Global Gaming Business Magazine
Casino ergonoMiCs PoarCh Creek suCCess story
battle royal March 2014 • $10 • Vol. 13 • No. 3
Back to Basics online gaming systems and how they work
strategies to attract more youthful demographics
Slot-maker American Gaming Systems prepares to spread its wings
Official Publication of the American Gaming Association
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Vol. 13 • No. 3
Global Gaming Business COVER STORY Page 22
14 Fantini’s Finance Volatility Happens Frank Fantini
Emerging slot manufacturer American Gaming Systems, backed by a well-financed new owner, a new CEO, an enviable management team and top technology, looks to expand its share of the casino business.
16 AGA Time to Deliver Geoff Freeman
62 Global Gaming Women Next Generation of AGA Women Sara Rayme
By Frank Legato
64 Marketing Value: A Simple Word
American Gaming Systems CEO Bob Miodunski and incoming CEO David Lopez
42 Comfortable Profit
18 Youth Be Served Smart casino operators are catering to the next generation of patrons, serving up an interactive, social experience to the younger demographic. By Rodric J. Hurdle-Bradford
Suppliers of ergonomically designed casino furniture keep players comfortable—and playing. By Dave Bontempo
MGM’s hard-won project in Maryland’s Prince George’s County will apply the operator’s expertise to what could be the most profitable casino in the East. By Marjorie Preston
Our monthly section highlighting and analyzing the emerging internet gaming markets. Feature 48 iGaming Tech Operators debate the best combinations of software and platforms for the nascent U.S. iGaming industry. By Marco Valerio
iGNA Outlook 51 Social Gaming Legality,
36 Alabama Getaway As Alabama’s Poarch Band of Creek Indians fights Bible Belt sensibilities and hostile politicians, its casino profits soar. By Dave Palermo
4 The Agenda 6 Dateline 13 Nutshell 54 Emerging Leaders
32 Maryland Grand
Part 2 By Tony Cabot
With Masterminds Advertising’s Andrea Janssen, Bank of America Merrill Lynch’s Dawson Her Many Horses, and Caesars Entertainment’s Jacqueline Beato
56 Frankly Speaking 58 New Game Review 60 Cutting Edge 66 Goods & Services 69 People 70 Casino Communications With Joe Pappano, Senior Vice President, Director of Merchant Sales and Managing Director, Vantiv Gaming Solutions
52 iGames News Roundup
COVER PHOTO BY LEVI ELLYSON, 501 STUDIOS, LAS VEGAS
MARCH 2014 www.ggbmagazine.com
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Hypocrisy Unchained Roger Gros, Publisher
here is a lot to be concerned about with iGaming if you are a land-based casino operator. The simple fact that players can enjoy gambling from the comfort and safety of their own home should be enough to make you nervous. Unless you have a strategy to contain the potential damage, and possibly turn it in your favor, you should be worried. Sheldon Adelson’s strategy is something of a scorched-earth policy. Adelson wants iGaming gone from the legal agenda in the U.S., and he plans to use his vast wealth to make that happen. He wants Congress to put a ban in place that would prevent any more states from legalizing iGaming, and certainly stop any movement in that direction from the federal government. But is that a reasonable policy? Remember, iGaming was exploding on illegal—or at least “grey” area—websites in the U.S. prior to 2006. With the passage of the Unlawful Internet Gaming Enforcement Act, most—but not all— of those online casinos and poker rooms stopped taking bets from U.S. customers. Over the intervening years, however, much of the business that went away has returned to now clearly illegal sites. Also in the last year, we’ve seen three states legalize online gaming. Any federal prohibition would now have to “grandfather” those states into any overall ban. So for Adelson to suggest that a law banning iGaming in the U.S. would put the issue to rest is simply disingenuous. More disturbing, however, is the argument for a ban. Certainly there’s some justification when it’s viewed from a business perspective, as LVS President Rob Goldstein explained to me recently. “What worries me about it is twofold,” he said. “First, the cost of entry is incredibly small, which means anyone can get into it. That shows me it is of limited value. Secondly, once you’re in it, it’s all about marketing dollars. The reinvestment becomes larger and larger. The customers have no loyalty. There’s no bricks and sticks that attract them. “We thought that brands had real value online. But the more I look at it, the more I
Global Gaming Business MARCH 2014
question that. Once a customer gets online, he looks for the best deal, so the deal becomes the driver. If that’s the case, the margins erode quickly. That’s the biggest fear for me, from a business perspective.” But when you get to the “moral” outrage that Adelson exhibits, the justification gets thin, and begins to damage gaming of all types, because Adelson’s arguments can apply to all of us. He says online gaming targets the vulnerable, encourages underage gambling, promotes money laundering, and is a breeding ground for criminal enterprises—all arguments that anti-gamers have used in the past against the land-based casino industry. He claims iGaming sites are “reckless” and have no regard for the players. But he fails to mention an incident that was reported recently when a player owed several Las Vegas casinos almost $13 million ($8 million to Adelson’s Venetian). Despite Adelson’s iGaming objections, this situation would not have occurred online. First, there are no legal online casinos that extend any credit, much less $8 million worth. Second, the player’s activity would be tracked and warnings sent out to both the operator and the player as he lost more and more. Player tracking on iGaming sites is much more comprehensive than in real life. Everything that occurs is recorded electronically, so online operators are much more informed than their land-based cousins. This will actually prevent underage and problem gambling and protect players who may get in over their heads in the iGaming space. So Adelson’s campaign is not only damaging to the growing iGaming industry but it clearly threatens our business both land-based and online. No, iGaming may not be the most profitable business in the world, but there’s no way to put it back in the bottle. Banning it will only encourage illegal casinos and expose players to fraud and other dangerous activities. Further attempts to ban it will only damage consumer confidence and the gaming industry as a whole. Let’s hope Adelson realizes he can’t win and decides if you can’t beat ‘em, join ‘em.
Vol. 13 • No. 3 • March 2014 Roger Gros, Publisher | email@example.com Frank Legato, Editor | firstname.lastname@example.org Monica Cooley, Art Director | email@example.com David Coheen, North American Sales & Marketing Director firstname.lastname@example.org Floyd Sembler, Business Development Manager email@example.com Becky Kingman-Gros, Chief Operating Officer firstname.lastname@example.org Lisa Johnson, Communications Advisor email@example.com Columnists Frank Fantini | Geoff Freeman Steve Karoul | Sara Rayme Contributing Editors Dave Bontempo | Rodric J. Hurdle-Bradford Emily Oliver | Dave Palermo | Marjorie Preston Renese Rhoden | Robert Rossiello Cameron Steinagel | Marco Valerio
EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises
• Mark A. Birtha, Vice President and General Manager, Fiesta Henderson Casino Hotel
• Julie Brinkerhoff-Jacobs, President, Lifescapes International
• Nicholas Casiello Jr., Shareholder, Fox Rothschild
• Jeffrey Compton, Publisher, CDC E-Reports
• Geoff Freeman, President & CEO, American Gaming Association
• Michael Johnson, Industry Vice President, Global Gaming Expo, Reed Exhibitions
• Dean Macomber, President, Macomber International, Inc.
• Stephen Martino, Director, Maryland Lottery and Gaming Control Agency
• Jim Rafferty, President, Rafferty & Associates
• Thomas Reilly, General Manager, ACSC Product Group Eastern Region Vice President, Bally Systems
• Steven M. Rittvo, President, The Innovation Group
• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University
• Ernie Stevens, Jr., Chairman, National Indian Gaming Association
• Roy Student, President, Applied Management Strategies
• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 921 American Pacific Dr, Suite 304, Henderson, NV 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 2014 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 921 American Pacific Dr, Suite 304, Henderson, NV 89014
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DATELINE TRIBAL march2014
Navajo NotioN Committee endorses New Mexico gambling compact
Navajo President Ben Shelly
avajo Nation leaders emphatically told members of the New Mexico Committee on Compacts they would not renegotiate an agreement that would allow the tribe to open three more gambling operations over 15 years. The compact had been worked out by tribal officials and Governor Susana Martinez’s representatives. The committee ultimately voted to forward the agreement to the House and Senate for their approval. The U.S. Department of the Interior also must approve the compact, which would run through 2037. Currently, the Navajos operate two Las Vegas-style casinos near Gallup and Albuquerque under a compact that will expire next year; a third casino offers low-stakes gambling and is not subject to state regulation. Navajo President Ben Shelly said he was concerned that requests from lawmakers for changes to the compact could prevent the legislature from voting on it in its 30-day session. He explained if a vote doesn’t happen until next year, the existing Navajo compact could expire before a new agreement is approved by the state and the U.S. Interior Department.
Shelly noted the “number of gaming facilities has been a very important position to the Navajo Nation.” He said the tribe has an unemployment rate of 50 percent, and although the tribe has no immediate plans for future casinos, additional ones would help create jobs. “It is the position of the Navajo Nation that the gaming compact, in its current form, is fair, reasonable, and will continue to provide great benefits to the Navajo Nation and the state of New Mexico,” Shelly said. Other tribes and pueblos oppose the proposed Navajo compact—in particular, the Laguna and Acoma pueblos, whose officials said a Navajo casino close to Albuquerque could hurt their gambling operations. Under their current compact, the Navajos, Mescalero, Jicarilla Apaches, Acoma and Pojoaques have no set limit on the number of casinos they can operate. Nine other tribes have different compacts with the state, approved in 2007, which allow them to operate two casinos each. New Mexico received about $71 million from tribal casinos last year, mainly from slots. Shelly urged other tribes to drop their opposition to the Navajo compact. He said disagreement among the tribes over gambling agreements “sends a wrong message to the federal government. I am asking all the tribes to stay united like we have done in the past.”
Supreme Disappointment Another year passes with no Carcieri ‘fix’ ast year when U.S. Senator Maria Cantwell of Washington took over the chairmanship of the Senate Committee on Indian Affairs from retiring Senator Daniel Akaka of Alaska, Indians were hopeful that their No. 1 cause, a legislative “fix” of the 2009 Supreme Court’s Carcieri v. Salazar decision, would be enacted. They were disappointed. Now Cantwell is set to leave her position as chairman of the committee and hand it over to anWashington Senator other senator. Maria Cantwell The controversial court decision, almost universally reviled by tribal leaders across the country, says that tribes recognized after the Indian Reorganization Act of 1934 cannot put land into trust. Upon taking the chairmanship of the committee, Cantwell began developing a strategy for bringing the “fix” to a vote, something that Akaka tried unsuccessfully to do before he retired. In February of last year she declared that the “fix” needed to pass to ensure economic security for tribes. Without legislative action, the court decision created two classes of tribes, she said. She made deals with many fellow senators and tribal leaders as she tried to bring the issue to a vote. Tribal leaders pressed her to adopt as her touchstone a bill that passed the Democratic House in 2010, just as it was getting ready to hand over power to the GOP. Since then, Republicans and a significant number of Democratic lawmakers have tied any support for a Carcieri fix to changing the process for putting land into trust, specifically for making it harder to put land off the reservation into trust for casinos. During 2013, Cantwell came up with a draft bill that included a higher threshold that tribes had to meet before getting an off-reservation casino. It also included a provision that virtually shut the Narragansetts out of the game forever. This is at odds with Cantwell’s earlier pledge not to create a two-class system of tribes.
Global Gaming Business MARCH 2014
End of thE Road Struggling California casino closes
he Santa Ysabel Casino in San Diego County’s isolated Backcountry gave up its seven-year battle last month and closed its doors. The tribe, which attempted unsuccessfully to declare bankruptcy after the county of San Diego refused to negotiate down what the tribe owed it for infrastructure and additional sheriff’s deputies, blamed the county for much of its troubles. Eventually the $50 million in debt proved too much for the tribe. Tribal Chairman Virgil Perez issued a statement that said, “We have always strived to meet all of our obligations and to serve as a responsible corporate partner in our community, as well as a valuable public resource to our members and the surrounding area.” The Great Recession, which began the same year (2007) that the casino opened with 349 slot machines, worked against the tribe, as did the out-of-the-way location. The catastrophic 2007 wildfires also hurt business.
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DATELINE EUROPE march2014
HigH Street CongeStion U.K. betting shops under fire
Skillful DeciSion Dutch court says poker not a game of chance
court in Amsterdam has ruled that the organizers of poker tournaments in the Netherlands are not guilty of breaking the nation’s gambling laws because the game is not strictly gambling as defined by Dutch law. The determination was made in a court battle that has raged since 2007 between the city’s police and a venue called Café de Viersprong Bussum, which regularly hosted small-stakes tournaments. In issuing its ruling, the court devoted extensive research to the level of skill involved in the game of poker, eventually agreeing with the defendants that the skill factor in poker was substantial enough for the game not to be considered gambling under current law. It’s the second time a Dutch court has found for skill over luck. A defendant also charged in connection with a tournament operation was found not guilty in 2010 on the same rationale. But Dutch lawyer Peter Plasman cautions that despite the similarity in the rulings, the law still affords no certainty. “It does not offer a precise definition of which games should be considered of chance and which ones should not,” he said. “There could be another judge, somewhere, ruling that poker is a game of chance.”
he Local Government Association of England and Wales says planning and licensing laws need to be changed to prevent betting shops from being “clustered” in commercial areas. In adding its voice to a growing chorus of concern by municipal governments over the proliferation of the venues across Britain, LGA spokesman Tony Page said, “Councils aren’t anti-bookies but need powers to tackle the damage that can be caused to high streets and town centers.” The LGA, which represents 370 councils, says local authorities have been “left powerless” to limit the number of shops opening in a given area. The LGA said the number of betting shops in some parts of London has doubled in the past decade, largely in response to the popularity of
electronic table games, which now generate the lion’s share of bookmakers’ revenues but are limited by law to four per shop. The controversial machines, known as fixed odds betting terminals, are considered by opponents to be a major cause of problem and addictive gambling, and calls for restrictions have reached all the way to Parliament. The Association of British Bookmakers says the number of shops has been relatively constant at 8,700 over the last decade and there has been “no proliferation.” But William Hill Chief Executive Ralph Topping recently conceded that a problem could exist that local councils should have greater powers to address. He said he is “against betting shop clustering on social grounds,” adding that while the venues “have always been part of the community,” political action is necessary “when the situation starts to alienate communities.”
Smaller Is Better
Existing Madrid casinos thrive even without EuroVegas
he two new casinos that have succeeded Las Vegas Sands’ abandoned EuroVegas project in Madrid say they’re holding their own despite the country’s challenging economic climate. Casino Gran Madrid, owned by Grupo Gran Madrid, and Casino Gran Via, owned by Grupo Comar, opened their doors just days after LVS announced in December that it will not pursue the $30 billion EuroVegas without a number of labor and financial and tax concessions and an exemption from a tough national anti-smoking law which the Spanish government refused to grant. “The arrival of a giant like EuroVegas meant that we had to do something and couldn’t just stand still,” said Pedro Olmedo Franco, a director of Casino Gran Madrid. Without it, he said, “we probably wouldn’t be here now.” Unlike some other Spanish cities, Madrid had a longstanding ban on any casino operating within an 18-mile radius of the city center. But it was effectively lifted when the city found itself competing against Barcelona to lure EuroVegas. Grupo Gran Madrid already had three casinos in Spain with combined revenues of €28 million. Grupo Comar has several casinos in Spain and the Dominican Republic which generated €110
Casino Gran Via
million last year. The former spent €20 million to open Gran Madrid, the latter €15 million for Gran Via. Neither operator said it could provide earnings details so close to their openings. Franco characterized Gran Madrid’s debut as “slightly weak” because of the Christmas season, while Javier García, general director of Grupo Comar, said he was “very satisfied” with Gran Vía and predicts it will turn a profit this year. The casino has recently averaged 1,500 visitors a day, each paying an entrance fee of €9 and required to bet a minimum of €2.5. García forecasted a profit for this year, without providing specifics. The global downturn plunged Spain into a banking crisis that required a massive international bailout. The economy emerged from a twoyear recession in the third quarter of last year but still faces serious challenges, including a 26 percent unemployment rate. The two casinos have made a modest contribution on that front.
MARCH 2014 www.ggbmagazine.com
DATELINE ASIA march2014
Sweet Home Korea Genting to build IR on Jeju island
he rejection of Caesars Entertainment as a casino developer last year has harmed South Korea in ways the officials never realized. In anticipation of a change in attitude, last month Malaysia’s Genting Singapore Plc, Southeast Asia’s largest casino operator by market value, announced it has partnered with Chinese property company Landing International Development Ltd. to develop a $2.2 billion property on Jeju island. The project will include luxury hotels, retail, a theme park, villas and condos, as well as gaming entertainment and other leisure and entertainment facilities. The project will encompass 230 hectares of land and will be a 50-50 joint venture between Genting and Landing. Determined to attract international investors to its tourism industry, the government of South Korea says it will ease the rules governing how casino
Casino Go Go Businesses line up behind casinos in Japan s Japan’s lawmakers move toward authorizing a multibillion-dollar casino industry, leaders from an array of Japanese businesses have begun angling for a piece of the action. Takeshi Niinami, head Takeshi Niinami, chief executive of convenof the convenience ience store giant Lawson Inc., and Singo Torii, exstore chain Lawson ecutive vice president of Suntory Holdings, the country’s third-largest brewer, are spearheading the formation of a group of private- and public-sector and nonprofit leaders to support legalization. Along with the 2020 Tokyo Olympics, allowing casino resorts in Japan “will provide a spark for not just tourism, but also for the revitalization of local economies in the countryside,” said Hiroshi Mizohata, a former head of the Japan Tourism Agency and a member of the group. “We want to get various stakeholders involved.” Mizohata told Bloomberg the group will work closely with lawmakers, make policy recommendations in collaboration with local governments and companies and advocate with the public. The group plans to recruit members from local governments, business lobbies and companies and academia, and will be financed by membership fees, Mizohata said. He said the group won’t accept funding from casino operators. The group has scheduled an initial meeting for early in February and plans to officially launch in May, which is about when observers expect the Diet, as the national legislature is called, to pass a bill creating a legal framework for casinos, effectively decriminalizing them. The bill is backed by the governing Liberal Democratic Party, with Prime Minister Shinzo Abe’s reported support, and will be followed by a second legislative package detailing regulations and taxes. This is expected to pass sometime in the first half of 2015, meaning the first casino should open in Tokyo prior to the Olympics. Analysts at Citi say they believe a request-for-proposal process could commence as early as this year. Observers believe four casinos will be authorized initially: one each for Tokyo and Osaka and two regional areas to be determined.
Global Gaming Business MARCH 2014
licenses are issued. Prospective foreign investors in casinos have been required to have credit ratings of higher than BBB, but that is set to change. “We will ease the restrictions,” said an official from the Ministry of Culture, Sports and Tourism. “Even if bidders cannot meet the conditions, they can be licensed in case they stand out in other areas like financial capacity.” Yang Zhihui, chairman of Landing, said the resort would target Chinese gamblers far away from the country’s preferred gambling destination, Macau. “Eastern and Northern China is very close to Jeju Island and it’s roughly about a one-hour flight, which makes so much more sense for people in Beijing, Shanghai or Qingdao to come to Jeju Island than going to Macau,” Yang said.
Star Sighting in Manila Nobu joins Melco’s City of Dreams
second. A joint venture between Belle elco Crown Entertainment has raised its planned investment in Corp., a subsidiary of Philippine retail giant SM, and a Philippine-listed subCity of Dreams Manila to US$680 sidiary of Melco, the resort is slated to million, and the figure could go open this summer with 1,680 slot mahigher as more major brands join as chines, 365 table games, three luxury partners. Speaking in Manila at a ceremony hotels and an array of dining, shopto announce that high-end hospitality ping and entertainment attractions, brand Nobu will be opening a hotel at including the largest nightclub in the city. Total cost is pegged at US$1.3 the resort, Melco Co-Chairman and billion. Chief Executive Lawrence Ho said of the company’s financial commitChef Nobuyuki “Nobu” Matsuhisa ment, “It keeps and Robert De Niro going up. Our most recent number is $680 million because PAGCOR will allow us more gaming tables, and we keep The 321-room Nobu will be the finding great brands.” PAGCOR, the Philippine Amuse- first hotel in Asia for the vaunted U.S. ment and Gaming Corporation, is the group, and the ceremony was attended by celebrity chef Nobuyuki “Nobu” government regulator sponsoring the Matsuhisa, the company’s namesake, site on Manila Bay where City of and his partner, Hollywood film star Dreams is under construction. Four Robert De Niro. The first U.S. Nobu gaming resorts have been licensed for hotel was opened at Caesars Palace in the site, known as Entertainment Las Vegas last year. Other Nobu hotels City. The first, Solaire Resort and are planned for London, Bahrain and Casino, opened last March. City of Dreams Manila will be the Riyadh, Saudi Arabia.
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DATELINE USA march2014
Vegas wrangles rodeo
o the relief of Las Vegas Events, an arm of the Las Vegas Convention & Visitors Authority, the highly profitable National Finals Rodeo will remain in Las Vegas through 2024. LVE came to terms last month with the Professional Rodeo Cowboys Association, the organization that runs the rodeo. Previously, the PRCA threatened to move to Orlando or Dallas, and even signed a memorandum of understanding with Osceola County, Florida, to relocate the rodeo there. The NFR has been a fixture of the Las Vegas event calendar for the past 29 years. The 10-day event is routinely described as the Super Bowl of rodeos. In 2013, it sold out the 17,500seat Thomas & Mack Center for 10 consecutive days and nights at the end of the year. The show generates some $90 million in non-gaming revenue to Las Vegas. The boards of both Las Vegas Events and the PRCA voted unanimously to accept the new deal, which will guarantee $16.5 million annually in purse and sponsorship for the NFR.
