Gaming Arts with Rob Ziems

Good morning, Dan. How are things in Vegas today?

Wonderful morning, Nick. Good to see you. I should say good afternoon.

So it's late July, so I'm assuming it's very hot where you are right now.

Yeah. What are you going to do? I'm inside. I have air conditioning, so I'm safe.

Okay. So Dan, we're going to combine this month's listener question with the news as it covers the same topic. Before I read that question, let me just say that we'd love to tackle any questions anybody listening may have. If you have a question that we're presenting or something you'd like us to present, please drop us an email at reelcast@reelmetrics.com. Again, that's R-E-E-L-C-A-S-T @reelmetrics.com. Our policy is to keep all questions anonymous, so please don't worry about us revealing your identity. It's not something we do. Okay, so this question comes from the Western US and it states, "Hi, guys. Last month I was surprised you didn't talk about the Caesars acquisition by Tilman Fertitta. Would love to hear your thoughts. Do you feel there's an actual business strategy behind this or is it just more financial engineering?" So many thanks to the listener for that question. I am kind of surprised we forgot to hit this last month.

But indeed the big industry news was that in late May Fertitta Entertainment announced an all-cash offer of $17.6 billion plus 11.9 billion in assumed debt for Caesars Entertainment, which represented a 49% premium over Caesar's pre-announcement stock price. Not surprisingly, Caesars bit and it is going down. So as part of the transaction, the Carano family, which owns about 5% of Caesars, has agreed to roll over a portion of that equity into the new company, and it appears the entirety of the current management, including Tom Regan and his team, will remain at the helm. The transaction is obviously subject to a bunch of regulatory approvals. It's projected to close in mid '27 and CZR will be delisted from NASDAQ post-close.

So as to the listener's question, I feel that this is a highly substantive acquisition and by no means just financial engineering. First, there's the Caesars' debt, which has really drug on the company for close to 20 years now. So it's not going to be a cakewalk, but Fertitta's plan is surprisingly detailed in terms of how they're going to attack that debt. And then secondly, and this is what I find most interesting about this, Dan, is that Fertitta's looking to build kind of this, I would call it a lifestyle ecosystem by merging the Caesars Total Rewards Loyalty Program with Landry's Select, which is Fertitta's restaurant loyalty program that covers, I think it's around 500 venues, including Morton's, Del Frisco's, McCormick and Schmidt, et cetera. So it's being packaged as kind of a dine locally, gamble globally concept. And I have to say that in terms of a demographic dovetail with Caesars, this could be big. It's very interesting. So Dan, your thoughts on this one?

Yeah, I don't know. I mean, you mentioned the debt. It's also the rent obligations as well to DaVici, and that's always been one of the challenges. The other day, I was looking at just the list of Caesars properties and I knew they were big, but when you actually go state by state and start looking at the list of properties, it's incredible.

I think it's 60 now, unless I'm-

Yeah. And the crazy thing is there's basically no overlap between the Fertitta and the Caesars properties. I think you have Lake Charles, Louisiana, where they would have two or three, and then you have Atlantic City where it would be four or five, but even there from a market share perspective, it's not as big. So I'm sure there's some strategic divestitures and spinoffs of properties that would happen to tackle the debt. But yeah, I mean, it seems like the non-gaming offering that Landry's and Fertitta's provides should be really complimentary to Caesars, especially in the regional markets and give them a competitive advantage. I mean, my sense has always been there's probably some capital and reinvestment that has to happen in a lot of their, especially non-strip properties. I imagine his plan is get that debt down, improve the cash flows, and plow it back into the properties. So I mean, I always have the sense that his target demographic maybe was slightly different than Caesar's with his non-gaming focus, a little more entertainment focus. So it'll be really fascinating to see.

Yeah, it's been a thing that's been in the works for a long time. I think he's been eyeing that company since 2018, 2019. He's really wanting to make something happen there. But anyway, I think it should be fascinating. It's also interesting he's keeping the entire management crew in place. Well, anyway, we'll watch it with great interest to see where it goes.

