Future Slot Machine Summary

One of the most prevalent trends you’ll find in the world of slot machines is the blurring of lines between app and slot machine. Today’s slots feature much higher gamification (rewarding you for certain behaviors), skill-based casino games (where the player has more control over the outcome), and even remakes of classic arcade games done as slot machines.

Slot machines have been evolving ever since Charles Fey produced the first game in 1895. Slots advancements include everything from virtual reality to detailed bonus rounds.

Casinos and game manufacturers have improved the slots experience over the decades to continue drawing new customers. The goal has always been to keep up with the overall gaming technology curve.

After all, casinos can’t expect to draw players with three-reel mechanical slots when video gaming technology (e.g. Xbox One) is more lifelike than ever.

But the gambling world currently finds itself at a crossroads in terms of attracting millennials. This generation hasn’t shown the same affinity for slot machines as their predecessors.

Casinos realize that their slot machines must adapt to meet the demands of younger players. But how can they accomplish this?

I’m going to discuss some interesting proposals that have been thrown out regarding how to make slots more interesting to young people. But first, I’ll cover the current state of slots gaming and notable advancements up to this point.

The Current State of Slot Machines

Slots have been the lifeblood of casinos for decades. Even today, slot machines draw the vast majority of gaming revenue.
So why are casinos and game developers so worried?

Slot machines still attract plenty of Baby Boomer and Generation X customers. But there’s a noticeable gap in how many millennials are visiting gaming floors.

Gambling venues know that they can continue attracting older generations. The problem, though, is that millennials aren’t taking to slots. It’s easy to ignore them when considering that the average casino is still successful. But what will casinos do in another 20 years, when many Baby Boomers are either in retirement homes or have passed away?

Casinos want to act now and introduce new slots features that’ll encourage younger people to spin the reels. Skill-based slot machines are one of the most-recent efforts in this movement.

These slots feature bonus rounds that contain skill elements. A skill-based slot not only allows one to influence the results but also interact more with the game.

Millennials have grown up with highly advanced technology ever since they were kids. People in this age range have been using smartphones to some degree for a decade.

Research shows that the average millennial logs 18 hours per day on their phone. They spend this time multitasking across different platforms, most notably social media sites.

They’ve also grown up with advanced video gaming technology, which has produced Xbox One, PlayStation 4, and Nintendo Switch.

Given all of this, it’s no wonder why younger people aren’t impressed with pushing the spin button over and over. They want more interactivity from their gaming experience.

One of the biggest problems with casinos and slots is that they’ve remained unchanged for a number of years. 3D graphics might wowed Generation X, but they’re doing little to entice millennials.

But this isn’t to say that young people aren’t willing to visit casinos. They do frequent casino resorts for the bars, restaurants, and other entertainment. They’re not, however, gambling much when they go to these venues.

Gaming venues have begun to realize the changing trend in recent years. They’ve responded by adding mobile casino tournaments, esports arenas, and the aforementioned skill-based slot machines.

The mobile sector is especially important for multiple reasons. First off, people don’t have to leave the bar to play a mobile gaming tournament. Second, young people are used to multitasking with their phone.

None of these measures have brought millennials to the gambling floor in droves. But these moves set a precedent for the type of things that must be done to attract younger players.

Slots Advancements Over the Years

Slots may not be rapidly advancing year after year. But game developers have made some impressive changes over the decades to modernize these games.

The first big step in the slots evolution began in the 1960s. As you can see below, the changes have kept coming over the years.

Video Slots

Up until the early 1960s, slot machines operated on mechanical reels and required players to pull a lever. Bally changed this in 1963, though, with their Money Honey slot.

Money Honey was the first electromechanical machine. While the game still required using a lever, it was the first slot to offer electronic reels.

In 1976, a small California gaming company introduced the first video slot in Fortune Coins. This game operated through a Sony television and offered both electronic reels and a spin button.

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Video slot machines have since become the norm. Mechanical slots, on the other hand, are relics that are rarely found in casinos.

Progressive Slot Machines

A progressive slot machine features a jackpot that increases slightly with every made bet. These prizes continue growing until somebody wins.

As popular as progressive slots are today, it’s strange to think that they only became available in the early 1980s.

It’s at this point when game manufacturers could add microchips to slots that keep track of the increasing jackpot.

