p. 1 cover april:_cover, inside, back.qx 3/15/16 10:37 AM Page 1
GGB Global Gaming Business Magazine
ALABAMA’S POARCH BAND WEB MARKETING IGT’S WALTER BUGNO iGAMING’S U.S. FUTURE
April 2016 • Vol. 15 • No. 4 • $10
The many shapes of the modern slot game
With multiple projects on tap, where does the company go from here?
Future Shock Interblock’s ETGs
and casino floor concepts rock industry Official Publication of the American Gaming Association
Association of Gaming Equipment Manufacturers
CONTACT US AT SALES@NETENT.COM ©2016 BLACK FROG ENTITIES, INC. LICENSE FROM BRAVADO INTERNATIONAL GROUP. ALL RIGHTS RESERVED.
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Vol. 15 • No. 4
Global Gaming Business Magazine
26 COVER STORY
16 AGA Regulation Meets Innovation
After years of developing the electronic table game genre it invented in Slovenia and spread throughout Europe, Interblock Luxury Gaming Products is creating excitement on the casino floor with innovative concepts and community gaming in North America through subsidiary Interblock USA.
20 Fantini’s Finance Bouncing Back Frank Fantini
40 Regulation What We Don’t Know Can Hurt Us Richard Schuetz
By Frank Legato
49 Slots Big Shots, Big Slots
50 Marketing on the Web
As casino marketing goes from the mailbox to the PC to the iPhone, a specialized group of vendors can help make the most of the internet to reach customers.
Beyond Player Tracking
By Dave Bontempo
20 MGM’s Renaissance From multiple new resort projects to ambitious plans that may redefine gaming on the Las Vegas Strip, MGM Resorts International is on a roll.
56 Front Poarch Alabama’s Poarch Band of Creek Indians has been unable to secure a state compact, but in the end, the successful Class II gaming tribe doesn’t really need one. By Dave Palermo
By Roger Gros
By Marjorie Preston
Our monthly section highlighting and analyzing the emerging internet gaming markets. Feature
42 The State of U.S. iGaming
DEPARTMENTS 6 The Agenda 8 By the Numbers
14 AGEM Page 60 Frankly Speaking 62 New Game Review 64 Emerging Leaders With UCLA Professor Brett Abarbanel, William Hill US’s Dan Shapiro, and Joingo’s Danielle Parsons
By Steve Ruddock
68 Cutting Edge
70 Goods & Services
46 Is Younger Better?
48 iGames News Roundup Global Gaming Business APRIL 2016
If At First You Don’t Succeed
12 Gaming History
With a mixed bag of results in the first three real-money iGaming states, the industry is nevertheless poised for growth.
66 Table Games
10 5 Questions
32 Skill Games and Millennials Casinos and game manufacturers are exploring the game styles, possible presentations and new gaming environments needed for games of skill on the slot floor.
74 Casino Communications With Walter Bugno, President, International, IGT
The first game had them coming in hordes. Now we unveil the next wave with new gameplay, new characters, and a commanding presence on the Arc Doubleâ„˘ cabinet.
The Walking Dead ÂŠ 2016 AMC Film Holdings LLC. All Rights Reserved. Licensed by Aristocrat. 2016 Aristocrat Technologies Australia Pty Limited.
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Vol. 15 • No. 4 • April 2016 Roger Gros, Publisher | email@example.com Frank Legato, Editor | firstname.lastname@example.org Monica Cooley, Art Director | email@example.com
Roger Gros, Publisher
n my capacity as a consultant to Global Gaming Expo (G2E) on its conference program since its inception, I’ve seen a lot of proposals submitted to conduct seminars. Most are well thought-out and serious, but down through the years, there have been some doozies. A few years ago, there was a submission to do a seminar on growing marijuana on reservations. Not sure what that had to do with gaming, but when the proposal mentioned the “next buffalo” for Native American tribes, I guess it made a little sense. But it was rejected. And then there was the one that suggested refunding 100 percent of players’ losses just to create good will. There wasn’t any explanation about how casinos would pay their employees or service their debt, but apparently good will would be enough. Not sure we even responded to that one. I thought this one was crazy. Someone had developed an algorithm to select players for fantasy sports teams. Now if DFS had been a reality back then, it would have been perfectly acceptable, but at that time, people were playing only season-long games, so it was a stretch. But my favorite had to be the one that was going to teach casino executives meditation so that they wouldn’t “sweat” the money so much. It’s actually not such a bad idea, but I think if you combined the marijuana-growing proposal with this, it would have made more sense. But that’s all in the past. We’ve just completed the Call for Papers process for this year’s G2E, and I have to say that I’ve been blown away with the quality of the suggested sessions. I was most interested in the diversity of the topics being addressed. Top of the list, of course, are dissertations on millennials. Frankly, I’m pretty sick of hearing of this generation, mostly because it’s going to be quite a few years before they really make an impact. But when I read some of these proposals, I began to change my mind. There has been some solid research done on how exactly millennials feel about gambling and what they’re looking for
Global Gaming Business APRIL 2016
in the casinos of the future. I’m confident that this year’s program will present some of this solid data. Secondly, we’ll hear about skill games, or as my AGEM friends like to call them, variable payback games. We’re already light years away from the pinball-style games we saw previewed at last year’s G2E. And again, we’re seeing some solid research being conducted on how people—and casinos—will respond to this new generation of games. And don’t forget social casinos. What casino can be without the play-for-fun sites these days, but how do you actually manage it and make sure you’re getting the biggest bang for your buck? Several proposals for the 2016 conference will point the way. Big data is also a very popular issue. With myriad ways of contacting your customers or potential customers these days, how do you identify and focus on the most important ones? And how do you parse the data to make sure that you’re getting the maximum value from each customer? I really liked some of the proposals surrounding direct mail versus mobile marketing. I don’t know about you, but my physical mailbox is still stuffed with offers from various companies that I’ve used in the past. So clearly, direct mail isn’t dead. But what if you can get an offer to an important customer while he’s close to your property? The possibilities are endless. And the world of the regulator is changing quickly as well. We’ve got some interesting suggestions on how regulators can do their jobs better and with more efficiency, benefiting both the jurisdictions and the casinos they oversee. So this is just a hint of what you’re going to see at G2E 2016. Sure, the products offered on the floor will get you excited, but when you see the conference that we’re going to present—this year it will be ready to go early so you can plan your trip and activities more completely—G2E will be the most important gaming event of the year—again.
JohnBuyachek, Director, Sales & Marketing firstname.lastname@example.org Floyd Sembler, Business Development Manager email@example.com Becky Kingman-Gros, Chief Operating Officer firstname.lastname@example.org Lisa Johnson, Communications Advisor email@example.com Columnists John Acres | Frank Fantini | Geoff Freeman Paul Girvan | Simon Hammon Richard Schuetz | Roger Snow Contributing Editors Dave Bontempo | Chris Irwin Dave Palermo | Marjorie Preston Steve Ruddock | Jacqueline von Zwehl
EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises
• Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International
• Julie Brinkerhoff-Jacobs, President, Lifescapes International
• Nicholas Casiello Jr., Shareholder, Fox Rothschild
• Jeffrey Compton, Publisher, CDC E-Reports
• Geoff Freeman, President & CEO, American Gaming Association
• Dean Macomber, President, Macomber International, Inc.
• Stephen Martino, Partner, Duane Morris, Baltimore
• Jim Rafferty, President, Rafferty & Associates
• Thomas Reilly, Vice President Systems Sales, Scientific Games
• Steven M. Rittvo, Chairman/CEO, 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. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2016 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014
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Establishment Job Growth: Atlantic city, new Jersey and the U.S. December 2007 to november 2015
cASinoS = JobS t
he closure of four casinos in Atlantic City in 2014 resulted in the loss of more than 8,000 jobs. And the city has still not recovered. In the South Jersey Economic Review, produced by Oliver Cooke of the William J. Hughes Center for Public Policy at New Jerseyâ€™s Stockton University, charts demonstrate how Atlantic City just completed its 24th consecutive month of negative job growth. And in the last three years, the Atlantic City region has experienced the second-worst decline in the labor force in the entire country. The full report can be found at stockton.edu/hughescenter.
metropolitan Areas with Largest percentage Declines in Labor Force: november 2012 to november 2015
ArizonA impAct A
recent study completed by Jonathan Taylor, The Economic Impact of Tribal Gaming on Arizona 2014, demonstrated that, like all casino gaming, the benefits flow out from the source. At right, Taylor reviewed the expenditures tribes make within the state just with direct payments, not even the indirect benefits. Taylor is president of the Taylor Policy Group, an economics and public policy consultancy, a research affiliate at the Harvard Project on American Indian Economic Development at the Kennedy School of Government, and a senior policy associate at the Native Nations Institute, Udall Center for Studies in Public Policy, University of Arizona, Tucson. Download the study at azindiangaming.org. 8
Global Gaming Business APRIL 2016
transfers from indian tribes to Arizona State and Local Governments
cumulative contributions from indian tribes to Arizona State and Local Governments
millions of 2014 dollars by Arizona fiscal year
millions of 2014 dollars by Arizona fiscal year
Tribal contributions to cities, towns and counties after June 30, 2014 had not been reported as of press time.
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NUTSHELL Cosmopolitan sports book
5Questions with Jeff Burge
CFO and CTO, CG Technologies
G Technologies (formerly Cantor Gaming) has been running sports book operations at the Cosmopolitan for five years. But with the recent appointment of former MGM executive Bill McBeath as CEO, a bigger, more splashy sports book was required. He identified an underutilized space on the first floor, directly inside the entrance from the Las Vegas Strip. Together with CGT, he created a comfortable sports-bar environment with lounge seating, a fully stocked bar, food and adjacent table games. Jeff Burge, the CFO and CTO of CGT, spoke with GGB Publisher Roger Gros about how it is performing. The previous sports book at the Cosmopolitan was small, tucked away on the second floor. This one is front and center right off the Strip and a true focal point. Yes, this one was created to be a destination. And the design was a result of things we’ve learned over the last five years. Most of the wagering is done these days on mobile, so the transactional side isn’t as important, and there are fewer betting stations. But people still want to get together with their friends to watch the games. We tried to create an environment here that combined the bar, food service, lounge seating and table games.
1 2 3 4 5
So this is a result of what you’ve learned over the years? Sure, you always learn as things evolve. Five years ago, the formal betting stations were necessary for the educated gamblers. But that has evolved, largely driven by the mobile app. Almost everyone has one; it’s very common in this market. People will sit here in the sports book and place bets on their mobile apps all day long. They’re looking for an environment, and that’s what we’re providing them these days. What’s different at the Cosmopolitan than at your other sports books? Well, this is the “difference that matters,” one of their favorite slogans. And we were more than happy to work with them to create something that is unique and integrates with the other things they’re doing on this property. How has it been performing? We’ve been open here for four weeks and it’s just been going gangbusters. It’s a great location, more space and a better product overall. The resort in general is doing much better than it has in the past, with a much more gaming focus. We had our best Super Bowl here by far, in the five years we’ve been open at the property. You’ve got pool tables, foosball tables and other games in the area. What’s the idea with that? It’s trying to avoid the sports-bar curse. When there’s not a big sporting event on TV, sports bars all over the world have trouble. Here, we’re giving them other games to play, and there’s a table-game pit right next to the book, so you’ve created more of a fun environment rather than an event-driven location. 10
Global Gaming Business APRIL 2016
“Not only do the citizens of New Jersey overwhelmingly support legalized sports betting and the revenue that would come to the state with it, but existing federal law picks winners and losers, and is unconstitutional and arbitrary.” —Statement from New Jersey Congressmen Frank Pallone, Jr. and Frank LoBiondo after the Third Circuit Court of Appeals ruled to reconsider the state’s challenge to the federal law banning sports betting
“After the cold winter always follows spring.” —Lionel Leong, Macau secretary for economy and finance, on hopes for recovery in 2016
“Every time you put a gaming bill up in the Florida legislature it’s like throwing a side of beef into a shark tank.” —Florida Republican state Senator Tom Lee on the failure of a bill to expand gaming in the state and grant a compact to the Seminole Tribe
CALENDAR April 5-7: iGaming North America 2016, Planet Hollywood Resort & Casino, Las Vegas. Produced by the Innovation Group, BolaVerde Media, Lewis and Roca LLP and eGamingBrokerage.com. For more information, visit iGamingNorthAmerica.com. April 27-29: GiGSE 2015, Hyatt Regency, San Francisco, California. Produced by Clarion Gaming. For more information, visit gigse.com. May 3-5: Southern Gaming Summit/BingoWorld, Mississippi Coast Coliseum and Convention Center, Biloxi. Produced by BNP Media. For more information, visit SGSSummit.com. May 17-19: G2E Asia, The Venetian Macao. Produced by the American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com. May 31-June 3: Juegos Miami, The Biltmore, Coral Gables, Miami, Florida. Produced by Urban Expositions and Clarion Events. For more information, visit JuegosMiami.com. June 7-10: iGaming Super Show 2016, RAI Amsterdam, Netherlands. Produced by Clarion Events. For more information, visit iGamingSupershow.com.
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living legend Len Ainsworth still going strong and involved in gaming after selling his stake in his own company By Frank Legato
he trend of consolidation in the slot supply sector over the past three years apparently has yet to end, as Austria’s Novomatic Group announced in February that gaming industry legend Len Ainsworth will sell his majority share in Ainsworth Game Technology to Novomatic for around $473 million. Novomatic, the giant gaming manufacturer and operator whose Austrian Gaming Industries subsidiary has long dominated the European slot-machine market, has struggled mightily for the past few years to enter the North American gaming market, its Florida-based subsidiary Novomatic Gaming Americas failing to make significant headway into U.S. casinos despite the Austrian firm’s substantial expansion war chest. Australian slot-maker Ainsworth, however, has made a big splash in the Americas under President-North America Mike Dreitzer, increasing North American revenues last year by 41 percent and unit volume by 30 percent as it completed a new 291,000-square-foot headquarters building in Las Vegas. Its A560 range of cabinets has been a big hit in U.S. casinos, with its slots consistently registering as top performers wherever they are placed. This was added to its big share of the market in its Australian home base and other markets around the world. Under the agreement, Len Ainsworth will sell his 172.1 million shares, amounting to 53 percent of the company’s equity, to Novomatic at a price of $2.75 per share. The company’s shares closed at $2.12 the day of the announcement. This is, of course, the second time the 92-year-old Ainsworth has founded a major international slot supplier, built it to success and ultimately sold his stake. He founded what is now Aristocrat Leisure Industries in 1953, after using equipment from his dental supply business to build his first slot machine. Over the ensuing decades, he built Aristocrat into the powerhouse of the Australian “pokie” business, and created a new genre of slot machine in the low-denomination, multi-line video slots that now dominate the industry. Ainsworth’s Aristocrat revolutionized the slot business in the 1990s with the U.S. introduction of multi-line video in Indian casinos and in Atlantic City, a trend that would continue into the early 2000s with revolutionary new products like Hyperlink multiple progressives. By that time,
I take the view I’ve been lucky in life and I should share my luck with my family. I think medicine and universities would be the target. If you can find a cure to something, that is a big prize in itself.
though, Ainsworth himself was well on his way to his next venture. In 1995, Ainsworth sold his stake in Aristocrat and founded Ainsworth Game Technology, building it in remarkably short time into a viable competitor for the entrenched market share of his former company. In the ensuing 20 years, Ainsworth—as energetic as ever in his travels to major trade events around the world through his 80s and into his 90s—gained shares of markets around the world as it grew its business, culminating in the establishment and growth last year of its U.S. business. The privately owned Novomatic reported it will keep its stake in AGT at around 53 percent, and will keep Ainsworth’s ASX listing on the Australian Stock Exchange. Typically for Ainsworth, he told the Sydney Morning Herald he will donate “a large chunk” of his $473 million windfall from the sale to charity. “I take the view I’ve been lucky in life and I should share my luck with my family,” Ainsworth said. “I think medicine and universities would be the target. If you can find a cure to something, that is a big prize in itself.” He also told the newspaper the sale to the European slot leader will assure that the second company he founded will last decades into the future. “It gives all the staff a guarantee the company will be there for the future,” he said. “I’m ambitious, of course, but I probably have 10 years rather than 40 years left on this planet.” That would put him at 102, but after surviving prostate cancer in the 1990s and continuing his remarkable career into the new millennium, industry pundits have learned to never count the affable Australian gaming legend out.
gaming industry legend len ainsworth will sell his majority share in ainsworth game technology to novomatic for around $473 million. 12
Global Gaming Business APRIL 2016
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AGEMupdate AGEM KEY BOARD OF DIRECTORS ACTIONS
AGEM MEMBER PROFILE Advanced Micro Devices, Inc. is based in Sunnyvale, California. For more than 45 years, Advanced Micro Devices has driven innovation in high-performance computing, graphics and visualization technologies—the building blocks for gaming, immersive platforms and the data center. Hundreds of millions of consumers, leading Fortune 500 businesses, and cutting-edge scientific research facilities around the world rely on AMD technology daily to improve how they live, work and play. AMD employees around the world are focused on building great products that push the boundaries of what is possible. AMD technology enables the graphics that catch players’ eyes and keep them riveted, including options for HD, 4K, 3D, multi-display and next-gen innovations like virtual reality and augmented reality. AMD’s scalable offerings include low-power (even fanless) options for convenient small form factors to top-of-the-line multi-display machines. AMD’s embedded family of accelerated processing units (APUs), systems on a chip (SOCs) and discrete GPUs deliver the next generation of casino gaming. The newly launched 3rd Generation AMD Embedded G-Series SoCs expand the scalability offerings and are designed to deliver an immersive, graphically rich experience and smooth system performance, all in a compact, energy efficient SoC with low power consumption ideal for casino and digital gaming. AMD will be showcasing real-life gaming machines and slot machines at G2E this year. For more information, visit the AMD (NASDAQ:AMD) website, amd.com/gaming, blog, Facebook and Twitter pages.
• The Nevada Gaming Policy Committee was recently reconvened by Governor Brian Sandoval for the second time since 1980s. The meeting was dominated by daily fantasy sports discussions, but AGEM Executive Director Marcus Prater was given a slot to speak at this important forum. His remarks centered on the significance of ensuring that Nevada remains the intellectual capital of the global gaming industry and how the Gaming Control Board and the suppliers worked together in the aftermath of Senate Bill 9 that legalized variable-payback slots. • The proposed conference in Mexico organized by SEGOB has now been confirmed to go ahead May 17-18 in Mexico City. AGEM has been given a seat at the table in shaping the conference and its agenda with three main topics being proposed. These include: Machine Certification, Banning of Illegal Machines and Responsible Gaming. • AGEM continues to work with the Bermuda Casino Gaming Commission to write regulations for suppliers who want to do business with the three proposed casinos. A draft was recently submitted to Executive Director Richard Schuetz for review and it will ultimately be presented to the full commission. • As part of AGEM’s mission to support responsible gaming initiatives around the world, the members recently approved annual contributions of two eminent organizations. The National Council on Problem Gambling based in Washington, D.C. will receive AGEM’s annual contribution of $40,000. GamCare in the U.K. received ￡5,000. • The March board meeting saw four new members welcomed to the group, taking the total number of AGEM members to an all-time high of 154. APEX Gaming, based in the Czech Republic, was welcomed as a Bronze member, along with Casino Screens, RMMC and Tohkoh Plastics America as Associate members.
UPCOMING EVENTS • AGEM recently agreed to contribute $5,000 toward the International Masters of Gaming Law (IMGL) Spring Conference being held in San Francisco April 20-22. • The 10th Annual Nevada State Conference on Problem Gambling is taking place May 5-6 in Las Vegas. AGEM pledged a contribution of $5,000 to support this event.
The AGEM Index reported positive growth in February 2016 after falling 8.86 points in January 2016. The composite index stood at 197.00 at the close of the month, which represents an increase of 8.54 points, or 4.5 percent, when compared to January 2016. The AGEM Index reported a year-over-year increase for the fifth consecutive month, rising 4.29 points, or 2.2 percent, when compared to February 2015. During the latest period, eight of the 14 global gaming equipment manufacturers reported month-to-month gains in stock price, with two up by more than 50 percent and another up by more than 40 percent. Of the six manufacturers reporting declines in stock price during the month, only one was down by more than 10 percent.
ASX: AGI (AU$) !
ASX: ALL (AU$) !
Astro Corp. Crane Co. Daktronics, Inc. Everi Holdings Inc. Galaxy Gaming Inc. International Game Technology PLC INTRALOT S.A. Konami Corp.
Global Gaming Business APRIL 2016
Nasdaq: AGYS (US$) !
Ainsworth Game Technology
Gaming Partners International
Advanced Micro Devices, Inc. headquarters in Sunnyvale, California
Exchange: Symbol (Currency)
Taiwan: 3064 (NT$) ! NYSE: CR (US$) ! Nasdaq: DAKT (US$) ! NYSE: EVRI (US$) ! OTCMKTS: GLXZ (US$) ! Nasdaq: GPIC (US$) ! NYSE: IGT (US$) ! ATHEX: INLOT (") ! TYO: 9766 (¥) !
Scientific Games Corporation
Nasdaq: SGMS (US$) !
Nasdaq: TACT (US$) !
Stock Price At Month End Percent Change Index Feb-16 Jan-16 Feb-15 Prior Period Prior Year Contribution 10.45 ! 9.90 ! 9.89 ! 5.56 ! ! 5.66 ! ! 0.15 2.19 ! 2.22 ! 2.50 ! (1.35) " ! (12.40) " ! 0.15 10.00 ! 10.25 ! 7.44 ! (2.44) " ! 34.41 ! ! 0.70 41.00 ! 19.60 ! 30.55 ! 109.18 ! ! 34.21 ! ! 1.16 49.05 ! 47.76 ! 66.83 ! 2.70 ! ! (26.60) " ! 0.88 7.07 ! 8.03 ! 10.23 ! (11.96) " ! (30.89) " (0.43) 2.94 ! 2.81 ! 7.11 ! 4.63 ! ! (58.65) " ! 0.10 0.22 ! 0.13 ! 0.37 ! 69.23 ! ! (40.54) " ! 0.07 9.64 ! 9.20 ! 8.50 ! 4.78 ! ! 13.41 ! ! 0.04 14.78 ! 14.47 ! 17.84 ! 2.14 ! ! (17.15) " ! 0.72 1.13 ! 1.19 ! 1.79 ! (5.04) " ! (36.87) " ! (0.13) 2,739.00 ! 2,766.00 ! 2,418.00 ! (0.98) " ! 13.28 ! ! 1.47 8.51 ! 5.92 ! 13.51 ! 43.75 ! ! (37.01) " ! 3.69 7.24 ! 7.73 ! 6.52 ! (6.34) " ! 11.04 ! ! (0.04) Change in Index Value !
