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Penny Arcade

As a revolution in penny slots sweeps the casino business, the penny player emerges as a force to be reckoned with-and rewarded

by Frank Legato

Welcome to Penny Lane.

Or Pennyville. Or Pennies in Heaven. Or just about any other cute moniker you can place on a roomful of brand-new slots, each sporting a decal that could scarcely have been found on a casino floor five years ago-"1¢"

We are in the midst of a revolution of sorts in the slot business. It is a revolution even stronger than the one that occurred in the late 1990s, when the multiline video style of slot game was matched with another type of decal no one had seen in decades-the nickel.

The penny denomination was, at that time, pretty much nonexistent. Penny slots were the stuff of history-of old mechanical novelty games placed in Reno sawdust joints like Harold's Club in the 1930s. There were experiments in the late 1990s with the penny denomination by slot manufacturer VLC (now part of slot leader International Game Technology), which placed banks of penny and two-cent multi-game units that accepted no coins and paid out in vouchers, but the games themselves pretty much went nowhere with players.

Meanwhile, nickel video slots took off, with nine-line programs by Aristocrat, WMS Gaming, and IGT beginning to take 90 or more coins per spin and paying out hundreds of credits in jackpots. But the nickel games had one problem-the cash-out process. Cashing out was a tedious adventure wrought with hopper fills, heavy coin buckets full of nickels, and long lines at coin redemption.

Enter IGT again, this time with EZ Pay, the first widely used ticket-in/ticket-out, coin-free slot system. As other manufacturers released their own ticketing systems, the nickel denomination gained new life. Without the burden of actual coins, the manufacturers were free to create an entirely new genre of games with more paylines, higher maximum bets, and top jackpots in the hundreds of thousands of credits. Tickets saved the nickel video slot.

Now, it looks like tickets may lead to the nickel slot's extinction.

That's because manufacturers, casinos, and players are realizing that what worked with nickels works even better with pennies. These days, most of the high-profile video slots-the ones with brands from TV or Hollywood, the ones that marshal the very best in technology-are being released first not in nickels, but in pennies.

And players love them. They love them more than the nickel games, because they can make $20 or $40 last for hours instead of minutes. They love them because they have high hit frequency, lots of bonus rounds, interactive displays, incredible animation-in short, they are fun.

Players even know, going in, that these games generally have the worst overall payback percentage on the slot floor-in most jurisdictions, the overall return is below 90 percent.

But they still love them. They love them because the games offer lots of playing time, and even occasional large jackpots, without having to bankroll hundreds of dollars for a slot session.

Suddenly, there is overwhelming demand for the penny. The casinos and manufacturers are responding to the demand with ever-increasing supply. There are million-dollar progressives in penny. There are penny reel-spinners. There is penny video poker, penny keno… pennies are everywhere.

In some casinos in the Midwest and, notably, in the local Las Vegas casinos, pennies are approaching coverage of as much as a third of the slot floor. The number is on the rise in Atlantic City, Connecticut, Mississippi… just about everywhere. There are actually many penny slots designed for classic gamblers, but, for the most part, people are playing these games for their sustained, low-priced entertainment.

Large portions of slot floors are becoming, in effect, penny arcades.

Variety

Part of the reason the old VLC penny video slots never extended beyond a bank or two of games on a given slot floor was that those games were all the same. The themes varied, and the video graphics were eventually improved with a new operating system, but the game features remained mind-numbingly similar-right down to the same silly, computer-generated tunes and sound effects coming from each game.

Not so with today's penny games. With Aristocrat Technologies and IGT leading the way, the variety offered in today's penny-denomination games is a microcosm of the variety in the overall slot floor. Manufacturers are no longer saving their good themes, their good licensed brands, and their best technology for their higher denominations. They are putting out their best in pennies first, in all game genres.

It was Aristocrat Technologies-the same manufacturer that first brought nickel multiline games to this country from its Australian parent company-that first got the ball rolling for penny slots in this country. In 2000, the manufacturer brought its first penny video slots to Native American casinos in the Midwest and a few casinos in Colorado. "We saw it as a big opportunity, because we had seen what happened in other jurisdictions, such as Australia," recalls Kent Young, vice president of marketing for Aristocrat Technologies. "When pennies were introduced there, they took off at a rapid rate. That market [home base for parent Aristocrat Leisure Industries] is now 90 percent penny and two-cent slots. We saw that the market here was going to follow that trend."

