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ASIAN BOOM PART 2 | NIGC’S STEVENS | DIGITAL SIGNAGE | GAMBLING IN VIETNAM

October 2013 • $10

Vol. 12 • No. 10

Restaurant

Revival

Making the most of your in-house eateries

ONLINE OPTIONS Ultimate Gaming maps the way to the future of internet wagering

Reservation Shopping How the Interior Department makes its determinations

Official Publication of the American Gaming Association


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Vol. 12 • No. 10

CONTENTS

october COLUMNS

Ultimate Arrival The operators of the first legal online gaming site in the U.S. hope to seize their first-mover opportunity in a ramp-up that promises to provide a model for successful internet gaming in the biggest market of all. By Roger Gros

On the cover: Tobin Prior, CEO; Tom Breitling, Chairman; and Chris Derossi, Chief Technology Officer

16 Fantini’s Finance Casino Fatigue Frank Fantini

18 AGA A Vision for the Future Geoff Freeman

58 Global Gaming Women A Story of Mentorship Jill Alexander

Cover photo by Derrick Treadwell

DEPARTMENTS 4 The Agenda

FEATURES

6 Dateline

20 The Off-Rez Conundrum Tribes in California and elsewhere seeking to have land off their reservations placed into trust for casinos must battle the persistent charge of “reservation shopping.”

14 Nutshell 66 Cutting Edge

By Dave Palermo

44 Booming Asia Part 2 of a spotlight on the Asian gaming industry examines how new players like Japan and eastern Russia may affect the market. By Rodric J. Hurdle-Bradford

50 Restaurant Recipes Location, menu design and pricing are among the keys to turning a new casino-resort restaurant into a success. By Marjorie Preston

60 Signs of the Times Digital signage solutions have replaced the traditional printing operations with messages that are changeable, flexible and profitable.

GGB iGAMES Our monthly section highlighting and analyzing the emerging internet gaming markets. FEATURE 26 Ultimate Gaming (see Cover Story above)

34 Online Gaming

Be Careful What You Wish For Richard Schuetz

68 New Game Review 72 Frankly Speaking 74 Goods & Services 77 People 78 Casino Communications With Tracie Stevens, Chairwoman, National Indian Gaming Commission

36 iGames News Roundup 42 iGNA Outlook

Moving Target Kimberly Arnold

By Dave Bontempo

OCTOBER 2013 www.ggbmagazine.com

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THE AGENDA

Grading Growth

Vol. 12 • No. 10 • October 2013 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

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

A

group of some of my gaming friends and I were sitting around a few weeks ago talking about how the gaming industry was going to grow from now into the future. After all, we’re just about at the limits of expansion, with Massachusetts well on the way to establishing its casino industry. The only areas left now are Texas and maybe Georgia or somewhere in the southeastern U.S. We’ve got the rest of the U.S. covered. Of course, internationally, there are still growth opportunities. Asia is hanging out there like a plum, but the remaining regions available are going to be difficult to enter for major gaming companies. Japan is going to insist on local ownership, most likely. South Korea has already demonstrated that local ownership is important. Russia probably has room for growth, but you’ve got to have some brass ones to think you can compete there. So with a minimal amount of expansion, one of the other ways to grow is consolidation. We’ve seen a fair share of that lately. Ameristar was bought recently by Pinnacle, which gives that company a strong position in the regional markets. But Pinnacle was forced by the government to sell some important properties to allow that sale to go through, strengthening those companies (Tropicana Entertainment, which purchased Lumiere Place in St. Louis, and the Golden Nugget/Landry’s, which bought the unfinished Lake Charles property) and increasing competition. Just last month, Eldorado, which operates properties in Reno and Louisiana, bought MTR Gaming, which owns casinos in West Virginia, Pennsylvania and Ohio. On the supplier side, Bally Technologies gobbled up SHFL entertainment, bringing the largest table-game supplier under the wing of one of the largest slot machine manufacturers. Sci Games is just about to finalize its purchase of WMS Gaming. While both of those mergers were very synergistic, there are not many ways vendors can merge without actually losing value on one of the sides. It’s difficult to see how or why any slot manufacturers would merge. So consolidation is still a way to grow, but opportunities are few and far between. We have the advent of online gaming just about upon us in the U.S. But what that has done for the most part is simply bring new companies

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Global Gaming Business OCTOBER 2013

into the industry, rather than grow existing companies. Our cover story this month, Ultimate Gaming, is an imperfect example of that because Station Casinos and the Fertitta brothers own a majority of the company, but it is still a new company with little connection to the past. Other companies are hardly new to the online gaming industry. In New Jersey, which is supposed to launch its online gaming business next month, a stipulation that the industry be connected to the Atlantic City casinos has merely meant remote partnerships with established online gaming companies like bwin.party entertainment, 888, Gamesys, Betfair and others. While the AC casinos will get some of the revenue, it will be a decidedly smaller pile than their partners, and they will learn little of their partner’s expertise in most scenarios. So while online gaming will grow the business overall, it will not grow the existing bricksand-mortar companies very much. And how will online gaming affect the landbased casinos? When you can gamble on your mobile device, why even travel to a casino? You’ll have the best games, virtually unlimited choices and even skill games that will be even more entertaining than today’s slot machines. So can you count on attracting players to your casino resorts largely for your non-gaming attractions? Who knows? The impact of online gaming on bricksand-mortar is largely unknown right now. I wish I had some wise conclusion to allay your concerns about the industry, how it will grow, and what changes should be coming down the road. But I don’t. Granted, the friends with whom I was discussing this were part of the “old school” and we know the past very well, but our knowledge of the new technology and the customers of the future is limited. All I can offer is the promise that Global Gaming Business will be covering the cutting edge of the changes that will occur in the industry over the next several years. We’ll be like the canary in the coal mine. Keep an eye on this magazine and our attendant websites and apps, and you’ll better understand and predict the path to more growth and greater prosperity.

Becky Kingman-Gros, Director of Operations bkingros@ggbmagazine.com Columnists Jill Alexander | Kimberly Arnold | Frank Fantini Geoff Freeman | Richard Schuetz Contributing Editors Dave Bontempo | Rodric J. Hurdle-Bradford Dave Palermo | Marjorie Preston Robert Rossiello

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

• Julie Brinkerhoff-Jacobs, President Lifescapes International

• Nicholas Casiello Jr., Shareholder Fox Rothschild

• Jeffrey Compton, Publisher CDC E-Reports

• Dean Macomber, President, Macomber International, Inc.

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

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

• Jim Rafferty, President, Rafferty & Associates

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

• Steven M. Rittvo, President, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

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


Macquarie: Your blueprint for success in Gaming.

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

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

Sung Chun Managing Director 310-557-4303 sung.chun@macquarie.com

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

These examples may not be representative of every client’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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DATELINE USA october2013

AdvAntAge: Wynn Boston blinks in Massachusetts showdown R

epresentatives of Suffolk Downs racetrack, which wants to build in East Boston and Revere, and Wynn Resorts, which wants to build in Everett, argued their cases before the Massachusetts Gaming Commission, which warned both warring parties to come to an agreement about whether Boston should be considered as a host city in relation to the Everett casino, or a Boston Mayor Thomas Menino supports Caesars’ surrounding community, according to state law. “I’d hope that everybody can sit around the table Suffolk Downs project. and come to a conclusion and quickly—within hours, days, the time is really short,” declared Commission Chairman Steve Crosby. “It’s time this gets resolved.” And it was resolved a day later when the city of Boston dropped its claim as a host city, which would have given city residents a say over whether or not the Everett project would be approved by the commission. Instead, Boston will opt to be considered a “surrounding community,” which gives it the right to be compensated for impacts upon the city. Everett voters have already given the nod to the Wynn project. In a joint statement issued on Friday, the competitors said they would no longer ask for a commission hearing to decide the issue.

“Based on the new information provided at Wednesday’s public meeting, the parties have agreed to begin discussions about Boston’s status as a surrounding community to address the impacts that Wynn’s proposed gaming establishment would have on Boston and the Charlestown community,” the statement read. This issue was considered of paramount importance in deciding the fate of the Everett casino, since Boston Mayor Thomas Menino has made no secret of his desire to kill the upstart Everett casino, so that the Boston proposal can move forwarded unimpeded. A week earlier, Suffolk Downs filed formal plans for its casino with the Boston Redevelopment Authority. This is the opening step in the development review process for a project that has the full support of Mayor Thomas M. Menino’s administration. The developer proposes a $1 billion casino with 6,600 slots and gaming tables, two hotels with a total of 450 rooms, taverns, 17 restaurants and 30,000 square feet of retail shopping. Menino signed a host community agreement with Suffolk Downs that would pay Boston $32 million a year, but the casino is the subject of hot debate among the candidates to replace the retiring mayor. So starting the process under Menino’s sympathetic review will move the process along in case an anti-casino mayor is elected.

BIG WHEEL PEDDLES NAME RIGHTS The Linq’s observation wheel completes first stage of construction

C Rock Steady

Ohio’s Hard Rock “Rocksino” to open earlier than planned he $265 million Hard Rock International “Rocksino” rising in Northfield, Ohio could open earlier than anticipated, in December. The “Rocksino” is a joint project of the Northfield Park racetrack and Hard Rock. Besides 2,300 slot machines and racing, the facility will have a live music venue. Hard Rock’s CEO James Allen predicts, “People will travel thousands and thousands of miles to come to a Hard Rock.” One thing that might draw them is a restaurant named after former Cleveland Browns quarterback Bernie Kosar, who plans to call it Kosar’s Wood-Fired Grill. Ohio currently has 10 gaming facilities, including four casino resorts, plus racinos. The facility due to open in December will be located midway between Cleveland and Akron.

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Global Gaming Business OCTOBER 2013

ould the High Roller ultimately be called the Pepsi Cola Rolla? Like the Staples Center in Los Angeles, Citi Field in New York, Citizens Bank Park in Philadelphia, M&T Bank Stadium in Baltimore and numerous other arenas and attractions that have made money by selling their names, the High Roller may soon be prefixed by the name of a major corporation. The operators of Caesars Entertainment’s new retail corridor on the Las Vegas Strip are offering “sponsorship opportunities” for a company that wants to put its name on the 550-foot observation wheel that will be the centerpiece of the Linq, a $550 million outdoor retail and entertainment corridor. The circumference for the wheel was completed in September, with the cabins to be installed next. “We have already received interest from big brands for the naming rights of this landmark, but given its significance on the Las Vegas landscape, we continue to search for the right brand to feature as the name of the wheel,” said Dan Burgner of Caruso Affiliated, which is in charge of the sponsorship. The Linq project will have 178,000 square feet of restaurants, bars and clubs, 37,000 square feet of retail and 70,000 square feet of entertainment venues. The first openings will take place in December, with the rest of the development scheduled to open in February. The observation wheel will still be under construction and will open after that.


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DATELINE ASIA october2013

Vietnam may Lift LocaLs Ban Pilot project will allow citizens to gamble in government-owned resort

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For now, the Grand Ho Tram will be off limits to Vietnamese citizens.

Russian Renewal

Taiwan supplier, Cambodia operator join Ho in Russia

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t’s getting crowded in Vladivostok. Taiwanese gaming supplier Firich Enterprises plans to spend US$24.7 million for a 19 percent stake in Lawrence Ho’s proposed resort casino near Vladivostok, Russia. English-language Macau Business Daily reports that Firich will provide the property with electronic gaming machines tailored for the Russian mass market and will assist it with player development in Taiwan and South Korea. Ho is co-chairman of Macau casino giant Melco Crown Entertainment, but is making the investment separately through companies he controls as part of a joint venture with a local developer called Elegant City, which will hold 30 percent of the project’s equity. Ho is reported to be paying US$66.3 million for 51 percent through a Hong Kong-based investment vehicle called Oriental Regent, of which Hong Kong-listed Melco International Development will hold 5 percent and another listed entity, Summit Ascent Holdings, will hold 46 percent. Meanwhile, NagaCorp, the Cambodia operator, announced it would spend more than $350 million to build a casino resort near Vladivostok with 1,000 hotel suites, 100 gambling tables, 500 slot machines and conference, dining and entertainment facilities. The company said it would establish a local presence to obtain a gaming license and begin construction in time for a 2018 debut.

Following the Evidence Philippines expands Okada investigation hilippine investigators say they have identified witnesses in their stalled probe into allegations that Japanese tycoon Kazuo Okada bribed officials to win a casino license. The government previously had said there wasn’t enough evidence to formally charge Okada, but now it plans to send agents to Tokyo to interview three former employees of Okada’s Universal Entertainment, and was coordinating this with Japanese authorities. Justice Secretary Leila de Lima also said it is possible that the country’s former top regulator, Ephraim Genuino, could be implicated. The investigation was launched in the wake of news reports published late last year alleging that Universal paid US$40 million to a politically connected businessman to obtain government approvals and concessions related to a $2 billion resort casino Universal is developing in Manila through local subsidiaries.

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n a move that could signal a softening of Vietnam’s longstanding opposition to gambling by its citizens, lawmakers debating new regulations for the industry are discussing a plan to allow locals to play in a casino proposed for a special economic zone near popular Halong Bay. The Communist Party’s decision-making Politburo is reported to favor what is described as a pilot project that would be limited to citizens who meet certain income requirements and “have a record of good conduct.” The National Assembly also is discussing legalizing sports betting, which authorities know is heavily patronized by Vietnamese through underground websites and other networks. Prime Minister Nguyen Tan Dung visited the province of Quang Ninh last month in connection with a government plan to develop a mixed-use resort with gambling in the 1,800-hectare Van Don Economic Zone. Quang Ninh is about 160 kilometers east of Hanoi and is home to a casino in Mong Cai that caters mostly to Chinese. The zone adjoins Halong Bay, which attracts millions of foreign and domestic tourists a year. Upscale hotels in the area also feature casinos which, like Mong Cai’s, are restricted by law to foreign passport holders.

HIGH FASHION SJM, Versace ink Cotai hotel deal

A Palazzo Versace already exists on Australia’s Gold Coast

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ociedade de Jogos de Macau has signed an agreement with Italian fashion giant Versace to develop a branded luxury hotel as part of SJM’s planned gaming resort on Cotai. Asia’s first “Palazzo Versace” (there is one in Australia and another under construction in Dubai) will target Macau’s booming market in tourists from China, where the obsession with high-end European brands has become legendary around the world. “The combined expertise of Versace and SJM will create an unforgettable hospitality experience for Macau’s visitors which will enhance Macau’s role as a world-class leisure and tourism destination,” said SJM Chairman Ambrose So. SJM, Macau’s largest operator by number of casinos and total revenues, won formal government approval in May to build a 2,000-room resort with a casino and other attractions on Cotai, joining the territory’s five other gaming licensees in the multibillion-dollar development of the booming resort district. OCTOBER 2013 www.ggbmagazine.com

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DATELINE GLOBAL october2013

Ottawa Fights Back Ontario nixes new casino for capital O

ttawa Mayor Jim Watson’s request for additional gaming in the provincial city has been rejected. Watson wanted his city to keep existing slots at Rideau-Carleton Raceway and add a second facility elsewhere, reports CBC News Ottawa. But Finance Minister Charles Sousa said Ottawa could not sustain two gaming halls. The Ottawa Public Health Board concurred, citing concerns about increased gambling addiction. Though Watson offered to approach the Ontario Lottery and Gaming Corp. and the province for an annual invest- Ottawa Mayor Jim Watson ment of $2 million to treat problem gambling, the board was unconvinced, and voted 8-1 against a casino expansion. Earlier this year, Ontario Premier Kathleen Wynne fired Lottery and Gaming Chairman Paul Godfrey because they could not agree on the OLG’s handling of gaming modernization, according to John McMillan of the National Capital Region Harness Horse Association. Godfrey insisted he was given no reason for his dismissal, but he made public statements indicating that Toronto would receive a special deal from OLG if it hosted a casino.

Killing Crown

Wynne later told reporters, “I was clear there wouldn’t be any special deals for Toronto,” and in May, Toronto City Council rejected a proposal to develop a casino there. Godfrey has since been replaced by Philip Olsson, the former head of the provincial Liquor Control Board. Olsson is the sixth chairman of OLG in the last seven years. In Ottawa, Councillor Marianne Wilkinson said restricting gaming to Rideau-Carlton Raceway would “provide an economic benefit for one business over others,” is therefore illegal under the Municipal Act, and could open up the city to lawsuits. Nonetheless, Ottawa’s City Council voted to restrict any new casino in the city to Rideau Carleton Raceway and limit it to 1,250 slot machines and 21 table games. The vote reverses a decision by council last October to invite bidding on a casino and appears to have dashed the hopes of Ottawa Senators owner Eugene Melnyk and other potential operators for a stand-alone venue at a more advantageous location. Melnyk wanted to build a casino as part of an entertainment complex complementing his Canadian Tire Centre in Kanata. The Senators lose money, he has said, and having a year-round draw would help to stem the losses.

Echo’s Treasury casino in Brisbane

Echo fights to save Brisbane

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wo years after Trump Ocean Club (below) opened in Panama City, construction has restarted on plans to equip the luxury retreat with the largest casino in Central America. The venue had been stalled over financial difficulties on the part of the developer, Newland International Properties, which entered U.S. Bankruptcy Court in May to negotiate a restructuring of $220 million in debt, a process that is now complete. The casino could be open as early as February, but is more likely to debut later in 2014, according to Managing Director Mark Stevenson, who said designers are “in the final stages right now of completing the final planning and detailing.” Trump has an agreement with South Africa-based Sun International to operate the 7,000-square-meter gambling hall in exchange for a payment of US$45.5 million and another $60 million to build out the facility. Sun also will take over a block of hotel rooms for marketing to high rollers. The casino will be Sun’s second in Latin America. The company also developed the Monticello gaming resort near Santiago, Chile.

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asino giant Echo Entertainment Group wants to relocate and expand in Brisbane as the Australian market continues to be challenged by subdued economic conditions and volatility in the VIP sector. Echo reported a net profit of A$83.5 million for the 12 months through June, almost doubling last year’s results but missing the $123 million forecast by a Bloomberg poll of analysts. The company also warned against year-on-year comparisons, noting that underlying profit of $126.9 million was down 15.5 percent and results were impacted by costs associated with restructuring at its flagship Star casino in Sydney together with some $40 million in operating cuts and other payments and fees. The Brisbane relocation is key to that plan because the company’s Queensland properties, which include casinos in Gold Coast and Townsville, are too limited in their offerings to attract overseas tourists, said Echo CEO John Redmond.

Big Play

Trump Panama casino back on track

“You need to build or develop something at a scale that allows you to compete with the rest of the world,” he said. Rival Crown, controlled by billionaire James Packer, also is looking to plant its flag in Brisbane, where Echo holds an exclusive license, arguing Australia needs to increase its gaming options to compete against growing markets such as Macau and the Philippines and to reverse what it sees as “evidence of weak consumer sentiment” in Australia. Competition may also be on the horizon from Hong Kong businessman Tony Fung, who is proposing a $4.2 billion complex of resort hotels and leisure attractions, including casinos, along the Great Barrier Reef near Cairns. The state also has OK’d a short list of bidders for a combined resort and cruise ship terminal, which might include a casino, in Wavebreak.

Global Gaming Business OCTOBER 2013


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DATELINE EUROPE october2013

Building a Structure

MORE IS MERRIER

The E.U. Parliament outlines a framework for online gaming

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he diverse nature of the oversight of online gaming in Europe will get more centralized after the European Parliament voted on a comprehensive framework under which the industry would operate. By an overwhelming majority, the membership voted to accept a report by English MEP Ashley Fox that concludes that online gaming is an activity of a special nature and must be accompanied by strong consumer protection measures. Some of the measures the new law will tighten are ways to combat fraud, money laundering and match-fixing in sports. The law calls on the European Commission and member states to set up a union-wide self-exclusion list, setting up personal loss or time limits, so players can ban themselves or limit their play, respected by all gaming operators. The law also recommends setting up a uniform identity system so problem gamblers and minors can be prevented from logging in to an online casino or gambling system. To make it easy for players to identify participating sites, the Parliament recommended a “trust mark” or logo of the regulatory authority.

Game Control Norwegians love poker; Norway not so sure o other nation can boast as big a pot of poker winnings as Norway on the recent European Poker Tour, where Norwegian players won more than their counterparts from Spain, Finland, Lebanon and Germany. But that didn’t mean there were any congratulatory calls from the prime minister. It’s illegal to play poker for money in Norway, where all gaming is regulated through government-sponsored operators Norsk Tipping and Norsk Rikstoto. Playing poker on the internet is prohibited also. It’s not illegal to play on international websites, over which Norwegian authorities have no control, but winners are expected to declare their earnings and pay tax on them. And it hasn’t stopped an estimated 350,000 Norwegians from playing poker internationally, and now pressure is growing to allow the real-money game in Norway as well. “The poker ban in Norway is ridiculous,” said Thor Hansen, viewed as the godfather of Norwegian poker and a three-time world champion. “I’m certain it would raise more money for Norwegian athletics and culture if it was legalized.” The Progress Party and the Liberal Party are in favor of legalization. The governing Labour Party is opposed, however, fearing it will drain funds away from the official betting monopolies and result in social problems.

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Pay Up! Malta seeks fees from cruise ships

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Global Gaming Business OCTOBER 2013

Cyprus mayors want casinos

Nicosia Mayor Constantinos Yiorkadjis wants casinos spread across Cyprus.

