Cover Story
(December 2007)Cover Story
(December 2007)
Mike Pace has been
called a genius by friends and employees. But what does that really
mean? Perhaps Abraham Lincoln said it best, "Towering genius disdains
a beaten path. It seeks regions hitherto unexplored." Or Arthur
Koestler's take on genius: "The principal mark of a genius is not
perfection but originality, the opening of new frontiers." Or maybe
Goethe is right: "Geniuses experience a second adolescence, whereas other
people are only young once." and, that's Michael Pace.
Mike Pace has been creating new electronic devices since he was a child. Back then the CEO of Pace-O-Matic filled his days with inventing new electronic creations and reading science, math, and electronic books that his father bought him. In high school he entered state science fairs and won for his unique innovations. However, one year he lost (or was disqualified) when the judges simply couldn’t believe that a teenager could have concocted such an innovative creation without professional assistance.
In 1975 before remote controls
were common it was Mike alone who invented a device that turned down the stereo
volume automatically, turned it into a hands-free speakerphone when the phone
rang, and turned the volume back up once the call was completed. He’s been
creating new electronic devices ever since. “It’s what I do,” he said as
if there was any doubt.
For more than 25 years Mike has set the pace for other gaming companies, leading the way while others follow. For the past seven years, he has been running his fifth technology company, Pace-O-Matic, based in Atlanta, Ga. Prior to that at his other gaming companies he created a few firsts: the first countertop video game ever; the first game terminal that offered multiple games; the first electronic pull-tab dispenser; and the first pari-mutuel Class II games for Indian casinos.
In 1989 he created Pot-O-GoldTM, which he says is one of the highest earning games of all time. When he started Pace-O-Matic in 2000, after coming out of a four-year retirement living on ranches in Colorado and Wyoming with his wife, Karmin, who handles the finances, the company developed new software to bring existing Pot-O-GoldTM games into compliance with ever-changing state laws.
There were about 50,000 of the
games on the street; all were originally placed in states that complied with
laws at the time. When the laws changed by either legislative or judicial means
the games needed software changes to comply with the new laws or they would have
been deemed illegal to operate.
Gaming in Georgia and Ohio
Pace-O-Matic officials explained the evolution of its products and difficulties encountered in the marketplace. As well as developing new software Pace-O-Matic invented a game called Nudge’emTM, which was built in compliance with the laws in Georgia. However, the state became saturated with illegal games and Pace-O-Matic just couldn’t compete with them.
The law required that games be skill-based and that no more than $5 in vouchers could be paid to winners. Other gaming companies were selling games that were based on chance and paid out more than the legal limit and players began playing these high-ticket games of chance. Even though Pace addressed about 150 state district attorneys about enforcing the laws and shutting down the illegal games, his pleas fell on deaf ears. Georgia had no agency to approve games and legal gaming enforcement was rare.
Pace-O-Matic had games in a few other states as well, all tailor-made to fit their laws. When Pace, who had always made games specific to the laws of each state, heard about Ohio jailing operators for illegal games, he thought he saw an opportunity there.
Finally, he thought, a state that upholds the gaming laws and gets rid of
companies that don’t. It was what he campaigned for in Georgia. Pace-O-Matic
created a game to comply with Ohio’s gaming laws, such as being a majority
skill-based game. Before entering the market in Ohio, Pace-O-Matic had the game
tested by a Ph.D. in economics at Ohio State University, by an independent
attorney, and a mathematician, and all declared the game to be majority
skill-based.
Tic Tac FruitTM’s game play was similar to the familiar Tic-Tac-Toe. It offered players nine squares and the opportunity to choose the best spot to obtain three symbols in a row. Between 2004 and 2007 Pace-O-Matic had sold about 3,600 machines in Ohio.
Ohio’s law allowed for cash payment on skill-based amusement machines; for winning a single game it was possible for a player to win anywhere from $7 to $3,000. Because players flocked to the games, operators, Pace-O-Matic, and players were earning well. But it wasn’t to last.
Within a year illegal game operators flocked to Ohio like men did during the famous California Gold Rush! They created Tic Tac FruitTM look-alikes; some even using the very same name. But even with the same name the games were far from the original; they were not majority skill-based, making them illegal. Pace declared that most of the illegal games had no element of skill at all. Players started playing the illegal games preferring games of chance to games of skill in an effort to win more money even if it was illegal, while Pace-O-Matic refused to sell games of chance in a state that disallowed them.
Pace-O-Matic was not the only one unhappy with the illegal games. The attorney general, who in 2006 had authorities round up many of the games that had flooded the state, was decidedly despondent. As it turned out, along with hundreds of illegal games that were confiscated so were about 200 Tic Tac FruitTM games.
Hearings were scheduled for each operator who had games in their possession. Pace-O-Matic spent hundreds of thousands of dollars going to court numerous times on behalf of individual operators. The company’s attorneys argued that their games were legal. At the hearings and trials that ensued the game were never found to be illegal and in at least one case the judge declared the game to be legal statewide.
