Industry Impact Analysis ’08

Global Gaming Supplier Industry Impact Analysis ’08

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org AGEM Leadership

November 19, 2008

Welcome to the Association of Gaming Equipment Manufacturers’ (AGEM) R. BROOKE DUNN inaugural issue of the Global Gaming Supplier Industry Impact Analysis. This President, AGEM year marks an extraordinary year for our industry and AGEM member companies. During the course of the past year, our membership nearly doubled from 32 to 60 members as of the date this report was published. The latest expansion in our membership and increased exposure throughout the world demonstrate the strength of our group and the active involvement of our members. We would like to thank all AGEM member companies for their participation, ﬁ nancial support and tireless efforts to positively promote our industry.

ORRIN J. EDIDIN Vice President, AGEM This year has not been without its challenges as global economic conditions have remained volatile and the current ﬁ nancial crisis has impacted all sectors of the economy. Many of our publicly traded members have witnessed the negative effects of the challenges facing the broader market. While concerns over demand for leisure, hospitality and gaming industries persisted through the recent election cycle, the longer-run outlook for the supplier segment of the market remains bright.

AGEM and its member companies remain proactive and at the forefront of legislative measures and industry events. In 2008, AGEM-sponsored events took BRIAN WEDDERSPOON Secretary, AGEM place in Biloxi, Montreal, San Diego and Las Vegas. It is worth noting, gaming proliferation in emerging markets bodes well for global gaming suppliers. We expect that the upcoming year will require equal diligence to ensure the issues vital to the industry’s success are considered. In addition to expansions in Asia, Europe, and other regions, additional capacity within the United States is also expected to pay dividends for suppliers.

During 2008, AGEM retained Applied Analysis, a Nevada-based economic and

THOMAS A. JINGOLI gaming consultancy, to assist in the preparation of this Industry Impact Analysis and Treasurer, AGEM conduct our member company survey. The survey was designed to provide you with insight on the diverse composition of our member companies while demonstrating our strengths. The results of these efforts are located on the pages that follow and represent the ﬁ rst time information exists that shows the collective size and scope of global gaming suppliers.

We hope this report provides you insight into our prestigious organization, the gaming supplier industry, our technologically advanced member companies and MARK LERNER their innovative product offerings. General Counsel, AGEM

Sincerely,

Brooke Dunn Marcus E. Prater President Executive Director

MARCUS E. PRATER Executive Director, AGEM Phone: 702.812.6932 ■ P.O. Box 50049, Henderson, NV 89016-0049 USA ■ www.AGEM.org Association of Gaming Equipment Manufacturers Table of Contents

2 Executive Summary 15 Global Reach During 2008, the Association of Gaming Association of Gaming Equipment Manufacturers Equipment Manufacturers (AGEM) has made (AGEM) Members operate in more than 40 countries signifi cant contributions to the economy, charitable across the world. organizations and was involved in key legislative measures. 17 AGEM Members During the course of the past year, our membership 3 News nearly doubled from 32 to 60 members as of the date Over the years, AGEM has contributed more than $1 this report was published. million to interests involved with addressing problem gambling. National and local organizations such as the National Center for Responsible Gaming, the 19 Members Added ‘08 National Council on Problem Gambling, the Nevada The latest expansion in our membership and Council on Problem Gambling and The Problem increased exposure throughout the world Gambling Center have all benefi tted from AGEM’s demonstrate the strength of our group and the active contributions. involvement of our members. 4 Committees 21 AGEM Membership AGEM and its member companies remain proactive AGEM frequently comes together on issues related and at the forefront of legislative measures and to gaming legislation, gaming expansion into new industry events. jurisdictions and regulatory matters. The group addresses these issues at its monthly meetings and, when needed, will join together to promote the 5 AGEM Leadership industry’s best interests or to affect change. The latest expansion in our membership and increased exposure throughout the world demonstrate the strength of our group and the active 23 Gaming Supply Forecasts involvement of our members. We would like to thank Legislative initiatives gaining approval on the all AGEM member companies for their participation, November 4, 2008 ballot included 15,000 slot fi nancial support and tireless efforts to positively machines in Maryland, removal of loss limits in promote our industry. Missouri and increased betting limits in Colorado. 7 Industry Impact Analysis 27 The Community In 2008, AGEM retained Applied Analysis, a AGEM provides fi nancial support to a number of Nevada-based economic and gaming consulting responsible gaming organizations, including the fi rm, to conduct an economic impact analysis for National Council on Problem Gaming, the Nevada the global gaming supplier segment of the gaming Council on Problem Gaming, and the Problem industry. Economic impacts include economic output, Gambling Center. AGEM encourages its members to employment, and wage and salary payments. support the cause through their own companies. 13 AGEM Index 29 Gaming Referendums During 2008, AGEM developed the monthly Recent gaming referendums from around the Association of Gaming Equipment Manufacturers’ United States with the potential to impact gaming (AGEM) Index that comprises 16 global gaming equipment manufacturers came to a vote on this suppliers throughout the world. A total of 13 year’s ballots. suppliers are based in the United States and are listed on the NYSE, Nasdaq or AMEX, while two trade on the Australian exchange and one supplier trades on the Milan exchange.

1 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Association of Gaming Equipment Manufacturers Executive Summary

During 2008, the Association of Gaming Equipment Economic Output Manufacturers (AGEM) has made signiﬁ cant contributions (in billions) to the economy, charitable organizations and was involved in key legislative measures. The following $12 highlights key elements of the Global Gaming Supplier $11.9 Industry Impact Analysis. $10

$8 $9.4 Economic and Fiscal Impact $8.0 Based on the impact analysis contained in this report, we noted $6 the following economic contributions of the global gaming supplier sector during 2007: $4 ■ Direct impacts on the economy included approximately $11.9 billion of economic output (revenues), employing $2 approximately 28,200 full-time equivalents and paying salaries and wages of an estimated $1.9 billion. $0 2005 2006 2007 ■ Key economic measures all represented increases from the prior year with economic output up 27.3 percent, employment up 3.8 percent and salaries and wage payments up 7.6 percent. Wage and Salary Payments ■ Average annual salaries within the industry were $67,100, (in billions) representing an increase of 3.7 percent from the prior year. $2.0 ■ Including the “ripple effect” of the industry’s contributions, $1.9 the industry reported a combined economic output of $1.5 $1.8 $33.2 billion, employment of 78,600 and salary and wage $1.6 payments of $4.5 billion.

In addition to economic contributions, fi scal impacts associated $1.0 with the industry were material. Total income tax payments approached $1.0 billion, while taxes, fees and charges paid to municipalities were also signifi cant. $0.5 Philanthropy and Community $0 In addition to supporting responsible gaming and other 2005 2006 2007 industry-embraced initiatives, AGEM and its members have helped numerous charitable and non-profi t organizations, including The Boys and Girls Club and United Way. In the aftermath of Hurricane Katrina in 2005, AGEM made a major Employment donation to the Salvation Army and American Red Cross. Over 29,000 the years, AGEM has contributed more than $1 million to interests involved with addressing problem gambling. AGEM member 28,200 companies also contribute countless more on their own. 27,000 27,200 Legislative Update 25,000 25,900 While global economic concerns persisted through the election, legislative initiatives gaining approval on the November 4, 2008 ballot included 15,000 slot machines in Maryland, removal of loss limits in Missouri and increased betting limits in Colorado. Taking 23,000 a look at expansions during the next several years, we anticipate additional slot capacity of over 150,000 slot machines and nearly 3,500 table games in more than 25 U.S. States. These expansions 21,000 are expected to bode well for the gaming supplier sector. 2005 2006 2007

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 2 Association of Gaming Equipment Manufacturers News

