News Updates From August 06

Merit confirms Chinese raids

OFFICIAL confirmation has now come through from American manufacturer Merit of the news broken in this column on Friday, that raids had taken place on five companies on the Chinese mainland, with copied games and documents seized.

Merit's China-based attorneys assisted officers of the Chinese Administration for Industry and Commerce and local police in raiding four companies in Panyu and one in Guangzhou, according to Merit's director of government relations, Bob Fay.

He released pictures, reproduced here, showing the removal of games by the Chinese authorities, which was the culmination of several months of investigation as part of Merit's on-going intellectual property enforcement programme. Fay has already led raids in Hong Kong, Singapore and South Africa and promised further action in other parts of the world to combat copies of Merit games.

Raided were EXL Electronics, Chengtai Electronic Technology, Guangzhou Xipu Electornics and Totem Amusements, in the Panyu district and Jingge Computer Science and Technology in Guangzhou.

When 255 illegal gambling machines were also found on one premises, 150 police officers were brought in to seize the games, which filled four trucks.

Also seized were "50 to 60" pages of sales invoices from one of the companies which will assist Merit in tracing consignments to different parts of the world and to conduct follow-up action.

Commission considers AWP role

THE on-going drama of the declining UK AWP business is still behind closed doors as industry leaders try to hammer out a deal with the Gambling Commission, which would see a review of stakes and prizes a year earlier than the projected September 2007.

Meanwhile, one leading AWP operator commented to InterGame this week: "The mess that the AWP business is in is down to two factors: the greed of the retailers and the lack of motivation by the Government."

Futurelogic adds Pepper

FUTURELOGIC Europe, based at Maidenhead, has appointed Paul Pepper as service and support engineer with the brief to support product integration activities, casino trials and helping customers with their problems. Pepper has a Masters degree in engineering and comes from Unilever. Pepper will travel to the Kiev and EELEX shows in his first weeks with the company. FutureLogic is a leading thermal printer technology producer with a major investment in the casino industry.

Gamestec plans Deal tournament

Gamestec has announced plans for a national Deal Or No Deal Tournament across their Gamesnet terminals following the successful launch of the official Deal Or No Deal quiz game, based on the hit daytime TV show hosted by Noel Edmonds,
Deal Or No Deal has recently been rolled out across the whole of Gamestec’s estate and has remained at the top of the gaming charts for the past three months.

Jurian van der Meer, head of brand exploitation and products at Endemol, UK, producers of the show, said, “We are very excited about the official Deal Or No Deal quiz game. The popularity of Deal Or No Deal has risen tremendously and we knew that it would make a fantastic quiz game. Gamestec and Bell Fruit Games have helped make this a reality and we are certain that the game will continue to be a huge success.”

Betonsports closes US business

BETONSPORTS, the UK-based internet betting company which has had its chief executive, David Carruthers, arraigned on racketeering charges in the US, has closed down its US business, which was providing most of the company's profits.

Those operations were based in Costa Rica and Antigua. Its London shares have been suspended for the past three weeks. It is now evaluating whether it will have to sell its Asian business to settle its debts.

In all, 800 staff in Costa Rica and Antigua have lost their jobs. The company made a profit pre-tax of US$14.9m in the year to February 5, compared with $13.3m the previous year. Around 95 per cent of the profits came from its US trade.

The charges facing Carruthers allege that the company failed to pay US excise taxes on more than $3.3bn in wagers taken from US players.

Harrah's eyes Stanleys and LCI

HARRAH'S Entertainment is looking at a move into the UK casino market and is studying a proposal to buy the UK casino operators Stanley Leisure and London Clubs International, which are currently talking over a £634m merger. A detailed appraisal of both companies has been made by Harrah's, according to industry insiders.

Harrah’s has so far declined to comment.

Source: eCoinOp UK

11th August 2006

Last rites for the AWP?

By David Snook

If the views of one sector within the current UK AWP manufacturing/operating industry were to be accepted, then there is an unquestioned conspiracy against the street market, whether in pubs or arcades. That group cites a succession of individual circumstances and setbacks for the industry which, if viewed in aggregate, might suggest a plot to dismember machine gaming in Britain. The motive? To restrict gambling to the 'tidier' betting shop/casino sector and eradicating the perceived out-moded arcade/pub location.

The evidence could be seen as compelling...

