Following this summer’s merger mania among the world’s biggest slot manufacturers, Multimedia Games was pegged as the next takeover target, though few would have guessed the eventual buyer would be Global Cash Access. While analysts have questioned the wisdom of the deal, for GCA it makes perfect sense, expanding its business model and paving the way for a proliferation of Multimedia Games installations around the world.
Consolidation is trending among gaming industry suppliers, but it’s taking two distinct forms. Whereas the giant slot makers have largely merged with direct competitors, peripheral vendors have focused on snapping up complementary product lines and even seemingly tangential ones. Global Cash Access, a leader in providing fully integrated cash-access solutions and related services to the gaming industry, announced on 8th September it was seeking to acquire Multimedia Games, an Austin, Texasbased maker of electronic gaming machines and casino systems, for a consideration of approximately US$1.2 GCA’s multi-functional suite of full service kiosks provide best-inclass cash handling technology, cash access, back-office reporting tools and marketing services. The CXC 4.0, with a sleek new design, combined with powerful marketing peripherals and high-capacity components, delivers maximum velocity and unparalleled up-time.
billion in cash. The proposed merger is expected to close early next year, and though it would bring together two suppliers of completely different products, GCA believes it will nevertheless create significant synergies. For one thing, it could help get Multimedia Games quickly into new markets. NYSE-listed GCA, which is headquartered in Las Vegas and based internationally in Macau, has more than 300 gaming licenses worldwide, a figure comparable with giants such as Bally and IGT. Multimedia has fewer than 100.
GCA’s acquisition of NEWave, concluded earlier this year, was easier for the market to digest. NEWave is a provider of automated compliance and auditing tools to casinos, including anti-money laundering and currency transaction reporting tools.
“In the US especially, and you’re seeing it in Macau and Singapore, there’s a focus on KYC [know your customer] and source of funds, audit trails,” says Darren Simmons, senior vice president-Integration for GCA. “[NEWave] have got a very powerful offering to help casinos make that process more automated and integrate with systems that they already have in place.”
NEWave’s offerings made their Global Gaming Expo debut last month in Las Vegas as part of the GCA exhibit. Inside Asian Gaming caught up with Mr Simmons at the show to discuss where his company is headed globally and in Asia in particular.
IAG: How strong are NEWave at what they do?
Mr Simmons: In the US, NEWave has the most dominant market share in terms of these tools, and the largest product set that will go along with those tools.
So what compliance tools do Asian casinos use?
In Asia, the casinos generally run their own systems. And it’s working for them now. Around the world, regulators and governments that oversee gaming in different jurisdictions are moving towards a model with a preference for casinos using more automated tools for compliance and audit and reporting. Automation creates a higher level of transparency and reporting reliability. I think Singapore is probably the most aggressive in adopting automation, and certainly we’re looking at opportunities with our NEWave product there.
GCA’s watchword is “integration”. How are you bringing all these offerings together?
Our core products are our cash-access services: ATM functionality, credit and debit card cash services. When you look at our model we’re a very unique provider in terms of a fully integrated solution—cashaccess services, kiosk services, gaming intelligence services. So when you look at auditing and compliance, we tie all that together. It becomes a very powerful offering from a vendor standpoint and from a partner standpoint with a casino operator. You could have multiple vendors for all these types of products or GCA can bring you all of these solutions with one relationship.
How about the Multimedia Games acquisition? That caught many by surprise.
To many, the acquisition of Multimedia looked like it came out of left field. If you take a close look at the actual synergies and understand that we’re not competing companies, you’ll see that we’re very complementary companies. That provides for a pretty powerful offering into the marketplace and differentiates us.
Multimedia is mainly in the US, they haven’t really expanded outside into the international marketplace. GCA will offer the Tech Talk ability for Multimedia to do that. Certainly North America-wide into Canada and other jurisdictions that GCA does business in. GCA is in Europe, Asia and South America as well and we’ll be able to offer Multimedia a significantly larger footprint to introduce them to new markets.
We’re at a very unique intersection of gaming and payments. And there is no other company there. We’re the only one that’s been able to bring that intersection together successfully with the depth of solutions that we offer. The feedback that we’ve got so far in terms of our go-forward plan has been very well-received.
What else will the Multimedia Games acquisition mean for GCA once it’s approved by regulators?
It’s transformational for us. It effectively doubles the size of our company and brings us the ability to sell a new product set into our customer base. We’ve got a significant footprint in gaming with our cash accessrelated services and integrated solutions and now we have the gaming side with Multimedia. GCA’s current licensing in all the different jurisdictions we have is quite complementary and will be leveraged. In gaming and cash access, the licensing and all the requirements for the multiple jurisdictions, especially in the US where there are so many jurisdictions, that’s quite a heavy burden for many companies, so that’s one of our core strengths.
[Multimedia Games] have got a fantastic product set. Their tournament product has been well-received in the marketplace. They’ve got a very small market share, so for them to move the dial in terms of growth is significant. We’re excited.
Going forward, what are GCA’s plans for Asia?
We’ll focus on the Macau market. Clearly there are customers we do business with here in the US that have operations there. Certainly we like to tie together opportunities with our kiosk product and potentially with our cash-access product. We’ll continue to focus on that.
The NEWave opportunity is a significant one for us. These are the kinds of tools they’re looking for in Macau—automation, managing their business more effectively. Labor is a challenge in Macau and Macau’s casinos are trying to be transformational in terms of how they deliver their services given the restraints around the labor market. These tools will offer significant help with that.
We’re also working on opportunities in the Philippines. The Philippines are moving to the TITO model, so we’re looking at opportunities to get our footprint there. That’s an interesting market, and clearly set for growth, and we’ve got a partnership there with Dolphin and EGT from a distribution standpoint, so we’re going to continue to leverage that relationship and expand opportunities there. TITO is relatively new for the Philippine market, so our kiosk technology is something that’s in demand.
Finally, what’s your message to the market?
The key message is we’re an integrated solutions provider. We want to be a partner with our customers. We want to work with them long-term to come up with the solutions and services they want and that will enable them to better manage their businesses— and ultimately provide a better experience for their patrons in their casinos.