Scientific Games to unveil Cirque du Soleil slot machines

28 September 2015

Scientific Games Corp., having spent nearly $8 billion to create the casino industry's largest manufacturer, is using the Global Gaming Expo as center-stage to display the combination of several leading slot machine brands under one corporate heading.

Cirque du Soleil provides the perfect partner for that effort.

Las Vegas-based Scientific Games signed a licensing agreement with the Montreal-based entertainment company to create slot machines based on Cirque's acrobats, characters and music. The first game will be unveiled Tuesday when G2E, the gaming industry's largest conference and trade show, begins its three-day run at the Sands Expo and Convention Center.

The initial Cirque du Soleil slot machine is based on Kooza, the troupe's traveling performance that Scientific Games CEO Gavin Isaacs said has been seen by more than 160 million spectators in 60 countries. The slot machine will include video from the performance and have bonuses based on the characters and specialty acts.

Eventually, Scientific Games hopes to create Cirque du Soleil slot machines based on other shows, including the eight shows currently appearing on the Strip.

At the center of the Scientific Games 26,000-square-foot exhibit space at G2E will be a 360-degree slot machine carousel with five Cirque du Soleil slots. Characters from the acrobatic show will be on hand to unveil the game.

That seems fitting. Some members of the investment community have openly speculated about the contortion act that Scientific Games has undertaken in the past two years.

The company, a leading provider of content, equipment and systems for government-operated lotteries, jumped into the casino side when it acquired Bally Technologies, SHFL entertainment, WMS Industries and United Kingdom-based Barcrest in shared and separate deals. The slot machines, gaming equipment and systems from the former stand-alone companies now fall under the Scientific Games heading.

Isaacs said G2E offers the company an opportunity to display new innovations and flexibility for the casino industry. Multiple game titles and slot machine products from the separate companies are available under one slot cabinet.

"We've spent a lot of time and effort putting these companies together," Isaacs said. "Our customers will be happy because this integration shows that we support our older products, but we're also unveiling our new innovation, size and scale that gives them a taste for the future."

Scientific Games will display almost 300 slot machines, table games and associated gambling equipment during G2E, which includes 17 independent titles and 130 unique themes. New licensed brands include a Playboy-themed slot machine with music superstar Pitbull, games based on the music of Cher and Jimmy Buffett, and slots themed on the movies "Caddyshack" and "The Rocky Horror Picture Show."

Isaacs, who was an executive with several different gaming equipment companies before being tabbed to build Scientific Games, said the products displayed at G2E are about creating something that draws the interest of casino patrons.

Wells Fargo Securities gaming analyst Cameron McKnight said the biggest challenge at G2E is finding titles that will become popular casino products.

"Walking the show floor can be a sensory-overloading experience," McKnight said. "Unfortunately, there's no way of knowing in advance which machines will ultimately prove (to be) hits."

The buzz-word heading into G2E is skill-based slot machines — games that offer an arcade-style or video game component to the bonus round. The slot machines are viewed as ways to draw younger players to the casino floor. Scientific Games will display a slot machine that includes "space invaders" as the skill-based concept.

Isaacs said skill-based slots are a good step, "but it's not the golden panacea" for the casino industry.

"We have to create games that attract more players," Isaacs said. "I don't care if they are 35 or 65."

Scientific Games to answer questions about the company at G2E. Isaccs will participate in Wednesday' CEO keynote roundtable with Mark Frissora of Caesars Entertainment Corp., and Rush Street Gaming's Greg Carlin.

Wall Street researches offered investment advice on the company last week.

Macquarie Securities gaming analyst Chad Beynon reiterated his positive view on Scientific Games. JP Morgan gaming analyst Joe Greff said the company's cost surrounding its $5.1 billion Bally acquisition concerned him. He called Isaacs "a dynamic industry veteran."

Goldman Sachs gaming analyst Steven Kent repeated a concern raised earlier this month with Scientific Games' $8.5 billion debt.

Isaacs said the debt was part of the company's initial expansion strategy and was manageable.

"We have enough comfort in in our earnings and cash flow to pay down the debt," Isaacs said. "We always looking for ways to generate more cash flow."

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Global Gaming Expo (G2E) 2015

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