This morning, Bally Technologies announced that it had agreed to acquire SHFL entertainment, Inc. (which most people still colloquially call by its old name, Shufflemaster), for about $1.3 billion. The acquisition sheds light on the changing role of suppliers in the gaming industry.
Thirty years ago, what we now call “suppliers” were called slot manufacturers. And that’s what they did: produce little metal boxes, mostlywith spinning reels, that accepted and paid in coins. Manufacturers fought for market share by convincing operators—the people who ran casinos—that their slot machines would attract more play than their competitors’.
With the advent of player loyalty programs, some manufacturers began branching out into slot management systems and other sophisticated hardware and software applications that helped casinos track play in their slot machines. So “manufacturers” were selling more than the boxes—they were selling the tools to help managers manage those boxes. Others, like Shufflemaster, provided similar solutions for table games.
In the past five years, the gaming manufacturing landscape has shifted even more. Bally, one of the legacy slot manufacturers, became Bally Technologies, which reflects the change perfectly: it’s now about a range of technologies that not only supplement the core business of gambling boxes, but will one day replace it. Bally’s Interactive division makes smart phone apps that let people do more than just gamble—they can access a range of information about a hospitality destination, gaming or non-gaming.
At the same time, slots have moved out of their metal boxes, becoming instead source code that’s deployed across a variety of platforms, from traditional slot machines to Internet, social and mobile games.
In this environment, Bally’s acquisition of SHFL makes sense. It’s not a case of one manufacturer buying market share by scooping up a rival, but of a technology company that’s expanded considerably over the past few years buying a supplier in a related area. After the merger, Bally’s will be able to offer both traditional slot and proprietary table games across many platforms. When combined with SHFL’s existing suite of high-tech products for tables, from shufflers to electronic table games, this means that the resulting company will be well-positioned to continue to explore new technologies and applications.
Rival IGT has bet big on social gaming with its acquisition of DoubleDown Interactive, and WMS is in the process of being acquired by Scientific games, a company that focuses primarily on lottery-related systems and products. Each of these deals offers some perspective into the many industries that what used to be slot machine manufacturing overlaps with, and gives a sense that the future will see even more evolution of these suppliers as technology and gambling behaviors continue to change.