It would be a few years before the trend would start to materialize in U.S. casinos, mainly due to the nature of the denomination itself. In Australia, pennies were offered via "tokenization"-machines that accepted dollar tokens for all denominations, including pennies. Tokenized machines would not take off here, but ticket-in/ticket-out-known in the trade by the acronym "TITO"-would take off quickly, beginning in that same year of 2000.

"Tokenization allowed us to do pennies for a while, but TITO really opened up the penny segment for us," Young says. "Spitting out a ticket allowed you to spit out the equivalent of pennies. Once ticket-in/ticket-out took off, pennies started taking off."

They are still soaring. According to Young, some 60 percent of the games Aristocrat is shipping to U.S. casinos these days are in the penny denomination, with the strongest markets for the games located in the Midwest, Colorado, and off the Strip in Nevada. He says the penny market is also revving up in California, and is even starting to crack the traditionalist Las Vegas Strip in places like Mandalay Bay and the Stardust, and the similarly traditionalist Atlantic City.

Part of the reason for their success, says Young, is the new game ideas Aristocrat has poured into the penny denomination-ideas such as the Reel Power series, games such as Pompeii and Whales of Cash, which allow the player to purchase reels instead of paylines, with all wins paid as scatter-pays. These games, which have an extra row of symbols (four rows of symbols displayed on the five reels) offer a total of 243 ways to win on each spin. Aristocrat has jacked up the stakes even further with the super-charged version of this format, Super Reel Power, which takes the pay-for-reels concept and adds a fifth row of symbols (a five-by-five grid), offering a remarkable 3,125 ways to win with each spin of the reels.

Aristocrat has also brought its unique bonus and progressive video formats to the penny denomination. Bonus Bank games like Li'l Lucy, Cash Man, and Jeff Foxworthy allow the player to make an additional ante wager to qualify for a choice of four or five separate bonus events that appear at random on given games in a linked bank. Hyperlink progressive banks like Penny Train and Jackpot Carnival trigger common bonus rounds that award the player one of four guaranteed progressive jackpots. With Millioni$er, Aristocrat transformed this technology into the first penny slot to ever offer a top jackpot of a cool million bucks.

The common thread throughout these games? They are all interesting, loaded with features in individual primary games, in addition to the common bonuses and progressive jackpots.

"Penny slots, by the nature of the product, allow the players to have more lines and more ways to win, so it allows more excitement and entertainment value," says Young. "Also, because it's on video, it allows the math model to be a lot more entertaining and exciting than traditional slots. It allows game play to be a lot more volatile-instead of a lot of small wins, pennies allow you to have more exciting wins."

New Levels

Slot leader International Game Technology is another company that has taken the penny concept to new levels with a variety of game styles, and even higher jackpots.

IGT has responded to the penny trend in all of its game genres. According to Ed Rogich, IGT's vice president of sales and marketing, while the company still rolls out its standard S2000 reel-spinners in quarters, dollars, and even $5 denominations, the high-profile branded slots are being showcased in pennies, and pennies are being applied to all other game styles in both dedicated denominations and multidenominational units.

"The trend is there, and players are certainly responding to more line options, multiline options, and lower denominations," Rogich says. "We have games to compete on a number of different levels; lower denominations have multiple applications. For instance, Fifty Play Poker has great potential in the penny denomination."

Rogich adds that IGT's famous-brand video slots, which, a few years ago, were always introduced in nickels, are now going the penny route. Perhaps the most prominent example is IGT's newest release, Star Wars-a penny game that utilizes the most eye-popping technology ever seen in a video slot. "It's probably our premier penny game, with a $1 million set top award," he says.

Star Wars, however, is being accompanied by the simultaneous introduction of a complete collection of high-profile penny games-not the least of which is the video version of the Megabucks big-money progressive game, just launched in Nevada in a 60-line, 300-coin game, with a top jackpot resetting at an unprecedented $10 million.

Another IGT innovation is tearing up the penny markets-it is a nod to the fact that the United States, by and large, is still reel country. IGT took its most popular S2000 traditional reel-spinners and placed them in a five-reel, multiline format for the lower denominations. "The five-reel product is really strong these days," says Rogich. "We've seen great crossover of players from the traditional reel-spinners to the five-reel games." Next up in this genre in Nevada, he says, will be the penny version of the venerable Wheel of Fortune reel-spinner, which has already met with smashing success in Atlantic City.

