Ainsworth Game Technology has spent the past few years blazing a trail across North America. The trailblazing isn’t done.
The Australia-listed gaming supplier founded in 1995 by slot-industry legend Len Ainsworth had been in the U.S. market around eight years when a new era dawned—a commitment to expand its North American presence in a big way, illustrated first by the 2014 groundbreaking for a 291,000-square-foot North American headquarters. By the time that state-of-the-art facility opened two years later, the supplier’s march across America was in full swing.
The company has combined its R&D prowess—which had made it one of the top suppliers in its Australian home base and elsewhere around the world—with a remarkable North America team that has grown fivefold from the team in place in 2014. The result has been a litany of success in Class III markets across the U.S., with burgeoning sales and a fast-growing game library that includes hits like Pac-Man on the new A640 cabinet, added to a wealth of other high-performing games on the A600 cabinet and legacy A560 cabinet series.
It’s one reason Austria’s Novomatic Group last year bought up the 52.2 percent stake in Ainsworth previously held by the founder. While that was big news for both suppliers, other than some transfers of technology and games, the two companies remain completely separate entities, each employing its own technology to move forward in North American markets.
But a separate technological prowess is now paying off for Ainsworth in a completely different category of games—Class II electronic bingo-based slots for Native American markets. In early 2016, the company closed on the $38 million acquisition of South Carolina-based Class II supplier Nova Technologies. The purchase gave Ainsworth an instant presence in the Class II market with an installed base of 1,425 units in 11 states, more than doubling the number of Ainsworth units placed on a recurring-revenue basis in the U.S.
That Class II footprint has since more than re-doubled, including last fall’s delivery of 270 games at the Pokagon Band’s new Four Winds casino in South Bend, Indiana—the largest single North American installation in Ainsworth’s history.
But the Nova acquisition added much more to Ainsworth than a growing Class II footprint—it added a whole new dimension to the company’s overall R&D efforts with the addition of the former company’s highly regarded design team, and executives like David Waters, the former Nova director of technical compliance who became Ainsworth’s director of technical services and hardware with the 2016 acquisition.
“We inherited a ton of their talent, including Dave Waters, who is now director of technical services for the entire company,” says Mike Trask, director of product management and marketing for Ainsworth, “as well as an incredibly successful game design studio. It’s just opened up the entire Class II world to us, and it is an area we have truly focused on.”
The former Nova team’s expertise in Class II systems brought a skill set to Ainsworth that is easily applied to other server-based gaming technologies. This year, Ainsworth moves into central-determination slot gaming and instant racing—and with it, expands its footprint into Washington state and Kentucky, respectively.
Last month, the first Ainsworth games went live in Washington state, at the Tulalip Resort Casino. Initial games, including Twice the Diamonds, Mustang Fortune and Cash Cave, use the company’s A600 cabinet. In the Washington market, each supplier’s games are linked to a central-determination server, which essentially provides an electronic version of a scratch lottery, with the prizes from a predetermined central pool displayed as slot reel combinations.
In February, Ainsworth announced a long-term agreement with Churchill Downs, Inc., under which Ainsworth will develop historical racing machines for CDI’s Derby City Gaming, an 85,000-square-foot historical racing machine facility opening next fall around six miles from the Churchill Downs racetrack in Louisville, Kentucky. The new gaming parlor will feature 600 historical racing machines along with a feature bar and several food outlets.
Historical racing games, also known as instant racing, replay actual historical horse races in HD animation, providing handicapping information and allowing standard track wagers to be made through a slot-like interface before each race. Ainsworth will supply an extensive library of historical racing games on its A600, A600 Slant Top and A650SL Noir cabinets for Churchill.
As the former Nova team was being incorporated into Ainsworth—forming an R&D network with development teams in Las Vegas, South Carolina and Sydney—Ainsworth CEO Danny Gladstone continued to build up his North America team.
Early 2016 brought Trask, formerly the longtime Scientific Games marketing and communications executive, and Russell Witt, the former project manager and compliance director for Class II supplier Video Gaming Technologies and national director of tribal development for Gaming Laboratories International. Last December, former Scientific Games and WMS senior sales VP Deron Hunsberger joined Ainsworth as senior vice president of sales and marketing.
The complete North America team is now hitting its stride by directing new growth, and new product groups designed specifically for North America.
Booming Class II
Ainsworth’s move into Class II was under way well before the Nova acquisition. “We started looking at Class II companies probably four years ago,” recalls Ryan Comstock, Ainsworth’s vice president of finance and operations. “There were several targets that we had, on which had gone through various degrees of diligence.
“Nova Technologies ended up being the one that stuck, and in retrospect, it certainly was the best of the options for Ainsworth, and what our current business model is. Ainsworth has a very vast library of game content software, and we’re a very financially sound company. Nova was owned by a private equity group, and didn’t have the financial capital to reach their full potential. So, from that standpoint, we were able to very quickly port their product and software into the Ainsworth cabinets.”