Okay, Dan, it's time to move on to today's guest. This gentleman is a graduate of Indiana University and Drake University Law School, and that's some serious Midwestern street cred there, Dan, who began his gaming career with station casinos all the way back in 1999, then moving on to associate general counsel and general counsel roles at Aristocrat and Progressive Gaming respectively. In 2011, he joined Aruze Gaming in a business development capacity, ultimately ascending all the way to the presidency some seven years later, and then in 2023, he made the jump over to AGS where he served as their chief business and legal officer for roughly three years. Then in mid-2025, he picked up his present role as chief executive officer at Gaming Arts. I'm referring, of course, to Mr. Rob Ziems. Rob, how are things in the Silver State today?

Oh, fantastic. Good to see you guys. Thanks so much for having me.

Yeah, great to have you.

Thanks for coming on, Rob. It's great to see you. For those that aren't familiar, would you mind just giving us a quick kind of background of your adventure and how you got into gaming and what brought you to AGS in your current role?

Yeah, absolutely. So I went to law school with the sole purpose of being a criminal prosecutor. While I was in law school, I had the privilege of working doing an internship with the federal government on the Federal Probation and Parole Department. And then one summer after my second year of law school, I came out to Las Vegas and also had the privilege of working for a federal magistrate, Robert Johnston, and so I spent a lot of time doing legal research in the criminal law field, and that was my goal. And I graduated law school and literally packed up my pickup truck and drove to Las Vegas. I had visited Vegas right before I started law school, and I just fell in love with the town. And so that's where I came after I graduated law school. And fate being what it is, I never landed a role doing criminal work, but while I was in law school, I had taken required contracts courses and surprisingly was really attracted to that area of the law. And also a business law course, a negotiations course had sparked sort of an interest.

But still, when I came out here, I fully intended to get into criminal law. Instead, I ended up doing civil litigation. And though I was pretty successful, I didn't like it very much and not ashamed to say that a significant reason why I didn't like it is I found dealing with other lawyers to be tedious and pedantic. So I thought I would like to make a shift and started finding ways to get into the business world and was very fascinated with the gaming industry. My first wife, her family had been in gaming since it was legalized in New Jersey in the '70s, and so I got interesting exposure to some gaming royalty and found the industry just to be fascinating, but I like to joke that the way I actually got into the gaming industry was because I happened to play flag football out here in Las Vegas with the right people.

I started playing flag football with a bunch of the pirates in the Treasure Island show that used to exist in Vegas, and one of the guys on the flag football team was Felix Rappaport who was president of Treasure Island. And years later, I saw an opening posted for an in-house counsel role with Station Casinos, and I reached out to Felix who had left Treasure Island to become president of Boulder Station, and then was president of MGM Grand. I reached out and I said, "Felix, there's a position posted for in-house counsel at Station Casinos and wondering if you'd be willing to write me a recommendation letter." And he did. And when I read the recommendation letter, I called him to ask to make sure it was for me because it was certainly more glowing than I felt like I deserved.

But it helped me get my foot in the door and started at Station Casinos in 1999, worked for Rich Haskins and Scott Nielsen, and was in the Palace Station Building before they did the remodel that we see now, and I thought I had just landed the dream job. Absolutely loved being part of the Station's family. I wasn't there very long. I got recruited to join this little IP startup company in Charlottesville, Virginia that a friend of mine from high school was working at, and this was as the dot-com bubble was growing and before it had burst, and they made me a tremendous offer that was to pay off my student loans and plenty of stock options and all of that.

And so I took a brief stint for about a year and a half and was in Charlottesville, Virginia. Unfortunately, the bubble burst while we were there. Student loans remained and salary stopped. So I found myself coming back to Vegas and was back in civil litigation and thought the opportunity to get back into gaming would be difficult, especially on the legal side. It's a small club and sometimes once you're out, it's hard to get back in. But I got a call from a recruiter asking me if I knew anybody interested in becoming in-house counsel for one of the largest gaming manufacturers in the world, and from there, it led to an interview with Aristocrat. And I started with Aristocrat in March of 2002.

And at that time, Aristocrat had just recently purchased Casino Data Systems. It was dabbling in the US, but that purchase of Casino Data Systems was really its main entree into the market. And while there I had the privilege of doing a lot of transactional work, I spent a lot of time in Latin America working on some of their Latin American businesses, and that was just a fantastic experience. I got to spend some time in Australia and travel in different parts throughout the world.