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he mayors of Cyprus’ five main districts are gearing up to battle the government’s decision to create only one casino resort on the island. In July, the cabinet announced it would grant a license for an integrated casino resort rather than hand out several licences for smaller operations. Such a destination is expected to attract between €600 million and €800 million in new investment, draw half a million tourists and create more than 3,000 jobs, according to a study carried out by private-sector consultants and commissioned by the Cyprus Tourism Organization. Currently, there are no legally operated casinos in Cyprus, but 24 exist in the Turkish-controlled north, and these are patronized by many Greek Cypriots. Parliament has been asked to approve legislation to end the ban on casinos. Then, the real battle has started if early comments from the mayors are anything to go by. “I believe we would be better served by investing in smaller-scale casinos which are more viable,” said Nicosia Mayor Constantinos Yiorkadjis. Limassol Mayor Andreas Christou said he also believes all districts should be given the opportunity to have a casino. “All the towns have their strengths and can attract different types of visitors, so it would be fair to give licenses to all of the districts,” he said. The decision to build only one casino will foment competitiveness between the districts rather than encourage them to cooperate with each other, added Larnaca Mayor Andreas Louroudjiatis. “Cyprus is a small place, and we shouldn’t be put in a position where the different municipalities are having to compete with each other. That said, Larnaca has certain advantages over the other towns.” Establishing casinos was a pledge of the present conservative government, which came to power in February, to diversify the economy after its financial sector all but collapsed in March under conditions of a €10 billion bailout with international lenders. The previous administration opposed casinos on ideological grounds.

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alta is asking the European Union for clearance to allow cruise ships docking in local waters to keep their casinos open. Currently, vessels with casinos on board must close while in Maltese waters. But the government spies a potential revenue stream and is proposing charging operators a “concession fee” of €20,000 each and €8,500 for an annual license to dock. Operators are in favor of the plan but think the fees are too high for the money they believe they will generate by staying open. They also have expressed concerns about being assessed an extra charge for slot machines and table games over and above a stipulated number, the details of which have yet to be publicized.


ARISTOCRAT IS ENTERING A NEW REALM OF PLAY.


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DATELINE TRIBAL october2013 Wisconsin Governor Scott Walker will have the final word on whether another tribal casino will be established.

Tribal Warfare

Wisconsin off-reservation casino approved, sparking dispute

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he U.S. Department of the Interior Bureau of Indian Affairs recently approved the Menominee Indian Tribe of Wisconsin’s application for an off-reservation casino in Kenosha, Wisconsin. Tribal Chairman Craig Corn said he received a call from Kevin Washburn, assistant secretary for Indian Affairs, informing him of the decision. The tribe has attempted for years to open a casino at the 228-acre Dairyland Greyhound Park, which closed in December 2009. Washburn said in a statement that the Menominee “demonstrated that it had an unmet need for economic development to supplement tribal government services to their members and a historical connection to the Kenosha area.” Interior spokeswoman Nedra Darling said the department determined that gambling on the site was “in the best interest of the tribe and its members.” She noted the department also ruled that allowing a casino was “not detrimental to the

Supreme Challenge Michigan AG files court brief

surrounding community.” The $800 million Kenosha project would create 1,400 construction jobs and 3,300 permanent jobs, and generate $35 million in new state revenue. Kenosha, Kenosha County and area schools would receive more than $19 million in casino payments annually. The property would offer a casino with 3,100 slot machines and 75 game tables, a 5,000-seat multi-purpose entertainment venue, retail, restaurants, a hotel and parking. Governor Scott Walker announced he will meet with the leaders of the state’s Indian tribes to help them try to reach a consensus on the Menominees’ casino plan. But it won’t be easy. Ho-Chunk Nation President Jon Greendeer said Kenosha is part of his tribe’s traditional homeland.

Seneca Buffalo Opens Big New York project is third for tribe

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n a document filed August 30 with the U.S. Supreme Court, Michigan Attorney General Bill Schuette argued that the state should have the right to stop the Bay Mills Indian Community from operating an off-reservation casino in Vanderbilt. In the brief, Schuette wrote, “If state sovereignty means anything, it must include the ability to stop illegal conduct on lands under state jurisdiction. If Bay Mills is allowed to break the law by opening casinos outside Indian lands, tribes that follow the law will be unfairly disadvantaged by illegal, competing casinos.” The Bay Mills tribe has operated an 84-slot machine casino in the northern Lower Peninsula, about 100 miles from its headquarters in the Upper Peninsula, since 2010. The tribe purchased the property with interest earnings from a settlement with the federal government over claims it had been underpaid for land ceded through 1800s-era treaties; five tribes received the settlement funds under a 1997 law. The Bay Mills tribe said land acquired with interest from the settlement should be considered the same as other Indian land holdings. The state said the tribe opened the casino without federal permission and violated a state compact with Native American tribes. In March 2011, a federal judge ordered the casino to close, pending the outcome of a lawsuit filed by the state. But in August 2012 a federal appeals court panel reversed the ruling, saying the lower court lacked jurisdiction to close the casino and that the tribe had sovereign immunity. The U.S. Supreme Court will hear the state’s appeal to that ruling in early December. 12

Global Gaming Business OCTOBER 2013

Cathy Walker, president and CEO of Seneca Gaming Corporation; Barry E. Snyder, Sr., president of the Seneca Nation of Indians; and Kevin W. Seneca, chairman of the Seneca Gaming Corporation board of directors, celebrate the opening of Buffalo Creek casino.

he gaming floor was jam-packed during the official grand opening of the Seneca Buffalo Creek Casino, reports the Buffalo News. At an opening ceremony in Buffalo, Kevin W. Seneca, chairman of Seneca Gaming Corporation, called the long-awaited permanent casino “a huge makeover for this portion of the city. It’s becoming a new entertainment district for Buffalo, instead of an old manufacturing area.” The 67,000-square-foot casino offers table games along with the slot machines familiar to patrons of the temporary casino that opened in 2007. The original plan included a hotel and high-end restaurant and entertainment venues. The plan was scaled down after the recession hit; the existing facility has three small restaurants and no hotel. Native American culture also is prevalent throughout the building’s design, including a floor-to-ceiling “Tree of Peace” structure at the main entrance as well as an illuminated and animated electronic feather marquee atop the roof outdoors. The property employs 4,000 people. “It’s not only good for us; it’s always been good for western New York and the city of Buffalo,” said Seneca Nation President Barry E. Snyder, Sr. “It’s something we knew we could do. And when the Senecas say they’re going to do something, they do it.” Seneca Buffalo Creek Casino has regularly attracted more than 800,000 visitors a year—a number that is expected to increase to well past 3 million annually in years to come.

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NUTSHELL

“They Gaming parts supplier Suzo-Happ Group has acquired Australian gaming service and support company Trancity Group Pty. Ltd. Trancity will provide support services for Suzo Happ, which has indicated the acquisition will allow it to significantly expand its presence in Australia and Asia. Trancity will keep its name, and all staff will be retained. British software developer Playtech announced that it has built up a US$300 million war chest for acquisitions. The company, a leading supplier in the online gaming space, logged a 45 percent rise in pre-tax profit last year, thanks in part to a joint venture with British bookmaker William Hill. Even after last summer’s acquisition of Pokerstrategy.com, the company’s executives say Playtech is debt-free, cash-rich and on the prowl for new acquisitions that will add value to the company’s booming business. The Macau government has released figures showing 11 hotel projects under construction in the second quarter, totaling 6,200 rooms. Another 27 projects are under review that would bring the total of new rooms to 23,000 if all are approved. The Macau peninsula would house 17 of the hotels; five more are in the Cotai resort district, the remaining five elsewhere in Taipa and Coloane. The Coquille Indian Tribe is facing criticism for its proposed casino, the Cedars at Bear Creek in Medford, Oregon, which would be located at the site of the Roxy Ann Lanes Bowling Alley and Kim’s restaurant. The bowling alley is still in operation. The tribe plans to raze the neighboring Bear Creek Golf Course to make way for parking. Advocates of the casino say it would boost the local economy by adding 233 jobs. Glossy brochures depicting the tribe’s plans and its answers to criticisms have been distributed. North Bend and Coos Bay officials have written letters in favor of the casino. Wages would be 18 percent above the county average. A survey showed 59 percent were for the casino and 10 percent were against. The Coquille

tribe has one other operating casino in North Bend. In Miami, less than two years after opening a casino, Miami Jai-Alai filed for Chapter 11 bankruptcy protection, listing debt of $138.3 million and assets of $180 million. Its parent company, Florida Gaming Corporation, which operates a casino and jai alai frontons in Miami, and two other affiliates also sought court protection. Florida Gaming opened a Miami casino on January 23, 2012 to boost revenue as the popularity of jai alai continued to fade. Daniel Licciardi, the company’s executive vice president, said Florida Gaming “is now thriving and is a success by every measure but one: its relationship with its lender.” Licciardi said the company was forced to file for bankruptcy because of “ABC Funding’s relentless effort to wrest control of Miami Jai-Alai and the casino.” Maryland’s Casino at Ocean Downs has an expansion plan before its local planning commission that will add 35,475 square feet of space in a facility to be built in a current vacant parking area to the left of the current main casino building. No details were released, or revealed by the racino, as to what the expansion will be used for. However, Ocean Downs is the only Maryland casino with no table games, and property officials have consistently said they will not add tables until the casino space is expanded. The New York Racing Association is considering shutting down the historic Aqueduct racetrack in the borough of Queens, New York City. And unless new legislation is passed to protect the racino next door, a closure of the track would automatically mean the end of Resorts World New York. State law mandates that any property with video lottery terminals must be linked to a racetrack, so if the track closes, so must Resorts World, which has broken national records for slot revenues since opening in late 2011.

CALENDAR September 29-October 1: International Masters of Gaming Law Autumn Conference, Grand Hotel, Oslo, Norway. Produced by IMGL and held in conjunction with the International Association of Gaming Regulators. For more information, visit gaminglawmasters.com/conference/oslo2013 or iagr.org. October 1-4: North American Association of State & Provincial Lotteries (NASPL) 2013 Annual Conference, Westin Providence Hotel, Rhode Island Convention Center, Providence, Rhode Island. Produced by NASPL. For more information, visit naspl.org. October 8-10: European iGaming Congress, Fira Barcelona, Spain. Produced by Clarion Gaming. For more information, visit eigexpo.com.

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Global Gaming Business OCTOBER 2013

November 12-14: South American Gaming Suppliers Expo (SAGSE), Costa Salguero Center, Buenos Aires, Argentina. Produced by Monografie. For more information, visit monografie.com/sagse_bsas. November 20-21: African Gaming Conference 2013, Federal Palace Hotel, Victoria Island, Lagos, Nigeria. Produced by Lagos State Lottery Board and Global Gaming Africa. For more information, visit africangamingconference.com. December 9-12: The 40th Annual Symposium on Racing & Gaming, La Paloma Resort, Tucson, Arizona. Produced by the University of Arizona’s Race Track Industry Program. For more information, visid ua-rtip.org/symposium_racing_gaming.

Said It”

“If casino gambling ever comes to Florida, Doral is the single best location. We’re on the airport. Every highway leads there. And I have 800 acres.” —Donald Trump, who would gladly turn his Trump National Miami golf course into a casino

“It is unacceptable that gambling companies can avoid U.K. taxes by moving offshore, and the government is taking decisive action to ensure this can no longer happen.” —Sajid Javid, economic secretary to Britain’s Treasury Department, on new taxes on revenues of British online gaming companies based in Gibraltar and other offshore tax havens

“We do not want the evil of casinos to spread to other parts of the state. They should be in the Mandovi (a river off Panaji) or out of Goa.” —Party spokesman Reginaldo Lourenco on efforts by one of the companies operating the Indian riverboats to move operations elsewhere in the state

“There is nothing personal here. We love Tom Menino. We love the city of Boston. We want the city of Boston, which is right next door, to receive fair compensation for any and all impacts particularly on the Charlestown portion, including traffic.” —Former Massachusetts Governor William Weld, arguing before the Massachusetts Gaming Commission as a representative of Steve Wynn in his dispute with the city of Boston over a casino Wynn wants to build in Everett

“It’s nice to be able to stay close to home and know that any money I lose is going to go to the local economy. We’re all a little tired of driving to other states and leaving our money there.” —Baltimore-area resident Jason Cooke, who regularly traveled to West Virginia or Delaware to play poker prior to last month’s opening of the new poker room at the Maryland Live! casino

“How well New Jersey goes initially could serve as a potential catalyst or roadblock to other well-populated states following its path with online gaming.” —Credit Suisse gaming analyst Joel Simkins, on the significance of New Jersey’s role as the first densely populated state to approve online gaming


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FANTINI’S FINANCE by FRANK FANTINI

Casino Fatigue Gaming revenues are flat or declining in most regions; should investors worry about this trend, or is it shared by other industries?

A

ccording to the National Revenue Report published by Fantini Research, regional gaming revenues edged up 0.51 percent in July to $2.451 billion thanks to new casinos. But the overall number masked continued weakness that is revealed by the 3.68 percent same-store decline in July, the latest month for which full statistics are available. As gaming revenues continue to lag the country’s economic recovery, the question has to be asked whether this is a long-term, perhaps even permanent, trend. One often-blamed factor is the proliferation of casino gambling throughout the country, as something that once was special has become commonplace. But casino fatigue seems an unlikely reason. Most new casinos are in new or underserved markets and should contribute more to growth than to cannibalization. It appears more likely that there is a change in consumer behavior reflective of broader causes. A look at the restaurant industry shows that gaming is not alone. Revenue at casual dining restaurants declined a significant 3.5 percent in July following a 2 percent drop in June, according to the Knapp Track Index. Those numbers are interestingly close to regional gaming revenue declines of 3.7 percent and 2.7 percent. And these declines come in the face of improved consumer confidence, usually a dead-on predictor of better times for a consumer discretionary industry like gaming. Meanwhile, sales of the biggest-ticket items for most Americans—homes and cars—continue to grow. That is counter-intuitive. When times are tough, it is expected that it is the smaller items— especially those involving entertainment, such as gaming and casual restaurant dining—that would hold up while consumers wait for an improving economy to give them the resources to buy cars and houses. 16

Global Gaming Business OCTOBER 2013

And, indeed, that is what happened during the Great Recession. While GM and Chrysler were on the ropes and homebuilders and mortgage companies collapsed, casinos and restaurants outperformed. An interesting change in the dynamics of regional casino play has occurred since the recession. Then, it was common for casino operators to report that customers were still coming to casinos; they were just spending less. That behavior makes eminent sense when budgets are tight but people still crave entertainment, if not outright escape from the daily grind. Today, casino operators report the opposite: customers are making fewer trips, but spending more. That trend is borne out by admission statistics from three Midwestern states that operate turnstiles and where there are few new casino openings to blur the picture. July admissions compared to last year: Illinois Iowa Missouri Missouri same store*

-8.8 percentage -6.4 -6.7 -13.5

July win per admission vs. last year: Illinois Iowa Missouri

+2.2 +3.4 +3.7

*Factors out Isle of Capri’s Isle Casino Cape Girardeau, which was opened this year Why are fewer players spending more money? The answer probably has more to do with decisions by casino management than decisions by consumers. In order to control costs in the slow business environment, casinos have cut back, or cut out, marketing to low-value players and focused resources on their best players. Thus, the casual player who accepted a free buffet offer for a cheap night out during the re-

cession isn’t getting that offer as often, or at all. And that can lower overall revenues, too, depending on the marketing and player mix. Interestingly, there is one aspect of the casino business that is booming, at least in Las Vegas— the uber-nightclub. By now, everyone knows of places like Hakkasan in MGM Grand and the clubs in Wynn and Encore where patrons order $10,000 bottle service and DJs earn $250,000 a night. On the surface, that would seem to fly in the face of overall industry trends. Colliers International and the UNLV Center for Gaming Research recently drew the conclusion in their semi-annual Las Vegas update that gambling has become less important in Las Vegas and the future is in non-gaming spending. But the trend toward non-gaming spending is not new. It dates back a quarter century to the 1989 opening of the Mirage. The excessive nightclub spending is at least partly fad, for sure, but might have more to do with the fact that affluent people are faring better in today’s economy. And the January increase in payroll tax deductions by definition hit wage earners harder than many others higher on the wealth scale. And that, as well, might contribute to the overall weakness in casino revenues. People are making decisions on how to spend, and more are choosing big-ticket necessities at the cost of entertainment. Consider win-per-admission again. The typical casino patron is not a high roller playing thousands of dollar per hand or $100 a spin, especially in regional markets. In Illinois, average win per admission is $99. In Iowa it’s $61. Missouri’s average per patron is $72. Those folks are grinding it out. That free buffet is more important to them. 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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Global Gaming Business OCTOBER 2013

istening to—and learning about—our members’ needs has been a large part of my job in these initial months as president and CEO of the American Gaming Association. In addition to meeting some of the smart, engaging and hard-working people who make our industry thrive, gaining this familiarity has helped shape my vision for what role the AGA can play in making them even more successful. To guide our strategy for what the AGA can be moving forward, I am increasingly intrigued by three key functions that allow a trade association to create the most value for its members: 1. Protect from harm. Protecting the industry from harm has been a strong suit of the AGA since it began. Frank Fahrenkopf and the team did a fantastic job shielding the industry from threats and other attacks on its reputation. This will continue to be a priority—and an area where I want us to be even more proactive. The new business environment demands that we move from defense to offense—aggressively promoting our story, engaging our employees and customers, and developing new champions of our industry. 2. Facilitate business growth. Most people don’t think a trade association can drive demand and help accelerate business growth, but I disagree. Creating a favorable business environment in which casinos can thrive is a key function of industry growth. One example where we’re making an impact is through our regulatory reform project. By working with the industry and regulators to streamline costly, redundant and outdated regulations, we can create efficiencies that provide new avenues for our businesses to grow and create new jobs. That’s just one way we can accelerate opportunities, and I look forward to removing more barriers and growing the pie for everyone

in our business. To do this, we must ask provocative questions and challenge ourselves to think bigger. For instance, the latest AGA research shows that more than 76 million Americans, or 34 percent of the U.S. adult population, visited casinos last year. These numbers are the highest they have ever been, and the acceptability of casino gaming continues to hover at over 80 percent of the population. But we can’t rest there. Part of our role at the AGA should be to ask: Who are those other 66 percent of Americans who didn’t visit? What are their opinions of the gaming industry? How can we inspire them to visit our properties and play our games? 3. Connect and inform. Connecting and informing means making the AGA an organization that adds value to diverse employees across the industry. Of course, working with top executives is vital for guidance and direction on much that we do, but it’s up to the association to expand its reach to create opportunities for other segments of the industry to come together. G2E is a great example of this, but we can do more. We should create opportunities to network and share, bringing together gaming professionals in key areas like sales and marketing and compliance, both at the corporate and property levels. We would do this with the goal of education, idea-sharing and community building within the industry. Building these networks will strengthen the industry, give everyone a stake in the work we do and empower executives to do their jobs better. As I continue to develop a strategic plan for the AGA, I’ll do so with these three fundamental goals in mind. I plan to find innovative ways to deliver more value to our members, and the industry at large. I look forward to implementing this vision in the coming months and years and to having you—no matter which segment of the industry you’re in—be a part of it.


