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Monday, Mar 18, 2024
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Making Winners

Los Angeles has pop culture, Las Vegas has the casino game industry and San Diego has an abundance of software talent. Bally Technologies Inc. combines all three at a small office located between Interstate 15 and the Poway city limit.

Blink and you might miss it. The SoCal Slot Shop on Scripps Summit Drive is one of more than two dozen design studios in various cities that Bally — a $1.2 billion Las Vegas company that trades under the symbol BYI — relies on to keep its offerings current.

Slot machines are a multibillion-dollar business, according to one analyst, with a worldwide market. It is places such as the office in San Diego’s North County that keep casino floors up to date.

The days of one-armed bandits have given way to machines that take many of their cues from video game culture, said Michael Gottlieb, who leads the local design studio.

The 11 employees of the SoCal Slot Shop write code for slot machines. San Diego is a particularly attractive place to have a studio because of its talent pool, Gottlieb said. Sony and Rockstar Games both have large video game studios here. It’s a competitive market for talent and Bally pays appropriately, the local manager said. What’s more, Bally is able to offer interesting work that attracts talented software writers.

Gottlieb, who has been in the local market since 1996, said the video game community in San Diego is small and tight-knit. “You tend to know who the good people are,” he said. “When you have an opportunity to nab them, you do.”

Gottlieb declined to give salary ranges. He said he employs senior engineers with upwards of 10 years’ experience, and sometimes 15 or 20. Pay can easily be in the six-figure range.

An Industry in Transition

Right now, the landscape is changing for the people who build and service slot machines. It is consolidating.

Scientific Games Corp. announced plans in August to acquire Bally in a transaction valued at $5.1 billion, which includes a plan to refinance $1.8 billion of Bally debt. Scientific Games (Nasdaq: SGMS) is based in New York.

Bally reported net income of $98.6 million on revenue of $1.2 billion in its last fiscal year, which ended June 30. Bally’s revenue increased 22 percent from fiscal 2013, though net income slipped 30 percent.

In terms of revenue, Bally lags behind a Reno-based slot machine maker, International Game Technology (NYSE: IGT), which had $2 billion in 2014 and has the right to produce “Wheel of Fortune”-themed games. IGT saw its revenue decline 12 percent from the previous year.

Like its competitor, IGT is about to get bigger. Italy-based lottery technology provider GTECH S.p.a. is buying IGT for $4.7 billion in cash and stock; GTECH will also assume $1.7 billion in debt. The combined company, to be called Georgia Worldwide Plc. and based in the United Kingdom, is expected to have revenue in the $6 billion range.

Chris Jones, an analyst from Union Gaming Research in Las Vegas, said he sees consolidation ahead, particularly in duplicative back office operations. Customer-facing operations such as the SoCal Slot Shop may better weather any consolidation effort, he said.

Gottlieb said the sale will have no impact on the San Diego outpost.

Star-Struck

Bally gets the inspiration for games from the world of comics, television and movies. A Wonder Woman game has just hit the market, and a new Betty Boop offering is slated for 2015.

Actually, there are two new Wonder Woman machines. Each has a concave, high-resolution screen; at 42 inches, the screen takes up a good deal of the player’s field of vision. The machines feature video clips from the 1970s TV series starring Lynda Carter. The video, already good because it was film footage, gets an additional boost from sophisticated graphics.

The machine’s music is literally a blast from the past. Players who score well during the game get a sudden, loud, extended version of the “Wonder Woman” theme, with a driving disco beat and Motown vocals. Even in a noisy casino, every player in the vicinity will notice the win.

The Barona Resort & Casino near Lakeside already has the Wonder Woman game. The Pechanga Resort & Casino in Riverside County is set to receive it this month, along with venues on the Morongo and San Manuel reservations farther north.

The upcoming Betty Boop game, also with a concave, 42-inch screen, has the 1930s-era heroine shopping on Fifth Avenue. The player interacts with the machine via touchscreen. The game includes animation, produced by the San Diego game designers. Bally used Hollywood talent to record the voice of Betty Boop.

The current-generation slot machine is very much like a video game console, such as the Microsoft Corp. (Nasdaq: MSFT) Xbox. When a casino operator wants a change, Gottlieb said, he simply buys new software.

Gottlieb, 44, came over from Midway Games where he worked from 1994 to 2009; most of that time was spent in Midway’s San Diego studio. Today, he also oversees a Bally design studio in Arizona.

The market for casino games is strong, Gottlieb said, because people eventually get their fill of certain video games and then want something different.

The appetite for something new is constant.

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