SlotCycle with Jeff Jordan

Nick Hogan:

Good morning, Michael. How are things with you today?

Michael Carruthers:

Great, Nick. It's great to be here. I appreciate the invite.

Nick Hogan:

Oh, you betcha. Great to have you back. Now we're in the of vacation season here in mid-July, so any

big vacation plans, or other plans this summer?

Michael Carruthers:

I'm working remote this week from Wisconsin. We're celebrating my parents' 50th anniversary, so my entire family is here, my

siblings and their spouses. And then my wife and I are planning a trip to, we're going to Hawaii at

the end of August. So after that [inaudible 00:00:39] end of the fall.

Nick Hogan:

Okay. Cool. Cool. So let's see, Michael. So since the last time we were together, let's see. So this week

we had more news coming out of New York City regarding the three casino licenses up for grabs. On Monday,

the New York City Council voted 29 to 9 to reject the proposed land use changes that were needed to

advance the Bally's Corp proposal there in the East Bronx. So unless the mayor decides to veto the council's vote,

it appears that Bally will most likely withdraw their bid joining LVS and Win, which withdrew in, I think it

was April and May respectively for those guys. So in terms of whose left, it looks like we have still

seven groups. And as I run these down, I'm going to just limit my mentions to the gaming companies and

not their various partners. So let's see, I counted, it's three that are proposing a Manhattan location, so that's Caesars

Rush Street and Mohegan.

Two for Queens. One is Sentinel Hard Rock, and then the second is a proposed expansion to Genting's Resorts World

New York. Then one proposed for Coney Island led by the Chickasaw. And then lastly in Yonkers, there's a big

upgrade proposed to the MGM Empire City. So three up for grabs, and most feel that the Genting and MGM

bids are safe as each is presently up, operational and ready to start generating tax revenue. And as for the

other five, we'll see, I've heard quite a few positive rumblings about the Hard Rock and Chickasaw bids. And call

it a personal bias on my part, Michael, but I feel that these Manhattan proposals are a little bit much

conceptually, and I think about the logistical challenges of just building, let alone operating a multi-billion dollar casino resort in

Manhattan. I don't know about you, but to me it sounds like a lot of moving parts.

Michael Carruthers:

It will be interesting to see what happens when Chickasaw are a couple of years in.

Nick Hogan:

Yeah, yeah, for sure. It's been one hell of a process there, but it does look like it's starting to

coalesce around some folks now. So good to see. Okay, so listener questions, we actually have two of them this

week. Before I jump into this though, let me say that we'd love to tackle any questions that anybody listening

may have. So if you have a question about what we're presenting or something you'd like us to present, please

drop us an email at [email protected]. Again, that's [email protected]. Our policy is to keep all questions anonymous. So please speak

directly and don't worry about us revealing your identity. This is not something we do. Okay, so the first question,

Michael, comes from an operator in Midwest, saying, "Hi guys, I'm going to need to replace chairs on my slot

floor next year. And I'm curious if you've done any studies about seating's impact on performance. Also, do you have

any general tips about picking chairs? Thank you."

So good question. I do not have any data points to share on seating, but as an operator, Michael, I

know that you have faced this a number of times. So what say you on the general tips side of

things?

Michael Carruthers:

Yeah, it's a great question. Anecdotally, comfort equates to more time on device,. If you're comfortable in your chair, you're

going to sit there, you're going to play longer. Where if it's an uncomfortable chair, you're not going to want

to be there very long.

Nick Hogan:

Absolutely.

Michael Carruthers:

So the way we approach this, or I approach this, is I look at my minimum feature set that I

want in a chair. I like pedestal bases. To me, they're more stable. They don't tip as easily as a

four-legged chair. I like gas shocks, the auto returns. Some must-haves for me are protective edge molding and on the

back. Start with that feature set that you want. Make sure it's in the range that you want it [inaudible

00:05:05]. Put them in your [inaudible 00:05:17] with the guests sitting on play with them for a little while and

get their feedback. They're the ones that are going to be using these things long term, so getting their buy-in

is very, very important.

Nick Hogan:

Now, Michael, do you as an operator operating multiple casinos, do you typically stick with just one vendor, or do

you do a mix, or how does that work?

Michael Carruthers:

Yeah, we have a standard slot chair for our company that we use across all of our properties. Same colors,

material, same feature set. So I can move chairs from property to property as we, same floors. We definitely have

a standard that we use, and it's been a great chair that they hold up well, they're well priced, and

the guests love them.

Nick Hogan:

Okay. All right, cool. All right. Thanks again to listener for that question. It's a good one, and happy to

hit that. The second one, Michael comes from an operator in the American South. And she asks, "Hello gentlemen, we

have a slot system from one of the big three vendors and ongoing issues with it have us thinking about

replacing it. But the costs involved are enormous. So how would you normally advise clients considering such a change? And

for those who've made a switch, are they generally happy?" Now, Michael, I have a ton of thoughts about this.

But I'd like to start get your feedback as an operator before I chime in. Before you answer though, I

did look into this gentleman's operation and it's just a straight class three resort. So table slots, hospitality, F&B, and

there's no exotic equipment or regulations. So going with that background, what are your thoughts on this, Michael?

Michael Carruthers:

Yeah, I've had the opportunity to work with all of the four big manufacturer slot systems, and there's not a

perfect one. Each one is, there's pros and cons between each of them. Some have strengths were others don't and

some, I believe this is where others don't. But at the end of the day, I think you got to

just kind love and live with what you got. Don't get caught up in that grass is greener mentality. It's

not true. You're going to have headaches with whoever you have. Just work on cultivating that relationship with who you

do have today, and make it the best that you can. Unless there is some glaring reasons why one sticks

out for your needs specifically, whether that's a technology thing that you have to have today, or other than that,

it's going to be hard to recoup that multi-million dollar expense that there's just not an ROI there for switching

for no reason.

Nick Hogan:

Yeah. And I couldn't agree more. I mean from my side, what I always emphasize to anybody who's considering this

is that systems as a business category is without question the most complicated in gaming. And beyond anything else, it

really boils down to that associated equipment regulatory designation. So for companies such as ReelMetrics, which we don't contend with

that designation, we are constantly releasing software builds. So whether it's bug fixes or the introduction of new functionality, I

mean, there's not a week that goes by that we're not releasing. But for systems vendors, material upgrades are always

subject to regulatory testing and approval. And as systems that are at the heart of any operation, the operators too

have to subject systems upgrades to heavy pre-deployment testing. So the result of this is that at any given time,

only around a third of any system companies install base is on the latest version of software.

So even if a rather annoying bug is fixed in the latest version, it's out of reach to two thirds

of your customers, typically. And when those customers finally upgrade, they're taking on bugs and limitations that have already been

fixed in a subsequent version. So structurally, I feel that disappointment is sort of baked in. And realistically, if you

switch from let's say one of the big providers to the next, although you're likely going to solve a set

of problems, odds are pretty good that the new system is going to introduce a new set of problems. So

like you Michael, my guidance on this would always be to just cozy up to your current provider and basically

exhaust all alternatives before considering such a switch. I can certainly understand the sentiment and frustration, but you, I just

don't think it's ever a path that's likely to get you to the promised land. So I have to say

I agree on all points there.