* The old Gaming Board recommended a move to 50p and £35 in stakes and prizes for two years ago - rejected by Government, in favour of a (much) later review by the new Gambling Commission.

* The lack of purchasing through an absence of innovation, caused by manufacturers cutting R & D investment in face of a downturn in sales. The natural progression is a loss of the once-dominant position that Britain held in AWP exports.

* The switch-over to a preponderance of 'greening' (a posh name for refurbishing) in AWP factories which once did nothing but all-new games.

* The ill-disguised and often notorious liaisons with foreign - notably American - casino industry leaders and 'consultants' with zero experience of AWP operating or even of the principles behind that genre of game.

* 40,000 AWPs have come out of the industry base in the past two years through the above factors.

There is a veritable catalogue of crimes committed by the Gambling Commission, the DCMS, the Government and just about everyone else in authority over the industry, but those are seen as perhaps the principal causes for the current woeful state of the industry.

There is a more moderate line to all of those arguments, but even before examining those credentials, there is a common bottom line. While the industry may be talking with the Gambling Commission right now with a view to advancing a review of stakes and prizes from the projected September 2007 to somewhere later this year, it may be too little too late. They'd hope for 50p/£50, but most money is on the 50p/£35 which in reality the business should have received two years ago.

Basically both 'camps' agree that without a review this year - THIS YEAR - the AWP industry will be beyond redemption.

But what of those compelling arguments? The stalling of the Triennial Review was clearly a bad move by the Government. The Gaming Board was its appointed industry watchdog, there to keep its eye on the industry and its ear close to the industry ground and report back dispassionately. If it recommended 50p/£35 then it did so as a carefully considered suggestion to keep already tilted playing fields from unbalancing completely. It should have been listened to; an accepted form of entertainment which had stood the test of time and which entertained millions and kept thousands in jobs, was placed in severe jeopardy because it patently failed to listen.

The rest is as inevitable as night following day. Instead of a regular pattern of assimilation, testing and initial purchasing in the first year after a review, followed by a year of intensive purchasing, followed by a slowing down in anticipation of the next review - used by manufacturers as an opportunity to put new games into the export market; we have stagnation. Operators have sat on their cash in case buying is quickly followed by a review rendering their purchase out-dated and they have also sat on their cash because the manufacturers are struggling to make playable and appealing games from old limits. The manufacturers have struggled to make ends meet - hence the stopgap of greening to keep factories open and an appearance of re-equipping in retailers' estates - and reduced their R&D spend. That reduction has also led to the surrender of the pole position in exports to competitors from Germany, Spain and the Netherlands.

The hoo-ha in the press about ministers dining with casino moguls and the scantily-disguised auto-suggestions of something murkier as a result, would have some recognition if the outcome had been the 200 new regional casinos which the Americans and Australians wanted. Yes, the American casino industry has generally been the root cause of the mess-up of foreign markets all over the world, notably Russia and Greece, but it hasn't happened here and probably won't as the mass of new casino openings will almost certainly not happen.

There is some evidence that the authorities came to the industry at one stage and suggested the simple transplant of industry standards from Nevada, Australia or New Zealand directly on to all forms of UK machine gambling. But the explanation of a few simple home truths - such as the intrinsic difference between an AWP and a casino slot - appears to have sent them off for a re-think. At least it is seriously to be hoped so...

Forty-thousand AWPs out? That is probably an under-statement. If you take half of them as those AWPs which were unceremoniously dumped out of betting shops when the fixed odds betting terminal was allowed in and the remainder as having dropped out of arcades because they offer poor alternatives to other forms of coin-op gaming, then you perhaps have the bulk of the downturn in numbers. But there should be added to that the reduction in the number of AWPs in pubs - again because the core player can go down the road to a betting shop and play for bigger numbers.

The essence of the problem is the imbalance between the offerings permitted in pubs and those permitted in betting shops, distorted further by the delay in a review of stakes and prizes. A fundamental error was made in the UK when the Gaming Board had the bookies by the short and curlies, legally, over FOBTs and dropped the case. It apparently did so because it wasn't offered the necessary funding to fight the action by the DCMS. A ha'porth of tar, therefore it could be argued, helped sink not just the ship - but an entire fleet. The admitted loophole which the Thomas Family introduced in Section 16 games (Section 21 in bingo clubs), certainly helped partially fill a void, but that has probably now run its course and in any case only applied to arcades and adult gaming centres.