Final Words on Philly Presentations to the gaming board focus on revenue he Pennsylvania Gaming Control Board, in its final suitability hearings last month on the five applicants for the second casino license in Philadelphia, heard executives of the Market8 predicted its casino would generate the most revenue. various projects explain how they Philadelphia Park, in Bensalem. Mohegan Sun at would bring new revenue to the city, while representatives of the current casino in the Pocono Downs, Sands Bethlehem and Mount Airy Resort are all within a two-hour drive of the city. city, SugarHouse, testified that a second SugarHouse was granted the opportunity to tesPhiladelphia casino would only siphon revenues from the several casinos now in the Philadelphia tify at the hearings after a request to intervene in the process, on the basis that any new casino in the city region. will cannibalize the existing properties. Each applicant was given a chance to presNeil Bluhm, the principal owner of SugarHouse, ent a final pitch to convince board members that its project would be best for the city and the flew to Philadelphia from his Chicago headquarters for the hearing and was critical of the hearing for a state. Revenue estimates varied widely—the second license. largest was from Market8, which predicts $363 “I felt I had to come down and tell them that if million in annual revenues from slots in its first these numbers are right, they’re going to have a mess year; the lowest was 79 percent less than that, on their hands,” he said. with Philadelphia Live! in South Philadelphia Market8 says $100 million of its gaming revenue projecting $203 million in the first year. (Both would come at the expense of SugarHouse, which projects projected 2016 as the first year.) posted $265.6 million in gaming revenue last year. There are four current casinos in the imme“Anything near the numbers that the proponents diate Philadelphia area: SugarHouse, on the have used—and we’re using their numbers—would Delaware River waterfront in Fishtown; Harresult in our property not being worth its debt, and rah’s Philadelphia, just south of the city in Chester; Valley Forge Casino Resort, at the con- that would result in severe financial problems when we have to refinance the debt,” Bluhm said. vention center in King of Prussia; and Parx at
Global Gaming Business MARCH 2014
REVELATION Will Caesars buy yet another Atlantic City casino?
he tale of the sale of the struggling Revel casino hotel in Atlantic City is getting as murky as its existence as a gaming property on the Boardwalk. Just weeks after rumors surfaced about an interest from Hard Rock International in the property, Bloomberg reported that Caesars Entertainment is preparing to bid on the property. But like the Hard Rock rumors, there is no certainty that any offers will be forthcoming. Should Caesars make a bid, it may face a regulatory hurdle. For years, New Jersey regulators tried to prevent one company from dominating the market. While the previous regulation against owning more than two casinos was overturned several years ago, the Division of Gaming Enforcement still must examine the issue of market concentration with any sale, known as “undue economic concentration.” And since Caesars already controls 41 percent of the market with its ownership of four casinos— Caesars, Harrah’s, Bally’s and Showboat—adding Revel’s currently anemic 6.2 percent would push it close to half the market. There are no guidelines about what is considered market domination, but the DGE is required to look into it. Caesars has confirmed that the company is listening to offers for Bally’s and Showboat, but no official offers have been made on either property at this time. The company recently bought the Atlantic Club casino (the former Atlantic City Hilton) and closed it down to remove competition from the market. Some analysts believe that Caesars would close one of the other properties should it successfully bid for Revel. Others say the company could cut costs by consolidating Revel into its system. How Caesars would afford to buy Revel is also problematic. Caesars Entertainment is saddled with more than $20 billion in debt, but a spinoff, Caesars Acquisition Company (CAC), was formed to make deals such as this. CAC currently controls the Planet Hollywood in Las Vegas, the underconstruction Horseshoe Baltimore and Caesars Interactive, the company’s online gaming venture.
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DATELINE GLOBAL march2014
More The Merrier Queensland competition heats up Q
ueensland has received expressions of interest from eight development groups for the three new casino licenses the Australian state has put up for grabs. Acting State Development Minister Ian Walker said the groups have been issued the required documents as part of the first stage of a vetting process slated to conclude on March 31. The licenses authorize an integrated resort with gaming at the Queen’s Wharf redevelopment area in central Brisbane and two in outlying areas, mostly likely in and around Gold Coast, that are popular with tourists. “These parties will now need to clearly demonstrate they have experience in design, development and operation of large-scale integrated resort and entertainment projects, or will be part of a bona fide bidding team,” said Walker, who added that it was too early to say whether the parties would formally submit bids.
Doctor Is In Casinos the cure for ‘unexciting’ Bermuda ermuda officials say casinos will bring 43,000 new tourists a year, mainly from the eastern United States, to the vacation island. The estimate came from Tourism Minister Shawn Crockwell, who has launched a vigorous public campaign for legalization that will take him to six town hall-style meetings. “We have an opportunity to try and entice people to come to Bermuda instead of going to the Bahamas,” he told a packed house at the first of the meetings. “Right now people see Bermuda as an unexciting place— we need to change that,” he said. He said seven developers have expressed interest in an old Club Med site he described as ideal for a resort-scale casino. “We need to get some global brands to Bermuda—high-end brands—if we want to be competitive,” Crockwell said. “We believe that with the integrated resort model, that would be the closest to get hotel development, bring in a quality brand and revitalize tourism.”
Bermuda Tourism Minister Shawn Crockwell
A casino on that scale would generate $50 million its first year, increasing to $60 million by the third year, and would provide more than 1,100 construction jobs and employ another 900 once it’s up and running. He mentioned a tax rate on gaming revenue of 10 percent, bolstered by hotel and payroll taxes. The domestic population over 21 would be allowed to participate but will likely pay an entry fee similar to the system in place in Singapore, which Crockwell cited as a model for regulating and limiting local participation. In all, the government is seeking support for a maximum of three gaming licenses. “The financial data that we have received suggests that, based on the current tourism numbers that we have and the resident population—and it’s estimated that between 10 percent and 15 percent of the resident population will participate—we can sustain financially three casinos,” he said.
Global Gaming Business MARCH 2014
The Aquis is a proposed development on the Gold Coast.
Australia’s largest casino operators, Echo Entertainment Group and Crown Resorts, are expected to be out front in the running, and reports are that New Zealand-based rival SkyCity Entertainment Group will be among larger developers from outside the country joining the fray. The ranks of the latter include Hong Kong financier Tony Fung, who has proposed a $4 billion luxury resort and residential complex outside Cairns in the north of the state that will look to leverage the appeal of the Great Barrier Reef. Echo and Crown will mainly be vying for the Brisbane license. Echo operates the only casino in the capital city, the Treasury, located not far from Queen’s Wharf, and the company announced in November that it will invest A$1.5 billion to replace the aging venue and also remodel and expand its Jupiters Hotel and Casino in Gold Coast. The two also are competing in Sydney, where Crown won approval from the New South Wales government last year to develop a competing resort on Darling Harbour, where Echo’s Star will lose its casino monopoly in the state in 2019.
Online and Offline Web casino built in to Belize resort plan
rand Belize Entertainment Group plans to build a resort and spa on the Caribbean island with an online portal the company is designing to capitalize on the global internet gambling boom. “As one of only four licensed casinos to Belize, the launch of the online casino will attract gaming aficionados around the globe while promoting our world-class property in Belize, even before it opens,” said COO Michael Glauser. The company is partnering with Peak Gaming Group on the development, launch and management of the online casino, which is scheduled to go live in the second quarter. The land-based component is being developed by Blue Sky Advisory Group, which also will manage day-to-day operations. Plans call for 200 rooms and suites, a spa and pool, 40,000 square feet of duty-free retail shopping and 315,000 square feet of gaming space with approximately 700 slot machines and 20 to 25 table games. Mobile gaming will be available in certain private areas and in the restaurants and lounges. The property is slated to open next year.
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“They Shares of Macau’s casino concessionaires have been on a rough ride this month in the wake of a JP Morgan Chase report suggesting that valuations may have topped out given the current state of the market. In a note to investors, Hong Kong-based analyst Kenneth Fong said the market has already priced in a “significant growth” assumption from the resorts under development on Cotai, while labor shortages and gaming-table allocations may add risks. He expects the gaming revenue growth to slow to 17 percent this year. It grew almost 19 percent last year to surpass US$45 billion, a result that has been a factor in prompting analysts to factor in more aggressive growth assumptions than may be warranted, in Fong’s view. A lawmaker in Connecticut joined law enforcement officials to announce plans to shut down internet cafés in several communities, which he calls illegal gambling parlors. State Senator Danté Bartolomeo held a press conference outside the Meriden police headquarters to announce a crackdown on the parlors, which offer “phone card sweepstakes” that sell prepaid phone cards that can be used to play video slots on computers. Connecticut is the third state to go after the internet cafés. Laws have been passed in North Carolina and Ohio specifically outlawing such operations. Bars in Pennsylvania can now start applying for state licenses to offer pull-tab games, daily drawings and other forms of gambling approved by the legislature last year. The Pennsylvania Liquor Control Board started accepting applications last month, and some expect most bars in the state will eventually offer the limited form of gambling. The bill allowing small games of chance was signed into law by Governor Tom Corbett in November. Macau Legend Development Chairman David Chow said he intends to invest up to €230 million in a hotel with a casino and other attractions on one of the Cape Verde islands. Chow is Cape Verde’s honorary consul in Macau. Hong Kong-listed Macau Legend operates the Landmark Hotel in Macau, two
casinos in the territory and the outdoor Fisherman’s Wharf leisure complex. Visitor arrivals to Macau were up 3.6 percent in December to 2.6 million, according to official figures, boosting visitation for all of 2013 to 29.3 million, an increase of 4.4 percent over 2012. Mainland China, the largest source of visitation, grew 10.2 percent last year, with Guangdong province accounting for 45 percent. Mainland visitors traveling under the Individual Visit Scheme rose by 13 percent to 8 million. Visitation from Hong Kong and Taiwan, the next two largest feeder markets, declined 4.4 percent and 6.6 percent, respectively, to 6.7 million and 1 million. Foxwoods Resorts Casino in Connecticut will be eliminating 125 table game dealer positions, but hopes to do it this spring without involuntary layoffs by offering severance packages to volunteers, the casino informed its dealers union last week. The casino currently has about 1,800 dealers at its two casinos at Foxwoods and MGM Grand at Foxwoods. The casino blamed increased competition, a challenging economy and “suppressed gaming market” for the reduction. A survey by the Macau Gaming Industry Laborers Association has found that 43 percent of casino workers hide their gambling habit. The poll of 481 workers found that 59 percent gambled. A representative of the trade union said 7.4 percent are “hardcore secret gamblers.” A Las Vegas company is pushing for a change in Nevada gaming regulations that would allow the use of prepaid cards directly in slot machines. But advocates for problem gamblers worry that the plan would get casinos closer to direct access to a player’s bank account. While automated teller machines are allowed on casino floors, Nevada has never allowed players to put their ATM cards directly into a slot machine. Now Sightline Interactive has proposed a similar step—allowing the use of prepaid cards inserted directly into slot machines. The company argues that winners would not have to carry cash, making them less likely targets for robbery.
“Gambling exists in Kentucky—it’s just that waterways divide some of us from it.” —Kentucky state Rep. Larry Clark, sponsor of two bills to legalize casino gambling in the state, on the fact that casinos would capture money now going across the Ohio and Mississippi rivers into other states
“Cannibalization is the elephant in the room… I don’t believe that we have the capacity to open just another casino. We need something that’s more than a casino.” —Pennsylvania Gaming Control Board Commissioner Gregory J. Fajt, at final licensing hearings for the second Philadelphia casino, on concerns the local market is saturated
“Personally, I’ve never felt that there was much hope for legalization on the federal level given the lack of progress at getting anything done in Congress in recent years. Given the recent push by some for another prohibition bill, it may be back in debate, but not necessarily in a way that will foster regulation. Stay tuned, but don’t hold your breath.” —Sue Schneider, of the iGaming North America Conference to be held in March, to Yogonet.com on whether internet gaming will ever be legalized by Congress
“Thank God that what happens in Vegas stays in Vegas, or at least it used to before mini-Vegases starting popping up like pimples all over the country.” —Marc Munroe Dion, writing for the Herald News, opposing a proposed casino in Fall River, Massachusetts
“We believe the market is saturated. We think a second casino won’t grow the market much, and will be negative for all the existing casinos.”
March 19-21: ENADA Spring, Rimini Fiera, Rome. Produced by National Association SAPAR. For more information, visit enadaprimavera.it.
April 23-24: Andean Gaming and Entertainment Trade Show, Corferias International Business and Exhibition Center, Bogata, Columbia. Produced by FADJA. For more information, visit fadja.com.
March 19-20: Caribbean Gaming Show 2014, San Juan de Puerto Rico Convention Center. Produced by the CGS Group. For more information, visit caribbeangamingshow.com.
May 12-14: Indian Gaming ’14, San Diego Convention Center. Produced by the National Indian Gaming Association. For more information, visit indiangaming.org.
—Gregory Carlin, CEO of Philadelphia’s SugarHouse casino, which is trying to persuade the Pennsylvania Gaming Control Board that licensing a second Philadelphia casino will hurt the regional industry, in an interview with the Philadelphia Inquirer
May 20-22: G2E Asia, Cotai Expo Center, the Venetian Macao. Produced by Reed Exhibitions and the American Gaming Association. For more information, visit G2EAsia.com.
“You had Barack Obama here eight or 10 times. You had Mitt Romney here. That kind of said—‘Hey, Vegas is all right.’”
March 19-21: iGaming North America 2014, Planet Hollywood Resort & Casino, Las Vegas. Produced by the Innovation Group, BolaVerde Media, Lewis and Roca LLP and eGamingBrokerage.com. For more information, visit igamingnorthamerica.com.
June 23-25: Canadian Gaming Summit, Vancouver Convention Center, Vancouver, British Colombia. Produced by the Canadian Gaming Association. For more information, visit CanadianGamingSummit.com
—Billy Vassiliadis, Las Vegas Convention and Visitors Authority, on the appeal of Sin City to politicians as it bids to host the 2016 GOP convention
MARCH 2014 www.ggbmagazine.com
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Volatility Happens While investors have seen Macau’s stalwarts on a roller-coaster stock ride, the market’s fundamentals are solid
y, what a volatile ride for the two biggest American casino companies by market value, Las Vegas Sands and Wynn Resorts. LVS rose 75 percent last year and continued to go up into the new year, then plunged 9.2 percent in a couple of weeks. WYNN had an even steeper roller coast, up 81 percent last year and also hitting a new high in January, then plunging 11.1 percent before regaining its footing. One word explains both 2013’s magic run and 2014’s volatility: Macau. Investors simply got giddy in the final four months of last year as Macau gaming revenues continually beat estimates. Indeed, two other American-listed Macau operators soared even more: Melco Crown by 132 percent and MGM Resorts 103 percent, though MGM was helped mostly by a Las Vegas recovery and an improving balance sheet. So, assuming the January swoons were just a temporary light-headedness, the extraordinary increases of last year still beg the questions: How far can they run? When does the run stop? Are they setting up investors for a big fall? First, a couple old Wall Street bromides, each offering opposing advice: • You can’t go broke taking a profit. Any investor who enjoyed all or most of the run-up can sell today at a big profit and walk away safe from any future sell-off. • Stocks that run tend to continue running. Not only is it true that momentum holds until something happens to change it, but there are strong fundamentals in Macau that the analysts cited together almost like a Greek chorus. Among the factors: • Revenue growth in the mid-teens; • Development of adjacent Hengqin Island bringing tens of thousands of vacationers next door; • Opening of the big new ferry terminal this year, bringing in more gamblers; • The 2016 opening of a bridge connecting to Hong Kong and the Chinese mainland; and, • Little new capacity over the next two years. Not only did analysts raise targets, some dared look further into the future than the usual 12 14
Global Gaming Business MARCH 2014
By Frank Fantini
months to see even higher prices. Jon Oh of CLSA, for example, raised his target on WYNN to $235, but said the stock could reach $280 to $300 when its Cotai resort opens in two years. That wouldn’t be bad for a stock that just over a year ago was $107. So, what’s an investor to do? Stay away from stocks that have run so far so fast? Jump on the bandwagon and enjoy the momentum ride? Here’s where some more old Wall Street wisdom comes in. For current shareholders who’ve enjoyed big profits, an often-used formula is to sell part of a position, thus protecting the initial investment while staying in for the rest of the ride. Another approach is to look at the stock market as a leading indicator. Because investors are focused on what business will be like six or 12 months down the road, there can be some comfort in staying in, or buying now, figuring underlying business trends are supporting the stocks. However, that assumes one knows when those underlying trends will change, and that stocks aren’t priced so high that, to once more employ an old Wall Street saying, the good news is priced into the stock. Finally, here are two of our own observations: • Macau isn’t likely to quit booming for some time. That should continue to support growth in stock prices. A key will be to look at valuations—price to earnings, enterprise value to EBITDA, price-to-earnings growth. If they start getting ahead of the growth of the underlying business, or well beyond historic norms, that will be a signal to start easing back, or even out. On the other hand, really long-term investors have got to love the growth stories that LVS,
WYNN and MPEL represent, not to mention the commitment by Wynn and Las Vegas Sands to return signficant capital to shareholders.
Internet Gaming: Less than Meets the “i” By now, the less-than-stunning startup of internet gaming in Nevada, New Jersey and Delaware is well known. Likewise, there appears to be no rush of states to join the pioneers, at least not this year. As many know, we have long cautioned that iGaming would be an evolution, not a revolution, in the U.S., and that stocks that doubled and tripled in anticipation of online gaming are set up to disappoint.
Macau isn’t likely to quit booming for some time. That should continue to support growth in stock prices. A key will be to look at valuations— price to earnings, enterprise value to EBITDA, price-to-earnings growth.
Now, we expect interactive gaming to ramp up as more players register, player acquisition programs kick in, technology glitches are resolved, geolocation services improve and more banks and credit card companies agree to process transactions. And no doubt other states will legalize, and eventually iGaming will lead to some nice profits for operators and providers such as 888 and bwin.party. Our point: This is no gold rush, and investors looking at brick-and-mortar companies entering this space would serve themselves well with cautious expectations. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.
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ÂŠ 2014 GTECH. All rights reserved. All trademarks and logos noted herein are trademarks owned by, or licensed to GTECH Corporation.
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AMERICAN GAMING ASSOCIATION
Time to Deliver
This year, we begin to fulfill our promises to the industry. By Geoff Freeman, President & CEO, American Gaming Association
M We Speak Casino. R PM has been in the gaming business for nearly 20 years. During that time, we have helped create legendary brands, opened countless new properties all across the country, and we continue to contribute to the amazing growth of some of the industry’s premier casinos. Let us do the same for you. Call today for a free presentation 800.475.2000.
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Global Gaming Business MARCH 2014
y first six months as head of the American Gaming Association was a time to listen and evaluate. As I settled into my new role, I wrote several times in these pages about developing our future goals and what changes we could expect in the months ahead. What resulted was, in large part, a promise to take an aggressive new approach toward articulating the value that our industry has for customers, employees, communities and the economy. We are fortunate to start from a position of strength, based on the success of the AGA since its founding in 1996. Now it’s clear that we need to adapt in order to have the right organization for the future. Now, with the new year fully under way, I’m eager to share with you some of the ways the AGA is moving full speed ahead to deliver on that promise. These exciting new changes are significant first steps toward becoming an organization that is prepared for the new realities of the gaming industry. A keystone of this aggressive approach is growth—on many fronts: As an industry, we must work together to protect ourselves from harm and promote our agenda. With that in mind, we recently announced the addition of Wynn Resorts, Station Casinos and Churchill Downs Inc. as new AGA member companies. I believe this is merely the start of a growth in membership we’ll see in the coming years—and it’s a big step toward creating the unified front we’ll need as we expand. As we rise above past differences to champion the industry as a whole, growth in membership only makes us stronger. Growth isn’t limited to the boardrooms or Las Vegas. Here in Washington, we’ve made significant additions to the AGA staff, with talented and energized team members who—together with the powerful group already here—have the experience with gaming, trade associations and
on Capitol Hill that’s needed to emphasize our new, proactive, campaign-style approach to telling the positive story of gaming. From lobbying and outreach to research and onthe-ground activities, we now have even more support for where we need to go. Reaching our goals as we expand and play offense to advocate for the gaming industry won’t be easy, but we have the right group in place to help drive innovation and economic growth. Every industry has differences of opinion, and we’re fortunate to be in an industry that has far more to agree on than disagree on. Breaking the inaccurate stereotypes associated with gaming is one area in particular where AGA will focus its efforts. The best way to shift inaccurate perceptions is by shedding light on the everyday examples of our industry’s commitment to leading innovation, to educating our customers on responsible behaviors and to bettering the local communities where our businesses operate. This is the start to the type of broad-based advocacy that will propel our industry through this year and beyond. Lastly, our Global Gaming Expo events in Las Vegas and Macau have long been the premiere conferences in gaming; their success is a perfect example of the truly global nature of our industry. Not long ago, we announced a move to make G2E even larger, as we’ve partnered with Union Gaming to launch a conference event in Japan, should that country pass its recently submitted Integrated Resort Acceleration Legislation bill. If Japan moves forward with legalizing casino gaming, it is poised to be one of the world’s largest markets—and G2E will be at the forefront of that growth. There’s more work to be done, but I’m proud to say that 2014 is already becoming a year for delivering on our promises. I look forward to sharing even more of them with you moving forward. And as I’ve said before in these pages, we can’t do it alone, so I’m excited for you to join us as we continue to relentlessly champion the cause of gaming.
