Mikohn Gaming Corporation History

Address:

920 Palms Airport Drive
Las Vegas, Nevada 89119

Telephone: (702) 896-3890
Toll Free: 800-336-8449
Fax: (702) 896-2461

Public Company
Incorporated: 1986 as Mikohn Inc.
Employees: 822 (1999)
Sales: $106.9 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: MIKNE
NAIC: 339999 All Other Miscellaneous Manufacturing; 713290 Other Gambling Industries

Company Perspectives:

Mikohn will market reliable technologically advanced, high value-added solutions to the gaming industry around the world, while conducting ourselves as a team with the highest professional and ethical standards in a dedicated creative and positive work environment. Key Dates:

Key Dates:

1986:: Company is founded.
1993:: Mikohn goes public on the NASDAQ exchange.
1994:: The CasinoLink accounting and player tracking system is introduced.
1996:: MikohnVision display is installed at New York's Times Square.
1998:: Mikohn acquires Progressive Games and its proprietary Caribbean Stud table game.
1999:: Company begins development of table games and slots based on popular Hasbro games.

Company History:

Mikohn Gaming, Inc. designs, manufactures, and distributes a variety of casino games, gaming jackpot and tracking systems, and interior and exterior signage for the casino industry. Mikohn's products include several table games, such as Caribbean Stud and Progressive Blackjack, as well as branded table games and slot machines based on Hasbro board and dice games, including Monopoly and Yahtzee. The company is also an industry leader in the design of interior displays, for stand-alone games or for clusters of progressive jackpot games in casinos. Mikohn holds gaming licenses for over 150 gambling jurisdictions worldwide.

1980s Origins

Mikohn Gaming, originally incorporated as Mikohn Inc. in 1986, pioneered the technology for 'progressive jackpot systems' used by casinos for managing clusters of slot machines and other gaming machines. The software Mikohn developed allowed casino managers to determine the amount of a jackpot and frequency of payoff based on player participation at connected machines. Moreover, signage utilizing light-emitting diodes (LED) displayed the current jackpot amount, while attracting consumer attention with flashing, traveling, and other types of moving displays, as well as animated and graphic displays of red, green, and yellow lights. The company's Mystery Jackpot software set jackpots based on a schedule, while Bonus Jackpot software allowed for random jackpots in addition to the regular payout.

After five years in business the company was reporting a profit of $54,324 on $5.8 million in revenues. By November 1993 Mikohn was prepared to go public, with an initial offering of three million shares offered at $15 per share. Under the leadership of David J. Thompson, named president and CEO of the company in 1988, Mikohn used the proceeds from the offering, some $40 million, to support continuing research and development, to fund capital expenditures, to pay debt, and for strategic acquisitions.

Through acquisition Mikohn hoped to integrate game technology development with sign and lighting operations to create new progressive gaming machines with spectacular visual displays that would attract attention in an already active casino environment. Toward that end, the company acquired Current Technology Systems, another jackpot systems manufacturer, as well as three large distributors, Casino Signs in Las Vegas, and Casino Signs Pty Ltd. and Club Casino Products Pty Ltd., both based in Sydney, Australia. For the November 1994 acquisition of John Renton Young Lighting & Sign, Mikohn paid $4 million and stock, plus 90 percent of the appraised real estate value of facilities in Nevada, New Jersey, and Mississippi. Young Lighting designed and installed both interior and exterior lighting systems and signs for the gaming industry. Acquisitions increased revenues at Mikohn to $57 million in 1994, while the company's net income reached $6.4 million.

Next, CEO Thompson prepared to take Mikohn global, suppling the international market for its products by establishing sales offices and manufacturing facilities abroad. The acquisitions of Casino Signs and Club Casino Products had given Mikohn a foothold in Australia, and the company expanded and upgraded facilities there. Mikohn also opened a sales office in Amsterdam, Mikohn Europe, BV, and completed construction on a sign manufacturing and assembly plant there in 1995. Mikohn formed a joint venture, Mikohn South America, S.A., and opened a 60,000 square foot plant in Lima, Peru. In 1996 the company opened a sales and service office in Buenos Aires, Argentina.

