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Nickel Not Small Change in Nevada

Nickels from heaven.

It's not a song, but if it were, Nevada casino executives would be whistling the tune all the way to the bank.

Or at least to the hard count room.

"The nickel machines are very important to us," said Pat Hutchins, the Tropicana hotel-casino's vice president of slot operations. "We've seen a decline in our quarter and dollar machines, with those players migrating to the nickel machines."

Today's nickel machines are a far cry from those of five to 10 years ago. Older nickel machines allowed players to gamble a few nickels at a time, but modern devices allow players to bet up to 90 coins on a single pull.

That's $4.50 each time the reels spin, more than many quarter or dollar machines accept.

"The nickel player is an important player," Hutchins said, noting that many of the leading manufacturers now set up their best new slot machines to accept nickels.

Popular games, the ability to bet dozens of coins, the growth of locals casinos, an increase in the percentage of nickel devices on state slot floors and a reported increase in drive-in tourist traffic from California have all contributed to the strong performance of nickel slots, industry observers said.

Nickel slot machines in the Silver State generated $1.7 billion during the most recent 12-month reporting period, according to Nevada Gaming Board figures.

The nickel win was up 18.5 percent from the $1.4 billion won during the preceding 12-month period.

The haul from nickel slots was 17.8 percent of the $9.6 billion the state's 339 casinos won from gamblers during the same period, and 27 percent of the $6.2 billion won from all slot bettors.

Only 10 years ago, nickel machines won just $391 million, but that number began dramatically escalating over the past four years.

While Nevada casino executives wring their hands about the impact of the recession and the Sept. 11 terrorist attacks on big-spending gamblers, nickel slots continue to generate double-digit increases in revenue.

The jump in money won from nickel slots over the past year contrasts with drops recorded by table games as well as quarter and dollar slot machines.

Quarter machines were the top slot money-winners for casinos statewide, winning $2.3 billion from gamblers, but their performance was down 7.1 percent over the most recent 12 month period.

Dollar slots won $1.4 billion, down 5.9 percent, and table games won $3.3 billion, down 1.7 percent.

In 1991, dollar machines won almost three times the amount won by the nickel devices. Nickel machines have now surpassed the amount won by of dollar machines, $1.7 billion to $1.4 billion over the most recent 12 month period.

An example of the increasing performance of nickel slots can be found at the Tropicana, on the south Strip. Property executives last summer finished moving the Tropicana's table game pit out of the high-profile center casino area.

Replacing the table games under the centerpiece Tiffany-style glass ceiling are 154 slot machines, many of them new, themed nickel slots.

"It's the part of the casino with the most traffic, and it made sense to put the slots there," Hutchins said. "There was some resistance from the table game side, but it's hard to argue with results."

Quarter machines are still the top revenue producing slots at the Tropicana, but nickel machines are quickly catching up, he said.

Credit Suisse First Boston casino industry analyst Brian Egger said that increases in California tourist traffic may partially explain the strong performance by nickel slots.

"With drive-in traffic you get a more mid-market customer, a customer more likely to play nickels," Egger said.

Las Vegas-area locals casinos also contributed to the increased popularity of the nickel machines, he said. Nickel video poker machines are popular with local bettors.

Control board statistical analyst Frank Streshley noted that the Las Vegas locals slot market has grown significantly over the past 10 years.

The Boulder Strip and North Las Vegas markets, home to many of the area's locals casinos, reported a fiscal 1991 slot win of $155.5 million.

That number reached $720.7 million last year, a 363 percent increase.

UBS Warburg casino industry analyst Robin Farley said the growth of nickel slots was most clearly tied to the growth of video technology.

"Rather than betting on one line, players can wager a small amount on as many as nine lines," Farley said. "Betting five or ten coins on a line adds up when multiplied by nine."

Gamblers are psychologically drawn to the multi-line video slots, she added.

"With nine lines, a player may put in 45 coins, but will likely win on at least one of the lines," Farley said. "It seems like you're playing for longer, almost always getting some coins back."

Another important factor contributing to the growth in nickel slot play a change in the mix of machines on the slot floor, Streshley said.

The number of slot machines in Nevada casinos remained almost the same over the past year, 187,433 in October compared with 187,538 in October 2000.

The number of nickel slots jumped from 60,704 to 64,282 during the same period, while quarter devices dropped from 82,003 to 75,452.

Dollar machine numbers dropped from 32,527 to 31,069.

"Nickel machines traditionally hold a bit more for the casinos," Streshley said.

During the most recent 12 months, nickel machines returned 92.8 cents of every dollar bet to gamblers, while quarter machines returned 94.6 cents and dollar machines paid out 95.5 cents.

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