Study divides slot players into 4 demographic groups
By Mark Gruetze
Published: Friday, Jan. 4, 2013, 7:34 p.m.
The casino world is going beyond understanding the buying habits of baby boomers, Generation X'ers and millenials.
A soon-to-be-published study divides slot players into four demographic clusters based on their primary motivations for playing the machines as well as their age, income, education and other gambling preferences.
The findings, to be featured in this month's International Journal of Contemporary Hospitality Management, are the result of the first publicly available research into what people look for at the slots, co-author Stowe Shoemaker tells Player's Advantage.
“In the old days, games were just developed and put out on floor,” says Shoemaker, who recently returned to the University of Nevada at Las Vegas after eight years as a distinguished professor at the University of Houston. “Over the last 10 to 12 years, more and more companies are investing more and more in consumer research to understand the reasons for gambling and designing slot machines.”
Major slot manufacturers such as IGT and WMS have researched what draws people to slots but kept their results to themselves for competitive advantage.
Shoemaker and two former students, assistant professor Sandy C. Chen of the Oregon State University Cascades Campus in Bend, and associate professor Dina Marie Zemke of UNLV, did this study. The report bears the ponderous title of “Segmenting Slot Machine Players: A Factor-Cluster Analysis.”
Shoemaker says he started the research in 2006 as part of a collaboration involving a major gaming company he would not identify and Strictly Slots magazine, which caters to slot players and provided a ready source of eligible subjects for the study. The University of Houston, where he was a professor at the time, was not involved.
In November and December 2006, magazine subscribers were invited to fill out an Internet survey about why they gambled. Questions included how long and how often they played, favorite slot games, likes and dislikes about themed slot machines and attitudes about progressive jackpots. The questionnaire took about 30 minutes to complete and drew 1,018 valid responses.
Players ranked 37 potential reasons for choosing one slot over another. Researchers used statistical techniques known as principle component analysis and K-means clustering to identify four main groups of players:
•Utilitarian: “They just go because they like to go,” Shoemaker says. “They gamble for a lot of different reasons, but nothing is really (most) important to them.”
•Excited: “Everything was all about the excitement,” with winning money ranking second.
•Multipurpose: “That group liked a bit of everything” — the excitement, the relaxation, the chance to win money.
•Relaxation: For these players, “it's all about relaxation.”
Although the data came from a 6-year-old survey, Shoemaker thinks the findings are valid. “People haven't changed that much,” he says.
About 22 percent of respondents gambled at least once a week, with about 45 percent going once or twice a month and the rest once every two or three months.
The five most important features influencing game choice were the machine's denomination (penny, nickel, quarter); perceived chance of winning; level of fun; overall bet size; and ease of getting to a bonus round. Only a third of respondents expressed interest in progressive machines.
“Slot players are different in terms of gambling motivation,” the study says. “Marketers must develop unique promotional messages to appeal to different groups of players.”
For example, women tend to dominate the Utilitarian and Excitement groups, while men are more likely to be in the Multipurpose and Relaxation clusters. The Excitement group had the highest income, while Multipurpose had the lowest.
Casinos targeting high-income people might extoll the excitement of their slots to female professionals, the study suggests.
Slots are important to casinos because the house can set the machines for any desired overall return, within state rules. In Pennsylvania, for example, the house edge averages about 10 percent.
“(Casinos) can set what the vig is,” Shoemaker says. “From the operators' perspective, who have mortgages to pay and salaries to pay and all that, they like that steady return that a slot machine can give. A table game has a much wider variability.”
The study reinforces gambling's stature as an entertainment option. Football fans spend money for the excitement of seeing a game in person and bowlers shell out for the relaxation of a night at the lanes. Those are similar enticements for slot players, Shoemaker says.
Revel borrows $150M more
The $2.4 billion Revel hotel and casino in Atlantic City is getting $150 in new financing only eight months after it opened.
The Associated Press reported that the struggling casino aims to expand its appeal beyond affluent leisure customers and group meetings. Revel said it will beef up its slots operation and open a more affordable restaurant to complement others run by celebrity chefs. Officials said the resort also will add a new high-limit slots area and expand its players' club.
Slot players lost $195.05 million at Pennsylvania's 11 casinos during December, the Gaming Control Board reported this week. That's down by 2 percent from $199.06 million in December 2011, which was before Valley Forge resort casino opened.
New Year's Eve was on a Saturday in 2011, which might have contributed to the decline.
The state gets 55 percent of the gross slot revenue, or what's left of players' wagers after jackpots are paid.
Statewide, the slot payout rate is 89.95 percent since the fiscal year started July 1. For every $100 bet, the machines return an average of $89.95. Highest payout rate: 90.63 at Parx in Philadelphia; lowest: 89.36 percent at Harrah's Philadelphia and Hollywood Penn National near Harrisburg.
Figures for Western Pennsylvania casinos:
89.97%: Rivers payout; December slot revenue of $23.27 million, up from $22.81 million in December 2011.
89.83%: Meadows payout; December slot revenue of $18.47 million, down from $19.47 million in December 2011.
90%: Presque Isle payout; December slot revenue of $9.95 million, down from $12.78 million in 2011.
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