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New Rule For Shutting Down Progressive jackpots

Written On  4/6/11 By Lenny Wasman :

Atlantic City may be establishing a dangerous precedent, and increasing the odds of hitting that big one, too.
Players both online and off have always regarded the contents of progressive jackpots as 'theirs', based on the simple fact that a proportion of their wagering is perceived as going toward building the jackpot. Consequently, when an operator winds up a jackpot with a substantial balance still available, it is expected that this will be redeployed for the players benefit - typically on another game.
For this reason alone, a new rule just introduced in the beleaguered Atlantic City land casinos is likely to prove controversial.
According to Associated Press reports this week, the new rule lets casinos terminate progressive jackpots, and keep the accrued money.
From Tuesday this week, Atlantic City casinos can terminate some multi-machine slot jackpots and keep the money that would have been used to pay any players successful in hitting those jackpots.
The casinos are required only to give the public 30 days' notice; if no one wins by then, the casino can remove those machines and 'cancel' the accrued jackpot.
The previous regulations required them to transfer the jackpot to a different progressive, or multi-machine system, as is the expected practice in the online environment.
The change applies only to progressive slots within a single casino. Progressive jackpots linked among several casinos would not be affected, AP reports. Regulators say the change allows casinos to more quickly get rid of underperforming slot brands and replace them with others.
The changes also permit the casinos to increase the odds of winning progressive jackpots from the current 50 million-to-1 to 100 million-to-1.
Josh Lichtblau, director of the New Jersey Division of Gaming Enforcement, which issued the new rule, said it is designed to give the casinos the flexibility to more quickly remove slot machine themes that are not proving popular with gamblers.
The change is part of casino regulatory reforms passed earlier this year by the New Jersey state legislature, which were designed to change or eliminate some rules the casino operators claimed were outdated, expensive or burdensome.
The motivation was to help improve the financial position and flexibility of Atlantic City operators fighting off competition from casinos in neighbouring states, which have captured almost a third of Atlantic City's casino revenue over the past four years.
This is not the first time that New Jersey has allowed casinos to cancel progressive jackpots; in 1992 a similar dispensation was made, and within the first three months casino operators canceled $16.6 million worth of jackpots, keeping the accrued monies.
That rule was later revoked, requiring the casinos to transfer progressive jackpots in games that were being removed from the casino floor to other progressive games, a rule that stood until this week.
Lichtblau assured Associated Press that the casinos will not be allowed to play "bait-and-switch" with slot games, allowing jackpots to build up, then canceling them, only to return them to use soon afterward with a smaller jackpot. The new rules require that when a particular progressive theme is ended, it can't be brought back.
Under the new rule, the casinos will no longer have an outstanding liability - the obligation to pay for a slots jackpot that is canceled.
David Hughes, chief financial officer of Trump Entertainment Resorts, said he doubts casinos will make frequent use of the cancellation rule, preferring to roll the jackpots over to make other games more attractive.
Operators still have discretion over whether they want to keep the accrued funds in a cancelled jackpot, or re-deploy these into another game to ensure the reward is still available to players. He predicted that most operators will choose the latter course.
"You don't do it for financial reasons," he said. "You'd have a backlash from your customers if you did that. You'd anger your customers, and customers drive everything."

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