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Slot machine replacement sales are in the doldrums in the United States, and have been for a while. Slot manufacturers believe it’s time for a sit-down with casino operators about solutions, and they’ve let it be known publicly that loosening up on hold percentages would, in their view, be a good place to start.

The broad silence that has followed suggests the casinos might beg to differ.

Says Mark Birtha, general manager of Hard Rock Rocksino in northeastern Ohio, “There’s the manufacturers’ side and the operators’ side, and there are things that are important to them that are very different.”

This gulf, if it can be called such, must be widening in the midst of these leaner times for the industry overall, for the Association of Gaming Equipment Manufacturers to bring out a report last month that combines historical revenue and slot hold trends in 16 states with a lively series of quotes from experts within and outside the industry, who describe an arc of rebellion on the part of consumers against today’s tighter machines, which they say have become more expensive and less fun to play.

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The report was released to publicize the survey that arrived at those trends, which the association commissioned in 2014 from Applied Analysis, an economic research and consulting firm based in Las Vegas. What Applied Analysis had found was pretty much what you’d expect—that slot handle and slot win, respectively the aggregate in dollar terms of what players wagered in those 16 states and what they lost to the house, tended to mirror the fortunes of the wider economy:

“During periods of notable economic expansions (mid-2000s), the gaming sector reported similar trends (in handle and win).”

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They track this back to the early ’90s, when the industry’s dramatic jurisdictional expansion would have factored into handle in a big way, although the report makes no mention of this.

“On the other hand,” it continues, “the point at which the economic climate shifted from expansion to contraction, the slot industry followed suit. More specifically, total slot handle and win contracted for the first time in 2008 (the first full year of the Great Recession). This appears to be the inflection point for slot operators overall.”

It doesn’t stop there. “It is important to understand how slot win has trended relative to personal incomes,” it goes on. “Throughout the majority of the 1990s, slot revenue expanded at a faster pace than overall personal incomes, suggesting a higher share of consumers’ wallets were being dedicated to gaming activities.

“These trends moderated somewhat through the 2001-to-2007 time frame as gaming revenue growth more closely approximated gains in personal income. From 2008 forward, there has been a clear and consistent trend that consumers are simply spending less of their earnings on slot activities.”

Operators and suppliers know full well that there are a lot of reasons for this, holds generally having ratcheted up to compensate for falling revenues and increasing competition being but one of them.

And AGEM acknowledges as much. But for the association’s purposes, the survey did examine trends in RTP in the selected states, focusing on the years from 2004 to 2014, when 10 of the 16 states reported increases in hold percentage and seven reported declines in win. From this, the association calculated a “blended” increase in hold of 14.5 percent over the decade against a corresponding increase in slot revenue of only 1.1 percent.

Applied Analysis’ conclusion was this:

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“While statistical correlations on a state-by-state basis vary due to any number of factors, the broader, aggregate trends would suggest a rising hold percentage has not translated into incremental gaming revenue for operators during the post-recession era. In fact, they very well may be contributing to its decline.”

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Of course, you’d be hard-pressed to find a granny on any slot floor in America who wouldn’t agree, and, not surprisingly, the follow-up report AGEM released in August duly made headlines nationwide.

But to be fair to both sides of the divide (and the manufacturers are, after all, the ones who brought to market the technologies that made rising holds possible), the survey is hardly conclusive.

“We make no representations as to the adequacy of these procedures for all your purposes,” Applied Analysis added as a cautionary note when it submitted its findings to AGEM back in February. Or as one casino executive put it, “The report was somewhat illuminating but by the same token somewhat one-sided.”

Actually, a closer read of it shows that gains in average annual hold slowed in the years after the recession hit. In 2013, they even declined. Percentage-wise, the largest average increases occurred from 2001 to 2007, a period that coincided with the advent of the cashless technologies that made viable the low-denomination, multi-line Australian-style games that experts agree are the greatest single contributor to today’s higher holds.

“The floors have been converted,” says Claudia Winkler, an industry veteran specializing in gaming and hospitality systems and IT. “Where you used to have a lot of choice of denom, you walk onto the floor now and they’re all penny games. Pennies have raised the overall floor hold substantially.”

This was also when leased games came to the fore. “Where there is more of a (revenue) participation element in the form of licensed games,” Birtha says, “you’re paying fees to the license-holder and fees to the manufacturer, so these games tend to come out with higher hold percentages.”

Industry consultant Frank Neborsky, who was vice president of slot operations at Mohegan Sun during the salad days of the mid-’90s, says, “When you talk about the player experience, that takes in a lot of things besides hold percentage. One thing I find interesting about the report is it didn’t mention anything about the potential factors influencing that. How did expenses change, marketing costs, promotions, the other perks that operators were giving to patrons for their loyalty? In other words, what was the true value of what that hold may or may not be affecting?”

Operators will tell you that certainly it hasn’t been the gambling alone. Time and age are steadily eroding the core base of machine players. The players rising to take their place generally don’t find slots all that compelling. They’re having to compete against the backdrop of a society that provides consumers with more alternatives for their discretionary spending than at any period in history.

“Guests are more focused on their entertainment dollar,” says Birtha. “If it was purely about winning at the game, there wouldn’t be anything but video poker out there. But clearly, that isn’t what happened.”

Nowhere is this more evident than on the Las Vegas Strip, which has evolved to a point where gaming constitutes well under 40 percent of total revenues, and slot inventories are down 15 percent from their peak, even as visitation hits all-time highs. Since 2006, handle has fallen at a rate of 3 percent per year. It’s down 22 percent from where it stood at its highest.

In an August client note, investment brokerage Union Gaming Research said, “Gaming equipment manufacturers and industry pundits suggest that Las Vegas operators have driven down slot demand by focusing on non-gaming customers, and that this trend has begun to spread to more U.S. regional markets. Our frequent conversations with regional property managers often suggest that cap-ex allocations and wish-list items are for new F&B outlets, meeting and retail spaces and more hotel rooms. Very few, if any, operators discuss the need for more gaming machines.”

Neborsky says, “What we consider a slot machine now, though it’s been advanced through technology, through better visuals, the emotional connection, it is still the same. You put money in, spin the reels, you win or lose. In essence the game is the same.”

And it has to change, he says: “If you look at the demographic that now plays slots, when they were in their 20s they weren’t necessarily inundated with technology. And you look at people in their 20s and 30s now, the things they do for recreation, if they aren’t gambling it’s because they’re on video games.

“On Candy Crush, Farmville, those games, they’re spending money, but not to win money, and they don’t play slots. The games have to evolve into a technology that isn’t necessarily a skill machine but something that is as much skill-based as randomly based.”

This is the conversation casinos want to have, according to Birtha. “It’s the million-dollar question. What do millennials look like and what do they want? How do we create slot experiences that meet the needs and wants of this younger generation? And how that value proposition translates to revenue.”

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AGEM’s thinking in commissioning the report is guided by the same desire, said Tom Jingoli, senior vice president of Konami Gaming and chairman of the association. “This is meant as a talking piece and not a broad brush stroke for the gaming industry.”

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Birtha, for one, welcomes the opportunity. “Both sides of the slot equation are looking for the same outcome. Value is the key for everybody. Our objectives are the same—a better product on our floors that our guests enjoy. It needs to be a conversation about what players want and how we support that. We’ll benefit from all of this equally.”