directors. A large portion of the action on their slot floor moved from higher-paying, higher-denomination machines down to the penny machines — and slot players loved them! Slot directors were able to increase the hold on their slot floors by changing the mix of machines rather than lowering the paybacks in the various denominations.

It was a win-win-lose situation. Slot players won because they were getting the machines they wanted to play. Slot directors won because the machines the players wanted to play held more than the machines they were replacing. And slot players' wallets lost because the machines held more.

I think the influx of penny machines bought time for video poker players. Slot directors concentrated on getting the right mix of penny machines and traditional, reel-spinning machines on their slot floors — with penny machines getting the lion's share of the space. The gradually increasing hold on the slot machines increased the revenue from the slot floor. Now that the slot mix is right, slot directors are turning their attention to video poker.

A movie theater can raise the price of its early bird ticket just by changing the sign. How does a casino raise its prices?

I know of only two ways: lower paybacks and decrease benefits. We've seen both of these in Las Vegas this year. Some casinos have replaced the near-breakeven video poker pay tables on their machines with lower-paying versions. And many casinos have made promotions less generous than they were in the past.

Send your slot and video poker questions to John Robison, Slot Expert™, at slotexpert@slotexpert.com. Because of the volume of mail I receive, I regret that I can't reply to every question.

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