Kevin Peterson was enjoying a little leisure at his small ranch outside Reno, Nev., on Friday, Oct. 19, a date he will likely not forget.
The phone rang and it was Jay Meilstrup calling, CEO of GameTech, an up and coming gaming device manufacturer and distributor out of Reno.
According to Peterson, Meilstrup said, "What are you doing on Sunday? What do you say we go to Billings, Montana?"
Of course Peterson soon learned the nature of the business on Meilstrup's mind.
Tim Carson, at the time President of Summit Gaming, a leading video gaming machine developer and manufacturer in Billings, had resigned his position after building the company for 12 years, then overseeing it's sale to GameTech last spring. Meilstrup was looking for a new leader for the Summit division.
He and Peterson quickly agreed the position was a good fit for Peterson who has spent his entire 25-year business career in gaming, most recently managing a vending route company in the Nevada market.
Peterson was comfortably installed in his new office at Summit headquarters off Overland Ave. in Billings when the Montana Tavern Times reporter dropped in Dec. 13.
It turns out Peterson's life-style may be ideally suited to the big, open Montana country.
"People here understand the outdoors," he says simply. "We love the open space and wildlife."
He's been engaged part-time as a licensed guide for a Nevada outfitter specializing in Bighorn Sheep hunts. In fact, just this past September, he led a hunting party that bagged the number six all-time ram for Nevada (see photo).
"That hunt covered 12 miles and 5,000 vertical feet," he says, which certainly would attest to his vigorous physical condition.
Peterson just finished his own Bighorn Sheep "Grand Slam" with a Stone Sheep taken in British Columbia this past summer.
He trains bird dogs, particularly German Short-Haired Pointers (one of which is waiting restlessly in his pickup in the Summit parking lot) and was planning pheasant hunts for the coming two weekends.
He's an avid fisherman, at present more inclined toward the big warm water lunkers like walleye and bass. He and his family are enthusiastic bowhunters and hikers, too.
The folks Peterson has met around Billings he characterizes as "great" and he says he enjoys the slower paced life of Montana and Billings. At the time of the interview, his wife was due in shortly and the couple planned to go house hunting, though Peterson allowed his children and their school careers would have to be taken into consideration.
He and his wife Amy have four children: a daughter who is a sophomore at the University of Nevada, a son who is a freshman at the University of Southern California, a daughter who is a high school sophomore and another who is in seventh grade.
Change is always challenging, Peterson says, but notes the transition has been made smooth with the help of former Summit president Carson.
"Tim has been great," he says. "He's been introducing me to everyone in the business, folks on the street, the members and leaders of the business associations and, of course, our customers."
And Peterson is no stranger to "the street." That is where the machine route vendor or salesman rubs shoulders with the location operator and Peterson has been doing just that for years during his association with Jackpot Enterprises (now ETT) and United Coin in Nevada.
In fact, Peterson already knew something of the Montana market before Meilstrup hauled him north to look over Summit. Since he had worked for United Coin, he got to know Grant Lincoln and Steve Arntzen, owners of Century Gaming, Montana's largest route operators and the recent purchasers of Peterson's former employer, United Coin.
But backing up a bit, Peterson was raised in Wheaton, Ill., a suburb of Chicago, where he attended the same school as did the late comedian John Belushi and super athlete Red Grange.
He attended Indiana University on a soccer scholarship ("of all things") and earned a marketing degree in 1981. He relocated to Reno in May of 1982 and made that his home until the present.
He was first employed by IGT as a marketing analyst, then moved into the sales side. He later joined Bally in sales and sales management and worked for gaming developer Silicon Gaming before moving into vending route management.
At Summit, Peterson says he has found an exceptional company with superb products and "a great team. And we're having some fun."
He acknowledges that some aspects of life at the company have changed since the acquisition by GameTech, which is publicly owned and traded. The due diligence and Securities and Exchange Commission (SEC) reporting requirements call for some altered business practices. "But the 'mother ship' has been very supportive," Peterson says.
