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GGB Global Gaming Business Magazine

SLOT HOLD PERCENTAGE DEBATE SPORTS BETTiNG and the COmPACTS mACAU: BEYOND THE ViP READiNG ANALYTiCS

June 2019 • Vol. 18 • No. 6 • $10

Oh Canada! Gaming is different north of the border

Why Not

US?

Are sports betting providers too Euro-centric?

Circus Circus

The iconic Vegas property a blast from the past

Association of Gaming Equipment Manufacturers


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CONTENTS

Vol. 18 • No. 6

june

Global Gaming Business Magazine

COLUMNS

38 COVER STORY Growing in Canada

AGA 10 Paper PASPA

Gaming in Canada is a mature industry that enables provincial governments and First Nation tribes to meet the needs of citizens. But Canadian operators face many of the same challenges as those in the U.S. That includes meeting the needs of an emerging generation of new players.

Bill Miller

Fantini’s Finance 12 Wired Frank Fantini

Making My Point 36 Dead Air

By Solange Jacobs Randolph

Roger Snow

FEATURES 14 Circus in Town Circus Circus stands apart on the Las Vegas Strip as a living monument to some of the greatest visionaries in the history of the casino industry. By Oliver Lovat

30 The Slot Hold Debate Current and former slot operations executives address the issue of whether or not high hold percentages on the slot floor are chasing customers away.

Michael D. Lipton, Kevin J. Weber and Chantal A. Cipriano

4

The Agenda

By Frank Legato

6

By the Numbers

8

5 Questions

46 Using the Data More operators are turning to data analytics software and those with the expertise to use technology to mine the data for marketing purposes. By Dave Bontempo

20 Sports Betting Spat The vast differences between the U.S. sports betting market and longestablished bookmakers and suppliers in Europe is leading to some tensions as U.S. partnerships are formed. By Marjorie Preston

24 Sports Betting and the Tribes Some tribes operating U.S. Indian casinos are still not convinced that operating sports books is worth the effort, while others want sports betting exclusivity. By Dave Palermo

Canada 42 Ontario 2019: Online Gaming, Alcohol and Cannabis

50 Macau for the Masses Operators in Macau will increasingly turn to the mass and premium mass markets to facilitate market growth, while limiting reliance on the VIP junkets dominant in the past.

DEPARTMENTS

13 AGEM 44 Emerging Leaders With Maskwaki Casino’s Dirk Whitebreast, NRT Technology’s Rosaura Gonzalez, and Incredible Technologies’ Bryan McVey

49 Frankly Speaking 54 New Game Review 58 Cutting Edge 60 Goods & Services

By Steve Gallaway and Brendan Bussmann

56 Caesars’ Rodio Billionaire Carl Icahn has used his influence on the board of Caesars Entertainment to bring in Atlantic City veteran Tony Rodio as the operator’s new CEO. By Patrick Roberts

65 People 66 Casino Communications With John Dinius, General Manager, Sycuan Casino Resort JUNE 2019 www.ggbmagazine.com

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THE AGENDA

Time and Time Again Roger Gros, Publisher

Vol. 18 • No. 6 • JUNE 2019 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Marjorie Preston, Managing Editor mpreston@ggbmagazine.com Monica Cooley, Art Director | mcooley@ggbmagazine.com

T

he year was 1982 and I was a dealer at Caesars Atlantic City. Hours were long, players were surly and the work boring. My cousin’s girlfriend at the time, Dawna, was working in the casino office and got a strange request. Someone was calling and asking if the office could refer them to dealers who might be interested in appearing on a video computer blackjack game that featured human dealers announcing the results of each hand on a slotstyle game. It wasn’t surprising when the management at Caesars didn’t cooperate with this request. After all, the highest-tech video games were Pac-Man or Space Invaders. But when Dawna jokingly told me about it, I had the thought that I could provide the dealers. The main problem was getting a couple of days off at the same time, but we all managed to do that. So I got together half a dozen dealers, all good-looking people. For some reason they didn’t use me on camera—I was just the organizer—go figure. We were whisked off to the studio in Boston, put up in a fine hotel, and filmed for two straight days. Each dealer had to repeat all the phrases you would use at a blackjack game— all the numbers, surrender, double down, split, etc. The producers didn’t want any animation or enthusiasm (kind of like a real blackjack game in Atlantic City in those days), just the numbers and phrases, thank you. After it was over, I would occasionally call and inquire about the progress of getting this game to market, but kept hearing discouraging reports. Eventually it was determined that the technology was not up to speed—literally. The time for the appropriate phrase to load between the player making a choice about whether to hit or stand or whatever was in the neighborhood of a couple of seconds. So a player staring at a frozen screen wasn’t going to work. Of course these problems were resolved about a decade later. I remember seeing the Sega dealer games at a trade show when they were first introduced and flashing back to those days in Boston. And today, the “live” dealers in online casinos are positively futuristic.

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Global Gaming Business JUNE 2019

It seems that we humans have great imaginations that often can’t keep up with either the technology or the response of other humans. Remember the introduction of ticketin/ticket-out (TITO) in the early ’90s? It was a disaster when it first hit the casino floor, but over the years as technology and marketing improved (let’s make sure we still hear the sound of the coins dropping even if actual coins don’t drop), TITO was gradually accepted and today it’s a required part of any slot machine. And don’t even start with RFID chips! Again, I harken back to the early ’90s, when then-Bally Technologies debuted a table that had a product that supposedly could read the cards coming out of the shoe and the chips in the rack and in the betting circles. It was amazing technology but it did not work. Even today, with the giant technological leaps, there are still problems. And how about server-based gaming? It was to be the panacea for all casino operators where you could pick and choose what games to offer, where to offer them and what to charge for them. While today, SBG is widespread, it was far from the magic bullet that proponents were predicting. So gaming and technology have a long and tortured history. Sometimes they are perfect together, and other times they’re at loggerheads. Sometimes it’s just that technology can’t do what the operators want, and in others it can’t do what the regulators deem necessary. Many companies are trying to address the payment processing issue these days. Why can you insert, swipe or wave your credit card in front of some device and have money transferred painlessly, but at a slot machine you still have to use dirty and outdated cash? Good luck solving that issue to the regulators’ satisfaction. But time heals all wounds. If it’s a good idea, people accept it, technology can achieve it and the developers have lots of time to wait and refine, any product can be successful. Just ask the guys who dumped all that money into the blackjack machine almost 40 years ago. They can tell you.

Terri Brady, Sales & Marketing Director tbrady@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Chantal A. Cipriano | Frank Fantini | Michael D. Lipton Bill Miller | Roger Snow | Kevin J. Weber Contributing Editors Dave Bontempo twitter: @bontempomedia Brendan Bussmanwn | Steve Gallaway | Oliver Lovat Dave Palermo twitter: @DavePalermo4 Solange Jacobs Randolph | Patrick Roberts William Sokolic | Michael Vanaskie __________________

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

• 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

• Michael Soll, President, The Innovation Group

• 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 2019 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

A Deeper Dive

T

he legalization of sports betting in the United States has proceeded at a rapid but often uneven pace. The latest American Gaming Association sports betting map gives a complete report, but fails to capture the nuances, although, of course, it’s not possible to imbue a chart with these dynamics. In the May AGA update map, there isn’t differentiation between the green states where casinos control sports betting rather than the lottery—Oregon, Montana, Rhode Island, Tennessee and Washington, D.C. Sports betting in New Mexico is occurring, but only in several tribal casinos and without the out-

right approval of the state. Mississippi has sports betting in its casinos (including the Choctaw properties), but lacks mobile wagering, which diminishes its revenue potential. Pennsylvania and Rhode Island have the highest tax rates but the lowest returns. And it completely misses the U.S. territory of Puerto Rico, where the governor promises to have the most aggressive, lowest-taxed and broad (including esports) sports betting system in the country. And the “gray” status of Florida and California speaks volumes about the power of the tribal gaming entities in those states. To obtain a copy of this map, visit AmericanGaming.org.

pArAllel liNes?

A

research report issued in 2014 in Australia may have some significant applications to the future of sports betting in North America. “Promotion of gambling and live betting odds during televised sport: Influences on gambling participation and problem gambling” was produced by Professor Nerilee Hing and Dr. Matthew Lamont from the Centre for Gambling Education and Research, at Southern Cross University, and Dr. Peter Vitartas, of Business, Economics and Law, from LaTrobe University. The three researchers conducted surveys of gamblers with many interesting results. At top, sports bettors were asked to indicate how many different sports betting companies they had accounts with during the last 12 months. Of the 95 participants who reported betting on sports, 64.2 percent had at least one account with a sports betting company. Those 95 sports bettors were asked how they made those bets via three different channels: internet (computer, smartphone, tablet or digital TV), telephone, or land-based venue (betting shop, pub, club, casino, etc.). Among the 95 sports bettors, on average, 45.8 percent of all sports betting was made via the internet, 42.4 percent at a land-based venue, and 11.8 percent over the telephone.

6

Global Gaming Business JUNE 2019

Number of sports betting accounts with sports betting entities 0 sports betting accounts 1 sports betting account 2 sports betting accounts 3 sports betting accounts 4 sports betting accounts 5 sports betting accounts

N 34 47 8 4 1 1

% 35.8% 49.5 8.4 4.2 1.1 1.1


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NUTSHELL

“They

5QueStionS Richard Schwartz President, Rush Street Interactive

S

ports betting has been a real boost to iGaming companies that have already been operating. Rush Street Interactive got into iGaming early on for an American company. Richard Schwartz, the president of the company, explains why the iGaming experience Rush Street has achieved in New Jersey and now Pennsylvania, not to mention its expertise in social gaming, make it an ideal partner for tribal and regional casinos that want to eventually run their own iGaming and sports betting operations. He spoke with GGB Publisher Roger Gros at the Indian Gaming Tradeshow in San Diego in April. To hear a full podcast of this interview, visit GGBMagazine.com.

1 2 3 4 5

GGB: What does Rush Street Interactive bring to tribal and independent casinos considering sports betting and iGaming? Schwartz: We’ve invested a lot of effort and time in creating high-quality products for the industry—

sports betting, both retail and mobile, social gaming and real-money iGaming. We want to find partners to work with to help them develop their own products in the market and train them to run their own operations. What’s the background of Rush Street Interactive?

Rush Street Interactive was created more than seven years ago with the goal to be ready when laws were passed to allow iGaming and sports betting. We invested heavily in the development of our own technology and platforms, which is a risky proposition. Many companies that try it fail, but we’ve been able to execute on our vision. Our platforms allow us to be nimble and differentiated from our competition. We’ve focused on the user journey to create that differentiation. What have you learned about that user experience over the last few years?

Players are very aware of what operators are doing and how you’re treating your players. Our competitors were doing things that weren’t creating a level of trust and transparency that the players want. They’re making a decision to gamble and they want to be treated fairly. When customers play on our site, they know exactly where they stand in terms of loyalty points and what those points mean. They know what our play-through requirements are. We’re trying to create player loyalty through a retention model that includes a great experience and community building. Rush Street has a physical casino as well—SugarHouse in Philadelphia—tied to New Jersey and now Pennsylvania internet gaming. What have you seen in the crossover to the bricks-and-mortar facility?

It’s very strong. This is often underestimated in our business—the value of online gaming as a way to enhance casino play. We believe the land-based property should be the brand, and you can utilize that brand to drive traffic to both the physical and the online casino. How has sports betting performed for you?

We surprised a lot of people in the New Jersey market. While the DFS sites have dominated because of their built-in database, we’ve been either third or fourth in the market every month, so we’ve gotten off to a strong start. We’ve also seen the ability to cross-promote sports bettors with the online casino. It’s been an incremental growth that has been way beyond what we expected in terms of players betting on sports and then playing other products. We’ve integrated our loyalty and bonusing programs with the sports betting site, so we make it easy to jump between the two products.

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Global Gaming Business JUNE 2019

Said It”

“It’s a gambling device... there’s been a lot of frauds connected with it. Bitcoin hasn’t produced anything. It doesn’t do anything. It just sits there. It’s like a seashell or something, and that is not an investment to me.” —Warren Buffett on Bitcoin to a group of reporters ahead of Berkshire Hathaway’s annual meeting

CALENDAR June 4-6: International Gaming Summit, Ritz Half Moon Bay, Marin County, California. Produced by the International Association of Gaming Advisors. For more information, visit TheIAGA.org. June 10-11: 13th Annual Native American Economic Development Conference, Pechanga Resort & Casino, Temecula, California. Produced by Native Nation Events. For more information, visit NativeNationEvents.com. June 12-13: East Coast Gaming Congress & NexGen Gaming Forum, Harrah’s Resort, Atlantic City. Produced by Cooper Levenson and Spectrum Gaming Group. For more information, visit EastCoastGamingCongress.com. June 23-25: Brasilian Gaming Congress (BgC) 2019, Tivoli Mofarrej, São Paulo, Brazil. Produced by Clarion Gaming. For more information, visit brasiliangamingcongress.com. June 27-29: Asia Gaming Expo (AGE) Cambodia 2019, White Sand Palace Hotel, Sihanoukville, Cambodia. Produced by AES Signatum. For more information, visit Asia-GamingExpo.com. July 12-14: Phil-Asian Gaming Expo 2019, SMX Convention Center, Manila, Philippines. Supported by PAGCOR. For more information, visit phil-asiangamingexpo.com. July 16-19: Amsterdam Affiliate Conference, Amsterdam RAI, Netherlands. Produced by Clarion Gaming. For more information, visit igbaffiliate.com/events/amsterdam-affiliateconference. July 22-24: Oklahoma Indian Gaming Association (OIGA) 2019 Conference, Tulsa, Oklahoma. Produced by the Oklahoma Indian Gaming Association. For more information, visit OIGA.com. August 12-14: GRWA (Gaming, Racing, Wagering Australia), L’Aqua, Cockle Bay Wharf, Sydney, Australia. Produced by Beacon Events. For more information, visit GamingDownUnder.com. August 13-15: Australasian Gaming Expo, Darling Harbour, Sydney, Australia. Produced by the Gaming Technologies Association. For more information, visit AustGamingExpo.com.


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AMERICAN GAMING ASSOCIATION

Paper PASPA One year after the landmark decision legalizing sports betting in the U.S., opportunities keep mounting

O

By Bill Miller, President & CEO, American Gaming Association

ne year ago, the United States Supreme Court ruled on Murphy v. NCAA and changed sports betting in America as we know it. The court opened the door for states and tribal nations to establish transparent, well-regulated markets for legal sports betting after nearly 30 years of a failed federal ban, which only perpetuated the dangerous illegal market. As new legal markets continue to expand and mature, all of us must keep the lines of communication open, share best practices and commit to fostering gaming environments that are as safe and responsible as they are innovative and fun. Legalized sports betting in post-PASPA America is off to a strong start. Since May 2018, well over half the country has succeeded in legalizing sports betting. Eight states now operate legal sports betting markets, providing their consumers with the opportunity to wager in a safe market; five additional jurisdictions have legalized sports betting and plan to be operational by football season; and a handful of bills are awaiting governors’ signatures. Furthermore, 35 private partnerships have been formed between sports leagues, teams and gaming companies. We have already seen promising results from new legal markets—like in January, when the total amount legally wagered in new markets exceeded Nevada’s handle. Or in March, when the total amount wagered legally on sports surpassed the billion-dollar mark for the first time. In total, since last May, nearly $3 billion has been wagered outside the well-established Nevada market, proof of the tremendous appetite for legal markets. This increased demand for legal sports betting can even be seen in Nevada, where

sports books brought in $5 billion in 2018—an all-time high. As these numbers continue to grow, so does the positive economic impact of sports betting. Since PASPA was overturned, more than $55 million has been generated in state and local tax revenue. If other jurisdictions wish to set their new markets up for success, they must include sensible tax rates, strong consumer protections and provisions that put responsible gaming at the forefront—all pillars of the American Gaming Association’s priorities for successful sports betting markets. This resounding success should also make it clear that we need to remain committed to educating the public on the availability of legal opportunities to wager on sporting events. From our research at AGA, “Current and Future Sports Betting Behavior Post-PASPA,” we learned that 100 million American adults are current or potential sports bettors, and that eight in 10 adults are supportive of legal sports betting in their state. But there is a knowledge gap to address—only 56 percent of people in states with legal sports betting are aware of it. AGA is working to make the awareness of these new legal markets just as mainstream. The unified opposition to PASPA aligned historically diverse voices from outside and within the casino gaming industry, including stakeholders from across the world of sports, government and law enforcement. Stamping out illegal and unregulated sports betting is achievable, but will require similar cross-sector collaboration within a rigorous regulatory framework. If we continue to promote and uphold smart policies, work collaboratively and put consumers first, imagine how much farther legal sports betting could take us.

Eight states now “operate legal sports betting markets,

providing their consumers with the opportunity to wager in a safe market.

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Global Gaming Business JUNE 2019


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FANTINI’S FINANCE

Wired Will the latest DOJ Wire Act decision impact investments in sports betting companies? By Frank Fantini

I

t is no secret that sports betting is the hot topic of 2019. In fact, one can’t escape reading and hearing about the latest events and announcements, important or trivial, whether in the general business press, on television, in trade publications or in just about any gathering of gaming industry stakeholders. One reason for all the interest is excitement for growth as state after state legalizes sports betting. Another reason is the drama created by the Department of Justice in reversing the Obama administration’s interpretation that the 1961 Wire Act only banned sports betting by telephone across state lines. The 1961 law was written before the internet and before computer servers. In those days, the situation was simple: if a person in one state called another on a telephone to place a bet, it violated the law. Today, however, computer servers exchange information across state lines for virtually all financial transactions. The far-reaching possibility is that a person can place a bet in, say, New Jersey with both the sports book and the person being in New Jersey, but, because the transaction might be serviced by servers in other states, say by the bettor’s bank in New York, that the bet is illegal. Drawing the possibilities to an even greater extreme, even a conventional bet like spinning a slot machine inside a casino with cash can be considered a Wire Act violation if the transaction is aided by servers in other states. Now, the Department of Justice might not take the issue to such an extreme, or such an interpretation might not stand up in court, but it illustrates the complications and potential unintended consequences of applying a literal reading of a 1961 law to the practical, everyday usage of 21st century technology. So where does this bring us, beside all of the excitement and drama? On one hand it leaves us in a state of uncertainty.

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Global Gaming Business JUNE 2019

However, all is not uncertain. We know that more states are legalizing sports betting, and that state lotteries are interested in getting in on the action. In other words, nearly every week there is another state congressional delegation that has a vested interest in opposing the Department of Justice interpretation. So, the forces of sports betting and online gaming are continually getting stronger, suggesting the Department of Justice itself might narrow its view of what is legal. Heck, even anti-online-gaming Sheldon Adelson, often speculated as the indirect power behind the Department of Justice decision, would demand a narrow interpretation if he thought the most extreme interpretation would freeze all gaming.

forces of sports “The betting and online

gaming are continually getting stronger, suggesting the Department of Justice itself might narrow its view of what is legal.

The DOJ might have hinted at a narrower opinion in its request that the New Hampshire Lottery suit against its opinion be dismissed, saying the lottery has no standing because it’s unlikely to face enforcement. So, assuming the status quo stands, what stocks make sense for investors in public markets? The companies getting the most publicity in the general business press are the big companies—MGM Resorts, IGT, Scientific Games. However, it appears unlikely that sports betting can generate enough new business to move those stocks appreciably.

For MGM, what happens at its Las Vegas and Macau casinos and in reforming its cost structure will have a far greater impact. Likewise, lotteries, slot machines and casino systems are bigger businesses for IGT and Sci Games. So, if you like their stories absent sports betting, you can consider sports betting icing on the cake but not in itself a reason to buy the stocks. Use William Hill as an example. Cutting the bet limit on gaming machines at its U.K. retail shops has had a much greater impact on the business than the growing U.S. sports betting operations. One solution is to spin off online gaming subsidiaries, giving investors pure plays into sports betting with companies backed up by deep-pocketed parents. William Hill did something similar in its deal with Eldorado Resorts in which Eldorado owns 20 percent of William Hill’s U.S. operations. (That, by the way, makes Eldorado an interesting sports betting play as a casino operator.) Scientific Games, likewise, will spin off its social gaming business as a separate public company. We’ll see if other companies follow suit. Of course, you can target individual pureplay sports betting companies, but picking winners in such a fast-changing world is more like throwing darts than doing fundamental analysis, because as technology changes, so do the rules of the road, as evidenced by the out-of-the-blue DOJ opinion. But there is growth to capture with various estimates that U.S. sports betting can grow to be a $13 billion to $17 billion revenue business, up from $497 million last year. Chris Grove of Eilers & Krejcik Gaming estimates a $5 billion market by 2023 just on what we know today. Perhaps the best approach for now is to buy a basket of pure-play sports betting stocks and ride the wave. 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 Gaming Publishing is the print and digital media publishing house behind G3 magazine, G3Newswire.com and the newly updated G3Newswire App. The monthly G3 magazine has been in existence since 2003, providing the gaming industry with news, interviews, market reports and product information. In addition to a monthly magazine that is distributed to a database of over 6,000 readers per month across 97 countries worldwide, the G3Newswire website services 11,455 daily visitors with news, reports, digital magazines and events listing. Gaming Publishing also publishes two apps for download on Android and iOS devices, the G3Newswire App and G3i. G3Newswire includes all the combined features of the G3Newswire.com website in an easily digested format on digital devices, while G3i hosts the digital library of G3 magazines over the last decade. Gaming Publishing launched the industry’s first daily news service app in 2015 with the debut of the G3Newswire App for iOS and Android. In May, Gaming Publishing released the third iteration of the app, which includes a slick new user interface alongside additional features for video, magazine and digital report downloads direct to mobiles and tablets. G3 is the official European media partner of AGEM. Gaming Publishing has recently attended the ECA European Dealer Championships in Tallinn, the G2E Asia show in Macau and the ICE North America event in Boston. Next on the agenda is the ECA Summer Meeting in France and the iGB Live exhibition taking place in Amsterdam in July.

