It seemed an odd combination when it was announced at the height of the consolidation merger in the slot industry in 2014. Global Cash Access (GCA), the gaming industry’s dominant company in payment processing, was acquiring Multimedia Games, a small but growing slot manufacturing company with a history in Class II gaming.
But to Ram Chary, now the CEO of the newly named Everi, it made perfect sense.
“In recent years, Multimedia had a great story,” he says. “They had almost closed their doors, but instead, wound up building a great business—a relatively small market share, but some very interesting games, some great technology, and most importantly, some very talented people.
“We knew that they needed to grow to keep on that same trajectory and our payments business provided a great footprint. So, the idea is we’re going to help them grow, and grow more quickly, through the vast footprint we have on the payments side of our business.”
Part of that growth, says Chary, is to utilize the company’s gaming talent developed in Multimedia’s former corporate headquarters in Austin, Texas, and expand beyond that.
“We have been very transparent about our desire to expand the breadth of what we have in terms of our gaming portfolio,” he explains. “We’ve opened up new studios in Chicago and Reno. We think they’re both great cities in terms of acquiring talent, both from the industry and organically through hiring folks straight out of school. The access to a geographically diverse talent pool is something Multimedia didn’t have, so we’re broadening and diversifying our base significantly.
“But you know, it starts and ends with what we have in Austin. The talent pool is very deep, both in the community and within our company, and the track record that the Austin team has in terms of coming up with ideas and innovations is really unparalleled.”
Everi’s success, says Chary, will always be tied to the payments business. It’s the lion’s share of the company’s revenue, and Everi owns the vast majority of market share in that side of the business.
“We’re not a generic payments processor; we are specific to gaming,” Chary says. “Over a period of many years, we’ve enjoyed significant scale. Now, with our gaming focus and scale, we can invest in our capabilities and create comprehensive solutions targeted toward our gaming clients. So, if you look at things that might have a competitive alternative, like our kiosk product or our cash access products, you will find that our technology, innovation and patent-protected cash access functionality separate our products from anybody in the space.”
Chary says innovations like Everi’s “Cash Club” wallet, “Everi Ticket,” and “Everi Bet,” a games-based product that allows operators to change the cost to cover all lines, are all technological advances that set Everi apart from its competitors.
“These are technology-based innovations that nobody else has, and they provide a tremendous value to our clients,” he says.
Everi’s ATM services, however, are the core of its payments business. The number of transactions completed each year and the amount of cash dispensed is staggering.
“Everi’s placement of ATMs and kiosks, which offer ATM and cash advance services, are still very central to our core payments strategy,” he says. “Each year, Everi completes roughly 70 million ATM transactions, dispensing about $15 billion in cash directly to gaming patrons. So, for many casino operators, that represents as much as 50 to 70 percent of their drop. That cash to the floor is the lifeblood of the casino, and our integrated solutions are critical to the way casinos operate today.”
Casinos also depend upon Everi to verify the creditworthiness of their customers through Everi’s Central Credit service.
“Central Credit allows casinos that issue markers to make informed decisions about a gaming patron’s creditworthiness and to share information with each other related to marker lines that are issued—things like the number of markers issued to a gaming patron and any currently outstanding markers,” Chary says. “Central Credit has been a tool that’s been around for many decades and is the only credit reporting agency focused on the gaming industry. It may be a behind-the-scenes product and something that is back office-focused, but it’s central to how a casino operates with a key gaming patron subset within the casino.”
Because of the dependence on cash and cash-based transactions, the gaming industry has increasingly become viewed similar to that of other financial services, like banks. The ability of gaming operators to understand how cash transactions are tracked, reported and justified is another crucial, but little known, area of casino operations.
In 2014, Everi acquired NEWave and in the most recent quarter, has acquired the principal assets of Resort Advantage. These companies have developed a suite of compliance tools focused on addressing the needs of the gaming industry. Everi has since expanded and refined those products into a total package that is an important element in the compliance arsenal.
“Everi Compliance offers a suite of solutions that nobody else in the industry has available,” says Chary. “We help with cage functionality, AML (anti-money laundering) and tax-filing requirements. We’ve picked up different capabilities through our acquisitions, and we have integrated and automated that functionality through software in a way nobody else has the capabilities to do. Here, we’ve only scratched the surface in terms of market penetration, and this remains a huge focus for us.”
While Everi is eying international expansion, Chary says the available opportunity domestically, coupled with the complexity of banking and cash reporting laws around the world, ensures the company remains focused on the United States and North America at this time.
