Bally Investor Presentation
March 2011
Safe Harbor Statement
Certain statements that may be made today will be considered “forward
looking” as that term is defined under the rules of the Securities and
Exchange Commission (“SEC”), and are therefore subject to the safe harbor
created by such rules. Although the Company believes the expectations
reflected in any forward looking information and statements are reasonable,
such forward looking information and statements involve risks and
uncertainties that could lead actual results to differ from those contained in
today‟s presentation materials and discussion. The general factors
impacting future results are discussed in detail in the Company‟s SEC
filings. The forward looking information and statements in this presentation
speak only as of the date hereof and the Company undertakes no obligation
to update the information contained in this report unless required by law.
Bally Technologies, Inc. (NYSE: BYI)
2
What We Will Discuss Today
Overview
Strategy
Financial Momentum
Gaming Products
Casino Systems
Market Opportunities
Why Invest in Bally?
3
Company Overview
% LTM
Gross Profit
25%
45%
4
30%
North American Gaming Industry Overview
Equipment Suppliers
Casino Operators
Significant barriers to entry
Slots are the highest ROI investments for
casinos
Spend on slot machines is insignificant
compared to casino infrastructure costs
Only three large competitors
Strong free cash flow
Large installed base of recurring revenue units
Depreciable life: 5-7 years
Replacement cycle created by
Sample Product
obsolescence, technology improvements
&Offerings
competition
and pent-up demand
Sample Product Offerings
Ability to increase prices annually
Continued raw material input price declines
5
Systems
27%
More than 900 casinos in North America with ≈ 960,000+
gaming devices, including over 425 tribal casinos
Legal in 40 states in the continental U.S.
Las Vegas Strip represents only 6% of the installed base
of slot machines in North America
Jurisdictional expansions typically result from a weak
economy and rising budget deficits
Fragmented industry – top five operators control only
18% of slots
Deemed an acceptable form of entertainment by more
than 80% of Americans
Favorable demographics – median income 15% above
Product Offerings
nationalSample
average
and average age of 47
Highly regulated industry with significant barriers to entry
U.S. market is not saturated when compared to many
other countries
Bally Competitive Advantages
Accelerating Innovation
Systems Leader
Dominant provider of systems
135 new titles released at 2010 G2E
Share gains with new Windows-based system
Won more Gaming & Technology awards than
anyone else at G2E – 2 years running
Convergence of systems with games
Won „Best Gaming Technology Manufacturer‟
Hardware Innovation
Award at 2010 IGE London show
iDeck™
Robust systems product pipeline
New Pro Series™ Cabinets
India Development Centers
V32 Cabinet Global Success
$45 million of annual savings
Marquee Games
Cash Spin
Hot Shot
Cash Wizard
Vegas Hits
Speed, quality, 24x7
Strong Balance Sheet and Cash Flow
0.7x gross leverage
Quick Hit
Blazing 7s
Under-Represented on Casino Floors
Ample liquidity to drive shareholder value
North America (≈13% penetration)
Increasing cash flow
Underpenetrated in gaming operations
Stable, Experienced Management Team
International (only 19% of LTM revenue)
Video (70%+ of recent orders)
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Research and Development
Added 50% more game studios in the
past 18 months!
Single game technology platform
Reorganized development teams and
processes
India Centers
o Bally employees
o Bangalore and Chennai
o Cost, speed, and quality
Approximately half of total employees
concentrate on R&D
11% of LTM revenue
Customer focused!
Result = Innovation Explosion!
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Save $45M+
Annually!
Employees dedicated to R&D
2010 G2E Innovation Acceleration!
1. 135 New Game Titles at 2010 G2E
2. Pro Series Cabinets & ALPHA 2™
3. Wheels
Bally Leads G2E
• Hot Spin™ with U-Spin™
Innovation Awards
• Vegas Hits™
AGAIN!
• Cash Wizard™
4. WAPS
