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Raising the Bar

AGS carves its new identity as a full-service casino supplier

Raising the Bar

A few years ago, industry impressions of the company then still known by its formal moniker, American Gaming Systems, centered around a story that was very compelling at the time. It went something like this:

San Francisco-based equity firm buys Class II slot supplier; employs gaming industry veteran to break the company out of its Oklahoma base and into traditional Class III markets.

The AGS story of today is no less compelling. Two years ago, the company was acquired by an affiliate of Apollo Global Management, LLC, and brought in a chief executive who, after several key acquisitions, established a Class III foothold with hits in a couple of genres, rebranded as AGS, and created a completely new identity for the company—that of a diversified North American supplier of slots, table game products and social casino offerings.

AGS, to be sure, is just now hitting its stride. David Lopez, the president and CEO, has reinvented the company. Former CEO Bob Miodunski, a veteran who once headed Bally, had gotten the ball rolling by establishing licensing in key Class III jurisdictions, where AGS saw success with skill-based hits like Ripley’s Believe It Or Not! and Family Feud.

But the move credited to Miodunski that is arguably the most important with respect to the new AGS was the slot-maker’s sale to the Apollo affiliate which brought in Lopez to replace the retiring chief executive.

Lopez, who formerly was CEO of Global Cash Access (now Everi), quickly formed a vision for the new AGS. It was similar to his original vision for GCA: “We wanted to turn it into more of a diversified gaming supplier,” he says. “We had a Class II distributor-sales infrastructure, with some R&D, but we wanted to expand into a global, diversified gaming supplier.”

After two years, that vision has come to fruition, mainly because Lopez saw immediately what was needed—a core platform that would translate seamlessly between Class II and Class III markets, followed by creation of a table games division and enrty into the social casino space.

Under Miodunski, the company had established a foothold with what was called the Roadrunner platform, a technology largely inherited through the acquisition of Canadian supplier Gametronics. “Before I started, the company really didn’t have a true platform that was their own,” Lopez says. “But Roadrunner put people on notice that AGS was going to become a Class III supplier.”

Roadrunner, however, was essentially a premium platform, with large cabinets topped by bonus wheels and elaborate, entertainment-style bonus events. Lopez knew that for long-term success in Class III, the company needed a workhorse core platform. He initiated a methodical approach to make that happen.

Colossal Start

A preliminary move was the acquisition of Colossal Gaming, a company founded by industry veteran Stephen Weiss that specialized in one type of slot: big.

Big, as in Colossal Diamonds, a giant-sized slot that has been one of the most successful Bertha-style offerings in the industry since AGS purchased the company. The distinctive, huge scarlet cabinet, commonly referenced by its nickname “Big Red,” has logged roughly 250 placements across 23 states—most recently gaining approvals in Mississippi and Nevada, where Colossal Diamonds was the beta-test game.

“When we projected what Colossal would be worth to us even in the first year or two, we justified the price we paid for it,” Lopez says. “Even forgetting about the rest of the Colossal business, the roughly 250 Big Reds we have in place now put us in a great position to justify that purchase.”

According to Lopez, the Colossal purchase was completed because AGS needed “something to bang doors down” to open all its products to new markets. He says the Colossal purchase was made after witnessing the success of Colossal Diamonds when AGS distributed the giant slot for Colossal. “What we saw in Big Red was a way to get the attention of Class III casinos,” Lopez says. “It gave us the clout to go in and say, ‘Hey, we’re here.’”

Actually, Big Red said it for them, instantaneously multiplying the number of operators familiar with the name AGS. Lopez says unfamiliarity is an occupational hazard for Class II suppliers making the transition to Class III. “The difference between operators in Florida and Oklahoma and the rest of the world was that in Florida and Oklahoma, they said, ‘Yeah, AGS. Diamond Lotto, Royal Reels,’ or another of our iconic games. Everyone else would say, ‘Diamond Lotto? Royal Reels? What are those?’

