Casino & Gaming International: Issue 11 by Casino & Gaming International

2008 ISSUE 2

WELCOME

THE CHANCE TO EXPERIENCE EVERYTHING ELSE Publishing Director Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Louisa Bull Email: louisa.bull@casinoandgaming.net Distribution Manager Tracie Birch Email: tracie.birch@casinoandgaming.net Business Development Manager Stuart Jameson Email: stuart.jameson@casinoandgaming.net Advertising Mike McGlynn, Sales Director Email: mike.mcglynn@casinoandgaming.net Ray Blunt, Sales Manager Email: ray.blunt@casinoandgaming.net Daniel Lewis, Sales Executive Email: daniel.lewis@casinoandgaming.net

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Woodland Place, Hurricane Way Wickford Business Park, Wickford Essex SS11 8YB. United Kingdom Telephone: +44 (0)1268 766 515 Facsimile: +44 (0)1268 766 516 Annual Subscription (4 issues): £107 UK £117 Europe & Middle East £127 USA & Canada £137 Rest of the World Please make cheques payable to ‘CGI’ and send to: Casino & Gaming International, Subscriptions Dept., Woodland Place, Hurricane Way, Wickford Business Park, Wickford, Essex SS11 8YB. United Kingdom. Photography © 2008 Casino & Gaming International Limited and it’s licensors. All rights reserved. © 2008 Casino & Gaming International Limited (except where otherwise stated). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written permission of Casino & Gaming International Limited. ISBN 190200335 7 www.casinoandgaming.net

orrectly blended, the building blocks of business growth – strategy, capital, R&D – will invariably deliver on vibrant market opportunities that gambling in particular offers. Few industries have such a volatile, yet compelling bottom-line; a relatively stable, yet intensely creative, lucrative reinvention quality. Operators across the industry spectrum, extending from this bedrock, are increasingly cognisant of the need to localise, immerse and culturally attune in the pursuit of licenses and product expansion. And there is plenty of confidence and progress: from the CityCenter server-based gaming install to plans for the Gran Scala in Spain. For the savvy, mobile, liquid generations of players, customers and clients fuelling that ancient desire and redefining the vast landscape of both mega resort experience and technology driven game play applications, there is always something else to capture the senses, physical and virtual. While the batteries of slots are nevertheless still pivotal, the gradual social shift is clear: it is not simply the single-minded winning of money, but a matter of the total interactive experience, revolving around entertainment, leisure, retail and sport. Combined with the infectious and functionally necessary remote world, the managed integration of gaming-connected lifestyles is inevitable. Of course pure gambling, together with its attendant risks, is not about to fade to the fringe: “Some say he was born with cards in his hand and whether he sleeps or wakes he thinks of nothing else. He speaks the language of the game he plays at, better than the language of his country; he knows no law but that of the game at which he is so expert. He is never more religious than when he prays he may win. He imagines he is at play when he is at church; he takes his prayer-book for a pack of cards and thinks he is shuffling when he turns over the leaves. This man will play like Nero when the City is on fire or like Archimedes when it is being sacked, rather than interrupt his game.” So said Charles Gotton in 1674 (The Compleat Gamester, pp21-22) [edited]). Mindful of that implied obsession, over 300 years later scientific principles are being applied to the problem of human susceptibility to the lure of the game. Modest means, motivation and desire are a volatile mix. Clearly, there is a negative causal link here where the financial means may be limited but the appetite immense – the stuff of mitigating corporate responsibility codes and practices that aim to prevent disaster or direct to treatment agencies for any unfortunate consequences that do materialise. So the chance of winning without the resources to sustain loss long term is likely doomed, with the fallout hitting many people unconnected with gaming around the minority of affected participants if left unchecked. Despite often incorrect, extreme and influential moral criticism from the media, substantiating claims that the industry has caused significant adverse social and economic effects has been quite another matter. The speed of development in Macau, for instance, where managing the risks associated with community dislocation is vital, requires constructive assessment. And while there is some validity in the idea that the jury is out regarding the adverse effects from mobile, online and interactive media, the special emphasis has been to create rigorous standards that other business sectors and regulatory authorities have dully noted. There is sufficient variety in the casino and gaming scene to suggest that people from all walks of life are becoming ‘loyal’ to this diversity. The trend is very definitely to this, not to personal or collective ruination, whether a pure gambler or not: it all demonstrates, in short, the chance to experience everything else. CGI

Stephen Lawton is editor of Casino & Gaming International

Casino & Gaming International ■ 1

CONTENTS

FEATURES 9

ADDRESSING THE CHALLENGES AND OPPORTUNITIES OF SUCCESS BY FRANK J FAHRENKOPF, JR. AUSTRALIA’S WAY: ADVERSITY, VISION AND THE FUTURE BY ROSS FERRAR

MOMENTUM BUILDS AGAINST INTERNET GAMBLING PROHIBITION BY JEFFREY SANDMAN

DO THE TREMORS SUGGEST WE ARE NEAR A MAJOR TURNING POINT? BY CLIVE HAWKSWOOD

POISED FOR STEADY GROWTH THROUGH LOCAL ADAPTABILITY AND CONTENT UNIQUENESS INTERVIEW WITH MATTI ZINDER

CROSS CULTURAL COMMUNICATION – CAN YOU MEET THE CHALLENGE? BY JOHN DOYLE

GAMING ACADEMY GEARING FOR CONSOLIDATION AND THE GLOBAL STAGE BY EMMA ELSON

GETTING IT RIGHT ONCE THE DUST HAS SETTLED BY PENNY COBHAM Casino & Gaming International ■ 3

CONTENTS

FEATURES 59

PASSION, VIBE AND CHARACTER: EMBRACING THE ERA OF MEGA RESORTS BY MATTHEW YOUNG

CRAFTING LIGHT ATMOSPHERICS FOR THE ULTIMATE INTERIOR EXPERIENCE BY GRAHAM ROLLINS

CREATING COHESION BETWEEN SERVICE, FUNCTIONALITY AND HUMAN SPACE BY ANN FLEMING AND KEN KULAS

CARD PAYMENTS IN GAMING CREATE WIN-WIN SCENARIOS BY NIGEL BIDMEAD

COMBINING INDUSTRY STRENGTHS TO PREVENT EVOLVING THREATS BY SCOTT OLSON RIDING THE WAVE OF GLOBAL PROTOCOL POSSIBILITIES BY PETER DE RAEDT

CREATING A STANDARDISED MEASURE OF SOCIAL AND ECONOMIC EFFECTS BY DOUG WALKER

105 GAMBLING LOYALTY SCHEMES: TREADING A FINE LINE? BY MARK GRIFFITHS AND RICHARD WOOD Casino & Gaming International ■ 5

MACAU & G2E ASIA

ADDRESSING THE CHALLENGES AND OPPORTUNITIES OF SUCCESS BY FRANK J FAHRENKOPF, JR.

In a relatively short period of time, the tremendous growth in Asia’s commercial casino gaming industry has established it as a major presence in the international entertainment and hospitality marketplace. The legitimacy of the commercial casino gaming industry – the value of it as an economic force and social mainstay – is undeniable. It is an international business that is bringing entertainment, economic prosperity and goodwill to millions, with the prospects for growth burgeoning in the highly successful Asian market. The upcoming G2E Asia brings the global gaming community together to learn from our past and plan for our future. This continued collaboration will be vital for the future of the region and the entire global gaming entertainment industry.

he legitimacy of casino gaming as a “player” in the Asian economy is evidenced by the boom in the commercial casino gaming business in – among other places – Macau, which is host to 29 casinos, up from a mere half dozen or so in 2003. The Venetian, Wynn, MGM MIRAGE, Galaxay, SJM and Melco PBL are represented in this group. By 2010, Macau is projected to be home to 35 luxury casinos and 38,000 hotel rooms. Next year, in fact, 21 hotel projects are expected to be completed, bringing almost 33,000 rooms to this market. Macau entertained seven million visitors in 1997. In 2006, 22 million people made their way here, and predictions are that in the not-too-distant future, 50 million will be visiting annually. Then there is Singapore, where a pair of world-class casino entertainment projects are under construction, among them the $3.6bn Marina Bay Sands being developed by Sheldon Adelson’s Las Vegas-based company, Las Vegas Sands. This project will include three 50-story hotel towers, two 2,000-seat theatres, a five-story convention centre, a metal-and-glass arts-and-science centre, and a 1,000-foot public sky garden. Resorts World at Sentosa in Singapore is another mega-casino gaming complex currently under construction. With a $6bn price tag, it will include 1,800 rooms spread across six separate theme hotels with full conference and business meeting facilities, as well as a destination spa, and Southeast Asia’s first and only Universal Studios theme park. Malaysia is already in the game as home to the Genting Highlands Casino and Resort, often called the “City of Entertainment.” Its 6,118 rooms make the resort the largest hotel in the world, surpassing the MGM Grand in Las Vegas. These developments are spectacular, and they point to a

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MACAU & G2E ASIA

>> AS SCIENCE IDENTIFIES THE DISTRIBUTION AND DETERMINANTS OF GAMBLING-RELATED PROBLEMS AMONG THE POPULATION AND ITS HIGH-RISK SEGMENTS, PUBLIC HEALTH, GAMBLING INDUSTRY, PUBLIC POLICY, AND EVEN ANTI-GAMBLING INTERESTS SHOULD BE ENCOURAGED TO WORK TOGETHER TO LIMIT GAMBLINGRELATED HARMS…MUCH PROGRESS ON THIS TOPIC ALREADY HAS BEEN MADE THROUGHOUT ASIA, AND THE G2E ASIA CONFERENCE AIMS TO PROVIDE A NEXT STEP IN THE NECESSARY AND ONGOING DIALOGUE >> bright future for the region. We have seen in the US how the commercial gaming entertainment industry has proven to be a solid community partner, and the growth of the Asian market signals similar levels of commitment. But this degree of growth and success does not come without challenges and hurdles that confront continued progress. Macau, where, from one perspective, times have never been better for the city and its citizens, is facing such challenges. On the one hand, the growth of the commercial casino gaming industry has brought what economists define as a “full employment economy;” average salaries are up an estimated 40 percent; GDP grew about 30 percent last year; and the small business community is growing exponentially. Then there is the other perspective. A labour shortage looms – and in some areas has already surfaced – as estimates show that upwards of 100,000 people will be needed to service the tourist trade that will be pouring into Macau. The indigenous population cannot fill this need. Related to this, various elements of sophistication related to employment, such as the development of staff loyalty and leadership skills need attention in order to secure a solid

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industry. The local infrastructure is also being rigorously tested. The transportation element is severely strained, and the demand for electricity and water could be overwhelming. Indeed, growth and prosperity are difficult to attain, and once attained, are a challenge to maintain. One of the most successful ways to review and address the prospects and challenges that contribute to the ingredients of the economic stew that is the commercial casino gaming industry in Macau and the entire Asian region is to facilitate the congregation of industry, government and academic leaders in the field. So was born Global Gaming Expo (G2E) Asia created by the American Gaming Association (AGA) and Reed Exhibitions – co-sponsors of the G2E portfolio of events. As many readers are aware, the AGA and Reed have partnered and staged the flagship G2E event held in Las Vegas for the past seven years. Since its inception, this event has been considered the premier business and networking forum for our industry, providing the type of product review and idea-sharing opportunities necessary to promote the adoption and refinement of the latest technologies, newest innovations and biggest ideas in gaming. This flagship G2E

MACAU & G2E ASIA

production has accomplished that, and although it has consistently attracted hundreds of attendees from Asia, we recognised the call for the same caliber of trade show and conference event in Asia to specifically address the needs and interests of the industry’s fastest-growing marketplace. The inaugural G2E Asia was staged last year in Macau. Attendance and trade show space were limited by accommodations at the time; nevertheless, an overflow crowd of 3,000 gaming professionals attended, representing more than 50 nations. The trade show space, which showcased 80 of the world’s leading gaming equipment manufacturers and suppliers, sold out. This tremendous level of success conclusively demonstrated the need and desire for a G2E presence in Asia. G2E Asia 2008 will be held June 4-5 at the Cotai Strip Convention and Exhibition Center in the Venetian Macao. The trade show element of this year’s event already boasts more than 125 exhibitors who have claimed ground on the 85,000-plus square-foot exhibition floor, which is three times the size of last year’s space. We learned a great deal from our inaugural event about the types of exhibits that are of interest in the Asian marketplace and how much and what kind of educational content should be featured. After all, the hallmark of the G2E brand is that we are designed “by the industry and for the industry,” and feedback from attendees is the primary driving force that determines how we develop these events. Importantly, we enhanced our G2E Asia programme advisory board to include more individuals from Asia who have made it possible to attract top-notch speakers, and helped us develop sessions that truly speak to the needs of the market. Next, we worked very hard to incorporate leaders from all the different types of organisations doing business in Asia, including Asian companies as well as US companies and others coming into the market. The result is that a number of valuable new features will be introduced at G2E Asia 2008, including the debut of specialised exhibit pavilions on the show floor and an extra day of conference content. Two of these new pavilions – Security & Surveillance and iGaming Business – will demonstrate how technological innovations are changing the way casino companies approach the business of gaming both operationally and in the back of the house. These pavilions will help gaming professionals stay up-to-date on the latest trends in these important areas. Internet gambling is an interesting case of the divergent paths that can be taken on gaming issues in different markets. As many readers know, the US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) in 2006, requiring banks and credit card companies to block electronic transactions to Internet gambling businesses and prohibiting the use of checks to fund Internet gambling accounts. Regulations have been proposed that would require financial institutions and automated payment system companies to implement policies and procedures designed to prevent payments being made to offshore illegal Internet gambling businesses. UIGEA has been challenged twice in the U.S. because of questions regarding its constitutionality, and the financial sector has strongly opposed the proposed regulations that would govern the law due to the excessive oversight burden they place on banks and other financial institutions. Several

pieces of legislation have been introduced in the US Congress to address Internet gambling. The AGA supports the Internet Gambling Study Act, which calls for a comprehensive study of Internet gambling to be conducted by the National Academy of Sciences to help determine the best way for the U.S. to deal with the issue. Despite this position and the turmoil in the US on this topic, Internet gambling is a growing sector of the gaming business in Asia – and elsewhere – just as it is being circumscribed in the United States. The fact that Internet gambling continues to garner such interest in the industry generally – and in the Asian gaming marketplace in particular – called for its inclusion in our programme. In addition to in-depth analysis of the Internet gambling arena, G2E Asia’s three full days of expert-led professional development sessions will cover a variety of key industry topics. The more than 50 sessions on subjects such as Asian Markets, Casino Design, Corporate Social Responsibility, the Gaming Floor, Macau, Marketing, and Security & Surveillance have been designed to help industry, government and community leaders navigate the very challenges currently facing Macau and the region. For example, with Thailand’s new prime minister having recently announced a desire to open his country to commercial casino gaming, and with Taiwan, Korea and Japan debating the prospects of getting into the game, what threats and benefits are posed to existing gaming jurisdictions by these expansion possibilities? Questions about saturation have been hanging over the expansion of gaming in the United States and other regions of the world. This subject will be considered during the Asian Markets track at G2E Asia within the various Regional Overview sessions offering panels of experts that include economists and developers. Gaming expansion also brings with it challenges related to regulation that affect the development, marketing and

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operation of the industry. We in the US commercial casino gaming sector have found that working with government to identify needs that must be addressed, and then cooperating to find solutions has worked well. By combining the expertise of the private sector with the oversight mechanisms of government, we have discovered a comfortable nexus for cooperation. With regard to regulation and the integrity of gaming operations, we have worked closely with government entities to make certain there is a high level of transparency so the public recognises that fair play pervades. Integrity and transparency are the hallmarks of modern US commercial casino gaming operations, which means governments, employees and customers depend on gaming companies to provide a reliable product. Challenges do exist, however, when it comes to regulatory issues such as licensing and compliance, multijurisdictional issues, information sharing, gaming standards and more, particularly in growing markets, and markets with a significant international presence. Here, again, many of these issues will be addressed during the Asian Markets track of G2E Asia, including those sessions featuring regulators from the region who will discuss philosophies that drive the development and implementation of regulations in the Asian market generally, and in Macau specifically. Another critical issue that should be considered by everyone in our industry – and is, in fact, a central track in the G2E Asia 2008 conference programme – is corporate social responsibility. It is a key component of the global sustainability of our industry, and its importance cannot be overstated, especially in relation to problem gambling. As we know, research has confirmed that there are a small percentage of people who simply cannot gamble responsibly. As an industry committed to creating economic progress, tax revenues and good jobs, we must also be prepared to mitigate any possible harm done to consumers. All of us in the industry recognise it is important to educate the public about how to gamble responsibly, and to gain a better understanding about disordered gambling and how to prevent and treat the malady. The casino gaming industry in the United States has donated millions of dollars through the National Center for Responsible Gaming (NCRG) to fund peer-reviewed research on disordered and youth gambling. We have long held that effective responsible gaming programs must be rooted in sound science in order to succeed, and there is much research and best practices to guide efforts in this arena. As part of the Corporate Social Responsibility track at G2E Asia, the NCRG is sponsoring several sessions aimed at exploring this important issue. G2E Asia will examine the steps to creating an effective, research-based responsible gaming programme that will address the concerns of regulators, serve employees and help protect vulnerable populations. Leading international researchers will provide a primer on the latest research findings most relevant to industry professionals and regulators. In addition, the conference will explore how to create an effective responsible gaming framework. We also will examine how responsible gaming programmes can best be adapted specifically for the Asian community. As science identifies the distribution and determinants of gambling-related problems among the population and its 12 ■ Casino & Gaming International

high-risk segments, public health, gambling industry, public policy, and even anti-gambling interests should be encouraged to work together to limit gambling-related harms, and these sessions should provide a useful primer on how that might be accomplished. Much progress on this topic already has been made throughout Asia, and the conference aims to provide a next step in the necessary and ongoing dialogue. Beyond corporate social responsibility, one of the most interesting discussions should take place around the subject of marketing. Conference sessions will explore how to determine the needs, wants and expectations of the various sub-markets in Asia, and how to cater to them. Another session will look at database marketing, a very popular form of marketing in the US, but a tool that still has to be reviewed to determine the validity and form of its use in Asia. Advertising strategies will also be discussed in light of the various rules and regulations in the region, some of which ban the mention of gambling altogether. With its recognition of the unique circumstances surrounding the Asian gaming environment, G2E Asia offers industry leaders in the region an impetus to come together and begin to tackle all of these issues on a broad scale. And to prepare a new generation of leaders, this year marks the introduction of the G2E Asia Gaming Management Certificate programme, a one-day training workshop of sessions specifically designed to address the subjects and trends that are most crucial to success in today’s competitive gaming marketplace. The legitimacy of the commercial casino gaming industry – the value of it as an economic force and social mainstay – is undeniable. It is an international business that is bringing entertainment, economic prosperity and goodwill to millions, with the prospects for growth burgeoning in the highly successful Asian market. Whether a gaming market is mature or just beginning to develop, the challenges and opportunities we all face are strikingly similar, and there is much to be learned from one another. G2E Asia will provide a forum for shaping the industry in Asia and a way to communicate ideas, vision and experiences to move the entire region toward a more successful future. The upcoming G2E Asia brings the global gaming community together to learn from our past and plan for our future. This continued collaboration will be vital for the future of the region and the entire global gaming entertainment industry. CGI FRANK J. FAHRENKOPF, JR. Frank J. Fahrenkopf, Jr. is President and CEO of the American Gaming Association (AGA) in Washington, D.C. In his role as chief executive of the AGA, Fahrenkopf is the national advocate for the commercial casinoentertainment industry and is responsible for positioning the association to address related regulatory, political and educational issues. A lawyer by profession, Fahrenkopf gained prominence during the 1980s, when he served as national chairman of the Republican Party during the presidency of Ronald Reagan.

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GAMING MACHINE DEVELOPMENT

AUSTRALIA’S WAY: ADVERSITY, VISION AND THE FUTURE BY ROSS FERRAR

Australia’s gaming industry, confronted with a baseless barrage of hysterical media sensationalism, is reinventing itself with a new sense of purpose. Operating internationally now, gaming manufacturers are preparing for the gaming ‘floor’ of the future which will be much more flexible, much more responsive to the player and much more fun to work in than today’s operations. Training will be much easier, with skills portable not only between similar operations but also between professions. Players’ experiences will be more enjoyable, more personable and more protective.

n 1956, legislation was passed in the Australian state of New South Wales (NSW) legalising the use of slot machines in clubs. The machines required “no skill to play them – patrons will simply insert a coin, pull a lever on the side and watch a series of tumblers spin around until they stop in assorted combinations”, according to newspaper reports at the time. The Government expected a revenue boost of up to £750,000 a year and the money raised would be used to subsidise hospitals. With around 100,000 machines and an adult population of 5.2 million, the NSW government now collects almost AU$2 billion annually from gaming. The ‘pokies’ (as they have been colloquially known) became something of a border tourist attraction for neighbouring states’ residents and hospitality industry suppliers flourished in the newly-legalised environment. Gaming machine manufacturers experienced solid demand for many years – but with that came increasing demands for more sophisticated, more robust, more entertaining machines. Manufacturers continually upgraded the gaming machine product. A continual stream of innovative improvements was enthusiastically accepted by the hospitality marketplace. From jackpots to tokenisation, from bank note acceptors to video reels, the gaming machine product evolved to a sophisticated and reliable entertainment feature of hospitality venues.

LEGALISATION AND GOVERNMENT REVENUE Other Australian states eventually agreed that the Government revenue boost available from gaming machines provided an undeniable rationale for following suit and by the mid-1990s, most states had legalised gaming machines in Australia’s 13 casinos and in thousands of clubs and hotels. There’s now Casino & Gaming International ■ 17

GAMING MACHINE DEVELOPMENT

>> THE INDUSTRY IS REINVENTING ITSELF WITH A VIEW TO THE EXTERNAL MEDIA ENVIRONMENT. IT MUST PORTRAY A CREDIBLE PRESENCE AS KNOWLEDGEABLE TECHNOLOGICAL PACE-SETTERS, AS PROFESSIONALLY MATURE AND PRUDENT BUT VIGOROUS AND AWARE, AS RESPONSIVE AND INCISIVE WHILST REMAINING TRUE TO ITS PRINCIPLES, AS PEOPLE OF PROBITY AND INTEGRITY WHOSE OPINIONS ARE WORTH LISTENING TO >> around 200,000 gaming machines in Australia – slightly less than 2.4% of the world’s total – and governments collect around AU$6bin annually from an adult population of 15.6 million. The pundits might reflect on the possible quality of the Australian health system if those funds had been applied to subsidising hospitals…

GAMING MACHINE MANUFACTURERS The upgraded Australian gaming machine product was noticed internationally and, as more jurisdictions legalised gaming, manufacturers’ operations became more global. And international manufacturers brought their products to Australia. The original local mainstream manufacturers now operate worldwide – companies originally set up in Australia now generate more revenue internationally than domestically. The end result sees gaming machine manufacturers operating around the world with massive inventories of software and resources, incredibly diverse compliance systems and vast knowledge and involvement in componentry and standards.

DEVELOPING GAMES The people who design games are typically young, bright, smart, fun people – they’ve landed a great job early in their

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career, often newly graduated with a degree in an information technology-related discipline and their task is to entertain people in hospitality venues. They’ll come up with an idea which might entertain, then have to consider its suitability for hospitality environments. Then comes the hard part: its animation on the screen. This is a very disciplined, very demanding part of gaming machine development which few seem to care much about. Picture a cross between a movie-maker and a cartoonist – get it right and you have a hit, get it wrong and you most likely have a dud. Next step: selecting or developing game mathematics and the hardware on which it will operate. Oops, it has to work – compliance (electrical safety, emissions, regulations, standards) is a huge part of game development. Then, testing by the manufacturer in their own workshop before testing by an external, independent software laboratory prior to submission to the respective regulator for approval – and most likely, some changes and more testing and re-testing along the way. Only then can sale to hospitality operators begin – and of course – supply, installation, connection to monitoring systems and training for technicians and operational staff. Every step along the way of providing entertaining gaming equipment is conducted by people who are licensed,

GAMING MACHINE DEVELOPMENT

in manufacturers’ premises which are approved, using processes and tools which are approved.

FACING ADVERSITY Australians sometimes boast that they thrive in adversity. One unintended piece of adversity due to the increase in gaming machine popularity domestically has been a sharp increase in public criticism, especially in mainstream media. Because critics are not accountable for their statements (or typically, anything else) the claims are often sensationally negative. Recently the public has breathlessly been told that Australia “has 21 percent of the world’s poker machines”; “has the world’s fastest machines” and “has the world’s hungriest machines” to name a few (and none of the above are even vaguely true). The same sensationalism has seen academic researchers make outrageous statements including “on our estimates, problem or at-risk gamblers spent about 53 percent of the money expended on hotel and club EGMs in 2005-06”. Of course, what they failed to disclose is that “their estimates” were based on the work of another researcher, who did not extrapolate selected numbers across the entire population. And they conveniently ignored the fact that 27 percent of the 418 subject gamblers were classified as “problem” gamblers – compared to more robust research which found that problem gambling is continuing to diminish to levels of less than 1%. The same hysterical sensationalism saw the academic researchers talking about machines churning out “four million spins a month”. That’s three spins every two seconds, 24/7. Again, the critics were not accountable for their statements – but it sure sounded good on the radio… Of course, the fastest observed play at a practical level is about two spins every 11 seconds – and most people would agree that even that level cannot be sustained over time. And lately, another breathless claim that players could lose $1,200 an hour on “heavy duty” machines. Interesting when recent research showed that 96 percent of players had an average bet size of less than $1 (again, a critic’s claim which is not even vaguely true).

THE IMPACTS OF VICIOUS CRITICS So where has this irrational criticism left thousands of hospitality venues and a handful of gaming machine manufacturers? Firstly, with a new sense of purpose: there’s nothing like adversity to focus people and the critics are finding that industry representative bodies are peopled by articulate, knowledgeable and sensible professionals who refuse to be “rattled” by fanciful nonsense; Secondly, with a broader appreciation of the impact of the media on public perception and politics – and the tools to bring the hecklers to account; Thirdly, with a renewed requirement for quality information needing up-to-date, repeated research. Problem gambling is an unintended consequence of legalisation. It’s up to all stakeholders to participate sensibly in providing support (if people need it) and education. The regulators, the hospitality venues and the manufacturers should be allowed and encouraged to continue to do their job well. The researchers should also do their job well – by providing properly defined and funded, properly executed, independently reviewed and properly reported facts.

A major downside of continual negative media on hospitality operators is that confidence is shaken by sustained attacks, combined with a changing operating environment involving indoor smoking bans and the like. Mind you, truly proficient operators “tough it out” and emerge the stronger for a little self-assessment. The industry is reinventing itself with a view to the external media environment. It must portray a credible presence as knowledgeable technological pace-setters, as professionally mature and prudent but vigorous and aware, as responsive and incisive whilst remaining true to its principles, as people of probity and integrity whose opinions are worth listening to. And if Australians really thrive in adversity, perhaps the lessons being learned there might provide some worthwhile pointers for other jurisdictions in dealing with vicious critics.

