GGB Magazine June 2013 by Global Gaming Business

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TABLE GAME BONUSES | TWITTER & FACEBOOK IN GAMING | SLOT SUPPLIERS | FIRST LEGAL U.S. POKER SITE DEBUTS

June 2013 • $10 • Vol. 12 • No. 6

Global Gaming Business Magazine | June 2013 | www.ggbmagazine.com

Very VLT How the machines are creating new industries in the U.S. and beyond

ond FFAREWELL A

Frank J. Fahrenkopf Jr. leaves an indelible legacy on gaming industry

JOIN

Together

Tribes unite to enter online gaming industry Official Publication of the American Gaming Association

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Vol. 12 • No. 6

CONTENTS

ON THE COVER Page 26

End of an Era This month’s retirement of Frank J. Fahrenkopf, Jr., the only leader the American Gaming Association has ever known, marks the end of what was the most important era in the modern gaming industry. Here’s a look at why Fahrenkopf has been arguably the most important figure in gaming’s move from a misunderstood business looked on suspiciously by most to the vital international industry it is today.

june COLUMNS 14 AGA A Look Back Frank J. Fahrenkopf, Jr.

16 Fantini’s Finance Boosting Values Frank Fantini

84 Regulation Over-Reaching? John Flynn

By Roger Gros Cover photo of Frank J. Fahrenkopf, Jr. by Roger Gros at the private high-limit gaming salon at MGM Resorts’ Aria Casino Resort in Las Vegas

90 Global Gaming Women Shaping Tomorrow’s Leaders Susan Hensel

FEATURES 18 Tweets and Likes Social networks have provided casinos unprecedented marketing opportunities, a world stage for promotion, and a vital communication link to customers.

DEPARTMENTS 60 Supporting Cast Some of the most important vendors in the casino industry are those who supply the ancillary products that make slots and tables work. By Dave Bontempo

By Marjorie Preston

66 Tribes and the Internet 42 The VLT Phenomenon Here’s how those small banks of slot machines in the corner at the local bar or restaurant collectively form a worldwide industry of their own.

The Agenda

Dateline

13 Nutshell 72 iGames 82 New Game Review

Participation in the internet gaming phenomenon continues to be one of the most divisive and challenging issues facing tribal gaming. By Dave Palermo

By Frank Legato

78 Record-Smashers 50 Setting the Tables

Bally Technologies continues to set new records with instant tournaments and promotional contests enabled by its iVIEW technology.

Side bonus bets, progressive jackpots and other new technologies have given a boost to the table side of the industry.

By Frank Legato

By Rodric J. Bradford

80 Resort Focus 54 Gambling’s Governor An excerpt from the new book by the former governor of Nevada provides a look at Bob Miller’s formative years. By Bob Miller

The importance of non-gaming attractions in the casino industry was examined at RD&E: Retail, Dining & Entertainment in the Gaming and Hospitality Industry.

86 Frankly Speaking 88 Cutting Edge 92 Goods & Services 97 People 98 Casino Communications With Matt Levinson, Chairman, New Jersey Casino Control Commission

By Patrick Roberts 3

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THE AGENDA

My Mentors

Vol. 12 • No. 6 • June 2013 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com

he new program being developed by the American Gaming Association’s Global Gaming Women to provide mentors for young women entering the gaming industry is admirable and necessary. When young people can learn from and be encouraged by experienced executives, it gives them a leg up on competition as they climb their career ladder. While I never had any “formal” mentor, I certainly had folks along the way who helped me, shaped my views on the industry and the world, and provided me with examples to emulate. I remember a man who I consider my first mentor in the gaming business, Mark Reifer. He was a writer for the magazine that employed me as editor. We covered the gaming industry in Atlantic City during a time when the state gleefully took the tax revenue from the city’s casinos while it was tightening the screws, making it increasingly harder to do business. Reifer, a former speechwriter for New Jersey politicians, taught me how to know my audience, for he knew his inside and out. Each month, he would turn in a 4,000-5,000-word opinion article that would be so dense, I could barely get through it. And when it came to editing it, just to fit the space allotted, it was impossible. Reifer would weave his logic so effectively, if you took out one sentence, the entire thing would collapse on itself. When I argued that no one was reading it, he told me he didn’t care. He said he had about a dozen people who read every word and those were the people he was trying to reach. And he was right. Each month, I’d get a call from at least half those people complaining about what he said, which was exactly the reaction he was trying to elicit. But “mentor” is a word that has a wide meaning in my personal experience. I consider people like the famous Steve Wynn a mentor, as well as a guy named Arnie Shehadi, who last I heard was running a small casino in Laos. Attorney Bob Faiss, the late casino executive/educator Shannon Bybee and the also deceased former New Jersey Casino Control Commission member Pat Dodd also fall into that category. But there is one person who will always have my gratitude for being my mentor and encouraging me when times in my life were tough: Frank

Global Gaming Business JUNE 2013

Fahrenkopf. Never would I have thought that my path would cross with such a powerful and influential figure in American history, much less develop a warm and enduring friendship. I got to know Frank pretty well when I was covering the National Gambling Impact Study Commission (NGISC) in the late 1990s. He had just become the CEO of the AGA, and we both followed the commission across the country through all the various sites it visited. Frank explained the strategy of the AGA, and how just telling the truth about the gaming industry would deflate all the criticism that it was getting at the hearings. Later, when I left my job at my original magazine, he encouraged me to launch another and promised that it would become the voice of the AGA. And with his last column this month, we are honored to have had his words grace our pages for the past 10-plus years. His faith in Global Gaming Business was unshakeable, and we considered it a mission to spread the good word about the gaming industry throughout our existence. Frank also recruited me to become a consultant to the Global Gaming Expo conference program. He wanted G2E to become the center of the universe when it came to information and education about the gaming industry. I like to think I played a small role in making that happen, because most certainly today, G2E has the best and most comprehensive conference program in the business. But finally, what I hope I learned from Frank that has served me well is a diplomacy that enabled him to reach across the aisle at important times in U.S. history and the history of the casino industry. I always try to approach each issue, each interview, and each controversy with an open mind and a composure that will allow me to convey the truth. Ironically, that’s a different message than I got from Reifer. One of those dozen people he was aiming for was former Culinary boss John Wilhelm, a member of the NGISC, who read every word and would not speak to me because I worked for Reifer’s magazine. So as a mentee, you have to understand what applies to you. And Frank’s wit and wisdom was easy to take.

EDITORIAL ADVISORY BOARD Mark A. Birtha, Vice President and General Manager, Fiesta Henderson Casino Hotel

• Julie Brinkerhoff-Jacobs, President Lifescapes International

• Nicholas Casiello Jr., Shareholder Fox Rothschild

• Jeffrey Compton, Publisher CDC E-Reports

• Dean Macomber, President, Macomber International, Inc.

• Courtney Muller, Group Vice President, Global Gaming Expo Reed Exhibition Companies •

Judy Patterson, Senior Vice President & Executive Director American Gaming Association

• Jim Rafferty, President, Rafferty & Associates

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

• Steven M. Rittvo, President, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 6625 S. Valley View, Suite 422, Las Vegas, NV 89118 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2013 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: Global Gaming Business, 6625 S. Valley View Blvd., Suite 422, Las Vegas, NV 89118 Official Publication

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DATELINE ASIA june2013

Sun RiSing on CaSinoS?

It may finally be the time for gaming in Japan

Trade Minister Toshimitsu Motegi has joined other powerful politicians supporting Japanese casinos.

ro-casino lawmakers in Japan are reported to be launching another bid to get legislation off the ground and into the Diet. The non-partisan caucus, estimated to consist of more than 100 members, says it wants to introduce a bill by the fall with a view to securing legalization within two years. Advocates have been pushing gaming’s potential economic benefits for the better part of a decade with little to show by way of political support. However, this go-round they’ve se-

cured an influential former chief cabinet secretary as their leader, Hiroyuki Hosoda of the ruling Liberal Democratic Party, a veteran lawmaker believed to have the ear of Prime Minister Shinzo Abe. “You need both sides of the equation before things really get moving. We want to make that happen this year,” said the lobby’s deputy leader Takeshi Iwaya, another prominent LDP legislator who served in Abe’s first government in 2006. In addition, Trade Minister

Toshimitsu Motegi and Education Minister Hakubun Shimomura of the Abe administration have been named to the advisory panel. The group says it plans to introduce legislation in the House of Representatives that would set guidelines for legalizing casinos in Asia’s secondlargest economy. The timing is expected after elections in July to the Diet’s upper chamber, the House of Councillors, where a coalition led by Abe’s Liberal Democratic Party hopes to seize a majority.

CEYLON SENSATION • PACKER EYES RESORT IN SRI LANKA • Sources in Sri Lanka say James Packer has acquired land in the capital of Colombo for a US$350 million casino. Crown Colombo, as the project is called after Packer’s Australian flagship Crown Limited, will be part of a 36-story skyscraper to be constructed on Beira Lake adjoining the state-owned Lake House newspaper publisher group. A 2016 opening is planned, the report said.

Taxing Issue

Philippines licensees hit with tax surprise he Philippines’ casino development plans have been dealt a blow by a ruling declaring that operators must pay the country’s 30 percent corporate income tax. The ruling by the Bureau of Internal Revenue runs counter to the industry’s understanding that casinos would pay only a 5 percent franchise tax as part of the normal 15 percent tax on VIP gaming revenue and 27 percent on mass-market revenue. The new ruling, which is being discussed by the government and existing and prospective operators, could force some to re-evaluate the market’s profit potential. This is espeManila’s Entertainment City cially significant for the four licensees at Manila’s massive government-sponsored Entertainment City resort complex. “The low tax level was the magnet that attracted foreign investors to team up with Filipino partners in the gaming business,” said one local expert. “The tax will kill the goose that lays the golden egg.” The first of the four planned Entertainment City casino hotels, Bloomberry Resorts’ Solaire Resort and Casino, opened on March 16. The other three— Belle Grande Manila Bay, a joint venture involving Macau casino giant Melco Crown Entertainment; Resorts World Bayshore, a joint venture between Genting Hong Kong and the Philippines’ Alliance Global Group; and Universal Entertainment’s Manila Bay Resorts—are expected to open in stages beginning next year and continue over the next several years.

Global Gaming Business JUNE 2013

Taiwan Treasure? Regulations set for first casinos on Taiwan’s outlying islands

aiwan’s government has approved a draft casino bill for consideration by the national parliament. One of the Matsu islands The bill assesses an effective 14 percent tax on gaming revenue, consisting of a 7 percent “franchise fee” for the first 15 years of operation, increasing to 8 percent through year 25 and 9 percent thereafter, and a local government tax capped at 7 percent. The Ministry of Finance had sought an additional tax on gambling winnings, but the measure would codify a 20-year moratorium on that. The draft sets the minimum age for entering a casino at 20 and envisions a number of Singapore-style restrictions, banning gambling by certain groups of Taiwanese citizens such as recipients of government allowances and individuals who have been declared bankrupt and those with bad credit records. Family members, close relatives or partners also will be able to request that individuals be excluded as problem or addicted gamblers. The parliament, the Legislative Yuan as it’s known, will now take up the bill, which currently applies only to the island chain of Matsu under the provisions of the central government’s Offshore Islands Development Act. Residents of the islands, which are located about 10 miles off the coast of mainland China’s Fujian province, voted in a referendum last summer to approve casinos. Minister of Transportation and Communications Yeh Kuang Shih said that the government is not considering allowing casinos on Taiwan proper, laying to rest an idea floated by influential Taipei businessman Terry Gou and others.

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DATELINE TRIBAL june2013

MaShing the MaShPeeS

House Speaker Robert DeLeo is frustrated.

Bay State House dawdles on tribal compact

week after the Massachusetts Gaming Commission voted to open the Southeastern casino zone to commercial bidding, ending the special status the Mashpee Wampanoag Tribe had enjoyed as the only entity allowed to apply for a license in that zone, one house of the legislature is sitting on the compact between the tribe and the state. The second go at a tribal state compact between Massachusetts and the tribe for the tribe’s land in Taunton has been languishing in a House subcommittee without hearing since Governor Deval Patrick forwarded it to the legislature on April 1. The Senate would like to hear the compact, according to Gale Candaras, Senate chairman of the Joint Committee on Economic Development and Emerging Technologies. “The House does not have an interest in a hearing on the gaming compact,” she said. “I would cer-

tainly want to hear it. These folks have come a long way. They’ve worked very hard for this. I would certainly be willing to hear it.” House Speaker Robert DeLeo said that he would like for the House to move soon on the compact. However, he is also frustrated at the pace the gaming commission has set for granting licenses. “I had hoped that by this time, if something could not have been worked out, that it would be sent out for the process that anyone can bid. Having said that, I think that there’s a real strong concern that we could end up with four casinos, and the Wampanoags could get one of them and the

state could get nothing. So I fully understand that.” State law that authorized three casino resorts and one slots parlor in the state set aside the Southeastern gaming zone for a federally recognized tribe, as long as the tribe could meet certain conditions, including a compact that was acceptable to both the legislature and the Bureau of Indian Affairs—and to be able to put the land into federal trust as reservation land. The BIA rejected the first compact because it said the state had asked for too large a percentage of the casino revenue, 21.5 percent. The second version, agreed to last month, creating a sliding scale of from 17 percent to 21.5 percent, depending on other factors, particularly the development of other casinos in the state.

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Choctaw Complete

Pocola, Oklahoma casino employs 850

Federal court upholds Arizona tribe’s casino federal judge added to the Tohono O’odham Nation’s unbroken string of legal victories last month when he ruled that the tribe’s plans to build near Glendale, Arizona do not violate the state’s compacts with its gaming tribes. The casino the tribe hopes to build in Glendale is opposed by Governor Jan Brewer, most of the state’s congressional delegation and several competing gaming tribes, including the Gila River Indian Community. Besides the lawsuits, two Rendering of the Tohono O’odham casino U.S. representatives, Trent Franks and Ed Pastor, have sponsored bills that would prevent the tribe from going forward with its plans for many years. A U.S. District judge rejected the arguments by the plaintiffs that the O’odhams’ plans violated the intent of Proposition 202, in which voters amended the state constitution to allow Indian gaming. The compact limited the number of casinos in the state, but allowed the O’odhams the option of adding a fourth casino. Judge David Campbell ruled that the proposition did not set a geographic limit for where that casino might be, although the plaintiffs insist that all the tribes at the time agreed to limit casinos in the West Valley that includes Phoenix. Now that the judge has rejected their arguments, leaders of the Gila River tribe have urged Congress to act as a court of last resort.

he final phase of the expansion at the Choctaw Nation’s Choctaw Casino Hotel in Pocola, Oklahoma, near the Arkansas border, recently was completed. The final phase added 145,000 square feet of casino and hotel space, an updated Center Stage meeting room for bingo and shows and a 600-space covered parking garage. Previous expansions concluded in December, and added gaming space with 2,100 slots, a high-limit gaming area and a 12-table pit featuring blackjack, Three Card Poker, Ultimate Texas Hold ‘em, live craps and live roulette. The property includes a seven-story hotel with luxury suites. The total expansion represents an injection of $60 million into the area economy. New dining options include Seven Ponies steakhouse, Oak Tree Lounge, Trophy’s Bar & Grill and

Coffee Café. The new Branches Trading Company will offer retail. A new Gilley’s restaurant and honky-tonk will open on July 4. The Class III casino opened in a strip mall in 1994, and expanded six years later when the tribe added 87,600 square feet of gaming space, located at 3400 Choctaw Drive, and had a staff of 300. With the latest expansion completed, the facility will employ 850 people. The Choctaw Nation operates eight other casinos.

JUNE 2013 www.ggbmagazine.com

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DATELINE USA june2013 Penn plans a Hollywood casino for Rosecroft Raceway

A Hollywood MoMent Penn submits bid for Maryland’s Rosecroft

enn National Gaming, Inc. just made the deadline for bids to the Maryland Video Lottery Facility Location Commission for the sole casino license to be awarded in Prince George’s County. As expected, Penn submitted a proposal to transform its Rosecroft Raceway, acquired in early 2011, into a huge racino. The operator is proposing a $700 million casino resort at Rosecroft, the 1947vintage racetrack 13 miles south of the nation’s capital on the Beltway in Fort Washington. It would carry Penn’s signature brand as the Hollywood Casino Resort at Rosecroft Raceway. The proposal includes an integrated casino gaming and racing entertainment facility including slots, live table games, a poker room, a hotel with a pool and spa, a variety of food and beverage op-

tions, an entertainment and multi-purpose event center, a new grandstand facility, and structured and surface parking. Penn predicts the new project would generate approximately 4,600 direct and indirect construction jobs, and 2,600 permanent direct and indirect jobs. Penn National intends to schedule and execute the development of Hollywood Casino Resort at Rosecroft Raceway to allow for the uninterrupted operations of the track and its year-round horse-racing meet. The bid will set up a battle for the sole Prince George’s County license between Penn, MGM Resorts International and a surprise player who put in another

SUSPENDED Wynn v. Okada on hold while feds investigate crimes he court case involving Wynn Resorts and former board member Kazuo Okada has been halted temporarily while Kazuo Okada U.S. authorities pursue a criminal investigation into possible bribery of Philippine officials by the Japanese billionaire, according to Businessweek. A Nevada judge last month granted a request by the U.S. Justice Department to halt pretrial proceedings for six months while it looks into the allegations. But Clark County District Judge Elizabeth Gonzalez warned the feds not to seek more than six months for the probe. “Don’t come back asking for another six months, and another six months, because it ain’t going to happen,” she said at a hearing in Las Vegas. Okada and his companies Universal Entertainment of Japan and Nevada-based Aruze USA are under investigation in the United States for potential violations of anti-bribery laws in relation to a $2 billion casino project in the Philippines, according to a court filing made last month by U.S. federal prosecutors, Reuters reported. Sources tell GGB that the federal government is close to indicting Okada and that continued discovery in the Wynn case would have threatened those indictments. Last year, Wynn Resorts sued Okada for breach of fiduciary duty and forcibly redeemed his 20 percent stake in the Las Vegas casino company, claiming his payments to the Philippine government, if deemed to be illegal, would put Wynn’s gaming licenses at risk. Okada filed counterclaims in an attempt to reclaim his shares. Okada has denied any wrongdoing in the Philippines and said he was ousted from the Wynn board because he opposed Wynn’s $135 million donation to the University of Macau Development Foundation. Okada pointed to what he says is questionable timing of the 2011 donation, which was followed soon after by the granting of land concessions in Macau to Wynn.

Global Gaming Business JUNE 2013

last-minute bid, Pennsylvania’s Greenwood Racing, Inc. Greenwood, owner of Pennsylvania’s most successful racino, Parx at Philadelphia Park, is proposing an $800 million Parx Casino Hotel & Spa on 22 acres in Fort Washington, with 4,750 slot machines and 170 table games. Greenwood formed the new subsidiary Maryland Casino LLC to put in its bid for the license the same day Penn submitted its application.

A GROWING OPPORTUNITY

New entity will own Planet Hollywood, Horseshoe Baltimore stake

aesars Entertainment announced that its board of directors has approved the material terms of a strategic transaction that will split the company into two entities, forming a new growth-oriented entity, Caesars Growth Partners, to be owned by Caesars and its stockholders. The move is intended to improve the Caesars online debt-heavy company’s capital structure and executive Mitch Garber provide support for new projects. Private-equity firms Apollo Management LP and TPG Capital, which own Caesars, each intend to invest $250 million in the new growth-oriented business. The transaction should provide capital to allow Caesars to continue to fund growth opportunities in a less levered and more flexible vehicle than its existing operating subsidiaries. In addition, the transaction will result in a cash infusion into Caesars Entertainment Operating Company, from the sale of certain assets to Growth Partners, including Planet Hollywood in Las Vegas and Horseshoe Baltimore, slated to open next year. “The transaction is an important step in our ongoing efforts to improve the company’s balance sheet and position ourselves to make strategic investments,” said Gary W. Loveman, Caesars chairman and CEO. “Caesars Growth Partners and its simple and flexible capital structure provide us with a vehicle to pursue growth opportunities while retaining a significant portion of the financial upside associated with these assets and projects.” Caesars and its affiliated companies will continue to manage Planet Hollywood and Horseshoe Baltimore, allowing these properties to be part of the Total Rewards network and benefit from Caesars’ shared services operating model. Mitch Garber, CEO of Caesars Interactive Entertainment, will serve as CEO of CAC and continue in his role as CEO of CIE.

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DATELINE EUROPE june2013

Holland Casino struggling Visitation to the Dutch monopoly’s casinos continues to shrink t

he Netherlands’ Holland Casino monopoly posted a €652,000 loss last year. The operator, which the government is looking to privatize, has been hit by falling visitor numbers, and may be unable to meet agreements with its banks this year, news agency ANP reports. Visitation was down 2 percent to 5.6 million last year and average spend per customer fell €2 to €96. The company said late last year that it planned to lay off 400 of its 3,000 employees. More recently, it said there may be more job losses. “Our focus is on further reducing costs and making the organization more efficient and effective,” Chairman Dick Flink said.

WHATEVER IT TAKES

New Cyprus President Nicos Anastasiades

Greece sells OPAP stake

he Greek government has approved the sale of its 33 percent holding in the country’s monopoly operator, OPAP, to investment fund Emma Delta for an undisclosed sum. The Greek-Czech fund’s initial bid of €622 million was rejected as too low, but as the sale attracted few bidders, both sides were motivated to get a deal done. The government was seeking €650 million, considerably less than an independent assessment that valued the company at €726 million. Greece is obliged to raise €9.5 billion from asset sales by 2016 under its international bailout plan. In return, the European Union and the International Monetary Fund have committed to €240 billion in rescue loans for the financially strapped nation. OPAP has a 10-year license to operate 35,000 video lottery terminals and the exclusive rights to operate 13 games of chance until 2030.

On Your Mark… Germany readies betting licenses

ermany is expected to begin issuing 20 Bet-At-Home is one of 14 online sports book licenses, with 14 companies vying for German companies already in line to receive them. online sports betting licenses. Under the new state treaty governing gambling in the country, the national Gambling Authority was scheduled to award the first batch in early May, but reports are they may be handed out sooner. The initial group, selected from among more than 100 applicants, includes Admiral, Bet365, Bet-at-Home, Betfair, Cashpoint, Casinos Austria, Goldesel Hobiger, InterMedia, Tipico, Tipp3, RaceBet and two German state companies, Odds Gmbh and Oddsline Gmbh. However, losing bidders are complaining that no clear or reliable information was passed on to them regarding the criteria that would be used for allocating the licenses. It is believed some are preparing legal challenges.

Global Gaming Business JUNE 2013

Cyprus Seeks Bailout Medicine from Casinos ash-strapped Cyprus is planning to license casinos in a bid to lure big-spending tourists and keep Cypriots from patronizing casinos in the Turkish-occupied northern half of the island. President Nicos Anastasiades says casinos are part of a larger plan to rejuvenate an economy that is expected to shrink by 13 percent over the next couple of years, with unemployment projected to soar despite a pending €10 billion bailout by international lenders. The tiny Mediterranean country of less than 1 million people will shoulder €13 billion of overall bailout costs mainly by seizing up to 80 percent of bank deposits of more than €100,000 and by breaking up the moribund Laiki Bank and folding its performing assets into the Bank of Cyprus. Plans are also in the works to distribute state- and church-owned land for cultivation and to allow individuals to stay on as renters whose homes or businesses are at risk of being seized because they’re unable to service their mortgages. Anastasiades, who was elected in February in part on a pledge to legalize gambling, says the island will contribute €21 million to help subsidize salaries for 6,000 jobless that will be hired in the tourism sector.

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DATELINE GLOBAL june2013

IconIc PromIse Packer says Sydney casino will be special

rown Chairman James Packer says designs submitted for his proposed luxury hotel and high-roller casino at the Barangaroo development district on Sydney Harbour will place the project alongside the Opera House as a landmark of Australia’s largest city. Designs for the US$1 billion, 350-room Crown Sydney Hotel Resort, conceived by the architectural firms of Adrian Smith and Gordon Gill, Kohn Pedersen Fox and Wilkinson Eyre Architects, have been submitted to a One of the three panel of judges for a decision. The panel is made up of designs to be representatives of Crown Resorts, Lend Lease, the considered for a Barangaroo Delivery Authority and the New South possible Crown Wales Department of Planning and Infrastructure. casino in Sydney The final design will require approval from the Delivery Authority and the Department of Planning and Infrastructure. Packer is pushing to increase the allowable height of the development from the approved 170 meters to about 235 meters. This would allow it to dominate other commercial towers approved for the site and afford sweeping views of Sydney Harbour, the Opera House and the Harbour Bridge. The project is being considered by a New South Wales government panel chaired by a former banker, David Murray, which has been asked to assess the net financial benefit of the project to the state. The panel was due to report in April, but the decision was delayed after Crown’s rival, Echo Entertainment, launched a bid to expand its monopoly casino in Sydney, the Star, and extend its exclusivity beyond its expiration date of 2019. The Grand Palladium Hotel is likely to apply for a casino license.

Getting It Started Jamaica ready to accept casino bids he Jamaican government will soon be accepting proposals for the development of resort casinos under regulations officials hope will create about 30,000 permanent jobs. Bidding by interested parties begins June 1 and will run through September 30, tourism officials said. Approved bids are expected to be announced early next year. The regulations, established as part of a Casino Gaming Act passed in 2010, provide for up to three resorts of 2,000 hotel rooms each. A new Casino Gaming Commission says at least six expressions of interest have been received.

Global Gaming Business JUNE 2013

ENJOY OK

Company gets nod for Uruguay casino

he government of Uruguay has given the go-ahead for South American gaming giant Enjoy to take over management of the Conrad Punta del Este Resort & Casino. Enjoy acquired 45 percent of the resort’s shares from Las Vegas-based Caesars Entertainment for US$139.5 million with an option to acquire the rest over the next several years. Enjoy General Manager Javier Martinez called the Conrad “the main resort and casino of South America and a real regional icon, valued worldwide. “Now we have more presence in Chile, Argentina and Uruguay, and we become the most relevant Latin American actor on casino management,” he added. The Conrad is one of the continent’s largest casinos.

ISLAND-HOPPING Caymans group wants gaming referendum

recent unofficial poll of the 250 members of the Cayman Islands Tourism Association indicated 71.7 percent would agree to some sort of gambling and 87.4 percent said they would approve a lottery, said Executive Director Jane van der Bol. “All destinations have different regulations about gambling and who can gamble. Countries like Aruba, the Bahamas, Puerto Rico, Dominican Republic, St. Croix, St. Martin, Curacao and Bonaire currently have gaming. In August 2012 there was news that Bermuda was looking at a casino and Jamaica said it was looking at implementing a casino by 2013,” van der Bol noted. As a result, CITA members have called for a referendum on gambling. “We would like to know more about how the people feel,” said van der Bol. “We would like to know more about the effects of gaming, casinos and lotteries here both from a tourism side to make dollars and the government side where money flows into the coffers, but also the socially responsible side.” Van der Bol also noted gambling has helped other countries create new activities and new jobs, has added to government coffers, attracted a wider demographic, helped fund projects and increased hotel room nights. Political candidates from all parties—whether or not they support gambling—are in favor of letting the public decide.

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NUTSHELL

“They Penn National Gaming announced last month that its spinoff real estate investment trust (REIT) will be named Gaming and Leisure Properties Inc., which is expected to own the real estate for 19 casino facilities and lease 17 back to the operating company. It would solely own and operate two facilities in Baton Rouge, Louisiana and Perryville, Maryland. Penn National would operate the casinos, receiving a fee from Gaming and Leisure Properties. A leading lawmaker in The Bahamas is in favor of changing the law that forbids Bahamians from gambling in the nation’s casinos. Dr. Hubert Minnis, leader of the Free National Movement, said during a House of Assembly hearing that any proposed gaming legislation presented to Parliament should ensure “fair play” for Bahamians. Asked whether that meant Bahamians should be allowed to gamble in the casinos, Minnis said, “In terms of whether Bahamians should be in casinos, I feel yes. That is my personal view.” Although Texas state Senator John Carona authored a constitutional amendment that would allow destination casinos in select locations and at Indian reservations and authorize slots at the state’s 13 racetracks, last month he declined to bring it up for a vote in the Business and Commerce Committee, which he chairs. At that time he said the chances appeared “very slim” and looked to become “less and less” as the legislative session wound down. The world’s first Nobu Hotel Restaurant and Lounge opened at Caesars Palace April 29 with appearances by partners including Chef Nobu Matsuhisa and actor Robert De Niro, among others. The boutique hotel features 181 rooms including 18 luxury suites. The interior designer was David Rockwell. Macau welcomed almost 2.4 million tourists in March, up by 1.6 percent year on year. It is the second consecutive month in which tourist arrivals increased over the same period in 2012. In the first quarter, arrivals were up 1.9 percent to 7.1 million. Australia’s Crown Casino has indicated it will not pursue charges in the case of thieves who bamboozled the casino to the tune of $32 million. The thieves hacked into the

casino’s video surveillance system to use the house’s own cameras to cue accomplices at the tables. The casino offered no comment on the decision not to pursue criminal charges against the perpetrators. MGM Resorts International will build a $100 million park and public promenade outside its New York-New York and Monte Carlo casinos on the Las Vegas Strip. The park will connect to a 20,000-plus arena behind the two hotels. The landscape will feature an outdoor plaza with trees, benches and food trucks. The Seneca Indians of New York say their long-awaited permanent casino in downtown Buffalo could be open by the end of the summer. Spokesman Jim Wise of the Seneca Gaming Corp. said the $133 million, 65,000-square-foot Buffalo Creek Casino could be open to the public by Labor Day or even before, about a month ahead of schedule. Travellers International Hotel Group, a joint venture between Genting Hong Kong and the Philippines’ Alliance Global Group, is looking to raise more than US$500 million in a PSX listing which news sources say will be the subject of an initial public offering later this year. The partnership is developing a $1.1 billion casino hotel known as Resorts World Bayshore as part of the government-sponsored Entertainment City resort complex on Manila Bay. Due to open in 2016, the facility will join four large-scale gambling palaces earmarked for the site. The first, Solaire Resort & Casino, owned by the Philippines’ Bloomberry Resorts, opened in March. Singapore’s Casino Regulatory Authority has renewed the casino license of Marina Bay Sands for another three years. The CRA said the renewal, which took effect April 26, comes with “requirements,” but did not elaborate. The authority did, however, remind MBS “that it is an ongoing requirement for its associates to remain suitable”—an apparent reference to legal issues confronting its parent company, NYSElisted Las Vegas Sands, which is under investigation by the U.S. Justice Department and the U.S. Securities and Exchange Commission in connection with its business activities in China.

