Editor's Choice

Editor's Choice
Video Vegas

Allen Varney | 24 Apr 2007 08:02
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Companies in the gambling industry - confusingly, they call it "the gaming industry" - tend to suffer at least mild disrepute, for reasons that hardly need rehearsing. But on their websites, slot-machine companies present upbeat corporate histories that read like Candide: Innocent entrepreneurs, just trying to make ends meet, repeatedly encounter tumult and calamities. Yet despite setbacks, these companies, being hardy and resourceful - they might say "scrappy" - pick up and move on, like gypsies.

Take Bally Technologies and WMS Gaming (formerly Williams). Though Bally has built slot machines since its start in the 1930s, both companies found their early fortune making pinball machines. In the late '70s, coin-op video arcades devoured the pinball market, and these scrappy multi-million-dollar corporations (along with a new startup, Konami) adapted to the new business. (Bally/Midway: Space Invaders, Tron; Williams: Joust, Robotron; Konami: Gyruss, Time Pilot, Super Cobra.) They all made big bucks until the arcades dwindled, and then, as before, they moved on - to the richest field yet.

EGMs (electronic gaming machines) are a far, far bigger market than our own little computer and videogaming business. The gambling industry, of which EGM is a major part, is global. North America is the primary market, with gambling revenue of $84 billion in 2005. Forty-eight U.S. states, all but Utah and Hawaii, permit lotteries or other forms of gambling. The casino market in Europe is large, and the fast-growing Asian space includes Southeast Asia, the Philippines, Japan and, soon, Taiwan. But common wisdom has it that the world's most fanatical gamblers are Chinese. Macau, a former Portuguese colony near Hong Kong, is now the world's largest gambling haven; its 2005 revenues of US$6.9 billion outstripped the $6.5 billion earned in Las Vegas. And all these casinos buy hundreds or thousands of slot machines and Video Lottery Terminals.

The arcade game makers were well positioned for this market. The first video poker machine appeared in the same year as Space Invaders, 1979. In both fields, manufacturers constantly pushed their technology, and over time they basically converged. Slots added microchips to improve randomness, while arcade stand-ups developed ever glitzier graphics. By the late '80s, if you could make an arcade game, turning it into a slot machine meant hardly more than adding a payout trough.

Williams sold its first video slot in 1991. The next year Bally, which had already pioneered electromechanical slots in the 1960s, introduced Game Maker, which offered multiple video slot games in one cabinet. Konami survived the arcade bust better than the others and only entered the slot business later, in 1996. Konami has since made a splash of sorts: In February 2007, the government of Ontario pulled Konami machines for flashing subliminal jackpot messages.

Almost all new slot machines made today are video slots. Bally leads the market, along with IGT, Aristocrat Technologies and Atronic; smaller players include Konami, Williams and a dozen others. One of these, in Austin, Texas, has become a refuge, a reliable paycheck, for more than a few computer game developers: Multimedia Games.


Slot manufacturers occupy different niches in the gambling ecosystem. IGT is big in Nevada and Atlantic City; Aristocrat owns Australia. Multimedia Games sells mainly to America's largest market, Native American reservations, and to the fast-growing $10-billion industry of "charitable" gaming (i.e., bingo). For years, the top-grossing slot on the reservations was Multimedia's Meltdown, the first to feature music by none other than computer game music legend George "The Fat Man" Sanger. The Fat Man has since scored many Multimedia slots, including Good Mojo and, uhhh, Cash From Uranus.

Sanger contrasts slot creators with computer game developers. "Both groups are wonderful. In my experience, the casino guys are more businesslike and kinder. Crunch time is more gentle; there is more emphasis placed on loyalty and on the importance of family and charity. Their world is somewhat less rocked by the many ghosts of disappointments and failures that haunt the videogames workplace.

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