RESEARCHING THE RESEARCH Gambling has been falsely demonised for centuries. Some recent research was conceived, specified, executed, reported and evaluated without due process in terms of transparency or consultation with all stakeholders – be they for or against the research subject. In many jurisdictions around the world, there is an awareness of prejudiced research outcomes and there is a growing willingness to publicly expose such research as biased and worthless. Such research is a waste of resources for the subject group and for all stakeholders. Research outcomes are suspicious if there has not been transparency or stakeholder consultation during the development process. Commissioning such research without due process invites dismissive publicity exposing a failure to discharge the responsibility to provide dispassionate evidence. Valid research requires a co-ordinated and collaborative approach to the strategic development of the research agenda; to the terms of reference and project methodologies of all gambling research projects; to the nomination of preferred researcher and peer review processes; to the imposition of a strict regime to ensure publishable quality research reporting; and to a coordinated media and communications strategy. It is impossible to discredit valid research which has been developed in full cognisance of all stakeholders’ views.

THE HOSPITALITY INDUSTRY EVOLUTION Two of the very significant recent steps in the evolution of the hospitality industry are the opening of Macau’s casino industry to international operators; and the licensing of two casino operators in Singapore. Both these steps see the rules for hospitality redefined. The standard of Macau’s and Singapore’s Integrated Resorts is revolutionary for the Asia-Pacific region and provides the newly-interested population a real motivation to travel and to experience the best in world-class hospitality entertainment. This radical elevation of standards has posed a challenge for hospitality suppliers including gaming machine manufacturers. It’s no longer enough to rely on the tried and proven combinations.

THE NEW PLAYER Here we have Generation X – the 20 to 35 year olds – of the Casino & Gaming International ■ 19

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Asia-Pacific region, wanting entertainment in their idiom. Immediate, action-packed, value entertainment – and gaming is ok. And here we also have Generation Y emerging in the adult entertainment field: Internet fluent, in the habit of controlling their world, always able to access and process huge amounts of information, happy to communicate with their world in a variety of ways. Hospitality venues whose plans look beyond a two-year horizon will have tackled the complexities of communicating with these groups. Their standards are not traditional and their means of obtaining information is new for many. Their patience and tolerance of inefficient or unnecessary practices is non-existent. Don’t even try sending them mail…

THE NEW GAME Soon we will all be thanking the pioneers of server-based and server-assisted gaming. The previous/current gaming machine configuration where software is isolated from the world on a box, is simply not appealing for Gen X or particularly Gen Y. It’s like giving a brand new notebook PC to a modern executive with an 8-inch floppy disk: not very effective… No, the new player needs new games. Games which aren’t yet conceivable. They will run on platforms we can only imagine – much like a 40 year old eight-inch floppy disk seems archaic and impossible to use now. What’s important now is the framework for migrating the gaming technology environment to one which has the capacity to support future advances, to foster innovation and to be stable, flexible and feature-rich. This will assist stakeholders to deliver innovative gaming products and services effectively and in line with anticipated expectation. Yes, this means reconfiguring the gaming infrastructure – and yes, this means learning a new way of operating. Just like office infrastructure was reconfigured a decade or two ago – and just like the modern office, the modern gaming environment will be a far cry in efficiency and productivity from what went before. You wouldn’t go back to a typewriter now, would you?

TECHNOLOGY STANDARDS Establishing clear, free, open, published, accessible, rapidly adoptable environmental technology standards will provide scope to implement “world’s best” innovations; and will leverage Research & Development effort and resources to deliver innovative products to the end user hospitality patron in an effective and timely manner. This is the work of the Gaming Standards Association and we will congratulate them for their current achievements when the significance of global open standards becomes more apparent. Whilst the GSA protocols are currently in field trial at several US casino locations, the practical reality is that GSA protocols have been implemented by major gaming machine manufacturers, have been adopted by the Gaming Industry generally and are now included in major facility plans. Whilst the GSA facilitates “the identification, definition, development, promotion, and implementation of open standards to enable innovation, education, and communication for the benefit of the entire industry” (according to its website), it’s the intrinsic visionary qualities of these efforts that will benefit the hospitality industry most. Those same qualities will enable future technologists to 20 ■ Casino & Gaming International

express their professionalism with a sense of innovative freedom which will heighten the entertainment value of gaming.

FUTURE-PROOF TECHNOLOGY The target is a flexible, open, secure infrastructure which is easily updated with whatever new technology might become available to hospitality venues – whilst enabling existing equipment and technology to continue to be operated and supported. Such an infrastructure is practical because it can be implemented without destroying the current gaming environment; it’s economically feasible because it will improve efficiencies; and it will leverage technology because products and services will be deliverable to the player in a much more timely manner. And a broader delivery can be achieved, where a particular product could be recommended to a player who enjoys similar games.

FUTURE OPERATIONS The gaming “floor” of the future will be much more flexible, much more responsive to the player and much more fun to work in than today’s operations. Training will be much easier, with skills portable not only between similar operations but also between professions. Players’ experiences will be more enjoyable, more personable and more protective. Today’s visionaries are implementing tomorrow’s technology – and that’s good news for the player, good news for the operator and good news for the regulator. And in all of this, only one thing will remain constant. The people who play gaming machines are in hospitality venues for positive reasons – for a meal, to meet friends, to enjoy some entertainment. That’ll never change. CGI

ROSS FERRAR Ross Ferrar is the EO of the Australasian Gaming Machine Manufacturers Association (AGMMA). Ross has worked in the Gaming Industry since 1979 and held senior management positions in casino table gaming, networked keno gaming, machine monitoring and networked jackpot operations AGMMA is a not-for-profit industry association, est. in 1990 to promote the development of the manufacturing resources of Australia. AGMMA’s members are Ainsworth Game Technology, Aristocrat Technologies, Aruze Gaming Australia, Global Gaming Industries, IGT (Australia), Konami Australia, and Stargames Corporation. AGMMA hosts and operates the Australasian Gaming Expo and the New Zealand Gaming Expo. For further information: contact AGMMA’s Executive Officer at info@agmma.com or on tel. +61 2 9960 0125. G2E Asia info: www.global gamingexpo.com/g2easia. Visit: www.agmma.com.au

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ONLINE REGULATION: US & UIGEA

MOMENTUM BUILDS AGAINST INTERNET GAMBLING PROHIBITION BY JEFFREY SANDMAN

Despite the US prohibition on Internet gambling, millions of Americans are still gambling online in an underground, uncontrolled marketplace, which federal law enforcement says has now been penetrated by organised crime. The Unlawful Internet Gambling Enforcement Act (UIGEA), which became law in late 2006, intended to prevent illegal Internet gambling, but a new Wild West has been created.

t a hearing before the House of Representatives Committee on Financial Services on 2nd April, regulators charged with developing a clear road map for implementing UIGEA told Congress that the law is too vague and that the existing legal framework is unclear. Financial services companies also told the regulators and Congress that the law is too burdensome, imposes too much of a cost on the financial community and is unclear as to what is and isn’t legal. In short, the current framework simply doesn’t work. The Wall Street Journal recently joined in the chorus to reverse course and regulate Internet gambling. In “Time to Fold” it states, “By legalising and regulating the [online gambling] business…Washington could more effectively battle such problems as underage gambling and addiction. It would also avoid unnecessary trade tiffs with its leading commercial partners.” Spurred by constituents, the media and affected parties, momentum is increasing in Congress to change the law and replace it with a practical and enforceable framework to regulate and tax Internet gambling in the United States. Last year, Rep. Barney Frank (D-Mass.) introduced the Internet Gambling Regulation and Enforcement Act (H.R. 2046), which would establish a regulatory framework for licensed gambling operators to accept bets and wagers from individuals in the US. His bill includes a number of built-in consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud and identity theft. Forty-eight members of Congress—Democrats and Republicans—have signed on as co-sponsors of the bill so far. A recent co-sponsor is Rep. George Miller (D-Calif.), who is

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one of the most influential members of Congress and a member of the Democrat leadership. The recent introduction of HR 5767 by Reps. Frank and Ron Paul (R-Texas) is a further indication of the changing tide. HR 5767 would effectively halt implementation of the regulations under UIGEA by prohibiting the Department of the Treasury and Federal Reserve System from proposing, prescribing or implementing any regulations related to the law and attempted ban on Internet gambling. Here’s why policymakers are moving toward lifting the

ban on online gambling and suspending enforcement of UIGEA.

BURDENS AND VULNERABILITIES IN UIGEA ENFORCEMENT At the 2nd April hearing, Wayne Abernathy of the American Bankers Association testified on the burdens and vulnerabilities in UIGEA enforcement. “The UIGEA and the Proposed Rule do not provide a rational path towards halting unlawful Internet gambling [but]

>> JON PRIDEAUX, CHIEF EXECUTIVE OF ASTERION PAYMENTS AND A FORMER SENIOR EXECUTIVE AT VISA TASKED WITH ESTABLISHING RULES, COMPLIANCE PROGRAMMES AND ENFORCEMENT RULES FOR THE OPERATION OF VISA ONLINE PAYMENT SYSTEMS, HAS NOTED, ‘I CAN UNEQUIVOCALLY STATE THAT INTERNET GAMBLING CAN BE REGULATED, AND THAT ABUSES CAN BE EFFECTIVELY REGULATED AND CONTROLLED. REGULATION ENSURES THAT PLAYERS GET A FAIR DEAL AND ARE NOT CHEATED…’ >>

24 ■ Casino & Gaming International

ONLINE REGULATION: US & UIGEA

to an increased cost and administrative burden to the banks and an erosion in the performance of the payments system,” said Abernathy. He further stated bluntly that UGIEA “will not result in stopping illegal Internet gambling transactions,” and described the law as an “enormous unfunded law enforcement mandate on banks.” Moreover, UIGEA leaves US financial service companies to interpret ambiguous State and Federal gambling laws, which do not clearly differentiate between legal and illegal Internet gambling activities or transactions. “Imposing this enormous unfunded law enforcement mandate on banks in place of the government’s law enforcement agencies is not likely to be a successful public policy,” continued Abernathy. Representatives of the US Department of the Treasury and Federal Reserve System acknowledge the challenges US financial institutions will face in attempting to comply with UIGEA. Since most payment systems are not well designed to comply with this law, “it will be very difficult to shut off payment systems for use of Internet gambling transactions,” said Louise Roseman, representative of the Federal Reserve System. “The implementing statute will not be iron clad at all.” Despite UIGEA, Americans will be able to circumvent the law by processing Internet gambling transactions through foreign banks where Internet gambling may be legal. Rosemen acknowledged that foreign banks are not likely to comply with UIGEA and monitor for specific transactions as is done in an effort to fight money laundering. “Money laundering is a global concern,” Roseman said. “Banks around the world cooperate. But the banking industries in countries where gambling is legal have no reason to work on this.”

REGULATING INTERNET GAMBLING PROTECTS CONSUMERS Testimony provided at a June 2007 hearing before the House Committee on Financial Services demonstrated how existing systems and technology have proven successful in combating underage and compulsive gambling and protecting against money laundering, fraud and identity theft. Keith Whyte, executive director of the National Council on Problem Gambling, the US advocate for programmes and services to assist problem gamblers and their families, discussed in his testimony the opportunity to use the technology and controls available on the Internet to combat compulsive gambling. “Clearly gambling on the Internet raises some difficult issues, but it provides theoretical opportunities for operators to deliver responsible gaming programmes that meet or exceed current standards in the ‘bricks and mortar’ gaming industry,” said Whyte. As an example, to combat compulsive gambling software can control the amount of money wagered, sets limits on amounts deposited, restricts the duration that somebody can play, and stop players whose gambling patterns seem out of the ordinary.

GENERATING REVENUE FOR IMPORTANT GOVERNMENT PROGRAMMES Regulated Internet gambling could generate significant revenue that may be used for critical government programs. The Internet Gambling Regulation and Tax Enforcement

Act of 2008 (HR 5523) introduced by Rep. Jim McDermott (D-Wash.), a companion piece of legislation to HR 2046, would ensure the collection of taxes on regulated Internet gambling activities. A tax revenue analysis conducted by PricewaterhouseCoopers concluded that taxation of Internet gambling is expected to generate between $8.7 billion to $42.8 billion in federal revenues over its first 10 years. “To be clear, these are not mostly new taxes – the bulk of the revenues generated would come from taxes required under existing law,” noted Rep. McDermott in a letter to his colleagues. “This is simply a framework to collect taxes on existing activity that is currently unregulated, unsupervised, and underground.”

RESOLVING THE WTO INTERNET GAMBLING DISPUTE In March 2007, the WTO ruled, in response to a dispute filed by the Caribbean island nation of Antigua and Barbuda, that the US unfairly prohibits foreign Internet gambling operators from accessing the US market, while allowing domestic companies to legally accept online bets. The Office of the US Trade Representative (USTR) subsequently announced the US intention to withdraw its gambling commitment to the WTO, thus allowing the US to keep its markets to offshore-based Internet gambling operators closed. The European Union (representing 27 member states), India, Australia, Canada, Japan, Costa Rica and Macao joined Antigua and Barbuda in seeking compensation (rumored to be in the region of $100 billion for the EU alone) from the US for economic injury resulting from this trade agreement violation. Rather than close the US Internet gambling market to foreign companies and pay trade concessions to do so, the US should comply with WTO requirements and open its market to foreign competition. The Frank bill could address this violation of international trade rules and bring the US into compliance with WTO requirements. In November 2007, a letter to the USTR was signed by eight members of Congress, including House Committee on the Judiciary Chairman John Conyers (D-Mich.), said the US should consider altering its ban on Internet gambling rather than pay compensation to countries barred from offering internet gambling services in the US. This position is also supported by the European Trade Commissioner who has said that Frank’s bill could bring the US into compliance with the WTO. A subsequent series of letters by influential members of Congress raise the possibility of congressional intervention to void new market access commitments granted by USTR. Letters sent by Rep. Peter DeFazio (D-Ore.) on 6th March 2008 and by Reps. Frank and Paul on 14th March 2008, call on USTR to disclose trade concessions made to foreign trading partners without Congressional approval. The international trade dispute continues as the EU announced late last year that it has opened an investigation into a possible international trade violation by the US for discriminatory trade practices against European online gambling companies. The investigation is the result of a Trade Barrier Regulation complaint filed by the Remote Gambling Association (RGA), which represents the largest remote gambling companies in Europe. The RGA claims the US is in violation of international trade law by threatening and Casino & Gaming International ■ 25

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>> UIGEA LEAVES US FINANCIAL SERVICE COMPANIES TO INTERPRET AMBIGUOUS STATE AND FEDERAL GAMBLING LAWS, WHICH DO NOT CLEARLY DIFFERENTIATE BETWEEN LEGAL AND ILLEGAL INTERNET GAMBLING ACTIVITIES OR TRANSACTIONS. WAYNE ABERNATHY, AMERICAN BANKERS ASSOCIATION: ‘IMPOSING THIS ENORMOUS UNFUNDED LAW ENFORCEMENT MANDATE ON BANKS IN PLACE OF THE GOVERNMENT’S LAW ENFORCEMENT AGENCIES IS NOT LIKELY TO BE A SUCCESSFUL PUBLIC POLICY’ >> pursuing criminal prosecutions, forfeitures and other enforcement actions against foreign Internet gambling operators, while allowing domestic US online gambling operators, primarily horse betting, to flourish.

an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it? Adults are entitled to do with their own money what they want.”

PROTECTING RIGHTS OF STATES

WHAT YOU CAN DO

Gambling activities have traditionally been regulated at the State level. Recognising this fact, the Frank bill reinforces the rights of States to control what, if any, level of Internet gambling is permissible within their borders. It also provides States the right to restrict entirely or control the types and levels of Internet gambling permissible within their borders. States further have the authority to impose additional taxes on permissible Internet gambling activities. The same provisions are afforded tribes. It also grants each sports league the ability to “opt out” if it wishes to maintain the current federal prohibition on sports gambling. This regulation is possible since new technologies can ensure the individual placing the bet or wager is physically located in a jurisdiction that permits a particular form of Internet gambling.

Supporters of Internet gambling have an incredible opportunity to influence this policy discussion by taking action and contacting their elected representatives. Visit the Safe and Secure Internet Gambling Initiative at www.safeandsecureig.org, where you can learn more and can email your member of Congress asking him or her to support the online gambling initiative. Prohibition has failed before and is failing once again. The way to protect consumers online is through strict licensing and regulation, and that’s exactly what the Frank and McDermott bills would do. CGI

VIABILITY OF REGULATION Industry experts have studied the issue and believe regulation of the Internet gambling industry is a very viable alternative to prohibition. Jon Prideaux, chief executive of Asterion Payments and a former senior executive at Visa tasked with establishing rules, compliance programmes and enforcement rules for the operation of Visa online payment systems, has noted, “ I can unequivocally state that Internet gambling can be regulated, and that abuses can be effectively regulated and controlled. Regulation ensures that players get a fair deal and are not cheated…” Andrew Poole, head of online services for GamCare, a charitable organisation in the UK committed to addressing the social impact of gambling, concurs. “We are satisfied that if the move towards more responsible operation continues to gather pace, as is increasingly observed across Europe and the rest of the world, that the continued legitimate development of the industry need not be off-set against significant increases in problematic gambling,” said Poole. “Robust, formal regulatory frameworks undoubtedly represent the best opportunity for achieving this.”

PRESERVING AMERICAN FREEDOMS Finally, there is an individual freedom argument implicit in the debate over online gambling. Rep. Frank has said it best. “If 26 ■ Casino & Gaming International

JEFFREY SANDMAN Jeffrey Sandman is spokesperson for the Safe and Secure Internet Gambling Initiative, which promotes the freedom of individuals to gamble online with the proper safeguards to protect consumers and ensure the integrity of financial transactions. Beyond his work with the Initiative, Jeffrey is CEO of Hyde Park Communications, one of the leading independent public relations firms in the United States. He attended the University of Warwick, holds a BA magna cum laude in political science from Queens College, an MPA with honors from the Wagner School, New York University, and a JD from the Georgetown University Law Center, where he was Senior Editor of Law and Policy in International Business. He is a member of the California, District of Columbia, and US Supreme Court bars.

ONLINE REGULATION: US & EUROPE

DO THE TREMORS SUGGEST WE ARE NEAR A MAJOR TURNING POINT? BY CLIVE HAWKSWOOD

There are signs that liberalisation and regulation of the online gambling market in the US and EU is increasingly being seen as a matter of when rather than if. The pressure for change is mounting and positive results could well begin to emerge sooner rather than later.

he Cold War, which thankfully has been consigned to history, was characterised by the Berlin Wall. It was an unedifying structure designed to keep people in and an almost completely opposite ideology out. The Eastern Bloc countries feared what would happen if their people were given a choice over which kind of system they would like to live under. I cannot help but feel that there is an analogy between that situation and the wall that so many jurisdictions have sought to put in place to keep out a regulated online gambling market. Millions of consumers in these jurisdictions would like to come over to our side. They have seen in the press and heard from like-minded people who have managed to escape over the wall that the online gambling world offers a better quality of life. They are tired of the grey uniformity of state-run lottery and gambling operations. They have learned that there are other regimes where people can actually choose between gambling products which are provided in a competitive market. The rates of return are better than anything they have ever come across and the range of products unlike anything they have ever seen. Is it any wonder that they want to get over the wall? Why the wall is there in the first place will no doubt be the subject of some academic dissertation that will deconstruct all of the socio-economic factors and conclude that it is all very complex and should be researched further. Rather than that, what Iâ&#x20AC;&#x2122;d like to look at is whether the wall was built on some very shaky foundations and the extent to which some of the cornerstones have begun to shake loose over the last year or so.

UNITED STATES Let us start with the Unlawful Internet Gambling Enforcement Act (UIGEA) in the US. Oh dear, oh dear. The wall builders Casino & Gaming International â&#x2013; 29

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constructed this huge segment late at night in Washington when practically nobody was watching. They even hid it behind a much larger structure, some important Safe Port monument, so few people knew it was there or saw it coming. Then in the dark they stuck it in the wall. It didn’t fit at all well and they did not cement it in. On the 2nd April this year, the House Committee on Financial Services looked at the UIGEA and took evidence from those poor souls who had been given the task of implementing it. Amongst others, they took evidence from Louise L. Roseman, (Director, Division of Reserve Bank Operations and Payment Systems); Valerie Abend (Deputy Assistant Secretary for Critical Infrastructure Protection and Compliance Policy, U.S. Department of Treasury); and Wayne Abernathy (for the American Bankers Association). The chorus from all of them was that the statute as enacted and the regulations as proposed, were burdensome, unworkable, and were unlikely to result in stopping illegal Internet gambling. It was a case of legislate in haste and repent at leisure. For the protectionists and anti-gambling campaigners they had the slight consolation that the passing of the UIGEA had encouraged many of the major online operators, principally those with stock market listings, to exit the US market, but there is no doubt that the void that they created has been filled by other companies. In short, and it can’t get much shorter, the UIGEA doesn’t work. Financial transaction blocking of this kind, where one of the parties is based in a jurisdiction where the activity is licensed and completely legal, is doomed to failure. We have made the point repeatedly, but it seems that some regulators and governments won’t be satisfied until they’re tried it for themselves and it remains high on the agenda for some EU states. Coming back to the US, there are signs that as more opinion formers take a pragmatic and objective look at the subject they are reaching the conclusion that regulation is the correct way to address valid concerns about consumer protection. It helps that the Frank Bill is sitting in the background ready to be used. It has been designed to address not just generic issues about licensing but also those unique to the US to do with the autonomy of States and the sensitivities surrounding some sporting authorities. The number of sponsors for that Bill continues to grow and Barney Frank is doing an excellent job in promoting its potential benefits and challenging the prejudices of some of his Congressional colleagues. The Frank Bill, or indeed any similar piece of legislation, is the sort of demolition equipment we need to knock great holes in the wall. At the moment we are all still pushing to get it started, but as and when the engine ignites it will take some stopping. More generally, the US approach, has brought it into conflict with the World Trade Organisation and even major trading partners like the European Union. The US has put itself in breach of its obligations under the General Agreement on Trade and Services. The champion of free market economics has been found guilty of unjustifiable protectionism. Surely, this must raise concerns amongst politicians in the US, even though who have no interest whatsoever in gambling? 30 ■ Casino & Gaming International

Likewise, in the EU prominent figures like the Trade Commissioner, Peter Mandelson, have taken up the cudgels not because they are pro-gambling, but because they are anti-protectionism. Helpfully, he has gone on record as saying that regulation is the answer to the US problems in this area and we hope that Congress will follow his advice. A regulated, competitive, non-discriminatory regime is in the interests of US consumers and the US Government: it is surely a question of when rather than if that will happen. We will certainly continue to lobby for that to happen and to look for other levers that will speed up the process of change and protect the interests of our members. An obvious example of this has been our Trade Barriers Regulation (TBR) complaint to the EU. This process allows EU companies to complain to the EU Commission about violations of WTO law. The RGA complaint provides evidence showing that what the US is doing has had a serious negative impact both on the services trade between the EU and the US and on the EU gambling sector, with potential significant impact on the economy of the EU. Companies point to a loss of US revenue, loss of stock market value of affected companies, as well as the payment of substantial fines in settlements with the Department of Justice. The complaint further highlights the potential impact of US sanctions on the ability of the companies to run their business under normal conditions outside the US, as well as knock-on effects on related sectors, such as financial services, IT and professional services. After initial consideration, the European Commission announced that there was a case to answer and launched a formal investigation. This will continue through the summer. The Federal laws targeted by this complaint had already been condemned in a WTO dispute settlement case (WT/DS 285) brought by Antigua and Barbuda against the United States. However, the US did not comply with the relevant rulings, but announced instead its intention to withdraw for the future its GATS commitments on gambling and betting services in accordance with the procedures provided for in Article XXI of the GATS. The RGA argues that applicable US obligations would not disappear even after the completion of the current process of withdrawal of the United States’ GATS gambling commitments. The reason for this is that the withdrawal would not have retroactive effects, that is, they would only remove US obligations for the future, but not in respect of past events. We are confident that at the end of the enquiry, the European Commission will find in our favour at which time it would have the option of launching yet another WTO dispute settlement case. This would be bad for EU-US relations and inevitably it would damage again the reputation of the US. Our hope is that this will not prove necessary and that progress can be made by negotiation. As part of that we would be disappointed if they could not at least get some form of undertaking that the Department of Justice will not pursue prosecutions against EU-based online gambling operations and the individuals associated with them for any activities which took place before the US withdrew its commitments under GATS. This would be like the US taking a small brick out of the wall itself. It has the opportunity to do that without weakening its position more generally, but if it fails to budge

ONLINE REGULATION: US & EUROPE

then both the EU and the WTO could come back and demand that bigger parts of the wall are taken down.

EUROPEAN UNION Of course, the wall is not purely a US construction. There are many foreign labourers involved in maintaining their own small sections of it. If the truth be told, most EU Member States are anxious that the wall stays in place and their methods of propping it up can be very imaginative. Their biggest problem, and the industry’s biggest help, is that there is an EU Treaty in place which says explicitly that except in very specific circumstances it is illegal to have a wall there. As this has been largely ignored, the European Commission, as the guardian of the Treaty, has had to step in to seek compliance. In this scenario they are akin to building inspectors telling disgruntled owner occupiers that they must tear down their new wall because it hasn’t got planning permission. In the real world the process is that the European Commission has formally requested many states to amend their laws following an examination of their supposed justifications for having them in place. If they do not comply then the Commission has the option of referring the matter to the European Court of Justice which can compel them to comply. And the scale of the action being taken by the Commission? Well, infringement proceedings have now been initiated against Greece, the Netherlands, Denmark, Finland, Germany, Hungary, Italy and Sweden. If I’ve forgotten anyone then I’ll happily apologise, but it’s hard to keep track when the numbers go up so regularly. Perhaps next time it would be wiser to list those who aren’t in breach of EU law. Under pressure from EU law and the European Commission, the wall is shaking all across Europe.

impressed (and they routinely are) by the plethora of antifraud, anti-money laundering, and anti-problem gambling measures that can be put in place by the online industry. The comprehensive audit trails alone tend to leave regulators purring with delight. We also need to make more use of the growing body of evidence (such as that in 2007 from the British Gambling Prevalence Study and the ongoing work being conducted at Harvard) which shows that, contrary to anecdote and conjecture, regulated online gambling is no more a driver of problem gambling than any other mainstream form of gambling. We must continue proactively to educate everyone who comes into contact with our industry about the true position. We also have to be honest and identify where more can and should be done and then we need to do it.

