Gambling’s expansion has Multimedia Games on cusp of cracking manufacturing’s upper echelon

It seems laughable now in hindsight.

Slot machine maker Multimedia Games Inc. was for sale in 2010 and couldn’t attract a buyer.

Today, it’s the hottest commodity for the gaming industry investment community.

“We’re an exciting growth story in gaming, and there aren’t too many of those, to be honest,” said Multimedia Games Chief Executive Officer Patrick Ramsey, 39, who joined the company as chief operating officer in 2008.

A few years ago, Multimedia Games had only a handful of gaming licenses. Now, with licenses in major markets — including Nevada, New Jersey, Pennsylvania, Illinois, Mississippi and Louisiana — Multimedia Games appears on the cusp cracking the manufacturing sector’s upper echelon.

“I think people have looked at us with just 30 percent to 40 percent of the U.S. market and saw our success,” Ramsey said. “They have to figure we’re bound to be successful when we can sell games to 80 percent to 90 percent of the U.S. market.”

Wall Street agreed.

Brean Capital gaming analyst Justin Sebastiano told investors Multimedia Games is on a clear growth trajectory. In a July research note, he said the company should easily crack into new markets as sales efforts increase.

“We visited 34 regional casinos in the past two months and universally, Multimedia Games was named the up-and-coming slot manufacturer by the property managers with whom we met,” Sebastiano said.

Credit Suisse gaming analyst Joel Simkins said this spring he noticed slot machines produced by Multimedia Games were making inroads on casino floors, even as corporate gaming companies continued to limit their budgets for replacing older games.

“As we have heard from casino operators in Atlantic City and tribal gaming, Multimedia Games is amassing low single-digit market share and orders in a number of locations,” Simkins said.

right place, right time

It wasn’t always so easy.

Three years ago, Multimedia Games had between 2,000 and 3,000 slot machines in the U.S. market, primarily concentrated in Indian casinos in Oklahoma and Washington.

The Austin, Texas-based company started out by feeding gaming devices to tribal casinos in Oklahoma. The business in the early 2000s provided the company with a solid revenue stream that increased as gaming in the state quickly expanded.

Eventually, the company branched into other Indian gaming states, including California, but had an eye toward the Strip and the expanding riverboat and regional gaming markets.

When Multimedia Games CEO Anthony Sanfilippo left in March 2010 to become CEO at regional casino operator Pinnacle Entertainment, Ramsey was named interim-CEO. Before joining Multimedia Games, Ramsey had spent six years with Harrah’s (now Caesars) Entertainment in a variety of operational positions.

Multimedia’s board tasked Ramsey with keeping the company in operation while buyers were sought for the business. None surfaced.

“It was the wrong time to be selling and the wrong time for buyers to be buying,” Ramsey said.

Six months later, the board pulled off the interim title and turned Ramsey loose to rebuild and expand the operation.

“We decided to go this independent route and try to build value, take market share and grow,” he said.

Today, Multimedia Games is fast approaching 20,000 slot machines in the U.S. market. The company was licensed in Nevada in September 2011 and launched games on the Strip last year. The company now has slot machines in Atlantic City.

“The Nevada license was important because it sent a message that we’re a real manufacturer that can compete in a major level, especially with some of the big players,” Ramsey said.

The company’s fastest-growing product is TournEvent, a bank of linked slot machines that allows casinos to run multiple slot machine tournaments and competition. Server-based technology personalizes the games for customers.

As of March, Multimedia had installed TournEvent in roughly 170 casinos — an average of 14 to 15 machines per installation. Multimedia’s average selling price was $19,000 per machine.

Simkins said Multimedia executives told him 500 casinos in the U.S. could support the product, but the company’s “realistic goal” was 300 properties.

Janney Montgomery Scott gaming analyst Brian McGill told investors in July that TournEvent could be a “significant driver” for Multimedia Games and could lead to the placement of the company’s other gaming devices.

“This is a unique product that has generated substantial interest from operators,” McGill said. “We think many properties also are more likely to add a bank of Multimedia’s games once they have a positive experience with TournEvent.”

Multimedia Games’ stock price is up 89 percent in the last 12 months on the Nasdaq. Several analysts recently upgraded their views of the manufacturer, mostly to a “buy” recommendation.

One Wall Street researcher predicted the company’s total annual revenues, which grew 22.2 percent to $156.2 million in 2012, will hit $185.8 million this year and top $214.9 million next year.

As of March, the company had cash on hand of $81.5 million and $31.5 million in debt, for net cash of $54 million.

