JUST SAY NO (TO REVENUE SHARING)

In what promises to be a very interesting test, Bally’s Las Vegas removed all of its participation games recently. Operators, particularly Bally’s LV owner Harrah’s, have long since tried to move away from the revenue sharing model. Who wants to give up 20% or more of revenue when the payback on a slot machine is only 6 months? Participation games are by definition the best performing games so pesky consumer preference has a habit of getting in the way of cutting costs. Mandalay Bay unsuccessfully tried the same thing early this decade. That was a number of years ago so I guess it’s time for another experiment. Is this a smart move? Yes. Harrah’s operates a significant amount of slot capacity on the Strip. A drop in slot play should not move the corporate needle. I’m all for a real life cost/benefit analysis. Given that 50% of slot industry profits are generated on the gaming operations side, the slot suppliers better hope this test fails.