AGEM Index Value A e: January 20 016 !
AGEM Index Value: February 2016
AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.
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AMERICAN GAMING ASSOCIATION
Regulation Meets Innovation Nevada can pave path toward modernized oversight By Geoff Freeman, President & CEO, American Gaming Association
hen the Nevada Gaming Control Board determined in October 2015 that daily fantasy sports, or DFS, companies must be licensed to operate in the Silver State, many observers falsely presumed that the casino gaming industry was flexing its muscle to shut down an upstart competitor. In actuality, Nevada provided legal clarity and a roadmap for DFS’ continued success— exactly what our industry is seeking across the United States. Our industry also is seeking a greater focus on the intersection of regulation and innovation, two critical components of gaming that are often at odds. Nevada Governor Brian Sandoval appreciates this challenge, and our industry applauds him for determining how Nevada can lead the way in regulating DFS and other important disruptors to the traditional gaming product. DFS is a compelling upstart business caught in a legal gray area. With billions of dollars changing hands and thousands of participants, DFS also is an industry in need of consumer protections and other regulations that ensure the integrity of its product. But DFS is not the only one caught in a legal gray area—so too are the casinos that might wish to do business with these new companies. Over the past year, gaming regulators have warned casinos to steer clear of DFS lest we risk our multibillion-dollar privileged licenses. Yet, how are gaming companies supposed to stay ahead of the curve of consumer demand—which DraftKings and FanDuel have clearly tapped into—by sitting on the sidelines? Even the majority of professional sports leagues, which have long opposed anything that toed the line of gambling, have not only
Global Gaming Business APRIL 2016
embraced but also invested in DFS. In the NFL alone, 28 of 32 teams entered into business relationships with DFS companies. Removing DFS from the legal “gray zone” and establishing a regulatory structure is critical to the casino gaming industry’s business relationship with DFS companies. One of the challenges in regulating DFS is that they don’t fit into the traditional statutory and regulatory silos. They are not like slot machines, live poker or other standard casino games; instead, they are new platforms that present unique sets of questions. The challenge for regulators, policymakers and the casino in-
One of the challenges in regulating DFS is that they don’t fit into the traditional statutory and regulatory silos. They are not like slot machines, live poker or other standard casino games; instead, they are new platforms that present unique sets of questions.
dustry is to build an effective framework for bringing these new platforms into the fold without strangling the very qualities that make them innovative in the first place. Two guiding concepts could help with navigating this new terrain and maintaining Nevada’s historic role in setting the gold standard for gaming regulation. First is the need to enable innovation. Can revolutionary gaming innovations happen in a heavily regulated marketplace? Evidence suggests that the unregulated market—birthplace to disruptors like DFS—is a type of testing lab. As new platforms become established, regulations should aim to integrate them into our industry without pushing the customer down the path of least resistance to the unregulated, illegal market. Secondly, regulations should be flexible. In gaming’s early days, casinos competed against the new building across the street. Later, casinos fought for customers with casinos in a neighboring state. Now, as gaming operates in 80 percent of the United States, casinos are competing against every other entertainment option. Regulatory flexibility will allow operators and manufacturers to rapidly adapt to changing consumer trends and help to ensure a thriving gaming industry, which states count on for significant tax revenues. And just like gaming operators and suppliers, regulators need to be nimble to keep pace with emerging technologies, shifting demographics and changing market demands. Otherwise, rules become obsolete before they are even implemented. The Las Vegas of today hardly resembles the Las Vegas of 20 years ago, and Nevada can send a message that it will continue to be the gold standard in gaming innovation. Follow Geoff Freeman on Twitter: @GeoffFreemanAGA.
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Bouncing Back Impossible expectations yield to rational reviews
By Frank Fantini
nvestor sentiment often runs a stock too far in one direction and then bounces back too far in the opposite direction. It can be fairly asked if that has happened on the recent recoveries in the price of the stocks of Macau casino operators. Use Las Vegas Sands and Wynn Resorts as examples. When Macau was booming, investors drove LVS and WYNN up to unsustainable prices in the apparent belief that Macau would grow 40 percent a year until every last Chinese player spent his life savings at the baccarat table. The unmistakable sign of a top came when one analyst added onto stock price targets the value of Japanese casino licenses. At the time, I noted that Japan hadn’t legalized casinos yet, very possibly would not, and even if it did, there was no assurance that LVS or WYNN would win the licenses or that the rules and taxes would entice them to seek licenses. Of course, here it is two years later, and Japan still hasn’t authorized casinos. What did change was Macau. The central Chinese government’s anti-corruption campaign became pervasive and relentless, and there might have been a little “we’ll show ‘em” motivation on the part of the mainland’s Communist masters for the American and Hong Kong billionaires getting richer off its citizens. The result was a long, unbroken, demoralizing decline in gaming revenues that set off a bear market in Macau gaming stocks. From an extreme high of $88.28 for LVS and $249.31 for WYNN in March 2014, their stocks plunged to $34.88 and $49.95 by this January. That was a collapse of 60 percent for LVS and 80 percent for WYNN. This created a huge buying opportunity. Las Vegas Sands’ dividend alone yielded 8 percent and appeared safe. But sentiment remained poisonous. Then, Macau gaming revenues flattened out. They rose modestly over the preceding months from December through February and a rebound in the stocks began, gained momentum and became a rocket ride. By early March, LVS rebounded 45 percent to 18
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cross $50 and WYNN 70 percent to soar past $85. The stock recovery happened a lot faster than the gaming revenue recovery that sparked it. In fact, revenues didn’t grow at all on a year-over-year comparison. But this is investor sentiment we’re talking about, not cold, calculated reason. For the record, we are investors in both WYNN and LVS and believers in both companies longterm, for reasons we’ll explain in a future column.
A ROSE BY ANY OTHER NAME The blossoming of daily fantasy sports is starting to look more like a daylily than a rose. Or, in the famed but more prosaic words of Andy Warhol, DFS might already have had its 15 minutes of fame. Until recently, DFS was the rage. Conference seminars on DFS were standing room only. Every day a major league sports team, or entire leagues, were signing deals. Giant media companies like 21st Century Fox, Google, Disney and Warner Brothers were showering DraftKings and FanDuel with investment money. And you couldn’t watch a sports event on TV without being barraged with DFS advertisements trying to part you from your money with the promise of big wins that sounded oh so much like gambling, not some cerebral game of skill. Now, there are deep cracks in the edifice that threaten its collapse. It started when the over-the-top advertising prompted anti-gamblers, legislators and attorneys general to question whether DFS is really gambling, thus illegal almost everywhere. That got a big boost from Nevada regulators who said DFS operators have to be licensed as gambling operations. Since then, the reaction to DFS has become almost as loud and frequent as the industry’s autumn advertising campaigns with attorneys general in big states like New York and Illinois classifying it as gambling and legislators in at least 22 states introducing bills to ban or legalize the activity. The result is an impaired business, and the result of that might be the drying up of investment needed to keep a still money-losing infant industry alive.
The first clear break occurred some weeks ago when 21st Century Fox revealed that it had written down its $160 million investment in DraftKings to $65 million. For a company whose earlier investments loosely valued it at $1 billion, that would calculate to a value of just $400 million. Adam Krejcik and Chris Grove provided some interesting statistics on the vulnerabilities of DFS in a report published by Eilers & Krejcik Gaming. DraftKings was $280 million EBITDA-negative last year and chief rival FanDuel minus $137 million, they estimated. Further, the great expense of player acquisition, including that TV ad bombardment, means DraftKings spent $174 to acquire a player and FanDuel spent $123. That means it will take them 15 to 24 months to break even on an acquired player, Krejcik and Grove calculated. Further, value is highly concentrated in a very small number of players. Just 1 percent of players provide 60 percent of revenues, they estimated. And even though Krejcik and Grove expect DraftKings and FanDuel to focus on bringing down costs this year, an observer has to wonder about the viability of the business model. Indeed, DraftKings has all but admitted as much with its attorney telling the Boston Globe that the company could go out of business if it loses its lawsuit in New York and can’t serve customers there. One expects that in this environment it will be difficult, if not impossible, to raise fresh money to replace the dollars bleeding away. A final nail could be driven by the 3rd Circuit Court of Appeals. If the federal judges clear the way for sports betting in New Jersey, and other states follow, fantasy sports could revert to its original niche of hard-core sports fans acting like sports fans, while gamblers move over to the main attraction—betting on games. 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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Back from the Brink MGM Resorts is on a roll, as multiple projects are on tap By Roger Gros
or a company that was on the verge of bankruptcy just a few short years ago, MGM Resorts International is on something of a roll. After buttoning up billions of dollars in debt, MGM Resorts began to plan. First, it won the final (extra) license in Maryland, for a casino in suburban Washington, D.C. Then it won the license available for the western region of Massachusetts for a casino in Springfield. A casino on the Cotai Strip in Macau looked iffy for a while, but it will now debut in 2018 in what will hopefully be a more balanced gaming economy. And this month, the first major project opens, the T-Mobile Arena on the Las Vegas Strip behind New York-New York and the soon-to-be-rebranded Monte Carlo (see page 21). Bill Hornbuckle is back in Las Vegas for a few days before heading out again. As MGM Resorts’ president and lead development executive, Hornbuckle spends at least half his time on the road. From Massachusetts to Maryland to Georgia (where MGM was interested in an Atlanta-area casino), Hornbuckle’s plate is full. But his immediate attention is going toward the T-Mobile Arena, coordinating the grand opening with a variety of entertainment events. “The Grand Garden Arena has been a great vehicle for us,” he says. “But clearly, there was a lot of dialogue in the community about yet another arena, and we just didn’t want to cede our position—period, end of story. What was interesting about this was the dialogue we were having with AEG, which wanted to manage the content. But AEG isn’t just a content company. Even though they have AEG Live, they are an asset-based company. That’s their core business; it’s about owning these huge, great assets.” With the talk of a National Hockey League team calling T-Mobile home, Hornbuckle says that would be nice, but not necessary for the success of the arena. “To make T-Mobile succeed, we need about 100 events,” he says. “To completely succeed as a company, we need about 200 to 240 events, give or take. The
Global Gaming Business APRIL 2016
NHL would get us there more quickly, but we’re confident it will come one way or the other.” The company’s other two arenas—the Grand Garden Arena at MGM, and one at Mandalay Bay—will continue to succeed, says Hornbuckle. “There are a lot of right-sized events, a lot of made-for-television events, that want to stay at MGM, and we’re happy about that,” he says. “I think the one that will see fewer A-level events, candidly, is Mandalay. But the whole economic design of that place, and the reason it still stays in existence, isn’t to be an arena. It’s to be a housing activity and a place for special events. Bill Gates was in there last year, speaking to his Microsoft folks. The CEO of IBM is coming in in a couple weeks to speak to 11,000 of his people.”
Park Place For a company where the recent 500,000-square-foot expansion of the Mandalay convention center was taken in stride, the creation of the Park, an entertainment area connecting T-Mobile with the Strip, is hardly an afterthought. The Park was envisioned by MGM Chairman Jim Murren to be the spine that connected T-Mobile with New York-New York and the Monte Carlo, which is undergoing its own metamorphosis with an asyet-undisclosed name change and The 5,000-seat Monte Carlo theater
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MGM Presents The T-Mobile Arena will transform the company’s Las Vegas properties, and even the city
or years, plans for large-scale arenas came and went in Las Vegas. Caesars was going to build an arena behind Bally’s. A former NBA player was planning a 20,000-seat arena near the former Sahara. A Texas businessman was considering a four-arena development west of Mandalay Bay. A developer wanted to site a 20,000-seat arena near the South Point casino. And several projects were proposed near Downtown Las Vegas. But none of them came to fruition because of one simple reason: the developers wanted the public to finance their dreams. But in April, a partnership of MGM Resorts and entertainment giant AEG will officially open the T-Mobile Arena, located behind MGM properties New York-New York and the soonto-be-rebranded Monte Carlo. A seven-acre Park will link the arena and a two-acre plaza to the Strip, creating additional venues for events. Bill Hornbuckle, president of MGM Resorts International, says the arena will be a game-changer for many of MGM’s Las Vegas properties. He credits AEG, which owns and operates many arenas throughout the country, including the Staples Center and the surrounding LA Live, with bringing many of their successful plans to Las Vegas. “We have 42 suites,” he says, “and we have these amazing bunker suites. We have everything that you’d expect in a suite. There are several different club areas, one at the very top of the arena, operated by our friends at Hyde, with sbe entertainment. And the views from up there are just spectacular.” Rick Arpin is senior vice president of entertainment for MGM responsible for MGM’s side of the operation. He says the arena will be unlike any other. “The architects did a great job on the seating aspect,” he says. “We’ve done all the things we’re supposed to do for sound. We’ll run a couple of tests, but we believe we have a blend of good sightlines and great sound.” Hornbuckle says the seats are all close to the performance area, whether it be sports or entertainment. “It has as many seats—save the suites—as Staples, yet it’s 650,000 square feet, where Staples is over 950,000 square feet. So, it’s very efficient. We bring people even that much closer down into the bowl, into the act,” he says. An ownership team has emerged that plans to bring a National Hockey League team to Las Vegas. Arpin says a team would be welcome, but it isn’t necessary. “We planned the arena with or without hockey,” he says. “On the other hand, we’ve designed the building so that we’re totally ready for an NHL or NBA team at any time. So to us, we’d love to have hockey. In addition to the local market, we think it has a tremendous tourism component. Canada is our top international market, so we think it would be great. We’re excited about it. We love the ownership group.” Arpin says the company is ready to bid for NCAA events like the collegiate basketball tournaments that dot Las Vegas facilities during March Madness. “We’re trying to get the NCAA to allow tournament events in Nevada,” he says. “Currently, they cannot be held here. Many folks are work-
The Park leading to T-Mobile Arena; exterior and interior
ing hard on this, so we’re confident this is going to happen. And we’re not just talking about basketball. There are a variety of NCAA tournaments for which Las Vegas could be a great home.” Hornbuckle says, in addition to the naming rights for the arena and the adjacent Toshiba Plaza, sponsorships and suite sales have been successful, including suite sales to competing casino companies. “We’ve exceeded our sponsorship expectation, led by T-Mobile and others,” he says. “We have sold all but two suites, so most of the suite inventory is gone. We have club ANNOUNCED seats available, some other things, but we started at the top and are working our way through.” FOR One of the reasons developers want public April 6 help to build arenas is that they’re not a great The Killers, with business. They’re very expensive to book, staff special guests Wayne Newton and Shamir and operate. But MGM Resorts has other reaApril 8 and sons to be involved. Other Dates “Our business case for investment into the Guns N’ Roses April 19 arena is the impact it will have on the surroundMagic Pass Event: Harlem ing resorts,” says Arpin. “And the general lift to Globetrotters visitation in the nearby properties will be impresApril 22 and Other Dates sive, as well as the impact on our casinos nearby.” George Strait He says the city will also benefit from the TApril 30 Mobile Arena. Billy Joel May 7 “It just keeps building the city,” he says. “It’s Canelo vs. Khan the same process as the opening of the Smith May 14 Center, having a great performing arts venue. Janet Jackson: Unbreakable And now we’ll have a world-class, modern arena June 24 and to add to our great facilities. Without this arena, Other Dates we wouldn’t be talking about an NHL team or Garth Brooks World Tour NCAA championship events. July 16 “For the city, it’s part of the overall strategy Dixie Chicks to grow visitation. We’re at 42 million now and October 21 Keith Urban this arena can help us get to 50.” —Roger Gros
APRIL 2016 www.ggbmagazine.com
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“It’s time to mature to the next level.” —Bill Hornbuckle, president of MGM Resorts, on gaming’s appeal to the millennial generation
The latest design of MGM Springfield drops a hotel tower and relocates the rooms on smaller low-rise buildings that blend better with the surrounding neighborhood
MGM National Harbor is in suburban Washington, D.C., close to major highways and just across the river from Virginia in Maryland
a 5,000-seat theater that will spill onto the Park. “We think it becomes the center of entertainment in the entertainment capital of the world,” says Hornbuckle. Adding the theater at Monte Carlo fills in a void that MGM lacked, he says. “As we looked at our entertainment portfolio, we know where we wanted to be—we want to control the arena business,” he says. “But we also recognize, we had 19 theaters, plus two arenas at the time. But what we didn’t have was a facility to compete with either the AXIS theater or Caesars’ Colosseum. We didn’t have something of scale that could accommodate premium entertainment that would run over two- to three-year contracts.” And the redesign of Monte Carlo is all part of the plan. “Luckily, it’s pretty vanilla,” he laughs. “It’s not like we’re tackling Excalibur or Luxor. You’ll see a lifestyle product emerge from there, something that hopefully competes a little bit more with Cosmo or potentially even with Wynn. We’re going to step it up.”
Maryland My Maryland The long-drawn-out process of adding a final license in Maryland for the Washington, D.C. area ended with MGM acquiring a license to build a casino resort at National Harbor, an existing mixed-use development on the Potomac River just across the bridge from Virginia and just downstream from the nation’s capital. MGM was only mildly interested in the state when one of its development officials discovered National Harbor, and the interest went from mild to wild quickly. “It was instant, as soon as you saw the property, given the infrastructure, the location, that it was the right thing to do,” says Hornbuckle. “So we went hot and heavy, and later, really hot. We spent a lot of money investing in winning that deal, but we did.” And MGM’s interest has been justified. Last year, the Maryland market did $1.5 billion in gross gaming revenue, most of that coming from one property, 22
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Maryland Live! in suburban Baltimore, operated by the Cordish Companies. “That’s not bad, for a parking lot location,” grins Hornbuckle, referring to Maryland Live’s site, adjacent to Arundel Mills Mall. But Maryland Live! was built for around $400 million. MGM plans to at least double that in National Harbor. Hornbuckle doesn’t see that as overspending. “In Detroit, where we double-spent everyone else, we dominate that market,” he explains. “And I think in Maryland, well, we’ll have 35 percent to 40 percent market share, because of the amenity itself. It is not just a casino; it’s a regional environment that has a theater of 3,500 seats. So the acts that we put here in the Park theater will go there, and vice versa. There’s a lot of synergy there. And there’s nothing quite like that in that area. The return may take an extra year or two, but for the next 30 years, there’s going to be nothing like it.” As part of the National Harbor complex, Hornbuckle says the attraction is the entire project. “We’re part of a trolley system that will link us with the Gaylord entertainment center, a large retail mall and the main part of National Harbor. We’ve got only 300 rooms, but there are 3,000 rooms within a half mile, so it’s going to be a major destination.”
Making It In Massachusetts A second license won by MGM was the western Massachusetts gaming license in Springfield, defeating companies like Mohegan Sun and Hard Rock along the way. But like all things in Massachusetts, it hasn’t been an easy path. Just recently, a design change that eliminated a large hotel tower in favor of low-rise buildings had some questioning the dedication of MGM to the Springfield project. But Hornbuckle points out that the financial commitment never changed, just the approach. “All politics are local, and particularly in Springfield,” he laughs. “The original design had residential on-site. The more we got into it, the more we thought about it—frankly, the more we priced it—we didn’t think it made a lot of sense. We had a commitment to the community to bring professionals back to this corridor, so, we’ve taken that residential off-site. We’ve got three locations. One for sure; two others are pending. We’re going to spread it out a little bit. We moved our hotel into the then-front structure on Main Street, which we think helps that Main Street corridor, it helps build the engagement, and the city still gets residential. And our budget’s still at $950 million more or less. “Springfield hasn’t seen anything like that ever, actually, in real dollar terms. And so, we’re pretty excited by it. It will take us until September 2018.” In Connecticut, the two tribes that operate the state’s casinos, the Mohegans
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The opening of MGM Cotai in Macau has been pushed back to early 2017, and will focus on the mass market rather than VIP rooms
and the Mashantucket Pequots, are planning to build a casino in the Hartford area, which would cut off MGM from those residents of northern Connecticut. The idea is to protect revenues and jobs from leaving the state for Massachusetts. Hornbuckle dismisses that concern, saying a casino located in southwestern Connecticut would make more sense if those are the issues. “Are we concerned?” he asks. “Yes. Have we remained active in understanding it? Yes. And here are two realities. They talk about losing 4,000 jobs. Hogwash. A third of our jobs are probably going to be Connecticut residents anyway, because remember, we are literally on the border. “Will we take some of their business? Maybe. But if you want to put a third casino in Connecticut, it shouldn’t go to Hartford or the airport or some smalltown location to block us. It’s got to go to the southwest quarter of the state, where you’ve got the whole New York metropolitan area, and a massive amount of people to pull from, and put it there. Of course, that’s not the intent, but we’d be willing to participate in a bidding process there. “The other concern is that this is reservation-shopping at its finest, under the guise of the protection of the state. We believe it’s unconstitutional, because of the way state constitution works, and we think we’ll prove ourselves correct in that opinion.” In March, MGM teamed up with the Schaghticoke Tribal Nation of western Connecticut to fight the Mohegan-Pequot third casino. The tribe has struggled for years to achieve federal recognition and accuses the state of discriminating against it by not giving it an opportunity to build and operate the third casino.
