With More Than 800,000 Machines in the U.S., Slot Machines Evolve to Meet Consumer Demand

WASHINGTON – A white paper released today by the American Gaming Association (AGA) pulls the curtain back on slot machines, exploring how they work and how the machines have evolved into America’s favorite casino game.  According to the paper, there are more than 830,000 slot machines located across the country today, and their share of the casino floor has grown from 40 percent in the 1970s to approximately 70 percent today.

The report, “Demystifying Slot Machines and Their Impact in the United States,” investigates how slot machines are developed, operated and regulated, as well as how they affect both gaming patrons and communities.

“Nearly 60 percent of gamblers consider slot machines the most entertaining games available at casinos,” said Frank J. Fahrenkopf Jr., president and CEO of the AGA. “The popularity of slot machines has helped drive the expansion of commercial gaming – a vibrant industry that contributes jobs, economic development and tax revenues to hundreds of communities across the country.”

The white paper examines the defining elements of slot machines currently in use – such as the types, cost and lifespan of the games – as well as recent technological advancements in electronic games. It explores the creative process behind the development of slots, which includes lengthy design and consumer testing phases. It also details the inner workings of a slot machine, revealing precisely what occurs when play begins.

The paper notes that more than $265 million is spent annually to regulate commercial casinos – ensuring, among other things, that the games operate fairly and reliably. The paper investigates how slot machines are tested and regulated, and analyzes their social impact, addressing a number of commonly reported misconceptions about the machines.

Interestingly, the white paper finds that, though the gaming industry has grown substantially – and the number of casino visitors has increased to more 60 million annually – there has not been a significant jump in the typical amount wagered on slot machine games. The average casino gambling budget is $108 – a figure that, when adjusted for inflation, has remained virtually unchanged for more than 30 years.

The report also notes research has not found any link between slot machines and gambling problems. Citing a number of peer-reviewed research studies from widely respected institutions, the white paper finds that, though slot machines have multiplied tremendously since the 1970s, the prevalence rate of pathological gambling has held steady during that time. Research shows that approximately 1 percent of adult Americans have the disorder.

“Competing in a bruising entertainment marketplace, slot machine makers have constantly innovated, keeping pace with customer demands and the trend toward increasing technological sophistication in all aspects of entertainment,” writes David Stewart, counsel at Ropes & Gray LLC and author of the white paper. “…(T)heir success can be measured by the fun their customers have playing their games.”

The white paper will provide the foundation for the 13th annual Responsible Gaming Education Week (RGEW) – themed “Taking the Mystery Out of the Machine” – which will take place August 2-6, 2010. Throughout the week, casinos across the country will host activities that increase awareness of how slot machines work. Created by the AGA in 1998, RGEW is an industrywide effort to empower casino employees to share responsible gaming messages with customers and community members.

Kevin Mullally, general counsel and director of government relations at Gaming Laboratories International, LLC and Michael Pollock, managing director of Spectrum Gaming Group, served as contributing authors to the white paper.

An extensive collection of gaming experts also provided input for the report, including Anthony Baerlocher, senior staff game designer at International Game Technology; Travis Foley, technology chief at the Nevada Gaming Control Board; Phil Gelber, vice president of game development at WMS Gaming, Inc.; Bill LaPenta, director of financial analysis at Spectrum Gaming Group;  Anthony Lucas, Ph.D., associate professor of casino management at the University of Nevada, Las Vegas; Allison McCoy, senior vice president of marketing at Spectrum Gaming Group; Derris Newman, vice president of research at The Innovation Group; Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers; Christine Reilly, executive director of the Institute for Research on Gambling Disorders; and Eric Weiss, lab administrator in the technical services bureau of the New Jersey Casino Control Commission.

The full text of “Demystifying Slot Machines and Their Impact in the United States,” is available at www.americangaming.org.

The AGA represents the commercial casino-entertainment industry by addressing federal legislative and regulatory issues. The association also serves as a clearinghouse for information, develops educational and advocacy programs, and provides leadership on industry-related issues of public concern.