AGEM News

■ AGEM was formed in 2000 by the largest of the slot ■ AGEM is also actively involved in education companies that felt a need for a collective voice. initiatives, including contributions totaling $300,000 to the College of Southern Nevada in Las Vegas / ■ Our organization works with trade show organizers Henderson to fund a slot technician curriculum. around the world to ensure its members and their During this current school year, nearly 250 students customers benefi t from an active and productive are enrolled in the program. business atmosphere. We also have offi cial partnerships with the American Gaming Association ■ AGEM indentifi es opportunities that benefi t its (AGA) and Reed Exhibitions, the co-owners of the members and the industry as a whole. These can take Global Gaming Expo (G2E) in Las Vegas and G2E Asia shape in the form of regulatory or legislative issues, or in Macau. expansion opportunities such as the ballot measure in Maryland that passed in November 2008 and created ■ AGEM also organizes social events at trade shows to a new market of up to 15,000 slot machines for build on the spirit of cooperation among its members AGEM members. AGEM is also very active in Nevada for the benefi t of AGEM customers. politics and contributes a signifi cant amount annually ■ Over the years, AGEM has contributed more than $1 to candidates who can help further the interests of million to interests involved with addressing problem AGEM members and the gaming industry in general. gambling. National and local organizations such as ■ AGEM serves as a “spokesperson” for the supplier the National Center for Responsible Gaming, the side of the industry and regularly fi elds inquiries National Council on Problem Gambling, the Nevada from around the world. In addition, the AGEM Index Council on Problem Gambling and The Problem is quickly becoming a respected snapshot of the Gambling Center have all benefi tted from AGEM’s month-to-month market performance of the supplier contributions. In addition to the contributions made by segment of the industry. this organization, AGEM members contribute countless more on their own.

Member companies’ 2007 Share of member companies’ revenues i gross revenue distribution: i sourced to gaming equipment sales in 2007:

Less than $1M 43%4.3% More than $1M to $25M More than 75% 24.0% $500M 13.0% 21.7% 50% t o 75% 16. 0%

26% to 50% 16.0%

11% to 25% 4.0% $25M to $100M 26.1% 1% to 10% 16.0%

$101M to $500M 0% 24.0% 34.9%

3 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Association of Gaming Equipment Manufacturers Committes

Governmental Affairs Name Company MEI Walt Stowe ...... Elixir Gaming Mark Lerner ...... Bally Technologies Market Share Gain Neil Friedman ...... IGT MEI holds the world’s largest installed Tom Jingoli ...... Konami base of unattended payment systems, handling over 2 billion transactions per Bill Bartholomay ...... WMS week in more than 100 countries. The Erik Batzloff ...... GTECH company developed the fi rst electronic Brooke Dunn ...... Shuffl e Master coin mechanism in the 1960s, followed by the fi rst electronic non-contact bill Gordon Dickie ...... Cadillac Jack acceptor, and more recently its credit card capability and vending Investment management solutions software. MEI payment systems’ technology is Name Company considered a choice in hundreds of real- Mark Lerner ...... Bally Technologies world applications and has earned the best performance rating in the market. Neil Friedman ...... IGT Through its commitment to quality and Tom Jingoli ...... Konami innovation, MEI continues to provide Member Highlights Alisha Ray ...... Progressive Gaming the highest reliability and state-of-the- art products for the vending, gaming, amusement, transportation, retail and Marketing kiosk markets. MEI is headquartered in West Chester, PA, with sales offi ces and Name Company manufacturing facilities worldwide.

Tom Nieman ...... JCM Global AGEM www.meigroup.com Tracey Chernay ...... TransACT Ed Rogich ...... IGT Brooke Dunn ...... Shufﬂ e Master Gina Lanphear ...... Cadillac Jack Claudia Baskerville ...... Atronic Education / Donation

Name Company Bob McMonigle ...... Aristocrat Orrin Edidin ...... WMS Walt Stowe ...... Elixir Gaming Brandon Knowles ...... TransACT

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 4 Association of Gaming Equipment Manufacturers AGEM Leadership

R. BROOKE DUNN ORRIN J. EDIDIN BRIAN WEDDERSPOON President, AGEM Vice President, AGEM Secretary, AGEM Senior Vice President President Global Director of Sales SHUFFLE MASTER WMS GAMING MEI R. Brooke Dunn joined Shuffl e Master in 1996 Orrin J. Edidin is President of WMS Gaming, Brian Wedderspoon is MEI’s Global Director of as Director of Marketing and was promoted a global gaming supplier headquartered in Sales for OEM as well as managing the sales to Vice President of Marketing in July 1997 Waukegan, Illinois. Mr. Edidin, who has been with operation for Central and South America. and Senior Vice President in July 2001. Prior to WMS since 1997, leads WMS’ Engineering and Since joining MEI, Brian has worked with the joining Shuffl e Master, Dunn was Vice President Product Development, Business Development, OEM customer base to develop and broaden of Gaming Operations Marketing for the Hilton Global Sales and Marketing groups. He also MEI’s product portfolio. Prior to working for Gaming Corporation, as well as Vice President oversees manufacturing, materials planning, MEI, Brian worked for more than fi fteen years of Marketing for numerous companies including sourcing and global supply management. in various senior sales and marketing positions the Reno Hilton, Harveys in Lake Tahoe and the Mr. Edidin’s vigilant focus on innovation and with a major automotive supplier. He has an Flamingo Hilton Laughlin. Dunn graduated the creation of intellectual property, product undergraduate degree in engineering and a from San Diego State University with a B.S. in portfolio expansion and gaining global market graduate degree in business administration. Marketing. Dunn has been a founding Offi cer share have resulted in WMS’ revenues more of AGEM since its inception. He has served as than tripling from 2001 through 2008, with a President for the last 3 years. Dunn is also on substantial improvement in earnings. Mr. Edidin the Board of Directors for Opportunity Village also drives WMS’s ever-expanding global and has served on the Board of the YMCA of footprint, including expansion into Asia, Latin Southern Nevada. America and Europe. Prior to joining WMS, Mr. Edidin was Associate General Counsel for Fruit of the Loom, Inc. and Farley Industries. From 1986 to 1992, he was Senior Attorney with the Chicago law fi rm of Katten Muchin Zavis Rosenman. Mr. Edidin also is a Trustee of the International Association of Gaming Attorneys and is Vice President of the Association of Gaming Equipment Manufacturers.

5 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 THOMAS A. JINGOLI MARK LERNER MARCUS E. PRATER Treasurer, AGEM General Counsel, AGEM Executive Director, AGEM Senior Director of Compliance Senior Vice President and General Counsel KONAMI GAMING BALLY TECHNOLOGIES Thomas A. Jingoli joined Konami Gaming, Mark Lerner is Senior Vice President and Marcus Prater, with more than 25 years of Inc. (KGI) in June 2003 as the Senior Director General Counsel for Bally Technologies, Inc. professional communications experience, serves of Compliance. In this capacity, he directs He joined Bally (then called Alliance Gaming as Executive Director of the Association of and coordinates activities of the compliance Corporation) in 1996 as assistant general counsel Gaming Equipment Manufacturers (AGEM), a department which oversees regulatory and and became general counsel in 2000. Mark is a trade organization comprised of the world’s top technical compliance, as well as the company’s former deputy attorney general for the Nevada gaming industry suppliers whose mission is to quality assurance laboratory. He also serves as Gaming Commission and the State Gaming further the interests of its members throughout the Compliance Ofﬁ cer for KGI, Konami Australia Control Board and was a partner with Jones, the world. Prater most recently served as Pty Ltd and Konami Corporation. Mr. Jingoli has Jones, Close & Brown (now Jones Vargas), where Senior Vice President of Marketing for Bally been involved with the gaming industry since he represented applicants for and holders of Technologies, Inc., where he spent a total of 1990. He was an Agent with the New Jersey business, gaming and other licenses before nine years at the Las Vegas-based slot machine Division of Gaming Enforcement from 1990 to state and local government agencies. Before and systems provider and directed Bally’s global 1994. Mr. Jingoli attended the William F. Harrah joining Bally, Mark was general counsel to a Las advertising, trade show, machine and systems College of Hotel Administration at the University Vegas gaming operating company. Mark is a sales support, media relations and special of Nevada, Las Vegas where he received a graduate of Michigan State University and the event functions. Prior to joining Bally in 1999, Masters degree in Hotel Administration. Washington College of Law of the American Prater served as Director of Marketing for Las University. He is a past chairman of the Nevada Vegas-based slot supplier Sigma Game, Inc. State Bar Standing Committee on Ethics and Prater, a graduate of the University of Oregon Professional Responsibility and of the Executive School of Journalism, also previously served Committee of the Nevada State Bar Gaming as Marketing Communications Manager for Law Section. Las Vegas-based casino operator Ameristar Casinos, Inc.