Michael Carruthers:

Yes. 100%. I think there's no perfect system that's out there. And at the same time, the system providers are

in a tough spot, that all of us as operators want something unique and different to ourselves. And that is

a ton of work and a big burden for the manufacturers to have to live up to. So they do

their best to create a system that works for the masses, and then switching from one to another is only

going to fix one issue and causing another issue, unless you find yourself multiple, multiple versions behind and it's going

to cost you a million, million plus to upgrade. Unless you're in that scenario that I don't know that it's

viable or worthwhile to switch just for switching's sake.

Nick Hogan:

Yeah, I think it's super solid advice. Okay. So Michael, time has come to introduce today's guest. So this gentleman

is a UNLV grad who has a very long and distinguished gaming career dating all the way back to 1994,

that leadership roles in both operations and supply on the upside. This includes executive slot tenures with the Mirage and

Bellagio, and supply side roles with Acres Gaming, IGT, Aristocraft, WalkerDigital, Blueberry, and GameCo. He also operates his own strategic

consulting firm, which provides advisory services to operators and suppliers. And six years ago he founded SlotCycle, which is the

focus of today's conversation. So I'm referring of course to founder and CEO of SlotCycle Mr. Jeff Jordan. So howdy,

Jeff, how are things in Vegas today, sir?

Jeff Jordan:

Well, it's hot as usual for July.

Nick Hogan:

Okay.

Jeff Jordan:

We're going to hit [inaudible 00:12:03] today, so it takes your breath away. But the rest of the year is

really nice. Thank you for having me, Nick and Mike, I really appreciate being a part of this today.

Nick Hogan:

You bet, Jeff. It's great to have you. So I thought we'd just start with you telling us a bit

about yourself. So where and when you entered the industry, the path that took you to your present role, and

any personal bits, your spouse, your hobbies, et cetera. And I do want to say in my exhaustive research of

looking at your LinkedIn profile, one of the things I noticed is that, so out of school you were an

intern at the US House of Representatives.

Jeff Jordan:

Yes, yes. Well, so while I was in school, I had the opportunity to be an intern for the late

Jim Bilbray. So yeah, I was able to spend two months in Washington DC working for him. And it was

an interesting experience along a couple of dimensions. One was that it was that I was able to get a

stipend to support myself from his office, and that stipend was based on relationships versus necessarily where I was at

in my career. And the second was, and the most important part was that Congressman Bilbray really took a unique

perspective with his interns. He actually, instead of just having them copy and do grunt work, he actually deployed them

into the field in hearings and looking at bills and writing letters to constituents.

Nick Hogan:

Okay.

Jeff Jordan:

So I was able to get him to sponsor a Republican, he's a Democrat, and I was able to get

him to sponsor a Republican bill that changed the way in the SBA administration, small business administration, how they dealt

with entities called small business investment companies. So I was able to apply what I was learning in school to

that situation and get him to sponsor that bill. So it was a really unique experience, and one that has

always helped me out in my career in terms of some of the skills I picked up there.

Nick Hogan:

Okay, cool. And wow, a bipartisan bill sponsorship, those days are gone for good.

Jeff Jordan:

Yeah, for sure.

Nick Hogan:

Okay. So in gaming then. So when did you enter the industry, and tell us a bit about your path

and getting to where you're today?

Jeff Jordan:

Sure. So I came from, well, I grew up in Albuquerque, New Mexico, so pretty humble beginnings so to speak.

And when I got to Vegas and went to UNLV, one of the challenges as a finance graduate was trying

to figure out, well, how do I deploy my skill set? So I interviewed with the Mirage to go into

their management program, and I was looking for a finance job at the time, and they asked me, well, the

finance jobs are full. So they asked me, "Well, would you want to be a slot analyst?" And I said,

"Well, I don't know anything about slots." And so they had me interview with a gentleman named Andrew Pascal, who's

a really accomplished entrepreneur and operator in his own right.

Nick Hogan:

I think he founded Silicon Gaming. Is he Steve Wynn's nephew? Is that the same guy?

Jeff Jordan:

Yeah. It's by marriage. Elaine Wynn's nephew. But yes, he's related.

Nick Hogan:

Okay.

Jeff Jordan:

So yes, he started Silicon Gaming. And you could argue that the modern gaming device really came from his vision

at the time, because if you remember, the regulators didn't really like solid state or hard drives in terms of

storing data on games. And so he was able to convince Nevada Gaming Control Board that if you encrypted the

data, both going in and out of the device, that that would solve their regulatory concerns. And so really without

that kind of innovation, we wouldn't have the modern video slot or modern gaming device that we have today. So

I was able to interview with him, and he showed me that. And what was unique about how Mr. Wynn

ran the slot business at the time is that the leaders of the slot business also had operational responsibility along

with marketing. So he took me through the business, showed me it was like a self-contained business unit. So I

competed for that job and ultimately got it, and was able to enter the slot business through that management training

program.

Nick Hogan:

Okay. Then you went on the Bellagio from there, was that right?

Jeff Jordan:

Yeah, so the big gamble for me, and I remember talking to my father, he was, because I was working

at Citibank at the time. And Citibank had a facility in Vegas, and Citibank was a huge S&P 500 company.

And he is like, "Well, I helped you get through college, learn finance, did you look at the Mirage's balance

sheet?" And so at the time I started, he had a lot of junk debt and was highly levered, and

there was a lot of questions about whether he would make it. And within about two years working there, he

had paid off that debt and recapitalized the company. So it was pretty exciting. But the real bet for me

in that time in my career was that Bellagio was supposed to be like two years out. It ended up

being four or five from when I started.

And the bet was, okay, if they're going to have this kind of growth, then that ought to mean that

there's a lot of growth for the people who are involved in the organization. And at that time, he didn't

have Beau Rivage on the books either. So it was very fortunate, because it did cause a lot of growth

and there was a big belief in terms of growing people internally. So I was able to get both through

my own accomplishments, but through the fact that there were job positions opened an opportunity to go develop and ultimately

open.

And eventually I operated the Bellagio slot business, which was pretty substantial. And because we deployed about 20 million of

capital into buying slot machines and slot systems, and we were kind of at the frontier of a lot of

changes in terms of product makes on both systems and games, we were able to make a lot of really

aggressive decisions that turned out to be very good decisions, but they were full of risk. And so it was

an exciting kind of heady time in terms of both my career and what we were able to accomplish as

a business.

Nick Hogan:

Okay, cool. And then you made a transition then after that into the, well, what the operators call the dark

side, I call it the bright side of it, jumped into supply.

Jeff Jordan:

Yeah. So when I set up to design my career, I was looking for an opportunity to learn all the

skills and have experiences in terms of running a business. So as I left Bellagio, I felt that I accomplished

a lot and learned a lot about the slot business, which was a business unit within a larger enterprise, but

hadn't quite started developing skills around what would it take to run a complete business unit at the enterprise level.