Mikohn's strategy for growth and development during this time involved obtaining exclusive rights to distribute certain casino games or gaming-related technology. In 1994 Mikohn acquired the rights to CasinoLink, an accounting and player-tracking system. CasinoLink assisted casino managers in the design of promotions (such as rewarding customers for game play recorded on player identification cards), discerning maintenance needs, and serving as a form of security and identification for customer credit. The system debuted in two casinos in Las Vegas in early 1995.

Mikohn acquired the exclusive rights to distribute the Caribbean Stud poker game which used progressive jackpot controllers and displays. The company also purchased the patent rights of the 'Flip-It' coin-pusher slot games for $1.5 million. Assets included an inventory of 200 machines already in place at 50 casinos throughout Nevada. Mikohn next obtained approval to install Flip-It slots in casinos in Mississippi as well.

Mikohn's product development began to focus on security-related technology and acquisitions. In September 1994 Mikohn acquired TransSierra Communications, provider of security, surveillance, and communications to the gaming industry. In 1995 Mikohn acquired the rights to manufacture, market, and distribute SafeJack, which incorporated surveillance technology into Black Jack game tables. SafeJack provided a small monitor which displayed the play of the table to the dealer. A camera read each card as dealt and indicated a winning hand on the monitor by flashing a light near that hand. Bally's Hotel & Casino in Las Vegas tested the product before Mikohn obtained regulatory approval from the Nevada Gaming Control Board in 1996. Mikohn also acquired the rights to develop, manufacture, and market TableLink, a player tracking system for table games.

In 1995 Casino Excitement, Inc., Mikohn's sign and lighting subsidiary, introduced its MikohnVision sign technology, a low-voltage, low-energy-use display. Designed to provide attention-getting signage for the casino industry, MikohnVision furnished bright, vivid lighting for real time wording changes, graphics, animation, and video clips in 16.5 million colors. The company installed the first MikohnVision sign at Players Island Resort, Spa, and Casino in Mesquite, Nevada. The company's national recognition received a boost when conglomerate ITT Corporation ordered a MikohnVision display for placement in New York's Times Square. In Las Vegas the Stratosphere Tower and the Sahara Hotel and Casino installed MikohnVision signs in 1996 and 1997, respectively.

Legalized Gaming in the Mid-1990s

Approval of legalized gambling throughout the United States in the mid-1990s expanded the potential market for Mikohn's products. Gaming legislation passed in Mississippi in 1994 and for riverboat gambling in the Midwest in 1995 and 1996. Several new casinos opened on Native American reservations in 1996 and 1997. In anticipation of new business Mikohn expanded its manufacturing facility in Gulfport, Mississippi, in 1995. The construction project more than doubled the plant's size, from 12,000 square feet to 30,000 square feet.

As its facilities and holdings grew, Mikohn also embarked on a restructuring program, consolidating some administrative, manufacturing, and distribution positions, closing some facilities in Nevada, Missouri, and Mississippi, and discontinuing production of older products. These changes reduced the Mikohn work force by 16 percent and reduced annual payroll by $5 million. Mikohn experienced a loss of $6.5 million in 1995, which it attributed to writeoffs related to restructuring. While 1996 revenues reached $91.4 million, research and development costs for SafeJack, MikohnVision, CasinoLink and new slot machine products resulted in a net profit of only $612,000.

In 1996 Mikohn introduced its new SuperLink technology, which provided casino managers with real time data on individual slot machines, clusters of machines, or small groups of progressive slots scattered throughout the casino floor. The first SuperLink installation occurred at Monte Carlo Resort & Casino on the Las Vegas Strip. Mikohn also won a $4.5 million contract to provide SuperLink and jackpot systems, as well as casino signs, for the new Station Casino in Kansas City. The Mohegan Sun casino and resort, on the Mohegan Indian reservation in Connecticut, held its grand opening in October 1996 and contracted for Mikohn's new SuperLink progressive jackpot system as well as signage and graphics displays. A $2.4 million contract with Horseshoe Gaming LLC in 1997 included the SuperLink progressive jackpot system as well as signage and graphics displays at its casino in Robinsonville, Mississippi.