However, international expansion is in the cards for Everi.
“From a cash access perspective, we have a significant presence in the U.K.,” he says. “If there are markets like that, where we think we have a good handle on the regulatory requirements and our products and services can get traction in that market, then we’ll look to expand into those markets. At this time, we are not trying to be a generic global player.”
Another area where Everi is treading very carefully is online gaming, and the difficult field of payment processing. Chary says the company is evaluating the risks versus the rewards.
“We believe that widespread online, real-money gaming in the U.S. is many, many years away,” he says. “It’s going to take a regulatory push and endorsement, if you will, from the federal government, so we think it’s at least several years away. There’s no question, because of our command of the regulatory requirements in the payments space, and our investments in technology, that we are uniquely positioned to enable those kinds of transactions in that segment of the business when it takes off… but we don’t think that’s going to happen any time soon.”
Building on Success
While the cash transactions side of Everi will always be dominant, Chary says he’s spending more time on the games side.
“I think the growth in the company will come primarily from games, but I want people to understand that our payments business will continue to provide steady results,” he explains. “We’re the only provider that provides both payments and games functionality, so we are intending to transform the casino floor, and ultimately that will lead us to additional growth in the payments business as well.”
Before the Everi transaction, Multimedia Games was long an acquisition target of larger slot manufacturers—which raised questions about the wisdom of it becoming part of a company that had never developed gaming content. However, the decision was made early on that the new Everi would leave the Austin-based slot company’s operations untouched, and in fact, would work to expand the products and markets of the former MGAM.
The first step in that process was to get a veteran at the helm of the games division—Chary promoted David Lucchese to executive vice president-games and relocated him to Austin.
Lucchese was the former vice president of sales at Bally Technologies, and a longtime executive of Bally, Aristocrat and the groundbreaking supplier Casino Data Systems. When he arrived in Austin, he noted a marked contrast to the corporate style of traditional slot suppliers.
“Having spent quite a few years with Bally and Aristocrat, and Casino Data Systems back in the day, I looked at our employee base here and realized that I had never worked with a younger, more technically savvy, artistic group of people in my career,” Lucchese says.
A lot of it has to do with Austin itself. Home to the University of Texas, along with a local community offering one of the most famous music and artistic scenes in the country, Austin offers benefits not to be found in Las Vegas. “We truly celebrate being an Austin-based development company,” Lucchese says. “We celebrate recruiting out of the University of Texas, as well as recruiting from the creative and technical set that’s attracted to Austin. We have a close relationship with the university here.
“All of those things come together for a nice, relaxed environment that our employees enjoy. We embrace that culture, and I think it comes through in the content we develop.”
The Class II, Class III and tournament products that have poured out of that environment were, in fact, what had made Multimedia one of the fastest-growing—and most desirable from an M&A standpoint—of the industry’s smaller slot companies. Lucchese believes that content will be the centerpiece for a large portion of the growth to come for the new Everi, which is already logging major contracts that combine payment products and services with meaningful orders of Everi’s slot games.
Moving Everi games into new markets is made easier by the fact that the former GCA was licensed in many more jurisdictions than the former Multimedia Games.
“GCA had a more mature penetration with both company licenses and product licenses, so that is getting us revved up to go into some new markets,” says Lucchese. He adds that combining the kiosk and payments businesses with slots has given a boost to market expansion. New combined payments and slots orders have come from Foxwoods, The Cosmopolitan of Las Vegas, Arizona’s Desert Diamond, Scarlet Pearl in Mississippi and the Alberta Gaming & Liquor Commission in Canada, to name a few. The Alberta contract represents a new jurisdiction for Everi games in a market where the former GCA had a long-established kiosk and payments business.
Whether or not contracts are combined with the Everi kiosk and payments businesses, the company’s strategy going forward is to greatly expand the markets in which it operates and increase research and development expenditures, which will enhance the company’s library of slot games.
“First off, Ram Chary has allowed us to really keep intact the great things that Multimedia Games established here in Austin,” Lucchese says. “We continue to recruit and expand our operation here, as well as expanding our technical, artistic and game development staff.”
That’s just the beginning. Lucchese has launched the first expansion of Everi’s R&D efforts beyond Texas, with new game studio operations ramping up in Chicago and Reno.
“At G2E, we actually demonstrated our first example of content from the new studios, which had been quickly developed,” Lucchese says. “We iterated on our hallmark Carnival in Rio game, fine-tuning a version for high-limit rooms.”