Toward the end of my time at Aristocrat, Aristocrat did a transaction with a company called Mikohn Gaming, and the deal was that Mikohn would put its content onto the Aristocrat, I think it was the Mark V or Mark VI platform at the time, and I had the privilege of negotiating that deal primarily with Mike Dreitzer. And we knew each other. I had friends that worked at the Attorney General's office when he did, and we were in their fantasy football and baseball league. We didn't know each other well, but we knew each other. But that transaction, we spent months working on that and I think really hit it off. And after that transaction closed, Mike had asked me if I would be interested in leaving Aristocrat and joining Mikohn in a really unique role. It was a business development role geared toward licensing Mikohn's intellectual property. They had a really substantial IP portfolio and were looking to find ways to monetize it.

And I told him I didn't know what that meant. I didn't understand what he was saying, and I recommended a couple of other people to him, but he was persistent, and eventually I started at Mikohn in 2004, I believe it was, and that was just a great job. I got to travel all over the place. I spent time in Russia and Germany, throughout Europe, looking at ways to license content. And eventually the company changed its name to Progressive Gaming International Corporation. Mike decided to leave, and that opened to the opportunity. He had recommended I be considered to take the general counsel position. So he left, and I think it was within about 60 days we got a letter from the SEC saying that they were opening some sort of major investigation into Mikohn, and then I got a notice of order to show cause from Nevada Gaming saying that they were also doing some investigations into Mikohn.

So I called Mike, gave him a few choice words for leaving me in that position, but ultimately, we cleared all of those concerns, and it was a really tremendous learning experience. I was 36 general counsel of a publicly traded company that had various challenges from previous management that gave me an opportunity to deal with some really complex and exciting legal issues. And also during that time, we negotiated the sale of our table game business to Shuffle Master, and so that gave me an opportunity to work closely with some of the folks at Shuffle Master, David Lopez in particular, who was in charge of product management at that time. And that was when David and I first started to work with each other and develop a friendship.

Progressive Gaming eventually filed for bankruptcy. This was right at the time of the global recession that hit. We had a major contract with a Canadian customer. The Canadian customer ran into some financial difficulties, weren't able to pay some of the bills that they had to Progressive Gaming. Progressive Gaming had gone through a really interesting refinancing of its debt with a hedge fund, and... This is the stuff of Hollywood movies. Apparently, the hedge fund manager was actually running a Ponzi scheme. Now, because of the global recession, this didn't really hit big news, but what happened is the Canadian customer didn't pay Progressive Gaming. As a result, Progressive Gaming didn't meet some of its cash mandates in the debt structure, and so the hedge fund immediately called all of the debt due.

And it was interesting because behind the hedge fund was IGT. So we had two debt holders, this hedge fund and IGT as secondary position, and when the hedge fund manager basically called the debt, IGT was like, "Well, we don't want you to do that." And so IGT ended up coming in and buying the assets, but six months after that whole debacle, the leader of the hedge fund was found assassinated on his front lawn in Beverly Hills.

I recall this story. It was told to me by Terry Oliver, and I remember Terry Oliver had met this guy early on and he said, "That guy's going to end up either dead or in prison." Something along those lines. But yeah, what was his background? He was some Asian guy or something?

Yeah, he ran a company called PEM, P-E-M. And yeah, this was his foray into gaming. And my understanding is, and this could be incorrect, but is that the Ponzi scheme was involving life insurance policies of people in Asia, and when we couldn't meet our cash covenants and failed to make a payment, that seemed to knock down the first card in the house of cards, and it eventually caught up with him.

Wow. Crazy.

Yeah. So when that happened, well, when Progressive Gaming had gone into bankruptcy, I left PGIC, started my own practice, basically had a solo practice, and the concept was sort of an outside general counsel to smaller companies that really weren't in a position to have an in-house general counsel and pay for that, sort of like a fractional general counsel, and did that for a little while. And Mike Dreitzer was one of my main clients when he was at G3, Global Gaming Group. And from there, I briefly joined a law firm here in Vegas that was looking to get into gaming. That didn't work out the way either of us had planned. And Aruze had recruited me. And they originally brought me in as I think vice president of business development, and the responsibility was to help Aruze get down into Latin America, and because of my previous Latin America experience with Aristocrat, it was sort of a natural fit.

