Since slot routes have been in the news again, due to the Herbst Gaming prepackaged bankrupcty, we've received several requests, such as this one, for an explanation of Herbst's slot-route business. We've answered this a couple times in the past five or so years, but for everyone who missed those QoDs, here it is again.
A slot route can be compared to a vending-machine route: The operator places machines in various businesses, then services them, collects the money, and shares the proceeds with the host businesses; on a slot machine route, the operator also pays off jackpots.
In Nevada, slot-route operators provide slot and video poker machines for non-casino businesses, such as supermarkets, convenience stores, bars and taverns, laundromats, gas stations and car washes, and the like.
Slot-route operators are licensed like casinos by the Nevada Gaming Commission, but generally speaking, they service locations with 15 or fewer gambling machines (the number of machines in each location is restricted by the regulators). Herbst Gaming, for example, services more than 6,000 machines at more than 600 Nevada grocery stores, gas stations, bars, convenience stores, and small casinos. Do the math and you wind up with roughly 10 machines at each location.
Here's a marketing blurb from one slot-route operator that will give you an idea of how they see themselves. "XXX provides customized finance and leasing solutions and route operations to the casino and gaming industry in the United States. We specialize in customized participation, space lease, and maintenance packages, with development plans, incentives, and marketing."
And here's a testimonial from a tavern operator for his slot-route operator, which also runs a player-benefit program. "I was provided with IGT Game Kings, a new cash dispenser, new progressive signage, improved game and program set-ups, and a new player-reward system. Since the installation of my machines and reward system, my coin-in is up considerably, my gross drops have increased by 35%, and my net win per day has risen from $80 to $134 per machine."
