Young Americans love Las Vegas. But there's a problem.
Their idea of gaming isn't the one Vegas was built on.
Millennials prefer videogames over slot machines. They like daily fantasy sports leagues — which technically aren't considered gambling, so casinos can't play.
This week at the Global Gaming Expo in Las Vegas, the industry is trying to figure out how to attract this young consumer. "It's going to be a lot about throwing things up on the wall and seeing what sticks," said Geoff Freeman, CEO of the American Gaming Association.
One idea being tested is new, skill-based slots. Traditional slot machines are games of chance. But companies like G2 have developed machines where part of a wager goes to chance, and part goes toward skill. A player sits in a comfy console chair and shoots at tanks on a big screen, like playing a videogame. Hit the target and win (or miss and lose), while at the same time a slot algorithm determines if they've also won or lost the chance component.
Nevada just approved skill-based gaming, and G2 is selling the machines for about $20,000 with no time limit built in. A gambler can sit and play all day.
"Are they the panacea? Certainly not," said Freeman. "The future of gaming is going to be written by a host of new activities, a host of new games — trial and error."
Analysts have generally negative opinions about equipment makers. Bank of America has a "buy" rating on companies like IGT and Aristocrat, but mostly because new games are coming out as "investor expectations remain low." Goldman Sachs has a "sell" rating on IGT, saying skill-based gaming could be a "potential catalyst, but likely not for another few years."
There's another industry development that's happening outside the casino — fantasy daily sports leagues such as those from DraftKings and Fanduel. So far, fantasy sports have not been legally classified as gambling, and casinos can only watch helplessly as millions are spent on the ventures every day. The Nevada Gaming Control Board is asking the state's attorney general to look into their legality.
"Of course it's gambling," laughed Jim Murren, chairman and CEO of MGM Resorts. "Do I think it's wrong? No. I think it's incredibly fun."
Murren wants in on the action, but he said the leagues should be regulated like casinos: "We've got to find a way to make it safe for everybody."
Freeman said members of his American Gaming Association are impatiently waiting for guidance on fantasy sports. "Many regulators, many policymakers, are saying that this is a gray area. Well, it's time to make it black or white," he said. "Casinos can either get involved in this business or they can't."
If they can't, Las Vegas may face even longer odds attracting the next generation of gamblers.