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FOCUS / SMALL BUSINESS Bloomberg Businessweek January 29, 2018
THE BOTTOM LINECasinossuch as Caesars and MGM Resorts, faced
with declining shares of visitors who gamble, are testing interactive slot
machines designed to appeal to younger customers.Slot Machines
For Millennials
Gamblit says its skill-based
games will draw younger
visitors to casinosIt’s one of the big dilemmas facing the $70 billion U.S.
casino industry—how to get people in their 20s and 30s to
play slot machines as much as their parents or grandpar-
ents. Generations raised on video games and smartphones
don’t have the same interest in plopping themselves in
front of screens when they’re out on the town. In Las
Vegas, the percentage of visitors actually gambling is
down, while the share going to nightclubs and other attrac-
tions is up. The total number of slot machines in Sin City is
off 23 percent from its 2001 peak—the machines make up
the majority of gambling revenue in the U.S.
That’s why Eric Meyerhofer, an electrical engineer who
previously ran a company that made ticket printers for
slot machines, co-founded Gamblit Gaming, which builds
millennial-friendly gambling devices. The products of the
Glendale, Calif.-based company look more like arcade
games than slot machines and have been out on the floor
of big casino operators such as Caesars Entertainment
Corp. and MGM Resorts International for almost a year.
They’ve opened a window into what young players like and
don’t like about gambling, Meyerhofer says. One thing is
clear, it’s not going to be an easy sell. “This will take years
to evolve,” he says.
Skill-based slot machines—some made by Gamblit, oth-
ers by rival startup GameCo Inc. and established manu-
facturers such as International Game Technology Plc and
Scientific Games Corp.—make up about 500 of the roughly
982,000 gambling devices in the U.S. and Canada, accord-
ing to market research firm Eilers & Krejcik Gaming LLC.
But casino operators say they’ll add the games because
they’re luring new customers. “We believe that these are
the games of the next generation,” says Rick Hutchins, a
senior vice president for slot machine strategy at MGM.
While the games require some skill—Gamblit’s Into the
Dead, for example, involves seeing how many zombies
you can blast—the size of the cash prizes is determined
randomly, much like traditional slot machines.
Meyerhofer’s original vision, back in 2010, was to file
patents for interactive gambling devices that he could then
license to big manufacturers. The idea was to create skill-
based slot machines where players could be rewarded inpart for their brains and dexterity and not simply by dumb
luck. Manufacturers, however, were slow to embrace his
ideas. So in 2016, Gamblit started making the machines
itself. Employing about 90 people and with revenue of less
than $5 million last year, Gamblit is still experimenting.
Another early notion was that its games would work best
in bars, where young people hang out. Instead, its devices
on the casino floor generate three times as much revenue.
One of Gamblit’s signature games is a video poker
table where up to four players compete to see who’ll be
the quickest to grab cards that pop up in the center. The
devices have proved popular with groups of strangers.
“People enjoy it better when they’re playing against peo-
ple they don’t know,” Meyerhofer says.
Couples gravitate to Gamblit’s single-player games,
such as Smoothie Blast, where players match fruits to
make a smoothie, and Lucky Words, where the goal is to
find words hidden on the screen. The games have been so
popular with couples that Meyerhofer is adding benches
to his devices instead of single seats. Borrowing from a
strategy of traditional slot makers, Gamblit has secured
the rights to well-known brands. The company later this
year will put out machines based on the classic arcade
game Pac-Man and the game show Deal or No Deal.
Because Gamblit’s games take longer to play than slot
machines, there’s a slower turnaround of bets, 45 sec-
onds for Gamblit vs. about six seconds for a typical slot
machine. There have been regulatory issues as well. While
skill-based games have been approved in gambling mar-
kets such as Nevada and New Jersey, regulators nation-
wide are still catching up. Caesars removed a Gamblit
Poker game from its casino near San Diego, for example,
because California regulators considered the four-person
device four separate slot machines and state rules limit the
number of devices some casinos can operate.
Meyerhofer says he’s certain regulators will come to
better understand the devices. As many as 70 percent
of Gamblit’s customers weren’t in the casinos’ customer
databases before, proving his machines are doing what
they’re designed to do, he says. “The youthfulness of the
player, that was an unknown one year ago today,” he says.
“I have no lack of confidence that this is going to work.”
—Christopher Palmeri