A review of stakes and prizes is an immediate but only partial solution. The real problem is that the industry is fighting an acute imbalance of gaming opportunities between the different types of location in the high street, with the betting shops at the top end, the pubs languishing way down at the bottom and the arcades and AGCs floating in between. It should also be argued that the middle sector is essentially different from the betting shops in that they offer something that the bookies don't, an environment which is not single-sex, which is less aggressive and which is designed to entertain rather than entice. Twenty quid in an AGC will entertain for a couple of hours - the same in a bookmakers will potentially be gone in minutes.

There is also an argument that the pubs have contributed to their own malaise. The operating principles of the old breweries are strongly retained by the modern retailers. A short-stay machine controller has but one objective - create higher profits from AWPs before moving on and upwards in his career, with little concern for the chaos he leaves behind. Retailers need to take a longer-term view and instead of anchoring themselves on 80 per cent payout (didn't one major retailer recently take a strategic decision to cut to 71 per cent?), they could look at going the other way. Anyone with even a modest understanding of the British AWP industry will know that if the pub player cites a machine as 'mean' you might has well change it. That is an opportune moment to report that AGC specialist Talarius is reporting a 15 per cent uplift in performance this week - and we understand that its percentage payout is 92-94 per cent. The year-on-year return for pub AWPs is currently 10-15 per cent down...

But those are interesting 'asides' that perhaps help to illustrate the points. The AWP industry remains in a parlous state, certainly the weakest it has been in my career in the industry, which will span 40 years next year. It is probably - I emphasise only probably - an unfortunate set of successive circumstances. I would discount the conspiracy theory, but only just.

Astra reports Megaslot upturn

ASTRA Games - part of the Novomatic Group of Companies - has seen a marked increase in demand for Section 16/21 multiplayer Megaslot conversion kits. The kit enables a four-player Megaslot, one of Astra's premier Section 16/21 games, to be transformed into two separate two-player machines, allowing more flexibility for the operator.
Alan Rogers, director of sales at Astra, explains the reasons for the upsurge in demand and the benefits of converting a Megaslot four-player: "Launched at ATEI 2005, Megaslot was the first video reel-based Section 16/21 multiplayer to be introduced to the UK market, going on to be one of Astra's outstanding products of 2005.

"Operators found that although they had success with the four-player Megaslot, some of their gaming areas only necessitated a two-player machine, particularly with smaller operations. In addition to this and in light of future limitations to Section 16/21 games, the unit can be spread across multiple sites after conversion, effectively doubling the profit earning capacity of the game in some operations."
The conversion kit will incorporate the full top box presentation, including the 26ins TFT screen, and has already seen considerable volume move into the market place, "Initial orders have been very positive, with kits for approximately 20 per cent of the total volume of Megaslot machines in the market being purchased," said Rogers.

Murphy to head Sega spares division

SEGA Amusements Europe has appointed Peter Murphy to head up its new spares business.
Sega says it is going to be 'aggressively developing' beyond its current guise as a video game manufacturer. It recently made a start by developing product in-house with Ford Racing Full Blown and has other projects in the pipeline. The spares business, which is due to commence in the coming months, will add another string to the bow.

Paul Williams, Sega's head in Europe, said: "For the past five years Suzo has offered an excellent service in supplying Sega spares, for which we are grateful. However, the time has come to bring it in-house and make Sega a one-stop shop for customers."

Peter Murphy brings with him 26 years of industry experience, including the last 14 at Brent Electronics.

Hazel to supply Deith spares

DEITH Group has announced the appointment of Hazel Electronics as its key supplier for all spare parts.

The Kent-based company will take over all non-warranty spare part and service orders for all video, novelty and non-Deith/CMS gaming machines. Matthew Deith explained: "Part of our long-term strategy is to out-source certain parts of our business, by appointing professional, dedicated companies to carry out certain functions more effectively.

"The arrangement with Hazel Electronics is the first step. We are very happy to appoint Ray Hazelton and his very experienced team who we know will provide a very efficient service."

Merit raids in China

MERIT continued its campaign against counterfeiters this week with a series of raids in mainland China.

InterGame's sources in China have indicated that raids took place on Tuesday, hitting six companies in Panyu, the main coin-op producing town in China, and nearby Guangzhou. A number of counterfeit games were seized by the Chinese authorities, assisted by lawyers working for Merit and a quantity of paperwork confiscated.

