Slot machines are disappearing at an alarming rate from the floors of commercial UScasinos. That’s according to a recent report by Deutsche Bank analysts Carlo Santarelli and Danny Valoy.
Deutsche’s analysis of 12 US casino companies that operate a total of 120 properties shows a 21 percent decline in the number of slot machines since 2007. This amounts to an aggregate loss of 43,400 machines.
Sep 05, 2018 Casino managers are under tremendous pressure to maximize their all-important slot revenue, but they do not want to kill the golden goose by raising the “price” too much. Jul 02, 2019 Casinos can either purchase a slot machine outright or lease it for a set number of years. Gambling establishments are more likely to purchase machines that they think have long-term value. Of course, casinos also need to be prepared to shell out a lot of cash for games. A brand-new slot machine typically costs anywhere from $15,000 to $25,000.
The decline isn’t because of an outlier or two: “All 12 operators in our analysis have culled their floors,” read the report. It concludes, “We believe this trend is likely to continue into the foreseeable future as operators shift financial resources to other amenities and continue to seek efficiency on floors.”
The 12 casino operators on which the report based its findings are:
- Ameristar Legacy Assets
- Isle of Capri Legacy Assets
- Eldorado Resorts
- Pinnacle Entertainment
- Boyd Gaming & Peninsula Assets
- Las Vegas Sands
- Mohegan Tribal Gaming
- MGM International Resorts
- Penn National Gaming/GLPI
- Red Rock Resorts
- Wynn Resorts
What’s replacing slot machines?
Not too long ago, it was slot machines that were replacing other games (poker rooms in particular) or underperforming amenities on casino floors. Slots were seen as casinos’ best square-footage bang for their buck.
This is no longer the case, for two reasons:
- Gaming habits are changing, particularly among millennials
- Casinos are realizing better revenue streams from other, non-gaming sources
Gaming habits are changing
A new generation of casino-goers are shunning slot machines. That has the industry scrambling to design slots and/or games. But when you consider the number of first-time visitors to Las Vegas is growing and the average age of visitors is decreasing, it’s clear that attracting millennials isn’t the problem.
Despite higher visitation, millennials simply aren’t gambling. But then again, this age bracket was never going to producemuch in the way of gaming revenue. Even if they do develop millennial-friendly slot machines, the number of slots on the casino floor is unlikely to increase. Casinos have found they can make as much or more money from non-gambling visitors.
Non-gaming margins are higher
Beginning with Steve Wynn’s shift to destination resorts when he built the Mirage — and later Bellagio, Wynn, and Encore — the industry has been increasingly pivoting toward non-gaming revenue with higher margins — hotel rooms, food, nightclubs, and other forms of entertainment.
Casinos are no longer giving these things away as comps to lure in gaming dollars. Instead, they’re charging a premium for them because of the experience that accompanies a trip to a true resort casino. At some point, this change might reach a complete role reversal, with gaming being the comp to lure people to the hotels, shops, and entertainment venues offered at luxury casinos.
As I noted in a recent column, “Casinos have long undervalued their hotels and amenities. They used to give them away as door prizes to anyone who set foot on the casino floor.”
But as it turns out, it’s the amenities and the four-star hotel experience that makes people want to part with their hard-earned dollars. This is particularly true among the younger visitors, who prefer to gamble at their convenience (online or at regional casino properties) rather than travel to gamble.
In the same vein, UNLV’s David Schwartz recently wrote that hotel rooms will soon overtake gambling in terms of revenue: “If the current trend continues, by 2019, rooms will make about as much money as the casino floor, in 2020 they will surpass it, and by 2023, Las Vegas Strip resorts will make about $2 billion more from their rooms than their gambling.”
Beyond rooms, non-gaming revenue has been gaining steam for decades.
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Per the Press of Atlantic City:
“In 1989 nongaming revenue represented 21 percent of total casino revenue; as of 2015, it represents 29 percent. For casino industry leader Las Vegas, the shift is even more distinct from a 60/40 split gaming vs. nongaming in 1989 to a 35/65 split in 2015.”
Don’t put slots on the endangered species list just yet
This isn’t necessarily a warning to slot machine manufacturers … at least not yet.
In addition to slot manufacturers adapting to current trends — skill-based slot machines (including touch screen table gaming) and virtual reality technology — the report notes that Mohegan Tribal (the only tribal casino operator examined) saw the smallest decline of its 12 companies. As one gaming analyst noted on Twitter, there is more to it.
Saw analyst report out saying slot floors have been shrinking. Simply not true. Yes, Commercial casinos are down, but Tribal & Route are up!
— Todd Eilers (@EilersResearch) April 6, 2017
Along the same lines, the report notes the largest operators (casinos with 10,000 or more slots) have been the most aggressive when it comes to removing slot machines. This makes sense, as it’s the amenities and experiential nature of a billion-dollar (or multi-billion-dollar) casino that attracts people.
Basically, the bigger the casino and the casino market, the less it needs to rely on gaming revenue.
