Page 1

December 2015

Hard Rock Gaming


Season’s Greetings and a Happy and Prosperous New Year! www.novomatic.com

Thank you very much for the good working relationship and your confidence.

International Sales: Jens Einhaus, Phone: +43 2252 606 319, sales@novomatic.com


Editor’s page Editorial: Editor in Chief: Glyn Thomas Mob: +380 952 705 596 glyn@ace123.com Features Editor: Damien Connelly dconnelly@ace123.com Associate Editor Asia: Bill Healey bill@ace123.com Associate Editor North America David Mckee dmckee@ace123.com Special Assignment Correspondent: Jack Bulavsky jackbulavsky@yahoo.com UK: Alan Campbell alancampbellcasinolife@gmail.com International Casino & Gaming Correspondent: JJ Woods jjsilks@eircom.net Technology Correspondent: Rebecca Green rebecca@ace123.com

Production: Designer: Stewart Hyde design@ace123.com www.totaldesignworks.com Subscriptions: Helen Holmes subs@ace123.com

Welcome to Casino Life...

As we go to print a number of editorial features are in the balance due to confidentiality issues and in one case a change of senior manager... all causing a delay, but we’d rather wait and get it right rather than print and be damned. As we reach the end of 2015 this issue of “getting things right” has become all encompassing as more and more institutions are watched and valued by their statements. In many cases a simple slip – a mistimed statement or a wrong inference -can cost a lot in stock value. In addition, as we all know, a good reputation cannot be bought or simply acquired – it has to be earned – over many years. Relationships have to be built and re-built time and again as staff leave, new ones join and companies merge often disrupting the status quo. With that in mind, we’re quite proud to have reached the golden age of ten this year and in that time to have developed and maintained a solid reputation which has lead to more exclusive editorial and in turn, solid advertising from those that can see the benefits of bespoke writing rather than re-cycled PR. This has also lead to us being invited to more casino openings, to cover more of the expansive leisure resorts and in turn to be trusted by more and more operators (and the suppliers) that we will cover their story correctly. A win–win situation. Our expertise has been applied in Ukraine where we have been fortunate enough to be insitu and were able to launch “Game ON” in October providing a launch pad for the new draft law. That the Government seems to have drifted to the dark side and favoured vested interests was not for the want of trying and we will continue through the newly formed Ukraine Gaming Association to press for a fair and transparent gambling industry. What to expect in 2016? More mergers / acquisitions as with a stable market the road to expansion is not just about new markets but acquiring your competitors, establishing best-of breed, re-branding and making some savings along the way. Second – the re-emergence of Big Data. We were obsessed with what it would bring once – but now it’s coming to the fore again in all sorts of markets. Third - a new genre. We’ve seen the rise of auto-roulettes from wood and brass to carbon fibre; the single multi-platformed terminals; Slot cabinets of every size, with overlaid reels, touch feedback screens, height adjustable (and yet still without phone chargers)... so perhaps it’s time for something new. What? If I knew I’d be patenting it now. Best wishes for the festive season from all of us at Ace Publishing.

Web & IT: Sudip Banjeree sb@ace123.com Publisher: Peter White Tel: +44 (0) 1892 740869 Mob: +44 (0) 7973 273714 pwhite@ace123.com

Glyn Thomas Editor in Chief

1


Contents 1

Editors Page

4 Hard Rock International Stephen J. Karoul interview with Nelson Parker VP of Casino Development Hard Rock International 11 In the cards California’s Bicycle Club Casino is reinvented with a new 17 River Spirit – Revisited Glyn Thomas talks to Pat Crofts CEO of Muscogee (Creek) Nation Casinos 20 The Big Play Aristocrat Technologies Worldwide tour to continue on to EMEA with addition of ICE 2016 dates - Andrew Behan 22 Gaming redefined Glyn Thomas chats to Alexander Gornakov CEO 27 60 Years of Proven Quality, Service and Support Peter White chats to Harald Wagemaker, Executive Vice President Sales & Marketing of Gaming and Casino EMEA SUZOHAPP 31 Gambling in the UK: the perversity of eschewing diversity Dan Waugh 36 ‘ICE Totally Gaming The greatest gaming show on the planet’ Rebecca Green chats to Kate Chambers, Managing Director Clarion Events 39 Ukraine Gaming Legislation Steve Donoghue 42 Where’s The Beef? Victor H. Royer 45 “Ignoring low level advantage players” by David Switzer The National Casino Forum (NCF) has held, and will continue to hold, meetings at the highest levels with the DCMS (Department for Culture, Media & Sport) on a regular basis.

Editorial Policy: The views and opinions expressed in Casino Life remain principally the views of contributors and do not necessarily reflect those of the editor or publishers. The publishers wish to avoid inaccuracies and, whilst every precaution has been taken to ensure that information contained in this publication is accurate, no liability is accepted by the editor or publishers for errors or omissions, however caused. Unless otherwise stated, articles appearing in this publication remain the copyright of the publishers and may not be reproduced in any form without the publisher’s written consent. Printed in the UK by MPC Ltd.

2


ExCel, London 2.-4. Feb. 2016 Stand S3 - 350

4845 Rutzenmoos - TraunsteinstraĂ&#x;e 12 - AUSTRIA www.amatic.com sales@amatic.com


Hard Rock Gaming Stephen Karoul chats with Nelson Parker VP of Casino Development Hard Rock International

4


5


With a total of 206 venues in 64 countries, including 158 cafes, 23 hotels and 11 casinos, Hard Rock International (HRI) is one of the most globally recognized companies. Is Hard Rock International a brand or is Hard Rock International a lifestyle? Hard Rock International is a world-class entertainment company that has been infusing hospitality with music and fun for more than four decades through its portfolio of Cafes, Hotels, Casinos and Live Music Venues around the globe. Hard Rock is certainly a brand, but most would say it is also a lifestyle that embodies the power of music as a universal language to bring people together through authentic and memorable experiences. Overall, music is at the core of the Hard Rock brand: it is our main differentiator – the single thread of brand DNA that runs through everything we do. How that differentiator is applied depends on context varying by location, venue and target guest profile, among others. Nelson, as you know, Casino Life Magazine takes great pride in interviewing leading industry CEO’s, Presidents and senior level executives to better understand both the companies that they work for or own, as well as what are the key attributes for their success. Please tell our readers about yourself and why you feel aligned with Hard Rock International? I’ve spent my entire 20-year professional career doing corporate development with the majority of that time focused in the gaming industry (previously Argosy Gaming and Foxwoods). Over this time, I’ve worked on nearly every type of casino development project imaginable around the world; each of them posing a new and fascinating challenge. I still feel incredibly passionate about what I do and thrive on the diversity and excitement of the projects I’m fortunate enough to be a part of. I

6

guess this is what keeps me on the road 3 out of every 4 weeks per month having visited 26 countries last year. I joined Hard Rock nearly 6 years ago for two reasons. First, it truly is an amazing brand. I remember visiting Hard Rock Cafes when I was a kid and being in awe of the music memorabilia adorning the walls. I still find it incredible and, fortunately, so do many others. Whether it’s the music, the memorabilia, the food or something else altogether, it just works; and, more importantly, it works equally across an incredibly diverse range of cultures and demographics, as well as venues (Cafes, Hotels & Casinos), often obtaining a significant premium compared to ours. The second reason I joined Hard Rock was its capacity and appetite to grow its global estate of properties through each of its verticals, but more importantly for me, its hotel and casino portfolio. The company is extremely well positioned to grow and I wanted to be instrumental in realizing its potential.


Hard Rock International is now involved with 11 casinos. What kind of synergy do you see between casino gaming and the typical Hard Rock International customer? Where Hard Rock excels is in its ability to appeal to such a broad range of guest profiles. The Hard Rock customers share synergies in the sense that the brand attracts and caters to both the young and the young at heart – music enthusiasts who share a desire to connect with music in a fun and exciting setting designed to allow for playfulness and exploration. A setting that is upscale, yet anything but uptight. Hard Rock’s gaming consumers are attracted to the brand for the same reasons as regular consumers – authentic experiences, upscale design, limitless service, a fun approach to hospitality, live music programming and so much more. However, the Hard Rock Gaming consumers are attracted to the brand for its strong variety and mix of offerings – outside of world-class gaming Hard Rock Casinos provide the highest quality of music, entertainment and F&B. Additionally, Hard Rock gaming properties are backed by the strong Hard Rock brand which has a proven track record of exemplary service and diversity of offerings.

Do you think that cross marketing between venues and customers is possible for Hard Rock International and if so, how will that help increase casino revenues? We have an incredibly loyal following of the brand and people seek our Hard Rock venues around the world to experience what each unique location offers. When we recently opened our casino in Ohio, the Hard Rock Rocksino Northfield Park, we saw a tremendous influx of customers who had played at other Hard Rock Casinos. The vast number of loyal brand fans is part of what made Hard Rock the statewide leader in VLTs/slots revenue in Ohio since the day we opened there. Now, our new customers in Ohio are travelling to our casinos in Florida, the Caribbean and elsewhere. In addition, while our hotels, cafes or live music venues are considered destinations unto themselves, a Hard Rock Casino in most cases infuses several of these different brand offerings and it is not unusual for a Hard Rock Casino to include a live music event space, branded F&B, or other brand features. Our consistent brand offerings and the variety of offerings available at our destinations are what allow Hard Rock gaming properties to be much more than just casinos and in turn attract a much broader range of patrons to our facilities.

