Page 51 - Bloomberg_Businessweek

FOCUS / SMALL BUSINESS Bloomberg Businessweek January 29, 2018

SlotMachines Gamblit says its skill-based
games will draw younger
ForMillennials visitors to casinos

part for their brains and dexterity and not simply by dumb
luck. Manufacturers, however, were slow to embrace his
ideas. So in 2016, Gamblit started making the machines
itself. Employing about 90 people and with revenue of less
than $5 million last year, Gamblit is still experimenting.
Another early notion was that its games would work best
It’s one of the big dilemmas facing the $70 billion U.S. in bars, where young people hang out. Instead, its devices
casino industry—how to get people in their 20s and 30s to on the casino floor generate three times as much revenue.
play slot machines as much as their parents or grandpar- One of Gamblit’s signature games is a video poker
ents. Generations raised on video games and smartphones table where up to four players compete to see who’ll be
don’t have the same interest in plopping themselves in the quickest to grab cards that pop up in the center. The
front of screens when they’re out on the town. In Las devices have proved popular with groups of strangers.
Vegas, the percentage of visitors actually gambling is “People enjoy it better when they’re playing against peo-
down, while the share going to nightclubs and other attrac- ple they don’t know,” Meyerhofer says.
tions is up. The total number of slot machines in Sin City is Couples gravitate to Gamblit’s single-player games,
off 23 percent from its 2001 peak—the machines make up such as Smoothie Blast, where players match fruits to
the majority of gambling revenue in the U.S. make a smoothie, and Lucky Words, where the goal is to
That’s why Eric Meyerhofer, an electrical engineer who find words hidden on the screen. The games have been so
previously ran a company that made ticket printers for popular with couples that Meyerhofer is adding benches 49
slot machines, co-founded Gamblit Gaming, which builds to his devices instead of single seats. Borrowing from a
millennial-friendly gambling devices. The products of the strategy of traditional slot makers, Gamblit has secured
Glendale, Calif.-based company look more like arcade the rights to well-known brands. The company later this
games than slot machines and have been out on the floor year will put out machines based on the classic arcade
of big casino operators such as Caesars Entertainment game Pac-Man and the game show Deal or No Deal.
Corp. and MGM Resorts International for almost a year. Because Gamblit’s games take longer to play than slot
They’ve opened a window into what young players like and machines, there’s a slower turnaround of bets, 45 sec-
don’t like about gambling, Meyerhofer says. One thing is onds for Gamblit vs. about six seconds for a typical slot
clear, it’s not going to be an easy sell. “This will take years machine. There have been regulatory issues as well. While
to evolve,” he says. skill-based games have been approved in gambling mar-
Skill-based slot machines—some made by Gamblit, oth- kets such as Nevada and New Jersey, regulators nation-
ers by rival startup GameCo Inc. and established manu- wide are still catching up. Caesars removed a Gamblit
facturers such as International Game Technology Plc and Poker game from its casino near San Diego, for example,
Scientific Games Corp.—make up about 500 of the roughly because California regulators considered the four-person
982,000 gambling devices in the U.S. and Canada, accord- device four separate slot machines and state rules limit the
ing to market research firm Eilers & Krejcik Gaming LLC. number of devices some casinos can operate.
But casino operators say they’ll add the games because Meyerhofer says he’s certain regulators will come to
they’re luring new customers. “We believe that these are better understand the devices. As many as 70 percent
the games of the next generation,” says Rick Hutchins, a of Gamblit’s customers weren’t in the casinos’ customer
senior vice president for slot machine strategy at MGM. databases before, proving his machines are doing what
While the games require some skill—Gamblit’s Into the they’re designed to do, he says. “The youthfulness of the
Dead, for example, involves seeing how many zombies player, that was an unknown one year ago today,” he says.
you can blast—the size of the cash prizes is determined “I have no lack of confidence that this is going to work.”
randomly, much like traditional slot machines. —Christopher Palmeri
Meyerhofer’s original vision, back in 2010, was to file
patents for interactive gambling devices that he could then
THE BOTTOM LINE Casinos such as Caesars and MGM Resorts, faced
license to big manufacturers. The idea was to create skill- with declining shares of visitors who gamble, are testing interactive slot
based slot machines where players could be rewarded in machines designed to appeal to younger customers.