Technology could transform slot machines

By Rachel Konrad

updated 6:07 p.m. ET March 16, 2007

REDWOOD SHORES, Calif. - Engineers at PureDepth Inc. spent years developing tools for helping the military plot 3-D maps of war zones, eventually licensing top-secret technology to the U.S. Air Force and Navy.

But the Silicon Valley startup hit the jackpot in October when it inked a deal with International Game Technology Inc., the world’s largest maker of slot machines.

Industry experts say a realistic digital video display is the final hurdle that will completely digitize one-armed bandits. The new displays by PureDepth and others — set to debut later this year — could profoundly change the $85 billion U.S. gambling industry and how it’s regulated.

When high-tech slots are in place, programmers will be able to control nearly every aspect of the game — cost, payout, even the images that line up on the payline. Casino operators will be able to make changes in real time through back-end servers that talk to computer chips inside the slot machines.

“This is the last piece of the puzzle,” financial analyst Aimee Marcel Remey, who follows the gaming industry for Jefferies & Co. “These new systems are so different from the slots out there now. You feel like it’s an exact science, every time you pull.”

If the Beach Boys are playing the Luxor in Las Vegas, next-generation slots could display images of band members instead of cherries, numbers or other symbols. If band members’ faces line up, an embedded printer could spit out front-row tickets.

Or suppose the penny slots area at a tribal casino empties out around 7 p.m., when big spenders arrive. With a few keystrokes, programmers could change the minimum bet to $1 and offer a progressive jackpot with all slots in the house — or even with thousands of machines statewide.

“If the NASCAR folks are coming to Vegas, they could change the fruits to cars,” said Fred Angelopoulos, CEO of Redwood Shores-based PureDepth, founded in 1999. “You can start thinking outside the box, literally.”

Without digital displays and servers, employees would have to manually close out meters, change glass, change reel strips and physically relocate and remove machines.
Digital slots, however, are vulnerable to the same bugs and malfunctions that plague personal computers. Regulators say they’ll be seductive targets for hackers, who have been trying to rig games for decades.

In 2000, a programmer in Edmonton, Canada, found a software glitch that let him regularly win $500 or more on some video poker machines. The maker of the machines — WMS Industries Inc. — estimated the incident cost at least $1 million and sued the man, who threatened to publish the flaw online.

The Nevada Gaming Control Board, which sets the pace for regulators nationwide, adopted new rules last year for digital machines. The board must approve all software modifications — even pictures on reels. The approval process takes up to 30 days.

The board employs 11 experts in computer science, electronic security and wireless networking. It will double the number of these specialists by late 2007 and build a new research facility to deal with an expected profusion of digital slot machines, said Mark Clayton, who heads the board’s technology division.

Executives at the top three manufacturers acknowledge that networked slot machines are a seductive target for hackers and are reluctant to call them hack-proof for fear of inviting challenges from would-be invaders. Instead, they’re working with regulators to reduce the potential damage if such an attack occurred.

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