The RTP Cycle, And What It Means For Your Venue
Tabcorp’s Trent Wonnacott and Riccardo Callegari talk about key market trends regarding Return To Player (RTP) rates and what your venue can do to stay ahead.
More than ever, customers want the option to win big on the gaming floor and, increasingly, venues are providing opportunities for customers to do just that.
As a result, the market has seen an increase in Return To Player (RTP) rates – RTP being the term used to describe the percentage of all wagered money an electronic gaming machine will pay back to players over time. The Victorian Commission for Gambling and Liquor Regulation has set the minimum RTP to 85 percent; however, the average RTP within Victoria currently sits at 90.8 percent, up from about 90.6 percent two years ago.
The 50-year-old gaming market in New South Wales is comparatively more mature. The regulatory minimum RTP is 85 percent but overall RTP in venues in NSW can range from 91 to 93 percent.
Tabcorp’s Product Deployment Analyst Trent Wonnacott explains reasons behind the variation in RTP as follows: “The increase has a few key driving forces. The primary factor is the resurgence of linked jackpots on the floor, which are currently leading the market and allow for multi-denomination capabilities.”
Wonnacott identifies other offerings that provide customers with opportunities to play: “There are also more standalone progressive products from an array of manufacturers, mirroring similar higher RTP variations and high jackpot startups to compete with these linked jackpots. At the same time, there’s also been a sharp decline in the number of ‘core’ games – in other words, games without the jackpot component.”
It is the ‘jackpot’ that increases by a small, predetermined amount each time the game is played that engages the customers and provides a level of excitement. This is a classic case of the cyclical nature of supply and demand. There’s an increase in the demand for more options and value for money from each cabinet on the floor.
Accordingly, venues have started to include multiple games in one-game packs, plus multi-denominations from each game, and this, in turn, drives RTP up where higher denomination games must maintain a higher theoretical RTP than lower denomination games. While some venues are keeping their patrons happy by providing a larger return, there’s a need to be cautious, warns Tabcorp’s Senior Manager (Venue Performance) Riccardo Callegari.
“Because of the increased RTP at some venues and the high levels of competition between venues, there’s a pressing need to strategise and ensure they can meet the jackpot liabilities on their balance sheets,” he explains. “In other words, venues need to make sure they can pay out that grand jackpot if it goes off, and this may mean a strategic planning of their gaming floors.”
Today’s gaming products come with varying starting points for the jackpot, as well as varying RTP levels. Strategies need to accommodate each venue’s different situation.
“You may start a new game with a higher RTP to give your players a better run for their money for the first two months,” says Callegari. “You can then review that and turn [the RTP] back, or you might start with a low RTP. This obviously impacts the ability to perform against the other products where customers know they’re going to get a better return.”
However, he advises against the latter unless you’re a massive turnover venue and you know there will be customers playing that game no matter what. As Callegari adds, “If the venue is small and does not have the luxury of high foot traffic streaming in, then that is not an option. You need to keep your patron satisfied in your venue for a good period of time to prevent them from seeking a higher RTP elsewhere.”
But these gaming floor strategies only solve the revenue and jackpot liability issues to a certain extent. As all new products contain RTP rates of around 90.8 percent, venues must honour that rate. And this, in turn, further increases the overall RTP for the market over time, notes Wonnacott: “Operators aren’t used to that because they’re growing internally but their balance sheet isn’t reflecting that revenue growth because their RTP has increased over the years.”
Venues also need to focus on their promotions, food offering, customer service, and loyalty and membership programs to provide patrons with a 360-degree experience to stimulate and increase visitation. As Callegari emphasises, “You have to start to mine the data on your player, understand your player and provide a holistic experience in your venue and not just on your game floor. Then you start getting incremental revenues as foot traffic increases, and as people spend more time on your floors.”