InterGame understands that the raids also uncovered a number of illegal gambling machines, at which point the police were brought in and arrests were made.

InterGame’s information is that the companies raided were Totem Amusement, Guangzhou Xipu Electronic, EXL Electronics, Jingge Computer Science and Technology Company, and Chengrai Electronics Technology. Official sources at Merit have confirmed that the InterGame information is substantially correct and that an official release will be made next week.

FOBTs creating distortion, claims suppliers

FOLLOWING the publication of InterGame's editorial Last Rites for the AWP? on Tuesday on our website, a leading supplier has emphasised the 'distorted playing field' created in the high street by fixed odds betting machines in bookmakers' shops and AWPs in clubs operating on the current stakes and prizes.

InterGame’s source made the point: "On an FOBT a player can stake up to £100 to win a maximum £500. It is easy to lose £100 in seconds. And the operator/location pays the same licence fees as a club machine or a Section 16 game.

“Even in a casino the maximum stake is only £2 and of course on an AWP 30p. In bookies' shops most players are tempted to go for the highest stake and that's why they make so much money for bookmaking companies and is destroying the AWP. FOBTs make illegal pokers look like angels."

Games Media squeezes out Juice

JU!CE from Games Media is "at the cutting edge of pay-to-play digital gaming and betting, offering stunning design married to high specification technology," the company says.

A 23ins portrait LCD touchscreen with full 3D graphics capabilities provides the player with an interactive experience. Games Media and its associate partners have created a full range of digital content, spanning the product categories from Section 34 through to S31, S16 and 21 and fixed odds.

JU!CE has been designed specifically for pay-to-play applications and is licensed exclusively for use in the UK and Ireland from Conei Corporation of Spain. The JU!CE terminal was chosen for its stylish and robust design to be the new digital gaming and betting terminal from Games Media.

This product is currently undergoing an extensive testing trial and will not be available until later in the year, but will be exhibited at the forthcoming FER Interazar show in Madrid and Preview 2007 in London.

Source: eCoinOp UK

5th August 2006

Talarius gets sales boost

TALARIUS' 185 adult gaming centres have performed well in the first half of the year - the 28 weeks to July 15, 2006, growing like-for-like sales by 15 per cent. Its Quicksilver chain of AGCs grew from 164 to 185 during the period, with 19 locations added by the acquisition of Leisurama Entertainments Ltd in March and two new greenfield sites in June. Sales at Cyberslotz.com, the company's interactive business providing online gaming for customers in the UK only, grew by 90 per cent in the period. After allowing for the impact of changes to its VAT status, sales grew on an underlying play-driven basis by 61 per cent year on year.

Namco goes for bowling

NAMCO Europe has bought a tenpin bowling group. Subsidiary Namco Operations Europe Ltd has purchased Number 10 bowling group for an undisclosed sum. Number 10 was founded by Peter Williams in the late 1990s and has sites in Ipswich, Norwich, Braintree and Romford. It brings the number of amusement and entertainment locations operated by Namco in the UK and Spain to 16, which includes the multi-leisure centres in County Hall, London and the Trafford Centre in Manchester. The company has confirmed that it is the first of a number of strategic purchases in the tenpin bowling industry.

Sega takes spares home

TUESDAY'S news that Sega Europe is taking back its spares distribution business from Suzo at the end of Suzo's five-year contract, was supplemented this week by Sega managing director Paul Williams. He confirmed that the company will shortly move offices to Chessington where the spares business will be housed with a dedicated counter. Suzo handled the Sega line throughout Europe, but all of it will now transfer to the UK office. E-coin-op understands that the company will shortly add a high-profile recruit to its staff to head up the new business.

Green becomes septuagenarian

UDC's Michael Green reaches the milestone of 70 on August 11 and will celebrate over 50 years selling coin machines in the UK and international markets. Asked to comment on a 50-year career, he said: "The overriding memory is of interesting characters.

The industry is full of them, all over the world; the business seems to attract them. Also, no two days are alike and there are tremendous swings in the business from high to low. I know of no other industry that is able to pick itself up from the depths and rise again. I also think that by thinking young, you feel young and can accept the changes readily. As for all those interesting characters, a great many of them are friends and remain so through thick and thin, right through your career."

Source: eCoinOp UK

1st August 2006