Las Vegas slot maker to pay $175,000 to settle Arizona probe

By Steve Green

Monday, April 12, 2010 | 12:51 p.m.

The Arizona Department of Gaming today said Las Vegas-based slot machine maker Bally Technologies Inc. has agreed to pay a $175,000 fine to settle an investigation of Bally’s procedures in shipping gaming device software to Arizona Indian casinos.

In February, Arizona officials had issued a "letter of intent" to suspend Bally’s state certification.

The agency cited concerns over Bally’s alleged failure to provide the department with advanced notice of shipments of gaming device software to Arizona casinos and shipping software directly to casino operation employees instead of to appropriate authorities at the tribal gaming offices.

Arizona regulators kept all of this software from reaching the gaming floors before verifying its compliance, the Department of Gaming said.

The settlement will allow Bally to continue operating as a licensed vendor in Arizona. Department of Gaming officials in Phoenix said the settlement was the largest fine ever paid by a gaming device manufacturer in Arizona.

“Beyond the civil penalty, Bally is instituting the necessary internal procedures to avoid further breaches of protocol,” Mark Brnovich, director of the Arizona Department of Gaming, said in a statement. “We are satisfied in the resolution of this issue and the confirmation that our safeguards blocked any software from reaching the gaming public prior to certification.”

Earlier today, Bally — which also makes networked slot management systems for casinos — said it amended its existing credit facility and entered into a new, four-year $75 million revolving credit facility led by Bank of America Securities LLC and Wells Fargo Securities LLC.

“We are extremely pleased with the amendment of our existing credit facility and the new $75 million revolver, which brings our total undrawn revolver capacity to $150 million," Bally Chief Financial Officer Robert Caller said in a statement.

"With these revolving credit facilities, cash on hand, expected net proceeds from the sale of the Rainbow Casino (in Mississippi), and cash flows generated from our ongoing operations, we have the liquidity to grow our business, consider appropriate acquisitions and fund anticipated share repurchases,” Caller said in his statement.

Bally had no immediate comment on the fine.