• Betty Boop’s Love Meter™
• Golden Pharaoh™ and Money Vault™
5. iDeck
6. Elite Bonusing Suite™
• DM Wheel
• iVIEW Wizard
• Tournaments
7. Bally App™
8. Bally TV™
9. Bally Command Center™
10. Private Innovation Lab
–
Please visit BallyTech.com for video clips on several new Bally games and systems innovations
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Award-Winning Innovation
Industry Experts and Independent Judges Vote for Bally’s Innovation
2011 Gaming & Technology Awards:
•1st Place: iDeck™
•1st Place: Elite Bonusing Suite™
with iVIEW DM™
•3rd Place: Hot Spin™
2010 Hospitality Operations
Technology Awards:
•1st Place: Elite Bonusing Suite™
with iVIEW DM™
9
Gaming Equipment Sales
Market Share vs. Recent New
Opening Ship Share Trends
≈ 13%
Bally
16
- 22%
Bally
Market
Share
Ship
Share
1H 11 Highlights
New unit ASP increased by 7% to $15,244
International units represented 32% of total units
Innovation Leader
New Pro Series cabinets
New ALPHA 2 operating system and games
135 new titles for 2010 G2E
V32 video slots
Spinning reel – 5 and 7-reel, 3-in-1 stepper
Future Opportunities
Rebound in the replacement market; ship-share gains
Gross margin expansion
Incremental conversion kit sales
International growth – penetrate more markets
Classics replacements – 50 new titles to target ≈ 50,000
units in the field
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Gaming Equipment Innovation
During 2011, Bally will release 125 new titles for its new Pro Series Cabinets – video and
spinning reel and its highly successful V32 cabinets.
V32 Cabinets
Pro Series Video Slots
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Spinning Reel Slots
ALPHA 2 OS, Pro Series Cabinets & iDeckTM
Upright
Slant
Spinning Reel
ALPHA 2 Operating System
Dual-core processor ; 4GB RAM; & 1GB Video Card
Enhanced multimedia experience – streaming video
10x as fast as ALPHA
Four screen full HD graphics
Backwards compatible with ALPHA games
New Pro Series Cabinets
Audiophile-quality, 4 speaker custom sound
Vivid dual hi-def widescreen displays
Better accessibility for on-floor servicing
Combo bill acceptor & ticket printer
Modular design
Network and server-based gaming ready
Backwards compatible with ALPHA games
iDeckTM
iDeckTM
Fully downloadable multi-touch screen button deck
Synchronized touch features, multi-touch
Skill based gaming apps
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Fixed vs. Variable Fee Games
Gaming Operations
1H 11 Highlights
42%
58%
First-half record revenues of $156 million
Gross margin of 71%
Increased in the average win per day in linked progressives,
rental & daily-fee and video lottery
Future Opportunities
Fixed Fee
Variable Fee
Grow installed base of recent releases:
Cash Spin™, Spinning Wheels, Dual Vision™, Digital Tower
Series™, Vegas Hits™
New upcoming releases:
Blazing Hot Tournament, Cash Wizard™, Blazing Hot Double
Jackpot™ , Hot Spin™
New WAPs:
Betty Boop’s Love Meter™, Money Vault
Continued market share gains
New markets
13
Gaming Operations Innovation
In 2011, Bally will release several new gaming operations games including WAP’s, games
with U-Spin Feature, Wheels and additional Digital Tower SeriesTM.
New Games
with U-Spin
New Wheels
New WAPS
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New Digital
Tower SeriesTM
Systems
1H 11 Highlights
Maintenance Revenues
$65.0
$70
($ in millions)
$65
$58.0
$60
$51.2
$55
$50
$41.8
$45
$40
$63.0
$34.3
$35
$30
FY07
FY08
FY09
FY10
Gross Margin
73%
FY11E
Future Opportunities
Elite Bonusing Suite™
iVIEW DM™, CoolSign® Media Management, Bally
Command Center™ & other server-based initiatives
SDS for Windows® – newer market segment
Further penetrate existing customer base with new
products such as Business Intelligence ™
Higher maintenance and service revenues
69%
1H10
Grew gross margin to 73% from 69%
Grew maintenance revenues by 13% to a record $32
million
New systems contracts with marquee customers –
competitive replacements and new casinos
Win / loss ratio continues to improve
1H11
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Overview of Bally’s Systems Business
New
Products
Core Slot-Monitoring
Systems