7


Hard Rock International is expanding aggressively now all around the world. Are there any geographic areas that are now of greater interest than others and if so, why? Our casino expansion strategy is very much global and continues to be a central focus for Hard Rock’s long-term growth. We will continue to aggressively target potential acquisitions, emerging markets and management opportunities (both commercial and tribal) throughout North America. For example, in the U.S. the state of Georgia is of particular interest. We also have an ownership interest in the Meadowlands in New Jersey, which we believe would be one of the most successful casinos in the country should enabling legislation pass. The privatization of casinos in Ontario is also something we’ve been closely following. We are also quite active in Asia currently pursuing a number of interesting opportunities, as well as in South America and the Caribbean. In addition, we continue to believe that certain strategic locations throughout Europe make a great deal of sense for us to create larger-scale hotel/casino offerings that currently do not exist in the region. For instance, I’ve been spending a great deal of my time in Spain over the past year

8


where we are in the process of submitting an RFP to develop a large, world-class Integrated Resort project just south of Barcelona. It would be the largest project of its nature in Europe. This would be a significant project for us and we are very excited about its potential. Beyond this, we are constantly seeking out opportunities to work with existing hotel/casino or resort/casino owners to assume management and reposition their properties to a Hard Rock Hotel & Casino. We have an incredible track record of transforming properties into market leaders and achieving significant EBITDA gains by applying the brand. There are many examples, but the Hard Rock Hotel & Casino Punta Cana in the Dominican Republic is one of the best. Revenues have more than tripled since we converted this 1,800 room resort with the largest casino in the Caribbean back in 2010. “Being a Rock Star has its privileges.� Tell us a little bit about the Hard Rock Rewards program and how it integrates with your casino properties? Hard Rock Rewards is a cross-platform initiative that was started several years ago to reward and

9


provide unique benefits to frequent patrons of our cafes, hotels, casinos and Rock Shop retail stores. It was not an easy undertaking given the diversity and nature of our operating platform, but the program has really taken off and last year we added over 1 million new members. We expect this trajectory to continue and are looking to add numerous enhancements in 2016. If you had a crystal ball and were able to forecast the future, what do you see in store for Hard Rock International ten years from now? I see Hard Rock as one of the world’s premier destination resort casino developers and operators. I also see exponential growth of our hotel/casino portfolio on a global basis. We have the brand and resources to accomplish this. It is more of a matter of executing upon the right opportunities. Steve Karoul is a recognized casino consultant with over 36 years of hands-on experience with the best casinos both within the United States and internationally. He is also an authority on all aspects of casino marketing. Steve has lived in numerous countries and has conducted casino marketing activities in well over 100 countries around the world. He also monitors Poker, online Poker and online Gaming around the world. He is an author, a lecturer and an educator who often injects his own hands-on experiences and openly shares his ideas and thoughts with fellow industry executives. Telephone + (1-860) 536-1828 or skaroul@comcast.net or see www.euroasiacasino.com

10


In the cards California’s Bicycle Club Casino is reinvented with a new look, focus and mission. By David McKee

I

n its 30-plus years, the Bicycle Casino, in Bell Gardens, has led a colorful life. “The Bike,” as it’s known to players and locals, was founded in 1984 by George Hardie Sr. The elder Hardie, however, was not fortunate in his choice of financiers. His backer, Sam Gilbert, was alleged to have underwritten the Bicycle Club as a means of laundering drug money. In April 1990, a federal court in Miami, Florida, ordered the Bicycle Club to be forfeited to the government to satisfy a tax lien. Thus, the U.S. government would find itself for much of the 1990s in the piquant position of running a California card room. The Bike – today the Bicycle Casino & Hotel

-- regained private ownership and respectability in 1999, when current CEO Hashem Minay and business partner Robert H. Carter bought the property. “In 1984, it was primarily designed to be a 1890s poker parlor. The emphasis was on poker, the promotions were poker, the events were related to poker. So even though they had Asian games, the emphasis was on poker,” Carter recalls. He and Minaiy came along at a time when the landscape was shifting. They added jackpot poker: “It didn’t really expand the market but it did solidify it.” The Bike was now perfectly positioned for the advent of the World Poker Tour in 2002. “Once that became televised, everyone started playing,” Carter

11


Robert H. Carter, President of Carter Management Group, Inc., a General Partner of The Bicycle Hotel & Casino

says, and the demographics at the Bicycle Casino took on a younger hue, expanding the casino’s player base. “So even though the fad portion of time for World Poker Tour might have passed, we inherited a bigger market and a younger market.” The casino was also the first terrestrial one to live-stream games on the Internet and although its “Live at the Bike” feed has gone through many incarnations, it continues to this day. “The Bike had not changed since 1984, other than we had added a 10,000-square-foot event center,” says Carter. Fast-forward to 2015 and the Bicycle Casino had morphed dramatically and none other than California Gov. Jerry Brown cut the ribbon on a fully revamped Bike, one that was now graced with a brand-new, $50 million, seven-story, 70-room, 29-suite hotel. Also added were a fitness center,

12

spa, sauna and pool deck, plus the Bike Brewery, a craft beer-oriented pub with 28 beers on tap and 28 TVs for sports fans. “Let’s say we have a poker tournament,” Carter says, explaining the imperative for a hotel. “That’s a national activity and people come in from outside the area to play. If we don’t have a place for them to stay, they’re going to stay somewhere else. We need facilities so that we can accommodate our tournament players, so that they’re in the casino while they’re here. We don’t want to give them a reason to go anywhere else. “[Brown] realizes the impact we’re having on the community and our willingness to work with the community in being responsible,” Carter says of the governor’s benediction of the casino. “He’s also familiar with the industry because I understand his


grandfather owned a card room. So it was recognition that we were important to the city in an area [Bell Gardens] that could use the help and that we were meeting what we perceived were our obligations to be good citizens and do what we can to improve.” Carter’s favorite improvement has nothing to do with gaming but is an area initially designed to cash in on the current craze for nightclubs. “We kept the shell of the nightclub on the second floor and turned into an event center that could be set up as a nightclub – it’s wired up for sound and everything – and it opens up to a pool area. So it lends itself to things like weddings, quinceaneras, business meetings that are not in a traditional meeting room.” Lee & Sakahara Architects and Hager Design

International – culled from at least seven architectural firms -- wrought some dramatic changes on the interior. A chandelier comprised of 1,660 crystalline strands greets the visitor overhead and the floor pattern – in a nod to the casino’s name – is laid out in a carpet pattern of overlapping circles. Says Carter, “we wanted some things that were over-the-top nice so that they would become iconic features inside the hotel.” On the outside, the desire was to craft “a substantial, sophisticated building that was welcoming to our customers.” What was desired was a post-modern look that wasn’t freakish but would garner attention, “a landmark that you could use to describe where you were along the freeway. “Our competition was either doing heavy

13


California Governor Jerry Brown & Hashem Minaiy, Managing General Partner & CEO of The Bicycle Hotel & Casino

remodeling or new construction and we had a vision of how we wanted to be in order to compete,” Carter continues. “Our position was that we either grow and improve or we become irrelevant.” The Bike isn’t the largest card room in the Los Angeles area – Carter estimates that there are as many as four bigger ones – so dramatic differentiation was needed. One of the things that grew during the makeover was the Bicycle Casino’s VIP playing area, done in a subdued Asian motif. Carter says this is in keeping with the casino’s history but also totemic of a reach for a new, international market, specifically Chinese and other Asian tourists. “For example, we have an [older] area called the Dragon Room, which was high-limit, Asian games, and that was done in

a historic, Chinese motif. However, when we looked at that we didn’t necessarily want that again.” What was desired was something that would have enough of an element of familiarity to provide the players with a feeling of comfort, but also intriguingly different. “We know that folks in that [Asian] market also like a lot of things about American architecture,” Carter says, “so we decided that we would blend that with facilities that were like home.” As for the local player, the desire was to provide some new amenities that would make them feel like the Bicycle Casino was a place to hang out, not just play cards. The brewpub, Carter is convinced, would succeed even were it a stand-alone pub in the neighborhood, providing Bell Gardens residents

15


with a place to socialize. Of the hard-core poker era, Carter says, “That market is changing and we felt like having people in our facility, whether or not they’re gaming, is nothing but good publicity for us.” All these changes have met with “overwhelmingly positive” customer response and a “nice increase” in business. “It’s something that they have been asking for a long time.” So what does the future hold for the Bicycle Casino? Carter notes that several of the major card rooms tried to get permission to add slot machines several years ago but that their ballot initiative failed. The casino’s card games are all ones that you could expect to find in a Las Vegas casino – with a critical difference. In those two money-spinners, blackjack and baccarat, you play them at the Bike in a non-banked format. That is to say, players play strictly against one another, not the house. Such is the nature of the California constitutional amendment that also permitted tribal casinos. In terms of additional physical improvements, Carter notes that Bicycle Casino doesn’t have much land for expansion and the logical next step would be to add a parking garage, although the demand hasn’t reached that point. “If we’re forced to, we could do another tower and expand the gaming facility. If we’re successful with this part of our business plan, then yeah, we can expand.” Having the governor of California come down from Sacramento to help open the new incarnation of the Bicycle Casino validates its importance to the surrounding community, Carter believes. The hotel brings room taxes and the expansion means more jobs for Bell Gardens. “First of all, we’ve really tried to be good neighbors with the city. We do a lot of community activity,” Carter says, “we provide scholarships for local children, we support the schools and we provide around 40 percent or more of the city’s general-fund budget. The community isn’t a rich community. It has high unemployment, so we’re an important economic force in that city. They rely on us.” “Folks in Sacramento know what’s going on and the governor is aware that gaming in California, through the card rooms,” Carter concludes, “is an important fiscal factor for these smaller cities.” In the newer, bigger, better Bicycle Casino, Bell Garden has a very important new factor indeed.

16


River Spirit – Revisited Glyn Thomas talks to Pat Crofts CEO of Muscogee (Creek) Nation Casinos 17


B

ack in 2013 we interviewed Pat Crofts, CEO of Muscogee (Creek) Nation Casinos, about the ambitious plans that lay ahead for the group at the River Spirit Casino. A $365 million project was planned to add a 27-story, 500-room hotel, additional food and beverage outlets, a 2,600 showroom theatre, 1,500 parking spaces and enlarge the gaming capacity with 850 extra slots and 20 more tables. A significant portion of the expansion would be branded under the signature of “Margaritaville’ – linked to the existing casino. Reported as the second largest construction development in the state of Oklahoma this was not a project that could be taken lightly. Some two years on we caught up with Pat to gauge progress. So, Pat, did your plans come true at the River Spirit? The dream is coming closer to reality each day. We just poured concrete for the 24th floor of the hotel tower and the exterior glass curtain wall has been installed up to the 17th floor. The low rise podium portions of the project are nearly shelled in. We will be able to work throughout the winter without weather interruptions and are on target for September 1, 2016 opening of the Margaritaville casino, restaurant and retail along with other restaurants, convention center, retail and the parking structure. The high rise hotel tower and showroom theatre will open mid-December 2016. In addition to the amenities previously announced we have added two more Margaritaville venues: a Landshark Landing Pool Bar and a Margaritaville Coffee Shop. We will be announcing the addition of a high end, national brand Steakhouse in the very near future as well as a full service Spa. The whole package is coming together nicely and will transform the River Spirit Casino into an upscale regional destination resort. Our partnership with Margaritaville, along with drawing power from other national brands, will assure a successful opening and operation of the property. Recently there was speculation about how the group would address budget shortfalls to the gambling budget. How was that resolved and does it have an impact on the expansion of River Casino? This issue was incorrectly reported and never had

