I Have Seen the Future of Casual Gaming: "Penny Slots" Become Serious Casino Biz

[Last October, Annie Van Bebber and I attended a gaming convention in Las Vegas that really opened my eyes. I have a lot more to write about this subject, including lists of the hottest Penny Slots, interviews with famous designers and demographic studies which we plan to pitch as a more detailed feature article. But for now, I wanted to give our J2 readers a look at an amazing new phenomenon that mixes video and casino games. Stay tuned for lots more on this subject.]

We were at a gaming convention recently in Las Vegas and it was among the most enthusiastic and populous gatherings of the sort we've attended in years. Lots of familiar sights and sounds, of course, from licensed movie and TV properties (Lord of the Rings, Star Trek, The Amazing Race, etc.) to new versions of classic video games (Lemmings, Altered Beast) and even totally original creations by pop artists such as Michael Godard (Rocking Olives).

But while this was indeed a gaming convention, the Global Gaming Expo (G2E) is not exactly a competitor to E3 or GDC, because when the G2E exhibitors and attendees talk about "gaming", they don't mean the video game kind, despite the fact that the vast majority of the games on display made lavish use of over-sized plasma screen monitors and high-intensity sound and graphics. G2E, you see, is about the kind of gaming that is pretty much never discussed in the world of electronic entertainment, but which comprises a gigantic industry. How gigantic? So large that it could serve as the focal point for a generation of game school grads looking at a vast wasteland in terms of game development job opportunities. It could also be the Next Big Thing in terms of entertainment for the generations that grew up playing video games on handhelds, consoles, computers and coin-ops.

G2E, you see, is the big, annual trade show for the casino industry. And, ironically, what's hot in the gaming halls from Vegas to Indian Reservations across North America is a phenomenon known as Penny Slots, a convergence of casino and video gaming that could easily hit the jackpot. Using server-based technology, eye popping 3D graphics, "hidden" games-within-games and virtual rewards to supplement the standard monetary payout, Penny Slots are on the way to becoming the gold standard of casino play.

From the evolution of Las Vegas as an American gambling mecca and Sunbelt tourist destination in the 50s through the 1980s, slot machines were the meat and potatoes of the American gaming scene. Of course the table games – poker, blackjack, roulette, baccarat and company – looked more glamorous (one can hardly imagine James Bond jerking the lever on a slot machine, can one?). But the "pull" of the so-called one-armed bandits – with their accompanying sounds of spinning wheels and the periodic clatter of coin clusters cascading into metal trays – was the populist lifeblood of gambling houses large and small for decades.

But throughout the 80s and 90s, as Las Vegas became America's fastest growing city, old casinos were regularly imploded to make room for family-oriented fantasias that sold spectacle as well as slots. Meanwhile, a multitude of new casinos were being constructed off the Strip, designed less for the tourists and more for the locals and their new neighbors who were buying homes off the housing bubble as fast as the lenders would agree to finance them.

Tastes were changing and slots were seen more and more as representative of "old" Las Vegas, while video poker was the new 900 lb. gorilla in the gaming room. Poker, after all, offered gamblers several opportunities to experience the thrill of a win as opposed to the single pull of the slot machine lever. Following the original deal, video poker players could opt to exchange or retain the dealt cards, at which point the secondary rush kicked in. Soon, slots were being ruthlessly replaced by video poker coin-ops. Worse still, the one-armed bandits that survived this gaming version of ethnic cleansing cost anywhere from 25 cents to $1 minimum per play. A few nickel slots remained and even one or two of the old school penny slots could be found in some of the older Downtown joints, but they were more curiosities than serious moneymakers.

At that point, several events transpired which profoundly altered the gaming landscape. First, once Atlantic City voted to allow casino gambling in 1976, the genie was out of the bottle. Almost every financially strapped city in America began pondering the success of the cities and states that were enjoying the gaming experiment and drooled over such idyllic scenarios as Nevada's lack of a state income tax.

