Montana Gaming Group

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By Cole Boehler

Steve Arntzen, Chief Operating Officer for Century Gaming, and Jon Dehler, President of Fleetwood Gaming, Inc., readily agree on one theme: that Century's acquisition of the Fleetwood gaming routes is a win/win/win/win/win'; that is, benefits accrue to both companies, to location operators, the regulatory community and consumers.

The two were interviewed by the Montana Tavern Times separately in Billings June 15.

The deal was a natural, according to Arntzen, since the respective route operations geographically overlay one another quite precisely. Both companies have focused on the major markets such as Billings, Helena, Great Falls, Kalispell, Missoula and Butte.

The regional proximity allows for increased efficiencies when servicing the locations, as the larger communities exhibit a more dense concentration of locations while also hosting more bona fide 20-machine casino operations, as opposed to smaller communities of southwest and eastern Montana where licensed locations are spread further apart and may more often be primarily liquor businesses with a handful of older, less productive machines.

Century will benefit from the increased efficiencies and volumes while Fleetwood will shed a segment of its business to focus on the development and distribution of advanced gaming machines for the Montana market.

"We want to be the best" in the game development and manufacturing field, "superior to anyone else," Dehler says.

Besides, Dehler has big plans to expand and grow another of his enterprises, Light It Up, a company that supplies and installs all the latest high tech electronic marketing gismos and exterior and interior lighting devices and products.

Fleetwood's workforce will decline from 65 to 38, according to Dehler, but the balance of the workers will be assuming new positions with Century at the same pay with very similar benefits, he says.

"Like us, Century knows the value of emplyees that can produce results and deliver great benefit to the customers and the company," Dehler says. "If those 27 people would have been facing losing their jobs, this deal would never have happened. Century is getting some fine people."

"This is a great opportunity for our employees and the Montana gaming operator," Dehler says. And of the sale, he says the new arrangement between Fleetwood and Century is "a great alliance and partnership."

Century will now be able to place and service the machines of every manufacturer licensed in Montana, especially the proprietary Fleetwood Casino King line and, soon, Brilliant Bet series, as well as IGT, Summit, Spielo and U-1. And that is a win for Century-vended location operators who could anticipate more traffic as customers may now find all game brands and types under one roof.

"There were distribution channel and software availability limitations" prior to the deal, Arntzen said. "we've broken through all those barriers."

In addition, location operators will not be faced with partnering with more than one vendor in order to field all the latest and best equipment, they say.

Fleetwood will, however, retain ownership of its own machines which, for many, will then be serviced by Century. Dehler predicts this new dynamic will substantially boost the number of Fleetwood games in service up to as many as 1,500 within a year's time, he optimistically forecasts as the Century routes are now open to Fleetwood equipment.

Arntzen agrees with Dehler's assessment. "This works real well for both of us as we'll now be able to place Fleetwood machines in our vended locations without having the typical initial cash outlay" for these machines, since Fleetwood will retain ownership and provide the capital.

Further, accounting and compliance routines are becoming increasingly standardized and automated, which again lends to business efficiencies for both locations and vendors, but for the regulatory agencies as well.

In fact, Arntzen reveals, the proprietary Century accounting program, RouteTrack, will not only be used at Century and former Fleetwood locations, but is being licensed to (currently four) other route operators within the Montana industry, bringing an even higher degree of standardization, efficiency and accuracy to the compliance, reporting and permitting aspects of the business.

During the interview with Arntzen, he offered a quick demonstration of the RouteTrack system and displayed the highly detailed reports that are routinely generated and are a valuable business tool for vendor and location operator.

Properly interpreted and implemented, the reports aid vendors and operators in determining the optimal equipment mix that can help maximize play. The reports are generated practically in real-time and will illustrate the relative performance of a location or even a single machine.

"This allows each operation to be fine-tuned," Arntzen says.

Arntzen says the key to Century's success has been identifying "the one thing we do best vend gaming machines and doing it better than anyone else. It's a simple model. And it gives us a great deal of satisfaction when our business partners who own the locations move up" in the local market's competitive hierarchy.

On the flip-side, Arntzen acknowledges the best vendor with the best products can't help a location that ignores other fundamentals such as assuring customers are comfortable and well taken care of.

In fact, Arntzen says, Century/location partnerships are somewhat selective.

"It is a two-way interview process," he says. "We need to know we've got a good location that will do the right things before we move to invest $200,000 in equipment."

As the gaming business becomes ever more competitive and highly evolved, Arntzen says he sees increasingly good logic for locations to partner with vendors, and that theory is increasingly born out as statistics indicate more locations are establishing vendor relationships.

"There's plenty of business for everybody," Arntzen says, but also notes locations that fail to keep pace with the competition operating the latest generation of high entertainment-yield machines are facing future struggles.

With the acquisition of the Fleetwood routes, Century will vend 440 of the 1,700 locations licensed for video gaming, approximately 400 of which are single-location operations. There are 12,000 machines out there about 75 percent of the total that are owned and operated by other route operators or independent businesses, Arntzen emphasizes, assuring competition will remain robust.

As more locations rely on vendors to make the substantial capital equipment investments over $10,000 for a new machine these days competition is further driving the rate of game development and machine replacement, Arntzen says, which is driving the manufacturing segment, where Fleetwood now plans to focus.

"We replaced 400 machines last year," Arntzen says, and speculates the company will easily replace at least that many in the coming year.

"The real driving force in game replacement," according to Arntzen, "is the increasingly demanding game players who expect the quality and entertainment value offered by the very latest generation machines.

"The new generation of 'smart' players grew up with very sophisticated video games and expect similar sophistication in video gambling devices. Manufacturers have been investing heavily in better, higher resolution graphic displays, more and improved animation, refined audio quality, new and innovative game features such as bonus rounds, and better ergonomic interaction with player consoles.

This increasing sophistication also means larger capital outlays, which then requires better and more extensive marketing to assure a fair return on the investment, he says.

Arntzen says he sees continued evolution of the gaming business in Montana, partly forced now by increasing shortages of service workers.

"The food business even the bar business is far more labor intensive than a gaming operation," Arntzen notes, then adds, "and when you focus on just one segment you can become more specialized and that means more efficient."

And that's what business these days is all about.

Source: The Montana Tavern Times, July, 2007, published monthly by Continental Communications, 125 W. Granite St., Suite 102, Butte, MT 59701.