AGEM Board of Directors Actions – May 2019 • AGEM members had an in-person presentation at the May meeting on the new Harry Reid Research and Technology Park at the University of Nevada, Las Vegas from International Gaming Institute Executive Director Bo Bernhard and UNLV Associate Vice President of Economic Development Zach Miles. The first phase of the project on the 122-acre site is a 120,000-square-foot building that is due to open in fall timeframe this year. UNLV is currently going through massive growth, and this new Research and Technology Park will be a unique resource that will benefit both students and the industry. The university is very focused on engaging with the business community, and wants to attract key industry corporations to collaborate in building and testing great ideas and new innovations. The new addition to Las Vegas will provide the right resources to do this. More information can be found at UNLVTechPark.com. • AGEM’s Nevada workforce development effort to lower the age of gaming supplier employment and internships from 21 to 18 announced passage by the Nevada legislature of Assembly Bill 221. Previously, Nevada statute prohibited any person under 21 from being employed as a “gaming employeeâ€? except as a member of a casino count room staff. The passage of AB221 retains the count room exception for casino operations, and otherwise applies only to the technology supplier sector, which previously couldn’t even offer internships to those under 21. The bill has been signed into law by Governor Steve Sisolak. • The European Dealer Championship recently took place in in Tallinn, Estonia at the Olympic Park Casino with the winner Tamas Adam from Switzerland being crowned on the final evening. The competition took place over two days with 38 competitors from 20 countries. AGEM is a proud sponsor of this event that highlights not only technical skills and control of the game, but also the importance of excellent customer service. • AGEM welcomed a new Bronze member at the May meeting—Competition Interactive, based in  Las Vegas and headed up by famed casino architect Paul Steelman. Competition Interactive is an innovative gaming studio that brings the familiarity of video games you play  playing    at home to the  casino environment.    

FORTHCOMING EVENTS • The International Association of Gaming Advisors (IAGA) International Gaming Summit will be held at Half Moon Bay, California June 4-6. AGEM is a sponsor of this event, and Connie Jones, director of responsible gaming, will be attending. IAGA brings together leaders from all global gaming sectors and provides operators, suppliers, attorneys, investors, bankers, regulators and other adviser delegates with an unparalleled opportunity to meet and discuss the top issues facing gaming today. • AGEM is a sponsor of the 13th Annual Nevada State Conference on Problem Gambling, taking place June 20-21 at Suncoast Hotel, Las Vegas. The conference promotes awareness, education and professional networking, and attracts addiction and mental health professionals and interested stakeholder groups.    

 

 

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AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.

 

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  points,  a 5.3 percent   gain from March The AGEM Index increased in April 2019 by 23.89 points to 476.35 2019. The AGEM Index’s April 2019 growth was driven by a 6.4 percent increase in the stock price of  Aristocrat Leisure Limited (ASX: ALL), which rose from AU$24.51 to $26.08. The stock was responsible for  AGEM Index     growth.     Game   Technology       9.8 points of the monthly International PLC (IGT) experienced a                 12.6 percent stock price gain from $12.99 to $14.63,which led to a contribution of 5.54  points. Overall,                      most AGEM Index companies reported in stock during the posi    increases    price     month,    with   10 trending   tively and four The outperformed the major stock indices, Dow   moving negatively.     AGEM  Index         as the   Average   and the  S&P 500  experienced    increases of 2.6 percent and 3.9 percent, respecJones Industrial tively, while the NASDAQ grew by 4.7 percent.                  

 











       JUNE 2019 www.ggbmagazine.com

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p. 14 Circus Circus:Layout 1 5/17/19 8:57 AM Page 14

What a

CIRCUS! Fifty years ago, the circus came to Las Vegas—and it stayed

I

By Oliver Lovat

n 1968, Jay Sarno and Stan Mallin were the emperors of Las Vegas, with their Caesars Palace reshaping what a casino could be. But Sarno’s Bacchanalian fantasies were unsated. He took the Latin word for performance arena, “circus,” and Circus Circus was born. Never has a casino been so aptly named. Under the duo’s ownership, the early history of the property was just that—a circus.

The Roller Coaster Advancing the concepts from Caesars Palace, Sarno wanted to take customers out of reality and into his fantasy world. Design hallmarks such as the fountains and driveway marked the customer journey. The entrance to the property was on the second level, and from the customer’s perspective there was a huge reveal of the entire floor. The descent to the casino was by slide, creating a truly unique sense of arrival. What set Circus Circus apart from previous casinos was the spectacle. Not only was the backdrop illuminated by a midway complete with barkers, but their shouts were punctuated by 700 slot machines—some 500 more than Caesars Palace, all with bells ringing, lights flashing and coins dropping. Trapeze artists swung from above and Tanya the Elephant roamed the floor. For those of us familiar with today’s iteration, little was family-friendly about this property. Topless dancers, flashes of implied nudity and a range of carnival games—including chickens dancing on hot plates—would be considered in bad taste if not illegal in today’s world, but were the centerpiece of this adult fantasy. With 14 bars and restaurants, more than any other property in town, Circus Circus certainly understood the value of food and beverage to an operation, years before others caught on. Customers were foremost in what remains the most radical casino ever to open in Las Vegas. 14

Global Gaming Business JUNE 2019

Before he created Circus Circus, Jay Sarno imagined a Roman empire, with Caesars Palace

The gods were on the side of Sarno and Mallin in 1966 when Caesars opened, but it seems they were conspiring against them by late 1968. Famously, Circus Circus opened without a hotel and charged customers to enter. Not a good idea. The Teamsters funding that enabled the hotel to be built and the casino to run came with strings—something the Gaming Commission did not welcome. The partnership’s license was under constant scrutiny, and ultimately was renewed on a monthly basis. Moreover, the FBI accused Caesars financial manager Jerry Zarowitz of having links to organized crime. The charges were dismissed, but Sarno and Mallin were forced to sell their Roman masterpiece. The gas crisis and the U.S. economic downturn put pressure on visitation and revenues. Sarno’s own gambling habits put pressure on his personal finances. To cap it off, the IRS claimed Sarno and Mallin owed $1 million in taxes, which led to a highly publicized court case and the end of a partnership that shaped modern Las Vegas. When another unlikely duo, Bill Bennett and Bill Pennington, came up with an exit plan, Sarno and Mallin took it. The original Circus Circus brought a sense of fun and excitement to the Strip. It was radical beyond anything before or after, and positioned the casino as a small part of the entertainment offering. It set out to offer “an experience” decades before that description entered the lexicon of modern casino managers. It advanced the casino resort template. Sarno and Mallin were ahead of their time in customer psychology, programming and vision, but Las Vegas wasn’t ready for them. Neither man was to open another casino, and Las Vegas was not to see anything as pioneering and bold as Circus Circus for decades.


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The Lion Tamers When they began their hunt for a casino of their own, Bill Pennington ran a slot manufacturing business and Bill Bennett had run the Mint on Fremont Street for Del Webb. After aborted attempts to buy the Four Queens and Howard Hughes’ Landmark, they signed a lease to operate Circus Circus with assistance from E. Parry Thomas, the banker and dealmaker who pieced together Las Vegas. Circus Circus Enterprises was to become one of the most successful businesses in the history of Las Vegas. Operator Bennett was the anthesis of showman Sarno, who retained a suite onproperty and served as an “advisor” to the new team. Sarno and Mallin were first and foremost developers. Bennett was a details guy, aware of every square inch of the property and the minutiae of the operations. Moreover, he had a clearly defined understanding of his customers and what they wanted. Shifting away from the adult carnival, Bennett brought his Downtown experience to the Strip, offering good value to low-volatility players and even families in a large, mid-market property. In many ways, he saw this model as the future of Las Vegas. And he was right. Almost immediately Bennett cleaned house, letting go many early employees, removing the alleged mafia influence from retail, retiring Tanya the Elephant and closing the risqué carnival shows (the latter proved pivotal; by bringing in more conventional carnival games, Circus Circus became the first property in Las Vegas that gave the kids something to do while their parents gambled). However, what defined the future of the gaming industry was the new team’s management. Physically, they put a ceiling over the tables so gamblers were not distracted by the show overhead. The duo focused on slots and slot customers, reducing the number of tables and associated over-

‘Little was familyfriendly about this property. Topless dancers, flashes of implied nudity and a range of carnival games—including chickens dancing on hot plates—would be considered in bad taste if not illegal in today’s world, but were the centerpiece of this adult fantasy.’

head and imposing lower betting limits, reducing the instability in revenue caused by a small number of high-limit players. The slots at Circus paid a reported 97.4 percent, significantly higher than other Strip properties and eye-opening by today’s standards. Circus was also the first Strip casino to offer linked jackpots, one of the benefits of owning the supply chain vertically. Taking away the volatility from the casino meant that Circus needed volume, especially on weekdays. The $18 room rates were widely marketed as the cheapest on the Strip, but more people meant more breakfasts, lunches and dinners, and the hotel ran at some of the highest occupancy levels on the Strip. After three years of ownership, Circus Circus Reno was announced, a property closer to Pennington. It seemed like a golden time for the Las Vegas casino industry, but dark clouds were around the corner in the shape of a U.S. economic slowdown, the MGM fire and the legalization of gaming in Atlantic City, which was soon to surpass Las Vegas in casino revenue. But with a low-cost, low-volatility business model, Circus Circus was relatively unaffected. Indeed, the casino prospered, expanding in Las Vegas by acquiring neighboring SlotsA-Fun, Edgewater in nearby Laughlin and 50 acres of land for a highly profitable RV park. Profits in 1980 were $8 million, $16 million by 1982 and $20 million by 1983.

The Trampoline Any circus performer will tell you it isn’t hard to jump high. It’s the landing that’s difficult. Circus Circus didn’t land. It floated. The successes of Meshulam Riklis at the Riviera and Mike Milken and Steve Wynn at the Golden Nugget proved that bringing casino finance from the shadows into the corporate world could be lucrative. With Bennett now firmly driving the business, Circus Circus Enterprises became the first major Las Vegas casino operator to undertake an IPO. By the close of day-one trading, the comJUNE 2019 www.ggbmagazine.com

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The Showmen pany was valued at more than $300 million, and changed the face of the casino industry forever. First, casinos could be an investible asset class for the many, not the few. Second, casino owners could get really rich, legally! In 1986, Pennington retired. Both he and Bennett, who assumed sole control and leadership, were among the wealthiest Americans in the country. Being a listed company had benefits, such as a lower cost of capital, which allowed the company to expand Circus Circus in Laughlin. Las Vegas was perceived to be moribund in 1987, when Bennett and Steve Wynn announced their plans to build new resorts. The men had very different visions. Sarno, a personal friend and mentor of the Mirage developer, shared with his protégé his plan for a never-realized third project, a mega-resort he called Grandissimo. Wynn’s Mirage is rightly hailed as the resort that changed Las Vegas, but there are evident nods to Sarno’s past work in the design. Its 3,000 rooms were for the highest to lowest rollers, with Siegfried and Roy in the showroom, tigers in the hallway and dolphins by the pool. This was an entertainment spectacle. Bennett’s Excalibur was Circus Circus in a castle. Its 4,000-room hotel—the largest in the world—was squarely aimed at families. The property had nearly half the gaming tables of the Mirage, but 500 more slots—a total of 2,700, more than any other property in town. The casino cost $300 million to build and produced $80 million in profits the first year. This was a remarkable achievement. Circus Circus was not forgotten, as the five-acre Adventure Dome—a climate-controlled indoor theme park with rollercoasters and rides— opened, at a cost of $90 million. Children rejoiced.

The Final Act Circus Circus Enterprises stock was among the best-performing in the U.S., but in the early 1990s management differences emerged, and many of the young executives hired by Bennett departed. The Luxor, Bennett’s next project, was beset by problems (there’s a reason they stopped building pyramids 3,000 years ago). Although iconic, the project proved costly in design, operations and maintenance, and the company wasn’t comfortable managing the volatility of the high rollers the property sought to attract. In 1994, Bill Bennett retired as chairman and sold his remaining stock in the company. By 1999, the company was renamed Mandalay Group. The new flagship mega-resort was called Mandalay Bay, a far more appropriate name for a modern hospitality company than the grind-joint Circus Circus. In 2005, the company founded on a gamble by Bennett and Pennington was sold to Kirk Kerkorian’s MGM for $7.9 billion. As MGM rebrands as a global entertainment company, Circus is almost untouched from Bennett’s days. With its neighbors—the modernized SLS, Genting’s $4 billion Resorts World, the $4 billion Drew and the $1 billion Las Vegas Convention Center—it looks somewhat out of place in the new Las Vegas and the MGM portfolio. That’s because it is. 16

Global Gaming Business JUNE 2019

Jay Sarno never built a third casino resort. He was inducted into the American Gaming Association’s inaugural Gaming Hall of Fame in 1989 and lent his name to the casino design awards. He died in 1984 at the age of 62.

Bill Bennett bought the Sahara after retiring from Circus Circus Enterprises, and remained active in the industry and community until his death in 2002. He was inducted into the Gaming Hall of Fame in 1990.

Stan Mallin retired from the gaming industry after the sale of Circus Circus to focus on his community and other business interests. He is 96 years of age and lives in Las Vegas. His omission from the Gaming Hall of Fame is a notable oversight.

Bill Pennington remained in Reno and spent his later years as a philanthropist in his home city. He was inducted into the Gaming Hall of Fame in 1991, and died at 88 in 2011.

The Double Trapeze The skill of the trapeze artist is in the handover. The story of Circus Circus is the story of two unique double-double acts: Sarno and Mallin, Bennett and Pennington. In the annals of Las Vegas history, there has never been as intuitively visionary a pair as the former, and no better operating team than the latter. Both duos understood the principle that casino resorts are non-differentiated businesses: they sell the same games at the same price, have the same beds and the same food at the same price. The only differentiator is


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‘There are many in the industry commentariat who lament the loss of the Sarnos and the rise of the Bennetts, but both were true visionaries.’

Jay Sarno rides an elephant outside of Circus Circus casino in Las Vegas, Nevada, as two performers on stilts stand by. The elephant is probably Tanya The Elephant, who performed at Circus Circus. (Photo credit UNLV)

the customer. Both sets of owners recognized this, but they responded in different ways. In his work Travels in Hyperreality, semiologist Umberto Eco cites his experiences at Disney and in Las Vegas to form his central question: How do we create environments that enhance reality? Innately, Sarno understood this, citing casinos as boring places, creating a physical experience rooted in emotion, asking the question: How do we create environments that allow our customer to escape their reality? The concept of visiting the circus is rooted in childhood, invoking something out of the ordinary, a spectacle of otherworldliness. The first version of Circus Circus was exactly this, as patrons came and marveled at Sarno’s imaginarium. For those of us too young to remember the early years, James Bond’s Diamonds Are Forever immortalized the property, along with a Jay Sarno cameo in full carny schtick. Watch it. Circus Circus in 1971 was unique. The noise, the atmosphere, the focus on entertainment and the range of amenities were all innovative to the extreme. This was an “experience” that no operator today would have the courage to repeat. Sarno dealt in fantasy, giving psychological fulfillment via escapism. This has been much emulated by Wynn and others. Bennett was deeply rooted in operating, meeting the physical needs and desires of customers, with a managerial and strategic skill set suitable for volume business. What Bennett did was reposition Circus squarely for the mass market and families, eschewing the conventional wisdom of volatility within the industry and developing a segmented strategy that was evident throughout his organization. He was the first operator to see that high-jackpot slots were the future of Las Vegas, and with a guaranteed hold, some customers would win big, but the house would always be the ultimate winner. The holistic principles of customer value and cost management, paired with culture, empowered his management to make decisions to that end and allowed the growth of the company. Ironically, it also limited the company’s ability to meet the needs of a different type of customer as it sought to develop a more premium product. 18

Global Gaming Business JUNE 2019

Portfolio-owning companies still face this conflict with inherent discomfort; a Circus Circus requires different management skills than a Bellagio, and management style must be aligned with the product and customer needs. With discipline, detail and determination, Bennett shaped casino management. Undoubtedly, he would have been successful with any other property, but the red-and-white canvas he inherited was perfect for his style of painting. There are many in the industry commentariat who lament the loss of the Sarnos and the rise of the Bennetts, but both were true visionaries. More than 50 years later, Circus Circus is still standing, successfully producing profits for MGM, a place for those priced out of the mega-resorts built in recent years. The last principal living, Mallin, has commented, “It is gratifying to see Sarno’s and my vision in the mid 20th century be the inspiration for the many mega-resorts in Las Vegas in the 21st century.” Walking around Circus Circus is like a tour of living history. Like the Ford Model T, the Apple II and Picasso’s Blue Period, Circus Circus is essential to understanding the evolution of Las Vegas, casino design, and the management of the gaming and casino industries. It’s worth revisiting and appreciating. There will be nothing like it ever again. Oliver Lovat leads the Denstone Group, which offers strategic advice and consultancy on customer-facing, asset-backed investment and development with a focus on casino resorts. He is a fellow of the Royal Institution of Chartered Surveyors and visiting faculty member at Cass Business School in London. He lives in Las Vegas. Lovat can be reached at oliver@denstone-re.com.


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What About US? Some U.S. bookmakers say overseas sports betting suppliers are encroaching on their turf.

Can’t we all just get along?

B

ack in March, as American sports fans placed their bets on Division I basketball, bettors in the U.K. were laying odds on the name of the royal baby (was Archie even a long shot?); whether Brexit will stand; and oh yeah, their version of football (a completely different game than the one played by Tom Brady and Antonio Brown). Americans and Brits have plenty in common, and just as many differences. We say “potato,” they say “potahto.” We drink coffee or cold beer, they sip tea or warm ale. Our football coaches have big, beefy names like Bill Belichick and Knute Rockne. One of theirs answers to Sir Alex Ferguson. And when it comes to sports betting, we’re separated by much more than an ocean. In the developing U.S. sports betting market, tensions have arisen between U.S. and foreign sports betting suppliers. One veteran bookmaker has called his European counterparts “carpetbaggers.”

Different Strokes

When the U.S. Supreme Court opened the door to widespread legal sports betting last year, it should have surprised no one that U.K.- and EU-based companies would flood our shores. Outside the U.S., sports betting is a mature market—the wagers have been legal in the United Kingdom since 1961, and online has been around since the late 1990s. With illegal sports betting in the U.S. valued at $150 billion a year, international betting firms want a piece of the legal action, which could reach $6 billion by 2023, according to research firm Eilers & Krejcik. But can they do it with different sports, different modes of betting and different player expectations? Can they do it over the counter? “What caught everybody by surprise was that Nevada was never consulted or looked at when it came to New Jersey,” says Robert Walker, director of product development and strategic planning at Las Vegas-based USBookmaking. “It’s not true of every European operator, but they didn’t vet the U.S. market—in my mind, they did the least amount possible.” Walker says consultants who pointed New Jersey operators to European partners “have no idea about sports betting systems. If New Jersey wasn’t in a rush to get to market, it would have played out differently.” His boss, Gaming Hall of Fame bookmaker Vic Salerno, says amen to that. “If Art Manteris or I were to go into books in London, we wouldn’t have any idea what they’re doing or how their odds work. They have higher margins and take more vig from the players. They book sports that aren’t quite as fast. They don’t understand —Robert Walker, Director of Product U.S. sports any more than we understand cricket—we Development and Strategic Planning, could still book it, but we wouldn’t understand why we USBookmaking lost or won. “They’ve never booked baseball, and I have concerns about how customers are going to react in the U.S.,” he

“It’s not true of every European operator, but they didn’t vet the U.S. market—in my mind, they did the least amount possible.”

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By Marjorie Preston

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“A lot of people are getting into the market who really don’t know what they’re doing, and they are going to fail.” —Vic Salerno, CEO, USBookmaking

continues, and adds, “I like to have companies that are based there and will profit here versus going outside the country.” Salerno suggests that U.K. suppliers bluffed their way into New Jersey by affecting an expertise they did not possess, especially when it comes to retail sports betting. “All these British companies are in iGaming, not sports wagering. They told the casinos, ‘We can interface with your casino systems, we offer all the casino games and we have sports betting too.’ I thought companies like Caesars and Golden Nugget would just extend their operations from Las Vegas and add New Jersey to their existing sports betting system.” He says Brits don’t understand American games, and even some U.S. operators underestimate the value of on-site sports books to a property. “These bosses don’t understand the sports wagering part. It’s only 2 percent of GGR, and they don’t take into consideration all the other things it brings: the excitement, the people from March Madness filling rooms.”

The Great Race Apparently, foreign operators have been waiting for years to pounce on the stateside market. According to a 2018 Bloomberg News report, William Hill had its eye on New Jersey as early as 2011, when state lawmakers starting challenging the Professional and Amateur Sports Protection Act. Bostonbased daily fantasy sports provider FanDuel was acquired by Paddy Power Betfair in May 2018, right after the Supreme Court ruling that nullified PASPA. And on May 14, 2018, the same day the ruling came down, Kambi CEO Kristian Nylen issued a statement saying the Swedish company had been planning “since its inception” a decade before to break into the new market. “I cannot speak for other suppliers, but we were ready, we were diligent, and we had boots on the ground in the U.S.,” says Kambi U.S. Director Max Bischel. The global B2B sports book operator broke into New Jersey with Hard Rock and Rush Street Interactive’s PlaySugarHouse sports books and is looking to go coast to coast as more markets open. Bischel dismisses claims that Nevada providers should have had first dibs on New Jersey. “I think there’s a very large element of protectionism there,” he says. “We’ve been doing this for the better part of 10 years in Sweden, the U.K., Germany, South America, Africa—it’s something we’re used to doing, and we have the flexibility to meet local and regional regulatory needs. Companies in Nevada can’t say who’s an expert and who’s not. The question is, who’s going to give the consumer what they need?” The speed of growth in New Jersey “puts it on par” with Nevada, Bischel says. “We’re seeing a lot of very sharp people coming over to the U.S. who know what they’re doing to adjust and understand the American market and can do it with relatively little trouble.”

Tom Washington, head of communications for London-based Genius Sports and BetGenius, acknowledges the competitiveness, “a sense that people are coming in and telling U.S. operators how to do things they’ve been doing for decades. “I remember going to conferences five, six years ago and hearing stories of European companies going in and selling to U.S. casinos in the wrong way—it was probably overconfidence, a bit of arrogance, like, ‘Here’s how we do it over in the U.K. and Europe; we’re sure you’re going to do the same and we’ll show you how to do it.’ It didn’t go over very well, clearly. What’s a no-brainer for companies like ours is to hire local expertise on the ground, which is what we’ve done.” The group now has more than 100 U.S.-based staffers.

