Global Gaming Business, June 2018

p. 1 june sports 2:_cover, inside, back.qx 5/16/18 4:07 PM Page 1

ggB Global Gaming Business Magazine

tRiBeS & tHe MeDia KioSK MagiC SPeCiaL SoCiaL MeSSaging nigC’s CHaUDHURi

June 2018 • Vol. 17 • no. 6 • $10

Macau Moment Why the mass market is playing an increasingly important role in China’s gambling capital

Regional

Consolidation How real estate investment trusts are driving mergers and acquisitions in the casino business

Betting Bonanza Supreme Court ruling opens up sports wagering in the United States

Association of Gaming Equipment Manufacturers

Official Publication of the American Gaming Association

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CONTENTS

Vol. 17 • No. 6

june

Global Gaming Business Magazine

COLUMNS

42 COVER STORY Slam Dunk

12 AGA Bad Penny Geoff Freeman

The U.S. Supreme Court’s May 14 decision in Murphy v. NCAA scrapped the Professional and Amateur Sports Protection Act as unconstitutional, clearing the way for legal U.S. sports betting.

Here’s how we got here and what it means for the industry.

14 Fantini’s Finance Rising Regionals Frank Fantini

54 Table Games Be Bold Roger Snow

By Roger Gros

FEATURES

On the cover: the famous Superbook at the Westgate in Las Vegas

16 Regional Renaissance The rise of gaming-related real estate investment companies as landlords of gaming resorts is leading to a new wave of consolidation among regional operators.

30

30 Macau’s

6

The Agenda

Rebirth

8

By the Numbers

Attention to the mass and premium-mass markets has led Macau operators to concentrate on nongaming amenities to ensure a sustainable tourism product.

By James Rutherford

16

By Marjorie Preston

22 Adelson’s Way The remarkable career of Las Vegas Sands’ Sheldon Adelson serves as a lesson in risk, reward and bold action.

By Oliver Lovat

28 Marshaling Social The effective use of social media in marketing campaigns has evolved from a “free” extra to an essential discipline that should be used to its maximum potential.

By Julia Carcamo

Global Gaming Business JUNE 2018

10 5 Questions 15 AGEM 50 New Game Review 52 Emerging Leaders With Mille Lacs Band’s Joseph Nayquonabe, Muscogee’s Emmanuel Bezzell, and Carnival Corporation’s Martin van der Merwe

36 Tribes and the Media

56 Cutting Edge

The unique status of tribal gaming operators has led to a complicated relationship with the mainstream and gaming industry media that has led to new challenges.

58 Frankly Speaking

By Dave Palermo

44 Kiosk Evolution The versatility of new technology in multi-functional kiosk products has turned the ATMs of the past into marketing vehicles of the future.

62 Goods & Services 65 People 66 Casino Communications With Jonadev Chaudhuri, Chairman, National Indian Gaming Commission

By Dave Bontempo

60 Southern Summit The Southern Gaming Summit, now wholly owned by the Mississippi Gaming & Hospitality Association, stages a successful 2018 conference and Mississippi Gaming Hall of Fame gala.

By Patrick Roberts

4

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THE AGENDA

Vegas is Hockeytown Roger Gros, Publisher

G

rowing up in New York City, baseball was the sport that enveloped me almost year round. Yes, I knew about football, and the New York Giants were even good back then. But they didn’t engender the same passion I felt for my beloved Brooklyn Dodgers or the same degree of antipathy I felt for the New York Baseball Giants or the fearsome Yankees.

Hockey? Sure, I knew it existed, but the New York Rangers were another team I just didn’t get. I liked to watch the game—my father was a champion skater and took us to see games every year. But it just didn’t click with me.

Fast forward to my life at the age of 23 in Washington, D.C. and the birth of the Capitals, a hapless franchise that has yet to even sniff a Stanley Cup final. But I did embrace the team, perhaps the same way New Yorkers did with the Mets in the early ’60s after the Dodgers and Giants fled the city for the West Coast.

And now I live in a city that previously had no major-league professional sports until the Vegas Golden Knights skated on the ice in early October of last year for the very first time.

While I certainly enjoy and appreciate hockey more than I did as a child, I expected to become a casual fan of a team that would undoubtedly struggle to win before a sea of half-empty seats.

And then 1 October hit. Those of us who were at G2E last fall will never forget the scene on the Strip that night. And those of us who actually live in Las Vegas witnessed the outpouring of assistance and love in a city that was perceived to be a bit cold and heartless up until that event.

And then came opening night for VGK about a week later. While I wasn’t there, what I saw on television had me weeping in my beer.

The tributes to the first responders, the heartbreaking homage to the victims, and the coming together of a city was reflected in the ceremonies that should have been jubilant and glorious, but were instead sincere and melancholy, and wholly appropriate.

But then the games began and something even more amazing happened. The Golden Knights began to win. Eight straight to open the

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Global Gaming Business JUNE 2018

season and they never looked back. In one of many firsts for expansion teams, VGK won their division. This has never happened before in any sport.

At this writing, VGK has won their first two playoff series and now is playing in the conference finals.

The Golden Knights were a bunch of castoffs from other teams with chips on their shoulders, anxious to show their talent. And that they surely have done. Tickets to VGK games quickly became the hottest in town, even surpassing the great Cirque shows!

Consider this. This season, VGK compiled 109 points. Compare this to one of the original six NHL teams, the Toronto Maple Leafs, who have been playing hockey longer than the NHL has been around, for well more than 100 years.

The Maple Leafs have never scored more than 105 points in any season.

But more than their winning ways, the Golden Knights have united Las Vegas in a way I never thought possible. The games are true celebrations. Opponents are intimated by the crowd. In football, they call it the 12th man, so I suppose in hockey it would be the seventhman advantage.

And that’s in the face of a flood of fans of the opposing teams who come to Vegas to party and catch a game featuring their favorite team, at least during the regular season. Vegas fans have become great hosts, welcoming fans from around North America—and then soundly beating the visitors.

Vegas being Vegas, the sports books have taken a beating from the local bettors who have had more faith in their team than the bookmakers did. For the first half of the season, bettors cleaned up by betting VGK and the over.

And let’s not forget the in-running betting.

Those phones are out making bets throughout the game.

So thanks to the Golden Knights for bringing a sense of community to Las Vegas and for indelibly creating a link to the people who live here. And may we be lifting the Stanley Cup down the Strip sometime in June!

Vol. 17 • No. 6 • JUNE 2018 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com Lauren Byrge, Director, Sales & Marketing LaurenB@GGBmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Roger Snow Contributing Editors Dave Bontempo twitter: @bontempomedia Julia Carcamo | Marie Casias | Oliver Lovat Dave Palermo twitter: @DavePalermo4 | Marjorie Preston Patrick Roberts | James Rutherford William Sokolic | Michael Soll

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 twitter: @CDCNewswire

• Geoff Freeman, President & CEO, American Gaming Association twitter: @GeoffFreemanAGA

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Vice President & Chief Compliance Officer, MGM Resorts International, twitter: @stephenmartino

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

• Steven M. Rittvo, Chairman Emeritus, The Innovation Group twitter: @InnovGrp

• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University, twitter: @kspilde

• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985

• 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 2018 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 Official Publication

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BY THE

NUMBERS

LucRaTive LOOT v

ideo gaming developers insist that “loot boxes” and “skins” are not gambling but merely amenities to their games. Loot boxes and skins are in-game packs often gifted to players as a result of completing in-game tasks and achievements. Increasingly, these are made available to purchase with real-world currency to provide a boost to in-game progression, or to enhance character abilities. The fact that they have value and are often traded between players belies that gambling denial. And the fact that players are willing to pay to acquire loot boxes and skins demonstrates that it’s gambling whatever way you consider it. It’s estimated that this year more than $30 billion will be spent on loot boxes and skins, and the growth in just a few years (2022) will exceed $50 billion. In a white paper titled “In Gaming Gambling—The Next Cash Cow for Publishers,” Juniper Research predicted this growth. To see a copy of the full report, visit juniperresearch.com.

Total Spend on Loot Boxes and Skin Gambling in 2022: $50 billion, Split by 8 Key Regions

None

We’re No. 2

N

ew Jersey online gaming revenue has been climbing for over two years now. It peaked in March, when it hit an all-time high. While April revenue declined from March by about 10 percent, it’s still the second highest since it launched in 2013. The chart, published by PlayNJ.com, demonstrates the dip, and explains that casino revenue in April far exceeded poker revenue ($23.8 million vs. $1.8 million). However, since intrastate poker was just getting started, poker aficiandos hope that liquidity in the poker rooms of Nevada, Delaware and New Jersey will increase. But those rooms will be controlled by WSOP.com and 888.com, since those are the only online poker rooms to be active in all three states, currently the only ones with active online gaming. Year-to-date, online gaming revenue in New Jersey has exceeded $92 million.

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Global Gaming Business JUNE 2018

1

2

3

1 NJ Online Gambling Revenue 2018 PlayNJ.com

4

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NUTSHELL

“They

5Questions

Alex Igelman

CEO, Millennial eSports

ith the eSports phenomenon suddenly exploding in Las Vegas and in gaming jurisdictions around the W world, Alex Igelman is ready to guide the way. As the CEO of Millennial eSports, a public company traded on the Toronto Stock Exchange, Igelman’s was the first eSports company in gaming when he opened an eSports arena in Downtown Las Vegas. To hear a full podcast of this interview, visit GGBMagazine.com.

Global Gaming Business: What brought you to Las Vegas?

Igelman: We came to Las Vegas about two and a half years ago. At that time, the company was primarily a

1 2 3 4 5

tournament organizer with a competitive gaming platform, which allowed people to play games against each other. That was the original model.

We identified Las Vegas early on as the perfect place for eSports. We built this arena in Downtown Las Vegas, the first of its kind, purpose-built for eSports.

In the back of our minds, we know eSports has a very active wagering side—maybe not in North America—but we knew that one day you’d be able to walk into a sports book and make a wager on an eSports event. But of course, our focus is on the millions of people who visit Las Vegas for all it has to offer.

How can casinos monetize eSports?

The easiest way for an operator to monetize eSports is as an event. If executed properly—and that means it has to have some authenticity about it by bringing in someone who understands eSports—it’s an opportunity to make money as you would on any event. In that regard, you’re trying to attract a demographic that you haven’t experienced at your casino before.

Then you could hold a tournament, as you might a poker tournament. There are some capital expenditures there if a casino wanted to have a permanent facility, but there are numerous tournament organizers who could arrange this. It’s a very specialized, niche market. You really have to know what you’re doing. It could be a loss leader until casinos figure out the right model.

What is that eSports demographic?

We’ve done a lot of research and determined that the average eSports aficionado is male and about 35. So we’re not talking about young kids. It’s a valuable demographic. And you have to remember, not only will you get the customer who likes to play eSports, but you also get people who like to watch professionals play eSports. That’s a huge segment.

We’ve seen several different models from Las Vegas operators from building eSports venues inside a casino to a production studio for eSports tournaments. Do we know what works yet?

I think it depends on the risk that the casino wants to take. In the eSports arena at Luxor, the relationship with MGM is more of a landlord. At Caesars, they’re using a production studio to host a full season of eSports with H1Z1. That’s a different kind of commitment and may attract a younger demographic.

But these are all the things you have to consider when examining eSports, and in time they will develop.

How would wagering on eSports work? And can you really prevent cheating on these eSports games?

In Nevada, being very progressive, they decided to accept wagers on specific events. It’s not a blanket acceptance, but each event has to be approved. It’s not the most ideal situation, but it’s a start.

As for cheating, the fact that all of the play takes place in a digital format makes it very auditable, and there are certain algorithms that will detect any abnormality in play. At that point, referees would look into any kind of match fixing. So in that respect, I think it’s easier to track, since you won’t have to read someone’s mind.

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Global Gaming Business JUNE 2018

Said It”

“In any industry, if you’re not adaptive, if you’re not trying things, you’re going to miss opportunities. I’m pretty optimistic about skill-based gaming being a part of what we do.”

—Skyelar Perkins, senior director of slot operations at Choctaw Casinos & Resorts of Oklahoma, commenting on the opportunities offered by skill-based gaming during a panel at the Indian Gaming Tradeshow

CALENDAR May 30-June 1: Vienna International Gaming Expo (VIGE) 2018, Meliá Vienna, Vienna, Austria. Produced by European Gaming Media and Events. For more information, visit ViennaGamingExpo.com.

May 30-June 1: Juegos Miami, The Biltmore, Miami, Florida. Produced by Clarion Gaming. For more information, visit JuegosMiami.com.

June 5-7, 2018: North American Gaming Regulators Association (NAGRA) Annual Conference 2018, AT&T Exec Education Conference Center, Austin, Texas. Produced by NAGRA. For more information, visit nagra.org.

June 7-8: Russia Gaming Week, EcoCenter Sokolinksi, Moscow, Russia. Produced by Smile Expo. For more information, visit RGWeek.ru.

June 13-14: East Coast Gaming Congress, Harrah’s Resort, Atlantic City. Produced by Spectrum Gaming Group and Cooper Levenson. For more information, visit EastCoastGamingCongress.com.

June 20-21: Peru Gaming Show, Jockey Exposition Center, Lima, Peru. Produced by Affiliated Marketing Group. For more information, visit perugamingshow.com.

July 13-15: National Council of Legislators from Gaming States (NCLGS) Summer Meeting, Cleveland Marriott Downtown at Key Center, Cleveland, Ohio.

Produced by NGLGS. For more information, visit NCLGS.org.

August 14-16: Australasian Gaming Expo, ICC Sydney Darling Harbour, Sydney, Australia. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com.

September 5-6: Casino eSports Conference 2018, Luxor, Las Vegas. Produced by Fox Marketing. For more information, visit CasinoeSportsConf.com.

September 5-7: International Masters of Gaming Law Autumn 2018 Conference, Hotel Boscolo, Prague, Czech Republic. Produced by IMGL. For more information, visit IMGL.org.

September 11-13: SAGSE Latin America, Costa Salguero Convention Center, Buenos Aires, Argentina.

Produced by Monografie. For more information, visit monografie.com/SAGSElatam.

September 17-20: International Association of Gaming Regulators Annual Conference 2018, Hotel Scandic Copenhagen, Copenhagen, Denmark. Produced by IAGR. For more information, visit IAGR.org.

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AMERICAN GAMING ASSOCIATION

Bad Penny Yucca Mountain is not America’s nuclear wasteland

A

By Geoff Freeman, President & CEO, American Gaming Association

s the U.S. and other nations become increasingly dependent on nuclear energy, our elected officials are faced with a difficult decision about what to do with nuclear byproducts. Members of the U.S. House of Representatives last month passed, by a large margin (340-72), a repeatedly tried-and-failed proposal for Nevada’s Yucca Mountain to become the country’s sole consolidated nuclear waste repository.

This is simply a non-starter, and not just for Nevadans.

According to the proposal, nuclear waste would travel through 329 congressional districts in 44 states before it would reach Yucca Mountain, a mere 90 miles from one of our country’s most visited tourist destinations.

More than 43 million visitors come to Las Vegas annually from every state, and international destinations across the globe.

Yet, some in Congress and the federal government continue to advance the shortsighted notion that the entirety of the nation’s nuclear waste should be transported over hundreds of miles through the heart of the country to a site a short drive from the Las Vegas city limits, and its 2.1 million residents and employees. It is particularly disappointing that congressional Republicans who have traditionally espoused states’ rights would seek to use federal power to attempt to compel Nevada to house nuclear waste over the objections of the bipartisan con-

gressional delegation, the governor and businesses and citizens across the Silver State.

Las Vegas provides an anchor for the U.S. casino gaming industry. Casinos have operations in 40 states, and are a staple in local economies across the country. In Nevada, the gaming industry supports 430,000 jobs and more than $18.7 billion in wages, while also generating $7.9 bil-

Nuclear waste would travel “districts through 329 congressional in 44 states before it

would reach Yucca Mountain, a mere 90 miles from one of our country’s most visited tourist destinations.

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Global Gaming Business JUNE 2018

”

lion in federal, state and local tax revenues. We will oppose policy that places our employees, our customers and our businesses at risk.

Now that the House has advanced this bad policy, the debate moves to the Senate, where similar efforts have failed for nearly three decades.

We stand with the many concerned citizens, small business operators and bipartisan members of the Nevada delegation in staunch opposition to any attempt to restart the repository licensing process.

Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.

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FANTINI’S FINANCE

Rising Regionals Consolidation is under way in the heartland.

Who are the winners and losers?

By Frank Fantini

T

he setting was the Southern Gaming Summit in Biloxi, Mississippi, an event reinvigorated under the management of Roger Gros and the crew of Global Gaming Business Magazine.

The topic was gaming industry consolidation, discussed by a panel led by Deutsche Bank analyst Andrew Zarnett.

The panelists were two leaders of the consolidation, CEOs Tim Wilmott of Penn National and Keith Smith of Boyd Gaming, and myself as kind of the lay person.

The conclusion: Consolidation will continue, but we probably are at a point where there won’t be a mega-merger, such as Boyd and Penn joining forces, in large part thanks to the limitations states have placed on the number of licenses a company can hold, or because of regulator concern about industry concentration.

The logic for consolidation is simple and classic. The industry is beyond its go-go growth years of a generation ago and, as with any maturing industry, acquisition becomes a preferred path for growth.

And the means are there, as lenders and borrowers are more comfortable with debt at four and five times EBITDA, and even a little more.

Thus, we’ve seen the cycle in which companies like Penn, Boyd and Eldorado Resorts run their debt ratios up to five times or so, cut costs to increase cash flows that reduce ratios to around four times, then buy again.

That process has created three regional gaming companies with revenues of several billions of dollars each, and an appetite for more.

Much of the consolidation has been facilitated by the coming of gaming real estate investment trusts, the first of which, Gaming & Leisure Properties, was created when Penn spun off its real estate and became a rent-paying tenant to its own offspring.

The rationale was that REIT stocks sold at 13 and 14 times EBITDA compared to seven and eight times for casino companies. So, REITs can buy casinos at nine and 10 times, raising the valu-

ations for casino investors while adding to earnings. And the casino companies could buy the gaming operations of the properties at low valuations in exchange for becoming rent payers.

Meanwhile, casino company shareholders can win in other ways, depending on how the deal was structured. When Pinnacle sold its real estate to Gaming & Leisure, Pinnacle’s shareholders also got stock in Gaming & Leisure. The result was a higher combined stock value, and investors began to receive a dividend that has been around a 7 percent yield. You can’t get 7 percent on your money just about anywhere else—not CDs, not money markets, not U.S. bonds. And the REIT investor has the security of owning real estate, the most tangible of all tangible assets.

So, we ask—as investors must do trying to protect and grow our money—where do we go from here?

Gaming & Leisure Properties has been the most active of the REITs, and has been broadening its tenant base beyond Penn, including in the most

“

The logic for consolidation is simple and classic. The industry is beyond its go-go growth years of a generation ago and, as with any maturing industry, acquisition becomes a preferred path for growth.

14

Global Gaming Business JUNE 2018

”

recent deals in which Boyd and Eldorado became rent payers.

But Gaming & Leisure will soon have competition as MGM Resorts spin-off MGP Properties and Caesars spin-off VICI Properties also broaden beyond buying the properties of their parent companies and leasing them back.

So, we have a cast of acquisitive companies and facilitators. In addition, other companies are acquisitive. As examples, Churchill Downs is buying small operations that larger companies might not want, such as Lady Luck in Vicksburg, Missis-

sippi, and Presque Isle Downs outside Erie, Pennsylvania, from Eldorado. Golden Entertainment, from its smaller base, is playing the buy, reduce debt then buy again game. Nor can Hard Rock International, Golden Nugget, Monarch Casino and even little Full House Resorts be forgotten.

Finally, there could be new blood entering in the form of Native American gaming enterprises and international companies. The Seminole Tribe of Florida already owns the aforementioned Hard Rock. The Mohegan and the Mashantucket Pequot tribes of Connecticut have ambitions beyond their reservations. The Poarch Band of Creek Indians of Alabama raised eyebrows with their agreement to buy Sands Bethlehem in Pennsylvania from Las Vegas Sands for $1.2 billion.

As for international players, Genting already has a growing U.S. presence with Resorts World at Aqueduct, brand-new Resorts World Catskills and Resorts World Las Vegas rising off the Strip.

Galaxy Entertainment has bought 4.9 percent of Wynn Resorts and, while the company says it’s merely an investment, a relationship has been established that could lead to something more.

So, what’s left to buy? A lot, is the answer. Privately held multiple-property companies such as Rush Street, JACK Entertainment and Affinity might some day be on the market, delivering properties to companies that want a presence in Chicago, Philadelphia, Pittsburgh, Cleveland, Detroit and Cincinnati. The Peninsula Gaming folks who sold out to Boyd are back as Peninsula Pacific.

There are plenty of individual properties that could come on the market, ranging from Cosmopolitan and Caesars-owned Rio in Las Vegas to the former Revel, which is about to reopen as Ocean Resort in Atlantic City, to riverboats in Indiana and Louisiana that might look more attractive, as gaming laws in those states are liberalized.

The list goes on, and it is long, even if a megamerger is unlikely. And with the ability of REITs to facilitate sales at higher valuations than before, there are plenty of ways for investors to play the gaming consolidation game.

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. For a free 30-day trial subscription email subscriptions@fantiniresearch.com.

