Introduction to Who Builds Slot Machines
Who builds slot machines throughout the world? For such a popular activity, there is a relatively short list of slot machine manufacturers in the world:
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- Multimedia Games Inc. (a subsidiary of EVERI Inc.)
Of these companies listed, Class III gaming is principally supported in North America by Scientific Games Corp. and IGT. They are both global leaders in the gaming industry. Mergers and acquisitions are the name of the game amongst slot machine manufacturers. It is currently a highly dynamic corporate environment.
In 2014, for instance, Bally Technologies was acquired by Scientific Games. This acquisition is significant as Bally was the driving force for inventing most of the modern features of slot machines enjoyed by so many.
These gambling companies provide products other than physical slot machines. They often also supply casino-management systems. These software packages help casinos to “run” their operations from day-to-day and even in real-time.
This casino operating system software is crucial to casinos as a way to reduce cost and, I’ve found, a significant advantage play for slots enthusiasts. I’ll provide more on this topic at another time.
This operating or enterprise software business is as highly competitive as slot machine manufacturing. Factors that determine how successful providers are in selling their systems include:
- product features and functionality
- accuracy
- reliability
- service level
- pricing
Competition is intense because of the relatively low number of providers and the limited number of casinos and jurisdictions in which they operate. Providers are Scientific Gaming, Aristocrat, IGT, Konami, and several smaller companies in international gaming jurisdictions.
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The Gaming Industry
Within the global gaming industry, companies building slot machines is trending towards consolidation amongst gaming equipment and technology companies. The gist of why is to increase scale and therefore operating efficiencies. The hoped-for result is accelerated innovation and product development resulting in broader service and product offering.
Several acquisitions of slot machine and other gaming equipment manufacturers have occurred recently, including the purchase of Bally Technologies by Scientific Gaming Corp. and the acquisition of Multimedia Games by Global Cash Access Holdings Inc.
Following a wave of supplier diversification in the gaming industry, where new providers have been gaining in market share, the industry is experiencing significant consolidation.
This convergence is attributable primarily to a slowdown in North American traditional slot machine revenues as regional gaming revenue headwinds, such as declines in same-store sales, impact the demand for slot machines.
Therefore, the machine gaming sector is evolving from just the sale and leasing of slot machines to include:
- multi-channel systems and table games equipment for traditional land-based casino
- lottery technology
- real-money interactive gaming
- online and mobile social casino gaming
A significant threat for the entire gaming and betting industry arises from illegal activities, which may drain significant betting volumes from the regulated gaming industry.
The loss of present players from legal casino operators has a material adverse effect on gaming industry operations, business, financial condition, and prospects.
Scientific Games Corporation (NASDAQ: SGMS)
A global leader in the gaming industry, Scientific Games Corporation (SGC) is the current owner of:
- Bally Technologies Inc. (one of the original slot machine companies)
- Spielo
- WMS Gaming Inc.
- Shuffle Master
- Barcrest
SGC’s company profile states that they provide:
- lottery games
- electronic gaming machines
- server-based lottery and gaming systems
- sports betting technology
- loyalty and rewards programs
- online social, mobile and interactive content and services
In 2013, Scientific Games Corporation purchased WGS Industries, Inc. Bally Technologies, Inc. was acquired by SGC on November 21, 2014, for $5.1 billion.
The products of SGC are installed in 450 jurisdictions worldwide, including all the major regulated gaming jurisdictions in the U.S. and 146 international gaming jurisdictions. They have 975,000 units installed in North America.
Within the gaming supply segment, SGC sees the competition on several fronts. Primarily, being a global leader in slot machines has resulted in their product lines competing with each other for space on the casino floor.
International Game Technology PLC (NYSE: IGT)
International Game Technology (IGT) PLC is a global leader in gaming that, according to its website, leverages a wealth of
- premium content
- substantial investment in innovation
- in-depth customer intelligence
- operational expertise
- leading-edge technology
It has not only established local presence and relationships with governments and regulators in more than 100 countries around the world but also approximately 13,000 employees. For U.S. federal tax purposes, under current law, it is treated as a foreign corporation.