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o issue is more U.S. Supreme Court ruling limitvolatile in the dising the ability of the U.S. Departcussion of Ameriment of the Interior to place land can Indian in trust for Indian governments. gaming than offMoreover, it has exacerbated reservation casinos, often lumped the growing public perception of with “reservation shopping” as a tribes not as culturally rich, inderogatory reference to the nadigenous governments, but busitionwide spread of Indian gamness entities and purveyors of bling. gambling. Critics of Indian government “The success of Indian gamcasinos would have the public being certainly has changed the lieve there is a dramatic, overall perception of non-Indians unchecked and unregulated exthat Indians are all poor and deplosion of tribal casinos in Amerpendent on the United States,” ica. They refer to this alleged says Alexander Skibine, dean of spurt of Indian gambling off the University of Utah Law tribal trust lands as “off-reservaSchool. By Dave Palermo tion” casinos. The result, he says, is a probCritics also suggest the lematic Congress, intrusive Intergrowth of tribal casinos is generated by shrewd, wealthy developers using tribal nal Revenue Service, critical judicial system and cynical public. governments (and sometimes Indian groups seeking federal recognition) and the federal process to build casino resorts, often near non-Indian communities that Getting The Numbers Right don’t want them. It’s not difficult to grasp why there has been a leveling-off of new Indian casinos. This is called reservation shopping. The market has matured. There is a bit of truth in both observations. But statistics largely refute the Some 247 of 366 federally recognized tribes in the lower 48 states have casimagnitude of the separate, though related, trends. nos up and running. The remaining tribes for various reasons have decided not The National Indian Gaming Commission, the regulatory agency for the nato get into the business, most likely because their rural, if not remote, reservation’s 28-state tribal gambling industry, audited 425 casinos in 2012, reporting tions can’t generate the market. gross revenue of $7.9 billion. The Indian Gaming Regulatory Act generally limits casinos to tribes under That is six more tribal casinos than there were in 2009, according to NIGC’s federal recognition when the law was passed in 1988. figures. But IGRA’s prohibition exempts tribes seeking lands for casinos off their Further, there was an increase of 20 casinos over the 405 operations audited reservations if they show the project “benefits” the tribe and is not “detrimental” in 2008. That averages out to five new casinos a year, nationwide. to the local community. Not much of a growth spurt. What is regarded as the “two-part determination” exemption in Section 20 Unfortunately, when it comes to politics, perception is reality. And the poster of IGRA also requires approval from the governor of the state in which the tribe child for false perceptions of Indian gambling might be Democratic Senator Diis located. anne Feinstein of California, who last year reintroduced legislation to halt “reserOnly a handful of tribes have used the two-part determination process to acvation shopping.” quire new land for casinos. In a fit of hyperbole, Feinstein got up on the floor of the Senate and proThe little growth that is occurring in Indian gambling is not being generated nounced, “More than 100 new Las Vegas-style casinos have opened in the state by tribes opening new casinos off their existing reservation. It’s not “off-reservain the last 12 years.” tion” gambling. Rather, the growth is due to additional IGRA exemptions for: The remark left more than a few scratching their heads. California has 59 • land claims by tribes that lost reservation lands for various reasons; tribes operating 60 casinos. • newly recognized tribes seeking initial reservations; and, When Proposition 1A was approved by California voters in 1999, allowing • restored tribes once terminated by the federal government. tribes to operate casinos on trust lands, 61 tribes signed regulatory agreements These “equal footing” exemptions do not fall into the two-part determinawith the state. That figure has grown by 10 in the last 13 years. tion and do not require a governor’s approval. To say Feinstein was a bit off the mark in her math is an understatement. There are currently 21 applications with the U.S. Department of the InteShe got an “F.” rior seeking trust lands for casinos. Many of the applications have been languishBut the point was made: Look out, Indian casinos are coming. ing for years, if not decades. Contrary to protestations by Feinstein and others, there has been little in the Ten of the applications fall into the category of “off-reservation” casinos. way of growth in the Indian gambling industry. Four tribes are seeking trust land contiguous to their reservations and five appliYet the controversy over off-reservation gambling is having devastating concations are newly restored tribes. There is also one initial reservation and one sequences for tribes. land claim. It has blocked congressional efforts to remedy Carcieri v. Salazar, a 2009 The list doesn’t forecast much in the way of growth.

N Off-Rez, On Point

Off-reservation gambling perceptions creating havoc for Indian tribes

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Inside Interior U.S. cabinet department that controls tribal gaming looks to change policy on recognition, casino land/trust By Dave Palermo

U

.S. Interior Department efforts to fix a “broken” system of federal recognition and assist American Indian tribes seeking new lands for gambling and government purposes are being challenged by some tribes and anti-gambling critics who fear an explosion of new casinos. Tribal governments largely applaud efforts by Kevin Washburn, assistant secretary for Indian affairs, to revise Interior’s Office of Federal Acknowledgement Senator Richard Blumenthal of (OFA) recognition process, which can Connecticut says current plans to last up to 30 years and cost indigenous fast-track tribal federal recognition groups several million dollars. would “open the floodgates.” Tribal leaders are also pleased that Interior has broken through a logjam of land/trust petitions caused by a virtual moratorium on applications during the George W. Bush administration. But efforts by Interior and Washburn to facilitate tribes have generated some criticism. Interior since 2010 has processed more than 1,000 land/trust applications, Kevin Washburn, assistant secretary for Indian affairs, decided to grant placing into federal trust more than 200,000 acres for housing, hospitals and land into trust for Wisconsin’s Menominee Indian Tribe. health clinics and other governmental services. Interior under the Obama administration also rescinded the controversial “commutability” memo by former Assistant Secretary Carl Artman, which stymied tribal efforts to place newly acquired lands in federal trust for casinos. Interior in the past three years has processed 19 applications from tribes seeking to place land in trust for casinos, approving 12 and rejecting seven. Perhaps the most controversial decision was the approval in August of an application by the Menominee Indian Tribe of Wisconsin to establish a casino in Kenosha, 160 miles from its upstate reservation. The project still needs approval from Governor Scott Walker. The decision surprised industry observers who believed that despite rescinding the Artman memo, Interior would limit casinos distant from tribal reservations. Calling the decision “difficult,” Washburn said there was precedence for offreservation casinos in Wisconsin, noting the Forest County Potawatomi in 1991 opened a casino in Milwaukee, 200 miles south of its upstate reservation. A number of tribal leaders are critical not only of the Kenosha ruling, but Interior’s more flexible policy toward land/trust applications for casinos. John Tahsuda, principal of Navigators Global, a tribal government relations firm, suggests amending the Indian Gaming Regulatory Act to provide Interior with clear rules on land/trust decisions. “The notion you can make rules malleable is what causes the average Joe to distrust the system,” Tahsuda says. “I understand the fear of opening (IGRA) and having harmful legislation put in its place,” he says. “Nobody wants to amend IGRA. But major laws are

This is a real watershed change, an upheaval moment in the whole tribal recognition process to lower the bar and dilute the standards. —Richard Blumenthal

Senator of Connecticut

amended routinely. Often and over time you need to adjust laws to meet changing circumstances.” Former Interior official Bryan Newland supports the Kenosha ruling. “I thought it was a good decision,” Newland told Gambling Compliance.com. “It was consistent with department policy to look at each application on an individual basis. “Tribal gaming in Wisconsin is unique and different from tribal gaming in Michigan, California and elsewhere. I don’t think you can look at any one decision and think that it spells a precedent for any future decision.” The 8,500-member Menominee Tribe has a high rate of poverty and unemployment. And elected officials in Kenosha are strongly behind the $800 million project, which is expected to create thousands of jobs. Indigenous groups can achieve federal recognition through Congress, the federal courts and the OFA. But Congress has long regarded the OFA process as long, costly and often unfair. Experts in Indian law contend the process has grown more convoluted, lengthy and expensive since passage of IGRA made the land/trust applications more controversial. Washburn’s “discussion” draft of amendments to the OFA regulations was applauded by most tribal leaders. Under one proposed rule change, tribes would only have to trace their ancestry and continuity as a tribal organization back to 1934. Tribes must now show continuity and ancestry dating back to “first contact.” The discussion draft also calls for eliminating a requirement that an “external entity” be used to identify the group as Indian since 1900. The relationship between indigenous groups and non-Indian agencies has historically been a tenuous one, particularly for tribes in colonial times prior to the establishment of the United States. Senator Richard Blumenthal of Connecticut and others criticized the effort, claiming easing the rules will lead to more Indian casinos. “This is a real watershed change, an upheaval moment in the whole tribal recognition process to lower the bar and dilute the standards,” Blumenthal told News Time.com. “It would open the floodgates,” Blumenthal said. “This could enable some groups to achieve federal recognition without meeting the standards and criteria that other tribes had to meet.” Washburn downplayed the criticism. “We want to be getting worthy tribes through the process,” he said. “More important, it is simply the matter of justice. We have to come up with just results, results that people trust.” OCTOBER 2013 www.ggbmagazine.com

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TRIBAL CASINO GROWTH SLOWS TO A CRAWL*

Federal Fallout

The controversy has split tribal governments, many opposed to the spread of casinos for a myriad of reasons, including increased competition and the potential encroachment of new casinos on the ancestral lands of other tribes. TOTAL TRIBAL Much of the impact has been in California, YEAR CASINOS with 109 tribes and nearly 80 indigenous groups 2000 311 seeking federal recognition. 2001 330 Proposition 1A advertising stated that Indian gambling would “only occur on tribal lands,” 2002 349 which was construed to mean largely rural Indian 2003 359 reservations. 2004 375 “California voters thought they settled the 2005 392 question of reservation shopping in 2000 when 2006 394 Proposition 1A provided that gaming only oc2007 391 curred on Indian lands,” Feinstein told fellow senators in introducing the “Tribal Gaming Eligi2008 405 bility Act.” 2009 419 “The words ‘on Indian lands’ were critical,” 2010 422 she said. “This made clear that gaming is appro2011 421 priate only on a tribe’s historical lands, and voters 2012 425 endorsed this bargain with 65 percent of the vote.” SOURCE: National Indian Tribal leaders and policy-makers were caught Gaming Commission off guard by shifting Interior Department policy and the growing number of recently federally recognized and restored tribes that have acquired or may soon seek trust land for casinos. “We didn’t think that kind of expansion would happen,” says Nikki Symington, a tribal consultant who worked on the Prop 1A campaign. “We didn’t anticipate that.” No one predicted the once-terminated Lytton Band of Pomo Indians and Federated Indians of Graton Rancheria would be restored by the courts (Lytton) and Congress (Graton) and allowed to build casinos on newly acquired trust lands in the San Francisco area. North Fork and Enterprise rancherias received approval from the Interior Department and Governor Jerry Brown to build casinos on newly acquired trust lands some 40 miles from their reservations. North Fork is partnered with Station Casinos of Las Vegas and Enterprise is backed by Gerald R. Forsythe, a Chicago industrialist and auto-racing magnate. Gambling critics would put this in the category of reservation shopping. In addition, Interior last year restored the Tejon Indians of Bakersfield to the list of federally recognized tribes. The Tejons are expected to reward their Las Vegas financial backer, Cannery Resorts, with a partnership in a casino development near the Interstate 5 Grapevine interchange. Meanwhile, Wappo Indians indigenous to Napa Valley are seeking a court ruling on their request for federal recognition and may also pursue a casino. Across the border in Arizona, tribes oppose Tohono O’odham’s plans to develop a casino resort in the Phoenix suburb of Glendale, on property the tribe acquired through a federal land claim for acreage lost in the construction of a dam project. As is the case in California, Arizona tribes claim the Tohono O’odham project would violate a promise made to voters in a 2002 ballot initiative. They told voters there would be no new casinos in the Phoenix area. In addition, two tribes contend the project encroaches on their ancestral lands. Wisconsin tribes have risen up in protest over Interior’s August approval of an application by the Menominee Indian Tribe to establish a casino in Kenosha, 160 22

Global Gaming Business OCTOBER 2013

miles south of its upstate reservation. The project needs the governor’s approval. California tribal leaders complain that Graton, North Fork and Enterprise “leap-frogged” over existing casinos, getting preferable market locations and jeopardizing tribes that “played by the rules” in remaining on their original reservations. The citizens’ group Stand Up California is seeking signatures for a ballot initiative to reverse legislative approval of the North Fork project. Funding for the petition drive, wrote the Bakersfield Californian, is “flowing in from gaming tribes that fear the increased competition and from Wall Street investors who have backed existing Indian casinos.” But the greater concern is the nationwide political, judicial and public backlash created by the perception of massive casino expansion. The fallout has threatened tribal sovereignty and self-governance. The California Attorney General’s Office has in the past year rejected at least a dozen applications from tribes seeking trust land not just for casinos, but water treatment plants, housing and fire stations. “That’s what happens when you break your promise with the voters, when you tell the voters, ‘We will keep gambling on tribal lands,’” says lobbyist David Quintana. “These off-reservation projects are jading the people of California against any effort by tribes to take land into trust, absolutely.”

Carcieri Conflict The Carcieri decision stemmed from a lawsuit preventing a Rhode Island tribe from taking land in trust that Governor Donald Carcieri feared would be used for a casino. The ruling has encumbered Interior’s ability to process land/trust applications, requiring the agency to research whether indigenous governments were “under federal jurisdiction” with passage of the Indian Reorganization Act of 1934. Nonetheless, Interior under the Obama administration has approved more than 1,000 land/trust applications, placing in trust more than 200,000 acres. Only 12 of the approvals involved land for casinos. But Feinstein and a handful of senators are steadfast in their opposition to a congressional “fix” to Carcieri, claiming it must be tied to a crackdown on off-reservation gambling. Elsewhere, Treasury and the Internal Revenue Service are targeting tribes for audits that largely involve social and welfare programs funded with casino revenue. The federal courts have scuttled the sovereignty doctrine in decisions involving tribal governments. And labor law exemptions for Indian governments have been stripped away by federal court rulings largely dealing with tribal casinos. “Members of Congress have made it very clear that is their concern,” said Jacob Coin, executive director of public affairs for the San Manuel Band of Serrano Mission Indians of San Bernardino County, California. San Manuel is opposing efforts by the Los Coyotes Band of Cahuilla and Capeno Indians to build a casino in Barstow, 100 miles from its San Diego County reservation, claiming the community is on Serrano ancestral lands. San Manuel supports efforts for a congressional fix to Carcieri that does not require amendments to IGRA off-reservation provisions. But the tribe believes there also needs to be a congressional fix to off-reservation regulations that allow tribes to encroach on the ancestral lands of other Indian nations. “We have to be concerned about the impact these off-reservation gaming activities are having on the broader land-into-trust issues,” Coin said. “Absolutely, we need to be. “Hospitals aren’t being built. Schools aren’t being built. Housing is not being provided, all because of these off-reservation gaming issues.”


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p. 20 to 24 offRez:Layout 1 9/17/13 11:06 AM Page 24

LAND INTO TRUST APPLICATIONS TRIBE

ACRES & LOCATION

SECTION 20 EXCEPTION

Soboba Band of Luiseno Indians of California

534.91 Acres – San Jacinto, Riverside County, California

On/Contiguous to Reservation 2719 (a)(1)

Seneca Cayuga of Oklahoma

229 Acres – Aurelius & Montezuma, Cayuga County, NY

On/Contiguous to Reservation 2719 (a)(1)

Cayuga Nation of New York

129.14 Acres – Cayuga County & Seneca County, New York

On/Contiguous to Reservation 2719 (a)(1)

Kickapoo Tribe of Kansas

259.92 Acres – Brown County, Kansas

On/Contiguous to Reservation 2719 (a)(1)

Sac and Fox Nation of Oklahoma

18.3 Acres – Stroud, Oklahoma

Land in Oklahoma 2719 (a)(2)(A)(1) Application dated 03/22/10

Confederated Tribes of Warm Springs of Oregon

25 Acres – Cascade Locks, Hood River County, Oregon

Off-Reservation 2719 (b)(1)(A)

Los Coyotes Band of California

20 Acres – Barstow, San Bernardino, California

Off-Reservation 2719 (b)(1)(A)

Manzanita Band of Mission Indians of California

60 Acres – Calexico, Imperial County, California

Off-Reservation 2719 (b)(1)(A)

Spokane Tribe of the Spokane Reservation, Washington (Land in trust)

145 Acres – Airway Heights, Spokane County, Washington

Off-Reservation 2719 (b)(1)(A)

Menominee Tribe of Wisconsin

228 Acres – Kenosha, Kenosha County, WI

Off-Reservation 2719 (b)(1)(A)

Stockbridge Munsee Tribe of Wisconsin

333 Acres – Town of Thompson, Sullivan County, New York

Off-Reservation 2719 (b)(1)(A)

Ho Chunk Nation of Wisconsin

33 Acres – Beloit, Rock County, Wisconsin

Off-Reservation 2719 (b)(1)(A)

Pueblo of Jemez, NM

78.43 Acres - Dona Ana County, Anthony, NM

Off-Reservation 2719 (b)(1)(A)

Lac du Flambeau Band of Wisconsin

20 Acres - Shullsburg, Lafayette County, Wisconsin

Off-Reservation 2719 (b)(1)(A)

Lower Brule Sioux Tribe of South Dakota (Land in trust)

90.94 Acres - Oacoma, Brule County South Dakota

Off-Reservation 2719 (b)(1)(A)

Wyandotte Tribe of Oklahoma 202 miles from Reservation

10.5 Acres – Park City, Sedgwick County, Kansas

Land Settlement 2719 (b)(1)(B)(i)

Mashpee Wampanoag Tribe of Massachusetts 2719(b)(1)(B)(ii)

322 Acres - Taunton & Mashpee, Massachusetts

Initial Reservation

Mechoopda Indian Tribe of California

637.05 Acres – Butte County, California

Restored Tribe 2719(b)(1)(B)(iii)

Cloverdale Rancheria of California

79 Acres – Sonoma County, California

Restored Tribe 2719(b)(1)(B)(iii)

Samish Indian Nation of Washington

11.41 Acres - Anacortes, Skagit County, Washington

Restored Tribe 2719(b)(1)(B)(iii)

Pokagon Potawatomi of Michigan

164 Acres – South Bend, St. Joseph County, Indiana

Restored Tribe 2719(b)(1)(B)(iii)

Coquille Tribe of Washington

2 Acres – Medford, Jackson County, WA

Restored Tribe 2719(b)(1)(B)(iii)

24

Global Gaming Business OCTOBER 2013


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p. 26 to 32 UltimateGaming:Layout 1 9/18/13 9:05 AM Page 26

The

Ultimate Package By Roger Gros

As the first legal online gaming site in the U.S., Ultimate Gaming hopes to parlay the first-mover advantage into long-term success.

Tom Breitling, Chairman; Tobin Prior, CEO; and Chris Derossi, Chief Technology Officer

O

n April 30, Ultimate Gaming made history with the launch of its Ultimate Poker online poker room in Nevada, becoming the first legal online gaming site in U.S. history. In November, if all goes according to plan, Ultimate Gaming will launch Ultimate Casino in New Jersey as online gaming operator for Atlantic City’s Trump Taj Mahal, becoming one of the first online gaming sites to launch in that state. For Tom Breitling, the chairman of Ultimate Gaming, the first-mover advantage in the first two U.S. online gaming states is just the start. He says his company plans to be involved globally in online gaming, and plans to become a leader in the field. Breitling refuses to get into the traditional squab26

Global Gaming Business OCTOBER 2013

bles about whether poker is a game of skill or a game of chance. He’d prefer to focus on the jobs, tax revenue and opportunities created, the same dynamic that spurred the growth of land-based gaming. “Pioneers get all the unpaved roads and all the arrows,” Breitling says. “The question is, who’s going to settle in and become the leaders? I think we’ve put together an incredible team of people who are focused on creating a great customer experience. And if you do that, and you communicate with customers, and listen to them, it’s all about building long-lasting customer relationships. And that’s what will help us maintain our leadership position.” Tobin Prior, the CEO of Ultimate Gaming, says, while his company is the first in the U.S. to operate, what his company is really pioneering is


p. 26 to 32 UltimateGaming:Layout 1 9/18/13 9:06 AM Page 27

“This industry has been up and running since the 1990s. We didn’t invent internet poker. What we did was embrace regulation, and build a platform that works to regulatory satisfaction and that also meets what the customers need.” —Tobin Prior, CEO, Ultimate Gaming

bringing together online gaming technology and the strictest of regulations. “This industry has been up and running since the 1990s. We didn’t invent internet poker. What we did was embrace regulation, and build a platform that works to regulatory satisfaction and that also meets what the customers need. And so, we’re not naïve about any first-mover advantage. We know—from bitter experience, by the way—that it takes a lot to make the regulators happy; it takes a lot of money, a lot of time, a lot of engineering resources to make them happy. But I liken it to like a sort of crash test for automobiles. If you don’t pass that test, you can’t get your car on the road.”

Ultimate Background Prior had been involved with Station Casinos founders Frank and Lorenzo Fertitta in the late 1990s when Station joined with Prior’s then-employer, Kerzner International. Prior built an online gaming site for the partnership that included state-of-the-art technology designed to pass regulatory scrutiny. “We spent many months developing technology in terms of things that regulators are concerned about: age and location verification, and so on. I spent two years working on this stuff with the New Jersey regulators. And I actually have a letter on file from Mr. J.P. Suarez (former director of New Jersey’s Division of Gaming Enforcement), saying that our systems were compliant with New Jersey regulations, and we could go into the online space, provided that we applied those systems, and if we broke any of the rules, they’d slap us on the wrists. We were actually licensed in New Jersey at the time, and it was deemed to be a very rigorous licensing jurisdiction. We felt if we could comply with that, the rest of the U.S. regulators would be OK.” But it wasn’t to be. “In 2002, there was a very widely publicized letter from the Department of Justice saying that they believed that online gaming activity was illegal. It was illegal where the server existed and where the player existed, so any distinction about our server being in a legitimate jurisdiction and players being elsewhere was basically overruled. And we certainly couldn’t take play from our customers in America. So long story short, we got out of the business. “In fact, all of us got out of the business—ourselves, Caesars, MGM, and everyone else at great expense. We sold our big server farms at cents on the dollar; all that pioneering work that we’d done was left for the industry to take up. “So we sat and watched while those companies that didn’t close up shop took our customers from the sidelines. And we were a bit puzzled why there was no action for so long. And then Black Friday happened. That was kind of the turning point. That’s when the DOJ finally seemed to indicate they were going to do something about this. This was a very material business, and it re-

ally needed regulation.” But by Black Friday, Breitling was already hard at work creating a company that would be in complete compliance with all regulatory oversight, as well as creating a proprietary platform that allowed Ultimate Gaming to move ahead without a technology partner for its system. “We started to travel the world and look at platforms,” says Breitling. “But we could have saved ourselves millions of frequent flier miles, because right in our own backyard was Chris Derossi and the CyberArts team. And while CyberArts was based in California, Chris lived here in Las Vegas. When we started talking to Chris and his team, we realized first that it was a clean technology platform. Chris had only operated in legal jurisdictions. Secondly, we realized that he lives and breathes this; he understands the platform, he understands the scalability, understands what it is we wanted to do, and it turned out to be the perfect marriage. And so we’ve been building our team, here in Las Vegas as well as in California, for the last few years.” Breitling says Ultimate’s goal was to become a business-to-consumer (B2C) company rather than a B2B (business-to-business) company. “Interestingly enough, Chris had to change 10 years ago to become a B2B company,” says Breitling. “He wanted to be a B2C company. But he pivoted as a result of the legal rulings, and only operated in legal jurisdictions, which was important to us. That was an important part of it, because we would be able to convert to a B2C, and that’s what Chris really wanted to do in the first place. So we transitioned over the last few years, converting from a B2B, into a business-to-consumer business, and building up everything from the front end to the back end.” Derossi says he understood that sticking to legal jurisdictions might cost him some money early on but would pay off in the long run. “In 2003, when we had started with ambitions to bring our poker product as an operator—B2C—to the U.S., there was a turning point. I had a meeting in Las Vegas with some of the casino operators, who made it clear to me that if we were to ever do anything that was in the gray zone, we could forever be tainted and unable to ever do business with a brick-and-mortar licensee in Nevada, because they would not put their very valuable gaming license at risk doing business with a tainted company. “And we knew someday we wanted to participate in this market; we knew it was coming. We just didn’t know how long. And so we decided that we were going to stay on the white side of the line and treat all the gray area as forbidden territory. And so that’s what we did. We spent 10 years longer than we expected, providing our technology to legal jurisdictions. And then, when the opportunity came along with this merger to go back to a B2C, in a legal way, in OCTOBER 2013 www.ggbmagazine.com

27


p. 26 to 32 UltimateGaming:Layout 1 9/18/13 9:22 AM Page 28

Poker pro Antonio Esfandiari is the spokesman for Ultimate Poker and Ultimate Casino.

the United States, it felt like we were finally getting the chance to do what we were born to do.”

