‘50 percent rule’ lifted IGT to top of industry

Sunday, Feb. 28, 1999 | 9:17 a.m.

Legislative proposals sometimes bring about exactly the opposite results intended by their backers.

Some of the same casino executives who hope to ban revenue-participation games in Nevada and reduce Reno-based International Game Technology's influence didn't appear to be worried about any fallout from a regulation they pushed in New Jersey several years ago.

Ironically, their success played a large role in IGT's rise in power.

In a bid to stop slot maker Bally Gaming (now a division of Alliance Gaming) from extending its former dominance in the industry, New Jersey regulators approved the so-called "50 percent rule."

The theory was that by limiting any slot manufacturers from supplying more than half the slots in any Atlantic City casino, the rule would foster competition and curtail Bally's power.

But, as often occurs when people tinker with the laws of economics, the move backfired on the casino industry by enabling then-struggling IGT to prosper.

With a stronger balance sheet and higher profits, IGT was able to hire the creative and management talent that has made it today's market-share leader.

And the political machinations designed to kill the slot industry's 500-pound gorilla led to the birth of King Kong.