So I was given an opportunity to join a Acres Gaming as a corporate development officer, and with really not

a lot of guidance of what the job responsibilities were, but to come in and add additional depth to the

management team. And so I took that opportunity versus going back into the slot business. So I kind of took

a fork in the road to build additional skills and experiences.

So Acres got acquired by IGT. And at Acres, I got a lot of experience doing kind of strategic relationships.

We acquired a gaming platform, so I got to execute that transaction. And I was working a lot on our

patent portfolios, so I got exposed to what patents meant and built a deep understanding of the patents at that

time in the marketplace. And then IGT acquired us. And so I get credit for about 10 years with IGT.

And at IGT I filled a number of business development and product and corporate strategy roles. So I got to

get some experience around mergers and acquisitions. I got some experience around doing kind of product level consumer research and

analytics to advise the product group. And then I got experience in the business development side. I got international experience,

so I was able to land in, at the time, Mainland China actually had more slot machines than Macal at

the time.

Really, the industry didn't know about it. So I mapped, with the help of a government relations firm, we mapped

out the whole industry, we worked with the government to understand their policy positions. That led to a $100 million

capital deployment by IGT. And I spent some time and then in a gaming market trying to understand that as

well, which led to another $90 million capital deployment by IGT. So that's how I got brought into the mergers

and acquisitions group. So it gave me an opportunity to play as a corporate staffer, advising management on how to

deploy capital, which is there's a lot of skills that get developed in that kind of experience that have stayed

with me as I've tried to pursue the opportunity we're about to talk about.

Nick Hogan:

Sure.

Jeff Jordan:

In addition, I have experience, as you noted in the class two space with Blueberry. I helped come in and

reposition some of their product group, and as they were coming out of bankruptcy. I also have some experience in

the social casino side with playSTUDIOS, and I did a stint in skill gaming with GameCo, trying to see if

we could make that enterprise work. I helped raise a pretty substantial amount of capital there for them. So yeah,

so I've got a wide breadth of experience across different verticals in the industry, and then kind of a deep

understanding of slot machines, and who plays them, why they play them, how to analyze performance, how to think about

the technology, think about game mechanics. So really deep expertise in slots.

Nick Hogan:

Yeah.

Michael Carruthers:

Yeah. Were you done, Jeff? I don't want to cut you off, sorry.

Jeff Jordan:

Yeah. No, I guess the other thing is one of my passion projects in my career is that I've been

teaching at UNR for almost, I guess 15 years now. And so when I came in the industry in 94,

I obviously, because I'm a bit of a nerd, I went out and tried to learn all I could about

what it meant to run or think about slot machines at the time. And there was just really very little

formal training. So over the last 15 years with UNR, we've been able to develop a program that brings in

gaming managers and help them understand all the tidbits, and all the skills that are necessary to try to run

a gaming business. And we've expanded that to include Oklahoma State. So once a year I go down to the

OSU and the UNR in a partnership to teach there as well. So that's my way of giving back to

the industry, trying to package up what I've learned and try to transfer that to the next generation of leaders.

Nick Hogan:

Yeah, cool. Michael?

Jeff Jordan:

I guess the question's always like, well, how do I become an entrepreneur in this space? And so I guess

as I learned all these skills and developed my career, I just found probably much like you Nick, like a

calling to do something on my own. And the challenge is pretty substantial, and it just felt like it was

the kind of thing to do. And certainly I had a lot of experience starting to advise entrepreneurs who were

on that journey themselves, and I found it to be an attractive journey. So that's how I became an entrepreneur.

Nick Hogan:

There a couple of things in there. So on the UNR side, as you know, my sister's a professor up

there. I speak to her classes every year. And she does one on entrepreneurship. And when I come in there,

I always ask these kids, "Well, why is it that you want to be an entrepreneur?" And the first thing

that all of them say every time is work-life balance. I'm like, "Okay, let's start there." If you think this

is a ticket to work-life balance, you are completely high. So for those who can't see, Jeff is cracking up

hysterically right now on camera. Yeah, indeed. It's always, when I hear that one, I always have to chuckle myself.

Jeff Jordan:

Yeah. Elon Musk is credited with saying, "Doing a startup is like eating glass." And I've always kind related to

that once I was actually doing it.

Nick Hogan:

That's for sure.

Jeff Jordan:

Yeah. It's kind of a weird set of emotions that come through as you're trying to start something on your

own. It's such a creative exercise. And as you go out and try to get people to believe in you,

I think it's much probably artists feel when they paint something and they try to get people to buy it.

Nick Hogan:

For sure, for sure. Okay, Michael?

Michael Carruthers:

Great. Yeah. So Jeff, for many listening, the ins and outs of the secondhand equipment market aren't very well known.

Can you give us a description of the marketplace and maybe some pros and cons that exist out there today?

Jeff Jordan:

Yeah. So I think, look, first of all the market's very okay, which is both an opportunity and a challenge.

It's an opportunity, because I believe that it's ripe for new ideas. But it's also hard, because if you're trying

to really size what the addressable market is, I think it's about a $1.6 billion business globally. It's pretty fragmented,

and it's primarily transaction driven, so it's a lot of competing on price. And because it's fragmented, I felt, and

fragmented and relatively, there's not a lot of innovation around the business models that were in the market. So I

felt like it accomplished from an perspective, the market was very attractive, because if you could figure out a business

model that was innovative that you might pick up market share and that because it's fragmented, you might be able

to consolidate elements of the market, and then that may make it attractive for investment.

And so that's kind of been the journey for SlotCycle is trying to see if our business model and technology

that we've deployed, whether that's innovative enough to attract customers. From an operator's perspective, I think one of the challenges

with the market is trying to figure out what's a fair price for the slot machine or the part that

you are buying, and how do you make sure that when you receive that slot machine or that part that

it meets the regulatory standards that you have, and that it also functions and then has what you need in

order to operate your business. From an OEM's perspective, because it's opaque and not transparent, it's hard to understand pricing

if you're not in the market every day. For an OEM that's used to pushing out new product that's relatively

cookie cutter, bringing the product in and its condition, figuring out what's necessary to bring that product back up to

life, and is it worth investing in?

And then ultimately having a sales force that wants to distribute that product. It just doesn't fit their traditional model

and their cost structure. So we think we have a solution that both benefits operators we're buying and then OEMs

that are looking to sell product. And then OEMs, or I'm sorry, then operators who are looking to liquidate their

equipment, you sit there, and Mike, you probably have experienced this a number of times. You're looking at the inventory

in your warehouse, you don't know what condition it's in, you don't have a lot of information about it other

than maybe its make and its model. You know want to liquidate it, but you don't know what it's necessarily

worth. You don't know necessarily whether you should cannibalize it or liquidate it. And so what we do for our

operators that are partnering with us, is we just basically take all the equipment in, we assess it, inventory it,

and then turn around and value it. And then we work to liquidate the equipment based on that information.