WE REINVENTED THE .
#aristocratslots BATMAN, SUPERMAN and all related characters and elements are trademarks of and ÂŠ DC Comics. (s14)
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MONEY Casinos try to cash in on their youngest demographic by Rodric J. Hurdle-Bradford
to 35. No, it’s not the score of a random football game from this past season; it is the age demographic that domestic casino operators are constantly trying to attract to their properties, from California to Connecticut and everywhere in between. Despite these efforts, this “millennial” demographic has yet to take up gaming consistently en masse, opting for nightlife, pool parties and other casino attractions and entertainment. Why is this? Have casinos been too slow to adopt digital and social communication methods to this generation? Are the nightclubs soaking up all of the disposable income from young adults? Are manufacturers not producing games to attract this demographic? Or is this just a natural trend among young people and casinos, regardless of the generation?
A Different Demographic The Great Recession. Social media. Casinos located in over half of the United States. The much-desired 21-to-35 age demographic has faced a distinct set of economic, communication and market variables completely different than any previous group of young Americans in our history. “This demographic has less disposable income and is often saddled with student loans, so gaming is not a priority because they do not have the time or money to be gaming customers,” says Mike Meczka, principal of Meczka Marketing Research and Consulting, a full-service market research company. “Casinos are trying to gain extra revenue by providing the nightclub atmosphere or 18
Global Gaming Business MARCH 2014
with pool events, but that is usually the extent of it. Often there just aren’t the programs there for the 21-to-35-year-old because of the limited disposable income.” According to Meczka’s research, over 90 percent of the U.S. population lives within an hour of a casino. This has brought unprecedented exposure to gaming for the youngest demographic. “Participating in a casino activity or heading to Atlantic City or Las Vegas for your 21st birthday has become a rite of passage, yet the casinos cannot obtain sustained activity due to the time and disposable income restraint,” says Meczka. Competing for the young demographic is a daily activity for Scott Kreeger, president and chief operating officer for Revel Entertainment, parent of the Revel Casino in Atlantic City. “Today’s younger clientele tend to look more toward socially interactive amenities, and they also maintain a slightly different schedule than the traditional gamer,” says Kreeger. “Modern casino design should effectively blend these nightlife and lounge amenities into the more traditional gaming areas, thus transitioning the overall casino environment into a more contemporary experience.” It is a strategy Kreeger has implemented with great success at Revel. “We have done an outstanding job of implementing and blending the overall experience into an environment that all players feel comfortable in,” he says. “The net result is that young players feel that the gaming experience matches the energy and excitement that they seek in the nightclub and restaurant scene.” Through these strategies, Revel Casino has won the battle that many experts feel is at the center of the group’s lack of gaming—a general disinterest in casino play. “This age demographic is never interested much in casino play, and these young adults are especially not interested in slot machines,” says Randy Fine,
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“At Revel we work to stay on top of trends and join the social conversation. This allows us to interact with our younger guests in a more relevant and timely manner.” —Scott Kreeger, President and COO, Revel Entertainment
principal of The Fine Point Group, a consulting and management company renowned for its expertise in casino operations. “Casinos recognize that young people are not interested, so they build a nightclub to solve the problem, which can generate a great amount of revenue but may not automatically translate into gaming.”
Communication Breakdown The most obvious reason that nightclubs and lounges have outpaced their casino counterparts in attracting the younger demographic is their use of social media to project an image of a product that is constantly evolving with new entertainment, food and beverage options and promotions. The “mega” nightclubs and “ultra” lounges in Atlantic City and Las Vegas can rely on the most popular DJs in the world to help lead their social media efforts, but they also use the communication vehicles to broadcast bottle specials, special promotional events, celebrity appearances and pool parties—all which change on a daily basis. This evolving entertainment schedule has more cachet with a younger generation than the stagnant slot machines or a slow-paced keno or bingo game. It is apparent to all parties that the traditional communication vehicles of direct mail and newspaper and radio advertising are extremely outdated for the young demographic. A benefit of the new social media platforms is that casinos can now reach their audience on a 24/7 schedule, instead of hoping that they see or hear a random advertisement. The younger demographic does not mind receiving information after standard business hours, late-night or even overnight so they can review it when they wake up in the morning. “The youthful customer is embedded in the digital age and seeks deeply connected and interactive content via ever-changing social channels,” says
Kreeger. “At Revel we work to stay on top of trends and join the social conversation. This allows us to interact with our younger guests in a more relevant and timely manner.”
Game On So what games are attracting the younger demographic? Table games are drawing younger patrons because of their element of social interaction, which is surprising to some experts, but not to others. “They like poker because they are playing against other people and craps because of the social interaction and fun with strangers,” says Fine. “They are not getting their needs satisfied with a solitary slot machine.” Once again, Kreeger and Revel have embraced this opportunity with proactive strategies to maximize both the property’s bottom line and the improvement of the experience for guests. “We find that table game offerings satisfy the interactive and social nature of this group, so we have strategically integrated our pits to be part of the club experience,” says Kreeger. “All of these factors blend well together to create a very high-energy experience. We actually have table games offered in the front of each nightclub venue that integrate bar experiences such as the entrance to Royal Jelly burlesque nightclub. “In keeping with this strategy, we take a more social and modern approach to our high-end table areas by encouraging public integration of open bars and seating areas with our high-limit rooms. This creates a youthful and energetic experience that even our traditional gamers find attractive.” Outside of the traditional games found at casinos, many experts believe that the introduction and expansion of online gaming is the missing product that will MARCH 2014 www.ggbmagazine.com
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“We offer a lot of value for players age 21 to 35, who do not have a lot of money in their pocket and who have not come close to reaching their earning potential.” —Jay Kornegay, VP of Race and Sports Operations, LVH capture the young demographic and convert them into valuable players for the rest of their active adult lives. “There is a need to create online games that are similar to the popular video game products the younger players have grown up with,” says Fine. “Imagine what would happen if you had Angry Birds, Grand Theft Auto, John Madden football or Candy Crush available for online gaming for money.” Fine says to further engage the younger players to slot machines or eventually online gaming, the actual play needs to be more like the play that occurs in the bonus rounds. “This generation is not interested in watching the spinning slot machine reels for entertainment,” says Fine. “Slot machine developers and gaming companies know the math behind the reel-spinning, and now they need to find a math model for video gaming. It is hard to solve, but it will help them attract a new generation of players.”
Need for Nightlife The overtures by casinos to the younger demographics of nightclubs has been the great equalizer to their lack of spending on the casino floor. This trend began a little over a decade ago in Las Vegas, and has spread to the Atlantic City, Southern California, Lake Tahoe, Reno, Phoenix and New Orleans markets, along with other cities. “Nightclubs and the DJ programming of the nightclub are a central attraction,” says Kreeger. “We provide packages which combine hotel stays with nightclub specials and concert tickets. These are the types of combined experience the younger customer is seeking because it fits in well with their seenand-be-seen desires.” These desires have added huge profit margins to the casinos’ bottom line, and an even newer revenue stream, “day life” (also known as pool parties), have proven an even more profitable venture than many nightclubs. “The daytime experience is a great complement to the lineup of worldclass DJs and entertainment,” says Kreeger. “As we transition young resort guests into gaming customers, it is important to create loyalty programs which provide benefits based on their slight shifts in purchasing habits. Your incentives need to match customer preferences, which are definitely changing.” Nightclubs have become the third tier of major revenue for many casinos, joining gaming and hotels. However, Fine is quick to point out, “Other cities do not have an option for Las Vegas-style nightlife, so they have to be more creative with their local entertainment programming to attract the 21-to-35year-old demographic.” 20
Global Gaming Business MARCH 2014
Sports Book on a Budget With the Great Recession delaying financial stability for the majority within this younger demographic, identifying the best places within the casino to make their money last longer has an entirely new meaning in added value. “We offer a lot of value for players age 21 to 35, who do not have a lot of money in their pocket and who have not come close to reaching their earning potential,” says Jay Kornegay, vice president of race and sports operations at LVH (formerly the Las Vegas Hilton), which is widely regarded as the best sports book in the country. “A $10 bet that can entertain the younger players for three hours is a very attractive situation. There are certain things we try to do to accommodate that age group, from the food items we offer on the menu to the proposition bets we offer on games, to the games we show on television.”
Growing Old with Gaming? The biggest question yet to be answered regarding the youngest demographic is if they will transition to the traditional games of slot machines, keno and bingo once they grow older like previous generations. With unprecedented exposure to casinos at a young age due to the expansion of properties across the United States and the popular nightclubs, most experts agree that their casino experience will come full-circle to the traditional games during the second half of their lives. “The reality is that the casino will take the 55-year-old over the 35-year-old every single time because they have both time and disposable income,” says Meczka. “It doesn’t matter what market you are in. The people age 21 to 35 now will go back to casinos as they get older; they will just have a different experience.” Fine has a different view. “By the time this age group is 65 years old in at least 30 years from now, the world could be a dramatically different place,” says Fine. “How it changes could definitely affect their playing habits.” In case this generation doesn’t come full circle and future generations of young players follow their lead, Kreeger is determined that Revel Casino be on the forefront of adjusting programming, personnel and promotions to create loyal lifelong customers. “The key to integrating the next generation of casino customers is to adapt your strategy towards their habits and preferences instead of exposing them to traditional gaming promotions, which are less relevant to them,” says Kreeger. “We try to cater to these changing preferences by offering a full complement of amenities that allow for a variety of experiences through a typical stay. So far it is working for us, and we are sticking to it.”
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American Gaming Systems CEO Bob Miodunski and incoming CEO David Lopez
Global Gaming Business MARCH 2014
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READY TO LAUNCH New leadership, a solid game platform and new financial muscle put American Gaming Systems in position to spread its wings in the slot market by Frank Legato
very discussion of the crowded slot sector these days tends to speculate which of the many small companies swelling the ranks of manufacturers stand the best chance to break free from the pack. For the past few years, those discussions have invariably pointed to American Gaming Systems, a private company that until December was owned by San Francisco middlemarket equity firm Alpine Investors. The reason AGS has raised eyebrows in the sector has revolved around one executive—Bob Miodunski. In 2010, Alpine hired Miodunski, the former chief executive of Alliance Gaming (now Bally Technologies), to take AGS to the next level. Alpine chief Graham Weaver lured Miodunski out of retirement to execute a vision he had of AGS expanding beyond its status as a Class II supplier with a core base of installed games in Oklahoma. Three and a half years later, Miodunski is heading back into retirement after handing off a very different company to new CEO David Lopez, the former Global Cash Access CEO and longtime Shuffle Master executive. In the interim, the former Bally chief has transformed AGS from what was a respectable Class II supplier to a company many see as a slot-maker poised to capture serious market share in commercial Class III jurisdictions. Lopez inherits a company with a solid game platform, a new Las Vegas headquarters, and an executive staff replete with seasoned gaming veterans, well on its way to capturing new markets as it continues to se-
cure new licenses across the U.S. “The strengths of AGS are a good product pipeline, a solid platform for slot development, and a lot of white space in front of us for regulatory approvals,” says Lopez, who spoke with GGB only days after taking over as president and CEO last month. “We’re on the upswing of the licensing curve now, so that’s a huge positive. But most of all, it always comes down to people. With the right team here, we’ve got a great foundation for growth.”
Team-Builder The strength of the AGS team is one of the primary achievements of Miodunski, who started loading the company with gaming veterans—some who were old Bally colleagues—from practically his first day as CEO in 2010. The company presented to Miodunski that year posed a challenge not unlike that he faced at Bally, struggling early in his tenure but turned around through timely acquisitions such as Sierra Design Group, which provided the slot platform that was to become Alpha—a new basis for products that would reverse that company’s fortunes. In 2008, AGS had acquired Torontobased Gametronics, which also happened to have a strong gaming platform Miodunski thought could be the basis for expansion not only into Class III, but into another new market that had cropped up in 2009—Illinois VLTs, with thousands of potential sales. To allow AGS to take advantage of these opportunities, Miodunski began building what is one of the enviable management teams of the slot sector. “We basically had to put together a management team and an organizational structure that worked in a regulated world,” he recalls. “We didn’t really have a management MARCH 2014 www.ggbmagazine.com
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Vancura created a credo he called “Honor the Player” in offering player-friendly features such as equally weighted bonus wheels and multiple bonus features, first appearing in the hit game “Blackbeard’s Treasure,” the first premium release from the newly rebranded Roadrunner series. Dr. Olaf Vancura, VP of Game Development
team—it was me, Vic Gallo (now general counsel) in compliance, and (former Oklahoma GM) Norm LeDoux running operations. That was the management team.” To ramp up the move into commercial gaming jurisdictions, Miodunski brought in Paul Lofgren, who was his executive VP of new business development at Bally, to serve the same role at AGS. To develop the new slot platform into successful games, he brought in one of the most respected game designers in the business, Dr. Olaf Vancura. Over the ensuing three years, Miodunski continued to load the AGS management team with seasoned veterans, from former Station Casinos and SkyWire vice president Curt Mayer as CFO to Ken Bossingham, the longtime Atronic and Spielo executive hired in January 2013 as chief operating officer. Miodunski still marvels at the team he was able to assemble at AGS. “For a management team of a company that size, finding individuals with more than 125 years of combined gaming experience was pretty amazing,” he says. Coinciding with building the team was building the product to move beyond the Class II world that was the AGS comfort zone. Vancura, who is vice president of game development, had been the head game designer for the former Mikohn Gaming, where he was responsible for some of the most memorable slot games in history—“Ripley’s Believe It Or Not!,” the original “Battleship!,” “Clue” and others. His first task at AGS was to transform the former Gametronics slot platform into an operating system flexible enough to handle everything from Illinois VLTs to premium casino slot games. “Olaf Vancura headed the team in Toronto, did some restructuring, and created a gaming platform that’s second to none in terms of capability for both Class II and Class III,” Miodunski says. The perfected platform would be dubbed Roadrunner, and Vancura wasted no time using it to develop games for all of the company’s emerging markets. For Illinois, the company bought rights to the Cherry Master brand, which had been prevalent in “grey area” amusement games in Illinois bars in the past, and used Roadrunner to create new versions of the familiar games. To date, AGS has sold around 1,000 games in that market, and the number is still rising. For the move to Class III casinos, Vancura called upon some of the philosophies he had employed at Mikohn, not least of which was injecting an element of general knowledge into the bonuses in slot games. Additionally, Vancura created a credo he called “Honor the Player” in of24
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fering player-friendly features such as equally weighted bonus wheels and multiple bonus features, first appearing in the hit game “Blackbeard’s Treasure,” the first premium release from the newly rebranded Roadrunner series. Knowledge-based bonuses would come next, in a series now called “It Pays to Know,” kicking off with a new version of “Ripley’s Believe It or Not!” and to continue soon with “Family Feud” and “Are You Smarter Than A Fifth Grader?” All of the games include knowledge-based, multiple-choice trivia-quiz bonus events that pay the most if players get the right answer the first time. Vancura also used Roadrunner to maintain the company’s core Class II business. “Olaf and his team developed some patents around the Roadrunner platform, and patents around its ability to develop games in Class III and port them to Class II,” says Miodunski. “He then actually started to put together some commercial activity in terms of getting that platform approved in all the commercial jurisdictions.” The approval process for AGS is ongoing, but the effort—begun by Lofgren and continuing under Bossingham—is definitely in the home stretch as far as U.S. markets are concerned. With Roadrunner already approved in GLI jurisdictions, the company recently secured Nevada licensing, and at press time was in field trials in Mississippi and preparing to enter the market in New Jersey. Regulatory approvals have passed the halfway point in the 37 North American gaming jurisdictions. “Once we get all those commercial jurisdictions lined up, we can focus on our product development pipeline, and put them out in all the jurisdictions where we’re approved,” Miodunski says. “We have a continuing focus on Class II. We have a commitment to Native Americans that goes back to the early 2000s; that’s very important to our business. Virtually every product we develop, except for pokers, we develop both in Class II and Class III—including even our premium products like Ripley’s. We’ll be releasing our Ripley’s Class II version in a few months, followed by Family Feud and Fifth Grader.”
Launching Pad Despite all Miodunski has done to position AGS for future growth, he says he never anticipated being the company’s long-term chief executive. “I had never even thought about how long this venture would last, but certainly, three and a half years was probably longer than I envisioned it,” he says. “Time has just flown by; what we’ve done in three and a half years is just
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“My roots are with a company where we focused on games for gamblers. When I was in that system, that’s how that company won. We put a lot of ‘Ws’ on the board by focusing on games made for gamblers. And I think that space is open today.” —David Lopez, Incoming CEO incredible.” Last spring, Miodunski says, he advised the executives at Alpine Investors that he intended to retire soon. As it happens, he was already putting things in motion that would carry the company into the future, beginning with the hiring of Bossingham as COO a year ago. “Ken was a great addition,” Miodunski says. “His experience in sales and market management, as well as operations and game development, really added a depth to our team we didn’t have. He took up a lot of the responsibility I had on a day-to-day basis, and allowed me to focus on more strategic matters.” One of those matters was the sale of AGS, which had been the largest entity in a relatively small fund with Alpine. “The moon and stars were aligned, and it was the right time to put the company up for sale,” says Miodunski. That effort ended in December with the acquisition of AGS by affiliates of Apollo Global Management, LLC, the massive private equity firm that also owns Caesars Entertainment. Several weeks after that deal was closed came the announcement that Miodunski would in fact retire (again), as the company named Lopez the new chief executive. “I’m delighted to have a guy like David Lopez come on board,” says Miodunski. “I was blessed when I retired from Bally to have a guy like (current chairman) Dick Haddrill come in and take the reins, and I feel the same way with David 26
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Lopez coming to AGS. “He brings a lot to the party, particularly his product management background at Shuffle Master. I think he’s going to bring a lot to the table in addition to just his skill as CEO.” Lopez was in product management for most of his 14 years at the former Shuffle Master, serving as VP of product management, executive vice president, chief operating officer and interim CEO before being named CEO of Global Cash Access, the leading supplier of ATMs to the gaming industry. “Bob’s got the company poised for growth,” says Lopez, “and that’s what I found attractive about AGS.” He says the fact of Apollo’s acquisition broadens the paths that growth may take, from organic growth to partnerships and mergers with third-party suppliers, tuck-in acquisitions and other possibilities. “Apollo is in it to win it,” Lopez says. “They’re in the supply space because they’ve seen opportunity with AGS, and there’s potential opportunity to grow AGS not just organically but through other means. (The Apollo acquisition) puts
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“The challenge in this space is the ability of a new manufacturer to open up new markets... As the business moves forward, we’re going to continue to open up additional opportunities.” —Ken Bossingham, COO
us, AGS, in a position to expand our product offering through a number of different channels, and I think that’s a huge advantage for the company at this point.” “Those M&A opportunities are wide open,” adds Bossingham. “If the business case is there and supports us adding companies into our portfolio, we’re now in position to do that.” “I couldn’t be happier with the progress we’ve made here at AGS,” says Miodunski, who remains with AGS as Lopez goes through jurisdictional regulatory approvals, “and now, having Apollo as a sponsor really paves the runway for us to do some exciting things.”
Product Pipeline While the future of AGS is that much brighter with the backing of its new parent company, first things first: one of the immediate challenges is to broaden the markets for AGS products—that “white space” Lopez mentioned. Bossingham says the next 18 months will be focused on completing AGS licensing in all U.S. jurisdictions, to be followed closely by Canadian markets. “The challenge in this space is the ability of a new manufacturer to open up new markets,” says Bossingham. “We expect by the end of the year we’ll be able to sell into half of the North American addressable market. We expect to achieve all the final licensing required for Nevada, Mississippi and New Jersey, then we’ve got other jurisdictions that are going to follow. As the business moves forward, we’re going to continue to open up additional opportunities.” Simultaneously, product development efforts will concentrate on feeding a continuous stream of games into that ever-growing pipeline. “I’m a product guy; I’m going to focus on product,” says Lopez. “There’s a place for technology and innovation, and I know that’s what the world is focused on. Obviously, we’re going to use technology and innovation, but our No. 1 focus will be on games, on product, on content, and on delivering a unique gambling experience to the casino patrons.” He says one key to keeping those games coming is to augment Vancura’s team with outside providers. “The key is to just broaden the pipeline,” Lopez says. “We’ve got a good team here, we’ve got a good game studio, and we’ve got some excellent partnerships with third parties. I think the key is to deliver the goods that they’ve created to the industry, so we keep our relationships with our existing third-party providers, and as needed, we’ll expand those relationships with third-party content houses and establish relationships with new ones.” “It’s exciting how much we’re thinking about and talking about product at AGS,” says Andrew Burke, the company’s senior director of product management. “That’s where Bob got us to. We had a lot of heavy lifting, but now, we actually have products, and we have good products—a lot of really good prod28
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uct internally and really good products from our third-party providers, and we’re delivering really good value to our customers.” “We’re very young in our product development cycle,” says Bossingham, “so for us, getting out a new box with a full line of content has been very exciting. We have our internal game design, but we’ve also gone outside with third-party development houses. We’ve engaged four third-party development groups to help us really supplement the product line we’re able to offer—the product roadmap on Roadrunner. “We expect that creates a good competitive set between game development studios, and may the best studio win. That’s going to allow all of those studios to learn from each other and also ensure we put out the best possible content for our players.”
