In this episode, Nick and Don speak with Mike Dreitzer, CEO of Gaming Arts. Learn about the risks & rewards of building a slot machine company, the group's startup phase, development philosophy, product portfolio, near-term plans, and its strategic alliance with Germany's Merkur Gaming. Also in this episode, supply and demand considerations related to multi-game product.


Nick Hogan:

Howdy Don, what’s shaking in the St. Louis area today?

Don Retzlaff:

Good morning, Nick. Everything’s good. Beautiful spring day, how about you? What’s the weather like over there?

Nick Hogan:

Oh, we actually have decent stuff now. So I was in shorts yesterday unbelievably, but not so today, but we’re in the throes of spring now, so it’s great. So let’s see, Don. So as predicted a few episodes back, there’s been a bit more M&A activity on the supply side. So on the 8th of May, AGS announced that it’s agreed to be acquired by Bright Star Capital Partners in an all-cash deal valued at 1250 per share or 1.1 billion overall. AGS’s CEO, David Lopez commenting on the deal stated it will leave AGS quote, “Well positioned to make targeted investments in R&D talent operations and industry leading innovation, which should accelerate our global footprint.” So kind of tough to disagree with that. First, I think that the capital infusion comes at a great time for a small company with a lot of great momentum and secondly, I think what’s the nice thing in here is they can jettison all that administrative and reporting burden inherent to publicly listed companies. So in a nutshell, my guess is it’ll make a nimble company even nimbler. Any thoughts from your side on this, Don?

Don Retzlaff:

Just the performance side. They’ve been on a little bit of a roll here the last 18 months. They’ve got several good themes out there, so they’re doing well. They’re definitely on an upward projection.

Nick Hogan:

Yep, kind of my view of it as well. Okay, so Don, listener question time. Before we jump in here, let me say that we’d love to tackle any questions that any way listing may have. So if you have a question about what we’re presenting or something you’d like us to present, please drop us an email at That’s R-E-E-L-C-A-S-T at Our policy is to keep all questions anonymous, so please speak directly and don’t worry about us revealing your identity, that’s not something we do. Okay, so the first question comes from an operator in Southern Europe who asks, “Good afternoon gentlemen. I saw Nick’s talk in Amsterdam last month and was fascinated by the points he made about over diversified slot floors and the tendency to let doggy products crowd out superstar products. Following the talk, we looked at our own operations and we’re shocked to see that this is precisely what’s happening on our floors.”

That’s interesting. “My question relates to multi-game slots. We have many and when we analyze the game level detail, which isn’t easy, we see two things, a very small number of titles generating around 90% of the revenue and big variances in average bets. In many cases, we see average bet ranges from 50 Euro cents to more than 15 Euros per spin with the higher average bets producing around three quarters of the revenue performance. In Europe, the philosophy has been that multi-games allow smaller operations to pack more variety into smaller floors. This has been viewed as a good thing, a one-size-fits-all approach. However, following the talk, I have the impression that it’s actually the same problem. Large numbers of poorly performing titles crowding out a small number of great titles and big players failing to access their favorite games because less valuable players are in the seats. Am I thinking about this correctly?”

So first, enormous thanks to the listener for that question. It’s really a great one, and now Don, I’m not sure where you land on this, but I personally have always had kind of a tortured relationship with multi-game slots. So on the one hand it’s a good format for obviously for slot hauls and route operations where you have low statutory unit caps and really limited physical real estate. So let’s say in the UK for example, when you have high traffic levels and regulations at cap slots at let’s say 20 units per venue, the multi-game makes a ton of sense. Also, as a platform for experimentation, let’s say smaller companies that are kind of test marketing, multiple titles on one box, also some great arguments in that format, and then for certain non-slot game types, so some ETG stuff, poker, Keno, bingo, etc.

It’s really well established and from what I’ve seen anyway, it’s fine, but as pointed out by the listener, analysis is always the first problem. Can you get to the game level detail? And if you can’t, the arguments in favor of the format lose quite a bit of luster, and then secondly, as it pertains to the over diversification and constraining host level favorites, I would say yes, it’s the same problem in a different package. So if you’re pointing the 50 cent players and the 15 Euro players to the same box, what you’re really doing is playing fast and loose with a 30X revenue multiple. So in my book anyway, it’s a fairly dangerous strategy. So my answer to that listener’s question would be yes, you’re thinking about this correctly, but Don, what are your thoughts on this?

Don Retzlaff:

I’ve always been a big fan of giving players more options and you’re right, especially if you look at things like the Illinois VGT market, you’re going to have five, eight machines. You want to have as many options on a box as you can. In a big casino, there are obviously things like Game King, Casino Wizard, Selection. You’re going to have a lot of different choices and those games usually perform pretty well. It is not easy to get the information on the theme by theme basis. It was one of my slot tech’s worst assignments. They hated going game by game and trying to get all the coin in and win information from it, but you really need it because you want to limit those

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