The top American Indian gaming vendors are rapidly expanding into the new markets developing in mobile and social media play at the same time as industry consolidation is giving them a chance to increase market share through savvy acquisitions.
More and more, gaming vendors are helping Indian casinos develop an integrated strategy across all platforms, including land-based casinos, social media sites on the Internet, and access by laptops, tablets and handheld devices like smartphones.
These opportunities for the biggest players come amidst a backdrop of continuing year-over-year revenue increases for Indian gaming. Ernest L. Stevens Jr., Oneida Tribe of Wisconsin, chairman of the National Indian Gaming Association, noted at this year’s NIGA annual convention that the sector saw $28.6 billion in revenues for 2013, a 2.5 percent jump over 2012. Stevens also noted the presence of 381 vendors exhibiting at NIGA, which drew 5,700 attendees.
One example of the integrated strategy comes from Austria-based Novomatic Group. Its Greentube Pro subsidiary is now making a big push to integrate social media gaming into small- to medium-sized Indian casinos. Greentube recently told ICTMN that its private label social gaming for Indian casinos as well as access to Novomatic’s hundreds of games will help keep a casino’s brand in front of its land-based players and attract new ones as well.
Ken Huang, a consultant for Greentube, explained that the physical casino will give online IDs to players in its loyalty programs. These customers will play on the casino’s Facebook site when they get home, developing even more brand recognition that will prompt them to return to the casino. Also, those players will then recommend their Facebook friends to like the social media casino, gaining new customers that are key prospects to come in to the physical casino. Gabriel Cianchetto, president of market development for Greentube North America, said this is “a phenomenal way for casinos to keep in touch with players.”
Does the online/land-based casino connection work? According to Greentube, more than 35 million people in the United States visit social casino sites each month, and 82 percent of them have visited a land-based casino in the past year.
Meanwhile the acquisitions market has been very busy in the last year or so, with Aristocrat buying Video Games Technology, Bally acquiring SHML/Shufflemaster and Dragonplay and IGT’s just-announced sale to the Italian GTECH S.p.A. These are just the biggest deals going down as top vendors maneuver to give themselves strategic advantages.
Aristocrat: Playing the Merger Game
Aristocrat is a prime example of a gaming company that has taken advantage of industry consolidation to boost its presence, through its big acquisition of VGT, which has a sizeable presence in Indian markets, and a couple of smaller buys. Aristocrat announced this month its deal to acquire VGT, a leading maker of slots and bingo machines for Indian casinos. The $1.28 billion deal adds some 20,200 machines on lease to tribal gaming operations, mainly in Oklahoma but also in California, Washington, and other states. It has also made smaller acquisitions of sector firms Paltronics and House Advantage.
“Aristocrat has had a long tradition with Indian country,” says Matt Wilson, vice president of marketing for the Sydney, Australia-based firm. “It is a significant part of our business” in the United States, he says, giving the firm “a very strong market share in tribal segments.”
Games and systems provider Aristocrat targeted the American market in the 1990s and 2000s, just as Indian gaming was booming, Wilson says. “Our businesses grew together,” he points out.
Aristocrat picked an Indian casino, the Pechanga Resort and Casino in California, to debut its latest big game, Batman 1966, which conjures up the original Batman television series starring Adam West.
Relationship management with Indian casinos is strong at Aristocrat, Wilson says, with executives making frequent trips to connect with customers. The firm’s Customer Advisory Board includes “a substantial amount of tribal gaming customers.”
Wilson says the firm has designed some Indian themed games for Native casinos but notes it is sensitive to the need to not be offensive. The firm has a Native regional marketing director, Liberty Reyes, who vets items for cultural sensitivity.
Aristocrat also has targeted the social media market. “We’re producing products to leverage the mobile and social games market,” says Wilson, through its n Live program.
IGT: Billion Dollar Baby
IGT (International Game Technology) prides itself on its “exceptional” relationships with Native casinos. The Las Vegas-based firm prominently acknowledges sovereignty, always a good place to start. “We understand that, as a vendor, we don’t sit at the table of tribal sovereignty, but we are proud to support those who do,” the firm’s Native American Development Group says, and that seems unlikely to change after IGT’s just-announced $6.4 billion sale to Italian firm GTECH S.p.A.
IGT is an Indian gaming Billion Dollar Baby. It touts its $1.4 billion in payouts to players in Indian casinos and its $2 billion in Indian country purchase financing. “We have been here from the start to offer creative financing and casino operations start-up services to tribes,” the company states, as well as offering tribes legal, operational, and regulatory resources. It also touts its social media effort, for which it acquired DoubleDown Interactive, which reaches six million players monthly. “IGT also shows its strong commitment to Indian gaming through its tribal gaming and education scholarship program,” says Phil O’Shaughnessy, director of global corporate communications. “At this year’s Indian Gaming tradeshow and convention, IGT provided a $25,000 donation to the American Indian College Fund via the International Game Technology Tribal Scholarship.”
IGT and GTECH will be combined under a United-Kingdom-based holding company, NewCo. Five of NewCo.’s 13-member board will be made up of current IGT board members. The deal is expected to close in the first or second quarter of next year, says IGT.
The publicly-traded IGT (NYSE:IGT) targeted global gaming back in 1981 and shipped its first gaming machines to a Native American casino in 1990, through Sodak Gaming. Sex and the City, Jurassic Park and Avatar video slots are some of its better-known products.
Bally Technologies: A Single View
Bally is a huge proponent of the integrated player approach. It took advantage of NIGA 2014, the biggest Indian casino convention, to showcase how it “connects the entire gaming world by giving casinos a single view of their player at the casino, on the go, and at home.” And it led in the merger game by acquiring SHFL Entertainment, parent of ShuffleMaster, last year, which allowed it to increase its stable of games that includes such well-known titles as The Magic of David Copperfield, Titanic and ZZ Top.
