Global Gaming Business Magazine, Jan. 2015

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GGB Global Gaming Business Magazine

CALIFORNIA BACK ON TABLE CITY OF DREAMS OPENS IN MANILA ICE ’15 PREVIEW CORDISH WINS PHILLY LICENSE

January 2015 • Vol. 14 • No. 1 • $10

Disaster in

Delaware Regional competition makes the First State a victim

My Amaya, Your Amaya Groundbreaking gaming company sets new supplier parameters Amaya’s

David Baazov and the People to Watch for 2015

25

Tribal

Disenchantment

New Mexico tribal gaming conflicts PERMIT # 1080 HARRISBURG PA

Official Publication of the American Gaming Association

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CONTENTS

Vol. 13 • No. 12

january

Global Gaming Business Magazine

22 COVER STORY

COLUMNS

Amaya Rising

14

Amaya Gaming CEO David Baazov’s bold move to acquire Rational Gaming and PokerStars, the largest iGaming company in the world, transforms his company from a small slot supplier and technology company into one of the largest B2C businesses in the gaming industry.

Fantini’s Finance Macau’s Lessons Frank Fantini

16

AGA 2014: Building Year for the AGA Geoff Freeman

66

By Marco Valerio

Global Gaming Women Mentoring Is The Cure Maureen Sweeny

DEPARTMENTS FEATURES

4 The Agenda 6 Dateline

18 Solid ICE

50 Delaware Dilemma

A preview of February’s ICE Totally Gaming 2015 at London’s ExCel Centre, Europe’s largest gaming trade event, which is expected to set yet another attendance record.

Delaware’s racinos continue to appeal to lawmakers for relief from an onerous tax burden while struggling from losses due to Northeast saturation.

26 People to Watch

54 Older New Mexico

Our list of “People to Watch” for 2015 profiles the industry’s movers and shakers in what promises to be a pivotal year for gaming, particularly in the supply sector.

Once a model of success for tribal gaming, New Mexico’s Indian casinos face stagnant growth and marketing wars as saturation takes hold.

By Roger Gros, Frank Legato, Dave Bontempo, Rodric J. Bradford, Ericka Meeske, Marjorie Preston, David Rittvo, Patrick Roberts, David Ross and Michael Soll

By Dave Palermo

13 Nutshell 48 New Game Review

By Marjorie Preston

62 Emerging Leaders With Isle of Capri Treasury and Risk Management VP Mike Hart and Choctaw Casino Marketing Director Wendy Carter

64 Frankly Speaking

GGB iGames Our monthly section highlighting and analyzing the emerging internet gaming markets.

66 Goods & Services

iGNA Outlook

70 Casino Communications

58 Best Practices Anthony Cabot

68 Cutting Edge 69 People With Andy Caras-Altas, Founder and CEO, Traffic Generation Limited

60 iGames News Roundup JANUARY 2015 www.ggbmagazine.com

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THE AGENDA

Role for Regulators Roger Gros, Publisher

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y friend Richard Schuetz is a regular contributor to our magazine. I’ve known Richard for more than 25 years in all the iterations of his career, including his current role as a member of the California Gaming Commission.

And I’m sure the last thing he thought he’d be was a regulator.

Last month, we published an article by Richard about how difficult it has become for regulators to keep up with technology and the convoluted corporate structure of gaming companies, suppliers and their affiliates.

But let’s be clear. Most regulators have some kind of political connections in their states. They are either former legislators or someone who has advised or contributed to legislators’ campaigns. Very rarely is it anyone who has any experience in the gaming industry (Richard is an exception, with an operational, start-up, tribal and supplier background).

Richard’s articles always make me think, and the December feature plunged me into the endless loop of “What is the real role of the regulator?”

This is a crucial definition, especially in today’s reality of online vs. land-based gaming. Full disclosure: We have a company in New Jersey involved in online gaming as an affiliate marketing company, iGamingPlayer.com. As such, I’ve been paying close attention to how New Jersey is regulating online gaming.

I attended a few sessions of the Nevada Gaming Control Board when they were considering the legalization of iGaming. The board eventually settled on online poker, but the bulk of the hearings considered the technology of iGaming—ID verification, geolocation, payment processing and the like. While none of this was perfected at that time—and still isn’t—it was all just a matter of time before it would be.

The big question is what faces all regulators at one time or another—land-based or online: Are the participants in the industry clean and trustworthy, and good corporate citizens?

So once the technology questions are resolved—as they soon will be—how do you evaluate the companies that want to participate in the iGaming industry?

Since Nevada is such a small sample, the decisions it makes, however well-reasoned and logical, will not be the “gold standard”—despite what Tony Cabot asserts in the iGaming North America column

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Global Gaming Business JANUARY 2015

on page 58. New Jersey is more likely the state that will determine the future of iGaming regulation, if nothing else because of its critical mass.

So the bottom line is if the company applying for a license is transparent enough and has the integrity needed to participate in the state’s iGaming industry, the same criteria you consider for landbased casinos should apply.

So let’s review the history of the New Jersey regulatory system. Pretty tough. In the early days of gaming in the state, Caesars applied for a license while controlled by the Perlman brothers, Stewart and Clifford. Rumor had it—with a strong set of evidence to back it up—the brothers were connected to Meyer Lansky, the Miami mobster. The brothers quickly sold the company and it was immediately licensed.

There are multiple examples of this kind of thing in New Jersey, Nevada and other states. Take out the offenders and it’s a clean slate. But what about the “tainted assets?”—the money, products or services developed under the questionable regime— wonder the critics. Well, no state has tried to define those assets in the land-based industry, so how can you do it online?

But back to the basics. What is the role of the regulator? Certainly to assure the integrity of the operators and suppliers, and the fairness of the games to allow participants in the industry to thrive.

For iGaming, that should be a breeze.

Everything is digitally recorded. If regulators can track the financial and equity transactions of the companies involved in iGaming, it simply becomes a matter of an objective review.

But, of course, none of this is that easy. Today’s transactions in the gaming industry are like a game of three-card monte. You never know what they’re hiding beneath each card. Richard Schuetz presciently outlined the difficulties in last month’s feature.

This REIT structure that gaming operators have seemingly embraced can become a Rubik’s Cube.

And what about the lottery-slot-iGaming-social gaming structure of the manufacturers? Let’s try to untangle that!

Yes, regulators have a tough job these days, but only the future of the gaming industry is riding on their decision. Thanks, Richard, for bringing this to our attention.

Vol. 14 • No. 1 • January 2015 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Anthony Cabot | Frank Fantini Geoff Freeman | Maureen Sweeny Contributing Editors Dave Bontempo | Rodric J. Bradford Erica Meeske | Dave Palermo | Marjorie Preston David Rittvo | Patrick Roberts | David Ross Rob Rossiello | Michael Soll | Marco Valerio

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

• Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Director, Maryland Lottery and Gaming Control Agency

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, General Manager, ACSC Product Group Eastern Region Vice President, Bally Systems

• Steven M. Rittvo, President, The Innovation Group

• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University

• Ernie Stevens, Jr., Chairman, National Indian Gaming Association

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 921 American Pacific Dr, Suite 304, Henderson, NV 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor.

Copyright 2014 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 921 American Pacific Dr, Suite 304, Henderson, NV 89014

Official Publication

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DATELINE ASIA january2015

Korean ConClusion Incheon mega-resort breaks ground s

outh Korean casino operator Paradise Group has broken ground on its planned US$1.7 billion Paradise City casino resort near the country’s main international airport at Incheon.

Plans for the project, located within a government-sponsored special economic zone on Yeongjong Island about 30 kilometers from the capital Seoul, call for a Paradise Sega Sammy Chief Executive Choi Jong-hwan 2017 opening.

Paradise is partnering with Japanese pachinko giant Sega Sammy Holdings on the development, which includes a 750-room hotel, shopping and dining and other attractions and a foreignersonly casino with approximately 160 table games and 340 slot machines.

“Above all, the resort complex boasts a geographical advantage in that it is located within walking distance from Incheon International Airport,” Paradise Sega Sammy Chief Executive Choi Jong-hwan told the Korea Herald.

Choi has said in recent interviews that the casino would establish a massive junket operator network to bring in high rollers from mainland China.

South Korea is home to 16 casinos restricted to foreign passport holders and one in the remote northeast of the country that is open to domestic players.

Under current law all the new developments would be foreigners-only.

Macau Missteps China says kick the gambling habit

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top Chinese government official has issued Macau its sternest reminder yet from Beijing of the need, “in the interests of the whole nation,” to diversify its economy away from an Macau’s new Secretary over-reliance on casino gambling. of Economy and Finance The warning from Li Fei, chairman of the Lionel Leong Macau Basic Law Committee and deputy secretary general of the National People’s Congress Standing Committee, was issued as Macau Chief Executive Chui Sai On unveiled a new cabinet for his final five years in office, headed by Secretary of Economy and Finance Lionel Leong, who takes office amid signs that the current gaming revenue slump, now headed into its seventh straight month, could tip the territory into recession.

“The overwhelming dominance of gambling in Macau is not in line with the overall interest of Macau,” he said, “and the fact that Macau’s economy, especially gaming, is closely connected with the mainland determines that when one judges the overall interest of Macau, one cannot focus only on Macau’s economic growth and tax revenue. One must take into account the socioeconomic safety, stability and developmental interest of the mainland and the whole nation.”

Li spoke ahead of an expected visit to Macau in late December by President Xi Jinping to celebrate the 15th anniversary of the former Portuguese colony’s return to China.

His remarks dealt another blow to the market’s already-battered gaming 6

Global Gaming Business JANUARY 2015

PHILIPPINE DREAMS

City of Dreams Manila opens

elco Crown Entertainment’s Manila super-resort opened on December 14.

City of Dreams Manila, the second of four destination casinos licensed for the Philippine government’s new Entertainment City tourist district, staged the soft opening for the “local market,” said Melco Crown Co-Chairman Lawrence Ho. The resort, priced at US$1.3 billion at full build-out, will formally launch its first phase in February, Ho said, likely timed to coincide with Chinese New Year, which commences on February 19.

City of Dreams Manila is a joint venture between a PSX-listed subsidiary of Melco Crown—which operates two casinos in Macau and is opening a third in the Chinese gambling hub next year—and a local subsidiary of Philippine billionaire Henry Sy’s retail and property conglomerate SM. Current plans allocate to the Melco subsidiary all the resort’s profits from hotel and non-gaming operations and call for a split of gaming revenue with its partner.

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stocks, which fell sharply following his comments as concerns mount that the gaming slump, the worst since the 2009 global financial crisis, the result of a perfect storm of factors—Beijing’s widespread campaign against corruption and illicit capital flight, slowing economic growth within China, tighter credit conditions and a crackdown on abuses in the third-country visa system for travel from the mainland—will not be reversed any time soon.

Leong, addressing this in his first press conference, admitted that the decline in gaming revenue is worrisome and said his office will concentrate on ensuring economic stability, developing small and medium-sized enterprises and maintaining employment for local residents.

“We need to be cautious and optimistic,” he said. “We need to pay attention to the gaming revenue drop, and consider whether it will impact Macau’s economic structure, or if it affects SME development or the employment situation of Macau residents.”

He said he intends also to look closely at the pending renewal of the six casino concessions. “We will have to reflect upon what has been done so far, and also review other matters such as the non-gaming component,” he said.

“We need to study policies, such as ensuring that Macau is seen as an exhibition and convention center. Such assessment is a very important element and crucial groundwork to renew gaming concession contracts.”

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DATELINE TRIBAL january2015 Florida Governor Rick Scott

Talking again Florida gearing up for gambling negotiations F

lorida Governor Rick Scott was close to renewing a compact with the Seminole Tribe of Florida but ran out of time before the end of the legislative session in May. The portion of the 2009 compact giving the tribe exclusive rights to table games at seven of its casinos will expire in July 2015, causing the state to lose about $116 million annually, according to new estimates from state economists.

Scott and the Seminoles are said to have agreed on a seven-year deal that would have added roulette and craps to its South Florida casinos and allowed it to build a casino in Fort Pierce. The agreement also may have explicitly banned Las Vegas-style destination casinos. But observers said the deal broke down over how much the state should be given by the Seminoles for that exclusivity.

Under the current compact, the Seminoles agreed to pay a minimum of $1 billion over five years in exchange for exclusive rights to table games. The

tribe can stop the payments if slot machines exist anywhere outside Broward and Miami-Dade counties, excluding those operated by other tribes. The Seminoles also can reduce payments if the South Florida parimutuels are allowed to have banked card games or if slots are authorized at any facilities that weren’t already operating in Broward or Miami-Dade, except for Hialeah Race Track, when the deal was signed.

Seminole spokesman Gary Bitner said, “They’re hopeful to renew the table games provision and come up with a program that’s best for the state.”

State Senate Majority Leader Bill Galvano played a major role in crafting the compact five years ago, and is expected to take a lead in the next legislative session.

Deal Breaker?

Walker, Potawatomi sign compact amendment

W Raise the MaRgaRitas

Oklahoma casino rising on unwanted sandbar

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fter months of delay waiting for the U.S. Army Corps of Engineers to issue a permit, construction began in November on the Muscogee (Creek) Nation’s $329 million Margaritaville Casino in Tulsa, Oklahoma. The property will open in late 2016 and will be connected to the existing River Spirit Casino.

The new destination resort-casino will offer a casino, convention space, a 3,000-seat entertainment venue and a 27-story, 483-room hotel. The project will add 800 full-time jobs and generate $135 million a year into the local economy. Located on the Arkansas River, Margaritaville will have a beach theme, complete with a pool deck, cabanas and palm trees.

General Manager Jerry Floyd said the dirt work alone will cost $20 million, and with architectural and engineering work plus other incidental expenses, the total price tag will hit $365 million, making Margaritaville the second-largest construction project in the history of the state of Oklahoma.

isconsin Governor Scott Walker and the Forest County Potawatomi recently signed an amendment to their 2005 gaming compact that would require the state to pay the tribe for any losses to its Milwaukee Bingo Wisconsin Governor Scott Walker & Casino if the Menominee Nation is allowed to open its proposed $810 million off-reservation Hard Rock Casino at the former Dairyland Greyhound Park in nearby Kenosha. The arbitration was required by the state’s compact with the Potawatomi tribe.

Walker alerted the Bureau of Indian Affairs that the agreement does not indicate whether or not he will approve the Kenosha project. The BIA has 45 days to accept the amendment, reject it or take no action, which essentially would amount to approval. The BIA approved the Kenosha casino last year, but Walker has the final say on it and has until February 19 to announce his decision.

Attorney R. Lance Boldrey was hired by Walker to handle the dispute between the Potawatomi tribe and the state. In a letter to Assistant Secretary of Interior for Indian Affairs Kevin Washburn, Boldrey stated Walker may not have the authority to establish annual state spending obligations, and that the deal may violate Wisconsin’s constitution. “I write today to inform you that, although Governor Walker has signed the proposed amendment to the compact, the state has concerns with regard to its terms,” Boldrey stated.

The Potawatomi tribe has withheld its $25 million annual payment to the state due to concern the state will end up owing the tribe if the Kenosha casino is approved. Also, under the compact amendment, the state would have to refund the tribe up to $100 million. Potawatomi Attorney General Jeff Crawford said the tribe continues to oppose the Kenosha project and “believes Governor Walker will ultimately find that this project is not in the best interest of Wisconsin.”

The Menominee tribe issued a statement that it was pleased with the arbitration and that completing the process removes a major hurdle the governor faced before granting final approval. The tribe repeatedly has offered to make the reimbursement payments to the Potawatomi, which won $400 million at its Milwaukee casino last year.

JANUARY 2015 www.ggbmagazine.com

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DATELINE USA january2015 Manila’s Ninoy Aquino International Airport

Live! and dangerous

Cordish partnership wins last gaming license in Philadelphia

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fter two years of proposals, plans and deliberations, the city of Philadelphia has its second casino licensee. In a public meeting in November, the Pennsylvania Gaming Control Board voted unanimously to award the second city casino license to Live! Hotel and Casino, the joint venture of Maryland’s Cordish Companies and Greenwood Racing, which operates Pennsylvania’s highest-grossing current casino, Parx at Philadelphia Park in nearby Bensalem.

Live! Hotel and Casino will be a 200,000-square-foot complex including a $425 million casino with 2,000 slot machines and 125 table games, with a 220room hotel created by refurbishing the current Holiday Inn on the site. Board members said a deciding factor in choosing the project was not only the hotel but also its South Philadelphia location, near the sports complex that includes the Philadelphia Eagles’ Lincoln Financial Field, the Phillies’ Citizens Bank Park and the NHL Flyers’ Wells Fargo Center.

Cordish also owns Xfinity Live!, the dining and entertainment center at the site of the former Spectrum sports arena at the stadium complex, which connects the baseball stadium and the arena.

The stadium location gives the Live! project access to more than 8.5 million annual visitors, said Cordish President and Managing Partner Joe Weinberg in an interview with Bloomberg. “We think the market has tremendous potential that is untapped at this point,” he said. The gaming board, in a filing explaining the decision, said essentially the same thing, noting “the synergy between gambling and en-

GOLDEN OPPORTUNITY Fertitta’s Lake Charles casino opens he $700 million Golden Nugget Lake Charles in Louisiana opened in December, and owner Tilman Fertitta said, “It had better be real full. With a $700 million investment, you’d better have a lot of people out there. Just look around; it’s got our touch on it. We like to finish everything off. It is a big number but that is just what I do.”

Fertitta’s fifth gaming property, the Golden Nugget Lake Charles is just a two-hour drive from Houston. “To have it next to Houston, Texas, which is our home, just makes it really special,” Fertitta said. He noted 50,000 of the 60,000 players who already have signed up for the players club are from Texas.

Golden Nugget Lake Charles will offer 70 table games, 1,600 new slot machines and a state-of-the-art poker room.

Other amenities include luxury rooms and suites, a worldclass spa, five bars and lounges, eight boutiques and gift shops and an 18-hole championship golf course.

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Global Gaming Business JANUARY 2015

tertainment at a casino” and “the more than 400 stadium-area events per year.”

Philadelphia Mayor Michael Nutter, who had pressured the board for a decision despite calls for the second city casino license to be shelved, praised the board’s decision, saying the construction process and the new casino itself will create “thousands of much-needed construction and permanent jobs,” according to the Philadelphia Inquirer.

Others weren’t so sure. Several analysts released investor reports in December.

None of the comments on the prospects of the planned Live! Casino and Hotel were positive.

The chorus of analyst opinion agreed with the position taken by Philadelphia’s current casino, SugarHouse, and Caesars Entertainment, which owns Harrah’s Philadelphia in nearby Chester: The regional market is oversaturated, and another casino will hurt current operators and the state revenue picture in general.

“The addition of another casino in the greater Philadelphia market will be a significant negative for current operators,” wrote Deutsche Bank gaming analyst Andrew Zarnett. “We anticipate that gaming revenues at SugarHouse and Harrah’s will be hurt the most… In our view, the addition of the Live! casino will have more of a deleterious impact on the market.”

Lee Gets Full House Proxy fight ends with new executives

G

aming industry veteran Dan Lee, who led a group of activist investors to take control of Full House Resorts of Las Vegas, is now the company’s chief executive officer.

Current CEO and Chairman Andre Hilliou, who had instructed stockholders to ignore the investors’ quest for control, will step down, along with Chief Operating Officer Mark Miller. In addition to Lee, the company’s six Former Pinnacle Entertainment CEO Dan Lee open board seats will be filled by investors Craig Thomas and Bradley Tirpak, W.H. Baird Garrett, Raymond Hemmig, and former Boyd Gaming Corp. CEO Ellis Landau.

In October, the Securities and Exchange Commission OK’d a request by the investor group, which controlled 6.2 percent of Full House, to restructure the board from five to 10 members. The group had complained about excessive CEO compensation and massive revenue losses, and sought more influence over the company’s operation and direction.

In response to the proxy fight, Full House put itself up for sale. But the coup by Lee and his overhaul of the board “likely delays and possibly ends” the planned sale, according to Cincinnati.com. Full House now says it continues to “evaluate alternatives for the company.”

The company owns three casinos: one in Indiana, one in Mississippi and the Stockman’s Casino in Fallon, Nevada. Full House also manages the Grand Lodge Casino at Hyatt Regency Lake Tahoe under a lease agreement.

Lee now has an option to buy more than 940,000 shares of Full House stock at a fixed price over a four-year period. He has his work cut out for him: Full House’s stock price has declined by 55 percent over the past 12 months, and the company has also breached its credit covenants.

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DATELINE GLOBAL january2015

Star Power

Transparency in Mexico

Government OKs new gaming regs

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tem of substitution of licenses. The aim is to end with the system of multiple licenses that is in force at present.

Jesús Fernando Rodríguez, former technical secretary of the casino commission, told Yogonet that in the past, several licenses were granted. “It means that licenses to operate 10, 45 or 60 gambling venues were granted. Now, there will be just one casino per license. Those operators with licenses to operate 60 casinos must now have 60 licenses—one per casino.”

The job of policing casinos will fall to the National Institute of Games and Draws, which will have to verify that online casinos are nontransferable and operated just by the licensee, “forbidding any transference, leasing or cession to a third party.”

he government of Mexico is making progress toward instiAlejandro Moreno Cárdenas tuting the new gaming law, which is geared to ensure integrity.

A chief goal of Mexico’s new Federal Law of Games of Chance and Draws, which would issue single, 10-year licenses instead of blanket licenses, is to prevent money corruption and underage gambling. Alejandro Moreno Cárdenas, president of the government commission, said, “It will be a transparent and ad-hoc law, and the main goal is to avoid money laundering.”

The law could be in force by the first quarter of 2015, said attorney Gerardo Ballesteros Félix-Díaz.

The lawyer said the main modification is the sys-

Rotten Relationship

Paragon plans in Vancouver

Paragon under fire by BC regulators

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ritish Columbia’s Gaming Policy and Enforcement Branch is assessing whether Paragon Gaming is qualified to construct and operate a multimillion-dollar casino resort on the Vancouver waterfront. That review is concurrent with an investigation of Michael Graydon, former CEO of the BC Lottery Corp., who now works for an affiliate of Paragon Gaming.

David Eby, provincial government representative for Vancouver, told the Vancouver News that regulators are checking into “the circumstances of Graydon’s departure (from BCLC) and his violation of provincial conflict-of-interest rules, and whether that makes him ineligible to work for a gaming company in British Columbia.”

The company “may not be able to continue to operate the Edgewater Casino if they’re found to be not suitable,” said Eby.

Betting on Bermuda Casino legislation introduced ermuda Minister of Tourism Shawn Crockwell recently introduced the Casino Gaming Act in the House of Assembly. The bill would allow casinos to operate legally for the first time.

The 118-page legislation spells out licensing requirements for casinos, including the provisions that only three casino licenses could be in force at any time; that a casino license will remain in force

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Graydon is now head of PV Hospitality, a subsidiary of Paragon Gaming. He was named to the post in late 2013, during his tenure as head of BC Lottery Corp., the governing body, which reports to the minister responsible for gaming and the Gaming Policy and Enforcement Branch.

In December 2013, the city of Vancouver approved the relocation of the Edgewater Casino to a larger site at the Plaza of Nations across the street.

The new property will be 72,000 square feet and would include two hotels, a shopping center, a conference center and other amenities.

The expanded casino can have no more than its current allotment of 600 slots and 75 tables.

for five years and cannot be transfered; and that any casino operating without a license can be fined up to $10,000. The law also includes a provision for establishing a casino tax.

In addition, the legislation would establish a Bermuda Casino Gaming Commission that would regulate the industry and be made up of five members, including a chairman who would be required to be a barrister with more than five years’ experience.

The legislation also would ban ATM machines from casinos, restrict minors from entering a casino

Global Gaming Business JANUARY 2015

Actor Robert DeNiro

Packer, DeNiro partner for Antigua resort

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ctor Robert DeNiro could team up with Aussie billionaire James Packer of Crown Resorts to develop a five-star hotel complex in Antigua, says the island’s prime minister, Gaston Browne.

According to the London Daily Mail, Browne said he expects the deal to close by the end of January, with construction to begin within the next 12 months.

DeNiro, who is said to visit the island regularly, was also appointed a special economic envoy of Antigua and Barbuda. His celebrity status “will attract more American celebrities to Antigua and Barbuda and the Caribbean,” Browne said.

The Las Vegas Sun reports that restaurateur Nobu Matsuhisa, a DeNiro intimate and business partner, is also part of the deal to take over the abandoned K Club, which has been closed for more than a decade. The resort, once frequented by Princess Diana and young princes William and Harry, includes “one of the most beautiful stretches of sand in the world, named Lady Diana Beach,” the Sun reported.

There has been no word if the resort, to be named Paradise Found, would include a casino.

Bermuda Minister of Tourism Shawn Crockwell

and allow fines of up to $10,000 or two years in jail for any person found with casino chips outside a casino.

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DATELINE EUROPE january2015

Caesars in Cyprus?

Government gathers bid for first casino L

ocal news outlet Phileleftheros reported that cabinet-level ministers from Commerce, Finance, Interior and Justice discussed a Cyprus casino last month, which would be put out for bid with a guaranteed monopoly for the first 15 years. One of the prominent names mentioned was Caesars Entertainment.

Phileleftheros’ sources said Asian interest had come primarily from Singapore, where Genting and Las Vegas Sands are the only two operators currently licensed. The sources said Caesars has also expressed interest, and had already dispatched representatives to the island to state their case in person.

The bill calls for 100 gaming tables and at least 1,000 slot machines. Taxes will be 15 percent of GGR, with an annual license fee of $2.5 million for the first four years, rising to $5 million in years four to eight. After that, the rate will be determined. The government hopes to weigh proposals and issue a license by August.

FOBT Fumble U.K. critics blast industry report report published by the U.K.’s Responsible Gambling Trust on betting shop e-tables has raised the ire of critics of the games, who blame them for a proliferation of betting shops in cities and towns nationwide.

The industry-funded trust says the research was undertaken to build a knowledge base to help mitigate problem gambling behavior, but opponents are alleging a whitewash, saying the report defends the bookmaking industry and ignores complex issues related to the controversial machines, which mostly offer roulette and have grown into a sort of minicasino industry that now generates the majority of British bookmakers’ revenues.

Conducted independently by experts in gambling behavior and social research, the report will be passed on to the Department for Culture, Media and Sport and the U.K. Gambling Commission to inform policy decisions regarding the fixed-odds betting terminals, as the machines are known.

“This program represents the first collaborative endeavor between multiple-industry operators and independent researchers. It is of outstanding significance,” said Professor Alex Blaszczynski, who chaired an independent panel that evaluated the research.

