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August 24, 2006

They pave the way for the tracks to submit their plans to offer specific games, which must be evaluated by GLI to ensure they meet the enabling legislation’s definition of games of skill – “game(s) played through any electronic device or machine that affords an opportunity for the exercise of skill or judgment where the outcome is not completely controlled by chance alone.”

Although there is currently a lawsuit challenging the legislation, it is not expected to delay full implementation of more than 900 games at Southland Park in West Memphis, which hopes to open its new gaming area November 1. Oaklawn Park in Hot Springs is moving more slowly, but may have 100 or more machines in place before the end of the year.

“They did a fine job [with the rules and regulations],” said Southland president Barry Baldwin. “They wanted to make sure they got it right.” And he wants to make sure he gets his facility completely ready before the gaming opening – a $39 million construction project is underway, with a new buffet, nightclub and bar and a special events center.

Baldwin hopes the investment, and the gaming machines, will give the facility some of its former glory, before the Tunica, Miss., gaming market had a devastating impact on its business. Tunica and its many casinos are just 40 miles from the racetrack.

“We don’t anticipate competing against Tunica, [our games] aren’t the same as slot machines,” said Baldwin. “But we’re just trying to get back to where we were in 1990, prior to Tunica.”

The games going into Southland include video poker and blackjack (including multi-player versions), and an IGT re-spin game called “Lock-n-Roll,” popular at Harrah’s Cherokee Casino & Hotel in North Carolina. All require user input, and a skilled player can do very well.

Southland’s games will be ticket in, ticket out, and while they will be connected to a central reporting system, officials chose not to install a downloadable gaming system. “We looked at server-based gaming for the future, but the cost didn’t make sense for where we are starting right now,” said Baldwin. “That’s obviously the wave of the future, but there are still a lot of question marks in trying the games of skill.”

Those questions should be answered in the coming months. “We know we are going to see some crazy numbers the first six weeks,” he said, as people come in to try out the games. At that point, people will decide whether they like or dislike the games, and then the revenues will settle to a sustainable level. “Then we’ll begin to build the business with player rewards programs and so on.”

IGT’s director of corporate development Walt Hawkins thinks that while slot machines are generally the industry’s revenue leader, games of skill can work quite well. A relatively isolated market like Oaklawn might have very good performance, but there’s potential even in the competitive market faced by Southland.

“I think if they market it aggressively, promote it, and become what I would call a locals casino, where people can go for a nice meal, some drinks, simulcasting and races, they are going to do well,” Hawkins said. “You may find out that people do like video poker. It’s the game of choice at locals facilities in Las Vegas, where 60 to 80 percent [of the slot floor] is video poker.”

Certainly Baldwin hopes to make it work at Southland. The “Lock-n-Roll” games, in particular, offer a unique marketing angle – two chances to win: after the first spin, and then again if a player chooses to lock one or more reels and spin again. “If we market it correctly, there are people who will like the idea [of two chances to win], that they do have some control.”

He added that diehard slots players who just want to play as fast as they can won’t find Southland’s games very appealing. “But there’s a whole vast majority who really just go out for fun. And we think we can try to appeal to a lot of that group. This will give you more time to play, because it’s a lot slower, and that’s not all bad. If we market it correctly, it will find its place.”

—Patricia A. McQueen