Las Vegas-based Bally’s financials also give a good peek at just how much expansion potential there is in online gaming, which it targets through its iGaming Platform and Remote Gaming Server. According to its most recent investor presentation, less than one percent of 2013 revenue came from iGaming, meaning increased focus can increase its share rapidly.
Bally put some spin on its Internet outreach by recently acquiring Dragonplay Ltd., a social media firm, as part of its increased online focus. Bally says Dragonplay, in business since 2010, has “approximately 700,000 daily active users and nearly three million monthly active users across all platforms.”
Two thirds of the publicly traded (NYSE: BYI) Bally Technology’s $1.3 billion in pro forma LTM (last twelve month) revenues came from the United States, including Indian casinos. Some $305 million of that came through SHML.
It claims in its investor presentation that its 2013 system revenue of more than $300 million surpasses all other vendors combined. Its five business platforms are electronic gaming machines, gaming operations, systems, table games and utilities, and iGaming.
WMS: Tilting Towards Sovereignty
WMS traces its roots all the way back to 1943, when Harry Williams started its predecessor company. Williams was famous in the gaming industry for introducing the “tilt” to pinball machines. More recently WMS has shown a tilt toward tribal sovereignty in a pending case where a municipality has tried to tax slot machines if they are leased by non-tribal vendors.
The Mashantucket Pequot Nation of Connecticut, owner of Foxwoods Casino, sued the town of Ledyard on behalf of WMS and another vendor, claiming this kind of taxation represents a breach of sovereignty. In the most recent development in the case, late last year, five other tribes joined the Pequots by filing amici curiae briefs (“Friends of the Court”) in support of the tribe. The Pequots are trying to reverse a 2nd Circuit court of appeals ruling allowing this form of taxation.
The tribes backing the Pequots and WMS are the Seminole Tribe of Florida, the Coquille Indian Tribe of Oregon, and the Confederated Tribes of the Umatilla Indian Reservation, also in Oregon.
Chicago-based WMS was acquired last year by Scientific Games Corp. of New York, in a deal valued at $1.5 billion. Scientific’s gaming footprint includes “instant and draw-based lottery games; electronic gaming machines and game content; server-based lottery and gaming systems; sports betting technology; loyalty and rewards programs; and social, mobile and interactive content and services,” it says.
WMS’ Indian casino involvement is reflected in the many big winners hitting jackpots on WMS machines in Native American facilities. The biggest recent one comes from a WMS wide-area progressive game at the Choctaw Casino in Durant, Oklahoma on April 28, 2014. Dorothy Bozeman of Texas scored a jackpot of over $1 million on a WMS The Wizard of Oz Gamefield xD machine.
Other big recent winners have come at the Chinook Winds Casino in Oregon (more than $500,000), the Seminole Hollywood Classic in Florida (more than $750,000), and Foxwoods (also more than $500,000). Some other popular WMS products include Aladdin, Iron Man, and Willy Wonka.
Konami Gaming: Managing the Whole Operation
Konami Gaming knows how important its Indian casino base is. That’s why it chose to unveil its new version of the old classic slot Dungeons and Dragons at this year’s NIGA show. The Las Vegas-based designer and manufacturer of gaming machines and casino management systems built the new D&D slots in collaboration with Hasbro and Wizards of the Coast and is making them available through its fantasy themes Conquests and Treasures and Enchanted Riches.
“The games will be placed in pods of 2, 3 or 4 and will be merchandised with custom logo premium chairs, a themed bezel complete with glowing runes, faux stone design elements, hand painted 3D dragon toppers and a variety of sign packages including one with a large rotating red dragon,” says the firm.
Konami’s footprint in Indian country extends beyond machines to its SYNKROS casino management system. The Turning Stone Resort Casino of the Oneida Indian Nation in Verona, New York in April chose Konami’s CMS. Turning Stone also picked up 120 new Class III games.
Konami’s footprint in gaming extends back four decades to when Kagemasa Kozuki founded Konami Corp. in Osaka, Japan. Kozuki still serves as chairman and chief executive of the firm, which is the parent of Konami Gaming Inc. Konami Gaming caters to North America, including Indian casinos, Europe, Latin America, Singapore and Macau, while Konami Australia Pty Ltd. serves Asia and the Pacific.
The Las Vegas shop designs and produces Konami signature products such as the Podium cabinet and the China Shores game, as well as the SYNKROS system.
Multimedia Games: Game-Changers for Gaming
Every player and casino employee is familiar with the sound of bells ringing. Last year Multimedia Games (NASDAQ: MGAM) took the concept a little further and actually rang the closing bell to end a NASDAQ trading day in New York City. An official of the exchange called the gaming vendor (either making a pun or being unwittingly clever) a “game-changer,” and the Austin, Texas-based firm’s CEO Patrick Ramsey gave a shout out to one of its best Indian casino clients, the Chickasaw Nation of Oklahoma.
The Chickasaw Nation uses 5,400 Multimedia gaming machines.
The company got to ring the bell on May 7, 2013 after a game changing 500 percent increase in share price over two years. The stock has been trading in the $30 price range recently.
Multimedia’s products “include video slots, reel-spinning slot machines, and the TournEvent slot tournament system,” says the company. It joined the merger frenzy this year by acquiring PowerTek for $13 million. PokerTek develops and distributes electronic table games. Carnival in Rio 2 is a new release of one of Multimedia’s popular games. For the second quarter of 2014, the firm realized $11 million in net income on revenue of nearly $60 million.
Oklahoma is its biggest state for gaming operations revenue. In fiscal 2013 it took in $61.1 million in Oklahoma, against $54.5 million for all other states.