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AGEMupdate AGEM MEMBER PROFILE

MAY 2017 KEY BOARD OF DIRECTORS ACTIONS Jackpot Digital Inc., based in Vancouver, British Columbia, Canada, is a leading electronic table games manufacturer for the cruise ship industry and the regulated casino industry. The company specializes in multi-player gaming products, including poker and casino games, which are complemented by a robust suite of back-end tools for operators to efficiently control and optimize their gaming business.

Jackpot Blitz is the company’s proprietary nextgeneration gaming platform, offering an incomparable player experience to go with unrivaled operator efficiency, flexibility and profitability. Jackpot Blitz offers Texas hold ‘em, blackjack, baccarat and video poker on an ultra-sensitive 4K touchscreen. With tournament functionality, bad beat jackpot, and an automated payment kiosk, Jackpot Blitz is the ultimate table gaming platform.

Jackpot Digital recently received an order from Ho-Chunk Gaming Wisconsin Dells of Baraboo, for 10 of the company’s Jackpot Blitz platforms.

The company also will be installing 10 PokerPro ETG platforms to automate its poker facility.

In addition, Jackpot Digital announced that it has signed a new software license and equipment lease agreement with Carnival Corporation. The agreement outlines terms for the replacement, in phases, of the company’s existing PokerPro Electronic Table Game platform with the company’s next-generation Jackpot Blitz ETGs on Carnival’s ships, subject to certain terms and conditions.

For more information, visit jackpotdigital.com.

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.

• AGEM members recently submitted a letter to Nevada Gaming Control Board Chairwoman Becky Harris, outlining revised recommendations on the proposed updated language of Regulation 14 (a follow-up to the legislative passage of the AGEM-endorsed Assembly Bill 75). This follows Harris pausing the process due to AGEM’s concerns over the initial content. A public comment period will soon be announced for feedback and further consultation before a final review.

• In line with AGEM’s mission to support educational initiatives, funding was recently approved for two gaming-related scholarship programs. The American Indian College Fund AGEM Scholarship Program and the UNLV Lee Business School AGEM Scholarship Program will each receive $10,000 that will support four students to a value of $2,500 each.

• At the AGEM April meeting, members approved support for a new event, the Brazil Legislators’ Day, which was held in Brasilia on April 26 following the Brazilian Gaming Congress. As talk of a gaming bill continues to be on the agenda (although unlikely anything will move forward in 2018), this gaming education networking event with legislators proved to be a good event with lots of positive discussion.

AGEM was represented by AGEM Mexico Committee Chairman Carlos Carrion of Aristocrat, who participated in a panel with Chairwoman Becky Harris and Ohio state senator and the incoming president of the National Council of Legislators from Gaming States (NCLGS), Bill Coley.

• AGEM welcomed the United States Playing Card Company as Associate Member in May. The company’s flagship Bee cards were introduced in 1892. The company is based in Kentucky, producing and distributing premier playing cards and dealing shoes to the casino industry. This brings the total number of AGEM members to 166 companies.

P

FORTHCOMING EVENTS • AGEM is a sponsor of the upcoming East Coast Gaming Congress, a prestigious gathering of industry officials from all fields, in Atlantic City June 13-14.

• AGEM is a sponsor of the upcoming Canadian Gaming Summit, the Canadian Gaming Association’s signature event, in Niagara Falls, Ontario June 18-20.

AGEMindex The AGEM Index reversed a two-month downward trend to close April 2018 with positive growth. The composite index finished the month at 531.33 points, a gain of 26.18 points or 5.18 percent, when compared to March 2018. The AGEM Index reported a year-over-year increase for the 31st consecutive month and has climbed 159.83 points, or 43.02 percent, since April 2017. During the latest period, six of the 13 global gaming equipment manufacturers reported month-to-month increases in stock price.

Seven manufacturers reported decreases in stock price during the month.

AGEM

Agilysys

Exchange: Symbol (Currency)

Stock Price At Month End Apr-18 Mar-18 Apr-17

Nasdaq: AGYS (US$)

11.78

11.92

Ainsworth Game Technology

ASX: AGI (AU$)

1.91

1.85

2.21

Aristocrat Leisure Limited

ASX: ALL (AU$)

26.82

24.06

19.50

Taiwan: 3064 (NT$)

20.20

18.10

24.20

NYSE: CR (US$)

83.64

92.74

79.21

NYSE: EVRI (US$)

6.41

6.57

6.35

OTCMKTS: GLXZ (US$)

1.11

1.04

Nasdaq: GPIC (US$)

8.88

9.84

9.99

NYSE: IGT (US$)

28.27

26.73

21.73

Astro Corp.

Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC Konami Corp.

Scientific Games Corporation Transact Technologies 1.

PlayAGS Inc.

9.90

0.63

TYO: 9766 (¥)

5,380

5,590

4,705

Nasdaq: SGMS (US$)

53.30

41.60

23.75

Nasdaq: TACT (US$)

12.20

13.05

8.75

NYSE: AGS (US$)

22.61

23.26

-

Percent Change Index Prior Period Prior Year Contribution (1.17) 18.99 (0.04) 3.24 (13.57) 0.08 11.47 37.56 16.22 11.60 (16.53) 0.06 (9.81) 5.59 (6.62) (2.44) 0.94 (0.15) 6.73 76.19 0.04 (9.76) (11.11) (0.09) 5.76 30.07 4.48 (3.76) 14.35 (5.80) 124.42 18.38 28.13 39.43 (0.08) (6.51) (2.79) (0.30) Change in Index Value

26.18

AGEM Index Value: March 2018

505.15

AGEM Index Value: April 2018

531.33

1. There is no Prior Year data for PlayAGS Inc. because the stock began trading in January 2018.

JUNE 2018 www.ggbmagazine.com

15

p. 16 regionalconsolidation:Layout 1 5/16/18 2:31 PM Page 16

JOIN

TOGETHER Regional consolidation has accelerated and become more palatable because of the REIT phenomenon

By James Rutherford

T

he story of the casino industry is a story of big companies buying other big companies, big companies buying not-sobig companies and smaller companies buying other smaller companies and becoming bigger companies. The last 20 years have seen more than a dozen operators disappear in this way, their names surviving only in the lights on the marquees, on chip faces and on the logos on table felts.

The experts will tell you this had to happen. It’s the Dao of capitalism.

“I can’t think of an industry where that doesn’t occur,” says Steve Gallaway of Global Market Advisors, a research and advisory firm specializing in gaming and hospitality. “That’s a natural business cycle—consolidation.”

The bottom line is that casinos are like shopping malls now; they’re pretty much everywhere. Looking across the Northeast, the Midwest and the South, there are few new jurisdictions to grow afresh, few opportunities, save for the very largest operators, for greenfield projects worth the

Boyd Gaming entered the Pennsylvania market with the purchase of the Valley Forge casino

16

Global Gaming Business JUNE 2018

enormous cost of building them.

There is the fact, too, that the ground beneath the industry has shifted irrevocably.

“The customer base is aging. Tastes are changing,” says Cory Morowitz, a gaming consultant and educator based outside of Atlantic City.

“Consumers today want emotional engagement with their products, and I don’t know, with the regulatory constraints, that we’re seeing the innovation keep pace. Millennials don’t really spend at high levels. And consumers, even though the economy is fairly strong, are challenged in some respects. There is a lot of competition for their spending dollar. And the gaming industry is a victim of all these trends.”

Revenue Revival Commercial casinos generated $41.2 billion in gambling revenue last year, according to figures compiled by Ken Adams, a strategic analyst with CDC Consulting in Las Vegas who writes frequently on industry issues. Backing

Eldorado Resorts recently bought the Grand Victoria riverboat in Elgin, Illinois from MGM Resorts and its local partners

p. 16 regionalconsolidation:Layout 1 5/16/18 2:32 PM Page 17

out Nevada, the take was roughly $29.5 billion, which translates into year-onyear growth, with notable exceptions in some markets, of between 1 percent and 2 percent.

It’s a battleground, in other words.

One impact has been “an increasing and heightened focus on the cost side of regional gaming, particularly around promotional expenditures,” according to investment analyst David Katz, a managing director with Jefferies covering gaming, lodging and leisure. “There’s been an increasing focus on leveraging and infrastructure from a loyalty and marketing perspective. And all of those things point to consolidation. It’s much easier to drive synergies when you’re bigger and cut the cost side of the business.”

There is finally the REIT factor.

Since 2013, when Penn National Gaming spun off ownership of 20 of its 23 gaming properties into Gaming & Leisure Properties, a Nasdaq-listed real estate investment trust—MGM Resorts International followed in 2016 with the creation of MGM Growth Properties, Caesars Entertainment in 2017 with VICI Properties—the casino REITs have amassed $30 billion of assets, transforming vast, financially fallow tracts of resort real estate into bankable equity in the process. The effect has been to shower the deal market with liquidity, and with interest rates as low as they’ve been it’s not surprising that public companies with investments tied up in low-growth regional markets and hungry shareholders to satisfy have concluded there may never be a better time to buy.

As Katz explains it, “If a property is for sale, an owner-operator that trades at around 8.5 times EBITDA is not going to be able to pay much more than that; whereas, if you split the property into real estate and an operating company, those two entities combined can pay a considerably higher multiple. So the seller wins, the opco is buying an operating stream at probably 6.5 times, and the REIT is buying a string of leases at 12 times. Everyone comes out a winner.”

‘Cheaper’ Money Real estate investment trusts are nothing new, of course. The outgrowth of a decades-old federal government initiative to promote outside investment in real estate, today there are more than 1,000 recognized by the Internal Revenue Service. Some are engaged in purchasing or originating mortgages and mortgage-backed securities (mREITs, as they’re known), but most are classified as equity REITs. These function much like mutual funds except they don’t trade in stocks Plainridge Park is the latest Penn National property to be sold to the GLPI REIT

and bonds; they make money for their investors by buying income-producing real estate which they lease to tenants that range across all sectors of the economy: retail (the largest segment), residential, office and industrial space, lodging and leisure, health care, data centers and other infrastructure facilities, even prisons. Equity REITs control around $2 trillion of assets in the U.S., according to the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group. Most are traded on the major stock exchanges, where they command a combined market cap of more than $1 trillion.

The key to what defines a company as a REIT is the unique status it enjoys under federal law: it pays no corporate income tax on the profits it distributes to its shareholders as dividends, and by law it must return at least 90 percent of profits in this way. In recent years, this has amounted to more than $60 billion annually, according to NAREIT. The three gaming REITs exemplify the best characteristics of the model: 1) solid, stable cash flows derived from the rents paid by their operating companies, the gaming licensees; 2) handsome dividend yields; and 3) robust growth opportunities in a mature industry that is consolidating at an increasing pace.

Investors, in turn, have rewarded them with trading multiples (currently around 13 times estimated 2018 EV/EBITDA) that are the envy of the industry. When VICI, the landlord of 20 Caesars Entertainment casinos, went public in February for $1.4 billion it was the fourth-largest IPO in REIT history and the largest-ever among hotel REITs (a crown it snatched from MGM Growth Properties).

The higher multiples stem from their perceived stability. Leases are fixed for periods generally lasting 10-15 years, with increases built in based on certain revenue or EBITDA thresholds over that time and optional extensions that can spread them out over another 20 or 25 years.

“You can borrow money for a lot less because you have solid assets,” explains Gallaway. “Borrowing rates are much lower for a REIT than for the operating casinos. Their money is cheaper. It’s a huge factor.”

Speaking on VICI’s first-quarter earnings call back in May, Chief Executive Edward Pitoniak, who previously headed InnVest, Canada’s largest hotel REIT, said, “The announced trades in the sector by us and our peers over the last six months are a testament to the growing confidence in the gaming REIT model. Market participants, both buyers and sellers, are gaining more confidence that the liquid market is truly developing. We believe this confidence will be key to generating further deal flow.”

With the purchase of Lumiere Park in Missouri, GLPI effectively controls the St. Louis market

JUNE 2018 www.ggbmagazine.com

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p. 16 regionalconsolidation:Layout 1 5/16/18 2:32 PM Page 18

“Borrowing rates are much lower for a REIT than for the operating casinos. Their money is cheaper. It’s a huge factor.”

—Steve Gallaway, Partner, Global Market Advisors

Done Deals “If you’re an entity that owns one to five properties, it becomes harder and harder to compete,” says Katz, “and in that regard, those entities capitulate and sell, particularly if they can get a good multiple.”

They’re getting them, too. The industry has seen more than $12 billion of M&A activity the last couple of years. Penn National (Nasdaq: PENN), Boyd Gaming (NYSE: BYD) and Eldorado Resorts (Nasdaq: ERI) have accounted for more than $10 billion of it.

The REITs figure prominently in most of these deals.

The current wave was launched in December with the announcement that PENN had concluded a $2.8 billion deal to acquire regional rival Pinnacle Entertainment (NASDAQ: PNK), whose 15 casinos and racinos in nine states had been acquired by Gaming & Leisure Properties the year before for $4.8 billion in cash and GLPI stock, essentially making Penn and Pinnacle sister companies.

Penn National gets 11 of these properties, comprising 17,700 machine games, 525 table games and 3,570 hotel rooms in seven states, and access to an array of new markets: New Orleans, Baton Rouge, Lake Charles, Black Hawk, Vicksburg and Chicagoland.

Pinnacle shareholders get $20 in cash and 0.42 shares of PENN for each of their Pinnacle shares, an implied value of $32.47 per share, by Penn’s reckoning, representing a hefty 36 percent premium to where PNK was trading at the time word of the merger talks leaked to the media back in October.

Concurrent with the deal’s closing in the second half, Penn will sell its Plainridge Park racino in Massachusetts to GLPI for $315 million.

GLPI also gains a new tenant in Las Vegas-based Boyd Gaming, which is paying $575 million to expand into the St. Louis, Kansas City and Cincinnati markets with the purchase of four Pinnacle casinos.

Factoring in these sale-leasebacks, adjustments to its master lease with GLPI and a projected $100 million in synergies over the next two years, Penn figures it effectively paid $1.71 billion for Pinnacle, a relatively modest 6.6 times EBITDA for the previous 12 months. It emerges a 40-property behemoth with casinos and racinos in 20 jurisdictions in 16 states and Ontario, Canada—53,000-plus slots, 1,300 table games and some 8,000 hotel rooms—and a VGT operation spread across more than 300 locations in Illinois.

At the same time that details of the Penn-Pinnacle merger were unfolding, Boyd announced it was entering the Philadelphia market with the acquisition of Valley Forge Casino Resort for $280.5 million in cash. In May, the company snapped up an Illinois VGT operator called Lattner Entertainment Group.

Between the Pinnacle and Valley Forge deals, Boyd has added 369,000 square feet of casino space to a nationwide portfolio now comprised of 29 casinos in 10 states—an additional 6,600 slots, 240 tables and more than 1,700 rooms.

18

Global Gaming Business JUNE 2018

The Lattner deal in Illinois adds another 1,000 or so machine games in 220 locations. Why get involved in VGTs? According to Keith Smith, president of Boyd Gaming, it was all about research.

“The studies we saw told us our players were spending significant time at their local bars or restaurants playing VGTs,” he told the audience at the Southern Gaming Summit in May. “If that’s the case, we want to be where our customers are.”

A Bigger Bang The other REITs have been busy as well, shelling out big money for their piece of the action.

MGM Growth Properties (NYSE: MGP), formed in 2016 with the transfer of six MGM resorts on the Las Vegas Strip, MGM Grand Detroit and MGM’s Beau Rivage and Gold Strike casino hotels in Mississippi, has grown its asset base to $12 billion and its 2017 rental income to $756 million with the acquisitions of Atlantic City’s Borgata Hotel Casino and Maryland’s market-leading MGM National Harbor. MGP paid for the deals with a mix of limited partnership interests and the assumption of $970 million of debt and $462.5 million in cash.

This spring, MGP announcing it was paying a cool $1 billion to acquire a racino near Cleveland, the Hard Rock Rocksino in Northfield Park, Ohio, with 2,300 VLTs, a 1,900-seat concert venue and gaming revenue last year of $232.5 million. The plan is to spin off the operation by leasing it to an outside company.

It also has an option on the $950 million MGM Springfield, a categorykiller scheduled to open in Massachusetts this summer.

Earlier this year, according to press reports, MGP even tried to buy VICI, the Caesars REIT, then all of about three months old. The $5.85 billion bid, representing a per-share offer of $19.50 (VICI was trading at $20 and change at the time) was rejected.

VICI (NYSE: VICI) has mapped a growth trajectory of its own. Launched last fall, VICI was one of the keys to getting creditors to buy in to a court-supervised restructuring of the largest and most heavily indebted company in the Caesars stable, Caesars Entertainment Operating Co., which had been in Chapter 11 protection since early 2015.

Originally a portfolio of 19 CEOC casinos (and four golf courses), VICI acquired Harrah’s Las Vegas in December for $1.14 billion and now owns a $10.5 billion, nine-state portfolio that includes the iconic Caesars Palace, 10 Harrah’s casinos and the Bally’s, Horseshoe and Harvey’s brands. The company also has options on Harrah’s Atlantic City, Harrah’s New Orleans and Harrah’s Laughlin and a right of first refusal on the Indianapolis-area racetracks casinos—Hoosier Park and Indiana Grand—Caesars purchased in November from Centaur Gaming for $1.7 billion. VICI also is in line to own a 300,000-square-foot convention center Caesars is developing on the Las Vegas Strip.

Then there’s the Tropicana Entertainment deal announced this spring, perhaps the best example yet of the force the REITs are exerting on acquisitions. Gaming & Leisure Partners is partnering with Eldorado Resorts on the

Project1:Layout 1 5/16/18 3:05 PM Page 1

p. 16 regionalconsolidation:Layout 1 5/16/18 8:44 PM Page 20

Gaming Real Estate Investment Trusts MASSACHUSETTS Plainridge Park*

MISSISSIPPI

GAMING AND LEISURE PROPERTIES, INC. Owned And Operated

LOUISIANA Hollywood Casino Baton Rouge

1st Jackpot Casino Tunica Ameristar Casino Hotel, Vicksburg Boomtown Casino Biloxi Hollywood Casino Tunica Hollywood Casino Bay St Louis Resorts Casino Tunica Trop Casino Greenville*

MGM GROWTH PROPERTIES

VICI PROPERTIES

Owned

ILLINOIS

MARYLAND

Harrah’s Joliet Harrah’s Metropolis

MGM National Harbor

INDIANA MASSACHUSETTS MGM Springfield

MARYLAND

MISSOURI

Hollywood Casino Perryville

Ameristar Casino Hotel, Kansas City Ameristar Casino Resort Spa, St. Charles Argosy Riverside Hollywood Casino St. Louis Lumière Place* River City Casino & Hotel

Owned

COLORADO Ameristar Casino Resort Spa, Black Hawk

ILLINOIS Argosy Alton Casino Queen Hollywood Casino Aurora Hollywood Casino Joliet

INDIANA Ameristar Casino Hotel, East Chicago Belterra Casino Resort, Florence Hollywood Casino Lawrenceburg Tropicana Evansville*

IOWA Ameristar Casino Hotel, Council Bluffs

LOUISIANA Belle of Baton Rouge* Boomtown, Bossier City Boomtown, New Orleans L’Auberge Casino Resort, Lake Charles L’Auberge Casino & Hotel, Baton Rouge

MAINE Hollywood Casino Hotel & Raceway Bangor

20

NEW MEXICO Zia Park Casino

NEVADA The M Resort Spa Casino Cactus Petes Casino Resort Jackpot The Horseshu Hotel & Casino Jackpot Tropicana Laughlin*

Horseshoe Hammond Horseshoe Southern Indiana

MICHIGAN MGM Detroit

IOWA

MISSISSIPPI

Harrah’s Council Bluffs Horseshoe Council Bluffs

Gold Strike Tunica Beau Rivage Biloxi

KENTUCKY NEVADA Excalibur Luxor Mandalay Bay Mirage New York-New York Park MGM (formerly Monte Carlo) The Park

Bluegrass Downs

LOUISIANA Harrah’s Louisiana Downs Horseshoe Bossier City

MISSISSIPPI

Borgata

Harrah’s Gulf Coast Horseshoe Tunica Tunica Roadhouse

OHIO

MISSOURI

Hard Rock Northfield*

Tropicana*

Harrah’s North Kansas City

OHIO

NEVADA

NEW JERSEY

Hollywood Casino Columbus Hollywood Gaming at Dayton Raceway Hollywood Gaming at Mahoning Valley Race Course Hollywood Casino Toledo

PENNSYLVANIA Hollywood Casino at Penn National Race Course The Meadows Racetrack and Casino

NEW JERSEY

Caesars Palace Harrah’s Lake Tahoe Harrah’s Las Vegas Harvey’s Lake Tahoe Harrah’s Reno

NEW JERSEY Bally’s Atlantic City Caesars Atlantic City

PENNSYLVANIA Harrah’s Philadelphia *

WEST VIRGINIA Hollywood Casino at Charles Town Races

Global Gaming Business JUNE 2018

* Sale Pending

$1.85 billion deal and will pick up most of the cost ($1.21 billion) in exchange for the real estate under six Tropicana casinos in six states, including the company’s Atlantic City flagship.

For $640 million, Eldorado gets those six quality operations, plus MontBleu Casino Resort in South Lake Tahoe—in all, 7,900 slot machines, 265 table games and 5,400 hotel rooms.

