December 02, 2003

Casinos Going Cashless

Ticket-in, ticket-out - or TITO - machines accept and pay out with cash-redeemable paper tickets instead of coins.

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Casinos shifting to coin-less slot machines

By Andy Vuong
Denver Post Business Writer

Post / Jerry Cleveland
Mike Hirsch, general manager of the Isle of Capri Casino in Black Hawk, sits in a row of slots that use tickets instead of coins. The casino currently has about 250 "ticket-in, ticket-out" or TITO machines.

Colorado casinos didn't want the state's racetracks to have video lottery terminals, but they are ready to take advantage of technology traditionally associated with the machines.

The casinos are preparing to roll out new coin-less slots that have "ticket-in, ticket-out" technology, which will make it faster and easier for customers to cash out.

Ticket-in, ticket-out - or TITO - machines accept and pay out with cash-redeemable paper tickets instead of coins. Ticket-based payouts are a staple of VLTs, so the only difference between the new slots and VLTs will be the way winners are determined. Slots have a random number generator that determines a winner, while most VLTs are connected to a central computer system that decides the outcome of each bet.

The Isle of Capri Casino already has about 250 TITO machines but plans to double that number by the end of next year.

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The Lodge Casino plans to install about 200 TITO machines in the first quarter of 2004. Harvey's Wagon Wheel Hotel and Casino plans to have 350 of 1,000 machines accepting tickets by the end of 2004. Fitzgerald's Casino hopes to convert 100 of its 594 machines to ticket-in, ticket-out by spring.

Many casinos have been waiting for regulatory approval of a more advanced form of TITO that allows gamblers to put coupons they receive in the mail in the machine. They expect approval to come by early next year.

This fall, Colorado casinos fought fiercely against an initiative by Front Range racetracks to install VLTs, with a large chunk of the proceeds going to support tourism. The measure was soundly defeated by voters in November.

But the new technology could help boost stagnant revenue for existing casinos, because downtime on the machines and the number of workers needed to maintain them will be cut drastically.

Some critics say the "cashless" technology may have a negative impact on problem gamblers.

The casinos, however, say they are implementing the new machines because of consumer demand.

"There is guest demand for the convenience associated with ticket-in, ticket-out technology," said John East, general manager for Harvey's.

The new machines allow people to gamble without having to handle coins, which often dirty their hands. It will make it easier for gamblers to change machines because they won't have gather their coins in a bucket that sometimes doesn't fit in a slot hopper. They can simply cash out and insert the paper ticket into a different machine. And gamblers will no longer have to wait for their money when they hit a jackpot.

For the casinos, the technology allows them to get more play out of a machine because the downtime would be minimized. It also reduces overhead.

"The games are in play a lot longer," said Ara Telian, director of slots for Jacobs Entertainment, which owns the Lodge and Gilpin casinos in Black Hawk. "There's no downtime for hopper fills, and there's less maintenance on the games."

Casinos can cut costs by up to 50 percent if they switch to TITO, said David Durst director of sales for gaming systems at International Game Technology, the country's leading slot machine manufacturer.

"This kind of technology allows a property to operate more efficiently," Durst said.

But the technology isn't cheap.

It costs anywhere from $300 to $2,000 to upgrade a traditional slot machine to a ticket-in, ticket-out, or TITO, machine, Telian said.

The technology has been around since 2000, but the first widespread rollout in Colorado will come next year.

"There's been a pretty steady expansion nationwide ever since" the first machines were installed in Las Vegas, said Marcus Prater, senior vice president of marketing for Bally Gaming & Systems, the nation's second-leading slot-machine manufacturer. "All of the Colorado casinos are exploring some form of ticketing or cashless" technology.

Meanwhile, the Mountain High Casino plans to test a machine in January that allows gamblers to access a line of credit with the casino using a player's card.

"You'll be able to draw from your account directly to the machine," said Sean Sullivan, general manager for Mountain High.

The new technologies take gamblers further away from their money and will make it more difficult for people to take a break or leave while they're ahead, said Rachel Volberg, president of North Hampton, Mass.-based Gemini Research, which conducts studies on gambling.

"By playing with credits ... it keeps a person more distant in terms of understanding that this is really money going out of their pocket, rather than just a number on a slot machine," Volberg said.

Just more than 34 percent of Colorado's 21-and-over population gambled at least once in 2002, according to a study by Harrah's Entertainment Inc., a casino operator based in Las Vegas.

About 3 percent of the adult population has a gambling problem, said Keith Whyte, executive director of the National Council on Problem Gambling in Washington, D.C.

"We would urge that if the state is going to allow these technologies, their obligation is to determine if there is any impact on the most vulnerable Colorado residents," Whyte said.

Mark Wilson, director of the Colorado Division of Gaming, said regulators will work to "make sure that gambling and the integrity of gambling is kept at its highest point so it's not problematic for anybody in Colorado."

And while the casinos are moving to the new wave of slots, they don't plan to abandon traditional coin machines completely.

"If somebody doesn't want to move forward to this technology, they can play like they always have played," Sullivan said.

Many gamblers are ready for the change.

Sitting at the Wild Thing slot at the Isle of Capri, Linda Croy moves her right hand away from a hopper filled with $1 coins to reveal her blackened fingertips.

"That's why I like the new machines more," said Croy, a Parker resident.

Other gamblers preferred the ticket slots because of the quick payout.

"I like them because you don't have to wait on people to get your money," said Lakewood resident Bruce Bagnell.

Posted by Craig at December 2, 2003 07:11 PM