When assessing the state of the casino industry, anyone would agree that 2021 is shaping up to be as successful as 2020 was disastrous. Companies that a year ago were looking for ways to survive to outlast the Covid-19 pandemic are now riding a wave of pent-up demand as customers clamor to return to casino floors without restrictions, without masks, and without fear.
On the supplier side, there is perhaps no company that better presents a microcosm of the industry’s rebound than AGS. The company had made steady gains since CEO David Lopez took over in 2013 and began assembling the team that would ultimately transform the company from a small specialty-game supplier into one of the major players in the supply sector. Momentum continued as the new AGS lured talent, added through acquisition, and engineered a successful IPO that led to Lopez and top executives ringing the bell on the New York Stock Exchange as its shares began trading on January 26, 2018.
Since that IPO, the company has never stopped evolving, building successful product libraries on the slot side, developing one of the most enviable collections of table game products in the business, and most recently, building an interactive division that is steadily growing in the accelerating online gaming market.
AGS, of course, was not alone among the companies struggling to survive last year and is not alone among the companies now poised to benefit from the industry’s return to full steam. However, AGS seems better poised than many to continue recent positive results and ride what is now a wave of pent-up demand to long-term strength.
Part of the optimism of company officials is due to the marked improvement of financial results in the first quarter of 2021. Revenue and pre-tax earnings were both up, compared to Q1 2020—before the pandemic took hold. AGS’ stock price also has rebounded nicely.
While Lopez attributes some of the positive Q1 results to pent-up demand as operations return to pre-pandemic capacity, he notes that AGS is set up for the long term. R&D continued through the industry lockdowns in all three of the company’s divisions, and momentum is now building for some of the strongest products ever from the AGS team—engaging new slot games, some of the most unique table-game progressives the market has seen, and a continuing surge in the company’s interactive footprint as top games are ported to iGaming operators via the company’s proprietary remote game server.
“We’re seeing the convergence of pent-up demand,” Lopez says.
“We’re starting to truly roll out some of the product that we worked on during the pandemic. We are not just in the early innings of our premium product strategy; we’re still warming up in the bullpen before the game starts.”
The AGS company slogan, in place for several years, is “Obsessed with the Game.” The explosion of new content across the company’s product library can all be traced to that company philosophy and culture of making great games.
“It’s going to be all about the games for us, really highlighting the products that our studios have been working on before, during and after (the Covid-19 crisis),” says Lopez.
Lopez is quick to deflect any credit for the continuing strength of AGS product to the gaming veterans who head the teams of each division—Mark DeDeaux, senior vice president of slot products; John Hemberger, senior vice president of table products; and Stuart Carr, vice president and general manager of AGS Interactive. Tying all divisions together is another gaming veteran, Matt Reback, who is executive vice president of operations.
“We’re so happy to have these guys on our team, whether it’s Mark, John or Stuart, and the execution by all these guys,” says Lopez.
The casino slot business for AGS was riding high when the pandemic hit last year and has continued its momentum as the industry has reopened. The company’s marquee slot products have included the Starwall merchandising display, introduced at the 2019 Global Gaming Expo and launched early last year—shortly before the casinos closed due to the coronavirus.
Starwall is a giant video backdrop display for Orion premium cabinets that frames three or six Orion games in a 4K video display that mimics the theme, colors and features of the game content on the Orion Portrait. Measuring 8.5 feet tall by 5 feet deep, the merchandising display can frame a three-pack along a wall or a freestanding two-sided six-pack bank of games, available in multiple different configurations
The Orion Curve cabinet, which highlights 4K graphics on a 49-inch curved portrait-style monitor, was launched at the same time as the Starwall early last year. It is being deployed both in for-sale versions and “Premium” versions, which are lease-only premium games.
DeDeaux, in the two years he’s overseen slot products at AGS, completely reorganized the slot products group, bringing in new talent to fill out three discipline groups—gaming operations, product management, and sales operations.
“We really made an effort to restructure the slot products group to have three specific areas of the business, but also to have business leaders with proven experience and talent that fit with the AGS culture,” DeDeaux says. “And I will humbly say that this is the best team of people I’ve ever worked with. (Former Konami executive) Steve Walther stepped in and took over our product management department and completely changed everything we did in product management. The focus really has been on getting deeper and better alignment with sales and with R&D.”
