Gaming manufacturers and operators know the drill well by now. Each new market, each new opportunity, brings new challenges in negotiating differences in regulatory climates in different jurisdictions. So it goes with video lottery terminals.

The VLT market is no monolith. Manufacturers and operators face differences between racinos, which often operate as many games as a large casino, and tavern markets with only a few machines in each.

Open protocols for central reporting systems or proprietary protocols? Gaming devices with random number generators or central determination? Can a game easily be transferred from those designed for casinos or are there special requirements that require extra engineering?

“We divide up the actual VLT markets,” explains Jim Coleman, product marketing manager at International Game Technology. “You have X number of machines that are allowed to be in bars and taverns in certain states like West Virginia, Oregon, Montana, South Dakota, and soon to be Illinois. And then you have VLT markets that are racetracks, or as the industry calls them, racinos, which are your Rhode Island Lottery, Delaware, West Virginia as well, New York, Kansas is getting their program up and running, and then obviously you have the bar and tavern market in all the Canadian provinces.”

But all VLT jurisdictions require central reporting of some kind, which has manufacturers who have been working on open protocols in casino markets calling for the same in VLT jurisdictions.

“We believe the greatest challenge facing VLT manufacturers today is the historical reliance on the proprietary technologies that we are now working hard to replace,” says Boris Amegadie, director of product management at WMS Gaming. “WMS is committed to developing open communication protocols and fostering the evolution of VLT network infrastructure in order to improve system and game performance. On the system level, GSA standards such as G2S remain an open item for discussion among VLT manufacturers, and we are working to support the development of G2S and ensure that our own development process takes into account the demands of G2S. In addition, WMS is also working to support the operators as they deploy next-generation, wide-area network infrastructure to replace their legacy networks, which cannot adequately support the newest games and systems coming to market.”

For one thing, open protocols get new games into racinos faster.

“With a proprietary protocol they would see product that was six to eight months later than in a Las Vegas casino,” Coleman explains. “Now they’re at the same time.”

SAS protocol, the market standard currently, has “opened up the door for jurisdictions like Delaware, Rhode Island and New Mexico to have basically the same type of product that you see in a Las Vegas casino or Atlantic City or Mississippi,” he says. “So that allowed us to introduce our new technology of MLD, which is a multi-layered display, as well as unique Megajackpot themes such as Wheel of Fortune, Indiana Jones - our complete complement of Megajackpots - for those jurisdictions.”

From the beginning, Spielo has been an important part of the VLT picture, both in systems and in games.

“Spielo has adapted very well to the unique challenges in this market,” says Robin Drummond, the company’s vice president of sales. “For instance, the physical and technological limitations of a government-sponsored, distributed VLT program can offer manufacturers practical challenges when it comes to central system communication and upcoming technologies like server-based gaming. Often, VLT retailer sites sit in remote areas in hundreds of different locations across a state with limited networking capabilities. Our INTELLIGEN Central System and Value-Added Modules perform functions like monitoring, metering, diagnostics, performance analysis and downloading over a multitude of network types, including dial-up, ADSL, GRPS, radio and satellite.”

The server-based frontier is also very much on the minds of European operators, where Novomatic is looking to fill the bill with its new Indigo VLT system. According to Andrea Lehner, Novomatic’s marketing and communications director, Indigo is “a fully integrated solution offering online lottery systems and facilities management, with central monitoring and control systems” designed around industry standard open protocols. It’s a complete package, the company says, with gaming content, including slot and video poker games, online monitoring of the complete installation in real time, optimized floor management via floor maps, comprehensive jackpot module, highly secure Public Key Infrastructure, user friendly configuration and maintenance.



Bally finds its Class III games, like Fireball, translate well into the VLT space.

THE ‘NEW YORK' FACTOR

In addition to the issues of protocols and technologies, the games and game themes seen in racinos similarly mirror trends in the larger casino world, with multi-level jackpots, low-denomination games with bonuses, even community-style gaming, all growing in popularity. And manufacturers are stressing many of the same kinds of solutions.

“As a company, our focus on ‘Player Driven Innovation’ and our willingness to listen to the ‘voice of the player’ is evident in the significant research we do in conjunction with slot players,” says WMS’ Amegadie. “As we look to take advantage of growing opportunities in the VLT marketplace, we plan on merging our exciting game content with our popular Bluebird 2 cabinet to create a platform that can generate significant player excitement and interest.”

And at IGT, as Coleman explains it, “In the racinos, with the move toward common protocol, we’re able to do our Megajackpot games and community games like Wheel of Fortune, Indiana Jones, eBay, Sex and the City, our multi-play games, etc.”

The sector is of significant interest to Bally Technologies as well.

“We are continually developing and introducing new hardware and games for our VLT markets,” says Craig Bullis, the company’s vice president for public gaming/VLT operations. “In the first half of 2010 we have planned releases of dozens of new game titles, including our new Digital Tower cabinet and games - Fireball is currently our hottest game in traditional Class III markets - and our V32 cabinet, featuring a 32-inch vertical touch screen.”

That doesn’t mean manufacturers are free to do exactly the same things in all jurisdictions.

In New York you won’t see new product as quickly, even in a giant racetrack casino such as the 5,300-machine Empire City Casino at Yonkers Raceway. That’s because New York is unique in requiring central determination of results. The system, which is provided by Multimedia Games, essentially hands out virtual lottery scratch-off cards, with that result then translated into the reel combination or poker hand the player sees on the screen.