So we kind of take the whole problem off their hands when they give us supply, and then all the

transactions go through the platform. So from an operator's perspective, if you're buying, you're really looking at is the slot

machine something I can put on my floor and meet the compliance requirements in it? From a park perspective, it's

kind of similar, and then you're trying to figure out price. And then if you're selling equipment, it's like, what's

my fair return on this? And then is it worth doing? And then the OEMs are like, "Hey, how do

I make sure that equipment that comes back that I'm selling it into markets I want to sell it in?

Maybe there's markets I don't want to sell it in." So we feel like we're uniquely positioned and the platform

itself allows for transparency, because we process all the transactions on the platform. We've built tools and features that allow

both suppliers of product to see what the transactions are and what their share is, and then ultimately for the

buyers to be able to interface with the platform and see the pricing.

Nick Hogan:

Yeah. Okay. So in terms of the needs you're really addressing with SlotCycle, one, certainly transparency. Secondly, it's an interesting

thing talking about the OEM side of things. I think for a lot of listeners, they may not even realize

that a lot of OEMs do sell some secondhand stuff out there, but I get that. But are there any

other needs that you felt that you could really address? I think at least one of the caricatures that I

have in mind in the secondhand equipment space is, in the past there were a lot of guys who were

maybe a little sketchy who were dipping around in it and stuff. And so I take it having a well-capitalized

professional firm was a big part of this as well. I'm not sure if that marketplace is still there with

sketchy suppliers or sketchy providers, but was that part of it too, just getting a different class of company in

the space?

Jeff Jordan:

Yeah, I felt like first when I jumped into this market, I think people, I actually have one board member

who thought I was crazy before I kind of recruited on the board and explained my entire vision. But yeah,

so jumping into the secondhand market is not what typically, I call them blue bloods. So if you've been in

the industry a long time, you tend to kind of stick with, oh, I'm an operator. I'm in the manufacturing

space. And so there's not a lot of individuals in that come from that space and go into the secondary

market. Now, we at SlotCycle have been able to build kind of a blend of people, some from this market

and then a lot from the traditional market. So I think we've been able to show that there's a career

here in the secondhand market. And really what we've done is we've designed our business and our philosophy around we're

a service business.

We're not necessarily, we're obviously interested in the transaction, because that helps pay the bills, but we've designed everything as

services, so that we could help operators and OEMs deal with this problem and try to deal with it in

a way that's thoughtful and considerate to the capital that's been invested, and try to get a higher return on

the capital. And also, I think there's clearly markets in international markets that are low yield, like Latin America fits

that bill pretty cleanly. They also buy new, but they live a lot off the used market. And so low

yields really drive their concern and capital constraints. And so as I look at the North American market, I think

there's more and more casinos that are becoming low yield as we continue to deploy more and more gaming devices.

So I think the market's actually growing in North America.

And so for operators who are buying used slot machines, it's kind of fitting one or two needs. Either they

are in a low yield market, they recognize it, so they're looking for product to continue to grow their business,

but they recognize they can only spend a certain amount of money given the win per unit profile. And so

we have some of those clients. And we have one client in particular who seems to be buying exclusively from

us, and we've been able to give him access to product that I don't think he would've had access to

prior. And then the second profile, or maybe casinos who are looking at their segmentation a little differently, they're looking

at, well, if I can buy a used product, maybe I won't drive the same kind of win per unit

profile as I would on a newer product, but I can still drive some incremental growth from that by expanding

that segment. And so they see opportunities there. And so I think there's kind of two types of customers domestically

that are looking at buying used equipment. And I think it's growing market.

Michael Carruthers:

Yeah. So with your background that we've kind of established, can you tell us a little bit more about the

vision you had for SlotCycle initially? Which feature set you wanted to include, positioning, USPs, and a little bit about

navigating the financing and regulatory process as well?

Jeff Jordan:

Yeah. So I was trying to build a digital business. I didn't necessarily see the physical element. So I built

out the digital marketplace and started the business development process, introducing this to operators and trying to gauge their perspective.

And I also started going out and raising capital. And two things kind of collided at the same time. First,

there was a lot of interest from some very large operators in the vision, but the vision where there were

some struggles were around taking the lead from liquidating it as they do today, to, oh, I'm going to sell

them. I'm going to sell them piecemeal and I'm going to handle the shipping and the logistics. There was a

bit of a gap there, and the regulatory step. There was particularly the regulatory component, I had a visual that

I could see the regulatory component wasn't as complicated as most people think. But for those that are in the

operating side who don't have experience there, it looks like a big black box and very complicated.

Michael Carruthers:

Yeah.

Jeff Jordan:

So I started running kind of into that dynamic, but I saw out of all the ideas I've ever tried

to push, I saw real interest. And so at the same time, I was raising capital and I had this

potential investor who did some due diligence on his own. He had some gaming executives in his Rolodex. And he

came back and he said, "Look, Jeff, I think you're on to solving a problem. You're just not thinking about

it big enough." And so that's when we started thinking about, okay, well, we need a physical, what if we

had a physical resource to go along with the digital marketplace where an operator could say, "Look, I want to

see my stuff sold on a marketplace. I want to see the marketplace thrive, so I have access to those

kind of supplier products if I want to buy it. But I don't want to necessarily be a seller on

the platform."

And so what we found was that unlocked to these customers that were very interested in the vision, it unlocked

them. They are now, oh, okay, if I could just send you slot machines and you take care of everything

else, they were game. And so then the next hurdle became around, okay, how do I get them over the

compliance hurdle? So part of my initial due diligence before, because when you're an entrepreneur, you've got to work through

much smaller steps than you do as proving your thesis is out. That's much smaller steps than you do as

a corporate entity.

Michael Carruthers:

Sure.

Jeff Jordan:

So one of the pieces I had from one of my advisors was like, Hey, Jeff, I know you think

the laws related to this in Nevada, but you got to go prove it. And I was like, "Okay." So

we spent a lot of time working with the Nevada Gaming Control Board, trying to establish some things, establish that

the marketplace didn't require regulatory oversights. We established that. And then the next piece was establishing that I could take

in gaming equipment in the state of Nevada from a licensed operator without a license in Nevada.

Michael Carruthers:

Yeah.

Jeff Jordan:

So I was able to get a legal opinion to that, and I was able to push that legal opinion

to my Nevada customers. But they were like, well, they still weren't sure. Because what had happened in 2011 in

Nevada was that Governor Sandoval and Mark Lipparelli had reimagined the law, how the law should work in Nevada. They

wanted Nevada to be an innovative state. They wanted all the slot manufacturing to occur here, whether or not you

were selling to casinos in the state. So they changed the laws, which allowed us to start taking in slot

machines, and we also have the ability to sell to a distributor. But what happened is between 2011 and us

going operational in 2021 is that the casinos really didn't understand that change, because that's not the business they're in,

they're in the business of running their casino. So we had to do a of education. And ultimately we got

Nevada Gaming Control Board to help us by, they issued a letter to us saying, "Hey, here's what you can

do, here's what you can't do."

