Technology boosting traditional, ‘Net bingo

By Liz Benston (contact)

Thursday, March 13, 2003 | 10:57 a.m.

They may look and sound like slot machines. But a host of new electronic devices on the market are actually bingo games that are helping to boost profits for a stagnant industry facing tough competition from a nationwide proliferation of slot machines.

Bingo is one of America's oldest forms of gambling and originated as a way to raise money for charitable groups. About 50 million Americans wager at least $10 billion on bingo each year, experts say. About $1 billion goes to nonprofit programs.

Still, the spread of tribal casinos with slots and house-banked card games nationwide has eaten into bingo revenue in recent years, experts say.

At Bingo World, an annual industry convention in Las Vegas Wednesday, operators saw how bingo halls are fighting back by replacing slow, paper-based games with faster, electronic versions.

"What people want is basically slot machines," said I. Nelson Rose, a gambling law expert and professor at Whittier Law School in Costa Mesa, Calif.

Like regular bingo, bingo machines require gamblers to play against other players in the casino or bingo hall. Some tribal casinos have even linked their machines to other tribal locations nationwide, attracting more players and funding a larger total jackpot.

Companies like Reno-based Sierra Design Group are leading the trend. The company makes video lottery terminals for state lottery agencies and electronic bingo games for casinos. Both types of games are intended to conform with state laws that forbid slot machines.

Sierra has a licensing agreement with International Game Technology to display bingo games on IGT-designed slot machines. Players daub numbers with the touch of a button and watch as slot reels spin around. The reels are for entertainment purposes only and only line up when a player hits bingo.

While some players prefer bingo cards, many will be attracted to the machines because they resemble slots, Sierra account executive Gregory Drew said.

State laws differ on what forms of bingo are allowed.

Some states allow electronic games that can be linked with one another, while others restrict bingo to the old-fashioned card and dauber variety. They may also offer newer "pull tab" games that resemble lottery scratch-off tickets.

The rules generally date back to "sin laws" adopted around the turn of the century. But many have been repealed or amended over the years, offering incremental gains for bingo operators. The spread of lotteries has sped up the liberalization of bingo games, Rose said.

A proposal to legalize bingo in Tennessee has come on the heels of a voter initiative last November allowing the state to introduce a lottery. Maine and Massachusetts are considering allowing Indian tribes to offer high-stakes bingo games. Iowa now allows up to two bingo jackpots rather than just one jackpot per day. And Missouri is exploring whether to legalize bingo by 2004, a plan that may also include broadcasting bingo games via satellite.

Some bingo operators also are looking toward the Internet to expand their businesses.

The fastest-growing segment of computer users -- older and retired people who are starting to communicate with friends and family online -- are around the same age as the typical bingo player, experts say.

Online bingo falls under the federal government's restrictions placed on Internet gambling and is therefore considered illegal, operators say.

Still, it may someday be legalized in the United States, offering the kind of business opportunity that operators will have no choice but to accept, said Andrew Bascombe, director of sales for Dot Com Entertainment Group. The Canadian company develops and licenses multi-player bingo technology on the Internet, including a site for the Hard Rock Hotel & Casino in Las Vegas.

While online casinos have drawn "bonus hogs" who surf around for the best deals, Internet bingo players tend to be loyal to one site and are looking for an online community they feel comfortable in, Bascombe said.

One survey showed that about 40 percent of players gambled for three hours or more online and that nearly 40 percent will play almost six times a week. Many of these customers also play at their local bingo hall, he said.

In Canada and other areas where online bingo has flourished, sites offer chat rooms, prizes and other features to draw players who in some cases are younger than typical bingo customers, he said.

"Online bingo is not the game your grandmother played," he said.

U.S. companies can offer informational websites or play-for-fun online bingo games to enhance their halls or casinos, he added.

Indian reservations are sovereign nations and therefore don't require legislative change to introduce electronic bingo games, known in the industry as Class II slots. Still, tribes have faced restrictions on the number and types of traditional casino games -- including slots and table games -- that can be offered in their gambling halls.

Rocket Games, a bingo game maker owned by the Miami Tribe of Oklahoma, sells electronic bingo games in about a dozen states but wants to expand further.

The company is eyeing states -- including California -- where tribal casinos have compacts that prevent them from adding more slot machines, said Nelson Johnson, chairman and chief executive officer of Rocket Games.

Bingo machines are less lucrative than slots but offer an alternative that isn't restricted under state compacts, Johnson said.

"We want to fill in the gap between what (the tribal casinos') market will bear and what they're offered under the compact," he said.

Security concerns also appeared high on operators' radar screens at the conference.

Bingo made national headlines a few months ago when a scam surfaced involving electronic bingo card minders made by GameTech International Inc. of Reno. GameTech employee Brett Keeton tampered with machines in Las Vegas to play more bingo cards than he had paid for, increasing his odds of winning and cheating casinos out of thousands of dollars. Keeton committed suicide after the scam was discovered.

The state Gaming Control Board has since completed an investigation, determining that Keeton acted alone. The board also initiated new scrutiny of electronic bingo minders and other associated equipment that doesn't necessarily control the outcome of a game.

GameTech didn't become a topic of discussion at Bingo World, even in a session devoted to auditing and security.

Still, more operators are learning the hard way that players and even bingo hall employees nationwide have perfected a number of creative ways to cheat at old-fashioned bingo games, experts say.

Some players steal bingo cards or bring cards from other halls to play them, said Jim Hale, owner of a Lion's Club bingo hall in Pennsylvania. Workers may even slip regulars extra cards, he said.

Bingo operators are so busy with other minute details that they often ignore fundamental security measures that protect the integrity of the game, Hale said.

"Players want a fair, trustworthy game," he said. "Otherwise they will go elsewhere."

Operators need to view tickets as hard cash, added Jim Story, president of bingo card distributor All American Bingo Inc.

"This paper is money. (Pull-tab) tickets are worth money," Story said.

Players who have fraudulently obtained cards can cheat a hall of hundreds of dollars per visit, he said.