The potential of these new opportunities is not lost on gaming manufacturers, who are lining up to carve out their shares of this growing market sector.
“There’s currently a lot of potential in the marketplace,” said Mick Roemer, senior vice president of sales, Multimedia Games. “All the manufacturers are interested in how that’s going to unfold because obviously it’s an expansion of units.”
Companies promise to be jockeying for their share of new markets. “This opportunity is so meaningful and so large that we certainly had to sort of prepare for it as a company. We are now preparing our top-of-the-line games for VLTs,” said Gene Chayevsky, chairman and CEO of Cadillac Jack.
“It’s quite interesting what’s happening right now in the market. Over the past couple of years, more and more jurisdictions in the United States have taken a much more serious look at expanding gaming,” he said. “A lot of states have determined that it might make sense to expand gaming through their lotteries.”
In the United States, South Dakota was the first state lottery to expand into VLT gaming in 1989, with Oregon following in 1992. Others include Montana, Louisiana, West Virginia, New York, Delaware and Rhode Island.
Experts have noted that most new machines that will be added domestically over the next three to five years will come through VLT expansion. “It’s reasonable to expect that the VLT segment will show the fastest growth in the traditional U.S. market,” Chayevsky said. Among the jurisdictions exploring expansion are Illinois, North Carolina, Texas and Ohio.
When VLT markets started to emerge in the late 1980s, early 1990s, a small number of vendors competed, Chayevsky said. But today’s jurisdictions will be seeking out a variety of products from a wider variety of vendors, as lotteries face increased political pressure to make sure revenue is maximized. The result: “The quality of the games will be very high. It will be very competitive, and Cadillac Jack and the others will have to fight for their share of the market. Nothing will be handed to anyone,” he said.
In the United States, VLT operations in many ways have changed, noted John Connolly, Bally Technologies vice president of business development. “What’s fascinating is that when [VLT operations] began to evolve some 20 odd years ago [with the South Dakota Lottery], it looked very much like a lottery. Over time, it has evolved,” he said. Now, in many jurisdictions, “it’s becoming much closer to casino features and functionality than lottery,” he said.
Casinos are much more prevalent than they were when the first video lottery operations took shape, he said. With the increased competition from casinos, the lottery industry has been evolving “closer and closer toward the casino world,” he said, citing as an example the VLT operations in Washington State. “They’re realizing that the casino sector has become much more a competitive force.”
“The line between “casino-centric” and “lottery centric” virtually has been eliminated,” agrees Tim Shortall, IGT vice president of Eastern Region Sales.
“For the most part, the VLT product you see in racinos and lotteries is exactly the same product you see in traditional (non-VLT) casinos. New York is different because it’s a central determination system, versus a central monitoring environment. However, our engineers and game design team have found ways to create and develop games for this market that look and feel just like traditional casino games.”
IGT has found significant success with products that offer the same type of experience in VLT markets as they have in non-VLT markets, Shortall noted. “We also have found that electronic table games continue to be popular in those jurisdictions where live games do not exist. We’re seeing great success with our Roulette Evolution at locations like Yonkers in New York,” he said. Among other popular IGT games are Golden Goddess and Black Widow, as well as Wheel of Fortune and Sex and the City.
ITALIAN FLAIRInternationally, Italy’s burgeoning VLT market is all the buzz. It became operational in 2010 and is expected to grow to some 56,000 machines.
“Italy has one of the most successful lotteries in the world, and, as it converges, it’s converging more toward the casino model in rules and regulations than it’s converging toward the lottery side,” Connolly said. “Companies with systems technology are going to have an advantage over companies without such systems.”
Bally already has made significant inroads in Italy’s VLT market, with several thousands of gaming machines, as well as systems technology, Connolly said.
New Brunswick-based SPIELO has an even greater presence in Italy, said Victor Duarte, president and CEO of SPIELO. SPIELO is a wholly owned subsidiary of GTECH, which is owned by the Italian company Lottomatica, the world’s largest lottery operator.
SPIELO has been a leader in the VLT market since its inception over 20 years ago, and is positioned for continued success, noted Duarte. “In fact, our company has served many VLT jurisdictions since their programs were founded and we continue to work closely with them,” he said. During the past several years, SPIELO has focused on updating its end-to-end solutions, Duarte said. “We have introduced INTELLIGENT, the most advanced VLT system in the market, the Vu series of gaming machines, and a compelling line-up of top performing VLT games.”
The results have been outstanding, Duarte noted. “In Italy, we were the first supplier to launch our solution in the market. Currently, we have more than 40 percent share of the machines operating in Italy, and our top performing game line-up includes the market’s most compelling progressive jackpot solution. We have seen similar success with the introduction of our prodiGi Vu in VLT markets such as Oregon and Rhode Island, where the games perform far above network average.”
Some of the most significant advancements SPIELO has seen have come in the area of networked gaming, which SPIELO has been involved in for more than a decade, Duarte said. “Recently, we have seen networked gaming evolve to even more server-centric functionality. For example, our Italy solution is completely server dependent with game outcomes centrally determined. There are also a number of enhancements that enable greater control over gaming machines, including the ability to proactively manage the availability, integrity and stability of gaming machines. These enhancements improve an operator’s ability to maximize the performance and uptime of their gaming assets.”
Multimedia brings a lot to the table with its central determinate system that operates the New York Lottery, he noted, but the Austin, Texas-based company is prepared to handle other VLT requirements and specifications.
As with all VLT jurisdictions, “It really comes down to looking at each jurisdiction and seeing what the enabling legislation is, and it’s not cut and dried,” Roemer said.
He noted jurisdictions are looking at ways to produce revenue. “They will go do that in whatever manner is the path of least resistance. It really is more of a political issue and an economic issue than anything.”
For the player, the VLT experience isn’t much different from the traditional casino experience. “I don’t think that a video lottery player really knows much difference between a video lottery game and a Class III game,” Roemer said.
Among Multimedia’s video lottery games that have performed well are Earnestine, Haunted House and Carnival in Rio. “Those games are all doing really good and we have been really happy with our content,” he said. “We’re not trying to be rock stars. We’re just trying to make really good games and make sure we are going to continue to create great content and provide a wider variety of product so we can command a larger portion of the floor.”
Another popular product is Multimedia’s TournEvent, which is in 28 sites today and is also being programmed for video lottery markets. “It fills a niche that really hadn’t been filled before,” he said. “It speaks to the community aspect of gaming and players are very receptive.”
New York’s VLT operations represent a shining example of VLT success, according to IGT’s Shortall.
“I believe if you were to research VLT jurisdictions, like New York, it would become apparent they are among one of the best performing markets. I attribute a lot of this to the tracks themselves and what they’ve done to operate in these environments,” he said. “I also believe enough cannot be said about the product at the VLT locations around the region. Looking at those properties, it quickly becomes obvious that they have some of the most up-to-date gaming floors in the country and feature the latest games and platforms. Downstate New York continues to show great promise, which is represented by the numbers and success we continue to see at Yonkers. And with Aqueduct opening soon, there’s a great deal of anticipation to see the impact it will have on the region.”
Shortall noted that IGT has increased its VLT market share through game performance and analysis, partnerships with operators and the respective lotteries and through the ability to work closely with these partners to deliver the best IGT products to their floors. “As an example, we have grown our floor share in New York from 23.65 percent of the floor, which we were allocated at the opening of each of the tracks, to 36 percent across the state,” he said. “Based on our performance and as a result of our success, we will receive 36 percent of the floor when Aqueduct opens later this year. This represents a ship share of 70 percent since the introduction of the VLT program in New York.”