Gaming equipment provider Everi Holdings spent a combined $65 million to acquire a pair of technology companies last year in a bid to boost its player loyalty platform and system.
The tuck-in acquisitions went mostly unnoticed.
Then the COVID-19 pandemic shut down the nation’s casino industry.
Now, as more than half of the commercial and tribal casinos in over two dozen states have reopened, marketing to gaming customers is again front and center in the minds of operators. First, to get the customer to come back into the building after a nearly three-month closure in some states. Second, to keep them coming back.
Last week, Everi President Randy Taylor noted the division’s significance.
“We continue to believe the player loyalty business is a great business and we expect it will be a meaningful contributor to our performance, in both the near and longer-term,” Taylor said on Everi’s quarterly earnings conference call.
During the quarter, which saw Everi’s revenues fall 8% because of the coronavirus shutdowns, the loyalty program stood out, contributing $5.2 million of revenue in the quarter, compared to less than $1 million a year earlier.
It wasn’t a large figure compared to slot machine sales, but it was notable.
“Even during this period when casinos were closed, we were selling and installing player loyalty equipment at some customers’ facilities as they prepared to reopen with our self-service, contactless kiosks, and marketing support,” Taylor said.
An Everi spokesman said the company’s loyalty system is unique in the industry because it operates in conjunction with a casino property’s cash management provider.
All the gaming equipment providers offer loyalty capabilities, including International Game Technology, Scientific Games, Aristocrat, and Konami. Smaller player loyalty companies have also moved into the space, offering specific functions.
Everi’s loyalty program is part of the company’s overall efforts to create a cashless gaming technology, a longtime company endeavor now given new urgency due to COVID-19.
Last fall, when cashless gaming was proclaimed as an industry-wide initiative backed by the American Gaming Association during the Global Gaming Expo, Everi promoted its virtual wallet platform for casino customers. Utilizing their smartphones, patrons can load credit or debit card information onto the virtual wallet app, which can then be tied to their player loyalty account.
Customers have control over how much money goes into the application and can make cash withdrawals at the casino cage or a kiosk. In addition to the mobile wallet, the company is promoting a product that allows players to insert their debit card into a kiosk and receive a ticket that can be directly inserted into a slot machine, enabling them to bypass any handling of cash.
Stifel Financial gaming analyst Brad Boyer said Everi’s initiatives outside slot machines enhance the company’s bottom line.
“Everi’s strong-performing leased slot product, relative underexposure to slot sales, emerging cashless gaming technology, recently acquired player loyalty technology, and a significant and underappreciated competitive moat around the (financial services technology) business position the company to emerge as a relative outperformer in the new normal that awaits on the other side of COVID,” Boyer told investors in a post-earnings research note.
Early last year, Everi spent $40 million to acquire casino gaming-related assets, including self-service kiosk and marketing platform technology, from Atrient. Toward the end of the year, the company paid $25 million for software and technologies products owned by Micro Gaming Technologies (MGT), $15 million upfront and another $10 million to be paid by the end of 2021.
Eilers & Krejcik Gaming principal Todd Eilers told investors that Everi’s message to operators was to re-think their player loyalty strategy, “as well as consider additional low-touchpoint cash access services, which could help the company’s FinTech segment recover faster than the market.”
Everi shares closed $7.31 on the Nasdaq Tuesday, down 56 cents or 7.12%.
Howard Stutz is the executive editor of CDC Gaming. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.