Real-time monitoring of slots and tools to
collect and manage data
≈ $2,000 per machine
Works in Windows, Linux and UNIX
environments
Target market is new casinos and
competitive replacements at existing
casinos



Maintenance
and Services
Suite of products designed to improve
the players‟ experience, player marketing
and the casinos‟ data intelligence
Products include iVIEW, iVIEW DM,
Business Intelligence, CoolSign, Elite
Bonusing Suite, Bally TV, Biometrics,
Bally App
Sell to Bally‟s existing systems
customers and new installs
5-7 YEAR FUTURE REVENUE DRIVERS
# OF GAMES


Maintenance revenues approximate
≈20% of the initial cost of all software
sold payable annually
Bally also offers services to customers
which includes basic product servicing
and customization of software to fit
specific needs
$ PER GAME
$ POTENTIAL
OVER 5-7 YEARS
Current Customers to Sell New Products
420K
~ $2,500
$1,050M
Market Share Gains (competitive replacements)
120K
~ 3,500
420M
70K
~ 3,500
245M
New Casinos (50% share)
PER ANNUM
Increased Maintenance
$5-10M
Increased Services
$5-10M
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Systems Leadership
28 of the 46 largest casinos in the World (3,000+ slots) select Bally Systems!
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Server-Based Gaming
Bally has a full suite of products designed to take advantage of all aspects of server-based
gaming on today’s floors and on the floors of the future.
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iVIEW Player Communication Network
Bally’s Player Communication Network provides server based gaming benefits without
requiring customers to replace their existing floors.









Picture in picture
Multiple screens or separate screen
Backward compatible
Customized marketing at the point of play
Second ways to win
New transactions & experiences
Improved service
Inventory polling & interrogation
Integration with CoolSign and top boxes
GLI approved to work on five
different manufacturers’
existing games!
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•
•
•
•
Progressives
Tournaments
Celebrations
Advertising
•
•
•
•
•
•
Rewards
Services
Banking
2nd chances to win
Mapping
Bonusing
Floor-Wide Elite Bonusing SuiteTM
Bally’s floor-wide Elite Bonusing SuiteTM delivers truly remarkable and new ways to excite
and reward players across the casino floor on iVIEWTM, iVIEW DMTM and CoolSign®.