The fact that he and GameTech CEO Meilstrup "go back a lot of years also helped in the transition," Peterson says. "Jay has got a real vision for the company and we've got great technology. We're looking at getting some Class III gaming products into the Nevada and Native American casino markets."
Games like slots, poker, keno, craps, blackjack and roulette--bona fide "casino" games--are considered "Class III" and are subject to especially rigorous regulation and taxation policies. Bingo--the niche GameTech has exploited--is considered a "traditional" game and is regulated as Class II gaming. GameTech is also considered the industry leader in hand-held wireless bingo devices.
As such, the potential synergies allowed by the GameTech/Summit marriage seem almost boundless. Summit's sophisticated Class III game content on GameTech hand-held wireless devices? Observers agree it makes a lot of sense. In fact Peterson says the company was showing devices along these lines at the recent World Gaming Expo in Las Vegas.
Peterson contends the Nevada market could actually learn a lot about advances in the game of keno by studying the sophisticated games that have been developed in Montana, which focus on maximized customer entertainment and utilize unique concepts such as bonus play. He does, admit, though, there would be an upward curve when it came to player acceptance.
Peterson also notes Summit is now engaged in building gaming machine components such as logic boards for other companies--even over seas--on a contract basis.
Peterson says he expects Summit and its crews to stay put in south central Montana
"The Billings area is hard to beat when it comes to operating a small, specialized manufacturing company. The labor pool here is excellent, loaded with talent and expertise, and the cost of doing business is reasonable," he says.
He says he does see some problems with the current state of video gaming in Montana, notably a declining hold percentage for operators.
"It used to be in the mid-to-low 30 percent range, but it's now down to the high 20 percent range," he says, then adds, "Nevada's average hold in small locations is about 24 percent.
"Some of our (Montana) machines host up to 24 specific games," he says and that may be too many and may be contributing to the erosion of the "hold" for operators.
"With that many games," he says, "when those that are played at very low volumes get hit, that game is upside down for a long time; it takes forever to earn back the loss. If we assist operators in narrowing the game offerings by inactivating--not removing--the games with low play volumes, we should be able to enhance earnings by reducing game volatility.
"And that concept would also allow operators to select on a custom basis the game offerings for their particular location's clientele."
He also says the Federal Treasury's pending February introduction of new five-dollar bills will be problematic for owners of older machines who will find many cannot be upgraded with new bill acceptors or software.
Only 38 Summit machines from very early production runs now in service will not be able to be upgraded, he said. All others can be upgraded. Some 2,000 Summit machines in service will need new bill acceptors at a cost of $495 to $995, depending upon if the devices have flash memory or EPROM "chip" memory.
That means, Peterson says, about 4,200 Summit boxes will only need to have bill validator software upgraded with a new chip or by being re-flashed at just $50 each.
"Operators can't be in denial" regarding this significant development, Peterson says (see complete report on the subject beginning on page one of this edition). "Get the upgrades installed. Banks will start pulling the old fives in February. "
Another challenge that may face operators and regulators soon in this jurisdiction is the decline in the use of impact printers in gaming machines nationally and worldwide.
As their use declines, unit-costs continue to head upward. Soon, Peterson says, the major manufacturer of impact printers may decide to raise prices until they are ridiculously expensive, or simply end production.
Either outcome will leave the state and business owners in a lurch since state law now requires impact-printed audit tapes for record keeping and game event verification, and operators may be facing replacement of that component with thermal printers or some other recorder.
"The state needs to be ready" with viable alternatives, he says.
In conclusion, Peterson says, "The transition from a private to public company can be tough. Tim and Natalie (Carson) have been great; a lot of help. Summit is a great company. We will continue to do what we do well and we will find ways to do it even better."
Source: The Montana Tavern Times, January, 2008, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.