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Rod Smith

Aristocrat Readies to Take on Slot Rivals

26 August 2003

Aristocrat Technologies, the U.S. subsidiary of Australia-based Aristocrat Leisure Ltd., is positioning itself to compete head-to-head with slot manufacturing giant International Gaming Technology.

Deutsche Bank analyst Marc Falcone said casino slot managers, who have been looking for new and viable slot suppliers besides Reno-based International Game Technology and Alliance Gaming, will welcome the competition too.

IGT in 2002 accounted for more than 70 percent of the domestic slot machine market, while Aristocrat and Alliance had market shares less than 15 percent each.

Outside the United States, however, Aristocrat's market share exceeds 40 percent, said Bob McNonigle, marketing consultant for Aristocrat in Nevada.

Aristocrat won necessary Nevada regulatory approvals in three separate August decisions to connect its video slot machines to IGT's, Acres Gaming's and its own cashless systems. Acres Gaming is being acquired by IGT.

The decisions pave the way for Aristocrat to market its newest gaming machines, with ticket-in/ticket-out abilities, for the first time in Nevada.

Aristocrat President Gavin Isaacs called the regulatory decisions "a major milestone" for the company.

"Without the approval to connect our latest slot machines to these cashless systems we have been unable to significantly grow our presence in Nevada," he said. "Now, we can offer Nevada casino operators another choice in the market."

Aristocrat already offers ticket-in/ticket-out games in 25 states, including New Jersey and Michigan, and a number of tribal jurisdictions.

McNonigle said the company's new ticket-in/ticket-out capacity will help satisfy customer demand for cashless slots, which cuts operators' need for service manpower in casinos and encourages customers to wager larger amounts.

"(Previously, Aristocrat) wasn't able to sell its machines to most operators in Nevada because no one wanted slots without ticket-in/ticket-out functionality," he said.

With the necessary approvals, casino operators will have a wider choice, which they have been looking for because of the dominance of IGT, McNonigle said.

Dan Roy, vice president of slots at Station Casinos, said: "(The regulatory approvals put Aristocrat) on a level playing field with other vendors that already have been approved. For Station, it's great because it gives me more flexibility when I add product and it gives me leverage when I go to vendors that have had a little bit of a monopoly in the past."

The enhanced capacities of Aristocrat slots puts the company in a significantly "better light" when it comes to making purchasing decisions, Roy said.

Previously, IGT's ticket-in/ticket-out capability has given it a big advantage with operators, he said.

Now, Aristocrat is in a whole new league and it's good for operators because it adds variety to their floors, in addition to cutting operating costs, Roy said.

Harrah's Vice President of Slots Bruce Rowe said the competition and innovation Aristocrat adds will be good for the industry.

"Aristocrat has always been a leader in low denomination games. We're thrilled Aristocrat has won approval for us to put some of their most popular games on our floors" now that they have overcome the regulatory challenge of offering ticket-in/ticket-out technology in Nevada.

McNonigle said Aristocrat has developed 50 new games which it will preview at the Global Gaming Expo Sept. 16-18 in Las Vegas, including a high-denomination progressive, a penny slot progressive that has a million-dollar payout and a machine that is a blend of a slot and a pachinko game.

Aristocrat joins WMS Industries and Alliance Gaming in challenging IGT's dominance of the Nevada and U.S. markets.

WMS Industries, once a top slot machine manufacturer, is also moving to challenge IGT, starting at next month's Global Gaming Expo, as it emerges from two years of self-imposed exile as a manufacturer.

Until 2001, WMS had an 18 percent share of the slot market and dominated the video segment, but some system integrity problems resulted in customer cheating in 2001 and led to WMS' market share plummeting to nearly zero in 2002.

WMS is now expected to arrive at the Global Gaming Expo with "guns blazing" and at least 40 new titles on display, Falcone said.

Alliance Gaming spokesman Marcus Prater said his company, which owns Bally Gaming and Systems, will officially unveil the "Saturday Night Live" series of seven slots at the Global Gaming Expo in addition to 110 new or updated devices on display.

Founded in 1953, Aristocrat has 2,200 employees worldwide. Its international headquarters is in Sydney, Australia, and it has offices in the United States, New Zealand, the United Kingdom, South Africa, Japan, South America and South East Asia.