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From the Southern Gaming Summit: Hot Products

By Jeff Hwang - Updated Nov 15, 2016 at 12:14AM

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A look at the hottest new products from the Southern Gaming Summit.

One of the main attractions at last week's Southern Gaming Summit was the expo, where a variety of vendors showed off some of the newest slots, table games, and technologies. Conspicuously absent from the exhibition floor this year was Motley Fool Stock Advisor pick Shuffle Master (NASDAQ:SHFL), a company suffering from accounting troubles and integration issues related to its Stargames acquisition. It could very well be nothing, but I found the company's absence somewhat disconcerting.

Slot manufacturers
Some of the greatest innovations are coming from the slot manufacturers. Server-based gaming continues to be a hot topic, though the impression I get from the slot makers is that the prospect for replacement demand is somewhat overhyped by Wall Street. The transition is expected to be somewhat gradual and will affect perhaps a quarter of the slot floor at first -- far from the previous mass replacement spurred by ticket-in/ticket-out (TITO) technology.

Industry Rule Maker International Game Technology (NYSE:IGT) showed off some of its server-based gaming tricks. Some of the key benefits will be the ability to change games on the fly on a given machine, as well as use the casinos' players cards to tailor benefits and services via an on-screen player card menu. For example, the player will be able to do things such as order beverages and make reservations, while the casino can send individualized offers.

IGT also brought a full menu of new games, the most noteworthy of which were the new Wheel of Fortune and Indiana Jones multilevel progressives, both of which included a new widescreen monitor.

WMS Industries (NYSE:WMS) continues to bring out some of the best new products in the business. The company has a new line of "sensory immersion" games utilizing an incredible 3-D Bose sound system, including a Top Gun game, already on the market, and another game based on the Wizard of Oz. Sitting at one of these machines is like sitting at an arcade machine.

Another noteworthy WMS product is the Transmissive Reel, which is an LCD screen layered over a five-reel mechanical slot. The interesting thing about this is that this technology is basically standard in Japan's pachislot industry, which currently consists of about 2 million pachislot machines. Recent Motley Fool Global Gains wild card Sega Sammy is the pachislot industry leader, consistently accounting for one-third of unit sales, and manufacturers and distributes pachislots for the two largest slot manufacturers in the world -- IGT and Australia's Aristocrat Leisure. The wonder is that IGT hasn't yet adapted this technology.

Aristocrat has also been a key video slot innovator. I believe the company is responsible for such game features as the Reel Power ("243 ways to win") and games that offer 50 lines for $0.25. The thing that gets me about the company, however, is that the games are way behind in terms of graphics and sound. By that measure, Aristocrat is the Atari 2600, while everybody else is to the PlayStation 3.

Speaking of Atari, Bally Technologies (NYSE:BYI) brought one of the coolest games yet in the form of Pong, a video slot based on the classic. The bonus game is Pong, which is played using a knob. Interestingly, this adds something of a skill element -- the more you beat the computer by, the higher the score you make, and the more you win. I'm not sure if this is a good or bad thing, however, as a slot player might be averse to having skill at a video game affect the outcome.

Table games
The table games business is a difficult one, and the only company really making any money at it -- Shuffle Master -- is having accounting problems. That said, there were probably about a dozen new games on display, even in Shuffle Master's absence. The theme continues to be poker-related games, and the vast majority of the games involve some bastardization of Texas Hold'Em. In general, these types of games have done well lately on the strength of poker's boom. However, there's a lot of competition in this space, and many of the new games don't rate to make it.

Otherwise, truly innovative games are rare and also face an uphill battle. The problem for any new game is that you have to convince gamblers to invest time to learn how to play a game that is designed to beat them. On top of that, you must convince gamblers that they like the game better than existing alternatives. This year, the Spin N Win game utilizes a pair of eight-sided spinning tops, and you simply bet on which side either or both tops will land on. The game passes the simplicity test but may not hold up against the competition in the casino.

Electronic table games
Electronic table games are another hot spot in the industry. Of course, Shuffle Master -- the leader in this space -- wasn't there. So far, one of the most successful products has been Shuffle Master's Rapid Roulette, which uses a live dealer with electronic betting stations. This product has already made its way into many of the Harrah's-owned (NYSE:HET) properties.

Another area is electronic table games without dealers. Aristocrat brought its own version of the dealer-less Roulette game, called the Megastar.

Lastly, the best electronic table game of the show was PokerTek's (NASDAQ:PTEK) PokerPro, an electronic poker table. It should be noted that Aristocrat owns about a 19% stake in PokerTek, and that Lakes Entertainment -- majority owner of WPT Enterprises -- sold its stake in the company last year. Last year, we took a look at PokerTek's main competitor, Lightning Poker, whose product is now being distributed by Shuffle Master. I was hoping to get a chance to compare the two tables side by side, though I think Shuffle Master's absence precluded that possibility.

While it's not clear to me that one table is necessarily that much better than the other, PokerTek has both the first-mover advantage and now a key partnership with Harrah's Entertainment, which owns the World Series of Poker. There was actually a third company with a new electronic poker table at the show, though I don't think the product is particularly competitive with either PokerPro or Lightning Poker.

For more on the Southern Gaming Summit:

Fool contributor Jeff Hwang is an expert blackjack player and a semi-professional poker player. Jeff owns shares of Shuffle Master, International Game Technology, WMS Industries, and Sega-Sammy. The Fool has a disclosure policy that can't be beat.

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