You can find as many objects to collect as you can find collectors, but some of the most interesting collectibles are slot machines. You can buy them used, but the legality of owning a gambling machine varies from state to state. This page takes a look at some of the issues involved in buying a used slot machine to start or expand a collection of your own.
Where Do You Live?
The first thing you should understand is that no matter where you live, if you’re using a slot machine to offer gambling to other people, you need a license. In some states, gambling is completely prohibited. Chances are you’re an individual collector and don’t have a gambling license, so don’t let people gamble on your games unless you have a high risk tolerance for illegal behavior.
In some states, even collectors aren’t allowed to own a used slot machine. These states include Alabama, Connecticut, Hawaii, Indiana, Nebraska, New Mexico, South Carolina, Tennessee, and Wisconsin. Ownership of slot machines, used or otherwise, is illegal in those states.
Casino Slot Machine For Sale
Other states have no legal restrictions on slot machine ownership as long as you’re not using them to run a gambling business. These states include: Alaska, Arizona, Arkansas, Kentucky, Maine, Minnesota, Nevada, Ohio, Rhode Island, Texas, Utah, Virginia, and West Virginia.
The other states have specific guidelines based on the age of the machine. For example, in California, Delaware, Illinois, Iowa, Louisiana, Michigan, Mississippi, Montana, New Hampshire, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota, Washington, and Wyoming, it’s legal to own a slot machine as long as it’s at least 25 years old. Other states have higher or lower age limits—in Florida you can own a slot machine as long as it’s 20 years or older, but in Massachusetts, it has to be at least 30 years old. And still other states base it on what year the machine was built; in Illinois and Iowa, for example, it’s only legal to own slot machines that were constructed before 1950.
To the best of my knowledge, this information is complete and accurate, but before buying your own used coin-op slot machine, you should check with local legal authorities to make sure you have the most up to date information. You should always obey the laws in whatever jurisdiction you reside.
What Kind of Dealer Are You Dealing With?
You’ll find plenty of people selling used slot machines on the Internet. Many of these are third-party sellers. That means they don’t offer slot machines directly; instead, they just take your order and then buy the slot machine from someone else and have it shipped to you. You’ll often notice that these third party dealers use stock images or pictures that were stolen from direct dealers’ websites.
It’s better to deal with a direct dealer when you can. These dealers will often offer a warranty on the machines they sell. They’ll also be able to help you over the phone if you’re having a problem operating your game. Third party dealers aren’t able to offer you this level of service.
One way to be sure you’re dealing with an actual dealer instead of a third party is to ask them if you’re able to visit their showroom or warehouse. Third party dealers, for obvious reasons, don’t have showrooms or warehouses.
What Kinds of Used Slot Machines CAN I Buy?
Most dealers offer reconditioned machines that have been retired from use in Las Vegas style casinos. Many of these are the same IGT (International Game Technology) manufactured games that you’re used to seeing in the casino, only older and more primitive. Most dealers also provide replacement parts and repair services.
One thing to look for when considering buying a machine from a dealer is whether or not they use real glass or plexiglass. Real glass is superior as plexiglass fades over time. You can expect to pay a little more for a machine with real glass, but it’s worth the extra cost. If you’ve ever seen a faded plexiglass screen on a used slot machine, you’ll know what I mean.
Many of these games can be set up to enjoy on “free play” mode. You don’t have to insert any kind of money in order to play these games. You can even modify these games to pay out tickets.
Examples of some of the popular and well-known games available for sale on the Internet include titles like Cleopatra, Double Diamond, Munsters, Red, White, and Blue, Sizzling Senves, Tabasca, Texas Tea, and Wild Cherry slots. Many other titles are available besides these, but you’ll recognize a lot of these brand names as still being available (albeit in newer models) in casinos today.
How Much Should I Spend?
Used slot machines are collectibles, and they’re priced accordingly. Shipping is usually going to be expensive, too. You can probably expect to pay at least $600 for a good machine and $200 for shipping. Video slots will cost twice that or more, and you’ll sometimes have the option of upgrading to a new LCD monitor when buying a video slot machine. Those are expensive, too–$400 or $500.
Other upgrades you can pay for include stereo sound packages, coin in coin out functionality, and/or backlit reels (on mechanical or electro-mechanical machines). These upgrades generally cost between $100 and $200 each.
Of course, these prices apply to relatively newer slot machines. Older antique slot machines can cost more or less. I’ve seen slot machines from the 1930s and 1940s that were beautifully refurbished for sale for as little as $325. Some of these older machines are barely recognizable as slot machines, but they make beautiful, conversation-worthy collections.
Conclusion
Buying a used slot machine can be a fun way to start a new hobby of collecting gaming machines, but do some research first. You want to make sure that it’s legal to do so before you get started. You also need to do some research into dealers before spending any money. Avoid third-party dealers, and find a direct dealer with a warehouse who offers warranties and telephone customer support.