For Eldorado, fresh off last year’s $1.9 billion Isle of Capri purchase, it works out to a very affordable 6.6 times EBITDA on a trailing 12month basis after giving effect to Tropicana’s cash on hand and cash flow from operations through the deal’s expected closing in the second half. Eldorado has identified a further $40 million in cost synergies, which it calculates down to a purchase price multiple of less than 5 times.

Put this together with an agreement Eldorado reached around the same time to acquire the Grand Victoria Casino in Elgin, Illinois, for $327.5 million in cash and you’ve got a very savvy operator that has bought into a fresh $900 million-plus revenue stream and two significant new markets—Atlantic City and Chicagoland— for a blended multiple of 5.5 times earnings, roughly speaking, after synergies and other cost savings.

Who’s Next?

For investors in all these concerns, it’s shaping up as one heck of a run, that’s for certain. But is it good for the gaming consumer?

“Is it a good thing that Walmart dominates, that Amazon dominates? You get to a point in a capitalist economy, in the end, where that’s going to happen,” Adams says.

“For the consumer, what do you get? Well, you get the operators with the most money.

Does that always result in the best product?

Probably not.”

But then, in his view, the statutory limitations on licenses that prevail in most jurisdictions more or less decree oligopolies anyway.

“The slot machine product in Downtown Las Vegas is much more competitive and much friendlier to the customer than downtown Detroit or Atlantic City or New Orleans. They don’t have the same kind of open competition that exists in Nevada.”

But that’s only part of the story, and not the most important part either, because, as he puts it, “The current model is not to make it cheaper, it’s to make it better, so you appreciate what you’re getting and you’re willing to pay full price for it.”

p. 16 regionalconsolidation:Layout 1 5/16/18 2:32 PM Page 20

2 0 0 0 AT T O R N E Y S | 3 8 L O C AT I O N S W O R L D W I D E˚

“On the marketing side, consolidation certainly helps because they should be spending less on marketing and promotional allowances.”

—Cory Morowitz, Managing Partner, Morowitz Gaming Advisors

Morowitz says, “On the marketing side, consolidation certainly helps because they should be spending less on marketing and promotional allowances. It’s interesting as you look across the landscape: Atlantic City went through a period with less casinos; marketing costs came down significantly. And now they’re starting to inch their way back up again. We expect with the opening of two new casinos that those marketing costs will continue to go up.

“And we’re seeing everybody improving their properties. So, having a wider distribution obviously helps the consumer. I think on the positive of this consolidation, with it usually comes some investment. As these companies invest in these products and make them better, it’s good for the consumer.”

Machines might get tighter, he says. “But there’s so much competition for that discretionary dollar, casinos will still have to treat their customers well in order to keep them.”

And no matter who buys up who, the 80-20 rule will always be there to assert itself when the dust settles.

“For those small number of customers that generate the lion’s share of revenue, I don’t think it’s an issue,” he says. “They’ll continue to get treated extremely well, and even fought over.”

Ultimately, there is a ceiling to how much efficiencies can be wrung from a property without damaging the player experience, he says. “I think that future margin improvements have to come from top-line growth. That’s part of the consolidation wave.”

He doesn’t see it subsiding either, not with the “financially engineered value” the REITs have brought to the equation.

“As with a lot of other industries, there’s a lot of copycat stuff out there, a lot of operators who are seeing opportunities to cash out and get full value. So as long as those multiples stay where they are, you’ll continue to see consolidation.”

It’s not as though there’s a lack of targets.

“There is still room for growth for medium- and small-size acquisitions and mergers, and certainly plenty of room to buy casinos that are freestanding,” notes Adams.

“Don’t forget, Caesars Entertainment is a meaningful player in regional markets,” says Jefferies’ David Katz. “Boyd, Eldorado. Monarch (Casino & Resort) may have a future in additional markets. Churchill Downs has been an acquirer.

Golden Entertainment has been an acquirer. That’s not a bad list. Not as big as it used to be, but it’s not nothing either.”

Greenberg Traurig’s Labor and Employment practice group provides an array of workplace strategies and legal counsel, including practical and efficient consulting, technical assistance, and litigation services. Our team understands the business impact of labor and employment issues.

• Represent employers of all sizes and industries in matters involving discrimination, harassment, retaliation, wrongful termination, whistleblowing and breach of contract issues.

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p. 22 adelson june:Layout 1 5/17/18 9:33 AM Page 22

The Many Makings of Sheldon Adelson

By Oliver Lovat

Learning From a

LEGEND

A decade ago, Sheldon Adelson faced the biggest challenge of his distinguished business life. Perhaps this time, Adelson’s absolute certainty in his convictions against conventional wisdom were a step too far. Shares in his company, Las Vegas Sands, had collapsed from $150 per share to under $1.50, and the doubters who had waited many years to prove Adelson wrong lined up to write his business obituary. Oliver Lovat explores the career of Sheldon Adelson and tries to understand what we can learn from the most unlikely titan of global gaming.

I

n 1933, in the shadow of Adolf Hitler’s rise to power in a fragmented and dysfunctional Europe, Sarah and Arthur Adelson, Lithuanian immigrants to the U.S., gave birth to Sheldon Gary Adelson. Like many on the tough streets of the East Coast, the early years of Adelson’s life were tough; the harsh living conditions of workingclass neighborhoods were punctuated by the anti-Semitism of both the streets and the country clubs.

Many have sepia-tinged memories of a childhood in simpler times, but growing up in Boston was not an easy time for a Jewish boy with big ideas.

Denied the educational opportunities that today’s children have and acutely aware of the fate of his people in Europe, Adelson knew from an early age that in this world that you had to either eat or be eaten.

In Adelson’s case, it was about financial security. With the awareness that he was undoubtedly smarter than the other kids on the block and with

22

Global Gaming Business JUNE 2018

the strong work ethic and determination that was instilled by his family, desperate to succeed in the new world as the life that his family had known was gone, a young Sheldon went to work. With many of the established professions and businesses closed to Jews, Adelson turned to trading. He traded newspapers, candy and toiletries, his mind alive to trading anything where there was a demand for his goods.

After a short time at college, the army and as a court stenographer, he returned to business, selling more sophisticated products, including mortgages and financial services. Using his proceeds, he invested in companies, including the American International Travel Service, which proved to be a highly profitable venture.

However, due to circumstances out of his control, namely the economic crisis of the late 1960s, his fledgling empire collapsed, and Adelson was left to rebuild. He turned to real estate, brokering Bostonian real estate and develop-

p. 22 adelson june:Layout 1 5/16/18 2:33 PM Page 23

The two Venetians (Las Vegas at left, Macau at right) spawned successful gaming/convention properties in each city

ing condominiums. He diversified to publishing, and again, always looking for opportunities, and with the insights gained from his past experience, saw the synergy between the emerging convention industry, travel and other trading businesses, including the potential of technology.

At 40, an age when many of today’s businessmen are supposed to be settled in a career or are becoming risk-averse, Adelson made another bold change. He would go into the convention business.

Initially slow, the technology convention business grew steadily and in 1979, as technology advanced, his computer show, COMDEX, came to Las Vegas and quickly became the city’s largest and most successful trade show.

Adelson grew the computer convention business almost single-handedly, acting as a conduit for cooperation and exposure for tech firms.

By the late 1980s, Adelson was not only wealthy in his own right, but sought to expand, acquiring the Las Vegas Sands hotel and surrounding land.

Always looking forward, in 1995 Adelson sold COMDEX for $860 million and built the Sands Expo and Convention Center, a 1.2 million-square-foot convention center, the largest privately owned convention space in the U.S., which allowed him to operate his own conventions. He imploded the 715room Sands hotel in 1996 and opened the $1.5 billion, 4,000-room all-suite Venetian hotel in 1999 to service his convention business.

Proven right again, Adelson could smile as he embarked a new journey, but not even he could have conceived where this road would end.

Las Vegas and the Venetian It is difficult to recall how differently Las Vegas was perceived when Adelson acquired the Sands and the effect his influence has had in shaping modern Las Vegas. When writing the story of Las Vegas, it is easy to point to the radical legacy of Jay Sarno and Steve Wynn in casino design, the corporate influences of Howard Hughes and Kirk Kerkorian and innovative casino marketing strategies of Bill Bennett and Gary Loveman, but in many ways, the city’s legacy and resilience owes much to Sheldon Adelson’s vision and business acumen.

In 1995, when Adelson acquired the Sands, Las Vegas was still predominantly a gaming town, with cheap rooms, subsidized food and free drinks— with the casino being the primary income generator, providing nearly 58 percent of revenues.

Las Vegas Revenues 1995-2015 Year Casino

Room

Food

Beverage

Other

1995

$1,317,990,842

$709,529,421

$(36,621,231)

$91,618,423

$199,742,476

2005

$2,073,768,901

$2,068,474,328

$168,268,199

$238,647,991

$725,389,566

2015

$1,731,786,103

$2,540,927,992

$448,286,886

$434,168,009

$1,270,685,297

Adelson wasn’t in the casino business. He was in the business business, and his Venetian took a very different business strategy than other properties.

In a 2014 interview, Adelson said, “If you do things differently, success will follow you like a shadow.” This was certainly true with the Venetian.

As he had proved throughout his career, Adelson knew his customer’s needs and would deliver on them in the way that he felt best. He and his team were the market leaders at convention sales and tourism, and knew their industries inside out. He knew that the conventioneers he catered to wanted nice rooms, and if they were prepared to pay $200 for a room in Orlando, Chicago or New York, why wouldn’t they pay the same in Las Vegas?

The conventional thinking in Las Vegas was to get the customers out of the rooms and into the casino. Adelson didn’t care about conventional thinking on room strategy, as his rooms were nearly double the size of the traditional Las Vegas room. Post-Venetian, resorts pay considerably more attention to the room product than before, and it is conceivable that by the close of this decade, room revenues will overtake casino as the primary revenue driver in Las Vegas.

The conventional thinking was to operate all the food and beverage internally as an amenity to guests. Adelson didn’t care about conventional thinking on food and beverage strategy, as he knew that if the offering was good enough, people would pay. When it came to food and beverage they were novices, so LVS took the radical step of outsourcing all aspects of their food and beverage program, with the exception of the casino bars. This had two effects.

First, there was a consistent revenue stream from the leases, and secondly, no operational headaches, especially from the trade unions which found the Adelson way of business not to their liking. The Venetian was the first integrated resort in Las Vegas not to have a buffet, which was deemed an essential component in casino resort development from the 1950s onwards. Even the 24-hour café, the Grand Lux, was an outsourced concept from the brains behind the Cheesecake Factory.

The conventional thinking was that casinos should be dark, where customers would not realize the time of day. Adelson didn’t care about conventional thinking on casino design; his were light and bright, whatever the time of day. Conventional thinking was that casino resorts shouldn’t operate shopping malls and should leave that to retail specialists. Again, Adelson didn’t care about conventional thinking when he built a shopping mall contiguous to his hotel. The Grand Canal Shoppes mall was ultimately sold to General Growth Properties, a retail REIT, for over $760 million in 2004.

Total Like Jay Sarno’s Caesars Palace in 1966, the Venetian had something bigger, something different in mind. Adel$2,282,261,926 son sought to attract people to Las Vegas who had not $5,274,550,990 been there before, catering to a different audience. He $6,425,856,302 wanted conventioneers by week and tourists by weekend.

JUNE 2018 www.ggbmagazine.com

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The Parisian Macao will soon be followed by the Londoner, a renovation of the former Sands Cotai Central

Sheldon Adelson’s knowledge of the meetings and convention business led to the creation of the Sands Expo and Convention Center in Las Vegas

Not just gamers, who sought to spend hours on slot machines, but real tourists, ones that would go to Las Vegas for the weekend instead of San Diego, Los Angeles or Dallas to go shopping, eat good food and see a show.

If they gambled, great. If they didn’t gamble, also great.

Adelson’s effect on Las Vegas was profound. He had developed the first truly integrated resort, where non-gaming revenues were as important as gaming revenues, as the property gave customers everything that they could want under one roof. This was a convention and tourist resort with gaming, restaurants, retail, nightclubs, exhibitions, entertainment and a spa. Adelson foresaw what the Las Vegas Strip was to be, with gaming accounting for one third of revenues. As we know, all other revenues grew over the subsequent decades as visitors appreciated the quality amenities in the city and chose to spend their money on non-gaming activities which were on offer.

It Was the Best of Times, It Was the Worst of Times Macau reverted to a special administrative region of China in 1999, and was a million miles from Las Vegas when in 2002, the Macau Government ended the SJM monopoly on gaming and opened the Chinese province’s market to external gaming companies.

Originally an outsider to the process, as MGM and Caesars appeared to be the leaders, the first of the Western companies to take advantage was Las Vegas Sands Corp., opening a casino designed and built in record time for $240 million. The casino opened prior to the completion of the hotel. It was a success, and the building’s construction debts were paid off in one year, as the Sands Macao shattered all gaming records for a property that size.

With such strong performance both in Las Vegas and Macau, Adelson not just doubled down, but quadrupled down. Sands was awarded a license and committed to build a casino in Bethlehem, Pennsylvania which was to open in 2008. His Venetian Macao, located in the reclaimed ground of Cotai, broke ground in 2004 with an opening in 2007. Sands was to build 3,000 rooms in the Palazzo, as part of the Venetian complex to open yearend 2007.

And most spectacularly, in 2006, Las Vegas Sands, originally perceived as an outsider to the process, won the right to build the Marina Bay Sands in Singapore and committed nearly $5 billion to the project. LVS was committed to over $10 billion of investment as the world’s debt markets collapsed, leaving it highly exposed.

In the U.S., the financial crisis was more pronounced than Asia, as households were directly affected in terms of discretionary spending. Adelson’s convention and tourism model was not helped by President Barack Obama’s advice to American businesses not to go to Las Vegas and spend money.

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Global Gaming Business JUNE 2018

Competitors in Las Vegas filed for bankruptcy. Some managed to hold on for a couple of years before they succumbed. Others just survived, requiring emergency equity and investment to keep the doors open.

On November 6, 2008, LVS reported to investors, “There is substantial doubt about the company’s ability to continue as a going concern because of the company’s failure to maintain a certain ratio of debt to earnings as required by its lenders.”

Speculators eyed up Sands. Unfinished buildings, huge debt, declining market, bookings down. Adelson was toast.

For nearly all businesses, a public declaration like this would usually mean the end. However, when reflecting on this time, did Adelson himself have an outlook that almost every other CEO in his position would not have? Forty years ago, when many of his contemporaries were at college and those analysts forecasting a sale were not even born, Adelson had seen this storm before, and last time did not have the ability or wisdom to face it.

It’s likely he had long considered “what if” his 1960s business had not folded. Now he could prove himself and in his own decisions.

In the South China Post and regional media, there were frequent comment pieces challenging how a Las Vegas-based conventioneer could understand the Chinese customer, prophesizing failure. However, the failure was in not understanding the mechanics of Adelson’s decision-making. Adelson and his team knew the Chinese customer, because the Chinese customers were like him and his family. This was a nation of over 1 billion people benefiting from economic freedoms, the ability to start businesses, take risks and challenge luck.

Yes, there are cultural differences, but from a psychological point of view, people in China wanted the same as people all over the world—good amenities, nice rooms, good food, and in Asia, to gamble. Moreover, what Adelson saw that the analysts didn’t was the revenues that were beginning to come in from Macau—while all the U.S.-centric analysts wanted to look at was the Armageddon of the Las Vegas casino market and decline in convention bookings.

In what must have been his boldest decision in a 50-year career, Adelson personally recapitalized the company of which he was the largest shareholder.

Had he failed, it may have wiped him out. However, he watched as Macau overtook Las Vegas to become the gaming capital of the world, peaking with revenues at $45 billion, and LVS was the biggest player in that market, generating nearly 50 percent of the market’s EBITDA. For Las Vegas Sands, the period of 2007 to 2010 really was a tale of two cities.

Today, Las Vegas Sands, Adelson and the iconic properties in Macau, Singapore and Las Vegas are admired success stories. Adelson’s LVS is a front-runner for a casino license in Japan, in what promises to be one of the most lucrative opportunities in global gaming. Who now would bet against Sheldon Adelson?

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Adelson’s Business Success Many books have been published about the careers of the great innovators and marketers of the 20th and early 21st century. The technology entrepreneurs of the late 20th century are rightly lauded in developing and exploiting new technologies creating businesses that are essential for modern living. Investors and financiers used the power of global markets to uncover value and efficiently run businesses for maximum profit.

The role of marketers—from the technology-driven big data analysts to the bold showmen with big ideas and bigger personalities—is celebrated.

Somehow, Adelson does not fit in the conventional stereotype. His is a story of shaping business to the evolving needs of the customer. He is an entrepreneur, yet of established and traditional businesses—moreover, businesses for people.

The lessons below have been adapted from work done by Peter Druker, the father of management theory, and Adelson’s own reflections. Let us call this program, “The Adelson Attribute Management Model.” Within this model, there are aspects to consider in personal training and development with the outputs being managerial competence, trust, efficiency and entrepreneurial thinking.

The Adelson Attribute Management Model Be Effective In his work, Druker is repeatedly concerned with managerial effectiveness, and the same is true for Sheldon Adelson. Effectiveness is the blend of insight and work ethic. It is the self-discipline required to turn intelligence to knowledge and to be able to operate within an organizational structure. Naively, the smartest person may not be the most effective, but the best executive or business person will almost always be, and these skills are proven within structures that are created around the individual to enable their abilities to excel.

Adelson’s breadth of career proves Druker’s hypothesis that those executives that specialize, for example in on single skill set, such as accounting, law or medicine, rarely have the breadth of insights to best handle the multi-variance of challenges that occur in business, as situations are fluid. Some believe that effectiveness is a gift that falls on some, but in truth with a range of exposure, focus, dedication and above all else, personal diligence, individuals can create their own structures and environments to maximize their personal effectiveness.

Have Values As we know, Adelson’s upbringing was unlike many that exist today in terms of hardship and lack of opportunity. There was no silver spoon or personal safety net, yet he regularly talks of the most valuable gift bequeathed to him by his parents, those of values.

Values cost nothing, but are vital in understanding the sense of self and purpose. Outside of business, Adelson is one of the greatest philanthropists in the world, and he uses his wealth to help and inspire those both within his community and outside, as helping others, supporting America and the Jewish people which are part of his DNA. As we note, leading a business involves making decisions, and without a manager directing you, the individual has choices to make. Personal insights and values have been at the core of Adelson’s business career.

What’s Next?

The late Israeli president Shimon Peres used to say that the Jewish people are never satisfied and will always do things better. Adelson’s career is illustrative of this. Many businesses are risk-averse and seek incremental growth. These are destined to failure unless the CEO is looking out and not in.

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Trust Yourself Executives form personal opinions, and in many cases these are subjugated by conventional wisdom, established norms and widespread market analysis. The lesson from Sheldon Adelson, like many entrepreneurs, is to trust your own judgment.

It is good, if not essential, to think differently at solving problems and analyzing challenges. Implementing free thinking is a high-risk strategy for many corporate businesses and consensus is always perceived to be a safer option, but Adelson has challenged this repeatedly, and this is the cornerstone of his success.

Understanding Your Market All Adelson’s businesses have been customer-driven. He has a clear perspective on customer psychology and market function. He knows views on what people want and how they want it, and has a strong view on how to deliver it. This is part experience-driven, but also demonstrates a deeper insight into people.

He understands that while it is important to meet aspirational wants, Adelson’s businesses are all about functional needs of a particular market, and if he can supply these in a commercial environment, where a profit can be achieved, then there is business case to be met. If you cannot understand that market or that business, leave it to someone else and revert to what you know.

Implementation Challenges of the Adelson Business Model It is relatively simple to codify the business attributes of Sheldon Adelson. It is hard to implement these in a commercial environment.

As indicated, Adelson’s businesses have followed a pattern of high growth, expansion and dominance of competition. This success has relied on a singular top-down management culture that is reliant on competent, confident management personnel that share the methodologies and adopt the vision as set out above.

His business structures are decidedly non-corporate, and great power is held by a few people.

Within corporate structures, it is nearly impossible to inculcate the culture and experiences required to broaden the thinking of management to be like Adelson, and corporations are reluctant to promote entrepreneurial minds that do not follow the prevailing organizational thinking—even when that thinking is validated by outside experiences.

Ironically, the outsider thinking of Gary Loveman and Harrah’s MBA invasion in the early 2000s (which had a very different vision than Adelson) had a similar transformative impact on gaming, but was heavily focused on internal reflection over looking at future challenges.

Hindsight With the benefit of hindsight, the business world should have been more confident of the durability of Adelson a decade ago.

They should have known that unlike many competitors, Adelson had been there before, taking notes and looking forward. Today, even his most ardent of critics and detractors can only admire the business savvy and confidence of one of the world’s most unique and resilient businessmen, as he proved, yet again, that nobody should underestimate the instincts and decision-making of this most unorthodox business outsider.

We can only hope that others can look at and benefit from his strategic legacy and try to replicate much from Sheldon Adelson’s unique business career.

Oliver Lovat is a fellow of the Royal Institution of Chartered Surveyors. He leads the Denstone Group, which offers strategic consultancy on casinos and hotels. He lives in Las Vegas.

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Not So

Free To Be Social media strategy and trends to which casino marketers should be paying attention

I

tention. Creating compelling content for your social media chann a recent Ascend2 report on digital marketing, respondents By nels is not only effective, but also difficult to execute if not (marketing influencers) indicated that the most effective aligned with your goals and objectives. digital marketing tactics in 2018 will be social media marJulia The type of content will vary if your goals are increasing webketing, with content marketing a very close second.