CALENDAR June 3-4: Indian Country Online, Pechanga Resort and Casino, Temecula, California. Produced by Pechanga.net and Spectrum Gaming. For more information, visit indiancountryonline.com. June 3-7: North American Gaming Regulators Association (NAGRA) Annual Training and Education Conference, Virginia Beach Hilton, Virginia Beach, Virginia. Produced by NAGRA. For more information, visit nagra.org. June 17–19: Canadian Gaming Summit, Palais de Congres, Montreal, Quebec, Canada. Produced by the Canadian Gaming Association. For more information, visit canadiangamingsummit.com.

July 19-20: National Council on Problem Gambling’s 27th Annual Conference, Seattle, Washington. Produced by the National Council on Problem Gambling. For more information, visit ncpgambling.org. Aug. 12-14: Oklahoma Indian Gaming Association (OIGA) Conference and Trade Show, Cox Center, Oklahoma City, Oklahoma. Produced by OIGA and Event 1 Productions. For more information, visit okindiangaming.org. August 13-15: Australasian Gaming Expo, Sydney Convention and Exhibition Centre, Darling Harbour, Sydney. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com.

Said It”

“I’ve often thought this whole subject of online gaming was getting everybody jazzed up, but it’s difficult to distinguish yourself online. We’ll have our oar in the water, but I don’t know how to make an experience on a computer screen as unforgettable as an experience in a luxury hotel.” —Steve Wynn, talking about the future of online gaming versus the luxury casino resorts that are his specialty

“Mr. Packer’s misguided comparison of his designs with the Sydney Opera House—a public cultural building that is highly responsive to its context—is both ludicrous and offensive.” —Joe Agius, New South Wales president of the Australian Institute of Architects, who has criticized Crown chief James Packer’s plans for a $1 billion hotel/casino complex in Barangaroo, which Packer said will be the nation’s most iconic building since the Sydney Opera House

“This bill is just not a good bill. It’s not particularly well thought out. Every time I turn a page it seems it gets worse.” —Rep. Karen Umberger of the New Hampshire House, who is one of several committee members reviewing Senate Bill 152, which would expand gaming in the Granite State

“It is completely crazy that money is not borderless. This is super-logical.” —Chi-Hua Chien, a general partner at venture firm Kleiner Perkins Caufield & Byers, whose company invests in Bitcoin operators

“We’re not interested in competing against everyone to get the 21-year-olds that are going to spend little to no money and are going to clog up the hallways.” —Jim Murren, CEO, MGM Resorts International, summing up his stance on casino nightclubs

“The legal arguments are flawed. It’s gambling. And when you gamble, you lose.” —David Stewart, lawyer for the American Gaming Association, on possible class-action suits against casinos for allegedly preying on addicts

“You can go online and lose your house in the middle of the night, drinking beer in your pajamas.” —Wyoming Rep. Dave Zwonitzer, on the dangers of internet gambling

JUNE 2013 www.ggbmagazine.com

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AMERICAN GAMING ASSOCIATION by FRANK J. FAHRENKOPF, JR.

A Look Back A fond farewell to my many friends in the gaming industry Frank J. Fahrenkopf, Jr., President and CEO, American Gaming Association

rom my days growing up in Reno to seeing the specter that is Macau today, I can safely say I have had a front row seat to the growth and maturity of the casino gaming business. I’ve worked with most of the giants of the industry and continue to call most of them friends. So, it has been especially gratifying that for the last 18 years I have had the privilege to help safeguard and advocate for commercial casinos in Washington and across the country, and it has been an honor to represent the interests of the men and women of this industry. As you may know, at the end of June I am handing the reins of the American Gaming Association to a new and able leader. As this will be my last column for Global Gaming Business as president and CEO of the AGA, I would like to reflect on where we started, remind all of us of how far we’ve come and take a brief look at the future. Eighteen years ago, gaming had just experienced a dramatic period of expansion that raised the industry’s profile and made it a target for governments always hungry for a new tax source. In Washington, there were calls to create an aggressive federal tax on gaming. Thus was born the AGA, and today there is still no federal gaming tax. To be sure, the industry still pays more than its fair share in state and local taxes. In 2010, the most recent data available, the industry paid nearly $16 billion in total taxes, an effective tax rate of 32 percent, significantly higher than the economy-wide total tax burden of 27 percent for other industries. As the ’90s continued, industry leaders recognized expansion had dawned an era that would spawn new and continued challenges at both the federal and state levels, and now casino gaming had the attention of the national media and a few moralists in Congress. Upon opening the doors of the AGA, we began addressing these new challenges by adopting a two-part strategy: first, to introduce the industry to Congress, the administration and the

public, and second, to let no negative claim about the industry go unanswered. We took our message to Capitol Hill, and meeting by meeting and issue by issue we put the myths to rest and introduced these decision-makers to the industry. If our strategy were to work, we needed to provide balance to the negative messages being delivered by the opposition. We leveraged studies, white papers and expert testimony to bring fact-based information to the media, elected officials and regulators. We welcomed the scrutiny of the National Gambling Impact Study Commission, we created and gave autonomy to the National Center for Responsible Gaming, and we used the truth to dispute the dozens of faulty statistics, half-truths and outright lies promulgated by our opponents. These actions were important to the acceptance of the industry, but the deal-closer was the industry itself. Through the years, we’ve expanded on our original mission to develop new programs that continue to add value for our members. We created the Global Gaming Expo family of events that brings together the industry every year in Las Vegas (G2E) and Macau (G2E Asia) and showcases the innovation and vibrancy of casino gaming. We launched our annual “All In” campaign to demon-

“

During that period, large portions of the industry have also undergone a dramatic shift from offering almost strictly gaming to an increased emphasis on a wide range of entertainment and recreational options beyond the casino floor. That shift has meant that one-third of industry revenue is now generated via the food and beverage, hotel and other lines of business within commercial casino properties. The industry continues to adapt to a changing world, and each year at G2E, we see the marvels of the next generation of games and hospitality and management tools. There is no doubt the industry is prepared to compete with other types of entertainment, but I should give a word of caution: The industry can never forget that operating a casino is a privilege, not a right; and our existence, more than perhaps any other industry, is in the hands of elected officials and regulators. It is for that reason we embrace strong regulation and enforcement. Our voluntary adoption of an industry Code of Conduct, the creation of the NCRG and millions of dollars contributed in support of responsible gaming are tangible proof of our commitment to being a good, responsible corporate citizen. Because of these actions and many others,

As a result of the AGA’s efforts the gaming industry has realized significant public acceptance gains, without which it is doubtful the industry would be the success it is today.

Global Gaming Business JUNE 2013

strate the industry’s commitment to philanthropy, diversity, responsible gaming and the environment. And our Global Gaming Women initiative promotes the advancement of women in our industry. As a result of the AGA’s efforts, the gaming industry has realized significant public acceptance gains, without which it is doubtful the industry would be the success it is today. In the last two decades, the industry has grown from operating casinos only in Nevada, Atlantic City and riverboat casinos in a handful of states to operating 513 casinos in 23 states.

’’

we have earned the privilege to operate, but the new wave of technology, most obviously internet gaming, will make maintaining that status a far larger challenge than any we’ve faced since the early part of the last century. In closing, I want to thank the leaders who have built this great industry and supported the efforts of the AGA. I want to also publicly thank my colleagues here at the AGA. No one could ask to work with better, more talented and committed men and women. As I take on my next challenge, I will be fortunate, indeed, to have such support.

Macquarie: Your blueprint for success in Gaming.

macquarie.com Advisory | Debt | Equities | Principal Investing David Berman Global Head of Gaming 310-557-4343 david.berman@macquarie.com

Charles Protell Managing Director 310-557-4347 charles.protell@macquarie.com

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Kyle Bender Senior Vice President 310-557-4335 kyle.bender@macquarie.com

These examples may not be representative of every clientâ&#x20AC;&#x2122;s experience. Past performance is not a guarantee of future performance or success. Macquarie Capital (USA) Inc. (Macquarie Capital) is a registered broker-dealer and member of FINRA and SIPC. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. This document does not constitute and should not be interpreted as either an investment recommendation or advice, including legal, tax or accounting advice. Macquarie Capital is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). Obligations of Macquarie Capital do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Capital.

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FANTINI’S FINANCE by FRANK FANTINI

Boosting Values Is it necessary to re-engineer companies to get the right valuation?

asino company stocks have long sold at valuations well below their brothers in the lodging industry and their cousins in entertainment. On the surface, that seems strange given that casinos generate so much cash and, in most markets, are protected from competition by laws that limit the number of casinos or restrict them to certain parts of a state or city. One reason often cited is legislative risk. Legislators rarely look at hotels or movie theaters as politically easy targets to tax as they do casinos. We can look at places like Illinois to see the effect of that. Another reason is that, although protected from competition, the high capital and high operating-cost industry is vulnerable when competition does come along, as the casinos of Atlantic City, Delaware and Connecticut have shown thanks to competitors arriving in neighboring states. Finally, many investors just don’t like volatility of earnings, and the big casino operators that cater to the highest of the high rollers do risk crimped earnings when their biggest customers play lucky. So what can be done to raise valuations? Until recently, not much, except hope investors buy the argument that valuations should be higher, a case that got slammed when debt-laden casino companies crashed during the financial freeze of 2008 and 2009. However, Penn National and Caesars Entertainment are addressing the matter through reengineering. PENN, as all know by now, has decided to split into two by putting its properties into a real estate investment trust, or REIT, and running the properties under contract through the existing Penn National, which becomes a management company. There are variations on that theme, but that’s the gist of it. PENN expects that this structure will allow Penn National to be asset-light, earning management fees and being able to expand without the burden of debt. The REIT, meanwhile, will pay out a big dividend, meaning that it both returns capital to shareholders, who in turn will support the share price,

Global Gaming Business JUNE 2013

and it can seek expansion projects, both to the benefit of its favorite casino manager, Penn National, and independent of PENN if that is in its best interest. In short, PENN promises the best of all worlds. So far, investors are believers. The stock has risen in anticipation of the split even as regional casinos have struggled with somber consumers and increasing competition. Caesars is taking a different approach. It is spinning off some of its assets into a new company that will get an infusion of up to $1.2 billion from investors while carrying far less debt than its parent, whose $22 billion owed has weighed down on CZR in a number of ways. The name of the new company describes its purpose: Caesars Growth Partners. Owning Planet Hollywood, most of the new casino rising in Baltimore, and Caesars Interactive, Growth Partners is expected to be able to invest in new projects while CZR manages them. Casino stocks rose after PENN’s initial announcement as investors began speculating that others could split in two, though most do not have the size and geographic diversity that makes a PENN REIT appear attractive. Some, such as Las Vegas Sands or MGM Resorts, could do a modified REIT approach, some have said, though LVS has a more conventional way of creating value—selling off non-core assets such as shopping malls when they mature to the right price. Still, everyone will be watching PENN and CZR to see if they succeed. If so, other casino companies will consider restructuring to unlock the value so many think has long been there.

READY TO TURN? Like so much of the rest of the economy, the casino industry has been waiting for recovery to gain steam. After so many false starts, a steady and accelerating recovery might finally be taking hold. The statistical evidence remains mixed, but most measures are now positive, with the biggest of them—job creation, consumer confidence and

home prices—definitely solid. So, when will the improvement show in casino revenues? Perhaps we have begun. After showing some fitand-start improvements last year, the first quarter finished flat with last year, but that was because of new casino openings. Factor out the new casinos and revenues nationally fell in Q1. But there are other variables to be factored out, like a shorter February than last year and a return to normal winter weather from a balmy 2012. Those looking for hopeful signs might have found it in March when regional gaming revenues rose 4.11 percent, though same-store declined 3.43 percent. The good news is that the largest revenue states, which should be more representative of overall trends, performed better in March than January and February, as evidenced by these March and year-todate percentage comparisons: State Connecticut Iowa Louisiana Mississippi Missouri New York Pennsylvania

March Year-to-date -3.27 percent -11.86 +1.20 -4.32 +1.76 -1.12 -2.52 -7.61 +1.95 -2.80 +8.76 +5.15 +0.58 -1.87

The lone exception was Atlantic City, which fell 10.45 percent vs. a year-to-date drop of 9.17 percent. AC, however, has almost become its own case, declining regardless of the environment elsewhere. Nationally, we’ll need to see some momentum build before saying the recovery for casinos is firmly in place, but March was encouraging, and there’s reason to think that January and February were not typical. A solid recovery could have an outsize positive impact on regional casino operators who cut expenses during the recession and will enjoy significant benefit when revenues really turn north. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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Beyond

&Twitter Facebook “Never work

with children

and animals.”

Fans and followers aren’t barometers of effective marketing—until you get them in the door By Marjorie Preston

—W.C. Fields

not destroyed,” Spiers says. “They were also utilized to communicate the latf Tony Rodio ever heard the comedian’s famous axiom, it didn’t deter est updates for closing and re-opening.” him from interviewing a penguin before an audience of school kids. Such is the power of new media, which has created instant access, limitIn November 2011, Rodio, president and CEO of the Tropicana less marketing opportunities and a hotline to millions of potential new cusCasino and Resort in Atlantic City, staged a press conference with a live African tomers. It has also spawned an information machine that’s hungry for penguin to announce the opening of Happy Feet Two at the IMAX Theater. The content, 24 hours a day. How can casinos keep it fed? resulting video, which got lots of play on YouTube and other outlets, not only promoted the movie, but presented the Trop as an entertainment destination, THE MEDIUM AND THE MESSAGE and did it with playfulness, humor and a big dose of adorable. Social media is so ubiquitous it seems to have always been part of our wellIt’s just one of hundreds of videos the Trop has posted to its website prodocumented lives, yet it’s relatively young. Facebook—with 1 billion users moting everything from aerialist Nik Wallenda, who walked a tightrope over comprising one-seventh of the world’s population—came online in 2004 (at the Boardwalk in advance of his casino show, to the resort’s popular ’70s disco, the time, Mark Zuckerberg’s social network was limited to his Harvard classBoogie Nights, which broadcast a four-episode online reality show in 2012. mates). It was followed by YouTube in 2005 and Twitter in 2006. Since then, The videos—as well as six-second mini-clips on Vine, Twitter’s new video-shara dizzying number of social sharing sites have lined up like so many domiing app—also give the resort the opportunity to push its Trop Advantage card. noes, all with their own discrete demographics. And Of course, it’s not all fun, games and warmwhile these platforms have not eclipsed old-school fuzzy images. Last fall, after Hurricane Sandy media—yet—they’ve turned marketing on its head, ravaged the New Jersey coastline, Tropicana used and forced casinos to define the outreach that makes Facebook, Twitter and TripAdvisor to keep peosense for their customer base. ple informed about the state of the city, which “In terms of how we communicate with customers, shut down for five days after the storm. And we’ve seen more changes in past three or four years post-Sandy, amid misleading reports about mass than in the previous 20,” says Scott Voeller, senior vice destruction in the resort town, the worth of digipresident of brand strategy and advertising at MGM tal media was incalculable, says Diane Spiers, Resorts International. “The ecosystem has become so Tropicana’s executive director for media services. widespread and so fragmented, it’s mind-boggling. “These platforms were critical to visually deTony Rodio inviews a Penguin for the premiere of That’s the challenge we all have as marketers, to idenpict that we had reopened for business virtually Happy Feet Two at the Tropicana AC IMAX theater tify the outlets we think will be most effective.” unharmed, that the Boardwalk was intact and 18

Global Gaming Business JUNE 2013

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“

In terms of how we communicate with customers, we’ve seen more changes in past three or four years than in the previous 20.

“The theory is that an advertiser must reach its cusThe fast-evolving digital landtomer at least five to six times utilizing various mediums,” scape means companies are sprinting says Spiers. “That’s what we do using direct mail, outjust to stay in place, Voeller adds. door, radio, print, emails, SMS text messaging, and social “Someone once said in today’s enviand digital advertising.” Customer-preference profiling ronment we need to live in beta, and the resort to determine which message will resenables that’s very true, because what’s releonate with which patron. “This not only reduces internal —Scott Voeller vant in social media today may be ircosts,” says Spiers, “but ensures we’re maintaining that Senior VP of Brand Strategy and Advertising, relevant tomorrow.” emotional connection with each guest on as close to an MGM Resorts International Despite the seeming dominance individual level as possible.” of digital media, however, budgets have not done a wholesale shift from THANKS FOR SHARING traditional to online platforms, at least not at MGM. “The digital slice is getOne seismic change in the digital age is the end of the marketing monologue, ting a bigger, but not significantly so,” Voeller says. “We do a lot of testing in which businesses would spoon-feed their message to a public that could not and learning. We tend not to make large up-front commitments until we talk back. Now, through websites like TripAdvisor and Yelp, consumers are know something is proving out.” having their say, and their compliments (or complaints) can be far more persuasive than clever slogans or other commercial messaging. ROCK, PAPER, SCISSORS “Marketers and advertisers used to control that conversation; now the conSo what’s working today? While some pundits have sounded the death knell sumer has taken charge,” says Jim Gentleman, senior vice president of account for traditional media, reports of their demise may have been greatly exaggermanagement for SK&G Advertising in Las Vegas. “Word of mouth used to be ated. Brands are built on multiple platforms, Voeller says, and while digital is friends and family, but today, TripAdvisor has opened up word of mouth “clearly an advantage,” it’s still incremental in its impact. around the world.” “When you think about what we’re communicating—top resorts, best in The public’s newfound bullhorn—Gentleman calls it “the democratization class, unique customer experiences—that’s difficult to do on digital channels of marketing”—is both a mandate and an opportunity, allowing resorts to in a way that can sell the emotion through,” he says. “Building an emotional showcase their successes and also manage customer gripes. The ability to field connection, getting people to believe what you believe, still needs to come complaints in an online forum—and do it graciously and well—not only through traditional channels. You have to have a nice blend between fully solves one problem, but can create a halo effect that may generate more busiconsidered traditional and what is considered digital and social.” ness. Television is still “the best channel for driving an emotional connection,” “Frankly at this point, brands don’t have a choice,” Gentleman says. and commercial radio can create a sensory “theater of the mind” to evoke pos“Whether you’re buying a car or booking a resort, you can find almost anyitive response, Voeller says. As far as other media are concerned, marketers thing out about that place or that product online, and if a customer has a bad seem to agree that direct mail, well crafted and focused, is still very persuasive. experience, they’re going to write about it. I look at it as opportunity for And while email blasts are already considered old-fashioned, the content is brands to take a negative experience and turn it into a positive. There will be being retooled for delivery on smart phones and other mobile devices. dialogue going on whether the brand is involved or not, so they have to get acIf anything, it’s newspapers that could be going the way of the dodo bird. tive in that space.” According to a February report in USA Today, digital advertising in the U.S. MGM is on it: the comlast year topped spending on print for the first time in history, and media pany has social media managers companies are scrambling to “quarantine” their more profitable units from the at every property, plus more in ailing print side. In a survey conducted last year, the Pew Research Center revarious corporate departments. ported that newspaper readers are rapidly graying. Of those polled, 48 percent “Upwards of 40 people or over the age of 65 had read a newspaper the day before. But only 6 percent of so are focused on only that,” people from 18 to 24 had done so. Voeller says. “They’re listening Tropicana still uses a mix of old and new—including newspapers—to to customer complaints so we reach its customers.

”

JUNE 2013 www.ggbmagazine.com

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Ocean’s Eleven filmed at the Bellagio in 2000.

Rehab at the Hard Rock

“ can react and adjust. They’re listening to all the positive comments. “Social listening is an amazing research tool, because you’re getting constant real-time feedback. It takes a lot of hard work, but it allows us to build our database and grow our customer-acquisition strategy.”

Whether you’re buying a car or booking a resort, you can find almost anything out about that place or that product online, and if a customer has a bad experience, they’re going to write about it.

DIGITAL ‘SEDUCTION’

—Jim Gentleman

Asked for online marketing strategies that worked, Gentleman cites SK&G’s “Modern Seduction” campaign for the Aria resort at CityCenter in Las Vegas. Along with TV and print ads, “We went further and created webisodes, 30- to 60-second video vignettes that told the back story behind the ads.” The stylish short films featured gorgeous couples at play at Aria’s pool and in fabulously appointed rooms with spectacular views of the skyline. The Palms in Vegas benefited when MTV’s The Real World broadcast its 2002 season from the property. “That put the Palms on the map,” says Gentleman, and it’s still paying off: “The Real World” suite, a lavishly decorated 3,000-square-foot apartment with three bedrooms, pool table, wet bar, and of course, communal showers, leases at a premium—for $7,000 to $15,000 per night. And the Bellagio scored a hit when Ocean’s Eleven filmed there in 2000. “Bellagio was a very successful property when it opened,” says Gentleman, “but boy, when it became the venue for that movie with George Clooney, Brad Pitt, Matt Damon and Andy Garcia, and you saw the property in all its glory with the fountains and the shots outside… Needless to say, that worked really well for the property.” A second reality show, Rehab at the Hard Rock, is another story. In 2010, Hard Rock International (a separate company that owns the Hard Rock properties in Florida, but not in Las Vegas) sued the Las Vegas property, saying the TruTV series “revels in drunken debauchery, acts of vandalism, sexual harassment,” and other hijinks that could alienate customers and tarnish the international brand. Yet in a backhand way, Rehab actually may have worked as a marketing

Senior VP of Account Management, K&G Advertising in Las Vegas

Global Gaming Business JUNE 2013

”

“The Real World” suite at The Palms

tool, at least for some viewers. “That brand is known for its rebellious, edgy nature, and Rehab probably captured that and more and for a certain demographic,” observes Gentleman. “But there’s no question it probably alienated a significant customer base who said, ‘That’s not the kind of place I want to go.’” The show was canceled in 2010, two months after the lawsuit was filed. But Rehab itself is still wildly successful, and just marked its 10th anniversary.

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FROM FANS, FRIENDS AND FOLLOWERS… While Facebook “likes” are all well and good, online applause also should prompt action, propel business, and generate patronage and revenue. It doesn’t take a massive budget to do it effectively, says Nancy Smith, CEO of Masterminds, an advertising agency based in Philadelphia and New Jersey. “People say only the Caesars, Boyds and MGMs can do a great job of this and have hundreds of thousands of fans, but smaller regional resorts, Native American resorts like Pechanga (in Temecula, California) and FireKeepers (in Battle Creek, Michigan) are doing phenomenal work with fewer resources.” FireKeepers, for instance, has some 200,000 online fans, and reels them in with targeted promotions, like a slot tournament that registers only

through Facebook. “Marketers say, ‘I don’t care about fans; how can I get them on the floor?’” Smith says. “The bottom line is, people are looking for a promotion that will draw them there. There are way more social media channels than a casino could ever participate in in an efficient manner, but from a customer service perspective, the big ones are Facebook, Twitter—which is heavily used by poker players—and YouTube, which is the second-largest search engine in the world,

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“

The bottom line is, people are looking for a promotion that will draw them there. There are way more social media channels than a casino could ever participate in in an efficient manner. —Nancy Smith CEO, Masterminds

”

followed by Pinterest and Instagram.” Beyond promotions, best practices demand that casinos post continuous content, entertaining content, new content and what Smith calls “exclusive content,” which could be as simple as a behind-the-scenes video of the headliner warming up backstage or a clip of a chef preparing and shar-

ing his favorite recipe. “Most properties should post every day, but keep in mind, it’s not the quantity of posts but the quality.” Poor-quality posts—without video, without photos, without something to grab viewers and make them take notice—will be overlooked and soon disappear from the newsfeed. Tropicana’s Fan of the Month promotion—Spiers calls it “one of our most successful ever”—rewarded people who posted “the most positive, genuine messaging” by entering them into a drawing for a grand prize. “We’ve also created a few Fan Appreciation Days for fans and followers to take advantage of exclusive offers,” says Spiers. “It’s our way of saying thank you for being our brand advocates.” That sort of advocacy—achieved through communication, promotion or downright seduction—is worth all the effort, says Voeller. “Even if they don’t converge from ‘likes’ to patrons, at the end of the day if someone is sharing a ‘like’ with their network, that means that product is getting a thumbs-up. But turning people into brand advocates—that’s the best metric of all.”

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Channel-Surfing in the Information Age

arketing strategist Dorie Clark is the author of Reinventing You: Define Your Brand, Imagine Your Future and a frequent contributor to Forbes and the Harvard Business Review. Global Gaming Business asked Clark for her perspective on casino marketing in the digital age.

GGB: First, some basics. Why has social media grown so dramatically over the past decade or so? Dorie Clark: It allows you to interact in a very

direct way with your customers, and reach out to influential customers whose thinking impacts a lot of other people. Traditional broadcast media—television ads, newspaper advertising—is great for brand-building and brand awareness, but what really makes a difference is a personal touch, strategically applied, and social media allows you to do that.

How do you optimize the value of digital streams?

Don’t miss the opportunity to listen and respond to people. Monitor the streams and if somebody says, “Hey, I’m out in Las Vegas, what should I do with my Saturday night?” you can respond, “Why don’t you come to our restaurant? We’ll give you a free appetizer.” Can you imagine the amount of good will you’d garner with something like that? It can be really tremendous. And when you think about social media users, they’re already active. They’re going to share that experience, so instead of reaching one person it could reach 100 or 1,000 people. What about managing customer complaints?

Address it quickly, try to understand and apologize if it’s appropriate. Sometimes all the person wants is an apology or acknowledgment, and then the problem will go away. If it’s a complicated situation, the goal is to get it offline; get them to email you and deal with it one-on-one instead of having this loaded scenario. You don’t want a showdown in front of the world.

Is there a generation that still prefers traditional media—say, older adults?

How do you track the return on your investment—investments of money, time and manpower—when it comes to digital outreach?

There’s certainly an audience of people who still get a majority of their news and information from television, radio and newspapers, so I wouldn’t recommend abandoning that. But social media allows you to target and amplify your message with certain constituencies.

As we get further into the era of big data, we’ll probably find ways to calculate ROI in a better capacity. Right now, it’s just not possible, at least not in a literal dollars-andcents way. I might read about a product in a magazine, and then see a friend talk about it on Facebook, then Break down those constituencies. Who’s Traditional broadcast do a Google search for it and using what? media—television ads, finally go and check it out For a long time now, the fastest-growing Facenewspaper advertising—is great myself; there are too many book demographic has been people over 50. factors you can’t trace. So I for brand-building and brand There are a billion people on Facebook; your grandmother is probably on Facebook. Other awareness, but what really makes think we need to scale back that expectation for the time media are more specialized. For instance, Twita difference is a personal touch, being. ter has a much smaller user base, but it disprostrategically applied, and social While you should be portionately consists of opinion leaders, seeing real results, those remedia allows you to do that. whether that’s politicians, newspaper reporters sults are baked into the overand editors or heads of organizations. So if all business experience. Is you want a marketing campaign to bring peobusiness increasing? Are more people coming to you specifically, ple through the door of the casino, Facebook is a good way to do that. If and seeking you out specifically, rather than just, “Oh I want to go you’re trying to strategically influence public opinion, Twitter can get the to some casino; it doesn’t matter which one?” Is your brand word out. stronger? Are people more excited about you? Are they spending Let’s say you’re targeting 35- to 55-year-old women, the traditional more time and money at your establishment? If those things are slot player. Pinterest is a phenomenal way to reach them because it’s overhappening, it’s because of a concerted package, and social media is whelmingly female. Google+, on the other hand, currently has a 70 perpart of that. More and more, social media is becoming like oxycent male user base and is a little more tech-heavy. If you’re looking to gen—it’s a mandatory part of doing business. reach millennials, particularly hip millennials, Tumblr is a good place to start, along with Instagram; those are places where visual images matter a lot. The gaming industry, fortunately, has a lot of cool places to showcase.