Beat It “You can say a company that’s never worked in the U.S. doesn’t understand the U.S. sports punter as well as local suppliers and bookmakers,” Washington continues (well, for one thing, we don’t call them punters), “but there’s no argument that companies like ours know sports betting operationally, how to run risk and trading and pricing, in a way that’s proven to drive profits for bookmakers around the world. I don’t think it’s fair or commercially astute for incumbent companies to take the view that because we haven’t worked in the U.S. market we cannot add tremendous value.” Salerno contends that newcomers to the U.S. are upending the domestic sports book model, possibly to the detriment of the sector. “They’re giving rebates if customers lose a bad beat, which isn’t good for the industry in the long run. We’re in a market that has very narrow margins of profit, and these things come at a cost to the bookmaker out of his net, which is really not large.” He also believes that international operators—who generate up to 90 percent of gross revenues on mobile—don’t really care about sustaining the retail sports book. Others are confident mobile sports betting will not have a negative impact on retail, but will bolster it. “Similar arguments were made that live betting would take away from pre-game betting, but actually it does the opposite,” according to Washington. “If I come into a casino and my pre-bet’s dead in the water early on in the tie, I’m still going to watch the game and may place an in-game bet. And if that bet comes in, I’m likely to recycle some of the winnings and continue to play.” Keith O’Loughlin, senior vice president of SG Digital, a division of Scientific Games, agrees that retail sports books will survive, and then some, as part of an omni-channel experience. “All you have to do is walk into any sports betting area or sports book in a casino and you feel the entertainment. What we’ve seen with our customers is that mobile doesn’t have a JUNE 2019 www.ggbmagazine.com

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“Companies in Nevada can’t say who’s an expert and who’s not. The question is, who’s going to give the consumer what they need?” —Max Bischel, Director, Kambi U.S.

“I don’t think it’s fair or commercially astute for incumbent companies to take the view that because we haven’t worked in the U.S. market we cannot add tremendous value.” —Tom Washington, head of communications, Genius Sports and BetGenius

cannibalization effect,” but enables operators to continuously engage with players, both on- and off-property. Asked what U.S. operators can learn from their peers overseas, O’Loughlin says immediacy and choice. International sports betting systems “are very good at what’s happening today, this morning, this afternoon and this evening—whatever’s going to be most interesting for the next couple of hours—merchandising it and giving customers really relevant betting options and great value.” He has no quibble with the sheer number of live events on offer in the EU-style online sports book: some 35,000 a month. “Customers won’t pull down a fraction of those, but they do want to see that you have a full offering. The operators that succeed will really focus on how to acquire customers, work with their partners to make sure the customer experience is amazing and monetize that rather than having to build technology-type businesses.” Salerno concurs, up to a point. “I don’t know how you can get action on all those events—nothing against Bolivian sports or betting on a minorleague soccer game; they have the ability to do that well, and I’ve always said if you’re going for ice cream with the kids you have to go to 31 flavors. It’s important we have a complete menu, so to speak, but here we focus on major events in the major markets.” A quick look at Betfair’s online sports book shows matches in Kuala Lumpur and Nigeria as well as NFL games, the Rome Open and the Turkish Cup, the NBA playoffs and the PGA championship. For an American audience, that may only be confusing. “You have to make the app that a consumer can take and modify to his choice,” says Salerno. “If he just wants to bet baseball, he has to get there in two clicks. If he wants to bet baseball totals, three clicks. He can’t go through 15 different things trying to find what he’s going to bet on. Here’s where the user interface becomes very important.”

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All Ashore According to Kambi’s Bischel, it’s less important for suppliers to compete against each other than to join forces against illegal sports books, which are taking millions or billions of dollars in wagers underground or offshore, providing no benefit for the states and no protections for the players. While it’s hard to know if local bookies and offshore ops are benign service providers, criminal enterprises or a little of each, governments are rightly concerned about the free flow of illicit funds to potential bad actors. “For us, the competition is in trying to make sure we can defeat the offshore and the black markets,” Bischel says. “Otherwise, it’s irrelevant.” Washington, meanwhile, calls for a truce. “People are always going to be protective about their business. The traditional bookmakers and others are extremely good at what they do, but this market is going to evolve a lot, and they’ll need to harness expertise in other areas with specialists like us. I think we’ll gradually shift to a point where stakeholders from both sides of the pond find a way to work together and get the best of both worlds.” The market could get even more crowded, according to an April report on MarketWatch.com, which said social media giants such as Facebook, Twitter and Google “will be clamoring to enter the sports betting business because they could easily take advantage of their massive user bases and infrastructure.” In Salerno’s view, only the strong will survive. “The landscape is going to be completely different a year from now. I’ve said from the start that a lot of people are getting into the market who really don’t know what they’re doing, and they are going to fail. Then there’s going to be a second wave that’s going to correct all these things and be very successful. “It’s going to be a huge market and it’s going to spread exponentially.”


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Compacts or Clout

Sports betting debate presents tribes with difficult decisions

A

By Dave Palermo

merican Indian political clout amassed over the last 30 years with development of a $32 billion tribal government gambling industry is proving effective in deliberations over legalized sports betting in the 29 states with Indian casinos. In addition, the Indian Gaming Regulatory Act (IGRA) of 1988 and tribal-state casino regulatory agreements, or compacts, are proving effective tools in protecting the rights of 242 indigenous communities operating casinos for the purpose of generating government revenue. States seeking legalized sports wagering are largely ceding to tribal demands, particularly exclusivity provisions in many tribal-state compacts. State officials are cognizant that to do otherwise could jeopardize jobs and revenue generated by Indian gambling. “States have found great value in the revenue these compacts generate through tribal gaming,” says Navajo Hilary Tompkins, an attorney with the Washington, D.C. firm Hogan Lovells LLP. “The states have been facing a lot of budget constraints and are very dependent on tribal revenue sharing,” says Tompkins, former solicitor for the U.S. Department of the Interior under President Barack Obama. Nine of 29 states with tribal casinos have revenue sharing provisions in their compacts, according to statistics compiled by tribal consultant Jeremiah M. Murphy. States also benefit from taxes, jobs and the economic impact of Indian casinos on surrounding communities. “My general sense is that the states are in a position where they really are dependent on the tribes and have an interest in continuing that relationship,” Tompkins says.

“The states have been facing a lot of budget constraints and are very dependent on tribal revenue sharing.” — Hilary Tompkins, attorney with the Washington, D.C. firm Hogan Lovells

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Global Gaming Business JUNE 2019

Economic Clout Tribal casinos in 2014 were responsible for 635,000 direct and indirect jobs nationwide, according to a study by economist Alan Meister for the American Gaming Association. The industry generated $96.6 billion in economic output, $33.2 billion in wages and $16 billion in taxes and payments to federal, state and local governments, Meister says. The economic impact of gambling has provided tribes with political clout. “Political power follows economic power, and Indians are a dominant player in the U.S. gambling industry,” says attorney Stephen Hart of Lewis, Roca Rothgerber Christie LLP, whose clients include several Indian tribes. “It’s fair to say tribes have good relations with the states, but it’s based on money, not anything else,” says Rosebud Sioux Joe Valandra, a consultant and onetime chief of staff for the National Indian Gaming Commission (NIGC), the federal regulatory agency for Indian casinos. “That may sound a little cynical. But tribes have, by and large, done a great job leveraging that financial benefit to the states.” About a dozen states have moved to legalize sports betting. But sports wagering legislation in California, Connecticut, Washington, Minnesota, Michigan, Florida, Oklahoma and other states with significant Indian gambling industries has been delayed or deep-sixed by powerful tribal lobbies not pleased with wording in the bills. While commercial casino operators and some Indian governments have expressed enthusiasm about sports wagering, many tribes are cautious about the low profit margins and risks associated with the endeavor. They are also insisting on protecting gambling exclusivity provisions in their compacts. “Tribes are not beating down the door to get into sports betting,” says attorney Glenn Feldman, whose clients include California and Arizona tribes. “A year ago, when the Supreme Court decision came down, everyone thought tribes would be ready and rearing to go,” Feldman says of the high court ruling that gutted the Professional and Amateur Sports Protection Act (PASPA), allowing states to pursue sports wagering. “But I don’t think that’s turned out to be the case. I don’t think we’ve seen a tremendous groundswell of enthusiasm for it.” Interest from states once excited about potential taxes from sports wagering has also waned.


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“A year ago, when the Supreme Court decision came down, everyone thought tribes would be ready and rearing to go. But I don’t think that’s turned out to be the case. —Tribal gaming attorney Glenn Feldman

Six states that legalized sports betting have been disappointed with tax revenue from the fledgling businesses. West Virginia has collected only a quarter of projected revenue from sports betting while Pennsylvania and Mississippi have generated roughly half of what was anticipated. In addition, many tribes remain fearful sports betting will prompt mobile and internet wagering, a crucial component to the profitability of sports books but an industry evolution tribes fear will diminish visitation to nearly 500 casinos and other gambling outlets on Indian lands. (See “Tribes Slipping Away from IGRA,” page 28.) “Sports betting takes us one step closer to what we don’t want to see, which is wide-open internet gambling in Minnesota,” John McCarthy, executive director of the Minnesota Indian Gaming Association, says of sports wagering bills tribes managed to delay until next year. Minnesota tribes have compacts with no expiration and no revenue sharing, agreements envied by tribes in other states. The state’s 11 politically powerful tribes signed a resolution against expanded gambling, including sports betting. “We believe it (online gambling) will hurt the brick-and-mortar operations,” McCarthy says. “That’s been an issue with us forever.” California tribes which top the nation’s gambling industry, generating some $9 billion a year in casino revenue, oppose proposed legislation to amend the constitution to legalize sports wagering not only for tribes, but card rooms and racetracks.

Thanks But No Thanks The measure will not succeed without support of 61 tribes who enjoy constitutionally guaranteed casino exclusivity and compact provisions allowing them to operate slot machines and banked and percentage card games. “I don’t see any appetite for sports betting among the tribes in California,” says Steve Stallings, chairman of the California Nations Indian Gaming Association, a group of 38 tribes. Washington state tribes also used their political influence to delay recent legislative efforts to legalize sports betting, particularly a bill that would have allowed the Muckleshoot Tribe to operate sports betting at an off-reservation racetrack.

“Sports betting takes us one step closer to what we don’t want to see, which is wide-open internet gambling in Minnesota.” —John McCarthy, Executive Director, Minnesota Indian Gaming Association

“Tribes are very much in favor of sports betting,” says Ron Allen, chairman of the Jamestown S’Klallam Tribe and Washington Indian Gaming Association. “It could be legislatively authorized and easily amended into our compact. “But the legislature just hasn’t vetted the issue enough to understand how it would work. We are insisting if it is allowed in Washington state that it only be allowed on tribal property.” Michigan tribes also pushed back on legislation to legalize online wagering, including sports betting. A current bill would allow tribes to offer internet gambling as a commercial venture taxed at 8 percent and regulated by the state, rather than gambling under IGRA. Tribes in Wisconsin, home to the NFL’s Green Bay Packers, with the possible exception of the Oneida Nation, are not enthused about renegotiating compacts to permit sports betting. About half of the nine Oregon tribes are likely to pursue sports wagering if the state lottery goes through with plans to offer the option. “The key is equity or parity with what the state offers,” Justin Martin of Perseverance Strategies says of the Oregon Tribal Gaming Alliance. “Statetribal relations in Oregon are really good. Regardless of who the governor is, we’ve always been able to sit down and request amendments.” Compact renegotiations have again proven problematic in Florida, where the Seminole Tribe has a virtual monopoly on a nearly $3 billion casino gambling industry. A tentative pack under consideration is expected to include sports wagering. The Mashantucket Pequot and Mohegan tribes—which share a monopoly on gambling in Connecticut—have been working out an agreement on sports betting with state officials that would give tribes exclusivity. Talks had stalemated when Global Gaming Business went to press. Connecticut tribes, which generate about $1.6 billion a year based on 2016 estimates, share a whopping 25 percent of their slot machine win with the state, far more than other jurisdictions. “If there is no agreement between the tribes and the state, I don’t see any gaming bill coming out, including sports betting,” state Rep. Joe Verrengia told the Hartford Courant. “Revenues of sports betting in other states are under-performing, and I don’t see Connecticut being any different.”

While commercial casino operators and some Indian governments have expressed enthusiasm about sports wagering, many tribes are cautious about the low profit margins and risks associated with the endeavor. JUNE 2019 www.ggbmagazine.com

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“The legislature just hasn’t vetted the issue enough to understand how it would work. We are insisting if it is allowed in Washington state that it only be allowed on tribal property.”

“Revenues of sports betting in other states are under-performing, and I don’t see Connecticut being any different.” —Connecticut Rep. Joe Verrengia

—Ron Allen, Chairman, Washington Indian Gaming Association

26

Compacts Playing Crucial Role

Impact On Compact Talks

IGRA is a congressional response to a 1987 U.S. Supreme Court ruling upholding the inherent right of Indian communities to operate gambling on tribal lands. It requires that tribes seeking to operate what is known as Class III, Nevada-style casinos enter into regulatory agreements with the states. Some tribes pay states a share of their gambling revenues in exchange for exclusivity to operate casinos. Revenue sharing remains controversial, in that IGRA prohibits taxation of tribal gambling. But nine of the 29 states with tribal compacts have revenue sharing provisions. IGRA also limits tribes to the types of gambling otherwise legal in the state. Some states have constitutional prohibitions against casino gambling. Others restrict it through legislation. Some compacts—such as those in New York, New Mexico, Mississippi, North Dakota and Oregon—refer to “casino-style games,” which in legal terms may include sports betting. Other agreements specifically define permissible games. Most exclude sports betting. Tribes in states with significant Indian gambling markets—California, Arizona, Oklahoma, Washington, Connecticut and Florida, in particular— are not able to operate sports betting unless the states amend their constitutions or enact legislation to legalize the activity. The Eastern Carolina Band of Cherokee Indians is pursuing sports betting legislation. “IGRA imposed a lot of restrictions on tribal gaming. The Seminole decision was an additional restriction on tribal rights,” Murphy says of the 1996 U.S. Supreme Court decision preventing tribes from suing states that refuse to negotiate compacts. “That said, in the instance of sports betting—a new Class III product—certain tribes have the upper hand. “States that have traded gaming exclusivity for a share of tribal gaming revenue have a significant interest in the success of those tribal gaming operations,” says Murphy, who has extensively researched compacts. “Connecticut has a 25 percent stake in revenues from two substantial gaming enterprises,” Murphy says. “But the state earns that 25 percent only so long as it prevents any gaming competition to those tribal gaming operations. “That’s powerful leverage for those Connecticut tribes.” “It’s all a very interesting balance between sovereign powers,” Tompkins says of the tribal-state compacts. “The very delicate balance that is achieved in these compacts is a hardfought, negotiated agreement. That is why I think there is reticence by the state to do anything that would jeopardize that balance.”

Nationwide, roughly 20 of the 29 compacts do not have expirations or include automatic renewal provisions, Murphy says. Seventy-seven California tribes have compacts, although only 61 operate 63 licensed casinos, according to the California Gambling Control Commission. Although most of California’s more lucrative tribes reached agreement on new deals before Governor Jerry Brown left office in January, about 33 tribes are still seeking deals with newly elected Governor Gavin Newsom. The legislative session would need to ratify compacts by August to meet a deadline for expirations, but they can be extended if talks are ongoing. Arizona tribes are in compact talks to extend agreements that expire in 2023, deals expected to include sports betting provisions. The Navajo Nation is endorsing legislation by state Senator Sonny Borrelli to allow tribes to operate sports betting kiosks in off-reservation bars. The proposition is opposed by most other tribes, which fear it would void existing compacts. Compacts for 32 Oklahoma tribes are due to expire in January, but the agreements have automatic 15-year renewals. Tribes are generally pleased with the current statewide agreement, which calls for machine revenue sharing of roughly 4 percent to 6 percent. “There have been some informal talks,” says attorney Mike McBride of Crowe & Dunlevy in Tulsa. “Suffice to say, the tribal party line is, ‘We’ve got a good thing going; let’s let the compact renew on its own.’” Legislators recently approved “ball and dice” games, which were amended into the existing compacts. The same could be done should lawmakers approve sports betting. But no bill is pending and only a few of the larger tribes have indicated interest in the low-margin endeavor. “The tribes’ collective position—as best there can be one—is that sports betting is a complicated and unique situation with a lot of moving parts, and nobody has or can get their arms around it yet, at least in this market,” says attorney William Norman of Hobs Straus Dean & Walker. “That needs to be separate and apart from this 15-year agreement we have that automatically renews in six months. “We’ve got a compact that has been wildly successful, more than anybody imagined it would be,” Norman says. “There is no reason to fix something that’s not broken.” Sources say newly elected Oklahoma Governor Kevin Stitt hopes to get additional exclusivity fees from the tribes to help with a potential tax shortfall from the state’s energy industry. But tribes can revert to a thriving Class II machine market not subject to state taxes, negating any increase in fees.

Global Gaming Business JUNE 2019


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Stitt and his communications director, Baylee Lakey, would not respond to requests for comment. David Qualls, chairman of the Oklahoma Indian Gaming Association, said in an emailed statement that tribes are not aware if Stitt will seek compact talks. “We don’t know. It’s possible, but the market has shown the current exclusivity fee to be well calibrated, and we would not anticipate tribal leadership being willing to discuss at this point something that is not in their economic interest,” Qualls says. “Any addition to the existing compacts to allow sports betting will require state legislation to legalize sports betting and a supplement to the compacts to make sports betting a covered game,” he says. It also would be subject to approval by the U.S. Department of the Interior.

California Conflicts A public ballot initiative to amend the constitution to legalize sports wagering in California failed this spring to amass the required signatures. Assemblyman Adam Grey is sponsoring legislation to put sports betting on the ballot in 2020, extending the opportunity to tribes, racetracks and card rooms. The issue is not likely to succeed without support of the politically powerful tribes. And they are not anxious to support any initiative that would extend sports wagering to tracks and card rooms. Tribes are particularly adamant about the card rooms. The tribes are suing

card rooms and state regulators, claiming the clubs are offering banked games in violation of state law and constitutional prohibitions. “I don’t think any tribes will support sports betting while the card rooms are expanding the games,” says a tribal lobbyist who requested anonymity. “Until that’s resolved I don’t see any progress on sports betting.” Tribes seeking new compacts operate smaller casinos and are largely concerned with provisions dealing with contributions to a tribal grant fund, local government mitigation, organized labor and state intrusion into the ability of tribes to regulate their casinos. Tribes contend these and other matters are largely outside the scope of what IGRA intended, and so are permissible issues in compact negotiations. Previous agreements entered into under the Brown administration were only “deemed” approved by Interior officials not pleased with the compacts. “These are all various peripheral things that may be good social policy that nobody can disagree with but are not within the scope” of IGRA’s seven issues permissible in compact negotiations, attorney George Forman says. “Not a single Brown compact was affirmatively approved,” he adds. Meanwhile, a biannual “all-tribes” meeting scheduled later this summer will likely take on sports betting. A tribal-supported ballot initiative to amend the constitution may be on the table. “Tribes are starting to have conversations on how to approach (sports betting), legislatively and politically,” says a source requesting anonymity. “It won’t be the only issue up for discussion. But I’m sure it will be a topic.”

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Tribes Slipping Away from IGRA

Sports betting and mobile gaming demand flexibility

ports betting deliberations in Arizona, Michigan and elsewhere are prompting debate over whether American Indians should begin moving away from federal Indian law and instead operate expanded gambling as commercial ventures, taxed and regulated by the states. The Indian Gaming Regulatory Act (IGRA) of 1988 allows tribes to operate Nevada-style casinos on Indian land held in trust status by the federal government. IGRA permits indigenous communities to regulate casinos exempt from state taxes. But IGRA is creating legal uncertainty over the ability of tribes to accept wagers from off Indian reservations, creating a potential obstacle to indigenous communities as gambling evolves from casino slot machines to internet and mobile wagering. “There are very diverse opinions on mobile gaming,” says Navajo attorney Hilary Tompkins of Hogan Lovells LLP, former solicitor of the U.S. Department of the Interior in the Obama administration. “If you go off Indian lands, you operate outside the Indian Gaming Regulatory Act. It would not be part of a compact under IGRA. It would be tribes acting as commercial entities,” she says, taxed and regulated by the state. The issue is particularly sensitive in Indian Country, because land-based casino revenue is crucial in sustaining tribal governments and providing services to indigenous citizens. Tribes fear sports and online wagering will erode revenue from some 500 casinos and other gambling venues on Indian lands. But the evolution appears unavoidable. The sports betting business is regarded by experts as an expensive and risky endeavor, likely to generate only a slim profit margin. But it is regarded as a valuable marketing tool in luring younger customers to casinos. Sports betting profits can be dramatically improved with account and internet wagering from the convenience of a smartphone. Roughly 70 percent of sports wagers in the European and New Jersey markets come from online bets. “Commercial operators and tribes realize

S

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Global Gaming Business JUNE 2019

“Tribes are soon going to be moving beyond the IGRA compacts and into a world where they operate not only under IGRA, but as a commercial entity under state law.” —Navajo attorney Stephen Hart

the only way that sports betting has a chance to be successful—both as a stand-alone profit center and as a promotional tool—is if it is tied to mobile gaming,” says consultant and Rosebud Sioux Joe Valandra, former chief of staff for the National Indian Gaming Commission, the regulatory agency for tribal government casinos. States and tribes have largely pushed back against online wagering as legislation to legalize sports betting spreads throughout the country. Most bills prohibit online wagers or limit it to bets made in or near tribal casinos. Exceptions include New Jersey, which has no federally recognized tribes, and Michigan, which is proposing sports betting legislation that would allow tribes to provide the business as a commercial venture outside IGRA, taxed at 8 percent and regulated by the state. Meanwhile, the Navajo Nation and Arizona Senator Sonny Borrelli are proposing legislation that would allow tribes to offer sports betting on the reservation under IGRA while owning and operating wagering kiosks at off-reservation bars, state-regulated and taxed at 6.75 percent. “Our primary goal is to develop and diversify the Navajo economy,” Dwight Witherspoon, speaker of the Navajo Nation Council, told a Senate committee. “This is about business, jobs and revenue, both for tribes and for the state of Arizona.” Most Arizona tribes are opposed to the legislation, which has come in the midst of renegotiating tribal-state compacts due to expire in 2023. Navajo attorney Stephen Hart of Lewis Roca Rothgerber Christie says tribes need to begin moving away from IGRA to embrace an industry evolving from middle-aged slot players

to millennials with smartphones. He says the trend will obscure the legal dispute over whether a wager occurs with the smartphone or at an internet server on an Indian reservation. “Tribes are soon going to be moving beyond the IGRA compacts and into a world where they operate not only under IGRA, but as a commercial entity under state law,” Hart says. “That’s the natural progression of things and a good progression for the tribes.” Meanwhile, casino opportunities in Indian Country have diminished—tribes operate some 500 casinos in 29 states—and indigenous governments are increasingly seeking commercial gambling ventures. “We see (online and sports betting), strategically, as an incredibly important part of the industry,” Charles Cohen, vice president of sports betting for IGT, told Frank Fantini, publisher of Fantini Research. “It’s going to be a major element of every part of the gaming industry in the U.S. in the next 50 years.” Minnesota tribes enacted a resolution to oppose expanded gambling in the state, including sports wagering. Minnesota Indian Gaming Association Executive Director John McCarthy says tribes fear online wagering brought about by sports betting will diminish casino revenues. McCarthy acknowledges, however, that online and mobile gambling will eventually become a reality. Tribal casino operators, he says, can only hope to forestall the inevitable. “If it is 20 degrees and snowing, are you going to get in your car and drive 20 miles to a casino,” McCarthy asks, “or are you going to go online?” —Dave Palermo


