State to scrap older video poker machines

Monday, Sept. 19, 2005 | 10:27 a.m.

SALEM, Ore. -- Thousands of Oregon's video poker machines are headed to the recycler, to be replaced by new ones capable of handling the popular new line games.

The Oregon Lottery intends to replace all the older terminals by next spring, beginning with 2,300 in October.

Another 2,000 machines will meet their fates in early 2006.

Players with favorite machines may resent the change, but it is expected to pay off, at least for the state and for retailers who offer the games.

Roughly half of the older machines scheduled to be replaced lack the capacity to offer slot machine-style line games, which the state began offering in May.

Since those games went online, Lottery profits are up by 19 percent compared to the same period a year ago, lottery spokesman Chuck Baumann said.

In August, for the first time since Oregon starting offering video lottery games, the state hit _$13 million in sales in a single week . and it happened twice, he said.

In addition, one of the older models is no longer supported by the manufacturer, making repairs a problem.

The first phase will cost $22.3 million for 2,300 terminals; the state hasn't yet bought the second batch but the projected rate is about $8,000 apiece, he said.

Machines will earn an average of $500 per week, so they will pay for themselves quickly, he said.

The old machines are not universally loved.

Patti West, manager of the Sandbagger Saloon, adjacent to the Crooked River Ranch golf course, has one of the older machines and says it is the least popular of the bunch.

"People are really excited about the new stuff rolling out," she said.

Under a new contract merchants decide whether to offer only video poker or add line games. Those who offer only video poker keep, on average, 28 percent of sales. Those who offer video poker receive 25 percent.

As of Friday, 86 percent of retailers were offering both games, Baumann said.

In the 2005 fiscal year, which ended June 30, the lottery recorded $940 million in sales and, of that, a record $579.7 million was from video terminals.

After paying commissions and overhead costs, the lottery sent $425 million to public education, economic development, state parks and stream restoration efforts. One percent of lottery proceeds pays for intervention for problem gamblers.