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 6 Association of Gaming Equipment Manufacturers Industry Impact Analysis

Approach and Methodology

In 2008, AGEM retained Applied Analysis, a Nevada-based To identify and model the interrelationships in the economy, economic and gaming consulting fi rm, to conduct an IMPLAN (Impact Analysis for Planning) software and economic impact analysis for the global gaming supplier databases were used. IMPLAN is an input-output model segment of the gaming industry. Economic impacts (or econometric system) . It utilizes complex economic include economic output, employment and wage and equations to explain how the “outputs” of one industry salary payments. These impact measures were further become the “inputs” of others, and vice versa. This segmented into direct impacts, indirect impacts and relationship is sometimes referred to as the “multiplier induced impacts. Each is described below. effect,” illustrating how changes in one sector of the economy can affect other sectors. ■ Direct impacts measure the effects of the specifi c impacting force being considered. Input-output models, as is the case with all econometric In this case, for example, gaming equipment models, are not without their limitations. The statistical manufacturing jobs are considered direct model used in this analysis, IMPLAN, for example, assumes jobs and the wages and salaries they are that capital and labor are used in fi xed proportions. This paid are considered direct personal income. means that for every job created or lost, a fi xed change in investment, income and employment results. In reality, ■ Indirect impacts consider how other developers, producers, consumers and governments businesses respond to the impacting respond to stimuli in complex ways, including changing the condition. Employee part suppliers, for mix of capital or labor as well as the types and frequencies example, are considered indirect employees of investment. Importantly, each impacting force has its to the extent their jobs are dependent, own unique characteristics, affecting how consumers and in full or in part, on the suppliers’ income businesses respond to the given change. generated by the industry-related purchases.

■ Induced impacts measure the effects of increased (or decreased) consumer expenditures resulting from wage and salary payments sourced to an impacting Applied Analysis (AA) is a Nevada-based economic analysis and gaming consulting condition. In the present case, for example, fi rm with extensive experience in preparing if a person were to be employed by the economic and fi scal impact analyses. AA also maintains a broad global gaming supplier industry, she might range of gaming experience and has performed work for some of the be expected to spend a portion of her largest gaming companies in the world. AA was retained by several organizations to review and analyze the economic, fi scal and social monthly salary at the supermarket, the impacts of community investments and operations. This includes local movie theater or on a family vacation. impacts on employment, wages and output as well as impacts on tax Induced effects capture the impacts of this collection and public service demands. In addition to quantitative assessments, these reports also include an analysis of the industry’s or spending as it “ripples” through the local sector’s social or community contributions (e.g., charitable donations economy. or employee volunteer hours). Recently, AA has prepared industry reports for the Nevada Resort Association, Nevada Association of ■ Total effects are the sum of direct, indirect Realtors, Associated General Contractors – Las Vegas Chapter and and induced effects. Nevada Restaurant Association.

7 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Economic Output Impacts

Based on our research, the global gaming supplier industry every $1 of economic output directly sourced to the industry, is estimated to be an $11.9-billion industry when measured approximately $2.79 is generated throughout the economy. in terms of its revenues. While the defi nition of the size and Compared to the prior year (2006), direct output scope of this sector can be debated as public data for all generated by the global gaming supplier industry increased elements of the supplier industry does not exist, many of by 27.3 percent from $9.4 billion, while 2006 represented the world’s largest gaming equipment manufacturers are a 17.4-percent increase from 2005. Expansions within the publicly-traded and provide signifi cant insight into the industry refl ect both the increased demand for gaming-related depth and breadth of this particular gaming space. equipment and market expectations for continued expansions. When including the indirect and induced impacts associated with the “ripple effect” of direct output, total Economic Output * 2005 2006 2007 economic output sourced to the global gaming supplier Direct ( ■ ) $8.0 $9.4 $11.9 industries totals $33.2 billion. For comparison purposes, Indirect ( ■ ) $7.5 $8.8 $11.2 according to the American Gaming Association’s 2008 AGA Induced ( ■ ) $6.8 $8.0 $10.2 Survey of Casino Entertainment, U.S. domestic gross gaming TOTAL $22.2 $26.1 $33.2 revenue was $34.1 billion in commercial casinos in 2007. For ( *in billons; totals may not sum due to rounding ) ■ ■ ■ Direct Indirect Induced Economic Output (in billions) $35

$30

$25

$20

$15

$10

$0 2005 2006 2007

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 8 Association of Gaming Equipment Manufacturers Industry Impact Analysis

Employment Impacts

Direct employment within the global gaming supplier economy. Compared to the prior year (2006), aggregate industry is estimated to be 28,200 in 2007, which represented employment was up 3.8 percent, following an annual a 3.8-percent increase over the 27,200 employees reported increase of 4.9 percent in 2006. in the prior year. Positive employment growth continued for the third consecutive year as total employment in 2006 averaged 25,900. Employment 2005 2006 2007 The “ripple effect” associated with the gaming sector Direct ( ■ ) 25,900 27,200 28,200 resulted in indirect employment of 20,500, while induced Indirect ( ■ ) 18,800 19,800 20,500 employment was 29,900 in 2007. Combined, employment Induced ( ■ ) 27,500 28,800 29,900 impacts totaled 78,600, suggesting that for every direct TOTAL 72,200 75,800 78,600 job created, the industry supports 2.8 jobs throughout the

■ Direct ■ Indirect ■ Induced Employment 80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0 2005 2006 2007

9 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Wage and Salary Payment Impacts

During 2007, the global gaming supplier industry generated industry reached $4.5 billion in 2007, which represented a approximately $1.9 billion in wages and salaries to the 7.6-percent increase from the prior year. The 2006 wage and economy, resulting in an average annual wage of $67,100, salary payment totals represented an 8.4-percent increase well above the national median household wage of $50,200 from the prior year. On a per-employee basis total wages and median salary of $33,300. The latest wage ﬁ gures sourced to the gaming supplier industry averaged $57,200, represented a 7.6-percent increase over the prior year (2006), $55,100 and $53,300 in 2007, 2006 and 2005, respectively, while the average wage and salary payments per employee including indirect and induced impacts. increased 3.7 percent from the $64,700 reported in 2006. Wages within the sector have reported consistent increases Salaries and as the 2006 income Wage Payments * 2005 2006 2007 levels reﬂ ected an 8.4-percent rise from 2005 and the Direct ( ■ ) $1.6 $1.8 $1.9 per-employee wage was up 3.4 percent. Indirect ( ■ ) $1.1 $1.2 $1.3 Including the indirect and induced impacts of direct Induced ( ■ ) $1.1 $1.2 $1.3 wage and salary payments, aggregate wages sourced to the Total $3.9 $4.2 $4.5 ( *in billons; totals may not sum due to rounding ) ■ ■ ■ Direct Indirect Induced Wage and Salary Payments (in billions) $5.0