“

”

Global Gaming Business JUNE 2013

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I think over 18 years we’ve done a pretty good job of raising the intelligence level of the American people that we are a really important industry, that we provide great jobs and benefits for our employees, that we produce other jobs that are created by what we do, with restaurants and other means. We pay a heck of a lot of taxes, because it’s a privilege to be in our business, not a right. And we’re good corporate citizens.

Global Gaming Business JUNE 2013

farewell Fahrenkopf I

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By Roger Gros

The only leader the American Gaming Association has ever known departs with a long list of accomplishments

t was the best of times; it was the worst of times… in the casino industry in the mid-1990s. Expansion had leaped out from Nevada and New Jersey into Iowa, Illinois, Mississippi, Missouri and beyond. Gaming executives were scouring the plains in search of the next legal gaming jurisdiction. From quaint riverboats to remote Indian reservations, casinos were sprouting up and making millions of dollars a day. It was the high tax rate that attracted states to the industry. A “sin” tax was a painless tax and state after state pursued the golden goose. Tribes understood there was an opportunity like no other and hired gaming experts to come in and advise them on how to operate. But the bounty did not go unnoticed in Washington, D.C., however. Congressmen spouted moral outrage, but more likely were trying to figure out their way to the financial trough. Threats of federal taxation were thrown about, and a gaming industry that was used to going its own way in the wilds of Nevada and the beaches of Atlantic City suddenly realized that it must have a presence in the nation’s capital. Frank J. Fahrenkopf, Jr., who would later lead the effort to legitimatize gaming in front of Congress, explains why it was so difficult for the industry to grasp the importance of that fact. “Raymond ‘Skip’ Avansino, who was then the president of Hilton Hotels, and who is one of my best friends, came to Washington one day.

Hilton was having a board meeting at the Washington Hilton. After the meeting, he came by my law office. I told him that I had spent the entire morning up on Capitol Hill with one of our law firm clients, the American Pasta Association. He did a double take. And I said, ‘Yes, the people in this country who manufacture pasta have a trade association, and have lawyers and lobbyists who work with the ag committees in both the House and Senate, and the Department of Agriculture, to make sure the federal government doesn’t intentionally or unintentionally hurt them.’ “This was about the time that the riverboat revolution was taking place in the Midwest. And I said to Skip, ‘You guys have billions of dollars in capital investment in the ground in Las Vegas and Atlantic City, and now you’re putting millions into these riverboats and so forth. You’d better be smart and do what most other industries have done—create a trade association.’ So he went back and talked to Barron Hilton, and Barron called a meeting. He invited all the CEOs; everyone came. Barron made the proposal that they should create something, and everyone said, ‘Yeah, that’s a great idea.’ And then they all went back to competing against each other and nothing happened.” It wasn’t until the Clinton administration floated a proposal that would impose a 4 percent federal excise tax on gross gaming revenues—all gaming revenues, casinos, parimutuel, lottery— that the industry woke up.

“I talked to President Clinton about it,” Fahrenkopf explains. “He told me that it really wasn’t his idea; it came out of the Treasury Department, and so it was dropped. But suddenly the idea that Baron Hilton had gotten from Skip Avansino started to take off, and before you know it, the decision was made to create what later became the American Gaming Association.”

GROWING UP COWBOY When it came to a leader for the new group, Fahrenkopf was the obvious choice. His political background combined with his experience in gaming was second to none. Born in Brooklyn, Fahrenkopf’s parents moved to Reno in 1947, when was he was 8 years old. He describes it as a bit of a culture shock. “I remember the first day of school,” he laughs. “Here I was a kid from Brooklyn. All I knew about the West was what I’d seen in movies, so I turned up with cowboy boots and a pair of Levi’s and a blue satin cowboy shirt, with pearl buttons, and I got the hell beat out of me. They pushed me down in a mud puddle; people didn’t dress that way. That’s the last time I wore that outfit, by the way. So yeah, it was a big change.” Reno, at that time, was the center of the gaming industry, and growing up around casinos and gaming was normal, says Fahrenkopf. “I just never really thought of it that way; it was just a way of life as I grew up, even when Vegas started to grow so quickly,” he says. “Gaming was just like any other business.”

JUNE 2013 www.ggbmagazine.com

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“Frank represented our industry with class and dignity and the perception of our business changed for the better because of it. I’m proud to call him friend and wish him every success in his future endeavors.” —Sheldon G. Adelson, Chairman and CEO, Las Vegas Sands

Even though the gaming business included exgangsters who left other states for the legal setting of Nevada, Fahrenkopf says the founders of the industry were good people. “I knew Bill Harrah very well,” he says. “And the Smith family ran Harold’s Club, which was the famous Reno casino in those days. “But there were some notorious people, as well, in Reno. The ‘Purple Gang’ was famous for its Reno casinos. Vegas was that way early on, as well. I can remember in the early days, you would see greeters in clubs have a .45 tucked in their belt. That was the good old days.” The good old days ended abruptly for Nevada, Fahrenkopf points out. “That all changed, really, as a result of two people: Grant Sawyer, and Paul Laxalt,” he says. “They were governors back to back. They got away from licensing single individuals to run casinos, to allow corporations to come in. Howard Hughes came in and bought five hotels, and was really part of it. “So the early days were pretty rough, but the advent of the public corporation being involved really was responsible for cleaning the industry up and making it just a regular business that has the problems and concerns and employees and health insurance—all the problems that a regular business has.” At that time Fahrenkopf was working as an attorney in Las Vegas and, along with Mike Sloan, now an executive with Station Casinos, ended up representing Wayne Newton in the purchase of the Aladdin casino. “The Aladdin had been shut down by the Gaming Control Board, led by a guy named Harry Reid, for its connections to the mob,” he explains. “But we were able to buy it and keep it clean.”

POLITICAL POSSIBILITIES

“Frank has been instrumental in representing, and promoting the gaming industry through his long-term vision and his steady hand of leadership.” —James Murren, Chairman & CEO, MGM Resorts International

Global Gaming Business JUNE 2013

Fahrenkopf’s political career began in college when he was in law school at University of California Berkeley. It was the time of the “free speech movement,” when left-leaning students and professors began to dominate the headlines. “I was so turned off by what I saw,” he says. “I didn’t think this was anything about free speech. It was left-wing radicals who were in charge of that. So when I came back from law school to Reno—I graduated from law school in 1965—I got involved in local politics.” Fahrenkopf joined the Young Republicans, a powerful group in those days, along with their counterparts the Young Democrats. “In 1970, I ran for national chairman of the Young Republicans,” he says. “I survived the big primary, and ended up against the guy who beat me, who became a very good friend of mine. His name is Don Sundquist; he went on to become a congressman, and later governor of Tennessee.”

With President Ronald Reagan at the 1984 Republican National Convention

Fahrenkopf then became general counsel of the Nevada Republican Party. In 1975, he was elected chairman of the Nevada Republican Party, and became the youngest member on the Republican National Committee, by about 20 years. “It was during that period of time that, through Paul Laxalt, I had an opportunity to meet Ronald Reagan. Then-Governor Reagan and then-Senator Laxalt had worked together to save Lake Tahoe, to create what’s known as the Tahoe Regional Planning Association. And when the governor would come over to meet with Senator Laxalt, I had an opportunity to meet him, and that’s how I first got to know him.” While Fahrenkopf worked for the election of Reagan as president in 1980, it wasn’t until the Republican Party took a shellacking in the ’82 midterm elections that he was asked to join the party hierarchy. “We had lost 26 seats in the House of Representatives that year,” he says, “and then the president asked me if I would take on the chairmanship of the party. I agreed to do it for a couple of years, and to do the ’84 re-election, and we won every state but one. And the president said, ‘Well, why don’t you finish this thing out with me?’ How could I say no?” After the Reagan years, Fahrenkopf returned to private practice, joining a prestigious Washington law firm, Hogan & Hartson, where he worked on legal issues for the Howard Hughes Corporation among others. In 1986, he co-founded the Commission on Presidential Debates, and has been the co-chairman of the organization since that time, overseeing the debates in every presidential race since 1988.

LEADERSHIP SEARCH When first approached by the founders of the AGA, Fahrenkopf was reticent. Hilton’s Avansino was joined by Steve Wynn, then with Mirage Resorts, and Chuck Mathewson, chairman of IGT at the time, on a search committee, and they convinced him to throw his hat in the ring. They hired a headhunter firm that narrowed the choices down from more than 100 to just two: Fahrenkopf and a

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GAME CHANGER HERE'S TO YOU, FRANK Frank Fahrenkopf, Jr. started in this industry nearly 18 years ago. He has since become President and CEO of the AGA, established the National Center for Responsible Gaming, founded the Global Gaming Expo and has guided the entire industry through Washington, D.C. For all of these accomplishments, Frank, we personally want to extend our thanks. From your friends at IGT, congratulations on your illustrious career, and what is sure to be an enjoyable retirement.

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Please examine these publication materials carefully. Any questions regarding the materials, please contact Erik Welch at (415) 217-2809

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“Frank Fahrenkopf’s impact on the gaming industry has been profound. His tireless work as a spokesman and advocate for the gaming industry greatly increased public understanding and awareness of casino gaming, helping pave the way for our industry’s growth and success. We are enormously grateful to Frank for his contributions, and proud to call him our colleague and friend.” —Keith Smith, President, Boyd Gaming

relative of former President George H.W. Bush. “I was in Nevada giving a speech, and I was asked to meet with them,” says Fahrenkopf. “So I met with Steve, Chuck and Skip, and they said, ‘Look. You’re from Nevada; you know the business. You practiced before the Nevada Gaming Control Board and Commission; most of the guys know you. Do it for a year. Get us up and running.’ So I agreed to do it for a year. That was 17 years ago.” Mathewson said it was Fahrenkopf’s attitude that convinced him. “The other guy kept on asking us what we could do for him,” says Mathewson. “Frank kept telling us what he could do for us. It’s rare when you can meet a person and know immediately he was made for the job. But that was Frank.” Both Mathewson and Avansino point out that Fahrenkopf took a cut in pay to accept the job of leading the AGA. “He had a very successful law practice at Hogen & Hartson,” he says, “so it took some doing to pry him away from that. But he was the right person for the job and was very well received. Steve didn’t really know him very well, but after we all discussed it, let time go by, we all agreed that Frank was far and above the best applicant.” Wynn says Fahrenkopf was one of 12 to 15 candidates with impressive resumés, but no one was even close. “Frank Fahrenkopf was clearly the going-away best choice for the job when we were considering the nominations,” he says. “He was a steady personality, a reliable and candid guy. He had the kind of personal presence and trustworthiness that the tobacco guys didn’t have. “Frank looks like a citizen. He was a really de-

With Penn Gillette

cent, credible man who could be the face of gaming for us in Washington. All three of us felt that was what we had, so the decision was really a lay-down hand; it was easy.”

IMMEDIATE CHALLENGES Fahrenkopf says he spent the first few months organizing the association and making his first hire, Judy Patterson, who remains today the senior vice president of the organization. But Fahrenkopf barely had time to catch a breath before the first crisis hit. “There was already a proposal in Congress to study the evils of gaming in America,” he says. “It was supported by the anti-gaming movement, but it was being pushed by two members of Congress who hated gaming. One was Frank Wolf, a Republican congressman from Virginia. The other was Senator Paul Simon, a Democrat from Illinois. And, so we immediately were faced with this challenge, and there were already 160 co-sponsors.” What was to become the National Gambling Impact Study Commission (NGISC), a two-year process to study all forms of gambling in the United States, had already put the gaming industry behind the eight ball. If the anti-gaming members of Congress had their way, the commission members would

“I have had the privilege of working with Frank for his entire tenure with the American Gaming Association. We could not have selected a better professional to lead us through the challenges the industry faced at the time, and his strong political skills and significant relationships on Capitol Hill helped to shape gaming as it exists today. Whether it was the creation of the National Center for Responsible Gaming, the development of the Gaming Code of Conduct, or taking the lead on legislative issues that could potentially impact the industry, Frank skillfully provided the guidance necessary for the AGA to take the lead on issues ranging from responsible gaming, to corporate social responsibility to regulatory reform. Commercial casino gaming now generates billions of dollars of tax revenues per year in the United States, directly and indirectly employs a workforce of hundreds of thousands, and is a significant contributor to our nation’s economy. He will be missed, but he provided a strong platform for the industry to continue to grow in the future.” —Virginia McDowell, President & CEO, Isle of Capri Casino Corp. 30

Global Gaming Business JUNE 2013

Thank you, Frank for leading our industry with wisdom, integrity, insight and enthusiasmâ&#x20AC;Ś for all these years! Your dear friends and colleagues

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“Frank Fahrenkopf has led the AGA with unique understanding of both federal politics and the gaming industry. He has established our association as the voice of a dynamic and controversial industry, and done so with integrity, grace and consistent focus.” —Gary Loveman, Chairman, President and CEO, Caesars Entertainment Corp.

With the late MGM Chairman Terry Lanni (c.) and original Caesars owner Clifford Perleman

all be virulently anti-gaming. They got one of their wish list for sure—Focus on the Family founder and conservative radio commentator James Dobson. So, it was Fahrenkopf’s job to balance out the opinions of people like Dobson with more rational, factual-based viewpoints. “We were very, very fortunate with the help of Harry Reid, who was not yet the majority leader, but influential in the Democratic Party, and with Dick Gephardt, who was the Democrat minority leader in the House,” he explains. “Newt Gingrich was also helpful. And we were able to get Terry Lanni, from MGM, Bill Bible, who was then the chairman of the (Nevada) Gaming Control Board, and John Wilhelm, who was then chairman of the Culinary Union, on the commission.” Along with Dobson, the other six members of the commission were anti-gaming, to varying degrees. The travel schedule—the places where the hearings would be held—often dictated what subjects would be covered, so Fahrenkopf said the AGA was quite prepared to offer testimony. “They had to give notice of what topics were going to be discussed,” he explained. “We would offer witnesses, and in most cases, we didn’t really have a problem. We always were able to get witnesses scheduled, as well as demonstrate what gaming had done for a particular region. For example, at the meeting in Atlantic City, all the union people turned out in orange T-shirts and made sure that the commission heard how many jobs were produced and the quality of life for employees, and so forth; those were very important things.” When the NGISC produced its report two years later, it was in fact quite complimentary about the effects of casinos on a community, saving its vitriol mostly for illegal gambling, lotteries and the looming specter of online gaming. Fahrenkopf be32

Global Gaming Business JUNE 2013

lieves the report wasn’t a case of the industry dodging a bullet. “I think that we made our case,” he says. “It wasn’t dodging a bullet; there wasn’t a bullet to dodge in my opinion. We simply brought forth evidence that debunked some of what I call the old chivalrists who constantly complained about the industry. And you know, facts were stubborn things, and we produced the facts.”

RESPONSIBLE RESPECT Anyone in the gaming industry clearly understands that some people have a problem with gambling. When the AGA was started, Fahrenkopf knew he had to confront the issue of problem/pathological gambling or the industry would end up like the tobacco industry had: despised and vilified by Congress and the American people. Fahrenkopf knew that he couldn’t allow that to happen, and the way to avoid it was to be proactive in understanding what causes those problems and how to treat them. But there was a paucity of credible research, except for a superficial federal study 20 years earlier. Fortunately, he knew who to turn to. “As a lucky break, Phil Satre, long before the AGA was formed, when he was running Harrah’s, had attended a conference at Harvard that focused on youth gambling,” Fahrenkopf explains. “And leading the conference was Dr. Howard Shaffer of the Division of Addictions at Harvard. And once I agreed to do this, I said to Phil and the others that were around in the business and on the board, that we couldn’t make the mistake of the tobacco industry; we had to find out as much as we could about this malady.” Fahrenkopf persuaded Shaffer to help organize studies into problem gambling. The response wasn’t completely positive. Fahrenkopf ran into opposition

“Frank is in a class all of his own. He is intelligent, powerful and charming. He has been wonderful to me and I regard him as a true mentor.” —Gavin Isaacs, President & CEO, SHFL entertainment

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“Frank has been both a thoughtful and dynamic leader through a period of great change for our industry. He is widely respected in Washington D.C. and has been the face of our industry for 17 years. Through his genuine care for people and love of our industry Frank did the right things to build our industry’s reputation for integrity, to lead initiatives for responsible gaming and women in gaming, and to ensure our industry had balanced representation as both a great source of employment and a great source of entertainment. Today gaming is recognized as a vital part of the global economy in no small part due to his strong leadership and tireless efforts.” —Richard Haddrill, Bally Technologies Chairman of the Board

at every turn. “It was a hard sell, with some members, on those studies,” he says. “So I reached out to Dr. Shaffer, and I met with him. We spent a couple hours together, and I indicated to him that we would—as an industry—financially support research and studies. I think he was a little afraid that we really wanted to control what he was doing, and it wouldn’t be fair and balanced. I told him he had total control. But of course, I was afraid too. I didn’t know—no one really knew—what the results were going to be as to the prevalence rate. But we trusted each other; we developed a good, warm relationship, and he began his work.” Funding was going to be an issue, but at just about the same time, the state of Missouri was requiring casino operators there to put money away for responsible gaming. Boyd Gaming took the lead. “Bill Boyd was the first,” he says. “Bill Boyd stepped up and wrote the first check, and then other

members wrote checks, and we created the National Center for Responsible Gaming. For the first year and a half, we were headquartered in Kansas City. Later we moved to Boston, where Harvard is, and the work began to bear fruit. Even today, the anti-gaming movement in this country—the responsible anti-gaming folks, anyway—will say they had doubts about it at the beginning, but it is today the world-acclaimed funding source of peerreviewed research on responsible gaming.”

SHOW OF SHOWS With so much on his plate, Fahrenkopf barely had time to consider what is standard practice in other industries when it came to trade shows and exhibitions. In the gaming industry at that time, the World Gaming Congress, run by a now-defunct magazine, held the dominant position, but several other shows had sprung up around the country bidding for the dollars of gaming exhibitors, with

With Sheldon Adelson, Las Vegas Sands chairman, and wife Miriam

little regard for the good of the industry. Fahrenkopf decided to approach the World Gaming Congress and ask for a piece of the action. “The people who were exhibiting their wares at the shows were mostly our members,” he said. “And the people who are buying at these shows are our members. And why are these shows making the money? We did some research and found that an overwhelming majority of trade associations in the country do their own shows. But we were immediately hit with the necessity of defending against this gambling commission, so I sat down with the people at World Gaming. We worked out a five-year agreement. I think the first year we got something like $500,000, and then it went up in increments over the next four years, with the understanding that we would help organize the educational part of the show—the seminars and keynote sessions. That was our contribution.” After the contract was up, Fahrenkopf said the

“Frank has been a tremendous leader for the AGA as an organization and for the gaming industry at home and around the world. He has been a tireless champion, always moving the business forward. And still, with all of his duties and responsibilities, he always found time to be a mentor and friend to me. I will always appreciate that.” —Aki Isoi, JCM Global President

Global Gaming Business JUNE 2013

A leader proves the future is ours to define. We thank Frank Fahrenkopf for his Leadership, Vision and unwavering Talent. You have united our industry toward a bright future. Well done!

Frank Fahrenkopf President American Gaming Association

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“AGEM and our members really started to work closely with Frank and the AGA when G2E launched, and it’s been a great relationship and partnership ever since. Frank’s guidance has improved the gaming industry on many levels over the years and we’re sorry to see him go while celebrating the conclusion of the greatest of careers. The foundation he set down in Washington will continue to serve us well in his retirement.” —Tom Jingoli, President, Association of Gaming Equipment Manufacturers

AGA would have been happy with negotiating a 50-50 partnership with the WGC. “But we ran into a stone wall,” he says. “They would not even show us the financial records, even though they were obligated to. So, I brought in a special committee consisting of the major manufacturers of the time. And we decided to start our own show. We put out a request for proposal. We got several responses, but when the folks at Reed Exhibitions came in, they impressed us the most because they asked what we wanted to make on this. And we said at least a million dollars a year. So they deposited $6 million in the bank, and we were covered for six years, under these circumstances. So we went with Reed, and the first year we did our show, and the other folks did their show, but clearly—it was very, very clear—they were not going to survive. “So we sat down with them the next year, and it was almost like a mercy killing. We gave them a little something so they could save face, and that was the end of it, and G2E was born.” The motto of the Global Gaming Expo—by the industry, for the industry—says it all, according to Fahrenkopf. “G2E is the biggest trade show and conference in the industry,” he says. “We listen to the exhibitors—large and small—and the operators, so it’s a great platform to get our products and information out. And of course, now we’re doing it in Asia too, with the 7th edition of G2E Asia being held this month.”

ASIAN INFLUENCE The growth of American gaming companies has spread far beyond U.S. borders, with three U.S. companies playing a significant role in the Macau gaming industry. Fahrenkopf says the AGA has tried to help the Asian gaming industry develop. “I remember I went there in 2000 or ’01 to speak at a conference,” he says. “There were about 36

Global Gaming Business JUNE 2013

40 people in attendance, and I told them if they were really interested in attracting U.S. companies, that they just had to be transparent and that their bank laws had to be modified. I suggested to them that they had to go to New Jersey and Nevada to meet with regulators in those states, and they did. Eventually the decision was made to put the licenses up for bid.” Macau’s history of corruption and violence connected to its casino industry when it was a Portuguese protectorate was worrisome to the AGA, but Fahrenkopf says he knew the U.S. companies weren’t going to apply if they couldn’t be assured that things were changing. “They don’t want to jeopardize their licenses by making a mistake going somewhere abroad and doing something there that would be illegal in the United States,” he says. “You could lose your franchise in the states.” Fahrenkopf says that Macau is now headed in the right direction. “Does that mean there are no problems there? I don’t think so; I don’t think anyone would say that,” he says. “But it’s a whole different system. We’ve been over there now for almost 10 years, and while there are ongoing lawsuits and allegations, the casinos are doing quite well. So we’ll have to see. But I think it’s been extremely positive.”

ONLINE IMPACT One of Fahrenkopf’s regrets was the failure to get Congress to even consider a bill to legalize online poker over the last few years, a position that had been fluid at the AGA throughout its history. He explains why that changed. “The first time we established a position on internet gaming was about 10 or 12 years ago,” he says. “And the position, which I have said maybe 10 million times—I hear it in my dreams—was,

“During a time when the image and success of the gaming industry was struggling, Frank founded the American Gaming Association, provided leadership and vision during challenging times and was instrumental in making the gaming industry the thriving sector of the U.S. economy that it is today. For example, when the industry was under scrutiny by the National Gambling Impact Study Commission, Frank and his team provided information and testimony that refuted concerns and enhanced the image of the gaming industry. Under Frank’s tenure, AGA operated the two most successful gaming conferences in the world, established the National Center for Responsible Gaming to combat gambling addiction and founded Global Gaming Women to address issues unique to women in the industry and to mentor and foster future industry leaders.” —James Maida, President & CEO, GLI

W e s a lu T e yo u fo r m ov i n g Th e i n d u s Tr y fo r Wa r d i n s o m a n y Way s .

frank fahrenkopf yo u r c o n T r i B u T i o n s a s fo u n d i n g p r e s i d e n T a nd c e o o f Th e a m e r i ca n ga m i n g ass o c i aTi o n le av e a l a s T i ng l e gacy.

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“Frank, for the tremendous impact you have had on the gaming industry, I thank you. Without your tireless efforts, gaming would have a very different face than it does today. Through your leadership all of those involved in this industry have had the ability to truly make a difference in our communities and in the way we do business as a whole. Your work has made corporate social responsibility and responsible gaming efforts a standard. My many commendations on being a force of change and for being a leader who we can all only aspire to be.” —Patti Hart, President & CEO, IGT

‘The American Gaming Association is opposed to all forms of internet gaming, because we do not believe the technology exists to properly regulate it with appropriate law enforcement oversight.’ That was fundamentally our position, because that’s what our regulators’ position was. They—New Jersey, Nevada, Mississippi, Illinois and others—were concerned about how to regulate internet gaming when they already had so much to regulate. “As an organization, we slowly started to change. About two years before we actually changed our position formally, we formed some working committees, to take a look at, number one, whether or not you really could control, be sure the person was where they said they were. Geo-location helped with that sort of thing. But an important question was, would it cannibalize existing brick-and-mortar companies? “And we reached the conclusion it really wouldn’t. When we looked at the demographics of the people who were gambling online at that time— now, this is four or five years ago—they tended to be young men, more highly educated, more highly compensated, and ones who didn’t regularly go to casinos. So we reached the conclusion that rather than cannibalizing brick-and-mortar casinos, it would probably be a new profit center.” Convincing Congress would prove to be more difficult. The AGA argument was simple. “If you didn’t do anything, and this thing continued to grow, Americans would be playing all kinds of casino games, so why not allow poker?” says Fahrenkopf. “There’s a poker tradition and culture in America going back to the early days, so it is perceived to be different than the other games. So we changed our position to be supportive of that. We worked very, very hard for four years with Senator (Harry) Reid and Senator (Jon) Kyl, who fundamentally were the leaders of the effort. “That was a big disappointment to us. It was clearly outside our control, and this was not only the AGA, but some companies that were not in the 38

Global Gaming Business JUNE 2013

AGA, who spent a lot of time and effort and money in support of trying to get the two senators to do something. We didn’t even get a chance to get a bill and go out and try to sell the bill. So that was clearly a disappointment.” But even with his departure, Fahrenkopf says the AGA will continue to push for federal legislation on internet poker. “Senator Reid says that it’s still on the top of agenda,” he says. “Senator Kyl is now retired. I have talked to Congressman (Joe) Barton, and we had the congressman out here in Las Vegas a few weeks ago. He’s met with some of our people. I believe that when he finishes his due diligence in the House, he may be introducing a poker bill, which hopefully we can support, and we’ll just have to see where it goes.” Fahrenkopf says the AGA would clearly prefer a federal bill over the state-by-state legalization that is currently under way. He says that the AGA wouldn’t interfere in that process unless it includes some of the “bad actors” that were indicted during the “Black Friday” April 2011 indictments or subsequent charges. The AGA board issued a request

With Celebrity Chef Emeril Lagasse

to intervene in the PokerStars licensing in New Jersey. He denies that Caesars Entertainment was the prime mover behind this policy, as critics have said. “We don’t do anything with one company,” he insists. “Our board, I believe, was unanimous with one abstention—someone missed the meeting—that the brief should be filed. I can’t comment on the details of it because it’s ongoing, but this was not something that was Caesars-generated. Our board is not only made up of operators, but manufacturers. So we felt it was something that we should do. “But our main concern with what’s going on in

“Frank is a true gentleman who has served the American Gaming Association and its members in a professional and admirable manner. Frank’s astute diplomacy in a variety of situations has contributed to the positive advancement of the gaming industry.” —Anthony Sanfilippo, President & CEO, Pinnacle Entertainment

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“Frank Fahrenkopf Jr. was the perfect choice for our first president. He understood gaming and its issues, as a Nevada attorney representing casino industry clients. He had a national presence, as a chairman of the National Republican Committee. And as a big plus, he lived in Washington, D.C., where federal gaming legislation was the industry’s greatest concern.” —Steve Norton, industry consultant and original board member of AGA

the states, as I said some time ago, before any of the states had adopted legalization, was that if there was no federal action, then we would have a patchwork quilt. Already with three states, if you look at those, it’s a patchwork quilt: Delaware includes all casino games, not just poker. It will be run by their state lottery organization. New Jersey is also all casino games, but operated by the Atlantic City casinos. And Nevada is poker only, although the governor has been given authority to enter in new interstate compacts with other states to increase the liquidity pool. “So we continue to hope that federal legislation will come in. But there are a lot of states looking at this, and we’ll go forward without it. And I’ve said, if there is no federal legislation, I believe the net result will be that we’ll have the largest expansion of legal gaming in the history of the United States, over the next couple of years.”

TOTAL TRANSFORMATION When looking back, Fahrenkopf points to the improved image of the industry during his time at AGA as one of his proudest accomplishments.

“Frank has played a major role in the development and expansion of the gaming business throughout the world. His leadership and skills have defined an industry that was so misunderstood in the past. He promoted the idea of responsible gaming and that the gambling industry was not a net ‘taker’ from the economy of a state or a country, but a powerful tool in economic development. It was Frank who defined the taxes paid, the employees hired and the vast contributions this industry made to charitable entities. Frank and the AGA created an industry. During Frank’s term there were more new gaming jurisdictions and casinos opened than in the previous 100 years. The new jurisdictions defined gaming and the integrated resort. Many people believe Steve or Sheldon built our industry but I know that it was Frank and the AGA who defined a business that became a desirable part of many states and countries. Without these licenses our gaming giants would be a fraction of their size and many businesses like mine would have never seen the successes they have. All of the companies who participate in the gaming business thank Frank and his family. We are all very proud that he represented and defined our business.” —Paul Steelman, President and Founder, Steelman Partners 40

Global Gaming Business JUNE 2013

With Wynn Resorts Chairman Steve Wynn

“The reputation of the gaming industry in the mid-’90s was not the best in the world,” he explains, “particularly among legislators, both in Congress and in state legislatures. And to see where we are today, with more and more states taking part in the industry in one way or another… I think over 18 years, that we’ve done a pretty good job of raising the intelligence level of the American people that we are a really important industry, that we provide great jobs and benefits for our employees, that we produce other jobs that are created by what we do, with restaurants and other means. We pay a heck of a lot of taxes, because it’s a privilege to be in our business, not a right. And we’re good corporate citizens. “Now we know, from the polling that we do, that there’s a rock-hard 15 percent of the public who are opposed to all forms of gambling. The other 85 percent have no problem with gambling for themselves or others. And most of that 15 percent of people hold their views because of their religious or moral perceptions. So you have to respect that.” Fahrenkopf says that even the mainstream media is coming around. “A couple of months ago, there was a frontpage story on the Sunday Washington Post, which has been the most vehement anti-gaming newspaper in the country,” he says. “I don’t know how many times I’ve gone before their editorial board, and never could make a nick in the opposition. So this front-page story talked about all the jobs being produced in Maryland casinos, and the training of people who’d been out of work, and the kind of jobs they were getting, the benefits that were offered. “And we just looked at each other in the office, and said, ‘Wow. Things have really changed.’”

