CasinoCityTimes.com

Home
Gaming Strategy
Featured Stories
News
Newsletter
Legal News Financial News Casino Opening and Remodeling News Gaming Industry Executives Author Home Author Archives Search Articles Subscribe
Newsletter Signup
Stay informed with the
NEW Casino City Times newsletter!
Related Links
Recent Articles
Best of Howard Stutz
Howard Stutz
 

Slot makers look for turnaround in 2011

3 January 2011

LAS VEGAS, Nevada -- Slot machine makers have had a rough few years.

The recession caused casino operators to hold back on buying new gambling equipment, sending sales revenues plunging for some of Nevada's leading gaming equipment manufacturers.

Companies such as International Game Technology, Bally Technologies and WMS Industries relied on other means to boost overall revenues. Casino and slot floor management systems and leased slot machines, where the manufacturer shares in the gaming revenues, helped plug the budget holes.

New casino openings, such as Aria in 2009, The Cosmopolitan of Las Vegas on Dec. 15, expanding regional markets and Indian gaming growth, kept the gambling equipment sector functioning.

Analysts believe 2011 could provide the beginnings of a recovery period for the slot machine industry.

It won't be a breakout year. But a small replacement cycle in which casinos change out old equipment, a handful of casino openings, and the expanding video lottery market internationally, will set the pace for 2012.

"Seemingly, perception is the demand for slot floors will be flat," Roth Capital Markets gaming analyst Todd Eilers said. "In general, however, I'm hearing that operators will spend a little more than last year. I would think we'll see some growth in 2011."

Eilers based his assessment — anywhere from 5 percent to 9 percent increase in slot machine sales — on several metric points.

Casino operators have repaired their balance sheets damaged by the recession, which could help send the economic doldrums of the past two years further into the rearview mirror. As gaming markets stabilize, older slot machine floors will be refreshed with newer products.

Eilers thought the replacement market could grow to as many as 54,000 machines in 2011, spread out among the major slot machine makers.

Only a handful of new casino projects are expected to come on line regionally in 2011, including Station Casinos' Gun Lake development in Michigan, new casinos in Illinois and Iowa and Pinnacle Entertainment's riverboat casino Baton Rouge, La.

"You're looking at about 10,400 new slot machines, which is about half of the new machines that went into the market in 2010," Eilers said.

The big key is the video lottery market. The games look and operate like slot machines but are controlled from a central server.

In the United States, New York City's Aqueduct Racetrack is expected to open the first phase of what will eventually be a 4,500-machine video lottery casino.

Several Canadian provinces have taken steps to replace their government-run video lottery machines, which could be a market for sales of between 20,000 and 50,000 games, based on various estimates.

Eilers said other video lottery markets on the horizon include Italy, Greece and Brazil.

"The suppliers are starting to talk about 2012 as a much bigger year than 2011," Eilers said.
Slot makers look for turnaround in 2011 is republished from CasinoVendors.com.