Nevada Trailblazer Four months into the legalization of online gaming in Nevada, Ultimate Poker remains the only site up and running in the state, as of mid-September. (Caesars Entertainment’s WSOP.com went live in Nevada on September 19.) Breitling says the company has learned a lot during those months, but it all came down to one thing. “The bottom line is that the technology is working,” he says. “And that there was lots of pent-up demand. We’ve dealt nearly 14 million hands of poker. We’ve delivered 700,000 pages of reports to the Nevada regulators. We are defining this area where innovation meets regulation, and it really is about working hand-inhand with regulators to prove that the technology works. “It’s a process and it’s a journey. We just released our second version that had over 60 new features and enhancements to it, including our loyalty program. So this is a process where you are listening to customers, constantly working to enhance and enrich the customer experience, and that’s the culture we have. We’re entrepreneurs, and we love building businesses, but this is a new environment.” Breitling says he’s not surprised that Ultimate Poker has no competition thus far. “I would say that there is reason why there’s only one,” he explains. “And that’s because it’s hard. And it’s a testament to Tobin, and Chris, and the entire team that’s now over 100 people, by the way. So when we talk about employing people, and bringing taxes back

to America, and protecting players, everything’s happening the way we outlined it in the beginning. But it’s hard. And there’s some challenges that these guys and that our team encountered, from day one. But we met every challenge and addressed them and worked with regulators, and the customers are enjoying the games. “We’re now giving out around three-quarters of a million dollars every week in tournament prize money. So Nevada is just the tip of the iceberg, but it has been a learning experience, and I think you have to embark on that journey with that mindset. That this is a journey that you are going on, where you have to look out for the consumers. You have to put in place a new set of standards. We’ve done all that, and it’s just the beginning.” Prior says the compliance issues make it difficult. “It’s not just a matter of taking a legacy product and putting it into a regulated environment,” he says. “You’re dependent on second and third parties

“We’re now giving out around three-quarters of a million dollars every week in tournament prize money. So Nevada is just the tip of the iceberg, but it has been a learning experience, and I think you have to embark on that journey with that mindset. That this is a journey that you are going on, where you have to look out for the consumers. You have to put in place a new set of standards. We’ve done all that, and it’s just the beginning.” —Tom Breitling, Chairman, Ultimate Gaming

28

Global Gaming Business OCTOBER 2013


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p. 26 to 32 UltimateGaming:Layout 1 9/17/13 11:48 AM Page 30

“We decided that we were going to stay on the white side of the line and treat all the gray area as forbidden territory. And so that’s what we did. We spent 10 years longer than we expected, providing our technology to legal jurisdictions. And then, when the opportunity came along with this merger to go back to a B2C, in a legal way, in the United States, it felt like we were finally getting the chance to do what we were born to do.” —Chris Derossi, Chief Technology Officer, Ultimate Gaming

and other parties down the line, to make everything come together. Regulators want to make sure that they protect the customers in many, many regards, whether it’s their data, their money, or whether it’s proving that they are within the four walls of any state. “They want that to be really, really robust technology. So we took the bestof-breed third-party technology, integrated that with our platform, and proved it out. And proving these things out is always going to come with some glitches. It’s going to be slightly less convenient for a lot of players than systems that they have been used to, or systems that still don’t have any regulatory controls built in, because that’s the nature of what we’re dealing with. And that’s where this whole concept of regulation meeting innovation, or meeting the practical world, happens.” Nevada and Delaware (the second state to legalize online gaming) have small populations that many doubt can support online gaming. Breitling wouldn’t dispute that, but says Nevada is a launching pad for his company. “Let’s take a step back,” he explains. “When we decided to get into this business, it was with the intent of creating a global business. And in true entrepreneurial fashion, the decisions we made indicate that. And so when you look at the series of Ultimate brands—Ultimate Poker, Ultimate Casino, Ultimate Gaming, the technology platform—it’s not our position to determine what games a jurisdiction decides to offer and regulate, but whatever they want, we’re going to provide those games at the highest level of integrity that satisfies customers. “So when we say that Nevada is the tip of the iceberg, it truly is. We’ve proved a lot here. It’s a state that only has 2.7 million people, and we think it’s in the range of just north of 100,000 online poker players that are potential customers. And when you talk about 50 million poker players that are living in this country, you’re talking about a small fraction of that number. “But it’s very important, and it’s important for a number of reasons. One, 30

Global Gaming Business OCTOBER 2013

everyday revenue is going into these state coffers that has not been going into these coffers. Two, players are actually logging on and being protected and enjoying these games, and we’re proving we have the technology. And then three, our platform is satisfying the Nevada regulators. “But this business will only succeed if there is a multiple-market strategy, which is why we hope to be among the first in New Jersey. We’ve made a lot of customers happy in Nevada, but the competition is coming. And I think the competition is actually good. It forces you to innovate your product, and it will grow the market. You’re going to have players coming and going. But we know that it’s just the beginning.”

Boardwalk Bound Ultimate Gaming has reached an agreement with Trump Taj Mahal in Atlantic City to be the online gaming operator for its casino license. The casino will not be branded as Trump or Taj Mahal, but as Ultimate Casino. Breitling is happy with the partnership. “The Taj Mahal has been a hub for poker on the East Coast over the last 15 or 20 years. It’s got a great history. And then you look at our other sister company, the Ultimate Fighting Championship, the first fight that the UFC had after Frank and Lorenzo (Fertitta) bought the company, was UFC 30, Battle on the Boardwalk, at the Taj Mahal.” Prior says the Ultimate Gaming brands will be used, along with some thirdparty content that will include popular slot games and proprietary table games. “We will be offering the Ultimate brands, so we’ll be having Ultimate Casino and Ultimate Poker,” he explains. “We are at an advanced stage of getting ready for the November date that the regulators have set for gaming to commence in New Jersey. We’re working hard on a daily basis with the Division of Gaming Enforcement and with our partners, to make sure that we’re in as good a state of readiness as possible. Regulations are still unfolding, so some of what we will have to comply with is not yet clarified, although the bulk of it is, and we are already compliant with another pretty comparable regulatory environment.” Payment processing has been an issue in Nevada, but one that has been alleviated by having more than a dozen Station Casinos in the Las Vegas area where the majority of Ultimate Poker’s customers are located. Players can also do wire transfers from their bank accounts. But credit-card companies are reluctant to approve transfers to and from customers’ accounts because of the uncertainty surrounding the 2006 Unlawful Internet Gaming Enforcement Act, which prohibits financial transactions for gambling purposes. At this time, one major credit card company is working with Ultimate Gaming and is considering any


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p. 26 to 32 UltimateGaming:Layout 1 9/17/13 11:48 AM Page 32

“We want our brand to be fresh and exciting. Customers want to be able to go on their devices and get bursts of entertainment, play games that they know and like. And for us, a big part of that foundation is about trust. So at the core of it, the Ultimate Gaming and the Ultimate series of brands will be about real-money online gaming, and a brand that you can trust.” —Tom Breitling, Chairman, Ultimate Gaming

outgoing transaction a cash advance with a very high interest rate. Prior says he isn’t concerned about New Jersey because there are still seven or eight ways to transfer funds in and out of the Ultimate Gaming site. “We have cooperation from our payments processing partners and the companies that they work with,” he explains. “There are still credit card companies that we need to convince on an individual basis to participate in the regulated gaming industry, as well as the issuing banks. That’s not completed yet.”

Brand Names Breitling believes the company’s experience in Nevada and New Jersey will be a gateway to other states. And that will be accomplished by establishing the Ultimate brands. “It comes down to choice,” he says, “and so we’re fortunate that we’ve built this dynamic environment with the technology that Chris has developed, which is very flexible. We’ll approach it jurisdiction-by-jurisdiction and game-by-game. And that will build the brand. But we understand defining a brand is a huge task.” Constantly referring to the “experience,” Breitling says the company is laser-focused on today’s customers and how they perceive that experience. “We want to over-deliver on that experience,” he says. “And what you’re talking about is a change in the way people think. This is truly about an integrated online gaming experience. People want this. Remember, we weren’t carrying iPads or smart phones around as little as 15 years ago. And now people want to do everything on these devices. They want to shop on Amazon at 2 or 3 in the morning, and buy a shirt or a book. And they want to play games online. So we want the Ultimate series of brands to stand for great entertainment. We want it to appeal to a broad audience, whether it’s in Ne32

Global Gaming Business OCTOBER 2013

vada with only poker or New Jersey, where it will be a full suite of casino games. We want our brand to be fresh and exciting. Customers want to be able to go on their devices and get bursts of entertainment, play games that they know and like. And for us, a big part of that foundation is about trust. So at the core of it, the Ultimate Gaming and the Ultimate series of brands will be about real-money online gaming, and a brand that you can trust.” But again, says Prior, it all comes back to the experience. “We focus not only on the brand itself and on the product, but on the experience,” he says. “So a lot of what we focus on is the user experience, and the customer service aspect of that user experience. We’ve gone to great lengths to get the best people into this business, who really understand the consumer, who really understand what they need. We’ve been through that learning curve, and we really do place a lot of emphasis on the customer experience and our customer service side of the business.” Interstate agreements are an important measure of the success of state-bystate legal online gaming. Breitling says there is certainly a synergy between Nevada and New Jersey that he hopes will come to an agreement on interstate play for poker, but that other states are watching. “We’ve been surprised with the amount of attention we received from states across this entire country,” he says, “because many of them need revenue, and want to protect their players. We’ve talked to more than 10 states that are very interested in this activity. Let’s look at the UFC example. The UFC started in one state, New Jersey, when the Fertitta brothers bought the company. They’re now approved in 49 states in this country, and over 100 countries in the world. If we follow that same roadmap—and that’s been a little over a decade—if we’re sitting here in a decade, and we’re sitting in 49 states, and over 100 countries in the world, offering our online gaming products with the Ultimate series of brands that resonate with customers, I think we’ll have a pretty dynamic and lively business, and this will be a pretty dynamic and lively industry.”


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p. 34, 35 onlinecol:Layout 1 9/17/13 11:21 AM Page 34

ONLINE GAMING by RICHARD SCHUETZ

Be Careful What You Wish For The drive to a federal solution on internet gambling may be a slippery slope

A

t the end of the 112th Congress of the United States, in late 2012, the company Public Policy Polling performed a series of polls that found that the American public had a higher opinion of colonoscopies, root canals, head lice and cockroaches than it did of the American Congress. One wants to note that it is this institution to which many gambling companies want to assign their future. Be careful what you wish for. The most recent Nevada experience with gambling began in 1931, but the state never became too serious about regulating the industry until 1955, with the creation of the Nevada Gaming Control Board. The control board was a response to specific historical events, namely a series of organized crime hearings that prominently featured many Nevada casino operators, and the federal government’s attempt to institute a 10 percent gambling transactions tax, which would have taxed the industry out of existence. The reasons given for the establishment of the board were numerous, but the first two board chairmen, as well as the governor of the state from 1958 to 1966, argued that the primary motivation was to keep the federal government out of Nevada’s business. Ironically, the state of Nevada, whose regulatory agencies were born in an environment of fierce fighting to keep the federal government out, is now deeply involved in an effort to get the federal government in. The establishment of a regulatory structure to thwart the federal government from destroying the gaming industry was but one of Nevada’s strategic responses to the threats of the era from the federal government. With a congressional delegation of three—two senators and one congressman—the state lacked the national political clout needed to quash these threats. They clearly needed allies. And one of the ways to acquire al-

lies was to embrace the American union movement, and allow union funds to become the source of financing for the casino industry. By embracing union money in Nevada, Nevada’s sparse congressional delegation gained the support of union-friendly congressional members throughout the United States. But this too carried with it a cost. Much of this money came from the Teamsters Union’s funds—nicknamed the “mob’s bank”—and was associated with the name of James Hoffa. This fact, and the animosity between the Attorney General of the United States, Robert

‘‘

and while this desire was defeated, it was defeated at the expense of enormous political capital on the part of Nevada. Be careful what you wish for. An area of concern that the Nevada gaming industry seems to be ignoring in its drive to secure federal involvement in internet wagering is detailed in the fact that the federal government has a terrible track record at developing essentially any legislation in the area of gambling that is not borderline incomprehensible. One only needs to look at the Wire Act of 1961, the Professional and Amateur Sports Protection Act (1992), Interstate Horseracing Act (1978), and the Unlawful Internet Gambling Enforcement Act (2006) to see case studies in poor construction, inconsistent language and curious logic. For the Nevada gaming interests to now believe that federal legislative drafters are going to become in some sense literate is certainly wishful, if not pure fantasy. Be careful what you wish for. Another sizeable risk of inviting the federal government into the gambling world is the fickle nature of political power in Washington, D.C. Like a pendulum, it swings back and forth, from left to right, and back again. The 2012 Republican Party Platform stated that all internet wagering should be made illegal, and urged the reversal of the Department of Justice’s recent ruling on the Wire Act. Imagine a new federal internet wagering law, coupled with a tax provision, and then imagine an electoral shift to the right for the 2016 election. Is there anyone presently fighting for a federal bill that would not then regret allowing the fox in the henhouse, so to speak? Sit back and imagine that the world’s richest anti-internet gambling mogul, Sheldon (click your mouse and lose your house) Adelson decides to spend $1 billion on the 2016 election. How supportive do you believe his candidate’s attorney general is going to be in interpreting the Wire Act, or a presidential appointee to oversee the regulation

The 2012 Republican Party Platform stated that all internet wagering should be made illegal, and urged the reversal of the Department of Justice’s recent ruling on the Wire Act. Imagine a new federal internet wagering law, coupled with a tax provision, and then imagine an electoral shift to the right for the 2016 election.

34

Global Gaming Business OCTOBER 2013

’’

Kennedy, and Hoffa, led Robert Kennedy to embark on an effort to solicit the assistance of the Nevada Attorney General to deputize a large number of agents so as to “raid” select casinos within Nevada. Only a meeting between Nevada’s governor, Grant Sawyer, and John F. Kennedy, the president of the U.S., stopped this plan. The federal government’s plans to damage or eliminate the casino industry through raids, prohibition or taxation were not limited to events of the 1950s and 1960s. Following Bill Clinton’s election he had every desire to introduce a welfare reform plan. One of the sticking points to this plan was that he needed approximately $15 billion in additional funds to see it into reality. President Clinton’s desired solution to this funding issue was to impose a tax on the casino industry,


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of the industry? There is also a tendency of the federal government to believe that once they have the right to tax an industry, they have the right to increase that tax. If there is an industry that should understand probability and odds, it is the gambling industry, and so they should definitely calculate the probability that the government, at some future point in time, will increase the tax, once they get a tax. It is seemingly in the DNA of the federal government to do so. Be careful what you wish for. Also, again, please explain why the federal government should leap into internet wagering, yet not touch the taxation and regulation of the traditional industry. Once the camel’s nose is in

the tent, don’t then expect that camel to stop. Be careful what you wish for. Gambling has historically and traditionally been an issue of states’ rights in the United States, and when the federal government has entered into this field it has been with borderline incomprehensible legislation of curious motivation. Furthermore, the federal government and its offices have traditionally been antagonistic to the industry. Also, once the federal government has a tax, there is a huge probability that this tax will be increased, and continue to be increased again and again. It is clearly their track record. Be careful what you wish for. The gaming industry should step back, and take a good, hard look at what exactly it is invit-

ing when it wishes for federal intervention in the industry. Trusting its future to an institution that has an almost humorous reputation of drafting seemingly obtuse gambling legislation, raises taxes with apparent abandon, and possesses little understanding for the reality of the industry, may be a most regrettable decision. The industry should really think twice about wanting to turn its future over to the care of an institution that has less respect with the American public than a root canal. Be careful what you wish for. Richard Schuetz is the commissioner of the California Gambling Control Commission.


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Delaware Tests Online Gambling with Launch of Free Casino Sites

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elaware has beaten New Jersey to the online gambling starting line by a couple of months, as the state’s three casinos launched the first phase of their online gambling portals on August 28. Of course, the first phase doesn’t involve actual gambling— the start-ups are no-money sites, but are seen as precursors for a real cash launch in October. Atlantic City casinos expect to offer online gambling starting late this year. The Delaware web portals now offer free slots, poker, blackjack and roulette games. In August, each Delaware casino’s home page directed visitors to the Facebook-linked game platform DoubleDown Casino, run by slot machine company IGT, one of Delaware’s contractual slots vendors. Each of the three licensed Delaware racinos— Delaware Park, Dover Downs and Harrington Raceway—have now included gateway pages and links to the IGT launch site for DoubleDown. The move keeps Delaware on pace to be the first state to offer a full complement of online casino games. For the moment, anyone can play Delaware’s free gaming sites, but when cash gaming is implemented, cash betting will only be open to Delaware residents. In the meantime, Delaware officials hope the free-play sites will help market the state’s casinos. The free games will still be available after cash betting begins. Delaware officials had hoped to have the sites go live last month. The system is run by current Delaware slot system manager Scientific Games and European online betting company 888 Holdings. In New Jersey, 888 Holdings has partnered with Caesars Entertainment—owner of Atlantic City’s Showboat, Caesars Atlantic City, Harrah’s Resort and Bally’s casinos—to offer online gaming. Under current federal rules, online gaming can only be offered within a state’s boundaries. New Jersey is still on track to be the largest state in terms of population to offer online gambling.

New California Internet Poker Bill To Be Delayed

O

pponents of a bill to legalize internet poker in California expect that the state legislature

38

won’t act on the controversial measure before adjourning for the year. The bill, introduced by state Senator Lou Correa through amendments to a previous bill, would allow state-sanctioned online poker games to be operated by card clubs or Native American tribes that run casinos. The San Manuel Band of Mission Indians, which operates one of the most successful casinos in the state, was credited with drafting the amendments. Internet poker bills have been introduced for three years in California, but none of them gained traction and advanced because of disagreements among tribes about who should be able to operate the websites. Correa said his bill has the support of the San Manuel Band of Mission Indians, which operates a casino in Highland, but it is opposed by others including the California Tribal Business Alliance. Senate President Pro Tem Darrell Steinberg said he does not think an online gambling bill will advance before lawmakers adjourn for the year September 13. “Maybe in 2014,” Steinberg told reporters.

William Hill completes Miapuesta acquisition

U

.K. bookmaker William Hill has completed its takeover of Miapuesta, the Spanish-facing gambling operation the company acquired as part of its £459.4 million acquisition of Sportingbet earlier this year. Hill received a six-month option to take over the Miapuesta business, and Hill CEO Ralph Topping confirmed last month that investors “should assume we will exercise” that option before it expires this month. The Miapuesta site now features a banner declaring, “Now we are becoming more.” Miapuesta players are invited to register with Hill. New players receive a €100 welcome bonus and a €50 free wager. Hill estimates the combined share of its own Spanish-facing operations and the Miapuesta brand comes to 23 percent of Spain’s total gambling market, while Q1 figures from the Spanish gaming regulator put the two companies’ combined share of the country’s sports betting market at around 13 percent. Also at William Hill, citing “regulatory reasons beyond our control,” the British bookmaker has withdrawn its online service for customers in China for “the foreseeable future.” In a message to affiliates last month, Hill said it is suspending all accounts for mainland China,

Global Gaming Business OCTOBER 2013

Macau, Hong Kong and Taiwan from August 19. It clarified that from this date, members based in those locations would not be able to use their account to access Hill’s online sports books or gaming rooms.

