Bets are soon off

May 13, 2015
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Major changes are coming to Louisiana’s video poker landscape, and the result may be fewer machines.

Fans of older-style video poker machines – the simple screened ones without electronic barking dogs and laughing jokers – need to place their bets now because on New Year’s Day 2016, those old machines will go dark forever.

And small businesses with only a few machines of any type may no longer be able to keep them.

That’s because the Louisiana State Police, who regulate video poker machines, are upgrading the accounting system to which all video poker machines are directly connected. And the switch also means that small businesses such as restaurants with only a few machines may not keep them.

All video poker machines will have to be either upgraded or completely replaced by the end of the year at an estimated cost of more than $115 million to the industry, according to the Louisiana Amusement and Music Operators Association website.

At a cost of about $40,000 per machine, the mandate to upgrade or replace video poker machines will hit small business owners in the business the hardest.

“It hurts to say, I spent everything I’ve made plus I’ve had to borrow some to reinvest,” said Daniel Doiron, who owns and operates between 100 and 150 video poker machines in Terrebonne Parish bars, restaurants and hotels.

Doiron said he hasn’t even added up how much he’s spent because doesn’t even want to see the total yet. He said that he had to replace 55 percent of his machines and upgraded the rest

The industry nationwide uses a communications system between machines and the various agencies that regulate them called the Slot Accounting System, the standard since 2002.

But Louisiana uses a far older system called ICIS for the State Police link to machines. Louisiana is the last state to upgrade, said Stan Guidroz, president of the Louisiana Video Gaming Association.

“The Louisiana central system is operating on the oldest protocol in gaming,” Guidroz said. He said that it is a good thing because the State Police will spend less money maintaining the aging computer system and will improve their ability to collect data.

The costs to upgrade are prohibitive for smaller video poker operators like Doiron, who place their video poker machines in bars, restaurants and hotels and many times split the profits from the machines with the establishments.

Those small locations can only have up to three video poker machines by law. The revenues they generate for state and local government are dwarfed by the revenue from multi-machine truck stop casinos, which may have up to 50 machines each, rake in. The truck stops, according to State Police data, currently operate 56 percent of the state’s 14,696 total machines, but bring in 70 percent of all of the profits the industry generates.

“The truth is, I’m the mom and pop and truck stops are the Walmart,” Doiron said. While truck stops will have no problem upgrading, he said, the changeover will hurt small scale operators in the state like himself.

The Gaming Association, through Guidroz, says that surveys of poker machine operators across the state reveal that 30 percent of the units in bars and restaurants will not be replaced at all. In those cases owners have completely paid off the cost of purchase. The price for reinvesting in new machines or upgrades, Guidroz said, is too high to take the risk.

Truck stop casinos have been aggressively upgrading and replacing their video poker machines across the state, the industry sources said, ever since the process of changing accounting systems started last year.

Last year Louisiana collected a total of $177 million in franchise fees from all video poker machines. Removing 30 percent of those machines should mean a net loss to the state of $11,327,407, or 6.4 percent of the total, a review of State Police data reveals.

But Guidroz said it is possible that the growth of truck stops in key areas of the state and migration of players from restaurants and bars to truck stops will likely offset revenue loss.

Not yet determined is the additional effect on the revenue derived from video poker machines in New Orleans at Harrah’s Casino and the many bars that now ban smoking because of a new city ordinance, Industry sources like Guidroz predict that further losses are likely.

Locally, video poker machines are sizeable contributors to government revenue.

Lafourche Parish raked in $925,594 from machines in 2014. In Terrebonne the parish’s take was $2,414,073.

Much of Terrebonne’s video poker money, said Chief Financial Officer Jamie Elfert.

Neither she nor Parish President Michel Claudet was aware that changes are coming to the video poker landscape, although a loss of money during tight economic times is not particularly welcome.

“Any loss of revenue has consequences,” Claudet said.

Newer models of machines allow players to deposit bills up to $20, while the oldest models only $10, $5 or $1 bills.

New models also allow computers in each playing location’s office to dispense additional cash prizes at random, over and above what is earned for play with virtual cards on winning hands, incentivizing players to keep playing.

Also, industry sources said, new machines offer bonus games that offer players more chances to win.

Poker players at Out Tha Box, a bar on Hancock Road in Houma, where management said one of their three machines has been upgraded and two new ones purchased, had mixed reactions to the changes.

Tracy Lee, a customer who tried her luck Friday night, said she will miss

the old machines, but is accepting of the new ones.

“The old machines paid more, but you don’t have the bonus games,” Lee said. “You’re chances are better with the new machines because of the bonus games, but the overall pay-out is less.”

Her husband, Darryl, was more accepting of the changes overall, and that players would do well to learn more about the machines they play.

“You’ve got to do your research,” he said.

Elda Williams plays a game of Double Up Deuces Poker at Cash Magic Truck Stop on Grand Caillou Road in Houma. The video poker landscape is changing in Louisiana since 30 percent of all video poker machines in bars and restaurants will disappear because machine owners can’t afford to upgrade or replace them in order to meet new State Police Standards.