Behind the Bells and Whistles

Date: February 16, 2011

Dr. Max Stern is a retired pediatrician from Costa Rica.  He has also won three gold bracelets in the World Series of Poker®, and his wife has won a WSOP® gold bracelet, too.  More importantly, for purposes of this article, Dr. Stern is the sole inventor of several patented methods of playing card games, dice games, and apparatuses for video gaming devices.  Unfortunately, he has not been able to monetize those patents.

On the other hand, Ernie Moody is a former stockbroker who is now arguably one of the most successful slot machine designers.  He invented and patented a new method to play poker in which a player can wager on more than one hand of draw poker at a time but only needs to make a decision on the first hand, while the cards being held are played for each hand.  Ernie Moody is an inventor for more than forty patents dealing with poker.  His Triple Play Draw Poker® is licensed to IGT Corporation and appears in video slot machines in casinos everywhere.  Due to its popularity, Moody has received millions of dollars in royalties.

While both Ernie Moody and Dr. Stern were familiar with the casino industry, neither of them started as an inventor.  Nor was John Breeding.  He was a truck driver who invented an apparatus for automatically shuffling a deck of cards described in U.S. Patent 4,807,884.  After several years of development, ShuffleMaster, Inc. started commercializing card shuffling devices and now is a leading supplier of electronic table games.

The point is, all of the games and devices used in the gambling industry began as someone’s idea.  Not all of those ideas come from someone associated with the industry.  The United States Constitution provides that “Congress shall have the power…to promote the progress of science and useful arts, by securing for limited time to authors and inventors the exclusive right to their respective writings and discoveries,” U.S. Const. Art. 1, §8, cl. 8.  Congress exercised that power by statute that “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”  35 U.S.C. §101.  Congress further defined some of those conditions and requirements, such that a person shall be entitled to a patent unless--the invention is not novel (§102) or the subject matter is obvious as compared to the prior art at the time of invention (§103).  Additionally, the application must be made in writing (§111) with sufficient enabling disclosure that describes the manner and process of making and using the invention (§112) and drawings if necessary for the understanding of the subject matter of the invention (§113).

The Bally brand name, long associated with pin ball games, now belongs to Bally Technologies, the leading purveyor of slot machines and casino systems.  Bally is the listed assignee of hundreds of patents for games and underlying systems to enhance the gambling experience.  Consider the following, for example:

  • more than fifty design patents for such things as display screen icons, U.S. Design Patent No. D414,757; shaped top for gaming machine, U.S. Design Patent No. D520,074; gaming machine layout, U.S. Design Patent No. D597,144; and gaming machine display enclosure, U.S. Design Patent No. D625,368
  • a multi-reel slot machine with selectable play, U.S. Patent No. 7,361,089;
  • a game machine payout system in the form of paper tokens, U.S. Patent No. 6,293,867;
  • a lottery games in which prizes are issued as certificates, redeemable only for merchandise, U.S. Patent No. 7,118,476;
  • a simulated poker game with a bonus reel, U.S. Patent No. 7,425,176;
  • an interactive BINGO game system, U.S. Patent No. 7,727,064; and
  • a systems for monitoring activities on a gaming table, U.S. Patent No. 7,771,272.

Similarly, International Gaming Technology, known simply as IGT, is a leading company specializing in design, development, manufacturing, distribution, and sales of computerized gaming equipment, software, and network systems worldwide.  IGT, to whom Ernie Moody has licensed his games, has a large research department and is listed as the assignee of more than a thousand patents dealing with video gaming devices.  The following is a small set of examples:

  • a gaming device that simulates movement of the gaming device screen, U.S. Patent No. 6,837,790;
  • a communication device that allows communications between a gaming machine and game service servers in a single network, U.S. Patent No. 6,875,110;
  • an electronic gaming apparatus that uses  authentication programming, U.S. Patent No. 7,063,615;
  • protocols and standards for communication by a gaming machine coupled to several USB peripherals, U.S. Patent No. 7,290,072;
  • a slot machine game having multiple ways to issue a percentage of a progressive award based upon any wager, U.S. Patent No. 7,357,716;
  • a management systems for gaming licenses, U.S. Patent No. 7,841,942; and
  • a multi-spin poker game with predetermined game outcomes, U.S. Patent No. 7,857,693.