Bahamas Considers Online Gambling

O

ffering online gambling, and the tourism benefits it could bring, will be a discussion point for the Bahamas tourism industry when it gathers together next month for a tourism conference titled “Shrinking The Global Divide: Synergy, Service and Sustainability.” Some supporters of the idea feel the country is not keeping pace with technology and that its gaming laws need updating. Prime Minister Perry Christie has already conceded that gambling regulatory legislation needs to be revisited. Uri Clinton, a senior legal executive for the huge Baha Mar resort and casino development on the island of New Providence in the Bahamas, will be a speaker at the conference, and says that the country must modernize to compete on a level playing field internationally. Clinton says online gambling could help the tourism industry through slow seasons and create new jobs. The country could also benefit from the lack of online play—especially sports betting—now available in the U.S., he says.

Android Gambling Apps Banned on Google

G

oogle Play is making an effort to clean up its services, and one of the casualties is mobile casino apps, which have essentially been banned. Google sent an email earlier this week to Android app developers outlining changes to Google’s hate speech section, illegal activity section, and gambling policy. Google Play will no longer allow “content or services that facilitate online gambling, including but not limited to online casinos, sports betting and lotteries, or games of skill” if they give players the ability to win real cash prizes through game play. The revision follows a similar change from Apple’s App Store. Apple, and its iPhone partnership, however, have not banned real-cash betting apps. Application developers have been given 30 days to revise their apps or they will be removed and banned from the Google Play store. The biggest changes, however, involve in-app advertising and the policy on how users can make payments for paid apps. Android has long been plagued by misleading copycat apps, pop-ups and fake reviews along with other annoyances.


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iGNA

Moving Target When is the right time to engage in online gaming? By Kimberly Arnold

‘‘

to have yielded significant caution throughout the industry. The Innovation Group conducted a survey of operators in February 2013, and while only 2 percent of respondents said they were not at least evaluating online gaming, fewer than 10 percent had gone so far as to select their partner and launch a free-play or social site.

‘‘

A

s a strategic adviser to a number of clients considering online gaming options throughout the past few years, The Innovation Group and its Innovation Interactive practice have witnessed the many challenges existing casino operators have faced in the i-gaming research and decision-making process. Some operators have jumped into the space and opted for a technology solution before investing the time and effort to develop their strategy and understand their market and client base, only to find it did not yield the marketing and visitation impact they were seeking. Others have delayed moving forward because of uncertainty of legislation, or the ambiguity as to how to leverage online offerings to support the land-based facilities. The unknowns regarding staffing needs are also commonly raised concerns, particularly for smaller operators and those considering a free-play or social solution that will take added marketing and IT man hours for existing land-based facilities to realize revenue from the online participation. Player protection, ownership of player data, and the B2C and cost issues regarding social platforms like Facebook have been prevalent for some time, and now the issues surrounding potential regulation of social gaming have many operators on their heels, particularly tribes with compact concerns. There are other reasons, of course, but these are among the most frequent we hear and have worked with our clients to address.

If this all turns out as it could, this change could be an important advancement for the industry.

HURRY UP AND WAIT The cumulative result of these concerns? For all the investment, research and technological advances to date, the industry has witnessed very few operatorbased free-play and social gaming sites go live. Even with examples like the Maryland Live! website, which is arguably one of the most successful demonstrations to date of how a free-play site can help reinforce the land-based brand, grow the player database and drive traffic to the casino, costprohibitive offerings and overall uncertainty seem 42

Global Gaming Business OCTOBER 2013

This trend appears to be shifting as of late, as we have seen more provider engagement activity from operators. This is likely due in large part to the considerable reallocation in offerings from the providers, particularly throughout the past few months. They have listened to their client base, adjusted and responded with improved solutions for free play, social gaming and real money, and recaptured the interest of many operators who thought the original proposals were far too costprohibitive for products not directly monetized. In addition, the technical solutions have become more flexible and diverse in content, more sophisticated from a marketing and consumer protection standpoint, mobile-centric, and in general, now more in line with player demand and operator needs. Ironically, this has all come to pass because, with the exception of New Jersey, Nevada and Delaware, online gaming technology has evolved more quickly than the corresponding legislation needed to allow for it. So for those in yet-to-be regulated jurisdictions, the providers had no choice but to develop free play and social gaming options that would better appeal to clients where legalization had yet to occur. So, now that this is becoming reality, is the time right for more operators to consider free play or social gaming as additional marketing and delivery channels for their existing casinos? And will the advancements and trends being seen among the providers in the regulated states bring added

value even to those who can’t engage in real money?

CAN’T WE ALL JUST GET ALONG? By now, everyone is aware that New Jersey, Nevada and Delaware are in the midst of implementing real-money online gaming, and at least in the case of New Jersey, the models we are seeing seem to be more in line with what we have seen in the European online gaming jurisdictions. Integrating with proven platform providers, the traditional slot manufacturers that have always been known for exceptional content are all vying to get the online versions of their games on as many operator sites/skins as they can. The good news is, even for those in unregulated states, that this may be the encouragement that was lacking for the manufacturers and game content providers to work together to more effectively integrate into one another’s platforms, and advancing relationships that in theory could benefit even free play and social gaming offerings through diversity of content. A few manufacturers had strategic agreements in place up until now, but not at a volume that could be considered industry-changing. Operators are overwhelmingly telling us they want to replicate the diversity of their floor in the online space, and of course choice and quantity are always good for the player. In other words, if this all turns out as it could, this change could be an important advancement for the industry. Next month, we’ll highlight real-life situations in which companies involved in free play and social gaming explain how they are implemented, what they have meant for land-based casinos, and strategies for moving into real-money online gambling. Kimberly Arnold is chief operating officer of the Innovation Group and co-manages the firm’s Innovation Interactive practice. She has worked as a strategic adviser and research specialist to tribes, providers and lotteries specific to online gaming throughout the past several years. Arnold can be reached at 303-798-7711 or karnold@theinnovationgroup.com.


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a

Tiger’s Tale CAN THE ASIAN GAMING

BOOM BE SUSTAINED? PART II – ASSESSING THE ASIAN CASINO COMPETITION By Rodric J. Hurdle-Bradford

T

he position of China as the lead country in the foreign gaming industry is undeniable (See “Asian Gaming Boom Part 1,” Global Gaming Business, September 2013). The question that looms over the Chinese is whether their gaming boom will sustain over the long term. “If the government institutes cash controls that are effective in blocking players from China getting funds to Macau to gamble with, then yes, the worries are well-founded,” says Dean Macomber, president of Macomber International, a gaming consultant firm. “If not, then their worries are not well-founded. One of the values that third-party VIP room and junket reps bring to Macau casino owners and operators is their ability to move cash through the Chinese border.” The link between China’s banking system and its neighboring countries had been established decades, if not centuries before the gaming boom. But to maintain the boom, a pro-gaming Chinese government is needed. “Gaming is a leisure-time activity, and therefore exists only after there is leisure time and leisure money to be spent around the world,” says Macomber. 44

Global Gaming Business OCTOBER 2013

“If an economy ebbs toward the leisure-time/spend demarcation line, then gaming dollars tend to shrink. But it also is important to remember that lessening percentages on large bases can still produce the same absolute dollar growth.” However, the sprawl of the gaming industry has spread throughout Asia, to both southern and eastern regions, including Cambodia, Japan, the Philippines and Taiwan. “If you are a company in gaming you need to be in Asia,” says Macomber. “Strategically, gaming companies belong in Asia even though it is more risky and the early returns are unlikely to approach Macau or Singapore.”

The Cause for Cambodia Often overlooked in the Asian gaming boom, Cambodia is a smaller market with a big upside if the current trends continue. Its growth is being seen in the online segment, where operators are experiencing rapid growth, along with the sports betting sector.


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Cambodia’s Savan Vegas

Solaire Casino Resort is the first integrated resort to open in Manila’s Entertainment City.

THE ENTIRE WORLD WILL JUDGE JAPAN WHEN TOKYO HOSTS THE SUMMER OLYMPICS IN 2020. BETWEEN NOW AND THEN, EXPECT THE CASINO AND GAMING INDUSTRY TO CONTINUE TO EXPAND AND WELCOME THE WORLD WITH OPEN ARMS. “From our perspective, in Cambodia the Asian gaming boom can definitely be sustained. This trend is related to the propensity of Asians to gamble and the continuing increases in regional gross domestic product (GDP) growth rates. Our forecast is that competition will continue to increase but that regional revenues will double within five years.”

—Mike Gore General Manager, Savan Vegas Entertainment Resort, Cambodia

“We are seeing an increase with both segments across the board in Cambodia,” says Mike Gore, general manager of Savan Vegas Entertainment Resort. “Most foreign markets overlook our competition in the online space. Brick-andmortar casinos are still learning the full potential and importance of online gambling.” With more of a dependence on traditional gaming, Cambodia is looking to increase slot machine revenue in particular, and casino revenues overall. Like China, Cambodia needs a government that develops and implements pro-gaming legislation and policies without extracting short-term revenues from casino properties. “From our perspective, in Cambodia the Asian gaming boom can definitely be sustained,” says Gore. “This trend is related to the propensity of Asians to gamble and the continuing increases in regional gross domestic product (GDP) growth rates. Our forecast is that competition will continue to increase but that regional revenues will double within five years.”

Japanese gaming industry,” says Kazuaki Sasaki, gaming consultant. “This is because the Japanese government is trying to attract citizens of these countries as tourists.” Domestically, Sasaki believes the opportunity to market growth lies with the Japanese middle-class player. “A larger, new gaming market will develop within Japan,” says Sasaki. “I think the audience and market share will be bigger than what most people expect.” He does expect Tokyo to continue to be the center of strength for the country’s casino industry. Even Tokyo’s heavy presence ultimately relies on the actions and policies of China. “The Chinese economic situation and stability will affect the Asian boom,” says Sasaki. “But a lot will also depend on Japanese casino laws, IR laws and the innovation of the Japanese gaming industries.”

Judging Japan

Perhaps the “wild card” country in the future development of the Asian gaming boom is the Philippines. “The optimists believe Philippine casinos can draw players from China, including the VIP room/junket player,” says Macomber. “The neo-conservatives believe it is a locals-only, or primarily locals market.”

The entire world will judge Japan when Tokyo hosts the Summer Olympics in 2020. Between now and then, expect the casino and gaming industry to continue to expand and welcome the world with open arms. “Islamic Asian countries will have a significant effect on the future of the

Can the Philippines Fulfill Expectations?

OCTOBER 2013 www.ggbmagazine.com

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“With close locations and cultural affinity, Taiwan’s Matsu and Kinmen islands are already popular with Chinese tourists and are expected to be very attractive for Chinese gamblers once casino IRs are established.” —Anita Chen Managing Director, Park Strategies, Taiwan

The Filipino government has issued four gaming licenses and placed a billion-dollar development minimum on each to ensure the highest level of capital investment possible. “The owners and developers must gamble that over a relatively short period of time the Philippine gaming industry can absorb a $4 billion investment, rather than right-sizing the projects at some lesser start-up critical mass and pace the growth as they boom and the market declares itself,” says Macomber. The increase in the presence of gaming in the Philippines doesn’t necessarily equal automatic access to domestic players. For many of them, China is still the place to be. “The opening of Resorts World Manila and Solaire Casino Entertainment in the Philippines had no effect on Macau’s performance,” says Andrew Klebanow, principal with Gaming Market Advisors. “As casinos open in countries bordering China, they will create new markets and serve populations that heretofore did not have convenient access to casinos. It can be argued that, as these populations are exposed to modern casinos, they will be interested in visiting Macau, much like the explosion of gaming in the United States’ regional markets stimulated visitation to Las Vegas.”

Touting Taiwan The Asian gaming boom has increased the momentum to expedite Taiwan’s gaming development. Efforts to legalize gaming in Taiwan began in the early 1990s, but it was not until 2009 that Taiwan took the first legal step to allow integrated resorts with casinos to be established on the offshore islands, a legislative effort attributed to the desire to recreate the success the gaming industry has brought to Singapore. Since then, the Taiwanese government has devoted significant efforts to develop gaming by establishing a legal framework. “Under Taiwan’s Offshore Island Development Act, casino IRs may be established on Taiwan’s six offshore islands, but not on Taiwan island proper, if the local residents of the offshore island approve it through a referendum,” says Anita Chen, managing director for Park Strategies in Taiwan. “So far, such a referendum has only been approved in Matsu, an island country off the coast of China near Fuzhou City of Fujian Province. The other offshore island group that is considered a popular spot for casino IRs is the island group of Kinmen, located off the coast of China near Xiamen City of Fujian Province. Kinmen County has not held a casino referendum yet.” 46

Global Gaming Business OCTOBER 2013

Shinzo Abe, Japan's prime minister, is an advocate for the development of integrated resorts.

On May 2, Taiwan’s Executive Yuan (the cabinet) formally completed its review of the Tourism Casino Administration Act and submitted the draft to the legislative branch for consideration and approval. The legislative branch was scheduled to begin reviewing the draft gaming law in the session starting in September. If all goes well, the draft law is expected to be passed by the end of this year. Once the law goes into effect, the Taiwan government will be able to announce a request for proposals for casino licenses for the offshore island country of Matsu by late 2013. By early 2014 it is possible that a winner of the casino license in Matsu can be selected. If the process goes smoothly, Taiwan could have its first casino IR by 2016. “Taiwan’s future casinos on the offshore islands are eyeing Chinese customers,” says Chen. “Taiwan is much closer to eastern China than Macau or Singapore, and many Chinese are already very curious to visit Taiwan. Now that Kinmen and Matsu are being demilitarized, they need a new source of economic strength. “They do not have major manufacturing or other industrial facilities, so tourism and gaming offer them a bright economic future,” she continues. “With close locations and cultural affinity, Taiwan’s Matsu and Kinmen islands


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Lawrence Ho plans to build a $600 million casino resort near Vladivostok in Russia.

are already popular with Chinese tourists and are expected to be very attractive for Chinese gamblers once casino IRs are established.”

Russian Relevance

The Primorye region of Russia presents a unique development opportunity. The planned Integrated Entertainment Zone (IEZ) near Vladivostok will evolve into a regional gaming destination serving eastern Russia and the medium-sized cities of northern China (Harbin, Shenyang and Dalian), and offer a more convenient gaming destination to residents of South Korea and northern Japan. For most residents of this region, Macau is too far away and too hard to get to.

The growing influence of Russia in the world’s economy is definitely reflected in the gaming industry, where it even is a factor in the Asian gaming boom. Eastern Russia has definitely carved out a niche in this market, but it is also susceptible to external factors for future success. “The future of gaming in eastern Russia is dependent on a number of factors,” says Klebanow. “It is imperative that the regional government move forward with establishing a sound regulatory structure so that international gaming companies with licenses in multiple jurisdictions can feel comfortable entering this marketing without having these licenses threatened. You only need to look at the reaction of the New Jersey regulators to MGM’s partnership in Macau in order to understand how cautious gaming companies must be when exploring new markets.” The Primorye region of Russia presents a unique development opportunity. The planned Integrated Entertainment Zone (IEZ) near Vladivostok will evolve into a regional gaming destination serving eastern Russia and the medium-sized cities of northern China (Harbin, Shenyang and Dalian), and offer a more convenient gaming destination to residents of South Korea and northern Japan. For most residents of this region, Macau is too far away and too hard to get to. “The IEZ may eventually have a half dozen casino resorts,” says Klebanow. “While not on the scale of casinos in Cotai, they will offer gaming, lodging and resort experiences far closer to home. We forecast that the Vladivostok IEZ has the potential to generate US$10 billion in annual gaming revenue in 10 years, once properties are fully developed. That will be new market growth that will not cannibalize from Macau.” 48

Global Gaming Business OCTOBER 2013

Vladivostok has both history and a geographical boundary on its side because it of its ability to serve greater Beijing and three northeast Chinese provinces. “These are feeder markets that are not really patronizing Macau to any great degree,” says Macomber. “Vladivostok is at least a good strategic opportunity and probably a good medium-market-sized opportunity. Only the future will tell if it has the potential to develop into a large market.” In July, Lawrence Ho, son of casino gaming mogul Stanley Ho, announced that he is investing over $600 million in Russian casinos, a strong show of support that spans across the country and continent divide. In September, the Cambodian gaming giant, NagaCorp, confirmed it also will build a casino resort near Vladivostok. “Lawrence Ho was the first international developer to enter into an agreement to develop a casino resort in the IEZ and he will not be the last,” says Klebanow. “As more casino companies become familiar with doing business in Russia and see the opportunity, they too will enter the market.”

Boom or Bust? The real-time analysis of the Asian gaming boom will continue to captivate the industry worldwide for years to come. While the boundaries between countries may be set, the ability to pull players from one area of Asia to another is still being defined. “The critical generic question is, ‘Why should a Chinese player go to a certain country or venue instead of Macau?’” says Macomber. “And why should a third-party VIP room/junket owner operator divert a player from Macau to these other venues? “If a company is going to be in gaming, it needs to be in Asia to participate in the growth primarily driven by China, but not inconsequentially by other Asian countries as well, individually, in groups and in aggregate. This is a big question that deserves a long answer over time.”


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Is your F&B outlet broken? Here are some tools to fix it. By Marjorie Preston

Restaurant:

Impossible The National Restaurant Association estimates that about of new restaurants fail in the first year, and about

one-quarter

60 percent

T

go under within three years.

he restaurant seemed to have it all: located on the top level a casino resort at the head of a glass-walled escalator, it featured panoramic views of the city and leisurely, multi-course meals that often spanned several hours. The décor was clubby and comfortable, the cuisine excellent, the service first-rate. The dining experience was nothing less than an education, courtesy of a personable chef who enjoyed regaling guests with the marvels of his cooking method. Moreover, the restaurant—let’s call it Bistro XYZ—was a “name,” well-established in several other cities and run by a highly regarded restaurateur. This place didn’t stand a chance. After several arduous years in which the parent company switched from continental fare to Italian to steaks in hopes of catching fire with casino patrons, the place finally folded its table tents and stole into the night. In many respects, XYZ was a great restaurant, and the owner had an innovative idea. In the quick-and-casual world of casino dining, he tried to buck the trend by presenting epic, European-style feasts. But in so doing, he violated several unspoken covenants that exist between all restaurants—especially casino 50

Global Gaming Business OCTOBER 2013

restaurants—and their patrons. First, XYZ was hard to find, and harder to get to (that vertigo-inducing escalator). Second, the pace of the spectacular multi-course meals was glacially slow. Third, the service was so attentive it actually detracted from the dining experience, and quickly went from ingratiating to irritating. In short, the ill-fated XYZ didn’t give people what they wanted. It gave people what the owner thought they wanted, or perhaps what the owner himself wanted. Ultimately, and inevitably, it failed. The National Restaurant Association estimates that about one-quarter of new restaurants fail in the first year, and about 60 percent go under within three years. Restaurant consultant David Rittvo, director of food and beverage for the Innovation Group, says the failure rate of casino restaurants may be lower because “you have a captive audience to some extent. A million customers a year are driven to your location, and any outside restaurant would love to attract those kinds of numbers.” But complacency in the restaurant business has never been an option, not even in the casino industry, which is more competitive now than in the past.


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STK main bar at Cosmopolitan

Gordon Ramsay, the combustible TV chef who now has three restaurants in Las Vegas, has said of his industry, “If I relaxed, if I took my foot off the gas, I would probably die.” We asked several F&B experts why casino restaurants bottom out, and what owners can do to maximize the odds of success and longevity.

The Right Place Just as in real estate, one of the best predictors of success in a casino restaurant is a great location. While it may sound desirable to create a “destination,” the ideal location for F&B in the casino environment is the same place it’s always been: just off the casino floor, or within an easy stroll. “Certain fine dining or white-tablecloth restaurants can get away with being off the beaten path, but it’s always difficult when you move it up a level. You start fighting human nature,” says Jay Chesterton, an Atlantic City casino veteran who is now vice president of food and beverage at Fantasy Springs Resort Casino in Indio, California. “Any F&B outlet that is away from the major traffic patterns and critical mass is going to be at a disadvantage, with the exception of a nightclub, which is always a destination. There are too many customers who just don’t like going up an escalator or elevator or flight of stairs.” The exception that may prove the rule can be found at the Cosmopolitan in Las Vegas, which clusters seven of its best restaurants—STK, Scarpetta, Comme Ca, and a few others—on the third level of its Eastside Tower. The Wicked Spoon buffet is on one side of the second floor; on the other side are Holstein’s steakhouse and China Poblano, grouped with high-end boutiques. Only one restaurant and several bars—including the first tier of the eye-popping Chandelier lounge—are close to the first-floor casino. Then again, since opening in December 2010, Cosmo has been distinguished by the success of its non-gaming amenities, and has yet to achieve the kind of casino crowd that could put it over the top. So the axiom holds: restaurants do best where the action is.

