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INSIDE GAMING: Signs of trouble from slot giant

Twelve months ago, Wall Street analysts never imagined having concerns about International Game Technology. The Reno-based company, which has a large corporate presence in Las Vegas, controls the lion's share of the worldwide slot machine market.

IGT has been an analysts' darling among manufacturers. Its stock price was stable and reviewers heaped praise over its products. Despite a casino industry slowdown in the slot machine replacement market, IGT still reported profits. Analysts remained bullish.


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  • What a difference a year makes.

    Last week's resignation by IGT Chief Operating Officer Steve Morro may have signaled the start of a companywide shake-up. Gaming sources told of layoff rumors, which IGT spokesman Ed Rogich vigorously denied.

    IGT CEO TJ Matthews has said the company is in a restructuring mode. Rogich said all areas will be looked at to reduce expenses.

    Matthews, considered one of the industry's brightest executives, is feeling some heat. He will add Morro's COO duties when the resignation is complete. But Matthews is also chairman and president as well as CEO, leaving some analysts worried that management is spread too thin.

    Wall Street expressed concern last week that Morro's exit was symptomatic of IGT's fortunes. The stock price is down almost 60 percent from a 52-week high of $49.41 on Feb. 26.

    "IGT's fundamentals, market share position, new device platform, game theme and system development progress are not likely to improve in the near term, and may have worsened since the company last communicated with investors," Merrill Lynch gaming analyst Rachael Rothman wrote.

    UBS Securities analyst Robin Farley didn't think IGT's strategic examination would help increase earnings until the second half of 2009.

    "This review will ultimately include a cost-cutting component," Farley said, adding that the current focus is on management structure.

    ***

    Gaming Control Board Chairman Dennis Neilander isn't a Donny and Marie fan.

    During a licensing hearing, Flamingo General Manager Don Marrandino said ticket sales for the show's opening Tuesday are strong.

    "I will be out of town that week," Neilander said.

    Added board member Mark Clayton: "I guess that's not going to make the marketing brochure."

    ***

    The Palazzo didn't wait to eliminate all aspects of the 40/40 Club. The resort opened Sportsbook Bar & Grill Thursday in 40/40's former space in time for football.

    In addition to a restaurant and more than 70 flat-screen televisions, the facility has five betting windows.

    Howard Stutz's Inside Gaming column appears Sundays. E-mail him at hstutz@reviewjournal.com or call 702-477-3871.

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    p wrote on September 09, 2008 08:20 AM: miss the old vegas of the 90's


    steve wrote on September 08, 2008 12:51 AM: Vegas still thinks it's 2003 and people have money to blow on slots and the reality is that most people DON'T so less people play + tighter slots = less people win = less people have a good Vegas experience and they don't come back.

    Vegas is over. Done. You have what...3 or 4 companies owning 90% of the resorts on The Strip?

    Less competition is always bad for business...just like newspapers.


    777slots@att.net wrote on September 07, 2008 07:28 PM: According to several studies from some of my student papers, the old machines accepted a Max wager of maybe 3 to 5 on the nickels. Now with the Penny slots it goes as high as 450. So the avg. Joe bets 10 to 100 units;however, they can never win the jackpot, consequently no one see anyone winning the Jackpot. People love to see others win, for it gives the avg. joe hope. Thats the KEY word HOPE. Most people that play the slots rely on hope. They are not very bright to begin with, and with them playing less than the max they have no hope. It's just a matter of time before the Corportate giants find this out, and scramble to find a way out. MEMO: make the max bet between 1 unit to 10 units. Keep some of the fools winning.


    Casinos cheat wrote on September 07, 2008 07:24 PM: Being an ex-slot tech I can tell you that casinos can and do cheat on the slots. Yeah the gaming control-ed board checks the machines, LOL. The GCB randomly checks a few machines in any given casino, the casino could have 30%of the machines rigged and they would have a less 1 in 3 chance of getting caught. There are a lot of ways for the house to cheat on slots and pokers. The game board needs to be secured so no-one can alter the program with indipendant policing agent present.


    K wrote on September 07, 2008 03:57 PM: Casinocon, thanks for the help. The electronic poker tables at the Excalibur probably are not doing as well as they hoped because they now have "massagers" there to massage your
    shoulders while you lose. No kidding.
    Hey slot players, do you want machines
    that pay out or do you want to lose your money and have your shoulders
    massaged? Vegas is in trouble....


    casinocon wrote on September 07, 2008 03:29 PM: I could've told you three years ago IGT was in trouble. They make an inferior product to WMS. Video Poker kept them alive. Now like K writes all slot machines are tightened up so much it is absolutely pointless to play them. Years ago I was happy to spend $50 a day playing the nickel slots for entertainment. Now I run through $100 on a penny machine in less than an hour. WMS machines are fun, but they are so tight their shelf life is only a month or so before people get completely fed up with losing so much of their money. IGT machines are getting worse, not better and just as tight. I realize the casinos set the percentages, but to the player all that matters is bang for the buck. They've killed the golden goose.


    blood-dog wrote on September 07, 2008 11:45 AM: to a good ann.


    K wrote on September 07, 2008 11:15 AM: Re: Signs of trouble from slot giant
    People want to win money, not t-shirts.
    The comps have practically gone down to
    nothing. Human beings are being removed from the casinos as fast as
    technology can replace them. What
    do companies like IGT expect? It's
    cheaper to stay home and play machines
    in your pajamas for free. It does not
    matter what machine they put on the floor as long as it pays out. People don't want to see some stupid dance and song when three sevens line up.
    They need to get in touch with the real gambler and not the corporate
    bean counters.


    Free Nevada wrote on September 07, 2008 07:14 AM: >The Palazzo didn't wait to eliminate all aspects of the 40/40 Club.

    Between John McCain and Sheldon Adelson, maybe there is hope for this country. One remaining big problem: Lil Wayne (Dwayne Michael Carter, Jr.) We need him shooting his videos here (drawing other low life scum gangster wannabes) like we need more crack users. Hip Hop is one thing, but screaming vulgarities about urinating on prostitutes while dancing ontop of a truck going down the Strip is another.