Critics, however, have taken aim at a key finding of the report that reducing bet sizes has no impact on the risks associated with problem gambling.

“It is clear that this report only has the interests of the industry at its heart,” said Robin Wales,

A

12

FREE AND OPEN Croatia set to legalize iGaming

T

he European Commission has approved draft regulations to legalize online gaming in Croatia in a more-or-less open-market environment.

Following the OK from the commission, the legislation will be introduced to the Croatian parliament, and if approved will enable the country’s citizens to register and play with online sites of their choice, unlike larger markets such as Italy and France, which limit participation to specific sites.

Operators will, however, have to obtain licensing prior to offering their services, and must comply with taxation requirements, which are expected to include a 5 percent levy on monthly revenues and a tiered levy on player winnings that starts at 10 percent of amounts above 750 Croatian kuna (approximately US$120).

Operators also will have to pay an initial licensing fee of $490,000 and maintain bank deposits in the country of no less than that amount.

U.K. Uptick Gaming revenue jumps as offshore operators taxed mayor of Newham Council in London.

Newham is leading a group of 93 local councils in England that have petitioned the government to cut the maximum stakes on the FOBTs from £100 to £2.

Wales said his council’s previous battles with the betting shops had been “thwarted by the lack of tough regulations and the toothless court system,” so the councils have turned to presenting their demands under the Sustainable Communities Act, which allows them to put forward solutions to perceived local problems. The councils include 31 from the London area and others from as far as Swansea, Birmingham and Manchester.

In April, the government announced it didn’t intend to force bookies to reduce the maximum FOBT wager, opting instead for a “sensible and balanced approach” in which gamblers wishing to wager more than £50 per spin would be required to either use a pre-funded account or physically place bets directly with a shop staffer. The proposals will be formally presented to Parliament this month.

Global Gaming Business JANUARY 2015

T

he United Kingdom Gambling Commission announced that gaming revenues have risen 6 percent during the 2013-2014 year among licensed operators, totaling £6.8 billion.

Brick-and-mortar casinos represent 47 percent of that yield.

The figures come only from casinos that held U.K. Gambling Commission licenses before the new gaming act became law, which require licensing and taxation of online gaming operations.

The Gambling (Licensing and Advertising) Act 2014 took effect on December 1. It requires that operators from around the world offering gaming to U.K. residents have licenses within the U.K. This means that gaming operations that fled offshore to avoid paying U.K. taxes will now be required to pay those taxes when they offer gaming services to those living within the United Kingdom.

Operators will have to pay a 15 percent consumption tax in addition to paying for a license.

The U.K.’s position is that no matter where the service is being provided, if it is being provided to a U.K. resident, the service must be taxed.

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NUTSHELL Toronto-based Brookfield Asset Management has abandoned its plan to buy the former Revel Casino Hotel in Atlantic City after being unable to reach a deal with bondholders for the casino’s separate power plant. The company had planned to buy the casino— which cost $2.4 billion to build—for $110 million after a bankruptcy auction for the property. It had planned to reopen the business as a casino-hotel and invest $200 million into it. Brookfield spokesman Melissa Coley said that the decision to end the sale came out of a disagreement with bondholders controlling debt related to Revel’s power plant.

Philippines regulator PAGCOR says it will wait for “substantial completion” of the four resort casinos slated for Manila’s Entertainment City district before deciding whether to issue new licenses. U.S. casino giant Caesars Entertainment is interested in developing a US$1 billion casino near the capital’s international airport and has submitted the idea to PAGCOR. Officials with the agency say they have met twice with Caesars executives but they’ve said the discussions “are only at a conceptual stage.”

The Cosmopolitan of Las Vegas could soon have a new owner. Nevada’s Gaming Control Board has recommended that the Blackstone Group be licensed to run the mega-resort, which has a 100,000-square-foot casino. The Cosmopolitan, which cost almost $4 billion to construct, was conceived before the recession, opened after the recession, and has never turned an annual profit. It is located on an 8.7-acre parcel between Bellagio and CityCenter on the Las Vegas Strip. Blackstone reportedly paid $1.7 billion for the property. For the sixth time, a casino gambling measure has been introduced in the Texas legislature. State Rep. Carol Alvarado’s bill, HJR47, would extend existing state laws allowing horse-racing, and protect the interests of the Kickapoo Nation’s Lucky Eagle Casino Hotel, the only tribalowned casino in Texas. Supporters said regulated casino gambling could generate significant tax revenues and create thousands of jobs at horse racetracks in Dallas, El Paso, San Antonio and Austin.

The Alabama Supreme Court unanimously upheld

state Attorney General Luther Strange’s July 25, 2012 raid on Center Stage gambling hall near Dothan, where state police seized 691 electronic bingo machines and $288,657 in cash. The justices ruled bingo games allowed in certain counties traditionally involve players using paper cards, numbers being drawn and a win being announced. “This ruling from the highest court in our state once again confirms that so-called ‘electronic bingo’ is illegal under state law,” Strange said.

Macau’s meetings and conventions market almost doubled revenues through the first nine months of 2014, according to data released by the government’s Statistics and Census Service. The hosted 240 events in the third quarter drew more than 724,000 participants and attendees, a 16 percent increase over last year’s third quarter. For the year through September, 743 events were held, generating more than MOP125 million in receipts, a 94 percent increase over the same period in 2013. The number of participants increased by 48 percent yearon-year to more than 1.5 million.

Cambodian casino operator NagaCorp says it is considering a public offering to help fund a US$369 million resort casino to open in phases in Russia’s Far East near Vladivostok. The casino is slated to include 100 table games and 500 machine games in the first phase, with subsequent phases to include a 2,000-seat theater, a spa and retail shopping. Depending on a final funding structure, the project could break ground in the first half of 2015. The U.S. Supreme Court has declined to hear an appeal of a January decision by the 9th Circuit Court of Appeals that protects California’s Buena Vista Rancheria of Me-Wuk Indians from having their compact challenged by Friends of Amador County. The Friends had sued the Bureau of Indian Affairs hoping to overturn the BIA’s decision recognizing the tribe. The Appeals Court ruled unanimously that the tribe must be a party to such a suit, but could not be sued due to sovereign immunity.

However, at the same time the Appeals Court ruled that the tribe must contend in court with a nine-yearold challenge by Amador County.

CALENDAR February 2-5: ICE Totally Gaming 2015, ExCel Center, London. Produced

by Clarion Gaming. For more information, visit icetotallygaming.com.

February 10-12: Western Indian Gaming Conference 2015, Harrah’s Resort Southern California. Produced by the California Nations Indian Gaming Association.

For more information, visit WIGC2015.com.

“They

Said It”

“It’s personal with me. It’s more than just a deal.”

—Mitchell Etess, CEO, Mohegan Sun, who grew up in the hotel industry in the Catskill Mountains of New York and hopes to help rebuild it with a Class III casino

“KT Lim is not some yahoo from Podunk with a fancy rendering. KT’s got the resort in Singapore. He’s got the monopoly in Kuala Lumpur. He’s got a lot of cash, and they’re as rich as we are, at least, in terms of companies, in terms of the balance sheets.”

—Steve Wynn, on the financial strength of KT Lim, head of Genting Group, the Malaysian juggernaut planning to develop its first Las Vegas resort

“Station wants us closed, PT’s wants us closed. Maybe you want us closed. I don’t want to be on welfare.”

—Tony Hanshaw, Dotty’s bartender, addressing Clark County, Nevada commissioners on a ruling that forces the tavern chain to change its business model or lose some of its slot machines

“Using realistic revenue projections before passing a potential online poker bill in California could go a long way toward alleviating similar feelings down the road, making for a more stable operating environment.”

—Jason Kirk, writing about the prospects for online poker legislation being adopted this year by the California legislature

“I’m a Democrat. I’m no Chris Christie fan.

But Atlantic City is not his black mark.”

—Former New Jersey Casino Control Commissioner Carl Zeitz, commenting that the failure of Atlantic City casinos should not be a political issue for opponents of New Jersey Governor Chris Christie in the 2016 presidential election

February 26: iGaming Legislative Symposium, Sheraton Grand Sacramento, California. Produced by Pechanga.net and Spectrum Gaming. For more information, visit igamingsymposium.com.

March 18-19: Caribbean Gaming Show & Summit, Caribe Hilton, San Juan, Puerto Rico. Produced by C&GS Group. For more information, visit caribbeangamingshow.com.

“The challenge for companies is how they are going to persuade the regulator and a more skeptical public that they really care and it’s not just cosmetic or just enough to keep either the regulator or politicians off their back.”

March 2-4: World Game Protection Conference, M Resort, Las Vegas. Produced

by World Game Protection Inc. For more information, visit worldgameprotection.com.

March 30-April 2: Indian Gaming 2015, San Diego Convention Center, San Diego. Produced by the National Indian Gaming Association. For more information, visit indiangaming.org.

“It’s too early to say they’re wrong, but it isn’t going to be anything like 20 percent. I feel very, very confident it’s going to be negligible.”

—Philip Graf, British Gambling Commission, on efforts by gaming companies in the U.K. to identify problem gamblers

—Cordish Companies Chairman David Cordish on the impact of the new Horseshoe Baltimore casino on revenues at Cordish’s Maryland Live! casino, which some analysts had predicted would amount to a 20 percent slice of Cordish revenues

JANUARY 2015 www.ggbmagazine.com

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FANTINI’S FINANCE

The Big Questions Is regional gaming in the U.S. back and is Macau broken beyond repair?

A

s we reach 2015, there are a lot of issues facing a rapidly changing gaming industry.

There is technology convergence, accelerating globalization, and new business models driven by consolidation, such as the creation of global lottery-slot-online gaming conglomerates.

Elsewhere, some casino companies are splitting into separate companies—asset-light casino managers on one side and real estate investment trusts as their landlords on the other.

Yet, two of the biggest questions to be answered this year are from the conventional brickand-mortar world: Will the U.S. regional gaming industry revive?

Will Macau remain the world’s fastest-growing casino destination?

The question about regional markets depends heavily on the health of the American economy and the optimism of the American consumer.

Predicting the economy is a tricky business, but signs finally point to a resurgence.

In Macau, the answer depends on government policy, which appears to be increasingly cool, if not downright hostile.

Let’s take a look at both.

REGIONAL GAMING The statistical evidence of economic recovery is encouraging.

Employment is up and jobless rates are down.

Consumer confidence and spending are back.

And the improvement is accelerating. Further, it appears that casinos, which had lagged behind big-ticket consumer spending earlier in the recovery, are starting to join in.

October gaming revenues rose throughout the country, for example. Regional revenues grew a healthy 2.9 percent. Overall revenues, which include Nevada, rose 0.72 percent to $3.147 billion.

It was the fourth time in six months that national gaming revenues have grown.

Other evidence of recovery came from Isle of Capri, whose October-ending quarter beat expectations by a healthy amount. Improvement came 14

By Frank Fantini

even among lower-rated players who all regional operators have blamed for weak performances. Further, the improvement has continued into the current quarter, CEO Virginia McDowell said.

ISLE also gave some credence to the case regional casino executives have been making for several years—that with costs cut, more revenue will fall to the bottom line. True to that theory, ISLE turned a 3 percent rise in revenue into a 17 percent jump in adjusted EBITDA. So, if the economy is improving, regional casinos, now running on lean expenses and with low stock valuations, might be a place for investors to be in 2015.

MACAU After years of double-digit growth, Macau gaming revenues have been declining at an accelerating rate for seven months and are now in the double-digit category.

The result has been a plunge of 30 percent to 50 percent in Macau casino stocks from their 52week highs.

For the first several months, lots of explanations were given, ranging from contraction in credit that finances junket operators to the Chinese government’s crackdown on corruption, to the new smoking ban on the mass-market floor.

But there had been credit contractions and corruption crackdowns before and they didn’t have so damaging and so sustained an impact.

This time, however, the negative reasons have piled enough to scare the devil out of investors.

There are even folks like Chartered Bank suggesting the VIP junket business model is broken.

Thus, the precipitous decline in stock prices.

We have often warned in this space about complacence over Chinese government policies relating to gambling. Those with rosy views had dismissed that concern, pointing to infrastructure improvements, and asking why the government would be building high-speed rail lines and bridges except to pour people into Macau.

Further, the Communist government is very pragmatic, they said.

Those arguments always seemed weak. China builds infrastructure throughout the country, not

Global Gaming Business JANUARY 2015

just to Macau.

And there also is political pragmatism, as in centralizing power. Tiny Macau, with its half-million people and its major industry mostly owned by outsiders from the U.S. and Hong Kong, is more apt to be made an example than to wield influence over the national government.

If anyone wants cause for pause in that regard, look at the slowly tightening noose the central government has put around Hong Kong, which is far more important to the country than Macau.

Or read these words from Basic Law Committee Chairman Le Fei in warning that Macau must wean itself from reliance on the gambling industry: “One must not focus on economic growth and tax revenue alone when looking at Macau’s overall well-being, given the close connection between its economy, especially the gaming sector, and the mainland. One must think from the perspective of China’s economic and social security, stability and development.”

That sounds like Macau should do what the central government sees as the national interest, and not act just in its own interests.

Le’s comments came just as China implemented strict adherence to visa rules and reportedly stopped 1,000 mainlanders from entering Macau on the first day.

This doesn’t sound like a national government that will encourage the Macau government to give all the new Cotai mega-resorts coming online all the table games they want.

And those new resorts each represent multibillion-dollar bets on growth.

So the big question for Macau—and investors in its casino industry—is, what will government policy be in 2015?

The case can still be made for growth to resume at rates that justify the big investments.

But it’s not a slam-dunk.

And the answer could rest principally with one man: Chinese President Xi Jinping.

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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AMERICAN GAMING ASSOCIATION

2014: Building Year for the AGA Initiatives launched last year will pay dividends for industry

By Geoff Freeman, President & CEO, American Gaming Association

T

he American Gaming Association delivered against its 2014 strategic priorities to facilitate growth, prevent harm and connect and inform, including: • Launching an aggressive perception campaign Get to Know Gaming, which promotes the value of gaming and our industry’s positive impact on communities across the country; • Vigorously protecting our industry interests by advocating for regulatory reform and leading a transparent discussion with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which resulted in the industry’s first-ever Anti-Money Laundering (AML) Best Practices guide; • Assertively developing relationships and cultivating congressional champions with key members of Congress in Washington, D.C.; and, • Uniting the industry—whether at G2E, gaming’s largest trade show, or through working groups and committees of industry experts to address critical gaming issues.

The AGA will look to continue to build on these priorities in 2015 and beyond. The AGA’s guiding principles of being more inclusive and transparent in 2014 will carry into 2015. We will also seek opportunities to: • Create unity—There is more that unites us than divides us. AGA aims to grow its membership in 2015 to better reflect the totality of the gaming industry. Working together, we are best equipped to achieve clout and influence on critical gaming issues.

• Support industry growth—AGA will play a strong role in supporting its members’ growth strategies by reducing barriers to innovation and reinvestment.

• Shape new policy environment—The fiercely competitive domestic market demands a new regulatory and policy environment that reflects the attitudes of American voters. We will encourage policymakers to act in accordance with their constituents, who have embraced gaming as mainstream entertainment and will increasingly support fair business policies.

16

2014 HIGHLIGHTS Delivered an Aggressive Perception Campaign

Get to Know Gaming is our multi-year initiative focused on the value gaming brings not only to local communities, but to the national economy as well.

Through this year’s data-driven campaign, we conducted a voter perception survey demonstrating that consumers view casino gaming more favorably than ever before and affirm our industry is a significant economic driver.

In the fall, Oxford Economics released the most comprehensive study of gaming’s economic impact nationally, which revealed that our industry contributes $240 billion annually in total economic impact, supports more than 1.7 million American jobs and generates more than $38 billion in taxes. Finally, by building the case that gaming is a critical component of a larger economic development strategy, we called on policymakers to partner with gaming leaders to ensure sustainability for these economic benefits.

In the year ahead, Get to Know Gaming will expand messaging beyond the economic impact to the social and community benefits that casino gaming contributes to communities nationwide.

Vigorously Protected Industry Interests

Calling for partnership with policymakers is the first of many steps the AGA plans to take in an effort to protect our industry’s interests from ineffective and outdated regulatory policies. Additionally, in the ongoing effort to maintain the integrity of our industry and our nation’s financial system, we established a collaborative working relationship with FinCEN on key gaming regulatory issues. Given the unique nature of the casino gaming industry in contrast to other financial industries, we completed and disseminated a comprehensive set of Anti-Money Laundering (AML) Best Practices.

Building Congressional Gaming Champions

Transformation of gaming policies takes commitment and collaboration from industry stakeholders, as well as policymakers who can help alter our industry’s treatment. This year has been focused on educating policymakers on the size, scope and

Global Gaming Business JANUARY 2015

significance of our industry. Working together with member properties, we have aggressively touted our industry’s value in targeted congressional members’ states and begun to develop members of Congress as key gaming champions. By welcoming members of Congress to visit regional gaming facilities visits, sharing research from our Get To Know Gaming campaign to reveal gaming’s economic footprint and value to communities, we’re beginning to alter policymakers’ perception about our industry—from a necessary evil to an important economic contributor.

Coalesced Industry on Priority Issues

In addition to touting the positive impacts of gaming and aggressively advocating for industry support, the AGA focused its attention on how we can better serve our members and coalesce the industry around issues of common cause. Global Gaming Expo is an existing forum that brings more than 25,000 industry stakeholders under one roof over four days. In 2015, we will look to incorporate opportunities to address gaming issues during G2E. Additionally, the AGA convenes member issue experts year-round to tackle issues of common cause.

The Bank Secrecy Act working group that coalesced to develop the AML Best Practices is a good example of groups that the AGA will look to convene more frequently to develop industry-wide resources.

A Look Ahead

Our industry has extraordinary potential, and AGA will help the industry to achieve its goals.

AGA will continue to promote the positive impact of gaming under the Get to Know Gaming campaign, to develop an agenda and call to action on regulatory and policy reforms, to grow our bench of congressional gaming champions and to bring the industry together to address key issues.

Working together, we can bolster the casino gaming industry’s image to garner a more favorable policy environment, build greater industry clout on issues of common cause and remove barriers to innovation, thereby empowering the industry to offer desirable and innovative entertainment experiences to our millions of customers.

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Solid ICE ICE Totally Gaming eyes new records

T

his year, ICE Totally Gaming, Europe’s largest gaming conference and exhibition, celebrates its 20th anniversary as a stand-alone exhibit.

ICE, an acronym for International Casino Exhibition, was originally a part of the Amusement Trades Exhibition, a larger amusement industry trade show. After the gaming portion of the show grew, it was established as a separate casino gaming trade show in 1995. This year’s event will be the third show at the ExCel London Exhibition and Convention Centre, after 10 years at central London’s Earls Court.

The conference—kicking off Monday, February 2 with the annual International Casino ICE Totally Gaming 2015 Conference at London’s Hippodrome and conLondon’s ExCel Centre tinuing with exhibits and meetings at ExCel February 3-5—is expected to draw more than Tuesday, February 3 20,000 attendees from 100-plus countries.

10:00 a.m. - 6:00 p.m.

The event has broken attendance records for each of the past five years, and this year is exWednesday, February 4 pected to continue that trend. Exhibits from the 10:00 a.m. - 6:00 p.m. world’s most diverse collection of suppliers that Thursday, February 5 serve the international casino industry and the 10:00 a.m. - 4:00 p.m. distinguished education program of the ICE Conferences will reflect the changing nature of the industry.

Following are just some of the special events to expect this year in London.

Kickoff to ICE to be held at iconic casino The iconic Hippodrome Casino, situated in London’s Leicester Square, has been chosen as the venue for the 2015 International Casino Conference (ICC), taking place on Monday, February 2. Organized jointly by Clarion Events and the European Casino Association, the ICC serves as the curtain-raiser to ICE Totally Gaming.

“This is the first time that the International Casino Conference has been taken out of a conventional conference-style setting,” says ICE Marketing Director Jo Mayer, “and we could not have wished for a more prestigious and appropriate venue than the Hippodrome. Following a three-year renovation program costing £40 million, the Hippodrome was named Casino of the Year 2013, just six months after it opened.

“With a cabaret theater attracting international stars including Dionne Warwick and Joss Stone and critically claimed restaurants and bars, there’s no doubt that the Hippodrome is no ordinary casino, and a perfect venue at which to host our ICC delegates.”

Co-organized with the European Casino Association, the 2015 ICC will bring together presidents, CEOs and board members from all of the largest casino groups in Europe. The conference will provide delegates with a platform to exchange views on the most burning issues affecting the land-based industry while giving them access to key speakers including Harrie Temmink, deputy head, Online & Postal Unit, DG Internal Market & Services at the European Commission.

The ICC is one of eight targeted learning events that cover all of gaming’s 18

Global Gaming Business JANUARY 2015

Hippodrome to host International Casino Conference

vertical markets. Delegates can opt for an access-all-areas passport, which gives the freedom to explore the entire ICE conference program or alternatively select a single conference of interest.

Regulatory Review ICE IS THE FOCAL POINT AS RECORD NUMBER OF INTERNATIONAL GAMING REGULATORS HEAD FOR LONDON The importance of ICE as the meeting place for all of gaming was amplified with news that a record 100 international gaming regulators are expected at the 2015 event.

ICE will once again feature over 500 exhibitors covering the betting, bingo, casino, lottery, mobile, online, social and street gaming sectors. Mayer believes that the attendance of so many gaming regulators is a major endorsement of the status enjoyed by ICE. “The really stand-out industry events attract a broad cross-section of stakeholders, and ICE as the lead B2B event in gaming is no exception,” she says. “Alongside the most comprehensive collection of gaming exhibitors, ICE will feature the largest number of trade association and representative bodies, the largest gathering of gaming media and now the largest number of gaming regulators all gathered at a single event.

“Our job is to host the regulators at our dedicated regulators luncheon, provide a professional forum for informed discussion and debate through our ICE Conferences program, demonstrate the world of gaming at its very best on the ICE show floor, and in the process, create a more positive and productive image of the industry with its regulators. We are delighted to once again have the support of lead associations including IAGA, IAGR, ECA, NCF and WLA for these initiatives.”

Regulators are expected to attend ICE from international jurisdictions including Belgium, Brazil, Bulgaria, Canada, Channel Islands, Denmark, Finland, France, Gibraltar, Isle of Man, Malta, Jamaica, Kenya, Latvia, Lithuania, Netherlands, Portugal, Singapore, South Africa, Sweden, Switzerland, United Kingdom and the United States.

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Other Events at ICE 2015 DIGITAL THINK TANK Located in the South Hall of ICE Totally Gaming February 2-5, this free-to-attend seminar theater features product demonstrations, tutorials and master classes from some of the most respected thought leaders within the gaming industry.

The Digital Think Tank format comprises a varied selection of topics relevant to the eight product sectors of ICE. Topics include seminar sessions dedicated to digital marketing, data and IT security plus more topic areas to be confirmed.

A total of 15 exhibitors will be holding 30-minute thought leadership discussions and presentations, which are being staged in a custom-built seminar theater with a capacity of 60. Entry is free and on a first-come basis.

Learning Opportunity ICE CONFERENCES MONDAY, FEBRUARY 2 – WEDNESDAY, FEBRUARY 4 ICE Conferences are the easiest way to locate, among ICE’s 25,000 visitors, like-minded professionals who face similar challenges you do. The 2015 program comprises a voyage through eight high-level, targeted events, which cover all of gaming’s vertical markets. Attendees can opt for an access-all-areas pass or select a single conference to attend. All conferences, except for the International Casino Conference, will be held at London’s ExCel Center.

International Casino Conference

The premier gathering of senior executives of the largest casino groups in Europe, organized in cooperation with the European Casino Association, will be held at the Hippodrome Casino in London.

World Regulatory Briefing

Crucial updates on the regulatory developments throughout the world that determine the potential for industry progress, organized in partnership with IAGA. Data Insight and Business Intelligence

Insight from experts in data analytics and business intelligence, on translating data analysis into measurable actions, across corporate divisions.

Cross-Platform and Multi-Channel Gaming

Over 30 leading operators discuss the strategic and operational impact of putting customers at the heart of multi-channel strategy.

Lotteries for the Future

A knowledge hub for lotteries in search of innovation, strategy, forward thinking, future planning guidance and practical advice on more immediate needs.

Game Design and Development

Making game development more dynamic; harnessing innovation, trust, and customer psychology to make gains in market penetration.

BetMarkets

Driving strategies to expand in-play propositions, mobile and multi-screen betting, social gaming, sports integrity, and penetrate new markets.

Cybercrime, Security and Regulatory Compliance

Anti-fraud, security, risk, compliance and payments executives from both online and land-based sectors come together and share best practices.

20

Global Gaming Business JANUARY 2015

IMGL Masterclass

Taking place at ExCeL during ICE International Masters of Gaming Law Masterclass on Wednesday, February 4 is a full-day, free-to-attend session where key regulatory stakeholders will share knowledge on current industry updates. For more information, visit gaminglawmasters.com.

Tribal Gaming: U.S. Indian Country Open for Business

Tribal gaming in the U.S. generates significant revenue, but is a relatively unknown opportunity for the gaming industry outside of the U.S. Join this free-toattend seminar on Wednesday, February 4, organized in partnership with Victor Rocha, editor of Pechanga.Net, a leading news source on tribal gaming, to gain insight into the history, emotions, sovereignty and commercial realities that dictate the way both land-based and online gaming is operated by the U.S. Native American tribes.

Vision 2030 – Game-Changer Scenarios

Recognizing a need for change and strategic, far-looking thinking, Atlantic Lottery Corporation embarked on a scenario-planning exercise to answer a key question: What might the lottery and gaming industry look like in 2030, and how might a gaming company respond to remain relevant?

As a result of a series of external and internal consultations and discussions, four alternative future environments have been identified: Circumvention, Immersion, Intrusion and Collaboration. ALC believes that a blend of these scenarios will shape the trajectory of the industry in the years to come. They were first presented to the industry at EiG in Berlin.

Phil Holmes, ALC’s vice president for strategy and planning, who led the scenario-planning process, and his team at ALC, now invite the wider industry to discuss the future scenarios and provide input on how you see the future shaping up. This interactive workshop at ICE will be held on Wednesday, February 4.

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David Becomes Goliath Amaya goes from a small technology company to one of the largest B2C businesses in gaming

Amaya CEO David Baazov

By Marco Valerio

I

f you met David Baazov at a gaming event in recent years, chances are good you’ve been furiously digging for that business card.