Automated, strengthened and
personalized promotions for players
Real-time marketing
Floor-wide bonusing
Second chance to win
Slot tournaments
Instant rewards
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Systems Products and Apps – Core to Cool
Bally Apps lets casinos stay connected with players 24/7 through web based apps designed for smart
phones to communicate promotions and events and download sample games such as Cash Spin
Allows casinos to personalize their promotions on iVIEW & DM and Cool Sign including floor-wide
bonusing with U-Spin bonusing, power winners, flex rewards, and tournaments etc. to target key players
Infrared scanning technology which can identify players and employees at the slot for anonymous
comping, responsible gaming, employee monitoring and other functions
Allows casinos to take control of all digital media outlets, in-room TV‟s, interactive kiosk‟s and signage
throughout the casino for promotions, advertising, employee communication & training
Cool!
Enables casinos to update multiple devices and download and configure content on a slot machine from
a central location for yield management and other tools for floor optimization, tournaments etc.
Functions as a universal translator amongst multiple different system interfaces – slot, hotel
management, F&B etc and allows for open and scalable universal translation and communication
Applications for casinos to analyze and visualize the extensive data gathered on the floor to improve
game performance and floor layout, player interaction, behavior, loyalty and value
Backward compatible player communication technology for the entire floor giving casinos an effective
method of reaching out to players for account access, bonusing, promotions, media content & specials
Table management solutions to replace manual player rating process with electronic automation,
eliminating delays and errors and reducing costs of manual entering of player ratings
Scalable and easy to use solutions to handle casino accounting, financial audits, credit lines, regulatory
reporting, compliance, player ratings, loyalty programs, multi-property support, player cards
Scalable and easy to use solutions to handle slot monitoring, accounting, operations, bonusing,
sweepstakes, promotions, ticketing, jackpots, promotional coupons and redemptions
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Core
North America Replacement Cycle Rebound
The North American replacement cycle is poised for a rebound
 Aging floors and technology obsolescence
 Need for customers to reinvest in existing assets to drive profits
 Pressure from new competition with fresh floors
 Investments in slot floors have a proven and immediate ROI
 Under-investment in existing floors since 2006
Annual Replacement Cycle
≈50-65K
110K
120,000
110,000
90K
100,000
90,000
80,000
70,000
60,000
≈40-45K
50,000
40,000
30,000
20,000
10,000
0
Last 2 Years
Upside
Normal Cycle
5
Replacement Cycle Data Source: Company Estimates & Wall Street Research
22
United States Market Opportunities
Several new markets and potential new markets exist within the United States.
New & Expansion Market Opportunities
Legislation enacted markets
20 - 30K units
Potential new markets
15 - 75K units
Existing market expansions
40 - 55K units
Potential existing market growth
5 - 10K units
Upside Potential
Potential New Markets
• Massachusetts
• North Carolina
• Kentucky
• Texas
Potential Existing Market
Growth
• Rhode Island
• Michigan
• Iowa
Existing Markets
• Alabama
• Arizona
• Colorado
• Connecticut
• Idaho
• Indiana
• Iowa
• Louisiana
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Jersey
• New Mexico
• North Dakota
• Oklahoma
• Oregon
• Rhode Island
• South Dakota
• West Virginia
• Wisconsin
• Washington
States in bold represent Bally-focused markets
4
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80 - 170K units
Legislation Enacted Markets
• Kansas
• Ohio land based
• Maryland
Existing Market Expansions
• California
• New York
• Florida
• Illinois
• Pennsylvania
• Ohio tracks
International Market Opportunities
Since FY04, Bally has grown its international revenues at a 29% CAGR and yet only 19%
of its LTM revenues from continuing operations were from international markets.
International Revenue as % of Total (1)
22.0%
20.2%
20.0%
18.0%
15.8%
16.8%
16.0%
12.6%
14.0%
12.0%
11.0%
9.2%
10.0%
8.0%
6.0%
FY05
Existing Markets
New Opportunities
FY06
FY07
FY08
FY09
FY10
Existing
Markets
New & Expansion Market Opportunities
Italy
57K units
Mexico
15 - 30K units
Canada
10 – 25K units
Greece
25 – New
30K units
Opportunities
• Macau / Singapore
• Australia
New
Opportunities
• France
• Eastern Europe
• Latin America / Caribbean
• Italy
• Canada
Potential New
• Mexico
Jurisdictions
• South America
• Brazil
• Greece
• Western Europe
• Taiwan
• Japan
• South Africa
Upside Potential
(1) International revenues exclude Canada.
6
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100 - 150K units
Long-Term EPS Growth Potential
Bally has a number of opportunities to generate long-term EPS growth.
Organic
Growth
• Replacement cycle
rebound
• Ship share
improvement
• New market
openings
• International
expansion
• New products
• New technologies
Margin
Expansion
+
• Scale efficiencies
• More conversion-kit
sales
• Higher software sales
• Lower raw material
costs
• Pricing power
Free Cash
Flow
+
• Strategic acquisitions
• Share repurchases
• Investments in
customers
• Customer financings
• Debt repayment
25
=
Long-Term
EPS
Growth
Potential
Significant Operating Leverage*
Through incremental sales, margin expansion, cost controls, and de-leveraging, Bally’s
business model has a significant amount of operating leverage to drive future earnings
per share growth.
Incremental Unit Sales
and Placements of
Games and Systems
Each incremental 1,000
units sold
$0.08
Each incremental 500
premium units placed on
participation
$0.10
Each new 2,000 unit
system:
• Installation
$0.07
•Recurring maintenance
revenue
$0.01
Continued Margin
Expansion
Each incremental 100bp
increase in Gaming
Equipment margin
$0.03
Each incremental 100bp
increase in Gaming
Operations margin
$0.03
Each incremental 100bp
increase in Systems
margin
$0.02
Cost Controls and
De-Leveraging
Each incremental 25bp
decline in SG&A
$0.02
Each $20M of Debt
repaid
$0.01
* Analysis based on Bally LTM results and analysts‟ consensus revenue guidance.
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Future Earnings Growth Opportunities
Bally has several future opportunities to drive earnings per share growth.

Premium pipeline: Cash Spin™, Wheels, Towers
$

New WAPS: Betty Boop‟s Love Meter™, Money Vault
$

Pro Series Cabinets & ALPHA 2
$

iVIEW DM™ & Elite Bonusing Suite ™
$

Strong systems pipeline
$

Italy VLT‟s (57,000-unit market)
$

Mexico, South Africa, Australia
$

Replacement cycle improvement
$

Aqueduct
$

Canada RFPs
$

Ohio
$
27
Why Invest in Bally?
Technology Leader
Growth Opportunities
New domestic & international markets
New product offerings
Replacement cycle uptick
Convergence of games and systems
Entering more existing international
markets
ALPHA single game platform
Effective game studios
India Centers = $45M+ savings
Strong product pipeline
Leading Systems
Provider
Biggest casinos use Bally Systems
SDS for Windows expands market
opportunities
Gaining market share
New Apps
Server-based initiatives
Market Share
Opportunities
≈ 13% game equipment install base
Underpenetrated in gaming
operations
Underpenetrated internationally
Gaining systems market share
Stable Revenues &
Growing Margins
Experienced
Management Team
Completed dramatic turnaround
Integrated five acquisitions
Retooled software & hardware platforms
Improved infrastructure & internal controls
28
51% LTM recurring revenue
Focus on regional / tribal markets
Pricing power
Additional margin expansion
opportunities