Grocery merger could shake up Vegas slot route business

By Liz Benston

Monday, Sept. 16, 2002 | 10:51 a.m.

Grocery giant Kroger Co.'s purchase of 18 Raley's stores in Las Vegas will likely result in another shakeup -- this one involving the lucrative slot machines in the stores.

The deal means that two familiar competitors in the slot machine market -- Alliance Gaming Corp. of Las Vegas and International Game Technology of Reno -- may be competing or negotiating over the operation of the 270 slot machines in Raley's stores.

Alliance's slot route subsidiary, United Coin Machine Co., runs the slots in the Raley's supermarkets and two of the city's four Food 4 Less stores. IGT runs slots in Smith's stores and the three remaining Food 4 Less stores.

Food 4 Less and Smith's are two of the more than two dozen grocery brands owned by Kroger.

Marcus Prater, a spokesman for Las Vegas-based Alliance, said it's too soon to say what could happen to the routes. A representative of IGT's slot route operations could not be reached for comment.

IGT is in the process of selling its Smith's route, which was picked up when the company acquired Anchor Gaming Co. in 2001. Though the route is lucrative, IGT has said it is more interested in focusing on its core slot machine business.

Slot route operators typically have multi-year contracts to operate their machines at groceries, convenience stores and other locations. But history has shown that operators don't necessarily retain their contractual rights under new owners. Another grocery acquisition involving Raleys in Las Vegas a few years ago resulted in a new owner ousting the existing slot route operator and replacing it with a new company.

Jackpot Enterprises Inc., later bought by Herbst Gaming Inc., sued Albertsons and Raley's over rights to a slot route at Raley's.

When Albertsons sold 15 stores to Raley's as part of a federal antitrust settlement, Raley's announced it would replace Jackpot with United Coin as its slot operator. Jackpot settled a lawsuit against the grocers, who claimed that Jackpot's contract was terminated with the sale of the stores. United Coin had also sued Jackpot to force it to remove the machines from Raley's stores.