Radical Blue positions itself for rebound in gaming gear

Russ Ristine figures it's probably two years almost certainly no more than five until casinos widely adopt the technologies that link gaming machines to back-office management systems.

That shift is likely to supercharge growth of Ristine's Reno-based Radical Blue Gaming Inc.

But the software company is doing well in the meantime as it develops the systems that allow manufacturers of gaming machines, casino operators and government regulators to test and simulate the new technologies.

Five of Radical Blue's seven employees work in modest offices along Keystone Avenue near the Truckee River, developing software for a niche in which the company has essentially no competition anywhere in the world.

That enviable position, explains Ristine, the president of Radical Blue, comes from the company's close involvement with the development of the casino technologies.

A little more than five years ago, International Game Technology was developing a set of protocols to govern the communication of devices on gaming floors with back-office systems.

The Gaming Standards Association, a group of gaming-equipment manufacturers, casino operators and regulators, was developing a competing set of protocols.

Facing the potential of a Betamax-vs-VHS fight over technology, IGT and the Gaming Standards Association agreed in 2005 to integrate their development efforts.

They picked Ristine, who previously had been working as vice president of systems development for Bally Technologies, to lead the effort to combine the best of the IGT protocols with the best of the Gaming Standards Association protocols.

And that, in turn, led to the creation of Radical Blue, which built software simulators, and then testing software, to make sure that the game-to-system communications networks work. (In the industry, the protocols are dubbed "G2S.")

"Since we've been involved since the get-go, we have a lot of experience," says Ristine. "We've been following this protocol since it emerged into the world."

And that history, in turn, snowballs into an even-better competitive advantage.

Now that Radical Blue's team of software developers has created a portfolio of G2S products, the company has a significant inventory of software code. When a customer orders a custom-made package, Radical Blue can use large chunks of its existing code, write new software only where's it necessary, and deliver products within a matter of weeks rather than the months and years needed for entirely new software products.

Customers typically pay somewhere in the area of $15,000 for a license to use Radical Blue's software, along with an annual fee for upgrades.

"We're not selling $99 software," Ristine says.

The protocol's adoption by casino operators and equipment manufacturers has been dramatically slowed by the recession. Casino patrons cut their spending, casino operators delayed their capital investments and equipment manufacturers saw their order books shrink.

And ultimately, the slowdown rippled back to companies such as Radical Blue.

Self-funded by Ristine and partners in Washington State and Wisconsin, Radical Blue had operated frugally even before the downturn, and the company was able to keep its staff together through the downturn.

"We've got some really brilliant people working for us," Ristine says.

Now the company is seeing fresh stirrings of interest in the conversion to G2S protocols European casino operators and Canadian lottery operators have come calling recently and Ristine thinks the delayed conversion to the new casino system is about to build steam.