The value of Class II to gaming tribes in hybrid jurisdictions lies not only in their play and earning power , but in the leverage they give tribes in negotiations when it comes time to renew Class III gaming compacts . After all , there is no revenue sharing for Class II games , so the closer the play experience comes to Class III , the more viable it is to load a slot floor with Class II and pay nothing to the host state .
“ There are active compact negotiations in a number of jurisdictions ,” says IGT ’ s Knudson . “ Negotiations continue in Oklahoma . Some major markets expire very soon . Class II is an extremely important negotiating tool , because compacts obviously are not necessary for Class II products to be utilized .”
“ I ’ m watching tribes go through ( negotiations ) right now in Oklahoma ,” says AGS ’ Burke . “ I can tell you Class II gives them that leverage , because they are 100 percent serious about going all Class II if they don ’ t get what they want .
“ The tribes have been able to look at the states with a straight face and say , ‘ Hey , if you don ’ t want to negotiate with us and play ball with us , we ’ ll just go this other route .’ I think that ’ s why it ’ s important to them that they keep 50 percent of their floor in Class II , in case they need to make a switch fast .”
Accelerating Game Development
The growth of Class II — and the refinement of bingo math models to the point where play is nearly identical to Class III — has led to parallel efforts in game research and development as suppliers strive to fill the gap in available content between the two classifications .
All of the suppliers serving both classifications now design new games to be launched in both classes simultaneously , as well as new games specifically tailored to Class II and customers in specific markets .
DeBruin says Everi devotes its efforts to creating content that will earn in either class . “ It ’ s something we ’ ve prided ourselves on , in terms of our approach with our tribal partner customers ,” he says . “ We do not have separate development teams . We design a game , and then release it , across Class II and Class III . That allows us to leverage our game design in all markets . It gives us flexibility .”
Burke says AGS follows the same procedure , on the slot platform the company developed on the bones of the operating system it inherited from the former Class II-heavy Cadillac Jack . VGT ’ s Starr , similarly , says all Class II development is now under the same Aristocrat team that produces Class III titles .
Knudson says IGT designs class II-specific content , along with Class III content that can be ported over to Class II . “ We ’ re putting a lot of the very
All of the suppliers serving both classifications now design new games to be launched in both classes simultaneously , as well as new games specifically tailored to Class II and customers in specific markets . successful games from Class III into Class II , and we ’ re also designing very specific games just for Class II ,” he says .
One result of all this new R & D effort is a growing library of products that follow the same trends as the Class III market . Lately , that means progressive slots . All the manufacturers are proliferating the progressive footprint in Class II markets , particularly in the area of localarea progressives .
“ What you ’ re seeing more and more now is technology where there ’ s not only the wide-area progressive , but you ’ re also seeing the single-site local-area progressives ,” says VGT ’ s Starr . “ And those tend to be the games players want to play the most . Particularly , we ’ re seeing a trend toward those single-site progressives because they tend to hit more frequently .”
Many of the progressives now in the Class II market are in the style of multiple progressives popular in Class III markets right now . “ I think the shift to multi-level progressives in Class II is really driven more by the shift of progressives in general ,” comments Burke . “ The whole gaming market has shifted that way , to the point where if you don ’ t have games with progressives , you ’ re in trouble .”
As in Class III , there is plenty of room for innovation in the Class II market . Eclipse Gaming , for instance , offers an “ Anyline Progressive ” that awards players regardless of the pay line on which a winning progressive lands . “ Entertainment obviously is becoming a little more of a factor in Class II ,” says Minard . “ You see bigger splash , bigger cabinets , more unique cabinets , better lights , better graphics ... The math still makes such a difference , but the visual aspects of these games are improving more and more .”
The acceleration of Class II content introduction is supported by the same R & D efforts that support the Class III libraries of all manufacturers — small suppliers like Eclipse as well as the industry leaders . “ We do player focus groups ,” Minard says , “ and we have advisory councils that include players , but mostly consist of slot directors from around the country . We do that regularly ; we ’ re always soliciting feedback .
“ And being small , we can be nimble . We ’ ve been in business 10 years , and we ’ ve earned a good share of the marketplace . We ’ ve got over 100 titles , and we have a good stable base of customers that like to play our games .”
The larger , post-merger companies like Everi and AGS , while combining design efforts and growing in Class III markets , mirror that same attitude of managing their market share , their legacy companies having served Class II markets for decades .
“ For a company like ours that started as a Class II company , we have a design philosophy in mind , where we ’ re designing for Class II and Class
34 TRIBAL GOVERNMENT GAMING 2019