And we were able to use that letter to then start taking in gaming equipment. Without that letter, companies like

Wynn Resorts and Penn Entertainment probably wouldn't have embraced us as such an early stage concept and idea. So really

critical to our whole strategy was the ability to understand the regulatory structure both in the state but federally and

in other states, so that we could then convince our partners that we know what we're doing and we're not

going to let them down. So that was kind of the early regulatory stuff. We bootstrapped our operation from... So

I think we started really business development in 2020, so we bootstrapped it from 2020 to mid-2022. I was able

to get some early investors like Chase Easterling, who currently works in the company and comes out of the secondary

market, plus Stephen Moore, who's the CEO of Walker Digital, and a very close colleague and friend.

He came to breakfast one day and said, "Look, I'm in." I really didn't even ask him for money, but

he came one day and said, "I want in." And he stroked me a check. And so we were able

to capitalize that company with the three of us and get to really, I mean, we were actually profitable in

2021 and most of 2022. So we were able to start running a very small business, bootstrapping it, which is

really the dream of an entrepreneur is to get to that stage, because then you're more likely to get capital,

you're more likely to feel more confident that there's a market for your goods and services.

Nick Hogan:

Gotcha. Okay, cool. And so Jeff, maybe you can just tell us a bit about SlotCycle's offerings today. So how

this works. Let's say I'm an operator, and I want to move some equipment, let's say. Okay. So I'm curious

the offerings, how it works today, and then also how has it really changed from how you saw it originally

to where it's now in terms of functionality and whatnot?

Jeff Jordan:

Sure. So we have two primary services, and then we have a basket of other services that are kind of

in their relative infancies. The first service is what we launched with, which is we have a multi-sided digital platform.

Sellers can come onto that platform and list their product. And buyers can come onto the platform and they can

look at the product from sellers, of which we are one of them. We are a seller on the platform,

but there are other sellers. And then they can buy the product. And for the most part, that platform works

like you would see eBay works or maybe parts of Amazon where you're buying not from Amazon, but you're buying

from other people. So it's a multi-sided marketplace with a lot of e-commerce functionality. Now, we've customized that platform quite

a bit, trying to understand the regulatory compliance around making sure you have qualified buyers and sellers on the platform.

So we vet everybody that comes on the platform. And we've got features that we've invested in to try to

make those transactions as simple as possible, but yet complete in terms of the legal matters. So that's one basket

of services. Now that platform's evolved over time. Now it's also an operational transactional system. So what do I mean

by that is that we use it to drive our delivery of our product. So if a seller signs up

and wants access to an ERP solution where they can take an order that's been processed and then they want

a workflow that allows them to then operationalize the delivery of the slot machine or the part, we have that

full suite of features that underpin the system.

Nick Hogan:

Oh, wow.

Jeff Jordan:

And we are a consumer of that feature set. So we drive a lot of innovation in it from just

our own operational capacity. So the second service is around what we call our white glove service. And the white

glove service is basically, we take in slot machines, parts, software off of the operator scans. We don't ask a

lot of questions. I mean, obviously we need to know what serial numbers are being shipped, but we're not asking

a lot of questions about the condition of the game. They're just like, "Ship it to us. We will figure

it out." And so we take in this equipment and then we turn around and sell it, and we share

in the revenue. So we may monetize it by selling the slot machine. We may monetize it by selling software.

We might monetize it by selling the parts. And it's a basket machine. Some are getting recycled, some are getting

sold, really depending on what's going on in the marketplace. We'll advise our clients a lot on where we think

there's value.

We sell these games in three different condition states. So there's as is, tested, and working and refurbed, and then

pricing varies. And obviously the commitment by us about the condition of the game varies. And one of the real

innovations that we were able to develop very early on, and this is part of why our values within the

company are around trust and transparency, is that the title actually transfers to us for the slot machines. So we

pay $1 for the slot machine, we have a royalty split then on the sale, and when we buy that

slot machine, then when title transfers to us, so does the risk, the compliance risk. So we then are on

the hook for making sure that the next transaction that we enter into is a legal and regulatory compliant transaction,

both at the federal and state level. So taking that risk off the table from operators and OEMs has been

really very helpful in developing our white glove service.

Nick Hogan:

Oh yeah, that is, I would say a key differentiator. And I'm curious, so on those three states of equipment,

you mentioned the testing and working thing, and then the refurb. Are you guys doing the testing and the refurbishments

yourselves, or is that being done elsewhere?

Jeff Jordan:

No. Yes, we do all of that work.

Nick Hogan:

Oh, wow.

Jeff Jordan:

So one of the benefits of being in Las Vegas is that we have access to really qualified slot technicians.

Nick Hogan:

Oh, yeah.

Jeff Jordan:

And we have a training program internally to build skillsets among the slot techs and new trainees. So if you

think about those three conditions, the bottom conditions as is, usually parts complete. So we'll usually go through and make

sure it's a whole slot machine. If it's not a whole slot machine and we're selling it as is, then

we'll describe in terms of major components, what's either missing or broken, and then the buyer can make their own

determination of whether they want to buy it and what price, and we can work that out. Then the middle

ones tested and working, and that means we're applying power. So what's interesting about slot machines is that they're really

stable once they have power and they're left on for periods of time, but they're very unstable when they get

the first power surge.

New machines it doesn't matter when they have that first power surge, sometimes things happen. So in test and working,

we're applying power. We don't apply power on as is, and we're validating that everything boots up and turns on

and is functional. And we videotape that and take pictures so they can see that when the machine leaves that

it was functional.

Nick Hogan:

Sure.

Jeff Jordan:

And all those pictures and items go onto the platform and they can look at them. And there's no warranty.

So it's just we put power to it. We're not knowingly sending you a bad part that's making the machine

not function. And then the refurb is, we're getting it as close to new as possible where there's dents, we're

taking out the dents, if it needs to be painted, we're painting it. We're doing real complete cleaning, and we're

testing every part, changing out batteries on the boards.

We're looking at fans closely to make sure if there's living stutter, we're going to replace them. We're making sure

that the monitors, there's no dark spots. We're really making sure that the machine is what I would call casino

ready, so the casino can receive it, if it's a casino that's purchasing, and they can plug it right in

into their operation and expect that it'll boot up and run. And we provide a 90 day parts-only warranty on

that product line. And obviously there's different pricing for those different packages.

Michael Carruthers:

So Jeff, over the years I've sold thousands of used machines, truckloads of chairs and bases. Can you tell us

a little bit about where you acquire most of this stuff from, which markets, and ultimately where it ends up?

Jeff Jordan:

Sure. Well, we acquire products really across the country, but I would say we're more tied to the California and

Nevada market. When we think about the regulatory structure, states fall in different groups. So there's a lot of states

where you don't need a license to acquire slot machines, and then there's some states where you have to be

a distributor, or you have to acquire them through a distributor. So acquiring slot machines through our model is not

as hard as many people thought when we were first starting. Now, selling them is more challenging, because you have

to have your legal authority within those states to sell them. There are some states that allow you to sell

in that state, but they have restrictions on the ability to operate or place them. So you can transact in

the state, but you can't really operate, and that's usually on the buyer.