No one would blame you. Following massive media attention that would have made him and his company famous anyway, you’d be hard-pressed to find someone in the gaming industry today who is not familiar with Baazov or the name Amaya.

In August 2014, Amaya officially took over the Rational Group and thus became owner of the largest iGaming company in the world, PokerStars, along with sister company Full Tilt Gaming, which isn’t small either. Baazov’s stake in the new super-company makes him close to a billionaire.

Amaya’s ascent to iGaming industry dominion is notable in great part because it looks so rapid. News of the ongoing PokerStars negotiations was broken just one month before the deal was signed—although we later learned they had been going on for much longer than that.

Quick Rise Amaya itself was no stranger to the iGaming world, having made industryrippling headlines since at least 2012, when it purchased the Ongame Network after previous suitor SHFL turned out not to want it all that much.

Other attention-grabbing moments in Amaya’s history included the acquisitions of CryptoLogic—one of the earliest iGaming software providers—and slot supplier Cadillac Jack.

But for all of these accomplishments, nothing the company had ever done before had been so bold as its ambition to buy a company so large and profitable as to be considered practically unattainable. Met by widespread incredulity when CalvinAyre.com first broke the story, the report turned out to be entirely legit. Once the deal was finalized and completed, it floored not just the gaming industry, but the financial world at large.

It was a spectacular deal, not only by gaming standards, but by any standard. Andrew Zarnett was part of the Deutsche Bank team that raised the debt financing for Amaya. He tells GGB the deal stood out because “a small Canadian company with a market capitalization of around $500 million ended up purchasing a company that was 10 times its size. It is very, very rare for a transaction like that to succeed.”

Baazov did not simply get lucky. As reported by Nathan Vardi of Forbes in a comprehensive account of Baazov’s background and the history of the PokerStars acquisition, Baazov had to persevere with a tenacity rarely seen outside of those movies where the dedicated teacher won’t give up on the troubled youths. In total, Zarnett tells us, Amaya had to raise capital from four different sources.

“Approximately $3 billion was debt,” says Zarnett. “Around $1 billion was convertible preferred—a financial instrument that can convert debt into equity. $650 million was plain vanilla equity. The rest was topped off with around $200 million in cash.”

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Complex as the deal turned out to be, it is perhaps forgivable that the iGaming industry initially questioned whether Amaya could ever dream of pulling it off. But anyone familiar with the company’s history would have done well to take it into account before dismissing the power and resources available to Baazov.

Roots of Deal Amaya was founded in 2005 by a very young, very street-smart, very business-savvy Baazov. Chris Moneymaker had won the World Series of Poker two years earlier, and the resulting poker boom was making many people wealthy (others not so much). One of the wealthy ones was Isai Scheinberg, founder of PokerStars. But it was tough to foresee the passage of the Unlawful Internet Gaming Enforcement Act

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It was a spectacular deal, not only by gaming standards, but by any standard.

Andrew Zarnett was part of the Deutsche Bank team that raised the debt financing for Amaya. He tells GGB the deal stood out because “a small Canadian company with a market capitalization of around $500 million ended up purchasing a company that was 10 times its size. It is very, very rare for a transaction like that to succeed.” in the U.S. in 2006, let alone Black Friday some years after that.

Incidentally, Amaya’s first product was an electronic poker table. But it did not take very long for the company to begin resembling the avid acquirer (and reseller) of assets it eventually became known as.

“Amaya was conceived as a consumer technology company that would acquire consumers in the converged online/offline world we inhabit,” says Eric Hollreiser, who handles corporate communications for both PokerStars and Amaya, “with an eye toward developing consumer products that leverage the convergence of internet technologies, software and mobile platforms with hardware and land-based platforms.”

Although it would have been clairvoyant to foresee Amaya inevitably making a bid for something as huge as PokerStars, a certain habit of “trading up” had been evident for a while.

By the time the industry got wind of Amaya’s (reciprocated) interest in PokerStars in May 2014, it was very tempting to infer the deal had a lot to do with PokerStars’ difficulties in trying to re-enter the U.S. market. A statement issued by then-CEO Mark Scheinberg a month later, when the deal was done, suggested a reinforcement of this perception. Scheinberg noted the negotiations had begun “more than six months ago,” which would have put it at around December 2013, when New Jersey’s Division of Gaming Enforcement announced it was suspending its review of PokerStars’ application for an iGaming operator’s license in the state.

But Vardi weaves a different narrative in his Forbes feature, claiming Baazov was speaking his PokerStars ambition aloud “after buying Cadillac Jack” in 2012.

“The difficulty getting into New Jersey played a role in PokerStars shareholders’ agreement to sell the company—but that was only one of several key factors,” Hollreiser says.

Amaya Impact Past the widespread stupefaction following the completion of the deal, the gaming industry must now confront how the changed ownership of the world’s largest iGaming company will shape the future of the space.

For starters, expect anything having to do with bad-actor policy to be substantially reframed. Much of the controversy centers around PokerStars’ alleged ineligibility in the U.S. online gaming market used to center on the criminal indictments against key personnel, including founder and previous owner Isai Scheinberg—but he and others are now supposed to be completely unconnected to the company.

New Jersey certainly seemed pleased with this turnaround. David Rebuck, director of the division that had put a massive roadblock before PokerStars’ entry a few months earlier, came out in clear appreciation of the Amaya deal and openly expressed optimism about PokerStars being determined eligible to operate in New Jersey.

But PokerStars’ adversaries in other U.S. states, especially the majority of them where there is still some chance of legislating against companies like it,

aren’t taking this sitting down.

Speaking to iGaming Business in September, influential tribal Chairman Mark Macarro of Pechanga said Amaya’s acquisition of PokerStars had done “nothing” to alter anti-PokerStars sentiment among the California gaming stakeholders who have long supported a bad-actor policy.

Macarro’s point is well taken—the Amaya deal hasn’t changed all hearts and minds. But it is forcing PokerStars’ foes to reassess and refine their strategies to keep it out of America. California Assemblyman Michael Gatto’s new online poker bill (AB 9) is almost entirely a replica of a previous Pechanga-backed bill, but with a few notable novelties, including a more strictly worded bad-actor clause.

PokerStars will either cruise into some states on account of its new ownership, or incur aggressively renovated resistance in others. Either way, Amaya is already diverting several corners of the iGaming world in a multitude of new directions.

Of subsequent importance is PokerStars’ now-definitive departure from a long-held commitment to poker-only iGaming. Commonly used nowadays to refer almost exclusively to pieces of legislation that legalize only online poker instead of all forms of online gaming, it’s almost been forgotten that “poker-only” used to be a key designation for PokerStars, especially when the uncomfortable subject of serving the U.S. market came up.

While the international iGaming competition was offering all sorts of realmoney games online (though none in the U.S.), PokerStars and former competitors Full Tilt Poker and UltimateBet stuck faithfully to online poker. This was not only a business decision, but a legally useful one too. For years, Stars, Tilt and the like maintained that peer-to-peer online poker was a game of skill, and thus not subject to U.S. laws governing “unlawful gambling.”

Then came Black Friday, which did a lot to damage the reliability and appeal of the poker-only approach. With the massive U.S. market no longer to be looked after, and the worldwide poker market in a general state of decline, it must have dawned on PokerStars that maybe it was time to try something new.

The company did not want to continue losing “wallet share”—online gamblers of various stripes were coming to Stars for their poker fix, but going somewhere else as soon as they felt like placing a sports bet or spinning a roulette wheel.

Gaming Transition As early as 2012, PokerStars was polling users about their non-poker iGaming inclinations. Later, Full Tilt Poker was remade into Full Tilt Gaming for the purpose of accommodating casino-style games. It’s important to point out this all predates the intervention by Amaya, since many people in the gaming industry have begun assuming non-poker gaming entertainment was Amaya’s idea.

Hollreiser sets the story straight by confirming that he was “directly involved in discussions and planning for our expansion into casino games and sports betting since 2012. Amaya played no role in these discussions or in the planning until the acquisition was complete. At that time, casino games had JANUARY 2015 www.ggbmagazine.com

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“

been launched globally on Full Tilt and on Pokerpublicly listed there, plus licensed and reguPokerStars and Full Tilt Stars in Spain and we had announced plans to add lated by the gaming authorities in several have some significant brand casino in Italy. We had also announced plans to add Canadian provinces. PokerStars, on the other sports betting before the Amaya deal was done.” hand, has offered real-money online poker to equity. A big challenge for If it hadn’t been for PokerStars’ prior interest in Canadians for years without any regional liany company entering into casino-style games, the Amaya deal may not have censing or formal approval. They’ve been social gaming these days is happened as soon as it did. Hollreiser claims Baazov undisturbed for years, but as soon as Amaya “began seriously pursuing PokerStars in 2013 after assumed ownership and thus responsibility, brand and name recognition. many have waited to see how the Canadian meeting with Mark Scheinberg, when PokerStars was You’re much more inclined seeking casino software partners for Full Tilt’s move government, at either the federal or provinto click and download an into casino games.” cial level, might react.

It may not have been Amaya’s idea to expand to If Amaya was ever in any regulatory danapp if you know it or have so many forms of gaming, but in keeping with the ger, it’s been invisible to every outsider so far. heard of it before. PokerStars mission from its original conception, Amaya is now Still, there are those who believe the operaleads in discoverability. preparing to take the concept of converged gaming tion of an unlicensed iGaming service in entertainment and test it on a massive, unpreceCanada is in contravention to specific sec—Adam Krejcik, Eilers Research dented basis. Over several conference calls, Amaya tions of the Canadian criminal code that promanagement has stressed how committed it is to inhibit unlicensed internet gaming activity. troducing very strong and competitive iGaming conMuch like the American states, Canadian ferences to complement the PokerStars brand. provinces can differ greatly in their predispoNo doubt this seriously alarms competitors. sitions toward internet gambling. Earlier last However, there may also be some widely applicable fall, the Quebec government issued a report usefulness from the results. For years, the industry has noting how challenging it would be in practried to crack the convergence code, hoping to determine just how many online tice to enforce a blanket ban on offshore iGaming operators active in Canada. poker players could be cross-marketed to online casino games, and vice versa. InElsewhere, Ontarian lawmaker Charles Sousa has called for a review of ternational iGaming operators who supply many kinds of games have drawn conthe offshore iGaming issue. In his conversation with Vardi, Baazov maintains clusions from their own experiences, but none could ever afford the luxury of a Amaya discussed the acquisition of PokerStars with Canadian regulators and sample size 89 million large. Amaya now can. “got comfort” to continue to operate.

Real-money gaming is only part of the equation. Social gaming and free-toNon-Gaming Growth play products can be strong assets for Amaya if leveraged properly, says Adam Out of all the “kings of online gambling,” David Baazov seems to be the Krejcik of Eilers Research. most modest. He says he sees online gamers less as “players” and more as “PokerStars and Full Tilt have some significant brand equity,” he says. “A big “consumers” with a common interest in online gaming. With this view in challenge for any company entering into social gaming these days is brand and mind, Baazov has big plans to go Las Vegas on iGaming—he teases a future name recognition. You’re much more inclined to click and download an app if where gaming revenue makes up less than half of Amaya’s total revenue. you know it or have heard of it before. PokerStars leads in discoverability.”

What can that possibly mean? Hollreiser sheds some light: “Amaya was Amaya now possesses access to a “user base of millions of players all over the conceived as a consumer technology company that would acquire consumers world,” Krejcik points out. “That doesn’t mean all these players will suddenly go in the converged online and offline worlds we inhabit,” he says. “To date, social, but the database they’ve built is enormously valuable nonetheless. Also, Amaya has worked within the gaming space and now leads in this category. this is now a very large company, with access to significant cash to invest in sales That will not change, and PokerStars management is laser-focused on mainand marketing. The biggest challenge for most social gaming apps today is custaining its leadership in poker, while growing in additional online games, intomer acquisition. If Amaya and PokerStars want to compete in this space, they cluding casino, sports betting and social.” can outspend several competitors.”

Mirroring much of what Hollreiser says, Zarnett has his own ideas about Future Focus what’s best for Amaya in the near future. “I believe what they should do now Zarnett is rather upbeat about the company’s future. “The fact is, they bought an is stay focused on executing their plan—to remain the best in online poker, incredible company. It has an incredible database of customers, many of whom while expanding their platform into casino and sports betting.” spend a significant percentage of their poker wallet on PokerStars, which in turn In spite of advice like Zarnett’s, the gaming industry barely got a chance generates a significant amount of EBITDA. Their conversion of that into cash is to catch its breath before reports suggested Amaya was considering acquiring extremely high—approximately 92 percent.” another iGaming giant—this time, the longtime international competitor to Things can thus seem universally rosy over in Amayaland. And indeed, PokerStars, Bwin.Party Digital Entertainment. they’ve got plenty going their way. But this hasn’t kept some observers from Other suitors are reportedly in the mix—but it’s too soon to form a very pointing out potential challenges. One of them has been the question of whether clear idea about what, if anything, will come out of it. From now on, howAmaya will need to withdraw PokerStars from certain “gray” markets. ever, it is likely to be a whole lot harder to underestimate what Amaya and The most hotly debated example is Canada. Amaya is headquartered and its intrepid founder and CEO David Baazov are capable of achieving.

”

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Global Gaming Business JANUARY 2015

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The Changing World { The 2015 Class of ‘25 People to Watch’}

J

ust a quick glance at this year’s roster of “25 People to Watch” will demonstrate how much change is coming to the gaming industry in 2015. As usual, the list is packed with accomplished people who have already been recognized as important members of the industry, making their mark, influencing others and building constituencies.

But what makes this year’s class so different is the diversity of their talents. Whether it’s technical, political, artistic, innovative or even completely unrelated to casino gaming itself, they represent the changes

Macau’s Master Ed Tracy President & CEO, Sands China

E

d Tracy’s roots go back far in the gaming industry. As the leader of the Trump organization in Atlantic City in the mid-1990s, he helped right the ship after the first bankruptcy grounded Trump Taj Mahal.

Later, he was at the forefront of the riverboat gaming industry, leading Capital Gaming as it developed a casino in New Orleans. As an adviser and consultant, he helped identify gaming opportunities for his clients as the industry expanded rapidly.

But it wasn’t until he was tapped by Las Vegas Sands to take over its floundering Macau operation that Tracy’s talents came to the front.

At the time he joined the LVS subsidiary Sands China, he followed a messy departure of the previous president.

Funds were short to complete the adjacent Sands Cotai Central, and relations with the government were difficult.

Tracy said he had to get down to business quickly, but first had to understand how it operated.

“The size and scope was daunting,” he says. “More than 9,200 hotel rooms, 600 retail outlets, many entertainment businesses. It was a very complicated, complex business.”

He also was surprised by the oversight of the company.

“The amount of regulators we had was also an issue,” he explains. “We’re a Hong Kong-listed company regulated by the U.S. and all the gaming jurisdictions in which we operate. So it’s a huge business with a lot of people and a big constituency. Getting used to that took some time, and I was lucky that Mike (Leven, LVS president) gave me 90 days to present a plan to him and the board to move forward.”

Whatever he did worked. Sands China has been soaring

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that are already engulfing gaming. Online gaming is well represented, as well as marketing. Politics raises its (sometimes) ugly head, and the industry’s reach into new jurisdictions continues to grow.

Nominated by the GGB Editorial Advisory Board, these stellar representatives of the gaming industry are just the tip of the iceberg of talent in the industry, and one reason why anyone who is concerned about the future of the industry need not be. For the future of gaming is secure even if this list represents only 10 percent of the industry’s leaders. But in GGB’s opinion it’s less than one-tenth of 1 percent.

ever since. Under Tracy’s watch, the three hotels and two casinos of Sands Cotai Central opened smoothly and the complex today operates like a well-oiled machine.

Sands China has largely avoided the labor strife impacting some of the other operators. But dark clouds have been hanging over Macau for the past year. Declining revenues have sent share prices of the companies plunging, and the VIP segment has cratered.

Tracy says he’s not so concerned with the VIP weakness.

“We are the least dependent upon the VIP market of all the operators in Macau because we’re built to serve this growing middle class in China,” he says. “I don’t

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see any road signs telling me it’s going to improve anytime next year. It could be that conspicuous consumption will continue to be frowned upon by the central government, whether you are a VIP or just a big bettor in the premium mass segment. None of them want to be pigeonholed as a conspicuous consumer in China right now. So it’s very hard to predict, but we will be the least impacted by that. We’ve shifted a lot of our resources away from VIP into the mass market, where there is potential for further growth.”

The good news, says Tracy, will be the opening of many new properties in Cotai over the next four years. While that might seem to just increase the competition, Tracy says there is reason to believe that it will simply increase the demand.

“If you look at history,” he says, “supply has always spurred demand in this market. When we opened Sands Cotai Central, not only did we fill it up quickly, but everyone experienced growth in the marketplace. I believe the history will continue to demonstrate that because the penetration in China is so low. It’s only 2 percent overall and only 8 percent in our close-in market. So we’ll see capacity drive demand.”

And it’s getting easier to get to Macau, he points out.

“We’re also very lucky that the central government of China has provided us with amazing improvements to the transportation infrastructure,” says Tracy. “It delivers people directly to the Pearl River Delta, where Macau is one of the destinations. The advent of high-speed rail, the highway systems, regional airport expansions and the bridge that is going to connect Macau and Hong Kong all bode very well for the future of our city, and have positioned us for success in the future.”

Still, with all the glittering new properties—every operator in Macau will be introducing a new resort during this time—existing operations need to keep pace.

“We’re making sure that obsolescence doesn’t become a reason to go somewhere else,” Tracy says. “The support of Mr. Adelson with capital reinvestment is a very important piece of our puzzle. We have the best ‘bones’ in the business, but you constantly have to update and modernize. We bring value-added entertainment and dining options to the table, so from a product standpoint we feel very comfortable with our position in the market.

“We’re preparing every way we can to ensure that our product is differentiated and stays fresh and interesting in the mind of the consumer.

We’re continuing to use entertainment to drive the mass market.”

With more competition, however, more pressure on an already tight labor market is going to be added. Tracy says Sands China is going to continue to do what they’ve successfully done to attract and retain employees.

“We currently have 28,000 team members and we listen intently to them,” he says. “We do a very good job of addressing the needs and desires of our workforce. A lot of that falls into providing academic, training and advancement opportunities. Being the biggest operator, we have more opportunity for advancement. With the upcoming openings of our new properties, the Parisian in ’16 and the St. Regis in ’17, we feel pretty comfortable that our ability to recruit will remain strong.

“When we were recruiting for Sands Cotai Central, we targeted the communities with outreach and educational programs, explaining the diverse kinds of jobs that were available. And again, as the largest company, we have a wide selection of jobs: entertainment, software or hardware, retail… We have all those kinds of businesses.”

—Roger Gros

Mouse to House Steven Tight President of International Development, Caesars Entertainment Corp.

A

lthough Steven Tight is relatively new to the gaming industry, he brings a wealth of hospitality knowledge to the table. He began a new career in the industry in 2011 with his current position as the president of international development for Caesars Entertainment Corporation. Based in Hong Kong, Tight is responsible for expanding the Caesars brand into international markets.

While he has been very successful in his role with Caesars, Tight got his start in the theme park industry. He explains why his skill set translates so well across industries: “The business model is surprisingly similar,” he says, “a capital-intensive industry with a major anchor attraction, and very similar supporting activities (hotels, F&B, retail, entertainment, etc.).”

He also draws another “similarity” between the two industries. “One is for little kids, and the other is for big kids!”

Tight’s extensive experience in the theme park industry was predominantly in roles with the Walt Disney Company, where he dedicated 17 years of his career. During his time at Disney, Tight held several executive-level positions, including vice president of finance at Disneyland Paris and managing director of Hong Kong Disneyland. One of his major accomplishments at Disney was the opening of Hong Kong Disneyland, as he led the negotiations with the Hong Kong Special Administrative Region Government to bring the park to fruition.

With European and Asian experience under his belt, Tight took his knowledge to the real estate development industry.

Tight was the CEO of two real estate development agencies in Dubai for five years after his time at Disney. During this time, he led the $2 billion Aqua Dunya project, which consisted of two theme parks, three hotels, a golf course, retail, food and beverage, entertainment, time shares and residential real estate.

In the last year of this time there, he oversaw a $100 million floating megayacht hotel project before joining Caesars’ team.

Tight returned to Hong Kong in 2011, when he began his current position with Caesars. It is evident that he has been hard at work, as Caesars recently announced news of its first integrated resort in Asia, which is expected to open in 2017 in Incheon, South Korea.

When it comes to evaluating gaming opportunities and locations, Tight says, “It certainly helps to have a strong international brand with great brand equity,” adding, “it opens doors when initiating dialog with local governments and potential partners.”

With regard to the future of gaming, Tight thinks the place to be is Asia.

“With fast-growing levels of disposable income for emerging markets, the strong affinity for gaming and continued liberalization of gaming legislation in new markets, I think there are significant opportunities for Caesars in this part of the world,” says Tight.

And it seems Steven Tight knows just what to do with a development opportunity.

—Michael Soll, The Innovation Group

JANUARY 2015 www.ggbmagazine.com

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{ 25 People to Watch 2015 }

Covering the World Kathryn O’Keeffe Global Gambling Reporter, The Wall Street Journal

T

he Wall Street Journal has always been an important publication for the gaming industry. In the days when gaming was going “public,” the newspaper legitimatized the business because it was making real money for investors and the less-desirable elements of the industry were disappearing.

So the reporters who cover gaming make an impact in the investment community by their coverage. Many writers assigned to this beat have gone on to bigger and better things, inside and outside the gaming industry. But writing for the Wall Street Journal also demands a responsibility and accuracy that is a cut above your average publication.

Kathryn (Kate) O’Keeffe is now the reporter for the newspaper covering the industry worldwide, after making a name for herself covering the Macau casino industry. Based in Asia her entire career, O’Keeffe moved to Hong Kong in 2010 to cover regulatory matters in Hong Kong and Macau for the Journal’s sister brand, Dow Jones Newswires, and soon thereafter, for the main publication.

Gaming was obviously a big part of the beat, and quickly took over. Last year, she was named global gaming reporter. Most publications cover the industry primarily from the U.S., but O’Keeffe is undoubtedly the only one to cover the worldwide industry from Asia.

She says the location can be challenging, but she works with reporters all over the world.

“I look to collaborate with colleagues in other countries whenever I can,” she

says. “I have worked on casino stories with fellow Wall Street Journal reporters based everywhere from Tokyo to New York and many cities in between. Since I took over global coverage of the gambling industry, I am also trying to make at least a couple trips to Las Vegas per year.”

One of the bumps in the road came when LV Sands Chairman Sheldon Adelson sued the Journal and O’Keeffe for libel. While she can’t comment on the litigation, she insists she goes to great lengths to get it right.

“The Wall Street Journal has very exacting standards,” she says, “but I would feel the same responsibility to get it right no matter where I worked. I take forever to file stories because I read them over so many times and triple-check facts.”

As for Macau, the convoluted nature of regulations and business arrangements makes it a difficult place to report, she explains.

“It’s precisely because Macau is less transparent than some other jurisdictions that I feel I can really add value reporting on it,” she says. “My philosophy from day one has always been to focus on the long term. I have spent years cultivating certain sources. It’s funny, though—the more I learn about Macau, the more I realize how much more there is to learn.”

O’Keeffe isn’t the most beloved reporter covering gaming. Her search for the truth often ruffles a few gaming feathers, but if anyone is expecting her to depart for greener pastures, dream on.

“I love writing about the gambling industry,” she says. “It is so exciting and full of dynamic characters. It’s hard to think of a topic I’d enjoy covering as much. I was actually trying to think of one the other day... maybe intelligence or baby animals.”

—Roger Gros

Force of Nature

capital region, so that it and Aquis Great Barrier Reef Resort can be put on the Hong Kong Stock Exchange to raise capital.

Fung takes pride in his family-friendly concept for Aquis, which is not a common approach within the gaming industry. He wants the casino resort to be enjoyed by all family members, which is why he has decided to include many non-gaming amenities in this development.

Fung also hopes the development will appeal to a market that is building popularity. “The large-scale integrated resort concept is relatively new for Australia,” he says, “and there is a real opportunity for Queensland and Cairns to participate in the emerging Asian integrated resort market.”

Fung believes the Aquis development will appeal to families and international tourists alike by being in close proximity to Australia’s two World Heritage-listed locations, the Great Barrier Reef and the Wet Tropics.

Although Fung’s project has been given the initial approvals, he ran into a few hurdles in late 2014. His attempt to buy the Reef Hotel Casino in Cairns was put on hold as Queensland’s Office of Liquor and Gaming Regulation failed to complete all the necessary investigations to grant approval. The delay also threatens the Casino Canberra purchase, which was expected to take place before the end of 2014 at a discount of $3 million to the original $9 million price.

Fung has threatened to drop his development plans, but Queensland Premier Campbell Newman is holding tough on his demands for licensing.

Between the family-friendly concept and the overall grandeur of the Aquis Great Barrier Reef Resort, Fung could change the gaming industry in Australia.

Projected to open in 2019, this game-changing development will not only expand the international gaming market of Australia, but will also cement Tony Fung’s place in the gaming industry.

—David Rittvo, The Innovation Group

Tony Fung Chairman, Aquis Great Barrier Reef Resort

T

ony Fung has a plan. The Hong Kong-based private investor wants to bring Chinese tourists to Australia in great numbers to see a once-in-a-lifetime development.

Recently venturing into the gaming industry, Fung is taking the industry by storm with his impressive project in Australia: the Aquis Great Barrier Reef Resort. This A$8 billion resort is proposed to have two casinos, eight hotels with 7,500 rooms, along with luxury residences, an 18-hole golf course, a water park with a man-made lake and lagoon, shopping, dining and entertainment, convention facilities and a sports stadium. The development is incorporated with the natural surroundings of the Queensland region, with spectacular architecture and design that make the resort as much a destination as the reef itself.

Born to Chinese investment billionaire Fung King Hey, Tony Fung has quite a bit of experience with investments. He took over his late father’s Sun Hung Kai Securities in 1985, where he served as chairman until 1996, when he founded an investment banking firm called Yu Ming Investment Management.

Fung gained more and more experience by redeveloping retail outlets, shopping centers and other businesses under Yu Ming. After years of building a foundation of experience, it was time for him to take on new territory in Australia.

In addition to owning personal property in Australia, Fung has invested in a cattle farm, a wagyu beef-breeding business and a sugar cane plantation. Recently, he announced plans to acquire Casino Canberra, a facility in Australia’s

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{ 25 People to Watch 2015 }

Chasing Perfection

The Advocate

Richard Luarkie Governor, Laguna Pueblo, New Mexico

Sara Rayme Senior Vice

G

overnor Richard Luarkie vividly remembers his grandmother repeating these words to him as a child, and the principle still guides and drives him today in his role as the leader of the Pueblo of Laguna: “Chase perfection. You will never catch it. But in its pursuit, you will be doing your best.”