And after being there for about a year, the general counsel that prior to me decided to move on to another organization, and I was asked to step in and continue the business development responsibilities, but to step in and be the general counsel and head of compliance and HR and things like that. At the time, I want to say Aruze, we had maybe 35, less than 50 employees, and were probably shipping less than 50 machines a month. And the company was really looking to broaden its reach throughout the US. Right around the time that I became general counsel, so this was early in 2012, the owner of Aruze, Mr. Okada, he got started in some serious litigation with Steve Wynn. Mr. Okada, through his other companies, had made some serious investments into the Wynn Resorts, both here in the US and in Macau. And between Mr. Okada and Mr. Wynn, there was protracted litigation, which created a really interesting experience at Aruze.

So Aruze had no involvement other than its owner was involved in this litigation and the Wynn organization had made some pretty serious allegations against Mr. Okada alleging bribery in the Philippines as it related to his venture to create a mega resort in the Philippines. And so that gave me a really interesting perspective on dealing with challenging licensing requirements throughout the US. And we were very fortunate to be quite successful. We got new licenses in Pennsylvania and Mississippi and temporary waivers in New Jersey. And so Aruze's business really continued to thrive. We were doing quite well, had an excellent studio in Japan and the Philippines, and they created just some really good games.

So I was with Aruze for about 11 years, varying levels of responsibility, and in late 2018, around G2E of 2018, I had been asked to step into the role of president of the Americas. So I continued to have global legal and compliance responsibilities, but was president of the US operation. And I think in 2019, that was probably our best year. Games were really performing. Aruze was doing quite well. 2020 was looking promising, and then of course we had COVID, and so that gave me some really interesting management experience of leading the company through the COVID era.

And ultimately, some of Mr. Okada's legal issues caught up with him. A firm that had been retained to represent him in the litigation with Wynn ultimately pursued him for payment of legal bills in the area of about $50 million. They were a great clever law firm, they found a way to go after Mr. Okada through Aruze. Because Aruze had debt from Mr. Okada, they were able to basically convince a judge here in Nevada to allow them to step in as the holder of the debt in place of Mr. Okada, and instead of work out some sort of payment structure, they foreclosed on the debt, which ultimately led to Aruze going into bankruptcy. It just so happens that my resignation coincided with the filing of bankruptcy in a matter of days, but I had been in discussions with David Lopez for months and months to leave Aruze to join AGS.

And so in January of '23, I had the great privilege of joining AGS initially as chief legal officer, but that expanded to chief business and legal officer, which essentially meant that I, in addition to legal and compliance, had taken over responsibility for managing the operations team, production facilities, things like that. Also had responsibility for managing the iGaming business and the international business for AGS. So a varied background that has given me the opportunity to experience a whole lot of things throughout the world and on the manufacturing side.

Yeah, we had Mike Dreitzer on, I want to say it was three, four months ago. So a lot of legal firepower that we've spoken to. I'm just curious, with him as your predecessor, both of you having a strong legal background and experience, has that given Gaming Arts any kind of competitive advantage or has it allowed you to differentiate in terms of when it comes to product approvals, regulatory approvals, transaction approvals? It's something that seems like it would be in your DNA at this point.

Yeah, Dan, that's a great question. I think actually it does in this very unique situation as it relates to being a wholly owned subsidiary of Merkur, and what I mean by that is, so Merkur has a unique ownership structure. The founder, Paul Gauselmann, I'm not sure how long ago, but he created what's called a family foundation, which is a corporate structure that here in the US we don't know anything about, we don't really understand it. And when I say we, meaning some regulators as we're going through the licensing process. And I think Mike, as my predecessor and me coming in before the transaction had finally closed, us having an understanding generally of the licensing process and dealing with regulators and understanding that it's a symbiotic relationship between business and regulators. Regulators exist because there's a business and the businesses exist because regulators allow it.

I mean, interestingly, what we do in the gaming world globally is illegal. The only way that we're allowed to do what we do in a legal aspect, plenty of people do it in an illegal aspect, but the way we do it is because regulations exist. And so I think between Mike and myself and of course, many other gaming attorneys in the industry, but particularly as it relates to being in Gaming Arts and working with America is our experience in dealing with that licensing process, understanding the corporate structures and knowing how to translate that so regulators understand it has been particularly useful, yeah.