Carcamo site traffic versus increasing your audience size versus increasing The results of the study may sound simple enough, but social engagement. Send the same message to everyone and you’ll find media is no longer the easy, “free” channel marketers once thought. yourself wasting impressions. You should segment your social messages The challenge is that Facebook, Twitter and the plethora of availthe same way you segment your offers. able channels are no longer nice-to-have places to push the latest promotion.

In addition, the increased adoption of social media has driven a shift in Social media is now a necessity in our marketing plans, but as the medium the way consumers are using this channel. Savvy marketers will understand matures, it becomes more difficult to increase the effectiveness of our efforts. that adapting to these shifts could lead them to get ahead of the rest of the According to Statista, 96 percent of businesses worldwide are using social pack to engage customers in meaningful ways. There are some trends that media, and the U.S. is by far the largest social media advertising market. seem to be leading the way: customer service, video, sponsored content and Once thought of as the fun, easy-to-manage channel, it is now one that artificial intelligence. requires thought and strategy as well as resources and accountability. Lack of an effective strategy is one of the top barriers to successful achievement of AT THE INTERSECTION OF goals (the other is budget). To be successful, you need to draw on experiMARKETING AND SERVICE ence, you have to plan, and you need to pay attention to details.

Social media isn’t all about brand promotion. Smart companies use their soYou must understand who your target is and how social fits into your cial media pages to interact with customers in fun, educational ways. They plan to engage those targets. Toss vanity metrics (number of likes and folmay even participate in conversations about recent events. By avoiding conlowers) aside, as those do not necessarily equate to any sort of ROI if they stant promotions, brands can make themselves seem like people who want to are coming from an audience that is clicking away because they were simply participate in the fun side of social media. entertained by your post. What you ultimately want your audience to do is Customers are also increasingly using social channels as their preferred convert by walking through your door and sliding their player’s cards into a method of communicating with brands... and they expect quick, timely reslot machine—and if they aren’t, you should probably consider overhauling sponses for everything from valid complaints to general inquiries. Let’s be your social strategy. honest: Who prefers to sit on hold, only to have an operator ask you to reAs with all marketing approaches, there must be a clear understanding supply them with the information you entered during the initial, automated of the desired outcomes. You must realize that each tactic deserves careful at28

Global Gaming Business JUNE 2018

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By avoiding constant promotions, brands can make themselves seem like people who want to participate in the fun side of social media.

part of your call?

On average, 2 billion messages are being exchanged between businesses and customers each month via Facebook’s Messenger app. According to Facebook, 53 percent of people are more likely to shop with businesses they can message directly.

Your call center agents can help you here.

Twitter may be stagnant in the growth department, but it is still crushing it in responses to customers. More and more customers are tweeting their issues, both good and bad. While the jury is still out as to whether this platform will go the way of MySpace, it’s important to stay on top of those messages.

demographic, interests, keywords... even the television shows people watch or events they are likely to attend. Best of all, you can create custom audiences based on what you already know about your channel audience or database.

Social media advertising continues to grow at a rapid pace (some estimates put it at 20 percent per year). That pace is not going to slow down. The flip side of this stat is with the increase in advertising comes an increase in pricing. Facebook alone increased its pricing over 70 percent year-over-year in 2017. So, being smart about your messages and targeting becomes even more important.

VIDEO AND STORIES

Chatbots and artificial intelligence are no longer science fiction. From the pop-up you saw today on a website, to asking Siri for directions or asking Alexa to change the temperature set on your thermostat, artificial intelligence is now a very real part of our day.

A survey by HeyWire Business showed that “53 percent of consumers ages 18-34 said that they’d prefer to use electronic media—email, web chat, text or social—instead of the phone for customer support.”

Because they are quicker than human beings (particularly when providing data-related answers and taking requests), chatbots can efficiently provide 24/7 services. Facebook announced the “Bots for the Messenger” app at its annual conference almost two years ago. Today there have been over 12,000 bots created on the app.

According to Hannah Farrow of Sparxoo, “All you’ll have to do is send a message to a company’s chatbot and get an immediate response. There’s even a good chance that these chatbots will eliminate 1-800 numbers. Plus, as users crave immediacy and personalization, chatbots will become a handy resource.”

CRM has been one of the most important elements of a casino marketing strategy, and now it is also a tool that can greatly assist in social media.

The path is clear. The question of social media is no longer a question of “should we?” The questions are about how we use the channel to drive the business goals. But, we still face some challenges.

One of the biggest challenges when speaking to operators is that social has been siloed when it should be working hand in hand with all of the other marketing tactics. Customers see our operations as one entity rather than being made up of six or seven departments.

As you can see from the trends impacting marketers, there needs to be a free flow of information and cooperation with all elements of an operation.

From customers looking for their favorite slots, information on restaurant times, and choosing between a visit to you or your competitor, the information they desire (even if they didn’t know there was a desire) needs to be available to them in a truly engaging fashion. Social media gives you the most flexible platform to do so. It goes without saying that marketing and technology must be in sync with an overall business strategy.

Facebook has stated that one in five videos shared are shared via their Live channel, and Instagram Stories usage went from zero in September 2016 to a whopping 250 million in July 2017. According to Hubspot, visual content is over 40 times more likely to get shared on social media than other types of content.

The opportunities we now have for live video are opening a new, fresh way to communicate with customers and immerse them in a branded experience. Additionally, video and live stories allow for unscripted or off-thecuff content that shows the human side of the brand.

Steve Olenski, a contributor to Forbes, notes, “Video content is gaining in popularity, and there are two main contributing factors. It’s highly effective and it’s no longer costly to produce. Today’s smartphones are equipped with cameras that produce high-quality 4K video that is comparable to expensive video equipment.”

Develop a plan that includes video, particularly real-time video which allows you to engage with fans and customers in an authentic way. The opportunities casinos have are endless. If you talk to your front-line employees, you’ll create a list of ideas that can take you through the year.

SPONSORED CONTENT In the beginning, we simply had to create something and hit “post” to reach our audience. We didn’t have to think about relevance, much less buying our audiences.

“Prior to 2014, brands spent their resources building communities.

After 2014, brands had to start spending money to reach them,” says ThinkTraffic Director of Strategy and Analytics Bjorn Talbot.

Today’s marketer has to be as savvy about social as they are about direct mail. The biggest challenge to marketers has been the decrease in Facebook’s organic reach in lieu of paid. While many continue to shake their fist at the unknown force that tinkered with the social media channel algorithms, the fact is you are better off focusing your energy on how to use the channel effectively. Using organic and paid posts together can actually improve your effectiveness. Think of your organic posts as the tools for long-term growth while paid posts are best used for short-term lifts.

Depending on the channel, brands can set campaign objectives—awareness, clicks, lead generation for B2B, etc. Targeting can be broad or tight depending on your needs and skill. Sponsored posts can be delivered on

ARTIFICIAL INTELLIGENCE

Julia Carcamo is president of J Carcamo & Associates, a full-service marketing consulting firm comprised of experienced marketing and branding professionals serving in a variety of vertical industries, including gaming and hospitality, entertainment, real estate, CPG and B2B. JUNE 2018 www.ggbmagazine.com

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Building a Better

Macau

With a two-year recession in the history books, Macau is relying less on big-spending VIPs, more on mass players and non-gamblers

By Marjorie Preston

B

ack in 2014, Macau’s gaming industry seemed like the bet that couldn’t lose. Andrew Klebanow remembers it well.

“Macau was going at a run rate of $47 billion a year,” recalls Klebanow, partner with Global Market Advisors. “At G2E that year, I said at the current rate, Macau could be a $100 billion market by the mid-2020s.

“The next week, we were off the cliff.”

It was a long way down. The first tremor came in in June, with the market’s first year-on-year decline since 2009. That 3.7 percent drop was followed by a 3.6 percent decrease in July. And so it went, month after dismal month, for more than two years. In 2015, the industry lost a staggering 34.3 percent in GGR. All in all, the epic downturn robbed Macau’s lifeblood industry of some $100 billion in value.

Today, the territory is bouncing back, with double-digit gains in many months driven both by VIP and mass play. But this recovery feels different.

Remembering the exodus of high rollers during the recession, operators have acknowledged that mass gamblers, and even non-gamblers, may be the real VIPs.

The Big Drop In the past, Macau relied on gaming for up to 80 percent of its economic sustenance. But that house of cards was built primarily on VIPs, the bigspending baccarat players brought in by Macau junket operators.

Then along came Chinese President Xi Jinping, who took power in 2013 and promptly cracked down on corruption and capital outflows from the mainland. Uneasy under the government microscope, VIPs took flight.

“People who had money no longer felt comfortable displaying it; those who continued to gamble went to other jurisdictions,” says Klebanow.

“NagaWorld in Cambodia enjoyed robust growth, in part predicated by the shift of gamers going to that destination. You saw gaming revenue growth at Entertainment City in the Philippines (where at the time, casinos were not even subject to anti-money laundering regulations).”

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Global Gaming Business JUNE 2018

Above: The whimsical floral display at Wynn Cotai has nothing to do with gaming. Left: Themed resorts like Sands China’s Parisian expand the attraction of Macau beyond just gaming.

Xi’s solution was straightforward. He told Macau to grow its economy beyond gaming, or else. “Focus on building a global tourism and leisure center,” said the PRC president in 2014. “Promote the Macanese economy’s appropriate diversification and sustainable development.”

The decline was grueling, but could it be worth it if it leads to a more resilient economy? Maybe.

“These sorts of growing pains are difficult for everybody,” says Michael Zhu, senior vice president of international operations planning and analysis for The Innovation Group. “We’re facing a new phase where we have better growth on the mass segment and are diversifying the hospitality program to offer more than just gaming. It’s still more or less a VIP-led recovery, at least so far, but the gap between the recovery rate of VIP and mass is getting smaller. It wouldn’t surprise me if the gap disappears in the coming couple of months.”

He agrees that too much growth on the VIP side could bring renewed scrutiny—and possibly another crackdown from the central government.

“Compared to the mass segment, VIP growth or recovery is more risky in that it’s more sensitive to the political climate. One word from Beijing and the picture could change quite substantially. There are different opinions over who’s leading the recovery, but I want to see a better balance. I would rather see mass-led than VIP.” While there’s an “allure” to VIP players with their ostentatious displays of wealth, “it’s a low margin business,” says Klebanow, “15 percent, whereas premium mass and mass is more like 30 percent.”

Besides, there are also a whole lot more mass players—potentially

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Q&A Grant Govertsen Managing Director, Union Gaming Asia Securities Ltd.

The Grand Resort Deck at Galaxy Macau features “Skytop Rapids”

millions of upwardly mobile Chinese who have yet to make Macau a destination.

“As China’s economy continues to grow, its people aspire to achieve upper middle class and upper class status,” says Klebanow. “There are not a finite number of people who want to go out there and gamble. If you look at travel tourism trends in that region, more Chinese mass market and premium mass market consumers are getting on planes and going places.”

Though some patronize jurisdictions outside Macau, “there’s enough to go around,” he says. “What we’re seeing is this consistent growth throughout the Southeast Asian region.”

Speaking of diversification, he adds, Macau’s Big 6 gaming concessionaires were mixing it up even before the downturn. “All the projects you see on Cotai were in the planning and construction phase long before 2014.

Wynn Palace was out of the ground. MGM Cotai was out of the ground and getting built. Walk on the Cotai Strip today, and you’ll see a wealth of really stupendous non-gaming amenities. It’s incredible. It surpasses what we do in Las Vegas.”

Playing the Long Game Speaking of Las Vegas, it seems the world’s No. 1 gaming town can learn a lot from No. 2. In 1989, Vegas reaped 60 percent of total revenues from gaming, 40 percent from non-gaming. Now with a 35/65 split, many analysts say it’s a healthier economy—not bomb proof, but better equipped to ride out market turbulence.

Macau could follow the same model up to a point, says Zhu. “Operators have established better programs on the non-gaming side: more hotel rooms, better food and beverage options, more entertainment, really creating more attractions for non-gaming visitors.”

But don’t look for Macau to become Disneyland. “It’s not a family orientation that is leading mass growth. It’s better penetration into the secondary and tertiary markets in mainland China,” says Zhu. “More provinces in central and northern China are showing pickup in the penetration level, with more people going to spend long weekends or the Golden Holiday week in Macau.”

VIPs will continue to be a mainstay, according to Klebanow. “I never see junkets going away; they’re pretty much partners in the gaming industry, which relies on them to bring customers into the property. What we’ve seen is consolidation among junket providers. At their peak, there were 250 junket promoters. There might be 110 now. A lot of the smarter operators went out of business or consolidated. There are fewer junket providers in Macau, but they’re bigger and far better capitalized.”

Beyond VIPs, “what we love is premium mass customers”—enthusiastic gamblers who bring cold hard cash or the equivalent, and don’t rely on

GGB: Does the first quarter of 2018—with overall GGR up 20.5 percent, and VIP and mass also up in the 20 percent range—bode well for the year?

Grant Govertsen: It does. The market remains very robust and has now recorded six consecutive quarters of double-digit growth and four consecutive quarters of growth above 20 percent. It’s not unreasonable to think that the market can grow in the high teens for the whole of 2018.

Is there a built-in disadvantage to too much VIP growth?

It could result in another bubble that at some point would burst, and it’s possible that a very high VIP growth rate could draw the attention of Beijing and lead to actions that rein in the market. This time around, junkets seem to be behaving more maturely and are not putting the entirety of their liquidity to work in creating ever higher rolling-chip volumes. Rather, they are becoming institutionalized—for example, Suncity.

What has the market learned from the 2014-16 downturn?

I think it’s in the operators’ best interest to continue to develop non-gaming attractions regardless of government mandates.

While Macau is a “gambling town,” when you look at the revenue mix of gaming and non-gaming, it’s non-gaming that’s becoming a differentiating factor. Gaming is a commodity; there’s no difference in a game of baccarat at any of the casinos. Non-gaming is an element that can be employed to drive the customer to the commodity. Therefore, it’s incumbent upon the operators to better understand the wants and needs of their core customer base and develop nongaming amenities accordingly.

credit to get in the game, he says.

The question remains: Could Macau one day become the $100 billion market of operators’ and investors’ dreams?

“Yes, it could it achieve that, but it’s not a traditional market economy, and there will always be constraints that preclude Macau from achieving that economy at a normal growth rate,” says Klebanow. “It also depends on how much more gets built. There’s still a lot of open area on Cotai. Wynn Palace has additional stages planned and certainly Las Vegas Sands has additional phases planned. There’s room to build if demand warrants it.”

Zhu notes that the government is also casting a wider net in terms of visitors. “Instead of attracting people from Macau only, I think there are various campaigns and promotional efforts to attract people from a bigger region including those from India and the Middle East.”

Closer to home, there’s a massive pool of gamblers and tourists still to be tapped, Zhu adds. “If you look at China’s total population, even given the income strata in many provinces and cities, there is still a large population that is underserved, who visit Macau less than once every year or other year. So there is still a large tourism base to materialize.”

The government may even give the green light to a seventh concessionaire in Macau, he says. “We are still far from the market being saturated.”

JUNE 2018 www.ggbmagazine.com

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Q&A Lawrence Ho Chairman and CEO, Melco Resorts & Entertainment

Putting the ‘Cool’ in Macau “We’ve always looked at ourselves as an entertainment company, unlike some of our competitors that are very focused on the casino business.”

Those are the words of Lawrence Ho, chairman and CEO of Melco Resorts & Entertainment. In interviews about Melco’s ventures in Macau, Manila and elsewhere, Ho continues to emphasize the cool quotient—nongaming, high-tech, entertainment-based attractions that appeal to far more than traditional slot and table game players.

We asked Ho to weigh in on what he terms “the new Macau.”

GGB: Macau’s ongoing recovery has been attributed both to returning VIPs and also to mass customers. What’s your view?

Lawrence Ho: Even though we’ve seen strong performance in the VIP gaming sector, we’ve made a conscious choice not to be solely reliant on rolling-chip revenues, as our long-term view is that future growth in Macau will be driven by the premium-mass and mass segments. Melco has always been positioned to address the mass and segments beyond gaming. Together, they make up approximately 90 percent of our EBITDA. That’s why we’re launching a revamp of our City of Dreams properties in Macau, providing offerings beyond gaming to address mass customers, such as the growing middle class in China and traveling families.

Will more non-gaming attractions draw more non-gamblers?

Melco has always been committed to offering Macau’s most fully integrated

32

Global Gaming Business JUNE 2018

and modern gaming and entertainment experience, capturing the increasing non-gaming demands from both gamers and tourists. In fact, 98 percent of our cap-ex in 2017 was focused on non-gaming investments.

Building our existing entertainment offerings beyond gaming—such as the world’s largest water extravaganza, the House of Dancing Water, as well as strong retail and dining—we launched our first original hospitality brand Nüwa at the end of 2017, replacing the former Crown Towers at City of Dreams in both Macau and Manila.

We anticipate the opening of our new signature hotel Morpheus, the world’s first free-form exoskeleton high-rise designed by the late Dame Zaha Hadid, in the first half of 2018. The centerpiece of City of Dreams’ Phase III will be an icon of the new Macau, adding almost 770 new luxury rooms, suites and villas, on top of new restaurants, retail and entertainment concepts.

Morpheus will be the second Melco-original hotel brand, and we expect its launch to further solidify our leadership position in the premiummass market segment in Macau.

That aside, we’re also supporting new platforms like eSports. Studio City recently partnered with digital entertainment company Garena to host the 2018 League of Legends Master Series Spring Final, one of the most popular eSports gaming leagues in this fast-growing segment, which has a large audience of millennials.

Macau may never be Vegas, with non-gaming revenues outstripping gaming, but do you see long-term benefits in an economy that’s not so reliant on gaming?

A diversified economy is very much in line with the thinking around the transformation of Macau into a world tourism and leisure destination. To achieve that, strong entertainment beyond gaming is integral. An increase in visitors would boost our revenue and the overall Macau economy in the long run.

What’s your outlook for Macau long-term?

We’re optimistic, and particularly excited with infrastructure developments improving ease of access to our properties. For example, soon you’ll be able to get to Macau from Hong Kong International Airport within 20 minutes, or ride the Macau Light Rapid Transit throughout Cotai.

The market is stabilizing into a more diversified tourism market, and revenues should likewise balance over the long term across gaming and non-gaming.

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MEDIA

Savvy

Tribes are not utilizing the power of the media when it comes to promoting their own interests

A

By Dave Palermo merican Indian tribes have been largely ignored in the public and media debate over the potential legalization of sports betting, despite the fact indigenous governments operate the largest segment of the nation’s legal gambling in-

dustry.

With nearly 500 casinos nationwide, tribal governments dominate gambling policy in many of the 29 states in which they do business, including the potentially major sports betting markets of California, Florida, New York, Michigan, Arizona, Washington, Minnesota and Wisconsin.

Tribal governments will play a significant political role in efforts to legalize expanded gambling in those and other states.

“If you are thinking of moving into some big-market states—whether it’s California or New York or Florida—you are going to have to deal with the tribes,” says Chris Stearns, a member of the Washington Gambling Commission.

“You don’t just walk in and turn on the lights,” says Stearns, a Navajo.

“Whether you have to deal with exclusivity or whether you have to push a boulder uphill in the legislature, you are going to have to work something out with the tribes. It may not be what you want.”

Nevertheless, tribal governments have been ignored in most trade press and mainstream media coverage of the nationwide movement for repeal of a federal ban on sports wagering, which happened with last month’s U.S. Supreme Court ruling.

“What’s been written is largely from the perspective of the commercial operators,” says a tribal media consultant who requested anonymity.

“I believe the media have been overlooking tribal gaming or not taking it into account,” agrees economist Alan Meister, author of the Indian Gaming Industry Report. “It could be just a pure lack of knowledge of Indian gaming.”

Tribes also have been left out of much of the anticipatory legislation introduced in New York and nearly 20 other states which could legalize 36

Global Gaming Business JUNE 2018

sports betting in the wake of the Supreme Court ruling repealing the Professional and Amateur Sports Protection Act (PASPA).

Debbie Thundercloud, chief of staff for the National Indian Gaming Association, a tribal casino trade group and lobby, says the tribal government casino industry “is one of the best-kept secrets in the gaming market in the United States.”

“It’s a big industry and it’s a significant part of the gaming industry in the United States,” says Ron Allen, chairman of both the Washington Indian Gaming Association and Jamestown S’Klallam Tribe.

The trade press had largely promoted a well-financed campaign for repeal of PASPA launched by the American Gaming Association, a lobby and trade group primarily for the commercial casino industry, but which has 10 tribal members.

NIGA, which puts its membership at 184 tribes, passed a resolution in April joining AGA in seeking repeal of PASPA. But NIGA is demanding new legislation to give tribes equal sovereignty with the states, tax exemptions provided in the Indian Gaming Regulatory Act (IGRA), protection of gambling exclusivity provisions in tribal-state regulatory agreements, or compacts, and other assurances.

The ability of many states to pass legislation expanding sports betting and other legal gambling may hinge on their ability to work with the tribes.

Tribes in the West and Southwest and along the East Coast are apparently more anxious to pursue sports betting than those in the Midwest and Great Plains. (See page 38.)

