Estimating the Short-term Effects of an Increase in Par on Reel Slot Performance

Data from a US hotel casino are analyzed to examine the validity of a controversial theory holding that reel slot players are unable to perceive substantial increases in par (i.e., a hidden price). The results of a multiple regression analysis support this theory. A 50% increase in the pars of a $5.00 reel sample, failed to significantly affect the performance of these games. The control-group games featured 5.0% pars, while the experiment-group pars were set at 7.5%. Descriptive statistics show that the theoretical win per unit actually increased at the 7.5% par. The strategy behind the theory is to obtain bankrolls before players decide to gamble elsewhere. As player acquisition costs are rapidly growing, casino executives wish to maximize their return on this investment and increase their share of wallet. For those operating casinos in markets with easily accessible competitors, this study is rich with managerial and strategic implications