CONCLUSION Unfortunately, we are still at the tremors stage, and we don’t expect the wall or even important parts of it to collapse in the next 12 months, but there is a distinct feeling that we are near a major turning point and that positive change could happen sooner than we had hoped. When ones back is to the wall (no pun intended, especially as I’m already extremely sorry for using the wall analogy so repeatedly here) phrases used by the great Winston Churchill can often spring to mind. In this case perhaps the most fitting one was when he said about the Second World War following the British victory at El Alamein in 1942 that, “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” With luck, 2008 will be the year that we will look back on as the beginning of the end. CGI

INDUSTRY Inevitably, it remains of key importance that the online gambling industry plays its cards right and doesn’t give anyone the excuse to build the wall higher or to reinforce it. In business terms the industry continues to thrive. Although consolidation and growth continue to be hampered by legal and regulatory uncertainties, even companies that pulled out of the US market have redirected their efforts and are on an upward curve. Other sectors of the gambling industry may not be doing so well and we need to be mindful that if they feel threatened then they will strike out. It is not unusual for parts of the bricks and mortar industry to argue publicly that people should have less concern about them and more about the online industry. In effect, what they mean is tax and regulate them more lightly or even better keep competition from the online industry out altogether. Protectionism can make strange bed fellows. Some of this is unavoidable and is a fact of business in any walk of life, but the online industry would benefit wherever possible from getting closer to the traditional industry and finding common cause. Irrespective of the facts, there is a widespread belief that online gambling is a riskier proposition for the consumer and that online operators cannot have the same levels of social responsibility as bricks and mortar establishments. This needs to be countered at every turn. If we can get by any initial reservations, regulators and legislators cannot fail to be

CLIVE HAWKSWOOD Clive Hawkswood has been Chief Executive of the Remote Gambling Association (RGA) since its establishment in August 2005 following the merger of the Association of Remote Gambling Operators (ARGO) and the interactive, Gambling, Gaming & Betting Association (iGGBA). Before that he was the General Secretary of ARGO. Clive was formerly head of the Betting & Racing Branch at the British Department for Culture, Media & Sport (DCMS). Prior to that, he was at the Home Office, spending time in both the Gambling Section and the Horseracing Policy Team. Earlier in his career he spent several years working in the bookmaking industry. He is also a Director of the Responsibility in Gambling Trust (RIGT), the British charity that raises and allocates funds for problem gambling related research, education, and treatment.

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MOBILE GAMING

POISED FOR STEADY GROWTH THROUGH LOCAL ADAPTABILITY AND CONTENT UNIQUENESS INTERVIEW WITH MATTI ZINDER

Mobile gaming is a global phenomenon with the core expansion, particularly since the UIGEA in the United States, currently centred on Europe but where the Asia-Pacific region is poised to dominate growth. Wagers placed in mobile gambling are projected to reach $16bn by 2011 against a background of mobile gamers registering 750 million casino plays by 2009. The Asia Pacific region itself is predicted to contribute about $6.7bn in 2011, compared to $647 million in 2006. Nevertheless, entering an early mass market requires close attention to localisation, a tenacious perseverance in uncharted waters and state-of-the-art technology.

GI: What are your impressions of what emerged from the recent Mobile World Congress in Barcelona?

MZ: As you know, we have been participating in 3GSM and subsequently GSMA for the past five years. In that time we have seen quite an evolution of our niche to the point where we are now perceived as an integral part of the overall mobile content space. There was a lot of interest both from the gaming world – online and land-based casino operators – and from other players who are now coming to terms with the fact that this is a credible, serious business which they are now looking at much more closely. There were a very large number of business-oriented participants at the Congress, whereas previously the innovation aspect was stronger. And that was principally about what kind of technology is involved, how the back office works in this situation, and how the whole processing system is put together. Now, the issues and questions relate to operations. The main difference is that there has been a marked growth in the focus on business prospects rather than on technology and innovation, important as that naturally remains. For us, there is quite a bit of follow up to do on Barcelona and it is all related to the business area. The bottom line is that I feel the whole offering that we have has progressed from a kind of novelty to a credible business Casino & Gaming International ■ 35

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enabling forward thinking, aggressive businesses with broad horizons, to look purposefully at the early mass market.

prospects to adapt our system to meet the legal requirements.

CGI: The Congress in Barcelona is also part of your promotion within the Spanish market. How is that working out for you?

Firstly, it is compliant with all the legal counsel we have received; secondly, our solutions comprise a number of developments and capabilities putting us in a very unique position. It is not just the mobile application per se it also includes components of the back office and processing solutions that, together, fit in a very particular way with the legal guidelines set by these jurisdictions. This enables us to apply a very effective gaming solution. I think our presence at

MZ: There are a number of developments that are occurring specifically in the Spanish market. In certain areas of Spain gambling is being made legal. What we are doing now is working with a couple of our clients and a number of

>> AT A STRATEGIC LEVEL IN DISCUSSION YOU MAY AGREE THAT ASIA IS EXCITING, AND IT IS, BUT IN ORDER TO SUCCEED IT REQUIRES REAL COMMITMENT AND IMMERSION INTO THE MARKET. OF COURSE, WE ACCEPT THAT BOTH THE TECHNOLOGY AND THE GEOGRAPHIC LOCATION ARE NEW. THE REALITY IS THAT YOU MAY FALL ON YOUR FACE A FEW TIMES – AND WE HAVE DONE THAT – BEFORE ANY PROGRESS IS MADE; BUT EVERY TIME WE MAKE A MISTAKE OR COME UP AGAINST A BARRIER WE SEE THAT CHALLENGE AS AN OPPORTUNITY FOR GROWTH >> 36 ■ Casino & Gaming International

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the GSMA and the context of what we have developed there was definitely instrumental in reaching this point. CGI: What is the strength of the mobile games market in Spain? MZ: The mainstream mobile games market is very big in Spain and the downloading of various types of applications is growing quite steadily. And it has one of the largest mobile content providers in the World – Zed. Obviously, the legal position is the critical issue here, just as it is for many other jurisdictions. So, considering the strength of the market in Spain, there is certainly a definite intent to do business, so through due diligence clarifying what the status of a given company would be if they were to proceed to launch in that market is fundamental. That is about where we are at present. CGI: As part of your European expansion are the EU accession nations of eastern & central Europe a focus for you? MZ: Many of the countries in this region are now undergoing rapid development – Armenia, Romania, Bulgaria, Poland. The legislative specifics are still very murky, but the key here is to work with the right local partners as it is so often with many emerging markets. That’s where our main effort is: identifying and establishing close local partnerships in every one of these countries to ascertain the technical modifications that we need to make to adapt products to local conditions, just as in Spain. Because of our very flexible and wide range of back office systems, processing solutions and adaptations on the phone, we are able to create versions of our product to specifically suite individual requirements. The primary issue therefore is working through the right configuration to address those needs and that’s where we rely on our local partners. Every country, after all, has its own issues concerning the provision of mobile content, so to achieve registration and transfer of the download application over the air and integration with the carrier networks, and so on, it is necessary to work with third party providers. Then there is the question of whether or not these markets can work in English, the lowest common denominator. If not, we need to assess the strength of the market and the potential it holds in order to localise the product. In a case where we think it is applicable and worth our effort then we proceed to localise it into the given language, which we have done in a number of cases already. CGI: Might your range therefore include a bull fighting game!? MZ: At this point we have a very well defined set of games that seems to be sufficient. We’ve developed one for Asia and the UK – the two main strategic markets. Of course, if we get feedback from any of our local partners that a very specific game has local potential, then we will explore that. CGI: Of course, the games do still need to be relatively universal…

MZ: That’s the beauty of our sector: firstly, the games are very simple. There is no need to create awareness or educate people how to play a slot machine, blackjack or in Asia how to play baccarat – it’s a given; secondly, once they are launched they are extremely profitable. So the combination of acceptance and understanding by the target markets of what these games are and how to play them brings our offering to a very sweet spot from a business perspective. CGI: Are you considering the Americas presently? MZ: At the moment there are quite a few complications with any approach to the Americas; not least with the very low credit card usage and the fact that there are processing issues to overcome. It holds a lot of promise, but our focus right now remains in Europe and Asia. We do, however, think that Latin America is something we should begin to look at. CGI: The Asia-Pacific region is, when you consider how Macau has followed on from Las Vegas, an enormous market. Where do you see yourself in the big developments in mobile gaming in Asia? MZ: The demand is huge in Asia and we are using our games in a range of different applications and not only in a direct play-for-real version. We have a product range called SpinFone which is a pay-per-download solution that is being trialled by a group of land-based casinos to develop loyalty. They are using it as a loyalty points system rather than as direct game play, and that is proving to be very, very effective. The players use real money in the casinos and when they leave they load up a version of our product which is identical to the real play version but it is being utilised as a play-for-points loyalty system. Casinos are finding that increases the turnaround time of players going back to the casino which is raising casino revenue. Obviously, there is pick up on the real game play where that is possible, but this is where the excitement is at the moment. CGI: Do you perceive much progress globally toward standardisation of networks for mobile gaming? MZ: That still depends on the market, especially in Asia where you are looking at 20 or so countries with 20 different sets of local specifics. That is why we have been investing a lot of time and effort with people on the ground, interacting with potential clients, understanding the needs - we get down to a very high degree of detail. At a strategic level in discussion you may agree that Asia is exciting, and it is, but in order to succeed it requires real commitment and immersion into the market. Of course, we accept that both the technology and the geographic location are new. The reality is that you may fall on your face a few times – and we have done that – before any progress is made; but every time we make a mistake or come up against a barrier we see that challenge as an opportunity for growth. CGI: In respect of land-based casinos, what impact do you think server-based gaming will have on mobile gaming? MZ: Any willingness to open up to new gaming models and Casino & Gaming International ■ 37

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technologies on the part of a very conservative land-based casino business group is positive for us, especially given that by installing these systems we are able to leverage that in a number of ways. CGI: Do you find game play is made more sustainable by being refreshed or is it better that new games are created? MZ: It’s a combination. Some games will never change – blackjack, baccarat, roulette – these are standard commodities. But to maintain loyalty in order not to commoditise you have to provide some sort of edge or unique offering for the players. So where does that player decide to spend cash? It is going to be at a place where the gaming experience and everything around it, including additional offers, additional features within specific games, is unique. For example, Tombraider, is a five-reel multi-line bonus-slot game and our Pub version has two bonus features. If you provide that as part of your game mix with the recognised staples like blackjack, baccarat and roulette – without which you cannot launch a casino – then you have additional innovative game options making all the difference. Our back office and business intelligence systems allow us to define and to target players in a very active way enabling us to see the trends and discern gaming patterns. The overall result is a much more entertaining gaming experience for the player and a more profitable system for the operator. CGI: Do you see the idea of handset use in casino properties catching on? MZ: That is an area we are watching closely of course but I do not necessarily think that’s where things are going. A Wifi device within an existing gaming establishment is not a particularly good thing. In that case I think it competes for player attention within the casino and doesn’t provide any added value. But a remote gaming experience that extends the casino’s range beyond the physical location of the casino – that’s where the added value comes in. Whether it is a real play or loyalty option, or any other solution, that’s where the advantage is and where the mobile device really shines and not within the casino space. The only thing that would add value would be a personalised communication and messaging solution that uses text messaging because virtually everyone does have a cell phone, especially in Asia. Instead of providing that as a competing gaming option to players, utilising it for its basic communication function in order to enhance existing game play and provide promotions – that’s a different story. CGI: Do you think that the growth and development in mobile technology is likely to make it easier to deal with gambling addiction problems or rather that its very mobility will always be difficult to control? MZ: In many cases that boils down to the willingness of the 38 ■ Casino & Gaming International

operator to take action. At the end of the day we are a technology supplier and that comes with a lot of different safeguards and it is down to the operator to decide which safeguards to implement and what not to. The technology, in fact, is not at issue here: there are a number of safeguards ranging from identification to gaming limits to server-side controls. The issue is how serious the gaming operators will be in enforcing and implementing these tools. Our clients comply with the highest standards in the industry. Our business is conditioned by the fact that it will be accepted and seen more as an entertainment element. If there are cases where the technology is misused or used in the wrong context that will hurt our business, so we encourage our clients – in some cases even require them – to implement safeguards with the technology that we provide. CGI: It will be interesting to see how this all unfolds… MZ: We are not going to see an explosion but I believe in the upcoming months there will be a constant, progressive growth in the business which will bring us to a point at the beginning of next year where we will be accepted as an integral part of the interactive gaming business. CGI

MATTI ZINDER Matti Zinder is the founder and CEO of Spiral Solutions Ltd., a full-service interactive marketing, advertising and technology development firm established in 1999. Foreseeing the direction where interactive gaming was headed, in 2003 he established Spin3, a division of Spiral Solutions, which to date is credited with developing and rolling out one of the leading mobile gaming solutions worldwide. Spin3 has been nominated as the Best ‘Made for Mobile’ Game system at the Mobile Entertainment Forum 2005 and at the World 3GSM conference 2006. In 2005, three leading full-service UK mobile casinos were launched using Spin3’s proprietary platform and technology, and earlier this year, he was named one of the 50 most important individuals in mobile content worldwide by a respected and leading wireless industry publication. Matti has become a leading voice and authority in the area of mobile gaming, and has served as a keynote speaker at many international wireless industry symposiums and conferences, including the Mobile Entertainment Forum, Mobile Gambling Forum, MEM Asia and the Mobile Gambling Summit Asia. Prior to founding Spiral Solutions, Matti served as the Director of Marketing/East Asia at Elbit Defense Systems, a global defence electronics company and as Vice President of Marketing at eSafe Technologies/Aladdin, a NASDAQ listed company. He holds degrees in Chinese and Far Eastern studies and Business Administration from the Hebrew University in Jerusalem. Matti Zinder is proficient in a number of languages, including Mandarin Chinese, Hebrew and Arabic.

Hotel Okura, Amsterdam 13th-14th May 2008 The European Gambling Briefing (EGB) is now firmly established as an essential part of the gaming events calendar for the terrestrial and remote industries alike. EGB delivers serious, senior-level analysis on the legal and regulatory issues shaping on and offline gaming today, going beyond the theory to look practically at the ramifications of these issues for operators and suppliers building an international business. Now in its fourth year, EGB is moving venue for 2008 to take place in the sophisticated surroundings of the Hotel Okura in Amsterdam. Networking has always been central to EGB’s success and 2008 will be no exception, with exciting options currently being explored in our new host city.

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COMMUNICATIONS AND iGAMING

CROSS CULTURAL COMMUNICATION – CAN YOU MEET THE CHALLENGE? BY JOHN DOYLE

In today’s modern multinational commercial environment, it is no surprise that communication channels across national boundaries are increasing at an exponential rate. Advances in communications technology, the Internet, cheaper international travel and the rising globalisation of major brands have all contributed to the rise of the multicultural business environment. As competition among global brands increases, so does the need for companies to operate on a cross cultural basis and an integral part of this is the ability to communicate effectively.

he study of cross cultural communication began in the years following the Second World War as companies began to shift their focus from their domestic markets and looked to expand internationally. Those looking to take advantage of the burgeoning international market found that their domestic employees often lacked the required skills to communicate adequately on a cross border basis to potential customers and new colleagues alike. Foreign language training was offered in an attempt to rectify the problem but this did not get to its core. As a result a number of studies designed to examine and improve the broader subject of cross cultural communications were commissioned. The study of cross cultural communications goes beyond obvious elements such as the acquisition of language skills and instead aims to bridge any divides that can be created by cultural misunderstanding. The discipline covers many scientific fields including psychology, cultural anthropology, sociology and communication and its core purpose is to enable people from different cultures to communicate and understand each other. As such, it is now recognised that organisations must possess a knowledge and appreciation of cultural communications if they are to integrate and succeed in the marketplace.

THE IMPORTANCE OF THE MULTINATIONAL MARKET IN iGAMING The online space is one that transcends national boundaries by definition and is an ideal medium for companies to market their products on a multinational basis. Conversely, the ease with which companies are able to utilise economies of scale when bringing their products to an international market means that an international perspective is becoming somewhat of a Casino & Gaming International ■ 41

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prerequisite for any company looking to launch into the online space. This is particularly true with companies offering services rather than tangible products that need to be delivered. The entire transaction and delivery process can occur online without the need to cross into the physical environment. Organisations that fall into this category include banking and money transfer providers, music download sites and of course, iGaming companies. The fact that every part of the transaction is online goes a long way to lowering margins even further. In the retail gaming sector, betting and gambling businesses have always operated on relatively low margins and this is no different online where they are low even when compared to those of other online service providers. As a consequence there is a desire to market to the widest

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possible audience and utilise potential economies of scale even further. In the past, many iGaming operators looked to exploit economies of scale by targeting the worldâ&#x20AC;&#x2122;s most valuable homogenous group, the United States. However, the introduction of the UIGEA has forced the majority of those active in the market, including all those that are publicly listed, to shift their focus away from the US and onto the wider market as a whole. At present, this process sees no sign of abating. While some markets are approaching some semblance of maturity, the ongoing wave of gambling (de)regulation, particularly in Europe, means that new markets are opening to those operators with an international outlook. Furthermore, in regions where the move towards (de)regulation is proving to be slower such as South America and Africa, the very cross

COMMUNICATIONS AND iGAMING

border nature of the online space enables to less scrupulous operators to reach customers and open those markets themselves. Allied with this, advances in localisation and payment technologies have allowed operators to offer the same portfolio of products with little need for anything more than cosmetic changes. Pokerstars for example markets its product portfolio in over 14 languages while Sportingbet markets in 26 languages across seven main brands. While the appearance of the sites and the specific products may differ, the technologies behind the offerings are able to remain constant. These advances, combined with the market conditions described above, that have prompted iGaming’s rapid transformation into a truly global industry within the online space.

THE ADVANTAGES OF LOCALISATION The importance of the multinational market for iGaming has inevitably led to a greater requirement for operators to localise their products. While, as just discussed, this is relatively easier and more superficial to carry out in iGaming than other sectors, it is no less significant. In any commercial venture the customer is all important and will generally gravitate towards providers that best cater to their needs and wants and iGaming is no exception. All areas of a provider’s offering are subject to this need from the products themselves, through the attractiveness of the values attached to the brand, to the quality of the support and service provided in the post buying phase. A good example of this would be the rise of Backgammon. While it may not be too popular in the traditional poker playing regions of North America and Northern Europe, Backgammon has a huge following in other parts of the world and is particularly popular in Southern Europe and the Middle East. Companies looking to market this Backgammon successfully must go further than make obvious alterations such as changing the language that the site uses. They have to be able to identify all those nuances that make these markets unique and reflect them in their offering, from the advertising they are able to employ through to the location and nationality of their sales support team. A provider that is able to localise its offering well is better placed to take advantage of conditions across the market and is also better able to protect itself from exposure to adverse conditions within specific regional and national markets. This helps to target the available market in a more efficient manner and ensures better results; with clear communication and

support for customers, the chances of success are much higher.

THE INTERNAL EFFECTS OF LOCALISATION ON AN ORGANISATION In order to target specific cultural and national markets effectively and ensure the greatest chance of strong revenue streams, iGaming companies must build teams that are able to communicate clearly with the target audience and make sure that they are supported well. This should be maintained across the entire transaction process from attracting potential customers initially, through to providing them with good after sales support. While the use of a market’s domestic language is one variable that has a major impact, it is by no means the only one. Any American facing company that has attempted market its domestic offering to a UK audience with little or no alterations has learnt to its cost that the deep cultural differences between the two countries outweigh their use of a common language. In sportsbetting for example, any US focused operator looking to enter the UK or European market will have a major task on their hands in localising their offering and make it fit for purpose. Although US and UK Sports Betting sites share a common language they share very little else and full localisation will mean a change to traditional fixed odds as well a complete overhaul of all terminology and jargon used on the site. This situation is equally applicable if the situation is reversed and can be replicated in any two countries where the same language is spoken. Therefore, it is imperative that any iGaming operator targeting a particular cultural market engages a team from that market to carry out all communications. As most iGaming companies target a host of different markets, it follows that they will have a team of employees from a wide range of nationalities. While this benefits the company’s effort within each specific market it is targeting, it also holds several advantages for the company as a whole. By employing a team that is diverse enough to communicate with every targeted market segment, the organisation will be able to tap into a far wider and more varied breadth of knowledge and experience than it would be able to if it employed people from one homogenous group such as its domestic market. The benefits of this can be seen in the context of the staff members themselves as well as the company as a whole as they will interact with different cultural groups who they will be able to learn from as well as impart knowledge to. As a result they are likely to find the working day more varied and interesting.

>> IN ORDER TO TARGET SPECIFIC CULTURAL AND NATIONAL MARKETS EFFECTIVELY AND ENSURE THE GREATEST CHANCE OF STRONG REVENUE STREAMS, IGAMING COMPANIES MUST BUILD TEAMS THAT ARE ABLE TO COMMUNICATE CLEARLY WITH THE TARGET AUDIENCE AND MAKE SURE THAT THEY ARE SUPPORTED WELL. THIS SHOULD BE MAINTAINED ACROSS THE ENTIRE TRANSACTION PROCESS FROM ATTRACTING POTENTIAL CUSTOMERS INITIALLY, THROUGH TO PROVIDING THEM WITH GOOD AFTER SALES SUPPORT >> Casino & Gaming International ■ 43

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CHALLENGES OF THE CROSS-CULTURAL WORK ENVIRONMENT Although possessing a multinational workforce is advantageous for most iGaming operators, some very real challenges are created when people of various nationalities come together in a business environment. Firstly, there is the challenge of equal opportunities. Businesses need to create a social environment where all employees feel equally respected, recognised and acknowledged for their work whatever their cultural background. If employees are undervalued, this has a direct effect on an individual’s output and attitude and in turn will have a negative impact on business overall. Another and perhaps even more difficult challenge is that of employee relations. Every person has a degree of social conditioning and this can affect relations between specific groups of people. All communication is cultural and so body language, attitude, and mood directly affect each other. Miscommunication can lead to conflict and aggravated situations, and affect morale and productivity. When the work environment becomes stressful, the additional challenge of cross cultural communication can add extra strain and hinder results if poor staff relations are left unresolved.

WHAT MUST IGAMING FACE UP TO? iGaming companies don’t just have multinational audiences but are often based across multinational boundaries too. Many iGaming companies have located a sizable proportion of their operation in iGaming friendly jurisdictions such as Gibraltar, Malta and Antigua for legislative and taxation reasons. As this process involved a move from the country of origin there will often be a majority of staff from that country at least initially, with a minority of other nationalities joining. This environment creates many positives, but can have a very negative impact if mismanaged. The challenge when operating with a one nation majority is that they often have links to the country of origin of the company and begin to see themselves as the true staff for the operator. The other employees may then succumb to the pressures of being a minority and see themselves as underdogs. This creates additional cross cultural communication challenges as staff expectations, understanding and motivation begin to widen, making the workplace increasingly difficult to manage. Gaming companies that have a high number of different nationalities on the staff role will inevitably employ a mixture of locals, nationals and those who have chosen to relocate. Those who relocate are often in higher positions within the company, and so have better pay, benefits and relocation packages. This immediately highlights potential problems regarding equal opportunities in terms of position, wage and career advancement. In short, gaming companies need to find a balance. They must be capable of being sensitive towards any discrimination of nationals of the jurisdiction and yet at the same time understand and appreciate the challenges experienced by people who have relocated such as homesickness, isolation, and adapting to a new culture. The successful operator is one that can identify and appreciate the differences in culture between the various groups within its organisation, exploit the potential benefits, manage any possible areas of conflict and maintain healthy 44 ■ Casino & Gaming International

communications with all. A multinational workforce, like any other, must be managed professionally and sensitively.

WHAT DO SUCCESSFUL iGAMING MANAGERS NEED TO KNOW? The key to successful cross cultural communication is awareness. Successful iGaming managers need to be fully aware that cultural differences can cause communication problems, both within the work place and towards the customer base. Miscommunication is a common problem in any multinational environment, and especially when there are added pressures such as tight deadlines and high or low expectations involved. Cross-cultural communication skills are essential for an iGaming Manager to be able to lead a team to the best of their ability and to the level expected by employers. Cross cultural communication is particularly challenging when technology has opened up the opportunity to communicate in so many ways including; chat, email, telephone, forums, blogs and web copy. In addition, there are a variety of roles and responsibilities that involve direct communication, both internally and externally. A manager in iGaming must be able to identify where cross cultural communication is the cause of any problems, and have the skills and strength of character to deal with the scenario with understanding and expertise. All departments need to recognise the importance of managing cross cultural communication correctly and devote the required time to solve and issues. Training will assist managers to identify areas where potential problems may arise and show how to use preventative measures to limit possible damage. Quality training provides managers with the level of expertise required to ensure they get the best from their team and enable operators to maintain a competitive edge in today’s gaming market. CGI

JOHN DOYLE John joined Pentasia as a Consultant in November 2004 after spending five years in Marketing. After three years overseeing the recruitment of key personnel into a range of iGaming clients John moved into the newly created position of Group Marketing Manager for Pentasia in November 2007. The holder of a BA in International Business and Marketing, John is now responsible for initiating, developing and managing the ongoing marketing strategy for the Pentasia group.