Money in the Bank Is it a new restaurant? To avoid becoming a freshman dropout, it’s critical to have enough capital in reserve to keep the doors open and the bills paid with no expectation of immediate return for at least six months and ideally, a year or more. That includes rent, payroll, equipment, marketing, food costs, taxes, franchise fees if applicable, etc. Just as important, the owners must have enough faith in their concept that they can ride out the post-opening period of adjustment, when busi-

“Believing in it is the first key, then having the development budget, the pre-opening budget and an ongoing budget available so you can weather the first two or three months when you could be overstaffed because you’re training people. Allow yourself to potentially struggle. In most cases it takes a while to develop a following, and you have to keep going.” —David Rittvo, Director of Food and Beverage, Innovation Group ness is likely to be spotty and the temptation is great to change something—anything—to get the cash register ringing. “If you don’t believe in it 110 percent and it comes out of the gate not hitting the numbers you projected, it’s hard not to start changing things—operational hours, menu items—instead of giving it a chance to be exposed to as many people as possible,” says Rittvo. “Believing in it is the first key, then having the development budget, the pre-opening budget and an ongoing budget available so you can weather the first two or three months when you could be overstaffed because you’re training people. Allow yourself to potentially struggle. In most cases it takes a while to develop a following, and you have to keep going.” Even if a restaurant never really gets to the point where it’s turning them away at the door, it may serve its purpose within the casino environment, in which each piece serves the whole, Rittvo says. “If the restaurant is not doing great numbers but is serving a niche in the market and customers are happy, it can make sense. If it’s losing money and maybe they’re making it up on the gaming floor, then that restaurant might have a place.” Chesterton adds, “There are some places in Vegas and maybe Atlantic City that have enough of a base to continue to let those restaurants go forward and are willing to not necessarily worry about how many covers they’re doing because they satisfy a certain customer. It’s an amenity and a service that’s important to those properties. But not every property has that luxury.” “The trend now is the more cash, the better for the property,” says Ray Bertschy, vice president of food and beverage for the Tropicana in Atlantic City and a former executive chef. “You’ve got to realize sometimes we make money in food and beverage, and sometimes we don’t. We try to show profit but a lot of our money is based on comps.” OCTOBER 2013 www.ggbmagazine.com

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An Eye for the Bottom Line

When a customer asks what’s good on today’s menu, too often the server recommends a personal preference, or pushes the special just because it’s the special. Instead, ask a few questions.

It goes without saying that all businesses should run as lean as possible without compromising quality. For restaurants, which deal in perishables and fluctuating market costs, it’s essential to stay on top of expenditures on a day-to-day basis. If a restaurant cannot control its food costs—which can range from 22 percent of a Chinese restaurant’s total budget to almost 40 percent at a seafood restaurant—it’s running inefficiently, which hampers its chances for long-term success. Chefs must be nimble enough to make quick changes to the menu when food prices seesaw. “For example, a year ago we were paying a dollar for a lemon,” says Bertschy. “Fresh tomatoes were high. And people stopped serving them.” Labor is a restaurant’s No. 1 cost (food a close second), and a casino restaurant with union laborers can pay far more than outsourced operations. No wonder some properties are seeing the upside of outsourcing their food and beverage outlets. But there is also a downside. “Some casinos take the stance that they want to concentrate on gaming; they may not have the core competencies to run the restaurants,” says Rittvo. “Being the landlord reduces their capital risk and operational risk. The flip side is that it can create complications if the restaurant is not aligned with the host casino. You could have issues with customer service, and how do you deal with comp dollars in a case where the restaurateur wants 100 percent of the value?” “Carmine’s pays its cooks eight bucks an hour, and we pay our cooks $18,” says Bertschy. “Watching payroll is a daily thing—it’s early-outs, sending people home or not scheduling them at all based on how busy we are. But we’re qualitydriven first. Yes, we want to make money, but the customer comes first.”

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Engineer the Experience

Most restaurant operators train their service teams to upsell customers by hyping the daily specials, pushing the specialty cocktails, rolling out the dessert cart, all with the aim of adding to the check total. Tom Frank of RoundWorld Management in Las Vegas advocates the precise opposite: downselling as a way to win loyalty and ultimately benefit even more from those customers, their friends and everyone with whom they share their endorsements. “This is not a one-time thing,” says Frank, whose title is “culture engineer.” “Fundamentally every visit is about the next visit. And we need our gamblers and customers to want to come back more than we need to gouge them while they’re here—here they just lost $100 on the slots, and now someone wants $6.95 for a Coca-Cola? Enlightened casinos are getting past that; they know it’s more about frequency than the size of the check.” Another common mistake: When a customer asks what’s good on today’s menu, says Frank, too often the server recommends a personal preference, or pushes the special just because it’s the special. Instead, ask a few questions. This is an opportunity to truly serve, to inquire about the customer’s needs and wants, and represent the establishment as caring about the individual’s dining experience. “Instead of saying, ‘Well, my favorite thing is this or that,’ ask, how hungry are you? Do you like specific foods? Is there anything you don’t eat? Are you vegetarian? Imagine if you took over the responsibility of the menu and said, ‘Let me take you there.’ This is not about a contest to see who can sell the most prime rib.” By the way, a waiter who suggests prime rib or pork loin to a vegan has already conjured up a negative image, albeit unwittingly. Be sure to ask first, and then make an informed suggestion. Frank’s colleague, Gregg Rapp, menu engineer at RoundWorld, says analyzing and reconstructing a menu for optimal profit can increase margins by 10 percent to 15 percent on an ongoing basis. Here is his four-part menu-engineering process:


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“People will taste what you tell them they’re going to taste—if you take a bottle of wine and put a label on it from North Dakota, it’s going to taste different than one that has the Napa label. I would rather have fewer items on the menu and build the value of that food with description.” —Gregg Rapp, Menu Engineer, RoundWorld

1. Cost your menu. Assess every item down to the individual ingredients to determine exactly how much it costs—to the penny—to offer a certain dish. Yes, it’s a time-consuming process, says Rapp, which may be the reason 80 percent of restaurants don’t do it, or don’t do it properly. But failing to cost the menu really leaves them in the dark about their expenditures, and is “the No. 1 black hole,” says Rapp. And that’s a recipe for losing money. 2. Categorize menu items according to profit and popularity. Section menu items into categories: veggie entrees, meat, seafood, alcoholic and non-alcoholic drinks, and so on with no overlap. Based on revenues from the past month or so, identify the current “stars” (dishes that are both profitable and popular), the “plow horses” (low profit but popular), “puzzles” (high-profit, not too popular), and “dogs” (low-profit, not in demand). With the proper research, you can develop a menu that works harder for you. Of course, you will highlight your money-makers, the stars. Can you also devise a way to make the plow horses more profitable? How about taking the traditional soup-and-salad duo and turning it into a more profitable salad sampler? Sometimes, Frank says, lowering the cost of the puzzle items can create enough volume to make them profitable. As for the dogs, well, you may want to keep a few of them (kiddie meals often fall into this category), but don’t go out of your way to promote them. 3. Design your menu. Use visual cues such as graphics or bold text to draw people to the menu stars. Do not create a separate column for prices—if you do, customers are likely to scan the prices first, before even thinking about what they’re hungry for. Instead, position the price two spaces after the end of the item description, in the same font size and weight, and don’t use a dollar sign. A 2009 study from Cornell University’s Center for Hospitality Research suggests that guests spend more when menu prices are presented without dollar signs (or the use of the word “dollar”). Study co-author Sheryl E. Kimes said “references to dollars, in words or symbol, remind people of the ‘pain of paying.’” Also, take time to “build the value” by selling menu items through effective copy. “People will taste what you tell them they’re going to taste—if you take a bottle of wine and put a label on it from North Dakota, it’s going to taste different than one that has the Napa label. I would rather have fewer items on the menu and build the value of that food with description,” says Rapp. Are you serving meatloaf, or Aunt Martha’s Moline, Iowa meatloaf? That latter tells a whole new and delicious story. 54

Global Gaming Business OCTOBER 2013

4. Test your new menu. This process varies from restaurant to restaurant, but applying the same line-item scrutiny to your results as you did to the research should soon tell you how it’s working.

The Menu as Roadmap Want an example of a well-structured menu? Surprisingly, both Rapp and Frank point to Dairy Queen, which guides patrons to their preferences through categorizing that is simple, fun and explanatory. “It’s really brilliant,” says Frank. “It asks, ‘Are you a cookie lover, a chocolate lover, a candy lover, a fruit lover? You get to say, ‘Gee, I’m a chocolate lover,’ or ‘I love bananas, so give me the banana cream pie sundae.’ I didn’t have to search for it—the menu took me there.” Rapp agrees. “In the old days, DQ had all the sundae flavors together—and there were 30 or 40 flavors. Now when you go in they have the fruit flavors grouped together, the candy, the chocolate. You can dial into what you want, and when you have an easier decision, you may even buy more.” He recalls an upscale pizzeria that invited diners to create their own pizza from dozens of ingredients. It sounds like fun in theory, but in practice? “They’re making me work too much,” says Rapp. No matter how great the food, when dozens of hungry customers on their lunch breaks are forced to design their own personal pie, it slows down the line, creates frustration and reduces profits. Most important in Frank’s view: build a great culture. “If you and the employees hate their job, I promise you the good food will not taste as good. If everybody is miserable, what’s the point of fixing all the other stuff? Nothing else matters when the place doesn’t drive people back. We’re not just there to feed people before they go gambling. We’re there to help them have more fun.”


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Eat Your Vegetables F

ood trends come and go with the seasons, and sometimes more quickly. In the past few years, there have been surges of interest in organic and farm-to-table foods, molecular gastronomy, gluten-free everything, artisanal everything. Ice cream is in a cold war with frozen yogurt, and Chia seeds are all the rage. These food trends are slightly schizophrenic; the obsession for healthy foods is balanced by Cronut-mania and the recent introduction of French-fry burgers. In generations past, even robust culinary trends were said to have a shelf life of 10 to 15 years at most. In the age of rapid-fire information, and with entire TV networks devoted to food, the trends can change from day to day. According to the Institute of Food Technologists, 31 million Americans consider themselves foodies, with preferences driven by trend. “It wasn’t long ago that kale was a product you would only find as garnish on the buffet; now it’s on every menu in America as a salad item; next it could be cauliflower or Brussels sprouts,” says Jay Chesterton of Fantasy Springs. “Between social media and the influence of the internet and cooking shows, people are not intimidated anymore by new things and new ingredients.” While restaurants should not blindly follow the fads, they should stay current through fine-tuning their menus quarterly or twice a year, says Tropicana’s Ray Bertschy. “Keep the ‘sellers,’” he says. “You can’t take away the veal chop and the filet, because that stuff is always going to sell.” In the depths of the recession, comfort food made a comeback, and it’s still popular. Bertschy has noted a demand for “old-style meatloaf and mashed potatoes and spaghetti and meatballs.” Spanish food, especially tapas, is hot thanks to advocates like Chef Mario Vatali. Another trend that started during the recession and is still going strong is the burger joint— not fast-food but fast-casual. Bobby’s Burger

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Palace by Bobby Flay, which started at Mohegan Sun and has an outlet at Maryland Live!, will soon open a location at Crystals at CityCenter; Flay’s archrival Gordon Ramsay—the chefs recently challenged each other to a burger showdown—has opened his first Gordon Ramsay BurGR at Planet Hollywood in Vegas. At the Atlantic City Tropicana, a longtime favorite, Red Square, with its imposing statue of Lenin and walk-in vodka vault, has been replaced in recent months by—you guessed it—Chickie’s and Pete’s Burger Bar. Former Red Square GM Joe Massari decried the end of the popular restaurant, telling Atlantic City Insiders, “Fine dining seems to be a thing of the past, unfortunately. People just seem more interested in having an appetizer and two entrees for $20 than a fine dining meal.” That may be true, says Chesterton, especially as the economy continues to limp along. “In the worst of the downturn, the American public really became more cautious with how they spent their food dollar. The restaurants that were hardest hit were what I refer to as ‘expense-account restaurants;’ people were not out buying the fois gras and multiple bottles of champagne. The economy is starting to pick up, but restaurants are still being more pragmatic with what they offer.” Consultant David Rittvo concurs. “The three-hour meal has given way to shorter meal periods. You don’t have to walk in and order an appetizer, and entrée and dessert; I piece together a meal with small plates.” He says Asian and Filipino cuisine have succeeded Vietnamese food as the ethnic favorite—a perfect fit for casinos eager to court Asian customers. What’s the next big trend? Odds are some creative chef has already created it. “Instead of following the trends, if you have the ingenuity and wisdom you can set the trend,” says Chesterton. “A steakhouse will never go out of fashion, but you have to ride those waves a bit and be astute enough and be nimble to go in another direction.”


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GLOBAL GAMING WOMEN

A Story of Mentorship Sometimes you can find a mentor and not know it until years later.

Y

ou never know when or where a mentor will cross your path. Sometimes it is an unexpected encounter, and sometimes it is a well-thoughtout plan. As I reflect upon my life and career choices, I realize that one individual helped shape my career path and inspired me to always push just a little harder when faced with a difficult task. As was typical of life in the late ’70s and early ’80s, there was no question whether or not I would actually go to college. The only question: What would be my major? I was artistic and loved graphic arts in high school, even winning an award for my work. Everywhere I went, I had a camera, always looking at the world through a visual lens. I was raised in a New York City suburb, so I often wonder why I did not take advantage of all that the city had to offer. Instead, I chose to attend the State University College of New York at Buffalo, 10 hours away from home. Although I have had many mentors over the course of my career, it was here that I made the one decision that shaped my journey under the guidance of the person I now realize was my very first career mentor. During freshman year, I took a journalism class as an elective because it sounded fun. Frances Murphy was my professor. Little did I know at the time, but she would change the course of my life. As I expected, the class was interesting and enjoyable. Toward the end of the semester, Mrs. Murphy encouraged me to take the next journalism class despite the fact that the course was only open to journalism majors. She was teaching the class and granted permission for me to participate. She encouraged me, nurtured my talents and helped me to focus on my future. At the time, I did not realize that Frances Murphy was more than just your typical college professor. She was also the first woman to chair the Afro-American Newspapers board of directors, the publisher emeritus of the Wash58

Global Gaming Business OCTOBER 2013

By Jill Alexander Senior Director of Corporate Communications, Isle of Capri Casinos, Inc.

ington Afro-American, a popular columnist at the Baltimore Afro-American and granddaughter of the newspaper’s founder. Sadly, she passed away in 2007 before I could thank her for shaping the foundation of my career. Mrs. Murphy earned her bachelor’s degree in journalism at the University of Wisconsin in 1944—long before it was common for women to attend college. She joined the Afro staff as a full-time reporter after graduation and worked her way up to city editor of the Baltimore newspaper in 1956. In 1958 she went back to school, Coppin State Teacher’s College, and earned a bachelor’s

We can all learn something from other women in gaming. A mentor can be someone we know personally, or someone we aspire to be. In the long run, sometimes we all need a little advice, or seek input from a trusted confidant.

degree in education. While teaching elementary education in Baltimore, she pursued a master’s degree in education at Johns Hopkins University. She was one of the first AfricanAmericans to receive a master’s degree from the prestigious university. In 1971, she was named the chair of the Afro-American Newspaper Company, the first woman to hold that position, and one of the few women to serve in that capacity in media at that time. She left the company to become a

professor of journalism in 1975 at State University College of New York at Buffalo. I lost contact with Mrs. Murphy after graduation, never really looking back until recently. This amazing woman played an important role in making me who I am, and I wanted to thank her. I discovered an unusual fact while searching. Mrs. Murphy’s daughter now lives in Biloxi, Mississippi—the same city where Isle of Capri Casinos was founded. I reached out to her daughter and shared my story. Mrs. Murphy taught me never to take no for an answer without understanding the reason someone is telling you no. You see, when I inquired with the registrar’s office about majoring in both journalism and design, I was told, “No, you cannot do that.” Mrs. Murphy encouraged me to seek out the reason why the school was telling me I could not. After countless conversations with school officials, I finally discovered that the computer was programmed not to allow students to major in these two areas because they were among the largest departments on campus. Mrs. Murphy sat with me the day I told her this and figured out how I could accomplish my goal. She outlined all of the course requirements for both majors and mapped out the solution. Mrs. Murphy mentored from the heart; her goal was to simply help a young woman make her mark on the world. Today, as a gaming professional, I am surrounded by many mentors, including Isle’s CEO, Virginia McDowell, who has played an important role in the launch of Global Gaming Women’s online mentoring network, the Global Gaming Network (www.globalgamingwomen.com). We can all learn something from other women in gaming. A mentor can be someone we know personally, or someone we aspire to be. In the long run, sometimes we all need a little advice, or seek input from a trusted confidant. Global Gaming Women’s online mentoring program can be your link to finding inspiring insight, or just the little push you need to challenge yourself.


A Night to Honor Gaming’s Brightest Stars Don’t miss your opportunity to be part of a gala evening honoring four stars who have made the gaming industry what it is today — Gary Loveman, leader of the world’s largest gaming company; Frank J. Fahrenkopf, Jr., who piloted the industry’s most important trade group for nearly two decades; Celine Dion, who led the rebirth of the headliner in Las Vegas; and Guy Savoy, the creative force behind one of the Strip’s most memorable culinary experiences. Help honor these industry legends — sponsorship and ticket information is now available at www.americangaming.org.

Gary Loveman

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super

Signs

Digital signage is lighting up exteriors, the casino floor and hotel lobbies By Dave Bontempo

D

igital signage embodies two major gaming-industry components. First, it is functional. Digital solutions replace traditional printing operations like design, approval, press setup, printing, drying and delivery. They create messaging flexibility, in scenarios ranging from new restaurant menus to updated show lineups and upcoming tournaments, to instant room discounts. The function serves the bottom line, too. Casinos embrace the digital network format, which appears more expensive up front but becomes a money-maker by eliminating the traditional printing expenses. Inside of a couple of years, this system becomes a source of profit. Second, the digital age also is fun. It conveys swagger, emanating from an operator’s checkbook. Brilliantly lit, well-orchestrated messages spark excitement throughout a casino. They are tangible, visible, and stimulating. Casinos also embrace the social-media craze via signage. With an estimated 200 million cell phones in existence just in the United States, messaging apps have become the real-time rage. The digital network can flourish on or near the games as casinos launch their multi-layered attempt to market and retain players. Building exteriors offer another perfect canvas. Properties put up impressive symbols of prosperity—a gigantic ball or Ferris wheel, for example—that can be seen from miles away. These landmarks, which also display messaging, help identify casinos. Las Vegas and Atlantic City establishments, among others, have taken digital signage to that level. Some consider signage a $2 billion annual market, as operators continue to sign on. Several companies, from Bally Technologies and JCM to Gaming Partners International, CastNET and YESCO, eagerly feed it.

Bally: A Cool Jewel Casinos utilize Bally CoolSign, a marketing tool designed to help casino operators enjoy a simple yet powerful user interface. First, the general: “It’s everywhere you can think of,” says Matthew Olden, product manager for 60

Global Gaming Business OCTOBER 2013

Gaming Support’s Apple media player; Bally CoolSign Video Wall format


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can schedule something once and then wait for the condition. “It’sYou raining right now here in Las Vegas. You can have an ad for that occasion telling people ‘don’t forget to visit the concierge to get your umbrellas. ‘

—Matthew Olden

multimedia solutions at Las-Vegas based Bally Technologies. “Convention spaces, hotel lobbies, elevator banks, pools, spas, restaurants, hotel rooms and the exterior of the property.” And the specific: Pre-determined thresholds can trigger specific offers. There is no need to change the message or formulate a new one. “You can schedule something once and then wait for the condition,” Olden indicates. “It’s raining right now here in Las Vegas. You can have an ad for that occasion telling people ‘don’t forget to visit the concierge to get your umbrellas.’ “You can tailor a message to your hotel occupancy. Give a 20 percent discount on the rooms until you hit a certain number of rooms sold. Then you can change it to 15 percent, automatically.”

Product Manager for Multimedia Solutions, Bally Technologies

And finally, the emotional: it spikes the enjoyment of tournament and jackpot winners. CoolSign can drive and stream content to slot-machine devices like iVIEW and IVIEW DM, sending congratulatory messages of victory. Throw in lighting and sound integration to intensify the experience. “It really can change the ambience of a casino,” Olden says. “It drives more interest. It shows you an upcoming event like a tournament, lets you see it as it unfolds and shows you the result of it afterward.” When Bally set Guinness World Records for the world’s largest slot machine tournament in Pechanga last year, the CoolSign media-management system enabled patrons to view the tournament leader-board information on digital monitors and display screens throughout the property. The Video Wall format provides another eye-opening venue. Its Cosmopolitan 2 product is a large screen broken up into at least 16 individual windows, each proclaiming an offer from the spa or steakhouse, tournament information and the forecast. In one sense, it’s a Wall of Fame. Nearly everything a property may wish to pitch customers can be seen from one location.

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Gaming was not the first recipient of this technology. CoolSign was initially developed for shopping malls, Olden says. The company that owned it, AdSpace, went out of business. Bally eventually purchased the product. Olden, who used to sell to Bally Technologies on behalf of another company, was brought on board to keep developing it. “Casinos were later to the game,” he says, “because the solution sets available in the past were not tailored to gaming. The solutions did not account for the casino slot floor. That has changed for the industry.”