$4.0

$3.0

$2.0

$1.0

$0 2005 2006 2007

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 10 Association of Gaming Equipment Manufacturers Industry Impact Analysis

Fiscal Impacts In addition to the economic impacts quantifi ed in the Business Taxes Borne Specifi cally preceding sections of the analysis, it is worth noting the global By the Gaming Industry: gaming supplier segment generates a signifi cant amount of public revenues. While measuring these particular effects was ■ Non-restricted Gaming Licensees – Issued for the operations beyond the scope of this analysis, it is worth noting taxes, fees of gaming and/or tables only; or for the operation of 16 or more and charges are applicable in nearly every jurisdiction in which slot machines only; or for the operation of games and/or tables gaming supplies are manufactured or operate. in conjunction with slot machines. Gaming suppliers, including manufacturers, also participate in revenues and bear a share of the A review specifi cally of the United States gaming suppliers following taxes. suggest they contribute signifi cantly to the federal government via corporate income taxes. The industry ■ Slot Machines: Annual Tax – Annual tax of $250 per contributes nearly $1.0 billion in income tax expense (net of machine (NRS § 463.385). reported benefi ts). ■ Slot Machines: Quarterly License Fee – Quarterly tax of With a signifi cant amount of production originating in the $20 per machine (NRS § 463.375). state of Nevada, this analysis considers taxes and fees ■ imposed on all businesses as well as those levies imposed Table Games: Annual License Fee – Annual fee that specifi cally on gaming-related businesses. Nevada has varies from $100 for 1 game to $16,000 plus $200 for each several hundred taxes, fees, exactions and charges that are game over 16 (NRS § 463.380). levied on businesses, residents and visitors. The largest of ■ Table Games: Quarterly License Fee - Quarterly fee that these revenues are discussed briefl y below. varies from $125 for 1 game to $20,300 plus $25 for each game over 35 (NRS § 463.383). Business Taxes Borne by All Industries, ■ Including Gaming Suppliers: Monthly Percentage Fee – Based on gross gaming revenue at a rate of 3.5 percent of the fi rst $50,000 during ■ Ad Valorem (Property) Taxes – Nevada requires that all real the month, plus 4.5 percent of the next $84,000, plus 6.75 property is reappraised at least every fi ve years. Property taxes vary percent of revenue exceeding $134,000 (NRS § 463.370). between jurisdictions, but generally speaking, real and improved ■ Restricted Gaming Licensees – Issued for the operation of properties are taxed at an effective rate that can range from 0.5 not more than 15 slot machines and no other games. percent to 3.0 percent of taxable value (NRS § 361.260). ■ Slot Machines: Annual Tax – Annual tax of $250 per ■ Retail Sales and Use Taxes – Retail sales and use taxes are machine (NRS § 463.385). imposed on the sale of tangible personal property not specifi cally exempted by statute. Sales tax rates in Nevada range by county, ■ Slot Machines: Quarterly License Fee – Quarterly with Clark County reporting a rate of 7.75 percent (the highest tax ranging from $81 (1 machine) to $1,815 (15 machines) in Nevada). Tax is applicable to the sales and use of gaming depending on the number of machines (NRS § 463.373). equipment (NRS § 372, 377, 377A, and 543.600 (et seq)). ■ Other Gaming Fees and Charges – In addition to levies ■ Modifi ed Business Tax – Modifi ed business tax is a levy imposed mandated by the state of Nevada, additional governmental on businesses and fi nancial institutions. The tax rate is 0.63 percent for units may charge specifi c licensing fees and taxes. businesses other than fi nancial institutions, and 2 percent for fi nancial institutions, of the employer’s gross wages paid by the employer during the calendar quarter. There is an allowable deduction from the gross wages for amounts paid by the employer for qualifi ed health insurance or a qualifi ed health benefi t plan (NRS § 363A, 363B).

■ Insurance Premium Tax – A tax imposed for the privilege of Applied Analysis reviewed information made available transacting business in Nevada. Each insurer shall pay a tax upon directly from AGEM members and publicly-available his net direct premiums and net direct considerations written, at the information (e.g., company ﬁ lings with the Securities rate of 3.5 percent (NRS § 680B). and Exchange Commission). While Applied Analysis had no reason to doubt the accuracy of the information referenced herein, ■ Secretary of State Fees – Fees imposed by the state of Nevada they neither audited these data nor performed thorough review and assurance and varies based on each business formation (NRS § 78, 78A, 80, 81, procedures, and as such, Applied Analysis can make no representations or 88A86, 87, 600, and 104). assurances as to their completeness or usefulness for all purposes.

11 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Member companies’ expectations of market i conditions during the next 12 months: International Game

Market conditions will 4.2% Technology (IGT) improve significantly

Market conditions will ™ 4.2% REELdepth Multi-Layer improve slightly Display (MLD™) technology Market conditions will 45.8% stay about the same IGT specializes in the design, development, manufacture, distribution Market conditions will 29.2% and sales of computerized gaming worsen slightly machines and systems products. Market conditions will 16.6%16.7% worsen significantly IGT’s new family of REELdepth™ games uses Multi-Layer Display (MLD™) technology to create actual depth Markets accounting for the greatest percentage animation sequences for its Standard i sales during the past fi ve years: Products and MegaJackpots® themes. Players switch between spinning reel OOhther game play, video slots and video poker all 21.7% Nevada Casinos 26.1% on one gaming machine. The technology is an ingenious layering of two or more Member Highlights Liquid Crystal Displays (LCDs) that create the visual effect of true depth without the European Markets use of 3-D glasses. As reel confi guration 4.4% is dictated by the players, operators who SthAiSouth American invest in REELdepth™ games no longer Markets 4.4% have to budget to change glass, change reel strips or physically relocate and Other US Casinos remove machines on the fl oor. AGEM 13.0% Native American Casinos 30.4% www.igt.com

Markets expected to account for the greatest i percentage of sales during the next ﬁ ve years:

Nevada Casinos Other 12.5% 20.8%

Native American Casinos Asian Markets 20.8% 8.3%

European Markets 8.3%

Other US Casinos 29.3%

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 12 Association of Gaming Equipment Manufacturers AGEM Index

About the AGEM Index Market Capitalization* Publicly-Traded AGEM Members (in millions USD) During 2008, AGEM developed the monthly Association International Game Technology $4,157 of Gaming Equipment Manufacturers’ (AGEM) Index that comprises 16 global gaming Lottomatica (GTECH) $3,514 suppliers throughout the world. A total of 13 suppliers are based Konami $2,446 in the United States and are listed on the NYSE, Nasdaq or AMEX, while two trade on WMS Industries $1,254 the Australian exchange and one supplier trades on the Bally Technologies $1,230 Milan exchange. The index is computed based on the Aristocrat Technologies $1,202 month-end stock price (adjusted for dividends and splits) of each company and weighted Global Cash Access $217 based on approximation of market capitalization. Market Shufﬂ e Master $214 capitalizations for manufacturers trading on foreign exchanges Multimedia Games $80 have been converted to US dollar-equivalents as of month-end for comparability Transact Technologies $66 purposes. The AGEM Index is based on a 100-point value Gaming Partners International $56 as of January 2005.