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no problems just solutions Call +44 (0) 1624 825278 W domicilium.com E info@domicilium.com The Isle of Man Datacentre, Ronaldsway Industrial Estate, Ballasalla, Isle of Man, IM9 2RS

A sixty-minute journey from London City Airport, Domicilium’s Next Generation Datacentre Provides Power, Connectivity and Security for All Online Services Domicilium’s recent shortlisting for “Innovation in an Outsourced Environment” at the inaugural Datacentre Industry Leaders Awards, held at the beginning of December, is a feather in the cap of the company which has been quietly providing high availability and highly secure hosting services for over a decade. According to company founder and Chief Technology Officer, Phil Adcock “Just being nominated for such a prestigious award speaks volumes about Domicilium – we were proud to see our name ranked alongside companies which are known and respected throughout the industry. Moreover, by making it onto the shortlist of finalists, Domicilium has achieved recognition for its investment in a new and technologically advanced 21,500 square foot facility near Castletown on the Isle of Man.” Just as when buying a home, it pays to think location, location, location. The Isle of Man is a strategically ideal location for companies which require high availability, hosting and managed services either for main production or outsourced applications such as IT continuity and disaster recovery. Firstly, it is well served by air services from major centres of commerce in the UK including London City, London Gatwick, Birmingham, Liverpool, Manchester and Southampton Airports (all less than one hour from the island). However, by virtue of its geography and the thought of any difficulties this might incur, resources including skilled sub-contractors, key suppliers and even spare parts inventory are all more or less on-site to provide 24x7 support. From a risk management and mitigation perspective, this means that in the event of an outage caused by a critical equipment failure, mean time to repair (MTTR) is minimised – an essential measure when providing meaningful high availability service level agreements. Secondly and unlike much of the UK, the Isle of Man has nothing less than an abundance of power. Of the 180MW generated by the island’s gas powered power stations, hydro-electric plant and its recently commissioned waste-powered generator, only a fraction is utilised at peak demand (the balance is sold to the UK). Not surprisingly this provides a useful surplus which local providers are happy to guarantee to companies looking for assurances regarding medium and long-term supply. Thirdly, the Isle of Man is a main breakout point for fibre links to London and Manchester, as well as having a variety of carriers terminating. The island therefore offers a fibre communications network including two SDH rings and multi-terabyte capacity. And finally the Isle of Man has room to grow; in addition to its built-out space for example, Domicilium has an option to expand its existing location 100,000 square feet through options on adjacent space available for conversion. In designing its new facility, Domicilium carefully considered various methodologies being deployed in Europe, with a view to making it best in class. One thing that was outstanding was the fact that as far as datacentres are concerned, one size definitely does not fit all. The company has therefore developed a concept called “Rapid Deployment” which allows customers not wishing to locate within any of its shared spaces, to create a bespoke datacentre within the datacentre in an eight-week time period. Project Manager Andrew Cairns said “It was evident from an early stage that in order to cement our position as leaders in the field, we would need to offer the option for shared or custom spaces. This is a powerful incentive for companies looking to outsource infrastructure because in addition to providing a clear path for the next 15 years, it allows the actual space to be tailored to the specific needs of the IT equipment as well as the preferences of the customer.” “We have supplied a power distribution system with the capability to operate at Tier 4. In addition to 10 miles of power cabling, we have also installed over 30 miles of data cabling into the fabric of the datacentre. This means that data rooms can be added, sub-divided or taken away, with no disruption to services. The internal walls are constructed using AST’s SmartShelter components, which are both fire resistant and penetration proof to provide additional layers of security within the building.” From a cooling perspective, customers have a choice to cool using in-row, hot or cold aisle containment or more classically a raised floor environment to which Domicilium have added a twist: The system provides equal cool air distribution across the full height of the equipment racks which are equipped with multiple sensors to monitor the internal environment and provide an alarm if there is any unexpected build up of heat. Prevailing weather conditions means that free cooling is available for approximately 40% of the year. Fire protection includes a Vesda system which can detect and determine the severity of a fire and reduce the level of oxygen to suppress it for two and a half times longer than any other datacentre in the UK. Perimeter security includes a forbidding fenced compound, CCTV monitoring and biometric access control. For more details contact; Domicilium The Isle of Man Datacentre, Ronaldsway Industrial Estate, Ballasalla Isle of Man IM9 2RS Phone +44 (0) 1624 825278 Fax +44 (0) 1624 829525

UK: TRAINING, EDUCATION & MANAGEMENT

GAMING ACADEMY GEARING FOR CONSOLIDATION AND THE GLOBAL STAGE BY EMMA ELSON

In a very short period of time the UK National Gaming Academy is revealing its essential value in developing a countrywide professional infrastructure to service and enhance the casino and gaming industry. From its regional beginnings barely two years ago the prospects for its international reach through educational and industry partnerships will doubtless speed it into the international arena.

he formation of the UK’s National Gaming Academy (NGA), which took place at ICE in January this year, was one of the most significant developments within the casino and gaming industry to occur for a long time. When Blackpool and The Fylde College’s Regional Gaming Academy joined forces with North Warwickshire & Hinckley College and Greenwich Community College, they created a strategically sound foundation for future training growth. Consequently, other colleges are now keen to follow suit. Although the Government’s Regional Casino plans have been scrapped, the three colleges are nevertheless confident of a bright future. The NGA process was initiated at Blackpool and The Fylde College in October last year, when representatives from all three colleges met in Blackpool’s Regional Gaming Academy (RGA) and a contract was signed by Pauline Waterhouse, Principal and Chief Executive of Blackpool and The Fylde College, Geoff Pine, Principal of Greenwich Community College and Martin Shelton, Director of Service Industries of North Warwickshire and Hinckley College. The RGA had looked into the national distribution of casinos and where the needs of the industry would most productively be met – and Greenwich and North Warwickshire and Hinckley were the most obvious options, with an abundance of casinos in both the Midlands and London. The geographical location of the partners is imperative to the NGA’s ability to deliver a curriculum throughout the majority of the UK and the three locations are perfectly positioned to do this. The NGA will deliver bespoke training to all aspects of the industry including croupier, coin slot technician, hospitality and customer service training. As well as training people to

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UK: TRAINING, EDUCATION & MANAGEMENT

>> ‘THE FACILITIES AT BLACKPOOL ARE EXCELLENT, I WAS BLOWN AWAY BY THEM AND THE COLLEGE IS PRODUCING VERY WELL QUALIFIED AND EMPLOYABLE PEOPLE. WHAT WE ARE HOPING TO DO IS CONTRIBUTE TO THE CONTENT OF COURSES TO HELP TAILOR THEM TO THE PARTICULAR DEMANDS OF OUR SECTION OF THE INDUSTRY. WE ALSO PLAN TO OFFER WORK PLACEMENTS FOR STUDENTS DURING THE COURSE AND MORE PERMANENT OPPORTUNITIES ONCE THEIR COURSE HAS FINISHED. WE OPERATE A LOT OF MACHINES THAT USE WIRELESS INTERNET TECHNOLOGY AND CAN OFTEN BE REPAIRED AND MAINTAINED REMOTELY, SO THESE ARE NEW SKILLS THAT STUDENTS WILL NEED AS THIS PARTICULAR MARKET EXPANDS.’ INSPIRED GAMING’S OPERATIONAL DIRECTOR JOHN CARRINGTON >> enter the casino industry, the Gaming Academy is engaging major operators and manufacturers to meet the existing training needs of their workforce. It aims to be consistent in its training, with graduates receiving nationally recognised qualifications and standards accepted throughout the industry. Just as the Gambling Commission now governs the whole of the gaming industry, the NGA is looking to meet the training needs of the whole of the industry. New NVQs for the gambling industry have been written and the NGA expects to roll them out in the very near future. The qualifications are aimed primarily at people already working in the industry, to give them some formal qualifications, as well as those entering the industry. The idea is to redress the balance of people going into industry with qualifications and those already in the industry without qualifications. Linda Aiken is a 36-year-old student on the Foundation Degree in Casino Operations Management and currently works in one of Blackpool’s casinos. Her employer is fully supportive of her being on the course. She said: “I realised that at 35 I didn’t want to stand behind a table and deal all my life, as much as I enjoy the job. So I wanted to do something

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about that. I’m looking forward to the future now. The teachers are excellent. Whenever you need it there is always somebody there to help.” Whether or not she takes an upward path with her current employer, Linda knows she can use the skills she is learning on this course to enhance her performance in her current role. She explains: “I think everyone in the casino industry should do this course. The more you learn, the more gaps you see in what you are doing and the more you can improve yourself.” Blackpool And The Fylde College and the NGA as a whole is naturally keen to forge links with those within the casino and gaming industry. One such partnership is with Inspired Gaming, a Staffordshire-based company which operates around 90,000 machines throughout the UK across a range of outlets including the multi site sector such as casinos, bingo halls, licensed bookmakers, motorway services and bowling alleys. Inspired Gaming’s Operational Director John Carrington is confident of a fruitful partnership: “The facilities at Blackpool are excellent, I was blown away by them and the college is producing very well qualified and employable people. What we are hoping to do is contribute to the

UK: TRAINING, EDUCATION & MANAGEMENT

content of courses to help tailor them to the particular demands of our section of the industry. We also plan to offer work placements for students during the course and more permanent opportunities once their course has finished.” John added: “We operate a lot of machines that use wireless internet technology and can often be repaired and maintained remotely, so these are new skills that students will need as this particular market expands.” The link with Blackpool And The Fylde College is particularly pleasing for John as he studied at the college more than 30 years ago. “I loved my time in Blackpool and I have a great affinity with the place and it’s nice to be in a position to offer something back to the college.” John agrees that having recognised qualifications and training are becoming more important in the casino and gaming industry. “As a company we have tried in the past to offer our own training courses but it’s proved very difficult and that’s why we are keen to forge links with the National Gaming Academy. The vast majority, if not all, of the students completing courses will be well prepared and motivated for a career in the industry. These are exciting times for all concerned.” The National Gaming Academy (NGA) is co-ordinated by Blackpool and The Fylde College’s Regional Gaming Academy Manager, Colleen McLaughlin. She said: “I coordinate the National Gaming Academy as a whole. This job has been made a lot easier for me because of the fact that the three colleges have built up a great working relationship is a very small amount of time. We speak about day-to-day matters on the telephone and we confirm any decisions made in writing by e-mail but we also meet regularly. We aim to have three ‘mini conferences’ a year involving all Heads of Schools and Principals and in between that myself and my counterparts from North Warwickshire and Hinckley and Greenwich will meet as and when we deem necessary. So far things are progressing at the expected rate and we will be working closely over the next 12 months to establish in the other two academies what Blackpool has already achieved.” North Warwickshire and Hinckley College, set 10 miles from Coventry and 14 miles from Leicester, is one of the largest providers of education and training in the Midlands.

Based on two main campuses in Nuneaton and Hinckley, the College offers a wide variety of learning programmes to over 26,000 learners. The College enjoys strong links with its local communities and many of its students are engaged in learning programmes linked to business, industry and employment. Direct links with the University of Warwick, the University of Central England, Coventry University, De Montfort University and University of Leicester ensure progression routes for many full-time learners. Both towns have rail links to London. The College, like Blackpool and The Fylde is recognised as a national Centre of Vocational Excellence. Greenwich Community College serves a multi-cultural community of over 20,000 students and employing over 800 staff that reflects its student population. North Warwickshire and Hinckley opened last October and like Blackpool and The Fylde, it has appointed a full-time Gaming Academy Co-ordinator, Elaine De-Christie. Elaine comes from a background in PR, hospitality and gaming so is very well equipped to take forward the needs of the Gaming Academy in the Midlands. Elaine’s working life started in PR; she then left the industry and went to work in a restaurant. She started her croupier career for Coral Casino Group at the International Sporting Club, Berkley Square, London. She then enjoyed a stint at the Playboy Club, Hyde Park, before going to work on cruise ships for four years. She lived in Italy for a few years before moving back to London to work in various casinos including the prestigious Crockfords and the Village Club, Chelsea. When she married and had children, Elaine left the business to focus on family life before re-entering the world of work as a recruitment advisor. She went on to get a teaching qualification before she saw the advertisement for Gaming Academy Co-ordinator at North Warwickshire and Hinckley College. Elaine leads a team of just three, but there are plans to add to the team in time for September when the full suite of gaming courses will be offered at North Warwickshire and Hinckley. The NGA is working so closely together, in fact, that they are hoping to employ a graduate from Blackpool and The Fylde College’s Gaming Academy as their Coin Slot tutor. North Warwickshire and Hinckley’s Gaming Academy is

>> “I AND COLLEAGUES FROM BLACKPOOL AND THE FYLDE SPENT FOUR DAYS IN ATLANTIC CITY PRIOR TO THE G2E EXHIBITION IN LAS VEGAS IN NOVEMBER 2007 WHICH WAS EXTREMELY REWARDING. ATLANTIC CITY’S GAMING ACADEMY IS CELEBRATING ITS 30TH ANNIVERSARY THIS YEAR AND WE WANTED TO LEARN AS MUCH AS WE POSSIBLY COULD FROM THEM. WE WERE ABSOLUTELY DELIGHTED THAT THEY WANTED TO LEARN FROM US TOO AND WE SHARED A LOT OF BEST PRACTICE AND SWAPPED A LOT OF TECHNIQUES OVER THE FOUR DAYS WE WERE THERE. WE ARE ALSO DEVELOPING A GREAT RELATIONSHIP WITH MACAU’S TOURISM AND CASINO CAREER CENTRE AND ARE LOOKING AT THE POSSIBILITIES OF ATTENDING THE G2E ASIA EXHIBITION IN MACAU NEXT YEAR TO EXPLORE THE ASIAN MARKET FURTHER.” BLACKPOOL AND THE FYLDE COLLEGE’S REGIONAL GAMING ACADEMY MANAGER COLLEEN MCLAUGHLIN >> Casino & Gaming International ■ 51

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based in the Bermuda Park Innovation Centre at the Nuneaton Campus. The facility has been built in an annexe and, like the Academy at the Blackpool and The Fylde, is secure with access to over 18s only. The Academy is equipped with two roulette tables, two blackjack tables and two poker tables. It also has a fully licensed bar for evening events which doubles as a reception desk for training. The Academy has its own classrooms, private conference rooms and a galley for observing the learners. Although not equipped yet with any slot machines, the Academy is expecting to take delivery of 18-20 machines before September when the coin slot courses start. Elaine is currently spending a lot of time at Blackpool’s Gaming Academy learning and observing how to deliver the gaming curriculum. She said: “The NGA is the best thing to happen to the gaming industry for a number of reasons. The training offered is free to the industry in that it is not costing any company a penny and trainees are given quality level 2 and 3 training which also ticks the right Government boxes. The Gambling Commission is also happy because training throughout the industry is consistent and a set curriculum throughout all three Academies means that graduates all enter the work place with the same knowledge and qualifications. “The NGA is great for students as well in that they can use the great relationships forged with industry by the NGA, and primarily by Blackpool and The Fylde College, to get a job straight from their course. They also have a unique opportunity to apply for a job on cruise ships with Carnival Corporation. North Warwickshire and Hinckley is ideally situated for a Gaming Academy as we have 32 casinos in our immediate area plus the National Exhibition Centre (NEC), Wolverhampton and Milton Keynes all on our doorstep. To add to that we are not far from the UK’s biggest casino, The Isle Casino, based at the Ricoh Centre, Coventry City Football Club.” The Gaming Academy at Greenwich Community College has been driven by Principal Geoff Pines and has gone first down the coin slot technology qualification route, as opposed to North Warwickshire and Hinckley who have gone down the casino ops route, offering a genuine balance within the NGA. Furkan Choudhury is already in situ at Greenwich as the Coin Slot Technology Manager. He, like Elaine, will be spending a lot of time in Blackpool over the coming months in readiness for the first course at Greenwich in September this year. Greenwich has taken delivery of 10 coin slot machines to complement a brand new fully furnished IT suite and electronics workshop. Head of the School for Gaming at Greenwich, Alan Penney, said: “Blackpool and The Fylde College has been incredible in helping us to get to grips with the gaming curriculum, rules and regulations and the set-up of our academy. They will go on to be invaluable in training our staff to deliver the curriculum to the high standards that they have set and that the industry has come to expect.” Relationships have flourished throughout the two years of Blackpool’s Regional Gaming Academy with international providers of gaming provision, Atlantic City Community College and Macau’s Tourism and Casino Career Centre. Colleen said: “I and colleagues from Blackpool and The Fylde spent four days in Atlantic City prior to the G2E Exhibition in Las Vegas in November 2007 which was extremely rewarding. We visited all of the campuses in Atlantic City and 52 ■ Casino & Gaming International

had a chance to look at how they have built their teaching areas and put together their course content. “Atlantic City’s Gaming Academy is celebrating its 30th anniversary this year and we wanted to learn as much as we possibly could from them. We were absolutely delighted that they wanted to learn from us too and we shared a lot of best practice and swapped a lot of techniques over the four days we were there. We are also developing a great relationship with Macau’s Tourism and Casino Career Centre and are looking at the possibilities of attending the G2E Asia exhibition in Macau next year to explore the Asian market further.” A visit from the Gambling Commission to Blackpool and The Fylde College last October, as regards the National Gaming Academy, had some very positive feedback. A representative examined the teaching materials used with particular regard to social responsibility. Colleen is currently delivering a training programme to Blackpool’s Paris Casino staff about Social Responsibility and Money Laundering in gaming. Legislation put into effect on 15th December 2007 gave the gaming industry three months to implement training and policies on the new regulations regarding money laundering. The future holds many new developments for the NGA. Colleen explains: “When we got together as a consortium we made the decision to be a National Gaming Academy of just three colleges, for the first year at least. This way we can consolidate our facilities, our partnerships with industry and our curriculum. “But we are not averse to inviting other college’s to join us in the future. For example, it would be great to have a Gaming Academy over the border in Scotland to service the gaming industry there. “The Sky is the limit for gaming training throughout the world. When we opened the Regional Gaming Academy in Blackpool we had ambitions to grow, and we did, resulting in the National Gaming Academy that we have today. When we have consolidated the National Gaming Academy we will have new ambitions – to grow into an International Gaming Academy. “In fact we have had our first international enquiry, from an organisation s in Southern Ireland, Bulgaria and India. So I can say with confidence that there is plenty of scope to develop the first stem of the International Gaming Academy.” CGI EMMA ELSON Emma Elson is Blackpool and The Fylde College’s Press Officer. Emma joined the College in December 2005 from the Lancashire Evening Post newspaper, based in Preston. After graduating from Edgehill University College in July 2002 Emma joined the Evening Post as Editorial Assistant. She spent three years with local newspapers and was taken on at the College partly for her background in the newspaper industry. Emma applied for her current job as she was looking for a challenge and thought that co-ordinating press activity for one of the largest colleges in the country would provide that challenge. With her first big job being the launch of the Gaming Academy she has not been disappointed.

UK CASINO INDUSTRY

GETTING IT RIGHT ONCE THE DUST HAS SETTLED BY PENNY COBHAM

While the significant plank of the Regional casino is now removed from the Gambling Act 2005, the process of finally ratifying the other 16 Large and Small casinos is still underway. Commercial inequalities in the Act and subsequently introduced have created a difficult situation for operators, but they wish to be optimistic about the future and are determined to continue to do everything possible to secure shareholder value. However, this should be achieved by avoiding the negative effects of new on established casinos.

tto Von Bismarck is reported to have observed that “laws are like sausages – it is better not to see them being made”, and those of us involved with the casino industry would probably have some sympathy with that sentiment. But before looking at the impact of the 2005 Act on British casinos it is clear there is a great deal within it which is to be welcomed. It has at its heart protection of the vulnerable, an objective clearly shared by the British Casino Association (BCA) and all responsible operators. It also set up the Gambling Commission to regulate the whole sector within one body and it has updated the 1968 Act to reflect changes in technology and social attitudes. In the case of casinos it formalises into law many of the practices and codes of conduct which were already being observed by operators, but which are now conditions of licence. Moreover, from the time of the Budd Committee’s recommendations on gambling policy and through the Pre-legislative scrutiny stage the proposals had widespread support. However, the Act was pitched and tossed about on a sea of media and political turmoil, much of which seemed based on a misunderstanding of what was actually being proposed, and what the effects would be. The result from a casino operator’s point of view is an Act that is somewhat removed from the Draft Bill published nearly eight years ago in July 2003, and which has yet to be fully implemented. Indeed, at the time of writing no date has yet been set for the House of Lords to consider the Order necessary to ratify the location of the new Small and Large casinos although it is expected soon after the Easter recess. For over 40 years, the British industry has operated within one of the most robust regulatory regimes in the world, and has established an international reputation for probity and

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UK CASINO INDUSTRY

responsibility. Over 14 million visits are made annually to casinos in England, Wales and Scotland, which collectively employ over 15,300 staff. British casinos make an annual contribution to HM Treasury of over £200m. Operators wish to be optimistic about the future and are determined to continue to do everything possible to secure shareholder value. Over the last few years, they have invested hundreds of millions of pounds in their collective estates so that British casinos now provide facilities and venues that are amongst the very best in the world. They provide a range of entertainment, including award winning restaurants and bars, sports themed bars, night-clubs and live music. Of course, gambling is an important part of that mix, but casinos also provide safe, quality venues for people to meet socially without ever throwing any dice or placing a chip. We have a proud record for honesty, probity and keeping our venues crime free. But more than that, people visit because they know they will have a good night out with friends, in a friendly environment, maybe a bite to eat and will remember it as a special night. However, the effect of the 2005 Act, combined with changes to gaming duty in last year’s budget, the impact of the smoking ban and prevailing economic conditions, means that the industry is not in the rude health others ascribe to it, Government included. Of the 144 licensed casinos operating in the UK, at least seven will close in the coming months as a direct result of the changes in the 2007 Budget, the impact of the smoking ban and the inherent competitive advantage to be enjoyed by the anticipated new casinos, the effect of which is exacerbated by the proposed location of 10 of the 16 new licences in local authority areas in which casinos already operate. It is self-evident that the new licences will have inherent commercial advantages over current licences in terms of far greater machine numbers, Sports Betting and, in the case of Large casinos, Bingo. Whilst the BCA remains fully supportive of the principle of growth in the industry, we don’t believe this should be achieved in a way that prejudices the commercial viability of the existing casino estate, the investment in it and the economic benefits it brings to the local and national economy.

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As already witnessed, the commercial inequalities created by the 2005 Act have led to business cuts, with implications for direct and indirect employment. More may follow, with the most likely casualties being smaller, seasidebased casinos which are often essential to the mix of entertainment that underpins the local tourism offering. As noted above, this situation has been exacerbated by current trading conditions, including changes to the casino tax regime in the 2007 Budget (which represents, on average, £200,000 extra tax per year per casino) the effects of the smoking ban, the removal of so called section 21 terminals and an uncertain economic outlook as well as the location of the new licences, seemingly without regard to the location of, and impact on, existing casinos. At the time of the ’07 Budget, market analysts wrote despairingly of the tax changes with Dresdner Kleinwort going so far as to say: “Having over promised the casino industry and then under delivered in the Gambling Act 2005, the government has again in our view effectively kicked the industry in the teeth with some unfavourable changes to casino duty in today’s [2007] budget.” Panmure Gordon & Co noted: “The increased level of duty will probably cause some small marginal casinos to close. In addition, some planned new casinos are not likely to be built now….”

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The Financial Times and other papers have identified these and other reasons for Ladbrokes’ decision not to bid for any of the new licences. The fact that Ladbrokes reached this conclusion illustrates the difficulties other operators, with larger estates, will face when the new regime comes into force. Indeed, the House of Lords’ Merits of Statutory Instruments Committee has itself raised concerns about the manner in which the location of the new casinos was decided, and concluded that the policy objections may be imperfectly achieved as a result. In particular, noting that “casinos already exist in a number of the 16 recommended locations…”, the Committee expressly recognised that “a new casino might displace custom and employment opportunities from existing attractions”. The BCA believes that these imperfections in the decision making process have substantially exacerbated the impact on both existing casinos and local economies of the commercial inequalities created by the 2005 Act. That the industry faces a challenging time is not in question. The gambling Minister, Gerry Sutcliffe, MP, acknowledged this when he said during a recent debate in the House of Commons, “I pay tribute to the work of the British Casino Association on the issues that face the industry. I realise that there are some problems within the sector. That is why we want to consider what has been put to us and we will do so. We will work with the industry, as we have in the past, to look at what can be done for existing casinos.” It is for the reasons noted above that we continue to press the Government to consider carefully measures to mitigate the economic impact arising from those inequalities. Specifically, we have put a proposal to the Department for Culture, Media and Sport (DCMS) to allow existing casinos to relocate. Under the 1968 Act regime, casino licences could only be granted in the so-called permitted areas. As a result, in many areas of Great Britain it has not been legal to establish a casino. Our proposal is to remove this restriction (in respect of 1968 Act licences only) so that, where a local authority so wishes and there is market demand, it would be possible to establish a suitable 1968 Act casino in that location. The relevant local authority retains complete control over whether or not a casino can in fact be established due to the need for planning permission and a gambling licence. Our proposal is entirely consistent with the government’s regulatory approach, in particular as it does not alter the total, finite, number of licences available in the UK. As matters stand, closure means in effect abandoning an existing licence. This is obviously unattractive to a company, particularly bearing in mind the many millions of pounds invested by casinos in their estates over the years. It is hoped that some element of that value can be preserved, to the benefit of the existing authority, the new authority and the wider economy. However, given the significant costs of moving, a transfer is only likely to take place as an alternative to closure which, as far as the host authority is concerned, would have the same impact. For the reasons outlined above, casinos operating in local authorities which are due to get one of the new licences will face difficulties that this proposal could ameliorate. Furthermore, a loss of a 1968 Act licence in these instances, as a result of a transfer, will not have the

detrimental impact on the existing host authority that some might assume. The ability to relocate would result in a reduction in the overall number of casinos in the new licence area, giving greater value to the said new licence and will thus maximise the regenerative value that may be obtained as a result. It is a proposal that is supported in principle by both the Conservative and Liberal Democrat front benches and we will continue to seek a wide coalition of support for it. So what of the future? Gordon Brown’s decision in the early days of his premiership to abandon plans for the Regional casino removed a significant plank from the Gambling Act and, with the exception of Harrah’s and Genting through London Clubs International and Stanley respectively, a good deal of interest from other overseas operators in the UK market has evaporated. Our expectation is that the new licences will be sought by current UK operators even if doing so cannibalises part of their existing businesses. However, they may conclude that if their current casinos are to be commercially disadvantaged by the advent of new licences, they would at least prefer to be the ones doing the ‘disadvantaging’. As just mentioned, however, the political process has still not been completed, and the House of Lords will need to ratify the location of the new licences when it returns from the Easter break at the end of April. Local Authorities will then need to conduct their own competitions to see which operators will win the new licences – and perhaps to see if all the new licences will in the end be bid for. Once the dust has settled on that process it seems unlikely that politicians will wish to return to gambling policy for some time to come. It is difficult to imagine that any incoming Government, of whichever political persuasion, will consider further changes to gambling policy to be a priority. That is why it is so important that we get it right now and why we hope to hold the Minister to his promise given in the House of Commons that he, “will work with the industry, as we have in the past, to look at what can be done for existing casinos.” CGI

PENNY COBHAM Lady Cobham is Deputy Chairman of VisitBritain and is Chairman of the Trustees of the Gulbenkian Prize for museums and galleries. She is the longest serving member of the Finance and Policy Committee of the Historic Houses Association (1985- ), having been instrumental in restoring and opening 18th century Hagley Hall between 1977 and 1994. Penny Cobham has worked as a special advisor on heritage and tourism in the Culture Department and has served on the boards of English Heritage, Historic Royal Palaces, British Waterways, the Countryside Agency and the V & A. In the private sector, Penny Cobham chairs the British Casino Association and spearheaded the industry’s involvement in the Gambling Act 2005 as it moved through Parliament. She chairs the largest commercial radio station in the West Midlands, Heart FM, part of Chrysalis plc and is a business adviser to Ernst & Young.

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CASINO DESIGN

PASSION, VIBE AND CHARACTER: EMBRACING THE ERA OF MEGA RESORTS BY MATTHEW YOUNG

Now that America is seeing over 60 percent of its states with legalised gambling, and with gaming resorts getting ever more popular, designers are at a point to challenge current thinking and explore new ways to provide facilities with integrated design diversity and social and economic responsibility.

arrived at the supermarket in the late evening to pick up some last minute staples… the chimes were ringing, the lights blinking as if this destination was not for groceries… ah… Las Vegas, where slot machines flourish even amidst domesticity. This same evening it was time to top the fuel tank for the week’s travels ahead. What is this? More slots at the service station and all being occupied to boot? Yes, this is Las Vegas, the gambling mecca of the world, where even the residents indulge in the daily venue. However, the notion that gaming is at the forefront of Vegas was a thought of the past. Now, this city of mega resorts has a new attraction to offer — the rebirth of a city itself. Imaginary themes like the Disney World characters are stepping aside to the international appeal of designed architecture that could actually last longer than a decade. No need to implode these works of art in the near future after they have paid for themselves twice over; these are lasting structures that exemplify the collaboration of the world’s finest architects, engineers and designers; a tribute to what can be done when good design practices pair up with good gaming profits. The construction budgets are enormous and the designers get the chance to make the statement of a lifetime. So it is with CityCenter on the Vegas strip, not a rhetoric of childish themes but a community of urban design that will create a vibe and character found in the most notable cities of the world. Hats off to MGM, for having the insight that designed architecture can survive and be cherished on the Las Vegas strip. The new CityCenter mega resort offers an urban downtown setting in a city where there is virtually none. The individual character of each new building rising in the skyline demonstrates unique architecture. The collaboration of

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>> YOU CAN’T REPLACE OR COMPARE A WALK DOWN FIFTH AVENUE IN MANHATTAN TO A STROLL THROUGH THE MGM GRAND IN LAS VEGAS, BUT THEY BOTH LEND AN APPEAL TO HUMAN BEHAVIOUR, THE CURIOSITY TO SEE PEOPLE IN ACTION, THE EXCITEMENT OF SEEING GRAND STRUCTURES AND THE INHERENT UNIQUENESS OF HIGH DENSITY DESIGN. THE ARCHITECTURAL ELEMENTS FOUND IN THESE MEGA RESORTS ARE NOT UNLIKE A LARGE CITY BUT ARE MASTER PLANNED AND STRATEGICALLY PLACED RATHER THAN RANDOMLY DETERMINED BY ZONING DISTRICTS AND ORDINANCES >>

renowned design firms is bringing together different styles to create a city element not unlike New York or Los Angeles, but in an area that has not seen urbanisation. Yes, the site will undoubtedly be a tourist attraction as are all areas of the strip, but it also offers residency in an area of transients. With over 4,000 condo/hotel units rising, this new site will actually see permanent residents carrying on daily life. The exception to other built urban areas is that this planned scheme offers all the five star amenities at close proximity to your home, walking distance in fact. Signature fine dining restaurants, upscale retail, sophisticated leisure appeal, with state-of- the-art plunge pools, and glorious spas for health and fitness. You won’t find the grunge of other cities at this site because, like all of Las Vegas, it is a groomed masterplan.