Wells Fargo Securities gaming analyst Barry Jonas, who initiated coverage of the company in July, said Multimedia Games was “in the early innings.” He said the company was evolving from a small manufacturer to “a leading” U.S.-based slot machine provider.

“We are positive on Multimedia’s ability to materially grow earnings as new gaming licenses increase its access to the domestic gaming markets,” Jonas said.

domestic focus

Ramsey said one key to Multimedia’s success was dumping underperforming businesses, especially on the international front. Last year, the company halted its operations in Mexico, where it had 6,000 slot machines, but were operating under “terrible” financial terms.

The company is focused on serving the domestic market.

Multimedia Games has placed some of its slot machine titles into social gaming platforms and the company recently launched an application for free-to-play TournEvent on mobile devices.

Ramsey said the company is keeping its “eye on Internet gaming developments,” especially in New Jersey, which is launching full-scale Internet gaming later this year.

“I just don’t see the traditional slot manufacturing role being profitable on the Internet quite yet,” Ramsey said. “It’s critical for us to focus on land-based casino gaming. The company’s problem in the past was it tried to focus on too many things.”

Staying put

Ramsey said there aren’t plans to move Multimedia Games from Austin to Las Vegas. The company has two facilities in Austin — a technology development and distribution center and corporate offices — which employ a combined 500 workers.

In Las Vegas, Multimedia maintains a 4,000-square-foot office near Summerlin in Tivoli Village. The offices include a slot machine showroom, sales and marketing space, and service staff.

Austin has an advantage, Ramsey said, because the city is known as a technology hub and the workforce provides Multimedia Games with a “fresh approach” to slot machine game and bonusing design.

Ramsey, who spends four or five days a week in Austin, still lives in Las Vegas. So does longtime slot machine company executive Mick Roemer, who is Multimedia’s senior vice president of sales. Company chairman Steve Greathouse, a former Strip gaming executive, also lives in Las Vegas.

Interest in Multimedia Games has brought Wall Street analysts to Austin.

Slot machine floor managers, who make the ultimate decision on what games end up in front of customers, enjoy testing the products in the Tivoli Village showroom, even executives from Strip casinos.

Most of the slot machine companies — including Bally Technologies, Konami Gaming and WMS Industries — have offices near McCarran International Airport. International Game Technology is on Buffalo Drive off Interstate 215.

“We can show customers our products, add some excitement, and then we can take them downstairs to one of Tivoli’s great restaurants,” Ramsey said. “We took a risk, but it has paid off.”

Contact reporter Howard Stutz at or 702-477-3871. Follow @howardstutz on Twitter.