So there's different states, and there are different regulatory structures. So we're licensed in California as a manufacturer and distributor,

so we're able to receive machines, and we're able to sell machines and sell services into the state. In Nevada,

we're uniquely positioned, because of those law changes I described. So we're able to buy and sell, but we can

only sell to distributors. We can't sell to casinos that are placing the device for operations. We have to go

through a distributor to do that. So usually if there's a will, there's a way we can get there. We

don't have licenses covering the entire country, because that's a big capital outlay. And as we continue through our operating

history, we're investing more and more in those licenses. So really, we did a 10 state program with Penn Entertainment,

and we were able to show within those 10 states, about half of them, we didn't need a distributor, another

half we needed a distributor, and we were able to find a distributor to help us transact. So getting the

supply is less of a hurdle than turning around and selling it.

We think about our selling in three markets. The first is the retail market, which is operators of gaming devices.

So whether that's casinos, routes, there are entities that are placing games for consumers to play and earning revenue that

way. And then the second markets, the resale market sometimes called the wholesale market. And these are resellers who have

their own distribution channels, both domestically and internationally. And then the third market is the hobbyist market. So we sell

across those. And in the hobbyist market, we have a different platform called Own a Slot, where we can now

engage with hobbyists that want to buy devices, and again, we sell-

Nick Hogan:

Is that a material business line for you, out of curiosity?

Jeff Jordan:

It's a growing business. It's not yet material in that way. But it's an important segment because in some cases

we get in older equipment, some of those need to be recycled, some of those we may actually be able

to sell into the hobbyist market. So it gives us a channel in which we try to get a return

for our suppliers. So it's an important segment for us to be in and have that capacity, because we get

quite a bit of inbound action there from our work on slotcycle.com, and it's got its own regulatory structure because

it's a hobbyist market. And it's surprising too what they'll pay. We have one customer out of Germany that has

bought newer slot machines and has paid a refurbished price, and they bought quite a few machines from us. So

it is an important platform for us to be able to access that channel.

So now that's the buyers described in terms of who they are and the business they operate. Now, geographically, low

yield markets are the most important to us. We do see, one of the surprising markets for me was just

kind of how Nevada has its own low yield market that's interested in this product. So we've been able to

move quite a bit of product in Nevada through a distributor.

Nick Hogan:

Oh, wow.

Jeff Jordan:

And then Latin America is really pretty important to us in terms of connecting to a retail market. And the

resale market is important to us as well. So we serve all these clients and our pricing mechanics are designed

to be able to access all three of those markets.

Michael Carruthers:

Right. Yeah. We touched on it earlier, but the secondhand market, I don't know how to best say this, but

there are some questionable characters and practices out there that exist. So as the head of a company that's not

one of those, can you give us some cautionary tips or tales on things to look for, or things to

avoid in that secondary market?

Jeff Jordan:

Yeah, I think when I think about a buyer acting in that market, there's several things I would talk about.

The first is kind of understanding your regulatory responsibilities in your market. Some markets are more open to this kind

of activity. And then there's other markets that are really restrictive, like Indiana and Illinois are kind of tough markets.

If you don't have a distributor's license. And even if you have a distributor's license, there's some regulatory rules you've

got to go through. Whereas Nevada, you don't necessarily have to go through all of that. But you do have

to make sure that when you're buying the game, that the game is approved in that market, and that your

software that you're receiving is approved in that market. So in Nevada, for example, there's a hash verifier that the

Nevada Gaming Control Board gives that you're allowed to input the software in and verify that it's approved in the

state.

So you as the operator, as a former operator, we kind of take it for granted when we're working with

the OEMs. They come in and they say, "Okay, our product's approved in your market. You're able to buy from

us." And then we sign a contract, they ship it to us. But that doesn't necessarily relieve you of your

regulatory obligation to make sure that that product's approved. Now, big OEMs, multi-billion dollar OEMs, you're like, okay, I'm not

going to do a lot of work around it, because they're on the hook. But when you're buying in the

used market and you're buying a machine, you got to make sure that they're delivering. And that really falls on

the operator at the end of the day. So they've got to make sure that software and that product's approved

in your market. And so then the second's kind of knowing who you're buying from, what their reputation is, what

their history is, you got to do some kind of KYC around them. And obviously we do a lot of

that for our sellers. So we do a lot of that verification.

Third is understanding what you're buying. Parts are easier to buy. Slot machines are a little more complicated. On the

parts side, you need to make sure that your part number is kind of matching what you're buying. Now, in

some cases, an OEM might have multiple part numbers that are interchangeable for that. There might be two or three

variants of a board. And so as long as you get one of those variants, you're compliant. But you got

to walk through that process to make sure you're comfortable with the part you're buying and that it matches both

the regulatory side, but also that it's matching what you need for that slot machine. And we find that process

of identifying that part number to be challenging for both the seller and for the buyer. And so we've implemented

a lot of features on the platform trying to make that easier for both parties to work through that activity.

The next is, if you're buying the machine, what's the condition? Are you buying it as, tested working, or refurbed?

And being very clear about what your expectations are, particularly if you're getting a little refurbed, it's kind of like

having a checklist of what your expectations are and being able to communicate that to the buyer. And I guess

the last piece was if I was buying a used slot machine, and I'm kind of leaning into saying, okay,

that's where my capital's going to go. I'd pledge it to buy some spare parts to make sure I have

a good spare parts stock either already from previous purchases or from buying that in the secondary market to support

that gaming device, so you can feel confident you can operate it for the period of time that you need

to get your return on investment. So those would be kind of the things I would be thinking about if

I was a buyer in the market.

Michael Carruthers:

Yeah. Those are all great things. And in addition to that, I'd say talk to your fellow operators. I broke

in Southern California and I was fortunate enough to work with some great secondhand buyers, but there are some out

there that will bid high and then not show up on pickup day. One of the first things I learned

too is before you start loading games onto to a truck, get the check in your hands.

Jeff Jordan:

Yeah. So on the selling side, there's some challenges. If you don't want to do the consignment or white glove

program, the selling side's super interesting, because most of the time what happens is the casino goes out and says,

okay, here's my list of gaming devices that I'm selling or slot machines. And then it's as is. And so

maybe you're lucky if you get model, maybe you get lucky if they tell you what the bill validator and

the ticket printer is, and then all of a sudden the resellers now have to look at that list and

they've got to go, they've got to risk assess it. They've got to not only think about what they can

sell it for, but what can they buy it for. And then risk assess that maybe it's not as represented

by the operator. And so before video slots, that was a little easier to deal with because the devices were

not as part heavy, they weren't as technical.

Michael Carruthers:

Right.