In 2014 and 2015, International Game Technology PLC experienced multiple corporate mergers and acquisitions involving GTECH, Holdco, IGT, and Georgia Worldwide Corp. which has been and is a complex, costly, and time-consuming process. The integration process is expected to be completed by the
International Game Technology PLC’s online social gaming casino offering, DoubleDown Casino, is mainly conducted through Facebook and Apple iOS platform, a relationship governed by Facebook and Apple’s standard terms and conditions for application developers as well as privacy policies, both of which are occasionally modified, rather than by contract.
International Game Technology PLC currently does business in approximately 100 countries worldwide. At the end of 2014, IGT PLC had contracts with 717 casino operators in the Americas segment, with 249 in Latin America and 468 in North America.
Summary for Who Builds Slot Machines
Slot machine manufacturing is principally supported in North America by Scientific Games Corp. and International Game Technology PLC, both global leaders in the gaming industry.
The products of Scientific Games are installed in 450 jurisdictions worldwide, including all the major regulated gaming jurisdictions in the U.S. and 146 international gaming jurisdictions. They have 975,000 units installed in North America.
International Game Technology PLC currently does business in approximately 100 countries worldwide. At the end of 2014, IGT PLC had contracts with 717 casino operators in the Americas segment, with 249 in Latin America and 468 in North America.
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By Jon H. Friedl, Jr. Ph.D., President
Jon Friedl, LLC
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Summary: Class II slot machines are found in Indian casinos (Class III is Vegas-style, or RNG). The reason why Class II exists is because originally, Indian casinos were only allowed to offer bingo, including electronic bingo. Modern Class II slot machines look and act just like an RNG slot machine.
At least two people must be playing in order for a Class II machine to run (one time I was unable to play because no one else was there). A bingo server draws a number about once a second. When you hit spin, the computer generates your bingo card and then it goes through all 23 possible winning patterns (22 normal patterns like T, corner spots, diamond, etc., and then this bizarre final 23rd one that a blackout in 75 balls wins a penny). A winning bingo pattern makes the reels stop at just the right spot so you win that much (no different than an RNG slot machine, just a different way of determining whether you win or lose). I read the help files on the machine but it doesn't explain everything. It doesn't explain how you get a red screen. Sometimes when you win, the screen turns red and the reels spin again, and when this happens, you always win something which is more than what you just won (i.e., not a regular free spin which can lose). I have never won a penny (that weird 23rd winning pattern). Probability of winning on a single payline is about 1 in 5 with the distribution of wins similar to an RNG machine, with lots of small wins and few large wins.
I've played these early in the morning when the casino is almost empty and at busy times to see if I can detect any pattern of advantage or disadvantage, and I can't tell. I've won when it's dead and lost when it's dead and I've won when it's busy and lost when it's busy.
Does anyone know if there is a player advantage or disadvantage to playing Class II slot machines when the casino is quiet or busy? Is the probability of winning exactly the same for bet 3 as it is for bet 1? (with the only difference being that the jackpot pays a bigger multiple of bet amt, similar to video poker)
Administrator
In general, the competitive element of a class II slot accounts for only about 1% of the return. It will generally go to whoever completes a certain pattern first. You could be competing with other players anywhere in the casino or even the world. The competitors may be playing on entirely different themed machines too.
The other 89%, or so, of the return comes from 'consolation prizes,' which are fixed prizes for fixed patterns.
It is that 1% of the competitive element that makes them legal.
In my opinion, if you're going to legalize slots, then just legalize them. Quit kidding yourself that class II slots are really bingo.
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I've designed some class II slots so know a fair bit about the regulations and how they are designed.
In general, the competitive element of a class II slot accounts for only about 1% of the return. It will generally go to whoever completes a certain pattern first. You could be competing with other players anywhere in the casino or even the world. The competitors may be playing on entirely different themed machines too.
The other 89%, or so, of the return comes from 'consolation prizes,' which are fixed prizes for fixed patterns.
It is that 1% of the competitive element that makes them legal.
In my opinion, if you're going to legalize slots, then just legalize them. Quit kidding yourself that class II slots are really bingo.
