Two years ago, the Association of Gaming Equipment Manufacturers (AGEM) was facing a grim future. When the pandemic hit the gaming industry hard, all land-based casinos closed down, throwing millions of employees out of work. The members of AGEM immediately felt the impact and many of them likewise closed.
Daron Dorsey, the executive director of AGEM who had just stepped into the role at the time, explains that as the pandemic began to wind down, there were several positives for the organization.
“First it told the story about how the supplier side of the business survived this hopefully once-in-a-lifetime kind of experience,” he says. “And that’s a testament to the strength of how organizations just learn to adapt and learn to manage through these times. It also shows the breadth of operations in places that dealt with restrictions almost beyond limitations—pure shutdowns.
“As the market recovered in those places, things stabilized and we made it through in an efficient, fair and profitable way.”
The AGEM of today is strong, Dorsey says, with an average of about 150 members. New members are joining from numerous sectors, including banking, payment processing, sports betting, technology and other areas. To address these membership issues, Dorsey hired gaming veteran Allison McCoy as director of membership and events.
“Allison has a great background with associations and events, and she’s got great connections with groups like NCLGS (National Council of Legislators from Gaming States) and Emerging Leaders of Gaming/40 Under 40. And Alison will help us improve our communication with associate members.
“We’re also hoping to do social events every quarter, and not just in Las Vegas. We’d like to do some of these events in places like New York City, London and elsewhere.”
Dorsey says he wants to increase the visibility, and along with that, the credibility of AGEM.
“That includes some revamps of the website and some additional branding, and becoming more of an informational resource about what’s going on for the next six months to 12 months within our site,” he says.
Dorsey credits the AGEM board of directors for the vision needed to move the organization forward.
“When we think back 20 years ago,” he notes, “this was more about showing this is a legitimate form of business having legalized and regulated gaming in a land-based environment. This is not this nefarious influence that was only in a handful of places. But now, it’s everywhere. Anybody can drive a couple of hours in any direction, and they can play any one of our particular members’ products.
“We want to evolve on the supplier and manufacturer side. And that includes trying to be a bit more proactive from an advocacy organization.”
The AGEM board is also interested in expanding into other markets.
“We’ve been having those discussions about where there are growth opportunities, and we’re trying to learn, understand, engage more on the continent of Europe with some of those companies,” says Dorsey. “We want to find out whether they’re interested in coming to the North American marketplace and learning more about that regulatory environment. We are a global organization and try to be a sounding board or communication vehicle for any of those companies that are operating in that regulated space and learning more about the intricacies of those markets. Tracy Cohen, our European leader, is being very helpful with that.”
Responsibility for Products
One of the main thrusts of AGEM over the last several years has been the group’s influence in the responsible gaming arena. Almost 10 years ago, AGEM hired Connie Jones as director of responsible gaming. Jones held a similar position at slot maker IGT for many years, but at AGEM she’s representing the entire industry. Dorsey says AGEM is committed to responsible gaming.
“It’s important to us because it’s part of any conversation in which the products that we develop and put out in the marketplace come up, but also it’s the responsibility for that. That handshake partnership that we have with the regulatory authorities that give us the licenses to operate rests on the issue of responsible gaming. Everything we do, we do so in a responsible way. That’s part of our membership credo and it’s part of our charter.”
He says AGEM is lucky to have Jones, who he considers one of the top experts in the field.
“She attends every responsible gaming event,” he says, “and she knows every single person in the room. She speaks with authority and credibility, and if there’s a question about responsible gaming, we’ve got her as a resource. But we want to talk the talk and walk the walk. We really want to support organizations that do clinical research into problem gaming, whether that’s here in Nevada, or whether that’s national or even international because that’s important work they’re doing.
“We want to support the philanthropic, scientific and research ideas because we want to separate fact from fiction about what we’re really talking about here. So we’re proud that we dedicate 20 percent of our operating budget to responsible gaming issues across the board.”
AGEM is noted for its respectful relationship with regulators and legislators. In an arena where there can often be conflicts between the regulator and the industry, Dorsey says, “We can disagree without being disagreeable.” In Nevada, the first stop for any new member of the state’s Gaming Control Board is often an AGEM meeting.
“There’s a new chair of the Gaming Control Board,” he points out, “and there are two new members as well. They’ve all stopped at AGEM to talk. Those are good conversations to have just to update them on what’s going on. And I can give that piece of communication immediately, whether that’s Nevada, whether that’s somewhere else. I think that’s how we honestly try to improve our compliance and that’s how our entire regulatory environment works, and I think that’s what AGEM is all about.
“Maybe we can give them a 10,000-foot view without getting into the specifics about a certain set of circumstances or a certain set of issues that are confronting a particular licensee. They ask great questions, and hopefully we can be a resource for how things can improve.”
AGEM also has good relationships with legislators in jurisdictions that are considering expanding into gaming or widening their involvement in the industry.
“So it’s not just expansion in those areas, but also expansion opportunities within existing marketplaces as well, because the technology has moved forward quickly,” Dorsey says. “Everybody knows here in the North American marketplace when you talk about Class II gaming, but you start getting into electronic scratch-off tickets, or historical horse racing (HHR) games, or now iGaming or now sports betting. So we are watching those expansion opportunities very closely.
“We recently put together an event with Vixio where we talked about new expansion opportunities, whether that’s the Japan story or the Brazil story, whether those places will come to pass. And we’ve had conversations with the folks in the United Arab Emirates, and the potential opportunity with Wynn Resorts there that might become a large new market for both the suppliers and operators. So we feel that there has been outreach from them to us to talk about what our manufacturers know from a regulatory perspective. And that’s a good thing, and that’s a great conversation. Those are the kinds of conversations we want to keep AGEM involved in.”
While the operators’ side of the industry has been making great strides and setting new revenue records on a monthly basis, that hasn’t necessarily translated to suppliers as quickly as one might expect, Dorsey explains.
“The flip side to the operators’ record earnings is one thing that we confront in our day-to-day consumer experience,” he notes. “That includes supply chain issues, logistics issues and all kinds of technical issues. Sometimes those things cost two or three times as much as they might ordinarily in order to fulfill those expectations. So the cost side is really hard.
“When you look at revenue, your cost should increase significantly. That’s something that we are going to have to continue to figure out because that is a challenge. You’re often buying these supplies nine to 12 months before you can commercialize them. You’re holding them on your balance sheet, you’re holding them in your inventory. We’re really having to think like large-scale technology companies with nine-month, 12-month or 18-month lead times for necessary supplies and be smarter organizations just in order to keep your profitability and your success rate, because those things are outside your control.”
Another thing the industry has trouble controlling is the costs at G2E, with space rental, booth construction, electric and internet costs soaring. Dorsey says they’ve been having productive conversations with the expo company, RX (formerly Reed), and the suppliers.
“We have a G2E steering committee, and it’s been a very good relationship these last couple of years,” he says, “especially with the AGA and the RX folks. We want to be collaborative and collegial, because our members are making multimillion-dollar investments and we want to be good competitors at the same time. We want as many customers coming through those doors over those three days as possible. That’s the exciting part. Everybody gets to launch new products. You want as many people as possible to see those products.”
To hear a full podcast of this interview, visit GGBMagazine.com and click on the GGB Podcast button.