Knute Knudson is vice president of global business development for International Game Technology (IGT). Long known in Indian country for his work at Sodak and subsequently at IGT on Native American business development, Knudson’s role now extends to bringing IGT’s operations into alignment globally. Charles Anderer, executive editor, recently spoke with Knudson at the National Indian Gaming Association’s annual convention about his global role and some of the new directions that IGT, along with the entire gaming industry, is headed.
A lot of people know you for your focus on tribal gaming. Now you’re looking at the gaming world from a global perspective. How has that transition been for you?
Knudson: It has been very interesting. What we’ve done recently, for example, is form an ad hoc group within IGT to develop and execute strategies in specific markets. For instance, with developing VLT opportunities in Europe, we identified new markets in Italy and Greece. There also are developing markets in Hungary and elsewhere. Our strategy needed to be firmed up and executed in specific markets, which we are doing. We recently announced a partnership with Lottomatica to provide them game content and terminals for the VLT market in Italy. We’re working very closely with IGT Europe to offer strategic services and our knowledge of machine and systems products. We utilized the patience we learned in Indian country to make some of these deals work.
A company must have strategies for products, pricing, market entry… it’s the same basic discipline in all markets. The complexities internationally are very similar to the U.S., be it commercial or Indian. This is true because there are various kinds of product entry strategies, some of which are system-based; for instance, Italy uses a centrally-determined system (CDS) for VLTs. In Greece, it is unknown whether it will be a CDS or if there will be a random number generator on the floor or in a server.
When people look at Europe these days, they also see a market that is more advanced on the Internet gaming side and cloud computing than the U.S. The lessons go both ways, don’t they?
Knudson: In the use and acceptance of the internet and cloud systems, Europe is a little more advanced than in domestic commercial and Indian markets. We launched a cloud strategy for multiple gaming markets on the Continent. We have successfully implemented cloud strategies on beta sites and we have several sites running in Europe.
The principle is to develop the full range of system service products including analytics, downloadable games, and bonusing to name a few, through server-based cloud systems. This is done through the cloud rather than through physical server-based systems in casinos. Moving these services to the cloud means they can be more cost efficient. European casinos are interested in these services in the cloud. They are very interested in reducing costs and increasing casino earnings. Our domestic casino customers are asking many questions on cloud products and services. I’m sure the attitude toward cloud based services and systems are the same domestically.
What about the market for cloud solutions in the U.S.?
Knudson: There are approximately 180 casinos with 500 or fewer machines in Indian Country. Because of the size of those operations, they have limited resources available to invest in hardware (machines and servers). They also have limitations on resources for human capital on the information technology side of the skills ledger. These skills are not necessary to take full advantage of cloud services. With cloud, you’ve reduced costs and have been able to offer smaller casinos the full range of services including analytics and downloadable games that make them affordable. Think of the commercial side, too. All the operations in Nevada and other commercial markets can take advantage of these scaled offerings.
What are IGT’s expectations for Internet gaming in the U.S.?
Knudson: Our responsibility to our customers, our shareholders and our employees is to be ready for Internet gaming in the U.S. when it happens. We are in a number of internet gaming verticals in Europe where we are mainly a business-to-business provider of services. We made major investments in Double Down and Entraction. Our social gaming investment in Double Down is generating revenues and will continue to make money. Some have aligned themselves with platform providers.
As legislation is flowing through various state capitals and Washington D.C., we need to ensure that the regulatory framework allows IGT to offer our business-to-business services in a well regulated internet gaming environment. That does not mean we are advocating a specific solution. But in the multiple bills that are being considered, we have a responsibility to ensure that there are no barriers to entry for IGT.