by Jeff Simpson
LAS VEGAS -- The convention floor displays are ready, the promotional materials printed, the celebrities lined up and the marketing mavens ready to sell.
The gambling industry's biggest trade show, the Global Gaming Expo, opens Tuesday at the Las Vegas Convention Center, and exhibitors say that, more than ever, slot machine technology will be king at G2E.
And the power of the new technology will have a dramatic impact on casino revenue, Bear, Stearns & Co. casino industry analyst Jason Ader said.
In a new report released today, Ader said rapidly changing technology should continue to drive slot machine sales.
"The slot machine industry represents one of the most promising investor opportunities, not only in the gaming sector but in the entire market," Ader said.
Bear, Stearns & Co. estimates that coinless slots save casino operators 40 percent of the cost of operating coin machines.
Those savings, along with demonstrated customer preference for the ticket-in, ticket-out machines that eliminate waits for hopper fills and hand-pays, should prompt casino operators to replace existing slots faster than their normal 15 percent-20 percent replacement rates.
"In our opinion, an ultimately cashless slot floor is inevitable," Ader wrote.
Slot manufacturers are also expected to capitalize on an expected rush of states to consider slot machine legalization as a way to shore up shaky state budgets, he said, citing Ohio and Pennsylvania as two of the significant possibilities.
Slot revenues comprise 65.5 percent of all Nevada gaming revenues, and represent an even bigger share of the revenue pie in all other U.S. jurisdictions.
Between the likely expansion of gaming, new casinos like Atlantic City's Borgata in 2003 and Steve Wynn's Le Reve in 2005, technological innovation and the normal slot machine replacement cycle, the key drivers are in place to fuel continued slot industry revenue growth, Ader noted.
And best suited to capitalize on those drivers is International Game Technology, the industry's biggest manufacturer, he said.
"IGT is the 800-pound gorilla," Ader said, noting the impressive breadth and depth of the Reno-based company's offerings.
IGT and other top slot machine and slot system manufacturers are slated to be on hand at G2E this week, as are dozens of aspiring upstart competitors.
New slot systems will be pitched, as will cashless betting systems.
IGT is touting its new Harley Davidson slot machines, A.C. Coin & Slot Service Co. is pitching its Miss America slots, Bally Gaming is selling its new Cash for Life games and Shuffle Master is displaying its new Budweiser slots that are shaped like beer bottles.
"Casino operators have learned from Harrah's and IGT that they can use new slot machine technologies, including player tracking and coinless slot systems," Ader said. "And that reality will translate into an emphasis on technology on the G2E floor."