MGM Grand Plans To Add Retail And Dining To Its Strip Facade
MGM Grand President and Chief Operating Officer Scott Sibella said executives are “discussing redeveloping that entire frontage of the building out to the Las Vegas Strip.” (Todd Prince/Las Vegas Review-Journal)
Boyd Gaming planning new corporate campus
Casino operator Boyd Gaming Corp. has filed plans to build a new corporate campus. The plans call for two 10-story office buildings and a six-level parking garage in the southwest Las Vegas Valley. Boyd Gaming operates The Orleans, the Suncoast, downtown's California Hotel and other properties. The new headquarters would be just a mile from its current main office building.
Bellagio Conservatory transformed to celebrate Year of the Pig
The Bellagio Conservatory Team transformed the 14,000 square foot conservatory to commemorate Chinese New Year, the holiday that marks the end of the coldest days of winter. (Rachel Aston/Las Vegas Review-Journal)
CES 2019: Intro uses sound to connect people
Intro, a startup that is part of the Future Worlds Accelerator in the UK, has an app that uses ultrasonic sound to find people and companies nearby.
CES 2019 Video: CES wraps up another year
Time-lapse video of the action at CES 2019 in Las Vegas. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Create your own beauty products
Beauty Mix by BeautyByMe is a product that lets you create your own cosmetics and beauty products. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Picobrew’s home brew machine
Picobrew brings automation to homebrewing. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Surviving CES
What it's like to spend four days working the mammoth tech convention. (Jason Bracelin/Las Vegas Review-Journal)
Haier’s smart home
Haier presented smart home technology at CES 2019.
CES 2019 VIDEO: Foldimate makes laundry day easy
Foldimate has created a machine that will fold your laundry for you. Just feed it anything you need folded and it will do the rest. (Mat Luschek/Las Vegas Review-Journal)
CES 2019: Opte device corrects skin spots
Opte from Proctor and Gamble is a device for correcting spots and freckles from skin. It analyzes the area for spots and then covers them with a serum of matching skin tone. (Mat Luschek/Las Vegas Review-Journal)
Circa hotel-casino in downtown Las Vegas unveiled
Derek Stevens reveals Circa hotel-casino in downtown Las Vegas. He plans open by the end of 2020. (K.M Cannon/Las Vegas Review-Journal)
Circa, new casino coming to Fremont Street
Casino owner Derek Stevens announces his new property Circa, coming to Fremont Street in downtown Las Vegas in late 2020. (Michael Quine/Las Vegas Review-Journal)
Dreenk My Oeno makes wine suggestions
At CES 2019 in Las Vegas, the Dreenk My Oeno tells you all about wine.
Polaroid One Step Plus camera unveiled at CES 2019
Polaroid has moved into the digital age with its One Step Plus camera with Bluetooth. With the connected app, it turns your smartphone into a remote for the camera, along with filters and features.
Amazon is everywhere at CES 2019 in Las Vegas
Seemingly everything works with Amazon Alexa
LG Smart Mirror helps you dress snazzy
LG’s Smart Mirror is less of a mirror but more of an assistant to help get you looking snazzy. It takes your image and recommends clothes for you or matches existing clothes with new clothes, which can be purchased right from the mirror. (Mat Luschek/Las Vegas Review-Journal)
Underwater robots make waves at CES 2019 in Las Vegas
Robosea is a company dedicated to underwater robotics. They produce consumer robots for underwater filming as well as commercial products which can be used for underwater research. (Mat Luschek/Las Vegas Review-Journal)
CES 2019 - Victrola record players spin in Las Vegas
A new spin on an old favorite, Victrola record players are meeting a demand for retro products. The brand is also making furnitures with built-in speakers.
CES 2019: Slamtec robots ready to serve
Slamtec is a robotics company out of China whose goal is to provide solutions for laser localization mapping and navigation. They have created two autonomous robots that can be used in areas such as bars, restaurants and malls. (Mat Luschek/Las Vegas Review-Journal)
Mixologiq drink maker appears at CES 2019 in Las Vegas.
This is the Mixologiq drink maker.
CES 2019: Veritable smart garden
Let’s face it; not all of us have green thumbs. And herbs are particularly difficult to grow, considering their constant need for sunshine. Enter the Veritable smart garden from Exky, which does it all for you. (Heidi Knapp Rinella/Las Vegas Review-Journal)
Bonnie Springs Ranch near Las Vegas being sold to developer
Bonnie Springs Ranch near Las Vegas is being sold to a developer, set to close in March. Bonnie Springs, west of Las Vegas off State Route 159 — next to Spring Mountain Ranch State Park — spans more than 60 acres and was on the market for $31 million. The developer and his project partner are under contract to buy the ranch and plan to chop it up mostly into custom-home lots. The plans includes a 25-room motel, a restaurant and a 5,400-square-foot event barn.
Bone-conduction headphones form Aftershokz
Aftershokz offers bone-conduction headphones - headphones that don’t go in the ear.
CES Happy Hour party at Hangover Suite at Caesars Palace
Conventioneers mingled during the Hardware Massive CES 2019 Happy Hour Bash at The Hangover Suite at Caesars Palace in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Autonomous Cars and Futuristic Aircraft Rule CES
Day two of CES was dominated by autonomous cars and futuristic aircraft in the North Hall of the Las Vegas Convention Center.
TekNekSavr fights neck problems caused by smart phones
Atiya Syverson invented the TekNekSavr to help fight neck and head problems caused by strains while typing on smart phones. (Mat Luschek/Las Vegas Review-Journal)
New eyeglasses know if you fall and call for help
The French company Abeye has created eye glasses that will detect if the wearer falls and call for help. (Mat Luschek/Las Vegas Review-Journal)
Company that creates vibrator-like device claims genders bias against CES
Lora DiCarlo is a women-run start-up that creates a vibrator-like device designed for female pleasure called the Osé. This year they were awarded the CES Innovation Award in the Robotics and Drone Category, but a month later the Consumer Technology Association, which runs CES, rescinded the award and their booth. Haddock and her team believe it is a reflection of gender bias and sexism in an industry with a long history of male domination.
CES-Wagz has new pet products
Wagz has three new products to help create better lives for your pets in a digital world. One is a collar with LTE tracking and an HD camera. Also a smart pet door that only lets your pet in and out. Lastly, a device to humanely keep Fluffy out of certain areas of your home. (Mat Luschek/Las Vegas Review-Journal)
News Headlines
Home Front Page Footer Listing
You May Like

You May Like