Frank, thank you for your leadership to evolve the American gaming industry to new and greater heights.

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VLT

The

u o B nce

The fastest-growing gaming markets in the casino industry don’t necessarily include casinos. by Frank Legato

ith expansion of the casino resort industry moving into new jurisdictions like Ohio, Massachusetts and elsewhere, it’s easy to forget that some of the largest volumes of new gaming seats over the next few years won’t be in casinos at all, but in bars, taverns

and restaurants. There has been a revolution of sorts over the past few years in video lottery terminals, or VLTs—not only in the U.S., but around the world. And the trend only promises to continue. But what is a VLT? The definition changes according to who is asked the question. Some states like Maryland and West Virginia call the slot machines in their casinos and racinos VLTs because the state lottery owns the machines or manages the central system that links the games for accounting purposes. Other states in the U.S.—namely, New York and Washington—and some European nations such as Austria run central determinant systems, and in those cases, the machines are perhaps the most true form of a “video lottery,” in that a central system deals results to each machine in the jurisdiction from a finite, replenished electronic “stack” of results—an electronic version of a stack of instant lottery tickets. However, the form of VLT that is growing most rapidly across the world is the style of machine for which the term “video lottery terminal” was invented in South Dakota in 1986, a machine distributed in limited numbers to each of a large number of locations along one or more routes within a jurisdiction. Stakes are limited, top payouts are limited, and in most cases, players who win are paid by a clerk who pulls the cash out of a lock-box. “Ninety-nine percent of the world does not understand the definition nor the history of a VLT,” comments John Connelly, vice president of business development for slot-maker Bally Technologies, a company with irons in the fires of just about every kind of VLT. “On this topic, we tend to mix apples, oranges, bananas and Volkswagens into the same conversation.” Connelly notes that there are overlaps of technology between each type of VLT, depend42

Global Gaming Business JUNE 2013

ing on the market. “A lot of people say New York is a VLT market, which it is, but in actuality, New York is very different than Illinois, Oregon and other markets, because of the technology behind it,” he says. “And the types of companies you see in each market are very different, specifically because of the technology you see behind the regulations.”

Central Determinant Lotteries The VLT markets in the states of Washington and New York are the only U.S. jurisdictions in which VLTs in casinos are any different than the Class III slot machines in Las Vegas or other mature markets. In Washington, the central-determinant machines are in Indian casinos, and carry certain characteristics similar to traditional VLTs—the betting limit is

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VLTs in Oregon (top) and Illinois

$20, for instance. In New York, games must return at least 90 percent of wagers, and the heavily taxed machines, because they must operate as a finite-result video lottery, must have extra elements in the technology to allow them to stay within those rules. Video poker, for instance, will award “bonus” payments if players do not follow simple strategies for obvious wins. But the markets make up for those restrictions in volume—particularly New York, where Genting recently opened the state’s largest VLT venue at Aqueduct—and New York City’s first casino, Resorts World New York. Because of the system requirements, the suppliers serving the New York market are limited, and the main slot suppliers are ones with experience with system-based gaming in Class II markets as well as traditional Class III casinos. Texas-based Multimedia Games supplies the central determinant systems for both Washington and New York, and supplies many of the games there. Bally supplies a large volume of games to the central determinant states as well. Both companies have experience rooted in the Class II markets—Multimedia made its name in Class II, and Bally inherited one of the top Class II game and system suppliers in 2005 when it acquired Sierra Design Group. Vendors in states like New York, where the video lottery racinos compete with Indian casinos offering traditional Class III games, take on the additional role of helping casinos market their floors and maximize revenues. “We visit our customers on a quarterly basis,” says Joaquin Aviles, vice president of technology for Multimedia Games, “to understand their limitations and to listen to their system and gaming needs. We monitor their floor performance to create new ways to entertain their patrons, as well as provide unique and automated ways to enhance their marketing campaigns.” As successful as these casino-based VLT programs are, the hottest emerging markets for VLTs are in the form of traditional route-based machines. And the new jurisdictions on everyone’s front burner these days when talking about VLT expansion are Illinois in the U.S., and in Europe, Italy—and soon, Greece. Meanwhile, lotteries in Canada just completed a ritual they perform every seven years or so: a massive replacement of machines and updating of system technology for VLTs in the provinces, the total number of which rival the number of slot machines found in Canada’s casinos.

Illinois Gears Up It was 2009 when Illinois Governor Pat Quinn signed the Video Gaming Act into law, authorizing bars, taverns and restaurants with liquor licenses to have up to five licensed VLTs at each location. As is a common theme with new VLT jurisdictions, the impetus behind the law was for the state to benefit from gam-

bling that already existed illegally—it was estimated that more than 30,000 grayarea video slots and poker machines had been operating in downstate Illinois alone, and gaming machines had been fixtures in Illinois bars since the 1980s. The 2009 law, part of a $31 billion omnibus highway construction measure, called for eliminating all illegal gaming devices and replacing them with what, at the high end, was predicted to be a legal machine base of 40,000-50,000 machines across the state. Initial estimates had the state earning anywhere from $375 million to $500 million annually from the games. Those estimates would be adjusted significantly over the ensuing three years, thanks to a combination of hundreds of municipalities opting out of the new program and a challenge to the new law in the courts. A group of well-connected owners of a large liquor distributorship challenged the law on constitutional grounds, alleging the state constitution did not permit the bundling of a gambling bill with an unrelated highway construction measure. After back-and-forth decisions by lower courts, the Illinois Supreme Court upheld the law in a late 2011 decision. After the court decision, the Illinois Gaming Board kicked into gear with a methodical program to implement the law. Part of that law required the old gray-area machines to be cleared out. The law required that all “amusement only” machines that comprised the gray market cease operation by June 1, 2010, when their license stickers expired. The law made operation of illegal gambling devices a felony, meaning operators caught operating gray-area machines, instead of a fine and a slap on the wrist, could now be put out of business. The new law had teeth. “From a legislative standpoint, by giving the state a vested interest in the performance of gaming, we can justify putting the pedal down on criminal gaming,” says Bill Service, president and CEO of Illinois Gaming Systems, one of the major route operators in the state. “There are much more significant consequences now if you’re caught with (illegal) games.” JUNE 2013 www.ggbmagazine.com

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Replacing the illegal games were VLTs from nine approved manufacturers. Stakes were set at $2 maximum bets and $500 maximum wins. VLT revenues are taxed at 30 percent by the state. Operators receive 35 percent of adjusted gross receipts, and licensed establishments receive 35 percent.

Gaining Momentum

kiosk similar to those in casinos. “I’m a huge fan of this rule,” Service says. “I believe it’s a great and important feature in safeguarding the proper care of this industry. The alternative, of course—the way they do it in Oregon, West Virginia, Montana, South Dakota, Louisiana, any place where there is distributed gaming—is to have some version of a locked drawer and cash register, with a clerk giving out hundreds to thousands of dollars of winnings right out of the till. This is a much better system, albeit more expensive.” The terminal operator is responsible to pay for the payout kiosk, as well as buying the machines from major manufacturers and maintaining all the equipment. Service says the total equipment cost for a five-VLT operation is $100,000, not counting the cash that must be kept in the kiosk for payouts. “The establishment operator has almost nothing to do as far as operation of the games,” he says, “and if there are any disputes with respect to the players’ tickets or winnings, that’s my responsibility as well. We ultimately have the legal responsibility to make sure every player is correctly paid.” Service says IGS specializes in placing terminals in restaurant locations. “We can add a lot of value to a restaurant owner who is putting five games in,” he says. “We really know the market for retail gaming; we know what works and how to market those games

By the time the first VLTs went live in Illinois last October, much of the anti-gaming sentiment that had caused municipalities to opt out of the program had disappeared. According to a spokesman for the Illinois Gaming Board, as of the beginning of May, 222 of the more than 500 municipalities that had elected to opt out of the program had opted back in. At press time, 6,175 VLTs were up and running at 1,503 locations, with more cropping up every day. While some manufacturers set up their own distribution, more go through 70 licensed instate operators such as Illinois Gaming Systems, which established routes among the 21,000 —Joaquin Aviles liquor-licensed bars and restaurant owners in 900 municipalities VP of Technology, Multimedia Games throughout the state. IGS is run by veterans of the VLT trade. Service began his disto make it into a profitable location.” tributed gaming business 20 years ago in Oregon, and his company has run VLTs Revised estimates put the potential market in Illinois at around 30,000 maat bars and restaurants in that state and in West Virginia, which added VLTs in chines, which means that more than half of the market has yet to be established. bars and taverns to its lottery-owned racino operations through 2001 legislation. (If Cook County/Chicago, which opted out, were to opt back in, that number Service says that while the creation of VLT networks is similar in all three would soar to 45,000.) states where his company operates, Illinois has some significant differences from According to Service, the market share currently is dominated by Internathe VLT industries in Oregon and West Virginia. For instance, Illinois requires a tional Game Technology, Bally and Spielo International, but there is plenty of network of licensed operators to actually buy, maintain and operate the games. room for other manufacturers to get a slice of the action. West Virginia gives establishment owners the option of purchasing and operating For instance, two smaller manufacturers formerly known mainly in Class II their own equipment. In Oregon, the machines are bought and owned by the markets have each seized a very healthy 10 percent of the new Illinois market. state lottery. American Gaming Systems—whose CEO, former Bally chief Bob Miodunski, Another difference is in how winners are paid. Unlike any state in the U.S. ran Nevada’s largest slot route for years—has contracted north of 2,000 units in “and perhaps all of North America,” says Service, Illinois requires that every VLT Illinois. location have a secure automated payment system for every ticket—a payout

“We visit our customers on a quarterly basis to understand their limitations and to listen to their system and gaming needs. We monitor their floor performance to create new ways to entertain their patrons, as well as provide unique and automated ways to enhance their marketing campaigns.”

Global Gaming Business JUNE 2013

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VLTs at William Hill venues in the U.K.

AGS had Illinois in its sights when the legislation initially passed in 2009; it was one reason Miodunski was brought in as CEO. “Having Bob at the helm has been instrumental for us, and critical as we’ve gone after this market,” says AGS Marketing Director Andrew Burke. “Very few people in the industry have as much route experience as Bob does.” AGS took a methodical approach in pursuing the Illinois market. It bought rights to the “Cherry Master” brand of amusement games, the dominant brand among the old bar machines, and used its new Roadrunner platform to create modern legal games with features already familiar to Illinois players. Once the library of games was wrapped into a multi-game unit for Illinois, AGS worked with a select number of major operators to connect with establishment owners. Another smaller Class II operator approaching 10 percent market share in Illinois is Tennessee-based Video Gaming Technologies. VGT, which has more than 19,000 games in Class II markets like Oklahoma, has made connections with all the Illinois route operators, according to Illinois Sales Director Frank Fortunato. He says the company modified its three-game unit to create a 10-game unit for Illinois. “In 2010, we started contacting all route operators applying for gaming licenses,” Fortunato says. “We marketed our product to them, and they in turn marketed to the locations. We must have done 70 shows throughout the state in 2010 and 2011, and did more shows in 2012.” All of the suppliers and operators agree that the crafting of the law in Illinois, and the way the state implemented it, provides a model for how to replace gray machines with a thriving VLT market. “We believe other states are watching Illinois very closely,” says Shanna Sabet, a spokeswoman for IGT. “So far, the experience has had very few hurdles, and could be a good blueprint for new VLT markets.” “Illinois has done a fantastic job of taking essentially a gray market where thousands of machines were untaxed, with no benefit to the state,” says Connelly from Bally, “and turning it into a regulated market generating significant benefits to the state and the taxpayers.” Adds Burke from AGS, “This model of a smaller number of machines in a lot of locations makes sense for a lot of states trying to close budget gaps, and also trying to fight gray gaming.”

Hockey and VLTs It’s a model that has worked for years in Canada, where VLTs are nearly as common a leisure activity as the hockey games on the TVs in the bars and restaurants where the provincial lotteries have placed more than 35,000 units in all. The provincial lotteries have established their own model for distributed VLT gaming, with distinct rules that set them apart from Canada’s destination 46

Global Gaming Business JUNE 2013

casinos. “It’s a very established market,” comments Victor Duarte, senior vice president of gaming and content for Spielo International, one of the slot manufacturers dominant in the Canadian VLT market. “Some of the provinces are on their third generation of technology, and they really see the value of the central system and what it can do.” VLTs in Canada operate in the same manner as traditional Class III slots, but they are linked to central servers that provide monitoring, accounting functions and downloading of game content. Spielo is the only system supplier supplying the Canadian VLT market. “The provinces are very aggressive in assuring they have industry-standard protocols,” Duarte says. “They have the widest implementation of G2S today that I’m aware of. They are utilizing downloading to enable games to be remotely served to the machines, and to be switched. They definitely have the leading edge of one of the great things happening in gaming today.” The Canadian lotteries only recently wrapped up what is a seven-year ritual of updating system technology and instituting a massive replacement of VLT units. According to Duarte, while the timing of the replacement cycle is not set in stone—“It’s really dependent on when the government and lottery decides to procure new systems and games,” he says—every seven or eight years, suppliers like Spielo sell tens of thousands of units to the five Canadian lotteries. “It’s something we take very seriously,” Duarte says of the replacement cycle. “When the replacement wave comes along, as a manufacturer, you really have to appreciate that these lotteries are making long-term investment decisions. You have to be prepared to stand by them for seven or eight years.” “It’s like an orchid; it only blooms every seven years!” says David Finn, executive director and general manager of the Canadian market for IGT, which, like Spielo, is dominant in Canada. Finn says that in addition to different wagering rules for VLTs that distinguish them from casino slots—lower wager and maximum bets are common—the nature of the game content itself is different in the VLTs than traditional slots. “The volatility, the math is geared to a very different type of player,” he says. “I always said a player goes into a casino with $200 to $500 and wants to win $5,000, but a

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VLTs at Win City, Turin, Italy

VLT player goes into a bar with $40 to $60 and wants to win $500. “If you look at how the demographics are segmented in the VLT space, there are a lot of folks who are interested in time on device, which had been a bit of a shift in the casino world as well, but the volatility of the (VLTs) is a lot flatter than in the casino environment.” The other difference to be seen in a mature Canadian VLT market is a model for dealing with problem gambling. All of the provinces have implemented responsible gaming measures over the years, often working them into the requirements for gaming manufacturers. “It varies from province to province, but in some provinces you can set time on device,” Finn explains. “Some provinces let you set the maximum you want to wager. Nova Scotia lets you set limits—I don’t want to play at particular times; I only want to play this much total.” While IGT and Spielo maintained their dominant positions in the recent Canadian replacement cycle, other manufacturers like Aristocrat and Bally made significant strides in market share.

The Italian Model North American markets are only one story in the saga of the VLT worldwide. Europe has been a hotbed of VLT growth lately, mainly concentrated in Italy, which launched its VLT market in 2009. Italy had opened its machine market to street AWPs in 2004. “Those were a little like first-generation VLTs in the U.S., in that they were networked with primitive networking technology that would collect handle and hold and calculate tax-due information,” explains Luke Alvarez, CEO of U.K.-based Inspired Gaming, one of the top three suppliers of VLTs in Italy. “Then, in 2009, Italy introduced VLTs, and when they started to operate them in 2010, there were about 300,000 of the AWPs in Italy. There are now about 45,000 VLTs operating in Italy, of which Inspired operates around 8,000.” Inspired Gaming is Europe’s largest operator of electronic gaming, with 20,000 terminals in the U.K. that are de facto VLTs. “They’re not labeled as such, but they are very similar to the Italian market machines,” says Alvarez. The other two big suppliers in Italy are Spielo and the Austrian Gaming Industries subsidiary of the Novomatic Group. Spielo was the first supplier to be licensed in the Italian VLT market, and the first to go live. The firm’s VLT solution for Italy includes games, cabinets, site controller and central system. Spielo has more than 10,000 terminals in the market. Novomatic has the leading position in the Italian VLT sector with a 44 percent market share and a total contracted 24,000 VLTs as of 2012. The Novo Line VLT was designed exclusively for the Italian market. VLTs in Italy carry a €500 maximum prize (around US$650), and a maximum stake of €10. “Fully server-based operation is mandated by law,” says Alvarez, “so games cannot exist on the terminal at the time of installation. Games must be downloaded from the central server, not from an in-venue server.” He says gaming files must bear a digital signature so the Italian regulatory authorities can assure that each VLT location is only operating approved software and approved games. “It is a very sophisticated system, more sophisticated than anything that’s been deployed in the U.S.,” Alvarez says. “Italy represents the high-water mark of government real-time technical control. They want to achieve a high level of player protection, and assure that only approved games are operating. They also 48

Global Gaming Business JUNE 2013

are able to assure full tax collection. At the stroke of a button, they can analyze income and tax due from an entire estate, a particular venue or an individual machine.” The regulatory regime in Italy is itself more complex than many other VLT markets, with a hierarchy of individual venue owners, chain owners with hundreds of venues, hybrid betting shops with low-stake AWPs and VLTs, and minicasinos with as many as 150 VLTs. The VLTs are supplied under 10 concessions awarded by the Italian lottery. One aspect of Italy’s model that Alvarez says makes it more challenging than others is the tax regime. It is based on handle—total wagers—rather than machine win after players are paid. “Game designers have to go through contortions to deliver exciting game experiences to players while delivering increasingly lower RGPs (percentages),” he says. “We started out at 92 percent, and had to lower them to the low 80s. We don’t see that being repeated in most other countries. Most regulators apply a tax on the gross win or drop.” “Italy was challenging because of the sophistication of the requirements surrounding technology,” comments Spielo’s Duarte. “Italy is a market where, from my experience, there is an unprecedented level of control over the gaming markets.”

Greece and Beyond The Italy model has led other cash-strapped European countries to look into the potential of VLTs to ease some of their economic burdens. Chief among these has been Greece, which created the legal framework for VLTs with a 2011 law. Under Law 4002/2011, Greece will host 35,000 VLTs, to be licensed to OPAP, the Greek gaming monopoly which recently completed a privatization.

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“Italy represents the highwater mark of government real-time technical control. They want to achieve a high level of player protection, and assure that only approved games are operating. They also are able to assure full tax collection. At the stroke of a button, they can analyze income and tax due from an entire estate, a particular venue or an individual machine.” —Luke Alvarez

CEO, Inspired Gaming

OPAP will install and operate 16,500 of the terminals, and will grant operation of the remaining 18,500 to concessionaires. The law provides for four to 10 concessionaires. The privatization of OPAP, completed last month when private equity fund Emma Delta Ltd. acquired the Greek government’s 33 percent stake in the operator, has delayed the implementation of the 2011 law, but now that it’s complete, the Greek VLT market is expected to ramp up quickly. (The government retains a 1 percent stake in OPAP.) One of the major investors in new OPAP stakeholder Emma Delta is the Copelouzos Group. According to Katerina Tzannetaki, business development manager for Copelouzos, the new regulatory framework will be finalized within the next two months. “The Hellenic Gaming Commission had to be established first before proceeding to the development of a VLT market,” Tzannetaki explains. “The Law 4002 that regulates the Greek gaming market was adopted in August 2011, and the Hellenic Gaming Commission was established last year. The Regulation for the Operation and Control of VLTs is expected to be issued in July.” Those regulations call for a central server-based market that is a cross between what is found in Italy

and Canada. Under the law, OPAP must install its 16,500 VLTs within 18 months after the Operation and Control regulations are in place. Concessionaires have 24 months from granting of the concession to install the remaining VLTs. The Greek state will tax gross profits on the machines on a sliding scale of 30 percent to 35 percent. As with Italy, Illinois and other emerging VLT markets, the law establishing the market also addresses the illegal gaming market, which has been seen as an impediment to the establishment of the new market. “The prevalence of the illegal gaming operators undoubtedly could be considered as one of the barriers to a successful VLT market in Greece, especially since the illegal locations operate without any of the restrictions that will apply to the legal gaming halls and their players,” says Tzannetaki. “However, there are a number of criminal sanctions foreseen by the law that if enforced, we believe, could lead to a significant decrease of the illegal market. “The effective enforcement of the law is considered necessary and crucial for the elimination of illegal gaming operators and the direction of the players to legal gaming networks. The above combined with the adoption on behalf of OPAP of a strategy regarding a potential cooperation with the illegal operators—i.e., turning the illegal operators and locations to legal ones—could raise the possibilities of developing a successful VLT market.” The new market in Greece is viewed by suppliers as the next big opportunity. “Notwithstanding the well-publicized state of the Greek economy, it is still a decent-sized country that has minimal legal gaming at the moment,” says Inspired’s Alvarez. “It has a lottery business that does well, and a number of small and medium-sized casinos that do amazingly well. There is a lot of untapped demand for gaming. It is likely those machines will do very well.” As for the next VLT frontier after Greece, suppliers talk of several possibilities. “You’re going to see Southeast Asia grow,” predicts IGT’s Finn. “You’re going to see South America grow, and you’re even going to see some states in the U.S. grow.” “Europe in general is trending more toward a VLT type of product,” adds Bally’s Connelly, “and we anticipate significant growth in that region. At this point, trends indicate that Europe and Latin America offer opportunity, but I am a firm believer that other jurisdictions will be popping up. “I’ve been doing this long enough to know you never limit your options.”

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Keeping it Live New table games and bonus bet strategies enter domestic and foreign markets

By Rodric J. Bradford

echnology has invaded casinos in both domestic and foreign markets, in all games, but perhaps the sector that has developed the most in the last five years are live table games. 2013 has continued this trend, as several of the industry leaders have introduced new games and bonus bets to casinos across the world. While the resources of technology are growing every day, it is still consumer demand that drives product development with live table games. “Consumer demands are always what guides you,” says Roger Snow, executive vice president and chief product officer for table game supplier SHFL entertainment. “But enhanced technology can help meet these demands.” These consumer demands are adding new dimensions to the live table game experience, led by daily experiences with smart phones and the internet. This is adding to the popularity of the bonus bet opportunities and game presentation. “Consumers are looking for games where they can put down more money if they have a good hand,” says Robert Saucier, chief executive officer of Galaxy Gaming, another table game supplier. “It is similar to the popularity of doubling down in blackjack. It is being incorporated into more games and it appeals to more players.”

Global Gaming Business JUNE 2013

new to the Market One of the games that represents change in the marketplace is EZ Baccarat, which was rolled out in both the United Kingdom and throughout Latin American markets this year. DEQ Systems Chief Executive Officer Earle G. Hall describes the game, originally invented by the Talisman Group but now in the DEQ product line, as a phenomenon. “The game methodically cancels the need to collect commission,” he says. “It is a major evolution in baccarat.” According to Hall, the market adoption of EZ Baccarat has been faster and stronger than any other table game he has ever seen. “We are a technology company, not a table-game company,” says Hall. “By removing the commission and making the game more economical for the user it has become very popular. The ability to transfer the economics to use capital on a bonus spin is innovative.” Hall and DEQ Systems have enjoyed seeing EZ Baccarat have the same successful integration in foreign markets as it did in the U.S. According to Hall, in less than four years, EZ Baccarat has captured more than 50 percent of U.S. markets. “When (Talisman Group) introduced their simple way of game operation, it was so simple it was ingenious,” says Hall.

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“6 Card Bonus is such an enhancement to the underlying game that it is inconceivable that going forward any casino would offer three Card poker without it.” —Roger Snow Executive VP and Chief Product Officer, SHFL entertainment

Bringing the Bonus

Two years after introducing EZ Baccarat to the U.S. market with great success, Talisman Group transferred the same gaming principles to pai gow. EZ Pai Gow was introduced to the Canadian market in 2013. “Baccarat and pai gow have the same characteristics of charging a commission by taxing the winnings of the players,” says Hall. “EZ Pai Gow eliminates the principle of commission and transfers that money into bonus bets. Bonus bets are often more profitable for the casino than the base game itself.” For DEQ Systems, introducing these two successful games in new markets signals a new standard of industry expectations on the introduction of new live table games. “Before, our best-case scenario was waiting three years for a game to catch on, and then in years four and five really try to expand market share,” says Hall. But EZ Baccarat was considered a world-class game by year two, going from 10 to 25 placements, and to 50 placements by the end of its third year. “Once you have 50 units on a product, you can claim it has a solid market with legs,” says Hall. “And we are off and running with EZ Baccarat.”

It has been a busy year for SHFL entertainment, which introduced two new games this year, Big Raise Stud Poker and 6 Card Fortune Pai Gow Poker. Big Raise Stud Poker has one install, on field trial at the Venetian in Las Vegas. 6 Card Fortune Pai Gow Poker has six installs, all in northern California. “Over the past few years, our most popular bonus bet is 6 Card Bonus,” says Snow, who oversees all table game development and has created more than 15 games and side bets. “6 Card Bonus has done what few side bets ever have, and is revolutionizing the game.” Despite his success with bonus bets, Snow still questions their effectiveness and placements in games. “For the most part, side bets are just this sort of limp appendage; they take up space, and they are not really good for anything,” he says. “But 6 Card Bonus is such an enhancement to the underlying game that it is inconceivable that going forward any casino would offer Three Card Poker without it.”

Meeting the Market In 2012, Galaxy Gaming acquired the table game High Card Flush. Beginning this year, they began beta testing in 10 casinos with spectacular results. “It is the No. 1 game on many floors,” says Saucier. “It is a novel game that is easy to understand. Most card games are modifications of blackjack and poker, but this game involves flushes. It is not a true poker game. A lot of non-poker players enjoy it because it only takes two minutes to understand.” The 10-casino beta-testing JUNE 2013 www.ggbmagazine.com

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SHFL entertainment has been very busy rolling out side bets. Since late 2012, the company has been rolling out the House Money side bet for blackjack, and already has more than 100 placements.

phase was the most extensive ever performed by Galaxy Gaming, and the ability to closely track its initial performance has forever changed product development at the company. “We learned to be patient with a game’s release,” says Saucier. “Before, if we thought it was ready for release we would blast it out there. We are the secondlargest table game company in the world, so we have introduced many games at one time, but in retrospect that may have been a mistake. Modifications during the four-month-beta testing period were also closely tracked, as small changes greatly increased the quality of the game.”

Spending on Side and Bonus Bets A new philosophy from the game-playing public has emerged in recent years— players will spend more money if they are taxed less. A mentor for Hall in this philosophy has been Mike Patterson, vice president of table games for Barona Casino in San Diego. “Patterson always says, ‘the looser your tables are, and the better the player’s chance on a game, the more willing they are to spend extra income they save on bonus bets,’” says Hall. “We absolutely live by these principles and attribute 80 percent of our success to that.” DEQ Systems’ work with the Talisman Group reflects those principles, as the Talisman Group continues to look for products where the players are primed to find an advantage and increase their spending on side bets. “Often the best game inventors are old dealers,” says Hall. “They take time to observe players trying to find an advantage in the games. The perfect bonus bet is 52

Global Gaming Business JUNE 2013

perceived advantage in a game.” The Panda 8 bonus for EZ Baccarat has been the top requested bonus bet for DEQ Systems, with 500 installations in the last 18 months. “Casinos are always pressed for profits, and bonus bets fit nicely into table games,” says Hall. “The efficiency of bonus bets offers extra revenue without slowing down the game.” As progressive bets become a larger part of table games, the volume of table games with bonuses at casinos in both domestic and foreign markets is forecasted to increase for at least the next five to seven years, maybe even as long as the next 15 years. “You are going to see casinos continue to drift into bonus betting,” says Saucier. “The casinos make money with bonus bets. Sometimes multiple casinos will even link bonus bet jackpots.” Saucier says about “90 percent of the time” the operator has not developed an individual or group strategy of bonus bets available for the property. A cohesive and consistent strategy or bonus bet product offering throughout a property allows for players to develop a routine or relationships with certain side and bonus betting situations that could lead to more routine wagering. “Many operators know that their table games are going to make money regardless,” says Saucier. “They usually establish a new bonus game by just trying it at a table and seeing what happens. I know that we have certain markets where we do better than others, but that is due more to the regulatory environment than bonus bets.” SHFL entertainment has been very busy rolling out side bets. Since late 2012,

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the Original and

Undisputed Champ â&#x20AC;&#x153;Casinos are always pressed for profits, and bonus bets fit nicely into table games. the efficiency of bonus bets offers extra revenue without slowing down the game.â&#x20AC;? â&#x20AC;&#x201D;earle g. Hall CEO, DEQ Systems

the company has been rolling out the House Money side bet for blackjack, and already has more than 100 placements. SHFLâ&#x20AC;&#x2122;s new side bet for baccarat is Pair Plus, and the company launched new versions of established blackjack side bets Bet the Set and Royal Match, as well as numerous poker-style games, including Three Card Poker Exposed, Crazy Pineapple Poker, Seven Card Omaha and Tennessee Stud Poker. This year, SHFL entertainment also introduced two progressive bets for blackjackâ&#x20AC;&#x201D;Straight Jack Progressive and Bet the Set Progressive. â&#x20AC;&#x153;In table games, our biggest news is the rollout of our next-generation progressive hardware and software,â&#x20AC;? says Snow. â&#x20AC;&#x153;This product is such a jump from what we had before, it offers casinos complete flexibility for customized jackpots.â&#x20AC;?