DeDeaux calls the slot products group the “hub” bringing together commercial opportunities for slot products, “understanding all of the market dynamics and competitive landscape, and bringing really thoughtful ideas and strategies into the discussions with R&D.”
Among the R&D successes has been the new AGS Atlas Platform, with enhanced animation and graphics. “Overall, it’s a more efficient platform to develop (games) on,” says DeDeaux. “Our game designers now have a lot more efficiency in how they develop games. There’s enhanced graphics and animation available to them for use, and we can now do multi-denom, in a lot of different ways that we’re excited about.” The premium versions of many of those games, starting with Jade Wins Deluxe and Golden Wins Deluxe, are featured exclusively with the Starwall display.
Lopez comments that the Starwall display essentially provides an immersive slot area for a single game. “I remain excited about Starwall, and its potential staying power,” he says. “And we’ve come out with two new configurations for Starwall, including a football shape, which is going to, without using the term ‘social distancing,’ increase the comfortable space around each player. It will have a carousel feel to it, although it won’t be a carousel. It will increase that comfort zone between players. And along with the configurations, we have striking new media content to keep things fresh.”
“A big part of why we’ve seen success with the Starwall initially,” adds DeDeaux, “is that it just absolutely stands out on a casino floor. You cannot walk past it and not have it catch your eye. It’s merchandising that is almost like a work of art.
“You see so many merchandising packages out there that have different curves and bends to them, which are all great, but this was intended to be like a pure canvas—something where the game designers, the animators, and the graphic designers could paint a beautiful picture.”
As launch themes for the Starwall, the decision was made to create two extensions to popular Orion for-sale games, Golden Wins and Jade Deluxe, enhanced on the Orion Portrait Premium cabinets featuring the powerful new platform.
In addition to its rapid spread across Class III markets, the Starwall package and game themes are being offered to AGS Class II customers. “Given our big Class II portfolio, it was great to have a premium product like Starwall with proven titles like Golden Wins Deluxe and Jade Wins Deluxe,” says DeDeaux.
He says a launch of follow-up titles on the Starwall package will come later this year with another brand extension, River Dragons, a popular Orion Portrait game that features beautiful art depicting two animated dragons that float around the screen framing the reels. This version of River Dragons will send those dragons not only around the individual monitors, but across the entire Starwall display. “When certain events are triggered, whether it be a bonus or just an attraction mode, there will be lots of interaction between the games and the Starwall canvas,” DeDeaux says.
Another new game group for Starwall will be called Epic Reels.
“Between new types of game mechanics and features along with another planned extension, I think we’ve got more winners to come on Starwall,” says DeDeaux.
Meanwhile, the company’s slot products group continues to roll out a pipeline of new game groups for the Orion Portrait and Orion Curve cabinets. One of the newest is the Ultimate Choice Jackpots family, its games carrying the common feature of a picking feature in which the player makes choices to reveal prizes that can include a progressive jackpot.
There have been two initial Ultimate Choice Jackpots games, with hit titles Red Silk and Aztec Chief, and a second library of games including Captain’s Riches and Tiki Fortune.
“By far, Ultimate Choice Jackpots games have been winners for us,” DeDeaux says. The next game launches include Coin Bonanza, which features five-by-five reel sets and the AGS “Cash-on-Reels” feature, a simple mystery feature that pays cash amounts displayed on coin symbols when two land on adjacent reels.
“The initial performance of Orion Curve has been promising,” DeDeaux says. “We launched the Curve for sale, and we’re now launching the Curve Premium.” He says the Orion Curve Premium cabinet debuted with another extension of a legendary brand —Rakin’ Bacon! Deluxe.
“Rakin’ Bacon! Deluxe has been an absolute hit for us,” DeDeaux says. “The game designers have added some unique features to our little piggy character and evolved the original Rakin’ Bacon! concept and really added some new features to the game. It is proving to be a strong performer.”
“The Orion Curve is promising,” says Lopez. “You never know what you’re going to get when you release a product—it truly is like Forrest Gump and the box of chocolates—but this one really has performed well early on, and I’m really excited to see where it’s going to go.”
One other development for the slot products group is a partnership with Exacta Systems that introduced AGS content to the historical horse racing market, beginning with Kentucky. AGS ported its content to the Exacta platform, with titles including Rakin’ Bacon!, Tiger Lord, Peacock Beauty and others offered in HHR versions on the Orion Portrait cabinet.