The Pueblo of Laguna has always had an entrepreneurial approach and spirit as a government, but its advancements in sustainability and diversification are of particular note under Luarkie’s leadership.

“As a tribe, in order to be successful economically, we cannot have a dependency or entitlement mindset,” he says. “We have to have a mindset of innovation, of inspiration, of motivation and dedication to the challenge that lies ahead. We must demonstrate the ability to work together for the benefit of the greater whole, and we have to be able to find economic opportunities that will create a return for the tribe, and for anyone with whom we choose to partner.”

Leaders of the Laguna Pueblo learned early on that they needed to work togetherto create a sustainable, economically diverse society. In the early 1980s, the closing of the Anaconda Uranium Mine, one of the largest open-pit mines in world at the time, took the Pueblo from almost full employment to nearly 72 percent unemployment in a very short time span. To combat the shock of the mine’s closing, the pueblo launched Laguna Industries in 1984, a strategic move that quickly evolved to become one of the largest Native American defense contractors in the United States.

In later years, the financial settlement the tribe received after the closing of the mine was invested to form the Laguna Construction Company, another entity which would grow to become a significant federal contractor. With these job-creating tools and experiences at their disposal, despite the passing of IGRA in the late 1980s, Laguna did not enter the gaming industry until the mid-to-late 1990s, making them one of the youngest gaming tribes in New Mexico.

Luarkie says Laguna’s business model allows for a unique separation between tribal government and business. The tribe owns its economic enterprises as shareholder, and has structured them as Section 17 federal corporations, delegating power to the board of directors to run the business, make key business decisions, develop strategy and manage financial performance.

“At Laguna, we all appreciate the importance of economic diversification and revenue creation,” Luarkie explains. “One of the most recent businesses we have created is Eagle Holdings—a company that is run by Laguna Development Corporation (LDC), a limited partnership agreement between the Pueblo and LDC.” This new endeavor has empowered Eagle Holdings with up to $45 million of non-gaming dollars for investing, acquisition, etc., thus giving LDC the tools to diversify the Pueblo’s economy and generate more revenue. The goal is to diversify the investment portfolio and economic strategy for current Pueblo members and future generations.

“When I look at economic development and business diversification, the biggest competition is not the next consultant firm or company. The biggest competition is mindset—mindset of that client that we are trying to help get to that next level, even our own mindset—that we as a team need to do it differently.”

Indeed, it is in the team effort that the governor gives the greatest accolades. He credits several key people that have helped the pueblo structure opportunities including their investment advisors, Ulrich Consulting Group, David Martinez, the tribal treasurer, Leger Law and Strategy, and importantly, the entire Laguna Development Corporation team.

—Erika Meeske, The Innovation Group 30

Global Gaming Business JANUARY 2015

President, Public Affairs, American Gaming Association

I

t’s clearly not your father’s American Gaming Association anymore. The new Geoff Freeman-led staff at the AGA has diverse backgrounds, and there are only a few with strong gaming ties. One of those is Sara Rayme, a former MGM Resorts executive now AGA’s senior vice president in charge of public affairs.

Rayme says her experience gives her a leg up when she’s talking to other members of her staff and the AGA constituents.

“Having lived in Las Vegas and worked for a gaming company has been very helpful,” she says. “Understanding the nuances of this complex business has definitely been an advantage.”

While the AGA has always been an advocate for the industry, Rayme says the new “campaign-style communication effort” backed by Freeman is more aggressive.

“The AGA has always done a great job at ‘doing no harm.’ We’re trying to be more proactive,” she says.

Rayme says adding research and policy to the AGA’s mission has made a difference—organized within the “Get to Know Gaming” campaign that was hugely successful in 2014.

“We want to get out there and tell our story, give our side of the issues and not let the other side define the debate,” she explains. “Backing it up with facts and research is a more holistic way of looking at government affairs and public policy. It’s much more impactful than operating in silos.”

Unlike the former strategy, the AGA has gotten involved in legalization efforts in individual states.

“We provide a good perspective,” she says. “There’s been lots of competitive issues within the industry, and we think it’s our job to provide the macro picture of industry impact, as well as what works and what doesn’t work.”

But Rayme says the AGA avoids taking a position, urging the stakeholders to make that decision themselves.

Another area the AGA used to avoid was tribal gaming, contending that tribal and commercial gaming were two separate industries. Now, says Rayme, it’s clear that one affects the other, prompting a position against off-reservation gaming.

“The board had established a policy position on off-reservation gaming in 2012,” she explains. “It’s an issue that continues to arise across the country and it’s something that we’ll continue to address. We plan to add more expertise and counsel in this area.”

Sports betting is another issue that came up recently, when NBA Commissioner Adam Silver called it “inevitable,” a position that was cheered by the AGA. But beyond, that, Rayme says evaluation about this form of wagering is ongoing.

Regulatory reform has been one of the success stories at the AGA over the past several years, and that progress is continuing. “(Regulators) are thrilled about the open door we have at the AGA,” she says. “They have been completely open and receptive.”

As for the next two years in Washington with a lame-duck president and a Congress controlled by the opposing party, Rayme says the AGA looks at it as an opportunity.

“It’s a chance for us to advance our message that gaming is an integral part of every community where it is located, providing good jobs and tax revenues to the region and to the state,” she says. “We’ve got a great educational awareness campaign going on and we’re building champions in Congress.”

—Roger Gros

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{ 25 People to Watch 2015 }

New Image Susan Cartwright Vice President of Corporate Communications, International Game Technology

A

ll the talk in analyst and media circles surrounding leading slot manufacturer International Game Technology these days usually concerns the company’s pending acquisition by lottery and gaming giant GTECH, and how the company may look after the merger is complete.

But today’s IGT already looks a lot different than it did only a few years ago. A lot of that can be attributed to Susan Cartwright. As vice president of corporate communications, Cartwright has molded a marketing image for IGT as a multichannel supplier and a leader in the emerging social-gaming market—shedding the persistent image of the 800-pound gorilla of the slot market.

After 27 years in advertising and communications, Cartwright was brought in to head IGT communications by CEO Patti Hart in 2012, while IGT was in the process of acquiring social gaming company Double Down Interactive, a move that was drawing wide criticism at the time as an expensive move away from the company’s core strengths. (The success of IGT’s Double Down Casino would soon silence those critics.)

Since then, Cartwright has overseen a major repositioning of the slot manufacturer as a technology leader in multi-channel distribution in the online space as well as the brick-and-mortar slot market. Today, even IGT’s logo is different than the one that identified the dominant casino slot supplier of the 1990s and 2000s.

“One of the things I’m most proud of for the organization is developing a marketing/communications strategy that is aligned with the business strategy,” Cartwright says. “Prior to the rebranding and repositioning, we had a very solid business strategy that was focused on best-in-class content, diversity of distribution, innovation and shareholder value. But we were not linking that business strategy to the communications strategy.

“The reflection of Double Down as the embodiment of that has allowed us to tell that story about expanded distribution and best-in-class content. It enriches our story, with our shareholders, our employees and certainly, our customers.”

It was a task for which Cartwright was uniquely qualified, having worked in brand repo-

32

sitioning in communications functions for a variety of industries. She has conducted countless campaigns in marketing for blue-chip clients across the board. “That’s really similar to what we’ve done at IGT,” she says, “and that is to recognize that brands matter. It is a purchasing factor for our customers and also, quite frankly, for our players.”

The new image of IGT “was not just to be a logo change, but to really reflect the brand essence of what has always made IGT great, and what will propel us to the future,” Cartwright says. “When we looked at what made IGT great, it was being maniacally focused on innovation, and bringing new things to the marketplace and to our industry.”

She ticks off a laundry list of those innovations: ticket-in/ticket-out, sbX server-based gaming, video poker, progressive slots, Reel Edge skill-based games… and prominently of late, Double Down, which revealed the value of social gaming to the industry at large.

Cartwright’s branding and repositioning work is accompanied by promoting the industry at large, through the American Gaming Association, through government relations, compulsive gambling initiatives, gaming-related scholarships an other activities.

The industry will be watching to see how Cartwright’s team translates the communications function regarding IGT’s accomplishments to the newly merged company after the GTECH deal is complete. Cartwright says she’s excited to hone the strengths of two very synergistic brands. “I think they complement each other in a terrific way, each of them being leaders in their segments,” she says. “I think together, we’ll be stronger.

“We’re going to be creating the global leader in end-to-end gaming solutions across all segments.

The No. 1 gaming company will be combined with the No. 1 global lottery company, and truly the top tier in social gaming with Double Down.”

Cartwright also says she’s looking forward to keeping up with a rapidly changing gaming industry.

“We are at the crossroads of technology and entertainment, and creating compelling content across platforms,” she says. “We really want to maintain the right to radiate this through all our communications, for ourselves as well as the industry.”

—Frank Legato

Global Gaming Business JANUARY 2015

Change Is Good Rich Sullivan CEO, Red Square Marketing

R

ich Sullivan, CEO of Red Square Marketing and its gaming division Red Square Gaming, believes the industry “is in the midst of a gigantic moment of change. We are trying to lead our clients through it”—to reach a generation who watch TV with one eye and a phone screen in their hand.

Alabama-based Red Square employs innovative marketing campaigns using social media and other strategies aimed at Gen X and the millennials.

In 2000 when Sullivan joined the business, founded by his father, it was known as Sullivan St. Clair. “I wanted to grow it from a local semi-regional generalist into a national agency that did topshelf work,” he recalls. “I was fortunate to hire some smart, talented people.”

In 2008 it became Red Square. “I love the irony of an ad agency named Red Square,” says Sullivan.

It derives from the Sullivan St. Clair logo, which included a red square. “My impetus was to make the company bigger than just a family business,” he says. “I’ve always wondered why agencies are named like law firms. The name is the icon.”

Red Square entered gaming in 2003-2004. Sullivan, who grew up playing cards and made many friends playing on dockside casinos in Biloxi, recalls, “We said, ‘We need a casino account.’ We knocked on lots of doors. Our first gaming account was in Alabama, the Poarch Creek tribe. We have been lucky to grow with them.”

Gaming became 60 percent of their business, prompting a separate division. Clients have included the Cherokee Nation in Oklahoma, multiple Hard Rock casinos, the Poarch Creek band, IP

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Going Global Biloxi and Eldorado.

“In the last decade gaming has become a hard category, super high volume. It never stops,” says Sullivan. “That makes it exciting but also a challenge to enter the market. Looking at the competitive landscape, not many agencies are proficient at it. Some understand gaming and are gaming agencies, but are not known for being creative. Then there are creative agencies, but who don’t know what they are getting into. A third agency emerging is a digital agency proficient in interactive media.

We think we do all three of those things really well.”

Gaming companies need this approach because the market is becoming saturated, says Sullivan. “It’s a critical mass for casinos, and gaming is embarking on a new chapter. It’s no longer ‘build it and they will come.’ Marketing, branding and advertising will matter. The idea of someone holding a check on a billboard is not going to do it anymore.”

Red Square helped the Hard Rock Tulsa build a mobile game for a Halloween promotion and tie it into a loyalty program. “I think casinos will integrate digital into their traditional campaigns,” says Sullivan. “We think across all media. All the ways work. It’s just reaching people in new ways.

“Casinos will have to adapt to Gen X and the millennial generation faster than they anticipated,” he says. “That will impact player loyalty and the mechanism for developing it. Mobile marketing and the idea of connecting with players with Androids will be a bigger thing to adapt to than what people are thinking right now.”

Gaming saturation and evolving casino demographics are challenging, but present great opportunities. “Casinos that ‘get it’ and are willing to mix it up a little bit will benefit,” he says. “It’s not necessary to blow up an old model. Direct mail, outdoor, television aren’t going away, but are making way for experimentation and adding tools to the marketing arsenal.”

Gaming is still calculating the implications of social media, he says. “The idea that social media will dramatically do something is a hyped-up area of marketing. Social media strategy is not that I have a Facebook page. Where true social media comes into play relates to loyalty. One thing gaming does better than anyone else is loyalty. Casinos need to think in terms of loyalty so they can build their own little niche network.”

Sullivan speculates about turning casino advertising into a game: “How novel would it be to ask people to do something with their phone when they see an adverting spot? There are ways to make things happen by how people walk around now.”

—David Ross

Andrew Klebanow Co-Founder and Partner, Global Market Advisors

A

ndrew Klebanow has lived gaming all his life, and understands the globalization of the industry.

The New York native this year celebrates his 40th anniversary in the hospitality-gaming realm. It has a been a rich journey, spanning the roles of casino marketing executive, consulting-firm founder and partner, university guest speaker and industry world traveler.

Klebanow founded Gaming Market Advisors, and changed the name to Global Market Advisors with the addition of Jonathan Galaviz, an expert in Asian gaming. With American bases in Las Vegas and Denver, along with a Bangkok, Thailand office added in 2014, Klebanow splits time between the offices—he recently logged more than 20,000 air miles in a 17-day jaunt between office visits, trade shows and company projects.

“What I love most about this business is seeing what casinos do to improve lives,” Klebanow says. “A typical casino, unlike most businesses, will provide health insurance, a free meal every day and thousands of good-paying jobs. It really changes lives.

“The impact is even more dramatic in a place like the Philippines, in which one person working a good job can support six or seven people. The Solaire casino in Manila employs about 5,000 people. That’s a direct impact on 30,000 people, and then you have indirect jobs for the vendors, truck drivers, laundry service, etc.

That in turn leads to induced jobs, coming from money they spend in the community.”

Klebanow, along with Galaviz and third partner Steve Galloway, has incorporated several analytical tools for casino use into his company operations. GMA provides market feasibility studies, primary research, economic impact studies, due diligence, payroll control, operations analysis, business and marketing plan development, along with player reward program design for the gaming, hospitality and tourism industries. The company thrives upon domestic and international operations, project development, marketing expertise and detailed market analysis.

GMA authored feasibility studies in the Philippines, Vietnam and Vladivostok, Russia, and revenue forecasts for casinos in Macau. It also prepared the strategic marketing plan for the Solaire property.

GMA’s 2015 focus concerns Asian governments using casino development to grow tourism and stimulate job growth. GMA also will issue a white paper titled “Casinos and the City” exploring the history of casinos in urban environments and proposing strategies to use casino development to stimulate urban redevelopment.

Klebanow says Macau illustrates an effective business-model synergy between casinos and other establishments. The downtown gaming property boosts nearby jewelry stores, restaurants, etc.

While extolling gaming’s virtues in Asia, Klebanow believes the industry in America must re-evaluate some of its recent trends. Hold percentage on slots have risen to the point of counter productivity, he asserts.

It has often spiked 50 percent or more, and threatens to discourage long-term business.

“I’m adamant about that belief,” he says. “We have hit the tipping point. The industry has embarked upon the unsound strategy of raising the price of the product. I don’t think they want to admit they priced it too high. They keep adding bonusing rounds and top-box features with bells and whistles, but they are expensive. In Nevada, some gaming operators even petitioned the state to raise the maximum allowable hold percentage.

“Contrast that with a place like West Memphis (Arkansas), which has Instant Racing at what I believe is about 5.5 percent hold, and the game is very popular. They have about 1,000 machines and they are packed, while Tunica (about an hour south in Mississippi) is dying on the vine.”

Klebanow believes gaming operators should switch the win percentage back in the customers’ favor and limit the max-bet amount. He shares this opinion worldwide, including in articles in GGB magazine.

Klebanow has practiced his own opposition to the quick buck. He gave up a substantial casino restaurant job and returned to school at age 35, to earn a master’s degree in hotel administration from Cornell University. The hardest, yet most rewarding two years of his life resulted, he says.

Klebanow subsequently held major marketing roles for the Sahara Gaming Corporation, Alliance Gaming Corporation, Horseshoe Gaming, Santa Fe Hotel and Gaming and Sam’s Town, where he helped rebrand its player rewards program. Now there are worldwide clients.

Over four decades, Klebanow has enjoyed some ride. In 2015, it continues.

—Dave Bontempo JANUARY 2015 www.ggbmagazine.com

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The Price Point Craig Weissman Cofounder & CTO, Duetto Research

W

hen Patrick Bosworth and Marco Benvenuti left Wynn Resorts five years ago to form Duetto Consulting, they had an idea that would use analytics to drive room-price and other related decisions for casino executives. Benvenuti used Excel spreadsheets to break down the data, and Duetto was doing very well.

But there are limitations to Excel that Duetto began to notice, and a search began for someone who could take them to the next technological level.

Enter Craig Weissman, the technology guru behind salesforce.com, a Silicon Valley startup that organized sales efforts in any industry using the power of cloud computing. Together, they formed Duetto Research, a technology company that is designed to drive more revenue from non-gaming assets.

Weissman was looking to break into a “vertical”—an industry that needed new technology.

“He refers to this as a meat-and-potatoes industry,” says Bosworth, “that has antiquated technology generally, and he can help change the game in a large vertical.

And when you look at the global hospitality industry, anyone objectively looking at the technology that’s been in play would agree that it’s not at the cutting edge, and for the most part we are looking at programs that were developed in the 1990s.”

Weissman immediately developed GameChanger, a cloud-based program that helps hotel executives set a room price that will provide them with the most revenue, whether the customer is a casino player or simply a visitor renting a room.

“Setting one price for a room was counterproductive,” he says. “GameChanger lets those prices float more intelligently. If you have a greater demand for suites, it adjusts the price upward so you can make more money on the suites. If you notice a different behavior between your website business and your group business, you want to let those website rates float. GameChanger allows you to make those intuitive decisions more quickly, bringing more revenue to the bottom line.”

It might only be a $10-$20 difference, but Weissman says that adds up.

“Over the course of a year, you can make a lot more revenue just by doing what

Gaming’s Governor Eloy Inos Governor, Northern Mariana Islands

E

loy Songao Inos became acting governor of the Northern Mariana Islands (CNMI) on February 20, 2013, following a four-year term as lieutenant governor of the Islands. Inos was appointed governor following the resignation of his predecessor, and is currently serving out the remainder of the former governor’s term, through this month. He was re-elected in November to another term.

Governor Inos can now also be credited with successfully attracting gaming industry players to a public tender for an integrated resort in Saipan, CNMI’s largest city and a well-established tourist destination. Saipan has historically attracted visitors from Japan and Korea, and also has a rapidly growing tourist base from China. The governor’s administration selected as preferred developer Best Sunshine International to build a multibillion-dollar destination resort in Saipan.

As a new outlet for coveted VIP junket play, the pending development is sure to have the eyes and ears of the industry.

The governor’s vision for and commitment to the CNMI community are the hallmarks of his efforts to establish Saipan as a more substantial tourism and gaming destination. He is a true CNMI local success story, having attended the University of Guam, graduating in May 1981 with a degree in accounting and management along with a minor in public administration. Shortly after graduation, Inos became the di34

Global Gaming Business JANUARY 2015

seems to be intuitively obvious.”

Unlike many systems that can’t take into account gaming revenue, GameChanger does.

“That’s just another dimension of the program,” says Weissman. “It’s a different kind of customer, and if it makes sense to lower or raise your price for a casino patron, GameChanger will tell you that.”

One of the difficult elements to break down is the hotels’ use of online travel agents (OTAs like Travelocity, Expedia, Hotels.com, etc.). Weissman says Duetto is getting better at evaluating this, but there’s often data that fall through the cracks, like commissions.

“If you’re paying a 20 percent commission, that’s a pretty big hit,” he says.

“Our algorithm with GameChanger will evaluate all channels, and if it finds you’re making more money from other channels, that’s where you should put your focus, not in OTAs.” Weissman says Duetto isn’t stopping at just room rates. The company is developing programs that can apply to all non-gaming amenities, assisting operators in making pricing decisions about these elements.

“We’ve done some good work in this area and we have lots more work to do,” he says. “The algorithm can take in multiple sources of revenue, and we’re working to be able to incorporate all the different systems that gather this information. Eventually, we’ll be able to get all the folio charges and incorporate that into our calculations. The core engine is designed to evaluate all these sources of revenue.”

Duetto is attempting to do more with technology than has ever been done before in the hospitality industry.

“This is a difficult task and requires people like Marco and Patrick who are passionate about the industry,” says Weissman. “I would not have been able to this without their knowledge, and they would not have been able to do this without a good technology team, because this is not a trivial task.”

—Patrick Roberts rector of finance and administration of the Trust Territory of the Pacific Islands (TTPI). In this role, he managed and directed the overall TTPI budget and financial administration, and managed and supervised overall TTPI personnel administration, federal grants management, communications and procurement.

Remaining within the public sector, Inos moved on to be the director of finance for the CNMI government from 1987 to 1994, where he administered and supervised all aspects of CNMI’s financial administration.

After holding his position as director of finance, Inos moved into the private sector as the president of Century Group of Companies, Tan Holdings Corporation. While there, he managed and supervised the operations of Century Insurance Co. Ltd., Century Travel Agency and Century Finance Co. Following this position, Inos became the vice president of international trade and government relations and vice president of business development and special projects before returning to the public sector in 2006.

Asia and industry eyes will be on Inos and Saipan for the foreseeable future. One certainty is that the governor’s legacy will be tied to gaming, an industry he has embraced as the vehicle for economic development and the diversification of the CNMI economy.

—Michael Soll, The Innovation Group

More than a transaction.

A connection.

The real moment of truth on the casino floor is when a player gives you her money.

Only she doesn’t actually hand it to you. She hands it to us.

From the moment that currency touches our bill validator, we are responsible for providing an effortless, accurate transfer of cash into play. We accept your customer’s wager with reliable grace and efficiency, just the way you would personally. We are your representative on your casino floor.

This philosophy has earned JCM its position as the industry leader, with more bill validators and printers in play than all other brands combined. And now, we are about to reveal how a simple buy-in can lead to a level of player engagement that goes beyond the transaction. We’ll help you make connections.

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{ 25 People to Watch 2015 }

Voice of the People

Mastering iGames

Lynn Valbuena Chairwoman, San Manuel Band

Andrew Goodale Senior Director

of Mission Indians

of Interactive Game Development, SG Interactive

L

ynn Valbuena’s commitment to native tribes extends far beyond her role as chairwoman of the San Manuel Band of Mission Indians based in Southern California.

Even the short version of Valbuena’s résumé sounds like someone else’s lifetime achievements: past trustee for the Smithsonian’s National Museum of the American Indian; chairwoman of the Tribal Alliance of Sovereign Indian Nations; delegate to the National Indian Gaming Association; advisory member of California’s American Indian Chamber of Commerce; and trustee for the Los Angeles-based Autry National Center, which is dedicated to an inclusive history of the American West.

Valbuena, known far and wide as “Nay,” is also a 23-year delegate to the National Congress of American Indians, and has been a member of the Advisory Council for the American Indian Chamber of Commerce of California for the past 15 years.

She first served as chairwoman of the San Manuel Band in 1994. Last April, she assumed the role for the second time.

“The future of our tribe,” she said at the time, “requires that we continue the work initiated by our ancestors generations ago not only to ensure our survival, but also to maintain our cultural strengths and a commitment to progress in an increasingly complex world.”

Valbuena learned these principles at her mother’s knee. She is one of three children of the late Pauline Murillo, a tribal elder and author of acclaimed books about Indian culture, including Living in Two Worlds, a view of life on the reservation, in the San Bernardino Mountains near Los Angeles.

“My mom would always say, ‘Never forget who you are and where you came from,’” Valbuena says.

She hasn’t forgotten. Valbuena grew up on a reservation where many homes lacked electricity, clean running water was scarce, and “welfare trucks” delivered food to the tiny San Manuel tribe.

Also known as the Yuhaviatam clan of Serrano Indians, the community eventu36

A

ally ascended out of poverty, chiefly by opening a bingo hall in the mid 1980s. It was so successful, a 100,000-square-foot casino was added in 1994. Today, San Manuel employs some 3,700 area residents—98 percent of them non-Indian— at the tribal government center and the San Manuel Indian Bingo & Casino near Highland.

San Manuel diversified its economic portfolio by partnering with other tribes to build a hotel in Washington, D.C. The tribe also owns a hotel property in Sacramento, has developed a mixed-use retail and commercial center in Highland, and has real estate holdings throughout Southern California. The tribe supports various charities, nonprofit groups, community organizations and other Indian tribes, including community hospitals and educational and cultural ventures.

The primary enterprise remains the casino, and it’s poised for the next big step: the possible legalization of online poker in the Golden State. Last November, San Manuel joined the Morongo Band of Mission Indians, California’s three largest card clubs—the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino—and the Amaya Gaming Group, owner of PokerStars, to prepare for online poker.

“San Manuel will continue to move forward,” Valbuena says. “We’re not going away. We’ll be here forever.”

Asked what drives her, she says, “I have a passion to serve San Manuel and the broader native community. It’s what I do to help people in any way that I can.”

—Marjorie Preston

Global Gaming Business JANUARY 2015

ndrew Goodale has been in the thick of the interactive games business for years. This year, though, may present the biggest challenge of the executive’s career—building the largest provider of interactive gaming content and platforms the industry has ever seen.

As senior director of interactive game development for the newly formed SG Interactive, Goodale is responsible for corralling all the talent, content and technology of five former suppliers that now constitute the gaming and lottery behemoth Scientific Games—WMS Industries, Bally Technologies, Barcrest and SHFL entertainment in addition to the original lottery company—into the new interactive division of Scientific Games.

Goodale began his gaming career at Britain’s Barcrest, where he was a video graphics manager for 17 years. He moved into the interactive arena in 2012, just after Scientific Games bought Barcrest.

When Scientific Games bought WMS Industries last year, Goodale was interactive games development manager, a role he brought to Williams Interactive last spring. But Scientific Games’ purchase of Bally Technologies— which itself had absorbed the former SHFL entertainment—created a whole new ballgame on the interactive side.

The reason? Content.

Goodale’s new job is to work with a diverse, worldwide group of game development teams to identify the best of the WMS, Bally, SHFL and Barcrest libraries for transfer into the online space. “It’s almost too much content,” he says. “That sounds like a good position to be in, but it’s really challenging. We have to choose which games to invest in for the online space.”

Goodale’s background, though, makes him more capable than most to handle the challenge. If his years at Barcrest taught him anything, he says, it’s how to cross-market a game between channels—casino, AWP, and the LBOs, which has been Barcrest’s strongest market.

