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Best Gambling Guide for online gambling reviews, best gambling bonuses, gambling games, and gambling tips. Best gambling payouts and best gambling bonuses are featured in this gambling guide.

 

Gambling News by Gambling Headquarters

Saturday, April 01, 2006

Slot Game Makers Bet on Technology

 

Slot machines based on "Wheel of Fortune" and "Men in Black" are apparently going to be around for awhile.

A recent survey of slot floor managers by a Wall Street investment house shows casinos are reluctant to replace and update gaming machines that aren't more than a few years old.

Still, enhanced gambling technology could turn around equipment manufacturers' slumping sales revenue -- but that isn't going to happen this year.

Slot companies are developing downloadable gaming technology where slot supervisors would be able change the game content on a bank of machines with a few clicks of a computer mouse. The concept has piqued the interests of those who make decisions on whether to buy new games.

Still, most manufacturing representatives and casino executives don't expect to see the downloadable products on casino floors until 2007 or 2008.

That respective opinion led analyst Steven Kent of Goldman Sachs to offer a cautious view of the gaming equipment manufacturing sector to customers of the New York-based financial firm, which sponsored the sixth annual survey.

"We have lowered expectations and we remain concerned that investors will continue to be disappointed," Kent said on a recent conference call with investors in which the survey's findings were discussed.

An independent company interviewed slot floor managers at 151 casinos in 27 states on their view of industry trends and how their purchase of slot machines might be effected over the next few years. The survey represented 15 percent of the nation's slot market.

The survey found that slot games built by industry leader International Game Technology were losing space on casino slot floors to products from competitors. Meanwhile, Australian-based Aristocrat Technologies had solidified its standing the industry's No. 2 manufacturer.

Kent is considered by some company representatives to be one of the gaming analysts most critical of the industry. On the conference, call it was suggested that Goldman Sachs customers look at hotel and hospitality industry stocks for a better return on investment.

"Steve has always been pretty bearish on the manufacturing sector," said Patrick Cavanaugh, executive director of investor relations for IGT.

Most of the nation's major casinos spent the early part of the decade replacing their older slot machines with ticket in-ticket out games, which offered technology advances that eliminated cash payouts. The technology allowed machines to offer multiple denominations and multiple game titles.

The revolution led to enhanced sales revenue and increased earnings per share by slot makers during that time period. Many industry insiders believe that downloadable gaming, sometimes referred to as server-based gaming, will have a similar effect.

"Interest levels are high for downloadable gaming, (but) the timing and economics are largely unclear to slot operators," Kent said.

While it is still being debated what costs the casinos will face to implement downloadable systems, 59 percent of the operators surveyed said they would be willing to allocate up to 25 percent of their casino floor to the proposed systems.

"This is important because we think there is a misperception that downloadable gaming will create a full-scale replacement cycle, such that the 800,000 slot machines in the United States would have to be replaced, which is what cashless technology basically did," Kent said. "Most operators are not thinking about downloadable as being nearly the replacement opportunity as cashless. It remains unclear whether downloadable will go beyond just video machines and also be applicable to video poker and spinning reel."

Major slot machine companies are developing downloadable gaming concepts. IGT is testing its server-based gaming system at the Barona Valley Ranch casino near San Diego, a process that could take the rest of the year.

Cavanaugh said the idea that slot managers this early in the process would designate 25 percent of their floors for downloadable gaming was a big positive. When ticket in-ticket out technology was unveiled, casinos initially balked at the concept.

"Steve actually did us a favor in the survey," Cavanaugh said. "The technology is still being proven, but that figure shows a lot of interest in the concept."

Aristocrat President Gavin Isaacs said the company's downloadable games product could be in the testing stages inside casinos this year.

"The challenge to produce a product that wins over the players and brings them along," Isaacs said. "We need to make sure that what we do doesn't disrupt our recent accomplishments."

With several years of use to evaluate ticket in-ticket out machines, Kent said slot managers surveyed had varied opinions of the games produced by the different equipment providers.

Reno-based IGT has lost some of its dominant casino foothold to companies such as Aristocrat and WMS Industries. Aristocrat, which suffered heavy losses earlier in the decade when it entered the American gaming market, has righted the ship and flourished in the past few years. Kent said the company, whose stock is traded publicly on the Australian Exchange, has clearly risen above its American-based competition.

"It was nice to get that third-party affirmation and it was great to see it in writing," Isaacs said. "To be fair, we were aware in talking with our customers that our products have been well received."

Chicago-based WMS has improved its standing, but only slightly, according to the survey. The company had been behind others in bringing its cashless systems to the casino market.

Bally Technologies, which was recently renamed from Alliance Gaming, has spent almost two years in the doldrums and trying to recover lost sales with new products, only to see its popularity with slot floor managers continue to deteriorate, according to Kent.

"This year's survey showed that competition in the slot market is as competitive as it has ever been," Kent said. "This is a major concern considering the lack of new sales opportunities in the market over the next one to two years."

Cavanaugh said the survey didn't offer too many revelations for IGT. The company conducts its own annual slot census to determine what products are popular with casino customers.

The increased competition has had an effect on every company in the industry.

"At one time or another, everyone has run into trouble," Cavanaugh said. "We're very focused and on track on where we stand with our products."

While IGT is still considered by slot floor managers as having the best and broadest range of games in the slot industry, Aristocrat was complimented for a progressive machine that offers video spinning reels, multiple jackpots and low denominations.

"This game has created a whirlwind of demand for Aristocrat products that does not appear to have peaked," Kent said.

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