Making the News

Business Week

Originally Published:Thursday, December 10, 2009

The Slot Machine Meets the Video Game
Casinos hope to reach younger gamblers by rejuvenating one-armed bandits with tech tricks borrowed from video and movies

By Christopher Palmeri
Business Week

In the new The Lord of the Rings game from WMS Industries (WMS), players follow a map through Middle-Earth scoring points and bonus rounds. Lightning bolts flash and strike the earth on screen while speakers under the seat produce a thunderous rumble. Typing in a user name and password, players can store their scores. There's one difference from an arcade game, though: This machine can pay out tens of thousands of dollars to casino patrons.

The traditional one-armed bandit is being replaced these days with more sophisticated slot machines that incorporate 70-inch video monitors, 3D graphics, and group competition- all borrowed from the video-game and movie businesses. While the payouts are still based on chance, your game skills help you move to new levels. It's a textbook example of a mature industry making a gutsy bid to reach beyond its core customer-women 55 years old and up-to a younger demographic. By awarding fictional medals and incorporating video and sound effects, slot makers hope to bring more gamblers back to the casinos, which have seen a 6% decline in revenue this year.

Waukegan (Ill.)-based WMS, a former pinball machine maker, is one of the pioneers. In 2000, Chairman Brian R. Gamache began hiring video-game industry veterans-including Larry J. Pacey, a former Sega executive WMS named chief innovation officer-to pump fresh energy into the business. WMS reorganized its game designers into 10 studios, each with a separate studio head, a stable of mathematicians, and some graphic artists, and started searching for smart gimmicks from outside the gambling industry. "We asked ourselves, what would a casino look like if it adopted the technology everyone else had: interactivity, networked devices, IMAX (IMAX)-like screens, digital sound?" Pacey recalls.


Video-game glitz was in the spotlight at the Global Gaming Expo, the slot machine trade show held in Las Vegas in late November. At the large, elevated booth of industry leader International Game Technology (IGT), visitors inspected a game based on the Sex and the City TV show. Players spin a video version of a roulette wheel, egged on by the voice of star Chris "Mr. Big" Noth. Rival Bally Technologies (BYI) unveiled its new DualVision games for couples, who sit on a love seat and share the same pool of funds but are able to play their own games on separate screens.

Next up is a long-anticipated transition to server-based slots. On Dec. 16, MGM (MGM) Mirage will unveil the first fully networked slot machine floor at its new Aria Resort & Casino in Las Vegas. The idea is that casino floor managers can adjust the minimum bets, percentages paid out to players, and even the game on the machine, remotely. Previously this was done by technicians with screwdrivers, or through expensive upgrades to the machine.

With this technology, casino managers can hike minimum bets on busy nights, much as they do for table games such as blackjack today, to increase revenues. "It's a classic technology evolution that brings more efficiency," says Eric P. Tom, IGT's executive vice-president of sales and marketing.

Such advances always bring risks. Servers are hackable, for one. And casinos will have to assure customers they aren't using the technology to rig the bets. The Nevada State Gaming Control Board says there are "security requirements at every level" and monitoring of all game-altering transactions. But consultant Harvey Perkins with Spectrum Gaming Group says "customers look for excuses to explain why they lost. This may give them another: The casino changed the game."

Palmeri is a senior correspondent in BusinessWeek's Los Angeles bureau. Follow him on Twitter@chrispalmeri .


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