The company recently added partnerships with Samsung for access to hospitality channels in hotel-room televisions and Bright Sign for streaming. It continues moving toward a strong social-media presence as well, according to Doug Fundator, its business development and resale business director. Fundator was brought aboard in the last year as JCM continued to grow from a company that verifies the authenticity of bank notes to an outfit that addresses the players using them. “JCM is well-known for the idea that you can put a $10 bill through our validator, get a picture, image, serial numbers, and data on good notes or bad notes and report all the information,” Fundator says. “Then it became images of driver’s licenses, and diagnostics about the performance of the games. Now we are focusing on the messaging through the media system. “It’s exciting to see JCM really leveraging the contact we have and devoting itself to becoming a solid technology company, on top of our other achievements.” “Margaritaville Resort Casino, in Bossier City, Louisiana, purchased an abundance of LCDs for video walls and large format displays on the floor,” Fundator says. The Graton Casino, in Sonoma, California, brought in displays and overhead signage for its gaming floor. William Hill, with approximately 115 sports books in Nevada, purchased approximately 20 displays for each location, Fundator indicates. “Everybody is getting into media,” Fundator says. “It’s still

JCM: Expanding the Line JCM Global builds upon a sound foundation. The Osakabased powerhouse (Japan Cash Management) already is a leading supplier of automated transactions solutions for the banking, gaming and retail industries. Its extensive line of award-winning products set global standards with products like the Universal Bill Acceptor and Intelligent Cash Box. Digital signage is one of its new star players. JCM provides the LCD terminals through which casinos can stream content. That can mean information on the floor via items like ePoster, which has a display both for static images and for video. JCM’s digital signage product line includes the Video Wall, a large screen for watching football in clubs and sports books.

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Global Gaming Business OCTOBER 2013

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going to be the largest-growing area for everybody. You can’t just have a whole bunch of televisions. You need to have effective ways to get messaging out there to your clientele. “Customers want information available via everything from their phones to media packages. JCM will play in that space.”

YESCO: A Visual Wow There are times when message streaming inside the property just isn’t enough. Just ask the Las Vegas operators who use YESCO to make colossal statements at the gateways to their properties. Utah-based Young Electric Sign Company (YESCO) offers the gamut, including custom signs and electronic displays, outdoor media, specialty lighting, sculptural elements and historic signs. Elements from these different areas blend into signage displays used in the gaming world. In the past year, three of its Las Vegas projects—the Aria pylon, Harmon Corner and the upcoming Linq for Caesars Entertainment—reflect a different connection to gaming. Signage, it appears, can exceed the realm of practicality. It can be a metaphor for muscle-flexing. “Technology and ingenuity within YESCO has evolved to the point where we are now creating complex structures that are completely skinned with LED, rather than attaching LED signs to themed structures,” says Nick Priest, the special projects director for YESCO in Las Vegas. “Our clients tell us, ‘We don’t want the usual. We want something that no one else has. We want to create a visual first impression that attracts interest and allows versatility.’ “The idea works. Steve Wynn is proof of that, in my opinion. He came up with

YESCO signage for Aria in Las Vegas

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40-foot LED sphere by YESCO atop Revel in Atlantic City

the fantastic idea of a moving element that plays along with the content outside of his Wynn property about six years ago, and it is still relevant today.” The CityCenter area continues to evolve as a Western version of Times Square. The larger-thanlife presence of signage promotes both the general area and specific properties. Massive architectural projects may indeed become the visual tie-breaker to separate properties. Many already have mastered customer service and amenities. This is the next master stroke enabling an operator to break out of the pack. Want more players? Create mystique. Establish a visual identity. In April, YESCO unveiled its design for a 260-foot-high pylon for Aria, helping the luxury resort property owned by MGM Resorts to be seen from three miles away. It is an endlessly programmable, free-standing marquis, lit by 11 million LED (light-emitting diodes) pixels. Beautifully illuminated, it serves as an advertisement for their venues and entertainment. It is an impressive visual structure that draws eyes to its content. The structure is the largest marquee on the Strip, and announces Aria as a unique, upscale establishment. The next YESCO project, Linq, opens in October. It’s a huge Ferris wheel directing customers to shopping areas immediately off the Strip and toward Harrah’s Las Vegas. YESCO signage can be viewed with messaging on a sleek LED pylon and undulating LED “vortex” that directs one’s eye toward its club area. About a year ago, YESCO unfurled a monstrous television screen display at Harmon Corner, just across from CityCenter. YESCO’s work includes a four-sided, 20 mm pylon display for the Cosmopolitan. All exterior LED displays and strip-accent lighting are coordinated from a centralized show control system. The Vegas properties followed the lead of 64

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other YESCO clients like Revel, which sports the 40-foot LED sphere. Sitting atop the Atlantic City property, it makes an instantly identifiable icon. The ball is visible from the highway and will link the property to anyone who gambles.

Gaming Support: A Perfect Fit Gaming Support USA loves the financial ring of one word: compatability. “We are the experts in the interfacing to the gaming devices and systems,” says Don Baugh, the CEO and GM of the Las Vegas-based company. Gaming Support produces, for slot-bank solutions, media players that connect to the progressive controller (to receive current jackpot amounts and jackpot hit information). The company drives content on the video displays along with the progressive amount and jackpot hit celebrations. Naturally, the buildup provides suspense. “As the numbers go up, the excitement level grows with it,” Baugh says. “Players are convinced it’s not going to be hit beyond a certain amount, so if you’re closing in on, say, $100,000, that’s pretty significant. “The jackpot does not always have to be cash. There are times the operator will give away a car, and we can show a video for that. “The image of the jackpot amount goes away, and then the movie (a short clip on the screen) changes, so now you’ve got fireworks going off on the screen, maybe a trumpet and the message says, ‘Congratulations, we just had a jackpot winner!’ You hear the celebration music, you look up around you and there is most likely somebody celebrating.” The company’s existing product is a Windowsbased solution, but it announced at G2E a product that allows scheduling of media content through an iPad app that updates the media player wirelessly. A manager can use one pad to control a bank of 1012 machines. He can also move to another area, log in at that location and control another set of ma-


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Up until this point, there has been no way to take “anything away from the signage. There are so many messages that go by, but you are most inclined to remember the ones that have value to you. The casino can now direct the customer to see what they want them to see.

—Charles Meyer Technology Specialist, CastNET

chines. The product is often referred to as Media Player Lite. “The operator can customize the look of the display,” Baugh says. “Where do you want the jackpot amount to be, what kind of 10-15-second movie do you want playing with that? The movie is something that can loop over and over.” Baugh’s company deals directly with casino operators. Many are in the Midwest. For larger floor-wide media solutions, it works with Alpha Video/CastNET of Minneapolis to drive video displays across the casino floor. It also provides solutions for other property displays including the restaurant menus, poker room seating list, cashier windows and convention rooms.

CastNET: A Sense of ‘Mobile’ity CastNET, which provides signage service to more than 120 U.S. properties, throws out a mobile “fishing pole” to lure significant business. The spinoff company of Minnesota-based Alpha Video and Audio Inc. linked Near Field Technology (NFC) with the mobile age. In August, it launched MobileHere, a system that allows smart-phone users to take messages away from the casino floor. The innovation was showcased at G2E, and will likely be displayed in casino properties throughout the fourth quarter. Apple’s anticipated endorsement of the NFC chip figures to dramatically enhance the market for products like MobileHere. NFC is a short-range, wireless RFID technology that is meant for applications where a close physical touch allows information to be exchanged. By placing an NFC-enabled smart phone or mobile device against a CastNET with MobileHere digital sign, viewers can download information or be directed to media content on their device.

Customers can be directed to websites, videos or mobile app stores. They also can instantly download way-finding maps, menus and coupons. If someone wants to access information from a high sign, it will be available on a kiosk labeled “MobileHere.” “Up until this point, there has been no way to take anything away from the signage,” says Charles Meyer, emerging technology specialist for CastNET. “There are so many messages that go by, but you are most inclined to remember the ones that have value to you. The casino can now direct the customer to see what they want them to see. “Let’s say an operator has a restaurant that used to be a buffet, but now it’s a steakhouse. Maybe your overhead sign can announce that, but you can talk about something deeper. You want to talk about giving away an appetizer between 5 p.m. and 7 p.m. for anyone who buys an entrée. You want to talk about 2-for-1 specials. You can do that inside of CastNET.” Technically, CastNET is an easy-to-use yet powerful software solution for managing digital signage content. The company considers it the premier turn-key solution for any large-scale digital signage deployment. MobileHere created a new realm for it. “We’re always being asked about whether digital signage can deliver ROI for our clients,” he says. “The answer is that it can. Every time a phone touches the kiosk, you will know what type of phone it is, the size of the stream, the operating system, the date and the time, and what the customer took away, message by message. “That’s important for casinos who know that the customers are always changing.” Functional, fun and profitable. The formula is taking casino signage into its new era.

OCTOBER 2013 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Interactive Cash Product: Everi Manufacturer: Global Cash Access

veri, an innovative payments and monetization solution for interactive gaming, bridges the payments gap between land-based and interactive gaming. It integrates seamlessly with the extensive network of kiosks and land-based gaming operations, while simultaneously increasing operator brand awareness and giving operators more control over an operator’s interactive gaming solution. Everi creates a single point of accountability for the interactive gaming operator by reducing operator PCI burden, AML obligations, money transmitter licensing costs and approvals, jurisdictional gaming vendor licensing, and operator-supplied payment supply chain infrastructure. The Everi Product Suite includes the following: • Everi Payments, a simple and sophisticated straight-through payment wall built specifically for interactive gaming, acts as a payment aggregator by consolidating numerous payment options, traditional and alternative methods, into one simple-to-integrate payment wall. • Everi Digital Wallet, a robust and streamlined funds management and

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payments solution, manages real money and social currencies while bridging disparate game and loyalty systems to provide operators with more robust player data and unique marketing opportunities. • Everi Productivity Suite focuses on increasing revenue through player monetization, and includes easily accessible detailed reporting, player and transaction analytics and fully customizable offer engines. Each product is a single integration with modular feature implementation, allowing operators to select as few or as many of the customizable options that the Everi product offers. Leveraging the technology of the Live Gamer’s Elements platform, Everi easily navigates the regulatory and legal landscapes to ensure interactive gaming and lottery payments are always in compliance with jurisdictional gaming regulations as well as PCI and PII rules. For more information, visit GCAinc.com.

Mobile Hospitality Product: Insight Mobile Manager Manufacturer: Agilysys, Inc.

gilysys Insight Mobile Manager is a new and innovative dashboard application that enables hotel managers to view key information about the property quickly and easily from a mobile device. The solution contains panels of strategically organized data elements, including remaining arrivals, remaining departures, VIPs, total guests, rooms, house status, housekeeping, revenue, groups, group rooms remaining and reservation summary. Users simply tap on each panel to drill down and obtain more details. Insight Mobile Manager features a userfocused responsive design that allows information to be presenteds on a variety of devices. The dashboard can be filtered according to several criteria, such as property, building or wing, which offers a more in-depth view of activity. The solution gives managers a broad overview of historical data and current activity as well as a glimpse into the following day. It can be programmed to refresh automatically or on demand. Insight Mobile Manager is initially designed for use with the Agilysys Lodging Management System (LMS) property management solution and the Agilysys Visual One property management system. It will access the user credentials and security protocols established in the PMS host to

A

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streamline system management. In 2014, the application will be available for use with the company’s next-generation property management system. Insight Mobile Manger is supported by iPad, iPad mini and iPhone mobile devices. For more information, call 877-369-6208, or visit agilysys.com.


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NEW GAME REVIEW by Frank Legato

Alexander of Macedonia Spielo International

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pielo’s latest video slot, available in both the prodiGi Vu upright and Vu Slant cabinets, is distinguished by its enhanced free-spin bonus event and the ability of players to choose the volatility of their bonus. Alexander of Macedonia places the heroic Greek theme into a 50-line game with high hit frequency and low volatility. Most winning combinations in the base game pay for lining up two to five symbols, an expanded pay schedule that makes the most of the 50-line setup. The primary game also features random expanding wild symbols on all reels—another reason the hit frequency on the slot is high, and another appeal to players.

When the main Alexander of Macedonia Bonus is triggered, it returns a scatter pay of five times the bet and goes to a second screen that allows the player to choose the volatility of a free-spin bonus, but instead of the usual number-ofspins/multiplier combinations, the choices offer combinations of a number of free spins combined with various numbers of entire wild reels. The lowest-volatility choice is 15 free spins with Reel No. 3 wild. This is presented against 10 free games with Reels 2 and 4 wild; and five free games with reels 1, 3 and 5 wild—the highest-volatility choice and, with the first reel wild, the one with the most potential for big wins. Manufacturer: Spielo International Platform: prodiGi Vu, Vu Slant Format: Five-reel, 50-line video slot Denomination: .01, .02, .05, .10, .25, .50 Max Bet: 500 Top Award: 1,000 times line bet Hit Frequency: 59.46%—62.13% Theoretical Hold: 7.67%—14.66%

Sky Rider

Aristocrat Technologies

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ky Rider represents the launch of a new game brand from Aristocrat featuring the “Max Stacks” brand of stacking symbols. The brand is part of the slotmaker’s new “E-Series,” the “e” being for “entertainment”—games designed for players who seek out slots for the entertainment value of the games themselves, and not necessarily for the gamble. Sky Rider is launching with two base games, “Golden Amulet” and “Silver Treasures.” The common thread is that the player gets to pick the symbol that will show up as stacked symbols—clustered symbols creating big wins—in free-game spins. Each of the two base games is available to casinos in several payline configurations: 10 lines, 30 lines, 40 lines, 50 lines or a whopping 100 lines. Both games feature lots of low-level hits in a steady stream of winning combinations. The central feature, though, is the free-spin bonus games, which are triggered by stacks of scattered symbols on three or more reels. “Max Stacked Symbols”—scatter symbols stacked on all five reels—provide the highest return in the bonus games.

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In Golden Amulet, the number of free games depends on the number of stacks triggering the bonus. Three, four or five stacks of scatters trigger nine, 18 or 36 free games, respectively. Silver Treasure, on the other hand, employs a novel free-spin option: The player picks the major symbol to be stacked on reels throughout the free-spin round. (It can be a “mystery choice” picked by the computer as well.) The number of free games depends not only on the number of stacks triggering the feature, but on the stacked symbol chosen. If it is a high-value symbol, a stack of those on the reels in free spins is much more valuable, so fewer free spins are granted. If it is a lower value, more free spins are awarded—up to a maximum of 72. In effect, the player is selecting the volatility of the free-game bonus round. Manufacturer: Aristocrat Technologies Platform: E-Series Format: Five-reel video slot; 10, 30, 40, 50 or 100 lines Denomination: .01—10.00 Max Bet: 100, 500, 600, 800, 1,000 Top Award: 100,000 Hit Frequency: Approximately 50% Theoretical Hold: 4%—14%


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NEW GAME REVIEW

Ultra Stack Lion Aruze Gaming

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his is a new entry in Aruze’s “G-Series,” which is the line of video slots featuring classic free-game bonus events and big wins based on simple features like stacked symbols and wild symbols. Ultra Stack Lion is a 50-line game with high-quality graphics and animation. The central feature of the base game is the collection of animal symbols, which appear clustered in stacks on the reels to create multiple wins. The free-game bonus employs all the popular classic video slot features with a few twists and turns to keep things interesting. Three scattered feature symbols trigger eight free games, with stacked symbols influenced by a “Mini Game” at the beginning. When the bonus is triggered, five cat symbols appear, each showing a cat in silhouette. The player is prompted to select one, which reveals one of the five animal symbols on the reels. The number of symbols depicting the chosen animal is multiplied on the free-spin bonus reels. The selected animal symbol will appear as stacks in the free-spin round, covering up to several reels for big wins. Called the “Big Cat Feature,” the free-spin event can be retriggered during the bonus for eight or more additional free spins.

Manufacturer: Aruze Gaming America Platform: G-Series Format: Five-reel, 50-line video slot Denomination: .01—20.00 Max Bet: 250, 500, 750, 1,000 Top Award: 1,000 credits times line bet Hit Frequency: Approximately 50% Theoretical Hold: 4%—12.8%

Wild 80s

Multimedia Games

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his new 50-line video slot from Multimedia plays out the 1980s theme with sharp graphics, special random wild symbols and, most of all, humor. The game features are all hosted by a “Valley Girl” kind of character, which creates a fun atmosphere for players. The 50-line base game contains a random wild-symbol feature called “Flip’n Wilds.” On any given spin, the feature can send up to three cards flipping across the screen to land on reel spots as wild symbols (if the “Wild” side of the card lands) prior to the spin. Symbols on the reels disappear in clouds of colorful smoke before the cards start flipping. The primary game

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also includes very frequent stacked wild symbols. There are two bonus features in the game. In the “Fresh Free Spin Bonus,” scattered bonus symbols on the first, third and fifth reels trigger eight free spins, with increased Flip’n Wild occurrences. The game also offers a picking event called the “Boom Box Bonus.” In an entertaining display, different-colored buttons appear—sort of a disco mixing board—and the player is prompted to begin picking buttons to push, to reveal an ’80s icon. At the left of the screen are bonus award amounts. The player picks until unveiling four matching disco icons—cassette tapes, speakers, turntables and the top boom box—to return the corresponding award. (“M.C. Money in the house!”) During the picks, players also can reveal a wild card or multiplier. Of course, all the picks are set to the backdrop of booming ’80s-style music, as are the rest of the audio and visuals of the game. Manufacturer: Multimedia Games Platform: MGAM video platform Format: Five-reel, 50-line video slot Denomination: . 01, .02, .03, .05, .10, .25, .50, 1.00 Max Bet: 400 Top Award: 452,280 Hit Frequency: Approximately 50% Theoretical Hold: 2%—15%


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FRANKLY SPEAKING by Frank Legato

Atlantic City Scores

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V IC TOR

RINAL DO

see that Scores has opened in the Trump Taj Mahal in Atlantic City. It’s the first strip club ever to open within the confines of an Atlantic City casino. It’s got expensive booze, pulsating music, dancers on poles and lap dances at $100 per half-hour. No word yet on whether you’ll be able to use your slot-club points for those. And no, the dancers are not naked. It’s against the gaming regulations, so they have G-strings and pasties. Hey, this is a family resort, pal. I know it’s a family resort because Miss America’s back. Scores opened just in time to view, from the poles, the Miss America “Show Us Your Shoes” parade passing by. The clean-cut, all-American beauty pageant will turn up its volume so it can be heard over all the bumping and grinding and dance music. I’m guessing that in the future, Scores will have its own indoor parade to match the “Show Us Your Shoes” event, only with something other than shoes. The really great part about this juxtaposition of family values and lusty debauchery is that the Miss America contestants will have something on which to fall back if they lose. “Great dance, baby—here’s a twenty. Hey, weren’t you Miss North Dakota?” Bob Gans, the managing partner of the Scores chain, says the arrival of the strip club on the Boardwalk will give Atlantic City “sex appeal”—a term which, in Atlantic City, traditionally meant a loosely attached fanny pack. In an interview with the Philadelphia Inquirer, Gans pointed out that the 30 million annual visitors to Atlantic City include lots and lots of adults, and that “this offers them adult entertainment and an experience they’ll never forget.” He added, “This is not your father’s strip club.” Well, my father never went to a strip club as far as I know, but if he did, I guarantee you he didn’t pay a hundred bucks for a half-hour lap dance. But this is not your father’s Atlantic City, either. If it was, just the announcement that Scores was upstairs would cause half the customers on the slot floor to go Code Blue. There would be a massive traffic jam between the bus lounge and the venue—a giant gridlock of Rascals as bus patrons made their way to the pole-dancing. Seriously, though, when Gans said this is “not your father’s strip club,” he was talking about the 72

Global Gaming Business OCTOBER 2013

“high-end” nature of this joint. It doesn’t look like a strip club. It’s tucked away on that cavernous second level of the Taj, with a sign, a curtain and not much else on the outside. Inside, you know it’s high end because you’ll probably need hundreds of dollars if you want to stay there more than five minutes. The Scores chain actually advertises itself as “modern gentleman’s clubs,” with the New York City venue advertising “the most beautiful exotic dancers in the world, celebrity sightings and spontaneous entertainment.” Wow. I love spontaneous entertainment. The Atlantic City Scores is three and a half times larger than the one in New York, and according to Gans, it represents an “evolution” of the modern gentleman’s club into a social adult entertainment experience for men and women alike. (In fact, they’re starting up a male revue in the venue later this month.) It’s a natural for an Atlantic City market that has for years been trying to court more young, hip and diverse clientele to finally shed its image as the old-lady-at-the-slot-machines place. In the Inquirer article, Atlantic City Alliance CEO Liza Cartmell commented that the adult theme fits in nicely with the local “Do AC” marketing campaign, which is aimed at adults. John Palmieri, executive director of the Casino Reinvestment Development Authority, was also quoted in the article, “We are remaining true to who we are and what we are, when we can cater to opposite ends of the spectrum and everything in between successfully.” Yes, Atlantic City is now multi-tasking to serve its market, running Miss America alongside exotic dancers. It’s a market that can serve ice cream to the kiddies while advertising righteous babes slithering down poles. (“Don’t worry, honey. They use pasties. The kids will be fine.”) Heck, maybe some day Miss New Jersey will be a Scores alum: “Miss New Jersey, if you could do anything to promote peace and harmony in the world, what would it be?” “I would offer lap dances to all of the richest people in America, and I would use the money I earn to house refugees, feed hungry children and save abandoned puppies.” Oh, there she is…


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GOODS&SERVICES

Loveman, Fahrenkopf Lead Names as Hall of Fame Inductees man behind the world’s largest gaming Ttophecompany, the former head of the industry’s trade association, one of the Strip’s—and the world’s—most spectacular headliners and one of the world’s top culinary artists make up the 2013 class for the American Gaming Association’s Gaming Hall of Fame. Gary Loveman, chairman, CEO and president of Caesars Entertainment Corporation; Frank J. Fahrenkopf, Jr., leader of the AGA for its first 18 years; Celine Dion, a performer who led the rebirth of the headlining show in Las Vegas; and Guy Savoy, the creative force behind one of the Strip’s most memorable culinary experiences, will be honored for their outstanding contributions to the growth and stature of the gaming industry. The 25th annual Gaming Hall of Fame Charity Gala and Induction Ceremony will be held on Thursday, November 14 at Pure Nightclub at Caesars Palace in Las Vegas, and all proceeds from the event will benefit the National Center for Responsible Gaming. “The gaming industry is nothing without its innovators, artists and advocates driving it forward, and we are proud to honor Gary, Frank, Celine and Guy as talents who have helped transform our business into the entertainment juggernaut it is today,” said Geoff Freeman, president and CEO of the AGA. Induction into the Gaming Hall of Fame is the highest honor accorded by the gaming-entertainment industry. Each year, individuals who have distinguished themselves through significant contributions to the industry receive this honor. More than 70 people have been inducted into the Gaming Hall of Fame since its inception in 1989. For information about sponsorship opportunities for the Gaming Hall of Fame Charity Gala and Induction Ceremony, contact Brian Lehman at 202-552-2680. 74

AGA Targets Shipping Regulations he American Gaming Association has released a reTlinesearch report meant to kick off an effort to streamcomplex and costly regulations related to gaming machine shipping practices. The report, titled “Streamlining Shipping: Recommendations for Regulatory Reform,” offers solutions to the problems of the current regulatory system, which, it says, creates daunting complexities for both gaming businesses and industry regulators. The research, compiled by an AGA task force of compliance experts and former regulators, is being distributed to industry regulators throughout the country and around the world. “These modest but significant reforms to shipping rules achieve the balance of making it more efficient for our companies to do business while maintaining the integrity of the industry,” said Geoff Freeman, president and CEO of the AGA. “Meeting the concerns of regulators and adding efficiency to business operations will make our already-good system even better; it propels our industry forward by alleviating unnecessary burdens on manufacturers, operators and regulators.” Currently in North America, 365 individual jurisdictions apply different sets of regulations, which fill more than 1,000 pages and create a scenario in which 1.5 million different combinations of regulatory requirements can apply to the shipment of a single gaming machine today.