“Colossal really gave us the opportunity to get a foot in the door with that one product.”

Just in the nick of time, as it happened, because the next move on the AGS agenda under Lopez and executives like Andrew Burke, vice president of slot products, may have been the most important. The company acquired Atlanta-based supplier Cadillac Jack from Amaya Gaming for roughly $370 million.

Cadillac Jack mirrored AGS in many ways—a well-established Class II slot supplier earning a foothold in Class III markets with a popular library of games. Moreover, as it happens, there was little overlap in the Class II markets of each legacy company. Cadillac Jack was a leader in markets like Wisconsin, Alabama and Mexico. AGS was a leader in Oklahoma and Florida, among other markets.

And perhaps most importantly, Cadillac Jack brought with it a crucial piece for the emerging AGS—a core slot platform, one that was brand-new at the time of the acquisition. AGS engineers spent the first year after the merger marshaling the strengths of the R&D talent of both legacy companies, and molding that core slot platform into what is now called the Atlas platform, which runs on the company’s new dual-monitor core cabinet Icon.

The Icon game library, introduced at last year’s G2E, incorporates the best game mechanics of Cadillac Jack—from the PowerXStream ways-to-win reel format to Fierce Factor, which returns higher wins for higher line bets.

AGS is following up with a groundbreaking new premium format at this year’s G2E—again, combining the best of the legacy companies.

Lopez says he couldn’t have found a more perfect fit than Cadillac Jack to move the company forward. “All the things we had, they really didn’t have, and vice versa,” he says. “It was almost like we were meant to dock with one another, that these companies were meant to be together.”

Burke, who has been with AGS since before Lopez came on board and has been VP of slot products for two years, says the company added some of the best engineering talent in the business with the Cadillac Jack acquisition. “The combination of our R&D teams has been fantastic,” he says.

The core product AGS will bring to the Global Gaming Expo is the result of the strength of that combined team. “Performance has been amazing, pretty much everywhere we’ve gone,” Burke says. “We have a really great story to tell on the slot side because we’ve got a proven performer in Big Red, and now, we have a core product in Icon that gives us the six-pack on the floor, or 12 games.”

Games like Golden Wins, Gold Dragon Red Dragon and Queen of Wonderland Fierce Factor are among the early hits on the Icon cabinet. (More details on new AGS slot games for G2E can be found in the “Global Games” section.)

The next part of the slot puzzle for AGS is its new premium cabinet to be unveiled at G2E. Called Orion, it features a striking 42-inch flat-screen monitor, on which both dedicated games and games shared with Icon take on a new, cinematic feel.

“There’s really nothing like Orion on the market today,” says Lopez. “Visually, it captures immediate attention with this really unique emotive lighting design and sleek footprint. When you see Orion in a bank of three or more, it creates a billboard-like experience on the casino floor.”

AGS first displayed the cabinet to select customers at a June event (the first GameON customer summit), and according to Burke, initial feedback indicates big things to come. “When we first unveiled it,” he says, “the response we received was, ‘That’s a winner. That’s a winner.’ It’s not even out yet, and it is generating excitement.”

Setting the Table

As Lopez was putting the pieces together that led to the reinvention and resurgence of the AGS slot library, a parallel evolution was taking place that would provide another piece of the puzzle transforming the company into a diversified gaming supplier—the table game business.

Lopez says the plan to move into the table game space was there when he arrived in 2014. “When I first started with AGS, we made a list of things we wanted to do—businesses we wanted to get into,” he recalls. “We knew we wanted to enhance the slot business, expand into Class III and secure more licenses. We also wanted to start a table games business. Whether it was traditional felt table games, equipment, electronic table games … We knew we wanted to be in that space.”

AGS would move into table games through a combination of acquisitions and inventions, but first things first. Before the product came the people who would run the new division. Right around the time Lopez started, a perfect opportunity arose to kick-start the new table business, in the form of John Hemberger, a table game expert who ran the proprietary games division at SHFL entertainment for about seven years.