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p. 30 SlotHold:Layout 1 5/16/19 5:26 PM Page 30

Revisiting the RTP T

Do higher theoretical hold percentages on slot machines risk chasing players away?

here was a time when the function of slot operations involved the same priorities as elsewhere in the casino: cater to gamblers by enticing them to gamble more. For decades, it was a simple pricing formula: Those willing to gamble the most money got the best overall return-to-player percentage, aka RTP, aka payback percentage. Games with denominations of a dollar or more in two-coin and three-coin reel-spinners returned 95 percent or more to the players. Slot managers often used “loose slots” as a marketing tool—even on the Las Vegas Strip, where more than one industry veteran will recall offering upwards of 98 percent RTP on $1, $5 and higher-end games. Those old-time slot managers knew that advertising a higher theoretical return was the same as advertising a fair gamble. And players responded, making even a 2 percent or 3 percent hold, or house edge, more than sufficient to rake in revenues. These were volatile games, after all, and the thousands of players aiming for the big win more than compensated for the few who actually hit it. Then came the pennies, and a new kind of math. Multiple paylines and average bets in the hundreds of units enabled volatile games with lower holds, and thanks to a flood of themes drawn from popular culture, the low-denomination games would soon dominate the floor. The recession that began in 2008 made this type of game math even more popular with operators. Theoretical holds went up, RTP went down. Frequent players felt the pinch in the way of less time on device. Post-recession, there are fewer slot machines on the floors, per-machine profits are up, but RTP, particularly on the penny games, has not budged. 30

Global Gaming Business JUNE 2019

By Frank Legato

This has led to a lively debate among former and current operators: Are casinos gradually pricing themselves out of the slot business? The most vocal among those who answer “yes” to that question are slot professionals who have experience with both the old and new ways of doing things—people like Charlie Lombardo, who started operating slot machines in the early 1970s and was senior vice president of slot operations for Caesars’ Strip properties and head of casino operations for Seminole Gaming before retiring to become a consultant. Rising slot hold is one of the topics about which Lombardo has been most passionate in recent years. As a panel member at the first session of the UNLV Gaming and Hospitality Education series last year, he argued that too many of today’s slot operators are substituting profit for customer service when gouging players with high slot holds. He has appeared in the audience of most other industry panels on the subject, to challenge the notion that players don’t notice the difference between a high-hold slot program and a low-hold or “loose” game. Lombardo says a lower payback percentage, even on a penny game, definitely impacts the player over the long term—whether or not a player can notice a lower RTP in any given single session—because the player’s money doesn’t last as long as it used to. Lombardo has the research to back this up. He compared theoretical hold percentages from 2 percent to 15 percent, and calculated how long it would take a player to win or lose $100, placing an average bet. In one example from the chart at right, a game with an 8 percent hold yielded two hours of time on device and a total coin-in (total wagers, including those


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Casino to Win $100 Player to Lose $100

%

%

from winnings) of $1,250, while a 15 percent hold yielded one hour of play and around $667 of total coin-in. “That’s half the time (for the same average bet),” Lombardo says. “It’s almost like saying, here’s a new movie coming out. I’m going to charge you $20 to come see it, and then another $30 for a bucket of popcorn and a couple of drinks. Here, you’ve spent $50 and go in there, and find out it’s a 10-minute movie—they’re no longer two hours long. How many movies are you going to go to? That’s what we’ve done with slot machines.” Buddy Frank is another slot operations consultant with an operational history spanning the entire modern evolution of the slot machine, having begun as director of slot operations at Fitzgeralds in Reno in 1986 on his way to running slots at Northern Nevada’s Eldorado, Atlantis and Stateline casinos and California’s Viejas, before spending nearly nine years as VP of slot operations at California’s Pechanga Resort, retiring at the end of 2015. Frank agrees with Lombardo that casinos are risking alienating their customers with high slot holds. “Just as it is with any retail transaction, when the price gets higher than the perceived value, sales will slip,” Frank says. “In jurisdictions where they have excessive tax loads, the players have always had high holds, and probably won’t notice much since they’ve never known anything else. However, when holds tighten in markets like Nevada and others where they’ve traditionally been low, there is a strong negative effect.” Frank acknowledges that a player is not likely to notice the difference of a few percentage points in hold during a given session. “However, this type of change results in casinos making millions more,” he says, “which sounds good until you realize those millions came out of the pockets of your players. For the same amount of time and enjoyment, they had to pay more.”

Average Games Played Per Minute

Theoretical Payback %

Theoretical Hold %

Win/Loss

Theoretical Coin - In

98.00% 97.00% 96.00% 95.00% 94.00% 93.00% 92.00% 91.00% 90.00% 89.00% 88.00% 87.00% 86.00% 85.00%

2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%

$100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

$5,000.00 $3,333.33 $2,500.00 $2,000.00 $1,666.67 $1,428.57 $1,250.00 $1,111.11 $1,000.00 $909.09 $833.33 $769.23 $714.29 $666.67

10 10 10 10 10 10 10 10 10 10 10 10 10 10

Theoretical Payback %

Theoretical Hold %

Win/Loss

Theoretical Coin - In

Average Games Played Per Minute

98.00% 97.00% 96.00% 95.00% 94.00% 93.00% 92.00% 91.00% 90.00% 89.00% 88.00% 87.00% 86.00% 85.00%

2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%

$100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

$5,000.00 $3,333.33 $2,500.00 $2,000.00 $1,666.67 $1,428.57 $1,250.00 $1,111.11 $1,000.00 $909.09 $833.33 $769.23 $714.29 $666.67

12 12 12 12 12 12 12 12 12 12 12 12 12 12

Theoretical Payback %

Theoretical Hold %

Win/Loss

Theoretical Coin - In

98.00% 97.00% 96.00% 95.00% 94.00% 93.00% 92.00% 91.00% 90.00% 89.00% 88.00% 87.00% 86.00% 85.00%

2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% 9.00% 10.00% 11.00% 12.00% 13.00% 14.00% 15.00%

$100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00

$5,000.00 $3,333.33 $2,500.00 $2,000.00 $1,666.67 $1,428.57 $1,250.00 $1,111.11 $1,000.00 $909.09 $833.33 $769.23 $714.29 $666.67

Average Games Played Per Minute

15 15 15 15 15 15 15 15 15 15 15 15 15 15

Average Bet

1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Average Bet

1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50

Average Bet

2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

Theoretical Theoretical Time Played Time Played Minutes Hours

500.00 333.33 250.00 200.00 166.67 142.86 125.00 111.11 100.00 90.91 83.33 76.92 71.43 66.67

8.33 5.56 4.17 3.33 2.78 2.38 2.08 1.85 1.67 1.52 1.39 1.28 1.19 1.11

Theoretical Theoretical Time Played Time Played Minutes Hours

277.78 185.19 138.89 111.11 92.59 79.37 69.44 61.73 55.56 50.51 46.30 42.74 39.68 37.04

4.63 3.09 2.31 1.85 1.54 1.32 1.16 1.03 0.93 0.84 0.77 0.71 0.66 0.62

Theoretical Theoretical Time Played Time Played Minutes Hours

166.67 111.11 83.33 66.67 55.56 47.62 41.67 37.04 33.33 30.30 27.78 25.64 23.81 22.22

2.78 1.85 1.39 1.11 0.93 0.79 0.69 0.62 0.56 0.51 0.46 0.43 0.40 0.37

JUNE 2019 www.ggbmagazine.com

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“When holds tighten in markets like Nevada and others where they’ve traditionally been low, there is a strong negative effect.” —Buddy Frank, veteran slot operator and consultant

The epicenter of the RTP debate has been the Las Vegas Strip, where rising slot hold has been one part of a larger argument by critics who claim the large operators are pricing the mid-range gambler out of the market. Kevin Sweet, vice president of slot operations and marketing at the Cosmopolitan of Las Vegas, has been in the thick of the Strip slot market for more than a decade, having begun at Treasure Island in 2009 before managing slots at Bellagio, Aria and Las Vegas Sands. After a brief stint with Seminole Gaming, Sweet returned to the Strip to join the Cosmopolitan in 2015. Sweet acknowledges that operators in general have kept the hold percentages higher than in the past, and that player RTP has not recovered with the general economy. However, Sweet says the difference in slot hold is not the problem, noting that players do not notice the difference between 8 percent and 12 percent return on any given session. “Even an old-school three-reel mechanical machine had a cycle of several hundred thousand spins,” he says. “A player just isn’t playing enough spins to feel that type of change. When you change the hold on a game, you aren’t changing the odds to the top prize; you are playing with the frequency of the very small pays. For example, instead of BAR-BAR-BAR coming up every 42 spins at 8 percent, it comes up every 45 spins at 12 percent. That’s what changes, and a player can’t tell. There could be machines running 100 percent RTP and you’re still going to have people think your floor is tight.” Lombardo disputes this, noting that each drop in RTP affects all elements of a modern slot game. “Part of the problem is, we’ve taken the base percentage of that game and yanked it all the way down to 30-35 percent,” he says. “We’ve put money in bonusing, we’ve put money in special effects. Even though we may say it’s a 90 percent payback game, it’s not 90 percent anymore. The base percentage may be 30, 40 percent. “It’s only 90 percent payback if you’re the lucky guy who gets all the effects of the bonuses, gets all the effects of the progressives and the special effects we put in there. Otherwise, you’re just the guy who leaves it for the guy who does get it. “It’s not just that hold percentage is rising,” Lombardo says. “What kind of business are we in? We’re in the entertainment business. We’re not in the ‘let me take all your money, and get outta here’ business.” Sweet counters that players are, in fact, still getting a decent overall return because of another part of the slot-ops evolution, one that has become

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Global Gaming Business JUNE 2019

a barrier to lowering slot hold percentages for many operators—free play. “I personally do not have as much of an issue with slot holds increasing as I do with the increasing amount of free play we’re giving out as an industry,” Sweet says. “Free play, especially on the Strip, is used as a tactic to stay competitive. It’s no different than the mess that discounting table games has caused for the industry. “I could run the absolute loosest floor in the city—call it a 95 percent payback on every machine—but if I reduced the free play that people receive in their direct marketing offers, I’d lose more business than I’d gain. People can see free play; they can’t see hold percent.” Officials of the two largest Strip operators, Caesars Entertainment and MGM Resorts International, declined to comment for this article. Off the Strip, things are better in the slot-hold department, but Lombardo notes that even Station Casinos and Boyd Gaming have cut back on RTP. The only exception among locals casinos is Michael Gaughan’s South Point, two miles south of the Strip concentration of mega-resorts. “Forget what Gordon Gecko said; greed is not always good,” comments Cliff Paige, slot director at South Point. “Hold percent is essentially a tool, and like any other tool, it can be misused with very disappointing results on both the high and low end of the range. The philosophy we go by at our place is to always give the customer a fair shake… period! This has been Michael Gaughan’s philosophy as well as his father, Jackie Gaughan, at the El Cortez Downtown. “Casinos that get really aggressive and crank that hold to, say, 20 percent will look good in the short term. However, eventually these numbers will begin to fade. The casinos need to be very careful when setting the hold for their particular market. Destination customers will probably not be as sensitive, as they are under a time constraint more than financial constraints. It’s all about getting repeat business. Slots are not a short-term business; we are in it for the long haul.”

Pennies from Heaven Many in the industry blame the coming of the penny denomination for the initial rise in overall slot hold, but as Frank notes, it didn’t start out that way. Penny-denomination games began to spread after operators and manufacturers embraced ticket-in/ticket-out payment. Before that, even nickel video slots were burdensome as far as coin-handling—for players as well as operators. Pennies removed the coin-out obstacle and allowed slot designers


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Pennies removed the coin-out obstacle and allowed slot designers to experiment with offering payouts in the thousands and hundreds of thousands of coins, with no handpays—not to mention moving typical bets into the hundreds for every spin. to experiment with offering payouts in the thousands and hundreds of thousands of coins, with no hand-pays—not to mention moving typical bets into the hundreds for every spin. The latter development came after a few hiccups. Most prominently, many players actually considered penny games as... penny games. “Originally, their max bets were low—somewhere in the 20-cent range,” Frank recalls. “Therefore, setting the penny games a few points higher than the 6-9 percent of the nickel games made sense. Today, the average bets are well about the 80-cent range—the territory of older 25-cent games.” It was Lombardo who played perhaps the most important role in getting that average bet up. In charge of slots at Caesars at the time, Lombardo lobbied the manufacturers to institute a minimum bet, covering all the paylines, to eliminate the drag on average bet that resulted from players betting a penny or 5 cents per spin. “I went to each and every manufacturer and campaigned for that, and all of them started building that into their software,” Lombardo says. “After everyone saw the benefit, it became standard.” With minimum bets closer to maximum bets on the old quarter slots, average wagers came up. “Penny games are not penny games anymore,” Lombardo says. “We’ve got to look at them as a quarter game, 50-cent game, dollar game... If you look at average bets across the country, I doubt there’s anywhere that the average bet is less than a dollar.” The problem, notes Frank, was that operators did not scale back the holds that had been raised to compensate for low average bets. “We didn’t adjust

downward,” he says. “In fact, seeing record profits from pennies, many of the big corporate guys demanded that the manufacturers produce games pushing the limits well above 12 percent. “No manufacturer did this willingly,” he adds. “They were pressured by larger (usually corporate) customers seeking greater returns for their balance sheets. Game designers work long and hard to make sure that there is a great ratio of bonus rounds to standard play. If they do this with a 6 percent hold in mind, and then the operator sets the game at 12 percent, it can completely ruin the game dynamic.” “The problem I think a lot of manufacturers have is that they’ve built games to be an 8-10 percent theoretical hold game,” adds Lombardo. “It’s the operators who have come back and said, ‘I don’t want that.’ The manufacturers should say, ‘This is it. This is the percentages in which we offer it. You don’t like it, don’t buy it. Go to China and see if they’ll make it for you.’ “Who’s going to make it? Who’s going to make Buffalo for you the way we make it, at 15 percent, and still have everything the same?” But according to Paige, that’s exactly what some manufacturers are doing. “Penny games make up the largest segment of nearly all slot floors,” he says. “When a game hits the floor from a manufacturer, they want a hit right out of the gate. The way to guarantee that, at least in the beginning, is to have a higher hold. Once they get that higher win-per-unit, they expect more orders will come walking in their doors. “What would be nice is if the manufacturers provided a larger array of game volatility options, and not just low, medium and high, but the actual data based on standard deviation and a volatility index.” “Volatility impacts a player more than hold percent does,” says Sweet. “Right now the rage is either Asian-themed pro“It’s only 90 percent payback gressives or hold-and-re-spin bonuses. That’s what is working if you’re the lucky guy who gets in the market, so the manufacturers are going to keep producall the effects of the bonuses, ing them until a new trend takes over. “What we need to see is a great way to incent and reward a gets all the effects of the customer for betting a higher amount on a penny machine. I’d progressives and the special happily give a 20 percent reduction in hold percent if a person effects we put in there. was betting several dollars on a penny-base denomination maOtherwise, you’re just the chine. The manufacturers just need to create it, and do a good job of explaining it to the customer.” guy who leaves it for the

guy who does get it.”

—Charlie Lombardo, veteran slot operator and consultant

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Global Gaming Business JUNE 2019

Future of “Loose” Those same manufacturers, though, are fueling another option for players looking for the “loosest” slots, thanks to a resurgence of the traditional high-denomination stepper slot. Manufacturers such as IGT and Scientific Games are re-releasing many


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of the most iconic reel-spinners of decades past, with modern hardware and some video-style features like free spins, but with the same low hold percentages as in the past. Other manufacturers like Aristocrat and Everi, traditionally squarely in the video realm, are moving forward with new game groups consisting of traditional high-denomination stepper games. “There absolutely is and will continue to be a market for high-denomination, lower-hold games,” Sweet says. “There is always going to be a segment of the gamer that likes simplicity. So many people speak like the older slot player is dying off rapidly and our industry is facing a major crisis. They need to remember that from 2012 to 2032 there are 10,000 people per day turning 65 years old. These new retirees have a long life ahead of them, and I believe spending time in a casino will be one of the ways they enjoy their golden years.” “This is a segment that has potential and has been somewhat neglected over the years,” adds Paige, “with low denomination being the larger share of the manufacturers’ attention. Some manufacturers have begun to allocate some time and energy to this segment. They have increased the hit frequency to keep the customer engaged. They need to make sure the customer knows that this is something new and different.” “High-limit rooms are still doing very well,” says Frank, “and most of them feature games in the 4 percent to 6 percent range. Most also have a strong selection of older reel games. And video reel penny games, upgraded to $1, are also starting to do very well, but only when they are set loose.” Frank notes that the one sanctuary for smart players looking for high RTP remains video poker. “Anyone other than a novice can see the hold percentages on every game,” he says. “The outcomes are all the same using card math, so the only variant is the pay table, which is displayed to the public. A 9/6 Jacks or Better pays 99.54 percent, while a 6/5 variation pays 95 percent. That 4 percent variance is huge, and given a choice, every player will select the 9/6 game. “Here’s the rub—even at the extremely tight 6/5 setting, this game is still looser than most reel-spinners or video reels anywhere. Naturally, most of the big guys tighten, or get rid of, their video poker games. They simply don’t want those ‘advantage’ players in their casino. I have the opposite view. If you don’t have the loose pokers, you won’t have a certain group of players. Some say good riddance to that group, but I think they are both loyal, and they are, importantly, opinion leaders.” As far as running a “loose” slot floor in this day and age—and heralding it from the rooftops—opinions on its viability are mixed. For Lombardo, who ran his floor at Bally’s at a 94 percent overall RTP, it’s a no-brainer. “I don’t care who you are, if you’re in a market where you can advertise hold percentage, why wouldn’t you put a big sign out there that says ‘98% Payback Slots,’ or ‘97% Payback,’ and put them on your floor?” he says. “You’re absolutely asinine not to do that.”

“What we need to see is a great way to incent and reward a customer for betting a higher amount on a penny machine. I’d happily give a 20 percent reduction in hold percent if a person was betting several dollars on a penny-base denomination machine.” —Kevin Sweet, Vice President of Slot Pperations and Marketing, Cosmopolitan of Las Vegas

However, according to Frank, that time may be past. “I’ve researched this extensively over the years,” he says. “No one (the players) believes the claims of ‘loose slots’ unless you have provable stats—few do—or have a long-running position of loose slots. At the former Fitzgeralds Reno, we once hired a national accounting firm to ‘certify’ that our machines were set at the loosest percentages offered by game manufacturers. However, it still took years for our research to show that the public started to believe it. “Our billboards used to say ‘Certified—97% Paybacks.’ What they didn’t say was ‘Certified—You’ll Lose 3% Of Your Money.’ That’s one major problem with promoting loose slots... most players are going to lose.” Paige agrees. “Many a time I’ve heard a player say that this or that machine is tight, when in fact, they are playing a game with over a 99 percent theoretical RTP,” he says. “When you have a way to show the customer, such as in video poker, that the game really is ‘loose,’ then there is value in it. If, on the other hand, the RTP is not visible, most players probably won’t believe you.” Sweet stresses that free play is still the wild card in the situation. “I’ve always thought about what loosening the floor to the extremes would do for a casino’s slot business,” he says. “Again, if free play is what got sacrificed in order to pay for looser games, I think the customer chooses free play over a looser slot.” Frank predicts that as mergers continue and operators are run according to strict bottom-line business, slot holds will continue to rise, until they begin to see diminished returns. “Corporate takeovers with increased debt will force CFOs to demand higher holds for the next quarter, the future be damned,” he says. “The only hope is with the enlightened markets such as Oklahoma, Reno, and Las Vegas local brands.” One of Lombardo’s favorite stories refers to the old Dunes casino, which closed in 1993. “They hung a 30-foot screwdriver over the top of that entrance, and said, ‘We’ve loosened our slots.’ Here we’ve been fighting forever that we can’t take a screwdriver and loosen and tighten machines. They hung this big screwdriver, said we’ve loosened our slots... but didn’t change a damn thing. You couldn’t get a seat in there.” Such decisions, he says, are no longer viable in the corporate world. “Nobody’s given the ability to operate a casino. This is your room rate, this is your hold percentage, this is what you’re going to charge for a meal... Somebody else is making all those decisions for you.” In the end, Lombardo says slot marketing needs to move from the CFO back to the slot department. Until then, he says, don’t expect to see big screwdrivers at the entrances to any casinos. JUNE 2019 www.ggbmagazine.com

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MAKING MY POINT

Dead Air Why toxic behavior can kill the best company or product

“W

hat happened here, as the New York sunset disappeared? I found an empty garden among the

flagstones there…” A doctor, an existentialist philosopher and a psychic medium walk into a bar. The bartender looks at them and says, “Oh my God, this is perfect. Can you do me a favor and settle a bet I have with my musician friend here?” “Sure,” they say, taking a seat. The bartender throws a white towel across his shoulder, leans in to the strangers and asks: “How do you know death has occurred?” “That’s easy,” the doctor says. “It’s when the heart stops beating and the brain synapses stop firing.” Then the existential philosopher chimes in: “No, no, no,” she says, “Death, you see, is when the soul transitions from the realm of the conscious to that of the spiritual.” Then it was the psychic medium’s turn. “It depends on several factors,” she says, pulling a set of tarot cards from her pocket. “You got $50 on you?” “Oh. Thanks,” the bartender says, turning and returning to his customers. “Why?” the doctor says. “When does your musician friend think death occurs?” “When Elton John sings a song about you.” “. . . Who lived here? He must have been a gardener that cared a lot, who weeded out the tears and grew a good crop. And now it all looks strange…”

Yes sir, Sir Elton—aka Rocket Man, aka Captain Fantastic, aka Reginald Dwight (his real name)—has exhibited a penchant for penning posthumous salutes to the famous and not-so-famous. “Candle in the Wind” was written in 1973 as a tribute to Marilyn Monroe, and in 1997 rewritten to honor Princess Diana. He also wrote songs dedicated to Freddie Mercury, the lead singer of Queen, as well as American teenager Ryan White, who both died from AIDS in the early 1990s. But his best homage was the one he and long36

Global Gaming Business JUNE 2019

By Roger Snow

time lyricist Bernie Taupin came up with to pay their respects to John Lennon of the Beatles, who was murdered in 1980. And the best lyric in his best homage, titled “Empty Garden,” describes— in as fitting a metaphor ever conceived—how a bad person can harm so many good people. “It’s funny how one insect can damage so much grain.” Which is what the killer did. If you’re of that generation, the generation of flower power, free love, burning your bra and landing on the moon—the generation of Paul, John, George and Ringo—this tragic episode slayed not only a man, but a movement as well. “All we are saying,” Lennon once sang, “is give peace a chance.” Nah. F that. I could give peace a chance and all that but instead, I’m going to ambush you outside your apartment in Manhattan and shoot you. Four times. In the back. And while the blood and the life spill out of your body and onto the sidewalk, I will stand there, reading a book, until you are good and quiet and dead, and millions of your fans around the world are contorted in anguish over their loss. You may never cross paths with such a monster, but nearly every day in nearly every company around the world, we come across culture killers. Intentionally or inadvertently, they have the same effect on the morale in the workplace that Lennon’s murderer did on a massive swath of society. “It’s funny how one insect can damage so much grain.” Because these folks, the complainers, gossipers, passive-aggressors, bad-mouthers, muckrakers and #$@%-stirrers, are the true Patient Zeros in the cultural viruses that infect companies. The math is pretty simple: The longer they’re around, the more people they’ll infect, and then those people will infect others. And so on, and so on. Until you’ve got a pandemic on your hands. The image of John Lennon as a gardener, a nickname he gave himself years before, conjures visions of a man constantly working at his craft.

