Casino Journal

After a record year of achievement, manufacturers organization gears up for 2009

by Marcus Prater

January 1, 2009

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Need some good reading to awake from your post-G2E slumber? Here's a must-see report highlighting the size and scope of the global gaming supplier industry

With a new year upon us, it’s now time for the gaming industry to awaken from its post-G2E slumber. Ever since the show moved to mid-November, a typical pattern has emerged: Suppliers expend vast amounts of corporate energy getting ready for the show; customers visit the show and get overwhelmed; suppliers rest during Thanksgiving week and then coast in December; operators don’t want to mess with their casino floors in the weeks leading up to New Year’s Eve; and finally, the new year dawns and everybody is ready to get back to work.

While G2E was a mere handful of weeks ago, January marks the first time buyers can truly pull the trigger on placing orders, mostly because new capital becomes available, and the overall plan for the new year kicks into gear. There was talk leading up to the show that buyers were going to stay away in droves as the economic black cloud continued to grow and blanket the industry. As it turns out, all of that talk of doom and gloom and a ghost-town trade show was completely off base. Thanks go out to the American Gaming Association and Reed Exhibitions for all of the extra marketing that helped ensure a good turnout. What was clearly evident to those who walked the floor was a spectacular display of new games and technology, especially from the slot machine companies. It’s remarkable to see how far the slot segment of the gaming industry has progressed in the past 10 years alone.

G2E also marked the culmination of a frantic few months of activity here at the Association of Gaming Equipment Manufacturers (AGEM), the trade organization that represents more than 60 global gaming suppliers. The most notable event at G2E for us was the presentation of the “Global Gaming Supplier Industry Impact Analysis 2008” during a press conference at the Las Vegas Convention Center.

The report — which revealed that the supplier side of the industry has a $33 billion total economic impact on the global economy involving a total more than 78,000 employees — was the result of an independent study commissioned by AGEM and conducted by the respected Las Vegas-based research firm Applied Analysis.

The report, available at www.AGEM.org, is the first comprehensive review of the global gaming supplier industry, highlighting the size and scope of the sector and specifically identifying AGEM members’ global reach.

Highlights of the report included:

• Counting direct, indirect and induced impacts, the global gaming supplier segment generates $33.2 billion of economic output, ranking on par with the direct output of the $34.1 billion commercial casino industry in the United States.
• The industry directly generates $11.9 billion in economic output, employs more than 28,000 workers and pays them $1.9 billion in wages. Each job within the industry contributes 2.8 jobs throughout the economy for a total impact of 78,600 jobs.
• The industry employs a broad range of workers, including high-end technical professionals and engineers responsible for hundreds of millions of dollars in research and development annually.
• The average wage within the industry is $67,100 annually, more than double the national average of $33,300 and even more than the national average median household income of $50,200.
• From a fiscal perspective, the industry has a positive impact, with income tax payments approaching $1 billion, while industry specific levies are also material.
• During 2008, the industry unveiled the AGEM Index that tracks 16 publicly traded companies within the space. Currently, global gaming suppliers maintain a $14.5 billion market value with six of its members holding values in excess of $1 billion.

Among AGEM member companies:

• Approximately 57 percent generated revenues in excess of $100 million annually. Nearly 50 percent manufactured more than 2,500 gaming units annually.
• During the past five years, Nevada casinos represented 26.1 percent of members’ sales. That figure is expected to drop to 12.5 percent during the next five years as other markets expand.
• Domestic revenues, excluding those in Nevada, are expected to increase from 13.0 percent to 29.3 percent of members’ revenues in the next five years.
• Domestic slot machine deliveries are expected to top 150,000 units during the next three years.

Other AGEM highlights amid the frenzy of activity at G2E included:

• The largest party the gaming industry has ever thrown, the “A World Celebration of Gaming” event at the Orleans Arena, with more than 4,000 enjoying festivities that including on-stage entertainment from Kenny Loggins and the Alizma triplets.
• The “go live” of the AGEM Virtual Marketplace at www.AGEM.org, where high-definition videos of new products and technology allow anyone around the world the review and shop for what’s new and different.
• The impact of the new AGEM Index that tracks the 16 AGEM members that are publicly traded and provides a snapshot of the overall marketplace health of the supplier segment of the industry.
• The doubling of the AGEM membership base during the past 10 months, to more than 60 currently.

And so while we can celebrate some notable accomplishments during 2008, with the new year upon us, AGEM — like the rest of the industry — will shake off the end-of-the-year doldrums and do what we can to make 2009 even better.

Marcus Prater
is executive director of  the Association of Gaming Equipment Manufacturers (AGEM). He may be reached by email at AGEM.org@cox.net or by phone at (702) 812-6932. The association’s Web site is www.AGEM.org

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