Slot manufacturers are stepping up their efforts to create deals to help cash-strapped casino operators get new games on their floors.
With the economy in a tailspin, casino operators have seen their business levels drop and a corresponding tighter approach to capital expenditures and overall cost management. At the same time, slot executives realize they need the latest and greatest slot games on their floors to draw play and deliver the best revenue results possible.
To help make more of those purchases possible, slot makers are adding more flexible financing models than they typically have had in the past and, in some cases, are offering special deals on particular products.
“Certainly it’s a competitive environment out there,” said Ed Rogich, vice president of marketing for Reno-headquartered International Game Technology.
“I don’t think there’s any manufacturer who’s not [offering flexible terms and special deals],” Rogich said. “It’s just a sign of the times. Money’s tight.”
Customers are certainly trying to adjust to the financial circumstances and the economic realities, he said.
“Therefore they are much more open to alternatives to their traditional cash purchases,” he said. IGT had some packages and special offers tied to the show, as well as special financing alternatives. “You adjust your sales offers to the sales environment,” Rogich said.
Rogich and Ryan Griffin, manager of IGT Standard Product, both said IGT’s strong lineup at G2E paid off with strong results.
“Everyone has good stuff, but only the best of the best is going to get out there,” Griffin said, paraphrasing comments spoken to him by a slot executive during G2E.
“We are being very creative because of the state of the market right now,” Griffin said. At G2E , he said, “People would come to us, and say, ”We love the machines, but we have no money; we’re in a budget freeze.’ We’re being very creative in helping our customers out because we all know things will get better.”
Glen Sawhill, vice president of gaming operations for the Canadian casino-resort Caesars Windsor, in Windsor, Ontario, also has seen manufacturers reach out to operators.
“I think you’re seeing that out of most vendors right now,” he said. “They are understanding that there’s some tough times out there. They’re experiencing them as well. Rather than get no business, they’re taking a look to see how they can be a little more proactive during these turbulent times.” “These are bridges that many companies have never crossed before,” Sawhill added.
Rob Bone, vice president of marketing for Waukegan, Ill.-based WMS, noted that in these times when capital is scarce, customers are becoming even more diligent in determining where to invest and what products will provide them with the highest premium in product performance and player appeal.
“I think a majority of our customers are still focused on keeping their product offering as fresh and compelling as possible,” Bone said. “This is where a good amount of opportunity exists for WMS given that our product performance in multiple categories is among some of the best in the industry.”
Many casino operators who typically have had consistent
capital allotments are not in the same position this year, and they are seeking creative and prudent ways to get the most innovative and profitable products on their floor, Bone said.
WMS is “constantly working” with its customers to find collaborative and flexible ways to assist them with their purchase terms. “Non-traditional sales arrangements are being evaluated more and more on a case-by-case basis,” he said. “As with each deal that we evaluate, we need to ensure that the benefits and risks are fully vetted and that a “win-win” arrangement can be achieved.
Dan Savage, vice president of marketing for Las Vegas-based Bally Technologies, said customers are more tenacious and exercising even more due diligence in making their slot purchasing decisions.
“We think budgets are going to be few and far between and we think that when they get them, they’re going to have a very short window to spend them. We want to make sure we’re on their short list,” Savage said.
Recognizing the situation, Bally started talking to customers two months before the Global Gaming Expo in November. “We met with 50 casinos on this,” Savage said, noting Bally rolled out a G2E special placement deal and instituted more flexibility in its financing models.
“The first thing we did in September is we said, ‘Casinos are always passionate about participation games, so we’re going to offer participation games for sale that we’ve never offered for sale before.’”
“We took seven titles, some with wheels, and offered them for purchase at a reduced price,” said Savage, who noted the deal was set to end Jan. 15 at which time Bally will consider whether to extend it. The games included three Treasure Series titles – Arabian Treasures, Mayan Treasures, and Caribbean Treasures; and four Instant Spin games - Ultimate Diamonds & Sevens, Ultimate Party Spin, Ultimate Dragon Spin, and Black & White Sevens. “We also spent marketing dollars to promote these to players,” he said. Bally took another step by reducing the per-day participation fee to $50 per day, down from $60 to $65 per day on its Reel Money games in the SE9 cabinet.
In addition, Savage said, Bally has designed products for its new multigame. “We’ll give you three popular titles on one game. We’re putting more titles in the same hardware platform so they’re getting more bang for the buck.”
Bally also is being more flexible on financing opportunities, including offering special terms or value-added deals if an operator buys a certain number of games. In addition, the company will also partner with casinos on marketing efforts. “We’ll partner with you from a marketing point of view to help get customers in the casino and help get more play,” Savage said.
Bally polled sales people about the response from customers at G2E, and the results showed a deeper engagement from customers than last year, Savage said.
There were fewer tire kickers and more true buyers, he said. “They kind of came with an agenda, and they knew what to look for,” Savage said.
“When the game gets harder, and the competition gets tough, we think our value increases,” Savage said.
He noted that slot executives realize if they don’t invest in their slot floor, players will migrate to the casinos that have refreshed their floors with new games.
Savage noted that casino slot executives are looking for more insurance and more flexibility. “’If this doesn’t work, what can you do for me?’ They’re asking questions that they haven’t asked before. I think that’s good for everybody.”
Asked about whether there’s a danger that operators will take advantage of the situation and play one manufacturer off another, Savage was nonplused. “Some people will play that game with you. We have a pretty good assessment of where the bottom is.”
One of the reasons that Bally has included wheel titles in the special offerings for sale is the recent move by some casinos to remove Wheel of Fortune participation games. “They’re interested in refreshing their floors with more wheels. We saw great opportunity there.”
For at least one casino operator, the deals couldn’t have come at a more opportune time for the Florida casinos he is changing from Class II to Class III slot floors. “With us, we had to get new product. It’s just a unique situation because of the number of games we have to handle,” said Paul Tjoumakaris, senior vice president of gaming operations for Seminole Gaming.
Because he has capital to work with, Tjoumakaris is able to take advantage of the best deals out there.
“I think everybody now is a little more flexible. We get better lease terms; we get more opportunity to try the product. We find ourselves in the right time in the economy.”