Around the same time that Atlantic City was dreaming of re-inventing itself as the East Coast's Las Vegas, a Chippewa couple living in a mobile home located on Indian land in Minnesota challenged a tax bill they received from nearby Itasca County. With the help of Leech Lake Legal Services, they lost their case in state court, district court and Minnesota's Supreme Court. Unlikely as it seemed, however, the US Supreme Court agreed to review the case and in a unanimous and, at the time, shocking reversal of fortune, held that the states were not only unable to tax Native Americans living on reservations, they couldn't even regulate them!

From that legal position, it was but a short walk to the behemoth that is now the Indian Casino business.

Casinos, as a result, were no longer a novelty and the gilded gambling palaces in cities such as Vegas, which had long been thought "recession proof", suddenly found themselves competing desperately for customers with scores of legal gambling halls everywhere from New York City to Mississippi Riverboats.

Then the economy collapsed.

Casino business was down in any case as older customers died off and not enough players from younger demographic groups were taking their place. It soon became clear that the gambling world was going to have to try something new.

It began with a look at who was and who wasn't visiting casinos and it ended up with the gaming business looking to the video game industry for some answers. And behold, there were indeed answers. Demographic studies showed that the young potential customers had all grown up exposed to the videogame culture, were familiar with its motifs and were attracted to the format. The gaming industry had looked at the customers it wasn't attracting and found that a form of solution already existed. "Casual Gaming" may have become a tiresome buzzword to many members of the video game community by this point, but its success could hardly be debated. The concept had developed into a powerful force in recent years.

According to Wikipedia, Casual Gaming is "a video game or online game targeted at or used by a mass audience of casual gamers. Casual games can have any type of gameplay, and fit in any genre. They are typically distinguished by their simple rules and… require no long-term time commitment or special skills to play… Casual gaming demographics… vary greatly from those of traditional computer games, as the typical casual gamer is older and more predominantly female, with over 74% of those purchasing casual games being women."

Casual games are found all over the Internet, ranging from traditional card games like solitaire (and its variants, such as Freecell) to classic gaming sites such as Netives.com that offer users free generic variations of everything from Mah Jongg to Qix. Simultaneously, online gambling was growing by leaps and bounds.

At the same time, video game development houses were cutting staff and even shuttering their doors as the downward spiral of the economy finally struck the video game business. Yet one of the obvious facts that the gambling world's research demonstrated was that the younger players it wanted so badly were all video gamers – or, at the very least, had been at some point. And video game development had come up with lots of design innovations that melded perfectly with the gaming coin-ops that filled every casino from Vegas to the Mohican Sun.

Better yet, these games are all server-based. Players can accrue virtual rewards and status recognition points and store them to servers using a password. This allows players to play Star Trek or Lord of the Rings in Las Vegas one week and, by entering their password, pick up exactly where they left off – with all their gaming accomplishments displayed on-screen for anyone to admire – the following week on another Star Trek coin-op in a casino in Upstate New York.

And while server-based technology bound thousands of individual gambling establishments into a one world paradigm, young gamers also delighted in the discovery that the new world of Penny Slots offered exactly the kind of entertainment they once enjoyed in video games – in addition to the not-incidental perk of a payout.

Perhaps the most surprising thing about the incredible success the new Penny Slots have attained is the failure of video game journalists to take note of it. While the two worlds collide in a form of reverse fission, video gamers and developers who aren't also into casino gaming seem utterly oblivious to this phenomenon.

In fact, so far only the gaming-happy Japanese seem to get it, with old school coin-op game companies such as Williams (known as WMS in gambling circles) and Konami (which recently made a deal with Sega to adopt several of the latter's video game classics into Penny Slots) getting in on the ground floor.

Penny slots are big business right now, even attracting veteran producers, designers and programmers from the videogame business, and given the popularity they have demonstrated among gamblers, they could become one of the Next Big Things.

You can trust me on this; I'm a doctor.