As of press time, Everi had around 20 employees in Chicago and another 12 in Reno, with those numbers expected to grow. “As we work collaboratively between Chicago, Reno and the headquarters for games in Austin,” Lucchese says, “we get to share ideas and cultivate them. We then go off and execute on those assignments. It’s been great watching the process evolve.”
With the new R&D horsepower, Lucchese predicts fast expansion of existing game platforms and the development of new game styles.
“We’re in development mode,” he says. “First off, we’re expanding our feature set. With the game design discipline in all three cities, the talent has expanded and so has the creativity. The teams are focused on that, and we really embrace that kind of creativity and diversity.”
Next, he says, Everi is developing an extensive library for its core-games group, much of it based on the new Core HDX cabinet unveiled at G2E. Slated for general release this month, the Core HDX will be able to accommodate any of a total of 140 video titles at launch. The new design features dynamic lighting that synchronizes with game events, dual high-definition monitors and an ergonomic design.
The next step after this month’s launch is to add to those 140 titles. “We’re designing games natively to leverage that cabinet, and the sound and lighting package we’ve engineered into that cabinet offering,” Lucchese says.
Core HDX was designed to accommodate a year-old advanced gaming platform the company calls MForce. “MForce is a unifying platform that will drive all of our different products,” says Lucchese. “Whether it’s a stepper, a core video or a specialty game like our MPX or High Rise or Skyline, they can all be driven by that MForce platform.”
Finally, says Lucchese, Everi is now taking the first big steps in augmenting what has been a very successful library of proprietary themes and titles.
“The legacy Multimedia had dabbled in a couple of small brands in the past, but basically they were known for homegrown, creative content,” says Lucchese. “But now, we’re exploring licensed brands; we hope to have a couple of those secured and in our portfolio, to be unveiled at G2E 2016. All that’s coming together very nicely with the three development centers.”
Chary says this is one of the changes that Everi brings to the table.
“The former Multimedia team was philosophically opposed to brand licensing,” he says. “They didn’t really have the resources or scale to afford and execute in delivery of licensed content, or make that economically viable. In the slot supplier space, we intend to be a major player. You can tell that from our presence on the G2E show floor. To do that, we believe we need to play in the licensed product space.
“We’ll be different, and will need to be very targeted and specific until we can adequately prove out the business model. We will focus on acquiring a singular flagship brand that we can focus on and build content around. So we will play in that space, unlike Multimedia, but not in an extremely large or uncontrolled way.”
Lucchese agrees that licensed brands will be a small part of the company’s overall product portfolio at first—for one thing, the company already has a strong, steady and growing stream of recurring revenue from its long-successful Class II and video lottery markets. An important part of the company’s development expansion will be focused on the Class II market.
“We’ll continue to nurture this important segment of our business,” says Lucchese. “Our customers have told us how important this is to their operating needs, and we want to ensure we continue to take care of our loyal, long-term customers and partners on the Class II side of the business.”
With all that fresh engineering talent in Austin, and now elsewhere, the lion’s share of the business is likely to remain in proprietary themes. Lucchese says to expect new innovation in all game styles, including a growing emphasis on Everi’s stepper series in Class II and Class III.
One innovation launched at G2E is a game mechanic the company calls “Everi Bet.” This allows the operator to set the cost to cover all lines in a game to an appropriate amount for their individual casino. It also allows greater flexibility in the number of bet levels and maximum bets. It accomplishes this without changing the intended number of lines of a game or its volatility.
“The operators were just astounded at what we pulled together,” Lucchese says, “and multiple operators came to us and said, ‘That is, by far, the best thing I’ve seen at G2E 2015.’ We view that as game-changing.”
And then, of course, there is TournEvent. Wednesday of G2E week, Everi held the finals for its fourth TournEvent of Champions in Las Vegas. Most of those attending were among the 182 finalists of the months-long, national slot tournament centered around the company’s innovative TournEvent tournament system.
Each finalist had won a satellite tournament at one of 100 participating casinos—98 in the U.S. and two in Peru—and with it, an all-expense-paid trip for two to Las Vegas for the finals at the XS Nightclub at Wynn Las Vegas. Each finalist also was guaranteed prize money from the tournament itself, with no finalist walking away with less than $500 in winnings.
The tournament has grown exponentially since the idea was first floated to maximize the use of Everi’s TournEvent system, which holds contests on a dedicated bank of special games. The tournament bank sits under a giant overhead monitor that also acts as a leaderboard, with a video screen beaming live-action footage of contestants while the tournament is going on thanks to the cameras affixed to each machine.
