Slots still seen as attractive part of casino mix

2 October 2014

LAS VEGAS -- Not surprisingly, the slot machine manufacturing industry believes it is still relevant in a casino world in which revenue from nongaming elements has increased its overall influence.

But one slot machine company chief executive thought gambling-equipment providers could do more.

“I have yet to put a product in front of Nevada regulators and get rejected,” Multimedia Games CEO Patrick Ramsey said Wednesday at the Global Gaming Expo (G2E) 2014 state-of-the-industry keynote session. “Maybe I should push my own team more. Nevada is open to different products.”

Ramsey and other gaming equipment providers said slot machines were still an important factor in the overall hotel-casino experience, along with nightclubs, restaurants, shopping, hotel rooms and entertainment. All have become larger contributors to the overall revenue mix.

“In terms of millennials, statistically, young adults are more likely to play slots,” Amaya Gaming Group, Inc. CEO David Baazov said. “There needs to be a healthy mix, and slots have to be more entertainment-centric. It’s an increased demand from the customer that is driving us to innovate.”

The five-CEO panel covered a range of topics during the hourlong presentation, which was moderated by Bo Bernhard, executive director of the University of Nevada, Las Vegas’ International Gaming Institute.

Aristocrat Leisure Limited CEO Jamie Odell said there was still a “healthy partnership” between casino operators and slot machine makers. He said the changes in the industry are needed, but are often slow to come.

Attracting a younger demographic challenges any business, and finding ways to attract younger gamblers is not new.

Odell was an executive with Australian brewer Fosters before joining the Australia-based slot machine manufacturer. He said there was always a debate within the liquor industry on getting 20-something consumers to drink wine.

“They do it, but not until they are in their 30s,” he said.

The panel said regulatory issues often slow progress.

“We have to make products that are relevant to the players,” International Game Technology CEO Patti Hart said. “We’re the only industry that spends all our (research and development) dollars before a customer can play a game.”

At the same time, however, slot machine manufacturers don’t want to alienate an older audience.

Ramsey said a casino operator told him he was losing “the 65-year-old female customer who used to play slots 45 to 60 days a year.”

Ramsey, whose company is being sold to payment processing company Global Cash Access for $1.2 billion, said slot machines must be developed with a multigenerational appeal. Too much emphasis, he said, is being placed on age.

Attention during the talk was focused on consolidation within the slot machine sector.

Baazov, whose Canada-based company bought the parent company of online gaming giant PokerStars this year for $4.9 billion, said the fundamentals and timing of consolidation are working for the gaming industry.

“It’s a period of time where interest rates are low and a lot of capital was sitting on the sidelines,” Baazov said.

Beyond the Multimedia Games deal, IGT is being bought by lottery provider GTECH Holdings for $6.4 billion while Bally Technologies is being acquired by Scientific Games for $5.1 billion. Last year, Scientific Games bought WMS Industries for $1.5 billion and Bally acquired SHFL entertainment for $1.3 billion.

Also, Aristocrat is buying slot maker Video Gaming Technologies for $1.3 billion.

Odell said the mergers will create more than $600 million in savings.

Hart said IGT’s deal with GTECH was by choice and not a necessity.

“We didn’t have to sell the company,” Hart said. “We put ourselves together with another company to create a better company.”

Related Links
Global Gaming Expo (G2E) 2014
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IGT - International Game Technology

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