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Responsible development in today’s world of global warming fears and conscientious thought to sustainable design — “Green”, getting rid of the waste, and reducing our carbon footprints — it’s a great accomplishment to bring in CityCenter as a LEED Gold-rated facility. One would ask how on Earth can casinos and mega resorts be energy efficient and economically sustainable, but once again, through great efforts on the design teams, this has been accomplished. It is no small feat to acclaim this rating and once again this should set precedence for future developments. Another gambling city, old by American standards is the infamous Atlantic City; holding the title of gambling revenues for many years. The once salty seaside boardwalk town is again making way for a new generation of mega resorts. The

CASINO DESIGN

previous venues of the Wild West are being laid aside. The best example of this era in Atlantic City is perhaps the past development of the Borgata, a five star full class mega resort that respects the human aspiration that casinos do not have to be sleazy dumps that attract society’s indiscretions. The Borgata, designed to be kin to the fabulous Las Vegas mega resorts, has succeeded in transforming the image and architecture of these once questionable facilities. Not only do the high rollers feel at home, but the emphasis on resort style amenities has attracted families in for vacations as well. As Atlantic City gets ready for its next wave, other casino development giants like Pinnacle Entertainment are forwardthinking as well. Their new development at the previous Sands will lend a highly needed uplift to the mundane boardwalk casino resort feel. The previous early 1900’sstructures that wasted energy and were unattractive as design conversions to gaming will be replaced with upscale architectural facilities that bring in the 21st century thinking from both sustainability and appeal. Now that America is seeing over 60 percent of its states with legalised gambling, and with gaming resorts getting ever more popular, designers are at a point to challenge current

thinking and explore new ways to provide facilities with integrated design diversity and social and economic responsibility. Our approach is to listen, understand, challenge, create and deliver with vision, expertise and passion. With this in mind, design professionals should embrace this era of mega resorts with enthusiasm and passion to stretch the boundaries of conventional thinking and to achieve structures and interiors that exceed expectations. Today’s technologies are paving the way in other professions; let’s keep architecture and interior design in the forefront as well. Architecture has long been seen as a timeless art, one that lives through multiple generations and passes on the stories of time. Like architecture, gambling has been around since the turn of time, however, not viewed with the same dignity, passing on both discretion and indiscretions to its followers. It seems ironic that new architecture is being birthed from old gaming with a new twist; both have advanced from a better understanding and closer examination of human behaviour in this century. Throughout all the different classes, the elegance of these mega facilities shines through. A middle class family

>> ARCHITECTURE HAS LONG BEEN SEEN AS A TIMELESS ART, ONE THAT LIVES THROUGH MULTIPLE GENERATIONS AND PASSES ON THE STORIES OF TIME. LIKE ARCHITECTURE, GAMBLING HAS BEEN AROUND SINCE THE TURN OF TIME, HOWEVER, NOT VIEWED WITH THE SAME DIGNITY, PASSING ON BOTH DISCRETION AND INDISCRETIONS TO ITS FOLLOWERS. IT SEEMS IRONIC THAT NEW ARCHITECTURE IS BEING BIRTHED FROM OLD GAMING WITH A NEW TWIST; BOTH HAVE ADVANCED FROM A BETTER UNDERSTANDING AND CLOSER EXAMINATION OF HUMAN BEHAVIOUR IN THIS CENTURY >> Casino & Gaming International ■ 61

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you can’t replace or compare a walk down Fifth Avenue in Manhattan to a stroll through the MGM Grand in Las Vegas, but they both lend an appeal to human behaviour, the curiosity to see people in action, the excitement of seeing grand structures and the inherent uniqueness of high density design. The architectural elements found in these mega resorts are not unlike a large city but are master planned and strategically placed rather than randomly determined by zoning districts and ordinances. Using this metaphor, residential buildings become enormous hotel towers and strip plazas become an integration of hospitality and retail. The local gym becomes a unique spa experience and the lake, or private swimming pool becomes a cleverly designed multiacre tropical paradise to deliver the most in leisure enjoyment. The architectural scale of gaming facilities has definitely been redefined with grand scale and attracting dwellers from a full range of demographic and economic areas - each seeking their own experience in this wellgroomed small city, even if that is winning the million-dollar jackpot. In summary, CityCenter exemplifies the dawn of a new reality in Las Vegas. It is no longer a mecca for gamblers, but with 7,000 people per month migrating to move to this epicenter, CityCenter offers a home like no other in the US. Statistics show that presently, 62 percent of the people that come to Las Vegas are there for the incredible esthetics that the restaurants and shows provide. We have an incredible expertise in these leisure and hospitality sectors, our directorled design teams deliver elegant individual buildings through to comprehensive masterplans of several million square feet which respond with sensitivity to the client’s brief and enhance our environment. CGI

MATTHEW YOUNG

vacation in a resort, seemingly designed for only the ultra rich a decade ago, could not have been imagined. Yes, the new wave of mega resort architecture and interiors are here to stay for quite some time. It should be embraced by all as a 21st century historic architectural placeholder for it will survive and be passed along through the centuries to come. How many new developments in the world can claim a price tag of $7bn or more? Perhaps but a few and certainly none of them will be imploded soon. A difference in scale…a franchised hotel, a free standing restaurant, strip plazas with discount retailer anchors, all picture into suburban sprawl. As Americans have pushed themselves away from the hustle and bustle of urban living to relax in their single family suburban households and drive to their local commercial district, there still seems to be a yearning to return to the excitement of the city, even if only for a few days — the experience of new people and personalities. Mega resorts such as CityCenter create this opportunity in a safe environment, free from the hassles of subway, taxicabs, and private transportation. Plus casino resorts themselves offer more security than the big cities. Of course, 62 ■ Casino & Gaming International

Matthew Young is the Vice President and a Principal for the international design firm of CareyJones architects and interiors with offices in London, Leeds and New York City. Educated at the State University of New York in the early 1980s and continuing his education through internships and further studies at Harvard Graduate School of Design. Matt previously was Project Director for Architect of Record Leo A. Daly responsible for the delivery of Rafael Viñoly’s 65-storey Vdara Tower at the $8 billion MGM CityCenter in Las Vegas, North America’s largest construction project. Matt was also a Project Architect on the $7 billion strategic masterplan for the development of 500 acres of casino resort real estate for Harrah’s Entertainment in Atlantic City NJ and Las Vegas NV. Through the past decade our approach exemplified sustainable design principles before they had become part of the popular media mainstream. Dedicated to sustainable design and business practices, our architects are accredited for its quality assurance and environmental management systems to BS EN ISO 9001 and BS EN 14001 and have achieved integrated accreditation to these formal international standards. www.careyjones.com

”

8 - 10 July 2008, InterContinental Hotel, Madrid, Spain

“

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CASINO DESIGN

CRAFTING LIGHT ATMOSPHERICS FOR THE ULTIMATE INTERIOR EXPERIENCE BY GRAHAM ROLLINS

Today’s lighting design has rapidly evolved from a relatively passive energy application into a highly active, chameleon-like technology that is both cost effective and eco-friendly. Nowhere is this more imaginatively applied, ranging from subtle programmatic effects to dramatic scene-setting, than in casino properties. Ever more ambient and sensitive effects continue to evolve, tailored to each environment to exact specifications and with an increasingly measurable understanding of how that interacts with the human senses. Lighting architecture, such as that installed at Fifty and Manchester235 is now a key element in crafting the right atmosphere for commercial success.

nyone interested in the gaming world, casino culture or film has seen the glamour and grandeur that can be provided by the interior and lighting design of some of the World’s great casinos. Amply revealed in films such as ‘Casino Royale’ and ‘Ocean’s Eleven’, this high profile and often decadent environment is one of the defining components of what makes visiting a casino so awe inspiring and enjoyable for the visitor. Throughout casinos, past and present, it is often thoughtful and inspiring architectural lighting, combined with lavish decorative chandeliers, that helps to shape these impressive interiors, making our experiences memorable and most of all enjoyable. Historically, casinos were lit with large and ornate chandeliers or wall lights, but now there are far more tools at the lighting designer’s disposal to create dramatic and inviting spaces. Lighting technology is changing rapidly with the progression of new light sources such as high brightness LED’s, and this development is being driven by significant changes in building regulations requiring higher and higher percentages of energy efficient lighting. Lighting design is no longer as simple as an interior designer selecting the appropriately styled light fixture, and this is why currently no hotel, spa or casino will be designed without the aid of a professional lighting designer. In a lighting scheme it is very important to always strive to use the most appropriate of the available lighting technologies for each lighting effect, environment or task. It has always been the Lighting Design International (LDI) philosophy that people should perceive the lighting effect and not necessarily the lightsource. Generally, in our schemes we play down the appearance of the luminaries and play up their performance and effect. Every element in the interior scheme

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must be carefully coordinated with the lighting designer to ensure that the ambiance is balanced and inviting. The right lighting can be used to bring out the best in a finish, it can create the right mood, it can highlight a feature and it can change the whole appearance of a space with the use of carefully controlled colour and pattern. When designing a space we look to provide an aesthetically pleasing solution that enhances both the interior design and architectural features. An architectural lighting designer will often influence and shape the architectural features in a space to ensure a harmonious, low glare and fully integrated lighting scheme, but lighting a casino can sometimes be a much more decorative and expressive task governed by the style of the interior. The principals of impeccable lighting integration and detailing are still paramount, but casinos sometimes require the lighting designer to inject that extra bit of Las Vegas glamour that we have all seen in the Hollywood films. As displayed in the following examples lighting can either sympathetically give brilliance to the materials it is lighting, or it can be used to add extra character to the space. Fifty London went through a full scale renovation with the help of LDI back in 2005, building on its previous reputation and illustrious past since its opening in 1827. The casino was initially the work of the fashionable architect Benjamin Wyatt, and over the years it has played host to the Duke of Wellington, Benjamin Disraeli and Count D’Orsay to name just a few. The interior of the building on 50 St James Street has always been informed by 19th Century French design, and it previously incorporated flamboyant chandeliers and lots of crystal. London Clubs International (LCI) hired both LDI and interior designer Jeffery Beers to modernise its appearance. The challenge facing Jeffery Beers International (JBI) and LDI was how to transform a traditional gentleman’s club into a slick modern gaming venue, without losing any of the clubs ample traditional appeal, and obviously the lighting design had to play a large role in this renovation. LDI’s lighting designers for this project, Chris Lewis and John Dyke worked closely with JBI implementing their ideas, such as the huge Murano chandeliers, while detailing, specifying and designing the practical and complementary architectural lighting that ties the scheme together. LDI’s scheme had to provide different lighting solutions for each distinct area of the club, whilst respecting the buildings listed features. LDI wanted to create a much more intimate atmosphere through lighting design on the casinos gaming floors, helping focus the customer’s attention on the gaming tables and also allowing a lower level of ambient light to be used. LDI’s initial brief in this area was to create even lighting for each gaming table without glare, while affording clear views through the casino, and table lighting levels acceptable for the CCTV cameras. This brief was achieved by suspending groups of over-sized pendants below the high ceilings, to provide focussed lighting specific to each individual table arrangement. The custom designed pendants incorporate adjustable downlighters to highlight the playing surface, as well as ambient lighting and dedicated CCTV cameras. All the pendants hang from two beams that run the length of the room, which also support dichroic downlighters for emergency lighting, and spotlights that highlight the wall and ceiling decoration. This involved LDI designing an 66 ■ Casino & Gaming International

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entirely bespoke truss system, suspended by just three points on the listed ceiling and some stabilising supports on the walls. The height of the truss and pendants was crucial in the success of the scheme, allowing the pendants to hover low enough to create the desired intimacy without destroying the feelings of space and views of the ceiling. The casino entrance and grand stair are dominated by an enormous Murano glass chandelier which incorporates emergency lighting and is suspended from an electric winch allowing it to be lowered for cleaning and re-lamping. The walls around the stairs are covered with large three metre high halo-lit mirrors, further increasing the sense of scale, and acting as a backdrop for the impressive pendant. Other general lighting in this area is provided by lowglare baffled downlighters, set in to custom designed square ceiling plates which incorporate emergency battery packs, and, in some cases, support smaller Murano pendants reflecting the design of the centrepiece. For the designers of this space it was all about creating an imposing entrance, and this is highlighted again through the use of small low-glare uplighters, grazing light up the columns and further accentuating the height of the space. Fifty also boasts two restaurants, a bar and a night club. V restaurant achieves the soft ambience of a gentlemenâ&#x20AC;&#x2122;s club, through the use of xenon halo-lit mirrors, shaded standard lamps and custom parchment pendants internally lit with amber coloured lamps. The shades and pendants give a modern feel through their simplified shapes, and the dinning tables are highlighted by low glare halogen downlighters. The basement nightclub Fifty Below, formerly a storage area and devoid of any natural light, has a colour-changing glass catwalk running the length of the club, which is reflected in the mirrored ceiling. This feature floor is framed by glitzy Murano pendants and tables incorporating video screens, to give a real feeling of luxurious high tech space. The use of colour change in the floor, the glass shelving, the banquette seating upholstery buttons and the moving head projectors is all carefully controlled to complement each other and the surrounding finishes. In general the lighting levels in the bar were kept intimately low, allowing the feature lighting to dominate and dramatise the space. The lighting scheme at Fifty London is central to the success of the modernisation programme that has made Fifty one of Londonâ&#x20AC;&#x2122;s most desirable destinations, and the principles used and developed have been used by LDI on numerous casino projects large and small. London Clubs International also employed myself and Sanjit Bahra of LDI to design the lighting for Manchester235, a gaming club that holds a very different design aesthetic and history to Fifty. The lighting and decadent interior of Manchester235 was used to help transform an unused grade 2 listed Victorian warehouse, into a modern and diverse gaming venue. Nicholas Hollinshead Design (NHD) were responsible for converting the previously industrial surroundings, and their chic design, combined with inventive lighting, cleverly complements the original utilitarian features. Manchester235 was designed to appeal to new gaming markets as well as more traditional customers with a combination of leisure experiences and contemporary design, and hence the overall look and lighting were extremely important for attracting new non-gaming customers. The Casino is spread across two floors of the Great Northern Warehouse building in Manchester, and Casino & Gaming International â&#x2013; 67

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brings together games tables, games machines, live music, food and drink. Each zone has been given its own style and identity, from the warmth of the ground floor restaurant, to the crisp cool look of the first floor ice bar. The lighting scheme also had to provide different solutions for each of these club’s areas and personalities, creating the appropriate atmosphere and level of intimacy for each space, while using a consistent design language throughout the casino. The casino ceiling is made up of very small barrel vaults, supported by large iron columns, so without a plasterboard ceiling we had to develop a unique lighting solution. The design intent was always sympathetic and respectful to the building and Grade II listing, and this challenge helped inspire the some of the schemes most defining features along with this general lighting concept. General lighting is provided by low-glare AR111 downlighters installed in an exposed network of black cable tray allowing the building’s brick vaults to be incidentally viewed, without permitting them to become an overpowering feature. Planning restrictions meant that the original iron columns could not be clad; instead we chose to embellish and

highlighted them in line with the interior designs luxury ethos. Columns on the first floor are encapsulated in acrylic and up and downlit by colour-changing LED’s. When using colour change LDI are always very careful to make the effects created considered and discreet, and we feel it is important to not use too much colour, even in a casino. On the first floor the colour range was restricted to complementary blues, reds and purples, to complement the interior finishes, fabric colours and feature ‘ice bar’. On the ground floor, columns are uplit by low-heat halogen uplighters, this lack of colour harmonises with the space’s warmer colour palette allowing the drama to be created by the rivets and texture. In a similar manner to Fifty gaming pendants were custom designed at Manchester235 to lower the visitor’s eyeline, while helping shape the clubs identity. The ground and first floor pendants were this time given a modern industrial feel and incorporate a dramatic LED skirt for decoration, and eight fully-lockable downlighters, for functional table lighting. The VIP gaming pendants also utilise lockable downlighters but their character is more elegant combining directional lighting with an ambient shaded section to give a softer and

>> IN FUTURE PROJECTS, ENERGY-EFFICIENT LIGHT SOURCES ARE BOUND TO TAKE LARGER PERCENTAGES OF THE OVERALL LIGHTING SCHEME, WITH TECHNOLOGIES IMPROVING AND REGULATIONS TIGHTENING. IN MY OPINION IT IS IMPORTANT TO USE EFFICIENT, LONG LIFE AND EASY TO MAINTAIN FITTINGS WHEREVER POSSIBLE, BUT IT IS EQUALLY IMPORTANT TO ENSURE THAT THE REGULATIONS DO NOT BECOME TOO PRESCRIPTIVE DESTROYING THE AMBIENCE AND FLEXIBILITY >> 68 ■ Casino & Gaming International

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more luxurious quality of light. Both designs provide an eyecatching and stylish solution to table lighting, while ensuring that the casinos security concerns were well addressed, through even table illumination. The pendants were all commissioned by LDI, with each directional downlighter head was locked in place, ensuring there are no hot spots to disturb the security camera views. Numero is the casinos ground floor Italian restaurant, and the space is designed to be relaxed, warming and inviting. The lighting comprises of backlit bar counters, banquette uplighting, uplit mosaics and precise table downlighting all in shades of red, amber and warm white. It was important to ensure lighting in this space and the casino as a whole was dimmable. Lighting is used to set the scene, changing automatically throughout the 24-hour casino operation, to deal with different times of the day, the affects of daylight, and the changing mood of the various spaces. Linen is a fine dining restaurant situated on the first floor mezzanine, next to the VIP gaming area and bar. The mezzanine level shares some of its design language with the first floor gaming area, including the column lighting treatment, but the overall aesthetic is one of higher class. The low voltage downlighting to tables, warm banquette uplighting, soft cove lighting, silk shaded gaming pendants and Murano chandeliers bring a warm and inviting mood that can be dimmed to a subdued and private level for evening parties and atmosphere. The main casino bar is seen as a destination and focal point; the glass bar counter, rough-edged to give the effect of hewn ice, is backlit with cold cathode changing from white during the day to blue in the evening. This gradual and controlled shift in colour is an important and emotive reference to the passing of time, as the casino has very little natural light on this level, and the refreshing daylight like

white light gradually sets to become a vibrant midnight blue. The bar is flanked on either side by two swooping back-lit stairs, leading up to the main restaurant and VIP gaming The lighting scheme at Manchester235 plays an integral part in turning a bare and derelict warehouse space, into an intimate, dramatic and inviting venue, with the casinoâ&#x20AC;&#x2122;s multiple areas providing a perfect showcase for what good lighting can do for a space. In future projects, energy-efficient light sources are bound to take larger percentages of the overall lighting scheme, with technologies improving and regulations tightening. In my opinion it is important to use efficient, long life and easy to maintain fittings wherever possible, but it is equally important to ensure that the regulations do not become too prescriptive destroying the ambience and flexibility. Over the next few years the tools of lighting design will

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>> LIGHTING DESIGN IS NO LONGER AS SIMPLE AS AN INTERIOR DESIGNER SELECTING THE APPROPRIATELY STYLED LIGHT FIXTURE, AND THIS IS WHY CURRENTLY NO HOTEL, SPA OR CASINO WILL BE DESIGNED WITHOUT THE AID OF A PROFESSIONAL LIGHTING DESIGNER. IN A LIGHTING SCHEME IT IS VERY IMPORTANT TO ALWAYS STRIVE TO USE THE MOST APPROPRIATE OF THE AVAILABLE LIGHTING TECHNOLOGIES FOR EACH LIGHTING EFFECT, ENVIRONMENT OR TASK >> lit bar panels, shaded pendants, illuminated ceiling panels and coffer lighting. These light sources can dim, and they can be used to provide a good background level of light, but there use must still be carefully considered when wanting to create romance or intimacy in an interior. Energy efficient sources such as fluorescent, cannot recreate halogen’s ability to be bright and punchy at full brightness, and warm and candle like when dimmed, and I believe tungsten is still an essential mood lighting tool. LDI always design to maximise the effect of the space, reducing energy consumption and maintenance wherever possible, in order to give the most attractive and well balanced scheme. CGI

GRAHAM ROLLINS

evolve further, pushed by the phasing out of GLS lamps. LED’s have already changed dramatically and they are fast becoming a viable and useful low energy lighting tool. It is only a few years ago that the only real use for LED technologies was colour changing, or path lighting, but now with all the major manufacturers developing their own white and warm white high brightness LED’s the market is changing. LED’s are still not good enough to fully replace conventional GLS or low voltage halogen, and their colour rendering properties and warm white colour consistency are still debatable. But used as a component of the larger lighting scheme they can be very effective, offering benefits such as low heat, small size, precise beam control, variable colour, lower wattage and long maintenance free operation. Fluorescent and cold cathode are also both useful forms of energy efficient lighting, with successful uses being back70 ■ Casino & Gaming International

Graham Rollins, Senior Lighting Designer at Lighting Design International, developed his passion for lighting whilst studying Product Design at Ravensbourne College. Graham then went on to work for the innovative lighting designer Shiu Kay Khan, where he combined his talent for product design and designing lighting schemes for projects all over the world. Now Senior Designer at Lighting Design International, Graham heads up a variety of both international and domestic projects working alongside ground-breaking architects and interior designers. More notably Graham has designed award winning schemes such as Manchester235 casino, which scooped the Excellence Award at the 24th IALD awards, and more recently Temple Church which was shorlisted for the Heritage Award at the 2008 Lighting Design Awards. LDI have also recently been responsible for the lighting design of Ladbrokes casino Paddington and Mont Parnes casino in Athens. Fifty London won the Lighting for Leisure award at the National Lighting Design Awards 2006. Fifty London – Client: London Clubs International, Interior Designer: Jeffery Beers International/Ettwein Bridges, Lighting Design: Chris Lewis & John Dyke of Lighting Design International; Manchester 235 won the award of excellence at the IALD awards 2007. Manchester 235 – Client: London Clubs International, Architect: Burrows Cave International, Interior Designer: Nicholas Hollinshead Design, Lighting Design: Graham Rollins & Sanjit Bahra of Lighting Design International.

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CASINO DESIGN

CREATING COHESION BETWEEN SERVICE, FUNCTIONALITY AND HUMAN SPACE BY ANN FLEMING AND KEN KULAS

The past ten years have seen a dramatic shift in the face of the gaming public. Owners now target a younger clientele with a greater proportion of disposable income. No longer is it the retiree or core affluent that owners see walking between the rows of craps tables. Rather, it’s the younger professionals who have no qualms about paying $300 for a bottle of vodka and eight cans of Red Bull, if solely to have the opportunity to be “seen” by those walking by the casino’s hottest nightclub. Gone are the days of the cheap, disposable casino interior finishes with little to offer than strategically placed neon and scantilyclad cocktail waitresses. Rather, today’s hottest new casino resorts are cuttingedge with thought-provoking design, all with an eye towards service.

n this ever-changing landscape in which we design each and every day, how are we to choose a single focus for our peers within such a broad and complex canvas? More simply, we could drill-down and toil over the challenges of slot height and ponder the various solutions we’ve used to overcome the video monster ad nauseum. Or we could be more general, yet still address the elements we feel have had the greatest impact in our course as designers over the past eight years. In a profession that makes us begin from “undefined” each and every day, it has become our job to design and breathe life into the nuances that make the collection of spaces with a gaming environment cohesive. It’s that cohesive quality that affects each and every choice we make as designers, as in the grand scheme of things, every thought we have is destined to be a part of a much larger whole. The guest experience is paramount and we must not only design for the owners and architects, but for the patrons who want to be heard, serviced and entertained.

CLIENTELE At the end of the day, yes – we design for the owner. However, the owner of a gaming environment must be intimately familiar with the patron they wish to attract. The past ten years have seen a dramatic shift in the face of the gaming public. Owners now target a younger clientele with a greater proportion of disposable income. No longer is it the retiree or core affluent that owners see walking between the rows of craps tables. Rather, it’s the younger professionals who have no qualms about paying $300 for a bottle of Grey Goose vodka and eight cans of Red Bull, if solely to have the opportunity to be “seen” by those walking by the casino’s hottest nightclub. As such, owners are taking a much fresher, contemporary Casino & Gaming International ■ 73

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approach with the casino concept. Gone are the days of the cheap, disposable casino interior finishes with little to offer than strategically placed neon and scantily-clad cocktail waitresses. Rather, today’s hottest new casino resorts are cutting-edge with thought-provoking design, all with an eye towards service. As designers, adapting to the demand for higher quality has been a pleasure. It’s always a bit of a gift when we can incorporate CLEO’s belief in longevity and perpetuity into each new design we’re called upon to produce these days. Fundamental to each of our clients is a complete design that not only services the client, but takes service to a new level that will encourage greater property loyalty and bring gaming operations into the daylight for the repeat customer.

LIGHT AND PURPOSE The days of the dark casino interior are a thing of the past. Light is not only a major player in the newest and hip gaming venues, but the outside world has become part of the inside. Lush gardens, sweeping atriums, and water features are abundant in modern gaming design, and lend themselves well to the advent of the changing texture of casino purpose. Guests can now navigate through a property and find a means to be “paid back” at every turn. From patron loyalty programmes to the convenience of couture boutiques, service still stands out as a prominent focus in casino design. Buffets have become multicultural dining experiences with hefty price tags and prime rib specials have been pushed aside in favor of chic dining spaces helmed by five-star celebrity chefs. All of this, mind you, in response to the changing tide in casino service and the daylight aspect that’s pervaded design. Everything that can be experienced

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outside the casino can now be experienced inside, and people who don’t even gamble are utilising gaming resort space to satisfy their curiosity for the latest and greatest. When we first meet with an owner or client, we have to ask how our design solutions will benefit the changing focus on customer service. From the family on vacation who wants nothing more than to find a moderately-priced restaurant to the divas and moguls that demand luxury in every nook and cranny of their experience – our design process has to answer the call. No longer are owners asking for themed properties that pretend to transport guests to times in the past or distant lands. While those properties are still drawing their fair share of traffic, owners and patrons want features, not facades. Service, not stories. In every property we design, the novelty factor has been replaced by function, and we are further challenged as designers to add humanity in places throughout the new, contemporary guest experience where it has been so purposefully removed.

