I participated in a panel discussion regarding “systems” with a few others, one of whom was Andy Ingram, senior vice president of IGT Network Gaming Systems. Now, we all know that IGT is a pretty powerful company, and we all know they make systems and have been kicking around an idea called “Server-based Gaming” for the past several years. Although exactly what SBG is and what benefits it provides, always seemed somewhat vague and uncertain.
Wall Street analysts say SBG is going to be really good for IGT. Of that I have no doubt; I just couldn’t quite understand what benefit SBG offers to the casinos that buy it. IGT’s new ad campaign about “Open Systems” hasn’t helped.
Truth is, whether because of their size, their success or my own lack of comprehension, I tend to be a little skeptical of most things IGT.
Back storyThe root of my skepticism reaches back to 1981. Si Redd, who I did not know at the time, was then an industry legend and founder of a company called Sircoma, a name cleverly built of letters taken from the phrase “Si Redd Coin Machine.” My own, much smaller, company was ACR Consultants; a title not nearly so cleverly constructed of letters taken from my own last name. I remember sitting in ACR’s 260-square-foot world headquarters one day reading the Las Vegas Review-Journal at one of the two folding tables that-combined with the 20-year-old chair in which I sat-comprised the entirety of the world headquarters’ furnishings.
I recall that chair because it was an old but sturdy metal design from the 1950s. Its four-legged design provided a stable sitting platform but, lacking wheels, made moving from one table to the other cumbersome. Because the phone was located on one table, and the computer on another, there was a lot of movement.
My life back then was dedicated to designing and building a progressive jackpot system. On that particular day, life was not so good, and I hoped the newspaper would bring inspiration. I happened across an article saying that Sircoma had “gone public” and was now known as International Game Technology or IGT. I loved the sound of that name, the look of its initials, and the sophistication of the word “Technology.” I did not then understand what “going public” meant, but I got the distinct impression Si Redd, unlike myself, was not struggling to make his mortgage payments.
I decided on the spot that ACR Consultants should change its name-and perhaps its fortunes-too. A few minutes of doodling brought the new result: Electronic Display Technology, abbreviated as EDT. Maybe, someday, EDT could “go public” too.
No one much cared about the new name-no mention of EDT’s inception ever made it into the Review-Journal-but whether because of the name change, or the progressive jackpot design, by 1983, business was getting pretty good. World headquarters grew to more than 2,000 square feet, several employees and more than a dozen of those folding tables. Impressively, each of us had a desk, a phone and a new chair-with wheels!
One morning, the phone rang. An older man’s voice asked to speak to Mr. Acres. “That’s me.” I replied. “Well, hello boy! I’ve heard good things about you. I’d like to come by for a visit.”
An hour later the voice arrived, “Hello boy! I’m Si Redd, show me around.” A whirlwind of conversation followed. He was knowledgeable, commanding and friendly: “Why boy, don’t be formal. Just call me Si, all my friends do!”
Back then, IGT was distinctly second in size and stature to Bally but, of course, still dwarfed EDT by a considerable margin. And we were competitors. IGT built its own progressive jackpot system, though it was considerably more expensive than EDT’s product and less capable. That might sound boastful as you read this now. In my defense, though, we won every order on which we competed.
Si mentioned that point during his visit. “How is it that I’ve got a big office in Reno and dozens of engineers and just a few of you guys can build such a better system?” I had no idea but was glad for it to be true.
A master of flattery, Si said how important it was to make a profit, how much he admired my business model and technical design, that I should be proud of my accomplishment, and I should try to think of ways we could work together in the future. His visit lasted but an hour, and I had no idea of what an impact he-and IGT-would soon have on my life.
Seeing ReddA week after Si’s visit, I got a call from the Riverside casino in Laughlin where we were scheduled to soon install a progressive system. I listened quietly as the slot manager said he wanted to cancel the order because IGT had lowered their price.
“But you didn’t like their system as well as ours!” I protested. “Yes,” came the reply, “but IGT’s price is free. You can’t beat free!”
A second cancellation, this time a Strip casino, came just a few hours later. IGT was giving them a free progressive jackpot system, too. The next day brought a third cancellation for the same reason. A month’s worth of income had suddenly disappeared, and I began to regret the acquisition of all those wheeled chairs and the people sitting in them.
I decided to call my new friend Si.