18

any potential (or real) impact on the expansion project. It was not applicable. Back in 2013 you also alluded to other plans to refurbish other properties within the portfolio. How did that work out? We are in the process of remodeling and/or expanding several of our other ten gaming facilities. Some are under construction now and others in design and approval stages. We have recently completed remodels and expansions at three of our properties including Muscogee, Okmulgee and Duck Creek Casinos. The remodels all include common elements, colors and design to create an identifiable theme and appearance for Creek Nation Casino properties. A complete remodel/refurbishment project at our Eufaula Casino property is under way and will open before New Year’s Eve. Some of the remodel/expansion projects include the addition of hotel rooms in addition to gaming, food, beverage and retail elements. Feasibility studies are in process for these expansion projects. We will continue to reinvest in all of our properties. You recently announced the appointment of Andy Langston, previously Assistant General Manager at River Spirit Casino as your COO – how will Andy be able to help you in the next few years? Andy has been instrumental in the River Spirit Casino expansion project as well as the remodel and refurbishment projects at our other casino properties. He has taken responsibility for daily operations at our gaming facilities and made significant improvements to each of them. We have a tremendous challenge ahead of us in recruiting, hiring and training 600 to 700 new employees in addition to making sure all preopening and start-up issues are addressed for the River Spirit Expansion Project. We are also remodeling and upgrading existing venues and amenities at River Spirit Casino so they will be complimentary and integrated into the expanded resort facility. Andy’s guidance and oversight will be a key component of our future operations and growth. He is a very talented and effective leader for us. “We are fortunate to have Andy in this position due to his background and experience,” said Pat Crofts, CEO of Muscogee (Creek) Nation Casinos. “Not only is he serving as a member of our Gaming Operations Authority Board, he has held several


senior operational management positions at both large and small Creek Nation Casino properties.” Langston’s duties include operational responsibility over the Muscogee (Creek) Nation’s eleven gaming operations and implementing strategic plans and programs. In addition, he will devote a significant amount of time on the River Spirit Casino Phase II Expansion project that is currently underway. Construction and expansion plans aside ultimately casinos are about service and in your case keeping your stakeholders happy. As time progresses and you have got a handle on each casino, it’s performance and potential. Do you see your job becoming easier or are there new challenges? There are always new challenges. That is the nature of the gaming and hospitality business. Complacency is not an option and you must continually monitor and improve operations as well as reinvest in your facilities and human resources. We have an aggressive long-term Strategic Plan that will not allow us to sit back and admire our past accomplishments. It’s always full speed ahead. Finally, is there a game-plan to expand further or do you see a period of consolidation in the future? We do have some long term opportunities for other

expansion included in our Strategic Plan, but have a lot on our plate in completing the River Spirit Casino expansion project and the remodel/expansion projects at our existing properties which we are concentrating on short to mid-term. Our long term plans do include future expansions. Pat Crofts is an executive with over thirty seven (37) years of management and ownership experience in the gaming and hospitality industry, having held executive positions in multiple jurisdictions with several major private and public gaming companies with domestic, international, Tribal and non-Tribal operations. Currently CEO of Muscogee (Creek) Nation Casinos, responsible for the daily operations as well as strategic direction and development of eleven (11) gaming facilities located in northeast Oklahoma. Operations include over 6,500 electronic gaming machines and table games, multiple food and beverage outlets, entertainment venues and retail outlets with approximately 2000 employees. In addition to duties as CEO, Pat has served as a member of the Muscogee (Creek) Nation Economic Development Committee responsible for Tribal economic development / diversification.

19


James Boje, Managing Director, EMEA

Aristocrat leads the way with

THE BIG PLAY Worldwide tour to continue on to EMEA with addition of ICE 2016 dates – by Andrew Behan

H

aving successfully completed starstudded performances at G2E and SAGSE, Aristocrat Technologies has now added new dates to its ‘Big Play’ tour with ICE 2016 providing the next stage on its global circuit. “Every casino operator wants to make the big play – creating an experience for their player that is exciting, engaging and that builds loyalty,” says Chief Commercial Officer Maureen Sweeny, explaining the rationale behind Aristocrat’s latest comprehensive

20

package of Class III gaming solutions. “We are uniquely prepared and positioned to help operators do just that, with a deep and broad portfolio of industry-leading hardware and gaming content designed to reach every type of player demographic.” Visitors to the Aristocrat booths in Las Vegas and Buenos Aires will already have witnessed myriad large format cabinet innovations and a plethora of premium big name themes, now being prepared for roll-out in Europe and Africa, explained Managing Director – EMEA, James Boje. “During their first showing at


Maureen Sweeny, Chief Commercial Officer

G2E, Arc Double™ cabinets were voted the most innovative technology and have gone on to win multiple awards and widespread acclaim as they enter gaming floors across the U.S.,” he said. Aristocrat is bringing to EMEA a strong list of spectacular licensed themes for Arc Double, leading out with Game of Thrones™ Slot Game and will be supported by follow-up titles including Britney Spears™ and The Walking Dead™ Slot Game. The range can be complemented with illuminated branded inserts between machines to create feature banks in carousel, diamond and oval formations, creating a substantial floor presence and player destination. Landing on U.S. casino floors in just the last few weeks, Aristocrat’s Behemoth™ is big in name, big in nature and about to make a big impression in Europe, Aristocrat predicts. Boasting a colossal 84-inch ultra high-definition LCD portrait monitor, it’s definitely no shrinking violet, creating high visual impact and sight lines that shout across the casino floor. Yet the world’s biggest single-screen slot machine,

standing fractionally shy of three metres high, has a surprisingly small footprint and the cabinet itself is sleek and ergonomically designed for player comfort, resulting in a package that is, said Mr Boje, ‘big, bad, bold and beautiful all at the same time.’ “Our debut title on Behemoth will be Sons of Anarchy™, a highly revered and much sought after theme in this region,” Mr Boje stated, “With The Big Bang Theory™ Bazinga! planned to follow later in the year.” Another premium Aristocrat cabinet configuration already proving itself on gaming floors is the uniquely crafted Wonder Wheels™. Over three metres tall, each Wonder Wheels dual-seat pod sports a large community-style video display with three mechanical wheels delivering frequent bonus features, prizes and head-spinning entertainment. The wheels spin independently, keeping both players in the game at all times, even if one of them is in a bonus stage. Following on from Batman™ Classic TV Series Slot Game, the next scheduled releases include more big names with strong maths models, including Superman™ The Movie, Ted, The Big Bang Theory™ and Man of Steel™. “This format has proved very successful, though we will also launch a more compact Wonder Wheels™ at the show, for those operators seeking a ‘low’ format of the cabinet,” Mr Boje noted. He continued, “All of these larger than life hardware solutions provide operators with a variety of centrepiece options to draw in the crowds, led by a barrage of Triple A licensed gaming content and a long list of further titles in our roadmap to enhance longevity and ensure that casinos always have strong, fresh marketing assets to help maximise new player appeal and hold.” Mr Boje concluded, “If you missed the big reveal in Las Vegas and couldn’t make the trip to Buenos Aires, be sure to catch on the next leg of The Big Play worldwide tour on Stand S3-250 at London’s ICE Show, where Aristocrat will be staging the EMEA première of products that are taking the world by storm.”

21


Gaming redefined

Glyn Thomas chats to Alexander Gornakov CEO Alternative Gaming Solutions For those of our readers not familiar with your organisation could we commence this interview with a brief history of Alternative Gaming Solutions? Alternative Gaming Solutions, Inc, dba ALTO GAMING, is a Nevada-based corporation founded in 2011 with a goal of bringing innovation to the gaming industry through refreshing and costeffective products. Alto Gaming offers winning gaming solutions and full range of gaming equipment for casinos (class III) to the US and other global emerging markets including gaming machines and video slot games, jackpot signs and

22

displays, multiplayer stations and systems. All our products are GLI certified and are fully compatible to the US gaming standards and requirements. Traditional offerings also come paired with an equally notable set of systems for remote, online and social gaming called THE BIG 5™ aimed at bridging the gap between online and land-based sectors. For the Native American markets Alternative Gaming Solutions (Alto Gaming) provides a broad selection of globally established products as well as single slot games like WILD SUNRISE™, progressive links, multi-game platforms based on renowned


If there are two or three things that have changed in how the company does business, what have they been? How has 2015 been Penetrating the most for Alternative Gaming prestigious markets in USA Solutions? How are your and Macau arm to arm traditional markets doing with the American gaming and how is business in corporations is determining your emerging markets? dynamic and smart Please name those decision making processes emerging markets? in all aspects of the core Having a really intensive business which have and dynamic 2015, I influenced perceptions, can share that the team approaches, goals and is really dedicated and objectives within the whole inspired to deliver best company. The biggest service to its Native step we made ahead was American customers. to establish production Some of the US tailored and assembly lines in the titles were installed in USA which resulted in California, others are cost effective production pending installations and management in Oklahoma and the operations, higher quality Philippines which, believe of the products, shorter Alexander Gornakov CEO Alternative Gaming Solutions me, is an outstanding time to market, but in accomplishment my opinion the most considering the strong important achievement is legal and technical compliance procedures both the accomplishment of pro-active and customer for the company and the products. We do have dedicated product development, customization authentic product lines designed, produced and and adaptation which would give us the ultimate certified in United States of America, which aims market know-how and advantages in marketing and to increase the trust in the brand and the product products positioning. and definitely would lead to more business opportunities for the future. What’s going to be the company’s message for 2016? Who came up with the company name as it has to LEADING THE CURVE, of course. Being always be said it is original? determined to see beyond borders and try new The concept behind the name of the company, the compelling and entertaining concepts dedicated to mission and vision were crafted by the executives the gaming industry, we will keep on innovating, of the company with the clear understanding that managing and expanding with our genuine vision. altering gaming is not an easy task to state and The most recent momentum that had defined the prove, but definitely is very challenging, inspiring 2016 message was given during the G2E show in and captivating for Alto’s team and its followers. Las Vegas in September when we launched the HOT We do believe, that our ideas of bringing innovation RODTM slot machine, the next master series of the to gaming and entertainment are valuable and company, employing the famous HOT ROD brand applicable to most of the world’s competitive and concept presented in a convertible car-shaped markets, but USA is our core target market as there slot machine and exclusive premium game content. lay the roots of the gaming industry and majority of the technological novelties in gaming walk here. Can we expect to see the organisation launching theme and intriguing game math highly evaluated by the Native American gaming experts.