Of a man sowing seeds. Of a man experimenting and cultivating. Of a man nurturing soil until it’s the most fertile. Of a man ripping weeds before they can spread. And that’s what you have to do in business. Everything spreads from culture: it’s the Big Bang of every company’s universe. The environment, the ecosystem, the whatever you want to call it, dictates your chances for long-term success. Sure, you may be blessed by coming up with the right product at the right time—the equivalent of a lucky punch in a boxing match. But if you want your reign to be more Joe Louis and less Hasim Rahman, you must take care of your culture like it’s a garden. Counsel employees who exhibit toxic behavior. Squirt a little Roundup on them or rake a Garden Weasel over them. And only them. Don’t hurt good employees in the process. Remember, nothing angers a flower more than being treated like a weed. Be specific and targeted. And immediate. You cannot let it slide, no more than you would—if this were 150 years ago—let someone infected with smallpox stray from the pest tent to mix and mingle with the healthy folk. Quarantine and control. And if that doesn’t work, get rid of the pests. Doesn’t matter how long they’ve been there or what they’ve done in the past. Unchecked, they will damage so much grain that no one will ever eat again. They will move on like a locust to the next fertile field and do it all over again. Protect your company’s culture as if its existence depends on it. Because, ultimately, it does. Imagine what might have happened if someone had gotten to Lennon’s killer a year before, a month before, an hour before he pulled that trigger. Imagine what Lennon would have written. Imagine what he would have accomplished. Imagine who he would have inspired and what they would done to make the world a better place. Imagine. 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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O Canada!

Gaming in the Great White North is different from the industry next door, especially when it comes to tribal gaming. But the U.S. and Canada have a lot in common— including more competition and a changing customer base. By Solange Jacobs Randolph

T

he first lotteries in Canada were introduced nearly five decades ago, and today, gambling is nearly ubiquitous in the country. An annual study published by the Canadian Gaming Association reports that there are 114 casinos and casino-style facilities with more than 65,000 electronic gaming terminals and 2,000 tables in all provinces except Newfoundland and Labrador. With the exception of British Columbia and Ontario, Canada boasts 4,680 sites with more than 34,000 video lottery terminals. Countrywide, there are more than 30,000 commercial lottery ticket terminals, and the government has licensed more than 52,000 charities to operate almost 200 permanent bingo halls and facilities. Designated bingo halls and casinos in British Columbia, Manitoba and Ontario are home to upwards of 12,000 EGTs for bingo games and break-open tickets. Parimutuel or horse racing takes place at roughly 227 racetracks and tele-theaters in all the provinces except Newfoundland and Labrador. Finally, online gaming is readily available in all provinces except Saskatchewan and Alberta. However, the picture looks vastly different when Canada is compared to its southern neighbor, the United States. In the U.S., gaming operators are regulated by a local gaming commission or lottery association and taxed by the states in which they operate. The policies that govern Canadian gaming are provincially regulated, with different policies in each of 10 provinces and three territories. In some provinces, casinos are fully owned and operated by the government; in others, they’re government-owned but run by private operators. “Either way, the provincial governments are decidedly more involved in the operation of all gaming establishments––from casinos to bingo halls,” says CGA President and CEO Paul Burns. “Essentially in Canada, the provincial government acts as a full business partner.”

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Global Gaming Business JUNE 2019

Sticks and Bones Centuries before the first European contact, indigenous peoples of Canada engaged in many forms of gaming, from the ancient “Slahal”––a game played between two teams using sticks or bones—to modern lacrosse. The latter, one of North America’s oldest team sports, has its roots in a game played by native men as early as the 17th century, and was highly modified by European colonizers to its current form. Commissioned by England, Italian explorer John Cabot arrived on the coast of North America in 1497, bringing with him playing cards and a much more conservative attitude towards gambling, especially the dice games that had been outlawed in Britain. Canada’s first criminal code upheld that ban, but it didn’t stop organized crime groups from operating illegal wagering activities. The appetite for gambling grew. To crack down on organized crime, the government wrote even more stringent gaming laws into the federal criminal code. In the late 1960s, however, the code was amended to allow charitable gaming. It enabled provincially regulated lotteries to fund-raise for causes it deemed worthwhile, starting with the 1976 Summer Olympics in Montréal. Slowly, additional rights were granted that allowed the provinces to operate other gambling facilities and activities, including horse racing and slots. In subsequent years, Canada’s first commercial casino operations opened in Winnipeg in 1989 and Montreal in 1993. The criminal code finally caught up in 1999, repealing that outdated ban on dice games. Today, gambling is forbidden unless operated and licensed by the federal or provincial governments, with each province or territory deciding how to offer and regulate gaming in its jurisdiction within the constraints of the criminal code. In other ways, the code is more progressive, having advanced online gambling and sports betting more rapidly than in the United States. In Canada, online gaming has been legal for more than a decade. “In fact, there are only two provinces, Alberta and Saskatchewan, that don’t


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Casino Rama in Ontario is the largest First Nations casino in Canada

“Gaming in Canada will only grow as long as products, venues and the delivery channels modernize and become more compelling in order to attract younger players.” —Salim Adatia, VP of iGaming and Canadian Services, GLI

offer online gaming today,” Burns explains. “Most provinces already manage online gaming operations that players can enjoy on their PCs and mobile devices,” says Salim Adatia, vice president of iGaming and Canadian Services for Gaming Laboratories International. “This includes products for sports betting (albeit still parlay-style rather than single-event wagering), bingo, poker, casino games, lottery, keno, instant-win games, live dealer and more.”

Tribes on the Fringe Even First Nations like the Kahnawake are pioneers in online gaming. “We were one of the first jurisdictions in the world along with Antigua to offer online gaming starting in 1999, even before we opened our land-based gaming facilities,” says Murray Marshall, general counsel for the Kahnawake Gaming Commission, the official licensing and regulating authority in the Mohawk Territory of Kahnawake. Despite the early start, few Canadian First Nations have gained a profitable foothold in gaming the way many gaming tribes in the U.S. have. “In the United States, approximately 240 Native American tribes operate about 460 gaming operations,” says Adatia. “In Canada, the First Nations operate just 16 casinos in the country today.” According to the National Indian Gaming Commission, established by Congress after the passage of the Indian Gaming Regulatory Act in 1988, gaming tribes generate annual revenue of $27 billion. In the December issue of the Journal of Law and Social Policy, Dr. Yale Belanger reported that First Nations gaming only yields about C$1 billion (roughly US$747 million) in gross revenue each year. As First Nations gaming enters its third decade, Marshall attributes the vast discrepancy in scale and profitability to one key difference. “Very simply, Canada’s failure to recognize First Nations’ sovereignty, the kind enjoyed by Native American tribes in the United States, has kept First Nations of Canada on the fringe of the booming gaming industry.”

Why Gaming Matters to First Nations

W

hile the question of First Nations sovereignty remains unsolved, the economic benefit of gaming to the tribes is indisputable. Different provincial reporting requirements make tracking revenues from First Nations gaming difficult at best, but Belanger consolidated available figures, and reports that approximately $375 million is generated each year to benefit more than 300 First Nations, including: • $118.4 million produced by five Alberta casinos benefitting 40 First Nations (2016-17); • $104 million produced by Ontario’s casino benefitting 133 First Nations (2015-16); • $81.1 million produced by six Saskatchewan casinos benefitting 72 First Nations (2016-17); • $37.9 million produced by Nova Scotia Video Lottery Terminal sites benefitting 13 First Nations (2012-13); • $7-10 million produced in Manitoba by three casinos benefitting roughly 30 First Nations (2010-11); • $3.8 million produced by Blue Heron Charity Casino operated by Lake Scugog First Nations (2015-16); and, • $1.13 million produced by B.C.’s First Nations casino benefitting three First Nations (2015-16).

“For the Mohawk of Kahnawake, whose gaming facilities serve mostly French-speaking players from Montreal and its surrounding areas, gaming has created a strong economic engine to create real self-sufficiency and sustain the people of our nation,” Marshall says. However, though sovereignty is directly correlated to economic empowerment for indigenous people, more than half of Canada’s 634 First Nations have yet to see gaming’s positive effect on their lives.

First Nations Unite The U.S. federal government recognizes tribal nations as domestic dependent nations with tribal sovereignty, and the U.S. Constitution establishes the tribes’ authority to self-govern. Through IGRA, the NIGC was established to provide a legislative basis for the operation and regulation of tribal gaming, to protect gaming as a means of generating revenue for the

The multibillion-dollar Canadian gaming market supports more than 105,000 full-time jobs and adds more than $6 billion each year to fund important government and community programs and services. JUNE 2019 www.ggbmagazine.com

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“It’s the same thing you see in America. Older, wealthier clients are still the largest casino audience, but we’re seeing a resurgence in table game play led by millennials.” —Paul Burns, President and CEO, Canadian Gaming Association

tribes, and to stimulate tribal economic development. In Canada, no such regulatory framework exists, and the criminal code has effectively prevented most First Nations from capturing a larger share of the country’s multibillion-dollar gambling market. The Assembly of First Nations, a political organization that represents 900,000 First Nation citizens and 600 First Nation chiefs in Canada, has been lobbying the government to amend Section 207 of the criminal code to allow more First Nation-owned casinos in the country. Currently, provincial governments are not obligated to negotiate in good faith with First Nations who request permission to start up gaming activities within their jurisdictions, as state governments must in the U.S. “Given the present limitations of Canadian law, First Nations may ask permission to build and operate new casinos and permission may be denied by the provinces,” says Marshall. “An alternative is for a First Nation to exercise its own inherent jurisdiction over gaming—as the Mohawks of Kahnawake have for the past 23 years.”

Lessons for Canada—and the U.S. “Gaming revenue generated in Canada helps fund key government services in the provinces, including but not limited to education, health care, economic development projects, and charitable, nonprofit and other community-based organizations,” says the CGA’s Burns. The association estimates that the multibillion-dollar Canadian gaming market (including public, private and First Nation-operated gaming activity) supports more than 105,000 full-time jobs and adds more than $6 billion each year to fund important government and community programs and services. In contrast to the U.S., Canada is a small gaming market. In 2010, it generated $5.7 billion in total gaming revenue. In 2013, that number grew to about $7.2 billion. Four years later in 2017, the country saw a nearly 5 percent increase over 2016 to approximately $13.5 billion. This boost was fueled mostly by two provinces: Ontario accounted for 43 percent of the country’s total gaming revenue, and Quebec was the next best performer among the provinces, contributing roughly 21 percent. Gaming in Canada has followed a decidedly different path compared to the U.S., especially as it relates to First Nation gaming. There is sufficient evidence from the U.S. that tribal gaming projects can rival privately operated gaming establishments, drive competition for the entertainment dollar, and yield significant profits for reinvestment back into the host community and to help fund provincial government and community programs. Pressure is mounting to amend and modernize the restrictive gaming provisions of the criminal code, and the Canadian government now has the

40

Global Gaming Business JUNE 2019

opportunity to create a path to unprecedented economic opportunity and self-determination for many, including but not limited to First Nations. Advanced in many ways, the U.S. legislative resistance to online gaming has slowed innovation in this space. Online gaming isn’t dangerous or bad or unregulated and unauditable. It is almost a requirement to modernize gaming offerings in order to attract and engage millennial players. As Adatia notes, “The controls, protections, technology and the best practices are already available and proven in many markets.” Also, delivering online gaming entertainment that consumers want and expect benefits the U.S. by repatriating revenue that would otherwise be wagered offshore and go to those operating outside the jurisdiction.

What’s Next? Canadian casinos face the same concerns as in the U.S. about the aging demographic they attract. “It’s the same thing you see in America. Older, wealthier clients are still the largest casino audience, but we’re seeing a resurgence in table game play led by millennials,” reports Burns. The operators poised to win are already thinking about how to modernize and innovate with technology to attract younger players. Adatia agrees, adding, “Gaming in Canada will only grow as long as products, venues and the delivery channels modernize and become more compelling in order to attract younger players.” Modernization plans are already under way at a number of gaming properties. Casino Montréal has opened The Zone, an interactive and immersive new gaming experience for groups seeking a new form of entertainment. “It’s an opportunity for new players to learn the basics of popular casino games at their own pace while socializing, watching a game live on giant screens and enjoying music and top-notch food and drinks with friends,” says Adatia. Gateway Casinos, Great Canadian, Hard Rock and Woodbine Entertainment Group are among several private operations that have announced plans or broken ground to upgrade their facilities to appeal to new audiences. The Canadian gaming market is ready for innovative and entertaining new forms of gaming activities, and the time is right now for those seeking investment opportunities. Solange Jacobs Randolph is a partner to companies seeking to articulate their value, refine their identities and grow their businesses. With nearly two decades in the software, hardware, gaming and financial services industries, she crafts strategic communications plans and executes marketing tactics to help her clients establish their brand leadership positions. Randolph can be reached at sjrando@gmail.com.


UNLV_June_2019-final.qxp_Layout 1 5/14/19 11:02 PM Page 1

Presented by

OCTOBER 30, 2019

Customer Service & HR:

The People Factor

The human factor in the gaming industry can never be ignored. In this Episode, hear the best practices in human resources and how training and retaining top-level employees benefits the guest experience as well as the bottom line.

SEPTEMBER 18, 2019

Retail and Food & Beverage:

A Menu of Options

Non-gaming amenities are a large part of every casinos revenue stream. In this Episode a panel of experts will discuss the latest trends and strategies in food and beverage. Also, learn how to maximize your shopping space and what types of retail perform well in a casino environment.

Attend In Person, Live Stream or View Webinar For more information, including speakers and registration, visit UNLVGHES.com. UNLV Gaming & Hospitality Education Series Sponsors

UNLV Gaming & Hospitality Education Series Presented by

A M S APPLIED MANAGEMENT STRATEGIES


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CANADA

Ontario 2019: Online Gaming, Alcohol and Cannabis From cultural conservatism to permissive next-door neighbor: Is this the new Canada?

C

anada has long been seen as the conservative cousin of the U.S., staid and dull. This view was best exemplified in the 1980s when New Republic Editor Michael Kinsley said the most boring newspaper headline in world history would be “Worthwhile Canadian Initiative.” In the last few years, however, Canadian Prime Minister Justin Trudeau has moved forward with the legalization of cannabis, and in recent weeks Ontario Premier Doug Ford has indicated a possible major shift on gaming and alcohol policy. Is Canada experiencing a reputational shift? Let’s look at key highlights of the Ontario budget, with its overarching theme of trusting adult consumers to make responsible choices in their indulgences.

Gaming The budget suggests that the Ontario government intends to establish a competitive market for online gaming. This would ensure that players in Canada’s largest province have access to safe gambling options. To carry out this mandate, the province will consult with key stakeholders to develop a market that reflects consumer choice while creating an exciting gaming experience. The monopoly mandated by Canada’s criminal code only permits provincial governments to “conduct and manage” gaming. Private operators cannot be licensed to offer casino-style games or sports betting except as service providers under contract to the government. The budget is therefore likely considering a request-for-proposal model for operators when it refers to a “competitive online gambling regime.” According to this model, the province would maintain control over selected licensees carrying out the various offerings and would ultimately conduct and manage the offering. Absent amendments to the code, the Ontario government cannot provide an open market for private operators to apply for licensure to conduct and manage online gambling in the province.

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By Michael D. Lipton, Kevin J. Weber and Chantal A. Cipriano

In addition, the province has expressed its support of the legalization of single-event sports wagering and has asked the federal government to amend the code accordingly: It is time to usher Ontario out of the gambling prohibition era and treat the people of Ontario as adults by allowing them to bet on the outcome of a single sporting event. As consumer preferences continue to evolve, many Ontarians gamble using gray market websites. Today, Ontarians spend an estimated $500 million a year gambling online, with most of that money spent on illegal websites. The proposed amendment is intended to level the playing field for Ontario in competing with the United States, in particular due to the recent legalization of single-event sports wagering throughout various states.

Alcohol In an app-focused marketplace, people want convenience and choice. In the realm of alcohol sales in Ontario, convenience and choice are hard to come by compared to what is available in other provinces and in the U.S. In response, the budget proposes moving ahead with several alcohol-focused initiatives. Ontario’s system of alcohol sales is controlled by a select few enterprises. The result is that Ontario has fewer than 3,000 retail stores (by comparison, Quebec has more than 8,000 retail stores serving a population less than 60 percent the size of Ontario’s). The budget expresses an intention to permit alcohol sales in convenience stores. As well, Ontario intends to introduce the following: • A “tailgating” permit to allow for freer outdoor consumption and sales of alcohol at eligible sporting events • Extended hours of alcohol service at licensed establishments commencing at 9 a.m. (previously 11 a.m.), seven days per week • Permitting licensed establishments to advertise “happy hour” promotions

Cannabis In October 2018, Canada legalized recreational cannabis. The provinces have been challenged since that time by a national cannabis supply shortage from federally licensed producers. As a result, the illegal market remains and entrepreneurs are still restricted from venturing into the business of retail cannabis distribution. Because the Ontario government chose a private-operator model rather than a government-run model, businesses of all sizes will eventually have the opportunity to compete in an open-market system. In response to the supply shortage, Ontario implemented a temporary limit of up to 25 retail store authorizations for storefront dispensaries. However, Ontario is committed towards moving to an open allocation of licenses to promote greater consumer choice and convenience. When Ontario determines that the federal government can provide a more reliable supply, it will issue further retail store authorizations, including in municipalities with a population of less than 50,000 (which is currently prohibited) and in First Nation communities. Ontario is also urging the federal government to ensure that First Nations communities have the financial support needed to successfully respond to the federal legalization of cannabis. As we watch to see when and how all these measures come to pass, one thing is reasonably certain: in 2019, it’s much more difficult for our American cousins to describe “Worthwhile Canadian Initiatives” as boring. Michael D. Lipton, Q.C. is a senior partner at Dickinson Wright LLP and head of the Canadian Gaming Law Group. He can be reached at 416-866-2929 or MDLiptonQC@dickinsonwright.com. Kevin J. Weber is a partner in the Canadian Gaming Law Group at Dickinson Wright LLP. He can be reached at 416-367-0899 or KWeber@dickinsonwright.com. Chantal A. Cipriano is an associate in the Canadian Gaming Law Group at Dickinson Wright LLP. She can be reached at 416-646-6864 or CCipriano@dickinson-wright.com.