Hemberger, senior vice president of table products, was brought in to oversee the new business. “John had been running the largest table game division in the world, so he couldn’t have been a better fit,” says Lopez.

Hemberger wasted no time building up an impressive collection of intellectual property to jump-start the table division. First, the company acquired the assets of Casino War Blackjack, Inc., producer of the award-winning War Blackjack table game, a popular blackjack derivative based on the classic War card game many remember from childhood. The new division inherited a ready-made installed base for that game, and soon introduced War Baccarat to expand on the concept.

Next came the acquisition of three titles from In Bet Gaming—In Bet, Criss Cross Poker and Hot Roller Craps. In Bet is a blackjack side bet—similar to the classic Acey Deucey game—with more than 350 installations. Criss Cross Poker is another classic poker derivative many remember playing at the kitchen table, and Hot Roller Craps is a side bet for dice games.

Those were just the beginning. In just two years, Hemberger has built the new table game division of AGS into one of the most extensive collections of table game side bets, progressive jackpots, poker derivatives and new original games you’ll find anywhere in the industry, with more than 1,100 table product installations across the country.

Hemberger says the table offerings—both those acquired and new proprietary inventions—all must have certain qualities to succeed. The best, he says, promote a community feeling among players against the house.

He says he uses the game of craps as an example of the elements vital for any new banked table game or side bet to succeed. “Craps involves a united goal for players against the house,” he says. “We try to take this element to the banked card games.”

Unlike craps, though, new banked card games or bets must be simple to understand immediately.

A perfect example of a new game that “checks all the boxes,” as Hemberger says, is a game acquired a year ago called Buster Blackjack. It is a side bet that, simply, pays off when the dealer busts. The more cards it takes the dealer to bust, the higher the payoff. “It’s the perfect side bet,” says Hemberger. “If the dealer busts, the table wins. It has a community feel, and a common goal against the house.”

Since acquiring Buster Blackjack in September 2015, AGS has more than doubled the installed base from 250 to more than 600 across 106 casinos in 10 different states.

Another 2015 acquisition that has shown promise is Bonus Spin Blackjack, a side bet that pays off in two ways: If one of the player’s first two cards is an Ace, the bet pays even money. However, if dealt a blackjack, the player presses a button to spin a virtual wheel for various money denominations or a progressive jackpot.

A poker version of the side bet awards a wheel spin to players dealt three of a kind or better. AGS is making Bonus Spin available as a white-label offering for blackjack or poker as well.

“On slot games like Wheel of Fortune, you’re playing to spin that wheel,” Hemberger says. “It’s the same on a table game.”

Side bets are joined by proprietary games like Chase the Flush, in which players and dealers compete head-to-head using three hole cards and four community cards to create the longest possible flush; and 2 Card Poker, in which the best two-card poker hand out of four dealt cards wins.

“Flush games have some real appeal, because they’re simple, and you don’t have to have a table game background to play,” Hemberger says. “You just need to be able to look for suited cards. It’s a visual game.”

And the 2 Card Poker game? “Again, very fast-paced, very simple to understand, and an intense gambling experience for players.”

Hemberger adds that the Bonus Spin product fits well on a game like Chase the Flush, where normally, the progressive side bet would pay off on a seven-card straight flush. Here, players have at least a shot at the progressive by spinning the wheel every time they get a much-more-attainable three-of-a-kind.

The list goes on: Double Draw Poker gives players a second draw of one card, for a second bet. Tornado is a roulette utility device that allows players to initiate each spin of the wheel through a “remote ball activation device.” Double Ball Roulette has players spinning two roulette balls at a time.

Finally, at G2E, the AGS table division will roll out its first card shuffler, called Dex S. “It’s a poker-room shuffler, one deck being shuffled while one deck is in play,” explains Hemberger. “It can be used on single-deck blackjack as well. The randomness and shuffle time we’re getting on all the early tests are fantastic.”