At one of the hearings, however, the judge said a final trial would be held to determine the legality of the machines and that no authority could pick up any other Tic Tac FruitTM games. He also said that Pace-O-Matic couldn’t place any more Tic Tac FruitTM games in Ohio until a final determination on their legality at trial. Although Pace-O-Matic was barred from selling any more Tic Tac Fruit TM games, other companies took advantage of the injunction and continued to sell their own games that looked similar to Tic Tac FruitTM, but were clearly illegal, into Ohio.
“Inadvertently we created a hole for these idiots to move into the state,” said Pace. After the authorities were barred from picking up any more Pace-O-Matic machines they quit picking up all gaming machines because they couldn’t tell a legal game from an illegal one. As more games moved into the state the attorney general and the governor tried creating a new law that would force a guilty charge of consumer fraud on anyone who operated a gaming machine. Pace-O-Matic’s distributor went to court and got an injunction against that.
In
October 2007, the gaming situation in Ohio worsened. “The state house, state
senate, and the governor signed a bill prohibiting any type of game that pays
more than $10 in cash,” said Bob Hawk, Vice President of Compliance for
Pace-O-Matic. “That kind of clipped our wings. It’s my understanding that
everybody [all operators] closed down, all machines were turned off, and they
are going to be placed in warehouses.”
So with all the changing laws the
question has to be: Where is the industry going from here? The latest trend Pace
sees around the country is gaming companies moving toward sweepstake games to
promote product sales. For example, a game room could sell a phone card that
offers an allotted number of phone minutes and the back of the card could
feature a rub-off with a secret code that could allow players to win cash.
The future
But for the man who can’t stop creating, he’s not headed that way. He’s already in talks with eight new states and is ramping up to create games that would be custom made to suit the laws of each of those states. As the new deals come through, Pace-O-Matic is expected to grow more. Already the company has 30 employees; it started with just two.
His most recent addition will be taking over as chief engineer so that Pace can focus on selling and creating new markets. As Senior Technology Director, Clay Turner will be involved in all technical developments. An expert in higher mathematics, he will provide the expertise to help create games that comply with targeted jurisdictions. The two have known one another and worked and played together since they were in high school.
Pace said, “I’ve been working 80-hour weeks since the company started, overseeing everything I brought Clay in to help with the creative part of engineering, and head up the technical part of the company’s patent program.” Turner already has six patents of his own.
Pace, Turner, Hawk and Ron Carrara (Vice President of Sales and Marketing) are looking forward to entering new markets, even though games must be tailored made for each state, and laws can change and be reinterpreted any time. It’s all part of the business says Pace, and it just gives him another opportunity to create something new.
Pace added, “We carefully evaluate and examine the gaming laws in every state. We then design and build machines that earn the best allowed by law. When I built the first countertop video game people thought it was a gray area machine, but now it’s a mainstay in the coin-op industry. When I designed the first Class II games for Indian casinos it took years before Class II was finally accepted as legal. Things that are new scare people. Pace-O-Matic is going to continue to innovate and follow the laws. We like being first and sometimes that’s controversial.”
Ron Carrara, Vice President of Sales and Marketing
Ron Carrara was so enthused about Pace-O-Matic and its CEO Mike Pace, he
was willing to make his permanent home in Atlanta, Ga., two years ago to take
the position of Vice President of Sales and Marketing. He leads the sales force
and spearheads marketing and advertising strategies. Each year he attends about
10 domestic and international trade shows and travels about 60,000 miles to
visit with prospects and clients.
But Carrara is no stranger to traveling, meeting with potential customers,
knowing the industry, or selling products he believes in. He began his coin-op
career 47 years ago working for his family. His father began operating jukeboxes
and slot machines in the late ‘30s on military bases on the West Coast. He
sold his business to the military just before the Senate Crime Committee began
hearings on gambling. At the hearings the court told him they were destroying
all of his machines and Ron’s dad countered that they weren’t destroying HIS
machines because they now belonged to the government.
Ron’s dad had an interesting and colorful coin-op career that rivaled Ron’s.
He operated machines in Las Vegas, then California, and then Ron found his own
niche in the industry. He was a major force when Seeburg took over the jukebox
market; he made operating a profitable adventure; and he accepted a lucrative
position of operating machines. It was then on to Washington, D.C., where he was
soliciting locations; the company he worked for became one of the largest
operating companies.
Ron’s wife Joanie, a flight attendant, died in a plane crash that sent Ron
reeling. He didn’t work for a number of years after her death. Finally, Ron
realized that he had to get back to work and was offered a sales position at
Scan Coin and then Bally Distributing. Ron also worked for Betson, Struve, and
C.A. Robinson & Co., which he enjoyed.
We can sum up Ron’s career saying his responsibilities through the years have
included route operations, distribution, and sales and marketing. He has
represented some of the best-known gaming companies in the country, launching
sales of more than 40 of the top-earning games in the industry. We often credit
him for putting companies on the map after he has made his usual impact.
