Cantor Gaming seeks small-scale slot-route

2 April 2009

LAS VEGAS, Nevada -- Casino technology company Cantor Gaming acquired a Nevada holding company last year that included several gambling-related businesses.

The deal gave Cantor a vast library of slot machine games and technology. But another aspect of the transaction was a small slot machine route operation.

How small?

Cantor Gaming, an affiliate of global financial services provider Cantor Fitzgerald, appears in front of the Nevada gaming regulators this week seeking approval to operate about two dozen slot machines in five Southern Nevada locations, including a laundry and the Moose Lodge.

"The deal wasn't so much to get the slot route as it was to purchase 50 years of intellectual property," Phil Flaherty, a consultant to Cantor Gaming, said of last July's deal to acquire the assets and businesses belonging to Mickey Wichinsky.

Cantor has been trying to bring hand-held mobile gambling devices into Nevada casinos. The company is also operating the race and sports book at the month-old M Resort. Cantor is using its "in running" wagering technology at M Resort, which allows gamblers to wager on games while the action is in progress.

Cantor wanted Wichinsky's catalog of casino games so the titles could be integrated into Cantor's existing products.

The slot machine games came with a small slot machine route business, where Cantor manages the devices and shares in the revenues with the locations.

"The route operation wasn't that large, maybe about 100 devices on the route," Flaherty said. "It was part of the entire transaction."

Cantor is asking the Gaming Control Board this week for approval to operate five slot machines at the Pecos Laundry in Las Vegas, five machines at the Loyal Order of Moose Lodge No. 1763 in Las Vegas, three slot machines at the North Las Vegas Elks No. 2353, seven slot machines at the SuperMercado Rincon Latino in Las Vegas and two games at Mr. Deli in Las Vegas.

Restricted slot machine locations allow for up to 15 machines.

Herbst Gaming is Nevada's largest slot machine route operator with some 6,800 slot machines in roughly 600 locations statewide. Slot route operators have faced a challenging environment in the past two years. Herbst has said revenues from the route operations have fallen between 10 percent and 20 percent each quarter since the ban was enacted in 2007.

Brian Gordon, a partner in Las Vegas-based financial consultant Applied Analysis believes slot route operations will again become lucrative once the economy recovers. The uncertain economic environment has put a damper on consumer spending.

"Tavern owners have had to adjust their business models to reflect the new regulations," Gordon said. "Eventually, the dynamics are going to shift from where they are and, as the economy recovers, the tavern business and route business will recover."

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