By all accounts, the AGS table division is off and running. “Fifty percent of our content has been acquired, and 50 percent has been developed in-house, and that’s a healthy ratio for us,” Hemberger says. “It’s been just about two years since we created AGS’ table games division, and we’re thrilled to already have more than 1,100 table products in the field.”

Primed for the Future

In addition to the portfolio of slot and table games, AGS is preparing for the future, getting its ever-growing list of proven titles into the social arena, with the Lucky Play Casino and Vegas Fever apps that can be downloaded from the Apple or Google stores.

“There are a lot of R&D efforts that go into creating those games for the land-based environment, and they also work very well online,” says Julia Boguslawski, chief marketing officer for AGS. “We’re committed to taking our great library of proven games and offering them on our social platforms in a way that really recreates the land-based game experience. I think we do a really good job of that.”

For now, though, the corporate focus is still on creating that library on both the slot and table sides, and spreading the word of AGS to the few remaining North American markets that may be unfamiliar with the surging company.

With Mississippi, Florida and Nevada approvals in hand, AGS will continue to use its combined forces—the corporate Las Vegas office coordinates with production facilities in Oklahoma City and an R&D center in Atlanta, the former home of Cadillac Jack—to move forward in all markets.

“Outside of the U.S., one of our main focuses is the Latin American market,” says Lopez. “We brought in Drew Pawlak earlier this year to lead our sales and business development efforts in that region because there is so much more potential. Cadillac Jack had a really strong presence in Mexico, and it’s important for us to maintain and grow our market share there. We’re also closely watching Brazil.”

Another way AGS is moving forward in its target markets is through the GameON customer conference the company inaugurated in June. It is an intimate affair—fewer than 80 senior-level casino operators attended the first event, and Lopez says the company intends to keep the invitations under 100 key customers, invited for a private review of upcoming products and technology that is not possible amid the din of a huge event like G2E.

The conference intermingled presentations on AGS products with presentations on the industry at large, including a workshop staged by respected analysts Todd Eilers and Adam Krejcik of Eilers & Krejcik Gaming, LLC, a lively discussion on eSports by Fifth Street Gaming CEO Seth Schorr, a look at the Seminole Tribe’s history by Seminole Gaming CEO and Hard Rock International Chairman James Allen, and an industry overview by American Gaming Association President and CEO Geoff Freeman.

But the key focus of the conference was on the supplier’s customers. “GameON gives us an opportunity to say, ‘This is the new AGS; we’re here to listen; we’re here to provide value for you,’” Boguslawski says. “We get to really spend time working on our relationship with customers over three days. We want to be open with our customers, and we want it to be a two-way street.”

“We don’t want them to just listen to our sales pitch, which is why we enriched the agenda with so many peer and industry speakers,” Lopez adds. “We get paid to generate EBITDA for our customers.”

The information gleaned from GameON, and from constant contact with customers in general, is now feeding information on those customers’ needs back to an R&D team in Atlanta that stacks up to any in the business.

“We have phenomenal talent, because of all the different resources in Atlanta,” says Boguslawski. “That’s given us an edge.”

“The thing that separates us culturally from other companies is the genuine support that everyone has for each other in our company, to make sure we achieve our goals,” adds Hemberger. “We look at everything in terms of winning and losing. And no one wants to lose. We hate losing.”

Considering the new AGS, it’s a good bet it will be winning that dominates the horizon for some time to come.

Frank Legato is editor of Global Gaming Business magazine. He has been writing on gaming topics since 1984, when he launched and served as editor of Casino Gaming magazine. Legato, a nationally recognized expert on slot machines, has served as editor and reporter for a variety of gaming publications, including Public Gaming, IGWB, Casino Journal, Casino Player, Strictly Slots and Atlantic City Insider. He has an B.A. in journalism and an M.A. in communications from Duquesne University in Pittsburgh, PA. He is the author of the books, How To Win Millions Playing Slot Machines... Or Lose Trying, and Atlantic City: In Living Color.  

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