Great. And Rob, where do you stand now with licensure? And how many jurisdictions is Gaming Arts now licensed?

So we have roughly 150 licenses. Most of those of course are tribal. We are pursuing licensure in Pennsylvania and New Jersey. We have not started in Illinois, but we have most of the majors. We're throughout California and Oklahoma and Florida and Arizona and New Mexico. I think we have more licenses than we have product in those places.

Yeah. Yeah, gotcha. Okay. Well, now we last touched base with Gaming Arts in 2024, and you mentioned Merkur there. And so it was, I guess, a year after we spoke with Gaming Arts, then Nevada approved the merger and got a Merkur Nevada distribution manufacturing license. So can you walk us through that transition? Because it's two very different companies, very different pedigrees. So can you walk us through how that transition has gone and the cultural changes and things that you're seeing?

Absolutely. I got here in July, so I got here just after the Nevada approval and there was still the Louisiana approval needed to get done. So the closing didn't actually take place until mid-September. But I can tell you the transaction process, though somewhat challenging from a regulatory standpoint as it relates to the two very different companies, it's been really fantastic. I think it's interesting that the transaction takes place at around the same time that Mike Dreitzer is moving on to be chairman of the control board. And though Mike and I have known each other for decades and have a lot in common, I think we're also very different. And so Mike did a miraculous job of keeping Gaming Arts alive during a period where the transaction was pending.

I think the deal had originally been announced two years, almost two years before the closing happened, and my understanding is during that time, Merkur couldn't fund the organization. Gaming Arts had, I think, struggled to get a really good product out onto the floor. The cash situation was rough. The previous owner, I think, had gotten to a point where he didn't want to really keep funding the organization, and so I think Gaming Arts found itself in a place where I want to say it lost maybe 40% of its workforce. People were leaving, pay was cut for a period of time. So it was a hard time. And I tell Mike all the time, "It's miraculous how you kept this organization afloat while the transaction was pending."

Upon closure, Merkur was able to step in and really start providing some significant financial support. I don't know if you've noticed on LinkedIn, but we've been doing a fair amount of hiring at Gaming Arts. When I got here, I think we had 64 employees. We're just over a hundred now, and that's in a period of a year. And most of that hiring has been on the R&D side. We have massively grown our game development team. Our chief product officer, a gentleman named Greg Colella, he started about a year before I did. I don't know how Gaming Arts landed him, but it was, in my opinion, kind of a coup. Greg's been around the industry for quite some time. He's got a strong pedigree in his history of product management and game development. He's worked on arguably some of the best titles that are out in the industry.

Interestingly, Rob, Greg and I, we started at roughly the same time in product management at Mikohn, actually.

Wow.

Yeah, yeah.

Yeah, that's great. Well, he's remarkable. It's funny, when I got here, I made an effort to... I wanted to meet every employee. I spent at least an hour individually with every employee, and in particular, in talking to some of the engineers, I mean, I asked, "Why are you still here? What is it about Gaming Arts that has kept you here?" And they're all very excited about being part of an organization that comes from almost nothing to putting out great titles. And so the next question is, "Well, how come we didn't have great titles before, and what makes you think we're going to have great titles... No offense, but you're the same engineer." And the answer really is that the direction that Greg is bringing and the freedom that he is giving these engineers to create is the answer. And so what we're seeing, I think Greg is now almost on two years of being here, and the transition really is remarkable under his leadership.

We have games that have consistently hit the Eilers reports as showing his top 25, top 10 games. We're performing generally at around house average or better. And the roadmap is robust. So Wild Temple has been performing, it's probably one of Gaming Arts' best-performing titles in its history, and we've got, I want to say we have 14, 15 new titles that are coming out this year. I think six or seven of them have already been released. New platform upgrades that are giving us greater capabilities to run multi-screen features, the progressive jackpots. I mean, there's so much that we're putting out in the market that Gaming Arts has never done. When I started, one of the things Greg said is, "My goal is that..." This was before G2E last year. "My goal is that at G2E, our customers come into the booth and have to look back outside the booth and look up at the sign to make sure they're standing in the Gaming Arts booth." He said, "I want people to say, 'Is this really Gaming Arts?'" And that's what's been happening.