GameTech International $28

Ainsworth Game Technology $14

Elixir Gaming Technologies $14

Wells-Gardner Electronics $8 Total Market Value: Progressive Gaming International $3 *As of October 31, 2008 $14.5 Billion (USD)

13 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Historical Value of S&P 500 and AGEM Index $1,800 180 S&P500 AGEM Index $1,600 160

$1,400 140

$1,200 120

$1,000 100

$800 80 S&P 500

$600 60 AGEM Index

$400 40

$200 20

$0 0 J F M A M J J A SON D J F M A M J J A SON D J F M A M J J A SON D J F M A M J J A SON D

2005 2006 2007 2008

Company Ticker Symbol Exchange Currency Ainsworth Game Technology AGI ASX AUD $ Aristocrat Technologies ALL ASX AUD $ Bally Technologies BYI NYSE USD $ Elixir Gaming Technologies EGT AMEX USD $ GameTech International GMTC Nasdaq USD $ Gaming Partners International GPIC Nasdaq USD $ Global Cash Access GCA NYSE USD $ International Game Technology IGT NYSE USD $ Konami KNM NYSE USD $ Lottomatica (GTECH) LTO Milan Euro € Multimedia Games MGAM Nasdaq USD $ Progressive Gaming International PGIC Nasdaq USD $ Shufﬂ e Master SHFL Nasdaq USD $ Transact Technologies TACT Nasdaq USD $ Wells-Gardner Electronics WGA AMEX USD $ WMS Industries WMS NYSE USD $

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 14 Association of Gaming Equipment Manufacturers Global Reach

AGEM Member Corporate Ofﬁ ces and Operations Are Located In: ■ Australia ■ Austria ■ Bulgaria ■ Canada ■ Japan ■ Slovenia ■ Austria ■ United Kingdom ■ United States

AGEM Members Also Operate In: ■ Argentina ■ Germany ■ Peru ■ Beijing ■ Hong Kong ■ Poland ■ Belarus ■ Hungary ■ Puerto Rico ■ Belgium ■ Iceland ■ Romania ■ Brazil ■ India ■ Russian Federation ■ Chile ■ Israel ■ Singapore ■ China ■ Italy ■ South Africa ■ Colombia ■ Kazakhstan ■ Spain ■ Croatia ■ Latvia ■ Sweden ■ Czech Republic ■ Macau ■ Switzerland ■ Estonia ■ Malaysia ■ Slovakia ■ Finland ■ Mexico ■ Serbia ■ France ■ Netherlands ■ Thailand ■ Georgia ■ New Zealand ■ Ukraine

15 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 16 Association of Gaming Equipment Manufacturers AGEM Members

Gold Members

WMS Industries, Inc. ■ Aristocrat Technologies ■ Aruze Gaming America WMS Continues to ■ Austrian Gaming Industries GmbH Lead the efforts of ■ Bally Technologies networked gaming ■ GTECH /Atronic/ Spielo “One Step at a Time.” ■ International Game Technology (IGT) ■ Konami Gaming WMS is one of the world’s leading slot ■ WMS Gaming suppliers with an unmatched reputation for innovative game design and development. Our portfolio includes Silver Members many of the industry’s most popular and profi table branded casino slots and ■ AC Coin & Slot state-of-the-art gaming technologies. ■ We aspire to create the most entertaining Action Gaming products in the world and service our ■ Casino Technology customers with an uncompromising ■ Interblock USA passion for quality. Our success can ■ JCM American be attributed to our fi ve core values: ■ MEI Passion, Innovation, Tenacity, Quality and Member Highlights Integrity. In order to ensure that all of our ■ Multimedia Games employees share these values, we focus ■ Octavian International on teamwork as our guiding principle. ■ Progressive Gaming International Our reputation for innovative game ■ Shuffl e Master design and development is unmatched ■ and our investments in technology have Suzo-Happ Group positioned us to reap the benefi ts of ■ TCSJohnHuxley AGEM success for years to come. ■ Wells-Gardner Electronics

www.wms.com

Number of patents held among member companies: i

None 13.6%

More than 100 36.4%

1 to 10 36.4%

50 to 100 4.5% 26 to 50 9.1%

17 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Bronze Members

■ Ainsworth Game Technology Konami Gaming, Inc. ■ Cadillac Jack ■ CashCode New Facility & ■ Diamond Game Acquisition ■ Elixir Gaming Technologies Konami Gaming, Inc. is a total solution ■ GameTech International provider, manufacturing not only slot ■ Las Vegas Gaming, Inc. (LVGI) machines but a technologically advanced ■ Modern Gaming casino management system called the Konami Casino Management System or KCMS. Our company is known for its Associate Members state-of-the-art video slot titles played in casinos throughout the United States such ■ Elite Casino Products as the newest K2V™ product with the ■ Esterline Advanced Input Systems proven performing titles Rawhide™, Club Moulin™ and African Diamond™. ■ FutureLogic ■ Gaming Partners International Konami opened a 120,000 square foot ■ Gary Platt Manufacturing state-of-the-art manufacturing and ■ Global Cash Access administration facility in Las Vegas,

■ Grand Products Nevada. Prior to the opening Konami Member Highlights Gaming, Inc. acquired Paradigm ■ Greenberg Traurig LLP Gaming Systems, Inc. This acquisition ■ IDX gave Konami a casino management ■ Intel system and allowed the company to be ■ IPS competitive with other system providers like IGT, Bally and Aristocrat. ■ James Industries ■ AGEM Kreller Group www.konamigaming.com ■ KSK Digital Printing ■ MC2 ■ MCA Processing ■ Mikohn Signs and Graphics ■ Money Controls ■ Nanoptix ■ PDQ Printing ■ Proforma GPS ■ Sanmina-SCI Corporation ■ Tgraphics | Outpost Productions ■ The Bright Group ■ 3M Touch Systems ■ TMX ■ TransAct Technologies ■ Wrex Products ■ Young Electric Sign Company

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 18 Association of Gaming Equipment Manufacturers Members Added ‘08

April 28, 2008 ACTION GAMING, based in Las Vegas, Nevada, is the industry’s Suzo-Happ Group premier developer of licensed video poker content, including Triple Play Draw Poker. AINSWORTH GAME TECHNOLOGY, the American subsidiary of Synchronized Low Australia-based Ainsworth Ltd., continues to expand across the U.S. Profi le Xenon Topper with its strong commitment to video slot machines and games. AUSTRIAN GAMING INDUSTRIES GmbH – is an integrated The Suzo-Happ Group is a global global gaming company specializing in the design, development, leader in the design, manufacture and manufacturing, distribution and sales of electronic gaming machines distribution of gaming, amusement and advanced technology products, in addition to extensive and industrial products. The company operational activities encompassing casinos, electronic gaming halls and sports betting outlets. manufactures major brands such as Starpoint reels and Vision Pro monitors CASINO TECHNOLOGY, a leading provider of innovative casino while also representing key gaming products designed to captivate players’ attention based in Sofi a, component manufacturers such as MEI Bulgaria, counts more than 50 countries with its gaming machines and technology. Group, FutureLogic Inc., Kortek and Acrosser. Suzo-Happ Group services ESTERLINE ADVANCED INPUT SYSTEMS, based in Coeur d’Alene, customers in nearly 80 countries with Idaho, designs and manufactures custom user-interface devices and systems. engineering, manufacturing and distribution capabilities. GRAND PRODUCTS, based in Des Plaines, Illinois, with a facility in Las Vegas, manufacturers sub-assemblies and complete gaming The Xenon Topper has a low profi le to machines. accommodate locations where ceiling MC2, with a divisional offi ce in Las Vegas and operations throughout Member Highlights height is a problem. An on-board PCB the U.S., is a leading provider of trade show displays and services, allows stand alone operation or up to with an emphasis on gaming companies. eight toppers to be synchronized to work MONEY CONTROLS, with headquarters in the United Kingdom and in a collective pattern. Toppers can be offi ces in Las Vegas and around the world, is a leading provider of synchronized to create unique patterns, automated coin, note and cashless transaction validators. for example a snake pattern that runs PROFORMA GPS, based in Las Vegas, is a leading supplier of from one topper to the next. Up to eight promotional merchandise to a wide variety of gaming operators and AGEM toppers can be synchronized using cables. suppliers. SANMINA-SCI, based in San Jose, California, specializes in PCB www.suzohapp.com fabrication and assembly and high-volume sub-assemblies for the gaming industry. TGRAPHICS/OUTPOST PRODUCTIONS, with offi ces in Carson City, Nevada, and Sun Valley, Idaho, is an award-winning advertising design and photography operation with nearly 20 years of experience in gaming. WREX PRODUCTS, based in Chico, California, specializes in custom injection molding and die casting for the gaming industry. May 28, 2008 GREENBERG TRAURIG, LLP is an international full-service law fi rm with more than 1,750 attorneys and traces its roots in Las Vegas back to 1969 where it focuses its practice primarily on the gaming industry. THE KRELLER GROUP provides reliable, cost-effective global due diligence investigations that assist its clients, including those in the gaming industry, in making diffi cult business decisions. PDQ PRINTING, based in Las Vegas, specializes in a wide variety of design and printing projects for the gaming industry.