Confusion Abounds Industry writers and federal and state officials seldom delineate between commercial casinos taxed and regulated by the states and tribal government casinos, which operate under federal law and tribal-state compacts. Casino revenues are used to provide services to indigenous citizens.

“It’s all casinos to them,” AGA President and CEO Geoff Freeman told

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“

Whether you have to deal with exclusivity or whether you have to push a boulder uphill in the legislature, you are going to have to work something out with the tribes. It may not be what you want.

”

—Chris Stearns, member, Washington Gambling Commission

attendees of the NIGA conference and trade show in April.

Some blame the media. Others fault the tribes, many of which distrust the media or have difficulties dealing with the press.

Tribes have historically discouraged coverage of government casinos for fear of being labeled as rich Indians. Despite the unprecedented social and economic progress gambling has created for tribes, most of Indian Country continues to struggle with poverty and high unemployment.

“I don’t see a lot of focus on Indian gaming,” says Howard Stutz, former gaming reporter for the Las Vegas Review Journal. “A lot of the focus has been on states and the legislatures. I don’t think the media, in general, differentiates between tribal gaming and commercial gaming. A few reporters do—those who have been in the business for a while. But most of them don’t.

“I don’t know if that’s the fault of the media or the tribes.”

“Tribes are getting less and less coverage,” says Victor Rocha of Victor Strategies and Pechanga.net, a tribal gaming news service.

“Tribes are getting thrown in with commercial gaming,” Rocha says, a situation he believes is partially a result of the demise of newspapers and the popularity of social media news snippets.

“The problem is twofold,” says Rocha, a citizen of the Pechanga Band of Luiseño Indians. “It’s lazy journalism and it’s the tribes.”

It’s impossible to accurately report on the spread of sports betting without giving considerable weight to tribal casinos.

Two hundred forty-four tribal governments operate 484 gambling facilities in 28 states that in fiscal year 2016 generated $31.2 billion, according to the National Indian Gaming Commission, the federal agency that oversees and audits tribal casinos.

Eighty-four casinos in more urban areas, or 17.3 percent of the operations, generated 72.9 percent of the revenues, according to the NIGC. Many tribal casinos are marginal operations on rural reservations whose value is in the creation of jobs.

In comparison, the commercial industry in 2016 consisted of 404 casinos generating about $30 billion a year, according to the AGA and Meister’s report, an updated version of which was expected to be released in late May. But 273 of the commercial casinos are in Nevada, according to the AGA, where wagering on sports was already legal. Another 60 operations are in South Dakota and Colorado, leaving 71 for-profit casinos in the remaining 47 states.

AGA combines 54 racetrack gambling facilities, or racinos, in 15 states with the commercial casinos, raising the total revenue to $38.96 billion. Racinos, which according to Meister generated $8.6 billion in 2015, are largely run by the parimutuel industry to subsidize purses.

David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas, estimates the total legal gambling industry (tribal and commercial casinos, parimutuel racing, lotteries, charitable gaming and card rooms) generates about $100 billion a year.

The major beneficiary of sports betting on the commercial side of the industry aisle is MGM Resorts International, which has casinos in six states outside its base in Nevada. It also has an online app, playMGM. Ignorance of tribal government gambling even among the industry was evident last year when an AGA coalition launched its sports betting website stating its goal was to “give states the ability to decide the question of legalization.”

It also called for a “tax regime” enabling the U.S. to compete with offshore operators.

The website has since been edited to recognize that tribes are sovereign governments equal to the states with gambling revenues exempt from taxation.

Tribal government casinos under IGRA also have primacy in regulating gambling on trust lands.

Tribes Under the Radar Writing about tribes can be difficult for reporters not familiar with IGRA, tribal governance and Indian law. Tribal governments are not as transparent as non-Indian governments and keep much information secret.

The commercial casino industry is largely consolidated. The AGA had a unified message to repeal PASPA and a sizeable amount of research to support its case.

The 244 tribes operating casinos are far from monolithic, with different cultures and governmental structures.

Casino gambling plays a varying role in their economic strategies. And the legal and regulatory constraints of operating under IGRA and tribal-state compacts differ greatly from state to state.

Tribal associations in California, Washington, Oklahoma, Arizona, Minnesota and elsewhere invest heavily in public relations, particularly studies

I don’t think the media, in general, differentiates between tribal gaming and commercial gaming.

A few reporters do— those who have been in the business for a while. But most of them don’t.

“

”

—Howard Stutz, former gaming reporter JUNE 2018 www.ggbmagazine.com

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IGRA Old News in Indian Country Tribes look for an edge, even if it means going commercial n increasing number of American Indian tribes are considering operating sports books and other expanded gambling as commercial ventures taxed and regulated by the states, shedding themselves of regulatory limits under federal law, according to industry sources.

The trend parallels the growing number of tribes purchasing commercial casinos both in the U.S. and foreign countries.

“Tribes are seeing beyond their reservation boundaries and beyond what they can do under IGRA,” says a tribal lobbyist, referencing the Indian Gaming Regulatory Act. “They are looking for commercial investments.”

“Absolutely,” says Victor Rocha, president of Victor Strategies and owner of the Pechanga.net news service. “If you can’t make it happen on the rez, go commercial.”

IGRA provides a regulatory framework under which tribes can operate government casinos on tribal trust lands, exempt from taxation and with primacy for regulating gambling operations.

But IGRA requires tribes seeking new forms of gambling such as sports wagering to negotiate new or amended tribal-state regulatory agreements, or compacts. The process can be fraught with legal and political uncertainties, including state demands for a share of revenues.

There is also a legal cloud over whether tribes under IGRA can accept wagers from beyond reservation borders, potentially hindering efforts to embrace mobile wagering. Online gambling legislation is being pursued in several states, largely through lotteries.

Sports books are normally low-margin operations, but they can be more profitable with online and account wagering. Most pending bills to regulate sports wagering have a mobile or online component.

“IGRA is a golden yoke around our neck,” Rocha says. “Once sports betting goes mobile, tribes are screwed by IGRA. They’ll have to go commercial.”

A

continued on page 40 38

Global Gaming Business JUNE 2018

“

Many tribes are very sophisticated and have very good communications with the media. Other tribes are very careful.

”

—Mark Trahant, Editor, Indian Country Today

that show the benefit of tribal gambling on jobs and state economies.

But little effort is made to reach out to the press on ongoing issues, whether it involves sports betting and internet gambling or pan-Indian issues such as the land-trust process and the recent, failed attempt to get the Tribal Labor Sovereignty Act through the U.S. Senate.

“Everybody in Indian Country talks about PR, but they don’t really know what that means,” says Nikki Symington, a veteran tribal advocate and communications expert. “PR doesn’t include an ongoing relationship with the media. You need to keep an ongoing dialogue with the press.”

“Many tribes are very sophisticated and have very good communications with the media,” says Mark Trahant, editor of Indian Country Today and former president of the Native American Journalists Association.

“Other tribes are very careful,” says Trahant, a member of Idaho’s Shoshone-Bannock Tribe.

Trahant and others believe the non-Indian press and policymakers lack an understanding of tribal sovereignty and self-governance.

“I think you saw that recently with the labor debate in the Senate,” Trahant says. “They didn’t see that as an issue of tribal governance. They saw that as tribes trying to deal with organized labor.”

“It’s an issue at both the state and federal level,” Bryan Newland, chairman of the Bay Mills Indian Community in Michigan, says of the inability of the press and policymakers to grasp the complexities of Indian law.

Tribes contribute to the void by failing to invite mainstream media coverage of gatherings where gambling, land trust, labor and other native issues are discussed, whether it be NIGA, the National Congress of American Indians, National Center for American Indian Economic Development, Native American Finance Officers Association or other groups.

Neither the Las Vegas Review-Journal nor the Las Vegas Sun covered NIGA’s annual conference in April where sports and internet wagering were debated and the resolution voted on by the membership.

When NIGA’s working group on sports betting met in Las Vegas in May, the meeting was closed to the press.

“We didn’t want the press in the room,” a member of the working group said.

“The tribes could do a better job reaching out to the media,” Stutz says. “The media could do a better job trying to understand tribal issues.”

“It’s a fair criticism. It’s an ongoing challenge,” Allen says. “Some tribes are better than others when it comes to responding to press inquiries.

There has to be a stronger effort.”

Many tribes are in the process of rebuilding their communities, and their elected leadership is preoccupied with governmental issues.

Meanwhile, where tribes once operated in a bilateral relationship with the federal government, gambling has forced them to work more closely with state and local authorities.

“Tribes and their leaderships are being pulled in multiple directions,” Allen says.

Responding to the press is seldom a priority.

“I think most tribes are just too busy to deal with it,” Trahant says.

A number of tribal leaders are inexperienced and uncomfortable dealing with the media, Allen says, and need training in dealing with reporters.

“There are only a few of us who are comfortable talking to the media,” Allen says. “We don’t have enough people stepping up and talking and being more active.”

Some tribal leaders are discouraged from talking to reporters by their attorneys and consultants.

Others have a deep-seeded distrust, if not resentment of the press.

“There’s hubris that it’s none of (the media’s) business. The media has no right to ask questions or deal with their lives,” Symington says. “You don’t take the attitude that it’s in the tribe’s best interest to open up to non-Indians. They don’t necessarily see it that way.”

“Tribal leaders are very suspicious of the media,” says a tribal consultant who requested anonymity. “There’s very little trust there. They get negative coverage. They get biased coverage. They get coverage that’s not fair.

“Tribes are engaged at the government relations level. Tribes don’t feel any great need to be engaged with the media. They know the interactions that count are the interactions they have with Congress and state legislators.”

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continued from page 38

Then there are the potential legal and political complications in amending or drafting new tribalstate compacts.

“That presents a unique challenge for Indian nations under IGRA,” attorney Daniel Wallach told an audience at Indian Gaming 2018, the trade show of the National Indian Gaming Association, last April in Las Vegas.

“Commercial casinos may be able to hit the ground running while the vast majority of tribes are going to be delayed by the compacting process.”

For several years, California tribes have debated offering online poker as a commercial venture, sharing licenses with card rooms. They are undecided about sports betting.

“California is split, with some saying this would be commercial and others saying this would be tribal gaming” under IGRA, says Susan Jensen, executive director of the California Nations Indian Gaming Association. “I don’t think there is a lot of agreement as of yet.”

Tribal Debate Ongoing Tribes are debating how to leverage their $31.2 billion casino industry to take advantage of the new legal sports betting market.

NIGA, the trade group and lobby for some 500 tribal casinos in 29 states, in April joined the American Gaming Association, the commercial casino lobby, in seeking repeal of PASPA. One PASPA provision prohibited sports betting on Indian lands.

A NIGA resolution called for any enacting sports betting legislation at the federal or state level to recognize tribal sovereignty, IGRA tax exemptions and exclusivity provisions of tribal-state regulatory agreements, or compacts.

“Everybody in our industry is ready to mobilize and make sure we are being treated fairly under the law,” NIGA Chairman Ernie Stevens said after the resolution was voted on by the membership.

“We want to do what we can to embrace our gaming market.

“It’s an opportunity to attract more customers and hire more people,” Stevens said. “It’s not about gambling. It’s about jobs.”

Tribes Welcome AGA Alliance Most tribes applaud the partnership with AGA, despite the competitive history between the commercial and tribal casino industries and initial snafus made by the association in putting together its anti-PASPA website.

“To Geoff Freeman’s credit, he works hard at 40

Global Gaming Business JUNE 2018

“

“IGRA is a golden yoke around our neck. Once sports betting goes mobile, tribes are screwed

by IGRA. They’ll have to go commercial.

”

—Victor Rocha, publisher, Pechanga.net

being inclusive,” Ron Allen, chairman of both the Washington Indian Gaming Association and Jamestown S’Klallam Tribe, says of the AGA president and CEO. “Geoff is clear that the tribes are engaged in the industry as governments and have a different mission than commercial operators. I think he respects tribal governments.”

Two tribal governments and eight Native American casino enterprises have joined AGA, some to monitor sports wagering and expanded gambling and others to pursue commercial casino ventures.

Some tribes who have joined AGA—the Poarch Band of Creek Indians of Alabama, Florida’s Seminoles, the Oklahoma Cherokee and Mashantucket Pequots and Mohegan tribes in Connecticut—have acquired commercial operations in the U.S. and on foreign soil.

Tribal gaming revenue growth has been flat with a maturing market and diminishing availability of trust lands.

“One of the biggest fears about Indian gaming is that it’s uncontrolled and growing too fast, which I think is largely unfounded,” says economist Alan Meister, author of the Indian Gaming Industry Report.

“A proper analysis of the impacts of Indian gaming reveals that there are strong benefits to surrounding communities.”

Tribes moving away from IGRA and joining AGA are not abandoning their sovereignty. It is common for tribes to invest in commercial businesses. As with government casinos under IGRA, revenue from commercial ventures is also used to benefit indigenous citizens.

The small profit margins limit the number of tribes willing to pursue stand-alone sports books to a few more lucrative operations in urban areas.

Others fear sports betting will create competition from commercial casinos, racetracks and lotteries getting into the business.

“Most tribes see it as a threat to cut into prof-

its in an already competitive industry,” says a tribal lobbyist. “Then you have a very small handful of tribes that see it as an added amenity.”

While many tribes in the West and Southwest are more willing to embrace commercial gambling and an alliance with AGA, those in the Midwest and Great Plains are more cautious about blurring the distinction between commercial and tribal casinos.

The Mashantucket Pequot and Mohegan tribes of Connecticut, meanwhile, are challenging the state in efforts to preserve exclusivity to offer sports betting under the tribal-state compact.

“Tribes have spent many lobbying dollars drawing a bright distinction between tribal gaming for governmental purposes and commercial gaming,” says a Midwest tribal consultant who requested anonymity.

“You might find California tribes buying into it because they have a different perspective on things than the treaty tribes.”

Gambling does not have a significant impact on many large-enrollment tribes in the central U.S. “We don’t have that same level of investment. We don’t want to move away from our model” of operating under IGRA, says a lobbyist who also requested anonymity. “We don’t believe the commercial people have anything good to offer us. There is a difference of opinion on what is the best option to go forward.”

Rocha welcomes the debate.

“That’s the beauty of Indian Country. It’s multi-pronged. It’s not monolithic,” Rocha says.

“That’s why Indian Country is going to succeed.

“California’s position is different than Minnesota. They have to pursue a different solution.

That’s what makes Indian Country stronger. Indian Country has all bases covered.”

—Dave Palermo

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Sports Betting Past and Future The path to legal sports betting in the United States has been long and circuitous, but last month’s Supreme Court decision just supercharged its future

WHAT IT MEANS TO THE INDUSTRY, THE COMPANIES AND THE PLAYERS “Through smart, efficient regulation, this new market will protect consumers, preserve the integrity of the games we love, empower law enforcement to fight illegal gambling, and generate new revenue for states, sporting bodies, broadcasters and many others. The AGA stands ready to work with all stakeholders—states, tribes, sports leagues and law enforcement—to create a new regulatory environment that capitalizes on this opportunity to engage fans and boost local economies.”

—Geoff Freeman, President and CEO, American Gaming Association

By Roger Gros n May 14, the U.S. Supreme Court held that the Professional and Amateur Sports Protection Act (PASPA) was wholly unconstitutional and overturned it in a 6-3 decision.

Individual states will now have the opportunity to decide whether they want to legalize sports wagering within their borders.

The decision has wide-ranging implications for all states, all gaming operators, most gaming vendors and the general public—much more than GGB can publish within these pages. For all the details of the Supreme Court decision, its implications for individual states and jurisdictions, the major and emerging players, the leagues and all the legal mumbo jumbo, read GGB News each week (GGBNews.com).

But for context, we’ll trace the timeline, the reaction of some of the major players, and the current status in jurisdictions where sports betting is likely to emerge.

O

“A great day for the rights of states and their people to make their own decisions. New Jersey citizens wanted sports gambling and the federal government had no right to tell them no. The Supreme Court agrees with us today. I am proud to have fought for the rights of the people of New Jersey.”

—Former New Jersey Governor Chris Christie

SPORTS BETTING TIMELINE OCTOBER 1992 The Professional and Amateur Sports Protection Act, sponsored by former pro basketball player and then-New Jersey Senator Bill Bradley (r.), is enacted. It prohibits sports betting nationwide but grandfathers in Nevada, Delaware, Montana and Oregon, which already provide that wagering via casinos or lotteries. The bill gives New Jersey one year to affirm a referendum that would legalize sports betting at state casinos.

42

Global Gaming Business JUNE 2018

NOVEMBER 1993

MAY 2009

Having failed to pass a bill that would set up a referendum to allow sports betting, New Jersey’s window closes, and along with all the rest of the states, sports betting is now prohibited in the state. Assembly Speaker Chuck Haytaian (l.) is accused of ensuring the victory to a Republican governor as a result.

Delaware legalizes sports betting. The leagues challenge the state’s plan to offer bets on all sports. Eventually, courts decide that Delaware can only offer parlay bets on NFL games—no singlegame betting— which was what the Delaware Lottery offered prior to PASPA.

MARCH 2009

New Jersey voters overwhelmingly pass a referendum supporting legal sports betting at casinos and racetracks.

New Jersey State Senator Raymond Lesniak (r.) files suit over PASPA, funding the suit with his own money.

NOVEMBER 2011

AUGUST 2012 The NCAA, MLB, NFL, NBA and NHL file suit against New Jersey in an attempt to block the state from implementing sports betting on pro and college games. New Jersey inherits the Lesniak challenge.

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“We’ve been working towards this day for a long time and take great satisfaction in the Supreme Court’s decision. Just as we have with our 100-plus locations in Nevada, we look forward to working to make legal and regulated sports betting a big winner for consumers, state governments and all interested parties across the country. If we do this the right way, the only losers will be the illegal bookies that have been operating a massive black market. We’re going to get ready to open for business at Monmouth Park as soon as responsibly possible.”

—Joe Asher, CEO of William Hill US, on the plans to open a sports book at Monmouth Park Racetrack in New Jersey by the end of May

“We expect to be able to provide safe, exciting sports wagering experiences to consumers across the country, as we do today in Nevada. We plan to announce our specific approach to this business as we better understand the opportunities and regulations which evolve from the Supreme Court decision.”

—Mark Frissora, President and CEO, Caesars Entertainment

“Now entertainment companies formerly driven to offshore locations due to the strict limitations of the PASPA can return to the U.S., bringing jobs and economic opportunities with them... States like Illinois, Michigan and New York, which have been waiting for this opportunity, may now implement pro-business measures to encourage gaming and create the benefits like increased tax revenue that previously only a handful of states were permitted to enjoy. This ruling will create a positive domino effect by allowing any state that wants to, to open its doors and reap the benefits of rationally regulated gaming.”

—Jeff Ifrah, Ifrah PLCC

U.S. Sports Betting Outlook

SEPTEMBER 2013

JUNE 2017

The 3rd U.S. Circuit Court of Appeals agrees with the leagues in a 2-1 decision.

The U.S. Supreme Court agrees to hear the sports betting case, surprising observers since the suit was 0-7 until this decision.

OCTOBER 2014 New Jersey passes legislation that decriminalizes sports betting at licensed racetracks and casinos, a restriction imposed by PASPA. The leagues file suit again.

APRIL 2015 NFL Commissioner Roger Goodell says, “We oppose sports gambling. We haven’t changed our position on that, and I don’t see us changing our position on that.”

AUGUST 2016

STATE OF THE STATES

W

hile New Jersey and Delaware have a head start on legal sports betting, there are several other states that have already passed or are seriously considering passing sports betting legislation. These charts were produced by Fantini’s Public Policy Review (PPR), the only single source for all activity involving gaming legislation, regulatory and legal issues affecting the global gaming industry. It is a tool used by investors, regulators, casinos and gaming suppliers and affiliates. For more information on obtaining a free copy of the sports betting report, visit FantiniResearch.com.

Outcome of Sports Betting Legislation in 25 States

JULY 2017 NBA Commissioner Adam Silver states that he senses the law will change in the next few years in the United States.

MLB Commissioner Rob Manfred says the league wants a say in the future of sports betting.

MAY 2018 Supreme Court strikes down PASPA.

The full 3rd U.S. Circuit Court of Appeals rules 93 in favor of the sports leagues. New Jersey takes its appeal to the U.S. Supreme Court.

JUNE 2018 www.ggbmagazine.com

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Creative Kiosks

Those multi-functional, customerfriendly devices do more than ever

By Dave Bontempo

P

erhaps it’s time to formally name kiosks. Give them identities.

These versatile, de-facto casino hosts have become heavily engaged team members. They handle expedited check-out and dinner reservations, they show options and rewards redemption. Wayfinding, promoting new offers and facilitating tournament entries fall under their domain. So do the nuts-and-bolts functions of cash dispensing, ticket printing, bill breaks, jackpot rewards and marketing.

They are freestanding, wall-mounted or hand-held forms of customer service. Casinos use kiosks in corners, on walls, in lobbies, or near the gaming action. They represent a personalized yet unobtrusive helping hand, take on more duties, and never call out sick.

Like all workers, kiosks face the numbers game. Their space must be justified. Their deployment may slowly lessen with the age of electronic loyalty systems and mobile-phone technology, but like brick-and-mortar properties in the online gaming era, they will remain prominent.

Diversification remains their job security. Some industries, like phone companies and rail services, assign names to their automated personnel. It would not be surprising for gaming to catch up. This is not just a kiosk.

It’s Mr. (or Ms.) Kiosk to you.