Gambler’s Games Lopez says the coming months will be dedicated to broadening that AGS product pipeline. “I think I’ve got diverse experience, which will come in handy as we look to grow the company, if we choose to go global, if we choose to expand the product line,” he says. “I grew up as a product manager at Shuffle Master, so I’m a product guy. And from my perspective, I look at AGS and I really see an opportunity for us to capitalize on a niche within the slot business.” That niche: serving the gambler. Lopez says games designed specifically for gamblers constitute an area of opportunity for smaller companies like AGS. “I really think we have an opportunity to deliver what I call ‘gambler’s games’ to the industry,” he says, “because I think there’s a good, heavy dose right now in entertainment games. I’m not saying we won’t be involved in entertainment games. We’re going to use licensed titles; we’re going to have a nice selection of games. But I believe where we can carve a space out for ourselves is games for gamblers. “My roots are with a company where we focused on games for gamblers. When I was in that system, that’s how that company won. We put a lot of W‘s on the board by focusing on games made for gamblers. And I think that space is open today. I’m not saying nobody’s occupying it; there are a couple of folks out there doing a good job. But I believe there’s a space for AGS to carve ourselves out a nice little position on the floor to provide those types of games.” He adds that this philosophy can fit into any game, even those with entertainment brands. “It does come down to a style of game play instead of the actual licensed brand or even your own brand,” he says. “The style of the game is what we want to focus on, rather than the title.” Meanwhile, as Bossingham’s team continues to oversee the jurisdictional ex-
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pansion of AGS, initial feedback from the field on Vancura’s first entries in the premium category has been universally positive. Ripley’s Believe It Or Not!, in particular, has hit the ground running. “It’s still early in the rollout cycle, but it seems Ripley’s is off to a fantastic start,” says Burke. “We have about 40 units installed in five or six markets now, and the numbers are the strongest we’ve seen from our internal Roadrunner product. You’re seeing numbers that are two times, three times house average, and we feel that’s going to have a lot of momentum over the next few months.” As more products roll out, and as AGS achieves licensing in more jurisdictions, Lopez says feedback from the field will be poured back into game development to improve the overall product. “No. 1, the players vote with their money,” he says. “They vote with their entertainment dollars. And No. 2, our customers vote with their op-ex or their cap-ex, if you will; they’ll install more of our product.” Bossingham adds that feedback, and result-based research, is vital going forward. “Any organization that builds really strong product has very good analytics in place so they can understand why things work or don’t work,” he says, “and learn from those experiences to guide the future of product development efforts.” The effort to garner feedback from operators includes on-site interaction with customers. “Ken has mandated that those of us at the director level who work with him go out and observe installs,” says Burke. “We’re on site with the customers at 5 or 6 o’clock in the morning, and we’re with them all day, as they watch us install product. “It’s been a very eye-opening experience for all of us who have done it—a great bonding experience with our customers, too, as we watch something we previously had been not hands-on with. You hear about installs, and see them over the email chain, but Ken has had us out in the field with the customers watching and observing, and seeing if there’s opportunity to improve. That’s been a great experience for us internally.”
Developing the Brand As all of these factors come together to develop the AGS style and proprietary brand of slot machine, the team’s principles of game design are being applied to all products in the company’s growing market base—including that Class II market with which the company began. “Oklahoma is our core gaming market,” says Bossingham. “We’ve got a large gaming operational base there, and we continue to work really hard at optimizing the performance and yield of that install base. Our second key business is in Illinois, where we were one of the first entrants into that route market. We have done very well there, and can expect that market to continue to grow for us.” The company’s third market is potentially the largest, and it is developing quickly. “The single largest growth opportunity is our national markets, and that’s where we continue to get licenses,” Bossingham says. “We’re focusing on those markets with our premium products—Ripley’s, Blackbeard’s Treasure, Fifth Grader—and we feel with the national accounts, this 30
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“We had a lot of heavy lifting, but now, we actually have products, and we have good products—a lot of really good product internally and really good products from our third-party providers, and we’re delivering really good value to our customers.” —Andrew Burke, Senior Director of Product Management
is our first opportunity to really build our résumé. We want to make sure we maximize and optimize the first customer experience that each one of our national customers has with us. That’s why we’re pushing our premium product forward first. We feel that gives us the best opportunity to perform well. “We want people to look at AGS and know the experience is going to be a positive one when we touch that customer.” “We have so much opportunity in front of us with the domestic gaming space,” adds Burke. “When you think about the potential that markets like Nevada, Mississippi and Louisiana have for us to grow this business, as a team, we’re all heads-down focused on how we win in these new jurisdictions.” “We’ve really put forward a very formidable plan as far as what we’re tackling,” says Bossingham, “and what we’re doing is methodically trying to pull each one of these markets across the finish line. “Right now, we’re just trying to hit a single. As we tackle each one of these markets and get an approval in Nevada, these are very large events for our company—here’s a little Class II company that grew up in Oklahoma, and now we’re in the major leagues.” For AGS, the time in the majors is just beginning. “This is certainly a company poised for growth,” says Miodunski. “Having the Apollo financial strength behind us really gives us opportunities we haven’t had in the past, and that is really exciting. The team will continue to get stronger and better, the products will continue to get better, and I think this is a company that is going continue to grow, is going to be solid on the Class II side and on the Class III side, and is going to be a real niche player in the near future.” “We don’t have to be perceived as we stand today in the same lights as maybe you would look at the big four,” says Bossingham, “but I would like to think that in 10 years we’re considered to be a key innovator. We’re definitely as good as anybody in the space when it comes to developing product players like to play. “I would like to think that we have singled our company out so that we are not exactly like some of the larger companies—that the customer base looks at our company as a fun, exciting company that really focuses on providing a world-class business experience.” Adds Lopez, “With the ownership of the company, with the experience we have on the team, and with the ability to expand the team’s experience in the space, I really think it’s up to us as far as performance goes. But if we’re willing to grow both organically and otherwise, the sky’s the limit.”
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The Las Vegas casino company has won hearts, minds and a coveted casino license in the Free State. By Marjorie Preston
hen MGM Resorts International won Maryland’s sixth and final casino license late last year, Chairman and CEO Jim Murren predicted the company’s planned $925 million resort would be “the most successful commercial (casino) resort in the United States outside of Las Vegas.” It’s a bold statement, but the odds may be with Murren. The project has a nearperfect location: at National Harbor, a 300-acre multi-use resort development on the banks of the Potomac River. It’s just south of Washington, D.C. and in clear sight of Virginia (which continues to shun casino gaming and shows no signs it will soon capitulate). With a direct drop-off from the Woodrow Wilson Bridge, and dedicated exits from three interstates including the Capital Beltway, National Harbor is already a destination. In 2012, 9 million tourists, conventioneers and locals patronized its restaurants, bars, shops, marina and entertainment events. 32
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HEAD OF THE CLASS Two consulting firms hired by the state gave MGM high marks in all categories: anticipated revenues, job creation, economic impact, ease of access, parking—the works. And on December 20, state lottery commissioners voted 5-2 in favor of the National Harbor project, bypassing Penn National Gaming, which proposed a casino at Rosecroft Raceway, and Greenwood Gaming, which planned a development in Fort Washington. Because the other locations were not nearly as accessible as MGM’s, both operators sweetened their bids with givebacks to Prince George’s County. Penn National promised to “give back 100 percent of profits” from its planned Hollywood casino to the community, underwriting the operating expenses for a new hospital and also funding a teacher’s pension. Some observers saw Penn’s generosity as part of a strategy to safeguard its other interests in the region, specifically the Hollywood Casino at Charles Town, West Virginia.
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“MGM has worked hard to be respectful of where this facility is going to be located, making sure it’s not garish, that it fits into the skyline and is consistent with the significance and importance of everything going on in the greater Washington, D.C. area.” —Stephen Martino Greenwood, which owns the Parx brand, offered to reduce its operator retention rate from the 38 percent allowed by the state to just 33 percent. It pledged $200 million up front for highway improvements around its planned development, but asked to recoup any costs exceeding $100 million from local grant monies. Those efforts were for naught. When the die was cast, it all came down to the numbers. The consultants averaged their figures, and “MGM was $56 million more than the Parx location and $160 million more than Penn National,” says Stephen Martino, director of the Maryland Lottery and Gaming Control Agency. “So yes, from a gaming perspective our consultants thought the location of the MGM facility was going to generate the most revenue for the state of Maryland.”
Director , Maryland Lottery and Gaming Control Agency
A WINNING HAND The winning development will include a casino with 3,600 slots, 140 table games and a poker room, plus a 300-room, “4.5 star” hotel, plus restaurants, high-end retail, 35,000 square feet of meeting space and an entertainment center. Stylistically, the casino will be a big departure from MGM’s Las Vegas home. With impressive views of the river, the nation’s capital and the obelisk of Alexandria, Virginia’s city hall, the resort will rise from a bluff on a stepped pedestal, “creating a sense of respectful monumentality,” according to MGM. Company officials say they took their design cues from Pierre Charles L’Enfant, who created the original 1791 plan for the layout of Washington, D.C. “MGM has worked hard to be respectful of where this facility is going to be located, making sure it’s not garish, that it fits into the skyline and is consistent
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with the significance and importance of everything going on in the greater Washington, D.C. area,” says Martino. “At the end of the day, it’s a casino, and no one is going to dispute that, but it’s being presented and marketed in my opinion in a respectful and classy manner.” Construction is expected to begin immediately, and the facility is set to open in July 2016. “Given our investment, given our brand, given our cross-marketing opportunity, given the location itself, clearly we can drive more revenue,” Murren said after the win.
CAPTIVE AUDIENCE Lorenzo Creighton, general manager of the project, couldn’t agree more. “It’s Resorts 101—location, location, location,” says the gaming industry veteran. Creighton worked for MGM in Las Vegas and Detroit, and returned to the company in 2012 with the express purpose of developing the East Coast market, and adding to a portfolio that includes Tunica, Biloxi and Detroit. National Harbor “is probably one of the best resort sites in the United States,” says Creighton. “Look at the population density. I-495 runs right by the property, and hundreds of thousands of cars pass by every day. You have three major airports in the region. All the superlatives about the location are true. But our proposal was also world-class.” Industry analyst Frank Fantini of Fantini Gaming Research says the development will have a captive audience—and an affluent one. “The Beltway delivers the entire Washington population to your doorstep—that’s 2.8 million residents in Northern Virginia and the Washington metro area who didn’t have a casino, and now will have one.” “Given there is no gaming in Virginia, you’ll have patronage from people there, and they’re probably going to market to parts even farther south,” says Martino. “There is pent-up demand” for the facility, says Creighton, especially among Virginians, who reportedly spend up to $2 billion per year at out-of-state casinos. Of course, the patron pool isn’t limited to the driving public. “MGM has a huge database in its players club program on the East Coast,” Creighton adds— all of whom can fly into Reagan National, Dulles International or BWI and use their reward points at National Harbor.
SPLITTING THE PIE The MGM development may siphon some business from Maryland’s other casinos—especially Maryland Live! at Arundel Mills Mall in Hanover, about 40 miles away. The Cordish-owned complex, located halfway between Baltimore and Washington, attracts about 25,000 people per day on a typical Saturday and saw a 49 percent jump in year-over-year gaming revenue in January, making it the state’s most successful gaming hall. The others are Hollywood Casino in Perryville, the Casino at Ocean Downs, and Rocky Gap Casino Resort, which 34
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opened last May. “No question this is going to take bite out of Maryland Live!—is it going to be 10 percent, 20 percent? We don’t know,” says Fantini. “But Maryland Live!’s business is more oriented to Maryland and Baltimore than D.C., and they’re not going to lose a great proportion of that business.” Even if MGM skims $94 million from Maryland Live!, as one consultant estimated, it would still be a $500 million-per-year business, says Fantini. “And $500 million for what amounts to a big locals casino is still a pretty good deal.” A greater rival for Maryland Live! is Caesars Entertainment’s Horseshoe Casino, set to open near the M&T Bank Stadium in Baltimore later this year. The $400 million Horseshoe, which is expected to tip Maryland into the billiondollar-a-year casino category, could take $130 million in gaming revenue from the Hanover facility. But sing no sad songs for David Cordish, who is already working to offset the impact of both Horseshoe and National Harbor. In December, the chairman of the Cordish Companies announced his plan to add a hotel and convention center in Hanover, plus an “intermodal transit hub” with 1,500 parking spaces, ridesharing programs and bus routes connecting to BWI Airport and local railway stations. The hotel alone will enable the casino to attract overnighters, who typically spend twice as much as day players. The plan would enable Maryland Live! to “maintain our competitive edge,” said Anne Arundel County Councilman Daryl Jones in December. “Time is of the essence. We have got to start moving.”
THE LION ROARS During a contentious year-long bidding war, MGM was consistently put forth as the favorite. Penn National and Greenwood groused about the outcome, which will force them to reevaluate their own investments in Prince George’s County. Eventually, however, the losing bidders chose not to challenge the commissioners’ decision. “No one here presumed that MGM was the frontrunner,” says Martino. “We set up a fair, thorough and transparent process so all the contenders had a fair shot. We were agnostic about who was coming in… I think the numbers speak for themselves, and clearly MGM has the ability to generate the most revenue.” With development costs for National Harbor in the billion-dollar range, how much must the operator generate each year to pay the bills and turn a profit? Not to worry, says Fantini. “The Baltimore-Washington metro area has 9.3 million people. Yes, you’re going to have casinos in suburban Baltimore and one in the city of Baltimore, so it’s not like MGM will have the market to themselves. But the fact is, they’ll have the best part to themselves and still be able to draw from other areas. “It’s going to be easy pickings” for Leo the Lion, Fantini says. “The consultants are projecting $660 million in revenue, but personally I think that estimate is way low. I think this is going to be $800 million or more.”
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Jackpot! Poarch Band finds success with Class II machines By Dave Palermo
ith three casinos in Alabama and two dog tracks and a card club in neighboring Florida, the Poarch Band of Creek Indians can boast of operating one of the country’s largest and most successful American Indian gambling enterprises. By most estimates, Poarch Creek was generating upwards of $300 million a year in gambling revenue before the December opening of a 20-story Wind Creek hotel and casino expansion in Wetumpka, Alabama. The tribe also operates Wind Creek casinos in Atmore and Montgomery. As is the case with many gambling tribes, Poarch Creek has used its casino revenue to build a strong tribal government and diversified economy consisting not only of tribal and commercial gambling, but agriculture and manufacturing. “Our motto is to be self-sufficient,” says James Martin, president and CEO of the Poarch Creek Indians Enterprise Development Authority. “We don’t believe gaming will go away. But we don’t want all our eggs in one basket. We want to use the windfall we are experiencing and diversify, so we have a stable foundation for future generations.” What is impressive about Poarch Creek is the fact the tribe has achieved success in a conservative, anti-gambling state that refuses to negotiate a federally mandated agreement that would allow the band to operate lucrative, casino-style
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slot machines. The Indian Gaming Regulatory Act (IGRA) of 1988 requires tribes seeking what are known as Class III machines and house-banked table games such as blackjack, roulette and craps to enter into tribal-state regulatory agreements, or compacts.
No Talks, Plenty of Action Alabama Governor Robert Bentley and his predecessors have refused to discuss such a partnership, which comes as no surprise in a Bible Belt state where alleged political corruption led to sweeping raids that by 2012 shut down most of Alabama’s non-Indian gambling operations. Lacking a tribal-state compact, Alabama’s only federally recognized Indian tribe has crafted its success with Class II bingo-style slot machines. Poarch Creek has 6,200 of them, making the tribe arguably the largest operator of Class II machines in Indian Country. “Poarch Creek is unique because we have been able to flourish economically in a conservative political environment that is not conducive to Class III gaming,” tribal Councilman Robert McGhee says. “A tribal-state compact simply has not been an option.”
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Lacking a tribal-state compact, Alabama’s only federally recognized Indian tribe has crafted its success with Class II bingo-style slot machines. Poarch Creek has 6,200 of them, making the tribe arguably the largest operator of Class II machines in Indian Country.
Poarch Creek, which consists of 3,082 citizens, was a pioneer in Indian gambling, opening a high-stakes bingo parlor in 1985, a year after the tribe was federally recognized and the very day 230 acres was placed in trust by the U.S. Department of the Interior as an initial reservation. Through the efforts of such visionary leaders as Calvin McGhee, Eddie Tullis and current Chairman Buford Rolin (see sidebar, page 40), Poarch Creek has established itself as a major economic force, with nearly 3,000 casino, nongaming and government employees. The tribe also is a significant political player, funneling hundreds of thousands of dollars annually to the state Republican and Democratic parties. “We realized early we need a good relationship with both the local communities and the politicians,” says Tullis, tribal chairman for 27 years. The dollars have proven valuable in warding off attacks from Alabama’s anti-Indian and anti-gambling elements. The late segregationist and populist Governor George Wallace assisted Poarch Creek in its bid for federal recognition. But the tribe has continually encountered local and state opposition to its status as a sovereign government. State Attorney General Luther Strange has filed a federal lawsuit contending Poarch Creek slot machines are illegal. And Escambia County Tax Assessor Jim
Hildreth, in a filing with the state Supreme Court, is seeking to assess and tax Poarch Band trust lands. Both cite Carcieri v. Salazar, a damaging 2009 U.S. Supreme Court decision which contends the Department of the Interior has no authority to place land in trust status for tribes not “under federal jurisdiction” with passage in 1934 of the Indian Reorganization Act. Poarch Creek, whose members are descendants of a Creek Indian nation that existed in the Southeast for generations, was not federally recognized until 1984.
Battle For a Compact Soon after Congress enacted IGRA, Alabama and Florida officials announced their refusal to negotiate Class III tribal-state compacts. So MARCH 2014 www.ggbmagazine.com
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“Right now we would give the state some money for a Class III compact. We have customers that would like Class III gaming. But we’re not willing to give up an awful lot because we’re making money hand-over-fist.” —Eddie Tullis, former Chairman, Poarch Band of Creek Indians of Alabama
Poarch Creek joined the Seminole Tribe of Florida in what became a landmark federal court case. The 11th Circuit Court of Appeals eventually ruled in 1994 that Indian governments could not sue states that refused to negotiate tribal-state compacts, upholding 11th Amendment immunity against lawsuits. But judges noted that IGRA allowed tribes to request compacts through Interior Department secretarial procedures. “We immediately hopped on an airplane, met with Interior and said, ‘We want secretarial procedures,’” recalls Poarch Creek attorney Teri Poust, a member of the band. Unfortunately, Interior had not yet established procedures to handle the requests. The application remained on hold for several years. “Finally it got to the point that the tribe was doing so well we really didn’t need to do it,” Poust said. Poarch Creek is aware tribes seeking compacts are often forced to share revenues and cede regulatory authority to the state, a sore spot for a band proud of its sovereignty and self-governance. “Right now we would give the state some money for a Class III compact. We have customers that would like Class III gaming,” Tullis said. “But we’re not willing to give up an awful lot because we’re making money hand-overfist.” Poarch Creek also realizes that should it continue to press for secretarial procedures, Carcieri would be a factor in potential litigation. “If Poarch Creek pursued secretarial procedures there would be a lawsuit, and Carcieri would be included in the argument,” Poust said. Carcieri and a related Supreme Court ruling in Salazar v. Patchek is also discouraging Poarch Creek from seeking to place most of 10,000 acres of fee land in federal trust, although land/trust applications have been filed with Interior.
Class II Debate Poarch Creek’s gambling revenue is difficult to verify because the band does not disclose its earnings. But slot manufacturers estimate Poarch Creek’s inventory of 6,200 Class II machines, in a non-competitive market, could generate $500 million or more a year. There are some 425 Indian casinos in 28 states, but only 12 are equipped exclusively with Class II machines, according to the 2013 Indian Gaming Industry Report and other sources. Manufacturers estimate of the 350,000 slot machines in Indian Country, 7 percent to 10 percent are Class II devices. Federal regulations classify bingo as a game played against other players, regardless of whether machines resemble house-banked Class III slots. The National Indian Gaming Commission (NIGC), the federal regulatory authority for tribal casinos, last year revised rules and regulations to make 38
Global Gaming Business MARCH 2014
Class II machines more profitable. The agency also announced a proposed “reinterpretation” of a 2008 NIGC rule that “one-touch” bingo machines were a facsimile of Class III machines requiring a tribal-state compact. The opinion was published last summer in the Federal Register by a tribal-friendly NIGC headed by outgoing chairwoman Tracie Stevens, a President Obama appointee. “Indian Country spent many years and buckets full of money beating back an attempt by the prior NIGC administration to have one-touch declared Class III gaming,” attorney Dean Luthey told attendees of last year’s Oklahoma Indian Gaming Association conference and trade show. More than a third of the 65,000 slot machines in Oklahoma are Class II devices. The state did not get a tribal-state compact until 2006 and has retained a loyal Class II customer base. Class II machines are also operated by the Lytton Band of Pomo Indians in California, Kickapoo Tribe in Texas, Miccosukee Indians in Florida, Ho Chunk Nation in Wisconsin and tribes in Nebraska, Montana and Kansas. Attorneys general in several states have rebelled against the NIGC ruling. Jacob Appelsmith, adviser to California Governor Jerry Brown, said the NIGC was “stretching the definition of bingo beyond all reasonable limits.” Strange said Poarch Creek devices are, for all intent and purposes, “the same kind of slot machine gambling one might find in Las Vegas or Atlantic City.” The NIGC twice rebuffed Strange efforts to shut down the Poarch Creek casinos as he did others throughout the state. “Since IGRA pre-empts Alabama’s laws, Poarch Band may operate bingo, as defined by IGRA, on its Indian lands,” NIGC Chairwoman Stevens said in a March 14, 2013 letter to Strange. But the NIGC has not yet signed off on the one-touch reinterpretation, which would likely result in state litigation. The issue is largely moot, however, as tribes have offered bingo machines operated by a single touch for several years without enforcement action by NIGC or federal authorities. The machines provide tribes with leverage in negotiating expiring tribal-state compacts. Technological advances in the devices, making them more attractive, entertaining and faster to play, are fueling an increase in Class II gambling. It’s been said that the best Class II machine can generate up to 70 percent of the revenue of a Class III device. “What we’ve done is closed the gap in terms of the quality of the product,” Brad Johnson, an executive with Multimedia Games, told OIGA conference attendees.
