Slot machines, long the reliable soldier of gambling, are losing ground in Maryland’s casinos as younger gamblers seek out table games and older players can’t keep the slot stools filled.
Over the past 15 months, Maryland’s three largest casinos — Maryland Live, Horseshoe Casino Baltimore and Hollywood Casino Perryville — have kicked 1,350 slot machines to the curb. That’s a 16 percent cut to their slots to make room for more table games, restaurant space, entertainment and other amenities, all of which are increasing in value to casinos as interest in slots slides, particularly among millennials.
Traditionally a cash cow for the industry, slots are losing some of their appeal in lots of places around the country. It’s a trend that has casino executives concerned and busy dreaming up new ways to bolster slot games and make them more attractive. The dominance of slots has waned even in the gambling stronghold of Nevada, where the number of machines has dropped from a high of 217,000 in 2001 to 175,000 last year. And slot earnings have fallen there as well: Nevada casinos experienced a 20 percent reduction in slot revenue between 2007 and 2014, according to the Center for Gaming Research at the University of Nevada-Las Vegas.
The decline in the number of machines in Maryland has potential revenue implications for the state. Maryland taxes slot machine earnings at casinos at rates between 57 to 61 percent, with the exception of Rocky Gap Casino, where slots are taxed at 50 percent. By contrast, table games in the state are taxed at a 20 percent rate.
In 2014, Maryland casinos generated $833 million in gross gaming revenue.
Although he acknowledges that some of his colleagues in the Maryland legislature believe that the casinos are switching from slots to table games to avoid the higher tax, Del. Eric G. Luedtke ( D-Montgomery) says he is not troubled by the shift.
“I think it’s an expected part of the business,” said Luedtke, the House chairman of the Joint Committee on Gaming Oversight. “Casinos are right-sizing and responding to consumer demand, and I think they’re all getting ready for the opening of MGM next year.”
Casino behemoth MGM is scheduled to open its $1.2 billion MGM National Harbor Casino, overlooking the Potomac River in Prince George’s County, in the latter half of 2016. Plans call for it to have 3,600 slot machines and 140 table games.
“Once MGM opens, we should do a study of the tax rates and see if they are at the right levels,” Luedtke said.
Gamblers who prefer slots to table games needn’t panic yet. Casinos aren’t about to abandon slots. They still make up the vast bulk of gambling revenue and are a mainstay of the $240 billion industry.
But the drop-off has casino executives re-imagining what the slot experience could be for gamblers.
“It’s no different than any other business that sees changes within overarching trends,” says Alex Dixon, vice president and assistant general manager at Horseshoe Baltimore. “You look to collectively get together to see how you can stem the tide. It’s not something that’s going to be fixed overnight.”
Evidence of one of the ways that casinos are trying to stem that tide could be found on the desk of Nevada’s governor, Brian Sandoval (R), who last week signed a bill that allows for the development of interactive slot machines. These are games that would presumably be more appealing to millennials who don’t seem interested in the passive — and mostly solitary — experience of playing traditional slot machines.
“This bill allows gaming manufacturers to use cutting-edge technology to meet the challenges prompted by a younger, more technologically engaged visitor demographic,” Sandoval told the Las Vegas Review Journal.
Casinos and machine manufacturers are now free to pursue slot games that would mirror video games and introduce some level of skill rather than pure chance into the slot experience.
Five years ago, Eric Meyerhofer helped found Gamblit Gaming, a Glendale, Calif., company that develops video and mobile games for gambling.
“There was a recognition in the casino gaming industry that the traditional products are doing a great job attracting and entertaining people from their late 40s up into their 60s or 70s, but they have very little penetration into the 45-and-under group,” Meyerhofer said. “And that doesn’t bode well for a casino industry without coming up with ways to adapt.”
Meyerhofer, Gamblit’s chief executive, says casino operators are embracing the idea of “gaming zones” inside casinos and are making capital investments in their properties that will make room for engaging and socially interactive games that move away from the solitary slot experience.
Gamblit produces skill wagering games such as “Police Pooches Vs. Zombie Cats: In Time” (seriously, that’s the name) that Meyerhofer describes as “an ‘Angry Birds’-style game where you’re launching police dogs going after these zombie cats.” The game has a chance element but will also reward skill with monetary payoffs. Players can compete against both the house and other players.
Meyerhofer believes that Nevada’s decision to allow skill-based gaming will have a ripple effect.
“Everyone is seeing the same issue . . . the [current] products are not interactive,” he said. “They don’t capture your imagination.”
As for the introduction of skill-based slots in Maryland, Luedtke says Maryland and Nevada are in different positions.
“I don’t think we’re ready to have that conversation in Maryland just yet,” he said.
Maryland casinos are trying to drum up interest in slot machines the old-fashioned way: glitz and hype.
Slot machines such as Wheel of Fortune have had long-lasting popularity, and machine makers have tried to capture a similar pop-culture appeal by introducing games tied to such hit television shows as “Family Guy,” “CSI,” “Sex and the City” and “Game of Thrones.” Even Ellen DeGeneres, the doyenne of daytime TV, has a slot based on her show.
Last week, Maryland Live launched Giant Jackpots, an ongoing slot program that starts with jackpots at $50,000 and is guaranteed to be won by the time it reaches $100,000. Slot machines were mobbed, and customers were even waiting in line for a chance to play.
The first winner of Giant Jackpots was Chon Nguyen of Jessup, Md., who was playing the penny slots May 31 and won the jackpot on a 60-cent bet.
Her winning haul? $97,797.57.
Maybe slots haven’t run out of luck just yet.