HUMANITY As gaming environments take this gentle, time-guided shift into the new era, technology has most certainly cast its glow over the canvas on which we design. While sometimes its more of a shocking streak of fuchsia than a gentle sunrise peeking over the horizon, we have probably seen the most significant change in our design techniques due to the emergence of technology as a major player in the evolution of gaming design. From the rising height of slot machines due to the integration of video throughout the guest experience, one question has come to the forefront as a modern problem in

CASINO DESIGN

casino and gaming design: “How do you hide infrastructure?” These technological features are a double-edge sword. Not only are we faced with designing to hide the massive miles of cables and cameras that accompany these high-tech enhancements, but also the question of how we add humanity into spaces that are clearly lacking. Technology is inherently cold – video screens are two dimensional and noninteractive and new automated gaming tables have replaced the warmth of human dealers with the processor-fueled prowess of computerised gaming tables. Where do we go from here to create a warm and welcoming guest experience when the latest in technology is devoid of the friendly and welcoming elements of human dealers and the action-demanding one-armed bandits of the past? To deliver the clean, contemporary and cutting-edge designs that gaming ownership demands, we’ve gone back to the basics. Ceiling height, choice of materials, finishes and light have become our closest allies in the fight to coexist with technology. To keep guests from feeling too “closed-in” while gaming in slot parlours where machines tower over six feet, we’ve varied ceiling heights to create an open and warm environment. Columns, once used for structure, are used throughout our designs to hide supports and cabling, posing yet a more adventurous (and fun) question like “How do we decorate 65 columns?!” Areas that surround these technological wonders are rich with warm finishes and intriguing use of light, lending a humanistic tone back into spaces that were previously lacking. It’s easy to recognise spaces where the element of humanity was not thought through. Guest services and functional space, we think, must work hand-in-hand to produce innovative environments that have all the benefits of

being forward-thinking from a technological approach while still maintaining old fashioned warmth and personalised service.

PROOF POSITIVE So, now that we know that our customer has changed, ownership demands have changed, and we’re no longer going to be called upon to design the next medieval castlethemed gaming adventure, where do we stand as designers? Through all of the changes in the texture of the gaming landscape in years past, we’re fortunate to design under all of these criteria and conditions. The younger gaming clientele has brought with it the demand for more ergonomic and stylish design elements,

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from architectural detail and lighting to furnishings and flooring. This provides the perfect opportunity to introduce more savvy features into our casino and gaming designs. We used to sit across from owners and review furniture options (chairs in particular) and have them dismiss the session with a cursory, “Any chair from those two pages will do. We don’t care.” Now, we’re able to actually design the furniture itself for these gaming spaces and casinos are moving from institutional to individualistic. It’s not uncommon now to see furnishings in a particular property that you’ll never see anywhere else, and as designers, we love that. It’s not necessarily about having had the opportunity to design “the chairs,” but more so the opportunity to design chairs that complimented the entire casino experience, from line to fabric and finish. It’s the whimsical approach that we’re given the latitude to pursue when we fuse elements like mirrors and leather (and not having the end result resembling a dominatrix’s domain). When we’re able to tap into our mutual passion for nostalgia and mix it with the forces of technology and service, the end results can actually be quite fun. For example, we’re seeing an increased demand for spaces within casino environments that cater to the high-limit player. At $100 and up a hand or spin, these are folks who need to be wooed and who demand a unique experience that keeps their gaming dollars flowing into a particular property. Ownership understands the value of the high-limit player. We’ve had incredible success in designing innovative spaces that not only address the casino’s need to care for this gaming demographic, but the player’s desire for an experience out of the ordinary when they could likely gamble anywhere they choose.

CASE STUDY: NO LIMIT ON HIGH LIMIT A property we recently finished for a high-profile gaming facility emphasizes the desire of casino ownership to focus on

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the needs of their high-limit players and also speaks to how we’ve worked with revolutions in gaming design to create unique guest experiences. Completed in December of 2007, this private dining room created exclusively for high-limit gaming patrons allowed us the opportunity to create a lush space ripe with both form and function. Previously an open events and meeting space within the casino, we converted the two-level space into an exclusive dining and high-limit gaming experience below with executive offices above. To emphasise the exclusivity of this venue, we opted for a rich, creamy décor that immediately envelops patrons from their first slip around the peek-a-boo drapery surrounding the dining room’s entrance. The room is filled with warm wood tones and buttery leather textures and tones, all lending to a sense of warmth and welcome in this intimate space. Ownership also envisioned a dining environment with an exhibition-style kitchen, so we took that concept above and beyond. In instances such as this, technology is a welcome change as it afforded us the opportunity to design a space where the ultimate goal was guest interaction with technology. Designed into the exhibition kitchen are strategicallyplaced cameras and TVs along with integrated sound throughout so that diners can see and hear the kitchen activities. Technology made it possible for us to bring the audience of diners surrounding the exhibition kitchen to an intimate level of participation. No longer is it just a high-end lounge and dining destination for those casino patrons who qualify. Rather, we were able to provide a total dining experience, complete with video and integrated sound, so that guests would feel their level of patronage at the casino were affording them a more lavish and exclusive experience. Ownership plans to host events with famous guest chefs and offer the video to guests as a take-away from their casino experience.

CASINO DESIGN

casino owners and patrons alike that will transcend trend alone and provide a lasting, interactive guest experience that translates into increased traffic and higher patron loyalty. The morph continues throughout the gaming industry and it’s likely that what we are designing for today will take a back seat or become merely a component of what we design towards in the future. Regardless, we still enjoy the collaborative formative process behind bringing our clients innovative design solutions that are whimsical, traditional, functional and friendly – all at once. CGI

ANN FLEMING AND KEN KULAS In her wildest dreams, Ann never imagined that she would become an interior designer, much less open her own interior design firm. More inclined to follow her early love for art and writing, she ventures into some classes on interior architecture on a whim in college. When the process just seemed to click, she began her interior design career with JMA Architecture Studios in Las Vegas, Nevada. When Ann graduated, she joined Atlandia Design, a subsidiary of resort mogul Steve Wynn’s Mirage Resorts. She met Ken Kulas as he was part of her creative group that worked on such projects as the Danny Gans Theatre and the remodel of the luxury suite The Lanais at the Mirage Hotel & Casino as well as the Jasmine restaurant and Fontana Performance Lounge at the Bellagio.

No luxury detail goes untouched in the dining room. The entire concept is elegant and warm with light that dances through the various reflective elements. A stainless kitchen canopy, whimsical reflective wall tiles, and the blown glass ball detail that tucks gently within the walls behind the leather banquettes all speak to the fact that light is abundant and welcome. Completing the look are the generously-sized wood armed leather dining chairs that slide up to the highpolish wenge finish wooden dining tables. Through this design, we were able to complete a guest experience that not only answered the needs of casino ownership and solved the problems of existing space limitations, but one that incorporated the changing elements in the landscape of gaming design. From contemporary design with integrated technology to custom, propertyexclusive furnishings, the soup-to-nuts solution fit not only the property but the patron as well.

PARTING THOUGHTS From our first days designing for the gaming community during our tenure at MGM MIRAGE Resorts, we both felt the pulse of change that continually courses through the veins of casino design. Some years it emphasises features over theme and others it focuses on the shift from family-centric concepts to sophisticated playgrounds for the young professionals. No matter what trend may dictate, our primary responsibilities as designers never change. We must address those trends and then collaborate, developing solutions for

Ken has always admired those with the ability to define multiple functions for one item or space – and it began at home with his parents. Encouraged to create projects at an early age, his first memories are of building Lego hotels complete with swimming pools. With an interior design career that began in the showroom of a new home developer, his initial work with new home buyers in selecting design upgrades proved the perfect springboard. Ken later joined the Mirage Resorts, Inc. team and worked on such projects as the wedding chapel, showroom, and meeting rooms for the Treasure Island Resort. He would eventually be introduced to Ann Fleming, who would later become his partner in CLEO Design, through his work with Mirage Resorts. CLEO Design In 1999, when Mirage Resorts was sold to MGM Grand, the difficult decision between the newly formed Wynn Design or MGM MIRAGE had to be made. By this time however, Ann and Ken found that they had an excellent working partnership. Determined that their talents were well-honed and ready to go to the next level, they resigned from Mirage Resorts and CLEO Design was born. Now in its eighth year, their project list comprises some of the biggest names in the casino and gaming industry and they look forward to the next trends in hospitality design as they emerge.

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PAYMENT PROCESSING

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The casino and gaming market has traditionally been an industry based around cash. Now, the gambling industry is increasingly recognising the benefits of card and electronic payments as a platform for gaining greater efficiencies, enabling better customer analysis in order to increase competitiveness, comply with stricter regulation, and improve social responsibility. The huge growth in online gaming has opened up new opportunities for electronic and valueadded payment services which are now being transferred into real-world casinos and gambling establishments worldwide.

ecure electronic payment technologies are becoming ever-faster and more ubiquitous, and are now an expected part of the consumer payment experience, even in previously cash-based markets such as the Quick Service Restaurant (QSR) sector. The introduction of Chip and PIN technology has reduced the incidence of fraudulent activity at the point of sale, and continued advances in security are helping to ensure the integrity of electronic transactions and maintain cardholder trust and confidence. As a result, consumers are becoming more and more comfortable using plastic instead of cash or cheques, to the extent that it has become the preferred method of payment for the majority of transactions. Card payments incorporating new technologies such as contactless are becoming more widely used for smaller, high-volume transactions, replacing what would traditionally be thought of as cash-only purchases. The market opportunity for deploying electronic payment systems within gaming settings in the UK and across Europe is strong. An ongoing wave of mergers and acquisitions is making competition within the gaming and casino industry far more aggressive and the pace of change is rapid. Many companies are expanding worldwide and are looking for global business solutions that will provide efficiencies and economies of scale within their organisations. When it comes to payment, there is a clear opportunity for modernisation within the casino and gaming industry. At present, the majority of gaming machines still use cash or tokens, which have many disadvantages over card payments.

LIMITATIONS OF EXISTING CASH-BASED SYSTEMS The most obvious disadvantage to using machines which Casino & Gaming International â&#x2013; 79

PAYMENT PROCESSING

dispense cash or tokens is the amount of manual support these machines require in terms of replenishment, cash handling and banking. In addition, the support for these machines is high: they need updating when new coinage comes in; there is the risk of ‘shrinkage’ through theft, abuse of the machine and use of foreign coins; and precious staff resources can also often be tied up with frequent queries about inadequate dispensing of cash, or coin jams. While the casino and gaming market is still a predominantly cash-based business, many gambling establishments are now moving away from these cash-based systems and towards the benefits of electronic payment technology. Many other retail-leisure outlets, for example restaurants, are adopting faster and more convenient methods of payment and as a result are seeing greater efficiencies and customer throughput. Casino and gaming establishments that evaluate all of their current cash-based operations will soon see where the latest payment

technologies can help them become more efficient, while at the same time providing greater convenience for customers and facilitating compliance with the raft of rules and regulations to which the industry is subject. For the gaming business owners, analysis of these issues now will certainly pay dividends for the future: the latest payment technologies will undoubtedly play a key role in enabling the future operations and growth of the casino and gaming market. There is a wide range of card payment acceptance solutions available today, from stand-alone payment systems to sophisticated, fully integrated solutions which link to backoffice systems, making it easier to monitor customer behaviour, set limits on credit and to offer help and supporting information to customers who require assistance in managing their gambling activity. The latest generation of card payment acceptance systems, from portable, hand-held wireless systems to counter-based or integrated kiosk-based solutions, are now delivering significant advantages and a competitive edge in a

THE SELF-SERVE REVOLUTION Electronic payment is fundamentally built on trust—trust between the consumer and the retailer. Now a new generation of secure, consumer-oriented self-service devices is changing the face of card payment acceptance. The introduction of Chip and PIN has opened the way for widespread unattended card payments—a point of sale phenomenon that is transforming customer behaviour, fuelling today’s self-service transaction culture, and enabling a new generation of unattended payment services to be rolled out. As millions of consumers make the transition to smartcard and PINbased transactions, secure, high value self-service payment transactions are now becoming feasible for business operators and consumers alike. As a result, unattended card payment terminals, employing enabling devices such as the VeriFone Vx 700 and Secura 720 PCI PIN pads, are emerging as a rapidly growing trend across a variety of environments, including vending machines and kiosks. This is not just a phenomenon of low-value payments but has also promoted an increase in high-value products and services being sold through vending machines. Card usage equates to convenience – consumers are consistently demonstrating a growing preference for making card, rather than cash, payments. In addition, in today’s sophisticated payment environments consumers expect speed, convenience and simplicity when paying for goods. Increasingly impatient with queues and waiting, time-pressured customers are now viewing unattended payment terminals as a simple, safe, secure and effective solution. Unattended payment certainly delivers effectively against many consumer expectations; for example, in retail environments, self-check out options have been shown to generate a 40 percent reduction in average queue times, with increased throughput of up to 20 per cent, enabling retailers to cope with the peaks and troughs of demand. What’s more, retailers report that unattended and selfservice options are being enthusiastically embraced by all customer segments and demographics—from the elderly to younger and more IT-literate customers. Making card payment accessible and available to all has long been a key goal of the payment industry, and building in the ease of use and practical functionality already offered by familiar acceptance devices

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remains a primary objective for delivering unattended systems. For casino and gaming establishments, the gains of unattended payment are clear. With the drive to offer increased choice and greater flexibility to consumers, companies are now investing in their ability to take secure payments in unattended environments and deliver enhanced 24/7 self-service options for customers. The experience of the retail sector illustrates that the introduction of unattended payment terminals can actually increase customer spend, as a result of faster transaction times, improved utilisation of space and the redeployment of staff resources to greater customer service roles – all areas of improvement from which the gaming industry can readily benefit. Sectors at the forefront of spearheading and implementing unattended payments have experienced significant gains from providing safer and easier transaction solutions; self-service ATM banking generated major dividends for the financial services sector, including improved customer service, convenience and business efficiency. In the US, the usage of unattended payment terminals is growing by between 17 per cent and 20 per cent each year—a usage evolution that is being replicated across Europe. As contactless card payments take off in Europe, unattended payment solutions will support similar functionality, enabling the widest possible choice of unattended payment options and delivering more robust solutions – providing flexible payment choice to consumers in an array of settings. In the UK, many retail organisations are employing unattended payment solutions. The sophistication of today’s topof-the-range payment systems, is even offering the ability to provide value-added services and generate new revenue streams at the point of sale. Utilising the latest multimedia card payment systems, for example the VeriFone OP4100, MX700 and MX800 series of devices, opportunities exist to develop partnerships with content providers and to stream advertising and promotional information to customers on high-spec VGA screens to customers as they make payment transactions. As consumers everywhere embrace the convenience of selfservice and unattended card payments, VeriFone is helping to make expedient payment part of the fabric of every retail, service, hospitality and leisure environment.

PAYMENT PROCESSING

variety of gaming environments. Here is a brief overview of the type available and how they can be adopted by the casino and gaming industry.

technology applications increase and they can be fully integrated with systems both front and back-of-house.

POSITIONING OF PAYMENT SYSTEMS Customer Operated Systems Current multimedia, kiosk-based solutions can deliver selfserve payment transactions as well as offering an information resource for clients. These unattended systems deliver an invaluable, automated platform for managing time-consuming tasks such as membership applications, as well as providing an information or entertainment device in areas where queues tend to form. These systems can also be an extremely useful addition in any casino or gaming environments to inform clients on the rules of a game such as Poker, Blackjack or Roulette. Pay-at-table wireless solutions Handheld wireless solutions, such as the VeriFone Vx 670, make it easier for service staff to bring food and drink to gaming tables and complete the transaction on the spot. Studies have demonstrated increased customer throughput as a result of deploying these hand-held solutions and onthe-spot payment transactions. For the customer, they also provide greater peace-of-mind that their payment is secure, because their card remains in view at all times. Countertop Counter-based solutions reduce the time for a secure financial transaction to be processed, providing important financial checks and verification in real-time. Many countertop solutions, like VeriFone’s new Vx 810 Duet, are modular and so are scaleable as the number of transactions and new

Before implementing any solution, a gambling establishment must think through its obligations to the customer by allowing a cooling-off period before obtaining more credit for gambling. Positioning of payment systems need to be borne in mind when providing easy access to cash or credit. The Gambling Commission’s latest Code of Practice for the Gaming industry specifically states that if any customer wishes to use an ATM on the premises, for example, it must be in a position which ensures the customer ceases gaming in order to do so. While the industry obviously needs to be sensitive to the responsible positioning of payment terminals, today’s systems can provide enormous value and actively assist in ensuring compliance with industry rules and regulations.

MEMBER-BASED SMARTCARDS There are significant opportunities for casino and gaming establishments to adopt electronic top-up cards, eliminating the need for cash-based transactions altogether and making it far simpler for customers to pay and play. The use of pay-as-you-go and electronic top-up cards as payment methods is becoming increasingly popular, especially in the travel and transport sector. In the UK, recent electronic top-up initiatives such as the Transport for London Oyster pay-as-you-go travel card have enjoyed rapid adoption and similar schemes are proving effective across Europe. This increase in usage will inevitably result in greater user acceptance, familiarity and a willingness by consumers

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to spend more on top-up cards as a form of electronic payment. These cards, which have far greater traceability than cash, can also help casinos and gaming establishments to comply with regulations and have greater accountability to the relevant regulatory authorities. The benefits of ubiquitous card payment technology in gaming environments are manifold. Imagine the following scenario: a new customer walks into a casino or gaming establishment and fills in a membership form via an unattended electronic multi-media device. A simple credit or debit card PIN-verified transaction, via a self service PIN acceptance device such as the VeriFone Vx 700, confirms that the person filling out the questionnaire is who they say they are, that they are not under-age, that they have no criminal record in terms of money laundering, are not registered as an excluded guest and that they have sufficient funds to be able to participate. Once this verification has taken place, the guest is provided with a membership top-up card on which they can specify the exact amount of money they would like to put on it. This card is then used for all the transactions within the gaming establishment and provides a quick and easy method of placing bets, playing on gaming machines and ordering food and drink. For the customer, the top-up card is a far more convenient method of payment since, firstly, it does not require the customer to carry around a bag of cash or tokens; secondly, it allows the customer to set a limit on their spending; and thirdly, it offers a far more secure method of payment in that a PIN number can be allocated and employed, thereby greatly reducing the opportunity for theft.

INTEGRATED PAYMENT APPROACH The technology for combining a membership and payment card is available now and provides an easier, faster and more convenient method of payment for gaming customers and establishment operators alike. By deploying card payment acceptance devices at each gaming table and within gaming machines, the speed of each game can be increased, allowing more games to be played per hour, thereby increasing efficiency. In addition, winnings can be added to individual smartcards at the gaming table, also saving time in collecting winnings during the evening. Moreover, by allowing a more integrated approach, today’s payment technology can help organisations become far more transparent in their approach to money handling. Card payments are enabling today’s gaming establishments to develop greater accountability and corporate social responsibility practices, as well as derive considerable benefit from productivity gains.

MONITORING CUSTOMER BEHAVIOUR Subject to Data Protection Laws, the use of top-up cards combined with transactional software can provide valuable information for the casino or gaming operator. Electronic transactions offer a highly traceable method of handling money and can provide the casino and gaming industry with key customer information upon which improved business decisions can be made. If a company can track average spend per person, per gender, and per age group, precision targeted marketing strategies can be implemented. In addition, the data provided by customer transactions can provide valuable business information such as the most 82 ■ Casino & Gaming International

profitable times of the day as well as help identify periods where an organisation could be more efficient or profitable.

SOCIAL RESPONSIBILITY Gambling establishments are under increasing pressure from industry regulators to demonstrate that they are operating in a socially responsible manner, for example by clearly providing information about organisations which can help with gambling addiction and ensuring a proper duty of care to gambling customers. Electronic payments and tracking may be a positive step forward in delivering this greater social responsibility and supporting existing and future regulations. Advanced card payment software can allow consumer spending patterns to be evaluated for signs of early addictive behaviour. Early addictive behaviour patterns may include frequent overspending of a pre-determined budget, spending more than might be expected on a given income level or significantly increasing the frequency of attendance at a casino or gaming establishment. At this point, marketing to that individual could stop and support services can be offered, thereby encouraging those with a problem to self-exclude or seek help from appropriate organisations. Once a customer has self-excluded, any financial transactions by card can be put on ‘stop’. A self-service kiosk-based solution also offers an excellent opportunity for information to be displayed to ‘at risk’ individuals in a way that is objective and unconfrontational, yet useful for anyone who is questioning their ability to control their gambling habits. There can be little doubt that along with the continuing increase in popularity of all forms of gaming and the huge potential for further growth in the casino and gaming industry, there comes additional pressures. In the future, we are likely to see an industry characterised by greater consolidation, further mergers and acquisitions, and increased competition and regulation. Business operators who embrace advances in payment technology, work with regulatory bodies and harness the latest trends in operations are the most likely to gain competitive edge and win the race in this increasingly fluid but exciting market. CGI NIGEL BIDMEAD Nigel Bidmead was appointed Managing Director of VeriFone EMEA division (Europe, Middle East and Africa) in September 2002. He has responsibility for all aspects of VeriFone’s business in this region. Nigel has an outstanding track record in the international payments arena and has worked in Senior Management positions in the industry for over 20 years. Leveraging strong management and leadership skills, Nigel continues to bring his wide experience in the transaction processing market to bear in seizing key opportunities throughout the region, helping to develop the market solutions that have won many highprofile customers for VeriFone in EMEA. Nigel Bidmead is based at VeriFone’s EMEA headquarters located in the Greater London area of the UK.

‘NEW PARTNERSHIP DELIVERS MASTERCARD APPROVED PRODUCT TO GAMING’ The first gaming prepaid card solution to receive official MasterCard approval has recently been launched to the gaming industry. This pioneering solution is the outcome of a new partnership between TransSend, a European based provider of MasterCard prepaid card programmes, and Intercash, a provider of specialist payment solutions to the gaming sector. The announcement at the end of 2007 from MasterCard that they were changing their rules around prepaid cards in the gaming sector, created the opportunity for the first time for programme managers to bring fully compliant prepaid card programmes to the gaming market. In the past, the payout method has been a major challenge for the gaming sector. There is now, however, a concerted effort by the industry to produce a card payout product which enables winnings to be paid directly to the customer. Phil Davies, Director of Business Development at MasterCard Europe says, “We re-evaluated our position on the gaming payout programme when it became apparent that there were issuers who wished to approach the gaming sector with the correct methodology in respect to compliance and control, to give us the confidence to do business in this challenging market sector.” Historically, customers have either had their winnings paid to them by a cheque through the post or transferred directly into their bank account. With the new scheme ruling from MasterCard, prepaid cards can now provide a way for winnings to be paid out instantly. This significant step will allow gamers to access their funds immediately, resulting in a fast, simple and more convenient payout method for

Richard Jones, CEO, TransSend

customers and gaming companies alike. The card offers the same functionality as any MasterCard branded card. Users can therefore withdraw cash at one million ATMs worldwide, make point of sale payments at over 24 million accepted locations or use the card to make secure transactions online. The benefits for gaming companies include a reduction in costs in terms of cheque payouts and bank transfer fees, as well as access to a new revenue stream. Prepaid cards increase customer satisfaction, comfort and loyalty by providing instant access to winnings. This makes customers feel safe and secure and boosts customer loyalty by providing a product that customers can use on daily basis. In response to MasterCard’s announcement, TransSend made the strategic decision to enter the gaming arena with Intercash, who have an existing presence in the sector. Richard Jones, CEO of TransSend, explains, “When we originally looked into the sector, we identified two key elements for any programme manager looking to provide a compliant solution to gaming businesses. We knew that we needed to work very closely with our chosen scheme, MasterCard, and we needed a strategic partner that had a true understanding of the complexities of the gaming sector, relationships with existing businesses in the sector and a greater understanding of their specific needs.” Patrick Seguev, CEO, Intercash

Intercash, for their part, were looking to bring their industry experience and cardholder management system to Europe. The combination of Intercash’s gaming experience, TransSend’s prepaid programme knowledge and the MasterCard scheme, has therefore resulted in a groundbreaking and market-leading prepaid product for the gaming industry. Patrick Seguev, CEO of Intercash, is keen to emphasise how important the industry is. “The gaming industry has always been at the leading-edge of payment innovations and has continually pushed the boundaries,” he explains. “The very nature of the space it occupies – as an internet-based industry – means it is a truly global proposition at the forefront of the high-tech world.” Prepaid payment has been an important but complicated issue in the gaming sector and the card payout product represents a significant development in the creation of a fully compliant working prepaid solution. As a result of the partnership, TransSend will be able to launch a significant number of prepaid card programmes to the sizable customer base of Intercash and its partners. “We are very excited about this venture,” Patrick Seguev, CEO of Intercash commented, “The strategic partnership between our two companies and their powerful teams, the high level of knowledge, and the right technologies and networks combined, will provide the ultimate services to corporations seeking reliable and efficient payment solutions.” Intercash have been looking for a strategic partner in Europe to benefit from their extensive international experience for sometime, and Richard Jones, CEO of TransSend, believes that the partnership is a perfect merger of expertise. “There is a great synergy between Intercash and TransSend. Intercash bring us significant gaming industry knowledge and we bring substantial prepaid knowledge to the table,” he says. “This agreement is a significant step forward in our strategy to develop partnerships with operators in the payments industry who are leaders in their fields. It is our aim to provide the most innovative, market leading, compliant and secure prepaid card programmes to our customers.” The partnership’s prepaid card was launched at the ICEi show in January 2008, and the level of interest it generated confirmed how exciting a development this is for the gaming industry. For Alastair Graham, TransSend’s Head of Marketing, the reaction was a complete validation of their strategy. “The response was incredible” he says. “We could not have asked for more from a marketplace

launch. We have brought the right ingredients together to offer a really solid proposition for the gaming sector and the sector recognises this.” If the partnership between Intercash and TransSend represents a commercial match, then Seguev believes the product of their agreement, the prepaid card, is equally well-suited to its market. “The prepaid card is ideal for the online gamer,” he says. “By their nature, the people that play on the internet are savvy and high-tech. They want to have something that can be instantly loaded and that allows them to access their funds straight away – whether they want to pay for something at a point of sale or withdraw cash at an ATM.” The easiest way to describe the prepaid card is through the debit card analogy. It is effectively a debit card without the associated bank account. Winnings are loaded instantly onto the card and it is this speed and the simplicity of the process that makes it such an attractive product explains Graham. “Gaming customers want a fast, secure and reliable way to access their winnings. That is what prepaid offers. It is instantaneous and is there in the gamer’s pocket when they need it, thereby eliminating the inconvenience of travelling to a bank to cash or deposit a cheque.” Alastair Graham, Head of Marketing, TransSend

From the cash management perspective, the card removes potential problems and is more cost-efficient for the companies. Furthermore, it gives gaming companies a way of maintaining contact with the customer by providing a branded product that is effectively the payout mechanism; a device that Seguev explains is mutually beneficial. “If you are providing that level of service, then you are increasing the level of customer satisfaction and, in return, your customer loyalty strengthens,” he says. “There are many wins for both the customers and for the gaming companies themselves.” The idea is that the prepaid card becomes a brand extension for online sites. The level of service that they provide online can start to be provided offline when the customer is presented with the winnings from their game. Ensuring these winnings are presented securely is an invaluable part of such a service; a measure that Graham assures is firmly in place. “One of the important things with our prepaid cards is that they have Chip and PIN functionality so are inherently more secure for all point of sale transactions. Furthermore, a prepaid card is different to credit and debit cards as spending is limited to the amount of cash that is on the card. Consequently, there is a lower risk than if you were using your credit card. Put simply: you do not open yourself up to losing everything you have got in your bank account.” Whilst prepaid solutions operate in other markets, Seguev is keen to emphasise the importance of the gaming industry. “As the gaming industry is a pioneer of innovation in the payments industry, providing customer satisfaction when it comes to payout is one of the factors that actually drives the market. Providing the correct services to this industry will also benefit other industries, as the drivers in the online gaming industry are the same drivers for the prepaid industry.” Jones sees an interesting future for the gaming market. “Recent developments in the US have changed the focus of gaming companies away from the States towards other regions such as Europe and Latin America. The ability to service these markets should be centred on the ability to collect and return money to and from customers. This is the business we are both in,” he explains. “The areas that are largely cash-centric will see the most interesting developments. This will benefit gaming companies as they will now be able to operate more fully in these countries. The prepaid solutions market is forecasting rapid growth in the coming years, with the European market alone expected to grow 110% per annum until 2010. Seguev anticipates an interesting time for prepaid in the gaming market. “The future is going to present plenty of exciting opportunities, within which prepaid will be a key factor,” he says. “It is an exciting way of moving money. TransSend and Intercash want to be at the forefront of the prepaid revolution, as do MasterCard and the gaming companies. Just as we were the first to have an official recognised gaming payout card programme that carried the MasterCard brand, we want to be the first to announce the exciting new developments in prepaid.” The partnership between Intercash and TransSend may well pave the way for a number of similar moves in the prepaid world. The prepaid market is developing from its infancy; consolidations are taking place at a dramatic pace and some of the companies present at the original development of the prepaid sector are finding it hard to move out of this infancy stage.