Hey Wizard, I hate to necro this thread, but I was wondering - how is the RTP calculated for class II bingo slots when you never know how many people are going to be competing for that prize? As you mentioned, it's a small portion (1%), but how is that 1% calculated, if it can be? And wouldn't a busy casino theoretically bring down the RTP of the machine? Is there some sort of universal assumption on the average numbers of players that might be in on a game or something?
Thanks so much!
Class II slot machines look and act just like an RNG slot machine. Does it similar to skill based gaming machine or slot machines?
I would say they operate most similarly to Pace-O-Matic machines. Some other machines just, “Play,” the pre-seeded pool of spins over and over, whereas (from what I can tell from the patents) POM’s randomly select a result from the remaining pool of spins, kind of similarly to the Class II central server.
I also thought POM banks had a linked pool of spins, but that’s apparently not necessarily true is because I found two POMs in one location—one is out of $0.40/bet spins on a particular game and the other isn’t.
I would say they operate most similarly to Pace-O-Matic machines. Some other machines just, “Play,” the pre-seeded pool of spins over and over, whereas (from what I can tell from the patents) POM’s randomly select a result from the remaining pool of spins, kind of similarly to the Class II central server.
I also thought POM banks had a linked pool of spins, but that’s apparently not necessarily true is because I found two POMs in one location—one is out of $0.40/bet spins on a particular game and the other isn’t.
I wouldn't say Class II slot machines operate like POMS. The results are actually completely random & based on a math model, just like traditional slots. The difference is that the randomness is not based on where the reels land, it's based on the outcome of the bingo draw. Making it play 'like a slot' as a designer can be challenging because getting the desired volatility etc can be difficult to translate from traditional math models.
I wouldn't say Class II slot machines operate like POMS. The results are actually completely random & based on a math model, just like traditional slots. The difference is that the randomness is not based on where the reels land, it's based on the outcome of the bingo draw. Making it play 'like a slot' as a designer can be challenging because getting the desired volatility etc can be difficult to translate from traditional math models.
I agree with you, and that's actually kind of my point. The Class II slot machines randomly choose a result from the, 'Pool,' of remaining results in the central server and POM's do the same exact thing, according to their patent. The difference with POM is that the entire pool of results seems to be exclusive to an individual machine, (or maybe they can sometimes be linked) but either way, it's randomly chosen from the remaining results.
Administrator
Hey Wizard, I hate to necro this thread, but I was wondering - how is the RTP calculated for class II bingo slots when you never know how many people are going to be competing for that prize? As you mentioned, it's a small portion (1%), but how is that 1% calculated, if it can be? And wouldn't a busy casino theoretically bring down the RTP of the machine? Is there some sort of universal assumption on the average numbers of players that might be in on a game or something?
Thanks so much!
The way it tends to work is the game will group 2 or more players together who made a bet at nearly the same time, say within a second of each other. Then the first player to complete some particular pattern (in the fewest balls) will win a very small prize. I wish I could take it further, but that's about all I know. When I do a class II game, the game maker will somehow tack on a competitive element, I only get asked to do the 'base game.'
Administrator
I would say they operate most similarly to Pace-O-Matic machines. Some other machines just, “Play,” the pre-seeded pool of spins over and over, whereas (from what I can tell from the patents) POM’s randomly select a result from the remaining pool of spins, kind of similarly to the Class II central server.
I also thought POM banks had a linked pool of spins, but that’s apparently not necessarily true is because I found two POMs in one location—one is out of $0.40/bet spins on a particular game and the other isn’t.
The ones I have seen don't work like that. The outcome is based on a fair bingo card and ball draw. I'm not saying there isn't anywhere that does it the way you describe, but I think I can speak for California (when there were class II), Oklahoma, and New Mexico.
I agree with you, and that's actually kind of my point. The Class II slot machines randomly choose a result from the, 'Pool,' of remaining results in the central server and POM's do the same exact thing, according to their patent. The difference with POM is that the entire pool of results seems to be exclusive to an individual machine, (or maybe they can sometimes be linked) but either way, it's randomly chosen from the remaining results.
Hmm, as far as I know, Class II (Bingo) slots are not selecting a result from a pool of remaining results or a pool at all. Class II bingo is legal because you are actually playing Bingo behind the scenes, so mechanically, it must actually operate exactly like live bingo.
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