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Best of Howard Stutz

Gaming Guru

Howard Stutz

For slot machine company executive Bob Miodunski, Cabo will wait

30 April 2012

What happens when you grow weary of building and selling custom houses in Cabo San Lucas on the lower tip of Baja California Sur, Mexico?

If you're retired gaming executive Bob Miodunski, you come back to the U.S. and take a temporary position helping an up-and-coming slot machine manufacturer gain a foothold in the industry.

That was almost two years ago.

Six months after being named the interim president and chief executive officer of American Gaming Systems (AGS), Miodunski, 61, dropped the temporary title. He put together a management and development team for the slot machine company that included some of his former associates and rivals from the gambling equipment manufacturing sector.

Miodunski decided Cabo could wait a bit longer.

"It's kind of like putting the band back together," Miodunski said. "I was having a lot of fun."

Earlier this month, AGS was granted Nevada licenses to manufacture and distribute gaming devices and to operate a slot machine route.

The approvals don't mean Miodunski and his team will challenge slot machine giants International Game Technology, WMS Industries or former employer Bally Technologies anytime soon.

"We're not looking to compete with those companies," Miodunski said. "We just want to find some locations for a few machines on the casino floors."

AGS has roughly 7,500 slot machines in regional markets and Indian casinos, primarily in Oklahoma, Florida and California's tribal market. Roughly 96 percent of the slot machines are operated on a recurring revenue basis, with AGS splitting revenues with the casinos.

Initially, AGS has two products it will launch in Nevada: Pay It Again Video Poker and Caribbean Pearls, a pachinko-based game.

Miodunski also sees opportunity for AGS to enter both expanding and potential video lottery terminal markets, such as Illinois, Ohio and Maine. The privately held company owned by Alpine Investors of San Francisco opened offices in Las Vegas, but handles manufacturing from its Oklahoma City facility.

"It's all about timing. We seem to have the right pieces in place," Miodunski said.

Miodunski was brought aboard at AGS in 2010. Alpine Investors President Graham Weaver said then that Miodunski would offer "the leadership and motivation" needed to take AGS to a new level.

The Nevada license allows AGS to place its slot machines on a much larger stage.

During his five-year tenure as CEO of Alliance Gaming - which was renamed Bally Technologies after his 2004 departure - Miodunski was credited with turning around the fortunes of the slot machine maker.

Several key technology acquisitions took place during his CEO years, creating the basis for what is now Bally's highly regarded gaming and systems business unit.

Gaming Control Board Chairman Mark Lipparelli, who worked for Miodunski 10 years ago at Alliance, said during the April 5 AGS licensing hearing that his former boss doesn't get the credit he deserves for saving the sinking manufacturer.

Lipparelli acknowledged their relationship and voted in favor of the licensing.

"The company was on the verge of bankruptcy," Lipparelli said. "I'm not certain the company would have survived without his leadership."

Before becoming Alliance's CEO, Miodunski oversaw United Coin, the company's slot machine route operation division. He helped develop and launch United Coin's Gambler's Bonus, the industry's first player tracking system.

AGS has a new player tracking system similar to Gambler's Bonus, which Miodunski said would be useful in Illinois, where video slot machines are expected to be added to bars and taverns around the state.

Miodunski's retirement from Alliance Gaming came shortly after the company missed earnings projections over a couple of quarters. Results also had to be restated due to an accounting issue.

"His departure came at a awkward time, but nothing can take away what he did to save the company," said one slot machine industry insider.

After retirement, Miodunski moved to Cabo and built a house. In six years time, he built and sold three houses in the Mexican resort town, and was considering his next steps when AGS came calling.

His goal now is to develop more proprietary games that AGS can roll out to new locations around the state.

But in case you're wondering, Miodunski still owns two lots in Cabo.