The slot machine manufacturing industry recorded its largest quarter of game sales in more than five years during the three-month period that ended in June, according a recently published research report.
Southern California-based Eilers & Krejcik Gaming, which tracks slot machine and related technology equipment sales on a quarterly basis, estimated the total slot machine demand in the quarter that ended June 30 was between 21,500 and 22,500 games said.
“Tribal markets and international casino operators continue to replace games at a much higher rate than commercial casinos,” analysts Todd Eilers and Adam Krejcik wrote in the report they produce in conjunction with Fantini Gaming Research.
“(Sales to) commercial (casinos) is starting to pick up and this is the primary driver for the overall improvement in the average replacement rate,” they wrote.
The survey polled 147 participants, who collectively operate 569 casinos worldwide.
North American casinos purchased nearly 9,500 new slot machines in the quarter, including more than 3,100 machines associated with new casino openings, primarily Hard Rock Atlantic City and Ocean Resort Atlantic City, as well as other casino expansion efforts. Replacement sales accounted for more than 6,300 games and nearly 2,900 conversion kits were sold.
Eilers & Krejcik said replacement sales will continue into the second half of the year as casino operators estimate they will replace an average of 8 percent of their gaming floor over the next 12 months.
“We note this number continues to trend upward since hitting a low point in March 2015,” they wrote.
The report was good news to the slot machine sector, which is gearing up for October’s Global Gaming Expo tradeshow in Las Vegas.
The report highlighted that Australia-based Aristocrat Technologies has the top three slot machine performers for leased games – Lightning Link, Dragon Link and Buffalo Grand. The company has a 28 percent market share, according to the report.
“The company’s share of top performing casino owned games continued a recent upward swing,” Eilers & Krejcik wrote. “On the international front, survey participants purchased a healthy 51 percent of their games from Aristocrat, driven by strong sales in Europe, Australia, and Africa.”
As for the U.S. based operators, the survey gave high marks to American Gaming Systems (AGS), which went public earlier this year and has been expanding beyond smaller Indian casinos into larger commercial and tribal gaming markets.
Survey participants said they purchased 7.4 percent of their games from AGS in the quarter, which was more than 3 percent higher than the company’s average during the past 12 months.
“Looking forward, survey participants expect to allocate 6 percent of game purchases to AGS which was slightly better than our last couple of surveys,” Eilers & Krejcik wrote.
As for the slot machine manufacturing giants – the survey had similar evaluations of International Game Technology and Scientific Games.
Survey participants purchased 21 percent of their games from IGT in the quarter, which was about 4 percent below the previous 12 months. Casinos purchased 27 percent of their slots from Scientific Games, down roughly 1 percent from the previous 12 months.
“Aristocrat, AGS, and (Illinois-based) Incredible Technologies were the primary ship share gainers,” Eilers & Krejcik wrote.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