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Good Neighbors Poarch Creek relied on sage advice from indigenous neighbors
n the decades of struggling to achieve federal recognition and economic and social progress, the Poarch Band of Creek Indians often looked to other indigenous leaders for advice and Chief Calvin McGhee counsel. Eddie Tullis, Poarch Creek chairman from 1978 to 2005, lists the late Roger Jourdain of the Red Lake Band of Chippewa and Joe DeLaCruz, longtime president of the Quinault Nation, among those leaving behind a legacy of sovereignty and self-governance. But Chief Phillip Martin of the Mississippi Band of Choctaw Indians and James Billie, chairman of the Seminole Tribe of Florida, were particularly instrumental in assisting their Alabama neighbors on economic development and gambling issues. “The leadership of our tribe has always worked very closely with neighboring tribes,” says Poarch Creek Councilman Robert McGhee, whose grandfather Calvin McGhee was instrumental in the drive for federal recognition. “They shared information and knowledge.” Martin, who led the Choctaws for 48 years, was a pioneer in economic development on Indian lands long before gambling became an option. Martin died in 2010. Billie, re-elected as chairman in 2011 following his impeachment a decade earlier for alleged financial irregularities and sexual misconduct, in the 1980s led the Seminoles through a series of landmark legal challenges to its high-stakes bingo operations. “Phillip Martin was more involved in building a tribal economy than any other tribal leader,” Tullis says. “Phillip became a real friend and mentor to me. “As soon as we were recognized Phillip started making some of his staff available to us on an as-needed basis.” Martin also assisted tribal leaders in getting appointments to regional planning and economic development associations. “James (Billie) was my mentor as far as gaming was concerned,” Tullis says. “He’s quite a man.” As Martin utilized manufacturing and tourism to create jobs and pull the Choctaws out of generations of poverty—securing government contracts and offering tax incentives to corporate partners—so did Poarch Creek. Poarch Creek first purchased a 67-room Best Western motel and restaurant and later expanded its enterprises to include military subcontractor Muskogee Technology, Perdido River Farms and Magnolia Branch Wildlife Reserve. With passage of the Indian Gaming Regulatory Act of 1988, Martin turned Choctaw to gambling, tourism and hospitality. A similar evolution is taking place in Alabama. The Best Western today is the Muskogee Inn. And the tribe has expanded its portfolio with investments in Alabama and Florida hotels. “We copied them on their economic development,” says James Martin, president and CEO of the Poarch Creek Indians Enterprise Devel-
Global Gaming Business MARCH 2014
opment Authority. “Why reinvent the wheel? “We have been concentrating on the hospitality industry but we will go into other areas in the future,” he says, including commercial and tribal gambling ventures. Martin formed alliances with local, state and federal elected officials and Washington bureaucrats and policymakers. So did Poarch Creek. “He was very involved on the national level, particularly with the Indian Health Services in providing clinic and elderly care,” Poarch Creek attorney Terri Poust says of Tullis. “He also was very astute when it came to securing HUD housing and federal funding.” Relations became a bit strained when Martin contributed money to Alabama officials, ostensibly to keep Poarch Creek from securing a Class III compact. Alabama, and particularly Birmingham, is a major feeder market for Choctaw casinos. But Tullis said the band understood Martin’s motivation. “It didn’t have a profound impact on our relationship,” Tullis says. “We realized Chief Martin was doing something that was a political necessity for his tribe’s survival.” Meanwhile, Poarch Creek turned to the Seminole—which also struggled with state officials in securing a Class III compact—in learning how to grow a bingo-style gambling enterprise. Poarch Creek hired a Texas bingo operator and went into business the very day in 1985 its initial 230-acre reservation was placed in trust. Billie had sage words of advice on how to compete with other forms of Alabama gambling, including illegal slot machines, church bingo and country club poker games. “Billie kept telling me, ‘The secret is to advertise those big pots and people will come,’” Tullis says. They did. “We were blown away by how many people would travel to Atmore to play bingo,” says Tullis. “There was no other gambling in the state at that scale.” Mistakes were made. Human remains from Hickory Ground, sacred to the Muscogee (Creek) Nation forced in the 1800s to relocate to Oklahoma, were unearthed during construction of the Wetumpka hotel. Despite being reinterred and a memorial established, the incident ignited an ongoing feud. Tribal leaders are concerned about Poarch Creek citizens’ dependence on per capita payments, which AL.com reported to be $18,000 in 2013. And Tullis is discouraged at attorney and lobbying fees needed to ward off attacks on gambling and sovereignty. “I was chairman for 27 years and I never had an in-house attorney. I never engaged a lobbyist,” Tullis says. “Now we’ve got five or six inhouse attorneys and 20-something attorneys on retainer. We spend way, way too much money.” But Poust speaks with pride at the recent openings of a tribal clinic and elder care facility, both financed largely with casino money. “Both those buildings are just gorgeous,” she says. —Dave Palermo
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pretty Ergonomics in casino furniture means more play, and more earnings. by Dave Bontempo
rgonomics has become more than a flashy buzzword. Derived in the office world, it first denoted workplace safety advancements. Companies targeted everything from back pain to eye strain by unveiling better chairs, keyboards, machines, proper temperature and lighting. They won by creating more productive employees and avoiding billions in workmenâ€™s compensation claims. Ergonomics even sounded good. It implied sophistication, political correct-
Global Gaming Business MARCH 2014
ness and a cutting-edge philosophy that went outside the box. Ergonomics was for winners. Then came gaming, propelling the term to a new dimension. Gone was the eight-hour office day, replaced by a 24-hour, multibillion-dollar industry. Customers brought insatiable gambling appetites and varied body shapes to marathon gaming sprees. They could play almost forever in the right conditions. Comfort was no longer about workmenâ€™s comp. It was about comps.
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And player’s clubs, loyalty, etc. Comfort became the financial Bible to chair companies. A chair can determine how long a customer plays at a particular location. If a patron leaves because of back pain, the company receives the financial headache of lost revenue. This drives manufacturing workshops to produce the perfect chair, and then improve upon it. Durability is paramount now that the product is being used three times as much as its office-world counterparts. Hundreds of chair models feature enhancements like lumbar support, foam injection, curved edges, friction-reducing coating and flexible wood framing. State-of-the-art comfort forms a highstakes business plan for distributors and manufacturers. One successful pitch becomes thousands of chairs sold. The companies face a difficult task, however. Unlike suppliers who produce printers, tracking systems or cash access, they can’t connect a chair
“Your support has to be such that the tail bone doesn’t go sore, the legs don’t go numb. We are unique in that with revenue gained. There are no statistics to we mold our own foam. We promise better use of employee resources or time handle all the engineering on machine. By the time someone realizes a it has caused revenue lost. and manufacturing. We can chairForis ineffective, chair manufacturers, the agenda is clear: take customer ideas and Make the next product better than the last. the casinos, whose customers are, literally, sketches and turn them into Please sitting on the bottom line. And realize that erreality. When you sit in a gonomics is economics spelled differently. Gasser chair, it encompasses Gasser: Celebrating a Vision you. You feel secure in it.” Gasser Chair Company reaps the reward of a —Roger Gasser, Sales Development Manager, Gasser Chair
powerful connection. The Youngstown, Ohio company, formed in 1946, initially specialized in kitchen tables and chairs. That changed in the 1950s after one of its founders, George Gasser, forged a relationship with gaming magnate Bill Harrah. Gasser convinced Harrah that stools in front of slot machines would enable customers to play longer.
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The period is viewed as nostalgic by company officials. They recall Gasser, a young entrepreneur, making a sales call at Harvey’s Casino in Lake Tahoe. Gasser had noticed that several gamblers were taking stools from the bar over to the slot machines in order to sit while playing. He saw that players who had seats would stay longer on the machines. Armed with this knowledge, Gasser returned to Youngstown and built one of the casino industry’s first slot stools. It was a simple round seat and Gasser Chair’s Coltrane series basic four-leg frame with a foot rest. The innovation became Gasser model 218. And since then, the hits have just kept coming. The evolution encompasses various shapes, models, seat widths, specific applications of foam and ever-increasing durability. As the casino industry took off, unveiling properties from Atlantic City to Connecticut, Mississippi to California, Gasser accompanied the move. Indian gaming emerged, bringing varied sizes of properties to service. Gasser’s vision, coupled with the eventual Harrah’s gaming boom, propelled this company into a prominent position. In addition to the U.S., Gasser has a presence in Australia, Europe and the Caribbean along with product on board many cruise lines. The company product line has grown to include table-game seating along with poker, keno and bingo chairs. Gaming demands unique assets from ergonomic entities like chairs. Gasser, which also serves the hospitality industry, provides gaming seating with 24-7 durability. “The chair has to provide support, especially because players may be seated for long periods of time,” says Roger Gasser, the company’s sales development manager. “It is not just the softness when they sit down, because that can go away quickly. Your support has to be such that the tail bone doesn’t go sore, the legs don’t go numb. We are unique in that we mold our own foam. We handle all the engineering and manufacturing. We can take customer ideas and sketches and turn them into reality. When you sit in a Gasser chair, it encompasses you. You feel secure in it.” In 2012 Gasser Chair introduced the innovative Coltrane slot stool, which was well received. In 2013 at G2E, Gasser introduced the Coltrane table game stool. This led to numerous requests from table game managers for a narrower version of the stool to maximize player usage at each table. Gasser responded with the development of two table game versions with seats that are 1.5 inches and 3.5 inches narrower than the slot stool, while maintaining the same level of comfort, Gasser says. Innovative features of the Coltrane include molded, ergonomically contoured foam cushions, a backrest lumbar support seat foam with a front edge shaped for better leg circulation, Gasser’s unique Easy-Change seat and backrest system and Gasser’s Comfort Zone FlexBack. The Coltrane also utilizes an aluminum back plate and four-leg frame that makes it approximately 20 percent lighter than similar products of competitors, Gasser says. An optional hand pull accompanies the Coltrane, making it easy for operators to pull the unit away from the machine when
Global Gaming Business MARCH 2014
necessary. It also is easy to service, Gasser asserts. “Four bolts and you can change a seat top,” he says. “If you have a cigarette burn, for example, you will have easy maintenance to fix it.”
MLP: Adaptability MLP Seating, based near Chicago, has a 64-year tradition of serving the gaming and non-gaming worlds. Outside of the casino market, it services restaurants, offices and companies involved in health care. For casinos, it has hundreds of chair models designed to meet two important challenges: the size of customers and the height of slot machines. Company officials know it must ergonomically adapt to the casino marketplace. “You want to keep the screen at eye level,” says Ron Shaw, the national sales manager for MLP. “No matter how well-constructed a chair is, you and I are a different size than someone else. The casino wants it all to look the same, so as long as we know what height the screen will be at, we can adjust accordingly. We will morph our product to better fit those new machines, but at the same time, there are still thousands upon thousands of screens that still have traditional heights.”
“The more comfortable customers are, the longer they will play. Our goal is to provide the most comfortable product the casino can give its customers. That is why we customize our chair to whatever you want. You tell us what you want and we will create that for you.” —Ron Shaw, National Sales Manager, MLP
Back support can be manufactured subtly. Elements can include the seat’s ability to recline to a player’s posture. But the result is anything but subtle—it has to feel right. “The belief that has been out there is that there is no other product that impacts the customer experience more than the seating,” Shaw says. “The more comfortable customers are, the longer they will play. Our goal is to provide the most comfortable product the casino can give its customers. That is why we customize our chair to whatever you want. You tell us what you want and we will create that for you.”
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The company product line includes casino and gaming slot stools, “We have several chairs in development that are being designed poker, bingo and keno chairs. The chairs for casino gaming include opspecifically for customer projects. All of them incorporate our X-Tended tions like a flexible back. There is also a bucket-seat model. Play ergonomics and comfort but have unique styles. In addition, they Shaw says MLP gaming products are essentially custom-made. A will have sneak previews of some of the components of our second-gencasino representative will contact the company with sketches and rendieration X-Tended Play seats scheduled to be introduced later this year. tions. MLP will question them to clarify the desired product. Considera“This is an area of emphasis for our company now that we have full tions could include foam densities, seat pad options, different four-legged custom design capabilities. In addition to the custom designs, he is also bases, colors, shapes, upholstery, etc. involved with our engineers in creating additional interactive chairs for When all of that is hammered out, MLP builds a model and sends it two new customers with 2014 introduction dates. This is an extension to the potential customer. If the property is of the interactive chairs designed and satisfied, a large order of perhaps 1,000 developed for IGT, Bally, Aristocrat and chairs will ensue. Should the customer want Spielo.” alterations, they will be made and re-sent to The rollout will be a significant one, the buyer. Once the perfect chair has been he asserts. agreed upon, the order moves forward. “We will begin designing the next “We listen intently to our customers,” generation of the X-Tended Play series he adds. “We don’t just say ‘this is the later this year with some really exciting frame. It comes in black. You’re gonna want features that will change the industry,” black.’ Whatever you need, we can make Davis says. “We have had most of the that for you.” popular models in our current XDurability has its benefits, he says. Shaw Tended Play line for over 10 years now. indicates that some customers are replacing They continue to be very popular. Our —Skip Davis, President, entire seats but maintaining the frame, Gazelle model is by far the most freGary Platt Manufacturing which has held up for several years. The quently specified chair in the market. metal frames are hand-welded and have Over the years, all of our competitors extra braces to ensure durability. have created their version of the chair out of necessity, so we decided it was Platt: Ergonomic time to raise the bar again.” Specialty The key success ingredient, he says, Reno, Nevada-based Gary Platt Manufacis knowing what to concentrate on and turing makes casino seating for slots, table what to leave to others. games, poker, bar-top and bingo. It was founded on the belief that a high“One of the models we follow to remain competitive and flexible is quality chair would increase player’s “time on device” and thus increase to concentrate our manufacturing expertise in the areas were we have the most value added,” he asserts. “That means we have deliberately avoided gaming revenues. vertical integration. We leave things like injection molding, aluminum The company supplies IGT, Bally, Aristocrat, WMS and Konami extrusion, powder coating and plating, and anodizing to vendors who stools for their participation games and thus has a presence in most North do this for a living. We provide the designs and drawings and they proAmerican casinos. In 2000, the company engineered a chair for San duce to our specifications. Diego’s Barona Casino that introduced state-of-the-art ergonomics to “It allows us to establish and maintain key vendor relationships with gaming, according to Skip Davis, the company’s president. That design bedual sources and allows us to focus on our core business, which is makcame the basis for Platt’s X-Tended Play series of seating and propelled the ing chairs. It also allows us to avoid heavy capital investments in gaming world into ergonomics, he says, adding that the company is the processes that need to be run continuously to be cost-effective. This has only casino seating supplier that focuses exclusively on the gaming market. proven to be a vital competitive advantage.” Within that gaming specialization realm, ergonomics has become inThe other business principle that we have stuck to is to focus only creasingly significant. on the casino industry. All of our seats are going to games on the casino “We have hired a full-time ergonomic engineer who has been designfloor, so we pay attention to one industry only.” ing seating products in related industries for the last 30 years,” Davis says. It all goes back to the philosophy followed by all the industry’s chair “He has been involved in many of our product designs in the past as a conmanufacturers: Keep them seated; keep them playing. sultant. He is now on board full-time, and we are very excited about our new product development plans.
“We will begin designing the next generation of the X-Tended Play series later this year with some really exciting features that will change the industry.”
Global Gaming Business MARCH 2014
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iGaming 101 With myriad platforms and software combinations available, operators in the nascent U.S. iGaming industry debate the best path forward by Marco Valerio
he “software debate” is a pervasive one in online gaming, especially in the U.S. environment today. Players like to debate which software is better to play on, and operators need to figure out which platform is best suited to their company. Ever since online gaming went live in the U.S., first in Nevada then in Delaware and New Jersey, a veritable flood of online gaming platforms, old and new, has inundated the American gaming landscape. More are inevitably on the way. When talking about user-facing distinctions, the software debate is largely dictated by online poker, where most of the features are immediately on display. Conversely, online casino platforms are usually more back-end-oriented, with many of the games sourced from third parties such as IGT and SHFL. Upon preparing to launch their online gaming offerings following regulatory approval, U.S. casinos were tasked with a decision to make: either develop their own online platforms from scratch—a lengthy process, but with its benefits—or enter into an agreement to use any of a variety of ready-made solutions. Most U.S. iGaming entities so far have opted to go with the latter. Ultimate Gaming notably stuck by the former. Some, like Caesars Interactive, are currently trying to have it both ways, as we shall soon see. Roughly half a dozen different software platforms are now in play in the American market. These encompass both poker and casino games. They are 888, Amaya, PartyPoker, GameSys, Ultimate Gaming and GameAccount Network. Keeping track of which casino property is using which platform can cause a 48
Global Gaming Business MARCH 2014
headache. It obfuscates the view further that several casinos have different software agreements for online poker and online casino games. To understand the evolution of online gaming systems in the regulated U.S. market, a good place to begin is by looking at Nevada, not just because it was the first U.S. state to introduce regulated real-money online gaming, but also because the two primary—and to date, only—competitors in that state each exemplify radically different approaches to online gaming software selection.
In the Beginning... Ultimate Gaming acquired software developer CyberArts in 2011 with the goal of developing proprietary, in-house iGaming software. Caesars Interactive, on the other hand, stood to benefit from a pre-existing relationship with 888 Holdings to “borrow” the online poker software from the Gibraltar-based internet gaming operator. Euphoria was high when Ultimate Poker launched in Nevada in April 2013, but most reviews of its software back then were not favorable. The platform that CyberArts spent little over a year perfecting as much as possible was simply not up to date with some of the systems that had been around for over a decade. Ultimate Poker’s initial look and layout was pretty bare-bones, but more gravely, it lacked numerous features which American players had come to take for granted in an online poker product. For example, multi-tabling— the ability to play on more than one table at once, which is supposed to be a big advantage of online poker over brick-and-mortar—was problematic on
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Caesars did not have to create its own software from scratch. The company used the same software developed and employed by 888poker, which has been operating since 2002. Ultimate Poker in its very beginnings. Table windows could not be resized, making it difficult to arrange multiple ones on a computer screen. In addition, the tables did not “pop up” in a way familiar to most players when it came their turn to act. Ultimate Gaming personnel themselves admitted that the software was still in a very preliminary stage, and that improvements would be added over time based on user feedback. This is a promise Ultimate Gaming has lived up to, in great part thanks to its decision to create its own software, which enables the company to make adjustments with relative ease. A few months after the release of Ultimate Poker, Caesars Interactive launched its own real-money online poker product in Nevada, WSOP.com. Caesars did not have to create its own software from scratch. The company used the same software developed and employed by 888poker, which has been operating since 2002. The advantage that 888poker’s decade-old software had over Ultimate Poker’s much younger one was very evident. Unlike Ultimate Poker, WSOP.com was Mac-compatible, allowing more users to play. It easily permitted the resizing of tables (Ultimate Poker eventually caught up to this too). The table “lobby”—the area of the online poker client where users get to view which games are running—could be sorted much more easily on WSOP.com, and included more filters. Waiting lists for full tables were another edge that WSOP.com’s software had over its sole Nevada competitor. But because Caesars Interactive does not own its own software, it cannot easily amend or adapt it without first having to go through an entirely separate company. This trade-off is one of the most important
consequences resulting from the decision to either create one’s own software or adopt somebody else’s. Its impact extends beyond the merely technical. Online poker players in Nevada and in New Jersey have lamented the lack of Ultimate Poker’s software features compared to its competitors. But at the same time, it is generally acknowledged that Ultimate Poker’s customer service is superior to the rest, since the staff enjoys an unparalleled closeness and access to the product that players experience. This fact is not lost on Caesars Interactive, which has been known to be aspiring to something better. Although the company currently makes use of 888poker’s software, it is concurrently in the process of developing a more selfstylized proprietary platform with the help of French company Lucien Barriere Poker.
On to New Jersey The software platform situation in the U.S. becomes increasingly colorful and complex when we look at New Jersey, another state that has legalized and launched online gaming. The state’s decision to allow a wider suite of online casino games beyond poker created a demand for additional, more diversified platforms. In addition, a greater number of online gaming interests chose to go live in New Jersey from the get-go, seeing a greater opportunity for revenue than in Nevada, a much smaller state. 888, which continues to supply the online poker technology to WSOP.com in New Jersey, is also its own independent operator in that state, thanks to an operational license lent to it by Caesars, which possesses a few to go around. MARCH 2014 www.ggbmagazine.com
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Amaya can also provide an online poker platform, which it does to two New Jersey-facing brands: Golden Nugget and Betfair.
