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Howard Stutz

Pennsylvania Awards Six Slot Licenses

2 March 2006

PENNSYLVANIA – Six gaming equipment companies, including industry giant International Game Technology and Las Vegas-based Aristocrat Technologies, have been awarded Pennsylvania's first slot machine licenses.

In a unanimous vote Tuesday, the Pennsylvania Gaming Control Board said the companies are subject to a series of 40 conditions set out by the regulatory agency. Pennsylvania lawmakers, in July 2004, authorized the installation of up to 61,000 slot machines in 14 locations, including racetracks and stand-alone casinos.

Seven racetracks, including four that are operating, are expected to be the first licensed to receive slot machines, possibly by the end of the year. Up to 5,000 slot machines will be authorized at each location.

"This is a major step for expanded gaming in Pennsylvania," gaming control board Chairman Tad Decker said in a statement.

Still, Pennsylvania regulators will need to license in-state distributors to work with the manufacturers. The control board is divided over whether to allow distributors to operate within the entire state or within selected regions.

"They're finally moving forward to get issues resolved, which is a good sign," Susquehanna Financial Group gaming analyst Brian McGill said. "But the key is still how many distributors will be allowed. The timing has been a moving target, but my best guess right now is we're looking at a September time frame."

IGT spokesman Ed Rogich said the company was the first to file an application with the state, but until the suppliers are determined, the excitement level remains the same.

"(IGT's licensing) shows progress but it doesn't change anything as of today," Rogich said. "It's a positive step that brings us closer to reality, but a whole lot more has to happen."

Aristocrat Technologies President Gavin Isaacs said previously that Pennsylvania was a strategic opportunity for the Las Vegas-based slot machine manufacturer.

"Aristocrat, together with our Pennsylvania gaming machine distributor KGM Gaming is looking forward to working with Pennsylvania throughout the implementation of its gaming program," Isaacs said.

How long the process will take is still a mystery.

Pennsylvania is the first new major gaming jurisdiction of any consequence since the late 1990s. Under the gaming tax structure, 53 percent of all revenues generated by the slot machines will go to state and local governments.

In addition to seven racetrack sites, the state will award gaming licenses of 5,000 slot machines each to five stand-alone casinos -- two in Philadelphia, one in Pittsburgh and two at sites to be determined. Two resort locations of 500 machines each will also be awarded.

Even if the distributors are determined by the end of summer and the racetracks are awarded licenses, facilities to house the slot-machine-only casinos will need to be built.

"You're pretty much looking at a summer of 2007 event," McGill said.

IGT and Aristocrat were joined by WMS Industries as the most well-known major gaming companies receiving the licenses. Still under consideration are Shuffle Master, Bally Gaming, Konami Gaming, Atronic Gaming and lottery company Gtech Holdings.