Mikohn relishes new role as designer

Apr 29, 2003 6:08 AM

Mikohn Gaming, developer of such slot games as "Trivial Pursuit" and "Battleship" and interactive table games like "Caribbean Stud" and "Monopoly Blackjack," used to assemble gaming machines in its Las Vegas factory, using boxes it bought from Japanese slot maker Sigma Game.

But Mikohn has decided to stop manufacturing and rebuilding machines and turn toward what executives see as the company’s biggest strength ”” thinking up, designing and licensing new gambling games, player tracking systems and interior casino signs.

Mikohn, founded in 1986 to produce progressive jackpot slot games, changed to a company focusing on software engineering development and selling and marketing its intellectual property during the first quarter of this year.

"The difference (now) is that we are headed in a more strategic direction, and software content is the direction," said Mikohn president and CEO Russ McMeekin. "It’s much less capital intensive to run the company that way. Our cost of capital is really high."

"We probably won’t see the full economic benefit from it until the fourth quarter," said McMeekin, who joined Mikohn in June 2002 from Via Fone, a wireless software firm in the San Francisco Bay Area.

The company redirected itself after enduring a tough year in 2002. For various reasons, including nearly $30 million in corporate structuring costs, the firm reported a net loss of $37.9 million.

Mikohn still derives income from about 3,100 machines and table games it licenses to casinos. On March 3, it announced that the Mississippi Gaming Commission had approved the placement of Mikohn’s machine based on the kid’s dice game "Yahtzee" in casinos in that state, following a field trial in February.

The new direction took hold with Australian slot device builder Aristocrat Gaming, for which Mikohn has just developed the first of other Class III slot games it plans to provide for the Aussie company.

Bally Gaming signed an agreement in which Mikohn will provide the Las Vegas-based slot device builder with technology for wide-area progressive slots built by Bally.

Mikohn also has pacts with Cyberview Technologies to develop machines for the European market and with Sierra Design Group to provide software engineering for Class II slot devices for an Indian tribe in Washington State. And, it has a business contract with slot giant International Game Technology.

In each case, Mikohn is furnishing the software programs and other high-tech work, leaving the low-tech hardware stuff to its customers.

"It’s their assets, our content," McMeeken said.