“We’re also going to also be making the Orion Curve available for HHR, so as we move forward, we intend on continuing to leverage our best-performing games,” says DeDeaux.
Tables and Progressives
While the AGS slot products division continues to hum along, the table products division has been groundbreaking in its offerings this year.
In barely half a dozen years, through acquisitions and organic development, Hemberger, a table game expert and inventor who ran the proprietary games division at Shuffle Master for seven years—part of the time while Lopez was with that company—has built the AGS table products division from scratch with proprietary offerings such as Criss Cross Poker, Jackpot Hold’em, and Buster Blackjack.
Hemberger also built a utility products business, featuring the Dex S shuffler and the new single-deck packet shuffler Pax S.
But where AGS has really shone on the table side is in its side bet and progressive products—most notably the STAX Progressive product, which adds a must-hit-by progressive to table games, and Bonus Spin, which adds a wheel bonus to table games.
“Having John at the helm is having a guy that I would say is the best in the table game space, running anything,” says Lopez. “And that’s not even like an MVP debate in the NBA or any other sport. He’s top-notch, and the team he’s put together is fantastic.”
Arguably the best product yet on the progressive side for AGS is Bonus Spin Xtreme, a progressive side bet system that enables casino operators to link all table games on the casino floor to the same jackpot pool, requiring only one seed amount and providing faster-incrementing and larger jackpot awards.
Bonus Spin Xtreme applies a unique trigger to each table game, allowing the two-level Bonus Spin wheel—a grand prize spin for the triggering player along with a secondary jackpot for each player at the table—even on games such as roulette and craps that never hosted progressives before, in addition to baccarat, sic bo, and poker along with the traditional blackjack version.
As a third prize, Bonus Spin Xtreme incorporates the mystery must-hit-by progressive; when triggered, the wheel spins to pick one of the players with the progressive bet down for that prize.
“Bonus Spin Xtreme has the ability with a single progressive seed to link all of your table games across the floor to the common jackpot,” Hemberger says. “So baccarat can be linked to blackjack, can be linked to your specialty games, to craps, to roulette.”
He adds that Bonus Spin Xtreme combines many of the best features of other AGS table products. “The beauty of this product is it really takes advantage of all of the best features of our traditional Bonus Spin,” he says, “but adds some of the other things that are working on the STAX platform, and things that we just see in general on the table game side that are exciting.
“So when you think about a game like craps, and you think about all that energy that’s generated at the table, Bonus Spin Xtreme is a true community progressive. Everybody at the table, regardless of game type, by the way, is winning together. And that generates a lot of excitement.”
The new progressive product recently was rolled out in California casinos, and AGS has begun securing widespread approval in other markets across the U.S. Hemberger says the next installs are expected in Michigan, Connecticut and Maryland. “A lot of the excitement with this stems from the fact that there’s a progressive here that can go onto roulette,” Hemberger says. “That is the piece of it that’s really generated a whole bunch of interest, because there’s not really anything out there that’s had any level of success on roulette in the form of progressives.”
While the new progressive product is rolling out, AGS is launching its second shuffler, the single-deck Pax S. “We’re super excited about it because we handled development on this shuffler from day one,” Hemberger says. “There was nothing that we acquired from the outside here. It was fully homegrown, and we’re very excited. We have our first signed agreements locked in and ready to go.”
Pax S is a single-deck shuffler that delivers packets of cards to each player—seven cards per player for pai gow, for instance. “It’s a shuffler that stays true to what our commitment was when we got into this business—to provide an economical alternative to what’s out there in the market right now,” says Hemberger. “We certainly feel like we have a very robust product with all the features that operators are expecting in shufflers, but nothing that’s unnecessary that’s going to purely drive up the price of a unit.”
“I’m super excited about Pax S,” says Lopez. “I come from that space—I know what it takes for a unit to be successful there. We’ve got the right salespeople, we’ve got a service team and service leadership that understands the shuffler business.”
Hemberger recently launched a marketing program that will make it easy for operators to offer a complete package of AGS products. Called the AGS Arsenal, it offers operators one all-in price to offer any and all AGS table games, side bets and progressives for a set period. “They can offer any of these products and change the number as demand warrants,” Hemberger says. “It gives operators the flexibility that they need, and it allows us to form a more long-term commitment to each other, because typically these deals are not going to be month-to-month agreements. They’re going to be more like a year or two years.”