23


skill-based gaming slots? Obviously, the US industry regulations about the skill-based gaming slots may influence opening a new business segment not only in North America, but in other jurisdictions, too. Alto Gaming would observe the first signs of acceptance and employment of this concept in real environment but meanwhile shall invest in research about the technical and legal compliance details concerning the skill-based products. Another important fact here is the behaviour and preferences of the new generation, those young people, my mates who has grown up with computers, video games, smart phones, play consoles and internet. In my opinion particularly their input and technological affinity may shape the perceptions of skill-based gaming slots for the future, but will see... Gaming operators are showing more profit from non-gaming areas such as food and nightclubs. Are you concerned about this? Well, it really depends who are the operators and what is the market. If we take a consideration about the general concept of the integrated resorts popular in North America and Macau, this might be the case, but still even here each business unit is monitored and assessed based on its efficiency and IPR whereas gaming, based on my experience and relationships with the management boards of some of the major integrated resort brands, always would be worthy enough. From other side, as long as we provide gaming products that respond to the market’s requirements and satisfy the players’ needs for gaming and entertainment, we are certainly on the right track of the company’s future progress. How do you make Alternative Gaming Solutions products stand out from the crowd, especially in such a highly-competitive industry? The message is initially written in the company name, so that our team of professionals always stand on the cutting-edge of technological wave by providing state-of-the-art products that people cannot forget and would like to keep playing on. This year we have managed to establish a valuable collaboration with the globally renowned HOT ROD brand which led to an enormous success at G2E Las Vegas where the première of the HOT ROD™ Slot Machine took place and attracted a great number of visitors and customers enchanted by the glamorous

24

automotive look as well as the outstanding features and game design. Apart from the premium product lines, Alto Gaming is investing and working extensively into specific games details, industrial designs, applications and gaming systems that have proving our reputation of a visionary company providing ideas out-of-the-box and reaching new horizons with innovative solutions. HOT ROD suite of games launched during G2E Las Vegas, what was the feedback from visitors to the new range of games? Recreating the idea and nostalgic lifestyle of the HOT ROD and transferring it into an irresistible entertaining concept with pure gaming heart became the reason why Alto Gaming’s booth at G2E gathered a great number of admirers from around the world. Witnessing the visitors’ euphoria while presenting the HOT RODTM slot machine, the team behind the idea felt proud and motivated by the brilliant concept that won the hearts and the minds of the customers.


The Fastest Growing Systems Company

35

500

COUNTRIES

30,000

SITES

SLOTS

finland

Australia macedonia

RomAnia IRELAND

Germany georgia

slovenia

Luxembourg

LAOS MACAO

Switserland

DOM. REP.

ST. martin

SERBIA

curacao

Philippines

Sri Lanka

MALTA

Italy

Cambodia

KENIA

GIBRALTAR

suriname

Bulgaria

HONGARY

seychelles

TANZANIA MALAWI GHANA

SINGAPORE

malaysia

NIGERIA

URUGUAY

2011: 8,000 machines • 2015: over 30,000 machines 30000 25000 20000 15000 10000 5000 0

drA

ccou nting

2011

2012

2013

2014

drTou pots • • drT rJack d • icketin g g • drCa onusin shless • drPlayerTracking • drB

n rname

port • drInteractive reen • drRe t • drSc

DRGT Africa Sales@drgt.com www.drgt.com


HOT RODTM slot machine was definitely on the spotlight with its unbeatable features provided by the premium licensed product of Casino Technology – the exclusive ARCHTM cabinet delivering the next dimension of gaming interaction with its full HD resolution image through 42” horizontal, curved, gaming customized display. The dedicated branded game suite crafted to follow the legendary rodding adrenaline and story caught the visitors’ attention making them enjoy the speed and wins melted in one. Are there developments beyond 2016 in the works that Alto Gaming is excited about? What can you tell us about these developments, what they mean for the company, and what impact they could have on the relevant markets? Together with Casino Technology, Alto Gaming has been working actively in development of progressive series of games targeting the markets in Asia-Pacific. First feedback from the market is expected shortly and if the players and operators confirm that the gaming formula behind the Asian themed, progressive 8 PEACOCKSTM link is working, then we have the real chances to diversify our presence in that part of the gaming world, too. The company you partner with Casino Technology is synonymous with innovation and celebrated for a central focus on creating engaging content. What can we expect to see from Casino Technology and Alternative Gaming Solutions in 2016? Both we have experienced a very fruitful and outstanding performance during G2E in Las Vegas this year. The special symbiosis between us creates a very strong relationship, know-how, market and product approach that leads us in all aspects of the business. Partnering in gaming industry is vital and more actual than ever witnessing great mergers last 2 years. Consolidation of minds, ideas, efforts, cultural and geographical peculiarities, market experience, customers relationships is everything that makes one business worthy for strategical partners alike us and Casino Technology. The next significant show for both companies is ICE Totally Gaming and I am glad to announce that we have plans to rock the floor once again making the European Première of the outstanding HOT RODTM Slot machine. What are amongst the stand out features of Casino

26

Technology and Alto Gaming Slots that make them so popular with players World Wide? With 15 years of proven track record, Casino Technology has successfully implemented and positioned its innovative product developments and technological solutions on 5 continents. Alto Gaming was the first company that licensed and introduced Casino Technology brand at the US market. We knew the right people and they knew how to make games – this was the formula of our cooperation when we started back in 2010. We’ve walked a long way together, sometimes hard, sometimes not, but at the end after 5 years of hard work, both brands have received industry acknowledgements in some of the most difficult markets – USA and Macau which speaks for itself. Have you a favourite game? “ I’ll say it this way : Boys love toys, but gentlemen love style and adrenaline... so the logic answer to this question is HOT ROD, of course. I am a fan of HOT RODTM since my childhood . The thrill of the speed and evergreen stories about the exclusive engines promoted by the HOT ROD have born the idea to turn the boy’s dream into an innovative gaming industry approach and bestow the premium play satisfaction to our followers. The HOT RODTM slot machine has translated Alto Gaming’s message “Altering Gaming” and I am proud to bring my contribution to make this dream come true. How is the best way to get in touch with Alternative Gaming Solutions to get more information? Follow us on our website - www.altogaming.com as well as on social media: www.facebook.com/AltoGamingSolutions/?fref=ts twitter.com/alto_gaming www.linkedin.com/company/alto-gaming And finally what are the company’s main goals for 2016? In the short-term – we plan to have a blast at the upcoming ICE Totally Gaming show together with Casino Technology and popularize HOT RODTM slot machine worldwide. In mid and long term, we are looking forward to the successful introductions of the American and Asian bespoken products as well as enhancing the production capacity of the facilities in USA which undoubtedly would create more solid foundation for further growth.


Harald Wagemaker, Executive VP Sales & Marketing of Gaming and Casino EMEA SUZOHAPP

60 Years

of Proven Quality, Service and Support

Peter White chats to Harald Wagemaker, Executive Vice President Sales & Marketing of Gaming and Casino EMEA SUZOHAPP 27


How has 2015 treated SUZOHAPP? This 60th anniversary year has been tremendously successful for SUZOHAPP. I am proud to say that this is our fifth consecutive year that we are showing strong growth, which is due to our strategy and the great achievements of the entire team. The gaming industry is not growing at this rate. That shows that we are gaining market share through our focus and dedication on innovation and providing the right set of solutions for our customers all around the EMEA region. The SUZOHAPP Group exhibits at an impressive amount of exhibitions and conferences throughout the year. What has been the feedback from those shows to your 2015 product range? We recognised in a very early stage that especially the local shows and conferences are of the upmost importance to our customers. Hence, we decided some years ago to support them. To us it is first and foremost more about help to create a show that is important to our customers. Second we support all local operators, simply by being present and showing them what is new in the market. We feel that our customers and the market itself appreciate this. Recent proof of our continuous support is the bestowal of the ‘Most Loyal Supplier to the Industry Award’ that we received at BEGE Show in Sofia in November. Another example we are very proud of is receiving the ‘Best Game Accessories and Related Equipment in the Gambling Industry’ at the Casino Inside Gala in Romania in December. The year is certainly ending on a very positive note. As the global distributor for ELO touch solution what have been amongst the stand out features of their touch screen displays that are behind SUZOHAPP’s choice of supplier for the Gaming industry? In a word: Quality. Sheer quality is the answer. The Touchscreen market is still underestimated by some that look at pricing only. The level of technology implemented at ELO Touch is of such a standard that no other monitor supplier has been able to come close. Consistency is another great benefit of the ELO Touch monitors. ELO guarantees keeping all sizes and measurements equal to the model they introduced. We have been working together with ELO for well over ten years now. We continue to grow the ELO business due to this focus on quality. For us the great achievement during 2015 was being bestowed with Distributor of the Year Award from ELO Touch for outstanding sales in gaming during 2014.

28

How have the sales of the ScanCoin range been this year? With the acquisition of ScanCoin it is naturally clear that we would offer the range of products from ScanCoin. At the forthcoming ICE we shall show a full and interesting range of coin and note counters from ScanCoin for the fist time – not only for the front office, but especially for the back office. We see great opportunities for ScanCoin in the global gaming industry. Which of the wide range of products have been amongst your ‘stand outs’ in sales performance for 2015 and can you provide us an insight into new products for 2016?


A big winner you wonʼt mind. Gaming specific, web based, staff scheduling software.

That saves our customers an average of 7% of their staff costs.

7%

And will increase your gross win, through smarter operations.

No risks, no upfront costs, try before you buy with a 30 day contract.

www.theshopworks.com


We have a great selection of products. If you ask me to single out product groups which are particularly in demand, then I would say monitors, locks, coin acceptors and hoppers as well as our contract manufacturing services. Our new SH1950 Video Topper was the centre of great interest has received great interest at the local Bulgarian show in November and we are excited to see the reaction of our international customers at the ICE. Expect to see further innovations from our the Comestero changers brand. Naturally we will be presenting the latest products and solutions from our partner companies such as ELO and TransAct. How is the e-commerce side of the company progressing, is the company seeing a steady progression of business transactions generated from your comprehensive website? We have recently launched the complete update of our European website. It is available in six different languages and the website is clearly structured so that our customers can find what they are looking for as quickly and easily as possible. Our e-commerce side of the business is increasing and we are currently investing to expand the possibilities of online shopping with us. Will SUZOHAPP develop an App to keep customers up to date with product development parts supply levels as well as their account details? That is a very good question. We have recently started a study about this opportunity and things look promising. It is highly likely that we shall develop such an App. The latest topper innovation the SH1950 Video Topper made its exhibition debut during the BEGE Sofia Show in November, what was the reaction of the visitors to this new innovative design and can attendees to ICE Totally Gaming expect to see it on the booth? The reaction has been overwhelming. Many

30

customers have shown interest and quite a few shall use this new topper on their cabinets that they will display at ICE. Obviously it will have a prominent position on our booth as well. Let me take this opportunity to tell you more about our plans for ICE. We have created a brand new stand to reflect our customers and the markets we are serving in a more optimal way. Our booth will have dedicated sections to it. It will look and feel like several booths on one stand. Gaming OEMs and gaming operators will each have their separate area with the solutions dedicated to their needs. That means that our stand will be focused on presenting the right products for each market. This includes sports betting and lottery. We have made some innovative ideas on how to present this reality. We look forward to greeting our guests to our ICE stand at N4-110 between 2nd and 4th February at the ExCel Centre in London.