A Dynamic Demand As with every casino game, the influence of the mobile market has created a dynamic demand for the future of side bets and bonus bets. The bonus bets found on mobile games, in particular slot machines, are often tests for future live table games and other products. â&#x20AC;&#x153;Our mantra at DEQ is, â&#x20AC;&#x2DC;Can the product survive the accelerated evolution that is coming over the next three to five years?â&#x20AC;&#x2122;â&#x20AC;? says Hall. The smart phone trend has made players more demanding of speed at table games, in both action and response. Players will continue to look for a financial break so they can get a better deal, which has led to the popularity of entry bonus bets. Payout structures will continue to be centered around the perceived advantage of the player. Despite the ways mobile technology has influenced gaming, keeping bonus bets and payout structures basic is best for the gaming experience, and ultimately benefits the casino revenue. However, Saucier offers an alternate opinion. â&#x20AC;&#x153;I do not think simplicity is key; it comes down to the structure of the game,â&#x20AC;? he says. â&#x20AC;&#x153;The real key is for someone to have a real chance to win and increase their bet if they have a good hand. That is what keeps them playing.â&#x20AC;?

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Son of a Gambling Man:

My Journey from a Casino Family to the Governor’s Mansion

By Governor Bob Miller

he path to the Nevada governor’s mansion for Governor Bob Miller was long and convoluted. But it all began with a typical life in Las Vegas—except that to most Americans, a Las Vegas upbringing isn’t so typical when it includes a father who worked with the mobsters who controlled Las Vegas casinos in those days. The following is an excerpt from Chapter 5 of Miller’s book, which can be found at all online and land-based bookstores.

The Millers Begin Living the Vegas Life The summer after my sophomore year at Bishop Gorman High School, when I was 16, I landed a busboy job at the Stardust Resort & Casino, a newer, upscale hotel. The Stardust had opened on the Strip in 1958, three years after the Riviera, and immediately made a national splash with its giant “Big Dipper” swimming pool, a drive-in theater, and the state’s largest casino (16,500 square feet). The Stardust also boasted the largest sign in the world; it was an array of stars brilliantly lit by 11,000 bulbs that could be seen 60 miles away. The Stardust was just at a different level from its competitors. Its interior décor was posh, accented in deep reds and browns. A busboy job at the Stardust was a great gig. I worked room service, which meant zipping around on a cart. The Stardust, like most hotels in Vegas then, had guest rooms in the back, not like today’s towers. There were two-story buildings behind the Stardust, and I would retrieve meal trays. I didn’t last long, though. One day I came to work very tired. I said as much, and one of the waiters said, “Ah, go around the corner and take a catnap.” I’d seen waiters grabbing shut-eye when business was slow. It sounded good to me. So I curled up in a corner of the kitchen, out of sight, and dozed off. A loud voice awakened me. I opened my eyes to see, staring down at me, the chairman of the board of the Stardust: Al Benedict. He was

54 Global Gaming Business JUNE 2013

not a tall man, and he was of slender build, but his demeanor left no doubt he was the boss. He was a serious man. Just my luck, there he was touring the kitchen that afternoon. The sight of me incensed him. “You’re fired,” he said. To this day I don’t know whether I was set up. I suppose I was just a naïve kid and a perfect mark for the waiters. Maybe they resented the fact that my dad was a boss at the casino across the street. Or maybe they were just having some cruel fun at my expense. I can imagine now that one of them picked up a phone right after I’d nodded off and told a manager, “Guess what this kid’s doing?” I turned in my bow tie and jacket. I was a nervous wreck. Dad was going to kill me. This was surely my last day on Earth. He certainly was displeased when I told him. “You’ve embarrassed me,” he said. “I can’t believe you did something that stupid.” Those words crushed me. I knew I had no excuses to make. I’d deserved to be fired. Worse, I had let my dad down. I was not a stand-up guy; I was a sleeping boy. I would not be out of work long, courtesy of my father’s upward trajectory. Thanks to him, I landed a plum job working as a lifeguard at the Riviera pool, although he told the head lifeguard to keep an eye on me, to make sure I wasn’t sloughing off. I ended up keeping the lifeguard job for four summers. Like any job that involved dealing with people, it was an education in itself. In some ways, it would prepare me for what turned out to be a career in public office. I was shy by nature but the job put me into a position where I would have to chit-chat with guests, and it wasn’t unusual for out-of-towners to ask me whether I lived in the hotel. Tourists couldn’t believe people actually resided in regular homes in Vegas. To most visitors, our city was just the Strip and Down-

Born from fun.速

High-Five Frank. Congratulations on 18 years of fun.

KONAMI is honored to recognize one of the greatest individuals in the industry. During his career and tenure as President & CEO of the American Gaming Association, Frank Fahrenkopf, Jr. was an incredible inspiration to many and an accomplished leader. We congratulate him and wish him much fun in all his new endeavors.

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town’s Glitter Gulch, surrounded by cactus-studded desert wilderness. They were unaware of the neighborhoods of ranch-style houses, or the parks and ball fields, the churches and schools. They just saw Sin City. People stayed up all night. There were no clocks in the hotels or natural lighting in the casinos, for obvious reasons. The city never slept, and it didn’t want its customers to, either. Las Vegas, though, was quite a conservative town then. There were various taboos in the early 1960s that have since fallen by the wayside, as in the rest of the country. AfricanAmerican guests were not made to feel welcome in the resorts on the Strip or Downtown, even though blacks worked as laborers and, of course, as top-notch entertainers in the showrooms and lounges. Desegregation was slowly taking hold, as Vegas wrestled with the nickname “the Mississippi of the West,” a derogatory label slapped on it by civil-rights activists. I heard some unbelievable conversations between guests and the staff at the pool. Some segregationist-minded whites maintained that if blacks were allowed to enjoy the pool, whites would quit going there, or would demand the pool be drained and refilled. The bosses who ran the Strip and Downtown casinos believed that gamblers from the South would not want to visit a place different from the society in which they lived, and most of these casino chiefs were not exactly racially progressive themselves. But even if they were sympathetic toward civil rights, they wouldn’t allow such sentiments to interfere with the bottom line. It’s shocking to reflect that in the years I was a lifeguard there were no black hotel guests at the Riv or any of the Downtown or Strip properties, nor did blacks work as dealers or waitresses there. Even the black entertainers stayed at the only lodging available to them, in an area of town then referred to as the Westside. Through the efforts of Governor Grant Sawyer, and a welfare mom named Ruby Duncan, who led protest marches, the resorts finally were desegregated. (In 2008, Ruby Duncan was awarded the National Association of Secretaries of State’s Margaret Chase Smith American Democracy Award, beating out the likes of Al Gore. My son had nominated her.) At least, in theory. Sawyer, whose two terms as governor ran from 1959 to

There were various taboos in the early 1960s that have since fallen by the wayside, as in the rest of the country. African-American guests were not made to feel welcome in the resorts on the Strip or Downtown, even though blacks worked as laborers and, of course, as top-notch entertainers in the showrooms and lounges.

Global Gaming Business JUNE 2013

1967, wanted to do for Nevada what U.S. Senator Hubert Humphrey of Minnesota urged the country to do in 1948: walk into the bright sunshine of civil rights. Sawyer got an Equal Rights Commission through the Nevada legislature, which gave it everything but money for a budget and the power to do anything. Racial mixing wasn’t the only taboo at the Riv. Public displays of affection that would be considered G-rated today were considered racy in Las Vegas in 1963. The stage was one thing, with its risqué (for its time) topless shows and scantily clad showgirls. Public behavior was another matter. In summer 1963, we lifeguards were concerned by two young newlyweds embracing in the pool. The woman was well built and happened to be a singer opening for Liberace in the Riv’s showroom. Her curly-haired husband, a fledgling actor of some sort, had a thick mat of chest hair. Both were from Brooklyn, strong-minded and brassy, and didn’t seem to care what people made of them kissing passionately. We lifeguards had to go in the water and ask them to stop, saying, “Look, there are kids around here and if you’re going to get romantic, could you please go back to your room?” It turned out that wasn’t the only friction this pair would cause. A day or so later, the woman phoned down to the pool from her room. She gave me her name and room number and said, “I would like a lounge.” “Certainly,” I said. “Do you know where around the pool you would like to lounge? I’ll set it up for you whenever you come down.” “No,” she said, rather curtly. “I want this longue in my room on the patio.” As politely as I could, I said, “Well, the lounges are for the pool area, but I

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would be glad to set it up down here anywhere you like.” She hung up. Soon after, I got a call at the pool from one of the hotel owners. “Who just spoke to Miss Streisand?” he asked. I told him that I had, and I related the conversation.

Global Gaming Business JUNE 2013

“OK, I understand,” he said. “But would you take her a chaise longue?” So I did, carting it up the elevator to the third floor, down the hall, through her bedroom, and outside so that she could be the only guest having a chaise longue on her patio. In return, I received no tip, or even a thank-you.

It was only a few years later that this woman became a major international star, and a celebrity of such stature that the public knew her by her first name only, Barbra. There at the Riv’s pool, I’d encountered Barbra Streisand, who in 1963 was a brash 21-year-old. Her 24year-old husband, by the way, was actor Elliott Gould. Dad kept an eye on me at the pool. He’d usually get to work around 5 or 6 p.m., and I’d usually get off work at 7. I’d glance up and there he’d be in his dark suit, standing there watching, maybe making sure I wasn’t sleeping on the job again. Of course, I wasn’t supposed to hang around the hotel after work; he’d made that clear enough. Las Vegas already was different from any other city in the world. An ocean of multi-colored neon bathed the Strip. Marquees advertised the names of the country’s greatest entertainers. By the 1960s, Las Vegas had usurped Broadway as the live-entertainment capital of the nation. The Great White Way couldn’t compete with the Strip in terms of paying power to performers. The casino bosses wanted the best in the business so they could draw the most customers and the highest rollers, and they had the cash to spend. At the same time, the admission prices to the showrooms were bargain rates. The Riv alone featured such luminaries as Liberace, Sid Caesar, Imogene Coca, Harry Belafonte and Red Skelton. Elsewhere on the Strip, any one of the clique of entertainers the media dubbed “the Rat Pack” might be performing. When Frank Sinatra, Dean Martin, Sammy Davis Jr., Joey Bishop and Peter Lawford held their legendary “Summit” in the Sands’ Copa Room over a three-week period in 1960, during their filming of Ocean’s Eleven, Dad used his connections to get me in, twice. The lounge shows, of course, were free, and who knew what future star might be appearing. Wayne Newton, for example, got his start as a high-pitched teenager in Vegas’ lounges, performing with his older brother Jerry. One of the favorite lounge acts at the time was the Checkmates, a soul group that featured vocalists Sonny Charles and Sweet Louie, and that later on scored big on the charts with an R&B hit, “Black Pearl.” One night, after an evening at the drive-in

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Las Vegas already was different from any other city in the world. An ocean of multi-colored neon bathed the Strip. Marquees advertised the names of the country’s greatest entertainers. By the 1960s, Las Vegas had usurped Broadway as the live-entertainment capital of the nation.

with my date, it was still early. She insisted we return to the Riv. She was a hotel guest I had met at the pool and going to a drive-in was not her idea of seeing Las Vegas. I kept protesting, but she wanted to get into the lounge show. I resisted but finally relented. Neither of us was of legal age, but that didn’t keep a lot of young people from making their way into the lounges. I really couldn’t think of a compelling reason not to try, except that Dad might find out. But I never told any of my dates who my dad was, so I couldn’t use that as an excuse for why we should avoid the lounge. So we gave it a whirl. To my relief, there was a long line outside. I was able to convince the girl that we probably couldn’t get in. But as we were making our way out, I made a small logistical

error: We walked past the maître d’. He spotted me. “Oh, Bob! How great to see you! Would you like to see the show?” “Well, you look pretty crowded . . .” I began.

“No problem! Stand right here. Just give me a minute!” He came back a few moments later carrying a little round table, followed by an usher carting two chairs. “OK, follow me,” the maître d’ said. He walked down to the middle of the room and stopped right in front of the stage, adjusted some other tables out of the way, and put ours down. As he seated us, he said, “I hope you enjoy the show.” The cocktail waitress was waiting nearby. She greeted me by name and took our drink orders. My date was so impressed she barely knew what to make of the VIP treatment. Eyes wide, she gasped, “Do they treat all the lifeguards here like this?”

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Partners in T ime How slot machine manufacturers team up with third-party suppliers to create a more dynamic product

By Dave Bontempo

ha-Ching. The sound of a rebound filters through the gaming world. Revenue figures have inched up recently, with Las Vegas reporting some of its best totals in six years. Nearly $700 million was wagered on the Strip in one month. Perhaps no one loves this news more than those who supply slot-machine products. Companies offering bill validators, coupon printers and cabinets await a surge from the industry giant, as slots still produce 65-70 percent of gaming revenues. More demand for their products could be imminent and it may be payback time for past wisdom. Companies invested research and product-invention dollars several years ago, hoping to seize a market share when the economy rebounded. For them, it was never too early to have a product if their sense of the market was right.

TransAct Soaring TransAct Technologies notched a significant April score with its Epicentral couponing solution. The Hamden, Connecticut, company added 3,500 casino installs between Northern Quest in Spokane, Washington, and Wind Creek in Atmore, Alabama during the first week of the month. Combined with the 1,000 machines set up last year at Nisqually Red Wing Casino in Olympia, Washington, TransAct has a substantial Epicentral lineup. This was a nice breakthrough for TransAct, which develops printers, terminals, software and other products for the many industries including gaming, food safety and hospitality. In the gaming world, coupons are king. “It’s very exiting now that we have a total of three properties running the system with about 4,500 games,” says Tracey Chernay, executive vice president of sales and marketing for TransAct Technologies. “There are so many ways the casinos can use Epicentral, to reward players instantly or give them tickets for future drawings. “We are live across the entire casino floor. Every game on the floor is turning out a coupon.” Wind Creek Casino & Hotel utilizes Epicentral for its Lucky 7 and Wonders of the Gulf promotions, which involve the drawing for additional prizes for both carded and uncarded players. The carded players also gain personalized messages. “We are pleased that the Epicentral print system 60

Global Gaming Business JUNE 2013

tested well with our players, and we are looking forward to optimizing the overall casino experience,” says John Enriquez, Wind Creek vice president of information technology. “To further enhance the experience of our patrons, we have trained employees to be knowledgeable of every feature of it.” With the launch of Epicentral, Wind Creek is the first casino in the Southeast able to give players game-play prizes, he says. Northern Quest, meanwhile, unfurled Q Cash, a slot bonus program. Every few minutes each day, a Q Cash ticket worth $5-$500 will be randomly issued to a guest playing a slot machine. Any guests can win a Q Cash ticket by playing with their Camas Rewards Card on any slot machine at any level. Patrons will know they have won if a Q Cash ticket stating their name, account number and cash amount prints from the slot machine’s ticket printer. It can be redeemed at the casino cage or cashier’s station for 30 days after its issue date. Chernay says another success story—Epicentral’s debut at the Nisqually Red Wing casino in Olympia—continues rolling. The program launched last year spiked enrollment, visits per player and top-tier play. Chernay says the casino has been able to maintain a 25 percent increase in club players who qualified for top tiers and a 10 percent rise in guests earning reward play. The coupons and targeted promotional offers are keeping customers in the property longer, she says. TransAct continues to combine printing and couponing effectively. It unveiled the Epic 950 printer in the mid 2000s. It was a ticket-in/ticket-out printer, but always had a secondary port, because it was designed with couponing in mind. The company then unveiled Epicentral, the software system that connects to the printer so the Epic 950 prints both TITO tickets and coupons and promotional offers directly to players—while they are playing. Epicentral connects with the casino server and with management systems, food and beverage, etc.

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JCM: In the DNA Japan Cash Management continues building upon a significant boardroom decision. As the world economy collapsed in 2008, the Osaka-based company played the contrarian role of revving up. The policy of advancing while the economy retreated was a significant move for JCM, which specializes in gaming, banking, kiosk and vending industry solutions. The company produced the cutting-edge iVIZION bill validator, which debuted in 2011, and a series of 2012 enhancements known as Dynamic Network Applications (DNA), in time to greet the reawakening gaming world. Operating wirelessly or hard-wired, DNA passively monitors the EGM “SAS” line for critical housekeeping data, while securing two-way communication with all critical peripheral components. With this DNA, operators can get extensive reports and alerts in real time and deliver firmware updates instantly, with no downtime, across the entire operation. DNA also enables regulators to verify peripheral devices and software versions, and view reports. Dynamic Network Applications sits on top of the iVIZION, and has become available along with it, according to Tom Nieman, JCM’s senior vice president of global marketing. “The announcement of DNA, at G2E in 2012, was the fulfillment of a promise,” he indicates. “We call it the foundation of intelligence validation. You can build some real cool apps both to enhance your security and to enjoy peripheral management tools. DNA can help you manage your floor and labor costs. “By the time G2E rolls around in 2013, you will be hearing about DNA from live customers, not just us.” The JCM pitch addresses downtime caused by, among other things, paper jams and problems with printers. The DNA software acts like “a baby monitor,” according to Brian Montano, product development manager for DNA at JCM. “The slot director can sit in his office and look at what he needs before it happens,” Montano says. “Does the baby need to change diapers or be fed? Or, in this case, is the cash box almost full or off line? Is the printer almost empty? “This gives you periphery alerts. You can realize that you will be out of paper in 45 minutes and get someone down to the floor and get it swapped out within 30 minutes. At least then, you’re not finding out about the problem the first time a customer tries to use the machine and it won’t work.” While this scenario has become less frequent with cash boxes becoming bigger, their impact is always detrimental. If a heavy-traffic game goes offline, significant play is lost. Perhaps the gambler leaves the floor. “Think of the time it takes to upgrade a machine,” Nieman says. “A guy has to shut the machine down, use a hand-held component, plug it in, wait 60 seconds, close it, lock it up and go to the next machine. “With DNA, he is just going to use the software that runs the device. Now you can upgrade 2,000 machines at 3 a.m. with one download.” Nieman says the DNA reports can be accessed via laptops, phones and tablets. DNA follows up what was already a cutting-edge development of iVIZION. The iVIZION bill validator fits inside the machine with an array of features. That includes Contact Image Sensors (CIS), which, at 85 millimeters wide, can capture all world currency at 100 percent of the image, according to 62

Global Gaming Business JUNE 2013

iVIZION has helped casinos to validate bills more quickly. It enabled Hollywood Casino Toledo and Horseshoe in Cleveland to process more than $1 billion in a threemonth period last year.

company reports. It is self-calibrating and has a sealed banknote path with dirtand liquid-resistant design, resulting in less service-related down time. It reads at 2.7 seconds per note and optically centers banknotes, which eliminates the need for mechanical centering. The device also has high-level antistringing technology. Thieves have previously used the string concept to put a legitimate bill in a validator, have credits counted, and pull the bill back out. iVIZION has helped casinos to validate bills more quickly. It enabled Hollywood Casino Toledo and Horseshoe in Cleveland to process more than $1 billion in a three-month period last year. It debuted at Hard Rock in Las Vegas in 2011 and became part of both Maryland Live! and New World Resorts in 2012.

Banking on PromoNet FutureLogic’s PromoNet couponing solution debuted at G2E in 2011. It advanced into live trials in 2012 and landed installs both in Nevada and internationally early in 2013, according to Nick Micalizzi, vice president of sales and marketing in North America for FutureLogic. The Glendale, California, company’s four-year development of PromoNet expands its gaming impact. Already known for exceptional printers, FutureLogic brought an element of immediacy—coupons—to the floor. The issuance and deployment of coupons keeps customers in the game, both financially and psychologically. “We are seeing promotional couponing at the game pick up in the marketplace,” Micalizzi says. “It’s one of those hot topics people want to talk about right now. Casinos have found it so appealing for a variety of reasons. It can be that they are providing that feeling of luck to people who have lost, because here comes a coupon they can use now.” For creative marketing departments, the flexibility of the product appears limitless. It can help spot unidentified future club members, reward players instantly and establish face-to-face customer relationships via the mobile section of PromoNet. They also provide an instant level of program feedback.

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“You can use this product to gauge redemption rates on certain promotions,” Micalizzi says. “If you are promoting to the wrong person or for the wrong reason, that customer won’t redeem the coupon. But we are seeing redemption rates in some cases of over 50 percent (dwarfing industry norms of 2 percent-8 percent). Think of the flexibility. A property can issue a coupon good for the particular night it is generated or to be used in the future for some type of bounce-back, in which the customer would return during a particularly slow period.” PromoNet works by way of a dual port inside the slot machine. One connection fits the game, the other handles promotional couponing. The product has two major categories. Its “bank” operation concerns a group of isolated machines. The operators can arrange to have adapter boxes placed inside the games quickly, usually inside of a week. The PromoNet “campaign,” dedicated to most or all of the casino floor, involves several mechanisms. It ties into the e-mail network, allowing marketing people to create the design, slot operators to approve the reward triggers and amounts, accounting departments to determine the number of coupons allowed and then slot operators to download the adapters into the games. Another benefit occurs in the growing online area. A barcode on a coupon can enable a player to reach the casino’s website via his smart phone and then redeem rewards. This process also extends to a person’s home computer. The player can type in the barcode number and reach the same website. The mobile influence extends to a portion of PromoNet that enables a casino host to visually track a player, converse with him and print out a redeemable coupon.

The Cole Kepro Cabinet The hardware and software that operators use can be capped off by a sleek gaming cabinet. That’s the specialty area for Cole Kepro, the Las Vegas-based industry heavy hitter. Celebrating its 20th year in gaming, the company designs cabinets based on specifications from the slot manufacturers. It also purchases items like bill acceptors from JCM or the printer from TransAct. Cole Kepro operates out of a 108,000-square-foot building and presents an array of products. The cabinets need to be user-friendly for slot technicians to access quickly. The company’s major gaming areas include upright and slanted models, the bar-top, varied specialty cabinets, XVR cabinets and custom cabinets. Cole Kepro unveiled its XVR series at G2E in 2012 and is running live trials. The series blends the best of the upright and slant cabinets. They are aesthetically pleasing and designed to fit the industry’s appetite for 23-inch LCD monitors. Their presence is designed to match the slightly expanding standard for LCDs while keeping the cabinets small enough to fit small spaces, thus enabling more machine space on the floor. Interesting options in the XVR series include fasttrack wiring, a power distribution box, a sound system with subwoofer and LED lighting. Cole Kepro also lists a specialty area in its 2920 and 2028 series. For example, 64

Global Gaming Business JUNE 2013

the company’s Kepro cabinets have a wide-screen touch LCD, stereo amplifier, card reader, bill validator and ticket printing components. Optional elements in this series include cabinet wiring, power distribution box, barcode scanner, LED sidelights, backlit logo and wallmounting kit. The bar-top model has a wide-screen LCD with a sound-system subwoofer and a flow-through ventilation system. It also features backlit deck glass and a pop-up bill validator as standard. The slanted tops offer optional bill validators and integrated speaking ports as added features. They offer a height of 68 inches and width of 28 inches. Cole Kepro’s upright model has a slim-line cabinet design, LED lighting, an AC and DC power distribution box and a sound system subwoofer as options. Standard features include a belly door, bill validator stacker and removal component, slide-out printer tray and thermal printer support.

MEI Advancing It may be fortuitous that MEI, based in Malvern, Pennsylvania with an office in Las Vegas, is in the note-acceptor business. According to Eric Fisher, senior vice president of operations for the Americas, there may be more money to go around in 2013. “We are seeing a gradual increase in the replacement rate across almost every jurisdiction,” he says. “This is being led by the U.S., where an improving economy has led to increased profitability and, as a result, more investment. “New properties, largely driven by new or expanding jurisdictions in the U.S. (Illinois and Ohio) and expansion in Asia (Manila) are beginning to increase. We are now far enough removed from the financial crisis that operators’ balance sheets are healthy enough to consider new investments.” Note that phrase: “far enough removed.” It is unusual to hear anyone speak of the recession nightmare in the past tense. MEI has a reason for its optimism. It’s called 2012. The company enjoyed a record year, Fisher says. It obtained Revel in Atlantic City as a client for its Cash Advance system in April and closed contracts with companies in Canada. It expects a robust 2013 as its new SC Advance System merges with an expected surge in slot-machine replacement. The SC Advance is a second-generation upgrade of the Cashflow SC bill acceptor system. “SC Advance is now being specified in new properties and several existing customers are planning a transition from Cashflow SC to SC Advance,” he says. “Because SC Advance is backwards-compatible to Cashflow SC, we have the flexibility to support our customers’ needs and have worked with OEMs to guarantee a supply of both products. “MEI didn’t add superfluous functionality that added unnecessary complexity and cost. The new features—enhanced speed, four-way (and improved) barcode acceptance, a new recognition system and expanded memory—offer incremental improvements to a product that was performing very well. The result

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is a product that provides continuity with previous investment and is built to last well into the future.â&#x20AC;? MEI is already known for its billvalidating presence in industries ranging from grocery store checkout counters to subway systems. It handles 2 billion transactions a week and validates bills in nearly 100 currencies, Fisher says. Ten years ago, it brought the Cash System into gaming. The second generation began early in 2012 and, among other things, essentially doubles the amount of bills that can be processed. Fisher says the value of SC advance works like this: It has an improved recognition system, which provides proactive security by utilizing transmissive sensors to see all the way through notes in multiple wavelengths. The SC Advance also has faster note-to-note speed, which quickens transactions. Its expanded memory allows more notes to be recognized in a specific release of firmware. And it has comprehensive barcode recognition, which processes bar-

â&#x20AC;&#x153;MEI didnâ&#x20AC;&#x2122;t add superfluous functionality that added unnecessary complexity and cost. The new featuresâ&#x20AC;&#x201D;enhanced speed, four-way (and improved) barcode acceptance, a new recognition system and expanded memoryâ&#x20AC;&#x201D;offer incremental improvements to a product that was performing very well.â&#x20AC;&#x153; â&#x20AC;&#x201D;Eric Fisher Senior VP of Operations for the Americas, MEI

code coupons in all four directions and improves acceptance on multi-width currencies. Itâ&#x20AC;&#x2122;s easy to assume that slot machines debuting at trade shows or in casinos came off the assembly line as you see them. The reason they do? Third-party vendors have supplied the parts making the whole possible.

! #

"$%& JUNE 2013 www.ggbmagazine.com

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United We Stand

A divided Indian Country threatens tribal entry into the online gaming market

By Dave Palermo

merican Indian leaders in the Midwest and Eastern United States are stepping up efforts to form interstate internet coalitions in an effort to leverage tribal government entry into the quickly emerging online gambling market. Internet coalitions linking tribes in 28 states are an option for indigenous leaders who fear tribes will not be able to compete with large, popularly branded gambling companies in Nevada and elsewhere, notably Caesars, MGM and Wynn Resorts. “From the beginning I’ve been telling tribes their strength is in their numbers and how many states they are in,” says Ehren Richardson, an online consultant for several tribes and the National Indian Gaming Association. “Whether they like (internet gambling) or not, this is how they can succeed, by joining forces. It doesn’t mean every single tribe has to be involved,” he says, with larger tribes serving as hubs for smaller affiliate tribes.

Challenges and Opportunities But there are economic and legal obstacles, notably limitations in tribal-state regulatory compacts and provisions in the Indian Gaming Regulatory Act that most

The administration of Oklahoma Governor Mary Fallin is opposed to allowing online gaming in the state.

Global Gaming Business JUNE 2013

legal experts believe limit the ability of tribes to accept wagers from off Indian lands. Internet experts say tribes cannot generate the player liquidity necessary to make online gambling work if wagers can only be taken from persons on tribal lands. This is particularly true with poker, a non-house-banked game that along with bingo is generally classified as Class II gambling under IGRA. “I believe, both philosophically and legally, that tribes have a right to do Class II internet gaming right now,” says consultant Joe Valandra, principal in VAdvisors. “But until there is a consensus on the legality of off-reservation wagers,” Valandra says, the ability of tribes to successfully engage in online wagering “remains a difficult question to answer.” In the absence of federal legislation, several states have legalized online wagering or are considering doing so, posing a competitive threat to the $27.4 billion tribal casino industry. But elected officials in Washington, Arizona, Oklahoma and New Mexico—states with nearly 100 of the 247 casino tribes—are opposed to online gambling, creating jurisdictional and legal hurdles for tribes hoping to venture

Kurt Luger, executive director of the Great Plains Indian Gaming Association, believes the smaller tribes need to band together to benefit from tribal online gaming.