On to Interactive
One of the highlights of the AGS first-quarter earnings report was a 41 percent rise in revenues for the company’s newest division, AGS Interactive. Thanks to its 2018 acquisition of U.K.-based aggregator Gameiom Technologies, AGS can port as many of its games to the online world as necessary, without the need of a third-party aggregator.
According to division head Carr, AGS Interactive was well on its way before the pandemic hit last year and was on track to grow quickly in any event.
“The revenue increases are partly fueled by the pandemic, but also because we’ve brought a number of operators live and rolled out more AGS content,” Carr says. “A number of operators in North America were signed in 2020, but actually have gone live in the first half of this year.”
Adds Reback, “Our focus in the first quarter was really to expand our (iGaming) distribution by getting live with any of the operators where we were not live yet. We also wanted to expand our real-money library, so we added hit land-based titles like Red Silk, Dragon Fa, Blazing Luck, and Golden Treasure.
“Adding popular land-based titles that were ported over, and getting live with the operators, was really the main part of our focus. Pandemic or no pandemic, it would have been a very similar focus.”
Carr says the real reason AGS is rapidly gaining ground in the interactive space is the same as other company divisions—the strength of the games themselves. “The AGS game content is strong. We’ve had several successful titles—word spreads very quickly among the operators, and the fact that players recognize the game from playing in land-based casinos is also beneficial. Capital Gains is our most successful title in North America, and other top performers include Rakin’ Bacon!, Jade Wins and Fu Nan Fu Nu. In Europe, Red Silk and Aztec Chief continue to exceed expectations.”
“We’ve said all along, good games are good games for a reason,” says Reback. “The math is good, the graphics are good, the ride is good, the player experience is good. It’s the same reason people like playing Rakin’ Bacon! in a casino—they play it online and get a similar experience.”
AGS will soon add table games to its online offerings, as well as its lineup of side bets and progressives. “This is something AGS is known for, and we continue to see demand for on the land-based side,” comments Reback. “Getting these table game progressives ported over for online and real-money tables is something that can be a real differentiator.”
He says the first table offering online will be a blackjack game with side bets.
On the bigger picture, Carr says the mission for the interactive division is to spread its game footprint quickly, porting over as many popular land-based games as possible, expanding the portfolio, and going live with more operators and sites.
“AGS Interactive’s biggest priorities are to ensure that we are at the forefront of new states opening up in North America so that we can offer AGS and best-of-breed, third-party aggregated content quickly,” Carr says. “We want to continue to be a strong distributor of content and make sure that we capitalize on the omni-channel approach, meaning that we launch game content online almost simultaneous to their launch in land-based casinos.”
In addition to spreading from its current partnerships in New Jersey, Pennsylvania and Michigan to West Virginia and other U.S. states as more legal U.S. markets open, the company has spread online in Canada, and is looking to expand into Latin America.
The company has seen much success in Ontario with sites operated by the Ontario Lottery and Gaming Corp. “Golden Wins was our launch title,” says Carr, “and I think it exceeded their expectations right out of the gate. We’ve also recently gone live with Loto Quebec, and we’re seeing similar performance, because our games do well in Canada on the land-based side—and that’s a pretty good indicator of how things will go.”
“It is exciting to be live with OLG and Loto Quebec,” says Carr, who adds that AGS is negotiating to spread online to all other Canadian provinces. “Outside North America, we are doing business with tier-one Gibraltar and Maltese operators in Europe, getting ready to launch in Romania and the Baltics, and we’re live in Mexico and Colombia with expansion planned in these territories.”
“It’s all about expanding our distribution,” says Reback. “That’s where we’re super focused. It’s a huge mission to expand our library of games, to get our table games out there, and to get our progressives going.”
AGS is coming out of the pandemic at full throttle in all its divisions, and in all divisions, one constant remains—the strength of AGS games and technology. “The biggest opportunity for us is content, content, content,” says DeDeaux. “It comes down to that diversity of palette that we have across all of our studios and their capabilities.”
“The two things really drive all of our successes is our products and the people on our team,” says Hemberger. “We really try to stay committed to innovating and thinking about the players and the operators when we’re developing our products.”
For Lopez, everything comes back to his team.
“We have an efficient, effective, and very powerful team, and they punch way above their weight class,” he says. “It’s all about execution, and letting the team do what they’re best at.”