Several platforms beyond 888 and Ultimate Gaming have come into play in New Jersey. Moreover, some of the Atlantic City casinos are dealing with separate software suppliers to provide the online poker technology on one side and the online casino technology on the other. On the online casino side, Caesars Interactive operates CaesarsCasino.com, whose software provider is Amaya Gaming, not 888. Amaya is a Canadian-based company specializing in offering online casino solutions. In October 2012, Amaya purchased the OnGame online poker network from bwin.party, thus adding an online poker product to its offerings. Therefore, Amaya can also provide an online poker platform, which it does to two New Jersey-facing brands: Golden Nugget and Betfair. (Amaya provides both online poker and online casino content to Golden Nugget, whereas Betfair’s online casino technology is supplied by GameAccount Network.) When two online poker platforms are the same, there is the possibility to merge player pools. This could eventually happen between Betfair and Golden Nugget, although the latter has yet to offer online poker in New Jersey. A large-scale plan to combine player pools via the same platform is also at the heart of the All American Poker Network (AAPN), with primary backing by 888poker. It was expected that Wynn Interactive would enter the New Jersey online gaming market and conjoin its online poker offering with the AAPN, but as recent news reports indicate, Steve Wynn has changed his mind about going through with his online gaming plans. The AAPN reportedly plans to introduce a client in Nevada as well, and liquidity agreements permitting, an interstate combination of online poker players could one day become a reality. Rounding out the list of sites to which Amaya offers its online casino services is BorgataCasino.com, owned by the eponymous Atlantic City destination. But here we have one of the most notable splits between online poker and casino games. Borgata’s online poker client uses PartyPoker software, itself a tested, popular platform with prior international experience, akin to 888poker. PartyPoker doesn’t excel only in its software platform, but also in its seasoned, experienced personnel. This combination of qualified manpower and inveterate software may help explain the success that PartyPoker/Borgata (as they are often jointly referred to) has had over all of its competitors in New Jersey, according to the state Division of Gaming Enforcement’s most recent revenue report. GameSys is an additional force to be reckoned with in the U.S. online gam50
Global Gaming Business MARCH 2014
ing landscape. The U.K.-based gaming technology company is partnered with Tropicana in New Jersey. Tropicana/GameSys have yet to unveil an online poker product, but this is expected to be in the works, especially in view of the strong showing that online poker has laid claim to in the latest New Jersey revenue reports. (For all of the New Jersey online gaming sites that offer it, online poker accounted for almost half of total iGaming revenue since launch.) Analysis linked to GameSys’s acquisition of Virgin Casino (linked to the popular Virgin brand made famous by Richard Branson) has spurred reports that the two companies are now working on developing an original online poker platform in-house.
iGaming Prospects In surveying American online gaming, it would be unfair to omit the state of Delaware just because of its small size. But owing to the First State’s lack of mention in this article heretofore isn’t so much its comparatively miniscule population size. Rather, it’s the monopolized approach that the state took in licensing only one software provider. Out of an impressive roster of applicants, which at one point included international iGaming giants such as PokerStars, it was 888 that won the Delaware state lottery’s sole contract to offer both online poker and online casino platforms on behalf of a grudging triumvirate made up by the state’s three brick-and-mortar casinos. Player liquidity has been an imperative obstacle to Delaware iGaming since its launch in November. If the state is really serious about interstate liquidity agreements, then it follows that the aforementioned 888-backed All American Poker Network stands to gain by having an advantageous command of the state’s iGaming operation. Looking to the rest of the unconquered U.S. iGaming space, while it has become apparent which states have a more advanced courtship with the concept of regulated online gambling, it’s difficult for now to predict how local regulations will set the stage for extraneous software suppliers. Some states have indicated that they might be more xenophobic than others. California comes to mind. While not necessarily near any iGaming legislative closure, the Golden State has thus far lobbed up a couple of tribally backed bills that tend to be more or less jealously protective of the state’s large, prized player pool. Pennsylvania, on the other hand, has shown some interest in imitating its Northeastern neighbor, and via geographical proximity alone, it may be more easily influenced by nearby proven powers. At the core of the U.S. iGaming struggle remains the unquestionable fact that localized state legislatures looking to permit gaming expansion have naturally geocentric interests in mind. Software suppliers looking to strike another deal, be they based in Europe or anywhere else in the world, are thus advised to take this uniquely American characteristic into account.
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iGaming North America
Social Gaming Legality Part 2 Social games are not gambling, but are dragged into iGaming debates.
By Tony Cabot
n December, we looked at the legality of prizeless social network gaming, where players can engage in casual games or traditional gambling games like poker. Players cannot win anything other than virtual currency used for game play or virtual goods used on the site. The sites monetize these games through micro transactions, virtual goods, advertising and marketing offers. Because the players cannot earn anything of tangible nature (a prize), these games generally fall outside the prohibitions against illegal gambling. Social games have long been a fixture of human existence. They are games that people pay to play because they are fun to play. Common examples include pool, pinball and video games. I spent a significant amount of my wasted youth playing pinball at the local bowling alley with my friends, for no other reason than to meet up and hang out. We took great pride in being the best at pinball, pool, or whatever the game we were playing. We paid to play games where no prizes were awarded except the glory of having your initials next to the highest scores on the game. Without prizes, it is not gambling. Unlike gambling, the purpose of social games is not to make money off the persons willing to pay for the opportunity to win prizes usually involving games of chance. Instead, it is an entertainment opportunity, because you are certain to spend money with no opportunity to profit. Historically, gambling has been prohibited because the “lure” of the prize was deemed immoral (basing success on luck as opposed to the work ethic) or contrary to Christian values. Under either rationale, eliminating the prize eliminated the objection to the game. Skill games are another type of game that has not been historically prohibited as illegal gambling. We see skill games in myriad places, but the two most common are carnival midways and coin-operated games. Here, success based on skill follows morals or most religions, so the games are legal and
the law concerns whether they are really skill based and operate honestly. Regulation, however, is light and the licenses to operate such games are not considered privileged. So, assuming most social gaming sites are staying on the right side of the law by not offering prizes, is there any real need to revisit social gaming to determine if the government wants to shift its public policy? Because it is not gambling, the question is whether government should treat it like gambling. The old moral and religious arguments against gambling do not resonate well with the voters anymore. Campaigns against gambling no longer focus on the idea that gambling is bad and should be
“Disproportionate spending occurs with almost every recreational activity or hobby. You can spend $15,000 for a radiocontrolled model helicopter.” outlawed because God says it is bad. Instead, public policy has shifted to a pragmatic, amoral pluralist assessment. In other words, whether an activity should be legal is based on an objective evaluation that considers societal impacts. Here, no litmus test exists as to what should be permitted. Virtually every activity can have negative consequences. People have compulsive obsessions with shopping, food, and even exercise, but that does not mean they should be outlawed. Opponents of gambling, as an example, cite several externalities they argue should result in prohibition. Because no litmus test exists, advertisements against gambling tend toward either sensationalism or anecdotes. Recent advertisements against internet gambling, as an example, cite virtually every possible negative consequence from problem gambling including funding terrorism, whether factual or not. For public policy debates surrounding social games, you need to look at the same public health
and economic issues. The most significant is problem gambling. Here scant evidence exists other than some anecdotal evidence that some persons spend a disproportionate amount of money on social gaming. This is hardly the basis for sound public policy. Disproportionate spending occurs with almost every recreational activity or hobby. You can spend $15,000 for a radio-controlled model helicopter. The industry should be concerned if future credible studies show either (1) compulsive social gambling is in itself a significant public health or social problem or (2) compulsive social gaming is a significant predecessor to problem gambling. The former is a tough sell because, while not impossible, the likely outcome is that persons will not be losing large sums of money. The industry, however, may want to adopt best practices that monitor player activity so that appropriate caps are placed on ingame purchases. The second is the notion that these sites are teaching our children how to gamble. Here, the real debate should focus less on an internet activity that requires both equipment and a methodology to fund through credit card and on the instances of children-focused arcades for prizes where the skill games appear to not be skill-based and are not played as a skill-based game by 3-7-year-olds. Nevertheless, the social game industry must be aware that, despite the entertainment focus on the social game experience, critics will look at the age demographics of their users. Only greed should motivate a site to accept anyone under the age of majority. Done properly, social gaming is not gambling, and with simple, common-sense best practices we can minimize the risk of a serious public policy debate as to its legality. Social gaming could get dragged into the internet gambling debate, and therefore, the industry should have best practices in place and a prepared campaign to respond. Tony Cabot is one of the premier legal experts in landbased and online gaming, and is a partner in Lewis & Roca. He is also a partner in the iGaming North America Conference, March 19-21 at Planet Hollywood in Las Vegas.
MARCH 2014 www.ggbmagazine.com
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Wynn Or Lose? War expands between pro- and anti-online gaming groups
asino Mogul Steve Wynn remains hard to read, but his word still carries a lot of weight in the gaming business. Recently quoted as saying he’s not sure if online gaming will be a moneymaker for the industry and echoing concerns about underage gambling made by casino rival Sheldon Adelson, Wynn has set the gambling industry abuzz. But it’s hard to pin down exactly what Wynn thinks of online gaming. On the one hand, Wynn Interactive has been approved for a transactional waiver to begin online gaming in New Jersey. Wynn is partnered with Caesars Entertainment in the state, which already offers four online gambling sites through its Atlantic City casinos. On the other hand, even though New Jersey state regulators have issued the waiver to Wynn Interactive—which allows online sites to operate while the company’s full application is under review—the company says its online plans for the state are on hold. The New Jersey Division of Gaming Enforcement also granted a request by Wynn and Caesars Interactive to conduct internet gambling operations with the All American Poker Network and 888 Atlantic Limited, an affiliate of a Gibraltarbased online betting firm 888 Holdings, according to the Associated Press. Meanwhile, reports in Nevada have Wynn agreeing with Adelson—who is self-financing a move to have all internet gambling banned in the U.S.—that online gambling may not be good for the country. In an interview with political commentator Jon Ralston, Wynn said he now doesn’t see a “business opportunity” in online gaming, and has put plans for his New Jersey online casino on hold. Wynn also said he is not sure the technology used to block minors from gambling online actually works. He said in the interview that he agrees with Adelson, who has often pointed to the threat of underage gambling as a major problem with internet gaming. Wynn also expressed concerns about govern52
Global Gaming Business MARCH 2014
ment’s “insatiable appetite for revenue” and wondered if the government would actually allow operators to make a profit. Wynn stopped short of calling for a total ban, however. The Review Journal cites sources as saying Wynn does not plan to financially back Adelson’s efforts. Other sources told GGB that it’s more likely that Wynn’s comments may reflect a falling-out with Caesars Entertainment, which runs the potentially very lucrative WSOP.com poker site, rather than with the entire idea of online gaming. WSOP.com is now taking real-money bets in Nevada and New Jersey, which both have approved online gambling. Wynn is reportedly upset with Caesars CEO Gary Loveman for naming Wynn in a lawsuit against the Massachusetts Gaming Commission stemming from Caesars’ failure to get a casino license in that state. Wynn’s pulling of his internet venture in New Jersey apparently blindsided Caesars officials, the sources told GGB. Wynn did say his opinion could change again, but feels the issue is somewhat moot since Congress is unlikely to act on internet gaming anytime soon. “They can’t agree on anything, especially something this esoteric,” Wynn said. Wynn’s comments and apparent about-face concerning online gambling come as sides are being drawn for a fight over Adelson’s push for a ban. A new coalition backed by MGM Resorts International and the American Gaming Association has been formed to fight Adelson’s push for a nationwide ban on internet gambling. Caesars Entertainment is reportedly also backing the coalition. The Coalition for Consumer and Online Protection plans to launch an initial three-week, $250,000 online and print-ad campaign against a federal ban. The campaign will be focused on the Washington, D.C. market, and to a lesser extent Nevada. Much like Adelson’s coalition—which includes New York Governor George Pataki, retired
Democratic Senator Blanche Lincoln of Arkansas and ex-Denver Mayor Wellington Webb—the new coalition has brought in some big names to plead its case. Included is former Rep. Mike Oxley (R-Ohio), who served as Financial Services Committee chairman when the Unlawful Internet Gaming Enforcement Act of 2006 passed and will serve as the coalition’s spokesman. Also on board are Democratic lobbyist and former Barack Obama campaign manager Jim Messina; former Rep. Mary Bono (RCalifornia), now of FaegreBD Consulting; and Kristen Hawn of Granite Integrated Strategies. The coalition already conducted a poll through North Star Opinion Research last month, which found 33 percent of voters “strongly” oppose a ban compared with 22 percent “strongly” supporting it. The poll also found that 74 percent of respondents favor letting states decide individually on internet gaming as opposed to a federal ban. In a statement, the MGM-supported coalition said a federal law banning online gaming wouldn’t stop online gaming. Instead, a ban “would jeopardize consumer safety, allow for the existing overseas black market to thrive, stifle innovation and growth, and infringe on individuals’ and states’ rights.” Adelson, owner of Las Vegas Sands, formed his own Coalition to Stop Internet Gambling in January and has already picked up some major allies. About 15 state attorneys general have co-signed a letter to congressional leaders and House and Senate Judiciary panel members to keep online gaming illegal. Adelson’s coalition has said it plans to go state by state to oppose online gaming. Still, three states—New Jersey, Nevada and Delaware—have already approved and gone live with intrastate online gambling. Meanwhile, a study by Gambling Compliance, a group that tracks gambling-related legislation worldwide, says 10 U.S. states will consider online gambling legislation this year, an all-time high. The report says proposals for new or expanded internet betting could be considered in California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, New Jersey and Pennsylvania.
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PPA Pushes for Online Poker in Massachusetts
he Poker Players Alliance is campaigning in Massachusetts to include online poker in a bill to allow the Massachusetts State Lottery to study possible online lottery services. John Pappas, executive director of the alliance, issued a statement to the Massachusetts Joint Committee on Consumer Protection and Professional Licensure asking the group to examine offering intrastate online poker in the same vein as adopted in Delaware, Nevada and New Jersey. Pappas said other states such as Iowa, California and Illinois are “now recognizing the potential for significant job growth and millions in added revenue, and are proposing their own legislation to regulate the online poker industry.” “Today, in the U.S. and in regulated markets throughout the world, it is required that internet gaming companies employ ‘best of breed’ technologies that protect minors and problem gamblers, ensure that the games are fair, and that sites block players in prohibited jurisdictions,” Pappas said in the statement. “These mandatory safeguards are even more restrictive than those employed in brick-and-mortar casinos today.” There are 22,000 registered PPA members in Massachusetts.
Google Search Change Hurts iGaming Sites
months. The report also revealed that consumer spending in the U.K. online gambling sector was about $4.1 billion in 2013. Bookmaker William Hill remained the market leader with online net revenue growth of 18 percent in the first half of the year. Online search volume for sports betting was also up 18 percent on the previous year while searches for casino also grew 15 percent.
Ladbrokes has launched a new live-dealer service with Playtech. Ladbrokes will migrate to Playtech’s full range of gaming products in a move due to be completed in time for the 2014 FIFA World Cup national football tournament this summer, the companies said in a press release. The new suite of live-dealer games includes roulette, blackjack, baccarat and casino hold ‘em and allows players to bet with a live dealer and experience games in high-definition quality, the release said. TCSJohnHuxley Signs The deal allows the live-dealer product to Interactive Agreement deliver back-office systems to support bonusing ondon-based table game supand improvements in customer plier TCSJohnHuxley has enservice for Ladbrokes. The booktered the interactive gaming maker will also be able to increase industry with the signing of a the number of live-dealer tables memorandum of understanding available to customers. with software supplier EveryMaMeanwhile, Playtech antrix Holdings Limited. nounced a deal with Bulgarian slot The exclusive agreement promanufacturer Casino Technology vides the global land-based casino under which Playtech’s cross-platmarket (excluding North Amerform technology will bring Casino ica) with EveryMatrix products Technology content to multiple through TCSJohnHuxley, which channels, including mobile, tablet, will provide additional advisory, desktop and retail machines. front-end web development and The agreement will feature five Cath Burns, Group CEO, ongoing support services. of Casino Technology’s most popuTCSJohnHuxley EveryMatrix is an independlar game titles on Playtech platforms ent software development comduring 2014. All five games also pany providing gaming products for the iGaming were ported through Playtech’s retail subindustry. The company’s CasinoEngine product sidiary, Videobet. is the only casino aggregator offering a seamless wallet and back-office. Players get access to more IGC Appoints Furlong than 1,500 games from top casino vendors with New CEO live dealer options and the benefit of negotiating only one contract with TCSJohnHuxley instead he Interactive Gaming Council has of separate contracts with the various casino vennamed Keith Furlong as its new chief exdors. ecutive officer. The appointment was an“Operators globally are increasingly asking nounced at the 2014 ICE conference in TCSJohnHuxley to provide them with interactive London. Furlong will replace outgoing CEO solutions,” said Cath Burns, TCSJohnHuxley John Kennedy FitzGerald. group CEO. “As a trusted partner providing casiFurlong has served as the deputy executive nos with complete live gaming solutions, we are director of the Vancouver-based trade associanow well-positioned to deliver what the casino tion since 2000, and has been involved with operator needs to launch a compelling interactive casino regulation and online gaming for more offering from a market-proven platform.” than 15 years. Previously, he was the public information officer and legislative liaison for the New Jersey Playtech Strikes Deals Division of Gaming Enforcement in the attorwith Ladbrokes, Casino ney general’s office. He will remain as a memTechnology ber of the IGC board of directors. Furlong’s prior service on the board was oftware supplier due to his position as vice president and princiPlaytech was busy last pal of Catania Gaming Consultants, an intermonth, announcing two national gaming consultancy. major deals.
nternational digital marketing agency Stickyeyes reports that a change in Google’s search engine algorithms caused many online gambling sites to lose “significant organic visibility” in Google searches last year. The search engine updates sought to penalize brands that use what Google says are aggressive or unnatural link strategies. The study said the updates had already hit a number of gambling companies. Online gambling operator 888 Holdings fell from being one of the most visible brands in the casino sector to as low as 17th in Stickyeyes’ index in the space of just one month. Online gambling website Gambling.com fell from fifth place to outside of the top 100 in just two
British bookmaker MARCH 2014 www.ggbmagazine.com
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EMERGING LEADERS Strategic Marketer Andrea Janssen Social Marketing Manager, Masterminds Advertising s social marketing manager at Masterminds Advertising, Andrea Janssen knows that original, strategic thinking is essential to crafting marketing strategies for the United States’ most competitive gaming brands. She can also tell you how, in this dynamic new economy, it is equally essential to one’s own “Even though I was professional development. When Janssen graduated from college in 2009, jobs were young, Masterminds scarce, and many recent graduates were struggling to find their gave me the footing. By applying originality and clear-sightedness to her opportunity to prove own professional development, she set herself apart from the myself and rise crowd and on course to become a leader in the growing field of social media marketing. through the ranks. Today, Janssen applies that same originality and innovative You get out of thinking to the development of social media strategies for gamworking here what ing brands such as Agua Caliente Casino Resort Spa, Spa Resort Casino, FireKeepers Casino Hotel, International Game you put into it.” Technology, MegaJackpots, DoubleDown Casino, Delaware Park, Pinnacle Entertainment, Hollywood Poker Open and Penn National Gaming. Janssen initially pursued an undergraduate degree in music, but she was drawn to her marketing classes. Upon graduation, she decided that pursuing a master’s degree in entertainment business would be a good way to combine her interests and become more competitive in the job market. In the interim, she worked at the family business—a small retail shop that sells horse supplies. “Since selling hoof dressing and hunt coats didn’t seem to line up with my career goals, I asked to be in charge of the store’s marketing,” Janssen laughs. “We didn’t have a marketing budget to speak of, so I had to be… creative. I’d learned about social media’s potential in class and had a feeling it was going to be big.” When asked what advice she would give young professionals, Janssen states that sometimes, you need to create your own opportunities. For her, this meant finding an aspect of the family business that would enable her to develop the skills she needed. “It also meant deciding to enter a new field where, even at my age, I could be considered an expert,” she explains with regard to her decision to focus on social media marketing. Although her internal motivation has been an important aspect of her success, Janssen also feels fortunate to have found a company that supports her professional growth. After completing her master’s degree, she started in an entry-level position at Masterminds Advertising, where she quickly advanced to her current position. “Even though I was young, Masterminds gave me the opportunity to prove myself and rise through the ranks,” she says. “You get out of working here what you put into it.” The success of the projects to which Andrea has contributed reveals the quality of her work. Accolades awarded to her projects include Best Social Media Program at the AGA Awards, several Adrian Awards, a Gold Romero Award, and a Destiny Award. Additionally, popular industry publications such as Social Media Examiner, Socially Stacked, Huffington Post and Social Media Marketing for Dummies, 2nd Edition have featured her work. As for the nature of the work itself, social media is always changing. “The things I’ll be doing over the next year will be completely different than the things I did this year, which are completely different than what I did last year,” Janssen says. “It’s definitely never boring.” Considering the dynamic nature of her specialization and her strong work ethic, Andrea’s final advice to other emerging leaders does not come as a surprise: “Never. Stop. Learning.” —Emily Oliver, The Innovation Group
Global Gaming Business MARCH 2014
Financing Indian Country Dawson Her Many Horses Vice President of Gaming Industries, Bank of America Merrill Lynch awson Her Many Horses is not your typical Wall Street guy. In fact, it was not where he’d first pursued his career. Recognizing the unique relationship between tribal governments as sovereign nations and state and federal governments, Dawson first set out for a career in law with a desire to serve as an advocate for Native American people. This passion led him down a path into the banking world, where he has fast-tracked his career through a number of unique positions. Now serving as vice president of gaming industries at Bank of America Merrill Lynch, Her Many Horses credits his flexibility and willingness to keep an open mind as the main drivers for his quick advancement. “I grew up wanting to become an attorney,” Her Many Horses points out, “but I was open to suggestions and found a different path that still allowed me to achieve my passion of helping tribes.” While studying at Columbia University in pursuit of a bachelor’s degree in political science, Her Many Horses prepped himself for a future in law by taking an internship in the Office of General Counsel at Bank of America Merrill Lynch. This was an exciting opportunity, he says, and a far cry from his days growing up in a rural part of the Midwest. “I grew up on the Rosebud Reservation of South Dakota, so it was a great experience to be able to take the subway down to Lower Manhattan two to three times a week,” he says. His experience at the Office of General Counsel was so propitious that he was hired on a part-time basis while continuing his education as a full-time student. It was during this time that he was approached by a Merrill Lynch banker about the prospect of helping the firm build its Native American banking efforts through the gaming industry. “Gaming is a big driver of opportunity in Native America,” says Her Many
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Horses, “and the more we talked, the more the idea appealed to me.” Presented with a real opportunity to improve the lives of Native American people, this conversation sparked the shift in his career from law to finance and economic development. Upon his graduation in 2004, Her Many Horses was appointed as director of Native American business development for Bank of America Merrill Lynch, where he developed and managed the Native American market strategy for Merrill’s investment banking, wealth management and asset management businesses. Though his degree was not in finance, his hard work and dedication then led to a position as an investment banking analyst in the Native American gaming market in San Francisco. Her Many Horses went on to work for the Secu-
“If you want to be successful in life, it’s going to require long hours and hard work. I encourage people to figure out what they’re passionate about and do it.” rities Industry and Financial Markets Association briefly before going back to school to obtain his MBA at Dartmouth College. After college, he returned to Bank of America Merrill Lynch as an associate in its Charlotte office in North Carolina. His tenacity there afforded him the opportunity to leverage a VP position in the firm’s Las Vegas office, where he works today with clients all across the country. All in all, Her Many Horses’ dedication to Native American tribes established an extraordinary career, leading him through a diversified set of roles in various locales across the United States. This includes sitting on the boards of the American Indian College Fund and Native American Finance Officers Association. As one of the youngest vice presidents in his division and founder of the Native American Professional Network at Bank of America, he encourages others to have the same flexibility with their careers in order to succeed, but cautions that it won’t be easy. In the end, he says it comes down to doing what you love. “I encourage people to keep an open mind,” he says, “From a career perspective, this is also important, as job mobility in the corporate world is inherent. If you want to be successful in life, it’s going to require long hours and hard work. I encourage people to figure out what they’re passionate about and do it. A lot of our gaming clients, for example, aren’t located in Las Vegas, so I’m catching flights to different parts of the country three or four weeks a month. But I love working in gaming, as I see how it benefits our clients, particularly our tribal clients. So it’s a labor of love.” —Renese Rhoden, The Innovation Group
“Smart, young and motivated professionals can make a big impact quickly by uncovering innovative uses for data streams that are now a standard in the casino industry.”