Powerful Presence

Atrient PowerKiosk

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This is a fertile period for Michigan-based Atrient, which offers gaming operators custom-developed software solutions and a suite of applications.

It also designs and manufactures the hardware, producing the kiosks that grace casinos floors, walls and free-standing areas.

Atrient unfurls several products in this realm, which include the wallmounted and card-printing, enrollment sectors. They round out a collection that includes floor-standing and mobile-app kiosks.

The company has been a rising star, embracing both the new craze of mobile apps and the classic versatility of a stacked lineup. Its omni-channel marketing platform PowerKiosk is used by MGM Resorts International, California’s San Manuel Casino and Cherokee Nation Entertainment in Oklahoma, among others. The new Hard Rock in Atlantic City, opening

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June 28, recently contracted to deploy Atrient’s entire product suite, according to company reports.

Jessie Gill, Atrient COO, believes its power can lift large and small operations.

“Whether they are looking to relieve stress on their players club, automate processes, or responsibly reinvest in their patrons, savvy operators understand the value Atrient provides,” Gill asserts. “We recognize the international market doesn’t currently have a product that can provide the flexibility or reliability of the PowerKiosk solution, and we look forward to helping a growing list of international partners achieve their marketing initiatives.

“The most uncommon, yet powerful, benefit our partners experience is the flexibility our solutions afford them,” he adds. “Casino operators must be elastic when developing their marketing strategies, and they deserve a reliable solution that is limited only by their imagination and creativity. Atrient’s PowerKiosk platform provides this flexibility, which is why you see it installed by some of the world’s largest operators, but also some of the smallest.”

For Atrient, the power is everywhere. PowerKiosk can be deployed on mobile devices or on slot-machine screens. Besides offering promotions, it can be used as a self-service tool for account management.

The award-winning solution provides an extensive platform that not only rewards patrons with promotions but integrates wayfinding, calendars, social media and many other functions into a single kiosk. With options like the ability to query multiple databases including data warehouses, hotel informa-

tion systems and point-of-sale systems, it can evaluate patrons beyond just their ADT and current point or tier status.

PowerKiosk also features a large games portfolio with various themes like holidays, birthdays, sports and other game types, such as “play up,” “play more” and hurdle promotions. The operator decides how to deploy features to a kiosk, enabling a property to designate certain kiosks for certain functions, even for a specified period of time with just a few simple clicks on the control panel.

A property can use PowerKiosk for slot tournament registration and designate specific kiosks for that purpose, and then have them automatically revert to their full features after the registration period is over.

This solution has several modules managed through its control panel.

They include promotional games, virtual drawings, account lookup, comp redemption, wayfinder and casino maps, calendar services, slot-machine concierge and idle screen digital signage.

PowerKiosk integrates directly to the patron management system, with systems developed by Aristocrat, Scientific Games, IGT and others, officials say.

“One of our most recent successes has been the deployment of 12 Enrollment Card Printing Kiosks at the MGM National Harbor in Maryland,” Gill says of the new, luxurious property outside of Washington, D.C. “Since opening in December of 2016, these units have accounted for nearly 60 percent of all enrollment transactions and over 75 percent of all

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reprint activity, heavily reducing the stress on their new Mlife Rewards desk. The success of the kiosks is great to hear, but when senior leadership publicly declares the installation process as ‘the most dedicated customer service I have ever seen in my career’ in a white paper, we understand we have done our job and delivered a product that provides tangible value.”

How Suite It Is Las Vegas-based MGT unveiled a game-changing philosophy several years ago. It shifted customers from long redemption lines to the expedited comfort of a kiosk. Now it transfers kiosk content back to the players, via the phone.

Welcome to the Application Programming Interface feature, enhancing the company’s signature Promo Suite. MGT offers a groundbreaking product consisting of several integrated computer applications and one of the industry’s most advanced kiosk marketing software systems. API provides the communication enabling the phone to become an extension of the kiosk.

The result: a comp-wielding kiosk, in the palm of one’s hand.

MGT has long championed the philosophy of delivering promos through a game format. It has an extensive list of them, from board games to collect-and-win competitions and guessing games, a la The Price is Right.

Patrons earn loyalty points, discounts and rewards based on game results and tier status.

Travis Carrico, the company’s sales and marketing vice president, espouses the benefit of winning the same offer that once was mailed to a person’s home and could have been thrown away.

“This approach helps the casinos get patrons actively involved in the outcome of the promo,” he says. “This is something we are now able to deliver in electronic fashion through the kiosk.”

And the phone. Carrico says research indicates the value of the kiosk and its remote mobile-phone satellites.

“In some of the case studies we observed in Reno, we found that with just over 85 percent of their carded players, the first thing they do before stepping into action is to swipe their card at a kiosk,” he says. “They can self-comp, they can participate in contests, especially popular ones like picking the winner of every NFL game... any type of sports or marketing competition. We also found that well over 70 percent swipe the card at a kiosk before leaving.

“The same convenience can be available by phone.”

Loyalty customers can download an app to engage in contests on their phones. Carrico says casinos have already determined reward parameters by using their database analysis to lay out tiers and segments, allowing the rewards to stop on $50 for one person, $5 for another.

“The excitement for us is helping casinos maximize their marketing dollar,” he says. “This also helps them in the sense that as technology changes, it is the customers paying for the hardware by use of the phones or whatever device they are using. Compare that with how expensive it is regarding the slots, for example, whereby technology advancements mean that the casinos have to pony up for hardware.

“Think about the iViews, the picture-in-pictures, etc., that properties use to market to their players. That is an expensive capital outlay for them.”

Carrico considers the mobile age a relative infant. He thinks it owns less 46

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“In some of the case studies we observed in Reno, we found that with just over 85 percent of their carded players, the first thing they do before stepping into action is to swipe their card at a kiosk... The same convenience can be available by phone.”

—Travis Carrico, Vice President, Sales and Marketing, MGT

than a 5 percent stake in the relationship between phones and kiosks. Over time, the mobile devices may obtain more than half the action, a prominent shift. Casinos thus may gain an inexpensive ride for the next leg of this technological journey.

Carrico says MGT continues to thrive, gaining 20 percent revenue hikes each of the last several years.

He says the company has 260 installs in the U.S., and the properties using MGT represent more than 50 percent of slot machines available in the country.

“Long ago, we recognized that people were not only constrained by the budget of the wallet, but also a budget of time,” he recalls. “Customers stuck in line for 15 minutes translates into a lot of lost revenue. Getting people out of line over to an a automated, touch-screen kiosk was our way of solving that problem.”

The realm of touch screen may slowly go hand-held.

MGT Promo allows the casino marketing department to easily create and set up any type of promotion, including electronic drawings, scratch cards, swipe-to-win, new member bonuses, bounce backs, age or other demographic-based promotions. The system operates through an interface to the casino’s player tracking system and touch-screen kiosks. When players swipe their card at the kiosk, the system instantly evaluates them and determines the right reward from a prize matrix based on the reinvestment rate that was predefined for the player’s tier in the setup of the promotion.

Transactions, Quick Epicentral has been TransAct Technologies’ entry into the kiosk convenience game. The Hamden, Conneciticut-based company views it as an additional marketing tool to enhance communications with players, all while sending them directly to the game.

TransAct touts Epicentral as the gaming industry’s sole enterprise-level promotion and bonusing software suite able to target customers in real time at any slot machine or electronic table game, regardless of manufacturer.

“Epicentral now has over 20,000 networked connections in the U.S., Latin America and Europe,” says Tracey Chernay, the company’s senior vice president of global casino, gaming and lottery. “The current Epicentral version 3.9 incorporates all of the feature improvements we have made over the last several years of working with our casino customers. From improved diagnostics to added campaign criteria and qualifiers to automated slot move synchronization, we have learned from our customers and continue to evolve the product.”

Chernay gleaned an interesting trend from a recent tour of Epicentral

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New Visions Sightline and Worldpay form powerful partnership

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casino customers. Operators can not only engage the customers they know, but woo the ones they don’t.

“The most interesting thing discovered is the value to the casino of Epicentral’s ability to market to both carded and uncarded players,” Chernay says. “At a kiosk, the player must be carded in order for the casino to understand the value of that player and make the appropriate offer. With Epicentral, promotions can be earned by both carded and uncarded players based upon actual play metrics such as coin-in or time on device—while the player is playing. While the goal is to drive more carded play, the casinos appreciate the ability to market to that player who is not yet carded or who simply does not want to join the loyalty program.”

Chernay says Transact recently completed the second installation and works on the third implementation of the relatively new Epicentral SE (Systems Edition). This enables the host casino management system to drive printed offers or comps through Epicentral utilizing the host system’s marketing engine.

“This is allowing us to print playable free play tickets that can be selected by the player at the game and then fed directly back into the bill validator on the machine for immediate play,” Chernay indicates.

Gaming-world kiosks remain potent ambassadors. They emerged as a future generation of ATMs and became highly specialized. Industry estimates place the number of TITO kiosks versus freestanding ATMs at 8-to-1. And while the mobile age presents a burgeoning niche, the next new wave, kiosk functions, anchor the customer-service philosophy.

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alk about wheeling and dealing. Sightline and Vantiv, two strong performers in the loyalty card and connectivity realm, have completed significant mergers and acquisitions.

Sightline, developers of the Play+ platform, joined forces with NRT Technology, a leading provider of integrated ticket redemption and payment services to global casino operators. Now known as NRT Sightline, the company is slated to become one of the largest pure play payment technology companies with an equity value of more than $300 million. Increased payment service always means something relevant for kiosks.

Vantiv, a powerhouse company providing the connectivity for anyone wanting to use a card for gambling purposes, is now literally a world player. Or perhaps Worldpay-er. The Cincinnati, Ohio outfit purchased London-based Worldpay, expanding its reach to 146 countries. The deal was completed in January for an estimated $10.4 billion. The company annually handles more than 20 billion payment transactions for about $726 billion.

Amid the major moves, NRT Sightline and Worldpay remain prominently placed in the kiosk-casino realm. Omer Sattar, executive vice president of strategic relationships for NRT Sightline, linked his loyalty card with the connectivity muscle of Worldpay. Joe Pappano, senior vice president and managing director for Worldpay, has seen the company place increased emphasis in this area.

“When you look at what the system providers have done in the gaming industry—and we’re talking Scientific Games, IGT, Intralot, etc.—they are embedding payments and security aspects of payments within self-service kiosks,” he says. “The benefit of that? They are modernizing kiosks that have historically been cash-driven to offer the latest payment technologies and alternative payment methods.

“Look at state lotteries, the advanced deposit wagering (ADW) industry and integrated casino and resorts. They’re seeing kiosks as a way to expand their business model and as an extension of their core, driving new revenues and giving consumers a better way to leverage a financial instrument.”

Pappano says a massive gaming expansion is unfolding through the utilization of payments, one common denominator in driving revenue. Biometrics also impacts the kiosk realm.

“Both organizations—NRT Sightline and Worldpay—are taking a detailed look at how cryptocurrencies and alternative payment methods are consumed or utilized in a kiosk-type environment,” he indicates. “We’re looking at blockchain technology, and how that can be seamlessly utilized by a consumer within a kiosk environment.

“Kiosks are absolutely critical to gaming expansion and to drive consumer revenue. We see a kiosk no differently than we see a mobile device, as an extension of a brand experience.

We need to think about the disparate points of interaction as self- service kiosks.”

For Sattar, the kiosk is one key venue supporting the loyalty card. The Play+ card has significant use there, although it spread to use in department stores, Nevada sports wagering facilities and others.

“In the gaming world, our kiosks are multi-functional, more interactive and there are more things for people to do,” he says. “We’ve spent a lot of time on how to create a kiosk ecosystem where people can interact and get done what needs to get done.

“Look at sports betting and the functionality a kiosk can provide. You can enroll a person into a sports wagering account; you can accept their money by cash or a form of electronic payment; they can pick the wagers they want to make; and, theoretically that kiosk can either push money back to them electronically or disperse cash.”

—Dave Bontempo

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NEW GAME REVIEW

by Frank Legato

Power Boost Inferno Konami Gaming

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his unique progressive video slot on Konami’s dual-screen Concerto cabinet is centered around a mystery bonus event on a multi-level wheel display that can lead to one of five progressive jackpots.

The top Supreme Jackpot, resetting at $5,000, is a linked progressive. The other four, with resets ranging from $20 to $200, are stand-alone prizes.

The base game is a five-reel, 30-line video slot on Konami’s KP3+ platform. At the start, the player has the option to raise the wager for easier shots at progressives. The main bonus display consists of three concentric wheels. When the mystery bonus is triggered, pointers spin around the circumference of the wheel to land on various credit amounts, jackpot slices or arrows that move the bonus amounts to a higher level.

The player can choose extra bet levels that increase the number of pointers surrounding the wheel display.

Extra bet levels of 10, 20, 30, 50 or 100 credits cause one, two, three, five or 10 ar-

rows, respectively, to activate for the progressive bonus.

The concentric wheels surround a center spot marked for the Supreme Jackpot. During the bonus, the pointers spin to land on various slices, with the possibility of two pointers landing on the same slice. If two pointers land on a progressive, the player is awarded the accumulated value plus the reset value of that jackpot.

A pointer landing on the arrow slice moves the player to the next inner wheel, and higher awards. If the player gets to the innermost wheel and lands on an arrow, the top progressive is awarded.

Manufacturer: Konami Gaming Platform: KP3+ Format: Five-reel, 30-line video slot Denomination: .01, .02, .05, .10, .25, .50, 1.00, 2.00, 5.00 Max Bet: 100 credits plus base-game bet Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 4%-18%

Mustang

Ainsworth Game Technology

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his new video slot on Ainsworth’s premium A640 cabinet features a ways-to-win format and a potentially lucrative free-game bonus event including plenty of chances for multiplied wins and extra wild symbols. The A640 features a flat 42-inch vertical LCD monitor.

The base game, on a four-by-five reel array, is a five-reel, 1,024-ways-to-win video slot. (There are no paylines; wins are registered through adjacent symbols, with 1,024 possible ways to win on every spin.) The game is centered around a fairly frequent (once every 120 spins, on average) free-spin round.

Landing three scattered “Star” symbols on a spin triggers eight free games. Four scattered symbols triggers 12 free games; five scattered symbols trigger 20 free games. During the free games, all the wild symbols can randomly be replaced with either “2X Wild” or “3X Wild” symbols, multiplying the payoff by two or three in winning combinations.

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The free-game bonus is played out on a different reel set than primary-game spins, including the addition of “Gold Mustang” symbols that substitute for the base game’s “Red Mustang.” During the free games, all Gold Mustang symbol that land are accumulated. An additional free game is awarded for collecting four Gold Mustangs, and an additional free game is awarded for reaching seven, 13 and 15 of the symbols.

Manufacturer: Ainsworth Game Technology Platform: A640 Format: Five-reel, 1,024-ways-to-win video slot Denomination: .01-100.00 Max Bet: 360, 480, 600 Hit Frequency: Approximately 70% Theoretical Hold: 5%-10%

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Red Dream

Novomatic Americas

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his new game employs a unique reel array displayed on the giant vertical monitor of Novomatic’s sleek Dominator Curve cabinet. The base game is a fivereel, 52-line video slot played out on three separate reel arrays. In the base game, if two wild symbols land on the same reel within one reel set, all symbols between the two wild symbols also turn into wild symbols. (It’s called the “Red Mansion” feature.)

Three, four or five scattered bonus symbols trigger 10, 25 or 50 free games, respectively. When the free-spin bonus is triggered, the three reel sets merge into one giant reel array, with a total of 80 pay lines. The free spins can be retriggered within the feature.

Finally, three scattered Gong symbols on the first, third and fifth reels trigger a four-level Jackpot Bonus. A bonus wheel appears on the screen. The player spins the wheel on each sector for a chance to receive one of the jackpots. The wheel contains jackpot amounts and a “Next Level” slice. If Next Level is hit, the player spins again for the nexthigher jackpot. The bonus continues until one of the jackpots is won.

Manufacturer: Novomatic Americas Platform: Dominator Curve Format: Five-reel, 52-line video slot Denomination: .01 Max Bet: 250 Top Award: Progressive; $250 reset Hit Frequency: Approximately 50% Theoretical Hold: 7%-14%

Timberwolf Grand Aristocrat Technologies

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ith this release, Aristocrat places its popular legacy Timber Wolf brand into the Grand Series, in the imposing Arc Double cabinet and its dual 42-inch curved highdefinition touch-screen monitors, 5.1 stereo sound and premium ergonomic design. Grand Series games also feature a dual-wheel bonus that awards free games, multipliers or one of five progressive jackpots—the top prize available with either a stand-alone $5,000 reset or in a multi-site version resetting at $250,000. Other progressives start at $10, $20, $100 and $750.

The base game places the Timber Wolf theme into its unique Xtra Reel Power configuration, in a 4-5-5-5-4 array (four rows of symbols on each end with five rows on the middle reels). In this setup, there are 2,000 possible ways to win on every spin. The base game also offers Aristocrat’s Xtra Stacking symbols, with clusters of like symbols returning big wins—including the possibility of a full screen of the high-paying Wolf symbols.

When the dual-wheel Jackpot Bonus is triggered, the top wheel on the big screen spins to award credit amounts, free spins or

one of the jackpots. Free-spin wins include 3X an 5X wild multipliers and re-spins. If the wheel lands on one of the four lower jackpots, the lower wheel spins for a multiplier on the jackpot ranging from 2X to 10X. Free spins can also lead to the Jackpot Bonus, which means more than one jackpot can be won in a single bonus event.

Manufacturer: Aristocrat Technologies Platform: Arc Double Format: Five-reel, 2,000-ways-to-win video slot Denomination: Multi-site progressive (MSP)— .01, .02 Stand-alone progressive (SAP)—.01-20.00 Max Bet: 375 Top Award: MSP—$250,000 reset SAP—$5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.83%-11.31%

JUNE 2018 www.ggbmagazine.com

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EMERGING LEADERS Brand Leadership

It’s a Marathon, Not a Sprint Joseph Nayquonabe

Martin van der Merwe

Commissioner of Corporate Affairs, Mille Lacs Band of Ojibwe

Manager, VIP Marketing Services, Carnival Corporation & plc

ost interns hope a good performance will jump-start a career. But Joseph Nayquonabe’s stint as a federal lobbyist intern on Capitol Hill was anything but a jump-start.

“I failed miserably, so I tried an internship in the marketing department of my tribal casino at Grand Casino Mille Lacs when I was a senior at St. Cloud State University in 2003,” he says. “I fell in love with casino marketing and operations, and built my career there right out of college.”

After rising to become corporate vice president of marketing for Grand Casinos, Nayquonabe was appointed CEO and chairman of the board of directors for Mille Lacs Corporate Ventures, which oversees all tribal businesses. He also analyzes new opportunities for the Mille Lacs Band of Ojibwe, raises capital and sets strategy, coordination and development of resources across a portfolio that employs 3,500.

Since the opening of Grand Casino Mille Lacs in 1991, the portfolio has added Grand Casino Hinckley, Eddy’s Resort, Big Sandy Lodge & Resort, hotels in the St. Paul and Minneapolis area, plus a cinema, grocery store, gas/convenience stores, golf course, wastewater treatment plant, commercial laundry facility, medical office building and print shop.

“From our casinos and hotels to our nongaming operations, our businesses are a vital economic force in east-central Minnesota,” marathon runner Nayquonabe says. “The mission of my life is to be a force in Indian Country to make our economies innovate and grow.”

Before achieving success, Nayquonabe—who holds an MBA and a master’s degree in tribal administration and governance, both through the University of Minnesota—leaned on the guidance of two mentors.

Angela Heikes, CEO of Mystic Lake Casino, taught him the importance of data-driven decision-making.

“If it’s not getting measured it’s not getting done, so starting with the best metrics was something that helped me incredibly,” he says.

Robert Allen, past COO of Pinnacle Enter-

s the manager of VIP marketing services at Carnival Corporation since 2015, Martin van der Merwe touches more players from and in more places than perhaps any other player development professional in gaming. Van der Merwe’s serendipitous path from celebrity dealer to global host is overshadowed only by his passion for the industry and the players and brand he serves.

Based in the Miami/Fort Lauderdale, Florida area, van der Merwe reports directly to Carnival’s senior vice president, global casino operations, as global head of all customer engagement, including online, interactive, e-commerce, mobile, social, content, CRM and analytics, and sales across Carnival’s B2C and B2B business operations. Strategic relationships with land-based partners are a cornerstone of van der Merwe’s business development strategy.

But his “territory” includes over 100 shipboard casinos under the Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Cunard and four other brands. Needless to say, van der Merwe is always on the go, leading a team of more than 100 in the execution of marketing efforts, customer engagement strategies, and activities and events across a multitude of nationalities, languages and cultures.

Van der Merwe did not arrive in his role accidentally. As a dealer for casinos in South Africa, he entered the annual dealer competition held at the ICE gaming conference in London in 2005, where he placed second in the world.

Upon his return to South Africa, van der Merwe decided to go shipboard, joining a South African cruise ship company for six months before moving to Holland America, which would eventually be acquired by Carnival. He spent the next nine months dealing across 54 ports of call in 18 countries. As he developed professional relationships with players, his interests gravitated to marketing and player development. By 2008, van der Merwe was focused on marketing, and he played a large role in player retention during the cruise industry’s

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“The mission of my life is to be a force in Indian Country to make our economies innovate and grow.” tainment, was a slot guru for the tribal company and was laser-focused on the guest experience.

