States eye slots asnew revenue source

Sep 9, 2003 4:51 AM

Slot manufacturers are on a roll. The expansion of casino gaming into California and other jurisdictions, coupled with the introduction of slot machines at race tracks and the ongoing need to replace out-of-date machines, has fueled a surge in slot machine production that should continue at a robust pace.

Experts predict the total number of working gaming machines in North America should reach about 750,000 this year, nearly four times the 180,000 that existed in 1999.

In Nevada, slot machines have turned the tables on their casino cousins ”” tables and other games. Once considered amusement devices for neophyte players (read: wives of real gamblers), slots are now the crystal-clear focus of every casino.

According to Nevada Gaming Control Board statistics, slot revenue for the fiscal year ending June 30 reached $5.498 billion, or 64.7% of total Nevada gaming revenue. Table games generated $2.937 billion, or 35.3% of all gaming win.

That represents a dramatic turnaround from 20 years ago, when table games accounted for 59.9% of total gaming revenue, with slots capturing only 40.1%.

In addition to generating nearly 70 percent of a casino’s revenue, slots occupy an average of 80% of a casino’s floor space ”” more, in some cases ”” which have evolved from green-felt gambling halls to incredible electronic arcades with electrified sights and sounds that relentlessly hammer the senses.

Slot machines obviously have pull. The percentage of casino customers who say they regularly play the slots continues to increase ”” more than 70% last year, up from 60% in previous years.

And there doesn’t seem to be any end in sight. In fact, the outlook for slot machine manufacturers looks better than ever. Here are a few possible long-term trends that could fuel even more slot production:

”¡ California currently has about 44,000 slots, but more than double that amount after the state renegotiates its compacts with the tribes.

”¡ Pennsylvania is banking on legislation that could allow 3,000 slots at racetracks.

”¡ Ohio is also eying legislation that would allow some 14,000 slots. A favorable outcome in Pennsylvania could help fuel the expansion in Ohio and Kentucky.

”¡ Kentucky is looking at eight possible "racino" openings which could add 2,500 slots each. The original proposal died this year, but could be revived in 2004.

”¡ Arizona could place an additional 7,000 slots by the end of this year.

”¡ Illinois may add another 5,000 machines if another license is added to Chicago-area casinos.

”¡ Tribal casinos in Wisconsin, New York and Idaho could add another 6,000 slots to the market.