Jeff Jordan:

But today, if you're selling a video slot and it's got a digital button panel and it's got a fancy

monitor and expensive boards, if any one of those components are broken or don't function, the reseller really gets stung

if they bid too high. So one of the challenges is that because the casino is really just trying to

liquidate and not maybe do the homework to be able to describe their asset, and then they put a lot

of pressure on the resellers. And I think that depresses prices. So one of the services we're rolling out is

an auction service. And the design is that with our platform and our compliance position, we're in a position to

provide a service in which sellers can reach more buyers. And part of that service is that we'll come in,

we will assess the inventory, we'll certify the inventory, we will slap a sticker on it on the door, so

it's kind of sealed. So if it's broken, then somebody's been monkeying with it.

And then we express that inventory in a much more detailed way for the buyers, and then the buyers then

are able to bid with more confidence. And I think that's another service we're launching to try to make the

market more liquid and more confident for all the players to kind of transact with each other.

Michael Carruthers:

That's great.

Nick Hogan:

Okay, cool. So Jeff, completely shifting gears here for a sec. So obviously as we had our startup days, bootstrapping

days or so, and there's nothing, I enjoy more than good tales from that, fake it till you make it

stage. So I'm curious if you have any beauty anecdotes for us on that front, the situations you found yourself

in thinking, "Man, am I really doing what I'm doing right now?"

Jeff Jordan:

Yeah, sure. I'll tell you a story. So probably the second, Bellagio was the most complicated project I've ever been

involved in, but this was the second most complicated. So we were about 15 months in maybe to our operating

history. And we were profitable at the size we were at, and we're still trying to figure out how to

grow the enterprise. And we were out raising capital, trying to figure out our next move. And I got a

call from Tom Mikulich at Stations, and he was like, "Hey, we're getting ready to close a casino. I think

there's going to be a couple more. Can you help me?" So we started looking at it. But he said,

"Look, the challenge is going to be, you got to do this in 90 days. 90 days to close three

casinos, 6,000 some odd machines."

Nick Hogan:

No pressure.

Jeff Jordan:

Yeah, like no pressure. So I had a 7,000 square foot warehouse. I'd been in the market trying to look

at, and placed a proposal to get a warehouse. But time in Las Vegas's history warehousing was really tough to

get ahold of.

Nick Hogan:

Okay.

Jeff Jordan:

It was very expensive, and particularly at the size I was looking for, and not a lot of supply. And

so suddenly I'm like, okay, Tom's going to give me... I said, "Tom, I'll do it." I got a warehouse

coming. I thought this bid was going to go through. And so we started working on the contract. And I

was sitting in my office and I realized I had to land three planes in order to service Tom. I

had to get capital, because we had maybe close to a million in the bank from our operations that we'd

earned, but we didn't have enough to pull off supporting Tom, so we needed more capital. And then we needed

to get a warehouse sizable enough to be able to handle this volume.

And then the third was that we were just growing our staff to the size we were at. I needed

a bigger workforce. So we had to land all three of these planes. And what's kind of amazing in the

gaming industry is that we compete really hard with each other depending on which segment you're serving. But when there's

an opportunity, people within the industry align to support the opportunity. So

Michael Carruthers:

100%, yeah.

Jeff Jordan:

So we were in negotiations to raise $2 million. I called up that partner and I said, "Look, if you're

not going to invest, or your answer's not going to speed up the investment process, I'm going to have to

tell them no, because I need some capital today in order to serve and get this warehouse and serve Tom."

And he said, "No problem. We'll get you $1 million of the $2 million. We'll do it on a safe,

which is kind of a VC way of getting money fast, before the deal's finished." My lawyers laughed. They said

the safe was better terms than ultimately the deal we struck. But they trusted me with $1 million. They wired

it right away. And then I'm looking for a warehouse, and I find out that Aruse under Rob Zin's leadership

was looking to sublet build Aruse warehouse near the beautiful Konami building.

And I'm like, "Hey, I want to lease your space. I got this going on with Stations." He'd already knew

about our company. So I was like, "Here's where we're growing. Can I lease it?" And he's like, "Yeah." So

we start working on the deal. So we end up subletting the lease from Aruse. And then the third piece

is that working, we had a gentleman working for us named Louis Encinas. He did a great job recruiting from

his pool of people. And then we partnered with Eagle Gaming led by Mike Tomasello. And so then we put

together a workforce that was able to receive the machines in this warehouse we just leased. And then ultimately tear

down these casinos and ship. So overnight, we turned into a very large logistics company, moving equipment out of these

casinos and then moving into our warehouse.

Some of it we sold on the dock. And then we recycled about 3,000 machines within the casino in order

to be able to handle the inventory and disposition of the assets. And we did that from the moment he

called me, maybe it's 145 days or so, and then 90 days of operating that project. So it was pretty

heady, because the choice was either risk that I could execute that, or and grow SlotCycle. And if I missed

then SlotCycle's reputation's probably damaged pretty good. Obviously I would hurt Tom, or risk it and try to grow the

company. And so that was a pretty incredible experience. And obviously we couldn't have done it without Tom's trust in

me in particular, but in the company.

Nick Hogan:

Yeah. Some of those early projects, you get into it, and you think, "Woo, am I going to be able

to handle this?"

Jeff Jordan:

I get too far over my skis. And that's where it's like, man, you're eating glass. Because man, it was-

Nick Hogan:

How did that impact your work-life balance?Back to the work-life balance.

Jeff Jordan:

And it was in the middle of the summer, by the way. So we did all that in the middle

of the summer, just like now it's 109. And the casinos, we were lucky if they had air conditioning. So

it would've been closed down for quite a while.

Michael Carruthers:

That's great.

Jeff Jordan:

Pretty crazy.

Michael Carruthers:

So Jeff, similar to your background, many of the ReelCast guests are individuals with a great deal of experience both

in operations and supply, and we're always eager to get their thoughts on how operators and suppliers can work better

together. Are there things that you think we're really missing on, or are there gaps that we could work on

improving to close?

Jeff Jordan:

Well, I think one of them is training. I kind of got two different points on training. One is the

next generation of, well, first off, training management, whether it's executive or kind of mid-management, and slots is tough. Because

if you're in that business and you're trying to operate it, you need a mix of qualitative and quantitative skills.

You've got to be good with people, customers or employees. You got to be empathetic and be able to understand

them. But then you got to turn around and be a gear head around tech and analysis and understanding how

you're going to try to drive the revenues. And so I think training management is an area that the industry

could invest more in. Obviously, I do do what I can with UNR, but I think there could be a

lot more training opportunities for the organizations. Now, in SlotCycle, we see that there's a need for trained slot techs,

and there really isn't a formal training for them.

We've had some ideas incubated about how we might be able to help, but it's really going to require support

and sponsorship from OEMs and operators to make that work, especially if we want to continue to roll out as

much complicated product. When we all came into the industry, configuring a slot machine and getting it installed was a

lot simpler than it is today. The software configuration alone is a complicated endeavor, let alone trying to figure out

can I repair a part? Do I replace a part? Can a part be revived in the boardroom? There's a

lot of challenges there I think for the slot techs and for the operators who need qualified technicians. So I

think there's some opportunities around training.