But to go back to the main question, as far as culturally, the transition with Merkur, it's remarkable. They're some of the smartest people I've dealt with, and I like to say that they have been appropriately humbled in coming into the US market, and what I mean by that is they made a move into the US market, I think around 2016. They developed a studio, I think it was primarily in Florida, and we're looking to bring some of their content into the US market, and it didn't work. And in part of my discussions when Merkur and I were considering whether I was going to join, one of the things I talked to them about is what is your expectation as to the involvement of Merkur in Gaming Arts? And the answer was, and the behavior has been true to this, that they wanted to buy a US company with US talent that understood the US market because they didn't.

They certainly know gaming. I mean, they own a bunch of casinos throughout the world and they have been producing successful product in what we all consider international markets, but they recognize this is a different market. And so the relationship is such that they're supportive, they're happy to be learning about the industry. They're not completely ignorant to it. Certainly they bring us a great level of knowledge and expertise that is helpful for us to grow the market, but it's really collaborative. And this is the third foreign-owned company I've worked for, and I will say it's the best experience I've had. We were talking before this started. We had some folks from Germany. My boss was in town last week, and it's thrilling to spend time with people that are so excited about the industry and so fascinated by our market and excited to be in it. So it's been for me, and I think for anybody at Gaming Arts that you would ask, it's a fantastic... The transition was difficult and the experience since then has been really, really great.

What you say really resonates, and I remember coming through your showroom right before G2E last year, and I was struck and I made a very similar comment to your team that for the first time walking in your showroom, I felt like you all had arrived and you looked at the hardware and it was true modern hardware, the first time ever really computed, and if I had gone back a year or two years, that was not the case from a hardware standpoint, from a signage standpoint, artistic standpoint, gameplay standpoint. So yeah, kudos to you all. It's a great evolution to see.

Thank you. Well, all the credit to Greg and his team. Jason Kremer is our VP of engineering. He's got a group of 20 or so people working under him. We've got 10 artists here. We've just developed a studio in Australia built around a gentleman named Sec Young who's been in the industry for a little while and also has put out some of the highest-performing games in the marketplace. We've got now, I think as of this week, 10 people in our Australia studio. I said on my first day when I came in to Gaming Arts and I met the team, I said, "Look, I'm not a game developer. I don't pretend to know anything about it. My job is to help build an organization that can support demand that is going to come from our development team putting out product that customers want and players want to play, and so far they're doing that. So thank you for that." I'll pass along the kudos and I think it's well deserved.

Yeah. And going back to one of the things you said there about, well, when Gaming Arts was getting a bit of financial trouble and the investor was not wanting to plow additional capital. So I think Gaming Arts is 17 years old. Do I have that right, Rob?

I think so. It was founded, yeah-

2009?

I think it was founded originally 2009.

Okay. Okay. And it was really... I mean, well, it's the younger of the American manufacturers and certainly one that just came from bootstrapping, just startup from the core. Now, since that time, just say the tail end of the naughties there, a lot has changed in the industry. I think some big things in terms of a startup would be, first of all, the capital required to get some of this stuff off the ground now. I mean, just in the cabinets alone, and you guys are in slouches on that, I mean, just the moldings, you have a couple million bucks in moldings. And then what's really changed is the data landscape. So we have all this performance reporting now that comes out, and we show it's increasingly dominated by four companies. So with all this kind of stuff that's happened, I mean, do you think that we've really crossed that point where just building a classic startup for slot machine manufacturer, do you think we're just beyond that? It's not possible anymore?

Nick, it's such a good question. The easy answer is yes, it can't happen, but as I think about the question, it's like, okay, if I were tasked with coming up with a plan to say, how do we try it? I suppose it's possible, but it's not as likely as it would've been 30 years ago. And the way I could see it being possible is you don't have to design your own cabinet in-house. You can go to some third-parties that could give you a good cabinet. And the low-hanging fruit for a startup, I would say, is you don't start in Nevada. You don't start on the Strip. That's the hardest place to prove your performance. So maybe you can get some placements.