Bally Revenues Near $1 Billion lot and system manuSnologies facturer Bally Techannounced

Bally CEO Ramesh Srinivasan

Global Gaming Business OCTOBER 2013

record quarterly diluted earnings per share of 95 cents and record quarterly revenue of $264 million for the three months ended June 30, 2013. Diluted EPS was a record $3.45 on record annual revenues of $997 million for the year ended June 30, 2013.

“Fiscal 2013 was a truly momentous year in Bally’s history,” said Bally President and CEO Ramesh Srinivasan. “We made enormous progress in many different ways, including continued growth in wide-area progressive units, record gaming operations revenue, significant success in new markets like Canada, Illinois, and South Africa, establishing new revenue records in Systems while setting up Systems for further growth in the years ahead, and the launch of Bally content in regulated online jurisdictions. “These achievements position us well for continued growth in fiscal 2014 and beyond.” Srinivasan added that the acquisition of SHFL entertainment, expected to close by next year, “will position us even better as an innovative end-to-end gaming solutions provider. We remain steadfastly focused on executing well in our core business.” In other Bally news, the company announced the launch of “Michael Jackson Wanna Be Startin’ Somethin,’” the sequel to last year’s runaway hit “Michael Jackson King of Pop.” Featuring new bonuses, the machine is loaded with five more of Michael Jackson’s most popular tracks: “Bad,” “Billie Jean,” “Don’t Stop ‘Til You Get Enough,” “The Way You Make Me Feel” and “Wanna Be Startin’ Somethin’.” “This encore to the hit Michael Jackson King of Pop game is sure to thrill players and fans of the widely beloved artist,” Bally Technologies Vice President of Product Management and Licensing Jean Venneman said in a statement. “We are excited to deliver a game that features some of Michael Jackson’s most iconic songs, along with unprecedented player interactivity and the chance of a life-changing widearea progressive top jackpot.” Meanwhile, Bally Technologies has cleared its mandatory waiting period with the Federal Trade Commission to acquire SHFL entertainment. The waiting period expired August 26. The FTC did not take action during the waiting period, which falls under the 1976 Hart-ScottRodino Antitrust Act. The completion of the waiting period was a standard condition in finalizing the acquisition. The merger was announced July 16 by both entities. Bally’s purchase shares are $23.25 each. Regulatory approval is still needed in several jurisdictions like SHFL’s shareholders and regulatory agencies. Bally has commitments for a $1.1 billion term loan to finance the SHFL acquisition.


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BMM Expanding Moncton Operation aming testing company BMM Testlabs anG nounced a plan to expand operations at its Moncton, New Brunswick location, resulting in the creation of 27 new full-time positions over the next four years. The expansion was announced in a joint press conference by Drew Pawlak, BMM senior vice president of business development for the Americas, and New Brunswick Premier David Alward. Under the terms of the five-year agreement, the provincial agency Invest NB will provide up to $350,000 in the form of payroll rebates in support of the 27 jobs expected to be created over the next four years. The positions being created include test engineers, computer scientists, business development managers and project managers. The investment by the province will contribute an estimated $1.5 million annually to the province’s gross domestic product once all positions have been filled. In addition, the Department of Economic Development has approved $50,000 under the NB Growth program in support of eligible capital costs.

First Casino In Vietnam Equipped With 104 Interblock Play Stations ietnam’s new casino, The Grand Ho Tram V Strip Casino Resort, had 104 play stations installed by Interblock for casino games roulette and baccarat. Interblock worked with slot machine management to successfully install the G3 and G4 Interblock products at the Grand. “I would like to say thank you to the Interblock team for their design, production and efforts, which have fully satisfied slot management,” Vice President of Slots Ian Garner said. The Grand opened July 26 and sits on a stretch of beach near Danang, in Vietnam. Gaming facilities, a 541-room hotel, 10 restaurants and bars, three swimming pools and retail shopping make up the facility, which is owned by Asian Coast Development.

Novomatic Launches Biometric Hospitality System ustria’s Novomatic Group has introduced A what it calls a “comprehensive, biometrically supported registration and payment system.” Novomatic bundled existing technologies together to create proprietary systems that “allow various applications in the gaming segment as well as in ancillary areas such as gastronomy,” according to a statement from the company. “Once OCTOBER 2013 www.ggbmagazine.com

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a guest is registered, he can log in via biometric recognition, and gain access to the gaming area, or play land-based as well as online.” The so-called “single-wallet” environment includes gaming machines, restaurants or bars, or even an online or mobile casino. Even the cash payout can be administered via the biometric recognition of the guest at a cash terminal or cash desk. “This new development brings maximum comfort for the guest,” said the statement. “He will be able to utilize the entire offering at complete cashless ease. Also, casino operators will be able to tap completely new business perspectives with this revolutionary system, such as new offers, increased cost efficiency and increased security.” All existing Novomatic products are already “biometric-ready,” meaning that they can be easily and quickly upgraded and networked as soon as the system is launched to the market.

Pioneer Crossing Adds Aristocrat System aming technology supplier Aristocrat TechG nologies Inc. has won a corporate-wide systems contract at Pioneer Crossing Casinos. Aristocrat will install its award-winning Oasis 360 casino manage-

tomer service hotline for U.S. customers and the establishment of a more comprehensive direct sales presence, service and support organization to better serve customers worldwide. The service and repair facility and customer support hotline 1-855-FL-HELP-U (1-855-354-3578) will offer technical support, customer service, fault diagnostics, product repair, and 24-hour response to customer issues (Monday through Friday). As a value-added benefit, the new facility will also coordinate the pickup, delivery and swap-out of any FutureLogic printer under warranty within 48 hours at no cost to the customer. Also at the company, the FutureLogic GEN2 Universal printer was picked up by French Casinos Partouche and Tranchant for their choice in thermal ticket printers, which coincide with TITO, France’s Ticket-InTicket-Out method. The printing system will be in over 70 casinos counting the several independent casinos that also said yes to GEN2. The system is promotional couponing-ready, has a larger capacity for standard tickets, saves on ink and eliminates paper waste because it uses all the tickets in a ticket stack. The server-based printer supports the protocols SPC and GDC and can carry multiple hosts at once.

NEWave Compliance Software Suite Installed At Two Casinos he Title 31 Manager and Tax Form Validator software from NEWave have been inTstalledcomputer at Tulalip Resort Casino in Washington.

Pioneer Crossing Casino in Dayton, NV

ment system at Pioneer Crossing Casino in Yerington, Nevada. Aristocrat installed Oasis 360 at Pioneer Crossing locations in Fernley and Dayton, Nevada earlier this year. Pioneer Crossing Casinos owner Mike Benjamin said, “We needed a casino management system that would help us to reward our friends and neighbors for their play and loyalty. And we know through experience that Oasis 360 will help us do that, as well as help to make casino play even more exciting and rewarding.” Pioneer Crossing Casinos will also soon upgrade its Oasis 360 installations at its locations in Fernley and in Dayton, Nevada to mirror the Yerington install.

FutureLogic Opens Service Facility; Adds French Casino rinting solution provider FutureLogic, Inc. anPandnounced the launch of a new world-class service repair facility in Phoenix, Arizona, a new cus76

Global Gaming Business OCTOBER 2013

The modules belong to NEWave’s myCompliance Manager Suite. NEWave has also announced the suite’s installation at FireKeepers Casino in Michigan. NEWave added its NWJE eLearning program for FireKeepers, which is a training program on the modules for employees. Additional modules are TINCheck, eFile IRS and OFAC Watch List. NEWave’s myCompliance Manager helps casinos comply with anti-money laundering laws. It tracks cash transactions in real time, including outside check cashing services, consolidates audits and produces tax documents.

Pioneering Executive Development Program To Continue 23rd annual international Executive DevelProgram for the gaming industry will Tbe heopment offered by the University of Nevada, Reno and the University of Nevada, Las Vegas, November 14-23, at Harveys Lake Tahoe. Cosponsored by UNR’s Institute for the Study of Gambling and Commercial Gaming, College of Business and Extended Studies, and by UNLV’s International Gaming Institute, the program was

Harveys Lake Tahoe

led for 23 years by William R. Eadington until his death in February. The University of Nevada, Las Vegas has joined with the University of Nevada, Reno to co-sponsor the Executive Development Program. Co-moderators for the 2013 program will be industry leaders Bo Bernhard, executive director of the UNLV International Gaming Institute; and Mark Lipparelli, former chair of the Nevada State Gaming Control Board, member of the Board of Trustees of the University of Nevada, Reno Foundation, president of Gioco Ventures, LLC, and member of the first EDP graduating class. Both were students of Eadington and have been longtime EDP faculty members. The only program of its kind in the world, the exclusive nine-day series is designed for upper-level gaming managers, board members, government regulators and gaming professionals in positions of substantial executive and leadership responsibilities.

Strip Club Finally Opens at Atlantic City Casino he $25 million erotic dance club Scores AtTthemed lantic City, which will bring a major adultentertainment venue to the resort, has been granted regulatory approval for a liquor license. The club had been waiting for the approval in hopes of opening this summer. It was scheduled to open in September. Scores Atlantic City will be the first strip club in an Atlantic City casino. There have been other adult-themed shows in Atlantic City casinos, and the resort offers several strip clubs not located in casinos. It has taken two years for Scores to get this close to opening since first getting regulatory approval from the state Division of Gaming Enforcement bin 2011. The approval allows Scores to feature dancers in G-strings and pasties. Full nudity is not allowed at venues that serve alcohol in New Jersey, though some venues get around the restriction by serving sodas and allowing alcohol to be carried in.


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PEOPLE CHAUDHURI NAMED TO NIGC

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ecretary of the Interior Sally Jewell last month appointed Jonodev Chaudhuri (Muscogee Creek) as associate commissioner of the National Jonodev Chaudhuri Indian Gaming Commission for a three-year term. Chaudhuri will join outgoing Chairwoman Tracie Stevens (Tulalip) and Associate Commissioner Daniel Little, who recently was reappointed to a second three-year term. “Mr. Chaudhuri’s extensive background and experience in a broad spectrum of Native American issues make him highly qualified for this position,” said Jewell. “His perspective in legal affairs and organizational administration will enrich the commission’s deliberations and contribute to informed decisions that promote economic well-being for Indian Country.” Prior to joining the NIGC, Chaudhuri served as senior counselor to the Department of the Interior’s assistant secretary for Indian Affairs. In this position, he focused on a wide range of national policy issues, including economic development, tribal recognition, energy and Indian gaming. Chaudhuri’s professional background includes almost a decade in private practice, work as a community organizer, and service as a judge on five different tribal courts, including the Muscogee (Creek) Nation’s highest court.

SISK EXITS SANDS CHINA

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he No. 2 executive at Sands China has left the company, the latest in a series of recent senior-level departures at Las Vegas Sands’ Macau subsidiary. Chief Operating Officer David Sisk David Sisk was asked to resign, sources told The Wall Street Journal. The Journal speculated that his departure may have come as the result of a power struggle with Chief Executive Ed Tracy. They both joined the Hong Kong-listed operator in August 2010 after Sands had fired its previous chief executive, Steve Jacobs, several weeks earlier. Jacobs is suing LVS for wrongful termination. The June announcement that Grant Chum, formerly UBS’ head of Hong Kong equity research, has been hired as Asia-based senior vice president of global gambling strategy raised further questions about Sisk’s role, the Journal said.

Sands declined to comment, stating only that “David Sisk has resigned and is no longer with the company,” the Journal said. Before joining Sands, Sisk was chief financial officer of Wynn Resorts’ Las Vegas casinos and had also worked at Caesars Entertainment.

CANTONE NAMED MOHEGAN ENTERTAINMENT LEADER

DREITZER JOINS AINSWORTH

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he Mohegan Tribal Gaming Authority (MTGA) announced last month the promotion of Tom Cantone to senior vice president of sports and entertainment. In this newly Tom Cantone created corporate position, Cantone will oversee all aspects of the entertainment offerings at all MTGA properties including Mohegan Sun in Uncasville, Connecticut, Mohegan Sun at Pocono Downs in Wilkes-Barre, Pennsylvania and Resorts Casino Hotel in Atlantic City, New Jersey. Additionally, he will resume similar responsibilities at all future properties acquired and/or managed by MTGA and the Mohegan Gaming Advisors. Cantone previously served as vice president of sports and entertainment of the flagship property in Connecticut since 2007. Prior to Mohegan Sun, Cantone held senior management marketing positions at Foxwoods Resort and Casino, Sands Hotel & Casino in Atlantic City, Hershey Entertainment & Resort Co., Hollywood Casinos and various Trump properties. He brings over 25 years of experience to his new role.

JOHNSON PROMOTED TO LEADER OF G2E AND G2E ASIA

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to manage G2E Asia’s overall business in Macau. Johnson replaces Tom Loughran as industry vice president and will report to Courtney Muller, a senior vice president at Reed.

eed Exhibitions announced that Mike Johnson has been promoted to industry vice president for Global Gaming Expo and G2E Asia. Johnson has worked on Mike Johnson the G2E portfolio of events for seven years and will remain responsible for all G2E and G2E Asia’s revenue through management of exhibition, advertising, sponsorship and conference sales, as well as the development of the annual conference programs at the two events. He will also continue

ike Dreitzer, COO of BMM Testlabs Americas, left the company in midSeptember to join Ainsworth Game Technology North Mike Dreitzer America as its president. Dreitzer was COO at BMM for two years. He assisted the company in gaining licensure in North America. Dreitzer has over 15 years of experience with the gaming industry and was a Nevada deputy attorney general.

October 2013 Index of Advertisers AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Ainsworth Game Technology . . . . . . . . . . . . .39 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . .11, 25 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Bally Technologies . . . . . . . . . . . . . . . . . . . . . .2 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . .17 Cantor Gaming . . . . . . . . . . . . . . . . . . . . . . . .57 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .75 FutureLogic . . . . . . . . . . . . . . . . . . . . . . . . . . .29 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Gaming Support . . . . . . . . . . . . . . . . . . . . . . .61 Gasser Chair . . . . . . . . . . . . . . . . . . . . . . . . . .49 GLI . . . . . . . . . . . . . . . . . . . . .inside back cover GCA Interactive . . . . . . . . . . . . . . . . . . . . . . .33 GGB iGames . . . . . . . . . . . . . . . . . . . . . . . . . .71 GGB News . . . . . . . . . . . . . . . . . . . . . . . . . . .73 GGB Subscriptions . . . . . . . . . . . . . . . . . . . . .69 Glory USA . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 iGNA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .62 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40, 41 Incredible Technologies . . . . . . . . . . . . . . . . .63 JBA Consulting Engineers . . . . . . . . . . . . . . . .19 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Konami Gaming . . . . . . . . . . . . . .9, Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Macquarie . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Multimedia Games . . . . . . . . . . . . . . . . . . . . .13 NAGRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 NEWave . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Ortiz Gaming . . . . . . . . . . . . . . . . . . . . . . . . .53 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .18 Rymax Marketing . . . . . . . . . . . . . . . . . . . . . .37 Spielo International . . . . . . . . . . . . . . . . . . . .23 TCS JohnHuxley . . . . . . . . . . . . . . . . . . . . . . .55 Vantiv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 WMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47

OCTOBER 2013 www.ggbmagazine.com

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CASINO COMMUNICATIONS

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&A

Tracie Stevens

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Chairwoman, National Indian Gaming Commission

he National Indian Gaming Commission, like most regulatory bodies, has had a somewhat contentious relationship with the tribal casinos it regulates. Some commission leaders during the 20-year existence of the NIGC have opted for a less confrontational attitude, but it has always been rocky. When Tracie Stevens took over three years ago, she began to utilize the governmentto-government policy that the Obama administration has emphasized in all dealings with Indian Country. She directed an effort to reach out to tribes of all sizes to improve the relationship between the commission and the gaming tribes. She spoke with GGB Publisher Roger Gros from her offices in Washington, D.C. at the end of August. To hear a full podcast of the interview, visit ggbmagazine.com. GGB: Congratulations on completing your three-year term as chairwoman of the NIGC. What were your goals when you started? Stevens: In the beginning, (NIGC commissioners) Dan (Little) and Stephanie (Cochran) sat down to discuss what the issues were for the tribes and the NIGC. It was helpful because Dan and Stephanie had arrived before I had and had some inside information about how the agency was functioning. Over several weeks we identified four initiatives that were important: consultation and relationship building; technical assistance and training; the need for a regulatory review; and the need for an agency operations review.

Were tribal consultations the first thing you put into motion because you wanted to introduce yourself to Indian Country? Well, even though many tribes were familiar with us and where we had come from, we felt it was important to go out and to uphold the Obama administration’s initiative on government-to-government relationships. But there were also a few tribes who had been bruised

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and battered by the regulatory process, and we wanted to make sure they knew we were going to be fair. Interestingly, when we explained about our four initiatives and what we were planning, the initial reaction was “Really? You really think you’re going to get that much done?” There were a few people who laughed at us. When you went out on these consultations, you didn’t just go to the big tribes that make the lion’s share of the revenue, but you also visited small, more remote tribes. Why did you do that? First of all, the NIGC oversees all of Indian gaming, all shapes and sizes. The success of the large tribes is noteworthy, and they often have the talent and resources to have a very robust regulatory system. We found that the smaller operations really needed the NIGC technical assistance and training, that communication with our regional offices, and that focus. One of the big decisions made under your leadership was the definition of Class II gaming to not require a second action by the player. What was the background behind that decision? We were hearing a lot of questions from tribes, regulators and manufacturers about one-touch electronic bingo and we thought it would be best to address the questions. The questions were about the status of certain machines and what it means for us as regulators, tribes or manufacturers. Could you help bring clarity to this? Is there a full definition now of Class II machines? This seems to have actually blurred the line between Class II and Class III. I don’t know if I agree with that. I think it makes more clear the status of those particular types of machines. Previous commissions have more clearly defined Class II but tried to impose what was known as a “bright line” between Class II and Class III without following through. I think this decision makes it more clear what is Class II and what is Class III.

Another issue that you actually did not take action on was online gaming. Your rationale made complete sense, since there was no bill or even outline of one that would have given you oversight over tribal online gaming. Was it frustrating to not be able to provide clarity on that issue? I wasn’t really frustrated because the administration has not taken a position on internet gaming, and as part of the administration, we couldn’t take a position. What was frustrating was not knowing what everybody’s roles were going to be. There’s a number of federal, state and tribal entities involved, and that was more frustrating than anything else, and in the absence of any federal legislation, it’s hard to take any kind of position. But we’ve always taken the position that NIGC will administer the laws as Congress enacts them. What do you see as some of the highlights of your term as head of the commission? A couple of things. I’m really impressed with how our staff, not just in Washington, but all across the country, have taken pride in the culture change we’ve made from being a reactive commission to being one of prevention. It has a lot of elements, but it’s just good practice to do that. So I’m really proud of how everyone in our organization moved toward maintaining compliance rather than simply being responsive to non-compliance. But I think the thing I’m most proud of—and it’s probably our greatest achievement—is the progress we’ve made in relationship building. I’ve been known to say that if you’re hung up on process, you’ll never get to substance, and so we had to change the process in which we consulted with tribes. We’ve been able to get to the heart of the discussion in many instances because of this change, and we have advanced the president’s mission of government-to-government relationships. We are very proud of that.


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Global gaming business, october 2013