Can hi-tech games turn it around?

Even though Nevada casinos have posted modest gains in gaming revenue this year, slot machine play continues to decline.

For the first four months of 2010, Nevada casinos raked in $3.552 billion, about 1 percent more than they won during the same period last year.

However, slot machine revenue declined 5.5 percent, from $2.382 billion a year ago to $2.252 billion in 2010.

Moreover, slot machines’ share of total gaming revenue continues to shrink. Last year, Nevada slots accounted for 67.7 percent of all gaming revenues in the first four months of 2009, compared to 63.5 percent this year.

So, why are slots seemingly losing their appeal?

Some slot manufacturers suggest that casinos are in dire need of new and more innovative machines, which could stimulate play.

A recent poll by Wall Street investment firm Goldman Sachs found that nearly 43 percent of U.S. casinos devote at least half their floors to slot machines that are at least five years old, which by manufacturers’ standards are out-of-date.

"Floors are due to be updated, but may not be until more capital is available or there is a technological reason to do so," Goldman Sachs analyst Steven Kent wrote in the firm’s annual survey of casino slot managers.

Kent said that the last time slot floors were this old was in 2001, just before a three-year period of upgrades, fueled mostly by the advent of ticket-in, ticket-out technology.

He added, however, that just a small number of casinos will be replacing older slots this year.

But are the newest, technology-driven slots the answer casinos are looking for?

WMS Gaming, a cutting-edge manufacturer of electronic gaming machines, believes they are. "As technology continues to proliferate, it will make robust content offerings available everywhere," said Rob Bone, WMS Gaming’s vice president of marketing. "Operators must use technology in unique ways to create competitive advantages.

"Active gamblers will elect to bypass the ‘easily accessible’ offerings to get those that are new and different," Bone continued. "By spotlighting innovation – Community Gaming, Transmissive Reels Gaming, Sensory Immersion Gaming and Adaptive Gaming, alongside networked technology, for example – operators will deliver more exciting and relevant gaming experiences."

Manufacturers such as WMS Gaming are betting that high-tech innovations will attract younger slot players, members of the so-called Generations X and Y.

"As they age and gain more disposable income, this audience of ‘Millenials’ will become a much more attainable and profitable market," Bone said. "Having grown up with video games, the Internet and large-screen home entertainment, the next generation of players will bring new and considerably different technology and entertainment preferences to gaming, including experiences enhanced by interactive platforms, cutting-edge visuals and audio systems."

Even if the "millenials" represent the next generation of slot players, they are still in the minority. According to WMS Gaming’s own Active Gambler Profile Survey, 70 percent of active gamblers are "Baby Boomers" and older.

That would make the majority of gamblers aged 45 and older.

"The players who have most of the disposable income still continue to be between 50 and 75 years old," gaming expert Victor Royer wrote in an article for Casino Enterprise Management. "Generally, these older gamers enjoy games and themes that are familiar to them."

Royer said that, for the most part, high-tech innovations can create interest in new machines, but "traditional" slots will be the ones that receive continued and loyal followings.

"While everybody is interested in video gaming experiences, the old ‘pull the handle and see what happens’ spinning reel machines still offer the kind of excitement that players look for – and come to expect – from any casino they visit," Royer said.

Royer said slot players are still looking for some of the thrills that are now part of the great old casino lore.

"Overall, the current trends among players appear to be a demand for fewer gimmicks, more adult themes, bigger bang for the buck, recognition that slots are gambling machines and not entertainment consoles, and a definite sense of nostalgia," he said. "(They want) to recapture some of the great excitement of the old-style casinos."