Building a Database In both Massachusetts and Maryland, MGM will have to build a database of customers, something that doesn’t trouble Hornbuckle. He says this will also have to be done with benefit of the database of Atlantic City’s Borgata, owned jointly by MGM Resorts and Boyd Gaming. “Borgata owns the database. Boyd doesn’t own it, and MGM doesn’t own it; it’s Borgata, which is somewhat frustrating,” he admits. Nonetheless, the vast size of the MGM Resorts database across the country gives Hornbuckle faith that it will not be a problem. “We’ve got 60 million-plus people in mLife (MGM’s loyalty program),” he says. “There’s probably 8 million that really play. We put concentric circles around Springfield, around National Harbor, around any place up and down the East Coast corridor. We come up with 250,000 to 300,000 customers of substance. And so that’s a good place to start.” In addition to a third casino in southwest Connecticut, Hornbuckle says the company has been examining expansion opportunities in Georgia, where a bill to legalize casinos came close to passing this year, and in North Jersey, where a referendum is likely to go on the ballot in November. Hornbuckle admits the North Jersey interest is a bit reluctant, worrying about the impact of New Jersey gaming expansion on the Borgata, Atlantic City’s most successful property. “We’re looking at North Jersey because we have to,” he says. “If something’s going to happen there, we have to be involved.” A preliminary bill gives Atlantic City casino companies favored status when bidding for what will likely be two casinos in North Jersey. 24
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Asian Equation What was once the savior of MGM Resorts during the lean times, when debt was mounting, has slowly become its headache. An expansion in Macau to the Cotai area has been ongoing for the past five years, and construction on MGM Cotai has been progressing, but the company recently announced it won’t open until the first quarter of 2017. “It’s not about a budget issue; it’s about timing, it’s about trying to understand where the market’s going to be then,” he says. “So we’ve pushed it until the end of March, of the first quarter. No one was surprised by it—most notably the marketplace. And you know, the good news, over the last couple of months, is mass market has begun to stabilize. Matter of fact, we’ve seen some modest growth, particularly through Chinese New Year.” Hornbuckle says the VIP-mass market split has reversed over the past several years. “(Mass market) is now 80 percent of our bottom line, where VIP is only 20 percent, and I think that trend will continue for the whole community.” Even with the precipitous GGR decline over the period, Hornbuckle says it’s still a good place to invest. “At one point, people were getting 50 percent return on their investment each year,” he says. “But if we were even to look at what we’re proposing today, which is a $3 billion-plus spend, what we think it will return in today’s market, or next year’s market, which is a better example, will still be a return on investment of 22 percent or 23 percent. We’ll do that all day, every day, all day long. And the penetration into Macau is still less than 1 percent. “It’s a $45 billion market that has turned into a $25 billion market. And there are no other $25 billion markets anywhere in the world.”
Marketing Mission Prior to being named president, Hornbuckle was the chief marketing officer for the company. He says he’s more comfortable as president, and has appointed marketing executives who truly understand social media and internet marketing. In 2014, he brought in Lilian Tomovich, a former MasterCard executive, to become the first chief experience officer to improve the guest experience companywide. And last year, Beverly Jackson was added from the Grammy Awards to handle the social media aspect of marketing. “We’re looking at addressing a whole younger demo,” says Hornbuckle. “We’re all over it; we’re fully dedicated to it. What it will yield, we don’t know yet. And it will be a long-term yield. But we do know this. If you’re not in that space, you have no voice, and over time, that matters. And so we’re all in.” Hornbuckle says it’s not too soon to think about millennials, because the trends are moving in their direction. “From a marketing perspective, we’ve all seen what’s happened in Las Vegas, where the average age has come down six years, driven by the nightlife business. That’s all been a good thing. It’s an $800 million-$900 million business in this community, and we’re doing fine. It will shift, too, someday, by the way. The big DJ thing will become something else, and we’ll need figure that out. And millennials are very interesting. They’ll go into a club and spend $5,000 on a booth, but then they’ll go back to their room, with six girls in one room.” To further experiment with this demographic, Hornbuckle says MGM Grand is planning to build a “millennial casino” under the dome at the entrance to the Strip. He says they want “their own space.” “We’re preparing to make a significant commitment to a millennial casino,” he says. “We’ll define that as a space that’s interactive that you go into because of the draw of the space and the enticement through music, food, the communal environment. By the way, it has gaming in it—a kind of gaming we think they’ll interface with, like new tables and other things that we all have in the pipeline. “It’s time to mature to the next level.”
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Interblock banks on its quality e-tables becoming the third leg in the offerings of the North American casino industry
By Frank Legato
asinos have always had table games and slot machines. Interblock is adding a third leg to the gaming stool—electronic table games—and is proceeding to redefine the meaning of that growing game genre. And the genre is growing fast. Over the past two decades, multiplayer electronic table games (ETGs), or e-tables, have been a fixture in European casinos. Since the late 1990s, ETGs have been ubiquitous in casinos from Austria to the Netherlands to Italy to Slovenia, Bulgaria and points east. Starting with multi-player roulette, e-tables diversified in the early 2000s to include automated versions of craps, blackjack and other mainstays of the pit. Their primary benefits to casinos were obvious—more players in less space, without the labor costs associated with tables. But from the beginning, other factors were at play. ETGs afforded a way to create new table players by letting customers learn the games in a non-intimidating fashion. Electronics could add not only precise accounting of wagers and play history, but bonuses, progressive jackpots and other features formerly exclusive to slot machines. These days, casino operators in North America are starting to look at these same factors, and the automated tables are gaining fans everywhere they are placed. Electronic game pits are cropping up, as are lounges that bring the games to the millennial generation in formats designed to turn twenty-somethings into faithful casino customers. There are several suppliers producing ETGs for worldwide markets, but one leading the charge in North America is the company that created 26
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the genre, Slovenia’s Interblock Luxury Gaming Products. Through subsidiary Interblock USA, the company has launched ETG setups in U.S. casinos that are at once both radical and elegant in appearance—and superior in their technology, as Interblock continues to redefine the e-table genre. Founded in 1997 by computer engineer Joc Pečečnik, Interblock Luxury Gaming Products pioneered a new segment of products for the casino industry with the first automated roulette wheels surrounded by electronic wagering stations.
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Interblock designed Pulse Arena as a show that will attract all comers, but with a particular eye to the millennials. All of Interblock’s electronic gaming tables and player stations are arranged into a giant audio-visual experience, with live DJs, dealers and hosts manning dealer-assisted games intermingled with fully automated games. “I began laying the foundation for Interblock in 1989 in Mengeš, Slovenia,” Pečečnik recalls, “building PCs for customers, then supplying POS systems for restaurants and bars. I saw a high-potential niche in the gaming industry—specifically, in classic casino games like roulette.” Interblock made its international debut in 1997 at the ICE trade show in London with its first automated multi-player roulette product, Princess—“developed by me and a team of five in my own garage,” Pečečnik says. “After the enthusiastic reception for Princess, we launched Megastar roulette, dice and video, which set new industry standards.” The product Pečečnik developed in his garage would spawn a host of competitors, particularly in his home country, where nearly a dozen e-table suppliers would crop up within a decade after Interblock’s founding. However, Interblock has remained the class of the industry. “From the beginning, Interblock set the industry standards for electronic table games,” Pečečnik says. “We haven’t deviated from our original goals of bringing the traditional gaming experience to an electronic format, making operations easier for casinos, and creating an unparalleled experience for players.” “Joc’s philosophy, historically, has always been a luxury product,” adds John Connelly, Interblock’s global CEO since January 2015. “The analogy I’ve always used is that Mercedes has an S-Class, an E-Class and a C-Class. But they all represent luxury. All quality. What we’ve been successful in doing the past 12 months is really taking what Joc created, which is this amazing S-Class Mercedes, and with his help, we are in the process of launching our E-Class, and by G2E in Las Vegas, we’ll be launching our C-Class.” Connelly came to Interblock after 10 years with slot manufacturer Bally Technologies (now part of Scientific Games), where he was senior vice president of business development and interactive, and VP of international business—the latter a position in which he saw the European popularity of
multi-player ETGs firsthand. In North America, Connelly now sees a new frontier for e-tables. “Under 1 percent of the floor space in North American casinos has ETGs,” he says. “Internationally, you can find 15-20 percent of a floor with ETGs. So, the opportunity in North America is tremendous. Even if you just consider penetrating just a single percent, you’re looking at $100 million in EBITDA potential.” “What’s exciting,” adds Pečečnik, “is that in North America, only 22 percent of the casinos have ever had an Interblock product on their floor. In Europe, we quickly established Interblock’s position as the luxury gaming electronic table provider. Now, we can offer our high-performing products at different price points to appeal to different demographics and types of casinos around the world. “Unlike our competitors, Interblock is purely focused on electronic tables. We’re looking for the next revolutionary enhancement that will improve the user experience and revenue for our customers.”
Redefining the Genre Interblock has made its name by consistently finding that “next revolutionary enhancement” in the ETG genre. Four active, stylish product lines (Organic, Diamond, Ministar and StarBar) supported by three generator types (Automated, Dealer Assist and Video) add up to compelling player experiences for roulette, bnaccarat, craps, blackjack, sic-bo, big six, Big 3 Six, keno and video poker. Interblock is constantly experimenting with new ways to enhance the players’ experience with its products. These experiments have included use of holographic images—a concept Connelly says could come back soon—and new stadium-style setups that give a gaming area the feel of a sporting event— APRIL 2016 www.ggbmagazine.com
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From the beginning, Interblock set the industry standards for electronic table games. We haven’t deviated from our original goals of bringing the traditional gaming experience to an electronic format, making operations easier for casinos, and creating an unparalleled experience for players.
—Joc Pečečnik, Chaiman, Interblock
like, say, the eSports events currently drawing millennials in droves. Interblock has packed all its technology into its latest millennial-friendly presentation of its ETGs, called the Pulse Arena. Launched at last fall’s G2E show, the game presentation is billed as “a hybrid experience that combines gaming and social atmospheres.” Interblock designed it as a show that will attract all comers, but with a particular eye to the millennials. All of Interblock’s electronic gaming tables and player stations are arranged into a giant audio-visual experience, with live DJs, dealers and hosts manning dealer-assisted games intermingled with fully automated games. “The Pulse Arena creates a nightclub atmosphere on a casino floor by blending the energy of Interblock’s electronic table games, interactivity and entertainment to create an exciting new gambling experience for established players, while attracting new players to the casino floor,” says Pečečnik. “People are talking, sharing winning experiences, participating together—it’s an entertaining wagering experience that players haven’t been able to find in most casinos.” “You can get comfortable in your seat within the Pulse Arena,” Connelly adds, “and while you’re gaming, you have the ability to not only watch TV or interact socially; you have the ability, without getting up, to play virtually every game offered from a live table perspective. It’s all integrated, dynamic within the Pulse Arena.” Connelly says the Pulse Arena takes the best of Interblock’s core ETG products and “wraps them in an environment,” one that attracts millennials and uses a variety of experiences to capitalize on just how hot the e-table genre is at present.
Global Gaming Business APRIL 2016
“We statistically know that the ETG segment of the casino industry is growing double digits globally,” he says. “It’s one of the few areas that we can say that about. “So, we have intentionally integrated all of the leading products of Interblock inside. We have automated games, so at the slowest times during the day, rather than having to staff the Pulse Arena with 15 employees, we can go into an automated mode. The generators in the front are self-mechanical, meaning they will spin the ball, they will deal the cards. Or, we will have video blackjack up on the screen. So you can have very low infrastructure costs, and still maintain that environment.” During peak hours, of course, the name of the game is as much action, and interaction, as possible, with both virtual and dealer-assisted games in which a live dealer spins the ball or deals the cards. “We have blackjack, roulette, craps, baccarat, keno, sic bo—all the main games that you’d find in the traditional table portfolio,” Connelly says. “But what we’re adding to that are additional features and functionality, as well as new types of tournaments. “The concept is to take an area of the casino floor and really reinvigorate it,” he says, “not only with a leading product, in a segment that’s growing, but with an environment that will perhaps pull players onto the casino floor, whereas before they would have walked by. “During the day, we can have Frank Sinatra, we can have keno going on inside. We can have a mood that is very much conducive to perhaps an older clientele. But then, with the push of a button, we can go into an evening mode, where the music gets louder, the lights are brighter, we have dancers, a DJ, a host—and incorporate a lot of different and new features of functionality on the ETG. That really makes it more of a social environment. So, you’re gaming while socializing.” “When the players come back over and over again, they’re getting a new experience as they go inside,” says Pečečnik. “We’re adding progressives. We’re adding chat. We’re adding social media. This is not just a product that you can say is turn-key and stands as it is today. It’s something that’s going to continuously evolve into the future.” Those future players, of course, have been the focus of many manufacturers. Pečečnik comments that Interblock’s Pulse Arena is typical of the social aspect to table games that appeals to the millennials. “Interblock’s multi-player electronic table products keep the social aspect of play in mind,” Pečečnik says. “Our automated gaming devices use, for example, a real roulette wheel and ball, real dice and real cards. Our Dealer Assist gaming devices are real tables with electronic betting, offering players the ability to place wagers through play stations while a dealer conducts the game on the table.”
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Future Vision Interblock’s vision for the Pulse Arena and all of its ETGs is part of the company’s strategy to conquer new markets in North America and elsewhere, and to create new players along the way. Connelly’s appointment as CEO last year was one of many moves to add talent from the U.S.-based casino industry to a European staff that has been serving the sector for decades. The company, for instance, brought in longtime WMS Gaming executive Rob Bone as president of North America, and longtime WMS and Scientific Games marketing VP Colleen Stanton Kakavetsis as global vice president of marketing. “Obviously, you can’t replace 25 years of history in a private company, and Joc and the existing Interblock team that’s been here for decades, no matter who you bring in,” comments Connelly. “But we’ve brought in some great talent from around the world—from IGT, Aruze, WMS, Bally, Sci Games, you name it. What I’ve tried to do is really maintain that historical knowledge base within the company, and that innovation that existed within the company, and really complement it with people that know global gaming.” He says the Pulse Arena is an example of how that combination of talent is being used to “evolve the ETG segment to the next level, using the best of both worlds.” Another discipline being perfected by this combination of talent is finding innovative ways to add popular features to traditional table games that also increase the operator’s hold. “When it comes to ETGs, unlike in the slot business and other areas, the math behind the games is the math,” Connelly explains. “Roulette math has always been roulette math. Single, double zero. You really can’t touch that if you want be successful. You must mirror the play experience versus a traditional game, for all intents and purposes. “If you want to add something, you can, provided it’s at the player’s discretion. You can’t force them. So, there is a huge emphasis being placed on side bets—trying to increase that hold percentage, and to make it a little bit more exciting and compelling to players who are used to playing side bets on live tables, and on slot game bonus features.” Innovative ways to spice up table games has been one of Interblock’s hallmarks, and Connelly credits Pečečnik for orchestrating the plan. “He’s always looking to innovate, and take the electronic table game gaming segment to the next level,” Connelly says of the Interblock founder. “So, I don’t see us ever really stopping from an innovation perspective and trying new things. “Obviously, not everything can be a home run. But I think you’ll see, heading into G2E this year, that we have increased our roadmap and the resources supporting our roadmap dramatically in the past 12 months, specifically to try to bring the brand, and the look and the feel of Interblock, to the next level. Pulse is one example, but you’re going to see lots of other new things over the next six months as well.”
ETGs Soaring Fueling this drive for innovation is the fact the electronic table game segment itself is soaring. “Times have never been better for Interblock,” says Pečečnik. “We are seeing continual double-digit growth within the electronic table gaming segment around the world, and we attribute this largely to an ETG’s ability to extend across all 30
Global Gaming Business APRIL 2016
What we’re finding is that the ETG product we’ve been offering seems to be really attracting a new dollar onto the casino floor. It’s not cannibalizing. And it’s attracting both existing and new players.
—John Connelly, Global CEO, Interblock
demographic boundaries and complement performing trends on the casino floor.” Last year, Interblock commissioned the first-ever ETG player segmentation study, The ETG Player Portrait. “This report is the first and only study that defines who these players are and why they are critical to gaming businesses,” Pečečnik explains. “We found that ETGs attract not only slot players, but players from live tables and video poker as well—which makes ETGs the central conduit on the casino floor, the place where all the different segments of the market come together.” Adds Connelly, “The more player research we do, the more we are finding that we seem to be a melting pot between slot players who have always wanted to try a table game but are afraid and table players who perhaps haven’t liked the environment of a traditional live table. “What we’re finding is that the ETG product we’ve been offering seems to be really attracting a new dollar onto the casino floor. It’s not cannibalizing. And it’s attracting both existing and new players. Now, to the degree that’s going to sustain itself as the footprint expands, we haven’t gotten there yet. But so far, the indications are that the players really seem to be liking the fact that they have their own environment. “In over 80 percent of the surveys we did, we asked, ‘What was your most compelling argument to go up to the ETG, other than the way it looked?’ Resoundingly, the answer was, ‘I had my own environment I could gamble from.’ If I felt like socializing, I was able to socialize.’” Connelly adds that the new era of ETGs that Interblock is launching coincides neatly with the drive to please the next generation of casino players. “When you look at players’ online wagering, or even playing on social sites where they’re not winning any money, players over 50 are playing predominantly slots. In fact, over 90 percent are playing slots. But when you go to players under 40, it flips. Over 90 percent are playing table games. So there’s definitely been a cultural shift between the two generations, from slots to tables. “When those players come out to the casino floor, they’re predominantly leaning towards tables, and because they’ve played online or are used to a touchscreen and a computer screen, having an ETG sitting there seems to be attracting a younger demographic.” Connelly adds that this surge in ETG popularity is a worldwide phenomenon. “I’m very happy that it’s diversified across Asia Pacific, to Latin America, to North America, and even now, parts of Europe. We’re seeing growth and revenue increase across all our regions, in the double digits. And part of that is because, quite frankly, Interblock historically had not focused on several key areas of the globe—Australia; the Pacific Region; Latin America. We’re excited and
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pleased that right now the growth’s coming from across the board.” In the Asia Pacific region, Interblock recently went live in Studio City Macau. “We’re proud to say that we’re the first ETG player, or supplier, back into the Macau market,” Connelly says. “And that was several months ago. Since then, the demand for the Interblock product has been overwhelming. Asians very much have accepted the ETG product. I think it’s a great benchmark for what North America could be.” For Asia, that’s 15 percent of the floor in Macau, 15 percent of the floor in Singapore and elsewhere. “It shows that there is definitely this third leg to the gaming stool,” says Connelly, “meaning it is no longer just slots and tables— it’s ETGs. Because of that, it’s an amazing opportunity for our company to expand. Although Macau may be, from a junket perspective, going through a transition, I can say from an ETG perspective, it’s full-steam ahead.” It’s full-steam ahead in North America as well. Connelly says there is a “resounding appetite,” particularly from large casino groups, to create an area for the Pulse Arena. “Casino groups, especially the larger ones with a very large footprint, are trying to attract that energy and player traffic to the Pulse Arena,” he says, noting that the company is currently finalizing five Pulse Arena placements. “We’ve signed a very large deal in Quebec,” says Connelly, “and we’ll be going live with the first Pulse Arena somewhere around the May timeframe.” Meanwhile, the Interblock brand and product line stand to grow right along with player appetite for ETGs. “The Interblock brand stands for luxury, player-favorite electronic table games,” says Pečečnik. “We’ve created a unique brand. It’s important that players recognize our products among all others on the casino floor for their style and beauty. Once we’ve drawn the player in, we follow up with one-of-a-kind, patented technologies that deliver unparalleled gaming experiences.”
Fresh perspectives. Greenberg Traurig is proud that Martha Sabol, Founder and CoChair of our firm’s Global Gaming Practice, is President of the International Association of Gaming Advisors (IAGA) this year. We are thrilled to continue supporting IAGA and IAGA’s 2016 International Gaming Summit, which will be held in Malta. Martha A. Sabol IAGA President Martha brings extensive experience and unique insight to the gaming industry. She represents national and international casino owners, operators and suppliers in the areas of regulatory compliance, acquisitions, licensure, internal investigations and corporate counseling. Martha has been involved in IAGA for more than a decade and understands the vital role the organization plays in shaping the industry.
Global Gaming Practice Acquisitions | Financing | IP | Labor | Litigation | Operations | Real Estate | Regulatory Learn more at gtlaw.com/gaming GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2016 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 26946
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: o m Rand Skill Games & the
Casino of the Future
In 2015, Nevada and New Jersey introduced skill-based casino gaming. Is this the innovation that will snare a new player demographic? By Marjorie Preston
n casinos, the jackpot has always been on slots row. Slot machines are easy to play, with enough flash and dazzle to keep players mesmerized for hours—even when they don’t win (which is most of the time). In fact, loyal casino patrons seem content to blow a predetermined amount on their favorite Wheel of Fortune, Da Vinci Diamonds or Hangover game. They may walk away empty-handed, but as long as they didn’t lose the mortgage, hey, no hard feelings. Until now. The post-recession economy, along with increased competition and the redistribution of gaming revenues, has led more casinos to tighten their slots. That strategy has made consumers more tight-fisted too. Adding to the crunch, as baby-booming slot players inevitably age out, they’re not being replaced by a new generation of players. According to a February report from PricewaterhouseCoopers, slot revenues in Nevada declined from a high of $138 billion in 2006 to $105.4 billion in 2014—down 23 percent. Slot machine win is down 5 percent over 10 years in a “downward trend that will likely continue,” says PwC. With a billion-dollar industry in the balance, how do you solve a problem like millennials?
They Got Game That elusive Gen-Y demographic includes the estimated 87 million Americans born between the early 1980s and the early 2000s. They were weaned on ultra-high-tech games that are not only immersive and interactive, but immediately accessible and also challenging. Yes, millennials go to casinos, but they’re bored by traditional slots. And while they may enjoy a good wager—consider the surge in poker, online gaming and daily fantasy sports—they want some control over the outcome. In short, these players—who grew up on “Grand Theft Auto” or “Resident Evil”—take pride in their gamesmanship; unlike Mom and Dad, they may never be content with passive games, much less random odds. Enter skill games. Last year, the Nevada legislature approved a bill to bring skill-based, arcade-style slots to the state’s casinos, and the New Jersey Division of Gaming Enforcement followed suit. It was a watershed moment in the industry. Nevada Governor Brian Sandoval said that state’s legislation frees manufacturers “to meet the challenges prompted by a younger, more technologically engaged visitor.” Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers, called the bill’s passage “monumental.”
I don’t believe this will render existing slot product obsolete. We have a long way to go and a big world to conquer before we start threatening the existing base games. —Marcus Prater, Executive Director, Association of Gaming
Global Gaming Business APRIL 2016
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Video gaming tournaments can draw thousands of spectators and hundreds of players
Gamblit is developin g skill-based games for social casinos and live gambling
Some may initially implement a skill-based area to really focus on that aspect of gaming. Others may wish to intersperse skill-based games with other games to drive affinity between different types of games.
—Jacob Lanning, VP of Strategic R&D and Sales Strategy, IGT
“Of course, with regulations and game prototypes still in the works, it won’t happen overnight,” says Prater. “But it will enable us to capture the convergence of all the gaming entertainment in our lives at the moment, between phones, tablets and casino games. As the approvals hopefully spread to other markets, our ability as an industry to provide new kinds of games and wagering experiences will over time be a very significant event.” This isn’t just a play for millennials, he adds. “The demographic that plays Candy Crush or Words with Friends is actually a 40-plus female—the dominant demographic for slot machines too.”