I mean, look, in my experience dealing with the tribal nations as customers, I'd rather refer to them as partners. I find the culture generally... I mean, I hate to generalize because there are so many different tribes and certainly they're not all the same, but I have found generally dealing in the tribal world very high integrity, and there is sort of this, I think, connection to the underdog. And in every customer I've spoken to in the tribal nations, there is this sentiment of we want some smaller manufacturers on our floor and trying to challenge some of the bigger players and we're supportive. Look, you think about it, like I said, our best performing game, Wild Temple. Now it has sat for more than a year on... Let's say we have less than 200 of those out there. It sits somewhere between 0.8 and maybe on its best day, 1.5 of house average. Arguably, no casino should put that on the floor. You've got games that significantly outperform it.

And when you think about how much we spend at Gaming Arts on our entire R&D budget versus any of the top four, it's not even... Our entire R&D budget doesn't cover half of one studio in one of those companies, and yet we find ways to put some product out and it's only because our customers support it. So again, the easy answer is yeah, there's no way. You've got all this private equity money that is in here. I don't know exactly what the top four spend on their R&D budgets, but it's in the hundreds of millions of dollars. And we're just over... We're maybe 15 million.

It's funny you mention. Well, Dan Marks, who we had on from Aristocrat, also an attorney originally. So Gimmie Games is employing 200 people, just a single studio, yeah. So it's a hell of a challenge to outdo those cats, yeah.

Yeah, but look, to answer the question though, even in the bootstrap, you got to have tens of millions. And then going out and hiring the talent, it's tens of millions. And the licensing side alone is even going just through the... If you start in some of the smaller jurisdictions, it's hundreds of thousands of dollars and it takes at least three months, sometimes more than a year to get through. So yeah, the easy answer to your question is near impossible to pull off.

Yeah, it's pretty much short of institutional funding these days, you're not going to make it happen. It's just kind of the way it's gone.

Yeah. Rob, I wanted to ask you about one of your partnerships, third-party partnerships that you've been public about that I think is just fascinating. So correct me if I get into this wrong, but you all have been, if not the first, one of the first to be public in terms of being at the forefront of the intersection of online and land-based gaming, and you all announced a year or 18 months ago or so, partnership with Evolution, a huge online operator to bring Divine Fortunes and I think some of their other content or content at least that they have access to brick and mortar US casinos. And in my mind, it's incredible. I know the listeners are very interested in this. It's also a bit of a risk because you never know exactly how online content is going to translate. Can you talk us through that partnership and how you see this initiative playing out and maybe where you see the industry evolving when it comes to similar, whether you call them multichannel, omnichannel initiatives, blurring the lines between online and brick and mortar?

Absolutely. And Dan, I love the question because it is a unique approach. I believe that Mike Dreitzer started down this path, like you said, maybe 18 months ago or so, sometime before he left, and Greg, of course, has really picked up the ball and run with it. And I want to mention this, one of the customers that we dealt with, one of our Canadian customers when we were talking about this, we have usurped the name he gave it, but he calls it click-to-brick, and I love it, because prior to us doing this, it was really brick-to-click. Take your best performing land-based games, try them online.

And Mike might correct me on this, but my understanding of the concept really was at the time we had 20 people in all of our product development team, some great talent. But the concept being, well, is there a way that we can go to some of these online companies and convince them to let us have the rights to develop some of their best performing online games? They're not in the land-based world. Let us develop some of those best-performing online games for land-based. And to be clear, we're not taking... The game as it plays online is not exactly what it looks like when we put it in the casino, and that's important because it's a totally different form factor looking on your phone, your iPad, your tablet, your computer, whatever, and looking on this box that we invest a lot of money into. You've got a lot more real estate and a lot more opportunity to change the level of entertainment that's provided to the player.

And so Greg has worked very closely with Evolution. We also work with Blueprint, Inspired, I think is something we recently announced, and White Hat to take their titles. I think we've done two titles from each of those, and I think maybe two more coming from Evolution. And we have continued discussions with Blueprint and White Hat, of course. And the idea being these are titles that have performed at the top levels in the online world. And so arguably there's something there. And our team, I think, has done a really great job of taking that something and translating it for a land-based experience. And so far, we've been really pleased. As a small company, like I said, we haven't shipped a ton of boxes, but we start with a handful of placements in some select properties, and so far, performance has been quite good and customers have been very happy with it.