Mentor, Leader Jacqueline Beato Vice President of Finance, Caesars Entertainment acqueline Beato is the vice president of finance for Caesars Entertainment, where she works on initiatives to manage and improve the company’s balance sheet. Beato also oversees the company’s risk management and investor relations divisions. Prior to her current role, Beato built the company’s investor relations department in preparation for its February 2012 IPO. Beato started her career with Caesars at Harrah’s Joliet Casino and Hotel, where she managed several teams during her tenure, including the property’s VIP marketing and casino operations. She also serves on the board of the Latin Chamber of Commerce, and as the treasury adviser for the Zeta Tau Alpha sorority at the University of Nevada, Las Vegas. Beato received her MBA from Harvard Business School and a bachelor of science in industrial engineering from the University of Miami. As the daughter of Cuban immigrants, she recognized early in life the sacrifice that her parents and grandparents made to create a better life for her and her siblings. That upbringing instilled a desire to succeed and taught her the value of hard work, tenacity, open-mindedness, humility, and the belief that anything is possible. These characteristics have served her well in her early career, as she has been driven by the desire to prove her parents’ sacrifice was worthwhile. Throughout her early career, she has benefited from having great people around her that have shaped her professional career. “My best mentors have always been my bosses,” she says. “I have been fortunate to report to very strong role models that have taught me good values and work ethic.” As Beato has grown professionally, she has relished the role of becoming a mentor and leader to those around her. She regularly attends intern events, has coached emerging leader projects, and sits on new-hire panels. Beato receives the most satisfaction in her job when making a positive impact on people. “It is the main reason I enjoy the casino industry,” she says. “I can have constant employee and customer interaction.” She states that she is most proud of the way that she has always treated employees fairly and always provides “honest and open feedback.” She says the most valuable advice for emerging leaders and young professionals is to recognize the growing importance of analytics in the industry. “Smart, young and motivated professionals can make a big impact quickly by uncovering innovative uses for data streams that are now a standard in the casino industry,” she says, adding that all young professionals should ask questions, sit at the table, and put in the hard work if they want to succeed. Beato says she loves working for Caesars Entertainment because of their belief in creating diverse work groups and for placing their emphasis on a person’s work product, not their title. She enjoys the Caesars culture of encouraging motivated individuals to take on projects that will stretch one’s abilities, which she says “allows innovative thinkers to thrive despite variances in years of experiences.” Beato looks forward to the new, exciting developments coming online in 2014 at Caesars, including the Linq, High Roller, Horseshoe Baltimore and The Cromwell. As one of the industry’s emerging leaders she will be a mainstay of the industry for many years. —Cameron Steinagel, The Innovation Group
MARCH 2014 www.ggbmagazine.com
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FRANKLY SPEAKING by Frank Legato
Global Gaming Business MARCH 2014
state-commissioned study that shows integrated resorts could generate $1.5 billion in new annual spending in Florida every year. It may not be enough. The assembly is replete with anti-gaming lawmakers who just went to Disney World, and they are joined by the Florida Chamber of Commerce, which is also against gambling interests and which also has increased political contributions. Last month, Florida Chamber Vice President David Hart told Bloomberg that the goal of the anticasino side is “to protect Florida’s family-friendly image.” In the same article, Disney spokeswoman Andrea Finger went so far as to say the company’s opposition has nothing to do with any potential threat to Disney’s convention bookings, or to fears that visitors to mega-resorts may detract from the stream of tourists to the Magic Kingdom. Yes, I’m sure I believe that. Money couldn’t have anything to do with it, right? And Walt Disney never smoked a Lucky. No, casinos pose a threat to the air of morality that Florida strives to present to its thousands of tourists. After all, if megaresorts came, media stories about thousands of jobs, compelling new attractions and a new stream of visitors might crowd out stories about street crime, meth labs and old guys gunning down teenagers. In any event, it should be an interesting battle: Sheldon Adelson and Tan Sri Lim Kok Thay on one side; Disney’s Bob Iger on the other—along with Mickey, Minnie, Goofy, Tinker Bell and a whole lot of lawyers. All together now: “When you wish upon a lobbyist…” V IC TOR
just got back from the Tropicana in Atlantic City, where it was “Bacon Week.” Yes, that’s right. Bacon was everywhere. Bacon milkshakes. Chocolate-covered bacon. Bacon-flavored lip balm, bacon bourbon and bacon ice cream sundaes. It was a lovely festival of swine. Thank God they had paramedics on hand, so I live to eat another day. But another big story this month is shaping up in Florida. It’s a true Battle of the Titans: In this corner, billionaire casino mogul Sheldon Adelson. And in this corner… Mickey Mouse. OK, the master of integrated resorts and the world’s most famous rodent are not actually facing each other in a cage match or anything. (Although, I think Sheldon could take him. Or at least wrestle him to the ground. He’s only a cartoon, after all.) The epic battle is taking place in the Florida legislature, where lobbyists, not only for Adelson’s Las Vegas Sands but for international casino giant Genting Bhd., are being sent to promote the legalization of mega-resorts in the Sunshine State. Their arguments will, of course, be countered by lobbyists from the Walt Disney Company. The Magic Kingdom doesn’t want huge casinos in its state, which would counter what it sees as the Disney-esque culture that should pervade Florida: A fun, wholesome, family-friendly wonderland, with firearms. Apparently, no one has told Mickey or his lobbyists—which, I’m told, include Goofy, Minnie, Snow White and all seven dwarves (Grumpy is a particularly effective advocate)—that there are actually casinos in Florida already. Big casinos, like the Seminole Hard Rock properties. One of those is not much more than an hour’s drive from Walt Disney World. There are casinos at horse racing tracks, jai alai frontons and the most family-friendly parimutuel venues, dog tracks. (Goofy actually races at those venues.) There are casino cruises leaving from ports on the state’s east and west coasts. But Disney officials still insist that huge, luxurious integrated resorts would harm Florida’s “tourism brand.” Never mind that the six o’clock news does more to hurt that brand than a casino ever could. This is just the latest salvo in a long battle between Disney and casino corporations over mega-resorts. I remember writing a story in 1986—when I was a fresh, young mustachioed gaming writer—about possible resort casinos in South Florida that were ultimately prevented by Mickey Mouse. More recently, opposition from Disney killed a 2011 plan by Genting to build a $3.8 billion resort. Genting had spent nearly half a billion on real estate for what was to be a Resorts World Miami project. Mickey would have nothing of it, sending lobbyists to Tallahassee, making big campaign contributions, and even giving Florida politicians more than $400,000 in free theme park tickets. Yes, Disney can comp too. Disney sent 34 lobbyists to Tallahassee last year to fight integrated gaming resorts, to go along with 23 sent by the anti-gaming group No Casinos. Genting and Las Vegas Sands plan to send more than 100 lobbyists to the legislature this year to promote mega-resorts. They will arrive armed with a recent
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NEW GAME REVIEW by Frank Legato
Cyber Seven Aruze Gaming
his new game in Aruze’s “Innovator With Radiant Reels” stepper series centers on “7” wins, particularly in a free-game round in which the wins are more frequent. The base game is a simple five-reel, five-line game, enhanced by the Innovator format, which features large reels—at 18.1 inches across, which each reel strip measuring 3.54 inches, they are the largest strips for a fivereel format in the business—backed by multi-colored LED lighting and variable reel speeds, with lighting and colors varying according to game conditions. Radiant Reels spin forward and backward at various speeds. Three scattered bonus symbols on the middle reels trigger the Cyber Free Games event. The player is awarded five free games, and during the free spins, there is an increased chance of 7s landing on the reels for the top line combinations. Additionally, a multiplier applies to every winning combination during the free games. Above the reels are back-lit multipliers, including X2, X3, X4, X5 and X10—every winning free spin delivers
a multiplied jackpot. The free spins are frequently re-triggered during the bonus round for an additional five spins on the enhanced reels. Manufacturer: Aruze Gaming Platform: Innovator Format: Five-reel, five-line stepper slot Denomination: .01 Max Bet: 150, 300, 450, 600 Top Award: 1,000 credits times line bet Hit Frequency: Approximately 40% Theoretical Hold: 2.09%—12.96%
Get Rich on Route 66 Bally Technologies
his is the latest game on Bally’s V22/42 cabinet, which is the format featuring a normal 22-inch LCD monitor for the base game and a giant, 42-inch vertical monitor on the top screen displaying dual bonus wheels. It is the game style first used on the hit “Dual Wheel Hot Shot Progressive” game. In this case, the two wheels top a game based on the culture surrounding Route 66, the famous Western highway immortalized in song as the place to “get your kicks.” In this case, it’s “Get Rich on Route 66.” The base game features classic slot symbols and four different “7” symbols, with the top jackpot returned for five red 7s. There is also a 2X wild symbol that doubles the payoff in winning combinations. On random spins, “Mystery Stacks” will occur. Each reel has mystery symbol positions that are randomly replaced with one or two symbols before each spin, creating a stack of the same symbol to boost winning combinations. When players get a full stack of “Get Rich on Route 66” symbols on the middle three reels, a picking bonus determines one of two bonuses involving one of the bonus wheels. The player picks from nine tiles seeking to match three symbols to either spin the Credit Wheel for a prize ranging from 100 credits to 1,000 credits times the line bet, or a free-spin bonus. If the Credit Wheel is won, the player gets three spins of the wheel. If the free-spin bonus is triggered, the player is awarded five free
Global Gaming Business MARCH 2014
games with stacked 7 symbols. Before the bonus round, the player spins the top bonus wheel to determine which color the stacked 7 symbols will be—if the top red 7 is stacked, the largest bonus is available. Both wheel spins feature the Bally “USpin” method—the player physically spins the wheel, which spins at a speed based on the pressure applied for the spin. Manufacturer: Bally Technologies Platform: Alpha 2 Format: Five-reel, 30-line video slot Denomination: .01—1,000.00 Max Bet: 2,500 Top Award: 1,000 credits times line bet Hit Frequency: 19.23% Theoretical Hold: 4%—14.62%
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International Game Technology
his beautifully crafted Asian-themed video slot features 50 or 100 paylines on a five-by-five grid—five physical stops on each of five reels. The high-volatility base game features numerous “lucky symbols,” and the game features an engaging free-spin bonus in which the player chooses the volatility. When bonus symbols trigger the free game bonus through five spiral bonus symbols anywhere on the reels, the player chooses Free Games Bonus, and are able to customize the gaming experience by choosing from high numbers of free games with low volatility and lower numbers of spins with high volatility. Controlling the volatility in both the base game and the freegame round are “Roaming Multiplier Wilds,” which apply a random multiplier to any winning combination formed with the wild symbol. The game is designed top-to-bottom to appeal to Asian-style play, from the high volatility of the base game to the reel symbols. Players also are able to select their preferred language, picking between English and Chinese with the push of a button. Fire Pearl is compatible with a variety of IGT cabinets.
Manufacturer: International Game Technology Platform: AVT Format: Five-reel, 50-line or 100-line video slot Denomination: .01 Max Bet: 2,500 Top Award: 50-line: 50,000 times line bet 100-line: 125,000 times line bet Hit Frequency: 50-line: 57%; 100-line: 32% Theoretical Hold: 2%—15%
his is the latest in GTECH’s series of games based on the PopCap brand of internet amusement games. The slot reproduces Zuma, the fast-paced, tile-matching video game carrying a theme of Aztec Mexico in which the goal is to eliminate balls rolling around the screen along a given path. The 30-line base game includes several random bonus features. A moving “Ball Track” simulates the paths in the video game but either increments one of three progressive jackpots or triggers “Power Frogs” that award random wild symbols. A “Jumping Frog” will award frequent wilds when the familiar frog character (it represents lives in the video game) jumps to up to five reel spots, turning them into wild symbols. In a random “Ghost Boss Multiplier,” the Ghost Boss appears on the screen before any line wins are revealed and throws out a gold coin to reveal various multipliers. There are four bonus events, one of which allow the player the option to apply the skills gained in the amusement game in “Boss Battles.” The “Treasure Chest Bonus” is an auto-pick credit presentation triggered by three scattered Treasure Chest symbols. The “Kathtiki Khan Boss Battle” bonus allows the player to choose either a pick-a-prize option or a “Skill Challenge,” in which the player times ball shots to battle the Boss. The “Baron Digo Boss Battle” awards five free spins, and during each spin,
the Boss throws skulls. Players pick a skull for fullreel wilds plus additional free spins or a “blocker.” The “Maga Maga Boss Battle” awards nine free spins. During each free spin, the Boss throws a minion blocker, while the frog jumps to a wild. If the wild contributes to a win, the minion breaks or is destroyed, and the Boss is hurt. If the Boss is defeated, the player is given a chance for bigger wins. Manufacturer: GTECH Platform: prodiGi Vu Format: Five-reel, 30-line video slot Denomination: .01 Max Bet: 250 Top Award: 270,000 Hit Frequency: 30.68%—31.15% Theoretical Hold: 5.84%— 15.85%
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CUTTING EDGE by Frank Legato
Four-In-One Compliance Product: Casino Incident, Compliance and Licensing Management Manufacturer: D3 Security Management Systems
3’s Casino ICM is a software system purpose-built to solve the security, compliance and licensing challenges of casinos. Consolidating incident management, compliance reporting, slot operations and licensing on a single user-friendly platform, Casino ICM eliminates manual processes, introduces significant time savings and serves multiple divisions through its user- and role-based access controls. Launched by D3 in 2013 and now present in casinos throughout the U.S., the system delivers strengthened internal controls, powerful documentation ability and anti-money laundering compliance to a gaming industry hit hard by recent enforcements and extreme fines. Web-based, fully configurable and tailored to the customer’s exact requirements, Casino ICM features four distinct modules:
Incident Management Users can track excluded persons, drug and alcohol violations, advantage gambling, plus standard incidents such as slip-and-falls or physical altercations. Trending, root cause analysis and incident heat maps are built in, and the system’s fully integrated Guard Tour, Dispatch and GIA PSIM modules deploy counter-measures while ensuring optimal security coverage.
Compliance Reporting The D3 system’s configurability enables consistent data collection and the production of any number of reports. With pre-configured solutions for tribal, state and federal compliance—including for Title 31—the D3 system produces accurate and verifiable reports critical to a casino’s anti-money laundering strategy. Slot Operations Using D3’s mobile app for Apple’s iPhone (and iPad), slot technicians can manage slot upgrades, maintenance and inspections. The system automatically timestamps and documents the work performed at each machine, in turn providing machine history, employee accountability and accurate compliance reporting. Licensing Management Effective management of employee, gaming, vendor, food and liquor service licenses is another feature of Casino ICM. Licenses and certificates are securely stored in the D3 database with automatic notifications to alert a department when an action—such as renewal—needs to be taken. The system integrates with active directory and asset management systems to further streamline record-keeping. For more information, call 1-800-608-0081 or visit D3Security.com.
Mobile Strategy Product: Slots Jackpot Accelerator Manufacturer: Resort Advantage
he Slots Jackpot Accelerator is designed to address the additional regulatory reporting burden placed on operators with high jackpot volumes. With the significant amount of manual effort, hard copy forms processing, and the monitoring/updating of many internal business systems required to complete a slots jackpot payout, the potential for human error in the manual collection of patron and forms data can lead to regulatory fines and patron frustration. Resort Advantage saw a need to quickly connect the property’s floor staff with the exact information needed to be most efficient working with patrons during the jackpot payout process. RA developed Slots Jackpot Accelerator (SJA), a mobile device app that allows floor attendants to securely and efficiently bring the entire jackpot payout process to winning patrons at the gaming machine. SJA is designed to redefine how properties engage with their patrons, giving them control of business-critical jackpot processing activities to help improve patron relationships, floor attendant performance and overall profits. SJA’s mobile approach to jackpot payouts expedites the four key phases
Global Gaming Business MARCH 2014
of the process: jackpot notification, patron engagement, payment processing, and post-processing. SJA automates the compliance workflow, so floor attendants can gather the required jackpot payout information according to the business rules of the property. Using ID image capture, real-time SSN/OFAC/DML checking, electronic regulatory forms rendering, signature capture, and automated IRS forms, e-filing dramatically expedites the process and eliminates the majority of paperwork. Additionally, SJA’s latest innovations include integration with FutureLogic’s EGD TITO printers and Sightline Interactive’s propertybranded prepaid loyalty bankcard platform, providing instant access to jackpot payout documents and IRS forms at the gaming machine, as well as immediate electronic payment of winnings loaded on the patron’s loyalty card. Implementation of SJA, available on Android, iPad and Windows mobile devices, results in the routine enforcement and complete auditability of a property’s jackpot payout procedures and reporting requirements. For more information, visit resort-advantage.com.
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GLOBAL GAMING WOMEN
Next Generation of AGA Women
omen, an increasingly well-educated source of talent, have penetrated the global workforce in growing numbers in the recent decade. In 2011, the American Gaming Association set an example to rise above the status quo through Global Gaming Women, a group that strives to build strong relationships, to provide networking opportunities and to cultivate a nurturing environment for women to grow within the industry. GGW is set on improving the lives of women in the gaming industry and fostering the next generation of gaming women. In 2014, we are growing at AGA with a team of capable, talented women who will lead our industry forward. Before joining AGA, I worked with MGM Resorts International as the vice president of government affairs, leading the Maryland lobbying and referendum campaign for casino expansion. Now, as senior vice president of public affairs at AGA, I oversee all communications, research and campaign-style
by Sara Rayme, Senior Vice President of Public Affairs, American Gaming Association
initiatives. We are fortunate to be building AGA from a strong foundation of leadership, hard work, intelligence and ambition. My new female colleagues include the following: • Allie Barth, senior director of communications, joins us from the U.S. Travel Association, where she developed and managed the organization’s internal and external communications and implemented strategic campaign initiatives. She executes AGA’s communications platform. • Elizabeth Cronan, director of gaming policy, previously worked with International Game Technology (IGT) and held a consulting role with GeoComply, a geo-location company actively engaged in online gaming expansion. Elizabeth leads AGA’s public-policy activities, including regulatory reform and anti-money laundering initiatives. • Virginia Hurt Johnson, general counsel, brings 30 years of experience in the private and public sectors and has extensive knowledge of the executive and legislative branches. As part-time
general counsel, Virginia addresses AGA’s day-today legal needs, manages outside counsel, and guides the organization as it attracts new members and opportunities. To carry on the success of GGW, AGA plans to launch the GGW toolkit this year. It will include our recent research findings and suggest recommendations for implementation. We will distribute our material among affinity groups and AGA member companies to further educate and enrich the lives of women across our industry. We will also continue to promote GGW’s mission of education, mentorship and networking through our scholarship program, GlobalGamingNetwork.org, and the growing list of GGW events and programming. I look forward to learning and growing with women of our industry. Women belong in all divisions of gaming. GGW is one of the programs that AGA will continue to build to help elevate our entire industry.