Mohegan Chairman Bruce “Two Dogs” Bozsum says tribes need to be able to compete online with land-based casino companies.

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Overwork me.

into the online market. “I think the Southwestern states have kind of boxed themselves in,” Valandra says, largely due to tribal-state compacts that prohibit internet gambling or leave the issue sufficiently vague as to invite state opposition. Although Class II gambling is generally conducted outside tribal-state compacts, tribes in Arizona and elsewhere included Class II gaming in their compacts. The Cheyenne-Arapaho Tribes of Oklahoma in April agreed to shut down their free-play PokerTribes.com website in exchange for an agreement with the state allowing them to offer a real-money site for non-U.S. players. “Internet gaming is improper in Oklahoma,” where 33 tribes operate more than 100 casinos, Steve Mullins, general counsel to Governor Mary Fallin, told the Oklahoman. “We basically are saying we will not expand gaming in Oklahoma on the internet.” California, the largest Indian gambling market with 59 tribes operating 60 casinos, is seeking to authorize intrastate internet poker to guard what is believed to be the country’s most lucrative online gambling market. Online poker in California is not subject to the tribal-state compact. “The timing is right,” Wade Duty, executive director of the Louisiana Casino Association, which represents 17 commercial casinos in the state, including in Shreveport and Lafayette, told Delaware Online. “As more states look at the concept of internet-based gaming, most tribes are hopeful that there will be some kind of federal uniform framework as the different states authorize it.”

Joining Forces Because of the divergent legal landscape in the Southwest, the more intense discussions regarding internet coalitions are taking place in the Midwest and Great Plains, regions where rural tribal governments are pondering how they can benefit from online wagering. Kurt Luger, executive director of the Great Plains Indian Gaming Association, which consists of 24 tribes, has long been an advocate of an internet coalition to enable tribes in rural states to generate player liquidity. “Tribes know we’re isolated out here and domi-

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Business Matters Alliances vary in their approach to online wagering

nated by local markets,” Luger says. Minnesota tribes meeting in April discussed a regional, interstate network that would extend from the Star of the North to the Dakotas. Three bands of Lake Superior Chippewa Indians in Wisconsin have formed the Tribal Internet Gaming Alliance (TIGA), a coalition that will initially offer free-play interstate internet bingo with the goal of venturing into for-pay online poker. And the Mohegan Tribe of Connecticut and Mississippi Band of Choctaws Indians have also been involved in at least informal talks about creating a tribal coalition. Mohegan Chairman Bruce “Two Dogs” Bozsum last year told the Senate Committee on Indian Affairs he envisioned Mohegan as an online server hub, providing regulations and technical infrastructure which a coalition of smaller tribes could tap into. “By working together on a nationwide basis, we believe tribes will be able to compete successfully with all potential competitors, including Nevada,” Bozsum said. “It would give to those tribes—many of whom don’t have the resources—the ability to go out on their own, to be able to become full participants, whereas they could never do it by themselves,” says Alfonse D’Amato, chairman of the Poker Players Alliance. Luger has discussed the matter with John McCarthy, executive director of the Minnesota Indian Gaming Association, and Mark Van Norman, a consultant who recently stepped down as executive director of the National Indian Gaming Association. “We all have the same thoughts,” McCarthy says. But tribal association officials are cautious about discussing the issue publicly. “I don’t want to get ahead of the tribes,” McCarthy says. “It’s their decision.” Intertribal internet coalitions were expected to be a major topic at the Great Plains Indian Gaming Association meeting late last month in Prior Lake, Minnesota.

Internet Options Limited Although a number of Indian governments have opposed congressional internet gaming legislation, the absence of a federal scheme leaves them at the mercy of the states. A panel of gambling regulators at the April Global iGaming Summit and Expo in San Francisco predicted that states will eventually overcome legal, taxation, regulatory and operational challenges and enter 68

Global Gaming Business JUNE 2013

he three tribal founders of Tribal Internet Gaming Alliance (TIGA)—the Red Cliff, St. Croix and Lac du Flambeau bands of Lake Superior Chippewa Indians of Wisconsin—hope to launch a free-play, internet bingo website that would eventually expand into for-pay poker. TIGA looks to enlist into its network other tribes, and even states where internet wagering is legal. But it will not attempt to solicit wagers from off the reservations or from states that are not part of the network. TIGA attorney Jeffrey Nelson says he is not concerned with critics who contend the network will not likely generate a significant profit if wagers are limited to tribal lands. “Whether the business model makes money

Jeff Voyles, CEO of the Intertribal Online Gaming Alliance (ITOGA), expects to launch a tribal online gaming website this summer.

ITOGA attorney Robert Rosette wants a court to determine the rights of tribes to conduct online gaming.

at the outset is rather secondary,” he says. “The primary purpose will be to gain experience and bring more patrons to the land-based casinos. “We hope to eventually create a large coalition that will be a model of intertribal cooperation and economic success. It would be a model that other tribal groups can use not only for internet gambling, but as an example of how tribes can work together and use their sovereignty to diversify and become economic powerhouses.” The Intertribal Online Gaming Alliance (ITOGA), a group of six California, Oklahoma and Michigan tribes, is planning to launch an online for-pay bingo and Class II slot machine website that will accept off-reservation wagers. ITOGA CEO Jeff Voyles says the group hopes to sign up 10 tribes before launching the website this summer. Member tribes anticipate a legal challenge.

“The case on whether federally recognized Indian tribes can operate Class II gaming over the internet has never been decided,” says ITOGA attorney Robert Rosette. “The legal and policy argument to demonstrate why it should be allowed has never been made.” By using internet servers on Indian reservations and crafting wagers as loan transactions through tribal-owned payday lending operations, Rosette says tribes can make a legal case that wagers constitute “proxy play” originating and culminating on Indian lands. Rosette says the process also enables tribes to work within safe harbor provisions of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), which limit online gambling transactions. “We have the requisite legal framework to design games that comply with IGRA and do not violate any applicable federal or state law,” Rosette says. The two groups are generating controversy. Tribal involvement in payday lending, while a legal enterprise, is getting pushback from financial regulators. Industry observers also caution ITOGA about mixing gambling and payday lending, short-term loans at high interest. Voyles says payday loans enable the tribes to avoid UIGEA prohibitions against the use of credit cards for gambling. “It allows (players) to access money to play, because obviously we’re not going to use MasterCard,” Voyles says. “It’s legitimately a separate business. “If you take that loan out—$500 or $200 or whatever it is—you can use that loan for whatever you want. We’re not telling you to gamble with it. You can fix the air conditioner if you want. But you can gamble with it, if you like.” TIGA’s business model is far more conservative, but a founding member of the group, Kevin D. Maulson, has a 2008 securities fraud conviction in the operation of AmeriCash Inc., a supplier of ATMs to tribal casinos. Maulson says he will not remain with the group when a website is launched. “When it comes time to move forward on this (TIGA), that’s when I back away,” Maulson told GamblingCompliance.com. “I won’t do anything to jeopardize the hard work tribal leaders have done.”

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“

By working together on a nationwide basis, we believe tribes will be able to compete successfully with all potential competitors, including Nevada.

“There is no reason tribal coalitions caninto interstate agreements on the internet. not expand to states like Delaware or New But it’s not clear if tribes limited by IGRA Jersey or other places which also authorize inand tribal-state compacts can follow suit. ternet gaming,” says tribal attorney and conTribal governments, like states, also face regusultant Penny Coleman. latory and revenue-sharing issues. “If they enter into agreements—say a tribal “In the last 10 years, how many tribe-toconsortium entered into agreements with tribe coalitions on gaming have come together other states—they could offer gaming in state and held together when there’s money to be jurisdictions as well as in Indian Country.” shared?” Valandra says. “There haven’t been —Bruce “Two Dogs” Bozsum Tribal attorney Jerry Levine is optimistic any that I know of. Chairman, Mohegan Tribe his clients will succeed in internet gambling “The idea that tribes will come together much the way they pressed the legal envelope any faster than states in intergovernmental in establishing the right to operate casino compacts is a nice idea, but in practice will be gambling on Indians lands. very difficult to achieve. “Tribes need to be innovative, just as they were with slot machine technology “I’m not trying to be a naysayer. There’s great strength in unanimity among in the ’80s,” Levine says. the tribes. But I don’t see it.” “You’re going to see a lot of these efforts by tribes,” he says of tribal coalitions The proponents of both TIGA and ITOGA (see sidebar, page 68) contend a growing tribal internet alliance could eventually evolve into a hybrid that includes such as TIGA and ITOGA. “Some are going to get knocked down. But ultimately, as a matter of necesstates where online gambling is legal and commercial casino companies, which are sity, the tribes are going to find some way to stay alive in this internet area until legal in far fewer states than tribal governments. “I don’t know of a more powerful model than the one we’re building,” Voyles they can get the legislation or the tribal-state compacts or whatever they need to do it legitimately. says. “We’re talking about a labyrinth of affiliates operating in 28 states. That’s “They’re not going to get shut out of the internet gambling industry.” more than Caesars and MGM.”

”

Regulatory Management Counselors, P.C. would like to thank Mr. Frank Fahrenkopf, Jr. for his extensive and influential contributions to the growth and development of the commercial gaming industry. Your leadership will continue to be felt by those working in the industry for years to come. -RMC Legal Staﬀ

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First Legal Online U.S. Poker Site Opens

lthough American gamblers contributed billions of dollars to the revenues of online gaming operations based in international locations, they never had the chance to wager legally on sites operated within the United States. Until April 30. Three states have legalized online gaming/poker, but Nevada won the race to get the first online commercial poker operation up and running. New Jersey and Delaware have both indicated that their online casinos will open by the end of the year. But the spotlight fell on Nevada last month, specifically the Ultimate Poker site, which opened for business. Ultimate Poker is a brand of Ultimate Gaming, itself a subsidiary of Fertitta Interactive, owned by Station Casinos and former Golden Nugget owner Tom Breitling. The site is limited to players based in Nevada. The technology surrounding UltimatePoker.com assures that the players are located within the borders of the state and goes into much more depth when it involves establishing the players’ identity. Prospective customers are required to provide their Social Security numbers, as well as verification of a Nevada address (a hotel works just fine, thank you). Breitling says the site will be a model for companies participating in the U.S. market. “It’s an opportunity to show the world how to properly run online poker,” the Ultimate Gaming chairman said. Breitling says the company was pleased by the unexpected response, which included a front-page story in USA Today and numerous national TV appearances by Ultimate Gaming executives. “The numbers exceeded our expectations,” says Breitling. “We’ve had multiple games going ever since the launch and our cage has been busy accepting fund transfers.” To open an account, players must deposit money at the cage in any Station Casino in Las Vegas or transfer money in $300 increments from their bank accounts. Breitling says the company will soon announce an arrangement with a credit-card company to be able to move money through those channels. Nevada isn’t seen as a major online poker market, however. With only 2.8 million residents, the 72

Global Gaming Business JUNE 2013

state could hardly host a viable critical mass of poker players unless it could tap into the 48 million people who visit the state each year. But how many of those people will forgo gambling in a casino to gamble online? While most customers have been setting up accounts via visits to the cages of the 12 Station Casinos in Las Vegas and through bank transfers, Breitling says he’s been surprised at the number of accounts being set up from outside Nevada, even though they can’t play until they are physically within the state. “I think that’s a testament to Las Vegas,” Breitling told the Las Vegas Review Journal. “People are planning their trips and are saying this will be a part of that trip.” In just three days, Ultimate Gaming CEO Tobin Prior suggested that the site had already dealt 100,000 hands and had 50 games running at night. “I would say we were the largest poker room in the state at that hour,” he said. It hasn’t been all smooth sailing for the poker site, however. Verification of age and geolocation have been issues (UltimatePoker.com does not have an agreement with Verizon, nor does it offer services for Apple computers, limiting its penetration). Technical glitches have also been experienced, but Breitling says the company has concentrated on customer service to minimize those problems. “Just because we’re pioneering new ground, people still have customer service inquiries,” Breitling said. “We know they are gravitating toward a trusted website.” With that in mind, Ultimate Gaming executives point out that their current offering is a strippeddown version of what it will be in the future. Although the site has already offered tournaments, the analytic tools offered by offshore operators are missing, as are some of the popular casino

games, such as seven-card stud. Some also claim that “spoofing” the Ultimate Poker site is possible since the company uses mobile phones for location verification, while you play on a computer. UltimatePoker.com is considered by the Nevada Gaming Control Board as a beta test, which means that nothing can be changed for 30 days, when the problems/challenges will be evaluated. A.G. Burnett, the chairman of the Gaming Control Board, says some of the technical problems are a result of everyone “testing” the site. Meanwhile, when it comes to launching online poker in Nevada which has been touted as the wave of the future in gaming MGM may be saying, “Not so fast.” MGM Chief Financial Officer Dan D’Arrigo told the Chicago Tribune the company is still weighing the value of online internet poker in Nevada, which would be limited at first to intrastate wagers. “We have to make an assessment on the cost to operate in that space,” D’Arrigo said. “We haven’t ruled it out, but we haven’t given it a green light either. We’re not going to be the first or a pioneer from the state’s perspective. “Our preference is for something to be done at the federal level,” continued D’Arrigo. “We’re focused on these state-by-state initiatives, but it makes it more challenging and more complicated… Hopefully states will compact with one another and that will create liquidity and critical mass.”

California Tribes Working on Internet Gaming Bill

hile a bill that would legalize online gaming in California is working through a labyrinthine process that involves competing ideas among gaming tribes, legalized sports betting in the Golden State is becoming more and more likely. Several of California’s most successful gaming tribes are working behind closed doors to Mark Macarro, chairman of the Pechanga Band of Luiseno Indians in Southern California, says tribes are “primed.”

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agree on a proposal that would legalize online poker, according to reports. A bill to do that has been active in the legislature for the past three years. Disagreements between some of the most powerful gaming tribes in the Golden State killed any online gaming last year. Some opposed such a law because they felt it might threaten their existing brick-and-mortar operations. However, according to one tribal source, that attitude is “evolving.” Federal law does allow states to offer internet gaming solely within their borders. California is considered one of the world’s largest untapped internet gaming markets. According to Mark Macarro, chairman of the Pechanga Band of Luiseno Indians in Southern California, quoted by the Press Enterprise, “Tribes are primed right now to begin moving it, to begin working with state legislators to see something to fruition.” Several of the largest gaming tribes were invited to send representatives to work out a compromise that all could support, and then take it to friendly lawmakers to introduce in the legislature. Congress could make all this activity moot if it decides to act on rules that would apply nationally.

Federal Online Poker Legislation Fades as States Take Up Effort

ow that internet poker has been launched in Nevada, and New Jersey and Delaware are finalizing their plans to offer online wagering this year, the prospect of passing internet poker legislation on the federal level is all but dead. “I think we missed a golden opportunity,” Harry Reid, the Senate majority leader, told the Las Vegas Review-Journal. “I will continue to work on it, but it would be stretching things to think we could get something done.” Last year, the Nevada Democrat, along with

Republican Senators Jon Kyl of Arizona and Dean Heller of Nevada, worked together on a bill to legalize internet poker. The measure would have created a federal standard for online poker while barring other forms of casino games. Those efforts died in the Senate, however, as opposition to the bill could not move it in front of Congress. “It’s opposed by governors, lotteries and Indian tribes,” Reid said. “I felt online poker would be good for the state of Nevada.”

Deal-Breaker in Atlantic City

he bid by PokerStars to buy the Atlantic Club Casino Hotel in Atlantic City has now dissolved, leaving an uncertain future for both companies and a vacuum in the potentially lucrative online gambling market. The deal, announced in January just weeks before New Jersey signed an online gambling bill, would have seen the Rational Group, the parent company of PokerStars, buy the struggling resort for an undisclosed amount (reports had the price at around $50 million). PokerStars announced it would invest in the casino and preserve the jobs of

Senate Majority Leader Harry Reid

JUNE 2013 www.ggbmagazine.com

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about 1,800 employees. It would have been the first brick-and-mortar operation owned by the Isle of Man-based company. PokerStars was looking to reenter the U.S. online gambling market after being shut out in 2011 by the Department of Justice. The agreement between PokerStars and Colony Capital LLC, the investment firm that owns the Atlantic Club, stipulated that the company had until April 26 to receive an interim casino license from New Jersey gambling regulators in order to maintain the deal, according to a report by the Wall Street Journal. PokerStars had completed its application to take over the casino, and had just begun a 90-day review by the state Division of Gaming Enforcement. The DGE had until July 9 to complete its investigation, but announced it could take until August before it was done. With several delays and no license in place, Colony Capital decided to pull the plug. “Our purchase agreement with PokerStars has been terminated in accordance with its terms,” Atlantic Club COO Michael Frawley said in a brief statement. He went on to say that the Atlantic Club would

The Atlantic Club Casino Hotel

remain open and the casino was committed to an “aggressive pursuit of the opportunities presented by online gaming.” The Rational Group had already spent $11 million to keep the Atlantic Club open during the transition, according to the Newark StarLedger. Cooperation between the two companies was evident, with both Frawley and PokerStars officials touting the potential of the agreement. The deal was seen as a last chance for the casino, which lost over $19 million in revenue in 2012, continuing a losing streak that goes back to 2006. Did PokerStars’ past come back to haunt it? Was the delay by the DGE an indication that it did not look favorably on the online operator? Will the Atlantic Club, now showing signs of im-

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provement, go back to the negotiating table or seek a new operator? These questions remain. In Las Vegas, Tom Breitling, chairman of Ultimate Gaming, which the day before had launched America’s first legal online poker site, spoke at RD&E Experience, a conference focusing on nongaming amenities. He answered a question about the company’s interest in New Jersey, where full online gaming has been legalized, but operators must own a casino in Atlantic City to participate. “We absolutely have an interest in New Jersey, which has been a leader in this field,” he says. “The platform we own, we can put any games on top of it over and above poker. It’s an aggressive step to do full online gaming, and there will be a lot of time spent on licensing and technical standards. We could be a valuable partner in that market.” There is a tenuous connection between Ultimate Gaming and the Atlantic Club. Colony Capital is the owner of the Atlantic Club. It also owns a piece of Station Casinos, bought after the company emerged from bankruptcy following its privatization by Colony. Station is the majority owner of Ultimate Gaming. Some experts believe that Colony could remain the owner of the property and lease Ultimate Gaming, Station’s new online gaming system, or Colony could simply sell the casino to Station. The Rational Group was still holding out hopes that the deal could be salvaged, and filed suit to prevent Atlantic Club from negotiating with any other potential buyers. A hearing was held in late May to determine whether Rational had any grounds. “The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey,” company spokesman Eric Hollreiser told the Associated Press.

he Delaware State Lottery announced that it has selected a consortium of European online gaming giant 888 Holdings, veteran U.S. lottery supplier Scientific Games and Williams Interactive, the online subsidiary of slot-maker WMS Gaming, as the vendor that will design, launch and run the state’s new internet gaming program. In an interview with Delaware’s News Journal, Ed Sutor, CEO of Dover Downs Hotel and Casino, said the Sci Games/888/Williams partnership narrowly beat out a similar consortium of slot and system supplier Bally Technologies and Canada’s

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Amaya Gaming Group. “What the state told us, even though the voting and scoring was very, very close, what made the decision for 888 was the experience,” Sutor said. “They’ve been up and operating for over a decade.” Last year, Delaware became the first state to legalize a full-blown online gaming program, providing for an intrastate website offering online poker, slots, bingo and video lottery games. The state plans to launch the games by September. A request for proposals yielded applications from 14 companies, including International Game Technology and PokerStars in addition to the 888/Scientific Games and Bally/Amaya partnerships. The selected consortium will provide a complete turn-key solution for the gaming platform, content and operational services, including all accounting and player tracking services.

States Continue Move to Online Gaming

he absence of a federal bill to legalize any kind of online gaming has encouraged more states to consider legalization. In Pennsylvania, a bill introduced in the House

of Representatives would legalize online versions of most casino games, including poker, slot machines and a variety of online table games. However, as details of the bill become public, some experts are assailing its tax structure. “The text of the bill as it currently stands may make the market unattractive to companies in the online gaming sector due to remarkably high application fees and tax rates,” wrote Griffin Finan, an associate of Ifrah, PLLC, a Washington, D.C.based law firm specializing in i-gaming, in the blog Quadjacks.com. “Under the bill, the license application fee would be a steep $5 million and the tax rate is an astronomical 28 percent. “Neighboring states New Jersey and Delaware have both legalized online gaming within their borders without prohibitive fees and tax rates. For comparison purposes, New Jersey’s licensing scheme requires a $400,000 initial application fee and a tax rate of 15 percent.” Finan added that the requirement that only existing casino licensees can hold an internet gaming license in Pennsylvania is another problem in the bill. “Companies that are interested in participating in the Pennsylvania online gaming market, but do not currently have a slot machine license in

the state, would face significant hurdles to enter the market,” he wrote. Notwithstanding Finan’s opinion, though, the online gaming laws in both New Jersey and Delaware require land-based casinos to host the online gaming servers. In Illinois, the Senate approved in a 32-20 vote an expanded gambling bill, SB1739. Prior to the vote, lawmakers removed an online gambling provision from the bill. Senate President John Cullerton could introduce a separate online gambling measure later. Governor Pat Quinn said he believed the provision was a last-minute addition to the bill and requires further analysis. The bill has been sent to the House. And Washington state is considering two new ballot initiatives involving online gaming. Online gaming supporters have begun a grassroots campaign to gather 300,000 signatures from state residents, which would force state lawmakers to act on the proposals or, barring that, force the question onto the November 2014 ballot. Initiative I-582 would allow the establishment of online poker rooms. The Washington State Gambling Commission would be granted the ability to create a licensing process for online poker op-

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Bluhare, Ruby Form Partnership erators. Licenses would be issued for one year with one-year renewals. Online poker rooms would have to pay taxes, but the rate is not covered in the initiative. Players 21 years or older would be able to place wagers on poker through the internet or on mobile devices. Sports betting or other casino games would not be allowed. Initiative I-583 would repeal criminal penalties for online poker players as long as they were not involved in the operation of the gaming platform. Washington law currently makes it a Class C felony to play online poker. Playing any online casinotype game in the state could subject a player to up to five years in prison and a fine of up to $10,000. The initiative is looking to repeal these penalties.

Globant to Develop Games for Bally

lobant, a leading supplier of software products for use in interactive gaming applications, announced that it will begin developing games and software products for slot and system supplier Bally

S Technologies. With the partnership, Globant will produce games and digital gaming products for Bally Technologiesâ&#x20AC;&#x2122; web and mobile platforms. â&#x20AC;&#x153;We are really proud to have been selected by Bally Technologies as their partner,â&#x20AC;? said Guibert Englebienne, cofounder and CEO of Globant. â&#x20AC;&#x153;We are truly thrilled to add this prestigious company to our client base. Iâ&#x20AC;&#x2122;m confident that our creative and development team will be key to help take the company into this digital era, interconnecting the casino experience to the web, mobile and other platforms.â&#x20AC;? â&#x20AC;&#x153;Globant is a recognized leader in interactive game design and platform development, and we are thrilled to partner with a company of their caliber as we continue to focus on bringing the industry the most entertaining and profitable land-based and interactive casino games,â&#x20AC;? said Derik Mooberry, Bally Technologies senior vice president of games.

lot content provider Bluhare Studios announced a strategic partnership with veteran social game developer Ruby Seven Studios to provide social game content. Bluhare Studios, the slot game design group of slot-sector veteran Jim Jacksonâ&#x20AC;&#x2122;s Gemini Digital

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Development, announced a strategic partnership with San Francisco-based social game supplier Ruby Seven Studios, under which the two will combine to produce casino-style social game content. The two studios come together to vie for a slice of the lucrative $1.6 billion social casino gaming industry. Ruby Seven brings a knowledge base of social and mobile game publishing, and Bluhare Studios contributes a design team responsible for some of the most successful slot games in casino history, including Reel’em In, Jackpot Party, Monopoly, Wizard of Oz, and Aladdin and the Magic Quest. (Jackson was senior vice president of gaming operations at WMS Gaming when many of its most popular games were released, as well as president and CEO of slot-maker Sigma Game.) The partnership’s mission is to use the combined skills in gaming and social media to create social gaming content for use on iPhone, iPad, Android and Facebook.

Spielo G2 Extends Svenska Spel Contract

pielo G2 has signed a long-term extension to the contract under which it supplies Swedish lottery Svenska Spel with its online poker product.

tors can immediately start to offer play-for-fun games, which give players the chance to sample casino table games, multi-player games and Aristocrat’s online slots when they’re not in the venue. As soon as necessary regulatory approvals have been put in place, the operator can switch from play-for-fun poker to real-money poker.

Aristocrat Partners With Ongame

maya Gaming Group and Aristocrat Technologies announced they have entered into a memorandum of understanding under which Aristocrat will offer the Ongame poker network platform to its U.S. customers through Aristocrat’s award-winning nLive online gaming platform. Ongame has added many features for recreational players tailored for the U.S. market. Recent new products include Strobe, a new fast-fold poker format; Instant Rewards, an achievement and player incentive engine; and Hyperspace, inclient player communication. Ongame poker also has full mobile support for both iOS and Android, including tablets and iPads. Aristocrat’s nLive solution offers land-based operators a turn-key solution for providing their players with an online gaming solution. Opera-

weden’s government says its citizens are at risk from problem gambling and has asked regulators to propose ways to minimize the harm. About 2 percent of the population is believed to have a gambling problem, but illegal online gambling is a threat, officials say, because of its ability to lure players with better payouts and more products than monopoly operator Svenska Spel. In response to calls from the E.U. for the government to open the country to competition, the government has announced plans to introduce new gambling legislation later this year. In the meantime, a measure is being proposed requiring operators to submit a gambling impact assessment report before launching any new game.

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Spielo G2, the i-gaming and sports betting division of Spielo International, announced that it has signed a long-term extension to continue supplying Swedish lottery Svenska Spel with its market-leading poker product. Under the agreement, which is the result of a competitive procurement process, Spielo G2 will continue to provide its poker product to Sweden’s state-owned gaming operator for another four years, with an option for a further four-year term on expiry. Spielo International has been providing video lottery gaming solutions to Svenska Spel, one of the world’s most successful government-owned lottery and gaming operators, since 1996. Svenska Spel has used the Spielo G2 poker software since 2006.

Sweden Targets Illegal Online Gambling

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JUNE 2013 www.ggbmagazine.com

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Mega-Tourney Bally shows off its iVIEW DM system with a record-smashing tournament BY FRANK LEGATO

ure, Bally was breaking its own records, and they were records invented by Bally. But that doesn’t make it less impressive, particularly from a technological standpoint. On April 27, slot-maker Bally Technologies joined with Connecticut’s Mohegan Sun to stage the mother of all slot tournaments—a single, twosession event that involved more than 2,500 machines and 3,001 players. As Bally did last year with a similar event at California’s Pechanga Resort, the company had officials from the Guinness Book of World Records on hand. The 3,001 participants were enough to set a new Guinness World Record for the “World’s Largest Slot Tournament,” and one of the two sessions had players hammering away at spin buttons on the hit Bally video slot “Hot Shot” on 1,610 different slot machines from various manufacturers. That was enough to score the Guinness World Record for “Most Slot Machines Running the Same Game Simultaneously.” The numbers bested records set last year at Pechanga for a 2,885-player tournament and a single tournament session on 1,110 machines. For the players, the big draw was the money—a total of $100,000 given to 200 winners, with firstplace winner Kenny Gonzales taking $50,000. For Bally and its big customer Mohegan Sun, the most important result of the record-smashing tournament was the fact that the casino was packed for the entire weekend. In fact, a crowd formed a line ringing Mohegan’s Casino of the Earth at around 6 a.m. to register for the contest. That night, it was hard to find an open machine on the slot floor. “Even in smaller-scale tournaments like this we’ve done in the past, we always see a pickup in revenue when people come in to play,” said Mohegan Sun Slot Operations VP Frank Neborsky as his crew geared up to run the contest. “These types of events really show what makes Mohegan Sun great.” “The most exciting thing about breaking this record is actually seeing the customers,” comments Bruce Rowe, Bally’s senior vice president of strategy and business development. “When they line up at 6 in the morning, thousands of people waiting for the chance to win one of 200 prizes, it’s just amazing.” Mohegan, in fact, was the beneficiary of a simi78

Global Gaming Business JUNE 2013

Tournament registration at Mohegan Sun; Bally Technologies CEO Ramesh Srinivasan and Mohegan Sun CEO Bobby Soper

larly crowded floor two weeks after the tournament, when the casino hosted another Bally Guinness World Record event—the “World’s Largest Virtual Race,” a true enterprise-wide event in which every single slot across Mohegan’s three casinos—more than 6,000 machines—showed a virtual NASCAR race. Players with cards inserted in the slots were asked to pick one of eight famous NASCAR drivers, and after the video race ran on each slot machine,

everyone who picked the winner split a prize pool, the credits downloaded right to each winner’s meter. Several races were run throughout the day on May 11.