And it's interesting because I think there's... Look, in my experience, the online world and the land-based world, though the fundamentals that it's gaming are there, it's a very different world. The players are different, the experience is different, but I think we all expect there is some convergence where, at least in the US, you can only play online gaming where land-based gaming exists, and so there is some likelihood of overlap of this. So the idea that we are offering something that they've likely seen at the top of their homepage in many of the online casinos, it just stands to reason it's more likely than not there will be some attraction to see a familiar game. And then, like I said, our team, I think, has done a great job of staying true to the feel of the game, but adding features that the land-based players expect and adding that to different volatility, there's different RTP in those games, but fundamentally at its core, what they're seeing is recognizable.

Yeah, it's fascinating. And I know some of the forward-thinking operators are thinking about how to create partnerships between land-based and third-parties and online. So I'll be fascinated to see... This is even more interesting because a three-legged partnership between you potentially an operator and Evo or White Hat. So it'll be fascinating to see whether it's an MGM or a Caesars in New Jersey or an MGM in Detroit, how this evolves in terms of figuring out how to really activate that player and making that experience at MGM Detroit or Borgata or somewhere else seamless to the online experience. So keeping an eye on it.

We've got a little bit of cart before the horse in that we're not in Pennsylvania. During the licensing process, we stepped out of New Jersey and are just now getting back in to get temporary waivers to get back into New Jersey. We weren't in Michigan, have now just gotten early approvals to get into Michigan. So our customers who are in the online world have been excited knowing that we have these products and it's a different, they call it omnichannel, but it's sort of a different approach than most have taken, which is the land-based to online. But Yeah, we're really excited about it and I really appreciate you bringing it up because I think it's one of those places where surprisingly, this little company that has not been remarkable in its history other than a few flashes of some really interesting stuff is sort of pioneering what is a pretty creative approach.

For sure. For sure. Okay. Well, guys, I see we're getting close here to the top of the hour. So I wanted to ask, Rob, do you have any upcoming events or initiatives or anything that you wanted to plug before we jump off the line here today?

Well, thank you. I'd like to say we've got a tour bus heading around the country and can't wait to be in your town or do something like Game On like AGS has done in the past, but we don't quite have those resources yet. But what I will highlight is we will definitely be at G2E in our partnership with Merkur, or our owners, Merkur, have a fantastic booth there, and we're excited to-

It's about half the G2E floor as I recall.

Exactly. I mean, they are one of the larger companies in the world without having been successful in the US yet. So I think they're entitled to have the floor space. So no major events coming other than G2E where I can promise you we've got some really interesting stuff that has not been seen in the marketplace yet that we're going to be debuting. And I'll highlight that Spintec is the ETG company that Merkur has recently invested in. They will also, like they did last year, they'll have space in the booth. We at Gaming Arts are working closely with them to see how we can partner to help them accelerate their distribution throughout the US. They've been working with a company out of Oklahoma called Dynamic Gaming Solutions that has distributed their product in a number of markets, and I think quite successfully gotten their product on the floor in many casinos throughout Oklahoma and beyond.

And the product's doing great. I have a long history in ETGs from back at Mikohn where we had, what was it, is it TableMAX? I think was one of the early ETGs with... I think Shuffle had Tablemaster. And then of course at Aruze, we had ETGs. So I have a real love for that product and I'm excited about what role Gaming Arts might be able to play in helping Spintec get its product out into the US. And then the other thing I'll mention to highlight is Gaming Arts has its foundation as a keno and bingo company, and we are, I would say, market leaders in the keno world. Our bingo products are really interesting in that we don't have a bingo system, but we provide basically what are like side bets on bingo products that are throughout the country. And we're continuing to make investments into that world. That is very much a foundation for Gaming Arts. So I'm excited for us to debut some stuff at G2E and those product lines as well.

Excellent. Okay, great. Well, gents, thank you so much for joining today. Rob, really appreciate you taking out an hour to sit with us today.

It was a real treat. Thank you.

Yeah, you bet. And well, we will certainly be seeing you in Las Vegas for G2E, no doubt about it.

Thank you.

All right. Very good. Well, thanks so much, gentlemen.