G&Tfullpg.2019-fullpage.qxp_Layout 1 5/9/19 4:45 PM Page 1

18th Annual

Nominations Are Now Open! 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 2019 issue of Global Gaming Business magazine and awards will be presented at Global Gaming Expo (G2E), October 14-17, 2019 in Las Vegas. DEADLINE: AUGUST 16, 2019

Nominations are now open in the following 5 categories:

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

For details and to enter online visit:

www.ggbmagazine.com


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EMERGING LEADERS Running Success Dirk Whitebreast General Manager for Non-Gaming Operations, Meskwaki Bingo, Casino and Hotel irk Whitebreast faced a turning point in 2003, one borne of tragedy. His 18-year-old sister, Darcy Jo Keahna, committed suicide. Whitebreast returned to his Iowa hometown of Tama, ready to turn his life around to honor his sibling. “The day that I got the phone call about my sister was the last time I touched alcohol,” he says. Whitebreast got work with the Meskwaki Bingo Casino Hotel. He went from players club to surveillance to a supervisory role to marketing, the latter stemming from his successful bid to win a seat on the tribal council in 2009. “My public relations, communications and campaign-building efforts came in handy for the digital media strategist position,” says Whitebreast, who enjoyed marketing and hesitated before submitting a resume for a leadership development program. His acceptance opened the door to an appointment as general manager of non-gaming, alongside Joe Papakee, his counterpart on the gaming side. “The fact that there are two of us has greatly improved our company’s ability to meet the needs of guests and team members,” he says. Whitebreast had his share of problems: selfdoubt, lack of patience, and an over-reliance on technology. “Coming from a generation where technology provides me with answers and solutions as quickly as an issue arises, I know all too well that the real world doesn’t always move at the same speed as my phone,” he says. The tragedy surrounding his sister impacted more than Whitebreast’s career. “Each day I’m sober is the same amount of time my sister has been gone,” he says. “The two things are intertwined. This ultimately led to some soul searching, looking for an outlet to grieve, and eventually heal.” He turned to running. Whitebreast went from walking to jogging to running three miles nonstop. He lost weight, his mentality improved, he gained confidence. In 2005, he ran his first half marathon, and six

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months later a full marathon. “I felt good about myself, and learned discipline. Since 2006, I’ve run 45 marathons in 22 states.” In partnership with his wife, Lannesse, Whitebreast created the Red Earth Running Company, a firm devoted to marketing not only running apparel, but running itself. “She is the backbone of the business,” he says. “The goal is to take our experiences to change lives through running. It’s a passion project we feel worth pursuing.” In addition to Lannesse and his grandmother, Whitebreast has leaned on tribal elders like Donald Wanatee Sr. and casino execs like Papakee and former GM Dan Stromer for guidance. “It’s less about actual mentorship and more about people I look up to. I’ve learned a lot about and developed my own style of leadership by observing and listening,” he says. The future looks bright. “I believe it’s important to have a larger strategy rather than approaching areas in need of attention once they become an issue,” Whitebreast says. “We’re undergoing a major renovation of the hotel. My goal is to see the entire facility upgraded.” If Whitebreast’s career is any indication, newcomers to the industry have a lot of latitude. “I don’t know any other place where you can start out washing dishes and decide you’d rather deal cards or learn to be responsible for a bank holding in excess of $50,000 at the cage.” Experiment, he says. Explore, be curious and practice patience. — William Sokolic

World Wise Rosaura Gonzalez Vice President of Sales, NRT Technology Corporation osaura Gonzalez is a woman of the world, in the literal sense. She received an MBA from Instituto Europeo Campus Stellae in Spain and is working towards a doctorate in business administration from Universidad Central de Nicaragua in financial management. Oh yeah, she earned a bachelor’s degree from the University of Nevada, Las Vegas in international business. During her last semester in college, Gonzalez researched different companies, and found Bally Technologies, which had an entry-level position in her field. “I always knew I wanted to work for a company that would allow me to do international business, but I never expected it would be in gaming,” she says. “I didn’t know anything about the gaming world, but I learned fast.” Bally Technologies taught Gonzalez operations and sales while she established relationships with gaming operators. “I was also given the chance to live and work in Puerto Rico, and abroad in Spain, Panama, Argentina and Colombia, servicing clients.” After almost eight years, Gonzalez moved to NRT Technology Corp., where she now serves as vice president of sales. NRT develops payment systems, financial and marketing

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Advancing Through Evolution Bryan McVey Vice President of Mechanical Engineering, Incredible Technologies

kiosks, compliance tracking and reporting tools, intelligent table game platforms, credit information services and electronic marker solutions. In her doctorate thesis, Gonzalez has focused on helping nonprofits be more effective managing the financial well-being of underprivileged communities. “It’s a win-win for everyone, and will allow these organizations to deliver more value to their target audiences over the long term.” For all her success, Gonzalez faced an impediment at the outset: English. “One of the first obstacles that I faced was the language barrier, since English isn’t my first language. I also had to learn to adapt to new cultures quickly as I was doing business in countries across South America, Europe and Africa.” A lack of mentors early on provided another hurdle. “I had to figure out a lot on my own, often by trial and error,” she says. “I really threw myself into learning as much as I could about gaming by reading nonstop, going to conferences, introducing myself to anyone who would talk to me, and just jumping into the ocean.” Gonzalez eventually found several mentors who advised her but also challenged her in her quest to master areas ranging from slot manufacturing to sophisticated financial technology solutions. “I thank God for placing the right people in my path, people who have helped me achieve the level of success that I have reached today,” she says. “I know it sounds a little cliché, but I’m most grateful to my mother. She always pushed me to do my best in everything that I do, and it was her tenacity and courage that helped me face challenges.” With her career chugging forward, Gonzalez has some sage advice for newcomers considering the industry. “Understand what you want to do and what sector you want to work in and make a plan to achieve it. If you can, try to find yourself a mentor who can help guide you in that direction. And always remember that everyone goes through tough times.” —William Sokolic

here’s a stark difference between the electronic gaming machines of today and those that lined the first casinos on the Las Vegas Strip. Gone are the crank handles and spinning reels— they’ve been replaced with towering, lifelike screens that often feature games that seem more akin to the latest video game rather than a traditional slot experience. The evolution of gaming machines’ physical hardware has been dramatic and will certainly continue as technological advances endure. Bryan McVey, vice president of mechanical engineering for Incredible Technologies, is at the forefront of this evolution. While the gaming machines of today seem monstrous to most, they pale in comparison to the products McVey helped produce before moving to the gaming industry. McVey, a graduate of Virginia Polytechnic Institute and State University, began his career at one of the largest construction equipment suppliers in the world. A move to smaller, more scalable products is part of what drew McVey to the gaming industry. McVey explains, “I was attracted to using other materials like plastics, designing on a smaller size scale— earth movers are huge in comparison—and at larger product quantities.” Transitioning a career to a new industry and staying at the leading edge of technological trends is far easier with the help of others. McVey is quick to call out the help he’s received from professional mentors throughout his career. “I have been extremely lucky in my career path in that I have always had solid managers who have believed in me, were flexible, and cared not only about my work output but my long-term development,” McVey says. “My current manager, Larry Hodgson, has been a tremendous mentor, especially with his long and successful history in leading product development to make hit games and cabinets.” Making the switch to the gaming industry wasn’t exactly easy for McVey. In fact, he faced one of the most difficult challenges in his career during the early days of his life in gaming. McVey was one year in as a design engineer when his managing director unexpectedly left. “The company entrusted his position to me to build a new team for the future,” says McVey. “I had never hired anyone, let alone worked in a di-

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“Learn your customers, what draws them, and extrapolate and innovate from there.” rector position. I went into it with a bit of fear and hesitation, but also optimism and the feeling of being supported by my new leadership.” Despite the daunting professional challenge, McVey made the most of the opportunity and helped build out his new team. As he explains, “It felt like an even better fit after I got some experience… and I also was lucky that we were able to hire some great and experienced people to our new team.” Omar Torres was his first hire as a mechanical engineer from WMS, and McVey credits Torres’ industry and design experience in greatly helping to shape IT’s innovative product offerings over the last four years. Having successfully climbed the ranks within the gaming industry himself, McVey is happy to share advice to others who are just starting their career in gaming. “Learn your customers, what draws them, and extrapolate and innovate from there,” says McVey. “They all have needs and wants. The more you can understand and meet these needs, even anticipate them, the better.” —Michael Vanaskie, director, operations planning, The Innovation Group

JUNE 2019 www.ggbmagazine.com

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Data Crazy How do you interpret massive amounts of information? Turn to the experts, that’s how. By Dave Bontempo

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ata analytics: one term, from countless directions, embodies the quest for the gaming edge. Operators embrace the cutting-edge role of the colorcoded, patron-spending treasure map. If a picture is generally worth a thousand words, a casino graph or trend may be worth a million bucks. Data has never been more relevant. Integrated resorts get bang from the non-gaming buck, bringing hotel rooms, spas, golf courses and restaurants into the numbers-crunching world. A financial tweak gained through data can determine the success of a financial quarter. Casinos have witnessed a long journey, from intuitive placement of machines and eyeballed player ratings to targeted promotions, the identification of declining players and the assessment of promotional dollars spent. Loyalty and data-based marketing programs drive revenue. The new information age attaches trend to the spend, at a reasonable cost. Operators need data-analytics tools, which augment gaming operations for the relatively inexpensive price of consultants and software. While the categories of data analytics appear endless, they come in three major forms: through consultants, via internal assessment and through new products.

little guy, data and analytics will be up and running around very soon. I think we’ll see that being at the forefront of data and analytics will really separate out the best-run businesses out there, and as the industry continues to consolidate and focus on margin, I think those that are lagging will become acquisition targets.” Data and analytics provide both tangible and subtle contributions. Tangibly, they help properties make comp decisions, and to determine loyalty club offers and direct-mail promotions. The information plays a subtle role in addressing some emotional, non-gaming factors. “I think nearly everything collected at a property is useful as we start to push toward really personalized experience: hotel and dining preferences, spa treatments, and obviously gaming and marketing data,” Wyman says. “Having the pillows I prefer in the room and a welcome basket that has the right snacks creates this immense sense that this is my home away from home, that the property knows and cares about me, and this is a big part of what creates the brand loyalty we all desire from our guests.”

Driving the Right Vehicle

Accessibility to data has been enhanced by the digital world. Smartphones are ubiquitous. One can send SMS or push notifications to instantly reach guests and likewise gather real-time location data, including seeing what Instagram posts are being made from the casino floor. A Complete Picture This creates a balancing act for casinos: the opportunity for abundant The Innovation Group, a premier consulting ally of the gaming industry, new real-time information, along with the requirement to assess it property. has been associated with more than $100 billion in investment across six “It’s really a fantastic time for data analytics, and people are hungry for continents and several industries. Its it,” Wyman says. “But I think there’s a lot of confusion about what to do client base includes multibillionwith the data, and one of the biggest sources of frustradollar companies, banking institution we hear about is software. “I have a seven-month-old, and just tions and casinos. “There’s a lot of software out there that claims to Bryan Wyman, senior vice like my son, I think data and analytics offer canned solutions to problems across all casino president of operations and data is at the ‘learning to crawl’ stage right and resort operations. But a lot of companies end up analytics, says this market sector is now in casino gaming. But also like with a little buyer’s remorse when they see that the ascending. my little guy, data and analytics will software doesn’t do exactly what they want. “I have a seven-month-old, be up and running around very soon.” “I liken it to buying a Ferrari but not being able to and just like my son, I think data drive a stick. It’s neither the Ferrari’s fault nor the driand analytics is at the ‘learning to —Bryan Wyman, Senior Vice President, ver’s—the Ferrari is a great car, but it doesn’t address crawl’ stage right now in casino Operations and Data Analytics, the driver’s needs. So we work with operating teams to gaming,” he says. “But also like my The Innovation Group

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The rGuest Analyze product works well with point-of-sale for F&B or retail environments and in conjunction with property management systems to identify business trends in hotel operations

develop cost-effective ways to solve the problems they want solved.” The beauty of a consulting company is its ability to tailor individual solutions to properties. Rather than manufacture or distribute a product for mass deployment, it can address situations in a one-on-one format. “Direct marketing is a great example of an area where we’ve been really effective,” says Wyman. “With one operator, we were able to help refine their direct marketing program by improving their segmentation. Besides improving the personalization of offers by really understanding behaviors, we identified large behavior groups of guests who were unprofitable at the end of the day, and we were able to reallocate a portion of their reinvestment into other groups that needed just a little richer offer mix to get them to visit. “This was net-neutral on overall reinvestment, but great for the bottom line. And we were able to prove this out statistically, which gives a great deal of confidence to all involved. “With another group, they came to us to help them with visitation declines. We were able to not only identify a group of patrons driving the visitation decline, but we were able to diagnose the root cause, a combination of competitive factors and on-property changes, and work with them to design a solution.”

Blended Assets The Agilysys niche is rich. The Alpharetta, Georgia-based company was well-placed to serve the merged world of resorts and casinos. Its softwaredriven analytical tools enhance revenue areas that have become more significant to the combined hotel-casino bottom line. Company innovations from recent years impact poolside, restaurant, check-ins and reservation areas. Ravi Acharya, the company’s director of engineering, believes the market sector embarks on a significant new phase—an analytical age of discovery. “As more resorts are adopting in-room tech, only a fraction of them measure how and when guests access and use the in-room technology,” he says. “Knowing usage patterns can tell a lot about guest expectations—including their preferences, which most resorts aren’t yet thinking about.

“As more resorts are adopting in-room tech, only a fraction of them measure how and when guests access and use the in-room technology. Knowing usage patterns can tell a lot about guest expectations—including their preferences, which most resorts aren’t yet thinking about.” —Ravi Acharya, Director of Engineering, Agilysys

That’s where we expect our business intelligence tools to be in the year to come. We’re thinking outside the box with more creative and unexpected ways to capture and analyze the data that’s readily available. “What’s also coming is personalization for casino areas like high-volume buffets,” Acharya adds. “When the patron checks in, staff can see their total patron value rating and personalize the experience accordingly. The profile data will show the patron’s typical spend or food preferences and allergies. This goes beyond identifying VIPs.” Inside the data-analytics big picture, Agilysys touts its own rGuest Analyze, which works seamlessly with InfoGenesis POS and operates with the property management system LMS (for Lodging Management System). “Unlike anything else in gaming and hospitality, rGuest Analyze provides access to business data and trends on demand,” Acharya says. “Our customers like it for its dashboard with at-a-glance graphs and charts that visually show how the business is performing. They also use the technology to identify their top-performing employees. And they like knowing they can perform these tasks in just a few seconds.” The rGuest Analyze product works well with point-of-sale for F&B or JUNE 2019 www.ggbmagazine.com

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retail environments and in conjunction with property management systems to identify business trends in hotel operations. Acharya says rGuest Analyze helps resorts, especially those with abundant hotel rooms like properties on the Las Vegas Strip that need access to business patterns at their F&B and retail outlets. “They want to use the business data from the PMS to view guests’ habits, and they want to use that information to offer personalized incentives like upselling or cross-selling,” says Acharya. “Resorts could soon have technology that allows a guest to swipe their key card at a terminal upon arrival. They might be checking in for dining reservations or at reception; on the terminal screen, staff will see the guest’s profile, including whether the individual has a loyalty card, how many times they visited, how much they spend, their favorite menu items and other information that helps staff understand guests better. This data is something that casinos and hotels still don’t know about guests, but it can help staff design the best incentive based on the individual’s preferences, status and their other profile information.” Acharya also touts rGuest Analyze as a money saver. “Restaurant margins tend to be small, and as the adage goes, ‘A dollar saved is a dollar earned,’” he says. “POS analytics are an important part of saving the restaurant money. There are two primary POS analytics categories that operators should focus on: menu item performance and staff performance. Understanding the data in each of these areas will illuminate hidden costs.” How servers actually perform can be quantified from data in the pointof-sale software, Acharya indicates. The POS analytics help restaurants identify opportunities for staff training by analyzing things like tip percentages, table turn times, average sales per cover and how many specials were sold.

Crunch and Bunch the Numbers Knowing the numbers and what lies behind them is a major business element for Everi. Its financial technology solutions process more than 108 million transactions annually and generate more than $28 billion to casino floors, according to Jesse DeBruin, the company’s senior vice president of gaming operations. Numbers speak volumes. “Everi uses analytics software to evaluate the performance of a cross-section of its lease footprint made up of approximately 14,000 games, inclusive of both original content and licensed brand themes,” he says. “This data enables team gaming operations to track and predict revenue and conduct effective testing of game titles on certain parts of an operator’s floor or the same game on a different cabinet at the same property. “The analytics platform allows it to identify relevant trends in game performance and run analyses that support everything from design deci48

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“This improvement in tooling and reporting has given both operators and manufacturers earlier and better access to performance data to facilitate better decision making.” —Jesse DeBruin, Senior Vice President, Gaming Operations, Everi

sions to deployment of new and existing titles and player mechanics.” Everi uses a data-driven approach to support its decision-making. This can include what games to place in the field, how to configure bet structures and how to merchandise product. Those insights are fed back to development for future decisions, along with performance data fed back into the company’s proprietary data warehouses for analysis. “On the FinTech side, Everi collects and analyzes data from the more than 840 casinos that are connected to its secure network,” DeBruin says. From a data mining standpoint, the process also is intricate. “We evaluate transaction data from our ATMs and self-service kiosks for a number of reasons,” he says. “First, we ensure that cash cassettes within these devices contain the appropriate number of denominations and bill counts based on property and location of the device on the floor. This is important for devices we manage and for reports available for our customers. These devices are typically the first touch point for a patron once they step foot on the floor, so providing a frictionless transaction experience is critical. “Second, we want to identify friction points which may indicate an issue, an opportunity to improve patron experience or pent-up demand for new products or services. Lastly, we capture this data to deliver real-time reporting and dashboards via our XView platform to support customer operations.” DeBruin says the biggest change the company has seen in gaming analytics in the past year or two has been the improvement of tools available to operators and manufacturers. “The Eilers team has done an outstanding job producing game and cabinet reports widely consumed by the industry,” he says. “Many operators are using Reel Metrics, granting them access to performance across multiple sites and regions. Tableau is also a great tool used by operators and manufacturers alike. There are certainly others to cite, but this improvement in tooling and reporting has given both operators and manufacturers earlier and better access to performance data to facilitate better decision making.” From varied perspectives, industry operators use this important, emerging tool. Big data and small details unearth hidden financial gems.


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FRANKLY SPEAKING by Frank Legato

M&M’s and Strip Clubs M&M’s spins? Free Happy Meal buffets? Does it... OK, that’s all I’ve got. Moving on, Gila River Casinos in Phoenix set the Guinness World Record for the largest set of bingo balls and the largest bingo card in an event May 3 at its Lone Butte Casino. To celebrate the casino group’s 25th anniversary, the casino held a jumbo bingo game in its parking lot, using 75 giant bingo balls— each four feet around—and a 20by-20-foot bingo card. This is just what I need as I enter my golden years and face the consequent rapid progression of physical decrepitude. No squinting required to see numbers on a 20-foot card, right? As long as someone else is slinging those giant balls around (insert joke here), I’m all set for bingo after retirement. Finally, we’re all happy the gaming capital of Las Vegas will soon be home to the Las Vegas Raiders of the NFL, but no one is happier than the folks who run the Crazy Horse III strip club. This fine establishment—according to its website, voted “Best Gentleman’s Club in Las Vegas”—happens to be a stone’s throw from the construction site of the Raiders’ stadium at I-15 and Russell Road. The club’s owners report that daytime business has tripled since stadium construction began. It’s yet another example of how a big construction project benefits the entire community—and how some construction workers have way too much time off during the day. I’m wondering if their union contract requires lap-dance breaks. (I know mine does.) Maybe they’ll build the “Crazy Horse IV” as part of the Raiders stadium. I’m pretty confident Raiders fans are going to have plenty of free time between touchdowns. (Hey!) Don’t worry. It will be a classy joint. Complete with M&M’s dispensers. VIC TOR RINAL DO

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or me, the name “M&M’s” conjures up fond childhood memories of digging into the Halloween sack for those little bags, hoping I didn’t get the peanut ones. (Or worse yet, an apple.) Hey, I knew Halloween was a gamble. But I never looked at an M&M and thought about gambling. But the Mars candy company, which makes M&M’s, is now being accused of using the candy to promote gambling to children. It started when Dr. Samantha Thomas, a youth gambling expert and associate professor at Australia’s Deakin University, was walking by the M&M’s World store in London’s Leicester Square—where you can buy more than 100 selections of M&M’s, stuffed M&M’s candy guys, clever dispensers and other M&M’s merchandise. Among the merchandise was an M&M’s dispenser styled like a slot machine. It looks like an old-school one-armed bandit, with three reels that spin, matching symbols causing a hopper to spit out a big bunch of M&M’s. Shocked, Thomas got Parliament involved. Ministers sent Mars a cross-party letter protesting the M&M’s slot. “We were shocked when it was brought to our attention that M&M were selling a slot machine-style game, marketed at children, in their store in Leicester Square,” the letter read. “Our research shows that children often are unable to understand the risks associated with slot machines,” Thomas told The Guardian. “They remember the bright lights and positive sounds associated with the machines, and think they are a fun way to make money.” Mars removed the M&M’s slots from the London store. OK, I’m as sensitive about promoting responsible gaming as anyone, but let’s get real here. If you follow this thinking to its logical conclusion, we’ll need to eliminate playing cards from every home. Yahtzee? It’s got dice. That’s out too. And don’t even get me started on carnival games. Kids are not going to look at that M&M’s dispenser as anything more than a fun way to get candy. When I was a kid, I had toy guns in holsters. I’m 62, and so far, I haven’t shot anyone. And I experienced no ill effects from playing with my favorite toy, “My First Slot Machine” by FisherPrice. Also, any kid who thinks a real slot machine will pay out money like that M&M’s dispenser shoots out candy is in for a rude awakening. Of course, although I’ve seen pictures, I’m really only speculating on the nature of the dispenser. Does it accept coins? Bill acceptor, maybe? Are kids blowing their allowances going for the big M&M? Is there a high hold percentage for the kid who owns the machine? Is there a double-or-nothing option? Does it give thousands of M&M’s to one lucky kid while hundreds of other kids get nothing? Do kids earn free

JUNE 2019 www.ggbmagazine.com

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Macau: The Future Beyond the VIP Why the mass and premium mass markets are going to become increasingly important to the success of Asia’s gaming capital

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By Steve Gallaway and Brendan Bussmann

ifteen years ago, on May 18, 2004, Las Vegas Sands Corp. opened Sands Macao and changed the course of casino gaming in the region. Macau was once considered a secondary gaming market that catered to a small base of customers from Hong Kong and Guangdong, China. However, Sands Macao and subsequent entrants demonstrated that by providing high-quality gaming, dining and lodging environments, markets will respond. In the case of Macau, markets responded enthusiastically. In 2005, the city’s casinos generated $5.9 billion in gaming revenue, and by 2018, the industry had generated $37.9 billion. As Macau has grown during that time and with the introduction of resorts located up and down Cotai over the last dozen years, the market has witnessed continual change from the gambling den that previously was a Portuguese colony. Much of this initial growth was generated by the VIP or junket market. At one time, 72 percent of total gaming revenue was generated by VIP players, and today they still account for 57 percent. Such a large concentration of revenue from one segment has long been a concern of public policymakers in Beijing who have advocated that Macau diversify its tourism industry and create tourism products that appeal to different travel segments. Casino operators also have come to realize that reliance on one market for such a large portion of gaming revenues leaves them vulnerable to dramatic downturns, as was evidenced in 2014 when a crackdown on public corruption and conspicuous consumption lead to a retrenchment of VIP gamers. With the significant improvements in infrastructure in the region, the explosive growth of new integrated resorts in Macau and Cotai, the continual development and expansion of integrated resorts with a focus on 50

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the addition of non-gaming amenities, and the development of the non-gaming Hengqin Island, Macau and the surrounding area will continue to be the dominant tourism destination in Asia.

Understanding VIP vs. Mass As one looks at the Macau gaming market, they need to first understand the difference between the VIP market and the mass market. One of the keys to the VIP market is junket operators, which are essentially third-party providers of VIP gaming customers. A junket operator recruits VIP gaming customers from cities throughout China, facilitates transportation to and from the gambler’s home city, arranges visas, lodging and other services, and most importantly, provides the funds to the gambler in Macau. As collecting on gambling debts in China is illegal (problem 1), and considering the difficulty for gamers to move money out of China (problem 2), casinos are happy to work with licensed junket operators, as the casinos no longer have to be concerned with how to handle these two significant factors for a large percentage of their customers. The problem for Macau casino operators is that junket revenue is not as profitable as mass market gaming revenue, as they have to share slightly more than 40 percent of the VIP players’ theoretical win with the junkets. In addition, while junket providers account for 57 percent of gaming revenue, an inordinate amount of gamer demand is concentrated among a relatively small number of suppliers. Sun City is the largest junket operator in Macau and, according to Union Gaming, accounts for 50 percent of Macau’s junket market. With such a high concentration of market share, Sun City is a very powerful force and can, if it so desires, shift that VIP play to other markets such as Vietnam or Cambodia. Given the relatively low profit margin of junkets, and the need to diversify rev-


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The problem for Macau casino operators is that junket revenue is not as profitable as mass market gaming revenue, as they have to share slightly more than 40 percent of the VIP players’ theoretical win with the junkets. enue sources (both to be fiscally responsible and responsive to the demands of the PRC), Macau casino operators have strived to grow other markets, notably mass market and premium mass market customers.