He answered with that now familiar and still friendly voice, “Hello boy! Have you figured out how we can work together yet?”
When I explained my problem, he sounded surprised. “Boy, I can’t run a business giving stuff away for free. There must be something wrong on this end. Let me check it out and get back to you. By the way, how long do you think you could last without sales? Do ya need to borrow some money? Maybe I can help.”
I felt reassured by his tone and his promise to check into the problem. Obviously, there was some sort of mistake.
The next day, Si called again. “I’ve done some checking, boy. Seems we’ve got some sort of customer appreciation program going on. We’ve got so many unsold progressive jackpot systems in inventory that we’ve decided to give them away to our customers. Oh, and boy, we’ve got a lot of customers to appreciate, so this could take a while. You should come over to the house this afternoon, so we can talk about ways to work this out.”
Si lived in a house that originally belonged to Howard Hughes. It was located just off Desert Inn Road, and adjoined the golf course that is now part of the Wynn Las Vegas resort. I remember having to go through a guarded gate to get to the house-my very first experience with a gated community-and how intimidated I felt.
Si was sitting at his dining room table along with an IGT manager. Papers were organized in several piles on the table. Si reached over to one of the piles and handed me a document. “Here’s what we figure your business is worth, boy. I’d like to be your partner. I’ll own 90 percent, you’ll own 10 percent. It’ll be fun! Whaddya say?”
The number printed on the paper seemed at least one zero shy of fair, and my company wasn’t for sale anyway. EDT wasn’t much compared to IGT, but it was mine. I worked, sweated and sacrificed to build it. Now, someone wanted to steal it away. I felt foolish for having not seen this coming and angered by its arrival.
Sensing my emotion, Si lowered his voice and slowed the pace of his words. “Look, boy, this is how business is done. If I were a mean SOB, I could just run you into the ground and leave you with nothing. You are a bright young man, and I want to be partners with you. I’ll just be the senior partner. You’ll have money to expand with, and you’ll have money to make your house payment, too.”
Si paused, providing ample time in which to absorb his words and their implications. How did he know I was having trouble with house payments? Besides, it was his fault there was going to be any problem at all this month. For a brief eternity, my mind became a battleground as my anger at Si squared off with my fear of failure. I pondered on which expletive to shout as I stormed away. Then I thought about my wife and three kids and what it would mean to them if EDT failed.
Fear quickly overwhelmed pride, and I looked at Si. His confident smile told me he’d done this sort of thing many times before and knew what my answer would be-what it had to be. He’d won and he clearly knew it.
I heard myself insisting on 30 percent instead of 10 and to add that additional zero onto the price. I heard my voice accept a compromise of 20 percent and a tripling of the initial payment. Inside, I was disconnected from the conversation. All I felt was loss and certainty the negotiation was all pretend. Price and percentage were already decided upon before I arrived. This was simply a test to see if I could muster the courage to ask for more.
On that afternoon, I lost my independence and whatever remained of my innocence. And, once lost, neither can ever be fully recovered. Life does not promise unfettered freedom, and business is all about resources, leverage and positioning; none of which I then understood or possessed.
The deal closed a month later, and I became an employee. My underlying resentment only grew until I quit EDT in 1984 to start the company that became Mikohn Gaming. I sold the last 20 percent of EDT for just $35,000 and a release from my non-compete. A year or so later, EDT did indeed “go public,” at which time the shares I sold carried a value of more than $5 million. Oops.
Fast forwardAnd so, with this and 20 additional years of experience, I found myself on that systems panel at CasinoFest. Andy Ingram talked first. He spoke of how IGT believed in open standards, in the GSA protocols and in supporting third-party applications. My ears heard the words, but my brain simply could not process them.
When my turn came, I leaned over to the person sitting next to me and asked him to pinch me. “I don’t think I’m awake,” I said, “but if I am, what company did you say you worked for?” Andy smiled and calmly replied, “IGT.”
Despite a mighty effort to remain calm, my voice betrayed disbelief. “The IGT I know is very proprietary. The IGT I know opposed GSA standards. The IGT I know worked with Acres Gaming to create SAS 4 and used our Concept III protocols to build it. The IGT I know later claimed they alone owned that protocol and that we at Acres Gaming could not use it. Now, you ask me to believe you support an open standard?”
