Last week at Global Gaming Expo, major slot machine makers treated Indian casino operators Tony Goetz and Tim De Lugo like royalty.
Gots, which operates five small casinos in Upper Peninsula, Michigan, and Lugo, who oversees slot operations at casinos north of Fresno, California, said he plans to buy or lease the latest slot machines and gaming technologies.
After gambling equipment suppliers watched sales evaporate following last year's G2E, most slot company executives expressed cautious optimism heading into this year's show.
Large casino operators have continued to tighten controls on capital expenditures. The recession has led companies to hesitate to buy new gambling equipment to reduce operating costs.
Game analyst David Katz of Jefferies & Co. said there was little change in casino operators' attitude toward replacing slot machines after a meeting with company executives at G2E.
"There are certain companies that have continued to actively replace slot products over the past few years, given that slot products are an important revenue driver for local businesses and are not discretionary," Katz said. "Meanwhile, other casino companies suggest we will remain conservative."
This is why Goetz, Chief Operating Officer of Kewadin Casino, and De Lugo, Slot Operating Officer of Chukchansi Gold, offer a dim hope of generating revenue. Both companies said they were actively considering buying slot machines or renting equipment.
The transaction will not be large. Kewadin Casino has just over 2,000 machines, while Chukchansi has 2,000 games.
But a deal is a deal.
"We saw the importance of installing the best products at the bottom of the slot," Goetz said. "But we are also pursuing good deals and fair prices."
De Lugo said two competitors are replacing the slot machine layer and the Chukchansi casino needs to keep pace. Instead of buying new machines, De Lugo is in the participating game market, where casinos rent slot machines and share profits with slot machine manufacturers.
"That type of option helps casinos of our size," he said.
Slot machine executives hope the casino company's decision makers will realize the need to buy new gambling equipment with hints from local competitors.
Richard Haddrill, CEO of Bally Technologies, said, "The simple story is that operators have revised their balance sheets and now need to look at game operations and deliver the highest quality products to their customers." "We were more active in supporting our customers' financial conditions. They can basically pay for the product while making money."
Frank Farrenkov Jr., president of the American Game Association, who co-produced the Washington, D.C.-based G2E, agreed that casino operators may have reached a point where they should start reinvesting in the gaming equipment floor.
"If it's slightly activated, it's good for the manufacturing side of the industry," Fahrenkopf said. "That's the big problem going into G2E."
WMS Industries President Orin Edidin said the Workgun, Illinois-based manufacturer has continued to sell slot machines during the recession. Yes, he said, the industry-wide slot machine replacement cycle, in which thousands of games are replaced with new equipment, has never materialized.
"Alternative markets are starting to turn slowly," Edidin said. "Businesses are seeing a level playing field."
Awareness of sluggish sales hasn't stopped WMS from producing new games. Edidin said it invested 15% of its annual revenue of $765.1 million in research and development in fiscal 2010.
Major slot machine manufacturers did not hesitate to market their new games, management systems and gambling products last week.
Bally Technologies had Playboy Playmates Juliette and Tyran Richard sign to promote the company's new Playboy theme machine. Bally also exhibited slot machines with touchscreen technology such as the iPhone.
Comedian and game show host Howie Mandel helped launch the "Deal or No Deal" slot machine at the Atronic-Spielo booth.
Actor Ken Jung, who starred in the Las Vegas-themed movie "Hangover," cut G2E's ribbon and appeared in IGT's booth to promote the slot machine based on the movie.
IGT offers previews of the company's games based on "American Idol" and "Dark Knight," while offering high-definition 103-inch video screens for center stage banks on multiple player slot machines 슬롯머신
Credit Suisse game analyst Joel Simkins said slot makers have filled their booths with new products with cutting-edge technology and innovation. He expected the show's audience to increase by about 14 percent from a year ago.
"I hope this is a sign that customer demand and interest levels are improving as of 2011," Simkins said. "Our only focus is on product prices, which in our view may be beyond the limits given the still tight capital budget."
Slot manufacturer representatives said they heard the message.
IGT Chief Financial Officer (CFO) Patrick Kavanaugh said the company's latest games could be built on new platforms and cabinets that can change games with signboards and software downloads, saving time and saving money.
Building on this year's successful sales of slot machines based on popular television series and movies "Sex and the City," IGT used G2E to release several new themes, including the movie "Dirty Dancing." Cavanaugh said Sex and the City was one of the company's best-selling games with more than 1,000 machines deployed nationwide.
"We are looking for the right balance between licensed titles and the games we developed," Cavanaugh said.
Not all bells and whistles may have resonated with potential buyers.
"We appreciate the improvement in product offerings, but the channel checks did not immediately improve demand trends," Katz said.
"Our view is that the gradual economic recovery in late 2011 and 2012 and the opening of new casinos are key measurable catalysts for new and alternative slot sales."
