Editorial: Budget purse strings starting to loosen?
A sense of optimism prevailed following last November’s Global Gaming Expo. Casino operators and slot executives liked what they saw – a crop of new games that looked entertaining and promising. Add to that a universal willingness among manufacturers to offer favorable terms and new purchase or lease options, and things were looking up, especially since casino operators were faced with tired slot floors badly in need of refreshing.
A backdrop of pent-up demand caused by a capital spending slowdown spurred by two years of declining revenues, had manufacturers and Wall Street predicting a spike in sales in early 2010.
But the uptick in sale was not to be – at least not right off the bat.
“Everybody left the show positive they were going to spend more. But the attitudes changed and the sales figures never came through,” Bally Technologies Chief Operating Officer Gavin Isaacs told the Las Vegas Review-Journal in a recent article.
While manufacturers didn’t get that first-half 2010 bump in sales, they now may have reason for hope that the second half will at least be a bit better. Sales may be looking up, albeit modestly, as casino operators, seeing gaming revenues moving upward, may now be considering new purchases to spiff up older slot floors, and new opportunities are materializing in new or expanding video lottery markets, and elsewhere.
While she didn’t foresee any significant boost in sales in 2010, IGT spokeswoman Susan Macke told Reuters recently that the company does believe there is some pent-up demand and “there will be a bit of an uptick in sales before the end of the year.”
Still, she noted that consumers remain cautious about how they spend on their entertainment budget until they see sustained stability in the economy. “And until that time, operators won’t be able to invest in capex for slot machines.
The replacement rate for slot machines in the United States has dropped to 5 percent in 2009 from 10-12 percent in 2000, Macke said, adding that she does not see a recovery to the 10 percent level soon.
Asia may hold keyPotential slot demand in Macau and Singapore is fueling optimism among some slot manufacturer representatives.
Reuters reported that representatives from both IGT and Bally believe the region looks extremely positive. Bally’s Cath Burns told Reuters, “I don’t think there are enough slot machines for the demand.”
If past performance is an indicator, Macau looks to make a strong showing on slot growth. Macke noted that from 2005 to 2010, the growth in the number of slot machines in Macau was 420 percent.”
Only half of the 2,500 slot machines allowed in each of two casinos permitted in Singapore have been installed. That bodes well for future Singapore slot purchases.