Carrara served as President and Chairman of the American Amusement Machine
Association (AAMA) and presently serves on its Board of Directors. He is the
Past President of the American Amusement Machine Charitable Foundation (AAMCF)
and is presently Chairman of the Foreign Business Development Committee. He has
co-founded three industry trade shows: the Asian Amusement Expo, the India
Amusement Expo, and the International Expo for Amusement Machines in Mexico. In
addition, to open new markets in other countries, he has conducted seven
Department of Commerce Trade Missions to China, South East Asia, India, Eastern
Europe, South and Central America, and Viet Nam.
Pace, who lured him away from another gaming company, said, “Ron is one of the
industry veterans and one of the greatest sales managers on the planet. And, he
is one of the greatest, smartest, and most honest people ever in the gaming
industry.”
“OK, Mike, what do you want?” quips Carrara, with that familiar laugh. Mike
Pace and Ron Carrara are a team that could be called one of a kind.
Robert
Hawk, Vice President of Compliance
Robert “Bob” Hawk, Pace-O-Matic’s Vice President of Compliance, checks,
double checks, and then triple checks to make sure the company complies with a
location’s gaming laws. Always on the side of the law, for 28 years Hawk
preyed on the bad guys, working for the FBI as a special agent in organized
crime and later as one of its public relations directors.
Before accepting his position at Pace-O-Matic two years ago, Hawk took three
months to access its genuineness to make certain the company was legal and
ethical.
When Pace originally pursued Hawk for his expertise in the law and public
relations, he was skeptical about working for a gaming company. He explained,
“Michael told me, ‘Look at us, come down to Atlanta, work with us there, and
attend meetings in Ohio, and if you see something you don’t like walk away and
I’ll still be your friend.’”
Michael was so convincing and honest Hawk decided to give it a three-month trial
as an independent consultant. Hawk said, “During that time I saw nothing that
concerned me about anything the company did. They were always above board.” He
then signed on to work as a full-time employee.
Hawk, who is based in Cleveland, Ohio, said Pace-O-Matic garnered the support of
local authorities and/or officials around the state before the company sold any
games there. Hawk added that in those counties or cities where the games were
not welcome, Pace-O-Matic walked away without even attempting to place one game
there. “Our belief was and is that we only want to be where we are welcome,”
Hawk said.
The former FBI agent met with prosecutors, chiefs of police, and sheriffs around
the state to inform them how the game worked and how it had been reviewed by
independent specialists.
In counties and cities where authorities said the games sounded fine, Pace-O-Matic
sold games in those areas. Some game operators had multiple locations around the
state and Hawk advised them where the games were not welcome. “I told them if
law enforcement doesn’t want us there, be a good neighbor, and walk away.
Now that Ohio is changing its gaming laws and calling for all machines that pay
more than $10 in prizes to be closed down, Hawk will befriend authorities in new
states. And Pace-O-Matic will create new games that fit the laws of those
states.
Even though that strategy didn’t work in Ohio, the company plans to do it
again. Hawk said, “As Michael always says, ‘We always have to do the right
thing.’”
Clay
Turner, Senior Technical Director
It was a meeting of the minds when Clay Turner and Mike Pace met in 1972
at a high school gym class in Atlanta, Ga. While other boys scuffled on the
courts competing in a game of basketball, Pace and Turner stuck to the sidelines
challenging each other in a game of chess. More than 30 years later they're
still concentrating on games of skill; except now they're on the same team.
Turner, the Senior Technical Director at Pace-O-Matic, began working for Pace in
1979 at his first company, Pace Age Technology, which serviced small business
computers. At Pace's second company, Digital Controls, the pair created Little
Casino, the first countertop machine. It featured three games in one unit:
craps, blackjack, and poker. About 22,000 Little Casinos were sold around the
country.
When Turner joined Pace-O-Matic this past July he began reviewing the numerous
aspects of the business.
"One of the first things I did was apply for patents for things Michael is
currently inventing and for his latest ideas from the past year," explained
Turner. "Companies have used his ideas to create games that look and
perform almost identical to his. If he had applied for patents he'd be earning
what is rightfully his for developing the ideas and creating the products."
Well versed in patents Turner has six of his own.
As well as reviewing the past Turner is planning and preparing for Pace-O-Matic's
future. He carefully reviews state laws for gaming and recommends how games
should be programmed for different states.
As a physicist and mathematician who taught physics at Georgia State University,
Turner develops statistical mathematical equations to make games work in
accordance with each state's gaming laws. Turner also creates encryptions based
on algorithms to prevent anyone from deciphering programming.
Even with his encryptions he knows other companies will continue to copy its
games as best as they can. "It's easy to make a game look like a Pace-O-Matic
game. But to make it be legal and play like ours, it will now be almost
impossible."
John
Taylor
Steve
Vargas
John
Bushfield
Freddie
Evey