Gambling in the UK: the perversity of eschewing diversity A decade on from the Act, gambling is still the only show in town for most of Britain’s major operators. Dan Waugh

A

s Genting prepares to open Britain’s first truly integrated destination casino at the NEC in Solihull this week, Dan Waugh asks why our gambling industry has been so slow to embrace mainstream leisure. A few years back, the American Gaming Association published ‘Beyond the Casino Floor’, a report which claimed that the economic value of commercial casinos in the United States was between three and four times greater than its $35bn of annual gross gaming revenue. It is unlikely that the British gambling industry will be following the AGA’s example any time soon for the principal reason that gambling in Great Britain – unlike in an increasing number of US states and other markets - underpins nothing so very much more than....well.... gambling (and its traditional adjuncts, horseracing and dog-racing). Whereas in the US, around a third of casino expenditures relate to non-gaming activity (more than 70% on the Las Vegas Strip), in Britain it is closer to 5% (in licensed gambling venues).

Dan Waugh Partner at Regulus Partners

31


The unwillingness or inability of gambling companies to diversify revenue beyond gambling is perplexing to many overseas observers. For all the hyperbole of the Gambling Bill era, betting and gaming remain niche leisure pursuits - many of us do it but not very often; very few of us engage in it frequently. As a result, consumer expenditure on gambling is relatively small beer at the macro level. Restricting commercial activities to gambling thus confines the opportunities for growth. Given that most gambling businesses have fairly high fixed-costs, the opportunity to generate marginal revenues from existing areas of consumer spending should be highly attractive – but for a variety of reasons this has not proved to be the case. The image of Britain as a nation of gamblers owes much to the National Lottery, which skews participation rates towards the three-quarters commonly quoted. The key sectors of land-based gambling – betting shops, bingo clubs, arcades and casinos – enjoy relatively low levels of patronage compared with leisure at large. This is despite the relatively high dispersal of licensed venues (there are around 10,000 overseen by the Gambling Commission) which makes gambling significantly more convenient than in many jurisdictions. In the major global markets, the expansion of non-gambling amenities within venues has driven increased visitation and encouraged trial (if you want to be mass market then it pays to lead with mainstream activities rather than those which are niche or taboo – just ask Ann Summers). The reason for the industry’s obsession with gambling may lie in the high gross margins and large VIP expenditures that are characteristic of certain sectors. If one can make millions through the relatively simple process of spinning a wheel or plugging in a slot machine, why bother with the grind of activities which require more labour, more effort, different skills and may yield lower margins? A decade ago, a gaming executive I knew defended the unspeakably bad food in his bingo halls by explaining to me that he would rather see his customers spend their time and money on high margin bingo games than on dining. He seemed to have completely missed the point that his

32

customers were spending their money in the local chip shops instead (and then bringing the food into the clubs to eat). Things have moved on since then – but not by as much as we might have hoped. So does gambling’s reliance on gambling actually matter? The industry appears not to care too greatly, the regulator has a range of other issues to deal with and the Government is not particularly interested; and why should they? Yet what if the question of diversification involved more than simply the opportunity cost of foregone revenues? First, there is the fact that gambling is a politically volatile business, subject to unhelpful regulatory interventions and opportunistic tax raids. On three occasions in the last eight years, three different sectors of the gambling industry have seen their business models unexpectedly challenged by Budget Day changes to gambling duties - casinos in 2007 and 2009; bingo clubs in 2009; and betting shops in 2014 (this excludes the extension of remote gaming duty in 2014 to offshore operators which was well flagged in advance). Such changes are not unique to Great Britain (think UIGEA, the current government crackdown in Macau, the backlash in Italy, the banishment to Siberia of the Russian casino industry, the imposition of retrospective remote gambling taxes in Spain, the outlawing of slots parlours in Poland – the list goes on) and the lesson seems obvious - a business that is built entirely on gambling revenues is one that is vulnerable to that which issues from the politician’s soapbox or the bureaucrat’s pen. Gambling – a sector that often suffers from an unhelpful status in mythology and morality – is weak in part because it has so few champions. A small percentage of customers care passionately about their right to have a flutter, but taken as a whole the Great British public’s attitude to gambling is one of mild disapproval. Output is not significant within the context of national economics; employment is reasonably large (c.0.3% of Britain’s workforce) but highly dispersed, modestly paid and in decline; and while some communities truly value gambling (bingo clubs in some towns; arcades in seaside resorts, betting’s support for race courses), opposition


tends to be more active and more vocal (e.g. the 93 local authorities who supported the London Borough of Newham’s Sustainable Communities Act gambit or the councils who have adopted no casino policies in spite of the fact that the law does not permit them to license casinos anyway). Linked to this issue of political volatility is the question of gambling-related harm. There is a comforting story that we tell ourselves within the gambling industry that we are working towards a world where all gamblers spend within their means, allowing operators to benefit from affordable (and so sustainable) consumer expenditure and long-term customer relationships. Gambling businesses, we tell ourselves no more want problem gamblers than pubs wants alcoholics. It’s a neat line but what if it isn’t true? Several studies (notably the Australian Productivity Commission and in this country the work of Professor Jim Orford) have suggested that gambling companies are highly sensitive to the expenditures of problem gamblers. We don’t know this to be the case but we do know that certain sectors (casinos, betting shops and remote) derive large portions of their incomes from a small proportion of highly frequent customers (n.b. frequency is a key flag for possible harm). This is what the writer and former Wall Street trader, Nassim Nicholas Taleb calls ‘Extremistan’ – a place where the mean is meaningless and the behaviour of the few markedly skews the overall picture. Pubs on the other hand largely inhabit ‘Mediocristan’, where consumption values from one customer to the next are less divergent. If Orford is correct then this suggests an unhelpful paradox where ‘responsible gambling’ may be put squarely at odds with commercial objectives. If (and this remains to be proven) certain types of gambling are sensitive to the expenditure of problem gamblers, it makes it that much harder for companies to take meaningful action because to do so is to work against nearterm financial self-interest. Sacrifices that hurt tend to be harder to make. In this situation, revenue diversification would seem to have two things going for it. First, companies are going to find it easier to do ‘the right thing’ if they are less dependent on ‘the

wrong thing’; and second, by offering customers a wider range of amenities, there may be positive incentives for them to take breaks from gambling (as opposed to the negative incentives of limitsetting). It shifts our interpretation of responsible gambling from a series of mitigations to inherent characteristics. This logic was embedded in the Budd view of gambling reform that somehow got lost along the way. All this is fine in theory but how on earth does gambling make that journey from Extremistan towards Mediocristan (noting that dependence on high-value customers is not the same as reliance on problem gambling and the distribution of revenues will always be more skewed than in other parts of the leisure market)? By dint of the current licensing regimes, casinos and bingo clubs have the greatest opportunity for revenue diversification. Indeed, Simon Thomas at the Hippodrome has been demonstrably successful in taking the casino mainstream despite the obvious limitations of the 1968 Act regime; and now Genting is raising the bar again (under the more generous 2005 Act) at the NEC. Yet there is nothing to stop arcades and betting shop operators from seeking to exploit new revenue opportunities. Their business models may need to change in order to do so; but this is perhaps overdue anyway given the erosion of the traditional customer base and the need to appeal to younger customers in both formats. For all sectors, there are models of diversification from overseas that might be adopted or adapted (see http://regulusp.blogspot.com/2015/02/timeto-think-outside-box.html); and though this may require changes to regulation, reform is more likely to be achieved if its consequences are in keeping with social policy objectives. The dynamic of land-based gambling in Great Britain appears today to be a long-term shift towards obsolescence with the threat of near-term regulatory shocks. Both require strategic action, including a willingness to do things differently. Kicking gambling’s dependence on gambling may just be an important part of that process. Dan Waugh Partner at Regulus Partners www. reguluspartners.com

33


‘ICE Totally Gaming the greatest gaming show on the planet’ Rebecca Green chats to Kate Chambers, Managing Director Clarion Events How happy have you been Kate Chambers, Managing with the ExCel venue for Director Clarion Events ICE Totally Gaming? I think ExCeL has ticked all of the boxes that we hoped it would. It is a modern, purpose-built venue and from an operational perspective, build-up and break-down are as smooth as you can expect with an event the size of ICE. The transport and hospitality infrastructure is continuously improving and the venue is 35 minutes from Green Park and the luxury quarter of Mayfair. It takes some time for people to get accustomed to a new venue and I believe that process is now unfolding. From the brand’s perspective it has allowed us to provide modern business facilities to a professional, international audience of buyers and influencers in a way that previously was not possible. It enables us to provide the type of exhibition space and the environment which allows companies to present themselves professionally and to be true to their brand values. Lastly, it provides us with the space and opportunity to grow the brand in a controlled and measured way. By anyone’s standards, ICE is a very substantial annual event and ExCeL is the biggest exhibition space in London – it’s a great, winning combination. Attending exhibitions especially for companies based in other continents can be a considerable expense, what advice could you provide as to why ICE Totally