The games themselves include special features like floating balloons that boost your score if you touch them, engaging players in a fashion that the dull, button-pushing kind of slot tournament never could. For added excitement, at any point, any contestant can be awarded a random “Jump to First.” If that happens, you can have the worst score in the room moments before the end of a tournament round and then win the tournament.
The tournament has grown every year, and this year, the grand prize was $1 million, won by Rita Kellerman, representing the Ho-Chunk Gaming-Wisconsin Dells casino.
Chary says TournEvent has helped put Everi on the map.
“TournEvent is still under-penetrated in the market, despite all the recent publicity and historic growth that it has enjoyed,” he says. “Many people don’t know or appreciate the distinction of having a social-type experience on a traditional slot floor. So we’re excited about what TournEvent can do for us going forward, and we’re excited about a next-generation TournEvent, which we expect will come at some point in the future.”
TournEvent has drawn the attention of the industry, with other suppliers introducing their own instant-tournament systems that build on many of the innovations of TournEvent.
Lucchese is not worried about the competition.
“It doesn’t matter what segment of our product portfolio you consider, there’s always significant competition,” he says. “I think that continues to make all of us better in the product offerings that we develop for the casino operators.
“We have a huge following for our TournEvent product. One of the things that makes us extremely unique, besides having a great core product for everyday use, is that we fundamentally changed how tournaments are run on casino floors. But the icing on the cake, or the crown jewel for our casino customers, is the commitment that Everi has made to their business through the investment we make in providing TournEvent of Champions.”
He notes that the now-annual event motivates game developers at Everi to constantly improve the TournEvent system with new features—as well as creating profitable events for customers in the preliminary events, which are attended and hosted by Everi promotions staff, who ride one of two large TournEvent tour buses across the country for the satellite tournaments.
“We send our promotions team on the road, two buses, traversing the entire country—as well as internationally now—through the ‘TournEvent Season,’ and that just adds to the excitement. The arrival of the bus is a big deal, and the casino operators get to advertise and promote this big event with their customers. That’s what it’s all about—helping the casino operators provide a more compelling gaming experience for their patrons, to drive more loyalty and more play to their casino operation.”
Chary believes that TournEvent is attracting younger players who like the social interaction in a casino in a way similar to how they enjoy social media. But as for developing specific games to attract younger players to slot machines, Chary has his doubts.
“Slot play traditionally attracts an older demographic, and if you look at the profile across North America of that demographic, we don’t think it’s going anywhere anytime soon,” he explains. “I think attracting millennials and bringing them onto the casino floor, especially towards slot play, is really an incremental opportunity, as it plays to a replacement opportunity. Now, that may change down the road, but right now, our mission is to create an innovative, distinctive opportunity for the traditional slot player to go onto a floor and enjoy that experience.”
He also questions the current craze for skill-based games and how they might impact the popularity of slots with millennials.
“We’re watching skill-based games very closely, like many folks in the industry,” he says. “There are aspects of some of our game development that are going to include perceived skill-based elements or dynamics that would lend themselves to skill as regulations are developed to allow for this functionality into the market. For me personally, I struggle with the operator’s ability to monetize some of those things. Of course, it’s not going to make sense for us to get into skill-based games if the operators can’t make money doing it.”
The TournEvent finals were just one part of what was a coming-out party for Everi at G2E. Its trade show booth was larger than past displays of either legacy company, and, thanks to the consolidation of the larger companies, was situated in one of the prominent top-five locations.
Lucchese says the combined company’s first G2E provided a perfect forum for introduction of the new company to the industry. “The feedback we had at G2E was amazing,” he says. “There were customers that walked in the door and said, ‘Wow, with your product and showing, you guys have really stepped up your game. We can’t wait to get some of this new product on our floor.’ The content, the visual presentation, the graphics, the sound—it all came together.”
For the future, Everi’s games division will continue to build on the foundation set by Multimedia Games. Lucchese predicts more investment in the stepper library—an area he says has been underserved in general in recent years—as well as continued investment in core video in all game styles.
“Ram Chary has entrusted us to expand our product offerings in the games division of the company,” says Lucchese. “While continuing to invest on the payments side, he’s entrusted us to grow our ship share and our market share. If you look a couple of years down the road, I believe that you’ll see the investment beginning to pay off with our expanded library, our expanded content offering, our expansion of cabinet offerings and licensed content.”
In the end, says Lucchese, “we believe that creativity, coupled with our strong and steady payments business, will pay off with an expanded presence on casino floors.”