Both CasinoLink and SuperLink proved popular. Canadian gaming businesses took a strong interest in CasinoLink, and Mikohn signed a $1.8 million contract with the British Columbia Lottery Corporation for management of slot machines at existing charitable gaming operations. Several casinos in Australia and Europe also installed the CasinoLink system, including multi-site monitoring from a central location. Holland Casino used CasinoLink to monitor slot machines at ten locales throughout The Netherlands from one central location.

Continuing to focus on new technologies, the company introduced its patented MoneyTime slot bonus jackpot system. MoneyTime was designed to create further excitement on the casino floor by generating random, surprise jackpots, apart from the normal slot payouts. The MoneyTime system operated through linked machines in limited areas, and machines were distinguished by special themes, flashing lights, music, and sound effects when a player won the jackpot. By April 1998, Mikohn had connected MoneyTime software to 478 machines in 11 casinos in Nevada, New Mexico, Mississippi, and Connecticut. MoneyTime, along with SafeJack, was named among the top 20 innovative products or services by Casino Journal for 1998.

Mikohn planned to expand its capacity to combine casino gaming and surveillance technologies with the purchase of Progressive Games, Inc. (PGI) for $35 million cash. PGI's proprietary game, Caribbean Stud poker, was a popular product, allowing players to place a side bet on the progressive jackpot; a player with a flush or higher won from the jackpot. PGI obtained most of its revenues from game licensing, with Caribbean Stud available in over 300 casinos worldwide. Licensing revenues in 1997 reached $11.5 million, while the sale of game equipment garnered $1 million. Through Mikohn's purchase of PGI, which would become Mikohn's Progressive Game Division, Caribbean Stud machine placement increased by eight percent; 80 new orders for the game were placed within a month of completion of the acquisition in September 1998. Mikohn also purchased two distributors of Caribbean Stud, P & S Leasing Corp. in Mississippi, and P & S Leasing LLC in Louisiana.

Mikohn's game security technology was enhanced through a joint development with Harrah's Entertainment. Mikohn purchased the U.S. rights to Harrah's Total Track player tracking and accounting technology and then combined the technology with its own SafeGames technology. Mikohn and Harrah's planned to install the technology at up to 100 tables at Harrah's casinos nationwide.

While the market for gaming equipment stalled in 1998, large-scale casino development in Las Vegas offset the effects, and Mikohn won several large lighting and sign contracts. A $1 million contract with the Aladdin Casino and Hotel on the Las Vegas Strip involved the use of MikohnVision on a double-sided sign some 50 feet high and 37 feet wide to attract attention during and after reconstruction of the facility. A $3 million contract with the Mirage Resorts' new Bellagio Hotel and Casino resulted in an even larger Mikohn sign, 200 feet high and 85 feet wide. The contract also included 250 minor directional signs for areas outside the casino floor and 280 casino signs. Completed in late 1998, the signs were designed by Mikohn to complement the casino's Italian styling.

Mikohn also provided signage and equipment to the new Mandalay Bay Resort & Casino, which opened in spring 1999. In addition to Mikohn's Colossus and Mini Bertha sign machines, Mandalay ordered oversized slot machines, which Mikohn manufactured through an exclusive licences with International Game Technology.

Sales of Mikohn's CasinoLink system, particularly as a supplementary system to existing gaming infrastructure, continued strong in the late 1990s, particularly in Canada. Moreover, the company's CasinoLink contract with Casino Municipale di Venezia in Italy proved important Mikohn's European operations, due to its prominence in a central location.

New Design Opportunities in the Late 1990s

Mikohn gained its most comprehensive design opportunity through a $1.8 million contract with the renowned City Tattersall's Club in Sydney, Australia. Tattersall's gave Mikohn complete creative freedom to design a casino room as well as to design and manufacture the slot machines for it. Mikohn went with a Mardi Gras in Rio de Janeiro theme. Adapting the latest technology, fixtures included 15 animatronic characters which spoke to one another as well as to passers by; sound effects, dancing, and detailed movements enhanced the display. Mikohn completed the project in December 1999.

