Supply chain issues snarling slot machines’ path to casinos

June 20, 2022 World Industry Updates

When the books are closed for 2022, Nevada’s gaming equipment suppliers expect to have delivered more than 13,700 new slot machines to roughly 30 North American gaming projects, including new casino properties and expansions to existing casino floors.

But only if the supply chain cooperates.

In the past few months, casino operators and gaming equipment providers have gone from quietly discussing ways to manage product delays to openly addressing an issue that could alter multi-million-dollar casino openings.

Gaming equipment providers use high-tech components supplied by multiple vendors to assemble slot machines. Gaming analysts said much of the recent attention has focused on bill validators, a device attached to games that accept either currency or a ticket voucher, which are then converted into gambling credits.

Manufacturers of the bill validators use microchips, also referred to as semiconductors, to manage the automated transaction technology. The industry is centered in Asia and supply chain issues – including transporting the devices across the Pacific Ocean and into the hands of slot machine manufacturers – have been a challenge.

“Everyone is trying to figure out a workaround,” said Eilers & Krejcik Gaming Partner Todd Eilers.

Truist Securities gaming analyst Barry Jonas told investors in mid-May that JCM Global, a Japan-based provider of more than half of the bill validators used by the slot machine industry, “has seen sizeable chip shortages impact its business, which we think could have wider implications for the manufacturer’s pipeline this year.”

JCM Senior Vice President David Kubajak said the company, which has its U.S. headquarters in Las Vegas, “is being affected by supply chain challenges.” He said JCM, which is publicly listed on the Tokyo Stock Exchange, is facing the same headwinds as similar businesses dependent on the global semiconductor industry.