How Changes in the House Advantages of Reel Slots Affect Game Performance

backgammon-2488089_1920[We’re pleased to welcome authors Dr. Anthony F. Lucas of the University of Nevada and Katherine Spilde of San Diego State University. They recently published an article in Cornell Hospitality Quarterly entitled “How Changes in the House Advantages of Reel Slots Affect Game Performance,” which is currently free to read for a limited time. Below, they reflect on the inspiration for conducting this research:]

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Our motivation for this research stemmed from inquiries regarding extant policies for par selection and from the results of our previous research projects. Our prior work suggested that the highly skewed outcome distributions of modern slot machines would obscure even considerable differences in programmed casino advantages (i.e., pars), especially given the limited number of trials produced by individual players. In spite of these results, many industry stakeholders and casino operators contended that experienced players from high-visitation segments would be able to detect such differences over time. It was for these reasons that we decided to conduct the longitudinal field study with data collected from venues relying on a repeat clientele.

Our work is the first to focus on the longitudinal effects of par on unit-level game performance, within live casino settings. The results of our study were surprising in a couple ways. First, the high par games outperformed their low par counterparts, in terms of theoretical win. This surprised many operators who believed that frequent players would quickly recognize the value of the low par games, which were located a mere three feet away. Second, there was a lack of evidence of play migration, i.e., from the high par games to the low par games. The time series analyses failed to indicate a statistically significant and positive change in the magnitude of differences for both daily coin-in and theoretical win levels, over the sample periods. That is, the data failed to indicate a growing recognition of the differences in pars. If players were able to detect such differences we would expect to see both increased play and theoretical win levels on the low par game, over time. We would also expect to see simultaneous decreases in the same metrics on the high par game. To the contrary, these difference metrics remained stable within each two-game pairing, in spite of the clear economic disincentive for players to risk and lose bankroll to the game with the greater par.

Our results present an empirical challenged to the innervate wisdom regarding player hypersensitivity to par settings. Other slot operating paradigms related to “price” positioning and revenue optimization strategies are also contradicted by our findings. Because these all represent critical operating platforms, we are not sure how this work will ultimately impact the gaming industry. In large part, it depends on the willingness of those within it to re-examine longstanding beliefs and predispositions, and place evidence above instinct. While we expect some operators to accelerate in-house experimentation, it is likely that many will wait for future research, which we have in the pipeline.

It should be noted that without the cooperation of willing casino operators this research cannot be completed. They deserve a great deal of credit for bringing this work to light. Open minds bring positive change.

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This entry was posted in Customer Engagement, Hospitality Management and tagged , , , , , , , by Cynthia Nalevanko, Senior Editor, SAGE Publishing. Bookmark the permalink.

About Cynthia Nalevanko, Senior Editor, SAGE Publishing

Founded in 1965, SAGE is the world’s leading independent academic and professional publisher. Known for our commitment to quality and innovation, SAGE has helped inform and educate a global community of scholars, practitioners, researchers, and students across a broad range of subject areas. With over 1500 employees globally from principal offices in Los Angeles, London, New Delhi, Singapore, Washington DC, and Melburne, our publishing program includes more than 1000 journals and over 900 books, reference works and databases a year in business, humanities, social sciences, science, technology and medicine. Believing passionately that engaged scholarship lies at the heart of any healthy society and that education is intrinsically valuable, SAGE aims to be the world’s leading independent academic and professional publisher. This means playing a creative role in society by disseminating teaching and research on a global scale, the cornerstones of which are good, long-term relationships, a focus on our markets, and an ability to combine quality and innovation. Leading authors, editors and societies should feel that SAGE is their natural home: we believe in meeting the range of their needs, and in publishing the best of their work. We are a growing company, and our financial success comes from thinking creatively about our markets and actively responding to the needs of our customers.

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