Based in part on a national survey of slot managers and interviews with slots designers, makers and customers, the Bear Stearns study shows slot machines comprise a growing share of casino revenue and floor space. 

In Nevada, slots comprised 63 percent of gaming revenues in 1997, up from 58 percent in 1990. In Atlantic City in 1997, slots were 77 percent of casino revenues, up from 58 percent seven years earlier. Slots took 79 percent of Atlantic City gaming positions in 1997, up from 1990's 72 percent. The machines claimed 83 percent of gaming positions in Nevada in 1997, up from 80 percent in 1990.

"Several factors underlie the increasing role of slot machines and related games in casinos' overall financial success," Jason Ader notes.

Today's casino players demand more technologically sophisticated games than the traditional three- or four-wheel spinning slots, Ader observes. Plus increased competition in the casino industry has prompted casino operators to bring more and newer types of games into their operations sooner than they had historically, Ader notes. Bear Stearns estimates U.S. gaming equipment replacement market demand at approximately 31,222 units in 1997 -- rising to 61,408 units in 2002.

Demand and competition have fueled the development of a new generation of gaming equipment, including software-based machines with high-tech graphics and sound, machines that feature "games within games" and machines with games that require greater player interaction. The just-released Bear Stearns study features a Hot Products table describing new offerings from International Gaming Technology (NYSE: IGT), Anchor Gaming (NASDAQ: SLOT), Alliance Gaming (NASDAQ: ALLY), Silicon Gaming (NASDAQ: SGIC), WMS Industries (NYSE: WMS), Powerhouse VLC (NASDAQ: PWRH) and Sigma Game Inc.

The new environment for games comes at an opportune time for game makers, the study says. The slowing rate of new casino property openings in recent years left many gaming manufacturers with fewer new customers year by year. The new, shorter replacement cycle at existing properties and the planned opening of some new "entertainment superstores" such as the Bellagio property of Mirage Resorts Inc. (NYSE: MIR) and the Mandalay Bay property of Circus Circus Enterprises (NYSE: CIR) mean a better demand picture ahead, Bear Stearns says.

Interestingly, to create new games, gaming equipment makers find themselves in competition with Silicon Valley companies seeking software designers and other talent who have the skills to produce compelling, high-end gaming equipment, Ader observes. "Gaming equipment makers have entered a new era of increased demand and improved product," Ader says. "Their traditional landscaped has changed."

Bear, Stearns Co., Inc., a leading worldwide investment banking and securities trading and brokerage firm, is a major subsidiary of The Bear Stearns Companies Inc. (NYSE: BSC). With approximately $17.9 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, private client services, derivatives, asset management, correspondent clearing, securities lending and custody services. Headquartered in New York City, the company has approximately 9,400 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles and San Francisco; and an international presence in Beijing, Buenos Aires, Dublin, Geneva, Hong Kong, London, Lugano, Paris, Sao Paulo, Shanghai, Singapore and Tokyo.