Mikohn launched two new poker games, Wild Aruba Stud, a poker game with deuces wild, and Tre' Card Stud, a three-card stud poker game. Both games offered progressive jackpots for side bets, which added to the excitement. The games debuted at the Grand Casinos in Biloxi, Gulfport, and Tunica in late 1999 and in Las Vegas in early 2000. Mikohn also installed its first 'electronic pit' at the Grand Casino in Biloxi. The game pit included eight Progressive Black Jack tables, two Tre' Card Stud tables, and two Monopoly Poker Edition tables, all linked to three progressive jackpots.

The late 1990s also saw Mikohn's entrance into developing and distributing several new casino games based on popular board and dice games through an exclusive license agreement with Hasbro, Inc. Monopoly Poker Edition, the first branded specialty table game, allowed players to win up to 125 times a bet by matching railroad, utility, house or hotel property cards dealt from a deck of 50 cards. Community Chest and Chance cards acted as wild cards, while token cards, such as the iron, the hat, etc., gave the player a no-lose pass if the card matched the player's betting spot. Players had the option for an extra side bet of one dollar for the progressive jackpot. In addition to installing the game in Biloxi, Mikohn conducted field tests at Circus Circus in Las Vegas as part of the approval process in Nevada.

Mikohn also developed slot machines and a poker-style table game based on Hasbro's Yahtzee dice game. The table game used five oversized electromechanical dice and allowed for two rerolls. Players tried to match the numbers on the dice, with five of a kind--Yahtzee--being the big winner. The Yahtzee series of slot games included Yahtzee Bonus, Yahtzee Take a Chance, and Yahtzee Video. By October 2000 the company had contracts for 2,000 of the slot machines and had installed 1,500 machines.

Also in October 2000, Mikohn began distribution of a slot game based on Hasbro's Battleship game, the Battleship All Aboard Slot video game. The game incorporated strategy and skill elements, allowing a player eight chances to fire missiles at ships positioned on a grid similar to that of the original Hasbro game. Casino Journal placed the Battleship All Aboard Slot video game among the top 20 innovative gaming/service products for 2001. Mikohn next began to develop slot games based on Ripley's Believe It or Not! and Hasbro's Clue, a murder mystery board game.

Passage of a bill allowing gambling on Native American reservations in California provided a new outlet for Mikohn's products. Soon thereafter, the Barona Casino near San Diego signed a $1 million equipment contract with Mikohn calling for ten Mini Bertha slot machines and electronics and visual displays. By October Mikohn had contracts with 16 casinos for 344 proprietary games, including new branded slots and progressive table games.

Mikohn introduced the TableLink player-tracking and accounting

system in 2000. Similar to CasinoLink and SuperLink, TableLink was the first tracking system designed for such table games as blackjack, draw poker, and pai gow poker. Using a computer microchip, embedded in each gaming chip, which transmitted radio signals, TableLink's capabilities included automated bet recognition and calculation of win/loss per player. TableLink was installed at Harrah's in Tunica, Mississippi; the Motor City Casino in Detroit; Casino de Genting in Malaysia; and Crown Casinos in Australia.

Despite declines in net income in 2000, largely attributed to start-up expenses associated with its new LED technology for video displays such as that installed in Times Square, Mikohn management remained optimistic. Specifically, CEO Thompson cited strong sales (as demand for its Yahtzee and Battleship casino games in particular continued to grow) and the increasing potential for sales growth in California.

Principal Subsidiaries: Casino Excitement, Inc.; MCG, Inc.; Mikohn Australasia Pty., Ltd (50%); Mikohn Europe, B.V.; Mikohn International, Inc.; Mikohn Nevada Progressive Games, Inc.; Mikohn South America, S.A. (50%); TransSierra Communications.

Principal Divisions: Mikohn Games; Mikohn Systems.

Principal Competitors: Alliance Gaming Corporation; International Game Technology; Anchor Gaming.

Mikohn Gaming Corporation History

Company Perspectives:

Key Dates:

Company History:

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