19 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 THE BRIGHT GROUP, with headquarters in Silverwater, Australia, is a global contract manufacturer of cost effective, high-quality products ranging from electro-mechanical sub-assemblies to generic slot machines. YOUNG ELECTRIC SIGN COMPANY (YESCO), with headquarters Proforma GPS in Salt Lake City, Utah, and operations in Las Vegas and throughout the West, has been a leading provider of exterior and interior signs Hit the Jackpot since 1920. July 17, 2008 With more than 15 years of experience in the promotional products industry, CASHCODE, based in Concord, Ontario in Canada, is a leading Proforma GPS partners with its clients in international manufacturer of currency validation technology. CashCode boasts one of the highest acceptance rates in the industry, the development of strategically sound, and is also a proud member of Gaming Standards Association. attention-getting, thought-provoking, memorable promotional campaigns that SUZO-HAPP GROUP, based in Elk Grove, Illinois, manufactures clearly communicate their clients’ brand and distributes gaming components, parts and accessories and image while producing measurable results. has warehousing, production and engineering facilities around the world. Proforma GPS has extensive experience enhancing brand recognition in the TCSJOHNHUXLEY, an international company with operations in all gaming, hospitality, convention, trade of the world’s major gaming jurisdictions, is a leading manufacturer show, resort-retail, telecommunications, and product innovator of traditional and technology casino and gaming equipment. healthcare, automotive, non-proﬁ t, real estate and construction industries. August 27, 2008 The introduction of Hot Shot Progressive® DIAMOND GAME ENTERPRISES, based in Chatsworth, California, designs, manufactures and supplies electronic gaming machines, slot machines was one of the most gaming systems and instant tickets for the Native American, charity successful gaming launches in the 76-year Member Highlights and public gaming markets. history of global gaming leader Bally Technologies. To promote its Hot Shot NANOPTIX INC., based in Dieppe, New Brunswick, Canada, is Progressive slot game, Bally Technologies a global thermal printer solutions provider for the gaming, casino, point-of-sale and kiosk markets. sent bottles of private-label hot sauce packaged in a ﬁ recracker tube with OCTAVIAN INTERNATIONAL LTD., based in Guildford, Surrey, collateral to key contacts at casinos to United Kingdom, is a games and systems developer that is established facilitate follow up calls by Bally sales reps. as a leader in networked gaming solutions for casino, lottery and AGEM AWP markets. www.proforma.com September 22, 2008 ARUZE GAMING AMERICA, with headquarters in Tokyo and U.S. operations based in Las Vegas, is a manufacturer and distributor of hybrid LCD high-resolution reel and video slot and poker games and multi-terminal gaming devices. GLOBAL CASH ACCESS, based in Las Vegas, is a leading provider of cash access systems and related marketing services to the gaming industry. KSK DIGITAL PRINTING, with locations in Las Vegas, Cleveland, Ohio, and Detroit, Michigan, specializes in slot machine glass, reel strips, slot toppers, casino backlights and interior casino signage. October 22, 2008 INTEL, the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. INTERBLOCK USA, with its parent company based in Menges, Slovenia, has earned its reputation as the world leader in the development, production and distribution of multiplayer electromechanical gaming machines under the Interblock brand.

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 20 Association of Gaming Equipment Manufacturers AGEM Membership

Mission

FutureLogic, Inc. AGEM is an international trade association representing manufacturers and suppliers of electronic gaming devices, systems, table games, key components and support products GEN2 Universal Printer and services for the gaming industry. AGEM works to further & PromoNet Marketing the interests of gaming equipment suppliers throughout the Solution world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, Founded in 1983 and headquartered in the members of AGEM work together to create beneﬁ ts for Glendale, Calif., FutureLogic designs and every company within the organization. Together, AGEM has assisted regulatory commissions and participated in builds high-reliability electromechanical the legislative process to solve problems and create a assembly solutions for nearly every business environment where AGEM members can prosper printing need. As a leader in super-robust while providing a strong level of support to education and thermal printer technology, FutureLogic is responsible gaming initiatives. the industry’s premier supplier of thermal printers for casino gaming, promotional equipment, kiosk, industrial, RTAL, gas pumps and medical applications. Focus The Association acts upon issues relating to education, trade FutureLogic’s GEN2 Universal printer show representation, regulation, manufacturing and licensing is USB compliant with GSA and IGT standards, and promotes the expansion of responsible standards and compatible with existing gaming for the beneﬁ t of its members and the industry. Member Highlights platforms and the next generation of Working together, we are a force that drives a multi-billion downloadable games. The printer’s dollar industry. three game ports support all current and emerging game types including RS232, Membership in AGEM provides a unique opportunity to pave Netplex and USB 2.0 full speed. the road to success – both for your company and for other members. From marketing to management, members also www.futurelogic-inc.com have the chance to share their knowledge and expertise with AGEM fellow associates and, more importantly, the chance to learn from them as well. Strength in Membership

AGEM members develop and manufacture gaming devices, table games, slot machines, related systems and equipment and much more. Our members generate billions of dollars in combined revenues annually.

AGEM members provide high-paying, high-tech professions in all sectors of the gaming manufacturing industry. Employment opportunities include software design, graphic art, engineering, and cabinet making, among others.

AGEM frequently comes together on issues related to gaming legislation, gaming expansion into new jurisdictions and regulatory matters. The group addresses these issues at its monthly meetings and, when needed, will join together to promote the industry’s best interests or to affect change.

21 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Beneﬁ ts

AGEM members not only develop strong relationships 3M Touch within the industry, but membership benefi ts also include: Systems, Inc ■ AGEM members receive a 24% discount off of space at G2E Las Vegas. 3M™ MicroTouch™ ■ AGEM members receive a 17% discount off of space at G2E Asia in Macau. Capacitive ® ■ AGEM members receive substantial discounts on TouchSense System goods and services through the Endorsed Service Provider (ESP) Program. 3M Touch Systems provides the world-class touch solutions expected ■ AGEM addresses worldwide legislative and by its customers and the innovative regulatory issues that impact ALL suppliers. technologies and products expected from ■ AGEM promotes responsible gaming initiatives. 3M. The primary touch applications for ■ AGEM creates educational partnerships benefi tting MicroTouch-brand products are gaming/ both students and member companies. entertainment, point-of-sale (POS), point-of-information (POI), self-service ■ AGEM members that are publicly traded receive kiosks, fi nancial, handheld display enhanced exposure on the AGEM Index of gaming devices and interactive digital signage. technology equity valuation distributed monthly.

■ AGEM helps drive the direction of trade show The 3M™ MicroTouch™ Capacitive events, conferences and social activities.

