Indy Q&A: Interblock CEO charts electronic table game growth and online expansion

The Nevada Independent
 
Indy Q&A: Interblock CEO charts electronic table game growth and online expansion
Super Slots

John Connelly spent his first years as CEO of Interblock Gaming getting the North American casino industry comfortable with the idea of offering customers electronic table games.

Connelly was a top executive at slot machine giant Bally Technologies for 11 years before it was acquired by Scientific Games in 2014 for $5.1 billion. A year later, he joined Interblock, a privately held Slovenian-based company, to help increase the company’s market share in the U.S.

Interest in electronic table games — traditional table games that are played through an interactive video format much like a slot machine —  grew in his eight years as Interblock’s CEO. 

But the game changed for Connelly in June 2022 after Oaktree Capital, one of the world’s largest private equity funds, acquired Interblock and provided the company with the financing needed to increase its research and development division and expand its U.S. presence.  

Connelly became a senior advisor for Oaktree’s gaming division, which has expanded to include J&J Ventures, an Illinois-based slot machine route operator that is buying Las Vegas-based Golden Entertainment’s slot route business in Nevada and Montana for a combined $322.5 million.

Oaktree is also acquiring Mesquite Gaming, which operates the Casablanca Resort and Virgin River Hotel.

In the summer, Interblock acquired Aruze Gaming’s electronic table game business and integrated the devices into its product line after the Japanese company filed a Chapter 7 bankruptcy liquidation of its American business. Financial terms were not disclosed.

Interblock said at the time that adding Aruze’s electronic table games would “accelerate” several of the company’s growth initiatives. Interblock also took over Aruze’s U.S. offices in Las Vegas, moving the company’s headquarters away from Harry Reid International Airport to Interstate 215 and Decatur Boulevard.

At October’s Global Gaming Expo in Las Vegas, Interblock rolled out its fourth new category of casino products, including a tournament feature — allowing gamblers to compete against each other — for the company’s stadium gaming platform.

Interblock’s stadium casino platform can be configured with automated, video or dealer-assisted generators and live table gaming opportunities, depending on the size of the casino.

“We’ve been successful with the stadium concept that is in 90 percent of the casinos on the Las Vegas Strip,” Connelly said in an interview on Nov. 7.

This interview has been edited for clarity and length.

How have electronic table games evolved since you joined Interblock?

The initial perception in North American casinos of an electronic table game was a mechanical roulette wheel sitting in a group of slot machines. The games were [overseen] by slot managers and they weren’t perceived as a true table game.

A casino floor has 1,000 different slots with 100 different variations designed for hundreds of different types of players. We didn’t believe electronic tables should [be] lumped in with slot machines. Our mission statement and vision were to be synonymous with table games. We have over 50 different products with hundreds of different features and functionality designed to attract different types of players on a casino floor. It’s very similar to what you would find in the slot machine segment. 

How do you achieve the company’s goal?

You have to build a matrix with your primary games, such as blackjack, craps, roulette and baccarat, but you then have to design a table game with the same idea that you talk about a slot machine with bonuses and wagering opportunities. We have roulette games with dual wheels and enhanced craps games.

Did your background in traditional slot machines help you in this role?

Single-player [slot machines] is a type of experience that is a little more solitary, where players can go at their own speed. That product category has taken off and evolved.

When we walked onto casino floors after COVID, we saw thousands of players in traditional game pits, but it wasn’t innovative. The last true innovation people would consider noteworthy for table games was the automatic card shuffler, and that's over 25 years ago.

We created a technology umbrella that we placed over traditional table game pits that provided dealers with the ability to make more decisions per hour. It provided a higher house advantage, more customer service, and a greater level of security, through technology and innovation.

Electronic tables don’t use chips for wagering. Was that a hurdle to overcome?

Someone once upon a time asked that same question when the concept of removing coins from a slot machine was discussed. And here we are today with [ticket in-ticket out]. I believe very strongly and if you still are questioning that theory, let's look online. The last time I checked, there were no chips with online gaming.

Online casinos are in seven states. Expansion in the U.S. has been slow. What are your thoughts on growth in the U.S.?

We saw the casino industry put a ton of emphasis behind sports betting expansion and it was very successful in gaining traction. I can almost guarantee you that the next round of initiatives out of the gaming sector come 2025 is going to change from sports betting to online. There is a ton of money to be made in regulated online wagering.

What is the company’s online table game potential?

Interblock will enter the space from a traditional perspective [as a provider of content] and from a live-streaming perspective. In New Jersey, Michigan and Pennsylvania, traditional casino numbers are plateauing somewhat. In less than 24 months, the amount of online growth is achieving the same levels that took us decades to achieve in traditional casinos. It’s foolish to ignore that when online enters the market, it is incremental to a level that in many ways surpasses the traditional scope.

We believe strongly the catalyst to table games online should be derived from the traditional casino floor. We are helping the traditional gaming sector be an influencer and then a participant in online gaming. We think there is definitely a crossover. 

Nearly 10 years ago, we saw lottery giant Scientific Games buy slot machine companies Bally and WMS while GTECH acquired IGT. Now the lottery companies are being split from the gaming equipment side. Why is that happening?

I started my career in the lottery business. I thought it was a wise move to take the longevity and cash flow of the lottery industry and move it into the casino sector. They are two distinct businesses and it's an interesting collaboration. 

However, it was too complex for Wall Street and others to evaluate. Wall Street tends to dictate how they want to evaluate things to give you the highest multiples. [The recent sale of Scientific Games, creating casino gaming-centric Light & Wonder] has proven that Wall Street will reward you more by segregating those businesses.