Gamblers may be cutting back like other consumers, but not on the cheap slots

Hard pressed consumers in the United States have not given up completely on gambling, but they are turning increasingly to using penny slots for their entertainment.

Associated Press reports that spending on penny gambling machines produced about one-fourth of all slot machine revenue in Nevada last year, and more in other states. In Missouri, one of few states where gambling revenue rose in 2008, more than half of all casino revenue came from penny slots. For many casinos, penny slots are producing the only kind of revenue that's rising.

Gamblers say they like the machines — which were impractical before quiet paper payouts started replacing the tumbling bucketfuls of coins in a jackpot — because they can play longer for the same amount of money. And casinos don't mind, because they say that this product is more lucrative for the house.

"Affordability is why people love them," Frank Legato, a slot machine expert and editor of Las Vegas-based Global Gaming Business magazine told Associated Press. "Casinos just love them because the average bets are the same as the quarter or dollar games, but their house edge is bigger on these games.

"People playing penny machines are not concerned about that. They just want to have fun and play a long time with little money."

With 3-D video graphics, bonus spins and familiar story lines like "Star Wars" or "Wizard of Oz," the penny slot machines provide a form of "active participatory entertainment" that wasn't available with the old three-reel slots. That makes them especially big among people who go to casinos for the social aspect.

Small bets are big business.

Missouri's 12 casinos hold nearly 11 000 penny slots, more than half their machines. Statewide, penny slots brought in $81.1 million in February alone, which is about 55 percent of the $146.6 million casinos won during the month.

In adjacent Illinois, which lost gamblers to Missouri in 2008 when a smoking ban went into effect, penny slots brought in $18.9 million in February, or roughly 15.4 percent of $123.3 million in total casino revenue for the month.

Missouri is among five states — Iowa, Indiana, South Dakota and Pennsylvania are the others — where commercial gambling revenue rose in 2008, while it fell 8.5 percent nationwide. Tribal casinos' revenue is not counted in national tallies.

Darrell Pilant, vice president and assistant general manager at Harrah's in North Kansas City, said the number of penny machines is growing because patrons prefer them. And he thinks that growth will continue as new technology makes no-coin play even more appealing.

"I can't say that in three years or five years every machine on the floor will be video, but certainly at some point there will be fewer and fewer traditional slot machines," he said.

Higher-denomination, three-reel slot machines will always be in demand among hard-core gamblers who play for large jackpots and not necessarily entertainment, he said. But their presence in casinos is gradually diminishing.

Technological changes have made the concept of denomination almost irrelevant, experts say. Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada-Reno said the term penny slots is a misnomer because most wagers on the devices are much greater.

"There's a touch of delusion to this whole discussion," Eadington said. "The average play per spin is obviously way above a penny — usually the 30- to 50-cent range, depending on the market."

A casino spokesman compared someone losing $30 or $40 in a slot machine over a few hours with a person who spends the same amount going to a ball game or night on the town.

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