The Optimized Slot Floor Advantage: The art and science of data management

According to the Canadian Gaming Association, legalized gaming more than doubled in revenue between 1995 and 2010, from $6.4 billion to $15.1 billion. Slot operations make up the bulk of that money – up to 85 per cent of casino revenue – according to some sources. It is a lucrative line of business, one that requires the attention worthy of the return it yields. This is why the practice of slot floor optimization is considered a vital component of the business.

Slot floor optimization is part art, part science. Managed effectively, it helps casinos understand the relationship between machines and profitability. It helps managers determine the best mix of machines and how to optimize floor space use to maximize returns. When it comes to slot floor planning, bad decisions will lower returns on deployed assets and can have a direct impact on the patron experience. Ensuring the right mix of games, at the right price, aligned to customer demands and preferences can help the casino generate incremental revenue, all the while improving the customer experience.

Best Practices in Slot Floor Optimization:

Data Management: Enriching your Data

The first step in any slot floor optimization process is accessing and cleaning all the available data. It can come from multiple sources, often in different formats, with different nomenclatures and standards associated with them. The main sources of information which support slot floor optimization are: actual customer play, customer segmentation results, slot machine physical attributes, and placement data; all of these variables hold a piece of the optimized slot floor puzzle. By properly analyzing these data points by slot machine over time, processing millions of plays on every slot on every property, looking at factors such as denomination, location, game manufacturer and game type, a casino will get a precise picture of when, where, how and why customers play the specific slots. Admittedly, there are many different attributes associated with a slot’s success – what analytics does is take mass amounts of data to help deliver actionable, implementable insight.

Although big data remains, for some, an overhyped term, the reality is that the explosion of data is unlike anything we’ve seen before. Data volumes will continue to grow as more computers, smart phones, tablets, new apps and services, along with an increasing number of devices outfitted with smart metres and sensors and GIS transmitters, come online. As IDC has already predicted, the big data market will grow to $16.1 billion this year.

This continued data tsunami will force casino operators to focus their efforts on the right data – the kind of data that is actionable and gives meaningful insights into customer needs and desires. Casino operators are already collecting a great deal of data, and the industry is increasingly adopting predictive analytics and data-modelling techniques to optimize everything from customer experience to the layout of the casino floor. While all this data is good for the casino business, if the data quality is bad an unnecessary level of risk is introduced into the process. This is especially true when it comes to slot floor optimization.

Misclassification of a machine can wreak havoc on the optimization process and can have a huge impact of the bottom line, which is why the old adage “garbage in, garbage out” still applies. The challenge in any slot floor optimization initiative is ensuring the data is clean, as the results of the analysis can only be as good as the information that gets analyzed.

Misclassification of a machine can wreak havoc on the optimization process and can have a huge impact of the bottom line, which is why the old adage “garbage in, garbage out” still applies. The challenge in any slot floor optimization initiative is ensuring the data is clean, as the results of the analysis can only be as good as the information that gets analyzed.

Once the data cleansing process is done it’s time to identify the data elements that are truly meaningful to explain the variation in slot performance. It is done through an exercise called categorization. Categorization helps to define what the future demands of a particular machine will be as well as helping understand the future demand for a machine never before used. Categorization is an exploration activity that forces operators to look at all data (i.e. manufacturer, slot category, game type, platform, section, machine settings, etc.) to determine what data points are truly critical in explaining a machine’s performance. The end result is a list of attributes that are truly meaningful to decision making and lay the groundwork for effective forecasting.

Backing all bets with the power of forecasting

When deciding which games to offer or replace, casinos may look at historic results and surmise reasons why games which were popular in the past will continue to be so in the future. Therein lies a missed opportunity. With mountains of invaluable customer data available, a growing number of casinos around the world are turning to advanced analytics to assist with slot floor planning to forecast the right mix of gaming choices, denominations, and machine placements to optimize customer interest and use.

While the traditional approach to decision-making around slots was limited to reports based on one variable, looking exclusively at historical data, today’s forecasting looks at trends, seasonality, usage, location, machine drivers, game classifiers, time of day, day of week, etc., to truly understand customer preferences and factors that drive a machine’s success. With time, as databases become richer with new game and machine attributes the predictions get stronger, allowing for long-term gaming trends performance, and ultimately better decision making.

Now operators can forecast at every dimension: by casino, by floor, by section, by denomination; modelling at every level within the hierarchy that is meaningful and allowing to forecast how many plays this machine will see by customer segment. This allows casinos to understand best-case scenarios, what will happen next, what will happen if a trend continues, why this is happening and what actions need to be taken.

What’s more, based on this data, operators are also able to assess machines a casino has never seen before. Analytics provides operators with a sort of “shopping list” allowing them to buy machines based on data that will ensure their success when introduced into the overall floor mix. Data analytics allows operators to look at multiple scenarios: from moving a machine, to reconfiguring it, to replacing it all together. Each of these decisions has a different impact on revenue and cost. Analytics can help decipher what impact the replacement of a machine will have on the overall floor performance.

Presenting information visually

Data visualization is the presentation of data in a pictorial or graphical format. Though the term may be new, the concept is not. For centuries, people have depended on visual representations, such as charts, graphs and maps, to understand information more easily and quickly. As more and more data is collected and analyzed, decision makers at all levels will increasingly look to data visualization software to more easily find relevance among millions of variables, communicate concepts and hypotheses to others, and even predict the future.

For casinos the visualization of data is turning huge volumes of patron and machine data, from a variety of systems and locations, into meaningful information they can act on quickly. Imagine being able to physically walk onto the slot floor and point to what’s working and what’s not – that’s the power of visual analytics – it brings the data to life allowing for quicker decision making. 

Conclusion

One of the most important lessons for those looking at slot floor optimization is that it’s not a onetime process. To truly execute an effective long-term slot floor optimization strategy, a feedback loop is essential so that operators can learn from the decisions they are making and truly understand the health and wealth of all levels of the slot floor business. I often say that operators should look at the slot floor like a restaurant. The slots are like items on a restaurant menu. Just as restaurants want to please their guests with appetizing food, so too do casinos with slots that are appealing. And just as the perfect meal requires thoughtful combination of wine and entrée pairings, so too do slot floor layouts require a proper combination of machines, games, and location. Let analytics be the master chef for your casino’s slot floor menu.

Craig Carothers is the Principal of Demand Intelligence for SAS Canada with a cross-industry focus. He has over 25 years of diversified experience integrating systems and analytical applications to optimize performance by translating data related to product usage, customers, operations, and costs into actionable insights.

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