“He helped me by challenging me to always start and end with the guest when making decisions.”

Nayquonabe sees geographic expansion, urban-based gaming and serving new customer bases with new offerings as growth keys. He cites the purchase of Pennsylvania’s Sands Bethlehem by the Poarch Band of Creek Indians of Alabama as a blueprint for the future.

“I think this is the type of activity all gaming tribes will partake in, whether financing, developing or managing projects,” says Nayquonabe, who loves to read, listen to podcasts and shoot hoops with his three daughters.

Indeed, the tribal corporation has followed that road already as it seeks to anchor rural areas, with an eye on expanding education, housing and health care for the population.

Such growth opens up the need for younger talent. Nayquonabe urges young people to imagine themselves at the helm of a company.

“People want to follow someone somewhere, so, when you get to a leadership position, where are you going to take them? The clearer that picture gets based on your study and experience, the more confidence you’ll have in trying to make a difference in your company.”

—by William Sokolic

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Risk for Reward Through van der Merwe’s impressive professional journey, he has developed a keen appreciation for the value of brands, and for Carnival’s brands in particular. The icing on the cake for van der Merwe is the Carnival team, who he considers a family, and the company’s culture.

struggle through the Great Recession.

Emerging with the economy and a renewed enthusiasm by consumers for cruising, van der Merwe’s career exploded, coinciding with the convergence of traditional gaming operations and customer relationships, as well as new technologies and digital and social marketing platforms. He has leveraged Carnival’s access to a wide customer base to develop some of the most progressive marketing platforms in the industry today.

Through van der Merwe’s impressive professional journey, he has developed a keen appreciation for the value of brands, and for Carnival’s brands in particular. The icing on the cake for van der Merwe is the Carnival team, who he considers a family, and the company’s culture. Through his relationships, experiences and dedication, he embodies the best of what we all consider important in gaming leadership.

—By Michael Soll, The Innovation Group

Emmanuel Bezzell Director of Operations, Muscogee (Creek) Nation Casinos mmanuel Bezzell brings a unique perspective to the tribal gaming world in that he was born and raised a Muscogee (Creek) Nation (MCN) citizen. Bezzell’s Creek citizenship is a badge that he wears proudly, one that has given him opportunities to work for the tribe and benefit its citizens directly through contributing to its future growth, development and revenue generation.

After acquiring a bachelor of business administration degree from Northeastern State University and a master’s degree in administrative leadership from the University of Oklahoma, Bezzell started his gaming career as a front office supervisor at what is now the Hard Rock Hotel and Casino Tulsa.

Several years later, River Spirit Casino Resort in Tulsa was slated to open in 2009, and he was hired by the MCN Office of Public Gaming as a software compliance agent. Through this position, Bezzell learned a great deal about the regulatory side of gaming, performing software compliance tests and working with several independent labs to broaden his understanding of the gaming world.

In 2012, Bezzell landed the role of manager of higher education at MCN’s tribal headquarters.

Working in higher education gave him a unique perspective in that his department provided scholarships for college-bound tribal citizens. Having been a recipient himself of some of these very same services when he was young, he knew the importance of such efforts and how they directly and positively impacted young lives.

This role was his opportunity to give back to the tribe through his work. 2014 marked Bezzell’s return to gaming as director of gaming at River Spirit Casino Resort, and he took his role of personnel management seriously, noticing that millennials had a very different work style from other

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generations. As a means of keeping his employees motivated, he has developed employee recognition programs for his departments that reward hard workers for their exemplary performances and remind them that they’re appreciated.

Bezzell sits on several committees including the Executive Committee for the MCN Scholarship Foundation Program, and a youth council advisory board for Mvskoke Nation Youth Services (MNYS), a program through which Mvskoke (native language for Muscogee) youth contribute to tribal and non-tribal communities while enhancing skill sets that would carry them into adulthood.

Noticing how consistently low voter turnouts were, the Youth Council engaged young people to participate in voting rallies, which boosted education and drew the attention of even more youth.

Bezzell also is involved in SONS of Mvskoke, a men’s mentorship program dedicated to developing Native American boys into responsible men through structure, spirituality, Native American culture, physical wellness and leadership. With Oklahoma having the fifth-highest divorce rate in the nation, many of its young males grow up fatherless. This is where SONS of Mvskoke steps in; the program teaches young men practical everyday skills, as well as the value of giving services to others. States Bezzell, “I think these programs are important for the development of future leaders within our tribe and community.”

As for guiding today’s up-and-coming young gaming executives, Bezzell advises, “Be humble and patient.” Bezzell learned these principles from one of his most impactful mentors, retired MCN Scholarship Foundation Director Dr. Pete Coser.

And when seeking inspiration, Bezzell often turns to his favorite Muhammad Ali quote: “He who is not courageous enough to take risks will accomplish nothing in life.”

Says Bezzell, “Every once in a while, you have to take a risk to get the reward. That has stuck with me.”

—By Marie Casias, The Innovation Group JUNE 2018 www.ggbmagazine.com

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TABLE GAMES

Be Bold While aggressive moves are risky, that’s what creates unforgettable products and services

By Roger Snow

I

n the 1999 British Open at Carnoustie in Scotland—dubbed “Car-nasty” for its unforgiving layout—a Frenchman, a journeyman, an everyman named Jean van de Velle pressed his tee into the ground of the final hole with a threeshot lead over the field.

Which, in golf, is like having a three-turn lead in tic-tac-toe.

For competitors, commentators and spectators, what they were witnessing was evident: the opening salvo of a 487-yard foregone conclusion.

That he would win the tournament.

Birdie. Par. Bogey. Double-bogey. Any of them would etch van de Velle’s name onto the Claret Jug, the oldest, most prestigious prize in the sport. And no one would have faulted him for playing it safe. Three 7-irons and three putts.

Four pitching wedges and two putts. Sacrebleu!

He probably could have built a time machine, gone back 100 years, and returned with a jigger and a mashie niblik to get the job done.

But he didn’t. Instead, the man, who had never before contended in a major championship, reached into his bag and pulled out the hardest club to hit straight, the driver.

And snap-hooked it left.

The shot, miraculously, was so bad it was good. Or at least playable, coming to rest on a peninsula of grass near the tee box of the previous hole, surrounded on three sides by a stream. Van de Velle could have, having just averted disaster, halved the remaining 200 yards with a sand wedge, leaving him an easy-peasy approach for the second half.

But he didn’t. Instead, the man, who had played the match of his life up until now, reached back into his bag and pulled out the second-hardest club to hit straight, the 2-iron.

And banana-sliced it right.

Putting the “fore!” into that foregone conclusion, van de Velle’s ball ricocheted off the grandstand façade, and settled at the bottom of some hay-high rough. He then fatted his next shot into the very stream he had avoided earlier. He then gave serious consideration to the ludicrous notion

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of hitting the submerged ball—actually removing his socks and shoes and rolling up his pant legs!—before coming to his senses and pulling it out of the hazard for a one-stroke penalty.

He then duffed his next shot into a sand trap. He then blasted it on the green and rolled in a putt from six and a half feet away.

For a seven. Triple bogey. Tied for the lead.

Thirty minutes later, he would lose in a playoff.

Everyone who knows golf knows the story of Jean van de Velle. But do you know who won the British Open that year? Or the year before or the year after?

Yeah. Makes two of us, because in sport— win, lose or implosion—it’s boldness that resonates forever.

Same goes for art. Or music. Or life or love.

Or business.

Amazon flowed a river of red for years before its waters and its fortunes went into the black.

Tesla has never made a profit. Ditto Twitter and Snapchat. And Uber? Uber bleeds money from every tailpipe in its carmada. Google makes oodles of cash, but it’s all directly or indirectly from searching. Google Glass, Google Buzz, Google Wave and Google Video—just to name a fewgle—set fire to billions of dollars as these products and services flopped in the marketplace.

Meh. So what?

“Scared money never wins” is an expression in poker that means if you are afraid to take risks, you are destined to lose. It may take a while, but eventually and inexorably, the tide and time of the game will pick you apart and leave you with nothing.

This applies to companies as well. You’ve got to constantly take chances, even longshots.

Name a great company, an enduring company that every once in a while doesn’t do something that leaves you scratching your head.

Apple, a computer company, revolutionized personal electronics.

Netflix revolutionized not only the way television content is distributed, but also the way it

is created.

IBM revolutionized itself. The company today makes most of its money from consulting services, not from selling business machines, which is the “BM” in its name, right Watson?

Companies that refuse to change (yes, Blockbuster, we’re looking at you) or fail at changing (don’t know why you’re laughing, General Electric) wind up like a lot of chipleaders do in poker: eventually walking off the table with their heads down.

Now, of course, this doesn’t mean companies should go all-in all the time. That would be insane. (Fun, but insane.) Measure your risks, as you would your medicine, before taking them. Model out the possible outcomes, and the contingent outcomes, unintended and otherwise, to get the full scope of what could happen.

But recognize the business butterfly effect: There is no way you can predict the effect of every cause, the consequence of every intention.

Sometimes the butterflies are sweet and friendly (e.g., Pfizer created Viagra by accident), and sometimes they will turn venomous and sting you in the ass (e.g., the Campana company in 1982 launched a diet candy that was called— wait for it—“Ayds”).

Wow, is that the all-time bad beat or what?

Well, next to van de Velle, of course.

Keep fighting. Keep experimenting. Keep inventing new things and keep re-inventing yourself. Remember the old adage that if you’re not failing, you’re not trying hard enough.

People will mock you. They will secondguess you. They will Monday-morning-quarterback you when you fail and rationalize your success as luck.

But they won’t forget you.

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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2018 15TH ANNUAL

GLOBAL GAMING BUSINESS MAGAZINE IS PROUD TO ANNOUNCE THE 15TH ANNUAL G2E PREVIEW, the most comprehensive publication available highlighting the world’s most significant gaming event, Global Gaming Expo (G2E), being held October 9-11, 2018 in Las Vegas.

G2E Preview provides advance information about: • Keynote Speakers • Conference Agenda • A-Z Listings of Exhibitors • Casino Design • Security & Surveilllance • Casino Entertainment Awards 2018 • Show Floor plans and more!

DEADLINE FOR AD SPACE, JULY 31, 2018 PUBLICATION DATE, SEPTEMBER 2018

G2E Preview 2018 will feature our annual review of Progressive Products along with a series of Corporate Profiles—the “Who’s Who” of gaming vendors—that identify the top products and services on display at Global Gaming Expo 2018.

For more information on advertising and sponsorships, please contact

Lauren Byrge, Director of Sales 702-248-1565 x227 • LaurenB@ggbmagazine.com

A PUBLICATION

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CUTTING EDGE

by Frank Legato

Omni-Channel Power Product: Power Kiosk Manufacturer: Atrient

ince entering the market, Atrient has continued to distance itself from competitors, challenging the status quo and driving innovation. One example is the Power Kiosk, with its omni-channel platform that pushes the envelope, allowing partners to engage their guests anywhere, any time, and on any device.

The manner in which casino operators interact with their patrons is becoming much more fluid, with marketing material being distributed through multiple media channels—mail, brochures, billboards, radio, TV, email, SMS, web and more. The challenge for operators is efficiently distributing these necessary marketing initiatives to the right people, at the right time, through the best channel.

Atrient worked to tackle these challenges in the development of its omni-

S

channel solution—a device-agnostic platform that will provide partners with unlimited availability, infinite reach, unparalleled reliability and a single point of entry for many of these initiatives.

“It is Atrient’s goal to provide their partners with a platform that allows them to seamlessly interact with their guests, keep them engaged—and choosing them over their competitors,” the company says.

Atrient’s Power Kiosk solution is a gamechanger for casinos. Whether savvy operators are looking to relieve stress on their players club, automate processes, improve reach, or responsibly reinvest in their patrons, Power Kiosk is designed to deliver tangible solutions to their unique challenges. As the first marketing platform to allow operators to award their patrons, based on their play from a mobile device.

For more information, visit atrient.com.

Clean Air Product: V-PAC Air Treatment Products Manufacturer: UltraViolet Devices, Inc.

ltraviolet Devices, Inc. is expanding its offering of nextgeneration air purification equipment to the gaming and hospitality industry. UVDI’s V-PAC family of air treatment products includes equipment for central air systems and selfcontained air purifiers to improve indoor air quality.

Using a unique combination of advanced technologies, the UVDI systems solve the toughest smoke and odor challenges. The V-PAC products are ozone and chemical-free, sustainable, cost-effective and can reduce energy costs by recirculating more inside air so less outside air needs to be heated or cooled.

UVDI’s V-PAC central air treatment systems have been proven to clean the air where other systems could not meet the challenge. The VPAC central air system retrofits easily nto the existing HVAC system of a property and is simple to maintain.

The newest addition to the product line is the V-PAC SC Air Purifier, a self-contained multi-stage air purifier that is easily transportable for ondemand use. The V-PAC SC addresses all four sources of indoor air pollution (particles, gases, aerosols and odors). The key to the system is photocatalytic oxidation and ultraviolet light that doesn’t simply collect pollutants into a filter, but actually destroys viruses, bacteria and other

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volatile compounds within the air purifier.

UVDI is a leading manufacturer of advanced air purification and disinfection equipment using UV-C, photocatalytic oxidation and molecular filtration technologies. Its cutting-edge technology helps provide a healthier indoor environment for buildings. With over 65 years of experience in UV Technology, UVDI has perfected the science behind their technology and currently offers products globally.

UVDI systems are designed and engineered to: • Disinfect the air stream and destroy bacteria, viruses and mold; • Remove odors, volatile organic compounds (VOCs) and other gaseous pollutants; and, • Continuously clean coils and drain pans.

For more information on the UVDI product line, visit UVDI.com or contact Steve Odden at 630-561-6766/stvodden@gmail.com.

G&Tfullpg.2018_2.qxp_Layout 1 5/14/18 4:35 PM Page 1

19th Annual

Nominations are open for the gaming industry’s most prestigious awards.

The GGB Gaming & Technology Awards are the casino industry’s most prestigious awards for technology, products and services. The honors are designed to recognize and encourage innovation and technology in the rapidly changing casino industry. Winners will be announced in the November 2018 issue of Global Gaming Business magazine and awards will be presented at Global Gaming Expo (G2E), October 9-11, 2018 in Las Vegas.

DEADLINE: August 24, 2018

• Best Consumer-Service Technology • Best Productivity-Enhancement Technology • Best Slot Product • Best Table-Game Product or Innovation • Best Interactive Product

Nominations are now open in the following 4 categories:

All Non-Slot Product nominations will also automatically be nominated for the “Progressive Products” feature in GGB’s 2018 G2E Preview magazine. Slot products will be featured in the October issue of GGB, distributed at G2E.

www.ggbmagazine.com For details and to enter online visit:

Lauren Byrge • Sales Director LaurenB@ggbmagazine.com 702-248-1565 ext. 227

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FRANKLY SPEAKING

by Frank Legato

Sports Betting and the Chocolate Flower

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number of pips, ranging from one through six (not counting Gladys Knight), it has no ones or twos. It has two fours and two fives, so it rolls big every time.

Wow. Medieval dice cheats. “Come on, big roll!

Daddy needs some new chain mail!”

Meanwhile, in my latest issue of Cosmos magazine (“The Science of Everything”), there’s a report on a furor resulting from a health study on gamblers conducted by the British Journal of Epidemiology and Community Health (another periodical I never miss) along with the University of Tokyo. According to the story, the researchers solicited gamblers in Tokyo pachinko parlors to undergo a health checkup for the study by sending out a fleet of young women in sexy nurse costumes.

While the researchers later apologized for the sexist methodology—blaming it on an “improbable chain of accidental human processing errors” (I hate when that happens)—they defended the study, which sought to examine subjects who had just been exposed to “hedonic stimuli.”

I agree that the costumes made the effort “derogatory and disrespectful,” as one woman complained. Still, I’d like to know how many gamblers they would have been able to pry from their machines with an invitation from some beergutted, stubbly guy named Joe. Finally, they put a Chocolate Flower at the Bellagio. That’s “Flower” as in Marc-Andre Fleury, the goalie of the phenom Vegas Golden Knights. Outside of the Bellagio’s Patisserie is a 5-foot, 90-pound chocolate sculpture of The Flower, who was my Pittsburgh Penguins’ franchise goalie before the expansion draft landed him in the gaming capital.

Chocolate Flower sits on a base made from 20 pounds of Rice Krispies Treats.

If the Knights are still in it as you read this, I’ll be headed to a legal Atlantic City sports book to put my money on them. Then, I’m eating the statue.

Fleu-ry! Fleu-ry!

VIC TOR RINAL DO

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ell, this month, I had planned to write about the ancient loaded die they dug up in Norway, or the health study of Japanese gamblers that enlisted participants in pachinko parlors with invitations from “young women wearing mildly erotic nurse costumes,” or a chocolate goalie.

Don’t worry, I’ll get to all of that. But as I was contemplating all this earth-shattering news, the Supreme Court of the United States did what it always does. It issued a major gaming-related decision two days before my magazine was going to print.

OK, maybe SCOTUS doesn’t always do that.

Alright, it’s the first time. But still. It’s pushed naughty nurses in pachinko parlors right off the front page.

Now, we’ll have to stop the presses. Throw out the front page! Copy!

Copy!

Yes, there’s that part of me that’s still steeped in the traditions of print journalism, in which I began my career when we still did typesetting and used X-Acto knives to cut and paste copy. Of course, here in the future, by the time I had mentally digested the news of the May 14 decision of the U.S. Supreme Court declaring the federal ban on sports betting to be unconstitutional, the story was already all over the web, including articles from all the major online and print news organizations.

Ah, scoops just aren’t what they used to be.

Anyway, we had to cover it, but thankfully, our publisher Roger Gros offered to handle it, if only to lure me off the ledge onto which I had climbed.

The Supreme Court declared the prohibition on sports wagering imposed by the 1992 Professional and Amateur Sports Protection Act to be unconstitutional. New Jersey casinos and racetracks will now have sports books. Scores of other states are lining up to start sports betting programs.

Personally, I’m not a big sports bettor. I think I placed two sports bets in Las Vegas during the entire three-plus decades I’ve been writing about the industry. Both bets were on my Pittsburgh Steelers, and both times, the Steelers lost, so my natural conclusion was that they lost because I bet on them.

Hey, what else could it be?

Perhaps I’ll place sports bets now that they’ll be available to me wherever I go, including, presumably, at the touch of my smartphone. But never on Pittsburgh teams. It’s the kiss of death.

In the end, I welcome the Supreme Court’s decision, if only because I can now quit typing the acronym “PASPA.” As acronyms go, it doesn’t have a pleasant sound when you say it. Kind of like a sick cough or sneeze.

“PASpa! Oh, pardon me.”

Now, on to that other stuff. Archaeologists in Norway dug up a wooden die believed to be about 600 years old. Instead of the normal

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RISING STARS Nominations Open for GGB’s 40 Under 40

Under

Forty

e annual 40 Under 40 list of rising stars in the gaming industry is confirmation that new blood will invigorate the industry for years to come. Nominations are now open for inclusion for this prestigious honor.

How does the GGB Editorial Advisory Board identify candidates for the list? Are there special individuals in your organization under the age of 40 who have contributed above and beyond your expectations? Have you noticed a young person in the public or private sector who embodies leadership roles? Or do you believe that your abilities set you apart from your peers who are also under 40?

To nominate yourself or someone else for GGB’s 40 Under 40, visit GGBmagazine/40U40. All entries for GGB’s 40 Under 40 will automatically be entered into G2E’s Emerging Leaders program.

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SGS

Southern Gaming Summit is Back

Wholly owned by the Mississippi Gaming & Hospitality Association, SGS impressed speakers, attendees and sponsors

By Patrick Roberts

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Mississippi Choctaw Chief Phyliss Anderson

t was a memorable week in Biloxi in early May as the Southern Gaming Summit (SGS) returned with a new vigor and enthusiasm and featured the inaugural class of the Mississippi Gaming Hall of Fame (see page 61). The conference was held for the first time under the sole ownership of the Mississippi Gaming & Hospitality Association (MGHA), William Hill’s Joe Asher which bought out its former partwith attorney Dan Wallach ner following last year’s SGS. “The MGHA is proud to present the Southern Gaming Summit each year, and this year’s event was particularly meaningful to us,” said Larry Gregory, the executive director of the MGHA. “Since we own the show now, we are directly responsible for its content, which we designed to benefit the industry and highlight all the opportunities available to both commercial and tribal casinos in our region.”

In a transition year, the SGS was held at the Beau Rivage in Biloxi, a smaller venue that encouraged networking and interaction between attendees, speakers and exhibitors.

“We’re very pleased with the results,” said Gregory. “Our exhibitors and sponsors got to meet their customers in a very relaxed setting, and our attendees were able to easily mingle with speakers, creating a unique and powerful networking opportunity.”

The SGS conference kicked off with a welcome reception sponsored by VizExplorer and Rymax Marketing. Revelers took over the pool area at the Golden Nugget and a lavish spread was provided by General Manager Chett Harrison and his staff.

The next morning featured a keynote speech by American Gaming Association President and CEO Geoff Freeman, who delivered his refined message surrounding the legalization of sports betting in the U.S. Freeman 60

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AGA President Geoff Freeman

Above: Attendees packed the Beau Rivage ballroom for the keynote speech and important conference sessions. Left: Frank Fantini (l.) and moderator Andrew Zarnett (r.) were joined by Penn National Gaming’s Tim Wilmott and Boyd Gaming’s Keith Smith

contended that before the Supreme Court held the law to be unconsitutional, the issue had momentum because PASPA had failed so miserably. He also said partnerships are the key to success for sports betting, something DFS failed to recognize in its U.S. launch several years ago.