The iVIEW Edge The technology that made all this possible is the Bally iVIEW Display Manager system, a network which links machines to a back-end server via Ether-

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“Working with a world-class casino like Mohegan Sun only further displays the power of iVIEW DM with EBS to create electrifying levels of anticipation and excitement across the casino floor and drive thousands of people to the casino resort.” —Ramesh Srinivasan President and CEO, Bally Technologies

net connections. It is the marketing side of the serverbased gaming technology originally intended to permit download and configuration of slot content. Bally has a download manager available, but where it has really broken ground in the serverbased arena is by using the iVIEW system for networked individual bonuses and promotional events such as the instant large-scale tournaments and Virtual Races—first introduced with horse races, then augmented with the NASCAR brand—in a package known as the Elite Bonusing System, or EBS. “This is another huge moment for Bally Technologies,” said Bally President and CEO Ramesh Srinivasan before the tournaments. “The Guinness World Record events showcase our ability to deliver a tremendous return-on-investment to our casino partners. Similar EBS events have been proven to increase coin-in, time on device, carded play, and new players card signups. Working with a worldclass casino like Mohegan Sun only further displays the power of iVIEW DM with EBS to create electrifying levels of anticipation and excitement across the

casino floor and drive thousands of people to the casino resort.” “It shows the great partnership Mohegan Sun has with Bally, the things that can be done with a good business partner, and what technology brings to the table,” said Neborsky. “This provides entertainment and real value for our guests.” Rowe notes that tournaments on the scale of the Mohegan event would not be possible without iVIEW and EBS, because the system replaces physical chip change-outs necessary with traditional tournaments. The tournament game is sent directly over the Ethernet network to game screens, or to a small LCD iVIEW monitor on reel-spinning machines without video screens. “We take over the game screens, and in a matter of seconds, we convert that game from normal play to tournament mode, and as soon as that tournament’s over, we turn it back to normal play,” Rowe says, noting that Virtual Races like the NASCAR event add another dimension by taking the promotional game to the entire slot floor.

“For the customer, it allows a choice of playing the game at a lot of different locations on the floor. It creates a floor-wide community event with a kind of contagious excitement you can’t get any other way. No matter where you are on the floor, you can see other people participating in this event, and you want to play.” For the operator, Rowe adds that EBS amounts to a powerful tool. “It really fundamentally changes things for the operator, who is able to schedule events and get the customer into the building at the time they want them there,” he says. “We had people lining up at 6 a.m. for a tournament that started at 9, and those people will be here throughout the day playing other games.” Rowe adds that “mega-events” like tournaments and Virtual Races are only one aspect of EBS. “There are more applications within EBS that are individualized, for personal reinvestment at the game,” he says. “That’s going to really change things. It will move all that reinvestment money we used to do through direct mail and make it much more effective for use at the game, at the time the player is there.” While there certainly are a lot of ways to use EBS, the Virtual Race function is one that is rapidly spreading throughout the industry. The Golden Nugget staged the first NASCAR Virtual Race in Atlantic City on May 18, and casinos from the Florida Seminole properties to several Nevada and California properties, and even casinos outside the U.S., have staged Virtual Race events. “I think the momentum is building, and you’re going to see these technologies in many more markets,” says Rowe. “We’re learning which things work, how to tweak them and make them better, and how to regionalize them somewhat.” The next frontier, Rowe says, will be to take tournaments and Virtual Race events simultaneously to multiple properties. “We’re really looking forward to building this out to support multi-property, largescale organizations,” he says, noting that he envisions regional satellite events leading to huge, national contests, to the ultimate benefit of multi-property operators. It’s a good bet Bally’s going to keep the Guinness folks busy along the way.

JUNE 2013 www.ggbmagazine.com

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Casi-NO RD&E Experience defines the non-gaming paradigm BY PATRICK ROBERTS Engaged attendees complemented great speakers to make RD&E a valuable conference.

ne of the most unique conferences in the gaming industry was held last month in Las Vegas. The RD&E Experience is dedicated to the dissemination of information about non-gaming amenities in the casino resort industry. With competition encroaching in all jurisdictions and regions, casinos without other attractions will lose their edge. RD&E is designed to explain how to exploit the advantages that non-gaming amenities provide. The RD&E Experience is produced by Global Gaming Business magazine and the Innovation Group, and was held at the Planet Hollywood casino in Las Vegas. The conference featured stellar speakers and excellent networking opportunities. The keynote presentations were only the start. On May 1, Tom Breitling, the chairman of Ultimate Gaming, brought his wide knowledge of the gaming industry to the conference just one day after his company’s UltimatePoker.com website debuted America’s first legal online poker room. And the next day, sbe Entertainment President and founder Sam Nazarian arrived to explain how his company’s SLS Las Vegas casino resort will do things differently to gain a serious advantage on the Las Vegas Strip. The opening general session laid the groundwork for the conference, with Innovation Group President Michael Soll leading a panel of experts that included Mark Birtha, corporate vice president 80

Global Gaming Business JUNE 2013

Clockwise: Julie BrinkerhoffJacobs, president, Lifescapes International; Jason Gastwirth, senior vice president of marketing and entertainment, Caesars Entertainment; Las Vegas producer David Saxe Ultimate Gaming Chairman Tom Breitling

and general manager, Fiesta Henderson, Station Casinos; Jason Gastwirth, senior vice president of marketing and entertainment, Caesars Entertainment; Dean Macomber, president, Macomber International; and Joe Weinberg, president of the gaming division for the Cordish Companies. The panelists discussed why non-gaming amenities will be a make-or-break proposition for casinos now feeling

Top: Sam Nazarian, president of sbe Entertainment and owner of the SLS Las Vegas, is welcomed by GGB Publisher Roger Gros; Bottom: Four Seasons Las Vegas General Manager Mark Hellrung

the heat of increased competition. The information provided in this session was expanded upon and developed in depth the rest of the day with panels that discussed food and beverage (choosing menu items, the value of brand-name restaurants, and the latest trends in beverages), entertainment (the inherent conflicts between talent agents and entertainment directors, getting your brand on television, and booking novelty acts) and technology (non-gaming player rating systems and advances in ticketing). At lunch, Breitling outlined his path to success,

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The Linq case study with Caesars executives (l. to r.) Greg Miller, senior vice president of development; Tariq Shaukat, executive vice president and chief marketing officer; and Linq Vice President and General Manager Jon Gray

focusing on his entrepreneurialism with online booking and the purchase of the Golden Nugget Casino in Downtown Las Vegas. He explained how the industry is changing and how online gaming will play a role in all aspects of casino operation in the future. The closing general session on May 1 focused on social networking, and brought together some of the leading managers of the tools in the industry, including Julia Carcamo, vice president of brand marketing, Isle of Capri; Justin Cohen, president, Western Division, Internet Marketing Inc.; Danielle Deremo, interactive marketing manager, Mirage Hotel and Casino; and Derek Schoen, social media and internet marketing manager at Aria Resort & Casino. It was moderated by Ryan Leeds, vice president of strategy and new development for Masterminds. The second day kicked off with a case study of Caesars Entertainment’s Linq project, which brings together all the elements of non-gaming amenities, including a 550-foot-tall observation wheel. Moderated by David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, panelists included Linq Vice President and General Manager Jon Gray; Tariq Shaukat, executive vice president and chief marketing officer; and Greg Miller, senior vice president of development, both with Caesars Entertainment. Miller and Shaukat explained the strategy and thinking that went into the development of the Linq, while Gray explained how that strategy will be implemented in the operations of the project, located on the east side of the Las Vegas Strip between the Flamingo and Harrah’s.

Sessions on the second day included again food and beverage (restaurant design, lounges and nightclubs, and food festivals and special events) and entertainment (negotiating contracts, golf course design and operations, and using boxing and MMA as attractions), as well as sessions on hotel operations and how to use bloggers and tweeters to your advantage. Nazarian and GGB Publisher Roger Gros conducted a presentation at lunch that included Nazarian’s views on the Las Vegas market and how his SLS Las Vegas (the former Sahara) will take advantage of the “white space” in the marketplace. He revealed his strategies for food-and-beverage and retail, while using gaming as an amenity rather than as a focal point. The final session of the conference featured a discussion of how tribal governments can use nongaming amenities to ensure the continued success of their gaming operations. Moderator Katherine Spilde, chairwoman of the Sycuan Institute on Tribal Gaming at San Diego State University, directed a discussion with Sheila Morago, executive director of the Oklahoma Indian Gaming Association; John Palinkas, president of the Pechanga Development Commission; and Scott Sirois, a gaming consultant and former president of several tribal gaming operations, including those of the Tohono O’odham tribe of Arizona. The information provided, however, was just part of the story of the RD&E Experience. The intimate setting allowed attendees to query the speakers, offer their opinions and network with colleagues in a way not possible at other, more complex meetings. JUNE 2013 www.ggbmagazine.com

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NEW GAME REVIEW by Frank Legato

Arriba

Multimedia Games

his is a 50-line video slot themed around a masked Mexican wrestler character named “Beto,” with the theme communicated through colorful masks, jumping beans, and mariachi tunes from a “frog mariachi band.” The game screen is a five-by-four configuration (five reels with four symbols each, instead of the standard three). The frog mariachi band appears randomly on the reels to award either a multiplier of up to 10 times a winning combination or a credit value of up to 250 times the line bet. Bonus symbols on the third, fourth and fifth reels trigger the “Fiesta Free Spin Bonus.” Five free games are awarded, with odd-numbered spins awarding

either a winning-line pay multiplier or a credit award (a guaranteed win), and even-numbered spins awarding from one to three wild reels. Bonus symbols on the first, third and fifth reels trigger the “Jumping Bean Bonus.” The player is awarded four picks from a field of animated jumping beans, which reveal either credit awards or the Beto masked wrestler character. If Beto is found, an additional pick is awarded, and the value of the remaining unpicked beans is increased. There are two Beto symbols in the field—the highest bonus is awarded when both Beto symbols are found. The game is billed as “TournEvent Ready,” which means it can be incorporated into the Multimedia Games TournEvent instant-tournament system. Manufacturer: Multimedia Games Platform: MGAM video platform Format: Five-reel, 50-line video slot Denomination: .01, .02, .03, .05, .10, .25, .50, 1.00 Max Bet: 500 Top Award: 116,400 Hit Frequency: Approximately 50% Theoretical Hold: 2%—15%

Cash Fever: Love Fever! Spielo International

ith this game, Spielo brings back a theme that was one of the most popular games of the former Atronic brand. The central feature of the original Cash Fever was a thermometer marked by ascending bonus awards. The new version of the game, “Love Fever,” links the thermometer bonus to a love theme, combines it with several other bonus features and places it in a five-reel stepper in the Passion Slots series. The base game is a “243 Ways to Win” scatter-pay game—there are no paylines; wins are triggered by adjacent symbols for 243 possible winning combinations on every spin. Bonus events feature the cartoon “Dr. Fever” character from the original game, only this time as the “Love Doctor,” accompanied by a sexy nurse. The red lips symbol is wild, substituting for all but scatter symbols. The Cash Fever logo on the first, third and fifth reels trigger 10 free spins plus 100 “entry credits.” A random multiplier from 3X to 6X is selected to multiply all winnings in the free games. The free-spin round can be re-triggered for 10 free games at a time. The three main bonuses include the “Love Potion Bonus,” a picka-prize bonus in which the player picks from 18 flasks containing credits to try to create the “perfect love potion,” with a random multiplier; the “Diagnosis Love Bonus,” in which the “Love Doctor” asks the player to choose one of five patients and a “Love Chart” to determine the player’s credit and multiplier “diagnosis;” and the main “Thermometer Bonus.”

Global Gaming Business JUNE 2013

The Thermometer Bonus is triggered when a bonus sixth reel, in the form of an EKG meter, lands on the thermometer symbol. The mercury in the thermometer on the top-box video display then rises to stop at one of 10 bonus features, which include re-spins, multipliers, a wheel feature and mystery credit awards. At the top of the bonus thermometer are three linked progressive jackpots, resetting at $10, $25 and $1,000. These are mystery progressives; one can be triggered at any time. Manufacturer: Spielo International Platform: Passion Slots Format: Five-reel, 243-Way stepper slot Denomination: .01 Max Bet: 200 Top Award: Progressive; $1,000 reset Hit Frequency: Approximately 60% Theoretical Hold: 8%—12%

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Let’s Make A Deal Aristocrat Technologies

he first time the legendary game show Let’s Make A Deal was made into a slot machine, the former Shuffle Master did a lightly themed version featuring original host Monty Hall. Aristocrat’s take on the show uses the dualscreen MVP Vii Widescreen Slant cabinet as the backdrop for a game that digs deep into the attractions of the current version of the show, featuring host Wayne Brady. The game depicts all the familiar costumes, deals, “zonks,” curtains and giant boxes that make the show popular through a remarkable collection of feature-rich bonus events. In all, there are two base-game features and eight bonus features, including a wheel feature that can lead to one of five progressive jackpots. The top jackpot in the multi-site progressive version of the game resets at $250,000. A single-site progressive version has a top progressive resetting at $7,500. The base game features are the “Wild Box Multiplier” and the “Wild Wayne Bonus.” The former displays one of the signature Deal boxes which reveals a multiplier of a winning jackpot; the latter results in stacked wild symbols. Among the bonus events are a re-spin event called the “Money Box Feature,” in which the middle reels are replaced by the “Big Box.” Reels 1 and 5 re-spin, and the Big Box opens to reveal all symbol positions on the middle reels as either one of the symbols from the outer reels or a wild symbol. The player can take the initial pay or forfeit the win and try the bonus again—a replica of the “gamble” for which the game show is known.

Other bonuses include the “Quickie Deal,” which awards 100 credits for each Wayne Brady symbol, re-spinning for each Wayne symbol until a “Double Deal” doubles the entire bonus; the “Big Deal of the Day,” which offers a choice from three doors to reveal one of the other bonus events; “Smash for Cash,” in which the player smashes pigs to reveal dollars or a “zonk;” and three different free-spin bonuses. The game features Aristocrat’s “Modular Video Platform” package that allows operators to configure banks with anywhere from two to eight machines. The game also comes with Aristocrat’s iChair surround-sound chair with rumble, complete with an art panel on the back for additional branding. Manufacturer: Aristocrat Technologies Platform: MVP Vii Format: Five-reel, 30-line video slot Denomination: .01, .02, .05 Max Bet: 250 Top Award: Progressive; Resets $250,000 (MSP), $7,500 (SSP) Hit Frequency: Approximately 50% Theoretical Hold: 12.6%

Rock Around the Clock: Triple Clock Rockin’ Konami Gaming

his new version of Konami’s popular “Rock Around the Clock” game utilizes the full capability of the manufacturer’s Advantage Revolution cabinet, which features a three-part revolving reel mechanism used to alternate between spinning reels, video reels and bonuses. This new version of the game, based on the legendary 1950s song of the same name by Bill Haley and His Comets, triples the bonus feature popular in the first game, in which clock characters dance to the famous song in a sequence triggered when the clock on the bonus display reaches 12. One of the three clock bonuses triggers one of six levels of progressive jackpot. The base game is a three-reel stepper with a 50-credit minimum bet. It is a “27 Ways” setup—all wins pay in any position from left to right for 27 possible winning combinations on any spin. During base game play, the clocks in the bonus display increment every 10 spins. When one reaches 12, the corresponding bonus is triggered. Alternatively, reel combinations can automatically take each clock to 12 and trigger the bonus. When the blue clock is triggered, seven free spins are awarded. During free spins, the chance of “7” combinations of mixed colors increases, thanks to a “nudge” feature that results in stacked 7s. The free-spin round can be retriggered, as can the trigger combinations for the other two bonuses.

When the purple clock strikes 12, the “Lucky Records Feature” is triggered. A wheel bonus appears in the rotating chamber, and an arrow spins around the disc until landing on a credit amount and multiplier. The red clock triggers the “Rockin’ Jackpot” feature. Each reel is re-spun once to determine a wheel color pattern, which determines the color pattern on a bonus wheel. An arrow spin stops on one of the six progressive jackpots. Manufacturer: Konami Gaming Platform: KP3 Format: Three-reel, 27 Way stepper slot Denomination: .01 Max Bet: 500 Top Award: Progressive; $1,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 11.37%

JUNE 2013 www.ggbmagazine.com

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REGULATION by JOHN FLYNN

Over-Reaching? Are extensive licensing investigations still necessary?

n recent years, gaming executives and advisers challenged regulators to reform gaming regulations which they believed were obsolete. In particular, these challenges focused on the extensive licensing investigations conducted by many jurisdictions. Critics charge that these in-depth investigations of financial and background activity—once designed to eliminate organized crime influence— are now outdated, as many gaming industry investors are publicly traded companies, Wall Street firms or institutional investors. It should be noted that that these comments have been made during a time when we have experienced some of the largest incidents of fraud and corruption in our country’s history. These circumstances fuel the fire of this debate: Should regulatory agencies still require extensive licensing investigations? Proponents of cutting extensive licensing investigations make arguments that should be considered: A significant issue is the high cost of investigations. Many jurisdictions assess a substantial licensing fee or charge applicants on an hourly basis for the time spent conducting licensing investigations. Investigators frequently travel as part of the investigation, and travel costs can be significant. These high costs can make the investigation prohibitively expensive for some applicants. Another assertion is that extensive investigations are no longer necessary in a corporate world which includes compliance plans, compliance committees and, for publicly traded companies, SEC oversight. Proponents argue that the due diligence procedures required by compliance plans and by regulators replace the need for extensive licensing investigations. Executives and advisers express concern regarding time delays caused by extensive investigations. Time is lost preparing lengthy applications, providing the extensive documentation requested, and preparing detailed answers to resolve investigators’ concerns. This process can take many months to complete, which creates long delays in opening a resort or gaining approval for a new gaming device. The issue is exacerbated if applicants seek approval in multiple jurisdictions, each of which conducts its own investigation. This can create additional delays if the required application materi-

Global Gaming Business JUNE 2013

als and investigative processes are inconsistent from one jurisdiction to another. These are all understandable concerns which should be considered by regulators and addressed where possible. Conversely, there are several concerns which argue for a strong regulatory approach and extensive licensing investigations. Even with the growth of the gaming industry in this country, legalized gambling has been a controversial issue for many people. Texas is in this spotlight now, as legislators consider legalized gambling in that state. Legislators there face the same issues other states have faced as they consider how to regulate gaming and how to protect their state from unsuitable and corrupt influences. Texas may follow other states, which have addressed these concerns by developing a strong regulatory system led by in-depth licensing investigations. Let’s consider specific arguments in favor of extensive investigations: First, the in-depth investigation is the most effective way to verify that applicants are suitable to receive a gaming license. At the heart of strong regulation is the concept that a gaming license is a revocable privilege. This places the burden on each applicant to demonstrate they are suitable to receive a license. A strong licensing investigative process becomes the frontline defense necessary to verify applicant suitability and exclude corrupt influences from the industry. Regulators are also concerned that substantial cash flows generated by gaming operations attract both suitable and unsuitable operators. History is a good teacher that cash flow and weak regulation can create a “perfect storm” attracting criminal and corrupt influences. Through in-depth investigations, applicants are required to make extensive disclosures of personal history and financial information. Investigators carefully examine financial activity and research background history to discover criminal information, suitability of funding, business competency and probity, unsuitable associates, or other issues which may disqualify the applicant. The complexity of current gaming applications is another concern. The increasing complexity of financing and ownership structures has made the

identification of fraudulent or corrupt practices more challenging. The difficulties are exacerbated as foreign applicants enter our gaming markets. Because of differences in laws and cultures, it is much more difficult to effectively investigate foreign applicants and determine suitability. Investigators encounter difficulties accessing information and getting full cooperation from the applicants. Additionally, foreign environments frequently allow business practices which are unacceptable in our jurisdictions. An extensive investigation is necessary to identify and analyze these issues. In my 28 years of experience as a Nevada regulator, I have seen repeated examples where the indepth examination of financial and background information was necessary to identify unsuitable activities and associates. So, we come back to the original question: Are these extensive investigations still required? A fair answer is that the licensing investigative process must be regularly reviewed and updated. States have already responded to this challenge. Laws are being changed and procedures adjusted to reduce the investigative burden where appropriate. The investigative process must also evolve to effectively keep undesirable influences out of the gaming industry. Regulators should consider that, even though the mob does not exercise the influence it once did, fraud and corruption still occur and remain an ever-present risk. While industry concerns should be given serious consideration, the investigative process must remain sufficiently thorough to mitigate the risk that unsuitable investors could obtain a gaming license. That will require an extensive investigative process. John Flynn is a 28-year veteran of the Nevada Gaming Control Board, retiring as deputy chief of the Investigations Division. Flynn is currently the program director for Omni Seminars, which provides on-site training seminars for regulatory agencies on basic financial concepts, financial and background investigative techniques, and other regulatory issues. With partner Scott Otterstrom, Omni Seminars provides over 50 years of gaming investigative and regulatory experience. Flynn and Otterstrom can be contacted at omni_seminars@yahoo.com.

VOICE 13 TH ANNUAL 1

AME R I CA N G A M I N G A S S O C I AT I O N ER CO MM UN IC ATI COMM AT ION S AWA R D S Call fOr EntrIEs dEAdlinE july 1, 2013

Make Your VOICE Heard! Every year, the American Gaming Association’s (AGA) Gaming Voice Awards recognize the most creative and effective gaming communications. This is your chance to have your marketing, advertising and public relations efforts singled out as the industry’s best. The AGA is now accepting entries for the 13th annual AGA Communications Awards in 15 categories, including: • • • • •

Annual Report Website Mobile Marketing Social Media Program Digital Direct Marketing

• Print Advertising • Broadcast (Television and Radio) Advertising • Outdoor Advertising • Multi-format Ad Campaign

• Communications Campaign • Direct Mail • Employee Publication • Customer Publication

Companies involved in the casino, lottery or pari-mutel industries, including operators, equipment manufacturers, suppliers and vendors, tribal/government agencies, and associations, are eligible to submit entries. For more information, visit the AGA website at www.americangaming.org or contact Brian Lehman, AGA communications manager, at blehman@americangaming.org.

FOR THE LATEST INDUSTRY NEWS: americangaming

@AGAupdate

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FRANKLY SPEAKING by Frank Legato

My Favorite Guru

Global Gaming Business JUNE 2013

VIC TOR RINAL DO

hen one writes about the gaming industry, one expects to get emails from everyone who has a book coming out involving casinos or gambling. For instance, one of former Las Vegas Mayor Oscar Goodman’s people contacted us a couple of months ago about interviewing him on his upcoming book, Being Oscar. We told them sure, but since we had about 56 trade shows to attend within a period of, like, a week, we asked to do it right away. They said, no, too soon. Apparently, at that time, he was just too busy being Oscar. (Hey, it’s a full-time job.) But one interview opportunity sent to us a few weeks ago may be too good to pass up— well, at least from the perspective of getting material for a humor column. The subject of the email was “Slot Machine Secrets,” and it offered a chance to interview Earnest Cobb, who, it says, is also known as “The Slot Guru.” He’s written an “ebook” called The Secrets of Hitting More Jackpots. As you may suspect, I was taken aback. I thought I was the Slot Guru. I even did a show about MegaJackpots for the Player’s Network once where they called me their resident Slot Guru. A spiffy young news anchor would report information about IGT MegaJackpots winners and throw it to me, the crusty old Jimmy-the-Greek kind of expert, for the “tip of the day.” But Earnest Cobb—yes, he spells it “Earnest,” because he just is—evidently is the new Slot Guru, according to the email. I was intrigued, but before I turned in my guru clothes (it’s a robe that I wear as I sit on mountaintops waiting for people to come with slot questions), I wanted to investigate further. There was a link to a YouTube video on the email, so I clicked it. It was entertaining, to say the least. The guy says he’s been playing the slots for 20 years, even though he looks like he’s about 25. (Evidently, he started at age 5 with “My First Slot” by Fisher-Price.) He introduces himself as the Slot Guru, and says he “plays slots as a full-time job.” Then, he actually makes a sign of the cross, “blessing” the viewer as he introduces himself. (I guess slots are his religion.) The Guru says he’s won more than $10 million playing slots, and he shows you a BMW he bought. (Ten mil, and you couldn’t spring for a Porsche?) He also shows you a luxury apartment which, thanks to slot win-

nings, he “rents for $2,300 a month.” Umm… Does he know he can actually buy a place with $10 million? And $2,300 a month? That may land a decent crib where he’s from, but what if you want to live in New York City? For that rent, good luck finding a heated grate and a refrigerator cart. But the real fun comes when he tells you how he wins. It’s all by “karma.” He wins because he gives money away, which makes him “tingle all over.” He proves it by giving a $10 bill to another player in the casino where he’s filming the video. (The player looks at him as if he’s unsure whether to accept money from an obviously disturbed individual.) “The Slot Guru is not meant to take; he’s made to give!” he says, speaking of himself in the third person, as gurus often do. He goes on to show you the book he’s written, with the sole purpose of “sharing his secrets.” He admits he’s not going to tell you he can guarantee you’ll win. However, he does give you a hint at advice in his book that can lead to you becoming a well-off professional slot player with a BMW and a rented broom closet in New York: “You have to want to win!” Wow, why didn’t I ever think of that? I always go into a casino hoping I’ll come out sifting through pocket lint. He calls it the “SPEC Method”—“Select, Project, Expect and Collect!” If you expect to win, you will. “The biggest thing is to believe,” sayeth the Guru. “Some people are satisfied with small wins like $50. I take $50 and make it $100. I take $100 and make it $1,000.” Try this: Pay $20 for the Guru’s ebook and make it nothing. He does win me over with his advice for young urban teens who want to get out of the gang life and be gurus like him some day: “I win because I finished high school and went to college. And pull your pants up when I’m talkin’ to you!” Amen, brother!

Call for nominations EMERGING LEADERS OF GAMING Emerging Leaders of Gaming is the industryâ&#x20AC;&#x2122;s only networking group dedicated to young professionals assuming senior level and C-Suite management positions. Membership is by nomination only. Please submit your recommendation along with CV or Bio to: LEADERS@THEINNOVATIONGROUP.COM

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CUTTING EDGE by Frank Legato

Casino Air Purified Product: A1050 Air Purification System Manufacturer: Airistar Technologies

iristar Technologies’ new A1050 customized air purification system removes up to 99.97 percent of airborne contaminants, and as much as 65 percent of tobacco smoke in the first purification cycle. The custom-designed system tucks Airistar’s “Hexaflow” purification process away in a durable, customized cabinet designed to complement virtually any casino interior. The unit provides minimal distraction while delivering maximum airflows ranging from 500 to 1,000 cubic feet per minute. These custom units can be developed into a theme for a casino floor, sports book, high-limit area, table game pit, slot area or even private gaming rooms. The cabinet can be matched to any existing wood, color decal, stain or Formica laminate. One unit can cover up to 2,000 square feet of area depending on the ceiling height. The durable construction of the inner core offers a five-year warranty. Airistar offers patented technology that helps reduce the impact of second-hand smoke, tobacco products, bacteria, allergens, dust, odors and other harmful contaminants. The six-stage system has a quick-change filter package that can be serviced in seconds for easy maintenance. The A1050 has a HAPA filter that captures 99.97 percent of contaminants larger than 0.3 microns at higher airflow rates. There are also two

ultra-violet, titanium-coated (UV-C) bulbs to prevent mold and microorganism growth. For more information, contact Suzo Happ or call Airistar (847-2442800), or visit the company’s website at airistar.com.

Lower-Cost Validation Product: CashCode one with oneCheck Performance Report Manufacturer: Crane Payment Solutions

rane Payment Solutions has developed a product that can reduce long-term expenses directly related to the design of bill validators used in slot machines. The CashCode one validator with its “oneCheck Performance Report” features rugged, long-lasting beltless transport, a simple bill path design and ease of assembly to make service easier. Secondly, simple, digital-age diagnostic tools eliminate complicated test stands and generate RMA reports fast and efficiently. The oneCheck Performance Report is available by simply pressing a button on the bill validator, eliminating the need for any handheld tools. By utilizing the Performance Report, tech-

Global Gaming Business JUNE 2013

nicians can easily check key performance indicators (like the mileage, acceptance rate and firmware version). The Performance Report enables technicians to focus on the major issues of the casino floor rather than spending time cleaning BV heads when it isn’t necessary. It cuts down cleaning frequencies by 25 percent. It also offers cleaning cards with waffle technology, cutting cleaning time by more than 50 percent. Having firmware version available by on-demand printed ticket makes the floor 100 percent compliant. “I switched to CashCode one bill validators because the product is designed to last long and is equipped with innovative technology,” said Tim Burke, VP of slots at the Borgata in Atlantic City. “It has helped me to streamline our resources and focus on more important things related to our bottom line.” For more information, visit the company’s website at craneps.com.

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Awards CALL FOR ENTRIES The gaming industry’s most prestigious technology awards program is coming again and soliciting nominations. The winners of the Global Gaming Business Gaming & Technology Awards 2014 will be announced at a ceremony on the show floor at Global Gaming Expo in September. Don’t miss this chance to showcase your company’s latest innovation. Nominations are due August 19, 2013.