All In The skill comes into play with a variable payback percentage that could jump from 88 percent to 98 percent for gamblers who are particularly good at shooting down enemy planes in a bonus round or outracing their friends in a road rally, according to a statement from AGEM. The best skill-based product “treats me right,” says Eric Meyerhofer, CEO and co-founder of Gamblit Gaming. “It makes me feel that if I can perform, I can actually do pretty well on this game—I can win. There’s definitely a sense of accomplishment and a challenge to overcome, and that’s fundamental to any type of video game … It’s that careful balance of making the game engaging and challenging, but also easy to get onboard.” A savvy shooter who plays Bally’s Space Invaders, showcased at G2E 2015, may ascend to a level where he can try his luck or test his skill. Choose luck, and he gets a couple of free spins; choose skill, and he’s back in battle, shooting down alien missiles and saving the world. Space Invaders “appeals to people my age, who grew up playing those
And the Crowd Roars
ricewaterhouseCoopers says the casino of the not-so-distant future is likely to include: • The incorporation of skill-based arcades into traditional slots; • Social games that pit players against each another, using a poker-like operating model where the house takes a cut; and, • Casino floor redesigns built around games of skill including lounge areas, music, and food and drink service. In its February 2016 report on skill-based games, PwC also talks up eSports, advising operators not to “miss the tangential possibilities of this substantial and growing industry.” Dave Sapin, consultant for PwC’s Risk and Regulatory Team, says the industry is “huge,” especially in South Korea, which ESPN has called “the Mecca of eSports.” Since the early 2000s, the games have become as popular there as football and basketball in the U.S., attracting tens of thousands of people to massive arenas as well as small groups who frequent “PC bangs” (internet cafes) to watch or play. “They not only sit and play, they sit and watch each other play, watch their friends play, and sit online and play with people they don’t even know,” says Sapin. “They’re filling stadiums. It’s engaging, immersive, and competitive—the ultimate millennial gaming experience.” According to Newzoo, there are 131 million frequent eSports viewers and enthusiasts worldwide, up 46 percent from the previous two years. “The largest eSports events today attract live audiences that rival many major sporting events,” the report continues. “Designing a fan-friendly eSports experience around games of skill has the potential to attract significant non-gaming revenue from viewers, and should be a consideration for casinos.” —Marjorie Preston
APRIL 2016 www.ggbmagazine.com
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The Coming Slots Evolution types of arcade games,” says Anthony Baerlocher, game designer for Scientific Games, which acquired Bally Technologies in 2014. “It’s a simple mechanic, easy to understand. There are also eSports types of games, like ‘Call of Duty’ and ‘World of Warcraft,’ which are a little more complex to play, and more of the hand-held type of home-console games.” That’s not all. “The new regulations will allow us to play chess, checkers, darts or board games like ‘Battleship’ and ‘Monopoly.’ Rather than just branding these as slot machines, you can actually make a Monopoly-style game now. Then there’s trivia, puzzle games, types of apps that people download and play for fun, solitaire … The list goes on and on,” says Baerlocher. Players potentially may be challenged based on mental ability, dexterity “or any definition of skill where the player affects the outcome,” he adds. “We don’t know yet if there’s one specific formula that will work. But that’s the fun part of my job, figuring it out.” Operators may offer higher percentages based on other identifiers, too. “For example, if it’s your birthday and you put your player’s card in, the machine will light up and say, ‘This is usually a 90 percent payback game, but because it’s your birthday we’ll make it 98 percent for the next 24 hours,’” says Prater. “It’s not just skill-based.”
Changing Horses How will all this affect the casino floor, which is now crowded with rows of blinking, clanging slot cabinets? Jacob Lanning, VP of strategic R&D and sales strategy for International Game Technology, says players will vote with their feet, and operators will act accordingly. “Some may initially implement a skill-based area to really focus on that aspect of gaming. Others may wish to intersperse skill-based games with other games—perhaps licensed themes, for example—to drive affinity between different types of games. It’s up to the player, who will ultimately decide which configuration is most enjoyable and entertaining.” “You might see something like you might see at an O’Sheas, where you have beer pong alongside gaming with a band playing and whatnot, with traditional games blended in with new gaming forms,” says Meyerhofer. “Operators are mapping out plans, allocating space, and a number of them 34
Global Gaming Business APRIL 2016
Director, Product Management, Games, Konami Gaming, Inc. GGB: What brought the slot sector to the point of reinventing the slot machine? Walther: As technology has evolved, so have the needs of slot player audiences. With the advent of mobile devices containing hand-held video games and other forms of entertainment, slot machines are required to adapt and evolve with this entertainment. In an effort to expand our demographic, we’re actively exploring opportunities to integrate skill and wager components in order to pioneer a new form of gaming entertainment for current and future gambling audiences.
With the advent of mobile devices containing hand-held video games and other forms of entertainment, slot machines are required to adapt and evolve with this entertainment.
There are still a lot of baby boomers on the floor. Why rush to come up with a new type of game? Baby boomers have evolved in their technology requirements as well. The baby boomers of today grew up on the arcade games of the ’70s and ’80s—including some great, entertaining titles from Konami’s video game sector—so as this generation transitions to become more of the core demographic, we’re looking for opportunities to present new forms of entertainment that reflect their gaming preferences.
Have high holds contributed to the revenue problem on the slot floor? Multi-line penny games were an evolution from single-line and three-line high-denomination games, which offered new gaming experiences for players starting in the late ’90s, and provide another form of variety. There isn’t a lack of enthusiasm; people are just craving more, so we must be prepared to evolve. Traditional slots are still popular, but if we can create revenue from a skill-based game that we wouldn’t from a traditional slot, then that’s fulfilling a new need that wouldn’t otherwise be available to guests. Lastly, high hold and revenue are up to the operator to decide, and we equip our machines to provide a wide range of configurations for whatever operators decide to implement for their particular market. What form do you see the first skill games taking? I think we’ll see a wide variety. Our industry has already experimented with pseudo-skill games, and they haven’t been as successful as we wanted. There will be many unique ideas demonstrated and attempted, in hopes that one or two—if not more—will show promise and success. How will it change the casino floor? It will be up to the operator how they will position a new skill-based offering, but it’s not the first time technology has reshaped the casino landscape. Historically, we saw it happen with the advent of TITO (ticket-in ticket-out) technology, which did away with many of the carousel configurations with a change attendant in the middle. So whether they go with special areas, party lounges or rooms dedicated to skill-based is up to operators’ discretion and expertise.
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Our goal is not to move money around the casino by taking the existing slot player and giving them something new. This is to bring in new money and new players and grow our base. —Anthony Baerlocher, Game Designer, Scientific Games
But this kind of disruption isn’t new. “In essence, we’re always reinventing are queuing up to make real capital investments, or already have started the some aspect of the slot machine,” says Lanning. “Casino gaming is like all enterprocess. Though they don’t have the product to put in there, they’re kind of out tainment—it follows trends in other areas like movies and video in front in the belief that the product will come along to match.” games. Skill-based gaming builds from the already proven premExpect some hits, misses, offramps and speed bumps, says ise that players like an interactive experience.” Baerlocher. “This is something we’ll learn as we go. For right IGT’s Cleopatra Pinball One big challenge with skill games now, we’re talking to most of our coris skilled gamers who may actually edge porate customers about creating zones the house. “People are going to play a within their casino floor to test the skill game because they think they can product, with a little different feel and win, which creates a conflicting stance form factor. You could have a gaming between our casino customers and our lounge with tabletops and touch player customers—we need to provide screens where people can sit down and the opportunity (to win) while ensurplay. There will be a lot of tablets, ing our casino customers make money,” phones and other mobile technologies says Baerlocher. “There are lots of poas the regulations allow.” tential models on how it might work. What you won’t see is “anything The most obvious one is similar to fanthat looks like their mom or dad’s slot tasy sports or poker, where people put machines.” money in, play against each other and But it won’t spell the end of tradiwin a percentage of the money, so 90 tional slots anytime soon, or wellpercent goes back to players and 10 known game titles either. Many of the percent to house.” experts believe that the games you see A real win would be to stabilize the now could still exist, but include the floor, and also grow the player pool. added element of skill. “Our goal is not to move money In addition, says Prater, there will around the casino by taking the existing always be a segment of players “who slot player and giving them something simply don’t want to engage in somenew,” says Baerlocher. “This is to bring thing challenging or different. I don’t in new money and new players and believe this will render existing slot grow our base.” product obsolete. We have a long way With Nevada and New Jersey taking to go and a big world to conquer bethe lead, the industry is excited about fore we start threatening the existing the new latitude to develop these base games.” games. “This is the fun part,” says Lanning, The New “working with our customers to deterGold Rush mine how we can help them differentiIn an April 2015 report, the accountate their offerings. We can help by ing firm RubinBrown LLP anproviding extensive player research and nounced that the U.S. gaming game testing, while they can share their industry had reached record-high revvision for how much skill-based gaming enues in 2014. But the devil was in they envision in their properties. We the details. The bump was attributed have the resources to test extensively to iGaming and the limited-stakes across multiple platforms, so we need market, and bricks-and-mortar propnot rely on guesswork as to what will erties continued to show signs of attract players.” strain. “New gaming operations are “In five years’ time and beyond,” says taking away from the long-established Prater, “I think we’ll look back at this as a dramatic change in our industry, with a gaming operations,” according to the report, reflecting “a trend we expect to conwide variety of new wagering experience for millennials and all sectors. It’s a nattinue to grow.” Behind it all is a group of “aging entertainment offerings,” inural extension of what we already do.” cluding the Steve and Eydie of casino games: the classic three-reel slot machine. 38
Global Gaming Business APRIL 2016
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Global Gaming Business APRIL 2016
By Richard Schuetz
everal years ago, I was honored when this publication accepted an article I wrote that addressed the period in Nevada’s history where people of color were not allowed within the casinos of the Las Vegas Strip. Up until the early 1960s, the Las Vegas Strip was known as the Mississippi of the West. Black entertainers could appear on the Strip, but they could not stay overnight, and the normal black patron, well, forget about it. It was a regulator who helped break down this racial barrier through a most ingenious plan. For you see, in the early 1960s, gambling always had to be open to the public. One of the regulatory motivations for this was that it allowed regulators to observe the games and make sure they were being offered honestly and without deception. This required regulators to have access to the games in order to monitor the play, and sometimes they would monitor this play covertly with the use of undercover agents. Ed Olsen, the head of the Nevada Gaming Control Board in the early ’60s, deputized a black school teacher as a gaming agent, and when he entered a casino and was quickly escorted out, Olsen made the casino operators understand that they had failed to allow an agent of the Nevada Gaming Control Board to inspect the casino, and such behavior could result in the loss of the operator’s gaming license. From that point forward, there was a serious risk for an operator who opted to bar black patrons. This was one of several steps taken during this time that resulted in the Strip we find today, open and welcoming to all. In more recent times, it has been argued that another form of discrimination is taking place in the casino industry, and it concerns wage and salary differences based on gender. Since essentially every regulatory agency has a provision in its statutes or regulations that suggests its licensees operate with a high degree of character, honesty and integrity, one can only conclude that the regulators believe that this type of discrimination is not taking place, for certainly this behavior would not be consistent with a high degree of character, honesty and integrity.
We regulators can mandate that the industry provide us with all kinds of statistics. One only need look to any regulatory agency website to see the troves of data published each month about the firms they regulate. These statistics are provided for a number of reasons, one certainly being that markets are improved by an understanding and awareness of the details of the industry by the consuming public. These statistics are also provided because they are considered important. Well, regulators, here is your chance to make a difference. All you have to do is mandate that the operators provide you with a monthly report by job classification as to the average wage and salary difference between their male and female employees, and put the results on your website. The results will, like the cards in the casinos, speak for themselves. And since knowledge is power, this knowledge will add greatly to the power of the entire gaming ecosystem to understand the reality of the industry. It will also help usher in change. Many years ago, Olsen took a bold step to do the right thing, and it was an act of substantial courage. That action allowed him to know that when he left his agency he had truly worked to ensure the industry was demonstrating a higher level of character, honesty and integrity than when he joined it. Ed Olsen led the gaming industry as a regulator, and he led it from the front. There is a tool at our disposal that will allow us to understand if gender discrimination exists in our industry, and it is a simple matter to request the data be provided. How many regulators will take advantage of this tool and opt to lead from the front? Richard Schuetz is the executive director of the Bermuda Casino Gaming Commission, and was formerly a member of the California Gambling Control Commission. The opinions expressed in this article are his alone, and do not necessarily reflect the position of the government of Bermuda, the Bermuda Casino Gaming Commission, or any other entities or individuals within that country.
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A Work In Progress: The State of Online Gaming in the United States Legalized in three states, iGaming has been a disappointment to many. But what’s really happening, and how can you track the development of this gaming of the future? By Steve Ruddock
he United States’ legal online gaming experiment is now in its third year, and in that time it’s produced a mixed bag of results. The three states that were part of the first wave of licensed and regulated online gambling in the U.S. have, on the one hand, exceeded regulatory expectations, but on the other hand, fallen short, to varying degrees, of the envisaged windfall the industry was expected to heap on the states in the form of tax revenue. All the while, the gaming industry’s powers that be remain divided on the issue, as powerful factions within the American Gaming Association have lined up on opposite sides of the issue, pulling in opposite directions, and forcing the industry’s leading voice and lobbying arm to remain neutral and sit on the sidelines as the issue plays out without their involvement. Despite being able to point to the regulatory successes and strong consumer protections licensed online gaming has put in place, this lack of a unified message from the industry, coupled with what can best be described as underwhelming early revenue results, have led to online gaming expansion falling into a proverbial holding pattern for the better part of the past two years. “The map for U.S. regulated online gambling in 2016 looks much like the map from 2014, populated by Delaware, Nevada and New Jersey,” Chris Grove, a partner at Narus Advisors, says of the current situation. “The bright spot is certainly the performance of online casinos in New Jersey, where double-digit growth was the norm throughout 2015, driven by product improvements and a surge in consumer interest. The road for online poker has been a rougher one, with limited player pools severely hampering the ability of sites to generate growth.” Setting aside online poker’s struggles, the performance of New Jersey’s 42
Global Gaming Business APRIL 2016
online casino operators—and their declarations that far from being a cannibalistic product, online gaming has served to bolster their brick-andmortar properties—interest in online gaming legalization was renewed in several states. Over the course of 2015 and into early 2016, several states have emerged as potential candidates for online gaming expansion, which has given the industry hope that the long-awaited second wave of expansion is now beginning. “Prospects for expansion into additional states are limited, but promising,” Grove says, citing Pennsylvania as the most likely state to legalize and regulate online gambling. “With both casino and poker on the table, the (Pennsylvania) market would be an attractive one by any measure.” Grove also points to several other potential locales where legal online gaming could soon become a reality. “The debate over online poker continues to play out in California, but measuring true progress is a difficult endeavor,” he says. “On the fringe, we find a handful of states like New York, where legislative movement is occurring, but where the path forward for passage in the short term remains cloudy.”
Different Paths Each of the three states that currently offer legal online gaming has gone about it in its own unique way. For instance, Nevada legalized only online poker, while New Jersey and Delaware legalized online poker and online casino games. In all three locales, only brick-and-mortar casinos can apply for an online gaming license, but in Nevada and New Jersey, the state’s licensed casinos are free to partner with any acceptable online gaming partner of their choosing,
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On the flip side, the state’s online poker operators saw the floor fall out from beneath them, as the industry shrank by 18 percent from CY2014 to CY2015, with monthly revenue tallies having leveled off at a level nearly 50 percent off peak numbers due to a lack of liquidity.
“The bright spot is certainly the performance of online casinos in New Jersey, where double-digit growth was the norm throughout 2015, driven by product improvements and a surge in consumer interest.” — Chris Grove, Partner, Narus Advisors
whereas Delaware’s lottery brokered the deal that selected 888 Holdings and Scientific Games as the state’s singular platform to be shared by its three racinos. Each of these different models has brought about distinctive trials and tribulations that the industry has had to overcome, but all three states have done yeoman’s-like work when it comes to the all-important aspect of regulating their online gambling industries, and reining in the corner-cutting that was/is rampant among unregulated U.S. online gaming sites—and for the first time, giving U.S. online poker and casino customers consumer protections with real teeth. It should also be noted that while Nevada, Delaware and New Jersey were legalizing online gaming, several states also began selling lottery tickets online, utilizing the same consumer protections and regulatory oversight that we see in Nevada, Delaware and New Jersey. Furthermore, those states—Illinois, Georgia, Minnesota (although the state’s legislature later rolled back the sale of lottery tickets over the internet) and Michigan—have all generated significant revenue through the sale of online lottery tickets, and like their online gaming brethren, have avoided any scandals thanks to the tough regulations imposed on the industry.
The robust regulations are often pointed to as a reason for the industry’s slow start, but this is a tradeoff operators and regulators are more than happy to make, as the regulations have proven extremely effective. One person who is quite happy with the state’s results on this front is New Jersey Division of Gaming Enforcement Director David Rebuck. “We are now almost two and half years into authorized internet gaming in New Jersey,” he says, “and most in the industry are familiar with the main challenges we faced, such as regulating the development of strong KYC (know your customer player verification checks), geolocation and payment processing protocols. I believe we have shown the industry can be successfully regulated and, of course, those areas remain critical as the industry evolves.” Chris Capra, the U.S. marketing manager for 888 and the All American Poker Network, adds, “New Jersey has proven to be a well-regulated, legitimately successful market for online gambling.” In addition to geolocation, KYC and anti-money laundering and payment processing protocols, regulators in New Jersey, Nevada and Delaware can also hang their hat on the seamless unwinding of Ultimate Gaming in both Nevada and New Jersey when the company decided to pull the plug on its online operations. Yet another regulatory success was the creation of an interstate online poker network between Nevada and Delaware, which required regulators in both states to work together.
Jersey Sure Without being dismissive of what Nevada and Delaware have managed to accomplish, neither state (singularly or even combined) has a population capable of sustaining a vibrant online gaming market, and neither state is viewed as a viable testing ground for the U.S. online gaming market. On the other hand, even though it’s a relatively small market, New Jersey, with nearly triple the population of Nevada and Delaware combined, has proven to be a self-sustaining market, allowing analysts to create online gaming models for different states by extrapolating on the results in New Jersey. New Jersey’s online casino operators are currently in the midst of a 16month growth trend that saw CY2014 vs. CY2015 revenue increase 21 percent, with online casino up over 33 percent during that same period.
“I believe our continual dialogue with the industry has helped everyone to successfully adapt to this new chapter in authorized online gaming without compromising our high regulatory standards.” —David Rebuck, Director, New Jersey Division of Gaming Enforcement APRIL 2016 www.ggbmagazine.com
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Caesars’ WSOP.com has a 99 percent market share in poker-only Nevada iGaming
Remaining Challenges Despite their successes, Rebuck notes that there is still plenty of work to be done. “As with any new endeavor, there are always lessons to be learned,” he says. “Some of the lessons involved getting everyone on the same page in terms of our licensing, technical and customer protection requirements. However, I be“I think 2016 is going to be a critical year in the long-term viability lieve our continual dialogue with the industry has helped everyone to successof the U.S. market,” Capra says. “Without a second or third market fully adapt to this new chapter in authorized online gaming without opening up, there is going to be increased pressure for operators to justify compromising our high regulatory standards.” their investments in the U.S. markets. I don’t know how many would Rebuck also notes that one of the current challenges is “encouraging the injust cut their losses and leave, but I do suspect that you would see a sizdustry to innovate in areas such as skill-based gaming.” This is something the able decrease in spending to gain new players, as the market cap will be DGE tried to kick-start by introducing temporary regulations for skill-based significantly limited.” games (both live and online) in February. Capra points to the current situation in Nevada, where there are only Capra points to the improving but ongoing payment processing problems two operators, despite dozens initially applying for a license, and where operators have run into as a continued obstacle, but one he hopes can be solved the Caesars and 888 online poker site, WSOP.com, has a 99 percent with further expansion. market share. Essentially, Nevada’s decision to only legal“One challenge that all licensed operators face is the ize online poker has left current and potential operators The state-by-state lack of acceptance of legal online gaming by the credit with no realistic model to turn a profit in the small marapproach to card companies,” Capra says. “As we wait for other states ket, and as Capra suggests, no way to justify the cost. legalization has led to legalize and regulate online gaming, we have to make to operators and more headway with the banks and credit card companies Cost-Effective? to allow legal transactions… We need to see wider acceptservice providers But even in larger markets, where online casino and onance of the new credit card transaction codes that were re- voicing concerns as line poker are legalized, the cost of doing business could leased last year.” still prove to be a major barrier. The state-by-state ap-
Catching the Next Wave
licensing and vetting costs continue to mount.
Because of the New Jersey online gaming market’s growth in CY2015 and the continued successes of all three markets on the regulatory front, several states have come out of their holding patterns, and the second wave of online gambling expansion is gaining modest momentum. There is no sure thing, but Pennsylvania appears close, and California continues to be a wild card. One way to help push a state such as Pennsylvania across the finish line would be to mitigate the cost of setting up its online gambling industry, through measures such as adopting New Jersey’s regulatory model wholesale. “I believe hands-down New Jersey offers the best, most comprehensive model for online gaming,” Rebuck says, noting that other states would have a difficult time duplicating what New Jersey has done in a short period of time, and would likely incur great cost in doing so. “New Jersey has clearly laid the groundwork for a well-regulated internet gaming industry,” he says. “Any state that utilizes our regulations, which we continue to hone as the industry evolves, will absolutely save a tremendous amount of time and effort.” Going a step further, the DGE director makes the case for states to not only copy New Jersey, but to partner with the Garden State to cut down on the time and energy they would expend going from passage of a bill to launching online gaming sites. “In addition to our regulatory structure, we also have the infrastructure in place that would enable other jurisdictions to partner with New Jersey so they would not have to start from scratch,” Rebuck explains. “Those jurisdictions running their operations through what New Jersey already has in place could be up and running very quickly.” However, if further expansion remains elusive, it could create a persistent, albeit non-fatal issue for the current operators. 44
Global Gaming Business APRIL 2016
proach to legalization has led to operators and service providers voicing concerns as licensing and vetting costs continue to mount. Matthew Katz, the CEO of the geolocation and KYC company CAMS, says there are very few markets where the cost to receive a license and absorb the cost of vetting can be justified, and suggests that new states could ease this burden by forgoing the vetting process (the cost of which falls on the company) and recognizing companies already licensed in New Jersey or Nevada. Still, most people in the industry remain sanguine about the future of online gaming in the U.S., particularly if Pennsylvania comes through this year and ignites Wave 2 of online gaming expansion. “I do believe, however, that it won’t take much to significantly move the needle for the U.S. market,” Capra says. “If, for example, Pennsylvania was to work out the remaining issues and legalize online gaming in 2016 with casino and poker, it could have a big domino effect on other states.” If Pennsylvania legalizes online gaming, says Capra, “it more than doubles the entire market size overnight with more than 10 million adults in the state. Secondly, its proximity to New Jersey and 888’s success in creating interstate liquidity compacts will help move this forward very quickly to the benefit of the player base. And finally, it will put enormous pressure on New York to pass its own legislation. That tri-state region has more than 33 million adults, and would create a very viable market.” Beyond Capra’s coveted Eastern triumvirate, the online poker industry will no doubt continue to chase its white whale, as California and its coveted market of nearly 40 million residents continuously flirts with online poker legalization each and every year before leaving the industry despondent and mumbling “there’s always next year” to themselves.
