How do you go from a zero market presence in 2003 to a 15.17 share as of Oct. 31 this year?
According to principals at Spielo Gaming, it takes the right product but, even more importantly, it takes exacting attention to getting the balance between operator returns and player enjoyment just right.
Spielo Gaming, to Montana licensees an obscure company in 2003, entered the market with a bang, completing a single sale to Town Pump of over 300 units. But soon the "Power Station" themed games began appearing in locations state-wide. Then, when multi-games were allowed in 2005, the "Power Station Plus" hit the floor and there's been little looking back.
Today, the company has over 2,600 units of the 16,816 permitted in Montana (Bowman predicts over 3,000 units by mid-2008), and nearing 30,000 in other U.S. and world jurisdictions. It was founded, and remains based, in Moncton, New Brunswick, Canada.
Blaine Bowman took on the Montana sales post for Spielo in 2004, but has now assumed management responsibilities for sales and service operations in Montana, South Dakota, Louisiana and West Virginia, he told the Montana Tavern Times in an interview Nov. 2.
He is a veteran of the halcyon days of the VLC boom in Montana. He worked for the firm when it had 450 employees in the mid- and late-1990s, and was still there after that firm had been purchased by IGT and only 15 remained on the payroll in the state.
"That was an difficult time," Bowman recalled.
Bowman allowed that for some operators, the "hold" percentage of the Spielo games--the difference between cash-in and cash-out--was initially too high and necessitated further refinement of game play including pay tables.
Bowman's supervisor, Robin Drummond, concurred when he talked to the Tavern Times Nov. 21. He said the company had its origins in the small-location video lottery markets where governments owned and operated the games. That taught them how to present players with a satisfying gaming experience.
However in Montana, a jurisdiction in which operators own the machines, the economics aligned differently, Drummond said, and the games had to be re-thought and re-engineered to some degree.
The chief thing the company learned from its Montana debut, Drummond said, was finding the delicate balance between maximum player entertainment and returns, and a reasonable hold for the machine owner.
"We worked hard to get the balance right," Drummond said. "We learned about the importance of the owner in the equation and that has been very helpful in other operator markets we've entered. We have to be responsive to the individual market."
Bowman also added that Spielo learned the subtleties of keno through its foray into Montana, where keno dominates video gaming.
It looks like Spielo succeeded as it has the highest daily earnings of any brand in Montana and sees continually growing penetration.
Drummond pointed out a successful location needs to have a carefully structured mix of games (he is complimentary of the competing games from Summit, IGT and Fleetwood), but also noted Spielo has customized game programs available to work differently for different types of locations, with more or fewer bonus features, higher or lower pay tables and so on.
Spielo has seen plenty of transitions, too, in the last few years. It was purchased in 2004 by Rhode Island based GTECH (distinctly different company than GameTech, which purchased Summit Gaming last year). GTECH is a lottery systems developer, operator and provider, Drummond said, noting the company was without VGM equipment or game content at the time.
"It was a very complementary transaction," Drummond said.
In turn, GTECH/Spielo was purchased by Lottomatica, an Italian firm that conducts Italy's national lottery, the largest in the world, Drummond noted.
Now, the combined companies, operated semi-autonomously with separate headquarters, is a $1.7 billion concern with over 6,000 employees, Drummond said.
And Bowman has continued to ride that moving crest.
Born and still residing in Bozeman, his business offices, along with six Montana employees in sales and service, are based in Billings. He is divorced and has two children, Bayley, age 12, and Maddie, age 8, enrolled in Bozeman schools.
He graduated from Bozeman High School before attending the University of Montana and earning a bachelors degree in business. He then moved to Houston, Texas, where he was employed by a credit card company and returned to Montana and started with VLC eight years later.
In his understated way, Bowman said he enjoys tough, but congenial, competition with his Montana counterparts.
"Competition is good for the state, the operators and the players," he said. "We don't want to wind up like South Dakota" where nearly all machines were the now largely obsolete VLCs, and where now unavoidable and expensive wholesale replacement of the state's game inventory is underway.
As for Spielo's future in the state, Bowman said he anticipates "continued expansion," noting the company has tripled it's commercial space in Billings and is continuing to add staff as warranted.
And there are opportunities here that go beyond natural attrition and replacement cycles, Bowman explained.
When the U.S. Treasury releases the new five-dollar bills next spring, a round of bill acceptor upgrades and new supporting software will be required. A lot of the obsolete equipment still operating in the state with no manufacturer support will not be able to be upgraded.
Owners of those machines can try to hoard old five-dollar bills but that is at best a temporary solution.
Ultimately, operators will need to replace that device. Some industry experts estimate the soon-to-be obsolete machines constitute 25-30 percent of the state's inventory, and that represents opportunity for those selling state-of-the-art equipment.
Most IGTs will be upgradeable and all Summits, Fleetwoods and Spielos will accommodate the new bill acceptors.
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And we are always continuing our efforts to improve game play, player satisfaction and holds," Bowman adds.
Lottomatica/GTECH/Spielo is still on the grow, too, Drummond said, noting the company is close to acquiring Atronic, a $200 million a year German company with deeps roots in the commercial casino business.
"We're increasing our commitment," he said.
As far as Montana goes, Drummond said, "Blaine knows the market best, knows the people and has the contacts and relationships. We like to give our local reps autonomy and he's doing an excellent job."
Source: The Montana Tavern Times, December, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.