Duluth company not betting on Georgia for slot machine sales

A Duluth company is growing rapidly in the U.S. and Mexico without selling its bread-and-butter products in Georgia.

Gene Chayevsky

Gene Chayevsky

And while the fiscal crisis in many states is likely to fuel more revenue in coming years, the company is not betting on the Peach State to be one of them.

I’m talking about gambling. To be precise, video slot machines made and sold by Cadillac Jack. (The name comes from an old video Blackjack game.)

Up to now, the company has been primarily selling its slots to tribal casinos, while preparing to go up against the big boys (IGT, Bally, and Williams) that dominate the commercial ones in places like Las Vegas and Atlantic City, said owner and CEO Gene Chayevsky.

But since more revenue-starved states are considering the legalization of slots and video lottery terminals — or expanding their use — Chayevsky hopes to get a slice of that pie, too.

In this “high-margin” business, he said, a slice from different pies can boost a “medium-sized” company’s fortunes significantly. In the U.S. alone, he said, gaming amounts to a $65 billion industry with 800,000 devices deployed.

Chayevsky, a Latvian-born financial exec who grew up in Manhattan, would not disclose annual revenue for his firm. But he was willing to talk about growth in terms of employees — primarily software engineers, field service techs and graphic artists.

The workforce of 270 is expected to grow to 330 by the end of the year, he said. Over the next few years, another 60 or 70 employees annually are likely to be hired, as the company becomes licensed to do business in more states.

Georgia, however, does not appear to be in the cards for Cadillac Jack.

“Our projections for revenue in 2015 do not include the state of Georgia,” Chayevsky, 41, said. “Although it’s certainly possible, we can’t plan for it.”

Instead, he said, states like North Carolina, South Carolina, Texas, Ohio, Michigan and Wisconsin are looking at introducing or expanding gaming. And beyond the U.S. and Mexico, he thinks Brazil, Europe and Asia will be growth engines down the road.

While selling slots in Georgia may be a long shot, Chayevsky has been pleased with the company’s Gwinnett County sites ever since he arrived six years ago. He was part of a private equity firm that bought Cadillac Jack to turn it around. In 2008, he became chairman and CEO. Then last November, he bought it outright, largely because of the growth potential.

One of the keys to growth is innovation — dreaming up entertaining machines that players gravitate to, he said. Many slots are becoming more like video games. Some use abridged story lines and joy sticks. A casino may have 2,000 slots on its floor provided by 10 competing manufacturers. But the lion’s share of the space, he said, goes to the five highest-performing ones.

Part of the attraction for slots comes from the odds of winning, which are higher than traditional lottery products like scratch-off tickets and drawings. The machines are programmed for a “theoretical payout percentage” between 88 percent and 96 percent, Chayevsky said. The casino operators select the exact percentage — not Cadillac Jack.

“They know their customers,” Chayevsky said.

- Henry Unger, The Biz Beat

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4 comments Add your comment

Mass Dawg

March 22nd, 2011
9:42 am

States need to come to the realization that gambling doesn’t create revenue, or economic growth. Look at Atlantic City, Detroit, Niagara Falls, NY, and New Orleans. These areas have seen no appreciable growth in jobs or city revitalization. Governments need to weigh the short term gains they receive in tax revenue against the wonton destruction of communities, and personal lives.

Gambling revenues for states is the equivalent of crack cocaine. It’s provides a false sense of reality that ends badly.

TnGelding

March 22nd, 2011
10:00 am

“gaming amounts to a $65 billion industry with 800,000 devices deployed”

Wonder how much it is when you add in the illegal action? Legalize it, tax it and set aside a per centage of profits to treat the addicts that seek help.

david

March 22nd, 2011
10:13 am

It is a personal freedom issue! We need to legalize all forms of gambling as well as prostitution.

Mike

March 22nd, 2011
11:08 am

I have seen tons of “Cadillac Jack” machines in Indian convenience stores. They claim no cash payout but this, of course is a joke. They DO pay cash to the people they know and trust.
It is a terrible addiction that has costed many people their jobs, their homes, their savings, their families etc…
If they legalize them its still not going to stop the addiction.