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ONLINE FRAUD MANAGEMENT

COMBINING INDUSTRY STRENGTHS TO PREVENT EVOLVING THREATS BY SCOTT OLSON

With often sophisticated abuse and fraud causing financial and credibility damage to the online casino and gaming industry, ranging from in-game social abuses, promotion abuses, cheating and identity theft to financial abuses, across-the-board defence mechanisms to prevent and reverse industry losses is vital. It is therefore necessary to assess the techniques to combat that fraud, how device-based fraud management is an essential tool for any Internet casino, and how competitors can work together to address a common threat to the entire industry.

raud rates in excess of 10 percent of total revenues is not unheard of in the online gaming industry, and many online casinos struggle simply to keep chargeback rates to a level that doesn’t either jeopardise their access to certain payment types or create such a high payment processing fee structure that their profitability is severely reduced. The issue to analyse here concerns not only the various types of online fraud against casinos, but also the techniques to combat that fraud, how device-based fraud management is an essential tool for any Internet casino, and how competitors can work together to address a common threat to the entire industry. Why are casinos such an attractive target and why are fraud rates so difficult to get under control? The answer to the first question is obvious. Where else can an attacker find an online bank, casino and efficient money transfer mechanism all in one place? Online casinos are simply one of the most effective places for cybercriminals to take their newly stolen credit instruments and to turn them into financial gain. Unfortunately, for the operators of online casinos, the fraud doesn’t simply stop at the use of stolen credit cards. The spectrum of abuses facing online gaming sites are varied and don’t lend themselves to standard fraud management techniques. These abuses include a variety of problems:

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In-game social abuses such as offensive language and in game spam Promotion abuses create multiple accounts to take advantage of site monetary promotions Cheating can include in game collusion and chip dumping Identity theft in the form of using a stolen identity to Casino & Gaming International ■ 89

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create a new account and taking over an existing casino account to gain access to their funds Financial abuses include credit card fraud, money laundering, friendly chargebacks, and fully organised fraud rings.

Let’s first examine how a credit card deposit from a stolen credit card can make its way through an online poker site. First, the online criminal uses the stolen credit card to create a new account and make an initial deposit. Typically, that criminal has other associates in a broader fraud ring that help him move this money through the system. What happens is that the criminal will sit at a table with a mix of legitimate players and his associates. Player X proceeds to lose all of the money from his initial deposit to both his associates and to other legitimate players. It is essential for them to involve legitimate players as it makes it extremely difficult for the online gaming site to distinguish legitimate players from the criminal associates. At this point the process is repeated at other tables where the people take their winnings and proceed to lose them to the next tier of associates in their fraud ring. Ultimately, the money has moved through several layers of tables and it is eventually safe to transfer it out from “clean” accounts that have had no history of fraudulent deposits or other activities. Combating financial fraud is all the more difficult because criminals are using the Internet to their fullest advantage in their techniques. First, not only are there large fraud rings where virtual partners work online to defraud their target companies, but the tools of the trade are widely available through the Internet. Hacker chat sites share information and techniques on how to defraud targeted casinos. Large online databases where credit card numbers and all essential personal information are traded actively: These databases not only guarantee the validity of more than 90 percent of the card numbers, they also provide CVV2 numbers, mother’s maiden names, addresses, recent car colors and all numbers of other relevant personal information. The essential truth of how the online threat has evolved is that there is a thriving illegal online network and commerce industry providing the tools to defraud online businesses. The criminals are becoming more organised and working together. This makes it extremely difficult to effectively combat the threat alone. It is helpful to look at the avenues available to online gaming sites to combat fraud. Certainly, when a fraudulent

account is discovered, it is banned and any funds in that account are brought back into the casino. At this point, the options for the online gaming site are limited. How can an online casino prevent the same individual or group of individuals that they just banned from coming right back with different personal information and all new accounts?

AVENUES OF DEFENCE Essentially, there are three avenues available to use to reduce the damage caused by repeat offenders and organised fraud rings that systematically target an online gaming site, and they have varying levels of effectiveness. Let’s examine what we would do in a real-world scenario and see if that has applicability in the online world. In the real world, if a group of individuals were repeatedly breaking into a casino, law enforcement would be immediately engaged to find and stop the crime ring and prevent them from targeting the casino again. Additionally, the casino itself would identify the criminals and actively look for and prevent them from coming back into the casino. On the Internet, the first recourses available to a brick and mortar casino are simply not effective. Law enforcement online is essentially non-existent as a deterrent to crime. The problems with this approach abound. Very often the criminals aren’t in the same country as the online gambling site, making it extremely difficult to coordinate law enforcement efforts required to associate the real-world individual with a temporary virtual identity. Additionally, if law enforcement is lucky enough to find the offender, they have a difficult time prosecuting the individual as they reside in a different jurisdiction. Therefore, extradition may be impossible and local laws may not take as hard of a stance on online crime. If law enforcement isn’t an option, then one would logically move to the option of restricting future access by identifying those individuals the next time they attempt to create an account. Unfortunately, on the Internet, how does one accomplish that? Most fraud management systems are based completely upon identity information and financial information. All of this information is supplied by the individual, which makes it easy for the online criminal who has had an account banned to simply create a new one completely undetected. Fraudsters cleverly hide behind multiple identities and accounts. Use of stolen financial instruments, friendly chargebacks, abusive chat, spam, bonus and promotion

>> OVER TIME, COMPUTERS ESTABLISH A POSITIVE OR NEGATIVE REPUTATION BASED ON HOW THEY ARE ACTUALLY USED. IF A DEVICE CAUSES A PROBLEM ON ONE GAMING SITE, THIS FACT CAN BE BROADCAST SO THAT OTHER SITES CAN DECIDE HOW THEY WANT TO REACT TO THE NEW INFORMATION. BY LINKING A COMPUTER’S REPUTATION TO ITS ONLINE ACCOUNTS, FRAUD MANAGERS CAN SEE EXACTLY HOW A PARTICULAR COMPUTER HAS BEEN USED IN THE PAST AND ARE BETTER EQUIPPED TO EXPOSE AND PREVENT THE FRAUDSTERS FROM NEW ACCOUNTS, EVEN WHEN THEY ARE TRYING TO ENTER A WEB SITE FOR THE VERY FIRST TIME >> 90 ■ Casino & Gaming International

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abuse, collusion, cheating and other abuses are costing online gaming sites millions of dollars a year. Prevention requires the ability to expose and stop fraudsters from entering a site in the first place. One of the biggest reasons fraud managers continue to struggle with online fraud and abuse is because their fraud management techniques are focused primarily on personal identifiable information (PII). When abusive behaviour is identified, nothing prevents the individual from coming back. Without even leaving their chair, they come right back using the same computer to create a new fraudulent account and repeat the undesired behaviour. This is why it is essential for casinos to seriously consider adding device-based recognition and fraud management techniques into their arsenal.

WEB OF ASSOCIATIONS Device reputation allows fraud managers to see the relationship between all devices and accounts on their network. This, by itself, is extremely valuable. Why would one device be associated with 100 accounts? When you identify a bad account, stopping all other related accounts at the same time helps you get ahead of the problem. Over time, computers establish a positive or negative reputation based on how they are actually used. If a device causes a problem on one gaming site, this fact can be broadcast so that other sites can decide how they want to react to the new information. By linking a computerâ&#x20AC;&#x2122;s reputation to its online accounts, fraud managers can see exactly how a particular computer has been used in the past and are better equipped to expose and prevent the fraudsters from new accounts, even when they are trying to enter a Web site for the very first time.

larger the shared network of companies using reputation management software, the more robust and the more detailed the reputations are in its universe. The ability to tap into an extensive web of associations to see which devices and accounts are linked across the Internet provides tremendous value for fraud managers who are trying to connect the dots to stop organised fraud. With a network of online communities using device reputation for security, word travels fast. Imagine the benefit of knowing a device trying to deposit money on a poker site is associated with an account with evidence of stolen credit cards and chargebacks on another online gaming site. If a device identified with past fraudulent behaviour is linked to another device or account across a network of device reputation subscribers, that particular computer can be shut down before it can repeat the fraudulent behavior. A network with the ability to uniquely identify each device, expose associations with other online accounts, monitor that relationship over time, and continually share data with other online networks is an incredibly valuable tool.

STOP FRAUD BEFORE IT HAPPENS The bottom line is device reputation takes the guesswork out of fraud management. Internet security representatives have a clearer picture to make quicker, better informed decisions based on confirmed evidence to catch fraud that would otherwise be missed. With device reputation, online gaming sites can enhance their arsenal to fight fraud and abuse, and in doing so, increase operational efficiencies and reduce barriers to entry to significantly increase revenue. In an era of rampant identity theft, device reputation removes the mask of fraudulent and unwanted behavior to stop fraud and abuse before it happens. CGI

LAYERED APPROACH Device reputation can also enhance other risk management techniques. Take for example, a transaction scoring service that stops 10,000 transactions based on stolen credit card reports, invalid address, and other valid reasons. What do you think the chances are that these failed deposit attempts came from 10,000 unique computers? Why would you continue to process transactions from a computer that has submitted hundreds of high risk transactions all under different identities? Device visibility allows sites to stop accepting transactions from bad computers. More valuable still, in identifying the bad device to prevent future deposit attempts, you will likely see that this computer got some transactions through. In this way, device reputation strengthens the transaction scoring system by seeing high risk transactions that the risk scoring service missed. As you can see, without device reputation fraud managers are only looking at half the picture. The inclusion of device reputation augments an online gaming siteâ&#x20AC;&#x2122;s existing fraud detection solutions, providing a multi-layered defense needed to combat online fraud and abuse.

NETWORK EFFECT While device intelligence can be used to tell the good guys from the bad, the defining power of the device reputationbased defense lies in the sharing of reputation data among online entities. And perhaps the more compelling argument for a new paradigm governed by device reputation is that the 92 â&#x2013; Casino & Gaming International

SCOTT OLSON Scott Olson is the vice president of marketing at iovation, an online fraud management company. He is a recognised thought leader in IT Security and is a frequent speaker at industry events such as Combating Cybercrime, RSA, and Digital ID World. Scott holds a BSE in Electrical Engineering from Duke University and an MBA from the University of Texas at Austin. In 2007, he received the Distinguished Young Alumni award from the Duke University Pratt School of Engineering. Scott is a Certified Information Systems Security Professional (CISSP).

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STANDARDS, TESTING & ORGANISATION

RIDING THE WAVE OF GLOBAL PROTOCOL POSSIBILITIES BY PETER DE RAEDT

The creation of the Gaming Standards Association (GSA) 10 years ago signified the beginning of cohesion, organisation and collaboration among manufacturers to establish a common language for gaming protocols. Over the past decade, the GSA has grown from a handful of member companies in Las Vegas to a worldwide organisation that crosses physical borders and borders of business type, and now includes members from casino operators, manufacturers, lotteries and test labs. The work has been challenging, and now the rewards of that work are beginning to benefit the entire industry.

he world of gaming is dramatically different today than it was just ten years ago. Think back to a decade ago: neither the Bellagio nor the Venetian had yet opened in Las Vegas; Tribal gaming was in its burgeoning infancy; Aristocrat had not yet come to America; and Macau was a strip most casino executives had not heard of. During the past ten years, remarkable changes have come to the industry – not just in terms of physical structures and corporate re-organisation, but in terms of new technologies that are streamlining operations, driving manufacturer development and enhancing customer service and casino marketing potential. These developments, of course, are not bound to any shore or region; rather, they are encompassing the globe nearly simultaneously as manufacturers and operators alike make the most of international corporate structures, a more global marketplace, and an ever increasing acceptance of gaming by the public in nearly every corner of the world. However, for all its advances, there are elements of the global gaming industry that remain behind the curve of other global businesses in terms of technology acceptance and capability. Over the past decade, the Gaming Standards Association (GSA) has grown from a handful of member companies in Las Vegas to a worldwide organisation that crosses physical borders and borders of business type, and now includes members from casino operators, manufacturers, lotteries and test labs. The work has been challenging, and now the rewards of that work are beginning to benefit the entire industry.

“VISION IS NOT ENOUGH; IT MUST BE COMBINED WITH VENTURE.” — VACLAV HAVEL While Monica Lewinski was dominating U.S. headlines, and Casino & Gaming International ■ 95

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frozen water was found on the moon, the founding members of what was then called the Gaming Manufacturers Association (GAMMA) came together to begin to overhaul the industry. It started with a grand vision: coalesce the various manufacturers into a cohesive organisation to establish a common language for gaming protocols. On the surface that might not seem like such a grand vision, but ten years ago, the idea was thought to be laughable by some, impossible by most and absolutely mission critical to the future of the gaming industry to its farsighted founding members. It seems almost passé now, but at the time, manufacturers attempted to protect their market share largely through proprietary protocols. The theory was: “If we make our games and systems only talk to each other, casinos will only buy our games and systems!” The result was a cacophony of more than 30 different languages babbling across the casino floor, and an influx of IT personnel in every casino in the world whose job it was to act as UN delegates of sorts, trying to get the various games and systems to talk to each other. Not to be understated was the bill for this work, which could run an average casino upwards of $3m a year. Finally, the operators began to push back and began to push that $3m to the bottom line, not to a patchwork quilt covering the casino floor. It was in that environment that Acres Gaming Inc., Aristocrat Inc., Bally Gaming, Mikohn Gaming, Sega

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Gaming Technology Inc., Sigma Game Inc., Silicon Gaming Inc. came together to do the impossible: protect market share without burdening operators with a Tower of Babel full of languages. There had to be a better way, and it was now GAMMA’s mission to find it.

“WE WILL EITHER FIND A WAY OR MAKE ONE.” — HANNIBAL During a seminar at the 1996 World Gaming Congress and Expo seminar, John Acres put forth an idea: what if we used off-the-shelf technology to drive gaming technologies, using the advances of the internet and its associated elements to further the industry. Two years later, GAMMA began to realise that was the way: tested and proved off-the-shelf technologies could be utilised, manipulated and enhanced to provide the solution operators were now demanding of manufacturers and could also increase time-to-market for manufacturers. The wind of a win-win situation began to blow. The way of open technologies had been made clear, and ten years later, each of GSA’s standards is an open protocol. That means the standards create interoperable and affordable solutions for everyone. They also promote competition by setting up a technical playing field that is level for all market players. This means lower costs for developers, manufacturers, and ultimately gaming operators. GSA’s landmark and award-winning protocols – Game-

STANDARDS, TESTING & ORGANISATION

to-System (G2S), System-to-System (S2S), and Gaming Device Standard (GDS) – cover all facets of the electronic gaming industry from the box to the peripherals to systems. Today, manufacturers are developing and rolling out products based entirely on the idea that they are GSA-compatible. The G2S protocol, for example, has created an exciting new world of imagination and opportunity for manufacturers and regulators alike. A combination of IGT’s SAS protocol and GSA’s BOB protocol, the multiple award-winning G2S has created a situation unimaginable ten years ago: that manufacturers could come together to create an open base technology that everyone could use, where innovation could thrive and the marketplace could flourish riding a wave of new possibilities.

Acting jointly, GSA and MPI will spread technical knowledge behind GSA’s standards to students in Macau and other parts of Asia through MPI. The goal of the cooperative effort is to educate the next generation of engineers who will be working with the protocols in the field and in the development lab. Macau is developing at a breakneck pace that surprised the entire industry. Tables emerged as the predominant revenue-generator on the floor, and now the slot side is beginning to grow. As that growth moves into its next, rapid stage, the marketplace must be ready for today and for the games of tomorrow, which is why our work with MPI has such immediate importance.

BRINGING REGULATORS TO THE TABLE GSA IN EUROPE While from its very inception GAMMA/GSA was a consortium of international companies, somehow the perception began to emerge that GSA was an American company, full of American operators and manufacturers writing American protocols for the American gaming industry. The perception was that the rest of the world would somehow remain unaffected by the brave new technological world emerging in the States. GAMMA immediately embarked on a world tour, presenting to the European Gaming Organisation and the World Gaming Congress, enlisting additional European members and assertively spreading the message of global standardisation to European manufacturers, operators and regulators. The lack of standards significantly limited the growth for our industry and continued to increase the cost of doing global business. Today the future for both vendors and operators looks a lot brighter; it reminds me of time before the explosive growth of the internet. Recently, GSA began its 10 year celebration at the International Casino Exhibition (ICE) show in London, and for the first time held its Technical Committee Meeting in Europe. Held in Austria and hosted by member company Atronic International, the meeting also served as an orientation for Euro companies still curious about GSA and the potential its protocols bring to their businesses and jurisdictions. The fact is, when international companies, whether they are based in Austria or Argentina, develop their products with GSA protocols at their center, they have a greater opportunity of exporting their products to markets beyond their borders.

“WHEN WRITTEN IN CHINESE, THE WORD ‘CRISIS’ IS COMPOSED OF TWO CHARACTERS: ONE REPRESENTS DANGER, AND THE OTHER REPRESENTS OPPORTUNITY.” — JOHN F. KENNEDY Of course, Macau has recently taken the lead in the gaming world, outpacing all other markets in growth and in revenue, and GSA is there helping manufacturers and operators prepare for the near future of global G2S adoption. Late last year, GSA signed a memo of understanding with the Macao Polytechnic Institute, expressing GSA’s and MPI’s mutual commitment in providing education related to the very latest gaming technology and open communication standards. Moving forward with the agreement, MPI will first act as GSA’s office in Asia.

Every technological advance has a ripple effect for regulators. Just as each manufacturer has its own unique product selling points, each jurisdiction has its own unique regulations. GSA has become more and more familiar with this reality with its long relationship with Gaming Laboratories International (GLI). Manufacturers can test their games and systems against other OEMs’ games and systems in the safety of GLI and GSA’s interoperability centres located in various GLI labs. Out of that agreement grew an opportunity to assist regulators in GSA standard adoption. So to facilitate standardised testing of its G2S protocol, GSA is now providing toolkits to qualified government agencies worldwide. The toolkits, developed by Radical Blue Gaming, assist regulators in preparing their jurisdictions for the influx of G2S-enabled products that are now beginning to land in the marketplace. GSA will be supplying RadBlue’s G2S Scope (RGS) and the Scriptable Tester (RST) tools to government agencies that have a staff capable of testing communication protocols and are currently engaged in testing. In order to qualify for this programme, testing agencies must be the final approval authority and must have an immediate need for G2S protocol testing. GSA’s technical director Marc McDermott comes to this issue with a long background in regulation, having served on the Nevada Gaming Control Board. He said, “Regulators are certainly not obliged to use this toolkit; however, we wanted to provide them with easy access to the toolkit that is most commonly used by developers. It will benefit regulators to have a common testing tool they can use for testing products from multiple manufacturers. It is in the industry’s interest to validate a standard’s implementation using a common toolkit. This will significantly contribute to consistent implementation and ensures interoperability.”

PREPARING OPERATORS FOR THE WORLD THEY WANTED “Be careful what you wish for,” the old saying goes. Operators first pushed the issue of protocol consolidation, and now we have reached a point where the protocols are at hand. However, the emerging technologies can be complex and overwhelming to executives whose job involves numbers, not the acronym-laden world of IT. These technologies are also very exciting, and should be understood by those at the top whose feet will be held to the fire of future profitability. We are living through one of the most exciting periods in human history, and walking the Casino & Gaming International ■ 97

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tradeshow floors at G2E and ICE, each of us has seen firsthand how manufacturers across the globe are embracing new and emerging technologies and applying them to the gaming industry in new and exciting ways. To help bridge the knowledge gap, GSA created a series of four easy-to-understand, non-technical courses for busy executives and managers designed to quickly give attendees a better working knowledge of the industry’s new protocol standards and their implications. The series, titled “GSA Executive Awareness Programme,” consists of four one-day classes and focuses on the needs of executives and managers working for game and systems equipment manufacturers, casino properties, regulators and independent test labs. Each class is presented in non-technical, easily understood language. And in the most basic profit language possible, it can be stated that the reality is, every casino’s current database of players is aging, and today’s players will have to be replaced eventually by the next generation. Frankly, today’s 16 yearolds will be players in just five years or just two years in some jurisdictions. And what are these new potential customers like? What are their interests? Will they be satisfied with standard reel spinners? Or will they be a more demanding, more sophisticated consumer? The answer to those questions lies in the new technology enabled by GSA protocols, and, as daunting as the language of IT might at first seem, it is imperative that executives have a working basic lexicon on which to base their future projections and forecasts.

Enhancement Technology” at the Global Gaming Expo. The honour was soon following when G2S was named one of International Gaming & Wagering Business magazine’s “Top Three International Gaming Products” at the London International Casino Exhibition (ICE). From its modest beginnings of seven members, today GSA a global powerhouse of 72 members from all facets of the industry – manufacturers, casino operators, lottery operators and test labs, all united behind a common goal: to facilitate the identification, definition, development, promotion, and implementation of open standards to enable innovation, education, and communication for the benefit of the entire industry. We always knew we were on to something big, and we are honoured that the industry is recognising our efforts. But while awards are wonderful to win, the real winner isn’t GSA; we were never in this for the contest. The real winner is the worldwide gaming industry. We got the got the assignment and created the solution, but GSA isn’t reaping the rewards. We did this for the industry, and that future success is why we’re in this, and why our members are in this together. CGI

HELPING THE OPERATORS WHO STARTED THE CHANGE Operators started the standardisation ball rolling, and it must be operators who will adopt the protocols on the casino floor for any manufacturer’s vision to become a reel spinning reality in front of paying customers. But somewhere between demand and supply, a rift exists, where manufacturers are widely using the new G2S protocol and operators who must be ready to use the protocol for the new games to work. To help bridge that gap, GSA created a committee, the Operator’s Advisory Committee. Created out of GSA’s recent Operator’s Forum, the new committee is currently chaired by Don Karrer of Penn National Gaming and vice-chaired by Mick Constantino of MGM MIRAGE. The committee is comprised of representatives from a mix of GSA-member operator companies. The group is charged with facilitating collaboration between GSA member operators and member manufacturers and system providers with the purpose of determining future functional requirements from operators. The group will then ensure alignment on those requirements between the operator and manufacturer communities.

AND THE WINNER IS… Never underestimate the possible. When GAMMA was founded, few outside of the organisation gave their vision a chance at succeeding. About seven years later, GSA embarked on its most ambitious project yet – to create a single protocol that combined the visions of two far-reaching protocols – IGT’s SAS and GSA’s BOB. Then, more than 14 months of unprecedented cooperation between gaming manufacturers and operators across the globe resulted in the GSA’s new G2S protocol being named “Best Productivity98 ■ Casino & Gaming International

PETER DE RAEDT Peter W. De Raedt, is an independent consultant who became the president of the Gaming Standards Association in October 2002. Peter has a degree in Electrical Engineering from the University of Antwerp, Belgium as well as a Business Management diploma from South Africa. He started in the gaming industry in 1986 for TCS. As Systems Manager / General Manager, Mr. De Raedt has been running the Systems division for TCS (UK) from Belgium. Peter joined Aristocrat in Sydney in 1997. As VP of Technology he was responsible for establishing the new R&D center in Tucson Arizona. In 2001 Peter left to take up the position as Corporate VP of Product Development and IP for the MIS Group of Monaco and at the same time he resigned as Chairman of the Board of the Gaming Standards Association, GSA (formerly known as GAMMA). He served as their chairman since GSA’s inception in May 1998. Peter is also active on the editorial advisory board of CEM publication and is a partner in a new startup company. Peter is married, has two sons and lives in Reno, NV.For information about GSA and its award-winning protocols, visit www.gamingstandards.com.