CALL FOR ENTRIES

THE CATEGORIES ARE: BEST CONSUMER-SERVICE TECHNOLOGY This category concerns technology that directly touches the customers. Whether it is an enhanced kiosk, a new player tracking system, reservations system, parking management system or any other customer-friendly device, this technology directly impacts the experience of the customer. Why is this a step up from previous technologies? BEST PRODUCTIVITY-ENHANCEMENT TECHNOLOGY This category describes a technology that makes a job or task easier and more efficient. Examples could be an online accounting system, better technology for printing tickets on cashless slots, or an employee communications device that allows a property to better explain its programs to its workers. How does this technology improve on the way the task or job had been previously performed? BEST SLOT PRODUCT Very simply, this product is the judges’ favorite new slot product. It can be a brand new game or a traditional game that has been updated within the past 12 months. What makes this machine or game a step forward technologically? BEST TABLE-GAME PRODUCT OR INNOVATION The growth of table games continues to occur around the world and makes it important to recognize innovative developments in this area. In this category, nominations can be made for table games or any product related to table games.

For more information, criteria and nomination forms, contact Global Gaming Business Sales Director David Coheen at dcoheen@ggbmagazine.com or call 702-248-1565 X227.

To place an online nomination go to

www.ggbmagazine.com

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GLOBAL GAMING WOMEN by SUSAN HENSEL

Shaping Tomorrow’s Leaders Risk-taking, networking important steps in anyone’s career By Susan Hensel, Licensing Director, Pennsylvania Gaming Control Board; President, IAGR

hen I first became involved in the gaming industry, it was to take a job that had no title, no job description and no clear career path. Pennsylvania had just passed its law authorizing casino gaming, and I was the first person selected to work full-time on preparing for the startup of gaming in the state. I took a risk on a new industry and, despite the ups and downs inherent in any startup, I have never questioned my decision. Today, as director of licensing for Pennsylvania’s Gaming Control Board and president of the International Association of Gaming Regulators (IAGR), I believe that risk-taking is one of the keys to success for women in the gaming industry. Taking a calculated risk, such as being the first to sign on to a new endeavor, can open doors to opportunity. Another key to success is the willingness to take action rather than waiting for good things to happen to you. During my first meeting of IAGR, I was so impressed with the association that I decided I wanted to be a part of the organization’s leadership. I sought out the association’s then chairman and was successful in being elected first a trustee, next an officer, and now I have twice been elected president. In some of us, taking risk and taking action are inherent abilities; in others, they are skills that must be learned, and one of the best ways to learn them is through someone else’s example. Encouraging women to learn from one another is the reason behind Global Gaming Women. The organization’s mission is to support the development and success of women in the international gaming industry through education, mentorships and networking opportunities. Soon, Global Gaming Women will launch a mentoring program. Though I have never had the chance to be a part of a formal mentor-mentee relationship, I realize as I write this article that I, like all of you, have been in one way or another a mentor or mentee throughout my career. We may not

Global Gaming Business JUNE 2013

know it at the time, but all of the professional relationships we encounter shape our careers. We are always influencing or being influenced by the people around us. I have hired staff and helped them grow in their jobs and professionally. One woman in particular caught my attention because of the abilities, attitude and potential she demonstrated as my assistant in a previous job as an attorney. She was surprised when I plucked her out of that assistant’s job to give her a chance on the ground floor of the Gaming Control Board—the state’s first new agency in 30 years. Today that woman has been promoted multiple times and is now an agency manager.

sharing their knowledge, including Jenny Williams from the United Kingdom, Birgitte Sand from Denmark, and Kaye McDonald from Antiqua. At our annual IAGR conference, we seek to promote diversity as we bring together individuals from around the globe to hear from one another how to best improve the effectiveness and efficiency of gaming regulation. All of these relationships have had a positive impact on me and where I am in my career. Whether a gaming regulator or on the industry side of the business, the issues women face—with the exception of regulator employment restrictions—are not very different. We are

‘‘

Whether a gaming regulator or on the industry side of the business, the issues women face—with the exception of regulator employment restrictions—are not very different. We are all striving to achieve, to have a seat at the table, to have access to opportunity and to be recognized for our accomplishments.

I have worked for others from whom I have learned and who have helped define me as a leader. A particular lesson that has stuck with me came early from an anchorman who took me under his wing when I was starting out in the television news business. He emphasized the importance of passing on the knowledge gained from experience to those behind you, saying it not only helps them but also keeps you fresh and engaged in your own job. I have also worked with colleagues like my fellow trustees and other members of IAGR who represent different parts of the world and different cultures. IAGR is fortunate to have several female trustees who have risen to the tops of their organizations and who are generous in

’’

all striving to achieve, to have a seat at the table, to have access to opportunity and to be recognized for our accomplishments. We have all faced career frustrations. We can all learn from one another. And, we can get perspective on dealing with issues from more sources than ever before. They range from books like Lean In by Sheryl Sandberg, to professional relationships, to association colleagues and even TED speeches. Global Gaming Women is the latest resource available to us. The initiative creates a platform to encourage industry-specific relationships that in large or subtle ways, which we may not even recognize today, can translate into who we are and where we will go in the gaming industry tomorrow.

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Donâ&#x20AC;&#x2122;t miss the

11th ANNUAL SUPPLEMENT Published November 2013

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GOODS&SERVICES 2013 ‘State of States’ Reports Highest Growth Rates Since Recession n 2013, the national Idustry commercial casino insaw its secondlargest gross gaming revenues ever, according to a national economic impact study released by the American Gaming Association. The annual State of the States: The AGA Survey of Casino Entertainment shows an industry that has now seen three consecutive years of escalating growth—reaching its highest levels of gross gaming revenues since prior to the recession that began in 2008. The 2013 report also includes public opinion polling indicating that an overwhelming majority of American adults view casino gaming as acceptable for themselves or others. “After three years of increasing growth and positive signs in all sectors of the industry, it’s clear that we have weathered the recession,” said Frank J. Fahrenkopf, Jr., president and CEO of the AGA. “Whether we look at jobs, casino visitors served or tax revenues being provided, the bottom line is that there is much to be optimistic about in the commercial casino industry.” The latest edition of State of the States reveals that in 2012, gross gaming revenue at commercial casinos rose 4.8 percent to $37.34 billion. States and local communities benefited from $8.6 billion returned from this revenue in the form of gaming tax contributions. This represents an 8.5 percent increase over 2011 figures. Furthermore, the jobs created by the commercial casino industry continue to provide vital employment opportunities for more than 330,000 workers across the country; in 2012, these men and women earned $13.2 billion in wages, benefits and tips, a 2.3 percent increase over 2011 figures. “At a time when many industries are still feeling the lingering effects of the so-called Great Recession, gaming companies are going strong,” Fahrenkopf said. “We continue to provide much-needed jobs and tax revenue at a time when both are greatly needed.” Widely regarded as the most comprehensive resource of its kind, State of the States offers an indepth look at the commercial casino industry and provides national and state-by-state economic impact data, such as gaming revenues, tax contributions and employment and wage figures for the 23 92

Global Gaming Business JUNE 2013

U.S. commercial casino states operating in 2012. Public polling data included in the report were collected by VP Communications Inc. in conjunction with national pollster Peter D. Hart. A full copy of the 2013 State of the States can be downloaded at www.americangaming.org.

UNLV Offers New Gaming Curriculum of Nevada TDr.LasheMarkUniversity Vegas will launch its Yoseloff Gaming Innovation Program, offered through the UNLV Harrah Mark Yoseloff Hotel College, this August. The program, including a course on gaming commercialization, is named for university trustee Mark Yoseloff, who is a former designer, developer and manufacturer of electronic games. Undergraduate and graduate students in the program will learn how to design technically advanced casino games for resorts and the internet. The program also will include classes on the patenting process as well as business development strategies, and will include mentoring from Yoseloff and other industry executives. Yoseloff said the program, made possible through a $250,000 gift from the Yoseloff Family Charitable Foundation, was designed to give students “the tools they need to perfect their craft.” “I’ve always been a supporter of UNLV,” Yoseloff said. “I’ve been at Penn and Princeton, neither of which needs my money or help. UNLV is a school in transition with greatness in certain areas.” Each semester will conclude with a competition in which students will develop and present an invention or idea to be judged by UNLV faculty and industry executives. Winners will not only receive cash prizes but also get marketing and legal guidance to help sell it, with UNLV getting a royalty.

IGT Reports Big Gains manufacturer International Game TechnolS$78.2ogylot million reported a profit jump of 26 percent to for the first quarter, along with a revenue increase of 11 percent to $600 million. The manufacturer reported sales of replacement slot machines grew 68 percent for the quarter ended March 31 along with a 94 percent increase in revenue for the company’s most recent acquisition, the DoubleDown Casino social gaming franchise. The jump to $66.7 million in revenue for DoubleDown is seen as a vindication of IGT CEO Patti

Hart, in what Howard Stutz of the Las Vegas Review Journal called a “victory lap.” The $500 million IGT paid for DoubleDown was one of the top points brought up by former CEO Chuck Mathewson and former gaming analyst Jason Ader in their criticism of Hart during the proxy fight earlier this year which sought three new members for the IGT board of directors. “I think the quarter went a long way to negate the perception of DoubleDown,” Hart said. “It’s not being looked at as just a toy for the company. It’s now a significant source of revenues.” The positive results also is being seen as vindication for Hart’s entire approach to the management of IGT, which the Ader/Mathewson group had assailed as too reliant on non-core assets. “We’re moving forward and that’s what is important,” Hart said. “We have great momentum and the support of our investors. The quarter went a ways to moving us along.”

Bally Announces Share Repurchase lot and system manufacturer Bally Technologies Storsannounced that the company’s board of direchas authorized a new $300 million share repurchase program, replacing the existing $150 million program under which the company had purchased approximately $63 million of common stock. The company entered into an accelerated share buyback agreement with JPMorgan Chase Bank, NA on April 24, under which it will purchase up to $150 million worth of stock under the new share repurchase program. The company also announced it has increased the existing credit facility by $400 million, to a total of $1.1 billion, and extended the maturity of the facility to April 2018. Key aspects of the amendment are as follows: • Improved leveraged-based pricing grid, whereby the total leverage ratio for each applicable rate and undrawn fee tier was increased by 0.25 turns; • Maximum total leverage ratio to be 3.5 turns for the life of the facility; • No limitations on restricted payments (which includes share repurchases) provided the company’s maximum leverage ratio is under 2.75 turns and $150 million per year if above; and • Under the terms of the accelerated share buyback agreement, the company was to pay JP Morgan Chase Bank, NA $150 million on or about April 26, and will receive the initial delivery of approximately 2.5 million shares, representing a substantial majority of the shares expected to be repurchased over the course of the accelerated

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share buyback. The total number of shares ultimately repurchased under the agreement will be determined based on the daily volume-weighted average share price of Bally’s common stock during the repurchase period less a discount. The company will fund the accelerated share buyback with borrowings under its revolving credit facility and excess cash on hand.

Konami Launches Podium Goliath

lot manufacturer Konami Gaming has launched a giant version of its successful Podium cabinet, which has been one of the leading slot formats in the industry. The “Podium Goliath” is a 93-inch version of the Podium featuring dual 32-inch high-definition LCD displays, 360degree attract lighting, an enhanced sound system and an ergonomic button panel. “Since its introduction, Podium has been a proven performer,” said Konami COO Steve Sutherland. “Based on feedback from our customers, we have expanded our line of Podium products by creating the largest Podium yet. Goliath was designed to support our robust game library and provide a unique and fun gaming experience for slot players.” The Podium Goliath cabinet supports Konami’s K2V and KP3 libraries of games.

Software Engineer – Electronic Gaming (EGM) Bring your Talent and Passion to SHFL entertainment!

SHFL entertainment is a gaming supply company specializing in providing its casino customers with improved profitability, productivity and security, as well as popular cutting-edge gaming entertainment content. If you are looking for an opportunity with a progressive company within a growth industry, consider joining SHFL entertainment as a Software Engineer. The Software Engineer will design, develop and test software for electronic gaming products. Specifically, develop software specifications, determine requirements, design and implement the software, enhance, maintain and implement changes to existing software and/or development processes. Required Job Skills: 1 5 " . , -0 10 ) +(/10 0 % "&* 0 /. 1, /1. 0 ) .+/( 1 -"(- , * * +/(1) + % % ) 1+/1 1 1 $. "/1, /1 Shell scripting. 1 0 . "- 1&- "(- , * * +/(1) + % % ) 1+/1 1 0 -) +"/1# "/. -"% 1 +.15 ' 0 -) +"/1"51 ., - 0 , * 1 "* "- ., % 0 1 "- + /(1+ /12 +/'10 / + -"/* 0 /. 1

toolchain and package management. "* "- ., % 0 1 +.1 1, /1 1 "- 1 software debugging. 1 /0 -) ., /+ /(1" 1) % " .) 1, /1# , ) +/"1(, * 0 ) 1 % 0 #.-"/+ #1 , ) +/"1 , * +/(1) " . , -0 1 development experience will be a plus. 1 , ) ) +"/1 "- 1) " . , -0 10 0 % "&* 0 /. 1

Education: 1 , #0 % "- ) 1 0 (- 0 0 1+/1 "* '.& 0 -15 #+0 /# 0 1 E/(+ /0 0 -+/(1 , .0 * , .+#) 1 )$ +#) 1"- 1" .0 -1 related technical field. ______________________________________

0 /0 fits include a group health, dental and vision plan, long term disability and life insurance, paid vacations and paid holidays. Email your resume to: jchan@shfl.com

SHFL entertainment 1106 Palms Airport Drive Las Vegas, NV 89119 Principals only please. EOE employer.

Margaritaville Installs Aristocrat’s Oasis 360 lot and system manufacturer Aristocrat TechSResortnologies announced that the new Margaritaville Casino in Bossier City, Louisiana, slated to open in June, is installing the company’s Oasis 360 casino management system. Aristocrat’s systems team will install Oasis 360 at the new, fully integrated resort property, which will feature a 30,000-square-foot, single-level casino. Oasis 360 will monitor all 1,265 devices on the casino floor, and will employ bonusing modules such as the award-winning nRich, Ricochet Rewards and Splashdown Countdown. These bonusing combinations are designed to increase a property’s competitive advantage and player excitement. “We carefully analyzed all of the system options available to us,” said Margaritaville Resort Casino Senior Vice President and General Manager Barry Regula. “We chose Aristocrat’s Oasis 360 system because of its superior technology, bonusing engines and overall ease of use. We are confident the system will enable us to provide a superior interactive gaming environment and service experience for our guests.” JUNE 2013 www.ggbmagazine.com

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London’s Hippodrome Casino

TransAct to Place Epicentral at Hippodrome rinting supplier TransAct Technologies anPits nounced that it has signed a contract to install Epicentral Print System at London’s Hippodrome Casino. The Epicentral Print System will be connected to all 144 of the casino’s electronic gaming machines, including both slot machines and electronic table games, and is projected to go live in the second half of 2013. “We are really excited to sign a contract with Hippodrome, which is one of London’s premier casino properties,” said Bart C. Shuldman, chairman and CEO of TransAct Technologies Inc. “Hippodrome prides itself on providing its customers with a fun and amazing overall customer experience. The Epicentral Print System will allow casino management to provide an even more optimal experience to their carded and un-carded patrons without them leaving their seats at the tables and slot machines.” The Epicentral Print System, connected directly to TransAct’s ServerPort device inside the slot machine, is a cost-efficient software system that enables casinos to internally develop marketing programs and promotional coupons to be distributed to carded and un-carded customers on a real-time basis at a slot machine. Additionally, the system works with existing slot systems and games as it operates with a separate and distinct connection with the printer. With this, casinos are able to use Epicentral to connect to all existing slot machines, regardless of the game’s manufacturer.

Interblock Installs Games in Vietnam

lovenia’s Interblock announced that it has completed a successful installation of its Queen Roulette game in the Vegas Club in Ho

Chi Ming City, Vietnam. Queen Roulette is a third-generation electro-mechanical roulette unit with 10 play stations. “Queen is distinguished by its square design with clean and modern lines,” said a statement from Interblock. “The design, layout, material and technology place Queen in the highest class of electro-mechanical roulette machines.” “Our club is definitely convinced that newly installed Queen 10 must show the satisfactory performance as the other two products from the Interblock family, from G3 and G4 generations, did,” said Hyunho Cha, director of investments at Vegas Club. “That is why our club does not wish to have any other brand in the roulette sector beside the Interblock brand.”

BMM Expands in Macau aming testing company BMM Testlabs anG nounced that it has significantly expanded its Macau test lab and business operations within the Macao Polytechnic Institute (MPI). After reviewing global labs in 2008, MPI selected BMM as its technical gaming partner.

“Expanding BMM’s Macau test lab and office to a significantly larger premises is testament to BMM’s growing success in Asia,” said Kirk White, executive vice president and general manager of BMM Australia Asia-Pacific, “and our commitment to ensure the local Asian gaming market has direct access to a skilled and professional gaming compliance and testing services company. Our continued co-location and ongoing partnership with MPI ensures our unparalleled ability to meet the technical training and education demands locally for gaming technology awareness and the critical testing requirements for online gaming, slot machines, ETG, casino systems, lotteries and wagering systems of our Asian customers.”

Unity Partners With SHFL, Bally nity Technologies announced multi-year strateU gic partnerships with table-game supplier SHFL entertainment and slot and system manufacturer Bally Technologies, under which both suppliers will utilize the Unity multi-platform engine and development tools. The Unity engine is used by slot-makers and online casinos to create interactive gambling content. It is one of the most widely adopted middleware solutions for development in the gambling industry.

Gaming Design Professionals Bring your Talent and Passion to SHFL entertainment!

Are you looking to work in a fast paced, team oriented and fun working environment where your knowledge and innovation are valued? SHFL entertainment is a gaming supply company specializing in providing improved profitability, productivity and security as well as popular cutting-edge casino gaming entertainment content to its casino customers. SHFL / . -/ ,-+ * . ) / . -0* ( 0- / 0' + ) * . ' 0* . &( -,# ( 0$ / + * . ' 0 developer of table game content and technology. Our R&D departments develop next-generation technologies in a variety of casino gaming areas: interactive gaming, table games, electronic gaming and slots. Our goal is to reach far beyond just designing and creating great casino games as we continually strive to utilize cutting edge technologies to develop and enhance the user experience for our products and games. SHFL is looking for talented individuals interested in bringing their knowledge and skills to help us in our efforts to create a bright and fantastic future in all of our product segments. Principals only please. EOE employer.

We are currently seeking top talent in the following areas: game design, software engineering, art and illustration, HTML 5 mobile development, test engineering and cloud development. And our search list keeps growing every day. SHFL entertainment provides a culture in which your future success and growth can truly be a result of your own efforts and achievements. Joining our team means sharing in our vision and working for the preeminent player in a rapidly expanding global industry to develop compelling and innovative product lines. Our future depends on employing bright, energetic, talented people who share a passion for creating the best products, the best place to work and promoting our continued success. Interested? Check out our current employment opportunities on our website at

www.shfl.com and send us your resume and information. SHFL entertainment 1106 Palms Airport Drive Las Vegas, NV 89119

JUNE 2013 www.ggbmagazine.com

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PEOPLE TCSJOHNHUXLEY NAMES CEO FOR AMERICAS

able game supplier TCSJohnHuxley announced the appointment of Todd Cravens as CEO for the Todd Cravens Americas. Cravens will report directly to Group CEO Cath Burns, and will be based in Las Vegas. He will be responsible for the development of the group’s business interests throughout North America, the Caribbean, Central America and South America. An industry veteran with over 20 years experience in the gaming and amusement industries, Cravens most recently was president and general manager for Illinois for slot manufacturer American Gaming Systems. He was responsible for setting up the operation in the region and in a very short space of time positioned the company as a market leader in the fledgling VLT market in Illinois.

ATTORNEYS FAISS, CLAYTON MAKE TOP 50

he law firm of Lionel Sawyer & Collins has announced that two members of Bob Faiss its Gaming and Regulatory Law Department have been recognized as notable practitioners in the 2013 edition of Chambers Global: Gaming and Gambling Guide, published by Chambers and Partners, a U.K. publisher of legal guides. Attorneys Bob Faiss and Mark Clayton made the list, which is ranked based on thousands of interviews by more than 140 full-time researchers. Faiss, chairman of the gaming law department, was chosen as one of three “Stars” in the industry. Chambers Global called him “one of the major players of the gaming world” and “one of the best ever,” according to a statement from the company. Faiss has 40 years of experience and a “market-leading reputation,” the publication reports.

O’BRIEN NAMED CEO OF INTERBLOCK USA

nterblock USA announced the promotion of Senior Vice President of Sales Tom O’Brien to chief executive officer, effective immediately. O’Brien is a 25-year veteran of the gaming industry, who previously served as sales director at IGT and Aristocrat before joining Interblock USA in 2010.

Commenting on the announcement, Joc Pececnik, owner and founder of Interblock, stated, “Under Tom’s strong leadership, Interblock USA has expanded beyond our expectations. We feel very fortunate to have an executive of Tom’s caliber. His vision and leadership make him the perfect choice to continue establishing Interblock’s place in the gaming industry.”

GLI EUROPE NAMES BUSINESS DEVELOPMENT DIRECTOR

he GLI Europe division of leading gaming testing company Gaming Laboratories James Illingworth International announced the appointment of James Illingworth as director of European business development. Illingworth will be based in GLI Europe headquarters in Hillegom, the Netherlands. Illingworth has extensive gaming experience across the continent, having worked in the industry for more than 18 years for companies including Atronic, Magic Dreams SRL, Spielo International and TCSJohnHuxley.

FUTURELOGIC PROMOTES EDMUNDS

utureLogic, Inc., developer of ticket printing and couponing solutions, has promoted John Edmunds to the position of chief marketing and sales officer. In his new role, Edmunds will be responsible for global sales, marketing and product management. He joins CFP Tony Shepherd, COO Peter Murphy and CTO Mark Meyerhofer on FutureLogic’s C-level executive team, and will report to Eric Meyerhofer, FutureLogic CEO. “Based on his experience and performance, John makes the ideal individual to unite and develop our global sales, marketing and product management functions at a strategic and operational level across our business,” said Meyerhofer. “With his customerfirst approach, I am confident that FutureLogic’s global business will continue to grow and excel under John’s leadership.”

JACKSON NEW NONEXECUTIVE DIRECTOR AT BETFAIR

eter Jackson has been appointed as a non-executive director and a member of the auditing committee for U.K. online gambling group Betfair. Jackson is currently the CEO of Travelex, having joined the foreign exchange provider in March 2010.

Before joining Travelex, Jackson was managing director of consumer banking for the Lloyds Banking Group, having previously held a number of senior roles within the retail arm of HBOS before its merger with Lloyds. He started his career at McKinsey and Co.

ARISTOCRAT NAMES ASIA SALES DIRECTOR

ustralian slot manufacturer Aristocrat Leisure Ltd. has named Mark Aubrey as director of sales and business development for the Asia Pacific region. Aubrey will report to David Punter, Aristocrat’s general manager for Asia Pacific. Aubrey has worked in the entertainment industry for 10 years, in various senior sales and marketing roles for Activision, LucasArts and Warner Bros.

June 2013 Index of Advertisers Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . .22, 23 Bally Technologies . . . .Inside front cover, 37, 61 Boyd Gaming . . . . . . . . . . . . . . . . . . . . . . . . .39 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . .69 Caesars Entertainment . . . . . . . . . . . . . . . . . .31 Cantor Gaming . . . . . . . . . . . . . . . . . . . . . . . .25 Casino City Press . . . . . . . . . . . . . . . . . . . . . .76 Casino Design magazine . . . . . . . . . . . . . . . . .91 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .93 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94, 96 Gaming & Technology awards . . . . . . . . . . . .89 Gaming Partners International . . . . . . . . . . . .17 Gaming Standards Association . . . . . . . . . . . .58 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21, 25 Global Cash Access . . . . . . . . . . . . . . . . . . . . .47 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5, 29 Innovation Group . . . . . . . . . . . . . . . . . . . . . .87 Inspired Gaming . . . . . . . . . . . . . . . . . . . . . . .45 JBA Consulting Engineers . . . .Inside back cover JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Konami Gaming . . . . . . . . . . .9, 55, Back Cover Las Vegas Sands . . . . . . . . . . . . . . . . . . . . . . .33 LT Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . .81 Macquaire . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 MEI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 MGM Resorts . . . . . . . . . . . . . . . . . . . . . . . . .35 Multimedia Games . . . . . . . . . . . . . . . . . .11, 63 NEWave . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73 OIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Regulatory Management . . . . . . . . . . . . . . . .70 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .49 SHFL entertainment . . . . . . . .57, 74, 77, 93, 95 Steelman Partners . . . . . . . . . . . . . . . . . . . . .59 TCS JohnHuxley . . . . . . . . . . . . . . . . . . . . . . .53

JUNE 2013 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Matt Levinson Chairman, New Jersey Casino Control Commission

att Levinson was named the chairman of the New Jersey Casino Control Commission in August 2012. A resident of Atlantic County, Levinson oversees the licensing arm of the state regulatory agency, a change that was made in 2011 under the administration of Governor Chris Christie that shifted all the investigative responsibility to the Division of Gaming Enforcement. Levinson took over at a critical time in the history of the Atlantic City casino industry, and will decide on licenses for companies that will operate under the recently authorized online gaming law. He spoke with GGB Publisher Roger Gros at the CCC offices in Atlantic City in April. To hear a full podcast of this interview, visit ggbnews/podcasts.com. GGB: Let’s start by outlining the duties of the commission, versus the DGE in light of the recent regulatory reform in New Jersey. Matt Levinson: A lot of the day-to-day activities and duties of the commission have been moved to the division. The commission still deals with the casino licensing, the key licenses, temporary licenses. We still deal with the licenses of the actual casinos, the vendor licenses, and regulatory affairs. We also have a department that does a lot of gaming research.

“

So it’s more of a fair comparison now with Nevada? Yes. You took over at a pretty turbulent time. Gross gaming revenues have been declining for the last seven years, and continue to do so. Is there anything that the commission can do to help? 98

As a commission, the role is pretty limited. But Governor Christie and the legislature have enacted lots of legislation to improve Atlantic City. As the head of the commission, I deal with the head of the Casino Reinvestment Development Authority, the Atlantic City Alliance and the security task force. We are one team, and we’re working together to show people that Atlantic City’s here, Atlantic City’s ready, come visit Atlantic City, and really get the word out. But as far as what we can do with the gaming revenue, we’re pretty limited. Non-gaming revenue has become a real crucial part of the overall picture here. How is the commission starting to evaluate that kind of development here in Atlantic City? We’re taking a real look at the non-gaming numbers. We’re taking a look at things we’ve really never looked at before. When the casinos come up with their non-gaming revenue, I think almost 45 percent of the revenues come from third-party venues. So, that percentage and that revenue are not even included in those numbers. So, we’re missing the real story of the market in non-gaming. Atlantic City is alive. People are coming. Gaming revenue is on the decline. The competition is tough, and the economy is not so great. But, people are still coming down. And it’s becoming more of a destination resort. People are coming; they want to spend money. They have $100. They’re not spending $90 of it at the tables or slots anymore. They’re now maybe spending $40, and the $60 is going in the shops or the restaurants.

People are coming; they want to spend money. They have $100. They’re not spending $90 of it at the tables or slots anymore. They’re now maybe spending $40, and the $60 is going in the shops or the restaurants.

Global Gaming Business JUNE 2013

’’

Hurricane Sandy was devastating, especially the way Atlantic City was starting to rebound. The actual damage to Atlantic City was very minimal, but the perception continues in the feeder markets that Atlantic City was really hurt by the storm. Is the CCC able to do anything to really alleviate that perception? Well, number one, it’s talking to the media and to as many people we can to let them know that the Boardwalk and

the casinos are undamaged. And the businesses in Atlantic City, casino-oriented, were not affected. Of course, there were some with some minor damage; there was one with a lot of water in the basement. But nothing so severe that they couldn’t do everyday operations, and they showed that they could once the barrier islands broke. Do you consider part of your job to explain to investors how regulations have changed for the better in New Jersey recently? It is. I definitely see myself as a cheerleader for all of Atlantic City. I try to do as much as I can, just to show them how the regulatory process has changed, and that you can get into this industry, for a lot less than in other industries. The tax rate’s a lot less. And just getting that out there, so that Wall Street and other investors know this, is a huge positive for Atlantic City. It’s also a very exciting time for the Atlantic City industry because of the passage of online gaming. But the legalization in New Jersey didn’t have the “bad actor” clause, which some of the other states had. How are you going to view an application by one of the companies that may fall under that “bad actor” provision? The commission is still going to deal with everything with the highest integrity in the country. We are the model of this, and we’re going to continue that reputation. So, we are going to look at any company coming in the same way we look at every company coming in. We will weigh everything that’s in front of us, and everything that’s in their past, and in their future. So we look at integrity as number one. Are you confident that state regulators in New Jersey will be able to oversee online gaming, and sustain the high integrity that New Jersey has always been known for? I am 110 percent confident that the commission and the Division of Gaming Enforcement will enact all the regulatory process and be able to control online gaming and deal with any issues that would arise. And both organizations have great staff, and a lot of research is being done, and it’s going to be accomplished.

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