With several adjustments to the gaming machines at their venues, operators can change the formula determining the possibility for a player to win a payout. Such changes are particularly favored by casino customers and are believed to help gambling facilities draw the attention of more people and keep them on their floors.
Mohegan Tribal Gaming Authority President Bobby Soper said that they tend to monitor payouts at their competitors’ facilities in order to ensure their own competitiveness in the market. The authority currently manages Mohegan Sun, one of two full-scale casinos in Connecticut.
According to the monthly figures posted by state gambling regulators, casino managers in Rhode Island and Connecticut have increased their slots payout percentage since the opening of Plainridge Park Casino, the first slots parlor in Massachusetts.
For instance, Connecticut’s Foxwoods Resort Casino offered average payout percentage of 91.98 for the four-months ended October 31. The rate was the highest in 20 years. Rhode Island’s Twin River had average payout percentage of 91.87, the highest in the past 11 years. Last but not least, Mohegan Sun offered its customers an average payout percentage of 91.79, the highest in five years.
And the Massachusetts Gaming Commission reported that Plainridge Park Casino itself has increased its payout percentage from 90.07 to 91.43 in the four months since its opening. Massachusetts’ first gambling venue had its official launch on June 24.
Even the smallest changes in payout rates can have a significant effect on casino revenues, as patrons tend to wager substantial amounts of money on slots. For instance, Plainridge Park Casino managers have increased the payout percentage by about 1.5%. Although it may sound like an insignificant adjustment at first, it actually represents a $2.25-million shift from the casino’s monthly revenue into customer winnings.
On an annual basis, the venue would generate $27 million less in gaming revenue, which would mean a loss of $13 million in tax revenue to the state. Under the current gambling regulations in Massachusetts, Plainridge Park Casino pays a 49% tax on gross revenue from its slot machines.
Gambling operators believe that increasing payout percentages would eventually have a positive effect on their operations, as more customers would be attracted and they would stay longer at casinos.
Clyde W. Barrow, Professor at the University of Texas, commented that raising payout percentages actually means that players still lose the same amounts of money, but it actually takes them a bit longer to lose them. What is more, the raises make patrons more inclined to return to casinos and lose money again.