GAMBLING BEHAVIOURS

CREATING A STANDARDISED MEASURE OF SOCIAL AND ECONOMIC EFFECTS BY DOUG WALKER

The academic literature on gambling has grown significantly during the past twenty years. This has coincided with the spread of casino gambling around the world. There is no sign of the casino growth waning in the near term. Yet, there are some clear limitations to our scientific understanding of gambling behaviours and the economic and social effects of gambling. Indeed, some of these limitations have been clearly visible from the earliest studies on problem gambling behaviours and effects.

see gambling research as being multidisciplinary, yet falling into two broad categories. First, there is the psychological/physiological area: why people gamble, why some people develop problem gambling behaviours, and how to diagnose and treat such problems. This area of research is by far the one that receives the most research effort. Although problem gambling has parallels to substance/alcohol abuse, there are distinctions which justify problem gambling being its own field, especially from a treatment perspective. Psychological and medical researchers have made significant advances in diagnosing, explaining, and treating gambling problems. But there are still many unanswered questions. Fortunately, the amount of funding available to encourage research in this area has increased dramatically in recent years. There are also a number of academic outlets specifically for this type of research. The second research area is on the economic and social effects of gambling and problem gambling behaviours. These issues are closely tied to the psychological/physiological area of research. The economic/social effect of gambling is a critical area of research because in many ways it bridges the psychological/physiological research to policymaking. When politicians and voters create policies regarding casino gambling and other types of gambling, they often take serious consideration of the potential social costs of gambling as well as the potential fiscal and economic growth benefits that the industry can induce. The economist can help to identify and quantify the social and economic costs and benefits, making decisions on gambling policy more informed and objective. In addition, having empirical estimates of the social costs of problem gambling can be a guide to treatment researchers and clinicians by illuminating which types of gambling effects are

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the most costly, and therefore most justify attention or public expenditures. Despite its importance, this “economics” area has received little research attention. For example, little is known about how the casino industry will affect other industries (either gambling or non-gambling). Little empirical evidence exists on how the introduction of casinos affects the government’s overall tax revenues. Neither has there been much research on the employment and wage effects of introducing casinos. All of these are important issues that could take researchers years of work to address for any particular jurisdiction. (The number of jurisdictions with casinos is growing quickly; there is no end in sight to the growth in the number of potential research topics.) Still, few economists appear to be interested in the economic effects of gambling. For those researchers already engaged in this field, the lack of competition is a good thing. It means we do not have to think very hard to come up with ideas for new papers. But the state of knowledge would surely benefit from more researchers. Why do so few economists study the economic and social effects of casino gambling? A number of possibilities come to mind. First, one may argue that there is a lack of research funding available. I am not convinced by this argument because economists choose all sorts of uninteresting topics to study, even without funding. Gambling is certainly one of the more interesting industries that could be chosen as a topic, with or without a financial incentive. Second, one can argue that research outlets are not very welcoming to “economics of gambling” research. Of course, researchers can send their work to any number of economics journals, and papers on the economic effects of casinos have been published in a number of reputable journals. But as far as the specialised gambling journals go, they appear to be

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dedicated to publishing articles on the psychology/medical issues of gambling behaviours, rather than the economic and social effects. For example, the aim of the Journal of Gambling Studies has even changed. In 1999, the Journal described its aim: “The journal is devoted to the understanding of the phenomenon of gambling as a social, economic, legal, psychological, pathological, and recreational activity in society. Professionals from all disciplines are invited to submit articles, including professionals in the fields of anthropology, sociology, economics, political science, history, criminology, finance, psychology, social work, and psychiatry. Awareness and arousal of interest in gambling, commercial gaming, and the social costs associated with it, such as pathological gambling and its treatment, comprise the primary focus of the journal.” The current (2008) aim of the Journal is noticeably more focused: “The Journal of Gambling Studies is an interdisciplinary forum for research and discussion of the many and varied aspects of gambling behaviour, both controlled and pathological. Coverage extends to the wide range of attendant and resultant problems, including alcoholism, suicide, crime, and a number of other mental health concerns. Articles published in this journal span a cross-section of disciplines including psychiatry, psychology, sociology, political science, criminology, and social work. As an economist, I find it particularly interesting that economics was deleted from the list of fields of interest to the journal. Why has economics declined in importance? It is a primary field that informs critical policy decisions. Perhaps the Journal of Gambling Studies has been receiving so few economics articles and so many on psychology/physiology, that it was necessary to refocus the journal.” Even if some journals are narrowing their focus on specific aspects of the gambling issue, this simply leaves open opportunities for other journals. The new Journal of

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Gambling Business and Economics and Journal of Prediction Markets, for example, will help to encourage new research on economic aspects of gambling. Overall, I do not believe that trends in the gambling journals or the lack of research funding can explain the lack of economic research on gambling. I am convinced that there are two basic reasons why gambling research has not seen a larger number of economists involved. First, I think the lack of data is critical. In the U.S., for example, commercial casinos have begun to spread outside of Nevada and Atlantic City, NJ, only since the early 1990s. As the data pool grows, I believe we will start seeing many new studies. Research in other countries is arguably better developed because of earlier and more widespread experience with the casino industry. For example, the 1999 Australian Productivity Commission report may be one of the best studies to date on the economic and social effects of gambling. The second reason there has not been much economics of gambling research is that there are some fundamental methodological problems in identifying and measuring the effects of gambling. I have previously addressed some of these issues in other papers. In my February 2007 editorial for BasisOnline (www.basisonline.org) I focused on four serious “hurdles” to social cost of gambling research. The first issue is that many researchers fail to define “social cost” before trying to measure it. The result is that different researchers end up measuring different things. This makes it impossible to make comparisons across jurisdictions or countries, and obviously reduces the quality of social cost estimates to policymakers and interested voters. The second issue I addressed was the “counterfactual” scenario. One problem in gambling research is that researchers often implicitly assume that if casinos were not legal, for example, there would be no problem gambling behaviours or the associated costs. This is obviously untrue, as people can always find jurisdictions where gambling is legal, or participate in illegal gambling. So many social cost estimates overestimate the marginal impact that a policy change may have on the social costs of gambling. The third issue is that many social cost estimates are based on surveys of pathological gamblers in which the respondents are expected to give accurate estimates of their gambling losses. The validity of these survey data are often taken for granted, even though published research indicates that the reliability of such data are seriously questionable. For example, one recent study found that many survey respondents are unable to estimate their gambling losses, even if they are given instructions on how to do so. The fourth issue I addressed in the BasisOnline article is how to treat government expenditures. The estimated social costs of gambling will be very sensitive to how aggressive a government is in funding gambling research. For example, governments of the U.K. may provide significant funding for research, diagnosis, and treatment of problem gambling. According to most social costs researchers, these costs would be included as social costs of gambling. Then if government simply cuts funding for research, diagnosis, and treatment, the estimated social costs of gambling fall significantly. This obviously poses a problem for developing objective social cost measures. Here I would like to focus on just one of these issues:

comorbidity. I believe that this is the most serious and fundamental problem with social cost of gambling research. Comorbidity refers to co-existing or multiple disorders. Research indicates that pathological gamblers typically have other psychological problems, such as mood, anxiety, impulse control, and/or substance use disorders. Several studies have examined the degree to which pathological gamblers suffer from other concurrent disorders. For example, one recent study indicates that about 73 percent of U.S. pathological gamblers have an alcohol use disorder. A study published lasts year found that 76 percent of participants in their study had co-occurring behaviours, and 56 percent had multiple co-occurring behaviours. Both of these studies examined a variety of behavioral disorders, most of which are associated with impulsivity. Another recent study examined the onset of multiple disorders. Of those problem gamblers studied, “74 percent of participants with problem gambling and another disorder experienced the other disorder before problem gambling.” Clearly, problem gamblers often have other behavioural problems, which usually surface prior to gambling problems. Still, this does not inform researchers about the existence or direction of a causal link between problem gambling and other disorders. This makes it virtually impossible to apportion the social costs caused by a problem gambler to his problem gambling, anxiety disorder, alcohol use disorder, or the other problems. Even if researchers found convincing evidence that problem gambling is the fundamental or primary disorder, it still would not make the attribution of costs much easier. This is because different combinations of impulse disorders may be manifest in different types of costly behaviors. Much more research on the relationships among comorbid disorders and a clearer understanding of the behaviours associated with such disorders are needed before believable “social cost of problem gambling” estimates can be developed. Perhaps an initial stab at working through the comorbidity dilemma will be clinicians assigning blame much in the way U.S. auto insurance companies do for traffic accidents: Based on the facts of the case, each driver is assigned a percentage of the blame and drivers’ insurance companies are responsible for the respective shares of the costs. Problem gamblers’ cases are often unique, and such judgments of which behavioral disorders are to blame for socially costly behaviors, and in which proportions, must be made at the individual level. The result of such a system for estimating social costs attributable solely to problem gambling may be argued to be just as arbitrary as current measures. Another possible way to approach costs while considering comorbidity is for researchers to do careful parallel studies. They could study two groups, one with problem gamblers but not coexisting disorders, and the other with individuals who have multiple disorders. Researchers could study the extent to which co-occurring disorders lead to higher (or lower) social costs relative to the group with only problem gambling. I am not aware of a good study like this having been published yet. In February 2008, a consortium of Canadian funding agencies released the “Socio-Economic Impact of Gambling (SEIG) Framework” (http://www.gamblingresearch.org/). The SEIG report aims at overhauling the social cost research and developing a “gold standard” for such studies. The study Casino & Gaming International ■ 101

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claims that it provides a framework for this to happen. It is yet to be seen whether the SEIG report will have the influence it intends to have. In any case, the framework proposed in the SEIG report is limited in the same way that all previous social cost measurement methodologies have been limited: there is no valid way to apportion social costs among different disorders. The SEIG framework is very effective in outlining different social cost identification and measurement issues that deserve research attention. It also includes numerous pleas for additional funding to support such research. A cynical politician or funding agency head might read the SEIG report as being simply a list of topics to help justify additional research funding for social scientists. (Of course, as an economist, I’m all in favour of additional research funding for this area!) Should researchers begin to examine the long list of topics provided in the SEIG report? Given the current understanding of problem gambling and how it is related to other disorders, my opinion is that empirical estimates of social cost are largely arbitrary, and are therefore of little practical use and should probably not be used as bases for important policy decisions. I began by complaining that too little economic research has been performed on casino gambling and associated behaviours. Now I am questioning whether such research is useful. What gives? Overall, I do think it is useful for research to be done on the social and economic effects of gambling – with a caveat. Such research can be useful as long as it moves us toward a standard definition and measurement methodology for costs and benefits. In my view, standardisation is probably more important than which definition of “social cost” is chosen, or exactly how the costs are measured. For example, cost-of-illness (COI) studies have been performed in the substance abuse literature for years. This framework is similar to a welfare economics perspective, but there are significant differences between the two perspectives. It is an easy exercise to highlight the limitations, similarities, or differences among different approaches to social costs. If researchers begin to favour one type of methodology – even if it is flawed – the flaws and how they are manifest in empirical estimates can be easily identified and will become well-known limitations of the approach. Gross domestic product (GDP) is a standard measure used to evaluate economic growth within countries through time, and to compare growth across countries. The measure has numerous flaws and limitations, all well-known among economists. Yet economists continue to use the measure because it is standardised. We cannot say the same thing about the “social costs of gambling.” The lack of a consistently used definition of “social costs” has been a problem since researchers first began to make serious attempts at identifying and measuring the social costs of gambling in the early 1990s. Relatively little attention has been paid to this issue, and almost no progress has been made in resolving it. The SEIG framework may even make the “standardisation” problem worse. This is because the SEIG framework identifies numerous effects of gambling, but does little to offer a justification for whether particular effects should be included or excluded from cost-benefit measures. Nor does it discuss which effects are appropriate focuses for policy. Therefore, the SEIG framework may actually move us 102 ■ Casino & Gaming International

away from the standardisation that it is supposed to bring about. To its credit, however, the SEIG report does highlight many of its potential problems. But many of these had already been addressed previously in the literature and in conferences. The framework does not appear to offer much new, except a detailed listing of different costs and benefits associated with gambling, and calls for funding for social and economic research. Where does this leave gambling researchers, policymakers, and voters who want good information on the effects of gambling on society? They can take some comfort in knowing that there have been advances in understanding the psychological and physiological issues surrounding gambling. The research on the economics and policy side of the gambling issue has been much slower to develop. I do not expect this to change quickly. However, if more researchers begin to attack the problems, we may see some research advances. This is certainly an area worthy of research effort, but so far little progress has been made. Without some legitimate way to handle the comorbidity issue, I do not see social cost estimates as being very useful. However, one could argue that as long as we remain cognizant of the potential problems in cost estimates, they can still provide some useful information. But too often the limitations of studies have been downplayed or ignored by the researchers who author such reports or the end-users (e.g., politicians) of the research. Good public policy decisions should not be made on invalid methodologies, as is so common in social cost of gambling estimates. But perhaps bad measures that we all agree to use – whose limitations are widely recognised – are better than measures that are highly arbitrary and vary widely. If our goal is to understand the social and economic effects of gambling, we should strive to make consistent the measurement of effects across researchers and jurisdictions, and through time. The validity of such measures is, of course, critical, but given the current understanding of the methodological problems inherent in this type of research, a flawed standardised methodology is better than multiple flawed and varying methodologies. These appear to be our two options at this time. I have argued, and still argue, that the welfare economics conception of social costs is the best methodology to use. CGI

DOUG WALKER Douglas M. Walker is an associate professor of economics at the College of Charleston, in Charleston, South Carolina, USA. His research focus is on the economic and social impacts of legalised casino gambling. He has published in a number of journals, and has done consulting work for a variety of public and private organisations. His book, The Economics of Casino Gambling was published by Springer in 2007. Walker’s webpage address is www.cofc.edu/~walkerd.

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SOCIAL RESPONSIBILITY

GAMBLING LOYALTY SCHEMES: TREADING A FINE LINE? BY MARK GRIFFITHS AND RICHARD WOOD

Loyalty and discount schemes in which customers are invited to sign up for a card and become a member of a scheme, sometimes in exchange for registering some basic personal details, are an established feature of the retail and services landscape. They have become widespread and arguably ubiquitous. Such schemes are part of the increasing emphasis on defensive marketing where the focus is on retaining existing customers and increasing the amount of custom from them. But whether this leads to ‘customer enhancement’ or ‘customer exploitation’ is open to question.

hen it comes to gambling, there is a very fine line between providing what the customer wants and what could be perceived as exploitation (i.e., ‘customer enhancement’ vs. ‘customer exploitation’). The gaming industry sells products in much the same way that any other business sells things. They are now in the business of brand marketing, direct marketing (via email with personalised and customised offers) and introducing loyalty schemes. Such loyalty schemes can help in awareness, recognition and brand loyalty. However, one question to ask is whether loyalty schemes are socially responsible. On joining loyalty schemes, customers supply lots of information including their name, address, telephone number, date of birth, and gender. They can send the gambler offers and redemption vouchers, complimentary accounts, etc. Benefits and rewards to the customer include cash, food and beverages, entertainment and general retail. However, an unscrupulous online gaming operator could conceivably entice known and/or suspected problem gamblers back onto their premises with tailored freebies.

LOYALTY SCHEMES Loyalty and discount schemes in which customers are invited to sign up for a card and become a member of a scheme, sometimes in exchange for registering some basic personal details, are an established feature of the retail and services landscape. They have become widespread and arguably ubiquitous. There are a number of major groups of loyalty schemes in different sectors including retail, financial services and the travel and hospitality sectors. Such schemes are part of the increasing emphasis on defensive marketing where the Casino & Gaming International ■ 105

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focus is on retaining existing customers and increasing the amount of custom from them. There are two major types of schemes: collect and spend, and instant discount. Collect and spend schemes are used widely by many big retailers including some gaming companies. Collect and spend schemes are often free; customers present their card each time that they make a purchase and thereby collect points, which can be redeemed at a later date for a discount or other reward. Many of the larger schemes collect data on customer purchases and use that data to further adapt their offering to suit their customer group, seeking thereby to enhance repeat purchases, or behavioural loyalty. Instant discount schemes tend to be used by smaller retailers and other service outlets. In order to obtain an instant discount card, customers are typically expected to make a modest initial payment for the card. Subsequently when the card is presented at point of purchase a discount is received on some or all of the goods purchased. These types of scheme appear to be much less used by the gaming industry compared to ‘collect and spend’ schemes. Over the last decade or so, relationship marketing, and in particular loyalty marketing, has become increasingly popular among companies (including gaming operators) who seek customer retention in marketplaces that are complex, dynamic and highly competitive. Retailers tend to compete primarily on product price. In contrast, the hospitality and leisure industries tend to compete on the basis of atmosphere, service quality, and reputation. It could therefore be argued that customer loyalty and retention may be more relevant and of greater importance to the leisure sector (including the gambling industry) than for retailers. Loyalty card schemes are now widespread and used by many companies in an attempt to increase customer retention, that is, repeat patronage with the aim of increasing company profits. It has been suggested that loyalty has both an attitudinal and behavioural component. Attitudinal loyalty is related to psychological commitment and infers a positive emotional or mental liking of a particular organisation and/or brand. This is based on range of factors including trust, confidence, familiarity, a perception of shared values, and a past relationship. Alternatively, behavioural loyalty is demonstrated through overt measurable behaviours such as increased shopping frequency, customer retention over time, tolerance of price increases, and increased share-of-wallet. On the whole, businesses prefer attitudinal loyalty to behavioural loyalty, as it is believed to have a greater resilience. This is because it is thought that attitudinal loyalty leads to long-term behavioural loyalty but not vice-versa.

Research into loyalty schemes shows that loyalty cards tend to lead to a calculated commitment rather than affective loyalty. This is because typical loyalty card rewards (e.g., discounts, points and prizes) target behavourial loyalty rather than attitudinal loyalty. There has also been considerable debate in the marketing literature as to whether loyalty card schemes build genuine loyalty or whether they are little more than relatively sophisticated discount schemes where customers trade their contact details for access to reduced price goods or services. Others have reported that loyalty card schemes generate little more than information that is used by companies to tailor and enhance their goods or services. It has been suggested that there are a number elements that together determine the customers’ perceived value of a reward-based loyalty scheme. These are: ■ ■ ■

The monetary value of the rewards given relative to the cost of the product (e.g., the price of a game compared to the value of the reward). The aspirational value of the rewards (e.g., how exciting and/or desirable the reward is). The perceived likelihood of achieving the rewards (e.g. the odds or frequency of getting a reward). The ease of use of the scheme.

Furthermore, the potential such a scheme has to attract members depends not only on the value of the rewards it offers, but also on when the rewards are available. Research on the psychology of reinforcement tells us that when rewards are delayed they are far less motivating. Many accumulating benefit schemes, such as frequent-flyer schemes, try to (partially) alleviate this problem by sending their members a statement of accumulated points at regular intervals. Typically, these statements are accompanied by material promoting the aspirational values and ease of achieving the various available rewards. Unfortunately, it is not known to what extent these elements are important in a gambling-related reward schemes although there seems to be good face validity that they may be important for gamblers. It is also known that many customers (including gamblers) are members of several loyalty schemes, (i.e., polygamous loyalty) such has having two or three supermarket loyalty cards that could be viewed as ‘disloyal’ behaviour. However, this appears to be a fairly rational behaviour by consumers as it is unlikely that one company or organisation can realistically meet all their needs. Companies (including those in the gambling industry) need to

>> DESPITE THE POTENTIAL TO EXPLOIT GAMBLERS, SOME GAMING COMPANIES WHO OFFER LOYALTY CARDS ARE BEGINNING TO USE THEIR LARGE DATA SETS TO HELP IDENTIFY PROBLEM GAMBLERS RATHER THAN TO PROMOTE THEIR GAMING PRODUCTS TO THEM. THIS WOULD APPEAR TO BE MORE SOCIALLY RESPONSIBLE THAN LOYALTY CARDS PER SE. SUCH CARDS MAY BE MORE ACCURATELY DESCRIBED AS RESPONSIBLE GAMING CARDS OR PLAYER CARDS RATHER THAN ‘LOYALTY CARDS’ >> 106 ■ Casino & Gaming International

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understand that their clientele may hold a ‘portfolio’ of loyalty cards. Furthermore, the customer may view these as complementary rather than as competitive. This perspective will encourage companies to make appropriate use of differentiation through the levels of discounts offered, any supplementary reward design, membership pricing, and membership benefits. Although loyalty card data has typically been restricted to direct marketing it can also be converted into information and knowledge, and utilised to tailor businesses’ goods and services (e.g., price, product range, service quality, convenience). This requires integrative knowledge of the ways in which loyalty card schemes can underpin processes associated with customer relationship and knowledge management. Despite the increasing knowledge about loyalty schemes, some authors have suggested that there is no single formula for the development of a successful loyalty card scheme, and that in some cases it depends on the scope for customisation of the goods or services, which in itself depends on the company’s positioning within its particular sector. Therefore, the loyalty card scheme should be determined as much by the data that the company needs to optimise its goods and services to its clientele, as by the rewards offered to ensure participation by the clientele.

LOYALTY CARDS VERSUS PLAYER CARDS Despite the potential to exploit gamblers, some gaming companies who offer loyalty cards are beginning to use their large data sets to help identify problem gamblers rather than to promote their gaming products to them. This would appear to be more socially responsible than loyalty cards per se. Such cards may be more accurately described as Responsible Gaming Cards or Player Cards rather than ‘loyalty cards.’ Clearly, player cards utilise very similar technology to loyalty cards but should be considered as conceptually very different. Whilst loyalty cards are utilised for the purposes of attracting and maintaining a customer base, player cards should be solely concerned with the issues of protecting ‘vulnerable’ players and (ideally) offering useful information and services to help all players manage their gambling behaviour. Whilst it is technically possible for a loyalty card to also be concerned with harm minimisation, the reality is that their aims are mutually exclusive. Furthermore, it is unlikely that a loyalty card incorporating harm minimisation will be given credibility by customers, stakeholders, or regulators as a genuine responsible gaming strategy. Recent research has shown that many gambling customers, particularly in online environments, expect that a trustworthy operator will have effective responsible gaming initiatives as part of the services offered, but can be sceptical of how and why such services are developed.

CONCLUSIONS The empirical literature on the use of loyalty cards in gambling environments has been limited. It has also been argued there are distinct differences between loyalty cards and player cards, and that player cards can be a socially responsible tool in gambling settings. For player cards to be useful, the player needs to be rewarded for actually utilising social responsibility features (SRFs) and it is important that any reward given to players does not encourage continued gambling. This is the critical difference between a loyalty card scheme, which can encourage longer and/or more frequent

play, and a responsible gaming strategy that encourages behavioural transparency (i.e., a good awareness of personal gambling behaviour). The design of the interface is essential and should be both easy to use and entertaining. The use of player cards and SRFs should feel as though they are a part of the gaming experience rather than something tagged on afterwards. In this way, they will not feel like a chore or something for people with problems, and instead they become a part of the core playing experience. In conclusion, this article’s main argument is that gaming companies should strive to use their large data sets to help identify problem, and/or ‘risky’ gambling behaviour rather than use just using such data for marketing products. The long-term success of the gambling industry is likely to be dependent upon the ability to produce a low-impact (in terms of problems), enjoyable, gaming experience that actively seeks to identify and assist ‘vulnerable’ and problematic players. There is undoubtedly a much larger future entertainment market in providing low-impact games to many players spending a little rather than high-impact games where a few players spend a lot. The former is also less likely to attract punitive regulatory attention. We would argue that the future success of responsible gaming initiatives will also be dependent upon the degree with which an operator actively engages their players into responsible gaming initiatives, rather than providing passive measures that will be frequently be ignored or deemed only relevant to problem gamblers.

REFERENCES Bellizzi, J. A. & Bristol, T. (2004). An assessment of supermarket loyalty cards in one major US market. Journal of Consumer Marketing, 21, 144-154. Ben-Meir, D. (1997). Integrating secure and smart-card technologies into online cashless gaming solutions for clubs and casinos. Located at: http://www.securitymagnetics.com.au. Berger, D., & Hauk, I. (2002). Cashless gaming. Located at the European Association for the Study of Gambling website: http://www.easg.org/Warsaw/Presentations/dominik_ber ger_cashless_gaming.htm. Bolton, R.N., Kannan, P.K. & Bramlett, M.D. (2000). Implications of loyalty program membership and service experiences of customer retention and value. Journal of the Academy of Marketing Science, 28, 95-108. Briggs, P., Burford, B., De Angeli, A. & Lynch, P. (2002). Trust in online advice, Social Science Computer Review, 20, 3, 321-332. Capizzi, M.T. & Ferguson, R. (2005). Loyalty trends for the twenty-first century. Journal of Consumer Marketing, 22, 72-80. Cuthbertson, R. & Laine, A. (2004). The role of CRM within retail loyalty marketing. Journal of Targeting, Measurement and Analysis for Marketing, 12, 290-304. Davies, G. (1998). Loyalty cards can erode loyalty; only customer relationship programmes can build it. European Retail Digest, 20, 8-13. Griffiths, M.D. (2007). Brand psychology: Social acceptability and familiarity that breeds trust and loyalty. Casino and Gaming International, 3(3), 69-72. Griffiths, M.D. & Wood, R.T.A. (2008). Responsible gaming and best practice: How can academics help? Casino and Gaming International, (4)1, 107-112. McIlroy, A. & Barnett, S. (2000). Building customer relationships: do discount cards work? Managing Service Quality, 10, 347-355. Morais, D.B., Dorsch, M.J. & Backman, S.J. (2004). Can tourism providers buy their customers’ loyalty? Examining the influence of customer-provider investments on loyalty. Journal of Travel Research, 42, 235-243. Nielsen, J., Molich, R., Snyder, C. & Farrell, S. (2000). E-commerce user Experience: Trust. Nielsen Noordhoff, C., Pauwells, P. & Odekerken-Schroder, G. (2004). The effect of customer card programs; a comparative study in Singapore and The Netherlands. International Journal of Service Industry Management, 15, 351364. O’Brien, L. & Charles, J. (1995). Do rewards really create loyalty? Harvard Business Review (May – June), 75–82. Oliver, R.L. (1999). Whence customer loyalty? Journal of Marketing, 63, .3344.

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Palmer, A., McMahon-Beattle. U. & Beggs, R. (2000). A structured analysis of hotel sector loyalty programmes. International Journal of Contemporary Hospitality Management.12, 54-60. Passingham, J. (1998). Grocery retailing and the loyalty card. Journal of the Market Research Society, 40, 55-63. Rothschild, M. L. & W.C. Gaidis (1981). Behavioral Learning Theory: It’s Relevance to Marketing and Promotions, Journal of Marketing, 45, 2, 70–78. Rowley, J. (in press). Re-conceptualising the strategic role of loyalty schemes. Journal of Consumer Marketing. Sharp, B. & Sharp, A. (1997). Loyalty programs and their impact on repeatpurchase loyalty patterns, International Journal of Research in Marketing, 14,.473-486. Stone, M., Bearman, D., Butscher, S., Gilbert, D., Crick, P., & Moffett, T. (2004). The effect of retail customer loyalty schemes detailed measurement or transforming marketing? Journal of Targeting, Measurement and Analysis for Marketing, 12, 305-318. Wood, R.T.A. & Griffiths, M.D. (2007a). A qualitative investigation of Swedish online poker players’ attitudes and perceptions toward online poker playing, trust of websites, and responsible gaming policies. Report prepared for Svenska Spel Yi, Y. & Jeon, M. (2003). Effects of loyalty programs on value perceptions, program loyalty, and brand loyalty. Journal of the Academy of Marketing Science, 31, 229-240.

MARK GRIFFITHS & RICHARD WOOD

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Dr Mark Griffiths is a Chartered Psychologist and Europe’s only Professor of Gambling Studies (Nottingham Trent University). He has won many awards for his work including the John Rosecrance Research Prize (1994), CELEJ Prize (1998), International Excellence Award For Gambling Research (2003), Joseph Lister Prize (2004), and the Lifetime Achievement Award For Contributions To The Field Of Youth Gambling (2006). He has published over 185 refereed research papers in journals, a number of books, over 35 book chapters and has over 550 other publications to his name. He has served as a member on a number of national/international committees (e.g. European Association for the Study of Gambling, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling etc.) and was former National Chair of Gamcare (1997-2003). He also does some freelance journalism with over 120 articles published in The Guardian, Independent, The Sun, Sunday Post, Daily Mirror, as well as Arcade and Inside Edge.

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Dr Richard Wood is a Chartered Psychologist and has been studying gaming behaviour for over 12 years, mostly at the International Gaming Research Unit (IGRU) at Nottingham Trent University where he is still an associate member. He also worked as a Post Doctoral Research Fellow at The International Centre for Youth Gambling Problems and High-Risk Behaviours at McGill University in Montreal. Dr Wood has published numerous gambling related articles, presented his findings at conferences and seminars around the world, and undertaken many responsible gaming consultations for both the gaming industry and regulatory sectors. His research focuses on both the individual causes of problem gambling, as well as the structural characteristics of games that can influence the gambling behaviour of vulnerable players (info@GamRes.org www.GamRes.org)

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