36

Gaming is the must attend Event on what is a very busy exhibition and conference calendar? Exhibition organisers, as a rule, try to avoid descriptives such as ‘biggest’ and ‘best’ but when it comes to ICE that’s exactly how our stakeholders describe their experience of the event. Clearly ICE is a big show which means that it has momentum and has become a meeting place for the international gaming community. Decisions are made at ICE and commercial organisations choose to launch new products and new services in London. It’s unique because it brings together both the online and the offline gaming worlds in a way that no other event does. It’s also the most international gaming business event on the calendar with 133 nations represented at the 2015 edition, 60 on the show floor as exhibitors. Last and by no means least, ICE Conferences represents gaming’s most influential senior level learning and networking programme. Draw all of these elements together and you have an intoxicating cocktail of networking, ground breaking product, knowledge exchange and opportunity. You will not find that energy anywhere else. Sports Betting and Social Gaming are amongst the current hot markets in Gaming how are they


represented at ICE Totally Gaming 2016? There is a whole focus on eSports as part of the Betmarkets conference, from understanding how it works, what the player demographics are and how to build an eSports betting product. Social platforms are covered in the Cross-platform and multi-channel gaming conference, with the likes of the Italian SNAI talking about their launch of auxiliary social products that can enhance the experience of the player and build engagement to drive then to real-money. Social platforms like Twitter and Facebook are speaking. Plus the International Casino Conference at the Hippodrome, will feature an implementation of a social casino product by Playstudios. The betting sector is once again well represented on the show floor with the Racing Post Café once again serving as the hub. Sports Betting Community is repeating last year’s successful initiative when it ran tours of the betting exhibitors on the show floor.

professionals travel vast distances to be in London each year, is the opportunity that ICE delivers to see the very latest innovations and advances in gaming technology. In fact, many of our 500+ exhibitors timetable product launches around the dates for ICE. Our campaign for ICE 2015 asked attendees to Discover the World of Gaming and for 2016 our invitation is to Enter The Gaming Technopolis. The message that we are sending to our international community of stakeholders is that the journey they make to Gaming’s Technopolis will be their most productive and successful of the year. There is also a video how can readers view that? It has been produced by Cinebop, the creative studio responsible for the Discover trailer for 2015. It’s an open invitation to the Citizens of Gaming to enter the ICE Gaming Technopolis. We know from our 2015 campaign metrics that the film trailer was one of our most successful marketing tools in terms of encouraging visitors to register their attendance at ICE and the same is proving to be the case for 2016. Readers who haven’t seen it can do so by visiting https://www. youtube.com/ watch?v=1XTzfEwGpo

What was the inspiration behind the new theme and slogan Your Journey to the Gaming Technopolis is underway? As you know, we work extremely hard to create a new marketing With the next ICE Kate Chambers MD Clarion Events Harald Neumann Novomatic MD, theme for each Show approaching (left) and Ron Goudsmit, one of the founders of the European Casino edition of ICE. can you see Association with Jo Mayer MD Gaming Portfolio, Clarion Events We believe that the excitement business to building with Team business marketing should have the same creative ICE Totally Gaming 2016. credentials as consumer marketing and I was delighted You get excited every year, no matter how long you to see that approach vindicated in June when we have worked on the show. But for some of the team, accepted the Association of Exhibition Organisers ICE 2016 will be their first and for them the sense of Excellence Award for Marketing Campaign of the anticipation is understandably more pronounced. year in support of ICE 2015. This was a huge honour We are custodians of the brand – an honour and for my marketing team who, despite being small in responsibility that none of us takes lightly, hence the number, put in a huge amount of work to maximise excitement. the attendance of so many international buyers for our exhibitors at ICE. Is the show big enough or do you see the future as The campaign creative, which is set in a surreal broadening out to involve Food and Beverage and gaming city of the future, invites industry professionals incorporating aspects of the Leisure & Entertainment wanting to see the very latest innovations and solutions Industry? to ‘Enter The Gaming Technopolis’ - a pop-up gaming It’s very important that we calibrate the growth of city where connections are made, where ideas flourish ICE. It would be counter productive to simply bolt and where conversations are all about the future. something on to the current successful format and We know from the visitor research that we conduct expect it all to fit. ICE is a brand that has been carefully after each edition of ICE that the single most important nurtured and that’s what we will continue to do. reason that thousands and thousands of industry

37


What do you consider as the key factors behind the Monday 1st February. Organised in partnership with success of the continued growth of international the European Casino Association (ECA), the ICC is being attendance at ICE Totally Gaming especially in recent held at the award winning Hippodrome, which is the years? UK’s busiest and most popular casino, and is located in I don’t think there’s one single reason that you can Leicester Square, central London. The ICC is followed point to. As I mentioned at the outset of the interview, by Modernising Lotteries: Retail & Digital; Data Insight ICE is a big event and big events tend to generate their & Business Intelligence and a programme dedicated to own momentum and I think this was very noticeable Cross-Platform & Multi-Channel Gaming (all Tuesday at the 2015 edition when you got the feeling that there 2nd February). Wednesday 3rd February, the final full were a raft of impromptu meetings and gatherings day of ICE Conferences, will feature Game Design & taking place which hadn’t been organised by us or by Development; World Regulatory Briefing (organised our partners. in partnership with IAGA); Betmarkets (organised in If we look at the tangible features of ICE, it brings partnership with SBCNews) and Cybercrime, Security together the online and offline gaming worlds in a & Regulatory Compliance (organised in partnership way which no other exhibition can emulate. We have with GAMSHIELD). The threat of Cybercrime and the support of what will be close to 30 international the importance of combatting it, is reflected in the trade associations and representative bodies, all of decision to include an add-on workshop led by the whom participate fully in the event. ICE Conferences is specialist Organised Crime Command based at New arguably the best learning programme in gaming and Scotland Yard. The workshop will run from 10 – 12.00 it is supported by on Thursday 4th the free to enter February. Members of the ICE marketing team receive their AEO Excellence ICE Seminars. Award for Marketing Campaign of the Year However, whatever Are delegates way you care to provided a choice look at the event, of hotels that are the ultimate reason of a convenient for attending is location to the quality of the the venue at a exhibitors – and we discounted rate? have the very best We are very aware in the world! of the importance of securing the best What will be the accommodation at key topics under the best rates and discussion at ICE we work hard with Conferences? our hotel supplier ICE is unique within the gaming sector in that it to achieve this. Hotel booking for ICE Totally Gaming delivers invaluable commercial/product exchange 2016 is being managed by Zibrant and HotelMap. If opportunities for our 25,000 visitors, as well as the readers would like assistance with their hotel booking, opportunity to participate in high level information or they can contact our dedicated hotel adviser via knowledge exchange at ICE Conferences. We know Patricia.Jones@Zibrant.com - Guests should send their from our customer research, that our visitors value requirements, phone number, quoting Event Reference the opportunity to learn about the key contemporary Code MG5WV and she will get back to you with hotel issues impacting gaming via ICE Conferences and then options. It is also possible to phone seven days a week, be able to meet with the industry in action on the show on +44 (0) 207 870 4100 floor. We think it’s the biggest learning and knowledgeexchange event in world gaming with over 64 hours How can organisations whom are interested in of learning opportunities, delivered by 140 thought exhibiting is there any space remaining on the leaders drawn from both within and outside the exhibition floor? international gaming community. It’s a very dynamic situation which is subject to change. The subject matter has been curated to help prepare The best option is to contact Stuart Dacre, the ICE Sales international business for the technological, regulatory Manager – stuart.dacre@clarionevents.com. and social challenges and opportunities which lie ahead and the eight strong programme for 2016 opens For the latest information on ICE 2016 and to register with the International Casino Conference (ICC) on for tickets, visit icetotallygaming.com

38


Legalising gambling in the Ukraine

U

by Steve Donoghue

kraine is planning to legalise gambling after the industry was forced to shut down for political reasons in 2009. Since then a buoyant black market has existed and the Ukrainian public have been unable to take benefit from the taxes and consumer protection that a legalised industry would provide. So it is great news that the government is considering legalising the industry again, but it needs to do it correctly or it will never achieve the potential that a well regulated industry can bring in terms of investment, jobs, tax revenues and keeping gamblers safe. As a management consultant who has specialised in the gambling industry for twenty years and advised operators and governments around the world, I can say with some experience that this is the most critical time for Ukraine, as getting gambling legislation right from the start ensures for a healthy future. Getting it wrong will only store up problems that will explode eventually. The problem with gambling is that it is a business that is based around money and usually cash. That makes it very attractive to honest businessmen

and governments but also to dishonest ones as well. It is no secret that Ukraine has a problem with corruption, it ranks 142nd out of 175 countries in Transparency International’s Perception of Corruption Index 2014, it’s joint with Uganda and the Comoros. Gambling is ripe for corruption. It serves both government officials and gambling operators who have strayed to the ‘dark side’. Officials can extract money when issuing licences, threatening to remove licences for trumped up infringements or even gaining part ownership of gambling facilities. Operators can in return for their bribes, not pay all of their taxes, ignore laws designed to protect the consumer and easily launder money from other criminal activities. These are not wild predictions, they are all well documented symptoms of poor gambling legislation. I recently spoke at the excellent Game On conference in Kiev where I argued for there to be an independent gambling commission which, for its first few years, was staffed by people with

39


regulatory experience from outside Ukraine. Such is my fear that the corruption endemic in Ukrainian politics will ‘capture’ the newly legalised industry that such dramatic measures are needed. I also believe that any gambling inspectors, should be trained, paid and housed like a military Special Forces unit and they themselves come under the scrutiny of an independent anti-corruption force. Many will ask why such extreme measures are needed? Many will see this is un-Ukrainian and an overly restrictive approach. Many will look to neighbouring countries and suggest that their more loose regulations fit better with an Eastern way of doing things. My response is that doing it any other way will undoubtedly lead to corruption, which in turn will increase crime, increase problem gambling and decrease the amount of taxes which can be collected. It is the moral and financial obligation of the Ukraine government to regulate gambling and do it properly, realising that it has a problem of corruption and that it needs to go to extreme methods to deal with it. When you are dealing with an industry like gambling you always need to prepare for the worst. It’s just too attractive to the bad guys. Gambling should be about fun and excitement, in a safe environment with some of the proceeds paying for schools and hospitals. Not just a vehicle for corrupt government officials and operators to line their pockets while citizens suffer. I know that the majority of those working in the illegal gambling market want to operate in a well regulated corruption free industry. I also know that there are gambling companies around the world who would be interested in investing billions of dollars in Ukraine if the industry was free of corruption. So I plead with the government to heed my advice and ask all interested parties in Ukraine to join the Ukraine Gaming Association and support their calls for decent and effective regulation.

Steve Donoughue MBA- Biography Steve Donoghue MBA has been a management consultant specialising in the business strategy and politics of the gambling industry for the last twenty years. www.gamblingconsultant.co.uk

40


Where’s The Beef?