TouchSense® System is the next-generation Member Highlights ■ AGEM members stay informed of big-picture issues touch interface for gaming machines that affecting the top slot and table game suppliers and provides players with tactile-feedback therefore their vendors. to their on-screen selections. This hybrid 3M MicroTouch ClearTek II touch system extends today’s gaming standard for Contact AGEM Today touch into tomorrow’s slot machines. AGEM Marcus E. Prater, Executive Director www.3m.com Phone: 702.812.6932 / E-mail: [email protected]

Electronic gaming units produced in 2007 by member i companies in the electronics/manufacturing industry:

More than 2,500 47.9%

1, 000 to 2, 500 4.3%

501 to 1,000 0.0%

101 to 500 4.3%

1 to 100 0.0%

0 43.5%

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 22 Association of Gaming Equipment Manufacturers Gaming Supply Forecasts

United States Slot Machine Growth By State

■ 500-1,499 ■ 1,500-2,499 ■ 2,500-4,999 ■ 5,000-9,999 ■ 10,000 and above

Percentage of member companies’ purchases Member companies’ federal tax i during 2007 made from local vendors: i payments as a share of revenues:

More than 50% 8.3% More than 75% 12.5%

50% t o 75% 00%0.0% 26% to 50% 20.8%

26% to 50% 37.5% 11% to 25% 16.7% 11% to 25% 6.3%

1% to 10% 41.7% 1% to 10% 31.3%

0% 12.5% 0% 12.4%

23 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 United States Slot Machine Growth By State Bally Technologies,

Projected Number of Machines – 2008 to 2012 Inc.

TM State Name Total Share of Total iVIEW Display Manager Alabama 1,600 1.0% Bally Technologies, Inc. is a leading Arizona 3,500 2.2% provider of state-of-the-art systems, products and services to the gaming California 10,490 6.7% industry, providing its customers with Colorado 700 0.4% an exciting and one-of-a-kind gaming Connecticut 2,150 1.4% experience. A major force in the creative gaming entertainment ﬁ eld, Bally is an Delaware 1,800 1.2% industry leader in the manufacture and Florida 6,254 4.0% distribution of casino gaming devices and computer systems. Corporate holdings Indiana 8,700 5.6% also include the impressive Rainbow Iowa 850 0.5% Casino in Vicksburg, Mississippi focusing on providing customers with a friendly Kansas 7,400 4.7% atmosphere and the ultimate in Louisiana 1,950 1.3% high-value entertainment. Member Highlights Maine 525 0.3% Bally Technologies’ CineReels™ Maryland 15,000 9.6% seven-reel stepper platform and new iVIEW Display Manager (DM)™ were Michigan 8,720 5.6% recently honored as two of the top Minnesota 2,000 1.3% 10 best new slot ﬂ oor technology Mississippi 6,250 4.0% products of 2008 by Casino Enterprise Management Magazine (CEM). AGEM Missouri 3,000 1.9% Nevada 14,375 9.2% www.ballytech.com New Jersey 12,815 8.2% New Mexico 1,200 0.8% North Carolina 1,800 1.2% Oklahoma 15,350 9.8% Oregon 560 0.4% Pennsylvania 17,300 11.1% Washington 7,800 5.0% Wisconsin 3,130 2.0% Wyoming 750 0.5% GRAND TOTAL 155,969 100.0%

Source: Deutsche Bank and Applied Analysis

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 24 Association of Gaming Equipment Manufacturers Gaming Supply Forecasts

United States Table Games Growth By State

■ less than 50 ■ 50-99 ■ 100-199 ■ 200-299 ■ more than 300

Member companies’ state and local Amount invested by member companies i taxes as a share of revenues: i in research and development during 2007:

More than $100M More than 75% 6.3% 9.1%

00%0.0% Less than $1M 50% t o 75% 31.8% $25M to $100M 26% to 50% 12.5% 22.7%

11% to 25% 0.0%

1% to 10% 68.8%

0% 12.4% $1M to $25M 36.4%

25 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 United States Table Games Growth By State Shufﬂ e Master, Inc.

Projected Number of Tables – 2008 to 2012 Leader in Market

State Name Total Share of Total Shufﬂ e Master’s goal is to provide Arizona 130 3.8% customers with the high quality table games they expect from an industry California 200 5.9% leader. The company takes pride in Colorado 20 0.6% cutting-edge product lines and dedicate substantial resources to developing new Connecticut 190 5.6% and better ways to enhance the Delaware 40 1.2% gaming experience.

Indiana 150 4.4% With more than 27,000 automatic card Iowa 45 1.3% shuffl ers, more than 5,600 proprietary table games and nearly 7,000 electronic Louisiana 50 1.5% table system seats in the market, Michigan 285 8.4% Shuffl e Master is proud of its role in the resurgence of table game popularity Minnesota 30 0.9% and will continue to promote Mississippi 155 4.5% responsible gaming. Member Highlights Missouri 60 1.8% Shuffl e Master has more than 90 percent Nevada 616 18.1% of the automated shuffl er market and New Jersey 701 20.6% more than 90 percent of the proprietary table game market (based on revenue). New Mexico 10 0.3% New York 45 1.3% www.Shuffl eMaster.com AGEM Oklahoma 240 7.0% Oregon 65 1.9% Washington 235 6.9% Wisconsin 132 3.9% Wyoming 8 0.2% GRAND TOTAL 3,407 100.0%

Source: Deutsche Bank and Applied Analysis

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 26 Association of Gaming Equipment Manufacturers The Community

Community Participation Gary Platt and Philanthropy Manufacturing

X-Tended Play chairs Responsible Gaming AGEM provides ﬁ nancial support to a number of Gary Platt Manufacturing (GPM) was founded on the concept that a high- responsible gaming organizations, including the National quality, comfortable chair would increase Council on Problem Gaming, the Nevada Council on a casino player’s “time on device.” Gary Platt pioneered specialized casino seating, Problem Gaming and the Problem Gambling Center. and today is the premier manufacturer of AGEM encourages its members to support the cause performance chairs preferred by astute casino customers and casino management through their own companies. worldwide. Gary Platt incorporates the latest research when developing its chairs. AGEM also works closely with the American Gaming Using ergonomics, the company has Association (AGA) and helps promote the AGA’s engineered an ergonomically correct chair that prevents strain on a player’s arms, education and advocacy programs, which include back and neck. responsible gaming programs.

Member Highlights X-Tended Play chairs are covered with a comfortable and exceedingly durable Philanthropy fabric. The GPM standard for fabric is 250,000 double rubs, far more than any In addition to supporting responsible gaming and other other chair on the market. This deliberate fabric choice makes these chairs industry-embraced initiatives, AGEM and its members outstanding in even the toughest have helped numerous charitable and non-proﬁ t AGEM casino environments. organizations, including The Boys and Girls Club and www.garyplatt.com United Way. In the aftermath of Hurricane Katrina in 2005, AGEM made a major donation to the Salvation Army and American Red Cross. Education

AGEM has become active in supporting educational programs that promote gaming manufacturing as a career. In 2007, AGEM made a contribution supporting the College of Southern Nevada in Las Vegas, which offers an Associate of Applied Science degree in electronic engineering with a slot repair emphasis.

27 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Percentage of members’ workforce considered i to be highly-trained professionals: Ǧ Multimedia

More than 75% 16.7% Games, Inc.

50% t o 75% 25. 0% Multimedia Games Introduces Class III Slots 26% to 50% 16.7% Multimedia Games innovations have 11% to 25% 29.2% pushed the gaming industry’s technology envelope. Giant strides made in casino 1% to 10% 8.3% management, back-ofﬁ ce systems development, new gaming systems, game 0% 4.2%4.1% introductions, innovative communications, networked technologies and player tracking systems have helped position Percentage of industry employees covered by the company as a leader in the world of i employer-sponsored retirement programs: Ǧ interactive gaming systems.