The best way to identify hits for the online market, he says, is to look at what’s already been successful. And having access to the top slot games from the land-based gaming industry affords that capability. “If you can tie in your interactive roadmap to the land-based roadmap, you’ll be successful,” Goodale says. “When a land-based game goes live, you can back that up with an interactive mobile and desktop game. That’s what we’ll be doing more of going forward, and there are not many out there who can do that.

“Cross-marketing is the key. I could put out 10 games a month, but we have to make sure we get the right return for what we’re putting out.”

The next logical step, of course, is to launch online first and cross those games over to the land-based space. Goodale has an added advantage when deciding which games will fly online and which will cross over well to landbased casinos—the Play4Fun network. Williams Interactive’s growing social game platform and network is often used as a testing ground for games, and as a vehicle for cross-marketing.

For 2015, Goodale says one key goal is to identify the games that will translate best to the mobile channel. “Mobile is a key,” he says. “In the U.K., mobile is really becoming the preferred channel.”

Goodale’s goal for SG Interactive? “It’s world domination!” he laughs— but he’s not really kidding. “We are pretty fortunate in that we have all these land-based games in North America, and I can’t stress enough how much we need to utilize what we have across all channels,” he says.

“Yes, world domination sums it up nicely!”

—Frank Legato

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Boston Bound Robert DeSalvio President, Wynn Massachusetts

T

he business world likens waste cleanup to management trimming, employee thinning and the streamlining process for a downsizing, right-sizing economy.

Robert DeSalvio takes the term literally.

The new president of Wynn Massachusetts, LLC starts the year helping his property clear a dump site near the operator’s site in Everett, near Boston. Wynn Resorts will convert a contaminated site on the Mystic River that previously housed a Monsanto chemical plant and then build a casino. The waterfront has been unavailable for public access for more than a century.

This project will include a five-star resort with more than 500 rooms, high-end retail and dining, ballroom and meeting space. It will redevelop an industrial neighborhood. The $1.6 billion project is ticketed for a 2017 completion.

“We intend to be a great corporate partner for the community,” DeSalvio says.

“We will clean up a polluted site that will reconnect Everett with its waterfront. Nobody has wanted to touch the site because of the substantial cost of a cleanup. It would not be worthwhile if you were a developer or for an individual business owner, but our project is so much bigger that we can do the required mediation.”

Assisting new properties has been a career-long path for DeSalvio, a Glen Rock, New Jersey native. He began at Caesars Atlantic City in 1979, one year after the resort became the nation’s second gaming destination behind Las Vegas. DeSalvio later spent two years with Bally and 14 with Las Vegas Sands Corp., becoming the executive vice president of marketing. DeSalvio went on to spark the emergence of Foxwoods with a nine-and-a-half year run that left him as the executive vice presi-

dent of marketing.

Then came Las Vegas Sands, again. As gaming emerged in Pennsylvania, DeSalvio became president of the company’s Sands Bethlehem facility from 2006 until 2014. DeSalvio is credited with leading the casino through a recession that delayed the opening of the hotel and for reviving the local economy.

“When you think about the things which make you most proud, that was probably it for me,” DeSalvio says. “We were the stewards of a property with extensive historical significance. The Bethlehem Steel story regarding the building and defending of America is a tremendous one. There were 30,000 people working out of that site during World War II. Their objective was essentially to come up with the armaments to produce one warship every single day.

“When you inherit a site like that, the architecture is very important to the community. The locals were afraid that someone would develop and level that site, ruining the legacy. We understood that we were building on hallowed ground. We preserved the look of it and built a nice casino. The locals were very happy that we got it right.”

DeSalvio joined Wynn last March to spearhead its successful bid to gain a gaming license. The competition was fierce and the process was tedious.

“What was important for us,” he says, “is we had a project that had substantially more jobs created at higher income levels (generating more tax revenue).

With our excellent reputation of being a good employer and our chance to bring in international tourism, we felt very good about our proposal.”

Now it’s on to employing two principles with proven track records, he says.

One is to foster good relationships with the host community. The other is to hire people who know how to make guests feel welcome.

That looks easy, but seldom is.

For DeSalvio, a long-time class act in this industry, it is again time to build.

—Dave Bontempo

Designs for the Ages Paul Steelman President, CEO and Founder, Steelman Partners

D

espite his three-plus decades of success in the casino architecture and design industry, Paul Steelman, president and founder of the prestigious Steelman Partners firm, still never passes up an opportunity to learn lessons from 2014 that he can use to plan ahead for even more successful 2015.

“The downfall of Atlantic City has provided many lessons to be learned,” says Steelman, a native of the Boardwalk town. “Casinos can be successful when they are based on convenience gambling for a while, but for real long-term success the property has to be a true destination attraction.”

Steelman is putting this lesson into play with his designs in both domestic and foreign casinos to create a true “destination casino” experience.

“Gambling is a 600-year-old product that has remained relatively in the same form for 160 years,” says Steelman. “There isn’t any other form of entertainment that can really say that; you are constantly trying to reinvent other forms of entertainment.”

Steelman’s project list for 2015 definitely spear38

heads change and reinvention within casino design and architecture. On the Las Vegas Strip, Steelman Partners will be busy in 2015 creating the Asianthemed casino for Malaysia gaming company Genting.

“It is not a typical Las Vegas casino hotel,” says Steelman. “We are featuring real historical characteristics of an era on the façade design in the same style of the Forbidden City from the 5th century. This particular theme of old meets new has not been done in Las Vegas. We want to put people in that place at that time in history with access to modern conveniences and luxury.”

In Asia, 2015 will be just as busy for Steelman this year, as his firm is the design architect for Galaxy Gaming in Macau, which includes interior design as well.

“Thousands of hours have been dedicated to this next-generation casino design,” says Steelman.

Steelman’s progressive thinking has allowed 2015 to be a landmark year in an entire new industry— amusement theme parks. In Australia, his firm is leading design efforts for Wave Break Island, a multibillion-dollar theme park and integrated resort with 100 attractions on the most scenic site in the country. However, the majority of Steelman’s focus for

Global Gaming Business JANUARY 2015

2015 will remain in the gaming industry as he eyes additional projects and Cambodia and even an opera-house theater in Ho Chi Minh, Vietnam.

Steelman Partners also is working in Russia, another gaming growth market, as well as projects in Central America and South America, capitalizing on the emerging trend of destination tourism.

“I learned from working with Steve Wynn that I am here to listen to my clients and customers to create the best possible design product for them,” says Steelman. “It is even more important now because we have to listen to our clients to learn their ethnic diversity and incorporate that into our design of the casino.”

What also excites Steelman about the industry for 2015 and beyond is the future of design, which includes more technology, brighter color schemes, interactive experiences and a more diverse clientele.

Once again, Steelman is at the forefront of the industry.

“We want to be a leader in that digital design category,” says Steelman. “Innovation is all about designing, not what you want to work, but designing what is going to work in the future.”

—Rodric J. Bradford

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{ 25 People to Watch 2015 }

Growing Player Ram Chary Chief Executive Officer, Global Cash Access

W

hen it was announced in September that Global Cash Access, the leading supplier of ATMs, kiosks and payment technology to the casino industry, was acquiring Texas-based slot manufacturer Multimedia Games, there was surprise across the industry—not that MGAM was being bought, but that GCA, rather than a larger slot-maker, was doing the buying.

But for Ram Chary, who became CEO of Global Cash Access a year ago, it was part of the plan to transform the Las Vegas-based supplier into a much larger, more diverse company.

With thousands of ATMs and kiosks already in the field, GCA was already the top gaming supplier in its field when Chary took the reins in what is his first job in the gaming business.

Right out of the gate, Chary knew he wanted to grow the company into something bigger. “GCA enjoyed great market share, had great financial fundamentals, good cash flow and very low leverage,” he says. “I took advantage of those characteristics to grow the company through acquisition.”

The first would be a tuck-in acquisition that immediately diversified the company’s services to casinos. Last spring, GCA acquired NEWave, supplier of a wide range of compliance software that automatically puts operators in compliance with federal tax, anti-money-laundering and other regulations. A few months after that came the Multimedia announcement.

“Our acquisition of Multimedia Games clearly is a transformational opportunity for us to move more and more into gaming and to continue our gaming-exclusive nature,” says Chary.

Moreover, he adds that by being in casinos exclusively, GCA had developed an R&D culture that made it more than simply an ATM supplier.

“Clearly, in the macro economy, ATM transactions are more commoditized, and some of the cash advance aspects of the business were found in a lot of different places,” Chary says. “What I was more surprised to find was that we have proprietary technology—proprietary software that’s patent-protected, and kiosks that are also very unique and stand on their own in the space, and they are things that are not provided by the other suppliers.”

It is in that respect that the acquisition of Multimedia Games makes the most sense, Chary says.

“Fundamentally, we both provide hardware that ends up on the casino floor that’s critical in the casino operation,” he says. “That’s a commonality that’s very significant but that many people over40

look. We sell to the same decision-maker in the casino’s organization more often than not.

“We’re unique in the space in that we have proprietary technology no one else has, and we have functionality in our hardware no one else has. Multimedia shares that individuality. They are Austin, Texasbased; they are run much more like a software development company than a slot supplier, and as a result, they provide innovative, different-looking and distinctive slot products to the gaming space. In terms of the DNA of the organization, the focus on technology and innovation is something we both have.”

Multimedia Games has been one of the fastestgrowing companies in the slot supply sector. Originally concentrated solely in a few Class II markets, MGAM has spread rapidly in the Class III arena over the past few years. Combined with GCA—a company with licensing and distribution in place across the industry—that pace is sure to speed exponentially.

“We’re in more than two times the casino properties that Multimedia is,” Chary says. “We have almost three times the number of relative licenses in jurisdictions to sell products and services. So, using our deep relationships and our large footprint as a channel to afford more jurisdictions and more entities Multimedia’s capabilities is really going to be key for us going forward.”

Not that GCA’s core business is going anywhere.

GCA generates more than $20 billion in cash to casino customers and process more than 90 million transactions every year. Just the past few months have seen major contract renewals from Station Casinos, Penn National Gaming, Seminole Gaming, Foxwoods and others.

In 2015, Chary says he will focus on “translating the power of our combination to clients,” by molding the varied offerings into viable solutions for operators. “Our cash-to-the-floor solutions will continue to allow them to get the most out of the patron base they have, and in terms of patron experience, the innovative games we’re bringing to market in 2015 on the Multimedia side will help our clients have their clients enjoy their experience in the casino,” he says.

“We aspire to be the most relevant strategic partner for casino operators.”

Meanwhile, says Chary, GCA will remain on the hunt for acquisitions that can quickly expand its services. “We’ve had an unprecedented, historical pace in 2014 of consolidation in the supplier space, and the larger ones will take 12-36 months to settle,” he says. “Our complementary acquisitions will allow us to focus on our clients immediately.”

—Frank Legato

Global Gaming Business JANUARY 2015

Slot Futures Eric Meyerhofer CEO, Gamblit Gaming

E

ven before he cofounded printing/couponing system supplier FutureLogic, Inc. in the mid-1980s, Eric Meyerhofer had entertainment on his mind. His first job as an electrical engineer just out of college was in movie special effects, developing electro-mechanical animation systems for Hollywood filmmakers.

Even after his long stint as CEO of FutureLogic began in 1986, Meyerhofer continued to ponder the future of entertainment in the gaming industry. By the 2000s, having built FutureLogic into the top supplier of ticket printers and couponing systems for casinos, Meyerhofer turned his entertainment concerns to the slot machines themselves.

Meyerhofer recognized early on that younger Generation Xers and the millennials—larger than any generation before it, even the ubiquitous baby boomers—represent the next big wave of new casino customers.

And millennials, quite simply, don’t want to spend an evening watching spinning reels.

“We believe that this is the story of two markets, laying in parallel next to one another,” Meyerhofer explains. “I want to give the appropriate nod to the existing EGM industry; they do a fantastic job catering to the market they serve, which is now becoming an older demographic. But it does leave the millennials and the younger half of Gen-Xers a little cold.

They don’t show interest in the classic casino games.”

In 2010, Meyerhofer set out to do something about serving this emerging market. As a sideline at first, he founded Hard 8 Games and its subsidiary Gamblit Gaming, with a mission to bring the types of games millennials actually do like to play—the ones on their mobile devices—to the slot floor.

Meyerhofer found investors liked this idea as well. American Capital led a consortium of investors that gathered $12 million in capital for Gamblit’s expansion. Last year, Meyerhofer left FutureLogic to devote his full energies to the new company, and its new concept for developing slot machines.

Since then, Gamblit has made inroads in online markets, particularly for-money iGaming sites in Great Britain, with a new kind of game content.

Games like “Dreadnought,” a space-themed strategy shooter game in which the player battles aliens, or

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puzzle games like “Lucky Words” and “Police Puzzles,” could be right off a mobile-game site. Gamblit produces them for all genres, including for placement in an EGM on a casino floor (which Gamblit demonstrated at G2E).

Gamblit provides the content and the platform, and the apps for players to put the games on their mobile devices. Meyerhofer has formed a studio for proprietary games and partnered with outside studios including Shanda Games, Gamiker and Flexball, producers of some of the most popular multi-player online and mobile entertainment games in the world. “We think of ourselves more as real-money games publisher and platform company than a content provider,” Meyerhofer says.

He adds that for game placement in casinos, LBOs and other physical locations, Gamblit is partnering with established manufacturers that have the production and distribution in place.

The idea is to create games for casinos and for-money online and mobile sites that accompany the traditional games with what Meyerhofer calls “SWig”—an acronym for skill wagering interleaved game. “When you play this game, it feels much more like an entertainment experience than a wagering experience,” he says, “and then there’s a shot of adrenaline and fun in the game from wagering.

“That’s more native to what millennials and GenXers do with devices and game experiences. They’re much more interested in a skill component—not headto-head wagering; these are house-paying games with a skill factor.”

Meyerhofer has brought in a variety of people from the video game industry, to work with those experienced in the regulated wagering industry. The games feel like skill games, but they conform to the requirements of slot operations, and to those of gaming regulators.

Don’t expect to see Gamblit games buried in banks of traditional slots, though. Meyerhofer envisions special sections or lounges devoted to the kind of interactive, social play experience the young players seek. Think the peripheral areas of nightclubs, day clubs or pools.

Meyerhofer says feedback from operators on the idea has been nothing but positive. “Fortunately, they are already on the same thought process,” Meyerhofer says, noting the steady decline of slot revenues of late. Regulators also are on board—New Jersey authorities have already asked for this type of game, and in Nevada, several Strip operators are speaking with Gamblit.

With 100 percent of the current slot floor currently devoted to baby boomers, there’s no place for Gamblit to go but up.

“A stat I saw recently is that more than 70 percent of visitors to casinos now are millennials and Gen-Xers,” Meyerhofer says. “You have zero percent of the wagering floor devoted to them.” He suggests operators should take perhaps 5 percent of the floor to introduce the new game style.

That 5 percent just may constitute the vision of the slot floor of the future.

—Frank Legato

1 7 5 0 A T T O R N E Y S | 3 6 L O C A T I O N S W O R L D W I D E˚

Wishing You Good Fortune in 2015 We’re excited about the future of gaming and our role helping casino owners, operators and executives; gaming manufacturers and suppliers; private equity firms; and investment banks as they reshape the industry.

We had an outstanding 2014: welcoming new members to our team, expanding to new markets and tackling new projects. Most importantly, we were proud to help our clients accomplish their goals.

As we begin 2015, we wish you a happy, healthy and prosperous new year!

Global Gaming Practice financing | intellectual property | labor | litigation mergers and acquisitions | real estate | regulatory Learn more at gtlaw.com/gaming GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2014 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol, 77 West Wacker Drive, Suite 3100, Chicago, IL 60601, 312.456.8400 or Laura L. McAllister Cox, 2700 Two Commerce Square 2001 Market Street, Philadelphia, PA 19103, 215.988.7800. °These numbers are subject to fluctuation.

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{ 25 People to Watch 2015 } Martha Sabol Co-Chair, Global Gaming Practice,

The Next Generation of Gaming

Greenberg Traurig

Matt Davey CEO, NYX Gaming

M

N

A Better Way to Serve artha Sabol could be considered a visionary in the casino and gaming legal field. Her model to provide holistic, comprehensive legal services to Greenberg Traurig’s clients, whether they are financing growth, licensing new technology or ensuring regulatory compliance, enables Greenberg Traurig to help clients monetize ideas, expand in new locales, create new offerings and defend their position in the market.

Sabol started her legal career later than most. Her first career was in the managed food service industry at Aramark and later ServiceMaster. She ascended, very quickly, to become the VP of sales at ServiceMaster, overseeing a national sales team. After achieving successes in management and sales, Sabol realized she wanted to broaden her repertoire of skills to include the legal and strategic aspects of the business. At 36, she enrolled in law school at Loyola University in Chicago, and after completing her degree, she accepted a position in the corporate department of a Chicago law firm at the height of the dot-com wave.

Sabol was recruited from that firm to become the in-house counsel for Hyatt’s gaming division. Her time there provided the genesis for the idea of a holistic, full-service legal function. At the time, Hyatt owned and managed casinos around the world. In order to address all of the unique legal needs of this gaming company, Sabol was required to work with multiple law firms in each jurisdiction. She realized that there was not one law firm that fully understood the unique legal and business needs of the gaming industry. This inefficient and cumbersome process was costly and time consuming.

“I would have preferred to work with one law firm to handle all of our legal matters with the added benefit that it allowed me to have confidence that sensitive matters would remain confidential,” Sabol says. “Ultimately, this approach also would provide a law firm with a better way to serve its clients.”

After her in-house experience, Sabol saw an opportunity to apply her unique vision at a progressive law firm. In 2006, Greenberg Traurig recruited her to join its practice. Sabol realized this was the great opportunity to implement her holistic and comprehensive strategy.

“Instead of providing these services on a local or piecemeal basis, Greenberg Traurig is able to do it all with a cadre of experienced lawyers working in offices across the U.S. and the world,” says Sabol, who is today the co-chair of the firm’s gaming practice.

Over the past eight years, Greenberg Traurig’s gaming practice has grown substantially, and the firm is present and serving clients in almost all major and emerging gaming jurisdictions. Greenberg Traurig’s relationship with one major client, Scientific Games, started with providing regulatory and licensing services in a major acquisition transaction, and has grown to provide other legal services as its business expands into other areas.

“This natural progression was made possible by our strategic vision, and approach to servicing all of our clients’ needs, as well as strong local and national relationships,” Sabol states.

Moving forward, Sabol is excited about the direction of Greenberg Traurig’s gaming practice and prospects for growth at the firm. “We have been able to attract an amazing group of internationally recognized gaming lawyers to foster this practice,” she says, “and we look forward to continued growth and bringing amazing talent into Greenberg Traurig.”

Under Sabol’s leadership and vision, Greenberg Traurig is poised to build upon its success.

—David Rittvo, The Innovation Group 42

Global Gaming Business JANUARY 2015

YX Gaming is the next thing in game development, led by a true Gen-X executive, Matt Davey.

An electrical engineering degree led him to the Northwest Territories Racing & Gaming Authority in remote Australia, which was ironically one of the first governments to regulate online gaming. Later moving into software development with venture capitalists, Davey eventually landed with Swedish-born NYX Gaming.

NYX is involved in every sector of the new gaming world—casinos, social games, systems and even real-money online gaming. Davey says the company has succeeded because it brings a singular focus to all business deals.

“We view the world through the lens of the player,” he says. “And the player doesn’t care about the platform; they care about content. So our focus is providing the best content we can to our customers through our OGS (Open Gaming System), where we have over 350 games. When our customers don’t have a platform, we look to provide that technology to them as well.”

The company honed its expertise in the social gaming world, but Davey says he has been surprised at the rise of that sector over the past two years.

“I was shocked when I tried to wrap my head around the fact people would play casino-style games on Facebook for fun and pay real money for it. Clearly they are telling us there is value to that,” he says.

NYX has been retained by casinos to develop social gaming programs that drive customers to the property, and allows the casino to stay in touch with customers outside the property. He says there’s a standard ramp-up to do that today.

“The path is pretty well understood,” he says. “We’ve spent the past couple of years putting together the map. You start with a play-for-fun site. It can be totally free play or it can have virtual currency as well. That will help attract players and get them to return to your property. You can offer them bonuses to entice them. The next step is on-property mobile. That is available today and legal in most of the states. The third step is full online gaming, which is obviously subject to laws and regulations in the individual jurisdictions.”

Will we see NYX content on slot machines soon? Bet on it.

“We’re not keen to get into the market of building our own cabinets and hardware,” he says. “But we are very interested in looking at those machines as a distribution device for our games and software.”

NYX is now in the iGaming market in New Jersey. “We formed a joint venture with Sportech that has a tremendous platform, and they are licensed in 26 states,” Davey explains. “Our first customer is the iconic Resorts group, and we’re working with a second brand, Mohegan Sun, under the same deal.”

The disappointment in the launch of iGaming in New Jersey might be easing in the upcoming year. Davey says NYX compares New Jersey with Sweden, where the market is twice the size with similar populations and similar gambling proclivities.

“We think there’s a lot of latent demand,” he says. “The Division of Gaming Enforcement has been fantastic with the regulations, but it’s a new industry.”

The most recent development for NYX was the purchase of the OnGame Network poker platform from Amaya Gaming, a partnership that makes a lot of sense, says Davey.

“What David Baazov has done with Amaya has been breathtaking,” he says.

“In my mind, it has legitimatized what we’re doing in our part of the industry.

Their business has evolved and now they are clearly B2C.” With a possible public offering early next year, the future for NYX Gaming is very bright, indeed.

—Roger Gros

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Very Vietnam Shaun McCamley President, Grand Ho Tram Strip, Vietnam

W

hen Shaun McCamley started his career as a croupier in London in 1977, he did not realize the opportunities that would materialize, 37 years later, when he became the president of the Grand Ho Tram Strip in Vietnam, one of Southeast Asia’s largest casino resorts.

Since leaving London in 1979, McCamley moved on to international appointments in senior casino management roles at a members-only, junket and premium player facility at the Burswood Resort Casino in Perth, Western Australia, group vice president of gaming development at a casino resort in Subic Bay in the Philippines, and general manager of the Tinian Dynasty Hotel & Casino in the Northern Marianas Islands.

After leaving the operations side of the business, McCamley started a consultancy in 2004 and became a resident guru in regional Asian casino markets.

“Throughout all of my experiences, I have never forgotten what life is like on the tables,” McCamley says, “and I believe that gives me a perspective quite rare in this industry.”

This well-rounded experience has allowed McCamley to bring his expertise to the changing market in Southeast Asia.

Over the past few years, the Southeast Asia market has been looking for ways to diversify, predominately from Macau. Different initiatives have been conducted throughout several markets. Singapore, for instance, has had huge success in focusing its efforts on attracting a market segment different from Macau’s standard VIP patrons, better known as the premium mass. The premium mass market is booming internationally, and with these patrons it’s not all about gaming; it’s about providing high-quality entertainment with first-class celebrity value.

The regional markets in Asia currently have the opportunity to capitalize on this trend.

“At Ho Tram, the property is able to differentiate itself with Asia’s only beachfront integrated resort,” says McCamley, “and this has a huge potential in providing good entertainment with world-class facilities.”

While the macro market continues to shift, Vietnam attains an interesting position as it considers local gaming.

“It’s fair to say that Vietnam from a strictly gaming viewpoint has its challenges. However, as a tourist destination, it has to be high on the list of premier destinations to visit in the region,” McCamley continues. “We are definitely seeing changes in the market player mix now, and that change is being led by customers asking for something different.”

McCamley understands the needs of this market, and has been able to adapt the marketing program for Ho Tram. Outside of the current market segments, executives at Ho Tram are excited by the prospect of locals gaming in Vietnam.

“One of the most important things to watch here, however, is the draft decree on local gaming,” he points out. “We are all waiting to see how that shapes up, as it clearly could be big news for us in the near future.”

Under McCamley’s direction, Ho Tram is poised to continue its positive growth and position itself as one of the regional gaming hubs in Southeast Asia.

“There is so much going on at the moment. We just launched The Bluffs, a Greg Norman-designed links golf course, which has met incredible acclaim. We are happier with the performance of VIP, but there is still room for growth, and a lot of our focus now is on building out the mass floor and entertainment facilities.”

—David Rittvo, The Innovation Group

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{ 25 People to Watch 2015 }

Dress for Success Karla Perez National Director of Gaming, Cintas Corporation

G

one are the days when uniforms in the hospitality industry were bland, ugly and downright boring.

Today’s uniforms are expected to convey the fun and excitement of hotel and casino properties, as well as the personality of the employees. Leading that charge over the last few years has been the Cintas Corporation.

Karla Perez is the fashion-savvy, service-oriented leader of the Cintas gaming group. Her enthusiasm and dedication to her customers sets her and her company apart from the formerly staid business of dressing your workers. Perez now brings a new vision to how employees are seen and what the uniform represents.

To cement that new approach to gaming, Perez has been able to take part in a truly remarkable transformation of the entire gaming sector within Cintas. The company stepped up its focus on gaming by developing the Las Vegas Design Studio, which includes a showroom, a design studio, fitting rooms, a uniform warehouse and other elements of a full-service outlet.

“We’ve gotten such great feedback on the Design Studio,” she says. “Not only from the casinos in Las Vegas but all around the country.” Perez says many tribal casinos across the country come to Las Vegas “to experience the full service and receive the special treatment we give all our customers at Cintas.”

The company has made a splash at trade shows, most recently G2E, with highenergy fashion shows featuring attractive models and compelling uniform designs that are certainly not boring. Perez says the shows have made casino executives real-

ize that uniforms can be part of their marketing.

“You’re establishing a brand,” she says, “and everything in your property emphasizes that brand. Why not your uniforms, as well?”

Perez didn’t have any intention of getting into this business several years ago. She was happily working in the construction industry, traveling to Las Vegas several times a year during the “building boom.” During one of those trips, she was approached by Cintas and recruited to join the company.

“I was first attracted by the company itself, believe it or not,” she says. “I was impressed by their attitude toward their customers and their employees. Even though we’re a large corporation, we don’t really function that way. We feel more like a family-business, personal-service kind of company. We refer to our jobs as our family away from our family.”

And the style Perez enjoys fits Cintas like a glove.

“I’m very open and inclusive,” she says. “It’s not just me or other executives making decisions in a vacuum. We listen and take feedback from everyone; it’s a very collaborative process.”

In addition to its wildly creative uniform design services for casinos, Cintas also has a program where they can step into a casino and manage the uniform room. This, however, is a highly specialized service, says Perez.

“We tailor each program for the specific casinos,” she says.