Are products from the 2015 G2E all about the Big Bun – or is there some “meat” in it? by: Victor H. Royer

W

here’s the Beef” was a great television commercial for Wendy’s restaurants in the 1980s. Since then, this expression has come to mean – colloquially – “where is the value”, or something similar such as “where is the innovation”, as well as a multitude of other derivatives that basically describe some sort of a disappointment with the status quo. In a way, that is how I felt at the conclusion of the 2015 G2E. The reasons for this statement will become clear later on in this article. Yes, of course, we all know the challenges of the past few years – economically, as well as structurally – among the major manufacturers, and the gaming market in general. And, we are also all aware of the fact that there was significant growth in attendance at G2E this year, as well as a resurgence of confidence in general, optimism about the replacement cycle, and significant innovation across the board in many regards. There was a lot of “buzz” about skill-based gaming, but other than G2 Game Design, with its joystick and Tank game in particular, no one among the major OEM’s seemed to have – as yet – grasped the concept in a way that will fulfill the promise of that potential. There was also a lot of talk about “millennials” – who may perhaps be a generation of spoiled brats, thinking the world owes them everything for nothing. OK, so I may be harsh, and there are always exceptions. But trying to gear your entire game portfolio – or gaming floor – to “attract” that group in particular, is to ignore the principles that got you

42

there in the first place: Cater to customers who have the money … not to those who don’t. Millennials don’t gamble – at least not yet – but the reasons have nothing to do with the fact that they “don’t want to.” They do. It’s just that none of the OEM’s, or the casinos, have bothered to teach them! Millennials simply don’t know the excitement of casino gambling, and THAT’S why they don’t play! But not all is lost, of course. At the 2015 G2E, there were also many other marvelous innovations, as well as new games and products from a variety of manufacturers – not only those whom we all consider to be the Big Few (and getting fewer with M&A’s) – but several others who also showed great promise: Aruze, Ainsworth, Multi Media Games and Novomatic come to mind. But, overall, the major OEM’s were still pretty much par for the course, as we have come to expect in the past few years. And this leads me again to the beginning of this article, specifically the quote: Where’s the Beef? This is not intended to indicate that there isn’t innovation among the manufacturers. On the contrary, there has been innovation across the board, not only visually, and technologically, but also creatively. SGMS, for example, made a significant impression with their new cabinets. And, of course, each year we seem to have a lot more of the bells and whistles, more of the “yippee” and “wahoo” and more of the “lookie-lookie-lookie here” phenomenon that seems to be concentrated entirely within the somewhat elusive concept of “gaming entertainment”, or perhaps more properly


“entertainment” in itself. The overwhelming mentality seems to be twofold: One, “entertaining the player”, and, Two: “community” gaming. All of this is perfectly fine, and comfortable, and the major manufacturers still seem equally intent on pursuing this in the same way as they have been pursuing it for most of the past decade. But what about the gambler? Since when have slot machines become video consoles designed to entertain for the sole purpose of passing the time? Manufacturers and researches with expensive pie charts call this “time on device”, an odiously vacuous concept meaning “sucking your player dry a little more slowly”, but providing little actual value of how to keep the player playing, and coming back. I remember a Las Vegas where casinos were palaces for gambling, and playing slot machines meant money. Not “kiddie” entertainment. Certainly not entertainment in the sense in which it is now being peddled. While there is absolutely nothing wrong with entertaining the customer, instead of trying to “entertain” the customer with endless complexity and ever-more confusing multiple tiers of one thing upon the other, how about thinking of “entertaining” the customer by actually giving them something decent on which to gamble? Money is the true entertainment for slot players, and casino visitors. Why has “gambling” suddenly become an incorrect word? Why do we suddenly call everything “gaming” as if casino customers have suddenly become a bunch of children in kindergarten who need to be amused with an endless supply of cartoons? Slot machines are supposed to be gambling devices for adults, where adults use their own money in order to try and win money from the machine. It does not matter that the slot machines are mathematically negative-expectation games, something which most people know at least intuitively. The point of slot machines is to provide the player with an opportunity to risk a little bit of their money in order to win a whole lot of money from the casino. As long as we had slot machines that provided a financial “entertainment” – meaning the kind of big bang for the buck that made people jump up and down yelling and screaming with joy – we had casinos that provided true excitement, instead of what they are now: Video consoles with endless rows of childish games that print winning tickets whose value is not enough to buy a cup of coffee. And that’s what I meant when I said early on in this article: Where’s the Beef?

But wait, there’s more! Now there is yet another phenomenon growing within the minds of gaming equipment manufacturers, which everyone collectively calls: “community-style gaming”. For some reason people who are creating and manufacturing slot machines think that people come to the casino for a “social experience”. People who want to have a “social experience” stay home and have a barbecue with the family. People who come to the casino want to have nothing to do with their family, friends, or anyone else for that matter – they come to gamble, purely and simply, and they want an interaction with the game and nobody else. Slot machine players in particular absolutely despise having to share anything with anybody else – not only their machine, but anything to do with their wins and bonuses. Yes, they will be attracted to these “community-style” games, mostly because they are big, noisy, and they look like they are offering something. But these people quickly find out that what they actually get in these kinds of games is only the fact that they are big and noisy, and that they look like they’re giving something – except they don’t. Basically, community style gaming just offers nothing more than a big footprint on the casino floor with lots of noise, and no value to the player. For more than 25 years I’ve been talking to casino slot players and I can tell you from direct and personal encounters that community style gaming has only limited appeal, and that its entire appeal exists only because of the novelty factor, and not the re-play factor. Manufacturers of slot machines, and casinos in general, seem to have entirely forgotten that the goose that lays the golden eggs is the gambler first, last, and foremost. Giving people games where they piddle away their time penny by penny only to realize that they are losing their money at breakneck speed because they are actually spending dollars upon dollars, is not the way to feed the goose that lays the golden eggs. This is exactly what I heard the most often from Slot Directors and Casino Executives at the 2015 G2E. Those to whom I spoke – to a man – said this: “Too much entertainment, not enough gambling.” And that’s the 2015 G2E in a nutshell. What is happening is that the gaming manufacturers are slowly killing and roasting the goose that lays the golden eggs, and are doing so simply for the purpose of eating the goose today, and entirely forgetting that once this happens there will be no more golden eggs. This, and many other such situations, are so plainly obvious to me – and so plainly obvious to the players themselves – that it constantly befuddles

43


me, and them, why it is that neither the manufacturers – nor the casino operators in some cases – get it. It’s as if the entire gambling industry has locked itself in the “gaming” ivory tower, seemingly oblivious to the realities around them. Player research now focuses on hard data from player tracking components, but nothing about the reasons “why” players do – or do not – do something. That in itself is symptomatic of the fact that research budgets are being entirely misplaced, and as a result information that is being obtained is equally skewed to produce results that are not representative of the reasons why players do – or do not – do something. And that again leads me to the same conclusion as that at the beginning of this article: Where’s the Beef? How is it that we have forgotten to make gambling machines for gamblers? But there is still hope. At least some companies are beginning to see the way out of this delusion. Konami gaming see some of it. So do Aruze and Novomatic. Perhaps others will see more of it in the future. So, the question now becomes: Shall we continue building and marketing big buns with little pieces of meat in the middle, so that the people who play our slots will look at it, and after investing their money the only thing they will have left to say is: “Where’s the Beef?” Or – shall we once again recognize and understand that slot machines are gambling devices for adults who want to gamble, and start to once again make machines that are simple, but entertaining because of financial rewards? Gamblers are eternally optimistic. Even though they know, even intuitively, that they are gambling on a device, or game, where the house has a mathematical edge, if the game is worth the investment they will make that investment because of the reward that they are likely to get – and rewards that many people do actually get. Big wins from slot machines is what drives the market. And I don’t mean big wins like the multi-million dollars you get from Megabucks. Those kinds of wins are akin to a lottery, and that is not what is being discussed here. Instead, what IS being discussed here is the fact that we are eroding the value for the players of our

44

slots. And by so doing, we are eroding the value of the rewards – not only the rewards that the players will win when they actually do win one – but more specifically the rewards to the manufacturers by lowering costs of manufacture, and thereby increasing revenue, as well as the rewards to the casino operators who will now have a high yield game that gamblers actually want to play. And this does not mean that we will produce games that suck the player dry in a hurry, and spit them out the other end of the casino. It means producing games like we used to have. Games that take money, and pay money. And not “play” money. And so here we are in the second decade of the 21st century, hopefully learning from our past. Gambling built Las Vegas, and the reason why Native American gaming is so successful is because they remember that message. In Las Vegas and Atlantic City, and among slot machine manufacturers, and the current corporate owners of the majority of our casinos, they all seem to have entirely forgotten it. Hopefully they will remember soon. The days of the $600 room nights in the $100 buffets are over. Equally so, days of increasing complexity and cartoonish imagineering are likewise at an end. In the words of Benny Binion: “Give them good food and a good gamble and they will come back for ever.” For the casino operator, remember the “good food” part at a price that won’t break their gambling budget. For the gaming machine manufacturer remember the “good gamble” part, and you will save millions in development and manufacturing costs, and equally increase your profitability exponentially. And that, my friends, is the future for which we hope.


David Switzer

Ignoring low level advantage players David Switzer

Part 1

Introduction

An advantage player is a gambler who is knowingly playing a casino game with an edge over the house. They obtain this edge through a variety of legal methods, the simplest of which is betting more when they believe a large number of high cards are about to be dealt out. Because advantage

players can cut into casino profits, casinos use a large variety of counter-measures to thwart them, especially on the game of blackjack. Many of these procedures, such as complicated shuffles, poor penetration, no mid-shoe entry, and washing the cards (see the glossary below) are often successful in stopping advantage players but in the final analysis cost the casino by slowing the game down for average players. Casinos vastly overestimate

45


the effect that knowledgeable players have on their bottom-line, and if they were to eliminate or adjust these defensive procedures, they would increase their revenue by allowing average gamblers to play more hands.

Purpose of Study

The purpose of this study is to show how casinos can increase their table games’ revenue by adjusting the defensive procedures that they employ in their blackjack games that are aimed at stopping advantage players and to show that low-level advantage players are not a threat and should essentially be ignored. Professional advantage players using advanced techniques and those working in large, well-funded teams are a different matter and can be stopped by methods that go beyond the scope of this paper.

Justification

Casinos are very reactive in nature, so when they put forth a game and see someone who has found a way to beat it, they construct a way to stop that player without considering the negative effects it may bring forward. To stop card-counters, casinos often decrease the penetration, or the percentage of total cards dealt from the deck, to unplayable levels, which allows fewer hands before the need for a shuffle. Since shuffle trackers can track played and un-played cards through these shuffles, casinos construct elaborate and time consuming shuffles which slow the game down even more. When all is said and done, the advantage players, after observing the game, will not even sit down at the table because the game is too poor and all the casino ends up doing is proactively decreasing their own revenue that would have come from regular, non-advantage players if the game were made faster and more interesting.