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iGAMING NORTH AMERICA
Is Younger Better? The internet and the quest for millennial gamers
he casino industry is currently facing a dilemma. Older gamers are literally dying off while fewer younger people express interest in casino gaming. Effective marketing to millennials and their subsequent conversion to gamblers has become the holy grail in providing a replenished customer base for casinos. Many operators are banking on the “in-development” games of skill to attract millennials, but other avenues have also arisen. These generally include games delivered over the internet to a person’s preferred device. These include social gaming, daily fantasy sports and the more recent advent of eSports. The role of the casino is to be the provider and facilitator of these games, thereby laying claim to this market segment that will be won over as casino patrons by the “skill games” soon to come to casino floors. Daily fantasy sports (DFS) is seen as one area which a casino could leverage to bring younger (though primarily male) players into the casino world via a DFS competition run by the casino. Sports bars and lounges would be remodeled to accommodate the players. However, over the last year, the DFS industry has been in turmoil as regulators and law enforcement have focused on these operations in numerous states. While this may have taken the “shine” off DFS and the big multi-state providers such as FanDuel and Draft Kings, it may also open up the market to local casinos with their local affinities to compete in this space. The biggest questions for DFS and its delivery via a local casino are: Can it be profitable or at least break even with a smaller local market versus a national one, and, can the players be converted to gamers once in the casino? The answers to these questions are as yet unknown, but at minimum DFS provides one internet-based avenue for casino operators to explore its potential to drive millennial visitors. Social gaming has become the focus of the iGaming community in the U.S., given the lackluster performance of real-money iGaming in states that have legalized it, and the subsequent
Global Gaming Business APRIL 2016
By Paul Girvan
decline in the number of states considering realmoney iGaming. Social gaming has great potential for casinos in terms of reaching a new audience that had not previously considered casino gaming as desirable. The casino games are offered on a variety of devices that are never far from a millennial’s hand. Initial reports from operators on the East Coast support the contention that yes, social gaming does attract a wider audience, a sizeable proportion of whom have not visited a brick-and-mortar casino. When they do visit the casino in person, it has been noted that they are younger and tend to spend more on their casino visit than the average player. However, not all operators have seen positive results. This appears to be the result of a disconnect which is in part attributable to the software providers’ failure to offer features that would facilitate the delivery of marketing programs and promotional events designed specifically to drive traffic from online to land-based casinos. Contributing to this has been a failure of
casino marketing departments to rapidly evolve and execute marketing and promotional programs targeted to convert online players to land-based casino visitors, and to demand from software providers that they have the tools to do so. The advent of eSports provides yet another avenue for the casino to reach the millennial generation in one of its core defining activities. Anyone of my generation with a teenage son knows just how avid game players can be, and the number of hours per week spent on this activity. eSports are played online in a multi-player universe where individuals or teams compete. Game developers are now sponsoring worldwide competitions where the prize money is in the millions of dollars. Leagues have been developed and a “season” (usually three to four months) has been inaugurated with playoffs to crown the champions. Facilities can be custom-built such as is proposed for Las Vegas, where Ourgame International Holdings of Beijing has proposed a facility of approximately 14,000 square feet capable of seating 200. Dedicated facilities are not a necessity, and fortunately, casinos generally have a wealth of available space—whether in a showroom, ballroom or multi-purpose space that with minor alterations can accommodate eSports events. For example, the Downtown Grand in Las Vegas recently ran a competition to crown the champion of Wargaming Net League North America, or WGLNA. The winner claimed a $75,000 prize in addition to a slot representing North America in the Wargaming Global Grand Finals in Warsaw in April. All this was done in a space that would be converted later that week to accommodate a wedding.
While social gaming, DFS and eSports can deliver millennials to the casino, to have an impact on gaming revenues they must be attracted to the gaming product. Given this, the casino industry has put a lot of faith in game developers that are currently working on ‘games of skill.’
Downtown Grand Las Vegas has a Facebook page dedicated to its eSports events and competitions
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From a physical perspective, hosting one of these events is no more onerous than hosting a musical act. Other games such as League of Legends and Mortal Kombat are also popular. The former had major events at the Key Arena in Seattle, the Staples Center in Los Angeles and at Madison Square Garden in New York. From the casino perspective, this is a great marketing tool. First, it creates awareness among the millennial generation; it brings them to your facility (although in relatively small numbers). The casino can sponsor its own team (or teams) within the leagues, and games can be televised, garnering even more visibility for the casino among this demographic. For the three to four months of the season, the casino can schedule weeknight events in its existing facility. The ability of social gaming to create new land-based gamers is reflected in the data. Both DFS and eSports certainly achieve the goal of reaching and catering to the recreational demands of millennials, but it has not yet been shown that this results in concrete improvement of gaming revenues. Some might say that in this new paradigm, the impact on gaming revenues is not as significant as offering a wide range of leisure activities beyond gaming that appeal to the broadest spectrum of potential guests, with the thought that once in the building they will spend money. That, some say, is the future of the casino industry. While this argument has some merit, the reality of the decision-making process will, for the foreseeable future, be slanted towards the generation of gaming revenues. While social gaming, DFS and eSports can deliver millennials to the casino, to have an impact on gaming revenues they must be attracted to the gaming product. Given this, the casino industry has put a lot of faith in game developers that are currently working on “games of skill.” It is these games that will engender play from millennials on the casino floor, regardless of whether they are attracted to the casino by online social gaming, eSports events or DFS. As yet, it is unclear as to how effective these “games of skill” will be. Given the high level of graphics and production found in the eSports environment, one must hope that the machine developers have looked closely at the products associated with eSports, and that they replicate some of that quality in these new games. I don’t expect that the first generation of these games will entirely solve the issue of attracting millennials as gamers. I do, however, hope that the subsequent evolution of skill-based games will become ever more appealing to this key generation. With an attractive and appealing set of skill-based games in place, then internet-based activities such as social gaming, DFS and eSports can drive customers to the casinos with a much greater likelihood of these new millennial guests becoming casino gamers. Paul Girvan is a partner and managing director of the Innovation Group and runs the firm’s New Orleans office. Girvan has been providing feasibility analyses to the gaming industry since the early 1990s, and in the last five years has increasingly focused on iGaming. The Innovation Group is co-producer of the iGaming North America Conference held in Las Vegas each April.
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As the bill explains it: “The bill would require the first $60,000,000 collected each fiscal year pursuant to the license deposit and quarterly fees provisions to be deposited into the California Horse Racing Internet Poker Account, which the bill would establish in the General Fund. The bill Some expect a rebound of the poker offerings in New Jersey iGaming would continuously appropriate 95 percent of the funds in the account to the California Horse okerStars is back in the U.S., NYX Gaming LLC. Racing Board for distribution, as specified, and but only in New Jersey’s The entrance of PokerStars is would transfer 5 percent of those funds to the iGaming market. expected to give a jolt to New Fair and Exposition Fund, a continuously approThe Amaya-owned platform Jersey’s internet gambling marpriated fund.” finally launched in New Jersey on ket, which took in $149 milSome analysts who have run the numbers March 21 after a lengthy licensing lion last year in its second full have concluded that it would be a very rosy sceprocess in the state. The state apyear of operation. That reprenario indeed to where the new business would proved PokerStars for licensing in sented an increase of more than come close to raising $60 million a year. September. 21 percent over the previous By adding the United Auburn tribe, the conIt marks the company’s return to the U.S. year, according to the Associated Press. But all of sortium has come out in favor of Gray’s bill. His market after being shut down by the U.S. Departthat increase is attributable to the casino products bill does not contain a “bad actor” clause as has ment of Justice in 2011 for violating U.S. online offered by the state’s iGaming sites. The poker side been insisted upon by the coalition headed by gambling laws. of the business has been in decline for at least the Pechanga. Others that support the bill are the Only PokerStars customers physically located past year. Rincon Band of Luiseño Indians and California within New Jersey’s borders will be able to use its Nations Indian Gaming Association. platform to gamble online when the site launches. California Compromise? Rincon Chairman Bo Mazzetti recently PokerStars is partnered with Resorts casino in Atnoted that his tribe initially wasn’t interested in Tribes, politicians get together to lantic City. iPoker. “But more and more, the younger generaurge passage of iPoker bill The site will be the state’s 18th internet gamtion is on their machines, and not so much into bling site. It will undergo testing by state regulators the slot machines. They are more into mobile alifornia lawmakers Adam Gray and Reggie before its debut. It will offer not only poker, but platforms and table games and high-tech.” Jones-Sawyer have put their heads together to online table games and slot machine games as well. The Auburn tribe has moved around on this sponsor yet another bill that would regulate online “PokerStars is the global leader in online poker issue, having sided with two of poker in the Golden and trusted by its customers for its robust and inthe other coalitions previously. State. And the novative technology, world-class security and game Two years ago, it sided with United Auburn Inintegrity,” said David Baazov, Amaya’s chairman Pechanga, and opposed Pokerdian Community of and CEO. “We are honored and excited to now Stars as well as the participaNorthern California bring these experiences to New Jersey.” tion of horse-racing interests in has joined the PokerAfter the 2011 shut down, PokerStars had online poker. Stars coalition of been banned in New Jersey because of legal probThe coalition now includes gaming tribes who lems concerning former corporate officials of the the Morongo Band of Mission support legalizing Rational Group, owners of the site before Amaya Indians, the San Manuel Band iPoker in the state purchased it in 2014. of Mission Indians, the United and want to partner California lawmakers Adam Gray (r.) and PokerStars tried twice in 2013 to get licensed Auburn Indian Community, with the largest operReggie Jones-Sawyer (l.) have put their in New Jersey, but the state’s Division of Gaming Commerce Casino, Bicycle ator of online poker heads together to sponsor yet another Enforcement suspended the company for up to Casino and Hawaiian Gardens in the world. bill that would regulate online poker in two years, citing legal problems involving some Casino, plus PokerStars. An iPoker bill the Golden State. company executives, including an unresolved inPolitical watchers in the was introduced in dictment against its founder stemming from the Golden State are unsure February, just hours DOJ investigation. whether this shift is enough to change the game before the deadline to introduce bills. It includes Those executives stepped down as part of the significantly. Pechanga is big enough to keep any up to $60 million annually to the racing industry sale to Amaya. The PokerStars website also paid a bill that it doesn’t like from being rammed from a combination of one-time licensing fees and $547 million fine to the Department of Justice, through the legislature. Moreover, it still comcontinuous tax revenue. The amount would not be but didn’t admit wrongdoing. mands the loyalty of Agua Caliente Band of guaranteed, but would be yoked to profits from the New Jersey requires that internet gambling Cahuilla Indians, Barona Band of Mission Indiindustry. companies partner with an existing brick-and-morans, Lytton Band of Pomo Indians, Viejas Band In return, of course, the racetrack industry tar casino in Atlantic City to offer online gamof Kumeyaay Indians and Yocha Dehe Wintun would not have a place at the table of those actubling. PokerStars is partnered with Resorts, which Nation. ally participating as online operators. launched online gambling last year with Sportech
PokerStars Live in New Jersey
Global Gaming Business APRIL 2016
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Big Shots, Big Slots Slot providers playing finders and keepers with branded games
uccess in the competitive world of slots never gets easier. New suppliers constantly enter the market, while established providers have been striking key deals to spread their content even further around the world, to more operators than ever. It’s a far cry from NetEnt’s beginnings 20 years ago, when the market contained just a few leading lights, but the race is still the same. Create the best games, quicker than the competition, and make sure they are noticed by operators and their players. While that all sounds simple—and there are a number of strategies that suppliers adopt to achieve success ahead of their rivals—consumers are very different today compared with two decades ago. Now, Americans are more media-hungry than ever, and never more than a cell phone’s reach from a marketing slogan or advertisement. Branding is the new advertising. It’s no good just getting your name in front of people; it needs to be backed up by a trusted logo from a household firm or cultural institution. That’s why more and more game developers are joining up with the big names. Take NetEnt, as an example. Last year, we teamed up with Guns N’ Roses, one of America’s greatest rock bands and a global phenomenon, with an instantly recognized style and sound. It’s worked. Guns N’ Roses is already our most successful game ever since its European launch, and we’re now expecting big things in the United States too. But the logic also runs deeper than that. Just taking a brand logo and slapping it on a product doesn’t guarantee success (legend has it that a disastrous game based on the Steven Spielberg blockbuster ET was the iceberg that sunk Atari). So then, why brand a slot game? Loosely, the benefits can be broken down into five key areas: loyalty, new audiences, creative opportunities, standing out in a crowd and continued success. A fascinating aspect of brands is that they
By Simon Hammon
are more than simply companies or products. They have an identity that has been shaped and invested in over many years. Take Apple as an example. Its brand is now a lifestyle. People need to have the latest iPhone or iPad because it’s part of their identity, and the loyalty is bred out of this need to feed their own identity. Brand loyalty can be really strong, and lifelong. Companies use their brands to build up large followings of fans, or at least advocates, and people buy into the message that brands are looking to deliver. Partner with the right brand, and players will be more likely to not only play your slot, but also return for repeat play. A branded slot sticks in the minds of players and, with an emotional connection that has already been formed, they’ll want to come back again and again. Well-known brands help slots gain that extra consumer cut-through outside of the gaming audience. Some brands will introduce a whole new genre of fans to slots, be it sports, computer games or movies. For NetEnt, it’s music. We knew that Guns N’ Roses have a huge following, and so we wanted to
reach out to their fans with a high-quality game. It’s about finding new fans for slots who have never sought them out before. This means more players, more signups, and more revenue for operators. Design is also a huge factor and opportunity. Suppliers working with the best brands can gain more creative license to push the boundaries and innovation within game play, design, audio and more. There can be high standards to stick to for rights holders, who want their games to represent their brands in the best possible light. Our biggest productions involve months of creative effort to build a game that satisfies not the customer’s standards, but the requirements of our brand partners as well. From a supplier’s point of view, drumming up excitement can be important not only for increased playability, but also to pique the interest of the big operators. When looking for success in America, you need to prove you have a winning portfolio, and having those big brands on board can be a convincing piece of assurance for operators looking to make an investment. And then there’s the continued success. The gaming industry can learn some lessons from Hollywood. Once customers are brought through the door by a big blockbuster, they are more often than not retained by one or more sequels. The same process can be applied to the best branded games. Securing a well-known brand and launching a successful game can be just the beginning of fantastic partnerships and sustained results. A famous logo will not instantly increase retention. But combine the right brand with the right product, creating an extraordinary player experience, and you have a recipe capable of generating levels of engagement which are not usually replicated outside a very small percentage of blockbuster slots.
Why brand a slot game? Loosely, the benefits can be broken down into five key areas: loyalty, new audiences, creative opportunities, standing out in a crowd and continued success.
Simon Hammon, chief product officer at NetEnt, has detailed knowledge of the gaming cycle from being the operations and product development director in his own online business. His experience includes platform, game development, network operations and affiliate management within the bingo and casino sphere.
APRIL 2016 www.ggbmagazine.com
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Digital Delivery How casinos are marketing their products on the World Wide Web By Dave Bontempo
asinos celebrate the tangled “web.” Tangled for them means interconnected, far-reaching and beneficial. The web is a trigger point to lure first-time customers, fortify existing relationships and maintain real-time speed in the frenzied gaming world. Although the web may be cluttered by millions of online ads, it brings new mechanisms to reach customers. Most casino websites display tabs for promo offers, hotels, gaming, tournaments, nightlife and conventions. One click reveals a hotel suite, replete with square footage, a scenic landscape and comparisons to other rooms. Another prompts a booking opportunity. Just click it and pick it—launch an entire trip through a computer screen or mobile app. Transactions via the web appear limitless, and marketers must know how to target customers. They know that guests carry multiple devices, and that digitally connected screens are everywhere, including at kiosks. Marketers find ways to message their players, stroking the ego of a patron who finds a personalized room rate or restaurant special sent to his phone. No technology replaces eye contact, the time-honored face-to-face marketing skill issued by hosts and executives. Patrons do love having their own contact provide a sense of importance. Yet technical innovations enhance the efforts. The web forms a magical weave between age groups, geographic regions and income levels. Although considered relatively young, the web has
Global Gaming Business APRIL 2016
nonetheless become sophisticated, and internet advertising revenue exceeds $40 billion annually in the United States. Technology has moved online marketing beyond its classic role of using the web and email to drive direct sales via electronic commerce. Digital marketing channels include email, social media, game advertising, online public relations and video advertising. Operators must sift through this menu to tailor offers and realize the slowly shifting sands of general beliefs. Social media may be still widely used by young people, for example, but boomers have steadily become savvy. So have their forefathers. And mothers. “Granny is on Facebook,” a gaming executive says proudly of his grandmother. “And she is 88.” While casinos enjoy the bells and whistles of the web, they must remember a fundamental truth: content remains king. What they put on the site, the function of marketing information and their own research, has the same importance as where they place it.
The Casino Line of Scrimmage The web is an equalizer for gaming operators. It is an avenue they all travel, regardless of property size. What distinguishes top performers, in this context, is the skill of information assessment. “It’s a continual balancing act,” says Seth Schorr, chairman of Downtown Grand casino in Las Vegas. “The traditional customer (baby-boomer
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The beauty of digital marketing is that the analytics are very clear, as opposed to a billboard, for which, unless somebody tells you he saw it, pulled off the road and came to your property, you won’t know if he saw it or not.
—Seth Schorr, Chairman, Downtown Grand
age) still represents the sweet spot as far as disposable income in our business. For this person, an email is very effective. It is important that the layout is thoughtful. You don’t want too much information in that the presentation may look busy, but you want that person to open up an email, see a beautiful hotel room and know how to reserve it. “You also want to relate what casino promotions are going on. The layout is important. Too much and the main message gets lost. You may want to mention just your most important thing.” Millennials react to a different visual. Social media channels entice them to a property’s website to assess promos and room rates. This generation, which navigates offers quickly and easily, grew up with social media. “This group is more savvy than their parents regarding technology,” Schorr asserts, “and for them, social media channels are, in many cases, more important than the website itself to communicate different promotions. “They don’t open emails too much. You want to reach them on Facebook, Twitter, even Yelp. You may want to talk about your nightclub, mentioning that you have a big DJ. You tag him, people who already follow the DJ now know he will be at your casino, and when. “In anything you promote, you can tag relevant sites, and people following those sites can see what you are talking about.” The different promotional facets come together quickly. “The beauty of digital marketing is that the analytics are very clear, as opposed to a billboard, for which, unless somebody tells you he saw it, pulled off the road and came to your property, you won’t know if he saw it or not,” Schorr contends. “When people click onto your website, you know how many are doing that. When they click within your website to find something, we know that too. When they click to get onto reservations and book a room, we’re very happy about that.” The web’s dynamic launched another promotional realm for this company. Downtown Grand has begun luring players to an extravagant mid-December slot tournament that will award $250,000 to a single player. Entries are being driven through the web. Contestants will be recruited all year and assemble for the tournament, several months hence. The web plays a pivotal role by creating buzz and excitement about the tournament. Consider the reinforcement of Facebook and Twitter, as players use the forum to brag to friends.
The tournament figures to play a long-term role in forging long-term customer relationships as well. Downtown Grand also reached out to video-game players. Every Friday, it awards $250 to players who win a particular contest. It can be a shooter game, fighter game, etc. How are these people found?
Flagging Customers The connected world forces operators to think beyond mobile devices, apps and social media. They must reach customers across all touch points. Innovations help provide more effective marketing, according to the heads of Zebra Technologies and Cozumo. The next generation of web marketers is learning how to target and send appropriate, coordinated messages to guests. “We have seen that today’s most innovative marketers are working with what is identified as ‘contextual location awareness’ technologies,” says David Wolmetz, senior OEM account manager, hospitality and gaming, for Zebra Technologies, which is based near Chicago and was just named by Fast Company as one of its Most Innovative Companies for 2016. A global leader in solutions that provide real-time visibility into organizations’ assets, Zebra was cited for groundbreaking work as the NFL’s “Official On-Field Player Tracking Provider,” tracking high-speed game data and converting it into real-time, usable statistics.
We work with marketing executives to provide and enable what is seen as an immersive yet relevant marketing offer. And when this works, it closes a key loop in guest engagement, encouraging a lift in measured spend that can be used just about anywhere.
—David Wolmetz, Senior OEM Account Manager, Hospitality and Gaming, Zebra Technologies
APRIL 2016 www.ggbmagazine.com
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“We work with marketing executives to provide and enable what is seen as an immersive yet relevant marketing offer,” Wolmetz says. “And when this works, it closes a key loop in guest engagement, encouraging a lift in measured spend that can be used just about anywhere.” “Just like our retailer customers, gaming operators are marketing offers to customers using location-based technologies to establish oneon-one customer engagements at every touch point whether in venue or not,” adds Steve Okun, chief technology officer for Cozumo, based in Toronto. As a partner of Zebra, Cozumo employs Zebra technology, adding a plug-and-play, turn-key solution to deliver customized offers.
Gaming spend only gives properties part of the picture. Advanced revenue management systems today have the ability to analyze total patron worth and price based on it.
