Skill-based gaming push a reminder of past slot machine efforts By Howard Stutz, Executive Editor, CDC Gaming Reports April 9, 2019 at 8:00 pm Remember Silicon Gaming? In the late 1990s, the Palo Alto, California-based slot machine manufacturer created a series of games operated on a system called Odyssey that featured a futuristic design and what, for the time, were high-tech 3D graphics.Screen grab from YouTube video of Silicon Gaming’s video pokerOne of the company’s best-remembered games was a video poker product where a pair of disembodied white gloved hands would deal the cards. The machine was actually kind of creepy. Think of Thing, from the 1960s television series The Addams Family, dealing you a hand. Silicon was headed by gaming executive Andrew Pascal – a nephew of Elaine Wynn – and reportedly had start-up funding from several high-profile gaming types, including then-Circus Circus President Glenn Schaeffer. Silicon Gaming went public in August 1996 and raised $32.8 million before it had even placed a slot machine in a casino. According to a 1998 Forbes article, Silicon Gaming was asking casinos to pay $12,500 per machine – nearly double the cost for games at the time. In 1997, Silicon had just $9.6 million in revenue and lost $23 million. Four years later, International Game Technology bought up the company. AGS CEO David Lopez mentioned Silicon Gaming during an interview at last week’s National Indian Gaming Association conference and tradeshow in San Diego. I’d asked him about skill-based slot machines, which have been a topic of fierce discussion in the gaming industry for the past four years. So far, there has been a lot hype and speculation, but not much activity. In February, Nevada Gaming Control Board Chairwoman Sandra Douglass Morgan told a UNLV gaming education series that skill-based slot machines have not gained significant popularity on the casino floor. She said the board’s technology division was working with companies on various products, but the agency hasn’t seen a spike in new games for approval. AGS CEO David LopezLopez, who has been AGS’s top executive since 2014, thinks he knows why. The games take time not only to develop, but to gain acceptance in an industry that has often been criticized as slow to welcome change. “The trail blazers are here, and they are doing a good job,” Lopez said “The bad news is that the trail blazers don’t always make it. To be fair, they are probably all light years ahead (of the industry), but that doesn’t mean people are playing them right now. Some companies have had success, and the guys that are doing it are all working hard. They should be in the (Gaming) Hall of Fame. They are trying to break down barriers in gaming, and this is a major barrier.” Silicon Gaming was one of those barrier breakers, Lopez said. The only problem was that the games were a decade before their time. “You look at the cabinets, the graphics, we started seeing them 10 or 12 years later,” Lopez said. “But (Silicon’s) games never did well and they crashed and burned pretty fast. They were way ahead of their time, light years ahead. It’s not uncommon for companies that are light years ahead to fail.” For now, Lopez said AGS is staying away from skill-based gaming. The Las Vegas-based company, considered one of the industry’s up-and-coming slot machine providers, has grown steadily through more than 20 large and small acquisitions. As it looks to expand both its domestic and international footprints, AGS continues to concentrate on the Indian gaming market, which currently provides the company more than half of its revenues. Last month, AGS renewed its long-term contract with Oklahoma’s Chickasaw Nation, which secured the company’s installed base of more the 3,200 games in the tribe’s 22 casinos. The company is not focused on developing skill-based products. Still, Lopez is keeping his eye on the skill-based market, as he expects his competitors – Scientific Games, Aristocrat Technologies, IGT – are also doing. At some point, one or two of the skill-based companies will “catch fire” with a product that will start making its way onto slot machine floors. At that point, he wouldn’t be surprised if one of the major gaming equipment manufacturers – with a large footprint and an ever-larger distribution network – steps up to the plate. “Maybe someone will take something, run with it and find the secret sauce,” Lopez said. “And then others will copy it and it’ll be everywhere.” But it won’t happen overnight. “When it’s ubiquitous, when every Class II and Class III facility has true skill-based gaming products, you and I will be retired,” Lopez said. Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.