CEO Shuffle at Scientific Games

The evolving gaming industry is reflected in its leadership changes

Scientific Games CEO Kevin Sheehan.

Scientific Games CEO Kevin Sheehan.

In a move with big repercussions for the gaming industry, manufacturing giant Scientific Games recently announced that its chief executive officer, Gavin Issacs, is being replaced by former Norwegian Cruise Line CEO Kevin Sheehan. This is a major transition for Sci Games and reveals the direction the industry is headed.

Issacs started his career in his native Australia with law firm DLA Phillips Fox before moving, in late 1998, to Oz gaming manufacturer Aristocrat. Starting in the legal and compliance area, he took on progressively greater responsibilities over the next five years, being named Americas president in 2003. In that role, he was responsible for all of the company’s sales and operations in the Western hemisphere. Issacs remained with Aristocrat until 2006, when he left to become the executive vice president and chief operating officer of Bally Technologies.

Bally was, at the time, a slot and systems manufacturer seeking to grow its market share. The recent adoption of ticket in/ticket out technologies as well as the opening of new frontiers in online platforms led to a burst of competitive innovation among slot makers. The label “slot maker,” was, in fact, by the time of Issacs’ tenure, a misnomer; by 2010, the company generated only about a third of its revenue from selling slot machines. Another third came from operating linked progressives, video lottery and bingo systems, and renting games and their content. The final third was derived from systems: the specialized software and hardware that all gaming operators need to run their machines, track play, perform slot and table accounting, and manage customer databases.

At one time, being a good manufacturer simply meant designing a better mousetrap—or, in this case, slot machine—that appealed to players and was easier for casinos to maintain. By the late 2000s, though, the manufacturing space was becoming increasingly dominated by large companies that provided a range of services, from traditional slot manufacturing and service to sophisticated software suites.

In 2011, SHFL Entertainment (then Shuffle Master) recruited Issacs to become its chief executive officer. In an interview that year with Australian gaming magazine Club Life, Issacs shared that his mandate was to focus on customer service and improve execution. SHFL made and sold automatic card shufflers and other ancillary equipment, proprietary table games, electronic table games and slot machines. Under Issacs’ leadership, SHFL posted record revenues, expanded to Gibraltar and Latin America, and invested more in research and development, positioning itself for the future.

Two years into Issacs’ reign, though, his former employer, Bally Technologies, bought SHFL, ending his leadership there. But the same forces that led Bally to swallow SHFL made Bally itself an acquisition target. After acquiring rival manufacturer WMS, lottery and gaming giant Scientific Games bought Bally in early 2014. The resulting lottery, gaming and interactive provider brought on Issacs as CEO shortly after; he remained in the role until the recent announcement.

Issacs’ replacement gives a sense of where gaming is going. Sheehan was most recently president and CEO of Norwegian Cruise Lines, but also served as CEO of Cendant Corporation’s Vehicle Services Division, with responsibility for Avis Rent A Car, Budget Rent A Car, and other auto and truck fleets. This may ring a bell—current Caesars Entertainment CEO Mark Frissora came to the casino operator after leading the Hertz Corporation.

With Sheehan’s hiring, Scientific Games is getting an executive who has run companies in industries under increasing pressure, much as gaming manufacturing and systems currently are. Cruising, gambling and car rentals all tie into the larger leisure and hospitality world, where changes driven by shifting market conditions and innovation are rapid and potentially lucrative—or disastrous. In such an environment, a leader with a big-picture view may be an asset. Certainly, with as wide a range of operating divisions as Scientific Games, no single executive will have expertise in every area.

Not that Sheehan will want for counsel; Issacs is staying on a vice chairman of the board. Having digested the proceeds of its acquisition spree, Scientific Games is now focused on growing in a rapidly evolving gaming ecosystem.

Issacs’ career path—from corporate attorney to gaming CEO—demonstrates one leadership route in an increasingly complex business. Sheehan, who started in finance and has served as Distinguished Visiting Professor at Adelphia University, has taken a different path to the top. As the companies they run get bigger, expect gaming executives to share similarly diverse backgrounds.

David G. Schwartz is the director of UNLV’s Center for Gaming Research.