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Financially strapped states turn to video lotteries

These new slots are much like home video games. Packed with microchip processors, a machine can offer up to 10 games. You can take your chances on poker, bingo and sports, to name just a few of the offerings.

An increasing number of financially hard-pressed states are turning to video lottery terminals _ high-tech slot machines _ in order to take in millions of dollars for state treasuries.

Oregon, Montana, Louisiana, South Dakota and Rhode Island already have slot machines operating, according to electronics editor Frank Vizard in the current issue of Popular Mechanics. Legislation is pending in many other states.

In South Dakota, net income from video lottery is expected to be $54-million in 1993. Before video lotteries, net income from lotteries was $7.3-million. Machines in South Dakota are restricted to the 2,100 locations licensed to serve liquor.

A populous state such as New York, which has about 25,000 locations licensed to serve liquor, could generate revenues at these locations of upward of $535-million per year.

These slot machines are not the old-fashioned mechanical one-armed bandits. Today's slots look much like video games. They are packed with microprocessors that allow one machine to offer a multitude of games. One machine, for instance, can play a variety of poker, blackjack and keno games. Games also can be configured around sports themes or operate like Bingo. One new machine offers as many as 10 games.

Poker alone has hundreds of variations and a video lottery machine may offer everything from "Jacks or Better" to "Deuces Wild." Outcomes are determined by a random number generator within each machine.

So far, state governments are allowing only a few video lottery machines per location. South Dakota places a limit of 10 machines per location with a license to serve liquor. Oregon allows only five machines per location.

In Louisiana, however, an unlimited number of video lottery machines can be installed at pari-mutuel racing facilities and at off-track betting parlors. Up to 50 machines can be placed at a single truck stop, while in other locations only three machines can be installed.

Much of the game's appeal comes from the speed which a player can interact with the machine _ which also increases the number of games he or she can play.

The cornerstone of the video lottery machine is the touch-sensitive screen that gives the player instant gratification. Most machines use a capacitive overlay technology, whose screens can handle rough treatment. Spill a drink on the machine and it will keep playing.

For the most part, video lottery machines at retail locations are played the same way as at a casino. The difference is mainly in how a player collects his winnings.

Instead of money clinking into a tray, a printer installed in the machine issues a ticket for the amount owed to the player. The ticket is then given to the local operator _ bar, bowling alley, or whatever _ for cash.

Since video lottery games are primary entertainment devices, the winning payout percentage is high _ between 85 and 94 percent _ and is comparable to casino operations. Payout cycles vary. Some machines are programed to pay out small wins very quickly, while others make a big payoff less frequently. Of the remaining net revenue, the state typically gets between 35 percent and 55 percent.

An on-line computer system also allows the state to develop a progressive gaming option in which all the video lottery machines are linked to a central jackpot. A progressive game, for example, could award a multimillion dollar jackpot to a single winner. While progressive games are common in Las Vegas and Atlantic City, no state has yet implemented a progressive game.