It isn’t all gloom for gaming suppliers.
There will be a nice round of gaming expansion next year, and probably into 2013 and 2014 depending on new jurisdictions coming online such as Ohio VLTs, Illinois VLTs and Massachusetts, plus possible gaming expansions in Illinois and Florida.
Meanwhile, there has been a slow uptick in the North American slot machine replacement cycle.
That trend—and others, such as IGT gaining ship share, Bally’s lease base expanding and Multimedia Games attracting increased attention—are illustrated in the latest Roth-Fantini Quarterly Slot Survey.
Here are some highlights from the survey of 196 gaming venues representing 197,000 slot machines conducted by Roth Capital Partners and Fantini Research.
• IGT has reversed its several-year slide in ship share. Survey participants bought 34 percent of their games from IGT, four points above trailing 12-month ship share. Further, they plan to allocate 33 percent of their purchases to IGT next year.
• Bally’s lease base expanded as its new Alpha 2 platform received high marks. On the sales side, 15 percent of purchases were BYI games, consistent with its static ship share, but expectations for 2012 rise to 18 percent.
• Konami continued to gain market share as ship share amounted to 14 percent. However, Konami’s rapid rise might be over as ship share is consistent with the past 12 months, and respondents expect to allocate just 12 percent to Konami next year.
• WMS, long a market share gainer, appears to be in the reverse position. Ship share among respondents was 20 percent, down 4 points. Allocation plans for 2012 are 16 percent.
• Aristocrat’s 12 percent is consistent with its trailing 12-month average. Respondents intend to allocate 10 percent to Aristocrat next year.
• Multimedia Games, once at or below 1 percent, received 4.3 percent of shipments in the quarter, four points above its existing footprint and three points above trailing 12-month ship share.
• Top performing lease titles. IGT’s venerable Wheel of Fortune just keeps spinning, hitting No. 1 again, followed by the company’s Sex and the City. WMS’ Wizard of Oz finished third.
Konami, Aristocrat and Rocket Gaming all gained ground in the quarter.
• Replacement demand in North America is roughly in line with Roth Capital expectations at 7.2 percent for this year.
• Bally received most votes for best G2E product or technology.
Put all together, there is some reason to smile for investors in almost any of the major equipment suppliers. Good times might not be back, but better, and improving times do appear to have arrived.
Regional Recovery Resumes
The recovery in regional gaming markets resumed in earnest in September as gaming revenues nationwide rose 4.08 percent, the best comparison since June.
The rise compared to a 2.17 percent year-to-date increase through August, a clear indication that recovery is both continuing and accelerating.
Best year-over-year comparisons by multi-property regional operators were:
Pinnacle +6.28 percent
Isle of Capri +4.82
Penn National +4.78
These results were published in Fantini’s National Revenue Report.
Since then, October numbers have begun to come in, and will have been mostly published by the time this column is printed.
One of those early reports came from Illinois, which illustrates a number of the open questions about regional gaming in the U.S.: Do new casinos grow the market or has gaming proliferated to the point where cannibalization is more likely?
With casinos coming to Ohio and Kansas next year, and probably to Massachusetts after that, and maybe to other states, that becomes an increasingly important question.
Consider: In Illinois in October, Neil Bluhm’s new Rivers Casino Des Plaines tore the cover off the ball, netting $30.694 million in gaming revenue.
But it was at the expense of other Chicagoland riverboats. Their combined revenues fell 16.85 percent. Worst hit was the Grand Victoria at Elgin. The longtime state revenue leader plunged 29.38 percent as Rivers short-stopped Chicago gamblers.
Of the incumbent Chicago boats, the best comparison was generated by Penn National’s Hollywood Joliet, which is the only casino in the market to have undergone a major renovation recently. Its revenues fell 7.69 percent.
Elsewhere, the only casino to grow revenue was Delaware North’s Jumer’s Rock Island, which jumped 4.3 percent. Jumer’s happens to be the only other casino outside of Chicagoland that is relatively new, having replaced its original riverboat two years ago.
Arguments can be made on all sides of these results.
One case is that Rivers grew the entire market, as the table below shows. The other side is that most of that is cannibalization, a trend not to be desired.
Finally, there is a middle ground that points to the success at Jumer’s and strong defense at Joliet Hollywood and says reinvestment will bring a return even in competitive environments.
We tend to think there is some truth to all three arguments. However, that is another way of saying that gaming expansion is no longer a slam-dunk success without negative effect on competitors.
Here are details for Chicagoland casinos in Illinois:
• Joliet Hollywood (PENN) $10.4 million -7.7 percent
• Joliet Harrah’s (Caesars) $18.4 -10.6
• Aurora Hollywood (PENN) $13.3 -10.7
• Grand Victoria (MGM/HYATT) $18.2 -29.4
• Rivers (Rush Street) $30.7 NA
• Chicago total $90.0 +25.5
• Chicago same store $60.3 -16.9
Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.