Since the acquisition, the Ainsworth R&D team has merged the technology of the two companies. “Nova had a platform and a cabinet, and was doing great work in Class II,” says Waters, one of the key talents to come from Nova. “And after acquisition, we focused our energies on a unified hardware platform. We’ve migrated our entire Class II system to work on the same Class III hardware that’s offered by Ainsworth—we’ve added the A600 cabinets, the A640 cabinets and the A600 slant to the product line in Class II, and other server-based gaming.”
Ainsworth’s expansion into Class II is being driven by Witt, who joined Ainsworth in 2016 as director of Class II operations. The new technologies have expanded Witt’s role—he is now director of central-determined gaming operations and business development.
Witt says the Ainsworth hardware—the A640 will debut in a Class II version of the hit Pac-Man game at the National Indian Gaming Association trade show this month—has meshed seamlessly with the Class II technology. “Our hardware is very robust,” he says. “That’s kind of been our trademark. But now, with our Class II game offerings, everything’s been fantastic.”
Witt also gives credit to the combined team now in place at Ainsworth for the Class II surge. “One of the biggest reasons (for our success) was our product development,” he says. “Our product roadmap is probably one of the most robust in Class II. We’ve been able to quickly assimilate the Nova product and the Nova hardware into the Ainsworth hardware offering, so right out of the gate, we moved into all the hardware groups. An average of 20 games a quarter are being launched, in all kinds of different flavors.”
Class II game development is centered in the South Carolina studio, with help from Las Vegas and Sydney in porting all the strongest Ainsworth titles into Class II. “From the Ainsworth side, we take the best of the best, working with Mike’s team (in Las Vegas) and also our development team in Australia, to bring them over to Class II,” Witt says. “We do development from the ground up at our South Carolina studio. We’re also doing hybrid games, which take the best of the Ainsworth product and the Nova product and put them together.”
The development efforts are now bearing fruit in a big way. “We have had key installs in Class II,” says Trask. “For the first time, Ainsworth put games into the Miccosukee casino in Florida. We opened up in other markets across the country, and most recently and most significantly, of course, we put in 15 percent of the floor in the new Four Winds casino, and that’s all Class II.”
AnyBet, Any Time
Those Class II sales stand to get yet another boost from the development team, in the form of a revolutionary patent-pending technology called AnyBet, introduced in January on 80 Class II games at Jena Choctaw Pines Casino in Dry Prong, Louisiana.
AnyBet offers every player on a casino floor the chance to win mystery progressive jackpots with, as the name says, any bet. It is a first for the Class II market.
The 25- and 30-line AnyBet linked jackpots start at $250 and $5,000; the 40- and 50-line AnyBet links start at $500 and $10,000.
The 80-game link at Choctaw Pines includes 72 new Ainsworth games.
“AnyBet is being put on dozens upon dozens of our games, no matter the cabinet,” says Trask. “What is able to link them together is the line count, so we can link dual-screen games with single-screen upright cabinets, slant tops, and so forth.”
Trask says that while a minimum bet is all that is required to win one of the progressives, higher bets mean more chances to win. “Minimum bet affords one chance to win, but maximum bet is going to give you 10 chances to win,” he says. “As people bet up, they get more chances to hit an AnyBet jackpot.”
The technological innovation doesn’t stop with the $5,000 and $10,000 top prizes, either. Trask notes that the minor jackpots, with resets of $250 and $500, stop incrementing at $1,199 for player convenience, but the electronic meters keep incrementing as a “reserve fund” to seed subsequent jackpots.
The Jena Choctaw Pines installation was followed by a second link as part the big order at Four Winds in South Bend, and a third at the Desert Diamond casino in Glendale, Arizona. Soon to follow will be a launch of AnyBet into Oklahoma, into Alabama for the Poarch Band of Creek Indians, and into Texas for the Kickapoo tribe’s Lucky Eagle casino.
Trask says that while the top jackpot theoretically hits in the neighborhood of $14,000, some of the installations have seen top prizes rise as high as $18,000.
“The players have really picked up on it,” says Witt. “Mike’s team did a tremendous job marketing and branding. We feel we’ve got a product from a hardware and a software standpoint that really puts us in the game now with our major competitors.”
“AnyBet was a real winner for everyone involved,” comments company CEO Gladstone. “The players will like it, definitely the casinos will like it as the revenues are increasing, and the popularity of the game looks good.”
On to Washington and Kentucky
The same technology team that produced Class II technology like AnyBet is now opening up an entirely new market for Ainsworth in the Washington state central-determination video lottery. “The Washington market was definitely something that we looked at as a possibility before the acquisition of Nova,” says Witt. “The former Nova team felt very strongly that they could take that project on, and be able to create a central-determined product that met the standards for Washington Class III.”
“We installed our first lot of machines in Washington before Christmas, and we expect to put more machines into Washington this year,” says Gladstone. “Washington’s really a valuable market, and we’re looking forward to giving the operators some variety in our games.”
