by John Acres
Originally published in Casino Enterprise Management magazine – October 2006
Ever wonder how things get invented? How does something that did not previously exist suddenly come into being?
This is the story of how player tracking on slot machines was created by combining a child’s Christmas toy and a hotel room key with a desperate need for a new product.
Granted, it isn’t exactly the invention of penicillin, but today’s player tracking systems connect to well over half of the world’s gaming machines. Right now, millions of slot players have a player tracking card in their purse or wallet, and they use these cards to earn billions of points, worth tens of millions of dollars, annually.
The idea of measuring slot play began at Harrah’s in Reno with a promotion called “Premium Points.” Initiated back in the late 1960s or early 1970s, the promotion worked like this: Harrah’s employees watched players wager on slot machines and issued a paper coupon for every $20 played. Tickets could be exchanged for prizes such as toasters, transistor radios, and televisions at a redemption booth set up in the casino’s basement.
Most prizes required dozens or even hundreds of tickets and, of course, it took more tickets to get a television than a transistor radio. In this forerunner to frequent flier miles, players worked hard to win the prize of their choice, while Harrah’s enjoyed the continued loyal play of legions of gamblers. Because Premium Points was entirely administered by people, it was expensive and fraught with problems. Players got upset if their play went unnoticed — as could happen during busy times. Even during normal times, play activity was sometimes inaccurately measured. Customers could complain, but if managers were too lenient other players would falsely exaggerate their claimed play levels in the hopes of gaining an unearned reward.
These problems and the relatively high cost of prizes and administration prevented Premium Points from becoming an industry standard. In early 1983, the Golden Nugget in Las Vegas improved on the Premium Points concept by installing automatic ticket dispensers on each of its dollar slot machines. For every $50 wagered, a ticket was issued. By automating play measurement in this way, the Golden Nugget greatly reduced program costs while more accurately measuring player worth.
In 1981, I started a small company called Electronic Display Technology — EDT — where we made progressive jackpot systems. After seeing their potential at Golden Nugget, I decided to add ticket dispensers to our product line. The dispenser product proved immediately popular and we were soon selling them to casinos everywhere.
In December of 1983, I made a sales call to Sun City Casino in South Africa. Coming from the U.S., and presuming we did things better here than anywhere, I expected to find a backwards, perhaps even primitive, operation.
In truth, Sun City was a fantastic property for that era and could compete with any casino in the world for technology and imagination. My biggest surprise came when I checked into the hotel. Instead of a key, I was given a plastic card. To gain entry to my room, I had to insert that card into a reader mounted on the door, which was connected to a central computer. If the card matched the one assigned to that room, the door would open.
Today the card system has virtually replaced traditional room keys, but it was revolutionary in 1983 and was a brilliant use of technology. As an engineer, I was mightily impressed.
The remainder of my trip was disappointing, as sales to Sun City and other casinos did not match my expectations. Worse, sales were dropping in the U.S., too. Ticket dispenser sales simply were not living up to their early promise. Part of the problem was cost — $300 each was expensive given that a slot machine sold for only $2,000 or so.
Casinos found it difficult to maintain stocks of tickets in each dispenser. Players were naturally upset when they didn’t get a ticket because the supply had run dry. Crews of technicians went through the floor every day to restock supplies, but that process was costly and didn’t completely solve the problem.
These drawbacks, and a general fear of new technology, caused most casinos to hold off on buying dispensers. Those that did buy usually only installed them on high denomination machines.
More troubling still, ticket dispensers in general were not proving as reliable as hoped. EDT wasn’t the only manufacturer in the business, and another company designed a lower cost dispenser that appeared to have every advantage over ours. Not surprisingly, that new design was chosen over ours by a Las Vegas casino, and we knew our design would struggle to remain competitive.
One peculiarity of Las Vegas is how the dry, cold air of winter combines with thick casino carpets to create painfully strong shocks of static electricity. One evening a customer shuffled across the carpet and touched one of those new dispensers.
The resulting shock drove the dispenser’s electronic circuitry insane and caused its entire supply of tickets to spill out onto the casino floor. The customer gathered his new- found wealth and headed straight for the redemption booth. Soon other customers were doing the free ticket shuffle — enduring the brief pain of electrical shock for a generous reward of valuable loyalty tickets.
Management didn’t realize the problem until the next morning and suffered significant losses in unearned redemptions. The reputation of all ticket dispensers — regardless of manufacturer — was permanently impugned.
Those problems were heavy on my mind that Christmas Eve as I left work and went home to my family. A natural procrastinator, I depended upon my wife, Jo, to acquire all presents for our three kids. My duties were limited to installing batteries in the electrical toys and “testing” them for proper operation.
One especially interesting toy was called “Speak & Spell.” It included a keyboard, an electronic voice, and a beautiful blue electronic display. When its play button was pressed, the toy spoke a word, after which a player could type in the word on the keyboard. Each typed letter appeared on the display and a voice told if that spelling was correct or not.
The most amazing aspect of this toy was its price: under $50. I couldn’t imagine how it could be built for so little. EDT sold similarly sized progressive jackpot displays for $500, and our cost to build was over $250. How could Speak & Spell have a better display, a keyboard, an electronic voice, and sell for one-tenth of the price?
I grabbed a screwdriver and decided to find out. Jo soon discovered me dissecting her favorite gift to our children and was not amused. When I further explained that the toy died during surgery and could not be repaired, all Christmas cheer disappeared from our home.
On the bright side, I was able to discover the circuitry that made its low cost possible. After a suitable period of mourning, and after encouraging Jo to retire for the night, I took out my notebook to record the particulars. Flipping through the pages, I came across my notes about the hotel room card system in South Africa and its central computer.
The problems of ticket dispensers and customer loyalty, suddenly combined with thoughts of South Africa and all the Speak & Spell parts lying before me, triggered a string of important questions.
- What if we gave every player a card and created an account with their name and personal information on a central computer?
- What if we put a card reader and a display on each slot machine in the casino?
- What if we connected them all to that central computer and showed the player’s name on the display when their card was inserted?
- What if we measured all their slot play and recorded it on their account?
- Where could I buy a dozen roses on Christmas morning to restore peace and goodwill in my marriage?
Those questions melted away as daylight entered the house and our children lined the stairway to peek down and see what Santa had brought. Somewhere in the following days those questions returned and we at EDT found ways to breathe life into their promise. Within a few weeks, a working prototype was completed and, in the spring of 1984, we installed the first player tracking system at Harrah’s in Reno. All told, about 100,000 player tracking units of that first design were built and placed in casinos around the world. Today, player tracking technology has evolved to include video displays, bonuses, and marketing techniques of far more sophistication than I ever dreamed. Even so, the concept remains: encourage customer loyalty by making them feel important and by giving them something extra. While new technology can certainly lower costs and improve accuracy, it is important to remember that only people can make players feel truly special. Technology is simply a tool for making those people more efficient. Still, I do love technology, and though few people will ever know — and fewer will ever care — I find it amusing and gratifying that player tracking was born at a kitchen table on Christmas Eve, and owes its heritage to a child’s toy and a hotel room key. Next month: Patents in gaming and why you should care.