Multimedia Games in 2008 introduced its new Class III standalone slot machines More than 75% 61.9% featured the proprietary line of mGAME

gaming cabinets including the wide Member Highlights body widescreen gaming experience 50% to 75% 19.0% in the Oklahoma Native American and Rhode Island lottery markets. Following a successful launch of the new Jambalaya Jackpot video slot in Oklahoma casinos 25% to 50% 48%4.8% this summer, the company stands “ready to

play” for 2009 in new Class III jurisdictions AGEM with its lineup of innovative games. Less than 25% 14.3% www.multimediagames.com

Percentage of industry employees covered i by employer-sponsored health care plans:Ǧ

More than 75% 86.4%

50% to 75% 9.1%

25% to 50% 45%4.5%

Less than 25% 0.0%

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 28 Association of Gaming Equipment Manufacturers Gaming Referendums

United States Gaming Transact Referendums Technologies Recent gaming referendums from around the United States with the potential to impact gaming equipment Epic 950® Thermal Slot manufacturers came to a vote on this year’s ballots: Machine Ticket Printer Arkansas TransAct Technologies Incorporated is the Amendment 3, known as the State Lottery Initiative, leader in developing and manufacturing market-speciﬁ c printers for transaction- was approved by voters creating a State Constitutional based industries. Industries include Amendment to permit a state lottery. Until this approval, gaming, lottery, POS, kiosk and banking. Arkansas was one of eight states that did not have a Each individual market has distinct, state lottery. critical requirements for printing and the transaction is not complete until California the receipt and/or ticket is produced. TransAct printers are designed from the Californians approved 4 veto referendums, known as the ground up based on market-speciﬁ c California Tribal Gaming Compacts, on February 5, 2008. requirements and are sold under the Propositions 94, 95, 96,and 97 passed giving the Pechanga Ithaca® and Epic product brands. Band of Luiseno Mission Indians, Morongo Band of Mission Server based gaming, ticket-in ticket-out

Member Highlights Indians, Sycuan Band of the Kumeyaay Nation, and the Agua and cashless casino slot machine printer Caliente Band of Cahuilla Indians, respectively, the ability to server-based gaming is all about making install an additional 17,000 slot machines. In exchange for real-time connections with players, with patented dual-port technology, this expansion, the propositions require that these Native ServerPort™, the Epic 950 has the ability American tribes pay an additional 15-percent to 25-percent to simultaneously connect to the game of net revenues on added slot machines. Additionally, these and the casino server. four Native American tribes will pay a substantially larger AGEM annual payment to California’s General Fund. The change to www.transact-tech.com these compacts will last for 23 years.

Percentage of member companies’ share of sales attributable to sales in the State of Nevada: i

More than 50% 13.7%

26% to 50% 22.7%

11% to 25% 22.7%

1% to 10% 27.3%

0% 13.6%

29 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 Colorado Voters approved Initiative 121 known as the “Limited Gaming Initiative” modifying Amendment 50, which permits Elite Casino limited gaming in the towns of Central City, Black Hawk and Products, Inc. Cripple Creek. The initiative increases the single bet limit to $100 from $5, adds roulette and craps and extends gaming operations to 24 hours. New Product Development Maine Elite Casino Products (ECP) works with large and small game designers and Voters defeated a measure to initiate a state statute that manufacturers throughout the gaming would authorize Evergreen Mountain Enterprises to operate industry providing everything from a casino in Oxford County. The measure would have also engineering and assembly services to prohibited any additional gaming facilities to be built in the ﬁ nished products, such as bases and state for at least 10 years. cabinets. Additionally, ECP’s talented engineering staff regularly produces specialty top boxes for some of the most well-known and respected gaming Member companies’ contributions toward charitable manufacturers in the nation. i causes / other philanthropic activities past 12 months: Elite Casino Products will be unveiling $1.1M to $5M several exciting new 2008 product designs 10.6% in the near future. New products include three unique cabinet designs, as well Member Highlights as several top box, marquee and base designs. Look for these and other great new products from Elite Casino Products: Millennium Widescreen Slot Cabinet Less than $100K (22” LCD); Millennium Reel Slot Cabinet 52.6% $100K t o $500K (available in 3, 4, or 5 reel conﬁ gurations), 36.8% and the Millennium Velocity Slot AGEM Cabinet (26” LCD).

www.ecp-usa.com

Member companies’ share of sales i attributable to sales in US markets:

More than 75% 54.2%

50% to 75% 29.2%

26% to 50% 12.5%

11% to 25% 0.0%

1% to 10% 4.1%

Tel: 702.812.6932 | P.O. Box 50049, Henderson, NV 89016-0049 USA | Visit us online at: www.AGEM.org 30 Association of Gaming Equipment Manufacturers Gaming Referendums

Maryland Voters supported Question 2 on Maryland‘s ballot creating a IDX Incorporated new amendment to the State Constitution legalizing 15,000 slot machines on fi ve sites throughout the state. Craps Table Display Missouri In 1994, IDX formally ventured into the casino gaming market by meeting with Voters approved Proposition A, known as the Gambling major OEMs and casinos to determine the Loss Limits Initiative, removing the State’s $500 buy-in limit specifi c requirements for coin acceptors that prohibited a casino patron from buying more than and tokens for their industry. In 2005, $500 in chips during a two-hour period. The measure also IDX developed its RFID based Wickets technology as an alternate non-contact prohibits any future loss limits, increases the gaming tax by payment system for use in the casino, 1 percent to 21 percent, and restricts the development of carwash and laundry markets. any additional casinos that are not already built or under construction. Craps Table Display with payout pertaining to number of rolls a player Ohio throws during his time with the dice. The model CTD-711 Craps Table Display Voters did not approve Issue 6 on the ballot, which provides craps players with a detailed would have approved the building of a single privately view of the dice roll history, including owned casino off Interstate 71 in Clinton County outside the last 28 numbers rolled, the current Member Highlights point, prior points, change in shooter and Cincinnati. This would have been the fi rst casino in Ohio winning rolls. Displaying chronological with up to 5,000 slot machines and 120 table games. Ohio play history actually attracts more players voters have defeated three previous measures to authorize to the table, a good thing for table casinos since 1990. revenue. Potential new plays standing in the aisle cannot see what is happening on a busy table, but with this display they will AGEM be able to follow and learn the game.

www.idxinc.com

Share of member companies’ revenues sourced to gaming operations in 2007: i

More than 75% 12.0%

50% t o 75% 28. 0%

26% to 50% 12.0%

11% to 25% 4.0%

1% to 10% 12.0%

0% 32.0%

31 Association of Gaming Equipment Manufacturers | Global Gaming Supplier | Industry Impact Analysis ‘08 A In , Inte G LLP, ek D O). AGEM JCM Tech DX AGEM JCM meTec YESCO) lektroncek DD, ing Tech E echnologies, Ga echnology, Elektronc o Gaming Technologies, Game echnology, Elektroncek DD,oducts, Greenberg Traurig, oducts, Greenberg Traurig, LLP, I a Grand Pr oducts and Young Electric Sign Company (YESCO). AC Coin & i ng, Global Cash Access, Grand AC Coin Pr & Slot, Action Gaming, Casino T C Coin & Slot, Action Gaming, Casino T a nology, Cadillac Jack, CashCode, Diamond Game, Elixir Gaming T AGEM SILVER MEMBERS: c AGEM SILVER MEMBERS: ernational, Gary Platt Manufacturing, Global Cash Access, Grand Pr rnational, Gary Platt Manufacturi Ainsworth Game Technology, Cad Ainsworth Game Technology,oup, 3M Cadillac Touch Systems,Jack, CashCode, TMX, TransAct Diamond Technologies, Game, Elixir WrexGroup, Gam Products 3Mmin Toug Group, 3M Touch Systems, TMX, TransAct AGEMTechnologies, is an international Wrex Products trade and Young asso- Electric Sign Company ( eLogic, Gaming Partners Int AG mi Gaming and WMS Gaming. ciation representing AGEMmanufacturers BRONZE MEMBERS: a oductions, The Bright Gr AGEM BRONZE MEMBERS: and suppliers of electronic gaming ronics. echnology (IGT), Konami Gaming and WMS Gaming. 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