Day 3 of ICE North America’s Road Back series looked at the shift in customer demographics under Covid and how the product is being adapted to the returning players
The third day’s panel, chaired by Everi Holdings chief executive Michael Rumbolz, began with discussion of how the corona virus-related economic downturn was impacting the discretionary spend and activity among various demographics of casino players.
Former Scientific Games CEO Gavin Isaacs, now a non-exec on the boards of DraftKings and Galaxy Gaming, said the most interesting data he had seen applying to the core demographic group that goes to casinos, “blue collar, average age just under 50”, was the level of household saving. “Usually as a percentage of household income that runs to 6-7% but it’s now running at about 22%…We are starting to see the regulars coming back and they are playing well. So it’s not all doom and gloom out there.”
Steve Hill, president of the Las Vegas Convention & Visitors Authority, said the significant stimulus from the CARES Act had “probably bridged disposable income [but] the concern is that’s not going to last forever.
“The initial 70% recovery we can get to, but that last 25-30% is going to be difficult because the economic crisis as a result of the health crisis is going to take some time to overcome and federal government is not going to pay for that forever.”
Thomas Jingoli, COO of manufacturer Konami Gaming, admitted seeing “staggering numbers” in some places as some casino players returned after clearly being “tired of being cooped up in their homes.” However, he also questioned how sustainable that recovery was. “Once that becomes a sustainable process, then I think you will see our business on the manufacturer side recover. But that’s going to take a while. Casinos aren’t buying a load of product right now and until we see a sustainable recovery, then on our side of the business, we are going to struggle for the next couple of months.”
Bob Parente, chief revenue officer for Scientific Games, said that despite international variances, with Asia, Macau, Korea, Vietnam being heavily dependent on tourism and the borders being closed in a lot of cases, pent—up demand from the core value players was the underlying driver across all territories.
Jingoli added that while in “regional markets, native American casinos, Southern California, things in the midwest and east, the numbers have been fairly good out of the box” and in Vegas the local and the tavern market had come around much quicker, “until we get tourism back, Monday through Friday, conventions, things like that, the strip market is going to be slower to recover.”
The panel moved next on to examine how they were going to incentize this first returning segment and cater for that pent-up demand, with chair Rumbolz asking if this would be enough to fill casino floors, given limited capacity.
Scott Sibella, president of Resorts World Las Vegas, said they expected the leisure customer, “especially from Southern California that drive in market”, to follow the loyalty customer back to his casino, and that they would have to be incentivized “hopefully with creative soft cost giveaways and incentives, staying away from the hard costs and not giving in to the premium customer where we are doing the discounts and the heavy promotions.”
Hill said they continued to research the city’s potential customers, roughly equating to 70% of the US population – “about 30% of the population doesn’t consider coming to Las Vegas” – within which he saw three distinct groups. “The folks that are willing to come back as soon as we opened up. About a sixth of our normal travel group. The next group, about a third of that 70%, were a little bit wait and see make sure the health situation was good and Vegas was still fine. About half of the 70% were not going to consider travelling to Vegas or anywhere for 3-6 months. The demographics of those groups started younger, more male more employed and generally more wealthy, and as you moved through that spectrum those demographics shifted to the other side.”
Hill added that this early returning group had, with casino floors restricted to 50% capacity, been enough to keep most of the properties relatively full. “But to sustain that we are going to have to get more into those other groups, show that Vegas is healthy. That is also dependent on the markets they are coming from being healthy, how they feel about their home market and also we have a set of offerings that make the trip worthwhile.”
Julie Brinkerhoff-Jacobs, president/CFO of landscape and architectural design company Lifescapes International, emphasised the importance of effectively using outdoor space to incentivize players to return by making them feel safe to do so. “People are realising that if you are going to go anywhere, if there are outdoor spaces available where you can practice some social distancing but still be within the casino or in a restaurant that has some outdoor seating, that’s going to grow.
“Portable cabanas could benefit the existing casinos that may not have permanent cabanas or need to add more to benefit their returning guests.” She also highlighted other adaptations to the inside casino environment they could make to create the perception of safety for guests. “With plants there’s a perception that they keep the air clean or cleaner”. She also advised that “everyone needs to hire a cleanliness csar, some point person responsible with the staff for making sure that everything is not just clean but the guests feel comfortable…You need to make sure your people are trained to be able to react quickly and appropriately. It’s going to be more customer intensive and customer care more vital the ever going forwards.”
Turning to product, Chair Rumbolz asked if game designers were considering changes to features and pay tables to attract these early adopters back to traditional games like slots and table games. Jingoli said: “In these times when capex budgets have been cut and operators aren’t spending the amount of money they did in the past, it does put pressure on your product to perform.
“We’ve seen certain casinos turn every other machine off, but others have repositioned their floor with games that have performed better in the past and have turned the low-performing games off. I think that puts R&D at the forefront, because of the Covid virus, sure, but I think it was already there before that because of the competitive nature of the business we’re all now in.”
Isaacs added that with payback percentages on machines having been tightened up since the last recession, it’s was an opportunity for suppliers and operators to provide these returning players “with some value, especially in the local markets. It encourages them to come back and repeat and invest more.”
Isaacs also argued that this was an opportunity “an opportunity to reset the experience, to innovate”. He explained: “We’re the only industry I know of where going online has been prohibited for whatever reason. It’s now time, specifically when so many people are at home, for the casino experience to be extended to the online world. The key for the manufacturers and technology developers is now to create an experience that is online but enriched when it’s in a casino, but it’s the same experience. When you work with the regulators, it’s time for the people who develop these great games and products to be allowed to innovate using the tools that are available to every other industry.”
Parente added: “We are very good at reacting once we have a crisis, which moves the needle, but it takes something like that to accelerate development, so I think there’s something good, despite the pain we’re going through, to get us into the 21st century.”