Big jackpots – big business

Are players attracted to an online slots game by the experience of the game, or is it the pay tables or even the math that excites and entertains them? Or is it just the brand that’s been licensed to theme the game? To me there seems to be little that really sets one slots game as drastically different from the next. What I do know for sure is that players are attracted to big jackpots.  
A good example of this is in lotteries such as Euromillions; once the jackpot gets above a magical figure many more people will buy a ticket. For example when the jackpot on Euromillions is 15m Euro the average level of ticket sales is around 50m Euro for a single draw, but when the jackpot reached 190m Euro last August ticket sales were 200m Euro for just one draw!
In our business of providing prize insurance there is increasing interest from gaming operators developing lottery-style products that offer huge jackpots (i.e. in excess of €10 million). Progressive slots games in the online casino space do reach such levels, but only after considerable time, making big jackpot wins infrequent.

A numbers game
Data I have seen for a progressive slots game shows that when the jackpot level is below 4m Euro the average number of plays each day is 450,000. Once the jackpot goes over 4m this jumps to over 700,000 plays a day. There is a further jump at 6m where plays increase to over one million a day and then up to a massive 1.4million plays a day when the jackpot reaches 8m Euro.
In real terms this means that on a progressive slots game the jackpot grows from 5m to 10m much faster than from 1m to 4m, creating more excitement and more press coverage while driving more players to add to the growing progressive. With the evidence stacking up in favour of big jackpots, what perplexes me is why aren’t any of the gaming companies starting their slots jackpots at higher levels such as 10m? This would drive more players to their games, encourage more frequent play and as a result of these factors create higher jackpots that are won more frequently.
The obvious answer as to why they don’t currently do this is that they don’t want the financial exposure to such a big jackpot win, especially if this win is not being covered by a prize fund that has built up over time. But there are ways to mitigate this loss and minimise the financial exposure faced by the operator. One such solution is so start the jackpot at 10m, but have this seed amount covered by an insurance policy.
We have carried out extensive analysis at PIMS-SCA to create a range of high jackpot games, and have modelled different percentages of the bet going to the progressive jackpot, secondary prizes and insurance. We have also created models where there is no insured starting jackpot to use as a comparison. We played around with lots of different rates, taking into account that there may be some churn due to less return to players per bet, but we believe that this is more than recuperated by the attraction that the higher jackpot has, bringing in a greater number of players and a higher frequency of play.
These additional players are attracted by the jackpot – just like extra players are attracted to Euromillions when this has big jackpots – but for the players of slots, unfortunately unlike a lottery you cannot play the same numbers for every draw to make sure you don’t miss out, you just have to keep playing, hence the high frequency of play that also occurs.
I believe that before too long an online casino will see the advantages that higher seed jackpots on slots will produce. There will be a tipping point and a flurry of £10m starting jackpot slots games will be launched.    
There are already signs that big jackpot games will be launched by existing and new online gaming operators during 2013. In the last year we have received a great number of enquiries relating to jackpot insurance for new lottery type products. To raise and maintain player numbers the slots will also need to evolve to offer bigger jackpot pay-outs.

About the author: Matthew Butcher
Sales Director / Board Director of
Matt Butcher, Director of leading prize insurance provider PIMS-SCA, has successfully developed the Gaming and Promotional Marketing areas of the business. His main focus is to create new and long-standing relationships in the Gaming industry while tailoring unique risk management solutions to our client’s individual needs. PIMS-SCA has been in the business of risk management for over 25 years and is well-versed in all things gaming, having worked in online gaming for over ten years and with a long history of working with the land-based casino industry in North America.