Penny Slots: Small But Mighty Revenue Generators

The term "penny slots" is a misnomer. The machines should correctly be classified as dollar games that can be played in units of one cent.

That's the only conclusion to be drawn, given the fact that the multi-line/multi-coin play action of penny games translates into dollars per spin for a majority of casino goers who have migrated to the games in droves.

The popularity of penny games is a phenomenon at casinos nationwide, all the way from the mega-resorts on the Las Vegas Strip to regional gaming jurisdictions, including the Chicago area.

Even Horseshoe Casino Hammond, the last bastion of a penny-free casino slot floor, recently made the plunge by introducing 256 of the games to its inventory.

There is, however, a huge difference between dedicated dollar games and penny games, which for all practical purposes are played in dollars.

The overall payback on true dollar slots generally hovers around the 93 to 95 percent range, meaning that is the amount of total money wagered on the games that is returned to players as a collective group.

The same figure for penny games ranges from 84 percent to 89 percent in this particular market, which means players as a whole receive far less return while the casinos generate far greater profits.

A graphic example is Ameristar East Chicago, which has embraced penny slots to such an extent that it is the runaway leader in this category of games among all casinos in Illinois and Indiana by a wide margin.

At the start of 2008, 659 of the 1,896 slots at Ameristar were penny games. They generated total handle of $67,965,102, from which casino revenue amounting to $8,118,355 was realized.

In April of this year, 15 months later, 1,056 of Ameristar's 1856 slots were penny units. They attracted total handle of $109,087,191, which produced $12,909,615 in casino revenue.

By comparison, Ameristar won $1.4 million on its nickel games, $1.6 million on its quarter games, and $3 million on its dollar games during the same month.

Penny games, on average, extract the greatest percentage of slot players' collective bankrolls among all the slot denominations. The two-centers are a close second.

Ameristar isn't alone among casinos in the Chicago area, or the nation for that matter, when it comes to driving business toward the penny games. They all do, and that's what makes penny slots a gaming industry sensation.

Among the nine casino properties in Illinois, Jumer's in Rock Island is the penny slot leader with 561 units, followed by Par-A-Dice in East Peoria with 543 games.

Statewide during the month of March, dedicated dollar games still generated the most slot revenue in Illinois ($27-million). Two-cent games came in second at $23-million, followed by quarter ($20.2 million) and penny games ($20-million).

There's no doubt about it: Slot players with limited bankrolls who are attracted to penny games are collectively the industry's new high rollers.