Uniforms are worn every day, so they have to be comfortable and employees have to feel good about them. “We like to think we help customers be more attentive to the needs of their employees,” says Perez. “There’s been a big push to make sure employees are happy, so we hold brainstorming sessions with our customers to ensure that happens through their uniforms.

“It’s not just us designing uniforms, it’s providing the service to our customers to make their business better.”

—Patrick Roberts

Moving in Massachusetts Michael Mathis President and Chief Operating Officer, MGM Springfield

P

erhaps the hottest domestic location for the gaming industry in 2015 will be the state of Massachusetts, not for the casinos they will be opening, but for the rules and regulations that will be developed as MGM and Wynn introduce the industry to the state. For MGM Springfield, ultimate success and operational efficiency is in the hands of its President and Chief Operating Officer Michael Mathis.

“It is very special to get in on the ground floor of this opportunity,” says Mathis, who has been involved with MGM Springfield since its inception. “It has been an honor to help educate western Massachusetts about our industry and its many benefits to the community.”

Mathis’ 2015 will be jam-packed dealing with casino design, hiring employees and using his legal background to deal with the regulatory process and new guidelines. Prior to serving as MGM’s senior vice president of global gaming operations, Mathis served as vice president of legal affairs and assistant general counsel for Boyd Gaming Corporation. He has also served as corporate counsel for Las Vegas Sands Corporation.

The $800 million being spent on MGM Springfield provides a muchneeded economic boost to the region, as well as 3,000 jobs, one-third of which are already committed to Springfield residents.

“Training 1,000 people is a lofty goal, and we want to make sure the benefit is spread throughout the entire western Massachusetts region,” says Mathis.

To encourage working professionals to invest in the area, MGM Springfield will have 54 apartments on property. Along with 250 hotel rooms, an additional $50 million per year in property maintenance and development has already 44

Global Gaming Business JANUARY 2015

been pledged by MGM Springfield.

“One of the really important aspects of the development is that we are creating a truly integrated casino complex that matches the architectural lines of the surrounding buildings,” says Mathis. “We want to promote downtown Springfield’s resources like the theaters and convention center to our customers, as well. I was the person to make the promise to the city of Springfield, and now I am in a position to deliver on these promises.”

MGM Springfield’s current promise is to open by mid-2016, giving them 18 months to re-energize the downtown Springfield area, which was devastated by a tornado in June 2011, and has faced a rash of economic problems and limited workforce opportunities in the past four decades.

“There is a long-time large minority population in Springfield, and as an African American executive I take my role seriously, and the feedback from the community has been impactful,” says Mathis.

Mathis’ words are met with actions, as he is in the process of moving his family to Springfield. It was important to him that he was not an executive who flew in and out of the city without laying down any roots.

As the partnership between MGM and Springfield continues to strengthen in 2015, Mathis will gain further influence in the region and across the industry.

“During the development we were clear with what we can and cannot do, and we made sure we did not say we can fix every problem,” says Mathis.

“But we can help and become a catalyst for positive change in Springfield, and that has already happened. We are definitely looking forward to 2015.”

—Rodric J. Bradford

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{ 25 People to Watch 2015 }

Center of Action Katie Lever General Counsel, Scientific Games Corporation

L

ast year’s mega-mergers in the supply sector of the gaming industry put the spotlight on management of the merging companies, with analysts, pundits and the media focusing on CEOs, COOs, game developers, marketers and other public-facing executives.

But behind the scenes of all the mergers sit the most important executives of all—the legal team.

That’s why Katie Lever may just be one of the most important executives in gaming at the moment.

As general counsel of Scientific Games Corporation, Lever is managing all of the legal, compliance, intellectual property and other issues surrounding one of the biggest deals in the history of the industry, lottery giant Scientific Games’ acquisition of slot, table and system supplier Bally Technologies.

It’s a road she’s traveled before, and only recently. Lever was executive vice president and general counsel of SHFL entertainment when Bally acquired the table supplier in 2013. She continued the role for Bally as senior VP and general counsel for most of 2014, assuming her current role at Scientific Games when the acquisition closed in November.

The fact that Lever has been around big deals most of her career—she was the first general counsel for supplier Global Cash Access prior to SHFL, creating the compliance function for that company following its IPO—is certainly testament to her abilities as a corporate attorney, but she also attributes the fact to simple good fortune in landing jobs working with gaming’s top executives.

“I’ve been extraordinarily lucky to work with some of the greatest internal teams in the business, and I think that is absolutely key,” Lever says. “No deal is ever successfully accomplished by one person or one team alone. Working closely with an incredibly good board of directors, an amazing executive team, great finance and legal teams, is truly what brings together a successful deal.”

That has been the case in all three of the big deals with which Lever has been involved—she calls it the “magic element” of bringing together the right people. “We managed to work quickly, and really tightly as a group” in each case, she says.

The latest deal, the Scientific Games/Bally merger, involved the smallest team of all, Lever says—a small group of directors, executives and attorneys did all the due diligence, hammered out the details, got the agreement signed and announced the deal in a little over three weeks.

Yes, three weeks.

“There was not a lot of sleep happening in those three weeks,” Lever says. “We absolutely lived this deal. We did pretty much nothing else for that

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three-week period.”

Besides hammering out details of mega-deals, the other constant in Lever’s career has been the protection of intellectual property. At SHFL, she headed an aggressive legal campaign against international websites that were offering SHFL’s proprietary table games without permission. The subsequent licensing deals and ownership protection of SHFL’s substantial table-game IP generated millions in additional revenue for the company.

“It is no secret that IP, since my joining SHFL, has become a keystone of our assets that we protect.

When I started at SHFL, we went after every infringer, from the largest to the smallest, and continued until there were no infringers left. And we still are protecting those assets. We look at it every week.

I have a great group of people that look at IP from different angles, and we discuss infringements on a regular basis.”

The amount of IP Lever is responsible for protecting for the newly merged Scientific Games is mind-boggling. “We continue to dedicate dollars of my budget and members of my team to continuing that protection. It is an absolute key element of who and what we are,” she says.

Lever’s team of 30 attorneys constantly monitors IP, and occasionally has to play defense as well, as in the case of LT Game’s claims against SHFL multi-player tables. “We have lawyers all over the world protecting company assets,” she says.

Assessing the priorities for 2015 literally three days after the Bally merger closed, Lever says she is on the same wave length as CEO Gavin Isaacs— protecting that intellectual property is the most important function in the near term. Beyond that, she says, the legal team supports the business team in each market commercialization and in innovation.

“We pride ourselves on being the thought leader, so all three of those are important parts of what we do.”

As one of the first female chief counsels in the industry, Lever can’t escape the questions about the advancement of women in the industry. “I wish we didn’t have to, but we’re still talking about women being first in their areas,” she says. She wants to shift the focus from the glass ceiling to the accomplishments of women.

As general counsel of one of the most important companies in gaming—not to mention her current role as president of the International Association of Gaming Advisors—Lever is certainly off to a great start.

—Frank Legato

New Frontiers David Lopez President and Chief Executive Officer, AGS

A

s former American Gaming Systems CEO Bob Miodunski prepared to re-enter retirement near the end of 2013, one of his last official accomplishments—after transforming the company from a Class II supplier into a growing Class III slot manufacturer—was to engineer the acquisition of the Las Vegas-based company by private equity firm Apollo Global Management.

One of Apollo’s first moves was to set AGS up for a future of growth by naming David Lopez the new president and CEO. Lopez, who formerly was CEO of payments company Global Cash Access and before that spent 13 years with the former Shuffle Master, where he was chief operating officer, gives credit to Miodunski for setting the company up for future growth, but he also gives props to the management of Apollo for giving him the green light and resources he is now using the transform AGS into what he says is rapidly becoming a “true, full-fledged, diverse Class II and Class III provider of content and entertainment.”

Lopez says it all starts with the team. “My No. 1 priority when I arrived was people,” he says. “It comes down to team building... We’ve got a great team here, but as we grow, we’re going to need more people. And people are the straw that stirs the drink.”

The growth began almost immediately, as Lopez initiated an effort to expand the product offerings of AGS. He inherited a strong portfolio of products, but set to augment it, as is the norm these days, through acquisition. The most significant, he says, was the acquisition of slot supplier Colossal Gaming.

Colossal was founded and headed by Steve Weiss, a legend of sorts on the supply side as founder and CEO of Casino Data Systems. Its specialty was giantsized slot machines, but Weiss was already beginning to expand his own company’s product line. He is now the head of game development for AGS. “Steve is a very interesting and wonderful thinker, and he’s a great partner in the business,” Lopez says. “And obviously, he’s a leader with a mind for everything in the creative space. But Steve’s a former CEO, so he’s got a great strategic mind. He changed the culture of our development.”

As the Colossal game library began to merge with

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that of AGS, Lopez expanded the company further—into the table game area.

Again, people were the focus. “After discussions with my boss (at Apollo), we agreed that we’d go after talent first,” Lopez says. “We got some of the top talent in the industry.”

AGS shrewdly took advantage of one of the mega-mergers of the past two years, mining the talent of the former SHFL entertainment to bring in John Hemberger, who had run the table game business as general manager at SHFL and Bally, and Ofir Ventura, a game developer who created several successful products.

With the team in place, Lopez again turned to acquisition, buying Casino War Blackjack, Inc. and its portfolio of table games—most notably War Blackjack. In September, AGS bought three table titles from In Bet Gaming—Criss Cross Poker, In Bet and Hot Roller Craps.

Lopez also has been busy forming partnerships. A new deal with the custom-motorcycle reality TV show Count’s Kustoms will create a blackjack side bet that will award certain hands with a spin of a prize wheel to potentially win a custom, one-of-a-kind motorcycle.

The coming year will see Lopez pursue the nuts and bolts of transforming AGS into a more complete supplier. He says that means refinement of a new slot platform—perhaps using elements of the current Roadrunner and Colossal platforms, but creating a next-generation operating system as opposed to combining the two technologies. (“Combining two platforms is like trying to put toothpaste back in a tube,” he says.)

AGS also will determine the best games to make available on that platform, by analyzing the performance of legacy AGS games like Ripley’s Believe It Or Not, an unqualified success in the “It Pays To Know” knowledge-based

series, and Colossal games like Dynamite and Birds of Orion.

He says what stays in the library will be a function purely of how the games perform in the field.

Licensing to expand the company’s markets also will be a priority. In four years, AGS has gone from 70 mostly tribal licenses to more than 170 in North America. “That’s a lot of hard yards for the team,” Lopez says. “They’ve been working their tails off.”

From a larger perspective, Lopez says AGS and other slot-makers have to find ways to attract new players. “The level of interest and attraction and engagement of players in slots seems to have leveled off, and I think players are looking for something more,” he says. “Have slot machines changed enough? Besides curved screens and large-screen formats, has the industry evolved enough to continue to attract new players?”

Those new players will come from the millennial generation, and tapping into that huge demographic is “a massive challenge for the industry,” says Lopez.

“We’re going to have to take a new approach on this. No one’s cracked the code on this yet—we’re going to have to take the Allen Iverson approach to scoring, and just put up a lot of shots.”

Finally, Lopez says he will continue to build the company up through merger and acquisition, and will augment his team by tapping into the pool of available talent that continues to grow as the mega-mergers in the space play out.

It’s an opportunism that has already served AGS well. “In Class III, we want to be a provider of slots and proprietary table games, and at some point it will be more than that,” says Lopez. “AGS will be known by operators as a good partner when it is said and done.”

—Frank Legato

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NEW GAME REVIEW

by Frank Legato

Deal Or No Deal: Las Vegas!

GTECH

T

his latest version of GTECH’s franchise of video slots based on the popular game show Deal Or No Deal features several new elements and a format not seen in any of the title’s previous incarnations.

Deal Or No Deal: Las Vegas! features a unique base-game grid of two reel sets, one on top of the other, sharing a middle reel. The briefcases from the “Briefcase Bonus” are visible at the right of the screen constantly.

The progress of the Briefcase Bonus, the central feature of the game in which players gamble on whether their own briefcase will hold more than several offers from the “Banker,” is present on the base-game screen.

The base game includes wild symbols, free-spin bonus triggers and a “Banker” symbol that awards mystery wilds. There also is a two-level progressive feature. During base-game play, players accumulate “Big Deal” and “Mega Deal” briefcase symbols that count toward the progressive. Eight Big Deal cases trigger a progressive resetting at $20, and 18 Mega Deal cases trigger a jackpot resetting at $200.

There are two main bonus events. The Free Spins bonus transforms reels 2 and 4 into shared reels between the two reel sets. The shared reels include wild symbols and re-trigger symbols for the free spins, the number of which is determined by the number of triggering symbols.

The main Briefcase Bonus offers the player one round of briefcases to open revealing award amounts, after which the Banker makes a credit offer.

Judging from a list of possible amounts whether or not the player’s assigned briefcase will contain a higher award, the player can accept (“Deal”) or decline (“No Deal”) the Banker’s offer. If he declines, a bonus wheel appears on the top screen, and spins to award one of two different free-spin bonuses, credit awards, a double of the remaining case values, Big Deal or Mega Deal cases, or a “sneak peek” at the amount in the player’s briefcase.

The briefcase field remains visible while base-game play resumes.

Manufacturer: GTECH Platform: Prodigi Vu Format: Five-reel, 58-line, dual-screen video slot Denomination: .01 Max Bet: 180 Top Award: 100,000 Hit Frequency: 29.72%-30.08% Theoretical Hold: 5.2%-13.25%

Herds of Wins Konami Gaming

H

erds of Wins, Konami’s latest game in the KP3 format, is a new Xtra Reward series title featuring a novel reel animation concept with stampeding 3D game symbols.

The game is based on a multi-line three-by-five layout, but transforms into a stackedsymbol layout using Konami’s “Action Stacked Symbols” when the player enters the bonus feature. The theme is a depiction of herds of elephants in the African wild, with reel symbols floating over a jungle clearing scene.

When gold-framed Action Stacked Symbols appear on all positions of two or more reels,

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the “Herds of Wins” feature is triggered. All remaining partially framed reels are nudged until all positions are framed and replaced with the same symbol.

After that, all framed reels slide to fill the left-most reels and the entire reel structure lays back in a 3D motion as the remaining right reel symbols begin charging toward the player in a unique animation sequence akin to a racing herd of animals. The symbols eventually slow and resulting formations are brought back to a 3-3-3-3-3 layout for traditional line awards.

Herds of Wins is available across Konami’s video cabinet lineup, including its classic Podium, SeleXion multi-game and extra-large Podium Goliath.

Manufacturer: Konami Gaming Platform: KP3 Format: Five-reel, 20-, 30- or 40-line video slot Denomination: .01-5.00 Max Bet: 3.000 Top Award: 20,000 times bet multiplier Hit Frequency: 33% Theoretical Hold: 4.04%-17.85%

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Delaware

r e t s Disa

{

Squeezed in between East Coast saturation, the state gropes for solutions | BY MARJORIE PRESTON

Can Delaware racinos keep pace with competition while giving more than half of their gaming revenues to the state? Lawmakers in the First State are considering a relief package that may help. But that’s got opponents crying bailout. And some say the state needs even more casinos.

I

n 2013, when Delaware lawmakers granted a $9.9 million economic relief package to the state’s struggling racinos, one investment banker likened it to “applying a Band-Aid to a bullet-shot wound.”

The bloodshed continues. Last October, Ed Sutor, vice president and chief operating officer of Dover Downs Hotel & Casino, said the property— which reported a paltry $13,000 in net revenues in 2013—was heading for a new low. “This year it’s been worse,” said Sutor. “We’re negative $900,000.”

That bad news was allayed somewhat by third-quarter results. Thanks to the legislative aid plan, which shifted part of the cost of maintaining and running slot machines to the state, Dover Downs saved about $1 million in expenses for the quarter. But there was little reason for cheer. Having operated at a loss for the first nine months, the property was still in the red by $190,000.

Racinos in the First State have been hit by a double whammy: new competition in surrounding states (with more to come), and a crushing tax rate, the percentage of gaming revenues that comes off the top for the government and the state’s horse industry. In 2008-09, when newly elected Governor Jack Markell inherited an $800 million budget deficit, he “raised the business taxes, raised the personal income taxes, cut back the salaries of state workers, and hit us with the biggest tax increase we ever experienced,” Sutor says.

After the economy stabilized, Markell rolled back the business and income taxes, Sutor says. State workers got back pay and raises. “But nothing ever happened with the high share of (racino) revenues.”

An Unfair Share?

When casinos first opened in Delaware in 1996, they operated under a tiered tax structure. The sliding scale based on revenues began at 12.5 percent and could not exceed 30 percent. “But over the years, every time there was a downturn in the economy, the state increased their share,” says Sutor. “And they did it seven times.”

The racinos now pay an effective rate of more than 60 percent (Nevada, by comparison, collects a 6.75 percent tax on gross gaming 50

Global Gaming Business JANUARY 2015

}

win, the amount casinos keep after paying customers’ winnings). The operators have implored lawmakers to reduce that burden so they can remain competitive and avoid layoffs.

The Delaware Lottery and Gaming Study Commission is considering ways it can help, and will announce its recommendations this month. Meanwhile, the operators say they cannot grow—and in fact may not be able to sustain— without some accommodation.

‘Border Wars’ Bill Fasy, president of Delaware Park Horse Racing & Slots in Wilmington, says Delaware “used the Chicago casinos as an example when they were looking at a higher tax rate—and we all know what happened in Chicago.” In the mid2000s, Illinois’ graduated tax rate peaked at 70 percent; it has since been capped at 50 percent.

The numbers just don’t add up for Delaware racinos, Fasy says. “You can’t cover costs in the tax environment we’re in. If you have a dealer working for $7 an hour plus benefits, that’s $10.50 just for payroll. When you add that in from the standpoint of overhead, it’s more than you’re making on a $5 game. And that includes nothing else—not paying for lights or the electricity, not marketing or fixed costs like real estate taxes and insurance.”

“If you take an industry that’s given the state billions and not help it survive, how do you solve that revenue cut down the road if it goes away?”

—Ed Sutor, vice president and chief operating officer of Dover Downs Hotel & Casino

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When the three racetracks first added slots to bolster the horse industry, their only competition was almost three hours away, in Atlantic City.

Though Pennsylvania legalized casinos in 2006 and has since opened 11 gaming halls, the impact on Delaware has been a ripple compared to Maryland. Delaware Park did not post its first year-over-year revenue loss until December 2010—less than two months after the Hollywood Casino Perryville opened in Maryland.

In recent years, gaming revenues in Delaware have fallen off a cliff, dropping from a high of $300 million in 2007 to $192 million in 2012.

That’s when Maryland Live! opened in the Baltimore-Washington area, once a key feeder market for Delaware gaming.

“That was the real killer,” says Sutor. “They do a phenomenal amount of business. We’ll do $150 million in slot revenues in a year, and they do $600 million-plus.” In October 2014 alone, the casino at Arundel Mills Mall reported $50.3 million in revenue.

“Now we’re dicing it up to the point where we’re having border wars, trying to get people not to take their money out of state,” says Fasy. The sluggish jobs market hasn’t helped. “When people have less disposable income, then it’s a choice: Do I buy food for the family or go out to the movies or do I go to gamble? All these things compound on top of each other.”

And the competition is only getting steeper. In August, the new Horseshoe Casino opened in Baltimore, and out of the gate generated $1 million per day.

In 2016, MGM Resorts’ $925 million casino and resort will open at National Harbor, about an hour’s drive from Baltimore and about two hours from Delaware.

“To this day about 40 percent of our customers come from Maryland, about 20 percent from Virginia—the majority of our business is south and west of us,” says Sutor. A smattering of patrons hail from New York, New Jersey and Pennsylvania. But as Atlantic City learned—the hard way—even loyal players will switch their allegiance if there’s a casino closer to home.

The ‘B’ Word What rankles racino operators is the widespread use of the word “bailout” to describe their efforts to reduce the state’s share. Reporter Larry Mendte, writing in the July 2014 issue of Philadelphia magazine, said casino bailouts stink like “horseshoe crabs decaying on the beaches of the Delaware Bay.” State aid for racinos, wrote Mendte, “may be the worst deal in the history of bad state government deals”—worse, he said, than New Jersey Governor Chris Christie’s $300 million tax break for Revel (which was never realized since it was a tax on profits, something Revel never produced), the $2.4 billion Boardwalk casino that closed last year. Moreover, he said, the industry “produces nothing and leaches off the hopes and sometimes desperation of its citizens.”

“As a state we have come to rely on gaming revenue. I would like to see us reduce that reliance on gaming revenue and put the casinos in a position where they can be competitive and good partners.”

—Jack Markell, Delaware Governor

With press like that, no wonder the public is riled up at the thought of a reduction in the tax rate.

“You know and I know bailout is a bad word for the common citizen,” says Sutor. “Chrysler was bailed out. GM was bailed out. We’re not looking for a bailout or a change in the income tax rate; we’re happy to pay our taxes like any other business. Our problem is the revenue share. The public doesn’t understand that 62 percent of my revenues go straight to other people.”

State Finance Secretary Tom Cook, head of the commission studying relief for the racinos, says the term bailout “does not fairly represent an adjustment to the revenue distribution model. At the end of the day the state, the casinos and the horsemen are partners in this. The goal is for all three of us to be successful.”

Sutor agrees. “We’re looking for our partner to put back the model that worked when we opened this facility in 1995, to put in a graduated rate. Because the more money we make, the more we pay. Under the current model, with the big percentage we pay, it doesn’t work any more—not at these levels, and not with this much competition.”

If the tax rate cannot be altered, he adds, “Give us some credit for capital expenditures. In West Virginia the state has given back over $100 million to the casinos to help offset the cost of their capital expenditures. We don’t get that here. In the state of New York they give 8 percent of their gaming revenues back to the casinos for marketing purposes. We don’t get that.”

In fact, Dover Downs now carries more than $40 million in debt from capital expenditures incurred in 2006-07, when the property doubled the size of its hotel and added retail, restaurants and a nightclub, says Sutor. The racino has breached its bank covenants three times, causing interest rates to soar.

“No sooner did we do that major capital expenditure, borrowing $100 million, than we got hit with the big increase,” Sutor says. “That’s sucked out more than $20 million a year in cash flow over the past six years. We should have been debt-free by now.”

“That’s the tough balance we need to strike here,” says Cook, “understanding that the casinos need to be in an environment that allows them to take their profits and put them back into the facilities to stay competitive.”

JANUARY 2015 www.ggbmagazine.com

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“That’s the tough balance we need to strike here—understanding that the casinos need to be in an environment that allows them to take their profits and put them back into the facilities to stay competitive.”

—Tom Cook, chairman, Delaware Lottery and Gaming Study Commission

Ending a ‘Monopoly’ Despite this hyper-competitive environment, some developers and lawmakers are pushing to bring Vegas-style, non-racetrack casinos to Delaware. Investors have testified before the commission that too much of the racinos’ profits have gone to dividends and bonuses for executives. More revenues, they say, could be mined from casinos in better locations, possibly in the city of Wilmington and the resort community of Rehoboth Beach.

State Rep. Charles Potter of Wilmington has been pushing the idea for years. The racinos “had a 15-, 20-year head start,” he says. “They should have reserved some of their dollars for growth and development and hard times, and not continued their dependency on the state.”

But who’s dependent on whom? According to Sutor, Dover Downs, Harrington Raceway and Delaware Park have funneled $5.5 billion to the state over the last 15 years, money earmarked for public education, Medicaid and other budget items.

“If you take an industry that’s given the state billions and not help it survive, how do you solve that revenue cut down the road if it goes away?” says Sutor.

Potter is not persuaded. He supports Vegas-style gaming halls “closer to I95, near population centers, near interstate connections where people can get right in and have a good time.”

The racinos can survive, he added, if they “change their marketing mix, beautify their locations and add some amenities. They haven’t incentivized people. Two of the three locations have done no improvements; at least give Dover Downs credit for adding a hotel. But my primary responsibility is the amount of money that comes to the state.” Potter ignores the fact that one of Maryland’s weakest performers is Hollywood Casino Perryville, smack off I-95.

Cook concedes that the current racetrack sites—chosen in keeping with the goals of the Horse Racing Redevelopment Act of 1994—are less than optimal. As for new casinos, he adds, “That opportunity has probably been missed.

What you would not want to do at this point is just shift the play from a current location to another location. That doesn’t really solve the problem.”

Sutor scoffs at the notion that casino companies are lining up to invest in Delaware: “There are legislators and lobbyists who say there would be a line around the block of people wanting to come in to build a facility here in Delaware, and quite frankly we don’t believe it. I don’t know a bank out there that would finance a casino in a saturated market.”

Shortly after he made the remark, however, Pennsylvania approved a Class III license for South Philadelphia’s stadium district—just 30 minutes from Delaware Park. The casino development is a project of the Cordish Companies, the same company that built Maryland Live!

A Free Market?

In 2010, TMG Consulting of New Orleans presented a study of the Delaware casino industry that said the state could benefit from new casinos in Sussex and New Castle counties. While total gambling revenues would increase, the consultants said, the racinos would certainly feel the pinch, and earnings could fall more than 12 percent.

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Wilmington attorney Darrell Baker says the study “predicted the demise” of racinos in Delaware. “We developed ostrich management, doing nothing and thinking another sunny day would come. It’s turned into a textbook failure of how a monopoly will ultimately collapse. (The Delaware racinos) are flying biplanes when Maryland Live! is launching satellites.”

Baker says he represents casino interests from California and Nevada who are eager to build in the state; he declined to name the would-be investors, but advocates a compromise in which the tax rate is lowered in exchange for an open market.

“Lower the rates and allow others in,” says Baker. “That way the people who lower the rate will have political cover to say it’s not a bailout. There will be some provisions for the horsemen, but their perpetual suckling at the state budget will be capped or finite.”

He likened it to the liquor tax in the state. “It’s quite high, a 25 percent tax, but in Delaware anybody can get a liquor license. We dole them out like Tic Tacs. If the casinos want to be treated like liquor license holders, lower the rate and you can set up shop whatever you want. You’re not going to stop the competition. And doing nothing has been a recipe for disaster.

“This drip-drip-drip of subsidy for them is not going to be able to go on.”

Do the Math Though Delaware cashes in from sports betting it’s one of only four states in the U.S. where sports bets are legal at the federal level—those wagers are not exclusive to the racinos, and can be placed at some 80 convenience stores, liquor stores and restaurants. Nor has online gaming provided a tourniquet. Delaware, Nevada and New Jersey launched online gaming in August 2013 expecting a windfall.