International Game Technology (IGT) rolled out the first wide-area progressive slot machine in Megabucks in 1986. A wide-area progressive offers a jackpot that’s linked across multiple slots in one or more casinos.

Free Spins

Slot machines used to be void of bonuses. Free spins were the first real bonus feature added to slot machines.

Free spins are usually awarded upon landing three or more scatter symbols anywhere on the reels. This bonus then allows players to spin the reels without risking any money.

Online Slots

Online slot machines became available on free-play gaming sites in 1994. These sites allowed players to enjoy classic slots from the comfort of their own homes.

Of course, playing free slots isn’t the same as risking real money. So it was an even bigger deal when InterCasino became the first real money online casino to launch in 1996.

People were apprehensive about depositing at these sites in the beginning. However, the online gaming industry has built plenty of trust with players since then.

Second Screen Bonuses

Slots bonuses, including free spins, were very basic up until the mid-1990s. WMS sparked a change, though, when they introduced a second-screen bonus to Reel ‘Em in 1996.

A second-screen bonus takes players off the main reels and to a new screen. These bonuses usually involve fun mini games, such as choosing what’s in pots or guessing a coin flip’s outcome.

3D & 4D Graphics

3D slot machines were first introduced to casinos in the mid-2000s. This was considered a huge advancement, because it allows slot machines to stay close to video gaming technology.

3D graphics add length, width, and height to objects. Given that everything in life has three dimensions, 3D graphics create a more-lifelike slots experience.

More recently, casinos have begun offering slots with 4D graphics. The main difference between 3D and 4D graphics is that the latter adds time and motion.

In other words, 4D slot machines feature 3D images that move. This is just the latest step in making slots action feel more real than ever before.

Skill Based Games

Many game manufacturers felt that young gamblers wanted more than monotonously spinning reels again and again. This belief gave rise to skill-based slot machines, which feature some degree of skill in the bonus round.

These games usually give players the option to choose between free spins or a skill-based round upon triggering the bonus. The latter brings up a mini game where a player’s skill level has a direct effect on their odds of winning.

Here’s an example:

You trigger a bonus in a cowboy themed slot.
You choose the skill bonus.
You must shoot outlaws to win more credits.

It’s important to realize that the bonus only has a small impact on overall RTP (usually 3-5%). But these games are still fun if you want to do more than just spin reels.

Virtual Reality Slots

Virtual reality (VR) is designed to make people feel like action is happening right in front of them. While VR technology still has a ways to go, it’s currently available for online slots.

NetEnt became the first online gaming developer to launch a VR slot. They re-released Gonzo’s Quest – one of their all-time classics – in virtual reality. They’ve since re-released Jack and the Beanstalk in VR format too.

Virtual reality slots are much like skill-based games in that they haven’t become extremely popular overnight. But VR definitely figures to play a role in online gaming in upcoming years.

What Features Will Slot Machines Offer in the Future?

Slots makers are far from done with innovating their products. The only problem is that it’s not entirely clear where they go from skill-based games and virtual reality.

BMM Testlabs, a Las Vegas-based company that’s been testing games for 37 years, has some ideas. They’ve released a whitepaper that discusses some interesting ideas that could further slot machines.

Below you can see many of their thoughts on how slots developers can take the industry to the next level.

More Functions Beyond Slots

Slot machines currently serve one purpose: allowing customers to play the game that’s featured within the cabinet. However, slots players could one day find themselves with more functionality.

These machines could include options for ordering drinks, dialing 911, ordering valet service, playing music, in-screen texting, and phone integration.

Climate Control

Cigarette smoking is less of a problem in casinos that it was a few decades ago. However, it’s still possible for players to run into cigarette smoke and be turned off from gaming.

Localized climate control would allow gamblers to use air cleaning technology to make their space more breathable.

Sports Betting at Slot Machines

Casinos divide the slots floor and sportsbook into two distinct sections. But featuring a sports betting option at slots portals would add more convenience.

These combination betting portals would allow gamblers to place bets and spin the reels in one location. This would save them from having to travel back and forth across the casino.

Biometric Identification

Gamblers currently use player’s club cards to track their rewards in land-based casinos. Biometric identification would change this, though, and make picking up comps more convenient.

Many phones are now using biometric identification, which allows one to identify themselves with a thumbprint. This is easier than carrying around and inserting a player’s card at every machine.

Artificial Intelligence

Using AI to analyze people’s tendency has become a controversial topic thanks to Google, Facebook, and other companies.