The other area is around just more transparency around what actual return on investments occurring for products. We focus so

much on win per unit. We don't spend a lot of time talking about incremental, what products are driving incremental

versus cannibalizing. You may still buy a cannibalizing product, because you're in competition for entertainment, so you have to go

with popularity. But trying to understand those dynamics I think would help refine both purchases and R&D spend in the

OEMs. And I guess the last is in my consulting business, I've had an opportunity to work with different operators,

and my point of view on pricing of slot machines is there's four key elements. There's game speed, hold percentage,

volatility and bed configuration. And I think we're still in the early days of really understanding, particularly with the dynamics

around video slots and how flexible those platforms are, how to really optimize all of those elements of pricing.

And I think industry-wide, while there's maybe the big corporations do better with their analytics and have more capabilities and

skills to figure this out, there's a lot of smaller operators that are in a tough spot trying to figure

these out. And I think more transparency around how the industry should be thinking about those elements and how to

make decisions around those leads back to training. But the better we're at that than the whole overall industry ought

to do better in terms of making sure we've got satisfied customers and that our shareholders are satisfied, because we

wouldn't be been able to figure out pricing to satisfy all those players.

Nick Hogan:

Okay.

Michael Carruthers:

Yeah, there's definitely opportunity on the operator side to better communicate to the players what each game type does, or

this game is this, this game is that. Because if you ask the players what they want, they want more

time on device, they want bigger wins, they don't want to lose, they want a lot of wins, a lot

of large wins, and that game just doesn't exist. So trying to find the game that they want to play

on your floor, I think we can do a better job of communicating to our players, which games do what,

and hey, if you like this, play Y, or give them that kind of advice. And I think Nick's folks

do a great job of saying these games here are popular amongst this segment of players, and it's very helpful

to our organization particularly.

Jeff Jordan:

Well, that's a great point. One of the ideas I worked on in, I guess mid-2014 or so, was this

idea that the industry should have a game recommendation engine like Netflix where you actually have a marketing platform where

you're saying, look, if you like this game, you might like these other games based on other players' play habits

and your play habits. And it was interesting when we dived in to do some of the math on that,

is that the Netflix recommendation engine is actually easier to design, because it's binary. Did you watch the show? Did

you not? Maybe there's five stars, so maybe there's a little bit there. But the idea of trying to figure,

well, what does a player profile look like? What games do they like based on player ratings? And then how

does that relate to other players? It was much more complicated when we worked on the math.

Because if you think about it, every spin is a point of sale transaction, so that's the binary transaction. So

then you're trying to look in weight, whether its games played or point in, you're trying to weight that, and

then compare it across player segments.

Michael Carruthers:

Yeah.

Jeff Jordan:

But I still think, to your point, I think that's one of the opportunities is to do more marketing. We

do a lot of marketing around the property, but marketing slot machines is a little harder. And so the game

recommendation engine, if done could then unlock the ability to bonus based on, "Hey, if you play this game, you

might like this other game. Here's some free play to do that." And then you're able to kind of incentivize

or create promotions around the information.

Michael Carruthers:

It's almost like taking your slot floor and merchandising it and creating neighborhoods based on volatility. This is your high

volatility section, mid-volatility, low volatility, and kind of creating those pockets, so that players can play like games. And we've

done that with buffalo zones and lightning link lounges and everything else, but maybe we need to start looking at

that concept from a volatility perspective and creating those unique experiences as well.

Jeff Jordan:

Yeah, I think volatility is one of the more challenging concepts to communicate with customers, because they don't understand it.

I mean, it's hard enough for the average operator to really understand how volatility is impacting their floor. This goes

back to that quantitative qualitative balance. And so yeah, volatilities really challenging it. At Bellagio we tried to, and it

didn't work, but the concept was we called it Ways to Win. We had a bank of games, we called

it Bring It On. They were all the high volatility games, like 10 times pay and whatnot. And then we

had Payback Time, which was kind of mid-volatility, mid-hit frequency.

And then we had another theme which was low volatility. And we tried to train our staff. We had pamphlets.

This was before the digital revolution. We had pamphlets, and we tried to train our staff, but our staff couldn't

understand it. It was really difficult trying to communicate it, and that's why that's kind of bullish around the game

recommendation idea was is that you have these digital platforms, you got a mobile device, you got internet, so you

have these player apps that you could augment with this kind of information and make it much more interactive.

Nick Hogan:

Well, I see that I need to show you two guys some software. That's where we're doing a lot of

this now. Although not to the player, but more to the operator, where we're doing this type of market basket

pairing and segment specific marketing and all of this. SO I need to show you guys some stuff. Okay. So

Jeff, do you have any upcoming events, or initiatives that you'd like to promote before we sign off here today?

Jeff Jordan:

Sure. We're launching a feature called Parts Match. This feature allows a buyer, so an operator to come to the

platform and create a wish list or shopping list of parts or slot machines that they want. And then what

they do is when they're creating their list, through AI, we're looking through our database and providing pictures that might

match that particular part for writing information, description information. But they can create their list, they can add to that

list if we don't have it in the database, but they create their list, and they say, "Well, I want

five of these, six of these." Whatever the list is.

So the thought is that the buyer can spend one day a week, they can sit down and make their

list, and then we go out and we get suppliers to bid or provide sales quotes to that shopping list.

And then the operator can then go, "Okay, I'm going to buy. This one looks good. I can buy X

from this supplier. I can buy Y from this other supplier. Or maybe I'm going to pay a little more,

because I like that supplier." They can then shop through their pricing. Obviously we would participate if we have the

product in providing the quote. But the idea is that instead of the buyer going around on the telephone calling

five or six different suppliers and saying, "Do you have this?" Waiting for them to come back and say that

it's all digital, and it's an idea to try to again, make the market more frictionless in terms of buying

and supplying of product. So that's a big thing.

Nick Hogan:

Okay, cool. And that's called Parts Match, and it's on Slotcycle.com, right?

Jeff Jordan:

Yes, sir.

Nick Hogan:

They can find that feature if anybody goes in?

Jeff Jordan:

Yes.

Nick Hogan:

Okay. All right, cool. All right guys, well it looks like we're bumping up against the end of our time

here today. So Jeff, I wanted to thank you for spending time with us today. And of course SlotCycle is

a company that I watched grow from a sprout to where you're today. So I wish you ongoing success. I

think you're doing some incredible stuff there. So really happy to see you guys driving there. It's awesome.

Jeff Jordan:

Thank you both for your time today, and appreciate really the opportunity to spend time talking about SlotCycle and the

industry. It was a lot of fun. So thank you very much.

Nick Hogan:

You betcha.

Jeff Jordan:

Appreciate it.

Nick Hogan:

Yeah, thanks so much, Michael, for joining us today too. So, okay guys, well thank you, and have a lovely

rest of your day.

Michael Carruthers:

All right, thanks guys.