Hollywood Casino toledo slot machines

Ohio sets average return of at least 85%

BY JIM PROVANCE
BLADE COLUMBUS BUREAU

COLUMBUS — When players insert money into the 2, 002 slot machines on the glitzy, carpeted floor of Toledo's new Hollywood Casino, state law guarantees that the flashy, computerized devices will pay out on average at least 85 percent of what they take in over the long haul.

While that 85 percent is generally on the higher side of the government-mandated industry standard, most casinos across the country pay out more than that in hopes of getting an edge on the competition.

"No casino will open with less than 90 percent, " said Bill Thompson, professor emeritus at the University of Nevada, Las Vegas and an expert on casino gambling. "Some in the Midwest might be 89 percent, and some of the [tribal casinos] might do that, but 85 percent is baloney."

Hollywood Casino Toledo — Ohio's second 24-hour, Las Vegas-style casino — is set to open May 29 on the East Toledo riverfront adjacent to Rossford. Last Monday's opening of Rock Ohio Caesars Horseshoe Casino in Cleveland marked the state's first foray into casino gambling.

Ohio law allows the Ohio Casino Control Commission to raise the minimum payout of slot machines, the biggest draw to casinos.

"How to market different slots to compete with one another is really up to them, " said Matt Schuler, the commission's executive director. "We make sure that they meet state law and the software is exactly what was tested and approved."

Hollywood Casino Toledo General Manager Richard St. Jean said slot payouts are a market-driven variable. He said Toledo will be competitive with Detroit and Cleveland. Having the commission set a higher minimum would be a mistake, he said.

"It's really entertainment, " he said. "It comes down like to going to a movie. You expect to be at a movie for 90 minutes or two hours. If you went and paid full price for a movie that was 30 minutes, you'd feel like you got gypped.

"It's no different on a slot machine. If it's too tight and you felt like you just put your money in and had no entertainment or no time on devices, as we call it, that's very negative and that can turn a lot of people off very quickly."

For the most part, Mr. Thompson considers the Toledo and Cleveland casinos, as well as the Columbus casino coming this fall, to be monopolies. Toledo's toughest competition would likely come from Detroit, an hour's drive away, and slots payouts would be one area where Penn National Gaming Inc.'s newest venture could set itself apart.

In Michigan

Michigan's rules require a minimum payout of 80 percent on average from its three commercial Detroit casinos — MGM Grand, Greektown, and Motor City — while the state's 22 sovereign nation tribal casinos must pay out at least 75 percent under the terms of their compacts with the National Tribal Gaming Commission.

But neither the Detroit casinos nor the tribal casinos are required to reveal what their payouts are above that.

"If I was in Toledo, I would say, ‘We're doing 94 percent. Vegas does 94.5 percent. We're giving Vegas payouts. Detroit refuses to tell you. We'll tell you, ' " Mr. Thompson said.

A Michigan State University graduate, Mr. Thompson was a consultant for the President's Commission on Organized Crime under President Ronald Reagan in the 1980s and helped to write the final report as a consultant for the National Gambling Impact Study Commission under President Bill Clinton a decade later.

Michigan is watching to see what will happen as Ohio and Toledo bring their chips to the table.

"The [Detroit] casinos report to us that they expect to take a 5 to 10 percent hit initially, " said Rick Kalm, executive director of the Michigan Gaming Control Board. "We don't know where we will go from there. Detroit's market is a 75-mile radius, and they've enjoyed a lot of economy in that circle, " he said.

Toledo is inside that 75-mile circle.

Michigan regulators opted not to force the Detroit casinos to report their true payouts above the 80 percent minimum, primarily because the tribal casinos don't have to report.

"That's [the Detroit casinos'] proprietary information, " Mr. Kalm said. "They will decide how to use it. … But a lot of people can tell you where they feel or perceive the best payout is."

And there are other ways for casinos to compete.

"They will use all kinds of marketing — free play, free rooms, comps — like in any gaming environment, " Mr. Kalm said.

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