Snazzy Slots May Help Casinos Win Big

Slot machines are no longer just one-armed bandits.

The machines now talk to customers, display 3-D graphics and enable gamblers to interact with each other and spend money in a way similar to what the Internet offers.

While some changes can already be seen on certain slot machines today, the future will bring a whole new world to the casino floor -- and potentially to casino operators' bottom lines.

Several years ago, casinos began replacing the old coin-operated slot machines with ones that use paper tickets for payouts. The transformation helped casinos increase profits by cutting down on employee coin refills and allowing consumers to gamble faster by not having to scoop up buckets of quarters.

Today, nearly all casinos have "ticket-in, ticket-out" slot machines, with International Gaming Technology(IGT - Cramer's Take - Stockpickr) having been the leader in developing the technology. Now IGT is a major innovator in the next step for casinos: server-based gaming.

"Ticket-in, ticket-out was just scratching the service with what server-based gaming will allow these guys to do," says Joe Fath, an analyst with T. Rowe Price, IGT's largest shareholder.

Server-based gaming will bring a host of download and configuration capabilities to slot machines. The technology will allow casino owners to use a computer to connect all the machines on its casino floor and tailor each to players' preferences.