But the numbers in all three states have been underwhelming, to say the least. Last September, iGaming revenues for the state of Delaware were the lowest for all of 2014, with combined total revenue of $145,022.

The news from the racinos is also bleak. According to a November report in northern Delaware’s News Journal, in the decade between 2002 and 2012 the state’s portion of gaming taxes fell 20 percent. Casino taxes are expected to generate $180 million in the fiscal year that ended last June, down from $238 million just four years ago.

And so the debate continues. Fasy hopes for “long-term permanent changes to the business model that will allow the existing casinos to continue to employ 4,000 people, continue to market, and continue to expand and improve the product so we can compete.”

Last January, Markell seemed inclined to agree. “As a state we have come to rely on gaming revenue,” he said. “I would like to see us reduce that reliance on gaming revenue and put the casinos in a position where they can be competitive and good partners.”

As Michele Rollins, whose family trust owns millions of shares of Dover Downs stock, told the News Journal, “Where does this administration go when they want to find a business that will bring 1,500 jobs? They will go to China, they’ll go to the end of the earth. But I hope they’ll take a serious look at what they have under their nose and help us.”

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Land of Enchantment

New Mexico tribal gaming industry faces challenges

By Dave Palermo

F

ew states stood to benefit more from the birth and 30-year evolution of the $28 billion American Indian casino industry than New Mexico.

State tourism officials have long promoted New Mexico’s culturally rich pueblos and tribes in luring visitors who in 2013 spent $4.6 billion on hotel accommodations, restaurants, park fees, souvenirs and other goods and services, according to a recent report.

“Visitor studies consistently list tribes as the second reason people come to New Mexico,” says Governor George Rivera of the Pojoaque Pueblo.

“The scenic beauty and outdoor recreation is first on the list, followed by Indian culture, Indian art—the experience people get when they visit a tribal reservation or pueblo.”

But it wasn’t until the emergence of Indian casinos, hotels and related amenities, including golf courses, that the state’s indigenous communities began to truly share in the wealth generated by some 32 million visitors a year.

From the Buffalo Thunder resort outside of scenic Santa Fe to casino-hotels operated by Sandia, Laguna, Santa Ana and Isleta pueblos in panoramic Albuquerque, to the Mescalero Apache Inn of the Mountain Gods in the picturesque southern mountains, New Mexico soon became the gambling industry’s Land of Enchantment.

Twenty-four licensed casinos operated by 14 indigenous governments last year generated net revenues of $758 million, according to the New Mexico Gaming Control Board, creating jobs and economic development and easing poverty and despair on pueblos and reservations. (A 25th facility, the Flowing Water Casino near Ship Rock, is a Class II, bingo-style gambling hall operated by the Navajo Nation that is not licensed, taxed or subject to state regulatory oversight.)

Nearly 10 percent of the net Indian casino revenue is funneled annually into the state’s general fund, helping generate a $250 million budget surplus in the last fiscal year.

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CHANGES IN THE WIND Unfortunately, disenchantment is brewing beneath the surface of what is perhaps the most beautiful of the 28 Indian gambling states.

Maturation of the state’s casino market is seriously constricting industry growth. There has been no significant expansion of New Mexico’s casino industry since the market collapse of 2008, and the likelihood of future growth is debatable.

While gross gaming revenue jumped 7 percent in 2012, according to the Indian Gaming Industry Report, most of the increase was attributed to the opening that year of the Navajo Nation’s Northern Edge Casino near Farmington.

“I wouldn’t put it that these numbers contradict what the tribes are saying,” economist Alan Meister, author of the report, says of tribal operators complaining of market saturation. Growth in the two previous years measured 0.4 percent and 2.2 percent, Meister says.

Statewide casino revenue for the first six months of 2014 fell 4.8 percent compared to the previous year, according to state figures. And the revenue drop in the Albuquerque area was 6.3 percent.

“The New Mexico market is in stagnation,” says a tribal official who requested anonymity. “It may even be going backwards.”

Casino operators are finding it difficult to come up with funds to reinvest in their properties. And intense competition for the gambling dollar has resulted in an almost excessive use of free play and comps, which are eating into bottom-line profits.

“The market has been pretty stable for the last two or three years. It certainly hasn’t been growing,” says Skip Sayre, director of sales and marketing for Laguna Pueblo’s Laguna Development Corporation.

“We’re looking at the same group of customers going from place to place. It’s very competitive. The offers can be very aggressive, which is to the benefit of the guests.

“I don’t think anybody is not making money,” Sayre says. “But there certainly hasn’t been much growth.”

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Pojoaque’s Buffalo Thunder

Governor George Rivera, leader of the Pueblo of Pojoaque

Opening of Buffalo Thunder with the Flying Elvi

Apache tribes are also scheduled to expire in June.

Meanwhile, efforts by the Zuni and Jemez pueblos to launch gambling operations were at least temporarily halted in September when identical compacts negotiated with Governor Martinez were rejected by Interior.

And the newly recognized Fort Sill Apache Tribe is suing Interior, the National Indian Gaming Commission and state officials over the right to operate a bingo casino on trust land in southern New Mexico.

These and other gambling issues will be formally debated or lobbied in capital hallways in Santa Fe later this month when the state legislature is gaveled to order.

“You’ve got five tribes negotiating five very different compacts,” Sayre says.

“It’s going to be a fascinating legislative session.”

“It’s certainly a fluid situation in New Mexico,” says Pojoaque attorney Scott Crowell, a master of the understatement.

COMPACT TALKS GROWING TENSE

NAVAJO MUSCLING IN

Meanwhile, a looming June 2015 expiration of tribal-state regulatory compacts with the Navajo Nation, Pojoaque Pueblo and three other tribes and pueblos is posing challenges for Governor Susan Martinez and the state legislature.

The remaining nine tribes and pueblos have compacts that expire in 2037.

New Mexico legislators in 2007 convinced those tribes to sign compacts requiring them to pay the state up to 10.75 percent of their net gambling revenue in exchange for the right to operate casinos in what has become a crowded market.

Along with the tribal casinos, New Mexico also has four racetracks with a fifth in the planning stages, each legally able to offer up to 750 slot machines.

The competitive climate makes it difficult for the five tribes facing the June deadline to accept what they perceive to be an onerous revenue-sharing agreement with a state boasting a budget surplus.

The large and politically powerful Navajo Nation is for the third year seeking approval of a tribal-state compact that would allow the nation to operate five licensed casinos, including a potentially lucrative facility on the tribe’s ToHajiilee Reservation near Albuquerque.

The nation currently operates Fire Rock Casino near Gallup along with the Northern Edge and Flowing Water gambling facilities.

Many elected officials, tribes and pueblos are opposed to the nation’s ambitious growth strategy.

“We’re saturated enough,” state Senator Clemente Sanchez says. “We don’t need any more. Additional properties, particularly in the Albuquerque area, would just cannibalize existing operations.”

Pojoaque Pueblo, owner of the upscale Buffalo Thunder Resort, is struggling with a bond debt in excess of $245 million and is seeking major concessions in its tribal-state agreement.

Pojoaque is suing the state for “bad faith” negotiations and is asking the federal Department of the Interior for a compact that would free the pueblo government from its obligation to share revenues with the state.

Tribal-state compacts with Acoma Pueblo and the Mescalero and Jicarilla

Navajo—the country’s largest Indian tribe with 300,000 citizens and a 24,000square-mile reservation that spans New Mexico, Arizona and Utah—was late getting into the casino business, opening Fire Rock in 2008.

Its delayed entry into an already-maturing market poses problems for the nation. But with more than 130,000 largely impoverished Navajos in New Mexico, the tribe has little choice but to be aggressive in pursuing ventures that create jobs and economic growth.

“We need the ability to expand to five facilities over the next 25 years,” says Derrick Watchman, CEO of the Navajo Nation Gaming Enterprise. “Whether that pans out depends on the market and demographics.”

The enterprise employs 900 workers in New Mexico, 85 percent of them Navajo, and is creating a ripple of economic growth on the massive reservation.

The enterprise also operates the Twin Arrow hotel-casino on Interstate 40 near Flagstaff, Arizona, which employs another 400 workers.

“We’re using a lot of Navajo vendors,” Watchman says. “We’re using Navajo beef.”

A compact negotiated by Martinez but rejected by legislators last year would have allowed Navajo to operate five licensed casinos. It also required the nation to pay nearly 10 percent of net revenues to the state, a percentage roughly equal to the nine tribes that signed onto a 2007 agreement but higher than what the Navajos currently pay.

Each of the nine tribes with 2007 compacts is limited to two casinos. Under the failed agreement, Navajo could have opened a third licensed casino within five years with two more casinos opening at least three years apart.

The politically powerful Navajo Nation did not react kindly to the Senate’s rejection in February of the tentative compact that a day earlier had passed the House 36-30.

“They showed disrespect to the nation,” Navajo Delegate Lorenzo Bates says of a negotiations process that eventually led to a 31-10 Senate vote to defeat the compact.

JANUARY 2015 www.ggbmagazine.com

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Navajo Nation’s first casino, Fire Rock in Gallup

Navajo’s Northern Edge Casino

New Mexico Governor Susan Martinez

State negotiators often kept Navajo officials, including President Ben Shelly, waiting in an outer office, Bates says, and a legislative committee stalled in pushing the proposed agreement to a floor vote.

Many tribes lobbied against the Navajo proposal, particularly the Laguna Pueblo, which operates the Route 66 and Dancing Eagle casinos on the Interstate 40 corridor through Albuquerque.

“We support the Navajo Nation’s effort to achieve a new gaming compact with the state,” Sayre says. But until the Albuquerque area grows in population, he says, another casino would hurt existing operations.

Indigenous opposition to the Navajo deal strained tribal relations.

“I thought we were unified in everything we do; I don’t know what happened to them,” Navajo President Shelly told the Associated Press. “I guess greed and business is what happened.”

There is speculation Navajo is willing to lower to four the number of licensed casinos it hopes to operate in New Mexico. But Watchman said the nation will continue to pursue an Albuquerque-area casino once the metropolitan market improves.

“My projections are that between five and 10 years—considering how the population grows and the market improves—will be an opportune time to look at locating a casino there,” Watchman says.

Any increased revenue share with the state will have to deduct the amount of free play and comps Navajo is forced to issue in an effort to compete in the saturated market, Watchman says.

While there have been “informal talks” on a new compact, Bates says formal negotiations have not yet resumed. The tribe is waiting for some sign the state is willing to give the nation an offer worth considering.

“The state knows our position,” Bates says. “The ball is in their court to bring something to the table that the nation will accept.”

Enrique Knell, spokesman for Martinez, did not respond to requests for comment.

Industry insiders contend it is unlikely the National Indian Gaming Commission (NIGC) would move to shut down the Navajo operations should the tribe fail to reach agreement on a new compact before the June expiration.

“Can you imagine the NIGC moving against the largest Indian tribe in the country?” a New Mexico pueblo official rhetorically asks.

Bates calls the situation “serious.” “That’s why we’re meeting informally,” he says.

“Am I optimistic we will have a compact? Yes,” Bates says. “But the governor’s office and those responsible for negotiating a compact have to understand the needs of the Navajo, and not lump us into one bucket with other tribes.”

POJOAQUE STRUGGLES The failed promise of Pojoaque’s Buffalo Thunder, the state’s largest casino resort with nearly 400 luxury rooms, was evident soon after its August 2008 open56

Global Gaming Business JANUARY 2015

ing, celebrated by the Flying Elvi skydiving team.

The property was simply too large and ambitious, industry insiders say. And the market collapse left the pueblo defaulting on a $245 million bond debt, the first payment of which almost buried the operation.

“We didn’t have enough for payroll,” Rivera says.

Both Pojoaque and the Mescalero’s Inn of the Mountain Gods have had to restructure and delay repayment of their debt.

They now face the challenge of negotiating a new compact with state officials seeking an increase in revenue-sharing payments.

Pojoaque has filed suit against the state, claiming its revenue-sharing demands constitute bad-faith negotiations and violate Indian Gaming Regulatory Act prohibitions against taxation of gambling revenues.

The pueblo is seeking a compact through Interior Department secretarial procedures that would not require revenue-sharing payments to the state. The pueblo also wants to serve alcohol on the casino floor and lower the gambling age from 21 to 18, provisions not allowed under other tribal-state compacts.

Although a federal judge in November ruled against Pojoaque, the pueblo is appealing the decision.

Attorney Crowell is confident NIGC and Interior under the tribal-friendly Obama administration will not close the casino in the event it is operating without a valid compact when the current agreement expires in June.

“No tribe has ever been ordered to shut down because it has been unable to resolve a meritorious dispute with a state,” Crowell says. “We will not now and not ever walk away from the negotiating table if the state is willing to discuss the issues.”

“It’s incredibly unfortunate that Pojoaque has chosen to litigate, not negotiate,” Knell told the New Mexican newspaper.

Risks associated with Pojoaque’s legal action and a potential shutdown pale in comparison to the tribe’s bond debt. Industry analysts do not believe the resort can operate profitably under the state’s revenue-sharing demands.

“Pojoaque has some serious challenges,” says a tribal gaming attorney who requested anonymity.

“The course of action we’re on now is about the only course we can take to get relief,” Rivera says.

Rivera believes the state would benefit by reducing its revenue-sharing demands, allowing tribes and pueblos the ability to reinvest and grow their properties.

“The problem is not so much the market, but the fact the tribes are not growing with the industry,” Rivera says. “If tribes don’t have the revenue to reinvest, modernize and update their facilities, they’re obviously going to have problems.

“If you overtax an industry you run it into the ground. There has to be the opportunity to reinvest, improve and modernize, especially in a market like this.

“If the state is taking large revenue-sharing payments, not enough is coming back to the tribes but a few nickels. They can’t reinvest with that.

“What the state is demanding is just unreasonable. We’ve tried to get the state to understand the tribe needs the revenue,” Rivera says.

“We’ve gotten nowhere.”

LET’S CHAMPION THE INDUSTRY TOGETHER Protect and promote industry-wide legislative issues on Capitol Hill.

Create business and networking opportunities at industry events.

Access industry knowledge through educational programming and research.

Enhance world-class responsible gaming programs.

Articulate the value of the modern gaming industry nationally and at state and local levels.

AGA is committed to driving industry growth.

Join Us.

For more information, visit www.AmericanGaming.org AmericanGaming @AmerGamingAssn

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iGAMING NORTH AMERICA

Best Practices The evolution of regulatory systems should be noted by iGaming participants, Part I

G

aming regulation has historically resided in government silos.

When New Jersey legalized casinos in 1976, they distanced themselves from the Nevada regulators and laws. This proliferated the myth that gaming regulation relied on “model” acts taken as a whole instead of being made up of individual parts that make a regulatory system. New Jersey prided itself on claiming its regulatory system was much “tougher” than Nevada and set a new gold standard. New casino jurisdictions were then counseled to adopt either the Nevada “model” or the New Jersey “model.”

No one has a “gold standard” that should be copied. Regulatory systems must be individually designed to meet each country’s individual goals, needs, circumstances and resources.

New Jersey had a “tougher” system only if that is defined as an illogical collection of practices designed by persons without a deep knowledge of the industry they were regulating which significantly handicapped the industry competitiveness.

The faults in the regulatory system were masked while the industry had a regional monopoly. Just because an industry is doing well because of a regional monopoly does not mean its regulatory system is efficient or effective. Its flaws may only be revealed when its regional monopoly ends.

New Jersey reorganized. Today, the government prides itself on having the most efficient regulatory system to speed innovations to the casino floor.

Best practices do not dictate how a country should regulate its gaming industry. Gaming regulation has several components. First, the government sets public policy—i.e., what they hope to accomplish by permitting and regulating gambling.

Once the government sets policy, it should establish specific policy goals. Two major policies that are universal are that that the games are honest and persons get paid if they win.

Others that may vary according to jurisdictions

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By Anthony Cabot

are whether (1) gaming is conducted competitively, (2) all money is accounted for and all taxes paid, (3) the industry is free of organized crime, (4) the games are fair and (5) problem gamblers are discouraged or prevented from playing.

The latter may surprise some, but examples are plentiful. The Singapore gaming market is not competitive. Two operators have exclusive rights to conduct gaming and the number of suppliers is limited by a strict and lengthy licensing process. Nevada openly licensed organized crime figures in the early days to encourage investments and job creation.

Pennsylvania can hardly expect the games to be fair to the players when they charge a 50 percent tax. This tax is passed on to the players in worse odds and higher minimum wagers. Finally, destination resorts where the bulk of casino visitors are foreigners may have little interest in preventing problem gambling, because the costs are exported.

One reason that regulations fail is that jurisdictions adopt other jurisdictions’ regulatory systems without understanding they may have different goals, experience and resources.

Once, a small island country hired a New Jersey lawyer to mirror the New Jersey system for its small island. New Jersey required that casino chip manufacturers be licensed. That may have been practical for Atlantic City, which had a dozen large casinos, but not for a small island.

No one would apply to provide chips and the casinos could not operate without them.

How do best practices solve these problems?

Once a jurisdiction defines what it wants to accomplish through regulation and sets specific policy goals, best practices are techniques or regulatory components proven effective in accomplishing these policies.

Let me give an example. Government can adopt three different policy goals to problem gambling issues. The first would be that the regulatory system should be designed predominately to protect the player at any cost to the financial success of the gaming industry. In other words, if a technique proves effective in reducing problem

gambling, the government should adopt it regardless of the impact to the operators.

A second option ignores problem gambling issues because, as an example, the jurisdiction is predominately a tourist destination, and any problem gambling issues are exported with the players. A third approach is that the government decides it wants a balance, to minimize problem gambling without having a major economic impact on the viability of the casino industry.

Here, plenty of regulatory options exist. The jurisdiction can consider, among dozens of possibilities, preventing locals from playing, capping the maximum amount of the bets, imposing daily loss limits, banning gambling on credit, imposing a waiting period before a person can gamble, or requiring signage regarding problem gambling help in conspicuous places throughout the casino.

If the jurisdiction hopes to achieve a balance, it cannot make any informed decisions without understanding what best practices have proven to be effective in accomplishing these policies.

There is not necessarily a single technique to accomplish a goal—sometimes the science is not fully developed. It is like Ebola—the very trained and expert doctors do not have a cure, yet. But they are using proven drugs and other methods in combination to save lives.

A reasoned approach looks at each of the available practices to assess their cost and benefits, alone and in combination, in light of the particulars of their situation. If the market consists primarily of smaller “convenience-type” gambling, then different practices may prove more effective than for destination resorts.

Cultural differences also need to be considered.

A mandatory problem gambling helpline may work in the United States but not in certain Asian countries where raising personal problems with strangers may be disfavored.

Tony Cabot is one of the premier legal experts in land-based and online gaming, and is a partner in Lewis & Roca. He is also a partner in the iGaming North America Conference, April 14-16 at Planet Hollywood in Las Vegas.

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more palatable. One is that, despite its earlier problems several years ago California legislator introduces with the Justice DepartiPoker bill ment, PokerStars is on the verge of being licensed to ast month, California Assemblyman Mike operate in New Jersey, one Gatto introduced an online poker bill, AB of a few states that has on9, that will, he said, “expand the pie” and adline poker (Delaware and dress many of the concerns that have kept such Nevada are the others). a bill from passing before.

Another is that a Canadian California Assemblyman In introducing the bill, Gatto declared, company, Amaya Gaming, “The status quo is a lost opportunity. California Mike Gatto now owns PokerStars and is could receive significant revenue for merely regulatlicensed in New Jersey and elsewhere. Amaya never ing and legitimizing an industry that Californians ran afoul of the Unlawful Internet Gambling Enalready participate in but send their dollars overforcement Act of 2006 (UIGEA) by allowing seas.” He estimates that 2 million Californians play Americans to play with real money. poker. There are no credible figures for how many This creates as close to a clean slate as possible residents play online poker since it is currently illefor the legislation, including a new committee gal and unregulated. Nevertheless, many overseas chairman to shepherd the legislation. Gatto is the online poker sites currently accept American players new chairman of the Assembly Committee on Apin defiance of federal law. propriations, which has previously been charged Gatto’s bill is very similar to one proposed by with overseeing gaming-related bills.

Assemblyman Reggie Jones-Sawyer in the previous session. The main difference: it would require an Happy Anniversary initial deposit to be made in person and withNew Jersey welcomes a year drawals for as high as $10,000 to also be made in of online gambling person through satellite service centers. Gatto envisions that these would be operated by smaller casinline gambling in New Jersey is far from the nos, such as tribal casinos or card rooms, which billion-dollar business the state predicted— might make up for most of the gaming “pie” being about one tenth of that—but still has had it sucdivided between a few larger players. Most potencesses after one full year of operation. tial players are within about an hour’s drive of such “We’ve had some victories and we’ve had some establishments, he said. losses,” David Rebuck, director of the state Divi“A lot of people in the gold rush got rich selling sion of Gaming Enforcement, told the Associated shovels, and we think we have a proposal that has Press. “From a regulatory standpoint, it’s working shovels in it now,” he commented. really well, without any catastrophes, meltdowns or The politics for the legalization of online poker scandals. On the negative side, it was projected to in California have changed since last year, when a be a much stronger financial performer.” solid block of 13 tribes were united against allowOnline gaming brought in about $111 million ing the participation of PokerStars in partnership in its first year, and has settled in at about $10 milwith the Morongo Band of Mission Indians. That lion a month. Still, that’s very far away from the $1 alliance greeted Gatto’s bill with extreme skeptibillion New Jersey Governor Chris Christie precism, however, calling it “a rehash of previously undicted when it started and from the $500 million successful proposals.” many analysts predicted.

Since the last legislative session, Morongo and That revenue has still propped up some AtPokerStars and three card clubs have picked up lantic City casinos—online sites in the state have to more allies, including the San Manuel Band of go through Atlantic City casinos—but four casinos Mission Indians, which initially opposed Pokerhave still closed this year in the resort, though only Stars. Morongo has made it plain from the get-go two offered online gambling. A fifth casino— that it would fight legalization if the statute inTrump Taj Mahal—is scheduled to close this cluded a “bad actor” clause designed to exclude month. Its online partner, Ultimate Gaming, has PokerStars. closed and left the state.

Some things have changed to make PokerStars But the state has used the year to work on tech-

Try, Try Again

L

O

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nical problems that plagued the early days of online gambling. For example, Rebuck says problems with geolocation software—which determines if players are legally within the state’s borders—have settled down and now false reDavid Rebuck, Director, jections occur less than 5 NJ Division of Gaming percent of the time.

Enforcement Players, however, still face problems with credit card issuers and banks, many of which refuse to process online gambling transactions. Automated bank transfers remain the most common way for players to make deposits.

Rebuck told the AP that a goal for the industry’s second year is to increase player pools in online games like poker. He said he has had discussions in Nevada and the United Kingdom about sharing player pools, but no deal is imminent.

PokerStars’ entry into the market is also expected to give the state a boost, but Rebuck said approval isn’t likely until next year. Many had thought PokerStars, since being acquired by Amaya, would be approved more quickly.

The Pala Indian tribe of California launched a new site last month, and Rebuck said another company wants to join the New Jersey market as well, but he would not identify it.

Poker Folds Betfair ends New Jersey online poker games

U

nable to break into New Jersey’s online poker market, Betfair has decided to go the less-talked-about route and focus on slots and table games.

The company announced it will no longer offer online poker in the state and ceased poker games on December 1.

Betfair is the second site to stop offering poker in New Jersey after Ultimate Bet left the state entirely. The state’s online poker market has been dominated by PartyPoker, BorgataPoker.com and WSOP.com.

Betfair’s poker revenue, meanwhile, has been almost non-existent despite offering what was seen as an attractive “rakeback” and rewards and bonus system.

However, slots and tables games have proven lucrative for several sites.

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EMERGING LEADERS Midwest Focus

Storm-Tested Mike Hart

Wendy Carter

Vice President, Treasury and Risk Management, Isle of Capri Casinos

Director of Marketing, Choctaw Casino Resort, Durant, Oklahoma

ike Hart’s first assignment at Isle of Capri was to manage the complicated and critical Hurricane Katrina claim, eventually earning a senior management role overseeing the entire risk management team.

He is currently the vice president, treasury and risk management of Isle of Capri Casinos.

But that appointment did not come without years of dedication and hard work.

Hart earned his degree at the University of Missouri-Columbia, graduating with his master’s degree in accounting in 1999. Ernst and Young, LLP (E&Y) was the first firm to hire him, providing him with eight years of valuable experience as an auditor for one of the world’s most prestigious accounting firms. In 2007, he decided to make the leap and join Isle of Capri Casinos.

He managed the Katrina claim as a controller of special projects. Today, he is responsible for maintaining banking relationships, property and casualty insurance programs and payroll.

Hart says the most enjoyable and challenging aspects of his position and role in the gaming industry are one and the same.

“I like being able to do something different each day, and on the risk side, there are always unique variables and different circumstances on each claim,” he explains.

His role as treasurer has allowed him to learn more about capital markets, working closely with the big banks and structuring deals, and that together, these considerations are constantly offering him the opportunity to learn something new.

“Challenging myself with the unknown is very important to me,” Hart says.

Aside from his primary position at Isle, Hart is heavily involved in nonprofit and charitable activities.

Not only does he coordinate a number of events for Community Aces, one of Isle’s higher-profile charitable giving programs, he has served on the board of Gilda’s Club and as committee chairman for the Clayton Parties in the Park Board. Additionally, he has volunteered his time with Habitat for Humanity and received a leadership award from the Multiple Sclerosis Association of America in 2006 for his efforts as a corporate achiever. And over the last five years has served on the board where he chairs various Cystic Fibrosis Foundation-Gateway Chapter Committees.

Hart, speaking humbly about his humanitarian efforts, credits Isle of Capri CEO Virginia McDowell for giving him the guidance and ability to follow his passion in the nonprofit world and for being his mentor throughout his career.

“It was Virginia that taught me how to balance my daily job and nonprofit life,” he says. “She is an inspiration and role model.”

Hart’s passion for nonprofit organizations led him to help found Launch St. Louis, an organization to actively groom young corporate professionals for leadership roles in the St. Louis area’s cancer-related nonprofit organizations.

Hart’s advice to future emerging leaders who want to build an illustrious career: “If you have ideas, voice them, and really take the initiative to get involved.” Initiative is one of Hart’s core values—something he strives for personally and a quality he seeks out in those who work for him.

“A person with initiative adds tremendous value to any team,” he says.

—Erica Meeske, The Innovation Group

endy Carter has never worked in Las Vegas or Atlantic City, but her Midwest roots have made her the perfect choice at all the stops along her career path.