But artificial intelligence is also helpful at predicting what you’ll do. This process can create suggestions for you, thus adding one more convenient element to gaming.

The main question, though, is if players would feel comfortable with a slots portal analyzing their behaviors.

Skill Based Gambling Tournaments

The reason why developers are rolling out skill-based slots is because they know millennials like using skill when gambling. Therefore, skill-based gaming tournaments seem like a natural addition to the future.

Some casinos have already added esports arenas to their establishments. They could also give customers the ability to play skill-based tourneys directly from a slots portal.

Virtual Reality with Land Based Slot Machines

I discussed how VR has been brought to online slots. Land-based casinos, on the other hand, have done little with this technology.

But they’ll likely experiment with virtual reality too by offering VR glasses at slots portals.
Doing so would add another dimension to casino gambling.

Voice Control

Many have become acclimated to voice control through their phone and/or PC. Slots makers also have the capability to add this technology to slot machines as well.

Just imagine being able to speak with your slots portal, asking it to spin the reels, open a current sports contest, and/or launch an electronic table game.

New Forms of Currency

Adding new types of currency to slot machines is one more idea floated by BMM Testlabs. They specifically mention Bitcoin, a cryptocurrency that allows users to make peer-to-peer transactions.

Numerous other cryptocurrencies are available, which means that people could have more slots payment options than ever before.

Will Many of These Changes Be Implemented?

Casinos aren’t truly in a panic mode right now. After all, they still have plenty of older customers to keep the reels spinning.
Furthermore, slot machines have already undergone a number of innovations that have helped modernize them.

But it’s clear that slots aren’t advanced enough to attract younger players right now. In 15-20 years, millennials will become a core customer group for gambling establishments.

Casinos can’t afford to ignore the problem facing them right now. Slot machines simply don’t offer enough to attract the average young person.

Changes will continue occurring to help solve this problem. The only question is how far the industry will go to attract millennials.

They’ll face a balancing act that involves introducing new elements without turning off existing customers. Skill-based games may intrigue younger players, but they won’t necessarily be a hit with older patrons.

Likewise, esports are becoming more and more popular among young adults. But past generations could care less about competitive gaming.

It must also be asked if newer technologies like voice control, artificial intelligence, and biometric identification could alienate existing players.

Given the current concerns, game developers can’t just add every cool feature and new tech to slot machines. They must carefully consider what’s going to offer overlapping popularity among young and older gamblers.

Conclusion

Casino slot machines have never stood still in terms of technology. Game developers have added a number of new features over the years to keep slot machines relevant.

These elements include 3D graphics, skill, virtual reality (online), second-screen bonuses, and more. Such updates have helped modernize slots and drawn more customers.

Meanwhile, three-reel games have become vintage slots that are rarely available. Today’s older generations have largely gravitated towards five-reel slots that offer more features and better graphics. But these innovations still aren’t good enough for the average millennial. Therefore, game makers are currently considering new slots features to help draw young players.

BMM Testlabs has offered some intriguing ideas on what the latest additions could be. Voice control, AI, localized climate control, sports betting (through slots), and new forms of currency are just some of their ideas.

It remains to be seen what developers will really do to entice the new breed of slot machine players. After all, they must be careful to avoid alienating their core customer group.

But it’s clear that changes will be coming to slot machines. And it’ll definitely be interesting to see what the future brings.

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Introduction to Who Builds Slot Machines

Who builds slot machines throughout the world? For such a popular activity, there is a relatively short list of slot machine manufacturers in the world:

Multimedia Games Inc. (a subsidiary of EVERI Inc.)

Of these companies listed, Class III gaming is principally supported in North America by Scientific Games Corp. and IGT. They are both global leaders in the gaming industry. Mergers and acquisitions are the name of the game amongst slot machine manufacturers. It is currently a highly dynamic corporate environment.

In 2014, for instance, Bally Technologies was acquired by Scientific Games. This acquisition is significant as Bally was the driving force for inventing most of the modern features of slot machines enjoyed by so many.

These gambling companies provide products other than physical slot machines. They often also supply casino-management systems. These software packages help casinos to “run” their operations from day-to-day and even in real-time.

This casino operating system software is crucial to casinos as a way to reduce cost and, I’ve found, a significant advantage play for slots enthusiasts. I’ll provide more on this topic at another time.

