Within a few months, State Police will make a decision that could be costly for Louisiana's video-poker operators -- and could drive some out of business.
Although the issue is far from the public eye, an industry lobbyist compares it to the 1996 referendums in which parishes decided whether to outlaw the gambling machines.
The state is looking at four systems for monitoring the machines on a statewide basis to avoid tampering and to make sure taxes are paid. If the current system operator, International Game Technology, wins the contract, there's no problem.
But the systems of three other bidders -- GTech Corp., Scientific Games Corp. and Baton Rouge's Utility Systems Services Inc. -- will not be able to communicate with most video-poker machines in use.
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Matt Wellman, owner of One-Eyed Jack Gaming Inc., which owns 125 machines in New Orleans-area bars and restaurants, said he could be forced to replace 115 of those machines at once. The new machines would cost $14,500 each, along with $1,500 each for the other 10 to upgrade software, he said.
"Some of the people in the business won't be able to survive," said Wellman. "It's a big issue for us."
State Police are looking for a new system because the state's contract for the existing system will expire in June, though IGT has agreed to keep its system running until a new one is operating.
Capt. Genny May, head of the State Police Gaming Division, said the existing system has been used since video poker was turned on in 1992. The system is outdated, May said.
Complicating the issue is the fact that many of the video-poker machines in Louisiana have been on line since the games started and are considered obsolete by industry standards.
All the machines in the state are embedded with computer codes that enable them to talk to State Police through IGT's proprietary monitoring system. Operators of such systems do not release their codes to another company because of potential security problems.
If IGT builds the new system, it can build it to talk to all the machines because it has the codes. But if another company builds the new system, it will not have the codes to talk to all the machines.
Other prospective bidders have told State Police they can design a new system to talk to the newer machines in the state, but they will not design a system around obsolete machines.
That means about 12,226 machines could have to be replaced virtually overnight at a cost of $134 million, industry observers say.
"This is the biggest issue to face the video-poker industry since the 1996 referendums," when individual parishes voted on whether they wanted to keep video poker, said Alton Ashy, a major video-poker lobbyist in the state.
If most of the video-poker machines in the state have to be replaced, Ashy said the industry would like to spread out the transition to a new system over time and be assured that operators would not have to switch machines again in a short time.
Source: The Associated Press