—Rory Fagan, VP of Global Casino Accounts, Duetto
Finding The Right Outlet Red Square Gaming employs several strategies to help clients reach their audience. The Mobile, Alabama advertising agency, which focuses on casino brands, is a big proponent of digital marketing. Tina Delaporte, the company’s vice president of media, says this medium carries multiple benefits. “This is increasingly what people spend most of their time with (considering all digital platforms),” Delaporte says. “A digital strategy is the most important piece of digital marketing. Advertisers must define who they are trying to reach and what they are trying to accomplish. Once these are defined, user statistics can lead to social channels such as Instagram, Twitter, Snapchat or Facebook, or they could lead you to search engine marketing, online display, mobile video, etc., based on your objectives.” Each business entity, like gaming, needs to find its web fit.
A digital strategy is the most important piece of digital marketing. Advertisers must define who they are trying to reach and what they are trying to accomplish. Once these are defined, user statistics can lead to social channels such as Instagram, Twitter, Snapchat or Facebook, or they could lead you to search engine marketing, online display, mobile video, etc., based on your objectives.
—Tina Delaporte, VP of Media, Red Square Gaming
Global Gaming Business APRIL 2016
“Online marketing is heavily used for e-commerce businesses, where users can be exposed to advertising and directly purchase a product through digital platforms, resulting in a true ROI (return on investment),” Delaporte indicates. “Re-targeting (re-marketing) is extensively used in the retail category due to its high conversion rates. Testing audience preferences such as colors, sizes, prices, etc., helps these advertisers gain timely insights on trends. “For gaming, the path to purchase is usually not as direct. That’s why digital advertisers should consider both micro conversions and macro conversions. If a user submits an email address through a lead generator, for example, this micro conversion can be an indicator of a new, loyal customer or a macro conversion. “By determining the percentage of those that sign up versus those that convert to a loyal customer, a value can be attributed to each email obtained.” Delaporte ticks off the innovations that contributed to the quick prevalence of marketing platforms: Google in 1998, Facebook in 2004, the first iPhone in 2007. The web has room to mature on many levels, she indicates. Delaporte anticipates the incorporation of third-party data into marketing campaigns, more segmentation and testing of audiences in 2016.
Information Reigns Supreme What about content? There are more places than ever to put it, hence the urgency for updated and flexible information. There is also more visibility, with a company’s product line on display for its competitors and the entire web world. That’s why an important dimension lies beneath the glitz of fancy website designs and slick promos. It’s a world inhabited by numbers-crunchers. They measure more than an internet hit. They focus on the product placed through the web and costs associated with it. Casino operators use data from Las Vegas-based Duetto Research to enhance revenue strategies for their resorts. Duetto is a widely used resource for hotel-room pricing decisions. It recently unearthed some important information for its clients in the jockeying battle between operators and online travel agencies (OTA) like Expedia. Properties already invest in customer relationships via internet ads or by using the online agencies. Those outlets often take 20 percent of the room rate in exchange for helping to lure the business. Casinos have the option to augment their marketing strategy by placing room rates and promo coupons
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on their own websites. This allows a more personalized interaction between Conducting business on the vast internet may be daunting, but what a web it is. operators and their customers, enabling casinos to pocket the commission, Nearly every business tries to maximize it, including those outside of gamplace some of it in a room offer, or do both. ing. Golf courses provide virtual tours, restaurants display menus and certain inA recent announcement by Expedia raised the stakes of the hotel-OTA dustries can tease customers: Newspapers have been implementing paywalls on relationship. Expedia said it will let businesses bid up for prime space. EBay their websites, showing part of a story and asking customers to subscribe in order on Expedia? This tactic increases operator costs by inviting bidding wars. to read the rest, as they seek to recoup revenue lost to declining subscriptions. The development will be closely watched by gaming companies. It may For anyone who can grab a niche, the web presents the Golden Goose age. become the impetus for them to adopt new loyalty programs and invest in technology platforms that can integrate them to the hotel’s management systems. That’s one part of the advice Duetto provides casino operators. The other is information enabling casinos to know what they place on the web. That answer is the result of scientific research. Rory Fagan, vice president of global casino accounts for Duetto, says a big hurdle casino marketers must clear is determining the value of their most profitable guests. The challenge also brings opportunities. “Hotel room revenue, food and beverage, and golf and spa packages bring in a lot of money for casino resorts, and those with attached nightclubs or entertainment venues are also doing tremendous business,” he says. “Gaming spend only gives properties part of the picture. Casino marketers need to know a customer’s total worth calculated upon his or her spending across the entire resort. extraordinary Advanced revenue management systems today have the ability to analyze total patron worth and price based on it.” This gives casinos the “big data” needed to price rooms according to demand, calculate reinvestment ratios that maximize profitability, and create personalized offers, he adds. “One loyalty club member might have a $100a-day slot budget, and another might not gamble at all but spend several hundred dollars in a day at the spa, the restaurant and at the nightclub,” Fagan says. “Should the same reinvestment percentage apply to their room rate or the comps they receive? No, it shouldn’t.” Fagan envisions casino marketing connecting to loyalty programs and leveraging big data to determine total customer worth. It will be one thing Gasser chairs are proven p performers, p rformers,, to sayy the least. For for casinos to adjust rates based on demand for 70 years they have maintained d a sensible symmetry between peak days based on data produced by Duetto. It style, comfort and dependability bility that has never ceased to will be another for them to display it properly, and amaze. At Gasser Gasser,, we don’t merely perform, we dazzle. quickly. Visit Gasser at Southern Gaming Summit, Booth #627 And so the web arena unfolds, providing immense opportunity and competition for the casino world. gasserchair.com gasser chair.com | 800.323.2 800.323.2234 .2234 From gaming operator to advertiser, researchFeatured Chair: Prelude provider to real-time specialist, companies find digital marketing a complex, yet inspiring puzzle. APRIL 2016 www.ggbmagazine.com
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Beyond Player Tracking Concentrate on the gaming experience to develop more and better players
ong ago, when I invented player tracking, Nevada was the only state that allowed gambling. Tracking identified frequent gamblers, so casinos could form loyalty relationships with them. Everyone else was ignored. Today, most of the people registered in your loyalty database gamble rarely, if at all. They took the time to join your club, so they were initially motivated. They just didn’t find your gambling product sufficiently appealing to become regular, profitable players. Convert even a tenth of them into regular gamblers and your business doubles. That’s real opportunity, but you’ve got to move beyond player tracking to succeed. You must reinvigorate the experience that surrounds your games. The mission of casino gambling is to help players feel better about themselves—to make them heroes in their own mind, even while they lose. That’s done by empowering employees to wrap everyday services with recognition, respect, celebration and consolation. This is a lost art, as most of today’s casinos are devoid of human interaction.
BUILD HEROES Each of us yearns to be a hero, but life’s everyday burdens get in the way. That’s why we seek recreation: to recreate our self-image. To feel powerful. To be someone who matters. Casino gambling is a powerful recreation because it involves risk. And risk is an essential element of heroic action. I’ve been flying out of Las Vegas for over 40 years, and make a sport of asking seatmates how they enjoyed the city. I used to always find myself sitting next to a winner who “hit a $200 jackpot” or “won enough to pay for the trip.” Further conversation inevitably revealed they’d lost more than was won, but they still felt like a winner—a hero in their own mind—and that feeling was well worth the cost. Recently, a new trend has emerged—seatmates who enjoy visiting Las Vegas but don’t gamble at all, because gambling is “too boring,” or “too confusing.” I find this true across all age groups, not just the millennials. Gambling is in decline. The problem is us. We’ve taken away clanging 54
Global Gaming Business APRIL 2016
By John Acres
coins, booming bells and chatty change people. We eliminated enthusiasm and, in the name of efficiency, abdicate the responsibility for player entertainment solely to our electronic random number generators. No wonder gambling is in decline!
MAKE IT PERSONAL Heroes are special, but it’s hard to feel special when you’re just another member of a loyalty tier. Your business will skyrocket if you greet each player by name, deliver favorite drinks without being asked, celebrate jackpots as they occur and provide sincere consolation and encouragement when losses accumulate. All the data you need exists right now in your player tracking system: Just sitting there, wasting away.
formation. Data alone, though, isn’t enough. Decisions have to be made about what to offer and what to say. With hundreds of guests to serve each day, staffers can’t possibly select or interact optimally. That’s where artificial intelligence comes in. AI technology has advanced sufficiently that computers can implement your rules, follow your regulations and construct meaningful, profitable, personal engagements to every player and situation. All at light speed. Staffers are instructed— through mobile devices—how, when and where to serve each customer. The AI efficiently delivers direction while staffers effectively provide humanity. Players get consistently great experiences. You get persistently great profits.
START NOW CREATE A CULTURE Every casino’s culture is defined by how employees are organized, trained and empowered. Great cultures deliver experiences that are both satisfying to players and profitable to provide. Today, great cultures are hard to find because casino operations focus on efficiency instead of excitement. Staffers are rated by how quickly a service is provided, without concern of guest perception or satisfaction. Your product isn’t wins, losses or loyalty points. Your product is enabling players to feel better about themselves—to make them heroes in their own minds—even while they lose. That’s only possible with an exciting, warm, enthusiastic culture.
BE INTELLIGENT, GO MOBILE Player tracking was designed when desktop computers represented the future. Today those desktop computers—and perhaps even the desks beneath them—are artifacts of the past. Your employees either sit at one of those artifacts examining data or engage customers on the floor without information to guide them. Neither path delivers player satisfaction or revenue growth. Mobile devices allow staffers to be with customers while accessing each player’s personal in-
Your biggest threat isn’t competition from other casinos; it’s consumer apathy to your gambling product. More people visit Las Vegas than ever, but only a decreasing percentage of them gamble. And what happens in Vegas doesn’t stay in Vegas, because that apathy is spreading to gaming everywhere. My life in gaming began when the industry served customers as individuals and understood that gambling is a very emotional recreation. The industry was also small, and could never have expanded without electronic efficiencies. Unrealized was the damage those efficiencies inflicted upon the player experience. Today’s technology has advanced sufficiently that we can once again provide the emotional gratification players seek while retaining those efficiencies you must keep. Let’s move beyond player tracking and make the gambling industry grow again. John Acres has over 40 years experience in the casino industry and invented the player tracking and bonusing systems used today by virtually every casino in the world. Today, he serves as CEO of Acres 4.0, a company dedicated to increasing casino profits by improving the player experience, and a gaming consultant, sharing his insights for the growth of the industry.
GAMING EMPLOYEES: MAKE YOUR VOICES HEARD IN THE PRESIDENTIAL RACE Inform candidates that gaming is a valued community partner in 40 states delivering benefits that include:
1.7 MILLION JOBS
$240 BILLION IN ECONOMIC IMPACT
$38 BILLION IN TAX REVENUES
A PATH TO THE MIDDLE CLASS FOR WORKERS OF ALL BACKGROUNDS & EXPERIENCES
GET INVOLVED Join the American Gaming Association as we hold on-the-ground events in key states. Tell candidates to meet you and your co-workers and learn more about the industry. Visit gamingvotes.org and register to vote. Use #GamingVotes to get candidates’ attention on social media and let them know you’re paying attention to them.
WITH YOUR ENGAGEMENT, CANDIDATES WILL GET TO KNOW GAMING IN 2016. Learn more at www.gamingvotes.org and www.americangaming.org
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Strange Bedfellows Poarch Band and Attorney General make an interesting team in Alabama By Dave Palermo
ngoing efforts by the Poarch Band of Creek Indians of Alabama to wrest a gambling compact from Governor Robert Bentley and the state legislature do not appear to have much support, despite the tribe’s offer to help resolve a looming
budget deficit. “We don’t see gaming being a huge issue this year,” Robbie McGhee, tribal councilman and government relations advisor, says of the current legislative session. But the odds may improve in 2018, and the impetus for change could come from Alabama’s top law enforcement officer—a man who has spent several years waging an expensive, albeit futile, legal battle to shutter the tribe’s three casinos. Republican Attorney General Luther Strange, whose legal war against the band ended with a 2015 federal court ruling, is already being touted as the party’s gubernatorial candidate in 2018. Sources contend the Poarch Band has agreed to contribute millions of dollars to the effort. “It’s definitely a more amenable relationship,” McGhee says. The Poarch Band is an anomaly in the nation’s $28.5 billion Indian casino industry in that it has thrived despite lacking a tribal-state regulatory agreement, which would allow the band to operate what regulators classify as Class III, casino-style slot machines and table games such as blackjack, roulette and baccarat.
“Alabama has problems our tribe wants to help fix, once and for all.” —Stephanie Bryan, Poarch Band Chairwoman
Global Gaming Business APRIL 2016
Instead, Alabama’s only federally recognized tribe owns three casino resorts equipped with 6,000 Class II, bingo-style devices which, under federal law, do not require tribal-state compacts and are not subject to state regulations. There are 425 Indian casinos in 28 states, but only 12 states are limited to Class II machines. The devices are not as lucrative as Class III machines, but recent technological improvements—and being in a non-competitive environment such as Alabama—mean they can be wildly profitable.
Stepping Up in Class The Poarch Band has certainly been successful with Class II gambling. The tribe in December opened a $65 million hotel and restaurant expansion to its Wind Creek Montgomery casino. That project followed the unveiling earlier in 2015 of a $246 million hotel and casino expansion to the band’s Wind Creek Wetumpka facility. The band operates a third hotel-casino in Atmore. “We’re making money hand-over-fist,” says Eddie Tullis, a tribal chairman for some 27 years who now serves as the band’s treasurer. Tribal governments do not normally disclose the profitability of their business enterprises. But the Poarch Band prior to the recent expansion projects was reportedly generating well in excess of $600 million a year. Nevertheless, Poarch Creek would welcome a compact that would guarGovernor Robert Bentley doesn’t believe gaming payments from the Poarch Band are a long-term solution to the fiscal problems of Alabama
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The Wind Creek casino in Atmore is the Poarch Band’s flagship property
“We’re making money hand-over-fist.” —Eddie Tullis, Treasurer and former Chairman, Poarch Band
Alabama Senate President Del Marsh
antee Class III gaming and future statewide exclusivity to operate casinos. Legislators have threatened to legalize slot machines at three parimutuel greyhound tracks—two of which currently offer live racing—creating competition for the tribal casinos. The band also would like to appease customers seeking table games and Las Vegas-style slot machines. But efforts to negotiate a compact have been rebuffed by Governor Robert Bentley. Bentley is not an anti-gambling zealot, as was the case with his predecessor, Bob Riley. But Bentley doesn’t regard Poarch Creek’s willingness to share casino revenues as a long-term solution to alleviate a budget deficit approaching $500 million. The band has offered a $250 million up-front payment and an annual share of casino revenues to help with state finances. “Alabama has problems our tribe wants to help fix, once and for all,” says tribal Chairwoman Stephanie Bryan. “We know what it’s like not to have enough when you need it,” she says of the tribe’s impoverished history prior to launching a high-stakes bingo hall in 1983. Bentley is not impressed with the offer. “Gambling is not going to solve this problem,” he said in an April speech. “It does not create enough money.” Bentley advocates raising cigarette and automobile sales tax from 2 percent to 3 percent, a move he says would generate some $541 million a year. “The way I have designed it, this would solve the problem for years to come,” he says. Bentley may be averse to gambling as a means of balancing the budget, but legislators have in the past two years been floating bills to legalize lotteries and slot machines at the state’s three dog tracks. They have also discussed entering into a tribal-state compact with Poarch Creek. None of the legislation has succeeded. There are two gambling bills pending this session in the Senate Committee on Tourism and Marketing, one mentioning a tribal-state compact with the Poarch Band. But neither is expected to generate the needed support for a floor vote. “People don’t mind gambling. They pack the casinos,” says a tribal member who requested anonymity. “But legislators use the fact this is the Bible Belt as an excuse to be moralistic about the issue.” Republican Senate President Pro Tem Del Marsh introduced a gambling bill last year, which called for a lottery and commercial casinos while suggesting
the government negotiate a compact with Poarch Creek. But the band would not view a bill with no statewide monopoly for the tribe as an attractive opportunity. “At this point, the legislature is more comfortable with a lottery,” says Will Caliss, Marsh’s communications director. “I don’t know that it translates to a majority of members. But at this point they’re more comfortable with a lottery as opposed to Class III gaming. “Senator Marsh feels that giving a monopoly to Poarch Creek would be a mistake. If you open up gaming to the tracks, the economic impact would be much greater with the job creation, in part through the development of hotels that would accompany the gambling.”
Change With Strange When Bentley and Strange took office in 2000, state lawmakers were trying to come to grips not only with tribal casinos, but an unregulated commercial bingo machine industry centered at VictoryLand, a Macon County casino and dog track. The track casino, operated by politically influential entrepreneur Milton McGregor, was shut down in a 2013 raid in which state agents seized 1,615 slot machines and $263,105 in cash. Legal efforts to reopen the facility are pending before the state Supreme Court, complicated by a Bentley executive order in January delegating gambling enforcement to local jurisdictions. McGregor’s track casino has a lot of supporters, including Macon County Sheriff Andre Brunson. “Enough is enough. We’ve been putting up with this for far too long, and we’re tired of being mistreated here in Macon County,” Brunson told the Associated Press. “The people in this county voted for electronic bingo. It’s legal here. We are suffering without that casino being open, with so many people in this county out of work. “We are going to stand our ground here in Macon. I have every intention of protecting the rights and wellbeing of this county’s citizens. I’m not threatening anybody when I say this, but whatever we have to do, that’s what we’ll do.” Meanwhile, Strange’s efforts to close the Poarch Creek casinos apparently APRIL 2016 www.ggbmagazine.com
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“While I do not agree with the appeals court’s decision, it provides certainty and guidance to state officials where there was none before.” —Luther Strange, Alabama Attorney General, on his battle to shut down Poarch Band casino
VictoryLand, the Macon County dog track and casino, has been shuttered since 2013 and remains closed due to legal wrangling with Attorney General Strange
ended last year, when the 11th Circuit Court of Appeals upheld a 2014 lower court ruling that the band enjoyed sovereign immunity from lawsuits. “While I do not agree with the appeals court’s decision, it provides certainty and guidance to state officials where there was none before,” Strange said in a statement. Strange in the wake of the ruling is claiming “no harm, no foul” with the Poarch Band. He contends he has no bias against gambling or tribal governments. In assuming office, Strange said Bentley dissolved a governor’s task force on illegal gambling and dropped the issue in his lap. “When I came into office there was a lot of strife and turmoil around that issue,” he said in an interview last year. Strange said he had an obligation as the state’s chief law enforcement officer to press the matter with the federal courts. “Let everybody litigate their case and we’ll all live by the court’s decision and move on,” he said. “If the courts say they have the right to do that,” Strange said of Poarch Creek, “that’s the final determination of the issue.” The band is apparently willing to accept Strange’s explanation that he harbors no bias against gambling or the tribe. “I think when it comes to the 11th Circuit he was just bringing finality to the issue,” McGhee says of the potential candidate.
nomic base and our members,” McGhee says of the tribe’s 3,055 citizens. A tribal-state compact and Class III gambling would likely increase casino profits. But a compact also would require the band to pay a share of the revenues to the state, along with license and regulatory fees. Table games would be a welcome amenity to the Poarch Creek casinos, but they are also labor-intensive and would likely not generate the revenue per square foot of slot machines. Table games normally generate less than 10 percent of a tribal casino’s revenue. “As far as table games, I’m sure there’s a market for those,” says a Poarch Creek official who requested anonymity. “But it’s not a market that is going to generate significant upside for us.” “It’s not that important. We have a successful model with Class II gaming,” McGhee says of Class III gaming. “Of course, if we could bring something like that to entertain our guests, that would be nice. But it’s not necessary.”
The band has a plethora of investments and non-gaming economic development ventures, including motels, travel plazas, agricultural and cattle operations and a technology firm. Poarch Creek gaming operations extend beyond the three Alabama casinos to northern Florida, where it operates a poker room and equestrian center in Gretna and a greyhound track and poker room in Pensacola. The band has been seeking a compact with Governor Rick Scott to install slot machines at the two locations, but talks are on hold pending court rulings and tribal-state compact negotiations with the Seminole Tribe of Florida. FloridaPolitics.com reported that Bryan offered to forgo Class III gambling in Florida if the band was allowed to install Class II machines at the Gretna facility in exchange for $1 billion over five years. The website said Bryan in a 2014 letter to Scott also agreed to surrender four of eight parimutuel permits the band controls along Interstate 10. She also promised to build a $200 million facility and acquire 30 nearby acres for parking. “We believe that our proposal provides an approach to address multiple gaming-related concerns that affect the state,” FloridaPolitics quotes the letter as saying. “Provided that suitable consideration can be agreed to, the expansion of Class III gaming will not occur, and in fact our proposal to ‘give up’ four of our permits reflects a reduction of gaming.” McGhee declined to comment. Poarch Creek has also explored casino acquisitions along the Gulf Coast, particularly in Biloxi, Mississippi. “The tribe is always looking at opportunities that would benefit our eco-
The notion of a tribal-state compact has been broached with a number of recent governors, McGhee says. But it has been done cautiously. “If the governor ever wants to reach out, we’re more than welcome to talk with him,” McGhee says. “But it’s not absolutely necessary. We’re happy with the status quo.” It appears legislators may be more comfortable cutting a deal with the Poarch Band than allowing commercial ventures at dog tracks and other locations in the state. “I think there’s more support for a compact,” McGhee says. “I think the legislature understands now. When that Circuit Court decision game down, the legislature just thought, ‘The tribe is already here. It’s legal. How can we work with them?’” While the band would not greatly benefit from Class III gambling, a compact would guarantee long-term casino exclusivity. There was a time when speculation about a tribal-state compact also included the possibility of a fourth Wind Creek casino in the lucrative Birmingham market. But McGhee downplays that chatter. “We’re not talking about expanded gambling,” he says. “We’re not saying the talk of a fourth site won’t come up again. But now is not the time. Let’s give it a break. “The concern we have is protecting what we have,” McGhee says. “If additional gaming does come to the state, we think there’s a better way to do it than just putting it at the tracks.”
