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Best of Howard Stutz

Gaming Guru

Howard Stutz

Nevadan At Work: Technology Helps Bring Exec Back to Gaming With Alliance

10 January 2005

Distance made an interest in gaming grow fonder for Richard Haddrill. Technology's march drew him back to the business he briefly left.

For three years Haddrill headed Powerhouse Technologies, a gaming equipment company that had its fingers in numerous industry facets, including government-backed lotteries, systems for racetrack wagering, video lottery terminals and slot machines.

Under his leadership, Powerhouse became an attractive takeover target.

Following Powerhouse's sale to Anchor Gaming in 1999, Haddrill joined Atlanta-based Manhattan Associates, a software company serving the retail and manufacturing industries, as chief executive officer.

His success continued. During Haddrill's tenure at Manhattan, the company expanded its product offerings, market share, more than tripled its revenue and had its stock price increase eightfold.

But Haddrill remained interested in gaming. And when Las Vegas-based Alliance Gaming Corp. had an opening on its board of directors in 2003, Haddrill jumped at the opportunity to rejoin the gaming industry. In July, it was announced that Haddrill would replace Alliance CEO Robert Miodunski, who retired but remained as a consultant to the board.

Alliance Gaming went through a transition in 2004, selling off its Las Vegas slot-route operation, its Sparks casino and purchasing Sierra Design Group, a company providing systems and technology for slot machines and video lottery terminals.

Haddrill, who had one successful run as a gaming supplier CEO, said he was looking forward to the challenges facing Alliance.

Question: What brought you back to gaming?

Answer: I had been Alliance's board of for a year and half when Bob (Miodunski) was looking to move on. I had found a successor at Manhattan, so the timing was good. Gaming is really a fairly small industry and it is a fun business. You are in the entertainment business and yet it combines entertainment and technology when you're a supplier like us.

Question: How will technology continue to expand in gaming?

Answer: With the rapid speed of video (casino) games coming out, we're going to see more and more use of the central system to help casinos to manage the video (casino) games and to help the players get what game they want on the machine when they want it. For example, we have more than 300,000 machines connected to our systems today. We're the clear leader in that area.

Question: What's changing in slot machines?

Answer: There is a segment of the industry that is interested in low-denomination multiline products, and that is a near-term growth opportunity. Longer term, we see many other interesting player options, such as a player being able to select the game he wishes to play.

Question: IGT is clearly the industry's dominant manufacturer with a 70 percent market share domestically. How does Alliance compete?

Answer: In general, I'd rather be in our position as the No. 2 player with lots of market share to gain than I would be with 70 percent of the market (and) having to play defense. With the speed of changes in the industry, I think there's a great opportunity for a company like ours that has a broad product offering.

Question: What type of technology is Alliance bringing to table games?

Answer: We have some very exciting table-game products that allow players to be confident that there have been no mistakes made by a dealer. It allows the casino to coach its dealers on being everything from friendlier to more efficient in dealing with customers. We are seeing a lot of interest in our Mindplay table game products, which are fairly new. We just really launched them over this past nine months. The return on investment to the casinos is great and the players and the dealers like the product. Mindplay reads all the cards and determines the value of the comp to the player.

Question: Will there be consolidation among manufacturers as we've seen among the operators?

Answer: I think it's always possible. If you look at Alliance over the last three years, we've remade ourselves from a spinning-reel slot manufacturer operating casinos and routes to a company that is really all about technology. Through a series of small acquisitions and new-product development, we have remade Alliance. I would expect us to continue to enhance our products through both more mergers and acquisitions and internal development.

Question: Alliance's price per share decreased considerably in 2004 (almost 75 percent between April and October). How are you working to bring the price back up?

Answer: Our stock is moving in the right direction. We're introducing a whole new array of video products on our new alpha platform. This is an area (in which) we've historically been weaker. We're in a slower market environment because so many casinos invested in ticket in-ticket out technology over the last 18 months. Also, there are fewer new casino openings over the next year. But looking out 12 months, we see some major new market opportunities in Pennsylvania and the United Kingdom. We're also seeing some activity now in places such as Macau and Russia. With our broad video offering, we expect to do better in Europe in the year ahead.

Question: Is this a good time to be in gaming?

Answer: Absolutely. Expansion opportunities are coming, especially 12 months to 24 months out. This is an industry that is going to continue to change and will reward the innovative and the nimble. We're very excited about the future. We have a lot of great opportunities to gain market share as well as grow with the market.