When I think back on the events of my life, I find moments at which people around me conduct themselves in ways that I admire and wish I could emulate. I remember my first casino job back in the 1970s watching Norman Little work out the details of a player promotion. I admired his ability to logically define human emotions and analytically structure a game to deliver player satisfaction.
I remember my wife, Jo, remaining calm and collected even when our kids misbehaved. I admired that she could remove her own ego from the problem and think of what was best for the long term.
And I remember Andy Ingram as he absorbed my antagonism, paused briefly, and said with all honesty, “All that may be true, and it was wrong. It was also before my time. I came to IGT because management made a commitment to an open system. That’s what I am here to deliver.” I threw Andy a couple more volleys of challenge, each laced with disbelief and aggression. Each response was factual, polite and eager.
Angry, righteous and certain though I was, Andy was two measures more sincere, more logical and more thoughtful. By the end of the hour, I was ready to lead the “Andy for President” election committee, though whether IGT can actually deliver on his promise remains to be seen.
The open systems concept offers huge potential benefits to players, casinos and independent applications providers. I’ve long believed it impossible for any one vendor to offer every application a casino needs to prosper. I also believe small companies are best at creating new products, and large companies are best at manufacturing, deploying and supporting those products. That’s why Rich Fiore and I created Acres-Fiore, to build great games and, once proven, pass them back to companies such as Bally, Konami or IGT for deployment to casinos.
We absorb all the costs associated with game development but receive a slice of the profit from sales of successful games. Unsuccessful games bring us no income at all. Such an arrangement puts our goals into direct alignment with the casinos and the game manufacturers. We all make money by pleasing the customer. Acres-Fiore dies if we don’t hold up our end, which is risky but fair.
The SBG concept offers real benefits to all by merging the functions of loyalty rewards (player tracking), game configuration and game measurement onto a single system. It also makes the system provider a default gate-keeper of which applications and games are allowed on the network and which are not.
The network becomes a freeway over which new ideas are rapidly tested and resulting products quickly deployed. Loyalty and gaming functions merge, leading to yet-undreamt-of new products for attracting and retaining player interest. Once the freeway is built, anyone with a compatible vehicle can theoretically deliver products over it. The idea of two-guys-in-a-garage developing a killer game or bonusing application at last becomes realistic because those two guys aren’t burdened with the task of building a network or convincing casinos to buy and install it.
New application ideas become cheaper to test, cheaper to develop and cheaper to deliver. Therefore, those new applications should also cost less to purchase, too. What’s not to like?
There are, of course, potential obstacles. First, can one network truly be designed to support the applications our players want now and will demand in the future? Can it be made compatible with games from all vendors? Can it be made at a price that is affordable in comparison to the benefits delivered?
I believe the answer to all of the above is absolutely, undoubtedly, yes. I believe IGT is completely capable of creating such a system, as are Bally, Konami, Aristocrat and perhaps others.
Asking the important questionsMy concerns are of access and pricing. Will this new system be open to all, just a few, or only the system creator? Will there be an effort to standardize the way in which applications can be placed on the system? In other words, will two guys even have a chance?
What about the toll? Certainly a potent open systems network costs real money to develop, test and install. Certainly whoever does this work deserves to be paid. Is this a one-time payment with something extra thrown in for maintenance and improvement, or will it be a toll assessed on each trip over the network?
Will two guys be able to walk into your casino and try out their application, or will they have to first go to the system supplier and beg permission? Will that permission be refused if two guys are competing with an application offered by the network provider? Will two guys be charged unreasonable or exorbitant fees that essentially deny them access to the system and your access to their invention?
I don’t have these answers, but I know how you can get them. Ask.
Ask Andy, ask IGT and ask whatever other system provider you are considering. The concept of open systems, in its truest form, is revolutionary to our industry. It is in your interest to ensure that “open systems” means “open to all” and “affordable to all.” You can do this by making your desires known and insisting your wishes are met.
Just remember, as I learned back in 1983, business is all about resources, leverage and positioning. The time to ask is before you purchase, when the advantages of leverage and position are yours. Andy Ingram is offering you the promise of a very powerful idea, and I tend to believe he is sincere. Just make sure he delivers.
If you accept this responsibility, if you exercise this power, you will bring us all into a new era of possibility.
You will bring us to the time when we can at last cease to speak of technology and the technological concept of “server-based gaming” and move into the realm of what we should really think about: player-based gaming.