SAVE THE DATE May 20-22, 2014 The Venetian Macao
A G2E Event
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Value: A Simple Word All of your players understand the word well. Do you? By Steve Karoul
ne of my favorite sayings is, “The operation was a success but the patient still died.” Often, in today’s highly competitive casino industry, balancing common sense with value or perceived value in a highly regulated environment can make the difference between success or having your patient (the customer) die (or disappear). One time, I received a telephone call from a small player that I knew quite well on a personal basis. He called me to tell me that he was sorry but that he was going to have to cancel his reservation at Foxwoods. I asked him why, and he informed me that he was offered a better deal from another casino. He told me that he received a discount coupon in the mail and that he could use that extra savings for play in the casino. The $20 difference in room rates represented value to him. I was also intrigued because this customer was my own brother. So much for loyalty in the casino industry today; value won. This made me think for a moment about what else we take for granted that we often see day in and day out that may be perceived as “value” by our customers. Foxwoods was rapidly approaching its annual strategic planning sessions. Therefore, I decided to issue a challenge to all Foxwoods management throughout the organization to first take a good hard look at our own operation within each of their own operating divisions and then to make at least three personal visits to our direct competitors or any other competitors on either a local or a regional basis. I discussed this with our CEO, who immediately recognized the thought process, and issued a personal memo to all management to support our new value project and to accept the challenge. Over the next few months we organized numerous focus groups from almost every operating
department at the property. We then set up twohour meetings in one of our small conference rooms with each department head and their representatives to discuss our findings, focusing on what we thought were the key items or issues that represented better value to our customers if and when they visited our competitors. Each focus group was made up of 10 to 15 team members from within their respective departments. The only ground rule was that the sessions were not to be used as complaining sessions. We wanted positive feedback. The results were extremely interesting, informative and enlightening. I chaired every meeting and my secretary took minutes. Not only were we able to document what we thought our competitor(s) were doing better than us, we were also able to develop lists of positive recommendations of what we thought we would need to do to create better value or perceived value at our own casino. Obviously, many of the recommendations were easy to implement immediately, but many were also more complicated and involved some additional funding or capital expenditures. Therefore, I informed each group that I would summarize their recommendations and present them to senior management for further review. It was amazing. The entire property quickly became energized and focused on creating value or perceived value in everything that we did. We even came up with a value meal in our food court similar to McDonald’s Value Meals. What was interesting was that the process worked, and we began to quickly receive great feedback from our customers. I held several meetings with senior management and we further prioritized items that would require additional funding or capital expendi-
The $20 difference in room rates represented value to him. I was also intrigued because this customer was my own brother. So much for loyalty in the casino industry today; value won.
Global Gaming Business MARCH 2014
tures. Many of these recommendations were eventually rolled up into our cap-ex budget request, which was presented annually to our tribal council. Tribal council also quickly recognized the benefits, and we received approval for a very substantial capital-expenditures budget, which was needed to upgrade certain areas within the property to help create better value or perceived value for our customers. These improvements helped to ensure our long-term ability to remain competitive and profitable in today’s highly competitive casino industry. The overall feedback from our customers at that time was terrific. Our value project was extremely successful because our management team properly communicated the “challenge” down through the organization. That was the reason we set up our focus groups for each department to include team members from every level of operation within each department. People are people, and we all share many common traits as human beings. One such trait is being able to recognize value or perceived value. Another trait is involvement or inclusion in the change process. Many of our best and most productive recommendations actually came from many of our rank-and-file, front-line employees. Take a close look at your own casino and then take an even closer look at your competitors. You don’t have to reinvent the wheel here. The value project concept works. Use it as a model to issue your own challenge to your fellow team members. You may be very surprised with the results both from the perspective of what is wrong and the recommendations of how to fix the problems. Many of our recommendations didn’t cost a lot of money, but the changes represented “value” or better perceived value to our customers. Steve Karoul is a well-known and respected casino consultant with over 35 years of experience. Karoul has lived and worked in many different countries and has conducted casino marketing activities in more than 100 different countries. For additional information, Karoul can be reached at email@example.com or www.euroasiacasino.com.
IGPExpo Media Kit
er f y a o Pl ds ew g e in ndr m N ! am hu fro os G i ve Y sin e A th cei PL ca to e E e e nd r RE nlin m F o Co po a in y’s s Ex llar erse do J
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GOODS&SERVICES BALLY LANDS SYSTEM DEALS WITH BOYD, ALH
AGA TARGETS ‘PATENT TROLLS’
lot and system manufacturer Bally TechnoloSagreement gies announced an enterprise-wide systems with operator Boyd Gaming, and a
American Gaming AsTbyinghesociation has begun a lobcampaign targeting
separate enterprise-wide deal with Australian Leisure and Hospitality Group. The Boyd agreement includes deployment of Bally’s award-winning iVIEW Display Manager (DM) with Elite Bonusing Suite across 18 Boyd Gaming casino properties in seven states, including Nevada. Boyd Gaming will continue expanding its use of Bally systems, including ACSC slot-monitorBally Technologies President and accounting ing, marketing, player-tracking and CEO Ramesh Srinivasan solutions, as well as Power Promotions, which enables casinos to offer players downloadable promotional slot credits. “After a thorough review process, we believe Bally’s innovative systems solutions are a great way to differentiate our properties from the competition,” said Paul Chakmak, executive vice president and chief operating officer of Boyd Gaming. “As a key component of our new Penny Lane initiative, Bally’s dynamic tools will help us create new and compelling gaming experiences, allowing us to provide ‘More Bonuses, More Often’ to our customers.” iVIEW DM is backward-compatible on most gaming devices with a touch-screen display, and provides a way for casino operators to present selfservice player-account access, marketing messages, and secondary bonus games on the main game screen without interrupting play. Elite Bonusing Suite, when combined with iVIEW DM, adds tools such as Virtual Racing, Virtual Racing NASCAR and DM Tournaments, which have powered five world record-setting events. In a separate release, Bally announced an exclusive enterprise-wide gaming systems agreement with the Australian Leisure and Hospitality Group (ALH), which will deploy Bally’s suite of applications, including voluntary pre-commitment and utilizing a common player card, at more than 270 venues throughout the country, including those in the states of New South Wales, Victoria, Queensland, South Australia, Tasmania and Northern Territory. Bally’s iVista Display Manager picture-in-picture technology enables content such as player messages and player account information to be displayed right on the main game screen or top screen of games equipped with a touch-screen display.
AGA VP “patent trolls,” parties that Whitaker Askew file frivolous lawsuits claiming patent infringement in hopes that gaming suppliers settle claims to avoid costly litigation. Speaking at a forum hosted by the R Street Institute in Washington, D.C., AGA Vice President of Government Relations Whitaker Askew delivered a statement on behalf of the AGA, the Credit Union National Association and the Main Street Patent Coalition, calling on Congress to pass comprehensive patent reform. “Main street businesses are the economic engine that stimulate growth, jobs and innovation in this country,” Askew said. “We owe it to them to have a fair, cost-effective process in place to help protect against predatory patent trolls and the frivolous litigation they assert. “Patent trolls do not create jobs or innovation. The gaming industry is proud to be an innovative, major American economic driver, supporting more than 1 million U.S. jobs. Passing comprehensive patent reform legislation that curbs patent trolls is important to removing unnecessary and costly hindrances on American businesses.”
ACRES 4.0 WINS PATENT FOR ‘KAI’ ystem supplier Acres 4.0 announced that the Scompany U.S. Patent and Trademark Office issued the U.S. Patent 8,632,400, which covers the
intellectual property behind the concept of a “Gaming Device with Personality,” in connection with “Kai,” the mobile customer service and management system that automatically alerts hosts of highend or loyal players and casino personnel when service is needed. According to the company, this award marks the company’s 11th patent granted for its new “emotional technology,” with more than 70 additional patents still pending. “We are building an entirely new spectrum of casino services that extend our Kai solution’s customer service capabilities into new player recruitment and retention,” said John Acres, founder and CEO of Acres 4.0. “Casinos have relied on simple CASINO TECHNOLOGY fiscal awards of points and prizes to build loyalty for RECEIVES INNOVATION AWARD too long with ever-diminishing success. ulgarian slot manufacturer Casino Technology was “We have combined virtual personalities with given an award at the ICE Totally Gaming trade standard mobile communications to create an enshow last month honoring the company for “Sustirely new suite of emotional technology that gives tained Innovation” in recognition of its innovations players more of the fun, excitement and recognition in gaming. they come to casinos for. The issuance of 8,632,400 The award was presented by Ian Hughes, vice strengthens our patent coverage over these technolopresident of global services for Gaming Laboratories gies and enables us to continue to invest heavily in International, to Milo Borissov, founder and presitheir development.” In other Acres 4.0 news, Firelake Grand Casino Hotel Resort in Shawnee, Okla., recently installed Kai, becoming the first casino in Oklahoma to offer the new customer service management solution. “We have worked with Firelake to redefine the gambling experience throughout their property for the past several years,” said Acres 4.0 COO Roy Corby, “so when we first introduced them to Kai, they immediately knew it would bring value to their operations.” GLI’s Ian Hughes and Christie Eickelman congratulate Casino
Technology’s Milo Borissov and Rossi McKee on their Innovation Award. 66
Global Gaming Business MARCH 2014
Let’s Champion the Industry Together • Protect and promote industry-wide legislative issues on Capitol Hill. • Create business and networking opportunities at industry events. • Access industry knowledge through educational programming and research. • Enhance world-class responsible gaming programs. • Articulate the value of the modern gaming industry nationally and at state and local levels. AGA is committed to driving industry growth. Join us.
For more information, visit www.AmericanGaming.org AmericanGaming @AGAupdate
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dent of Casino Technology. The ceremony took place during the Casino Technology press conference at the company’s stand at ICE. As the first Eastern European company to achieve a breakthrough in gaming markets worldwide, Casino Technology was recognized for its customer-dedicated innovations in the region and advocating for gaming regulations and fair play. “Casino Technology has always been on the forefront working with the industry to promote professionalism and highest industry standards,” said Hughes. “The company actively embraced and supported gaming regulations long before most companies in the region, advocating for technical standards and a level playing field. Now, Casino Technology once again demonstrates its innovative spirit transferring its successful experience from land-based business to online gaming.” “For us this award is both a recognition for our efforts and an impetus to continue to promote the highest professional and technological standards in the gaming industry helping to improve its image worldwide,” said Borissov.
NEWAVE INSTALLS IN ARIZONA oftware supplier NEWave announced that it will SManager install its Audit Manager, Manuals and Vault software modules at an Arizona casino, empowering the casino with the ability to increase efficiencies in many of the casino’s operations. “We are thrilled to be expanding our relationship with another Native American casino operator in Arizona,” said NEWave Senior Vice President of Sales Clair Rogers. “We strive every day to continue to earn the trust of the casino operators we serve from coast to coast, and we know we have the best software available to help operators do business more efficiently.” NEWave’s Audit Manager, Manuals and Vault Manager modules are part of the company’s myRevenue Manager software suite, which helps casinos increase efficiencies, reduce waste and protect the bottom line. In other NEWave news, the company announced it has again expanded its relationship with Tachi Palace Hotel and Casino. Tachi Palace already uses many NEWave software modules, and now NEWave has installed its Audit Manager software at the property. Tachi Palace CFO James Snead said, “We have had a very good relationship with NEWave for many years, and we trust the company, their staff and their software to help increase our efficiencies and protect us from fines. We are pleased to now be expanding our relationship with NEWave.” 68
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PEOPLE BALI EXITS ARISTOCRAT AMERICAS
ich Schneider, the chief product officer for Aristocrat, has been named as interim president of the Rich Schneider company’s Americas division. Schneider, who joined Aristocrat after a long career at IGT, fills in for Atul Bali, who departed after more than a year at the helm. “I would like to acknowledge Atul Bali’s leadership and contribution during his time at Aristocrat, particularly in supporting our product strategy and helping to guide our growth in digital gaming,” said Jamie Odell, CEO and managing director for Aristocrat Leisure Limited. The move is part of announced changes to the company’s executive structure. Odell says a global chief operating officer will be appointed by mid2014 after a global search. “I’m confident our new executive structure will ensure we extract maximum benefit from our strong new product portfolios in the market and position the business to accelerate our performance trajectory,” said Odell.
REDMOND QUITS ECHO
cho Entertainment Chief Executive John Redmond has resigned after a little more than a year on the job in the wake of second-half results John Redmond showing that profits at the embattled Australian casino operator had fallen more than 30 percent. High rollers pummeled the company during the period. Combined with a number of one-time charges, the effect drove net income down to A$46.1 million. Chairman John O’Neill said Redmond will return to the United States for personal reasons following a three-month transition period in which CFO Matt Bekier will take over the reins of the company and its flagship Star resort in Sydney and three casinos in Queensland, one of which recently was sold.
CARRUTHERS JOINS SANDS CHINA
ands China has appointed Ciarán Carruthers as senior vice president and director of operations at the Venetian Macao and Plaza Macao. The 26year industry veteran previously served as COO at
Galaxy Entertainment Group. Carruthers is a respected gaming analyst and operator. As president of Asia Pacific Gaming Consultancy (Macau), he assisted the Belle Corp. in planning for casino Ciarán Carruthers management at what is now the City of Dreams Manila. Asia Pacific also produces one of Macau’s most respected casino publications, producing detailed market reports on gaming revenue, visitor arrivals, marketing promotions, visa restrictions, infrastructure, labor statistics and more.
HSU NAMED GM OF MELCO’S ALTIRA
onstance Hsu Ching Hui has been appointed the general manager of Melco Crown’s Macau property Altira, the company’s first casino. Melco also operates the City of Dreams and controls the under-construction Macau Studio City casino. Hsu joined Melco in its slot department in 2003, and rose through the company management ranks since then. Her most recent position was president of Melco’s Mocha Clubs, the standalone slot parlors the company operates throughout Macau. Michael Tjendra will replace Hsu as president of that company.
GCA NAMES RAM CHARY CEO
lobal Cash Access Holdings, Inc., a global provider of cash access/cash handling solutions and business intelligence services for gaming establishments, announced that Ram Chary has been appointed as chief executive officer and as a Class III director to the company’s board. Chary replaces David Lopez, who resigned as president and CEO to accept the position as the new president and CEO of slot manufacturer American Gaming Systems. From 2007 to 2013, Chary served in various roles at Fidelity National Information Services, Inc., most recently as an executive vice president of global commercial services. He previously led the technology division of Fidelity National Information Services, Inc., a banking and payments technology company.
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FAHRENKOPF NAMED BMM DIRECTOR
gaming industry’s main trade organization before retiring last summer. Fahrenkopf serves as cochairman of the Commission on Presidential Debates, which is responsible for the widely viewed presidential debates during the quadrennial election cycle. As a counsel at Hogan Lovells, Fahrenkopf gained national prominence during the 1980s when he served as chairman of the Republican Party for six of President Ronald Reagan’s eight years in the White House (1983 to 1989).
aming testing laboratory and technical consultancy BMM Testlabs announced that Frank J. Frank Fahrenkopf Fahrenkopf, Jr., the former president and CEO of the American Gaming Association, has been named a non-executive director on the board of BMM International, effective February 1. “This is a very exciting time for BMM around the world,” said Martin Storm, BMM’s president and CEO. “Having the esteemed Frank Fahrenkopf join the BMM group board is extraordinary for each of BMM’s stakeholder groups and a tremendous vote of confidence in our culture, capabilities and commitment to the gaming industry worldwide.” Fahrenkopf was the founding president and CEO of the AGA, and spent 18 years heading the
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 American Gaming Systems . . . . . . . . . . . . . . .11 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Bally Technologies . . . . . . . . . . . . . . . . . . .2, 35 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . .31 Casino Arizona . . . . . . . . . . . . . . . . . . . . . . . .41 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .68 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47, 61 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Global Cash Access . . . . . . . . . . . . . . . . . . . . .21 GTECH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 iGaming Player Expo . . . . . . . . . . . . . . . . . . .65 Incredible Technologies . . . . . . . . . . . . . . . . .43 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Konami Gaming . . . . . . . . . . . . . . . .Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Macquarie Inside . . . . . . . . . . Inside Back Cover Multimedia Games . . . . . . . . . . . . . . . . . . .9, 45 NEWave . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 Ortiz Gaming . . . . . . . . . . . . . . . . . . . . . . . . .29 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .16 Talking Stick . . . . . . . . . . . . . . . . . . . . . . . . . .41 TMG Consulting . . . . . . . . . . . . . . . . . . . . . . .68 UNLV Foundation . . . . . . . . . . . . . . . . . . . . . .57 Zitro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
MARCH 2014 www.ggbmagazine.com
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Joe Pappano Senior Vice President, Director of Merchant Sales and Managing Director, Vantiv Gaming Solutions
ayment processing has quickly become the Achilles heel of iGaming in the United States. If players find it difficult to deposit and withdraw money with their favorite online casinos, they quickly lose interest. There are few payment processing packages as complete as the one offered by Vantiv Gaming Solutions. Joe Pappano and his team have been working in the field for many years, and Vantiv has designed solutions especially for iGaming. Pappano explains the roots of the problem and reveals that there is light at the end of the tunnel in a group consisting of all the major players in the space. He spoke with GGB Publisher Roger Gros at the GGB offices in December. Pappano addresses the fraud protection, money laundering oversight and more details of the transaction designations for online gaming. To hear a full podcast of this discussion, visit GGBMagazine.com. GGB: Let’s start with a thumbnail description of
Vantiv. You are active in many other industries besides online gaming, aren’t you? Pappano: Yes, we are currently the third-largest merchant acquirer and facilitator of the movement of electronic transactions in the United States. Currently we move over $16 billion in electronic transactions, and we have been doing it over 40 years through our proprietary platform. We’ve taken this well-polished, disciplined infrastructure and leveraged it within the gaming ecosystem. We are a technology company, ranked among the top 20 technology companies by Forbes in 2013. How does Vantiv Gaming Solutions serve the industry? We focus on six market segments: casinos, social gaming, fantasy sports, advanced deposit wagering, state lotteries and the evolution of iGaming, including online poker, gaming and bingo. We have a great résumé and experience in all those segments. Tell us why electronic transactions have historically been an issue with gaming. Card acceptance within land-based casinos only happened in a couple of areas: either a cash advance at 70
Global Gaming Business MARCH 2014
an ATM or at the cage, and the use of cards in the non-gaming areas of a casino—hotel, restaurants, retail, etc. That is changing quickly, and presenting casinos with the next generation of player who is now walking in the doors. The technology that is going to create that omni-channel approach is just beginning. How can I take the activity that occurs online or on a mobile device and tie that back seamlessly to my brick-and-mortar casino? That’s an area on which we are really focused. Where is the gaming industry today in utilizing the know-your-customer (KYC) technology? The gaming industry is still antiquated when it comes to this technology. In all other businesses, more transactions are occurring online or on a mobile device, and you still have that retail presence. That same ecosystem can exist in gaming by minimizing payment expense and discovering new ways to drive revenues by better understanding your customer. In my 20-year career with Vantiv, I have never seen a better alignment of alternative payments, the digital wallets, the mobility of players, and the ability to truly know your customer. It’s a convergence of all these kinds of play. What’s the Vantiv solution to the problem of payment processing in online gaming? If you backtrack for seven years, since 2006, every financial institution has been conditioned that processing or facilitating an online gaming transaction is illegal. There were penalties and great oversight to make sure this didn’t happen. But now, iGaming has only been available in three jurisdictions for seven months. And if you add up the population of those states, it’s less than 5 percent of the nation. It’s a marathon, but everyone wants instant gratification, and we are walking each and every transaction to its final conclusion. But today, financial institutions do not understand the scrutiny and the layers of security that exist for internet gambling. They don’t understand the licensing process, the effective controls sur-
rounding KYC, geolocation, device fingerprinting, IP, underage and more. Every month since the launch of iGaming in Nevada, the acceptance rate for online transactions has been improving. We are seeing banks show up with approvals they hadn’t approved before. We are seeing the cards educate the issuers, and that’s helping. So it is working; it’s just taking longer than we want. We are confident that you will see changes in the merchant verification value (MVV) designation in online gaming, lotteries, race bets and more. It’s a marathon, and everyone plays a role in this. It’s working, and Vantiv will help to get the message out to all the players. Are there short-term solutions? Sure, there are different ways you can go that avoid these issues but put the onus on the customer. We’re trying to get that MVV designation to show the issuer that the parties are licensed, have provided the appropriate legal opinions, operate in legal jurisdictions and have the effective controls in place. How long before this issue is addressed by the banks and credit card companies? Actually, for the first time, as of last month, all four card brands—Visa, MasterCard, Discover and Amex—have come together to create a group that will work together to create one uniform scheme to oversee online gaming. There may be multiple codes, but it’s the first time something like this has happened. They’ve come together because they realize that online gaming is happening and it represents a tremendous growth opportunity. What is Vantiv doing to prevent the hacking episodes that we saw late last year with retailers like Target? We offer point-to-point encryption, which means repeat players never have to worry because the card data is not stored by online gaming operators. Those transactions go through us, and we have a well-fortified infrastructure that protects the integrity of the transaction and the data. We have invested millions in preventing these kinds of attacks.
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1. Ranking supported by Bloomberg. These examples may not be representative of every clientâ€™s experience. Past performance is not a guarantee of future performance or success. Macquarie Capital (USA) Inc. (Macquarie Capital) is a registered broker-dealer and member of FINRA and SIPC. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. This document does not constitute and should not be interpreted as either an investment recommendation or advice, including legal, tax or accounting advice. Macquarie Capital is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). Obligations of Macquarie Capital do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Capital.
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