Gladstone adds that Ainsworth is not an unfamiliar brand to Washington players. “We have a history in Washington, having sold some games there many years ago, back when we were first kicking the company off,” he says. “Some of those games are very popular throughout Washington state, so the Ainsworth product and game is well-known up there.”
Comstock says the Ainsworth team’s expertise in Class II system technology allowed the adaptation to the Washington market, but also into the historical racing business.
“The systems technology from the Nova acquisition has allowed us to enter into other parallel markets at the same time,” Comstock says. “One example is the Washington electronic scratch-ticket system, but more recently, we announced the partnership with Churchill Downs, and we’re venturing into the historical horse racing market in Kentucky. Those projects would not have been possible without the Nova acquisition. It’s a bigger story for us than just what our install base is today. The story is the doors that have opened for us in other markets as well.
“We were extremely fortunate to have some talented people from the Nova Technologies acquisition with the kind of skill set to build those server-based systems, and have a deep understanding of those math models. It certainly made the process a lot quicker and a lot more efficient than would have been otherwise possible pre-Nova technology, when Ainsworth simply just did not have the skill set or technology backbone to start building server-based systems.”
Like the move into Washington, the Churchill Downs historical racing agreement is a case of Ainsworth being in the right place at the right time, with the right product. “The partnership with Churchill Downs is fantastic,” says Gladstone. “They are great people to work with; I believe they would say the same about us. We’ve done this together; we worked on this using the technologies that we have.
“We believe we’re going to produce a great product, that will certainly make people stand up and look and say ‘wow.’ It’s all on our latest platforms. We’ll start with at least 600 units when the operation opens sometime later this year. It’s a really exciting project, and we’re very pleased to be involved with a company that’s the stature of Churchill Downs.”
Ainsworth has had a presence at the annual NIGA Indian Gaming trade show as long as the company has been in North America, but this month’s show is perhaps more important for the supplier than any of the past years.
“The NIGA show certainly takes on a lot greater significance when you have this Class II product that the tribes are increasingly interested in, including a number of tribal properties that are Class II only,” says Comstock. “Previously, we were just offering the Class III product at NIGA, but we now have a full suite of Class II products and more.”
Adds Hunsberger, “We’ve always had a commitment to the tribal market, and early on, Ainsworth had a lot of success working in the tribal community. So, it’s a natural fit as we move into other markets that are tribal-centric, like Washington, that we have these products to display.”
“We have a great relationship with the tribes throughout North America,” adds Gladstone. “What I think is very good for that market is that we brought a brand new product very quickly, with a lot of games. From our point of view, we are giving the Class II market a bit of variety in games, cabinets and style. We’ve already released the 600 cabinet into the market, which is technically advanced compared to some of the other things in Class II. The A640 release, which is a 40-inch, single-screen machine, is going to carry the Pac-Man game. So we think given the success across American casinos already with Pac-Man, we’re sure this is going to be a winner for all the tribes in Class II.”
Gladstone adds that the company’s track record in Class II is getting better all the time. “We’d like to grow our footprint; that’s stating the obvious,” he says. “With these new products, we will be there to take up a bit more floor space. Getting those 290-odd machines into the Four Winds, we’ve proved that we can supply at the large end—and we’ve got a very, very large game library. Since Ainsworth made the acquisition, our people have developed over 80 games for Class II, in under two years.”
The recurring revenue from Class II is the latest in several years of success for Ainsworth in North America. “We’ve had success with our proprietary games; Pac-Man’s been a real winner for us, and the recurring revenue out of Class II is lovely,” Gladstone says.
“We’ve still got a long way until we can can get a foothold in recurring-revenue (currently at around 10 percent of games sold). We don’t expect to be given anything. We know we’ve got to get it on merit, and we’re going to do that by product performance. We’ve also got a fair bit of product across Latin America on participation, but we’re still a sales-driven company. We’ll increase our participation with more titles.”
Growth in North America for Ainsworth is accompanied by the company’s consistently strong growth in Latin America. Moreover, the new Class II surge is incremental business for a company that already was growing quickly in Class III markets.
“We believe we’ve got a lot of organic growth in Class III and Class II, but our goals to achieve that growth are going to be driven by performance,” says Gladstone. “So, we’re really ramping up the number of games, and trying to ramp up the quality of games so we can compete.
“There’s a very tough group of competitors out there; it’s a tough place to play. So, you’ve got to be on your game.”
Gladstone reiterates the key ingredient to Ainsworth’s success as the expertise of the team the company has assembled. “We hired good people, and the good people performed,” he says. “Companies are nothing without their staff, and we’ve got a good sales team across the whole of the Americas. We’ve got a very effective team of production, game development and software engineers in the Las Vegas office.
“It’s a pretty exciting time for us, and we’re looking forward to the future. Because there’s more to come.”