IGT exec on the future of gaming: Interchangeable titles for social media, online real-money play and brick-and-mortar casinos

Patti Hart, CEO of International Game Technology (IGT), movie producer Jon Landau, center, and actor Stephen Lang cut a ribbon by Avatar-themed video slot machines during the G2E convention at the Sands Expo Center Tuesday, Sept. 24, 2013. Landau produced the 2009 movie, Lang played Colonel Miles Quaritch in the film.

Click to enlarge photo

John Vandemore

Quick: Where is corporate headquarters for IGT, the world’s leading slot machine manufacturer?

If you guessed Reno, you'd be wrong.

Despite the fact that the company is Reno's fourth-largest employer, IGT’s corporate home is in Las Vegas. Both CEO Patti Hart and Chief Financial Officer John Vandemore live in Southern Nevada, which has become IGT's base of operations.

Vandemore recently talked to VEGAS INC about the company.

Most people consider IGT a Reno company. Is that wrong?

I have to admit, I’m personally saddened to hear that. I live here, and I run the financial end of things here. I guess I need to make more noise.

Actually, I understand the perspective, given the company’s history in Reno. I think we now have equal parts of the footprint there as we do here. But this is the nerve center of the organization. This is where the executive team sits, day in and day out.

What role does Reno play?

Reno is the heartbeat of the organization because it’s where we design and manufacture games. If Las Vegas is the brain, Reno is the heart, and you can’t separate the two. Otherwise, you wouldn’t have a thriving organization.

If you fly Southwest between Reno and Las Vegas any day of the week and you don’t have at least five or six IGT people on the flight, you’d be lucky. They’re always collaborating with their colleagues. I guess the best way to state it is that we’re a Nevada company.

This is an incredibly global business. To give you an example, my morning began with a conversation with a company in Spain that has operations in Mexico and Argentina.

Are there advantages to being based in Las Vegas?

It’s a perfect place to have your corporate headquarters because it has a good talent base and you can get almost any place from here. There hasn’t been a month yet when I haven’t had to fly to either Reno or Seattle, San Francisco, London or Macau. It is a tremendous asset in terms of getting to customers and key markets easily.

How many employees does IGT have in each city?

It fluctuates a little bit because we’re always hiring and looking for talent. But in Las Vegas, we have 934, and in Reno, it’s about 2,040. Together, that’s about 60 to 70 percent of our overall workforce.

We also have a development base in San Francisco, and our interactive and social business is in Seattle.

How is the slot machine manufacturing division doing?

We’re incredibly pleased by our land-based business and product sales. It has done phenomenally well. It grew revenue at 12 percent this year, which is fantastic. It’s the foundation of the company, and it bleeds into our interactive business.

How does IGT make money from social media?

We offer a free-to-play service where you can effectively play almost any game we have on a living casino floor in a virtual sense. Every day, we give people an opportunity to win chips that they can use to play slots, blackjack or roulette. They’re free, and they can never be withdrawn for value, so they stay in the game. What we also do is offer the opportunity to buy more virtual chips.

If you went on to Double Down Casino, you could spend $99 and probably walk out with $100 million in chips that you could then use to play slot machines and table games, purely for enjoyment. There’s no ultimate reward allowed. The interest of the game draws people in and encourages them to buy additional chips that ultimately drops through and generates operating income for us. It’s people paying to be entertained.

Will people be able to play online for real money like they can Internet poker?

There’s a line of demarcation. Our social gaming actually spans the globe today, and we will keep it separate. It’s an unregulated business that leverages the same content. Because it’s not regulated and it’s not gambling, it’s something that can be played anywhere. That provides us with an opportunity above and apart from online poker.

But IGTI offers real-money online wagering. We have games today, predominantly in Europe but coming to New Jersey and Delaware soon, that allow you to play the same game you would on the casino floor in an online environment for money.

Nevada has opted not to include casino-style games in its online regulations, but New Jersey and Delaware have allowed that. Our expectation is that New Jersey will go live online, and when it does, we expect our games to be available in the marketplace.

Online gaming also familiarizes players with your land-based games, right?

Absolutely. What we’ve seen in markets where there is land-based and online casino-style gaming allowed is that it’s reinforcing play. If people like to play a game on land, they like to play it online. And if they like to play it online, they like it on land. The ability to play it both ways increases play noticeably.

That, I think, is really the future of gaming — the ability to generate a piece of content and use it in the social media, use it in online real-money wagering and use it in the land-based environment, as well.

What’s on the horizon for IGT? Any expansions planned?

I don’t know that you’d see a physical expansion. But we’re always looking to see that we have the right talent in place to drive the business.

Some roles are agnostic as to whether they’re in San Francisco, Las Vegas or Seattle, while others are really important to have in Las Vegas.

I wouldn’t suggest that we’re going to have a marked change in Las Vegas, but I would say that Las Vegas will continue to be that nerve center of the organization. We’ll have to make sure people understand that better and that people know we live and breathe here.

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