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. Contents copyright © 2008 Association of Gaming Equipment Manufacturers. All rights reserved. No portion of this publication may be reproducted without prior written permission from AGEM. 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.