“Our server handles accounting and prize distribution for all manufacturers’ games,” says Multimedia’s director of business intelligence, Richard Hale. “As the company selected to provide the server we are not allowed to also provide games. The system provides local cash management, unified currency and performance monitoring to the facility operators while providing central auditing and financial reconciliation for the [New York] Lottery.”

The state’s central determination requirement, together with a ban on skill games, brings differences in game programming, although a move to RNG games is being debated and could happen in 2010.

Michael Palmieri, director of slot operations at Empire City, notes the challenges of operating within the current restrictions.

“When I first started a couple of years ago, we had discussed with IGT to bring in Wheel of Fortune because we felt it was a necessary game to legitimize our place and to offer games that people obviously see elsewhere. We had to speak to IGT and convince them to develop a game specifically for New York, and then obviously work out all the necessary fee agreements with them. Then we also had to receive lottery approval to do that. When we see products at G2E or wherever that we think make work here, I’ll speak to the vendor and discuss first the possibility of developing the game specifically to fit the New York central determinant system, and then in their eyes would that be worthwhile to do. That is a big restriction in our market that you won’t find elsewhere. In a random number generator market, we say, OK, we want Lucky Larry’s Lobstermania, and it’s already there, it’s already been in Las Vegas, Atlantic City, you name it; but for any game in New York the vendors have to specifically design that game to fit within the central determinant system.”

New York chose four vendors to supply games: Bally, IGT, Sierra Design Group and Spielo. Game allocations are changed in accordance with performance. Bally, IGT and SDG have all increased market share, and with Bally having acquired SDG it now controls 55 percent of the New York market.

“We are firm believers that content is key, with variety and breadth for the major player segments as must-haves,” says Bullis. “While a significant amount of our development falls under the penny game category, we continue to put out dollar, quarter and nickel games with wagering sweet spots that are variable to fit a particular area, facility or niche. Additionally, in markets like the New York Lottery and tribal lottery, a good portion of our VLT games are ports and variants of existing Class III games, either from Bally, like Hot Shot, or from our partners whom we license content from - Aristocrat, Konami, Ainsworth and Atronic.”



IGT enjoys great success in Oregon, where a restrictive regulatory climate has allowed multi-games to predominate.

BARS, TAVERNS

In the VLT market, size does matter, and there are differences between game offerings at large racinos and those in tavern markets such as Oregon, or what is expected in Illinois, where bars and restaurants will be restricted to five units per facility when the Illinois Gaming Board gives approval to start.

In such markets, multi-game units, with the ability to offer suites of slot and poker games, are king.

Noting that hot trends within the casino industry such as community gaming don’t translate to tavern markets, Coleman says, “Because of the restrictiveness of the wagering and the payoffs they’re not conducive to that type of product. So what you see in the bar and tavern VLT markets are multi-games, which are hugely successful, and I’d have to say that just about all of the bar and tavern markets are multi-game. IGT’s product is what we call our Game King, which is our most successful-selling product every year, year in year out, where you have a family of slot-spinning reel games, you have a suite of poker games, and in jurisdictions that allow keno you have a suite of keno games. That market, they’re all about multi-games.”

In addition to restrictions on numbers of units, there often are restrictions on wager size and payouts as well. In Oregon, where all procurement of games is done by the Oregon Lottery, maximum bets are limited to $2.50 and payouts to $600. And while those restrictions don’t require the same degree of re-engineering as the New York system, they do require some adjustments.

“Although the max payout is lower, when you redo the math you can make it up in other areas,” Coleman explains. “That’s one of the things we do, find ways technologically and mathematically to make up for that by offering secondary pay that is also $500 when it would normally be, say, $50. So you can play with the math to make it appealing to players.”



Multimedia’s Meltdown line is paying off big for the company in Washington state.

There is also the fact the players in tavern markets aren’t necessarily the same as players in casinos, and that brings its own challenges.

“To produce great games you have to understand the special needs and desires of your players,” says Spielo’s Drummond.

Clint Owen, director of game production and design at Multimedia, suggests that the differences aren’t that large.

“In Washington, the VLTs can only be video games, so you see video three-reel games that are themed and designed to appeal to the three-reel gambler type of player. Our most successful theme in Washington is Meltdown. It was one of the first games we developed for the Washington VLT market as a three-reel, one-line bonus game. It has a simple, compelling re-spin bonus feature that is accompanied by a signature sound. We’ve since released three-reel, five-line, five-reel, 30-line and progressive games using the Meltdown name, all of which include the re-spin bonus. All of those extensions to the Meltdown line have done well.”

Canada has its own collection of bar and tavern markets, with the Ingenio division of Loto-Quebec operating as a provincial lottery corporation that has placed 11,000 games throughout Quebec.

It’s not an easy time for Loto-Quebec, which in January reached a tentative multimillion-dollar settlement in a class-action suit brought by problem gamblers. Still, the company is forging ahead with plans for upgraded gaming equipment.

“We have machines that are from the second generation, what we call the G2 video pokers,” says spokeswoman Marie-Claude Rivet, “but they’re getting older, and we have announced that we will appeal for a proposal to renew the whole part of VLTs for 2013.”

Which makes sense because Canadians are very specific in their game tastes, says Coleman.

“If we don’t have a game that fits that style, we create it for our AVP platform. They typically have a little bonus meter that is like a mini-progressive in a format that are 3x3, independent spinning-reel games. They refer to them as ‘lineup games’. Poker machines that have second-screen bonuses were very popular because they are limited in their payout percentage. With pokers you can read the pay tables, so when the payback is lower, to get a better entertainment value, you need bonuses.”

Those little market quirks and preferences are important to manufacturers and operators alike because, after all, the VLT market is no monolith. It’s several markets under one broad term.