Pokies and Slot Machine Information

Gaming expansion in USA?

A recent posting touched on the decision by the US State of Pennsylvania to allow the installation of up to 61,000 slot machines – mainly in and around racetracks. This creates a huge new business for gaming machine manufacturers.

Slot Machine Blog Article

Even after the addition of 61,000 slots, the number of gaming machines per capita in the USA will fall well short of what it is in Australia.

In 2004, the total estimated number of slot machines in the USA, including the 61,000 new devices approved for Pennsylvania, was: 770,408 (source: NWSource Article)

In Australia, the estimated total number of slot machines in 2005 was 197,107.

*Average slots/State reflects the average number of slot machines present in each State which allows slots.

#Estimated breakdown of gaming machines by Australian State:

So what would it mean for the slot machine makers if the saturation of pokies in the USA eventually reach the level its already at in Australia? Money! And plenty of it. At present there are 387.32 people per slot machine in the USA, versus 104.64 people per slot machine in Australia.

To catch up, the USA would need to install 2,081,275 additional slot machines. The cost of each unit is highly variable, but an estimate of USD$11,000 per machine means there is potentially USD$22,893,981,000 ($22 billion dollars) in new business to be had.

Is it likely the USA will catch up to Australia in slot machine penetration? Its not going to happen soon, but it may at least catch up to half the difference in the current level – around $US10 billion in new gaming machine hardware business. Slot machines require maintenance and eventual replacement – another huge source of potential revenue.

Aristocrat upbeat

One of the worlds largest slot machine manufacturers, Aristocrat, is confident about its future. After a rough and tumble couple of years it is making hefty profit and its CEO made the following observations:

“Beyond 2006, the outlook for the following few years also looks positive,” Mt Oneile said. The global gaming market continues to expand and as we gather momentum with our wider product range, and as our new technologies are introduced to the industry, I am optimistic that our long term objectives will be achieved.”

The Age Article

Interestingly, Australia is the ancestral home of Aristocrat, yet represents only its third largest market (source: 2005 Annual Report). Both the USA and Japan are producing higher revenues.

Pennsylvania pushes 61,000 pokies

The US State of Pennsylvania is pushing ahead with its grand scheme to introduce up to 61,000 slot machines.

“On April 5, state gambling regulators will begin public hearings on proposals for slots at 14 venues, including racetracks and freestanding locations, which could make Pennsylvania one of the biggest slot-machine states in the country. Slots could be up and running at the racetracks as early as the fall.”

Myrtle Beach Online Article

The potential sale of 61,000 slot machines was bound to attract the industries largest manufacturers, keen to showcase their latest technology. Pennsylvania has set a punitive 52% tax rate, yet they’ve had no trouble soliciting vendors to supply the gaming hardware:

“And many of the biggest companies came despite the exclusion of table games and a tax rate of 52 percent, more than six times higher than Atlantic City’s or Nevada’s.”

The companies approved so far are:

“The Pennsylvania Gaming Control Board…approved the licenses for the following six companies…
• Aristocrat Technologies, Inc.
• Aristocrat Technologies Australia Pty. Ltd.
• IGT
• NRT Technology Corp.
• Western Money Systems
• WMS Gaming, Inc. “

Pennsylvania Gaming Control Board

The legislation allows for up to 5,000 slot machines in some venues. The nearby Altantic City gaming venues have already started building up their own venues in view of the upstart new slot competitors being created in nearby states:

“Atlantic City is in the midst of an approximately $3 billion building boom to diversify its gambling industry and expand its casinos, in part to compete with the proliferation of gambling in neighboring Pennsylvania and elsewhere.”

As more and more States in the USA legalise slot gambling, the competition to attract players will intensify. It will be interesting to see how the huge Indian casinos and the gambling metropolis of Las Vegas react.

Woolworths is pokies king

Australian icon and megagrocer Woolworths continues to absorb hotel operators, and their slot machines.

“Woolworths has grown into one of the biggest gaming machine operators in the country with 10,722 pokies — nearly 6000 of them in Victoria “

The Age Article

Poker machines are a safe bet for any business – its pretty difficult to make a loss when you have these electronic safes working on your behalf. When you have 10,722 of them working for you, your profit margins are only going to improve.

It seems the acquisition of the pokies is only incidental to the real goal of Woolworths – buying up hotels so they can increase their presence in the oddly regulated liquor market in Australia. Whatever the cause, it gives Roger Corbett, CEO of Woolworths, 10,722 extra reasons to smile every day.

Portable Pokies

Casino games such as roulette are finding their way onto Personal Digital Assistants (PDAs) – those ubiquitous handheld computers you see people playing with on subways and buses everywhere. The US State of Nevada has now legalised some games for realtime gambling on these devices:

“Regulations passed Thursday make Nevada the first in the nation to approve the use of handheld devices for gambling in any public area of the state’s casinos, such as restaurants and poolsides. Rules allow a range of games, including bingo, poker, blackjack and horse race betting. Use in hotel rooms and other places that cannot be supervised is prohibited.”

MSNBC Article

The usage is restricted to public areas in casinos – but it may not take long for permitted usage to increase to citywide or even statewide. The next step after that is for slot machines to be simulated on these devices.

There is a lot of money being invested in developing the software:

“Cantor has sunk “millions of dollars” into development”

Slot machine manufacturers have enormous development resources and could easily tailor their games to run on remote units – no more jostling for slot machines to play – just take your PDA and play where and when you like.