Japanese slot maker expanding to Las Vegas with 100 workers

David Strow

Thursday, Jan. 13, 2000 | 11:10 a.m.

A Japanese firm well-known for its video game products on Wednesday revealed plans to launch an international slot machine subsidiary based in Las Vegas.

Konami Gaming Inc., a subsidiary of Tokyo-based Konami Co. Ltd., plans to initially open a 60,000-square-foot headquarters in Las Vegas later this year. The offices, which will handle slot machine design and manufacturing, will initially employ 100. By 2004, Konami hopes to have up to 200 employees in Las Vegas.

The company has already established a small corporate office in the Howard Hughes Center and is currently scouting the Las Vegas area for a location for its permanent facility.

Konami is an international firm with revenues exceeding $1 billion a year. The company is best known for producing a variety of video game products, from stand-up games for video arcades to cartridges for home entertainment systems. The company envisions selling to the Americas and Europe through the Las Vegas subsidiary.

"It's a natural extension of their current business," said Las Vegas attorney Tony Cabot, who represented Konami at a Thursday licensing hearing of the Nevada Gaming Control Board. "Games are in production, and they'll be in the (Control Board approval) lab very shortly."

Slot machine design is currently being handled in Illinois, Cabot said, while the company nails down a final location. Konami hopes to have all gaming operations shifted to Las Vegas within three years.

The company will be headed by Dean McClain, who has served in high-level executive positions with International Game Technology and Australian manufacturer Aristocrat Leisure Ltd.

Control board officials, who voted unanimously to grant Konami's license application, were impressed with the company.

"This is a very, very strong company," said board member Dennis Neilander. "Their interest coverage ratio is unheard of in the industry today."

Interest coverage refers to the amount of cash flow that is devoted to the repayment of interest on debt. Konami's rate is so low because of its high cash flow and the extremely low interest rates the company obtained from Japanese banks.

"They are well financed, and they competed against (Reno-based International Game Technology) very successfully in Australia," said Dave Ehlers, chairman of Las Vegas Investment Advisors. "Their games have great color, great graphics, great sound. Konami is a respected name."

The license allows Konami to manufacture and distribute slots, as well as operate slot machine routes in Nevada. The license must still receive final approval from the Nevada Gaming Commission, which meets Jan. 27.

"This should be a welcome addition to the industry," said board Chairman Steve DuCharme. "We look forward to seeing what you can produce over the next several years."

Board members were also impressed by Konami's philanthropic track record in Japan. About 12 percent of the company's stock is held by the Kozuki Foundation for Education. Founded by Konami Chairman Kagemasa Kozuki, the $1.2 billion fund distributes scholarships to needy Japanese students.

Board member Bobby Siller appealed to Kozuki, who attended Thursday's meeting, to spread some of that wealth to Nevada.

"It looks like a very promising future for your company," Siller said. "I would suggest that this generosity could be shared (with Nevada students) if you are successful here, as I expect you will be."