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Howard Stutz

Inside Gaming: Gaming techies reaching for more

15 June 2014

Lawmakers spent all of 15 seconds discussing technology at the final three-hour session of the Committee to Conduct an Interim Study Concerning the Impact of Technology Upon Gaming.

The panel’s focus over four meetings seemed to be a renewed effort to kill off tavern operator Dotty’s.

That idea failed — again.

The Association of Gaming Equipment Manufacturers (AGEM), however, thought the 15 seconds of committee attention to the topic for which it was created were golden.

The Las Vegas-based trade organization, which counts more than 100 members and includes most of the industry’s major slot machine companies and associated businesses, wants Nevada to approve new games with a new twist on a skill-based element, which is often associated with video games.

Some slot makers, such as International Game Technology, offer games that are considered skill-based. The company markets a slot machine based on the 1980s Atari video game “Centipede,” in which players use the video game feature during the bonus round to accrue more points or credits.

AGEM wants to take the idea one step further.

The proposed bill draft language approved by the committee would allow slot machines to have a bonus element where skilled players could actually change the payout of a machine in their favor. The concept of a variable payback percentage came from AGEM’s membership.

“We basically polled everyone and asked them to come up with 20 or so crazy ideas,” AGEM Executive Director Marcus Prater said. “This seemed to be the more important idea.”

Think about it, Prater said. A slot player getting into a bonus round can increase the payback of a slot machine from 90 percent to 96 percent, “just by having the skill to shoot down missiles on a video game.”

The proposal will be presented to the Legislature next year.

If approved, it would make Nevada the only state where it’s possible for a player to change the payout percentage of a particular slot machine.

“Everything that you can do in the video game world can be applied to a slot machine through a variable payback percentage,” Prater said.

Slot machine makers know the industry needs something revolutionary to revive sagging numbers.

The investment community has been lukewarm toward the gaming manufacturing sector, saying the lack of a replacement market and a small number of casino openings are reasons 2014 game sale projections have been reduced.

A more important factor concerns the number of players who actually wager on the devices. It’s shrinking.

During a Gaming Control Board meeting this month, representatives of Gamblit, a new slot machine company, said casino customers are skewing younger, but they are not playing slot machines.

“The younger markets are from a digital age and most are interested in the entertainment experience,” Gamblit CEO Eric Meyerhofer told the Control Board.

The company, which is seeking a Nevada gaming license, wants to produce slot machines that combine traditional gambling games with entertainment-style products, such as video games and various concepts from Internet-based social gaming.

Konami Gaming Executive Vice President Tom Jingoli, the president of AGEM, called the trade organization’s proposal a way to attract younger gamblers back to the casino slot machine floors.

“It gives the opportunity for manufacturers to develop some new game features,” Jingoli said. “It won’t be in every game that a manufacturer sells, but a portion of the games would have a skill-based element.”

At the legislative committee hearing, the owner of the downtown video arcade Insert Coins told lawmakers his customers would play slot machines if there was a video game element.

IGT says its already shown success with Centipede, which includes music and other symbols from the video game popular in the 1980s. There is even a joystick to help the player move through three levels as they dodge spiders, fleas and the Centipede while attempting to generate bonus points.

“Our goal is to come up with unique and exciting games that players want to play,” IGT spokesman Phil O’Shaughnessy said. “We will do this in whatever parameter that is set by the state.”

Creating new slot machine players is a reason why traditional slot machine companies are spending big money on social gaming endeavors.

IGT paved the road two years ago with its $500 million acquisition of DoubleDown Casino. On June 5, Bally Technologies announced it would pay up to $100 million for Dragonplay, an Israel-based social gaming company.

The idea is to put popular slot machine brands and titles on the free-play social gaming platforms so potential gamblers can learn the games and find them in casinos during their next visit.

Wall Street, which had been ambivalent toward social gaming, has come around.

“We look for this new business segment to be a primary driver of future revenue and earnings growth going forward,” Eilers Research gaming analyst Adam Krejcik said of Bally’s Dragonplay purchase.

Prater and Jingoli said AGEM believes incorporating a variable payback percentage concept into a slot machine could be a game-changer for the manufacturing community. The concept could also boost the casino bottom line. In April, slot machine wagering declined on the Strip after three straight monthly increases.

That’s what the pair and their lobbyists plan to tell lawmakers in 2015.

Hopefully, another proposal to drive a stake through Dotty’s heart won’t sidetrack the real work.