“We’re working with the leagues to see if there’s a deal to be had. I encourage you to look at it through that lens as well,” he said.

Later, a sports betting panel brought together moderator, attorney Dan Wallach, with Joe Asher, the president of William Hill U.S.; Laila Mintas, the deputy president of Sportradar; Tommy Shepard, an attorney with Jones Walker; and Seth Young, the director of interactive gaming for Foxwoods.

“By the time the 2018 NFL season begins, it would be shocking to me

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S Sponsors got together on the intimate exhibit floor for face-to-face meetings with clients

if Mississippi casinos weren’t booking bets,” Wallach said. “They need the right outcome, but then, once the regs are issued, it’s going to move quickly.”

Mintas said her company is there to educate the participants in the market.

“When we first speak to the leagues, there’s really a lack of knowledge of how the betting market works, how the integrity systems work, and what is really needed,” she said. “And we’ve seen that from many of the states, as well… If the system you set up cannot compete with that big black betting market, people will keep betting with illegal bookmakers, instead of coming into the legal market. That’s a real risk that we see.”

Another panel focused on the possibility of the legalization of gaming in Georgia. Featuring state Rep. Ron Stephens, the sponsor of a bill that would do just that, other panelists gauged the interest in the legislature. Part of the hurdle is that it takes a two-thirds vote of each house to approve the bill—120 of the 180 members of the House and 38 of the 56 state senators.

Moderator Ryan Soultz, director of governmental affairs for Boyd Gaming Corporation, was joined by Chris Anulewicz, a partner with Balch & Bingham, and Jeff Morris, vice president of public affairs and government relations for Penn National Gaming. Most panelists agreed that an amendment may be approved by the legislature and a vote held in 2020. And a gaming commission could be set up by 2021, and it would be off to the races.

The important organization Global Gaming Women sponsored the lunch this year, featuring a presentation from Phyliss Anderson, the first female chief of the Mississippi Band of Choctaw Indians, sponsored by Sportradar. Anderson compared the progress of women in gaming to the #MeToo movement that has sunk some very high-profile officials, including gaming’s Steve Wynn.

“The women’s movement easily parallels the efforts under way in Indian Country,” Anderson said. “We seek voices to be heard, and we only want justice, representation and fairness.

“As a female in leadership, and a mother and grandmother to girls, I tell you that I celebrate and cheer these women on as they speak out.”

The speakers were unified in the quality of the event and the benefits for attendees.

“The Southern Gaming Summit continued its tradition as a premier gaming industry conference in 2018,” said Tim Wilmott, chairman of Penn National Gaming. “The sessions were packed with informative insight into the present and future of gaming in the South, and it was capped off with a celebration of industry pioneers who blazed the trail in the Magnolia State. I thoroughly enjoyed this year’s summit, and Penn National Gaming looks forward to participating again next year.”

Trail Blazers Mississippi Gaming Hall of Fame launched with impressive gala he highlight of the SGS was the Mississippi Gaming Hall of Fame Gala on the final night. With Mississippi gaming approaching its fourth decade, the creation of the hall was a natural evolution, says Larry Gregory of the MGHA. “We had so many deserving nominees that it was very difficult to narrow down the recipients,” he says. “But with the votes of our 28 member casinos, the honorees were all very deserving and appropriate. And of course, we have a long list for consideration in the future.”

Attended by more than 500 people, they came to honor the pioneers in the Mississippi industry:

T

• Lyle Berman, co-founder of Grand Casinos, who not only played a role in the development of Mississippi gaming but also played a major role in the development of Indian gaming in Minnesota. Berman had a previous commitment so his award was accepted by longtime executive and now general manager of the Silver Slipper in Mississippi, John Ferrucci.

• Bernie Goldstein, founder of the Isle of Capri Casinos (named for a small island off the coast of Biloxi), who opened the first casino riverboat on the Gulf Coast. Goldstein died in 2009, and his award was accepted by his son, Robert.

• William S. Boyd, executive chairman of Boyd Gaming, who came east from Las Vegas to develop a casino named after his father—Sam’s Town, in Tunica—and who also helped to develop Indian gaming in Mississippi.

• Tommy Gollott, then and now a member of the Mississippi state Senate from Harrison County, who was instrumental in writing and promoting the legislation that approved casino gaming in the state, especially the dockside element.

• Jack Binion, who, like Boyd, is the son of a gaming legend, who recognized the potential for gaming in the South, and whose Horseshoe casino in Tunica quickly became the most successful casino in the state.

• Rick Carter and Terry Green, two local developers who figured out how to make the most of the new industry, opening the Copa casino in a converted cruise ship in the early 1990s, and who now own the Island View Casino Resort.

JUNE 2018 www.ggbmagazine.com

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GOODS&SERVICES SCI GAMES NAMES COTTLE CEO, REPLACING SHEEHAN

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aming supplier Scientific Games Corporation announced a major senior management shakeup in which Barry Cottle, currently CEO of the SG Interactive division, will replace Kevin Sheehan as president and CEO of Barry Cottle the company effective June 1.

Sheehan, whose two years as CEO have seen a complete restructuring and an overall positive transformation of Scientific Games’ revenue picture and balance sheet, will remain with the company as a “senior advisor.” The company gave no explanation of the reason for the management shift.

In his two years as CEO, Sheehan overhauled the management team, appointing top-flight executives to manage each of the three divisions— gaming, lottery and interactive—formed after the multiple mergers that created the current end-toend supplier that is Scientific Games. He also is credited with loading the supplier for future growth in the emerging legal sports-betting market with the acquisition of NYX Gaming and its industry-leading OpenBet sports-betting platform.

Prior to his August 2016 appointment as CEO of Scientific Games, Sheehan had achieved success in turning the fortunes around for Norwegian Cruise Lines as its CEO, which followed other successes at Cendant Corporation, the founding of Spanish-language television network Telemundo, and a number of other milestones.

When Sheehan joined the company, multiple acquisitions had left Scientific Games with debt that hovered around 8 times EBITDA. Less than a year and a half later, it was around 6.7 times and still falling. Scientific Games’ stock price, over the same period, rose six-fold, and its bonds went from selling at a discount to selling at a premium.

Cottle joined Scientific Games as chief executive of SG Interactive in August 2015. Prior to that, he had been senior vice president of Disney TeleVentures, creating online experiences for Walt Disney Company; executive vice president, interactive for Electronic Arts, growing that company’s online and mobile game division; and executive vice president/chief revenue officer for Zynga, helping to build its now-enviable stable of online and mobile games.

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Immediately before Scientific Games, as vice chairman of Deluxe Entertainment, he helped drive digital innovation including the launch of virtual reality in 2015.

In two years heading SG Interactive, Cottle led the team to double revenue growth and Scientific Games’ efforts to enter sports betting and iLottery through the NYX/OpenBet acquisition.

Along with the changes at the top, Scientific Games announced that Tim Bucher, previously senior vice president and general manager of the Consumer Solutions Group at Seagate Technology, has been named executive vice president and chief product officer across all Scientific Games’ business divisions.

Bucher is a Silicon Valley veteran who has created several successful companies which have either been taken public or acquired by tech giants including Apple, Microsoft, Dell and Seagate Technology over the past three decades. He has served in executive product roles directly for Steve Jobs, Bill Gates and Michael Dell, learning from those iconic entrepreneurs how to innovate and grow businesses.

BOYD GAMING BUYS ILLINOIS ROUTE OPERATOR

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as Vegas-based Boyd Gaming Corporation recently announced it has an agreement to purchase video gambling machine operator Lattner Entertainment Group in Ottawa, Illinois for $100 million. The deal, expected to close by the end of June, gives Boyd Gaming Keith Smith nearly 1,000 machines in 220 locations across Illinois.

Boyd Gaming owns the Par-A-Dice Hotel and Casino in East Peoria, Illinois.

Boyd Gaming President and Chief Executive Officer Keith Smith said, “The acquisition of Lattner is a strategic opportunity to further diversify and expand our business. Lattner will provide us a valuable new avenue to access gaming customers, and a platform to participate in the expansion of distributed gaming. We are excited to welcome the Lattner team to Boyd Gaming, and look forward to establishing ourselves as one of the leading distributed gaming operators in the country.”

Boyd Gaming owns or operates 24 gaming entertainment properties in seven states, offering more than 30,000 gaming machines, 630 table games, 9,400 hotel rooms and 280 food and beverage outlets.

PLAYAGS ANNOUNCES SECONDARY OFFERING

P

layAGS, Inc., the public company formed by the IPO earlier this year of slot and tablegame supplier AGS, announced the commencement of a secondary public offering of 4.25 million shares of the company’s common stock

by Apollo Gaming Holdings, L.P., the former AGS parent company that is now its largest shareholder.

The pricing was subsequently announced at $21.50 per share.

The underwriters will have a 30-day option to purchase up to an additional 425,000 shares of common stock from Apollo. The company itself is not selling any shares and will not receive any proceeds from the offering.

INSPIRED, SCI GAMES PARTNER ON VIRTUAL SPORTS IN PA

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ondon-based Inspired Entertainment, Inc. announced that its market-leading Virtual Sports products will be deployed at retailer locations in Pennsylvania following a groundbreaking technology project with the Pennsylvania Lottery and Scientific Games.

Virtual Sports products will launch as part of an integration with the Pennsylvania Lottery’s central gaming system provided by Scientific Games. Initially, Stock Car Racing and the new 1st Down Virtual Football will be offered. Scheduled events will be streamed into a mixture of retail venues and bars and taverns throughout Pennsylvania via two dedicated channels throughout the day. The product offering will be branded Xpress Sports by the Pennsylvania Lottery.

“We are delighted to announce this key milestone for the Pennsylvania Lottery and Virtual Lorne Weil Sports fans in the state,” said Lorne Weil, Inspired’s executive chairman. “Through an integration with the lottery’s gaming system, we’re introducing the thrill of virtual sports betting for the first time to Pennsylvanians, and we’re gratified to have been chosen by the Pennsylvania Lottery to deliver these new gaming entertainment products to its valued players with our high-quality virtual sports graphics and animation.”

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CARNIVAL PICKS KONAMI SYNKROS

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onami Gaming, Inc. announced it has reached an agreement with Carnival Corporation & plc, the world’s largest leisure travel company, to deliver its award-winning Synkros casino management system across the entire global fleet. As Carnival Corporation’s preferred partner for core gaming systems, Synkros will provide systems hardware and software for 100-plus ships spanning a portfolio of nine cruise line brands.

Konami’s Synkros will reach onboard casinos spanning nine leading brands: Carnival Cruise Line, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises (Australia) and P&O Cruises (UK).

New-build ships are also planned for implementation as it progresses.

INTERBLOCK INSTALLS TWO ETG STADIUMS FOR THUNDERBIRD

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uxury gaming manufacturer and electronic table game (ETG) market leader Interblock announced the placement of two 25-seat Diamond Stadiums within Thunderbird Resorts & Casinos properties in Rizal and Poro Point in La Union, the Philippines.

“We are thrilled to provide the luxury and style of electronic table gaming to Thunderbird Resorts & Casinos properties,” said Michael Hu, vice president of Asia for Interblock. “The Diamond Stadium creates a fantastic focal point within the properties which adds to the unique luxuries and exclusiveness the casino has to offer.

This is another significant installation for Interblock in the Philippines. We wish our partners the utmost success in this new style of gaming.”

Each Diamond Stadium is composed of 27inch play stations, one live baccarat table and three video generators that deliver baccarat games. All baccarat games are accessible from a single play station. Four high-definition wall-mounted LCD displays provide players with each game’s progress, statistics and trends.

JUNE 2018 www.ggbmagazine.com

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PEOPLE BALLANTYNE TO HELM MELCO CYPRUS

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elco International Development Ltd. has named Craig Ballantyne property president of City of Dreams Mediterranean, its integrated resort project planned for the Greek ReCraig Ballantyne public of Cyprus.

Ballantyne will oversee the resort’s daily operations, according to a statement from the company.

“I am honored that Melco has entrusted me with this challenging project,” Ballantyne said.

Before joining Melco International in September 2017, Ballantyne worked for Melco chief Lawrence Ho as chief operating officer of Russian operations at Summit Ascent Holdings Ltd., which oversaw Tigre de Cristal, the sole casino resort operating in the Russian Far East’s Primorye casino zone.

City of Dreams Mediterranean, to be developed with local partner Cyprus Phasouri (Zakaki) Ltd., is scheduled to open in early 2021. Until then, Melco has the right to open a temporary facility in Limassol. The partners have a 30-year gaming license, with the first 15 years as the market’s sole operator.

MORGAN JOINS NEVADA GAMING COMMISSION

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evada Governor Brian Sandoval recently appointed Sandra Douglass Morgan to a four-year term on the Nevada Gaming Commission. Morgan replaces former state Senator Randolph Townsend, who Sandra Douglass completed two four-year Morgan terms. She is just the second woman to serve on the commission.

Morgan is director of external affairs for AT&T Southern Nevada. She is responsible for managing legislative and community affairs activities for the company, and works closely with community leaders, legislators and other policymakers to help people become more familiar with technology.

Previously, Morgan served as a litigation attorney for MGM Mirage, the predecessor to MGM Resorts International. She also served as the city attorney for the city of North Las Vegas.

GEG ADDS MECCA TO BOARD

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acau casino operator Galaxy Entertainment Group has appointed former president and chief operating officer Michael Mecca as a non-executive director, effective immediately. Mecca retired in April after nine years Michael Mecca as president and COO. In a filing to the Hong Kong Stock Exchange, Galaxy said Mecca has entered into a three-year service contract that will make him subject to retirement by rotation and reelection in accordance with company and HKSE regulations. He will be paid an annual fee of HK$240,000 (US$30,500) plus bonuses.

INSPIRED GAMING NAMES PIERCE PRESIDENT, COO; ALVAREZ LEAVING

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ondon-based virtual sports and video lottery supplier Inspired Entertainment announced that it has appointed Brooks H. Pierce as president and chief operating officer.

Pierce joined the company in April as senior vice president for North America.

The company said the appointment is part of a management overhaul that also involves the departure of Luke Brooks H. Pierce Alvarez, the company’s longtime president and CEO, under “terms being finalized.”

“I am grateful to Luke for his leadership of Inspired since its founding and during its rapid growth in its inaugural year and a half as a public company,” said Inspired Executive Chairman Lorne Weil. “We will miss him, and we wish him every success.”

The responsibilities previously held by Alvarez will be divided among the members of a newly created “Office of the Executive Chairman,” which will carry out the day-to-day management of the company.

In connection with the formation of the Office of the Executive Chairman, Inspired’s chief financial officer, Stewart Baker, has been promoted to executive vice president, said the firm.

Pierce most recently was director of the Americas for Aristocrat Technologies. Prior to that, he was president, North American gaming and chief revenue officer for WMS Gaming.

McCOY JOINS INNOVATION GROUP AS BUSINESS DEVELOPMENT VP

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he Innovation Group (TIG) announced that Allison McCoy, a former executive with Reed Exhibitions and Spectrum Gaming Group, has joined the company as vice president of business development. McCoy brings 15 years of gaming industry experience to TIG, with a diverse background featuring significant international and cross-cultural work experience which will be instrumental in continuing to expand the firm’s established brand and suite of Allison McCoy services.

McCoy will work closely with TIG partners in the ongoing pursuit of new global business opportunities, including in the Native American gaming sector. Her track record of success in analyzing the viability of new prospects and partnerships, as well as her ability to initiate and grow strategic alliances, complements TIG’s existing business platform. Additionally, McCoy will oversee TIG’s Emerging Leaders of Gaming program, which is designed to turn today’s young executives into tomorrow’s industry leaders.

GGB

June 2018 Index of Advertisers

40 Under 40 Nominations . . . . . . . . . . . . .59 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . .64,67 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Atrient . . . . . . . . . . . . . . . . . . . . . . . . . .34,35 Crane Payment Innovations . . . . . . . . . . . .27 Dickinson Wright . . . . . . . . . . . . . . . . . . . .25 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 FABICash . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fantini Report . . . . . . . . . . . . . . . . . . . . . .63 Fox Rothschild . . . . . . . . . . . . . . . . . . . . . .45 G&T Awards . . . . . . . . . . . . . . . . . . . . . . . .57 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 G2E Preview . . . . . . . . . . . . . . . . . . . . . . . .55 Gamblit Gaming . . . . . . . . . . . . . . . . . . . . .39 Greenberg Traurig . . . . . . . . . . . . . . . . . . .21 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,41 JCM Global . . . . . . . . . . . . . . . . . . . . . . . .13 Konami Gaming . . . . . . . . . . . . . .Back Cover Merkur Gaming . . . . . . . . . . . . . . . . . . . . .19 Micro Gaming Technolgies . . . . . . . . . . . . .33 RPM Advertising . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . .9

JUNE 2018 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Q

&A

Jonodev Chaudhuri Chairman, National Indian Gaming Commission

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n era is coming to an end at the National Indian Gaming Commission, the federal regulator over tribal gaming. The term of Chairman Jonodev Chaudhuri expired at the end of April, and he’s now serving in a “holdover” status. But for five years, Chaudhuri has presided over a peaceful period in the relations between gaming tribes and the federal government. He sat down with GGB Publisher Roger Gros at the Southern Gaming Summit in early May to review the accomplishments of the NIGC during his tenure and his views of the future. A podcast of this interview is available at GGBMagazine.com.

Global Gaming Business: Your term is officially over now but you’ll still be serving until a new chair is appointed by the Trump administration. What is your focus now?

Your term has been relatively calm in comparison to some other chairmen. Why is that so, do you think?

We recognized early on that IGRA carved out an important role for NIGC, and that was to first and foremost serve as a regulator. In my professional career, I’ve always been immersed in Indian Country. I’m proud of the work that I’ve been able to do as an attorney, as a judge, as an organizer in Indian Country. I’m a supporter and believer in sovereignty, first and foremost, to the core. But I also understand that Indian Country has needed and will continue to need NIGC to be a credible regulator. So, our challenge when I first started was, given the history of the agency, how you hit that balance, to be supportive of tribal sovereignty, while at the same time not shirking your regulatory responsibilities. It’s a fine balance. I think after 30 years of IGRA, we’ve hit the correct balance point.

Jonodev Chaudhuri: I’m focused on tying up

as many loose ends as possible. I don’t anticipate being at NIGC forever. I do anticipate being at the agency through a significant part of the summer. We’ve been working as diligently as possible to serve Indian Country and the general public to the best of our abilities, knowing that my time is coming to a close. We’ve been working for many months to get important regulations out the door, to take care of things that are specific to the chair’s duties. But, I will say it has been an absolute honor to serve as chairman of NIGC during this period of time.

When I became acting chair, it was the 25th anniversary month of the passage of the Indian Gaming Regulatory Act, October 2013. So, my term will have spanned, as chairman—either acting or confirmed—the 25th anniversary through the 30th anniversary year of IGRA. And we’ve seen a lot of changes, but there are many more changes to come.

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Global Gaming Business JUNE 2018

who understands the technological changes. That division has helped inform our regulatory and decision-making. It’s helped inform our guidance.

It’s helped inform our enforcement functions, and it’s also informed our training and technical assistance. We now have IT vulnerability assessments that we do free of charge, for Indian Country.

So, we’ve made all sorts of huge advancements, in terms of technology. That’s the first bucket. The second bucket is, back to the perfect balancing point in everything that we do as an agency, to balance our credibility as regulators with our support of tribal sovereignty and tribal decision-making.

You see that in our enforcement philosophies.

That balance point has influenced our ramping up our numbers on the training and technical assistance side. Through our virtual trainings, we now train more people each and every year since I’ve been at the agency.

What do you consider some of your other accomplishments?

Now that you’re coming to the end of your term, what surprised you, what was something that you didn’t expect?

After 30 years of IGRA, I am convinced that we’re on the cusp of a new age of gaming. Gaming is an industry that’s inherently driven by technology. The technological developments that are on the horizon are going to drive important policy decisions, both nationally and on a regional basis, and I think we positioned the agency, and by extension, positioned our partners to be in a great place to meet the challenges of those changes, and take advantage of the opportunities that those changes will present.

Some of the accomplishments break down into two categories. One is on the technology side of the equation. One of our first orders of business was to create a technology division, in recognition of the changing technological landscape of Indian gaming. And that division has done what we intended it to do. It has informed every aspect of our agency, since it started. I’m very proud to have a great division director, Travis Waldo, who comes from Indian Country,

I’ve always been a policy person. I’m very honored to have served in the interior secretary’s office immediately before NIGC, and beyond that, I had advised and worked with tribes in a number of capacities over the years. So, I thought the biggest challenges would be advancing sound policies, which I think we’ve done. But what I didn’t anticipate was how much hard work there’d be, just in the day-to-day administrative functions of the agency.

That was the biggest challenge. I thought it would be instituting large-scale policy, or perhaps working through some tough enforcement actions, or working through some critical matters that involved Supreme Court decisions. But the hardest part was the administrative work, and keeping folks moving in the same direction, and keeping folks energized, and really being part of a team—in order to get the job done, we all have to believe in the same approach. And I think, collectively, we’ve done it.

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