Carter was born and raised in Kansas and relocated to Iowa in 2003 with her husband. As a student at the time, Carter was looking for a career path, and the gaming/hospitality industry was as intriguing as any. From a young age she had worked in a local restaurant back in Kansas, providing her with “nine years in the service sector that helped me transition well into gaming,” she says.

Her first introduction into the casino industry was at the Lakeside Casino Resort in Osceola, Iowa. It wasn’t long before Carter recognized she had found her calling.

Throughout her tenure at Lakeside, she has held leadership roles in sales, hospitality and marketing. Carter believes that her time spent in these departments while the company underwent a rebranding process after being acquired by Herbst Gaming Inc. in 2005 was an invaluable experience.

Carter left Lakeside Casino Resort in 2010 to assume a player development manager role at the Meskwaki Bingo Casino Hotel in Tama, Iowa. Just a few years later, in 2012, Carter took a significant promotion to work as marketing manager for the Choctaw Casino properties in Oklahoma. In September 2014, she accepted another promotion to director of marketing for the tribe’s exceptional Choctaw Casino Resort in Durant, Oklahoma.

Carter attributes her success to the support she received from her family and other key mentors from an early age. Growing up, she was part of a large household and learned quickly that, according to her parents, “if she wanted something—anything in the world—she had to go out and work for it.”

She quickly learned the nuances of the gaming industry and worked her way to a top leadership role for one of the country’s most successful properties, where she continues to work today.

“I believe that one major key to success in this industry is directly related to the quality of leadership a person is exposed to,” Carter says. “You learn what not to do from bad leaders, as well as how to be successful from the good ones. I have been incredibly fortunate to have worked alongside many

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“I like being able to do something different each day, and on the risk side, there are always unique variables and different circumstances on each claim.”

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“You learn what not to do from bad leaders, as well as how to be successful from the good ones. I have been incredibly fortunate to have worked alongside many of the greatest leaders in the gaming industry.” of the greatest leaders in the gaming industry.”

One particular individual that she praises is Tami Hansen, a former casino marketing executive and director of marketing at the Iowa Speedway.

“Tami is one of the most talented marketers I have worked with; she is a leader who displays the highest level of commitment and integrity with any project she does,” she explains. To Carter, during her earliest days in the gaming industry, this was extremely valuable.

When asked about advice for young and upcoming professionals in the gaming industry Carter responds, “Be a person of good moral character, display integrity, and take calculated risks. I recognized early on that each person is in control of their own destiny, and it is up to the individual to carve out his or her own path. Never underestimate your ability to work hard, or that you are smart enough to be successful.”

—Erica Meeske, The Innovation Group JANUARY 2015 www.ggbmagazine.com

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FRANKLY SPEAKING

by Frank Legato

Finger Food

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t may be a surprise to many, but funny stuff doesn’t just come to me automatically when I sit down to write this monthly wisecracking look at the gaming industry. Last month, though, I got a really nice Christmas present, all wrapped up in a bow and placed under the tree.

It was Jose Canseco’s finger.

OK, I’m speaking metaphorically. (I do that sometimes. When it comes to metaphors, I am a mighty fortress repelling all enemies.) I didn’t unwrap a present to a ghastly site on Christmas morning. No, it was a few weeks before Christmas, when I was in my customary “what-in-the-name-of-sunny-Zeus-can-I-write-about” mode, that I came across the story about Jose’s finger.

In October, the former Major League All-Star outfielder, who ticked off a lot of his former comrades with his 2005 book Juiced exposing rampant steroid use in Major League Baseball, was cleaning his gun in the kitchen of his Las Vegas home, as you do, when it went off and severed the middle finger of his left hand—which is bad, because that was the hand he used to take his steroids.

Surgeons managed to reattach his finger, but he later said it never really reunited with its former digit brethren. In late November, he took to cyberspace with a story that he was playing in a poker tournament in a Las Vegas casino, and his finger fell off. Yes, he said the finger right in the middle of his hand dropped to the table, right in the middle of a hand.

Don’t you hate when that happens?

The world heard the story from Jose himself, through a series of Twitter tweets: “I was playing in a poker tournament last night and my finger fell off. Someone took a video of it.”

And the follow-up tweet: “My finger should have been amputated from the beginning. It was very loose with no bone to connect it. It was also smelling really bad.”

Yikes.

Later that night, he tweeted, “I put my finger in the freezer. Anyone want finger appetizers? Or is it finger snacks?”

Yikes again.

There immediately were questions about the veracity of Canseco’s poker tournament story, since his prior tweets weren’t exactly Associated Press material: “Immortality is about 25 years away. Nanobots.”

“Galactic Beings have used comets as star taxis for eons.”

Actually, I thought everyone knew that.

In addition to Canseco’s history of bizarre tweeting, you’d think a public de-fingering in a Las Vegas casino would make the news, but there was nothing, outside of reports on Canseco’s tweets. And the rumored video of the poker tournament, including the finger flop, never surfaced.

He never even said the poker tournament was in a Las Vegas casino. For all we knew, it could have

been in upstate New York. Yes, at Finger Lakes. (Sorry.)

As far as wisecracking journalists writing about the episode, Des Beiler of the Washington Post blog gets my Cheeky Writer Award: “I hope he folded a lot in the tournament, because there was no way he was gonna get a good hand.”

As we went to press, a story appeared in TMZ in which Canseco admitted the whole thing was a hoax. Quite frankly, I’m shocked. But it was in TMZ, so it must be true.

Turning away from Jose’s finger before the former slugger slugs me—or gives me the finger (he was a switch-hitter, so he can still flip the bird)—we turn to Dolton, Illinois, where state officials have just nixed a plan to put a casino in the Dorchester Senior Center.

The state had actually approved a VLT license to Giovanni’s Catering for a lounge they were creating at the senior center—a liquor license had been secured, which entitles the holder to five VLTs—but withdrew it after the Better Government Association raised a stink.

I’m disappointed. I was actually starting to make plans to retire at the place. They were going to have a lounge and a bar, and video gaming terminals, and large-screen TVs beaming a 24-hour stream of Matlock episodes.

OK, I made up the bit about the TVs, but seriously, if I’m in a rest home anyway, why can’t I do a little gambling? It beats staring into space. And if they put video poker machines in there, the skill/strategy factor, combined with the physical dexterity required to operate the machines, will keep the players’ minds from turning to mush. I think it’s a great idea.

At least they’re not suggesting that the senior center residents play poker.

Someone could lose a finger that way.

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GLOBAL GAMING WOMEN

Mentoring Is The Cure

BEST IN THE BUSINESS?

DAMN

Glass-ceiling headache is the disease

By Maureen Sweeny, Chief Commercial Officer, Aristocrat Technologies

S We Speak Casino.

With over two decades of experience, knowledge, and results, we know the gaming industry. From Indian casinos to the biggest names, we help our clients become number one. Bring us your challenges and we will create solutions. Only the best can make a promise like that.

Call today for a free presentation 800.475.2000.

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Global Gaming Business JANUARY 2015

ince I recently joined Aristocrat Technologies Inc. in the new position of chief commercial officer responsible for our global Class III games and systems business, I have been excited to play a role in taking Aristocrat to the next level and becoming a part of the Global Gaming Women (GGW) community.

Moving to Aristocrat is a significant career and personal change, having spent the past 30 years at IBM. I began my career at IBM as an intern while still studying, and I later joined as a full-time sales trainee after graduating with my new—and untested—degree in business and computer science.

Think back in time and you’ll recall the IBM I joined in 1984 was a leading hardware and software company in a growing industry for many years. I spent my first year progressing through a series of sales and product training courses to prepare me to deal with real customers upon completion.

About 10 years in, I made the brave decision to move into a new segment of our business, services, and subsequently had the opportunity to shape and grow that business over the subsequent 20 years— both in the U.S. and globally across financial services, manufacturing, telecommunications, utilities, media and entertainment and industrial sectors.

During my time with IBM, the industry and the company were challenged, and continue to be challenged with many things the gaming industry also faces: new entrants, new technologies, consolidation, economic downturn and overall, continuing to be relevant to our clients and their success.

For individuals as well as businesses, one of the most critically important elements to successfully navigating and embracing change is mentoring. This is critical for developing one’s own career because it gives each of us the opportunity in a “penalty-free environment” to talk about strengths and weaknesses, and therefore, future development needs. Mentoring enables us to build our own individual personal scorecard regarding our development and to identify new experiences needed to build skills that have not yet developed. This is why the work of GGW, particularly its focus on mentorship, is important to me.

My history of mentorship dates back to when I was working to get promoted to my first executive role at IBM. I was working with my scorecard to

identify what additional skills and experiences I needed to be considered for an executive role.

While no one could tell me exactly what was missing, I was not being considered.

So I took a risk.

I asked for a meeting with the general manager of our division, and I opened the meeting with “I have a headache.” He offered me aspirin. I told him I didn’t need aspirin; my headache was from hitting my head on the glass ceiling.

What I needed was advice on how to get promoted. I had caught him by surprise, and after fumbling for a few minutes, he offered to appoint a mentor for me whom I worked with for the rest of my career.

Since then, I have had formal and informal mentors, a valuable combination of both men and women from different parts of the industry and across geographic locations. And as I advanced in my career, I understood it was my responsibility, and my pleasure, to give back what I had received, which is what I hope to accomplish with GGW. I have acted as a mentor to newcomers to the business world, both men and women, as well as to more experienced professionals. What I have learned is this: We all have something to learn, no matter where we are in our career. In fact, ongoing development and critical self-assessment are required at every stage of our careers, and our lives.

If you risk nothing, then you risk everything.

That rings true to women and men in business and has an added layer of meaning for the gaming industry. It is the advice I give to my three daughters who are in their mid-20s—a 27-yearold and 25-year-old fraternal twins getting started in their own careers: one in hospitality, one in entertainment and one in investment banking.

Women of gaming, let’s start this new year with a joint resolution to not be afraid to take risks. After all, if you are feeling comfortable in a role, it is probably time to change and challenge yourself. And that is the positive takeaway from the current state of flux of our industry; it is ripe with opportunity for change and growth as a part of that change. Let’s commit GGW to mentoring ourselves and each other. It’s a smart business strategy, for individuals and businesses alike.

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GOODS&SERVICES AGA SETS ANTI-MONEY LAUNDERING BEST PRACTICES

WMS LAUNCHES THE FLINTSTONES

he American Gaming Tcomprehensive Association released a set of anti-

MS Gaming, a ScienW tific Games company, announced the U.S. launch of

money laundering (AML) best practices to guide the efforts of casinos to protect the U.S. financial system and national security from money laundering and other American Gaming Association CEO forms of illicit finance.

Geoff Freeman The AGA’s Best Practices for Anti-Money Laundering Compliance are the result of more than a year of work to identify and enhance industry guidelines, which were developed in coordination with the federal Financial Crimes Enforcement Network (FinCEN).

“Today marks a milestone for the gaming industry, which has come together to develop the first-of-its-kind, forward-looking set of best practices that reflect our industry’s commitment to a strong culture of compliance,” said Geoff Freeman, president and chief executive officer of the AGA. “We look forward to further bolstering our partnership with FinCEN to prevent money laundering and protect the integrity of the U.S. financial system.”

At Global Gaming Expo in 2013, Jennifer Shasky Calvery, the director of FinCEN, warned the industry that it needed to step up its antimoney laundering campaign, and suggested that casinos would need to ask top customers the source of their funds.

Casino companies have developed risk-based programs that promote compliance with the legal requirements of the federal Bank Secrecy Act (BSA) and associated AML regulations to discourage illicit behavior and safeguard the integrity of the casino industry. Risk-based compliance efforts are essential to the casino industry’s effective implementation of AML controls.

The Best Practices illustrate the industry’s commitment to a strong culture of compliance.

They distill the procedures that a wide range of casinos have adopted across critical issues including customer due diligence, transaction monitoring and employee training. Notably, the document also sets forth a series of “red flags” that are specifically tailored to the gaming sector. Individual casinos have implemented a range of measures and guidelines that aim to prevent, detect and report efforts to present illicit funds at casinos.

To read the AGA’s Best Practices for AntiMoney Laundering Compliance, go to the website at americangaming.org.

“The Flintstones,” a new video slot based on the iconic 1960s animated series featuring stone-aged workingmen, at Borgata Hotel Casino & Spa in Atlantic City.

The Flintstones game combines the sights, sounds and characters of the classic animated series with the manufacturer’s Gamefield xD cabinet.

“Keeping our slot floor fresh and exciting for our players is extremely important at Borgata, and we are thrilled to be the first casino to offer The Flintstones game from WMS,” said Ted Herzchel, vice president of slot operations for the Borgata.

The town of Bedrock is brought to life thanks to a 42-inch horizontal screen over a vertical 32-inch screen with a mechanical wheel on the Gamefield xD cabinet. The five-by-four base game features both a Flintstones and a Rubbles array, and reels stretch up to 10 symbols high as wild reels and multipliers are potentially added in a mystery feature. Unique bonus rounds, drawn straight from the series, include the “Bedrock Bowling” feature and the “Dino Bonus.”

GLI REGISTERED IN PARAGUAY eading gaming testing company Gaming LaboratoLtesting ries International has been granted registration as a and certification laboratory for gaming equipment by the government of Paraguay. The registration was granted by the National Gaming Commission (CONAJZAR), the gaming and lottery regulator in Paraguay, and covers devices and systems for gaming and lottery.

“We are proud to be recognized by CONAJZAR by authorizing our registration as a lab in the jurisdiction,” said GLI Director of Latin American Development Karen Sierra-Hughes. “We are thankful to the regulator for the trust that this recognition means.”

In addition to testing and certification, GLI has been fulfilling its mission in Latin America and the Caribbean in the areas of consulting, rule-writing, professional services and training. For example, between its September Latin American Roundtable and its recently completed Argentinean Regulators Seminar, this year the company has brought together more than 90 representatives from regulatory entities and state lotteries from 25 jurisdictions across the region for critical training and discussion.

JANUARY 2015 www.ggbmagazine.com

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CUTTING EDGE

by Frank Legato

Cash Solution

Product: Counting and Sorting Solution Manufacturer: Giesecke & Devrient

arge resort casinos usually take in various currencies at each of their operations. Traditionally these receipts used to be processed at different in-house locations, involving the typical downsides of manual handling, moving boxes around, coordination and wait times. With the availability of high-speed counting and sorting solutions, all cash processes can now be consolidated into one.

With an innovative end-to-end solution from Las Vegas-based Giesecke & Devrient, banknotes are counted, identified and authenticated, then sorted by denomination, series, orientation, and fitness for circulation—all in a single run. Gaming tickets are processed in the same run. As an important extra, used player cards and table chips can be shredded if required.

The system produces customized, intelligent reports which management and accounting can access at any given time, since cash processing is integrated with the casino’s back-office systems. To check on the progress of cash operations, managers and supervisors just need to log in to the server from wherever they are.

L

The integrated solution is rounded off by customized process design and count room layout. Reasons are obvious: Even the most powerful equipment can only achieve optimal results when combined with smooth and efficient workflows.

Effects on quality and efficiency are amazing. According to past years’ experience, processes become up to three times faster, and at the same time much more accurate and secure. The number of single operations drops, freeing up resources that can be dedicated to other tasks.

Once more, with an up-to-the-minute view of the progress of each operation, managers and supervisors stay abreast of developments. This enables them to make the quick and effective decisions often required in day-to-day business.

For more information, visit gi-de.com or call 888-292-4324.

Sound Policy

Product: EGT Sound Beam Manufacturer: MISCO and Elite Gaming Technology

ISCO, a leading audio systems manufacturer, and Elite Gaming Technology (EGT) have joined forces to create the EGT Sound Beam, an integrated sound module designed to deliver higher quality sound for gaming.

The EGT Sound Beam packs a 2.1 (left, right, subwoofer) stereo sound system into a single structural component that’s only 20.3 inches long by 2.3 inches high by 4 inches deep. The compact size is intended to allow more room in the game cabinet for the bigger CPUs and display processors required by today’s sophisticated casino games.

The Sound Beam system includes a custom driver array of six speakers, delivering the equivalent of a 5.25-inch subwoofer in a 2-inch space, driven by a high-efficiency Class D amplifier. “Your players will hear the wide range of game sounds, both music and effects more evenly, which will enhance their total gaming experience,” said MISCO President Dan Digre.

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Global Gaming Business JANUARY 2015

“Game developers can leverage the high-fidelity performance of the EGT Sound Beam to deliver more sophisticated soundtracks in their games.”

The EGT Sound Beam provides a frequency range of 60 Hz to 20 kHz. The speakers, engineered and built by MISCO, feature a diaphragm of composite carbon fiber laminate, rubber surround, a neodymium magnet motor, enclosed mid-drivers which eliminate modulation, and extra-wide vertical dispersion with a low cabinet-edge diffraction. The high-efficiency MISCO amplifier electronics include an automatic crossover for the subwoofer, automatic bass management, programmable EQ for tonal balance and programmable high-frequency shelf and adjustable low frequency controls.

For more information, visit miscospeakers.com or elitegamingtech.com; email info@microspeakers.com or sales@elitegamingtech.com; or contact MISCO at 800-276-9955, or EGT at 630-545-0927.

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PEOPLE GOLDSTEIN NAMED LVS PREZ, COO

R

ob Goldstein has been named president and chief operating officer of Las Vegas Rob Goldstein Sands, replacing the retiring Michael Leven. Goldstein has been with the company since 1995 and served in a variety of executive positions, most recently president of global gaming operations.

“Our company is in the enviable position of having the most diverse set of assets and the strongest balance sheet in our industry, as well as being best-positioned to capitalize on future growth opportunities as they happen,” said Las Vegas Sands Chairman and CEO Sheldon G. Adelson. “With Rob’s strong leadership, passion and energy, I’m fully confident we will expand our industry leadership to deliver even greater achievements in the years ahead. Considering the depth of the team we’ve assembled, I can’t help but be even more bullish about what the future has in store for Las Vegas Sands.”

Goldstein, who developed casino-hotels in the U.S. and Caribbean prior to joining LV Sands, has been instrumental in the development of the company’s successful global retail strategy, as well as bringing innovative dining, nightlife and entertainment concepts to each of the company’s properties.

“We’ve set a high standard with our success, and I’m focused on continuing to execute Sheldon’s vision and the strategic objectives laid out by our board of directors and management team,” Goldstein said. “We will continue to concentrate on getting the most out of our existing properties, pursuing new development opportunities and driving shareholder value. We also will enhance our industry-leading approach to compliance, further our efforts as a community partner and continue to grow our leading position as a best-in-class employer.

There is much work to do, but I couldn’t be more excited about the opportunities ahead of us.”

NEW MANAGEMENT AT MOHEGAN, FOXWOODS

T

Mitchell Etess

he largest Indian casinos in the United States, Connecticut archrivals Mohegan Sun and Foxwoods, are each getting new leadership as 2015 begins.

Last month Mitchell Etess, who has worked at the Mohegan Sun for nearly two

decades, announced plans to retire in 2015 as chief executive officer of the Mohegan Sun Tribal Gaming Authority. He will remain for the transition to a new CEO. A successor is expected to be on board by early spring.

Meanwhile, Foxwoods Casino Resort brought on a new chief executive officer and president, Felix Rappaport, who promises to diversify the company’s holdings, including revenue from activities other than gaming. The new CEO told the Hartford Courant that the resort’s huge size is one of its advantages. He added, “All brands have lifecycles, and the reality is, I’m a very optimistic person. I think with all the challenges in today’s market, and the competition, Foxwoods can move in a positive direction again.”

SEE TO LEAD SINGAPORE REGULATORS

L

au Peet Meng, who was appointed to the Casino Regulatory Authority of Singapore in June 2013, will leave the CRA effective January 6, and return to the Singapore Police Force as director of operations.

Jerry See He will be replaced by Jerry See, chief executive of the Home Team Academy in the Singapore Ministry of Home Affairs.

In a statement, the Ministry of Home Affairs said Lau has “strengthened CRA’s standing as a firm, fair and respected casino regulator.” The MHA added Lau also established an enforcement branch and improved the CRA’s investigative and research capabilities.

IP CASINO NAMES MCKENZIE GM

D

uncan McKenzie recently was named general manager and vice president of IP Casino Resort in Biloxi, Mississippi. Most recently, McKenzie was general manDuncan McKenzie ager of Hard Rock Casino Biloxi. A 30-year casino industry veteran, he has served as general manager of casinos in Biloxi, Gulfport, New Orleans and Kansas City.

“With his extensive experience in the gaming industry and familiarity with the Gulf Coast market, Duncan is a great fit to lead the IP team,” said Vince Schwartz, former IP general manager, recently named senior vice president of operations at IP Casino’s parent company, Boyd Gaming.

McKenzie is past president of the Mississippi

Gulf Coast Regional Convention & Visitors Bureau and past chairman of the Mississippi Gulf Resort Classic. He serves on the executive committee of the Gulf Coast Business Council and is a member of the Mississippi Economic Council.

BURAK TO HEAD SAGSE ORGANIZER

M

onografie, organizer of the SAGSE South American gaming trade Alan Burak show in Argentina, has named 33-year-old business manager Alan Burak as the company’s new general manager.

Burak has been with Monografie for 12 years, having worked as a business manager in all areas—commercial, customer service, press, marketing, technical and strategy. He has participated in many projects in Latin American countries as show manager in a variety of Monografie trade shows, including SAGSE Latin America Buenos Aires and SAGSE Centro America y Caribbean @ Panama.

GGB

January 2015

Index of Advertisers

Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Alto Gaming . . . . . . . . . . . . . . . . . . . . . . . . . .45 American Gaming Systems . . . . . . . . . . . . . . .27 Angel Playing Cards . . . . . . . . . . . . . . . . . . . .63 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Bally Technologies . . . . . . . . . . . . . . . . . . . . . .2 Cintas . . . . . . . . . . . . . . . . . . Inside Back Cover Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .63 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Gaming Support . . . . . . . . . . . . . . . . . . . . . . .43 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15, 47 Global Cash Access . . . . . . . . . . . . . . . . . . . . .17 Global Market Advisors . . . . . . . . . . . . . . . . .31 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . .41 ICE . . . . . . . . . . . . . . . . . . . . . . . . . . . .49, Insert iGLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Konami Gaming . . . . . . . . . . . . .11, Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Multimedia Games . . . . . . . . . . . . . . . . . . . . .19 NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Red Square Gaming . . . . . . . . . . . . . . . . . . . . .9 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .66 World Game Protection Conf. . . . . . . . . . . . . .49 Zitro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39

JANUARY 2015 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Q

&A

Andy Caras-Altas Founder & CEO, Traffic Generation Limited

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asinos have millions of pieces of data gathered from the use of player’s cards, credit, casino play, purchases and more. But according to Andy Caras-Altas, founder and CEO of Traffic Generation Limited, they aren’t parsing that data very carefully. His company shows casinos how to use the data more wisely and what the data really means when it comes to creating customer loyalty and repeat visits. Caras-Altas comes from the iGaming world, where every piece of data is available, and he uses that experience to demonstrate how his company’s patented process works. He spoke with GGB Publisher Roger Gros about this process at G2E in Las Vegas in October. To hear a full podcast of this interview, visit ggbmagazine.com.

GGB: Big data, that’s what you’re all about.

You’re the expert when it comes to being able to transform data into profits. Tell us what your company does.

Caras-Altas: I think that while I would agree that that is what we do—we do help transform components of data with insight into cash, for our clients—we’re really about convergence— the convergence of digital gaming with landbased gaming, with land-based marketing, with digital marketing. That crossover is really what we’re about.

A lot of people in the industry are talking about convergence. And for us, that’s convergence with a little “c.” Not Convergence with a big “C.” And for us, Convergence with a big “C” requires you to have that single-customer view— to really know what your customer is doing everywhere. So, to have your marketing systems talking to your land-based systems, talking to your gaming systems, talking to your digital systems, having them all sharing information between them, is a minimum requirement.

Also, taking the best from all those different channels. We look to evaluate people’s emotional states and emotional feelings and add that to

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how they interact with your loyalty system and your property management system and your player development systems. We go into this from a decade and a half of online gaming in Europe, and also being affiliates, and generating traffic, and having a further unique position of being on both sides of the game.

Give us an example of convergence.

We just saw a convergence event occurring, as U.S. casinos were starting to look at digital gaming, whether it’s free play, simulated, social or even real money in those three states that have them—and understanding that a lot of the providers of systems to them were not holistic in their approach. They’re focused and very good, but very sniper-like. And for a casino, that’s actually quite challenging. You put in one system, and another system, and another system, and it doesn’t talk to your casino management system, or it doesn’t talk to your slot management system, and you have an over-arching loyalty system. And actually, the day-to-day management of those players becomes very difficult, because your staff falls into departments that match your technology.

Inevitably, that means there’s confusion of communication between them. Now, if you are Caesars Palace and you’ve got billions of dollars, and thousands and thousands of people, you can do something. But if you are one of the average 400 or 500 casinos that operate in the United States, you don’t have those resources. It’s very difficult.

So then, you hear people in the industry start to talk about digital gaming: “You must have a casino! It’s fantastic! You’ll increase traffic.

It will reduce your cost requisition, you can build a database, you can reach people you don’t know.” And that’s great, because some of those things are possible. But if you are then just presented with that digital solution, and you’re left alone, what on Earth do you do with it?

So what does a casino do that’s interested in building a digital free-play casino?

Start with the email address so you can communicate with the person and straight away, you’re starting to get a picture of a customer.

Use Facebook connect—just one click and you capture someone’s Facebook information, which you then can match up with your loyalty scheme. Start to look into other social channels, like Twitter, Google+, TripAdvisor. They are a lot more challenging, but it’s not impossible.

Several vendors offer plug-and-play type of digital casinos. Do you recommend that kind of thing, or building your own? Or does it matter?

Well, I think undertaking building your own turns you into a software developer. And I’m not sure that every casino is that. But there are lots of people who perhaps do have that capability. I’d point to someone like Foxwoods, which developed its own casino management system. But that’s a very large undertaking.

Buying the free-play casino is quite easy, but finding one that actually has a purpose, and can help you achieve your objectives—whatever they may be: incremental revenue, foot traffic, database—there aren’t really many solutions that we think are complete. Our company is there to try to complete them, so for the vast majority of casinos, I would suggest they look very closely at purchasing rather than building, and then look for some key factors.

Is there a means of actually engaging with the customer? Is there a means of customizing?

Is there a means of offering a different customer experience to different people? Are there games I recognize? Are there games that make the most of the digital space, and offer genuine entertainment and fun? Can I play tournaments across both the property and the digital space?

And if you can find ones that can do that, then you’ve got a fighting chance of actually having something that has a decent ROI.

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