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Slot Machine Shortage Spurred by Hurdle in Supply Chain


A scarcity in parts might trigger a slot machine drought. [Image: Shutterstock.com]

The slot machine scarcity

Fears surrounding a slot machine scarcity within the playing trade have was acknowledgments of issues on the horizon.

Everyone is attempting to determine a workaround.”

“Everyone is attempting to determine a workaround,” mentioned Eilers & Krejcik Gaming Partner Todd Eilers.   

The downside virtually solely facilities round a restricted provide of microchips, often called semiconductors, that validate automated transactions. As a end result, a number of multi-million-dollar on line casino launches might perish or include excessive caveats earlier than the 12 months is over.

A lacking piece

Gaming tools firms use expertise and parts from completely different suppliers to create slot machines, the most well-liked medium of retail playing. According to The Nevada Independent, gaming analysts concern {that a} large scarcity in invoice validators, which flip foreign money or vouchers into gaming tokens, might create an enormous downside for American casinos.

Nevada suppliers have been liable for delivering 13,700 slots to each new casinos and renovating properties in 2022 alone. The most identifiable challenge seems to be the availability chain, which offers with constructing and transporting a majority of supplies from Asia.

has seen sizeable chip shortages influence its enterprise”

According to a mid-May report from Barry Jonas, an analyst for Truist Securities, JCM, a Japanese invoice validator supplier for over half of the market, “has seen sizeable chip shortages influence its enterprise, which we expect might have wider implications for the producer’s pipeline this 12 months.”

JCM senior vice chairman David Kubajak, whose firm is headquartered in Las Vegas, confirmed the report by saying JMC “is being affected by provide chain challenges.” Kubajak famous that his operation was dealing with comparable troubles as different industries depending on semiconductors.

Daron Dorsey, government director of the Association of Gaming Equipment Manufacturers (AGEM), famous that playing has turn into more and more technology-dependent, and the supplies and programs which can be wanted have longer planning intervals. Dorsey additionally revealed that operators usually have suppliers depending on sub-suppliers, which complicates the method.

“All of the completely different firms are attempting to determine alternate options to seek out the completely different items, and that’s what made it troublesome,” Dorsey mentioned. “Someone may need had a historic supplier of some kind of element of their provide chain. If that supplier is not accessible or delayed, the businesses are having to go to a few, 4 or 5 (element suppliers) as an alternative of only one or two.”

Workarounds and problems

The challenge first popped up on the radar throughout a first-quarter earnings name in May; nevertheless, Jonas feels that the quick provide of microchips is only one small downside in a rising listing.

“Today, the chance is invoice validators. But what’s the issue tomorrow?” requested Jonas. “That is the true concern once you mix that with inflation and better fuel costs, and rising prices.”

Max Chiara, International Game Technology’s chief monetary officer, acknowledged that microchip shortages mixed with the emergence of the omicron variant price the corporate round $30m in first-quarter revenue.

tools suppliers are closely reliant on the airline trade, which has additionally struggled to reboot

Gaming tools suppliers are closely reliant on the airline trade, which has additionally struggled to reboot for the reason that pandemic started.

Shelia Kahyaoglu, an aerospace trade analyst for funding financial institution Jeffries, discovered that journey between Singapore, the Philippines, and Malaysia to different areas, together with the United States, had fallen 42-56% since pre-COVID occasions. 

As a end result, firms have been “getting artistic,” with some opting to recycle previous parts. Others might prioritize sending machines to firms with the biggest profile. 

“This is a priority, however it feels manageable for now a minimum of when it comes to replacements, and a number of the main on line casino openings have been nicely deliberate out for this 12 months,” Jonas mentioned. “I do assume you’re seeing prioritization of some type for any remaining stock.”

The largest on line casino opening in Nevada this 12 months is Sky River Casino, a $500m challenge run by Boyd Gaming for the Wilton Rancheria Tribe. The property and its 2,000 slot machines have a goal launch date within the fall. Legends Bay Casino in Sparks will not be as lucky, nevertheless, as 20 of its 660 slot machines might nonetheless be on backorder.

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