U.S. and Macau Models Mass and premium mass customers are handled similarly in Macau as they are in the United States. The casinos take on the responsibility of recruiting, retaining and inducing these customers to return. While there is a balance between discounts on play and comps, the significant advantage with this market segment, in comparison to VIP, is that the casino retains all of the net gaming win after it pays the host jurisdiction its share of gaming taxes. In Macau, casinos may extend a modest amount of credit to their established customers and take on the risk that a portion may eventually become uncollectable debt. However, premium mass customers quickly learn to understand that by defaulting on a casino debt, they will be unable to get credit at any other casino (since casinos share credit history with central credit service agencies). In the 15 years since the opening of Sands Macao, the Macau market has grown significantly in terms of revenue and in number of visitors. The mass market in terms of revenue has grown from just short of US$2 billion in 2005 to over $15 billion in 2018. As the middle class continues to grow in Macau and as operators continue to grow their own databases of players, this mass market segment will remain a prevailing force for growth in the region. “The Macau market shows continual growth in the mass market sector and has nearly rebounded from its downturn in just five years,” said Chad Beynon, an analyst from Macquarie Research. “With the continued expansion of new rooms and non-gaming assets on Cotai, we see continued growth in this sector as the market continues to expand.”

Total Gaming Revenue in Macau (in USD Billions)

While gaming revenue in Macau can be erratic, continued growth on the influx of visitors is more reliable. In 2008, Macau had 22.9 million annual visits to the market. This number grew by an average of 5 percent annually to reach 35.8 million visits in 2018. Similar to the trends experienced in Las Vegas over the past two decades, the introduction of additional non-gaming amenities will continues to attract new visitors and new sources of revenue to Macau. However, unlike Las Vegas, it is very unlikely that non-gaming revenue will overtake gaming revenue in Macau within the lifetime of these authors. Similar to other resort destinations, holidays continue to see a surge in visitors. On the most recent May Day holiday, visitor volume increased 37 percent year-over-year. According to the Macau Government Tourism Office, Macau recorded 636,644 visitor arrivals during the recent May Day Golden Week, which lasted from Wednesday through Saturday. The 37 percent increase can be attributed to the comparative three-day period from last year, which saw 531,503 visitors during the first three days that year. Hotel occupancy during that period reached 96.2 percent, nearly two points higher year-over-year with room rate growth at 16.7 percent. “As new assets come online, Macau will be able to withstand the continued growth in room volume and revenue,” said Beynon. “Infrastructure and investment will be key components in the growth of Macau to be able to handle the mass market.”

Annual Visitation to Macau (in Millions)

JUNE 2019 www.ggbmagazine.com

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Infrastructure Growth One of the biggest challenges since Macau went beyond the monopoly of The full master plan will include different sections including port service, Stanley Ho has been the infrastructure surrounding the region. While upeducation and innovation areas, tourism areas that will exceed 10,000 hotel grades continue to be made in planes, trains and automobiles, infrastrucrooms, residential areas, ecological zones, cultural and creativities areas, and sciture remains one of the key drivers and challenges to get mass market ence and research areas. visitors in and out of Macau. One of the keys to this area is that it is classified as a special economic The most significant infrastructure addition over the last year has zone, and it will be a visa-free zone to allow easy access and collaboration from been the completion of the Hong Kong-Macau-Zhuhai (HMZ) Bridge foreigners. This non-gaming island has been designed to focus as a complethat opened in October 2018. This project allows these three cities to be ment to Macau’s current offerings and serve as an attraction to the greater connected for the first time by automobile in a system of bridges and tunGuangdong region and international markets. The central government will be nels. Future development includes adding a rail line along the same path deciding how to further handle the entry policy for foreigners. to facilitate further transit from the airport in addition to the ferries from Hong Kong. As the majority of visitation to Macau continues to come from Guangdong Province in China, connecting Macau to the greater PRC is the bigger piece of the infrastructure puzzle, especially when considering the greater connections that are being developed to the high-speed rail system throughout China. These increased infrastructure improvements will greatly facilitate the ability for residents of cities such as Beijing, Shanghai, and Wuhan (the capital of the Hubei Province that hosts roughly 10 million people) to have better access to Macau. Air transport is poised to see significant growth in the years to come as well. In addition to the Hong Kong International Airport, the region’s Shenzhen, Macau and Zhuhai airports are all growing and developing rapidly for further route expansion. With Air Macau’s monopoly ending in Infrastructure improvements are easing transportation between Macau, mainland China, Hong Kong and November 2020, other airlines will have great ac- the non-gaming Hengqin Island, which bodes well for the mass and premium mass markets in Macau cess to the market. The infrastructure growth will need to continue as Cotai further expands its gaming and non-gaming amenities. Grand Lisboa Palace Cotai will serve as the latest of these significant additions as it adds roughly While Macau continues to rebound from the 2014 crackdown, the past 15 2,000 new hotel rooms across three hotel properties—Grand Lisboa, years have provided significant growth to the region on both the gaming and Palazzo Versace and Karl Lagerfeld. non-gaming fronts. While some in Macau will focus on the VIP market, the Sands Cotai’s Holiday Inn will transform into The Londoner, which mass market continues to show growth that, over time, will provide further will be an all-suite property, transitioning from 1,200 rooms into 600 revenue opportunities for those operating in the region. suites. Further revisions to the Sands property will take place in developAs companies look toward the next steps on licensure in 2022, their existments encompassing $2.2 billion in investment in the existing St. Regis, ing contributions and future plans on all fronts will be evaluated to chart a Sheraton, and Conrad hotels. path forward. The next 15 years will also likely provide some ebb and flow to Wynn, Galaxy, Melco and MGM also plan significant upgrades to the market. the area, in addition to the parcels that are currently open. Additional There is a solid foundation in place between the existing gaming market, hotel rooms are in the pipeline along with other non-gaming amenities to the non-gaming amenities that continue to be developed in the region, and the support additional mass market expansion. Further developments in nonfurther infrastructure that will cater to the mass market and grow revenue and gaming hotels, such as Lisboeta Macau and other properties, will add adtourism. Macau will continue to be the leading gaming market in the world, ditional keys to support the region as well. and the greater region will grow exponentially with the development of

The Future Is Bright

Hengqin and other areas in Guangdong Province.

Hengqin Island Opportunity One of the opportunities for expansion of the mass market in the coming years is Hengqin Island. The island, which is located to the west of Macau, is three times the geographical size of Macau and has experienced significant development. The development is focused on tourism, education and industrial/technological innovation.

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Steve Gallaway, managing partner, and Brendan D. Bussmann, partner and director of government affairs, are both with Global Market Advisors, the leading provider of consulting services to the gaming, integrated resort and hospitality industries. They can be reached at smg@globalmarketadvisors.com and bdb@globalmarketadvisors.com, respectively.


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NEW GAME REVIEW by Frank Legato

Hot Hit Pepper Pays IGT

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his new game, offered on IGT’s CrystalDual 27, AXXIS 23/23 and CrystalSlant cabinets, features a nine-level progressive, with each amount hit by landing seven or more “Hot Hit” symbols on the reels. The base game is a five-reel, 243-ways-to-win video slot. The scatter-pay format uses no paylines, but pays for adjacent like symbols, with 243 possible ways to win on each spin. The nine levels of progressive jackpot can be hit at any bet level, but the jackpot amounts rise with higher wagers. At any time during game play, if seven “Hot Hit” symbols land on the three-by-five reel array, the player wins the lowest progressive jackpot on a ladder display shown on the top monitor. The jackpot amounts rise with the number of symbols landed, with 15 Hot Hit symbols landing the top progressive jackpot, resetting at $10,000 at the 250-coin maximum bet. There also is a free-game bonus triggered by three or more bonus symbols. The progressive feature can be hit on a free spin or a primary game spin.

Manufacturer: IGT Platform: CrystalDual 27, AXXIS 23/23, CrystalSlant Format: Five-reel, 243-ways-to-win video slot Denomination: .01 Max Bet: 250 (Configurable) Top Award: Progressive; $10,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 4%-15%

Kingdom Cash Fire AGS

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ne of the newest games offered on the AGS Orion and Orion Slant cabinets, Kingdom Cash Fire features a five-level bonus that can result in credit prizes or one of four prizes—the top two linked progressive jackpots. The base game is a five-reel, 50-line video slot in the penny denomination. Three bonus symbols trigger the five-level bonus event. The player is prompted to select from a field of icons to reveal either free spins, a “bust” or a jackpot symbol. In the bonus feature, the player receives up to five picks, selecting until a “bust” symbol is revealed. After a “bust” or the five picks, any jackpot symbols are added up. A single jackpot symbol returns a random credit award. Two award the “Mini” jackpot; three or four, the “Minor,” and five, the top “Grand” prize. Any free-spin awards are then accumulated and the free-game feature begins. During the free spins, any stacks of non-royal symbols become stacks of wild symbols. The game incorporates a unique feature designed to raise the average bet for the operator. While the top two jackpots are linked progressives resetting at $5,000 and $500, respectively, the bottom two fixed jackpots rise with the level of the bet. The player can pick bet multipliers of 1, 2, 3, 5 or 10. With the wager, the “Minor” jackpot goes from $50 for a “1” bet multiplier to $500 for a “10.” The “Mini” ranges from $10 o $100.

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Manufacturer: AGS Platform: Orion Format: Five-reel, 50-line video slot Denomination: .01 Max Bet: 500 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.01%-13.8%


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Madonna

Aristocrat Technologies

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his new entry in one of Aristocrat’s most successful themed game groups presents musical icon Madonna and her music via the manufacturer’s new EdgeX cabinet, which features two 43-inch LCD monitors stacked in a landscape configuration that the company calls “personalized space” to create a “mini-jumbo feel” within a standard slot footprint. (The cabinet was launched earlier this year with the FarmVille game.) The new Madonna game is a five-reel, three-row video slot in the Reel Power ways-to-win format, with no paylines and wins for adjacent symbols totaling 243 possible ways to win on every spin. The base game showcases the “Mighty Cash” hold-and-respin feature. When a star symbol appears on the reels, a multiplier above that reel increments by one. That multiplier is applied to all credits and jackpots on that reel during the feature. Six or more Mighty Cash symbols trigger a hold-andrespin feature in which the reels re-spin to reveal credit awards or one of five static or progressive jackpots. Filling all positions with Mighty Cash symbols on one spin triggers

the “Vogue Wheel,” which spins to land either on a jackpot or on 2X or 3X, multiplying all wins. Three or more special bonus symbols trigger the “Like a Virgin Wheel,” which spins to award credits, a jackpot or free games. The Mighty Cash and wheel bonus features are available on free spins as well as base-game spins. The top Grand Jackpot is a wide-area progressive resetting at $250,000, or a single-site progressive resetting at $5,000. All the bonus screens are centered on video of Madonna performing one of her classic hit songs. Manufacturer: Aristocrat Technologies Platform: EdgeX Format: Five-reel, 243-ways-to-win video slot Denomination: .01, .02, .05, .10 Max Bet: 250, 500 Top Award: Wide-Area Progressive: $250,000 reset Single-Site Progressive: $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 8.1%-13.5%

Sky Dragons

Incredible Technologies

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his game is on Incredible Technologies’ new V55 cabinet, the vertical 55-inch portrait monitor used for an expanding reel feature that grows the reel set up to seven rows. The base game is a five-reel, 243-ways-to-win video slot. A mystery feature surrounds the two “Sky Dragons” depicted hovering above the reels. When one swoops down to the reels, the reel array can expand up to a five-by-seven grid. In this expanded reel setup, called “Scatter Ways,” the seven-row grid yields a total of 25,000 ways to win on every spin. The player-favorite “Mystery Slide” feature is activated when one or more “pearl reveal” scatters land on the reels. The silver Sky Dragon can then drop more pearls onto the reels for big wins. The Sky Dragons work as a pair, as the red dragon expands the reel set by one row, so long as one additional pearl is added by the silver dragon. Once the reels have grown to their maximum size of five-by-seven or no more pearls are added, the Mystery Slide spins to select a symbol to replace all pearl scatters, creating potential for big wins.

Up to 20 free spins are triggered by three or more Free Spins scatters. The Mystery Slide and lucky Sky Dragons are still active during free spins. Landing “Lightning Bolt Scatters” can lead to wins of one of four progressive jackpots, aptly named Rumble, Boom, Crash and Thunder. The top Thunder jackpot resets at $6,000. Manufacturer: Incredible Technologies Platform: V55 Format: Five-reel, ways-to-win video slot Denomination: .01, 02, .05, .10, .25, .50, 1.00 Max Bet: 250 Top Award: Progressive; $6,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.73%-14.89%

JUNE 2019 www.ggbmagazine.com

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Rodio New Caesar

Carl Icahn brings his trusted lieutenant to run Caesars Entertainment. The question remains: Sell or Improve? By Patrick Roberts

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arl Icahn has gotten his pick for Caesars Entertainment’s new CEO, industry veteran Tony Rodio. But how long Rodio will keep the job could be another matter entirely, with two potential buyers currently poring over the gaming giant’s books and possibly more to follow. The change in leadership was not unexpected. Neither was the choice. With Caesars’ share price (Nasdaq: CZR) swooning through most of 2018, Chief Executive Mark Frissora tendered his resignation in November. But no replacement was immediately found, and when his contract expired in February, he agreed to stay on until the end of April. That the replacement would be Rodio was a foregone conclusion once Icahn had amassed a controlling equity stake earlier this year—and with it three seats on Caesars’ 12-member board of directors—and indicated he wanted the job to go to his former top executive at Tropicana Entertainment. Rodio, who most recently was CEO of regional operator Affinity Gaming, also will have a seat on the board. Icahn also has made clear his belief that what CZR needs is new ownership to turn around the company’s performance, and he’s been leading other activist investors in pushing for a sale. Not surprisingly, Caesars said last month it was assembling a “transaction committee” to include two of Icahn’s directors to review “ongoing efforts in creating additional shareholder value.” In a statement announcing Rodio’s hiring, the company said the committee and the investment bank assisting in the process will consider several paths, including “continuing to operate as an independent public company.”

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Nationwide Reach

At Tropicana, Rodio was credited with overseeing capital improvements, including a complete overhaul of the flagship, Tropicana Atlantic City, that helped boost corporate revenues by 50 percent.

Macquarie Securities gaming analyst Chad Beynon said, “While the company acknowledges there is no timetable for any transactions or results, we believe this is to evaluate takeover bids.” And, in April, The New York Post said it has learned that billionaire Tilman Fertitta, whose attempt to acquire Caesars in a $13-a-share reverse merger was rejected last year, was back in the picture, joining regional casino giant Eldorado Resorts in the due diligence process. Eldorado, not coincidentally, is the company that bought Tropicana from Icahn last year for $1.85 billion in partnership with Penn National Gaming’s Gaming and Leisure Properties REIT.

Despite the scale and diversity of its portfolio—53 properties in 14 U.S. states and five other countries and the World Series of Poker— Caesars has struggled to build investor confidence since emerging from a Chapter 11 reorganization of its largest operating subsidiary in the fall of 2017, a 33-month ordeal that was the legacy of an illfated leveraged buyout by private equity giants Apollo Global Management and TPG Capital. Completed on the eve of the Great Recession, the acquisition buried the conglomerate, then known as Harrah’s Entertainment, under some $25 billion of debt. The reorganization cut $16 billion of the debt load, relegated Apollo and TPG to minority shareholders (they’ve since divested entirely) and spun off ownership of 20 of the casinos to a newly formed, separately traded real estate investment trust, VICI Properties. Disappointing earnings throughout 2018 didn’t help, however. The stock fell 16 percent over the last 12 months, plummeting to a multiyear low of $5.84 at one point in December, valuing the largest casino operator in the world at just $4 billion and opening the door for Icahn, a number of activist hedge funds and Fertitta, who owns the Golden Nugget casinos, the Landry’s restaurant chain and the NBA’s Houston Rockets, to swoop in. The new year saw CZR bounce back by around 40 percent, and currently it trades at around nine times 2019 forecasted cash flow, which is roughly a 17 percent discount to its largest competitor, MGM Resorts International. And there is still close to $9 billion of long-term debt on the balance sheet.


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Icahn has spent some $1 billion to acquire what is now a 28 percent stake in the company, including swaps, and he is not in the business of losing money. His previous forays in the gaming industry have included ownership of American Casino & Entertainment Properties, one-time parent of Las Vegas’ Stratosphere casino hotel, the never-opened Fontainebleau on the Las Vegas Strip, and Tropicana, and he eventually sold them all at tidy profits. He also owns the land under Atlantic City’s shuttered Trump Plaza Hotel and Casino, which closed in 2014.

Riding the Rodio All of which begs the issue of where Rodio fits in the picture. The 60-year-old brings more than three decades of experience to his new job, but as SunTrust gaming analyst Barry Jonas pointed out, he has never managed a company of the size and scope of Caesars. “We believe the key question here is whether Mr. Rodio is being appointed to run the company for the long run or to help prepare for a potential sale,” Jonas said. “We could see either scenario, given his past experience.” That experience was mostly acquired in Atlantic City, and also includes high-level positions with Hollywood Casinos, now owned by Penn National, and Harrah’s Entertainment. He worked at Tropicana from 2011 to 2018 and was chief executive and a member of the board of directors when Icahn sold the company and its seven casinos to Eldorado and GLP. At Tropicana, he was credited with overseeing capital improvements, including a complete overhaul of the flagship, Tropicana Atlantic City, that helped boost corporate revenues by 50 percent. Rodio joined Las Vegas-based Affinity Gaming in October. Affinity owns three Nevada casinos, including one in Las Vegas, and casinos in Colorado, Missouri and Iowa. JUNE 2019 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Next-Gen Button Product: Dynamic Bet/Bash Button Manufacturer: Omron Amusement Company

or many decades, Omron Amusement Company has supplied leadingedge gaming component technologies to Japan’s pachinko/pachislot industry, with a keen focus on sensor, switch and optical lighting technologies. Over the past 10 years, Omron has expanded promotion of new technologies globally to include casino gaming applications worldwide. New cutting-edge technologies are being added to gaming cabinets at a quickening pace, and Omron’s release of the new Dynamic Bet/Bash Button is no exception. Omron, which has developed button technologies for over 20 years, is introducing a new low-profile, dynamic bash/bet button for use on top of touch-screen button deck displays. This new “floating” button technology uses sensors in place of traditional electromechanical switches, but retains excellent tactile feedback for the gaming player. The new button’s large transparent lens cover allows for excellent display messaging and visibility, and the optional halo LED bezel lighting adds colorful eye-catching highlights. In addition, excellent life/durability test ratings and an IP54 seal-ability construction greatly reduce the risk of button failure in the field.

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Mounting a button on top of a gaming touch panel display can be a great cause for concern. However, Omron’s dynamic button has a strong support bracket allowing for secure mounting to the button deck. For designs which require it, a virtually invisible clear FPC connection with locking connectors and a relay logic PC board are options available in the new dynamic button assembly. Also, Omron’s unique “screwless” mounting feature allows for easier button replacement. For more information, e-mail an inquiry to GPbutton@omron.com.

Tap and Connect Product: SynkConnect Manufacturer: Konami Gaming

onami Gaming’s award-winning Synkros casino management system has incorporated SynkConnect, a new “cardless” player tracking convenience. This touch-less, multi-channel solution empowers casino players with a variety of secure methods to augment or replace a traditional player loyalty card at the EGM, including their personal mobile device, fobs, a room key and more. SynkConnect helps open up more opportunities for players to connect and engage with property loyalty programs by using near-field communication (NFC) through a card reader. For mobile cardless connection, players simply tap a personal smartphone device at the zone of the card reader bezel and the card reader changes

K

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color to indicate blue for inactive/uncarded connection, green for successful active connection, or red for misread/failed connection. SynkConnect helps transform how casino players connect and engage with the casino’s loyalty program using the technology conveniences already interlaced through their daily life and the guest experience. With more new ways for players to connect, SynkConnect helps eliminate barriers caused by dependence on traditional loyalty cards and increase “carded” play activity through a number of convenient methods of authentication. For more information, visit konamigaming.com.


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GOODS&SERVICES

The record-breaking social gaming Jackpot Party is now a part of SciPlay, a new spinoff company from Scientific Games

SCIENTIFIC GAMES HAS BANNER MONTH

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t was a busy April for Scientific Games. The company has launched the initial public offering of its social gaming business, putting up 22 million shares of the company to be called SciPlay. A week later, it launched OpenSports, a new end-to-end sports betting portfolio of products and services built around the company’s leading OpenBet technology, and announced a new partnership with Wynn Resorts. Scientific Games’ newly named social gaming division SciPlay announced the beginning of its initial public offering of 22 million shares of Class A common stock, the price expected to be between $14 and $16 per share. SciPlay expects to grant the underwriters a 30day option to purchase up to an additional 3.3 million shares of its Class A common stock at the initial public offering price. The shares are expected to trade on the NASDAQ Global Select Market under the ticker symbol SCPL. Scientific Games officials said the company raised more than $350 million through the offering. David Katz of Jefferies wrote a note predicting that Scientific Games’ debt-to-EBITDA could be reduced a quarter turn, assuming those return predictions are accurate. SciPlay announced that it expects to post a profit between $13 million and $15 million for the first quarter compared with a loss of $1.1 million in the same period last year, according to preliminary numbers published last month. The unit’s first-quarter revenue will rise to between $117 million and $119 million compared with $97.5 in the same period last year, an increase of 22 percent. Meanwhile, Scientific Games has launched OpenSports, the company’s new suite of sports betting technology. OpenSports signals the transformation of SG’s

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sports book product vision through an enhanced stack of solutions and speed-to-market delivery with player experience at the core of the proposition. The completely redesigned sports book solution offers customers a modular portfolio of products that can be mixed and matched to meet specific needs: • OpenBet remains the core sports betting technology solution, the backbone on which a sports book can operate through SG Digital’s proprietary betting engines tested for scale through global sporting events; • OpenPlatform provides world-class, fully compliant player account and wallet services and functionality; • OpenTrade, powered by recently acquired Don Best Sports, offers 360-degree managed trading services including pricing, odds and feeds; • OpenEngage powers sports book operators with player-focused flexible and innovative interfaces for digital (mobile apps, mobile web and desktop) and retail (SSBT, EPOS and Content Display); and, • OpenAccelerate helps operators implement, manage and run the day-to-day business of their sports books. A team of experienced industry personnel designs and executes critical strategy and world-class performance across acquisition, retention and player engagement. The new technology will have at least one very high-profile user. In a separate release, the company announced a partnership with Wynn Resorts, supporting the launch of Wynn Resorts’ unique digital sports betting and iGaming applications in the U.S. Wynn Resorts intends to initially launch in New Jersey and utilize several Scientific Games products and services, including a sports betting and iGaming system, a managed sports trading service, and Scientific Games’ market-leading content aggregation system that is home to more than 2,000 digital games such as 88 Fortunes, Raging Rhino, Zeus and more. It will be the first foray into New Jersey iGaming and sports betting for Wynn, which does not operate a casino in Atlantic City.

