The last 15 months have been very interesting for Interblock. In July 2022, the company announced that it was acquired by Oaktree Capital Management, and a few weeks ago, the manufacturer purchased specific assets from Aruze Gaming America. John Connelly, CEO at Interblock, gave an exclusive interview to Revista CASINO to talk about the strategy behind these movements and the future of their product offering.
US commercial gaming revenue reached a quarterly record of 16.07 billion dollars in Q2 2023, marking the industry’s tenth consecutive quarter of annual growth, according to a report from the American Gaming Association. How has this industry record impacted the company’s business?
When I joined Interblock at the very beginning of 2015, there were many people who (including myself) didn’t understand what Electronic Table Games (ETGs) really meant, who was playing them and what their potential was. Fast forward just seven years later, which is relatively quite quickly in our business, and now when people talk about casino floors, you would be hard-pressed to find anybody that doesn’t include ETGs in that discussion. They talk about slots, live tables, and Electronic Table Games, and quite frankly online also enters the conversation.
When the industry rises, it’s our job at Interblock to make sure our technology and product offerings rise with the industry, remain competitive, solve the problems that the operators are facing, and allow them to become more competitive and profitable while attracting younger demographics combined with existing players as well. It’s not easy; it’s a daily challenge. But as you see the industry growing, it’s good for all of us, and in the company, we just try to do our best to contribute in some way to those numbers you’re seeing, whether it is in a small way in some places and a larger way in others. We just want to be part of that success and that story, and we work every day to try to do that.
What is the objective behind the acquisition of specific assets from Aruze Gaming America? What added value do the company’s products provide to Interblock?
When I look across the globe at the competitive landscape that we face on a day-to-day basis, one of the most innovative companies that we come across is Aruze Gaming America. They have been at the forefront of innovation and technology for quite some time. The opportunity to acquire them, from a competitive standpoint, was obviously very interesting. The transaction gave us, from a North American perspective, approximately 80 % of market share. From a product perspective, the technology that Aruze Gaming America utilizes for roulette or the dice units, whether it is Sic Bo in Asia or the Craps game in the North American market, is very impressive.
And quite frankly, I think their roulette product was undervalued and underestimated due to some capital constraints they had in the company. I see their portfolio as complimentary: their products and the player demographics they attract don’t necessarily overlap in a negative fashion with the types of products that Interblock is currently offering. I see them as synergistic. I’m excited because they can only increase our portfolio in terms of the number of players and customer groups in a positive way. And last but not least, financially speaking, the transaction was very interesting to us, and it resulted in a very creative move, almost from day one.
It’s been more than a year since the company announced that it had been acquired by Oaktree Capital Management. How has the synergy between both organizations benefited Interblock’s operations?
Interblock has been a private company that was founded in Europe over 25 years ago, a quarter century ago. It was the first company to innovate electronic table games (ETGs), but it was growing so quickly that myself and the founders all agreed that it was time to really bring in the financial and expertise needed to take the company to the next level. So we began that process almost four years ago. We started looking for the right partner to do a transaction, and a little over a year ago, we finally closed with Oak Tree Capital, which is one of the largest private equity firms in the world.
As a result of being a phenomenal partner for the company, they’ve infused well over 100 million dollars of capital to allow us to expand the company from both an innovative research and development perspective as well as an infrastructure and portfolio perspective over the past twelve to eighteen months. This has resulted in Interblock becoming one of the fastest-growing gaming companies in the world, and we wouldn’t have been able to achieve that without having that kind of financial strength behind us and strategic partnerships.
The company is flourishing under the Oak Tree Capital ownership. They bought 100 % of the company and, since then, we can engage in transactions like the Aruze Gaming America acquisition and many other things like that, which allows us to go to that next level. So, all positive.
How has the company’s offerings evolved over time?
The best way I can summarize is that we’ve evolved Interblock over the past six years into three distinct product categories. One of them is where the company started, which was standalone products: the Mechanical Roulette Wheel that you now see around the world. These are products that don’t require a dealer, and they have people sitting around a mechanical device, whether it be a roulette wheel, a video blackjack, or a dice product.
We then migrated into what’s called the Stadium type of concept. The product portfolio around stadiums currently approaches close to 200 stadiums worldwide, with most of the major casinos having at least one, if not two, from Interblock. This was a different demographic, more of a social atmosphere. We continue to invest heavily in that area.
The third category we introduced a couple of years back was the Universal Cabinet. It was an electronic table game for one player or four. A couple of players sit in front of it, and they have their own generator, creating a more personalized environment. That was another demographic that we catered to. These three areas have really catapulted the company into what it is today. The company is probably 15 times larger today than it was six years ago.
However, we learned that there’s not just one type of player who plays mechanical roulette. Just like in slots, you have many diverse styles of machines for different types of players. We’re learning that ETGs (Electronic Table Games) are very similar. So, with that said, coming out of COVID, we noticed that many players stayed on our products, and they didn’t go back to the traditional live table games, but many players did.
Therefore, as one of our company principles, we’re trying to be synonymous with anything related to live table games, whether it be online or a physical casino. We want Interblock to be synonymous with the idea of live tables, anything related to a live table. This means that we now need to take our innovation and technology and somehow integrate that into traditional live table game pits. We have done that and have started to launch some products.
The company is presenting the future of table games at G2E 2023. Which product will attract the attention of visitors?
Las Vegas tends to be where a lot of technological innovations are launched, and this year will be no different. We are known for being one of the more innovative companies each year. We will be officially releasing the complete product offering, the new category within our company, at G2E 2023 in Las Vegas. That category will be called the Smart Pit. Essentially, it’s a technology umbrella that lays over the top of a casino table game pit and provides each dealer with ways to increase decisions per hour and ways to increase the house advantage with more side bets, while also reducing the ability of the dealers to make mistakes, almost eliminating it.
If you think about how many hundreds of millions of dollars are lost around the world each year due to dealers unintentionally making mistakes, this technology will eliminate the vast majority of that. It’s the future: everyone we’ve shown it to, including major groups around the world, agrees, and we are all in the process now of installing that technology on the Las Vegas Strip in preparation for the trade show and launching it around the world. We believe that we have essentially revolutionized the way live table game pits will operate in the future, from Craps to Roulette to Blackjack.