Jon Muskin, a patent attorney who focuses a good portion of his practice on the gaming industry and has filed over 100 patent applications in the gaming space, states that while successful casino game inventors have made large amounts of money with their game inventions, the majority of games invented by small inventors never see the light of day.  Truly, such an undertaking is an uphill battle, and certainly, not everyone makes money.  Michael Shackleford, a professional actuary who has made a career of analyzing casino games and runs the numbers on new games for casinos and game developers, says that trying to introduce a new game, whether machine or table game, is a very expensive venture and the probability of ever showing a profit is very small.  Unfortunately, the chance of earning a large payout is about the same as winning the jackpot from one of the gaming machines.

Sometimes, not all the appropriate protections may be in place and the inventor loses out.  In the U.K., a 73-year-old inventor claims that several scratch card games offered by the National Lottery are based on his board game.  He is suing the National Lottery for copyright infringement.  Several years ago, he produced gamecards on his original idea and offered them to the Lottery operator with the idea of using dice combinations on scratchcards.  Now, he is claiming they copied his idea.  While thousands of his board game were sold, he made no money after being let down by an intermediary.  He has spent his life savings trying to further his inventions but was made bankrupt several years ago after a series of legal problems.  His case is still pending.

Of course, even when an independent inventor is successful in getting a new game into a casino, the manufacturers would rather own the technology than lease it.  Ernie Moody says, "Casinos do not enjoy paying the daily royalty fee, even though the games make more money [than machines that do not require royalties].  Casinos want to buy the game for not a lot of money, keep it on the gaming floor for 10 years, have it make money, and then trade it in for 80 percent of the original cost."

In Maryland, the Maryland Lottery has been running since 1973.  Now, after a prolonged battle in the legislature, Maryland has a couple of video lottery facilities, possibly with more to come.  The Maryland Lottery provides instant games, various number combination games, and multi-state games.  Although it is not available with the Maryland Lottery, U.S. patent 7,527,556 entitled “Method and Systems for Shared-Ownership Lottery Plays”, describes a method for pooling the lottery play.  This technology automates the concept of an office pool that is typically exploited for large jackpots.  According to the patent, a player is assigned an ownership percentage for a pool made up of ten plays shared by ten players.  Using this scenario, a player is likely to win 10 times more frequently than without the pool.

Indeed, a state itself may get involved in providing technology in some gambling games.  For example, in 2008, Maryland settled a case involving ownership of part of the technology for the popular Keno lottery game that the state claims it helped conceptualize and has since spread all over the world.  The agreement puts an end to a dispute over a multiplier option featured in the Maryland Lottery's Keno Bonus Game, which permits players to pay extra and improve their price if they choose the winning numbers in a keno game.  Maryland had claimed that it should own a portion of a patent owned by Scientific Games, the provider of the Keno game, because it had helped the company incorporate the multiplier into the existing game while Scientific Games still has a contract with the state.  The settlement allows the state to continue utilizing the technology and share in some of the profits without giving some compensation to Scientific Games, no matter who utilizes it as a contractor.

Additionally, in December 2010, the Florida Lottery filed an application with the U.S. Patent and Trademark Office for a patent related to a game drawing method developed by the Lottery's product development team.  The method simplifies the drawing process currently utilized by some state lotteries.  From a business perspective, seeking patent protection makes sense for the Florida Lottery because, in Florida, the Lottery operates as a self-funding enterprise.  It is able to raise profits by increasing sales, and by holding patents for unique lottery games, play styles, methods, and systems.  Consistent with the statutory requirement that the Florida Lottery function as much as possible as an entrepreneurial business enterprise, a patent issued by the U.S. Patent and Trademark Office would allow the Lottery to potentially create a new source of revenue since the agency could charge a licensing fee to other gaming organizations to use the patented product or method.  Additionally, patents granted to the Lottery could potentially reduce the agency's operating costs, since it would not need to rely as heavily on games that are patented by vendors or other lotteries.

Not all the innovative technology is directed to the games alone.  According to patent 7,846,020 entitled “Problem Gambling Detection in Tabletop Games”, an establishment may determine the existence of problem gamblers within its halls by monitoring player behavior. The player's behavior is then compared to normal behavior and/or problem gambling behavior to determine if the player is potentially a problem gambler.  According to the invention, the detection system uses a variety of behavior patterns such as player movement, player betting patterns, facial expressions, physical clues, nonverbal clues, and the like.

As described above, a number of patents relating to various gambling games and methods have been issued and several patent applications are pending.  Sometimes, though rarely, one man's dream can turn into a million-dollar success story.  If an individual discovers a new way to play a gambling game or, as new and innovative products and methods are developed for casinos and slot machines, it is appropriate to consider appropriate protection.