ARISTOCRAT RELEASES NEW LINKED GAME IN MACAU

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ustralian slot-making giant Aristocrat Leisure, Limited announced that it has installed its newest linked progressive product “Gold Stacks 88,” in casinos across Macau.

The four-level linked progressive product has been placed in a number of venues, “and players and operators alike are responding positively to the game,” said the company in a press release. The company did not specify in the written announcement the properties involved or when it had installed the new game. “Our customers have reported that their players are loving Gold Stacks 88. The powerful combination of graphics, mechanics and game play is proving a hit with players,” said Chris Rowe, the firm’s managing director for Asia Pacific, in a prepared statement. Gold Stacks 88 is an Xtra Reel Power game featuring animated graphics and features such as “coinciding wins, stretch wilds, and the popular mechanics of Choose Your Volatility and Pick-Em Jackpot,” according to the release.

AGS ENTERS PENNSYLVANIA MARKET

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aming supplier AGS announced its first game placements in Pennsylvania at Parx Casino in Bensalem, a suburb of Philadelphia. The games went live on the Parx casino floor last month, with more games slated to debut across the state over the next several months. “We are excited about entering the robust


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Pennsylvania market and honored to do so at Parx Casino, a state-of-the-art property that attracts players from greater Philadelphia, the sixth largest metropolitan area in the U.S. with more than 6 million residents,” said Andrew Burke, AGS senior vice president of slot products. For its Pennsylvania launch, AGS debuted its industry-leading Orion Portrait, Orion Slant, ICON and Big Red slot cabinets and an array of its highest-performing game titles, including Fu Nan Fu Nu, Jade Wins, Olympus Strikes, Golden Wins and Colossal Stars. Following its game debut at Parx, AGS will roll out its games across Pennsylvania, which currently has 12 land-based casinos. In 2018, the slot machines and table games in Pennsylvania casinos generated a record gross revenue total of $3.2 billion—the highest total ever in the industry’s 13 years of operation—with Parx Casino leading the way.

CAESARS ENTERTAINMENT TO DEVELOP INNOVATIVE TECHNOLOGY HUB AT UNLV

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he University of Nevada, Las Vegas and Caesars Entertainment announced the creation of “Black Fire Innovation,” a technology hub where new gaming and hospitality concepts will be created and tested in a 43,000-square-foot innovation space that will include elements of mock hotel rooms, a casino floor and sports book, an esports arena and virtual reality facilities. Black Fire Innovation will bring together the university’s academic leaders and Caesars Entertainment in one space to advance current trends in hospitality and gaming technology to propel the industry forward. The complex is expected to open by the end of 2019. Black Fire Innovation will be headquartered in a state-of-the-art research building in the UNLV Harry Reid Research & Technology Park located in southwest Las Vegas. Expected to open later this year, this multi-purpose space will allow UNLV, Caesars and partners to develop and test new concepts using a mock integrated resort environment. Elements of mock hotel rooms, a casino floor with slots and table games, presentation/exhibit areas, sports book, esports arena and virtual reality facilities will be used to host on-demand testing of new ideas and products and provide a venue to showcase innovations to current and potential industry partners. Research within the Black Fire Innovation space will focus on emerging technologies, which

Black Fire Innovation will be headquartered in a state-of-the-art research building in the UNLV Harry Reid Research & Technology Park located in southwest Las Vegas. Expected to open later this year, this multi-purpose space will allow UNLV, Caesars and partners to develop and test new concepts using a mock integrated resort environment.

may include blockchain, artificial intelligence and virtual reality with interdisciplinary collaborations across areas such as architecture, psychology and fine arts. Additionally, there will be opportunities for participating startups, researchers and partners to examine how these new technologies are changing how resorts approach gaming, sports wagering and social spaces to appeal to new audiences. Although students and professionals from UNLV’s Division of Research and Economic Development and Caesars Entertainment will occupy the space, Black Fire Innovation is an academic incubator that will also be available to private industry partners who want to advance their research and test concepts. The space is expected to foster a collaborative research environment that will spark strategic partnerships and elevate student learning and entrepreneurship while training an emerging workforce that can excel in a rapidly evolving industry. Black Fire Innovation will be located within a four-story, 111,000-square-foot innovation building at the master-planned UNLV Harry Reid Research & Technology Park that is currently under development. The park—a partnership among UNLV, the UNLV Research Foundation and Gardner Company—will serve as a catalyst to unite business, research and technology and advance economic development efforts throughout Southern Nevada.

standards for casino kiosks that offer a range of services such as ticket redemption, bill breaking and ATM functions. In a press statement, GLI said its “GLI-20 v2.0, Standards for Kiosks” incorporated the “latest technical trends” and ensured such standards would “better align with overlapping requirements” in the GLI “family of technical standards and other industry standards.” GLI added the update was also designed to reflect “best-in-industry practices.” New Jersey-based GLI is seeking industry feedback, which it says it will then interpret, evaluate and resolve in the context of a final version of the updated technical standards. The company said the various standards it set were meant to help regulators by creating baseline technical guidelines, which they could adopt, and refer to as they found appropriate. GLI added such guidelines were also valuable to equipment suppliers, as those firms could use them as a guide in their design and development processes.

INTERBLOCK ANNOUNCES PLACEMENTS IN PA, PHILIPPINES

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lectronic table game supplier Interblock announced a corporate partnership agreement

GLI UPDATES KIOSK STANDARDS

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eading gaming testing company Gaming Laboratories International LLC has invited the industry to comment on its draft of updated JUNE 2019 www.ggbmagazine.com

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ICE North America Debuts

Clarion Gaming moves into the U.S. with show that focuses on iGaming, sports betting and technology

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ith the debut of ICE North America, Clarion Gaming has consolidated two of its previous conferences—GIGSE and Sports Betting USA—into one powerful event. Kate Chambers, the managing director for Clarion, calls ICE NA the “biggest sports betting conference in America.” “Wherever Clarion Gaming operates in the world we do so in partnership with the industry sectors that we set out to serve,” she says. “The decision to consolidate our presence in the United

ICE North America ribbon-cutting

Boxer Sugar Ray Leonard made a special appearance at ICE North America, here flanked by Clarion Gaming’s Kate Chambers and Roy Student, ICE NA Ambassador. Right: Esports played a big role at ICE North America

States into a single event and broaden our remit to include the five verticals of sports betting, iGaming, esports, iLottery and affiliate marketing, was taken after close consultation with stakeholders active in North America who told us that there was a need for a professional and, most importantly, for a trusted platform to help drive the future of gaming across the continent. “As such, our vision is to ensure that the entire A-Z of the gaming ecosystem in North America will benefit from the reputation and influence of what is the world’s most successful gaming event brand. ICE North America will enable gaming brands to establish a competitive advantage in what is a tremendously dynamic market full of opportunities to collaborate across all of our five key verticals.” More than 3,000 delegates were registered for the event, held at the Boston Convention Center, and heard from more than 200 expert speakers on 62

Global Gaming Business JUNE 2019

a variety of topics. “Delegates invest a great amount of time attending the events organized by Clarion Gaming, and it is our duty to deliver the very best market analysis and insight,” said Chambers. “Our speaker list reflects this, and delegates can look forward to a disruptive learning and network experience that explores the key issues and topics from every perspective.” A total of 29 commercial sponsors drawn from 14 countries put the power of their brands behind ICE North America. The collection of sponsors comprises a host of leading industry names from both sides of the Atlantic, including: 1xBet, Alderney eGambling Ltd., BetConstruct, Betgenius, Betinvest, Camelot Lottery Solutions, Continent8, Covers.com, Dentons, Digital Choo, Fox Rothschild, Gaming Laboratories International, Global Payments Gaming Solutions, IGT, INTRALOT, iovation, Kambi, Mazooma, NeoGames, Onfido, Optimove, Paysafe, Perform, SBTech, Scientific Games, SoftecDigital, Sportech, Sportradar, and SunTrust Robinson Humphrey. This group of sponsors joined the 42 exhibitors and the 200-plus opinion-forming speakers who cemented ICE North America’s status as the continent’s premier interactive gaming event.

with Penn National Gaming, under which Penn National will install the Interblock suite of ETGs at more than 20 properties of the company’s portfolio across the United States. Interblock also announced a major installation of a 100-seat ETG stadium at Resorts World Manila in the Philippines. The Pennsylvania agreement, which includes installations of electronic blackjack, baccarat, craps and roulette, guarantees Penn National exclusivity on newly released products. The games are included in a variety of formats from stand-alone automated and video units to bar-tops, live and/or automated stadiums, and Interblock’s integrated Pulse Arena product, which presents a variety of games in a nightclub atmosphere. The Diamond Stadiums are completely customizable to work with each casino’s unique floor plan and customer base. An unlimited number of play stations can be connected to a single table or generator, providing operators with an effortless way to generate revenue while simultaneously reducing operator expenses. In a separate release, Interblock officials say the Resorts World Manila (RWM) integrated resort is live with a 100-seat configuration of the Diamond Interblock Stadium. The Diamond Interblock Stadium at RWM consists of 100 play stations with 27-inch monitors connected to two live baccarat tables, two live roulette tables and a BigSix Super Spin wheel. The BigSix Super Spin game is exclusive to the property, and features a bonus in which players have the chance to win up to 1,000 times their bet.

GAMING ARTS CELEBRATES MILESTONES

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aming Arts, LLC, an end-to-end gaming technology provider of electronic gaming machines, bingo, keno, and interactive casino-wide promotional systems, announced multiple achievements across several areas of the company’s business.

Recently, the company received jurisdictional approvals of its first two Class III land-based slot themes in the Pop’N Pays family of games, Piñatas Olé and Big Top, housed on the eye-catching Phocus upright and hybrid cabinets. California, Okla-


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homa, Oregon and Florida will be the first states to launch Pop’N Pays shortly. More than 400 units are in the pipeline and are scheduled to be placed before the end of the year. The Pop’N Pays family of games is designed to provide an exciting and playful game experience through colorful and interactive characters and symbols that “pop” to award wins. Free games features and three-level progressives offer traditional yet whimsical content while delivering core gamblers an immersive experience without the overly serious nature of video reels seen in present time.

CAESARS LOYALTY PROGRAM RECEIVES FREDDIE AWARD

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aesars Entertainment Corporation announced that its loyalty program, Caesars Rewards (formerly Total Rewards), won the prestigious 2019 Freddie Award for best customer service throughout the Americas. The awards are voted on by millions of frequent flyers and reward program members to honor excellence across three geographic regions— the Americas, Europe/Africa and the Middle East/Asia/Oceania—and six different award categories, with Caesars Rewards receiving the “Best Customer Service” award for the Americas.

SAN MANUEL DEBUTS SIR MIXA-LOT SLOT GAME

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alifornia’s San Manuel Casino announced it will host the U.S. debut of “I like big BUCK$,” a slot game featuring the rap artist Sir Mix-A-Lot and featuring the artist’s 1992 hit “Baby Got Back.” The game, unveiled by supplier Bluberi Gaming Canada at the 2018 Global Gaming Expo, is the only slot machine themed after Grammy awardwinning rapper, and is the first of its kind to launch in the U.S. “At San Manuel Casino, providing best-inclass entertainment and gaming experiences to our guests is always a top priority,” said Peter Arceo, general manager of San Manuel Casino. “We are honored to be the first casino in the U.S. to debut

this brand-new game, which further allows us to bring truly unique experiences people can’t get anywhere else.” Inspired by the mega-popular ’90s anthem, the “I like big BUCK$” slot machine will feature Sir Mix-a-Lot’s likeness along with various sound samples from the legendary song. The slot is also the first premium brand licensed game released on Bluberi’s successful b.POD cabinet, which presents a vertical theater effect that extends to three 55-inch HD monitors in a carousel fashion.

The annual Freddie Awards first launched in 1988 to give frequent flyers and travelers the opportunity to recognize the world’s best airlines, hotel loyalty programs and loyalty credit cards. Now, with over 7 million votes cast for this year’s winners, they have evolved into some of the most highly sought-after awards, and winners are widely considered best-in-class. With the Caesars Rewards loyalty program, members can receive complimentary hotel stays, including international stays at Caesars’ newest luxury resorts in Dubai. Members also have access to special events such as private New Year’s Eve parties throughout the U.S., golf outings with celebrities, famed sporting events and much more through Caesars Rewards partners.

For more information or to subscribe to the database or monthly report contact Ashley Diem at ADiem@FantiniResearch.com or call +1-302-730-3793 - www.FantiniResearch.com JUNE 2019 www.ggbmagazine.com

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PEOPLE CHAUDHURI JOINS LAW FIRM, BECOMES AMBASSADOR FOR TRIBE

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onodev Chaudhuri, former chairman of the Na- Jonodev Chaudhuri tional Indian Gaming Commission, will stay busy once he steps down, taking on two important new roles. Chaudhuri has been hired to head an Indian law and policy group by the national law firm Quarles & Brady LLP. “While I will dearly miss my incredible team at the NIGC and the important work we performed on behalf of Indian Country, I’m thrilled to be joining another incredible team at Quarles & Brady, a firm whose philosophy, resources and talented attorneys make it perfectly poised to profoundly impact the landscape of Indian Country in the years ahead,” Chaudhuri said in a news release. Chaudhuri joined the NIGC in September 2013, first as its vice chair. He was later nominated to serve as chairman by former President Barack Obama and confirmed by the Senate in 2015. NIGC Vice Chair Kathryn Isom-Clause will take over as interim chairwoman on May 16. She is a citizen of the Pueblo of Taos and has worked at the agency since March 2016. In addition, the Muscogee (Creek) Nation has named citizen Chaudhuri as the ambassador for the nation. The MCN ambassador will strengthen the nation’s sovereignty and allow for a sustained MCN presence in Washington, D.C. The ambassador position was created to uphold the historic sovereign-to-sovereign relationship between MCN and the U.S. The ambassador will take part in federal executive and congressional discussions that affect MCN interests. It is difficult for MCN leadership to attend many of the meetings at the U.S. Capitol while still attending to the day-to-day operations of the nation. “Now, more than ever, it is very important for us to have a voice in D.C. The nation needed an official on-site advocate,” MCN Principal Chief James Floyd said.

FELDMAN JOINS UNLV IGI IN RESPONSIBLE GAMING ROLE

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lan Feldman, who spent 29 years as a senior executive with MGM Resorts International and Mirage Resorts, recently joined International Gaming Institute (IGI) at the University of Ne-

vada, Las Vegas as a Distinguished Fellow in Responsible Gaming. Feldman, whose appointment began May 1, will lead IGI’s responsible gaming efforts, including further developing programs and policies to advance knowledge Alan Feldman and capabilities within the industry and regulatory community. This fellowship will support IGI’s mission of promoting international best practices in responsible gaming at a time when integrated resorts are entering more jurisdictions than ever. IGI actively conducts responsible gaming research and related training programs, including a report and related work that led to the approval of integrated resorts in Japan. Prior to his recent departure from MGM, Feldman spearheaded the launch of GameSense—an innovative, player-focused national responsible gambling program that encourages players to adopt behaviors and attitudes that can reduce the risk of developing gambling disorders. Feldman continues to advise MGM on its ongoing efforts to improve the planning, development and implementation of responsible gaming policies and programs.

SCIENTIFIC GAMES NAMES MARKETING SVP

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cientific Games Corporation announced the appointment of Steven Steven Stamstad Stamstad as senior vice president of marketing and communications, reporting directly to President and Chief Executive Officer Barry Cottle. Stamstad has more than 25 years of global marketing experience and an impressive track record driving growth and transforming businesses in the online retail marketplace, mobile gaming, entertainment and sports industries. According to a company press release, Stamstad “will be responsible for elevating Scientific Games’ global leadership, increasing engagement with the company’s key stakeholders across gaming, lottery and sports and instituting data-driven, marketing best practices to drive results.” Stamstad will leverage his marketing and communication expertise to drive new products, build brand franchises and expand innovation across Scientific Games’ portfolio of omni-channel products.

BMM NAMES REYES SVP OF BUSINESS DEVELOPMENT

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nternational gaming testing company BMM Testlabs announced the appointment of Robert Reyes to the position of senior vice president of business development. Reyes will lead supRobert Reyes plier business development and sales, focusing on expanding BMM’s existing relationships with gaming suppliers, as well as developing new opportunities for compliance testing and technical consultancy. Reyes brings more than 16 years of business development and sales experience to BMM. For the past two years, he served as vice president of sales at RES Exhibits. Before that, he served three years as senior vice president of sales, North America for Ortiz Gaming, and served six years with Gaming Laboratories International, responsible for business development and management.

GGB

June 2019 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . .37, 67 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . .17 AGS . . . . . . . . . . . . . . . . . .Inside Front Cover Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Dickinson Wright . . . . . . . . . . . . . . . . . . . .33 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . .57 Fantini . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fox Rothschild . . . . . . . . . . . . . . . . . . . . . .27 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 G&T Award . . . . . . . . . . . . . . . . . . . . . . . . .43 GGB Subscriptions . . . . . . . . . . . . . . . . . . .64 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 JCM Global . . . . . . . . . . . . . . . . . . . . . . . .19 Konami . . . . . . . . . . . . . . . . . . . . .Back Cover MGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Omron Amusement . . . . . . . . . . . . . . . . . .57 RPM Advertising . . . . . . . . . . . . . . . . . . . .10 Scientific Games . . . . . . . . . . . . . . . . . .11, 29 UNLV Gaming & Hospitality Education Series . . . . . . . . . . . . . . . . . . . . .41

JUNE 2019 www.ggbmagazine.com

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CASINO COMMUNICATIONS

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&A

John Dinius General Manager, Sycuan Casino Resort

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alifornia’s Sycuan became more than just a casino in March. The “resort” tag was added when a major expansion was completed which includes over 300 guest rooms, including 50 suites. Other additions include more than 10 new bars and restaurants, meeting space, a larger casino, and a pool and cabanas with a lazy river and swim-up bar. John Dinius started his career at Sycuan, and was elevated to permanent general manager in 2016. He spoke with GGB Publisher Roger Gros at NIGA’s Indian Gaming Tradeshow in San Diego in April. To hear a podcast of the full interview, visit GGBMagazine.com. GGB: Congratulations on the opening of your expansion. I have to say, it was one of the most impressive expansions I’ve ever seen. John Dinius: Wow, thank you so much. And coming from you, Roger, I mean, that really does mean a lot. So, I appreciate that. I particularly liked the way you seamlessly incorporated the new construction into the previous property, which always looked good. How is it performing?

We’ve had incredible results thus far. It’s only a couple of weeks in, but the kind of occupancy numbers that we’re seeing, and some of the revenue numbers—we’ve never seen numbers like this, so we’re very excited about the future. Let’s talk about the Southern California market. Some properties like San Manuel, Pechanga and Morongo do incredible numbers, but you’re a little more remote. Where do most of your guests come from?

Actually, it’s about a 25-mile radius. We get about 80 percent of our business from that area, but we’ve never had the kind of amenities like we have today to cast a wider net and attract a different level of clientele. And one thing we wanted to be cognizant about was not alienat66

Global Gaming Business JUNE 2019

ing our current clientele, because we’ve operated a very successful property for 35 years, and we didn’t want to do anything to impact those guests that were there with us for those 35 years. So, we really tried to create this consistent flow between the old side of the property and the new. We tried to do a lot to create that seamless connection between the two sides, and we’re trying not to refer to it as old and new, but east and west. So we think our current customers will blend well with the new players. Do you feel like you’re competing with those larger properties now?

You know, in the past, we really haven’t shared a lot of the same customers—just being a hyperlocal. But I think that these new amenities allow us to cast a wider net, and who wouldn’t want to come to San Diego, and play in San Diego? Hang out with us and float down that lazy river. But I think it really does step up the game here in San Diego in particular, and I think that the level of finishes that we have, the décor, the kind of service in all the various amenities and venues that we have, is going to force our competitors to step up their game as well. There are lots of different market niches. Do you get a lot of Asian play?

It’s very important. I think the Hispanic market is an opportunity as well. It doesn’t feel that many of the properties in our area have really captivated either of those demographics, so, we’ve got some focus strategies to address that, and maybe in three to six months or so, I can let you know how successful those strategies were. It’s only been a week, but how have your customers responded to the new place so far?

Incredible. And I’m not just saying this, but we haven’t had one negative comment from our guests. They’re just blown away by the level of finishes and the décor.

I think what was really important to us was ensuring that our level of service matched that level of décor. So, we revamped all of our organizational commitments as they relate to guest service, and just redefined those commitments and really inspired our team to put forth their best effort, and so far they’ve done just that. We’ve also worked hard trying to build our executive team, and one of the gentlemen that has recently joined our team is Andrew Kerzmann, our hotel VP. He was at Mirage for quite a few years, and that facility was 3,000 rooms... So, this was a little bit different scale, but just having him onboard from the outset of the development was really helpful. We hired 850 new team members, and trying to get them onboard, and get them up to speed with our expectations was a massive undertaking, but our team executed at a very high level. You’ve risen from a line-level employee, all the way to the top. Tell us about that journey.

When I started, it was back in what we referred to as the gray days: before the compacts were approved. And we had slots for a little while, but when I got hired , there were no slot machines. So I started in a bingo hall, selling pull tabs. I’m sure you remember those. I felt like I walked into the job of a lifetime. It didn’t feel like work. When you go to work you go in and socialize, and somewhat entertain, and I just fell in love with the guests and the team members. And then when I got exposed to the tribal members, it just felt like home. It’s been an incredible journey for me. As soon as the slots came on board, I jumped over to that department and worked just about every position within slots. And then back in 2014, I stepped into the general manager role. So, it’s been an incredible ride. I’ve learned a lot. I used to say I was growing up out there, but now I’ve got to say I’m growing old out there.


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Profile for Global Gaming Business

Global Gaming Business, June 2019  

The casino gaming industry's most respected and important international trade journal.

Global Gaming Business, June 2019  

The casino gaming industry's most respected and important international trade journal.