Global Gaming Business APRIL 2016
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FRANKLY SPEAKING by Frank Legato
Drugs and Space Men
saw a TV commercial the other day that I found relevant to our fine industry. It was during a hockey game (my Pittsburgh Penguins annihilated the Devils, for all my Jersey-bred colleagues), and, as with a lot of sporting events these days, the commercials targeted middle-aged-to-old men in easy chairs, like me. Not surprisingly, the pharmaceutical industry invariably uses these time slots to reach people in various states of age-induced decrepitude, by identifying ailments we are likely to have and telling us to ask our doctors for their latest drug. Cue ethereal, new-agey music… “You’re the best you’ve ever been.” Fade to two elderly people dancing, possibly the jitterbug… which is weird, since it’s still new-agey music… “But don’t let fibromyopic dissitopia slow you down. Ask your doctor for Fabrezia.” These commercials are designed, of course, to instill fear. “Gee, honey, do you think I have fibromyopic dissitopia? And here I just got over the heartbreak of psoriasis.” They also always have that fast-talking murmur of a voice-over disclaimer at the end, telling you all the possible side effects: “Side effects may include nausea, excessive gas, festering boils, loss of two or more limbs, bleeding eyeballs, yellow fever, monkey pox and death… If you experience suicidal tendencies, stop taking Fabrezia immediately and find a ledge on a tall building…” No, actually, if you experience suicidal tendencies, you can take the drug I saw advertised the other day. Since I’m all about avoiding litigation, let’s call it “Tranquility.” It was originally developed to treat schizophrenia, but the drug company found there were just not enough crazy people in the world for it to turn a profit, so it became a recommended drug for severe depression. What got me about Tranquility, though, were the possible side effects. As confirmed by drugwatch.com, Tranquility’s possible side effects include “suicidal thoughts, sexual dysfunction and compulsive gambling.” Say what? Never mind that these three things are often side effects of each other. I’ve never heard of a drug that makes you want to gamble. To think casinos have wasted all this time doing it with free booze. They could have just set up a Tranquility stand in the lobby. Cue ethereal, new-agey music… “Are you one of the millions of mature people struggling with depression?” Break into Dixieland jazz track… “Take Tranquility, and roll ‘dem bones!” “Possible side effects include 5X odds, liberal comps and Yo 11! Oh, and suicidal thoughts, sexual dysfunction and compulsive gambling…” Turning to the gaming news, I found out… Wait. I should do a disclaimer of my own. The previous bit was intended as pure satire and stupid comedy only. There is certainly 60
Global Gaming Business APRIL 2016
nothing funny about compulsive gambling, and this industry does all it can to prevent it, and there is no way any casino operator would set up a Tranquility stand in the hotel lobby. Hey, we’re the official publication of the AGA, you know? Anyway, I just found out, on the day I’m writing this, that it’s National Pancake Day. The reason this struck me is that the Tropicana in Atlantic City held its “Bacon Week” two months ago. Can’t the pancake and bacon people coordinate this? I love pancakes and bacon. Well, it doesn’t always have to be burning industry issues in this space, does it? OK, gaming news. The Maryland Live! casino is offering a promotion like I never saw: “Win a Trip to Space.” Players wagering on the slots with their cards earn entries to a sweepstakes giving away $400,000 in cash and prizes, including four free trips to outer space. Neither the article I read on this promotion nor the casino’s website identifies just who is going to provide the space rocket, starship or whatever kind of vehicle will be used on these trips. For all I know, the winners could be shot out of cannons. But yes, there are private enterprises now that actually will put you on a vehicle and shoot you into space. It doesn’t say what your destination is. I hope they don’t just send you adrift. Legendary former Astronaut Buzz Aldrin—“The Second Man to Walk On The Moon”—was on hand at the casino to promote the contest. (I wish I had been there. I always wanted to ask Buzz whether Neil Armstrong just stepped in front of him at the last minute to get out the door of the lunar module first.) No disclaimer yet on the casino website. I would suggest the following: Possible side effects of space travel include nausea, vertigo, heads exploding from the pressure of space, freezing to death, alien abduction… and suicidal thoughts, sexual dysfunction and compulsive gambling.
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NEW GAME REVIEW by Frank Legato
El Toro Wild
Ainsworth Game Technology
his new four-level progressive video slot features a unique two-level free-spin event in which wild symbols and wild reels increase. The base game is available in 30-line, 40-line and 50line versions, with a recommended penny denomination. The progressives are won through various five-of-a-kind line results. The bottom four five-of-a-kind jackpots are static amounts, and the top four are progressives. Max bet is required to qualify for all the static and progressive five-of-akind jackpots. The four progressives are returned for natural five-of-akinds—no wild symbols—and maximum bet. The top progressive, attainable through one of two five-symbol combinations, resets at $2,500. The free-game feature includes a line combination that triggers a second, higher-level free-spin bonus. Three or more scattered “Bull” symbols trigger eight free games. During the free spins, the “El Toro Wild” symbol appears only on the second and fourth reels. Any symbols on those reels that are marked with a miniature “El Toro Wild” become wild symbols. A “Wild Multiplier” symbol appears on the third reel in the free games, substituting for all non-
scatter symbols. Three or more scattered Bull symbols during the feature trigger an additional five free games and enact the “El Toro Wild Bull” feature. Once this feature is enacted, all remaining free games are played with enhanced wild-symbol features. The Bull symbol does not appear during the feature, but El Toro Wild substitutes for all symbols except Wild Multiplier. The latter symbol appears on the third reel, and substitutes for all symbols. El Toro Wild appears on all but the third reel, and transforms all symbols on those reels into El Toro Wild. Manufacturer: Ainsworth Game Technology Platform: A560 SL Format: Five-reel, 30-line, 40-line or 50-line video slot Denomination: .01-10.00 (.01 recommended) Max Bet: 150, 200, 250 Top Award: Progressive; $2,500 reset Hit Frequency: Approximately 50% Theoretical Hold: 4%-15%
Fortune Stacks Konami Gaming
his colorful new Asian-themed game uses Konami’s new Concerto cabinet to full effect, with elegant artwork and a game featuring wild symbols, stacked symbols and multipliers. The base game is available in configurations of 10, 15, 20, 25, 30 or 40 paylines, and available denominations ranging from pennies to $5. The primary game features a wild symbol on any of the middle reels that substitutes for all other symbols except bonus triggers. Three, four or five “Ingot” symbols trigger five, 15 or 30 free games, respectively. Two, three, four or five of the symbols on a free spin award an additional three, five, 15 or 30 free games. The free games also include a special multiplier feature when Action Stacked Symbols appear on the first two reels. Action Stacked Symbols are clusters of one symbol, usually covering a reel completely. At the start of e very free spin in Fortune Stacks, Action Stacked Symbols on one or two reels will be upgraded with multipliers of 2X, 3X or 5X. The random multiplier will apply to all Action Stacked Symbols on that reel. If two Action Stacked Symbols with a multiplier contribute to a line win, the multipliers are multiplied by each other. For instance if a win is formed using a 3X and a 5X symbol, the line pay is multiplied by 15. 62
Global Gaming Business APRIL 2016
All wild symbols are stacked during the free games. The Concerto cabinet features dual 27inch high-definition touch screen monitors, a 19.5-inch video topper, signature holographic side lighting and Konami’s proprietary DynamicDash button panel. Manufacturer: Konami Gaming Platform: KP3+ Format: Five-reel, multi-line video slot (10, 15, 20, 25, 30 or 40 paylines) Denomination: .01-5.00 Max Bet: 200 Top Award: 7,500 times line bet Hit Frequency: 31% Theoretical Hold: 4%-18%
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Jackpot Lure Scientific Games
his new video slot from Scientific Games’ Bally Technologies group comes in a two-machine setup, with twin machines in the Bally Pro Wave slant-top cabinet in front of a single giant LCD screen for bonuses. The Pro Wave slant-top—featuring a 40-inch monitor curved in concave shape toward the player—is used here for an interactive bonus event that can lead to one of four progressive jackpots. The base game is a five-reel, 30-line video slot with a 500-credit maximum bet. The fishing theme is created with the reels floating under the surface of a lake on the large screen. The base game features two separate mystery features. In the Credit Multiplier Feature, a fish randomly swims across the reels to multiply wins from 2X to 5X. This occurs quite frequently—every six plays, according to the manufacturer. The base game also features Mystery Stacked Reels. Before each basegame spin, each reel has mystery symbol positions that are randomly replaced by two or three symbols to create five-of-a-kind wins. There are two main bonus events, both using the Pro Wave format to offer an interactive experience to the player. The main event is the Fishing Bonus. Triggered by scattered symbols on the first, third and fifth reels, the screen transforms into a map, on which the player selects one of three “Fishing Spots.” The player then swipes a finger on the screen to “cast” a fishing lure to reel in a fish to reveal credits or one of the four progressive jackpots. The top green fish returns the top progressive, which resets at 1 million credits, times the line bet times the denomination. At the maximum 500-credit bet on the penny version, that’s a $100,000 reset.
The other bonus event is a free-spin event that kicks off with a picking bonus. Free Games symbols scattered on the three middle reels transform the screen to a scene of floating life preservers. The player picks life preservers until matching three free-spin totals, for seven, 10, 15 or 20 free games. Manufacturer: Scientific Games Platform: Alpha 2 Pro Wave Format: Five-reel, 30-line video slot Denomination: .01-.001 Max Bet: 500 Top Award: Progressive; resets at 1,000,000 credits times line bet times denomination Hit Frequency: 31.75% Theoretical Hold: 3.88%14.71%
International Game Technology
his new game on IGT’s premium CrystalDual cabinet is replete with colorful symbols reflecting its Chinese theme, and a special nod to the number 99, considered lucky in Chinese tradition. (Actually, any combination of the number 9 is lucky in China.) The base game is part of IGT’s popular MultiWay series of video slots with scatter-pay formats—no paylines, with wins generated by adjacent symbols. The five-by-three reel setup in this configuration offers 243 possible ways to win on every spin. Developed for high-volatility game play, the base game includes a mystery bonus feature that can lead to one of four progressive jackpots. Consistent with the name of the game, the bonus is randomly triggered after any win of 99 credits or more. Randomly on a qualifying win, the screen will switch to a field of symbols, which reveal credit amounts or one of the four progressives. Picking matching progressive symbols at max bet can return jackpots ranging from a Mini resetting at $20 to the Grand, resetting at $9,000 (in the recommended penny version). There also is a free-spin bonus on a special set of reels on which
all minor-paying symbols have been removed, creating better odds of large line jackpots and for triggering the progressive picking bonus. Manufacturer: International Game Technology Platform: CrystalDual Format: Five-reel, 243-ways-to-win video slot Denomination: .01 (recommended; others available) Max Bet: 600 Top Award: Progressive; resets at 900,000 credits times denomination Hit Frequency: 29% Theoretical Hold: 4%-9.5%
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EMERGING LEADERS Poker Playing Prof Brett Abarbanel, Ph.D. Head of Social and Recreational Gaming Research, Univerity of California, Los Angeles s head of social and recreational gaming research at University of California, Los Angeles, Brett Abarbanel enjoys the flexible lifestyle that comes with a career in academia. The best part of her job is the ability to share her research through speaking engagements at international conferences and seminars on gaming—though she often finds herself convincing others that not all gaming research focuses on problem gambling. “I always aim to be relevant in the industry,” says Abarbanel. A longtime poker enthusiast, Abarbanel’s primary in“I always aim to terest has been on the social aspects of gaming, specifically the user experience for both live and online gambling. In be relevant in the fact, as part of her early research, she played in the World Seindustry.” ries of Poker to document gender disparities in gambling for her paper titled “Chicks with Decks: The Female Lived Experience in Poker.” Abarbanel grew up on the California coast in Del Mar, where one-quarter of the small city is home to the historic thoroughbred racetrack that bears its name. During the summer months, she worked at the fairgrounds, where her interest and skills in poker began to take shape. Her talents took her to Brown University, where she earned the coveted Hartshorn Hypatia Award in Mathematics before completing her a degree in statistics. In a decisive move, Abarbanel left the East Coast for Las Vegas to pursue a career in gaming. She reached out to Bo Bernhard, then director of research at the UNLV International Gaming Institute, regarding a research position. She landed the job, and while under his guidance, completed her M.S. and Ph.D. in hospitality administration. “I would not be where I am today had it not been for him,” she says. “Finding the right mentor is huge.” For her, it changed everything. Three years ago, Abarbanel met Richard Schuetz while attending a meeting of the California Gaming Control Commission. Though they no longer have their monthly meeting, as he is now the executive director for the Bermuda Casino Gaming Commission, she continues to credit him with improving her research. The mentorship provided exposure to the regulatory side of gaming, ultimately expanding her framework to consider policy implications as part of any new research project. Aside from the ongoing challenge of funding her own research, Abarbanel spends a majority of her time in service to others. Her connections in the global gaming industry have allowed her to recruit recent post-doc graduates into academic positions worldwide. She also serves on the Thesis Committee at UC Berkley, where she mentors graduate students pursuing their own research. Abarbanel challenges her graduates and other young professionals, believing that above all else, “you must be confident,” and “know what you’re capable of.” She sees a unique opportunity arising for the next generation of emerging leaders in gaming, believing that the industry currently “lacks a millennial perspective into the user experience.” Her advice to those up for the challenge: “Network as much as possible and understand the games.” —Jacqueline von Zwehl
Global Gaming Business APRIL 2016
Luck and Hard Work Dan Shapiro Director of Business Development, William Hill US peed, excitement and gambling were all aspects that drew Dan Shapiro to the horse racing industry years ago when he was a teenager. However, as exciting as the gambling aspect was, he also really enjoyed the sport. Shapiro used to attend races in New York with this father, who would give him $20 to make $2 show bets. Before he knew it, he was hooked. In high school, he was an avid reader of the Daily Racing Form and started attending races on his own. Then in college, he landed an internship at Suffolk Downs in Boston, which signaled the start of his career in the gaming industry. Since then, Shapiro has worked with nearly a half dozen different companies in several different capacities, all related to horse racing. In late 2007, he left a job at Youbet.com and joined his mentor at Brandywine Bookmaking LLC in Las Vegas, where he spent nearly five years as the director of marketing until the company, a pure startup, was acquired by British bookmaking giant William Hill in 2012. In his current position as director of business development, Shapiro has been a key part of the growth of William Hill US, which has become the leading sports betting company in the U.S. Shapiro says one of the largest and most difficult decisions in his professional career was to move to Las Vegas and help with Brandywine Bookmaking, which operated Lucky’s Race & Sports Books. At that point, he considered himself a “horse-racing guy,” and did not have much experience in other industries. It was a steep learning curve, and he credits his mentor, William Hill US CEO Joe Asher, as the leading voice in “guiding me out of horse racing and into the broader gaming industry.” Asher was the one who convinced Shapiro to move to Las Vegas, but they had known each other before they started working together. Several years prior they both were at a conference in Kentucky, and bad weather in New York delayed each of their travel plans,
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Starting Up Danielle Parsons Director of Field Operations, Joingo anielle Parsons, director of field operations at mobile marketing and technology company Joingo, never imagined she would find herself here. “Early on, I knew I wanted to work in the technology, online and/or digital space, but had a difficult time settling within an industry and finding a niche,” says Parsons. As a graduate of Lake Forest College in Lake Forest, Illinois, Parson earned her B.A. in communications and held positions with an affiliate network, a direct marketing firm, a publisher and an insurance company before finding her niche and landing at Joingo. “I had no idea that I’d eventually find myself in the casino gaming industry, but I’m very pleased I did,” she says. “It’s an industry that is quickly increasing its adoption of cutting-edge technology, and I’m excited to be part of that.” Parsons also credits her mentors as making a significant contribution to her early career success. She mentions former Joingo VP Brenda Boudreaux as one of the “remarkable people” who’ve helped her along the way. “I had the pleasure of working with her at Joingo from 2012 to 2014,” Parsons says. “I very much look up to her as a mentor and example of the kind of success I’d like to achieve in my career.” Parsons acknowledges that she’s been able to learn and penetrate this close-knit industry within a short period of time. She’s made quite a few connections and has learned the ins and outs since entering gaming almost five years ago. Although Parsons acknowledges a bit of culture shock when she first transitioned from a Fortune 500 company to a small technology startup, in retrospect she feels this was the perfect career move. She thrives in a small environment, and enjoys making a real positive change within the organization. Parsons also is very excited about the future of the industry. When asked about trends and new opportunities for emerging leaders, Parsons says, “The industry is buzzing with
“Never miss an opportunity to spend time with senior management so you can try to understand the big picture.” leading them to get to know each other. Instead of waiting at the airport, they went over to Keeneland Racecourse. Later down the road, Asher made the call for Shapiro to join him at Brandywine. Success has not been easy, and Shapiro worked extremely hard to get where he is today. Being detail-oriented, learning to communicate well and always working toward the proverbial big picture were the key traits he believes have led to his success. Shapiro also is working on his MBA at UCLA, and will graduate in June. Through his years in the gaming industry, Shapiro has gathered knowledge from colleagues and upper management, and one piece of advice he can offer to young professionals in the gaming industry is to “always learn and strive to develop your skills. Never miss an opportunity to spend time with senior management so you can try to understand the big picture.” It’s advice he thrives on, and continues to follow on a daily basis. —Chris Irwin, The Innovation Group
“I think this is a great opportunity for emerging Gen-X and millennial leaders to revolutionize the industry and really help shape the future of gaming with ideas directly from the source.”
talk of how to capture millennials as current casino customers inevitably age and exit the market,” she says. “I think this is a great opportunity for emerging Gen-X and millennial leaders to revolutionize the industry and really help shape the future of gaming with ideas directly from the source.” Parsons has great advice to offer other young professionals to move up the corporate ladder: “Recognize your own value. Don’t be afraid to speak highly of your education, experience and achievements and market yourself accordingly. Also, don’t remain in a position you don’t enjoy, that you aren’t challenged by, or in an organization that doesn’t recognize your contributions. Confidence is key!” —Jacqueline von Zwehl
APRIL 2016 www.ggbmagazine.com
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If At First You Don’t Succeed… What do Viagra and shufflers have in common?
ack in the late 1980s and early 1990s (an era today’s historians commonly refer to as “Hammer Time”), the big pharmaceutical company Pfizer was testing medications that accelerated blood flow to the most important organ in the human body. Well, OK. Second-most. The object of Pfizer’s fixation? Angina, a heart condition so painful it felt like a python was using your chest as a squeeze toy while an elephant was using it as a seat cushion. The true culprit was actually circulation, or more aptly, a lack thereof. After considerable time and expense, Pfizer’s scientists fleshed out a big, albeit unexpected, breakthrough. Circulation on test subjects—half of them, anyway— had improved; however, the improvement was localized to one particular area. And it wasn’t the heart. Pfizer had inadvertently invented sildenafil citrate, better known as Viagra. Big Blue. Vitamin V. The Tentmaker. There were probably more than a few giggles in the focus group that day, but it’s doubtful anyone is laughing now. Viagra has generated billions of dollars in revenue, and it has made life infinitely and intimately more satisfying for millions of men (and presumably the same number of women). Chance, serendipity, and good, old-fashioned dumb luck are always discreet variables in the formula for success. Just ask the biologist who left his dirty dishes in the sink only to discover penicillin, or the engineer who installed the wrong battery in his heart-monitoring device only to create the pacemaker, or the casino supplier that designed a card shuffler for blackjack only to revolutionize poker. Indeed, the table games industry had a Viagra moment in 2003, when Shuffle Master unveiled its new single- and double-deck shuffler, the DeckMate. Single-deck 6-to-5 blackjack was becoming all the rage, especially on the Las Vegas Strip, as gamblers were either ignorant or indifferent to the fact that 6 to 5
Global Gaming Business APRIL 2016
By Roger Snow
is a hell of a lot less than 3 to 2. Players accepted it. Casinos embraced it. And before long, it was everywhere. And Shuffle Master was there, too, locked and loaded with the DeckMate. This new machine could mix a pack of cards in 45 seconds, fast enough to accommodate any hand-pitched game. The company was now living the ultimate business fantasy, a perfect storm of right place and right time. It was as if you were a surfer, waiting and paddling, paddling and waiting for that monster wave, and suddenly there it was—right behind you!—big and blue and breaking, and ready to take you on the ride of your life. Except that it didn’t. The same blackjack players who acquiesced to a quadrupled house advantage drew the line when it came to shufflers. They balked, and the casinos bailed. It was a devastating setback. After years of planning and months of tooling and weeks of selling, it seemed that nobody—OK, almost nobody— wanted the DeckMate. But a funny thing happened on the way to everyone getting fired. One of Shuffle Master’s salespeople showed the machine to a card room in Los Angeles, and the suggestion was floated to try it on a poker table. Faced with a dearth of options and a glut of inventory, the answer to the question, “Why?” ended up being, “Why not?” The rest, as they say, is history. It turned out the DeckMate, born and bred for blackjack, was blessed with the ideal genetic makeup for poker. The game was faster and more secure. And talk about timing: This was right after ESPN televised the World Series of Poker, which Chris Moneymaker won, which made him a millionaire, which made him a celebrity, which made Texas Hold ‘em a national phenomenon. The poker bandwagon was running on nitrous oxide, and the DeckMate was sitting shotgun. And in the end, this failure, this flop, this market misfire became one of the most success-
ful casino products of all time. Nine thousand installs. Used on every continent that has casinos (sorry, Antarctica). Changed poker forever. The point to all this is there are two points. First, accidents happen. You try to cure angina but instead cure erectile dysfunction. You try to read the human heartbeat but instead regulate it. You try to build the perfect blackjack shuffler but instead do it for poker. John Lennon once said, “Life is what happens when you are busy making other plans.” Occasionally, innovation is what happens when you are busy making other things. Keep experimenting. Keep trying. Keep tinkering. It’s like a 10-year-old at one of those fancy new soda machines. Sure, a concoction of Coca-Cola, Orange Fanta, Squirt, Sprite, Fresca and Diet Dr. Pepper will probably taste like cold, sugary dishwater, but hey, maybe it won’t. No try, no success. Second, you’ve got to keep it real. Don’t rationalize. Don’t sugarcoat. The best laid plans of mice and mine often go awry. Big whoop. Call an audible. Change those plans, be they man-made or rodent. And hey, you know what? Admitting defeat in a battle can be the first step towards securing victory in the war. Hindsight is 20/20, while foresight has cataracts and a detached retina. The true visionary genius of Pfizer or anyone that capitalizes on unintended innovation is recognizing what went right inside what went wrong. Break an egg? Make an omelet. Stuck with lemons? Make lemonade. Knock over a spring designed to keep instruments upright on ships? Make the Slinky. (True story.) And above all else, when it comes to predictions, forecasts, theories, expectations and hypotheses, always write them in pencil, not pen. Much easier to erase that way. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates.