This operating or enterprise software business is as highly competitive as slot machine manufacturing. Factors that determine how successful providers are in selling their systems include:

product features and functionality
accuracy
reliability
service level
pricing

Competition is intense because of the relatively low number of providers and the limited number of casinos and jurisdictions in which they operate. Providers are Scientific Gaming, Aristocrat, IGT, Konami, and several smaller companies in international gaming jurisdictions.

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The Gaming Industry

Within the global gaming industry, companies building slot machines is trending towards consolidation amongst gaming equipment and technology companies. The gist of why is to increase scale and therefore operating efficiencies. The hoped-for result is accelerated innovation and product development resulting in broader service and product offering.

Several acquisitions of slot machine and other gaming equipment manufacturers have occurred recently, including the purchase of Bally Technologies by Scientific Gaming Corp. and the acquisition of Multimedia Games by Global Cash Access Holdings Inc.

Following a wave of supplier diversification in the gaming industry, where new providers have been gaining in market share, the industry is experiencing significant consolidation.

This convergence is attributable primarily to a slowdown in North American traditional slot machine revenues as regional gaming revenue headwinds, such as declines in same-store sales, impact the demand for slot machines.

Therefore, the machine gaming sector is evolving from just the sale and leasing of slot machines to include:

multi-channel systems and table games equipment for traditional land-based casino
lottery technology
real-money interactive gaming
online and mobile social casino gaming

A significant threat for the entire gaming and betting industry arises from illegal activities, which may drain significant betting volumes from the regulated gaming industry.

The loss of present players from legal casino operators has a material adverse effect on gaming industry operations, business, financial condition, and prospects.

Scientific Games Corporation (NASDAQ: SGMS)

A global leader in the gaming industry, Scientific Games Corporation (SGC) is the current owner of:

Bally Technologies Inc. (one of the original slot machine companies)
Spielo
WMS Gaming Inc.
Shuffle Master
Barcrest

SGC’s company profile states that they provide:

Future Slot Machine Summary Games

lottery games
electronic gaming machines
server-based lottery and gaming systems
sports betting technology
loyalty and rewards programs
online social, mobile and interactive content and services

In 2013, Scientific Games Corporation purchased WGS Industries, Inc. Bally Technologies, Inc. was acquired by SGC on November 21, 2014, for $5.1 billion.

The products of SGC are installed in 450 jurisdictions worldwide, including all the major regulated gaming jurisdictions in the U.S. and 146 international gaming jurisdictions. They have 975,000 units installed in North America.

Within the gaming supply segment, SGC sees the competition on several fronts. Primarily, being a global leader in slot machines has resulted in their product lines competing with each other for space on the casino floor.

International Game Technology PLC (NYSE: IGT)

Future Slot Machine Summary Template

International Game Technology (IGT) PLC is a global leader in gaming that, according to its website, leverages a wealth of

premium content
substantial investment in innovation
in-depth customer intelligence
operational expertise
leading-edge technology

It has not only established local presence and relationships with governments and regulators in more than 100 countries around the world but also approximately 13,000 employees. For U.S. federal tax purposes, under current law, it is treated as a foreign corporation.

In 2014 and 2015, International Game Technology PLC experienced multiple corporate mergers and acquisitions involving GTECH, Holdco, IGT, and Georgia Worldwide Corp. which has been and is a complex, costly, and time-consuming process. The integration process is expected to be completed by the fiscal year 2018.

International Game Technology PLC’s online social gaming casino offering, DoubleDown Casino, is mainly conducted through Facebook and Apple iOS platform, a relationship governed by Facebook and Apple’s standard terms and conditions for application developers as well as privacy policies, both of which are occasionally modified, rather than by contract.

International Game Technology PLC currently does business in approximately 100 countries worldwide. At the end of 2014, IGT PLC had contracts with 717 casino operators in the Americas segment, with 249 in Latin America and 468 in North America.

Summary for Who Builds Slot Machines

Slot machine manufacturing is principally supported in North America by Scientific Games Corp. and International Game Technology PLC, both global leaders in the gaming industry.

The products of Scientific Games are installed in 450 jurisdictions worldwide, including all the major regulated gaming jurisdictions in the U.S. and 146 international gaming jurisdictions. They have 975,000 units installed in North America.

Future Slot Machine Summary Game

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Have fun, be safe, and make good choices!
By Jon H. Friedl, Jr. Ph.D., President
Jon Friedl, LLC

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