More crossover is coming from traditional players to hybrid-style games in IGT's Reel Touch series-reel-spinning base games with a giant video monitor in the top box, on which standard multiline video bonus events are played out.

IGT is pulling out all the stops in offering a variety of game styles in pennies. There is the Multi-Way series, in which players purchase positions on the screen instead of paylines for 243 ways to win on each spin. There are 20-line games such as Hoot Loot in video reels and Spin Poker Deluxe in the multihand video poker genre. There is Fort Knox, with its four-level progressive jackpot triggered through a common bonus round played out on the video screen, on top of familiar base games such as Frog Prince or Cleopatra. IGT will soon add a second game in this genre, called Party Time.

The next level in this genre will be the Wheelionaire series, which will link the multilevel jackpot concept to a million-dollar-plus jackpot in some jurisdictions. Look for great games in this penny series, to include The Apprentice and Indiana Jones.

All of these penny games have one thing in common: "It comes down to more action per play," Rogich says. "At the end of the day, there is just more happening with each spin."

Is a Penny a Penny?

But are these really penny slots? How much are people actually wagering?

The answer is that they are not wagering a penny a spin, but neither are they normally wagering the maximum. Max bets on most of these games range from 300 credits up to 1,000 credits-in other words, $3 a spin to $10 a spin-the same as a traditional dollar or $2 slot. Where these games have taken off, players have generally wagered somewhere in the middle, covering all the paylines to achieve the maximum payback return, but using the low denomination to make their money last.

Casinos are continuing to increase their collections of penny slots, though, because people are generally betting an average per spin that ends up being higher than wagers on the nickels or even the quarter slots.

In Atlantic City, the first penny games appeared at the Tropicana, in the Pennies In Heaven slot room, and at the Caesars Entertainment casinos-Bally's Atlantic City and Caesars Atlantic City. According to Dave Lyons, senior vice president of slot operations for the Atlantic City Caesars and Bally's properties, the total amount of penny games at his properties has grown to 530 in a year and a half-nearly 10 percent of all the slots, including an exclusive floor of low-denomination games at the Claridge casino called Pennyville.

Lyons says the average wager on the penny games at his properties is around 40 cents a spin-more than the nickel games, a bit less than the traditional quarter reel-spinners. And the most popular games? No, not the multiline video offerings. He says players are going bonkers for IGT's penny reel-spinners. "When we opened Pennyville, sixty percent of the machines were multicoin, multiline stepper games," Lyons says. "We were one of the first in town to have them, and they do extremely well. People love the time on device they get with them-nothing fancy; just a lot of hits."

He says they are popular largely because Atlantic City players love the reels-and they are astounded to see that many hits on a classic reel-spinner. "Many of our classic reel-spinning players are now playing this type of game," he says, adding that big jackpots are an extra enticement. "In Pennyville, we have a progressive Double Diamond machine that now has a $30,000 jackpot. Players can get their hit frequency and time on device, and still have a chance to win that big jackpot."

The penny version of Wheel of Fortune was launched nationally at Bally's Atlantic City. That game starts with a jackpot of $50,000. The first jackpot of the linked network hit last year at Resorts Atlantic City, to the tune of $940,000-the city's largest penny jackpot to date.

Even on the big-money game, though, players are opting to cover their lines with less than the max, even if it means sacrificing the chance at the big prize. Lyons says the average wager on the penny Wheel of Fortune is 57 cents-it takes a $2 bet to qualify for the jackpot.

Up in Connecticut, the penny story is similar on the nation's second-largest slot floor, the 6,300-game operation at Mohegan Sun. Mohegan only introduced nickels two years ago, but, according to Slot Operations VP Frank Neborsky, the penny games are quickly catching up to the 12 percent of the floor currently occupied by nickels. There are currently 267 dedicated penny units on the floor, and a couple hundred more in multidenominational units.

According to Neborsky, the penny games average a maximum wager of 300-500 coins. Players are actually wagering anywhere from 75 coins to 200 coins per spin-easily outstripping quarter games in average bets. Because of the multiple credits and high hit frequencies, people are willing to bet more on a given spin. "The people playing 100 pennies a spin are the same people who would never bet the max on a traditional quarter game," says Neborsky. "A frenzy occurs during play when people are going into these bonus events and winning thousands of credits-it creates a lot of excitement in the slot area."

But what about the percentages? He says people don't mind that the overall returns on the penny games are typically 87 or 88 percent. "It has a lot to do with the enjoyment they are experiencing," he says. "They realize they are not always going to win, but they are having fun. Instead of four credits for their dollar, they're getting 100 credits. They cover their lines at first, and then raise their stake. As they increase their stake, their rewards increase."