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CUTTING EDGE by Frank Legato
Visualization Solution Product: NanoSlim Engage Manufacturer: NanoLumens
anoLumens, the industry-leading manufacturer and marketer of visualization solutions, has introduced its next-generation NanoSlim Engage 1.8mm display solution for gaming environments. Creating customer impact amid the numerous distractions in a typical casino environment requires an innovative approach and flawless execution. NanoLumens’ NanoSlim Engage 1.8mm creates the unexpected, dazzling visual casinos need to capture attention within the busiest environment. The NanoSlim Engage visualization solution is the first LED display that can be front-installed and front-serviced. Designed to allow owners and managers to engage their audiences up close and personal, the highresolution, large-scale visualization solution is designed to serve as the ideal display solution for the casino floor, race and sports book, bingo rooms and other areas where clear and up-close viewing is required. The NanoSlim Engage is a great step forward for gaming engineers and integrators who are demanding an easy-to-install and easy-to-service 1.8mm pixel pitch solution that can be viewed with spectacular edge-toedge clarity from very short distances. Like all NanoLumens solutions, the NanoSlim Engage 1.8mm LED
solution can be created in any shape, fitting into any architecture, so a casino doesn’t have to make big changes just to add a digital display. Backed by an unprecedented corner-to-corner six-year warranty, NanoLumens NanoSlim Engage 1.8mm displays are extremely slim, ultralightweight and energy efficient, featuring a bright, seamless, high-resolution picture quality that can be viewed from any angle throughout the display horizon without color shift or image distortion. All NanoLumens displays accept input from nearly any device or content management system. There is no need for special software, hardware or special personnel to display content beautifully. With a profile of only a few inches, NanoSlim displays can be installed on virtually any surface without being obtrusive, adding the “wow” factor to any environment without taking up precious space. The NanoSlim Engage is also available in a 2.5mm pixel pitch model. For more information, visit NanoLumens.com.
Table Ticketing Product: TITA Manufacturer: CountR Cash Systems
ountR Cash Systems, a leader in casino kiosk products worldwide, has released its most recent innovative technology, named Tickets at the Table, or TITA. After several years of refinement with assistance and input from commercial and tribal casinos, the product has evolved to have the flexibility to meet the needs of casinos that have one or 100 table games. At the simplest configuration level, TITA is able to track incoming cash and TITO tickets. At the conclusion of play, the dealer counts the customer’s chips, and rather than needing to “color up” chips, just input the amount, and a TITO ticket is presented to the dealer to give to the customer. TITA also has the ability to track win/loss for each table, as well as the table game floor and products reports that benefit and increase the accuracy of the table count and reconciliation. Chip inventory (opener, fills, adjustments and ending inventory) can quickly be input via a pad for each table, resulting in perfectly reconciling the day’s business. Supervisors are alerted to transactions that require their approval, and with one touch on the pad, can approve one in less than a second. This allows the casino to have an audit trail of each table, operator, pit and floor. It also greatly increases hands per hour and allows supervisors more time to address the needs of their customers and dealers. When a bunch note acceptor is added in place of the drop box, acceptance of up to 30 pieces of currency or tickets is automatically transferred to the
Global Gaming Business APRIL 2016
table totals. Counterfeit bills are rejected, and there is a ticket printed at the end of the dealer’s shift, casino shift or day with a report that shows all media in and out. Customers like being given a ticket to cash out at a kiosk, to play slots. Players can also come from slots and the TITA accepts the ticket, the players are issued chips and gaming continues with little slowing of the game. The casino has a quick return on its investment, fills are reduced, the cage can engage customers to increase business, player cross play is encouraged and marketing has a new tool to attract players. For more information, visit countr.de.
GAME-CHANGING INNOVATION. Technologies unveiled. Services and products to be bought. Insight to be gained. Connections to be made. But only one place in the world to find them all together.
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GOODS&SERVICES JACK ENTERTAINMENT PICKS BALLY SYSTEMS, SLOTS cientific Games Corporation announced that Sits former Jack Entertainment, recently rebranded from name Rock Gaming LLC, has chosen a comprehensive suite of solutions from Scientific Games’ Bally Systems division, along with 250 Bally and WMS-branded slot machines, for its Ohio casino properties. Those properties include the two former Horseshoe casinos, Jack Cleveland and Jack Cincinnati, along with the Jack ThistleDown Racino outside of Cleveland. After winning in a competitive bidding and selection process, Scientific Games will provide Jack Entertainment with its latest SDS slot-accounting solution, CMP player-tracking system, TableView real-time table-management solution, and the award-winning iVIEW Display Manager on-device messaging technology across each property’s high-speed networked gaming floors. Jack Entertainment will use the Bally Elite Bonusing Suite applications to offer automated, interactive on-game bonusing, promotions and rewards. The systems conversion project is already
under way, and the Bally systems are slated to be fully installed and deployed at all three properties by June 30. Scientific Games systems will also connect Jack Entertainment’s player-loyalty programs at Jack Cleveland Casino, Jack Cincinnati Casino, Jack ThistleDown Racino and Jack Detroit CasinoHotel Greektown, enabling the operator to offer enhanced player recognition and rewards for patronage at and across all four properties. “We chose Scientific Games because they are the leader in systems innovation,” said Jack Entertainment Chief Executive Officer Matt Cullen. “We look forward to having the enhanced system in place, which will allow us to streamline our processes and operations.”
NEW JERSEY ISSUES RULES FOR SKILL GAMING he New Jersey Division of Gaming Enforcement Tmanufacture has posted temporary regulations to govern the and sale of skill-based gaming devices to the eight casinos of Atlantic City. New Jersey and Nevada are leading in provid-
ing for slot machines with payback percentages that vary according to the skill of the player. It is part of a push, supported by the American Gaming Association, to draw new players into the industry from the vast millennial generation, which is larger than the baby-boom generation now dominant in the New Jersey Division of industry. Gaming Enforcement Millennials like comDirector David Rebuck petition and social interaction, and have shown no interest in the traditional slot machines that now dominate casino floors. Manufacturers and operators have been trying to determine how to offer games similar to the smartphone games like “Candy Crush,” competitive video games and arcade-game experiences to which the younger generation is drawn. Member suppliers of the Association of Gaming Equipment Manufacturers have been working with regulators in both states to determine what form skill games should take. Under the New Jersey regulations announced last month, casinos and manufacturers will be required to prominently display messages informing players that the outcome of their wagers can be in-
RULES OF THE ROAD Gaming Laboratories International hosts another successful North American Regulators Roundtable in Las Vegas aming Laboratories International last month G hosted its 16th annual North American Regulators Roundtable, welcoming over 200 reg-
absorb high-level information from thought leaders and discuss or share ideas about various topics with their peers. The event kicked off with a CEO ulators from 31 jurisdictions across North Amerpanel consisting of Mike Dreitzer, presiica and the Caribbean. This year’s theme, dent-North America, Ainsworth Gaming CEO panel at GLI’s Regulators Roundtable “Strategically Embracing Innovation,” included discussions centering on topics like iGaming and Technology; Seth Schorr, CEO, Fifth Street Gaming; Jerry Allen, CEO, 7 Cedars Refantasy sports. Cheaters and Minimizing Fraud,” which fea“We are honored by the support that our reg- sort; and Derik Mooberry, group chief executive, tured live demonstrations of techniques thieves ulator clients provide for our Regulators Round- gaming, Scientific Games, with GGB Publisher use to gain access to sensitive information and tables,” GLI President & CEO James Maida said. Roger Gros moderating the session. compromise the integrity of a gaming operation; New to this year’s Regulators Roundtable was “GLI is proud to host networking and learning and “What is the Call for Fantasy Sports?,” the event mobile application, accessible to attenopportunities for our guests. Every aspect of our which opened up discussion about daily fantasy 16th annual North American Regulators Round- dees via their smartphones. Regulators were ensports and the legal and policy issues related to couraged to use the application for submitting table was a success—the keynote addresses, the the debate. questions throughout the event, which were anvarious high-level sessions, and the brand new GLI announced that next year’s Regulators swered either during respective sessions or the event mobile application.” Roundtable will be held March 15 and 16, 2017 “What’s On Your Mind? An Interactive Forum,” The annual two-day event, held at Planet at Luxor Las Vegas. GLI will produce the Latin also new to the event. Hollywood Resort & Casino on the Las Vegas American Regulators Roundtable August 24 and Other popular sessions included “Detecting Strip, is a unique opportunity for regulators to 25 in Curacao.
Global Gaming Business APRIL 2016
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fluenced by their physical or mental skills, rather than the pure chance of traditional slot machines. The rules also maintain the 83 percent minimum return-to-player requirement of current New Jersey law—regardless of the skill of the player. Games under this category will offer a theoretical RTP percentage based on chance, and a maximum payback percentage based on the capabilities of the most skilled players. The rules also prohibit casinos from making the games harder or easier to win while a game is in progress, based on the perceived skill of the player. Other rules include monitoring programs to guard against collusion or money laundering in multi-player peer-to-peer games. “This is another important step towards implementing skill-based gaming in the Atlantic City gaming market,” said DGE Director David Rebuck. “Although the division has had the authority to authorize these games for some time and announced in October 2014 an initiative for manufacturers to bring their skill-based games to New Jersey, the industry requested specific regulations to guide their efforts to create innovative skill-based products.” The New Jersey skill rules mirror those adopted last fall by Nevada regulatory authorities, so skill games are likely to be approved in both jurisdictions simultaneously. However, companies that bring their skill-based products to New Jersey before any other jurisdiction will have the additional advantage of the “New Jersey First” law, which provides that gaming products submitted first in the state or simultaneously with other states will be tested, approved and available fore placement within 14 days. “While the division does not currently have any skill-based products in its Technical Services Lab, we are in discussions regarding several products, and hope the clarity provided by these regulations will bring even more submissions in this cuttingedge area that converges traditional casino gaming with the skill-based gaming so popular with millennials,” said Rebuck.
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ARISTOCRAT, VGT SIGN MAJOR DEALS IN OKLAHOMA GT, the Class II game subsidiary of slot-maker V Aristocrat Technologies, announced that Cherokee Nation Entertainment (CNE) has agreed to place VGT games at its nine casinos located across northeast Oklahoma. The parent company also announced a new deal in Oklahoma with the Muscogee (Creek) Nation Gaming Operation, under which the Creek Nation’s 12 casinos will add the Aristocrat Oasis 360 casino management system along with Class II and Class III machines. APRIL 2016 www.ggbmagazine.com
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Under the CNE contract, VGT is supplying Class II games, including new VGT Class II products such as Easy Money Jackpot wide-area progressive, the Red Spin Gambler video series, and the upcoming Client 6 high-entertainment games. The agreement continues a partnership between Cherokee Nation and VGT that dates back to 2002. CNE operates Hard Rock Hotel & Casino Tulsa; eight Cherokee Casinos, including a horseracing track; three hotels; three golf courses and other retail operations. The tribal enterprise employs 4,000 people. “We’ve worked with VGT for more than a decade and look forward to growing our partnership,” said Mark Fulton, chief operating officer of CNE. “As the region’s entertainment leader, we bring our guests the best entertainment experience in the market, and that means bringing them the latest, most enjoyable games in the industry.” In the Creek Nation deal, Aristocrat will install Oasis 360 to replace existing competitor systems at all Creek Nation casino locations, including the new Margaritaville Tulsa, which is scheduled to open later this year. Aristocrat will install its Oasis 360 system solutions suite, including the Oasis HALo suite of products. Additionally, all 12 properties will con-
vert to the Aristocrat one-card solution, allowing Creek players to enjoy all the benefits of their play at any of the Creek casinos. Pat Crofts, CEO of Muscogee (Creek) Nation Casinos, said, “We have enjoyed a strong working relationship with VGT for many years, and we are very much looking forward to benefiting from the combined forces of Aristocrat and VGT, bringing leading games to our players to further enhance their guest experience with us.”
“Illegal sports betting is especially pernicious—and enormous. Americans bet nearly $145 billion illegally on U.S. sports last year. Large-scale criminal enterprises use these funds for human trafficking, drug trafficking and money laundering schemes. We must continue to do all we can to root out this illicit activity.” AGA currently leads the Stop Illegal Gambling-Play it Safe initiative, an alliance with law enforcement leaders and public officials to protect consumers and communities from illicit gambling operations. Last September, a report by Virginia Commonwealth University’s Dr. Jay. S. Albanese detailed the strong ties between illegal gambling and organized crime.
AGA RENEWS COMMITMENT TO BATTLE ILLEGAL GAMING s part of National Consumer Protection Week, A March 6-12, the American Gaming Association underscored its commitment to exposing illegal gambling operations that target and prey upon vulnerable consumers in the United States. “As part of National Consumer Protection Week, we are calling for stronger efforts nationwide to root out illegal gambling in our communities,” said Sara Rayme, AGA senior vice president of public affairs. “Each year, illegal gambling operations prey upon vulnerable Americans, drain law enforcement resources and deprive communities of essential tax dollars for education and public safety programs.
INNOVATION GROUP LAUNCHES NEW WEBSITE he Innovation Group, a leading consultant to Tnounced the gaming and hospitality industries, anthe launch of a new website positioned to reflect the global direction of the company and its expansion into new areas of the gaming industry. According to the company, the site “incorporates new technologies targeting a new generation of leisure and gaming consumers and clients.” The new site is at theinnovationgroup.com.
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PEOPLE STUTZ JOINS GREENBERG TRAURIG
ward-winning business and financial reporter Howard Stutz has joined the global law firm GreenHoward Stutz berg Traurig LLP as strategic development manager for the Las Vegas office and the Global Gaming Group. A reporter with the Las Vegas Review-Journal for more than 11 years, Stutz covered the gaming industry, casino operators, gaming equipment manufacturers and global gaming expansion. Stutz also served as vice president of public relations at two communications firms and was the corporate communications manager at a publicly traded gaming company. Jim Mace, co-managing shareholder of Greenberg Traurig’s Las Vegas office, said, “We are thrilled to welcome Howard to the Las Vegas office. His unique experience within the journalism and communications fields, paired with his knowledge of the gaming industry, will be a valuable asset to the Las Vegas office and our Global Gaming Practice.” Geoff Freeman, president of the American Gaming Association, added, “While few industries rival the competitive nature of gaming, the same cannot be said for the press corps that covers it. Few journalists are dedicated to gaining a deep understanding of a business that’s unlike most, and those who do typically serve a broader business beat. An already-thin bench of gaming reporters has lost its chief justice.”
INNOVATION GROUP NAMES DAVID RITTVO PARTNER
he Innovation Group, one of the world’s leading consultants to the gaming and hospitality industries, announced the promotion of David Rittvo, executive vice president-international, to partner in the firm. Rittvo has been with the David Rittvo firm seven years, serving as director of business development and director of the food and beverage division before taking over the international division. In that capacity, Rittvo led the company’s expansion into Asia over the last several
years and built a team, now led by Senior Associate Michael Zhu, to take that effort forward. As a partner, Rittvo will lead international business development for the company, and become more heavily involved in the Innovation Group’s management and operational efforts.
ITAI FRIEBERGER APPOINTED CEO OF 888 HOLDINGS
tai Frieberger has been appointed CEO of 888 Holdings, taking the post immediately. He was formerly 888’s COO and joined the company’s board last May. Brian Mattingley, executive chairman of 888 since 2015, has been appointed as non-executive chairman. “We are delighted to anItai Frieberger nounce the appointment of a new CEO,” Mattingley said in a press release. “Itai has played a vital part in 888’s success to date and has unique market insight and experience to lead the next chapter in 888’s progress.”
AGS NAMES MEXICO/LATIN AMERICA CHIEF
lot manufacturer AGS has named Drew Pawlak as general manager of Mexico and vice president of Latin America, responsible for leading business development, Drew Pawlak operations and sales efforts in Latin American gaming markets. Pawlak joins the company with extensive experience working alongside gaming operators and regulators in Latin America, a key growth region for AGS’ advancing product portfolio. Most recently, he was senior vice president of business development for BMM Testlabs, where he worked for nearly 12 years and was instrumental in growing the business year over year.
JOSEPH EVE EXPANDS TRIBAL STAFF
oseph Eve CPAs announced a new addition to its growing team of experts in tribal gaming. April Bacon has joined the firm as advisory consultant. Bacon has more than 14 years experience in Indian gaming, most recently as assistant controller for Rosebud Casino in South Dakota. At Joseph Eve,
she will help organizations improve their accounting and finance functions through the use of cloudbased software and improved processes. April Bacon “At Joseph Eve, we are serious in our mission to be the premier, go-to accounting firm for tribal and commercial casino operators, and we carefully seek to attract talent that will help us fulfill that mission,” said Joseph Eve partner Lindan Elliott.
ZYNGA CEO PINCUS STEPS DOWN
ynga Chairman Mark Pincus is again turning over CEO duties to the company, this time to board member Frank Gibeau. Pincus becomes executive chairman and will focus on game development, the company said in a press statement. Gibeau was with game maker Electronic Arts Inc. before stepping down last May from his role leading strategy and product development for that company’s mobile unit. Pincus then recruited him to the Zynga board, where he has been mentoring product teams, leading planning meetings and delivering talks to game developers and marketers, the company said.
April 2016 Index of Advertisers
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Acres . . . . . . . . . . . . . . . . . . . . . . . .36,37,45,75 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Cintas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Data Spade . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Fantini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61,69 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Gasser Chair . . . . . . . . . . . . . . . . . . . . . . . . . .53 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . .31 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Innovation Group . . . . . . . . . . . . . . . . . . . . . .41 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Konami Gaming . . . . . . . . . . . . . . . . Back Cover NetEnt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Red Square Gaming . . . . . . . . . . . . . . . . . . . . .9 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .40 San Manuel Indian Bingo & Casino . . . . . . . . .35 Scientific Games . . . . . . . . . . . . . . . . . . . .15,39 Spin Games . . . . . . . . . . . . . . . . . . . . . . . . . . .29 UNLV Foundation . . . . . . . . . . . . . . . . . . . . . .72
APRIL 2016 www.ggbmagazine.com
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Walter Bugno President, International, IGT
GT has been the market leader in slot manufacturing for many years. Even though its U.S. market share has diminished in recent years, the purchase of IGT by GTECH has strengthened the company’s international presence. Walter Bugno, a senior executive with GTECH, was made the CEO of the international division of the company. He explains how the merger of corporate cultures has been accomplished and how the two companies have truly become one. He talks about the products being developed by IGT since the merger and explains how the games are introduced and released. He spoke with GGB Publisher Roger Gros at the ICE trade show in London in February. A full podcast of this interview is available at GGBMagazine.com. GGB: Tell us about the merger between GTECH and IGT, and how it has worked.
Walter Bugno: It’s been very positive for us.
Twelve months ago, we sat here as two companies. There was a big wall dividing what was legacy GTECH from legacy IGT. Fast-forward to today. It’s seamless, and the customers are feeling it. There’s a lot of excitement about new content, new cabinets, the expansion of our product range from VLTs, all the way to mobile and interactive and everything in between. We’ve certainly been impressed with the new leadership of the company, with Marco Sala, Renato Ascoli and your new role. You’re building a great team here. Tell us about how the integration is working.
When we announced the merger, Marco Sala was very clear with all of us on what his expectations of the new organization were. And the first point he made to us was design an organization that is based on the principle of customer first, and customer intimacy. His view of how to win the market was you need great product and great content, but to arrive at great product and great content, if you don’t have customer intimacy 74
Global Gaming Business APRIL 2016
and really understand what the customer needs, you won’t be able to develop that great product and great content. So, he’s built an organization that’s focused on being as close to the customer in every part of the world, and putting as many senior executives in this organization as close to the front line as possible. I think that’s been a real positive for us. It allows us to sit around the table and very clearly and openly describe what our priorities need to be, and have us all aligned on it, because we all share the view of the customer. Let’s talk about your specific responsibility, the international market. According to the EilersFantini Slot Report, IGT has some great market share in the U.S. but not so much in the international market. How are you focusing on that growth?
It’s a world of opportunity. You’re right. IGT, traditionally, has been very, very strong in, at the time, what was the home market. But now we are not a U.S. company. We are an international company, and hence the onus of responsibility for us is to be a significant player wherever we compete. We have great market shares in—when you combine the Spielo and GTECH and IGT positions—EMEA and in Latin America, but with still lots of geography for expansion. We are weaker when it comes to Asia. There’s no doubt that Aristocrat has maybe not a stranglehold, but a very dominant position, in its home market of Australia, and also in the ad-
There’s a lot of excitement about new content, new cabinets, the expansion of our product range from VLTs, all the way to mobile and interactive and everything in between.
joining markets of Asia. As a result, it is not realistic for us to say that we can take them. But to be a strong No. 2 in that marketplace is realistic, and our strategy is very simple: focus on developing locally curated content. It’s as simple as that. If we can change our product from being sourced in one market and just applied to another, to actually develop for that market, then I think we’ll have a chance at succeeding. But a world full of opportunity. Internationally, are the social casinos as popular in Europe as they are in the U.S. at this point?
Growing. Growing. We’re seeing quite a large number of our land-based casino operators approaching us to discuss the opportunity of some form of a social casino or play-for-fun solution for their brand. So, it’s growing, because it’s seen not necessarily as a stand-alone business, as DoubleDown Casino is, but as a means of building loyalty with their own customer base. We’re always amazed at the differences between European casinos and U.S. casinos in size and scale. IGT has a lot of systems; are these scalable that they can be placed in the smaller European casinos?
Yes, they are. One of the real complementarities of the GTECH/IGT merger was that GTECH was very good in the smaller scale, and hence had a very good market share in systems in the European market, for example. IGT was very good at the larger casinos. We’ve actually worked at putting that together into one common offering. We are now able to offer a product, an affordable or economical product, with exactly the same quality of solutions, depending on the scale of the business. For IGT, systems are a hugely important part of our business. It creates an even further level of relationship integration with our customers, because when you’re hooked in at the systems level, you’re with them every day, from the level of support, the upgrades that you’re giving them, and the problem resolutions.
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The casino gaming industries most respected and important international trade journal. Official publication of the American Gaming Associati...
Published on Mar 24, 2016
The casino gaming industries most respected and important international trade journal. Official publication of the American Gaming Associati...