As in Atlantic City, Neborsky says the IGT penny reel-spinners are among the most popular low-denomination games on the floor. "I have a ninety-coin, five-reel stepper link that is just doing phenomenally," he says. In video, he says Aristocrat rules the day at Mohegan, occupying seven percent of the floor, with Millioni$er among the most popular.

Nowhere is the penny craze more evident than in the locals casinos of Las Vegas. Dan Roy, senior vice president of operations for locals king Station Casinos, says the penny denomination is now up to an astounding 31 percent of the floor at Station's five Las Vegas casinos-compared with only nine percent of the floor in the nickel denomination. "We were probably exactly the opposite a year ago," he says. "It has dramatically changed in the past year. It's supply and demand-we're giving them what they ask for."

He says the game styles run the entire gamut, from multiline video to progressives to reel-spinners and video poker (a necessity among poker-crazy Las Vegas locals). "Some of the penny video slots out there now are really a gambler's type of game," Roy says. "Aristocrat's Cash Man is the best example of that. You do have volatile games out there. But the popularity of pennies goes to the fact you get time on device-playing with a lot of credits and a hit frequency over fifty percent and, with bonus rounds, there is always something going on."

Roy says not only are games from Aristocrat and IGT popular, but other vendors have jumped into the fray-notably WMS Gaming, which has entered the market with popular penny versions of Password, Men in Black, and, most recently, the Match Game.

The average bets? As with the other jurisdictions, players are covering their lines first and raising their stakes as they go, Roy says. This is even the case with the new penny version of Megabucks, just introduced in Nevada with a jackpot resetting at $10 million. The manufacturer has estimated that the first penny Megabucks jackpot will hit at around $14 million, but Roy thinks it will be a lot higher.

"A lot of people are just going to cover their lines, like on a standard video slot," he says. "There will be a lot of short-coin hits that will drive that jackpot up." By "short-coin hits," he means people are going to line up those five Megabucks symbols on the winning payline without the required max-coin wager yielding the top prize. He predicts the jackpot will cross $20 million before everyone starts betting the max. "Once the prize gets to that $20 million level, that's where we really see the jackpot frenzy start out here," he says. "That's where you'll see the max-coin bets start."

Penny Rewards

All of the slot operations executives say the burgeoning penny play has made penny players very important customers to the casino, as reflected in slot club rewards. In the old days, dollar players were always treated better in comps and cashback than quarter or nickel players. These days, the lines of denomination have been blurred.

Lyons, Neborsky, and Roy all say their slot club marketers no longer look at denomination-they look at coin-in. And, in the case of pennies, coin-in has easily been at the level of a quarter player, and, in many cases, of a dollar player. "Our club is point-driven-players are awarded points for a certain amount of coin-in," says Neborsky. "Whether you're a penny or dollar player, if you generate, say, $10,000 in handle, you will receive the same point value. Potentially, a penny player could be getting the same rewards as a $5 player."

In addition to slot club rewards, many executives are rewarding their penny players with higher overall returns. At the Atlantic City Caesars properties, for instance, penny games are included in the new Get Nuts marketing program, in which banks of games are being placed with higher percentages than anywhere else in the city-dollar slots at 98 percent; quarter slots at 97 percent; nickels at 95 percent-and pennies at 90 percent, the level at which most Atlantic City properties place nickels.

According to Roy, the Station casinos, typically known for the best slot payouts in the nation, are placing many of their penny-denomination slots at an overall return of 93 percent or more-the standard for quarters in most jurisdictions.

All of the slot executives also said the increase in penny play has not diminished play in the traditional quarter and dollar denominations-classic three-reel quarters and dollars are as strong as ever, they say.

The same is not true for the nickel, which is rapidly becoming an endangered species. Roy estimates that at least half of the nine percent of the floors at Station's casinos currently occupied by nickel games will eventually be changed over to pennies, relegating nickels to the same territory where the 50-cent denomination has landed-as one of the choices in the multidenominational format.

On the other side, half-pennies and other fractional denominations, already introduced in the 50-line games of Aristocrat, will be affecting the penny-slot boom very soon.

But for now, pennies are the big story. So put in your $20 bill, sit back, and enjoy the hits-for hours, not minutes!


This article originally appeared in Strictly Slots magazine. Used by permission.


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