Assumptions

1) Low and mid-level advantage players pose no real threat to a casino’s bottom line as they are often poorly bankrolled and do not possess the skills needed to consistently beat a game 2) Faster (and therefore more) play by average gamblers would increase the casino table game theoretical win 3) Allowing advantage players to play a “better” game would increase their personal win but casinos would still increase revenue by speeding the game up for all other players 4) Shuffling machines are effective at randomizing decks of cards

46

Scope and delineation

While this paper includes many forms of known advantage plays, this field is immensely diverse and is constantly being changed and updated with new and improved plays. The specific advantage plays included here are the ones that casinos are most actively aware of and most actively trying to stop. The data is very generalizable across the entire casino industry and not just limited to Las Vegas as almost all casinos use the same techniques to stop advantage players. Some casinos do this through rule adjustments while others do it through complicated shuffle routines, but almost all casinos have procedures that could be immediately eliminated which would increase table games revenue.

Part 2: Literature Review Introduction

There are three major procedures and actions casinos take to try and protect their blackjack games from advantage players: having long and complicated shuffles, limiting penetration on shoe games, and not allowing players to enter a game mid-shoe, referred to as No Mid-Shoe Entry (NMSE). This literature review will provide information on why these procedures are implemented by casinos and why they are detrimental to revenue maximization.

Shuffling

Shuffling the deck (or decks) in the game of blackjack is necessary to ensure that the next round of cards that are dealt have been randomized and neither the house nor the player have an advantage over the other. There has been much research done on the exact amount of riffles it takes to randomize a deck of playing cards, and the majority of studies seem to indicate that it takes seven perfect riffles to randomize a deck (Zuylen & Schalekamp, 2004). However, these studies refer to “suited” games where every card has a unique value - unlike the game of blackjack where all face cards are treated equally with a value of ten. For unsuited games such as blackjack, just four riffles are sufficient to randomize the deck (Zuylen & Schalekamp, 2004). If studies prove that it only takes four riffles to sufficiently randomize a deck of playing cards, why would casinos implement lengthy, complicated shuffles that do nothing except slow down the pace of the game? The answer is to stop a difficult advantage play known as shuffle tracking. Shuffle tracking is a form of advantage play where


a player or team of players keep track of groups of cards during a blackjack shoe and then attempt to figure out where those cards will reappear in the next round by watching the shuffle process. This technique is very difficult to master and is very prone to errors. According to Bill Zender, a top gaming consultant and former casino executive, there are very few professional shuffle tracking teams left as many of them moved on to more profitable and easier forms of advantage play (B. Zender, personal communication, March 27, 2014). However, a large majority of casinos still implement complicated shuffles in an effort to thwart these teams. Take for example the Caesar’s Palace casino in Atlantic City. This particular casino is one of a growing number of establishments that offers 6-5 single deck blackjack games, where blackjacks pay 6-5 on a dealt player blackjack instead of the normal 3-2 payout. This seemingly slight payoff change is disastrous for the player as it adds 1.39 percent points to the house edge (Shackleford, n.d.), and there would seldom be scenarios when a knowledgeable advantage player would attempt to play against it. However, average recreational players often don’t seem to notice this change and feel they are actually getting better odds on a single deck than on a game with multiple decks. This is optimal for the house as they now have eliminated most advantage players and increased their profit at the same time, and one could hypothesize that the house would want these poor players to play as many hands as possible as quickly as possible. Caesar’s Palace uses an automatic shuffling machine that shuffles the deck each time the cut card comes out, and the quickest and most effective way to shuffle the cards at this point would be to let the machine do what it was designed to do and to insert the deck, remove the freshly shuffled deck, and begin to deal. If a casino pays the fees to purchase or rent these machines, then they should trust their randomizing ability, as modern shufflers use state-of-the-art random number generators, and the shuffles these machines produce are no more predictable than the outcome of the next pull of a slot machine (Jacobson, 2012). However, Caesar’s Palace takes a different approach. Their single deck blackjack game shuffling procedure as of February 2014 was the following process: the dealer riffles the cards, washes the cards, riffles twice, strips, riffles twice more, puts the deck into the automatic shuffler, and then cuts the cards. This process, while not only time consuming, was presumably aimed at stopping advantage plays such

as shuffle tracking that are incredibly difficult to do and could actually be stopped using the much simpler technique of simply inserting the deck into the automatic shuffling machine and cutting out every other step of the process. To determine the actual amount this procedure costs Caesar’s Palace, it is easiest to determine simply how much riffling the deck once before putting the deck in the machine would cost. An average riffle takes approximately 4 seconds to complete. If a table is active for 16 hours per day, at 40 rounds per hour, then about 2,560 seconds will be spent on these riffles. This translates to losing over 28 rounds per 16-hour day. If the house edge on the game is 3% and there is an average of $50 wagered across the table per round, then this riffle costs about $42 per day in profit. (Jacobson, 2012) Multiply that by the total number of tables (four at Caesar’s Palace Atlantic City) over the course of a year, and the cost of this unnecessary riffle is about $61,000 per year to the casino. One riffle costs approximately $61,000 per year, and Caesar’s has five riffles, a wash, a strip, and finally a cut.

Penetration

Card counters gain their advantage over the house by keeping track of low cards (2-6) vs. high cards (10-Ace) that are dealt and betting more when the deck is more rich with high cards. High cards favor the player by granting him more blackjacks, 20’s, and favorable doubles while increasing the dealer’s bust percentage. Even though the amount of blackjacks will increase for both the player and the dealer, this increase in blackjacks favor the player as he is paid 3-2 on dealt blackjacks while the dealer only receives even money (by taking the players original bet). Casinos attempt to limit a card counter’s ability to keep track of these favorable situations by limiting the penetration of the shoe, or the amount of decks the dealer deals out before the shuffle. The less cards that are dealt out before a shuffle, the less information exists about the remaining composition of the deck or shoe and therefore the card counter is presented with less opportunities in which to bet big. Decreasing the penetration on a blackjack table does indeed hinder a card counter’s ability to make money, but it does so while also limiting the amount of bets other players at the table are able to wager. On a manually shuffled game, the reduction in deck penetration of a half deck (26 cards) cost about six rounds per hour. On machine-shuffled games, about two rounds per hour. Increasing penetration increases the number of decisions and increases

47


revenue potential (Zender, 2013). Although increasing penetration on a blackjack game is the quickest and easiest way to add hundreds of thousands of dollars to a casino’s revenue, casino executives are hesitant to act because they fear that hordes of card counters will swarm their tables. Card counters’ destructive power and earning potential has been highly hyped by the media with movies such as “21” and books such as “Bringing Down the House” about the legendary MIT blackjack team. However, in reality most card counters are either so incompetent or making such small amounts of money that casinos would be better off ignoring them. According to Richard Munchkin, a member of the Blackjack Hall of Fame and professional advantage player for over thirty years, there are most likely around several hundred to a thousand card counters who have an EV (expected value) of over $100 an hour and count cards occasionally, and perhaps one or two dozen who have over $100,000 in EV per year (R. Munchkin, personal communication, March 27, 2014). Bill Zender similarly puts the number of professional card counters at under 100 (B. Zender, personal communication, March 27, 2014). Darrin Hoke, the Director of Surveillance at L’Auberge du Lac casino in Lake Charles, LA, estimated that over the last four years, the number of card counters he has backed off is .00006% of the total gamblers that have played at his casino during that period. That works out to less than 1 in a million gamblers (Aponte, 2009). With such a small number of people who have the ability to make money counting cards over the long-term, it doesn’t make sense for casino executives to implement a countermeasure such as poor penetration that does almost nothing except severely hurts a casino’s revenue. According to Max Rubin, a member of the Blackjack Hall of Fame and exclusive consultant to the Barona Casino in San Diego, card counting does indeed cost casinos millions of dollars a year, but not because of competent players. Casinos lose millions of dollars every year by implementing revenue destroying procedures inspired by their irrational fear of card counters (M. Rubin, personal communication, April 15, 2014).

No Mid-Shoe Entry

When card counting first appeared, casinos had no idea what was going on and why some players were suddenly able to make large amounts of money on the blackjack tables. Eventually, however, casino bosses became aware of the play and started to throw card counters out of

48

the casino, requiring these players to get more creative if they wished to continue to play. In the 1970s, a professional player named Al Francesco came up with an idea called the “big player” strategy that was subsequently popularized by the legendary blackjack player Ken Uston. The big player strategy involved a small team of players where the majority of the players would sit down at a blackjack table, play the table minimum, and start keeping track of the cards as they were dealt. Whenever one of these “spotters” observed a large count, meaning the remaining deck was rich with face cards and aces, he would signal the “big player” who would come in, acting as a complete stranger to all at the table, and immediately begin to bet big. This allowed the team to fool the pit bosses because in the eyes of the bosses these players had no connection to each other and the big player was just a big gambler who couldn’t possibly be counting cards because he came in halfway through the shoe. Eventually casinos figured out this play (Ken Uston wrote a book about it in 1977) and came up with a way to stop it that is still in use in many places today. The way casinos put a stop to the Big Player teams was to enact a rule called “No Mid-Shoe Entry”, which restricted players from sitting down and playing a hand unless they had been playing from the beginning of the shoe. This rule made it impossible for spotters to call over big players, so the rule was successful in stopping large blackjack teams. However, like most procedures used to stop advantage plays, it hurts a casino’s revenue much more than it helps. Utilizing the policy of no mid-shoe entry on blackjack shoe games costs roughly three rounds per hour. This is calculated by assuming that five percent of blackjack customers in a casino are looking for a game in which to play (Zender, 2013).

Conclusion

Casinos are very reactive in nature, and often when they see a new form of advantage play they will immediately implement a rule change that will bring a swift end to it. They do this at their own peril, however, as many of these rules, namely complicated shuffles, poor penetration, and no mid-shoe entry stop some advantage plays but greatly reduce overall revenue at the same time. Casino executives need to think of their casino floor as a sea of gamblers with the occasional advantage player instead of a sea of advantage players with the occasional gambler.


IT CHANGES EVERYTHING. When you put the Aristocrat line-up at your disposal, you choose an all-round big experience — for you and your players. It gives you the win. Through pulse-pounding, immersive engagement across our C*Series™, J*Series™, E*Series™ and M*Series™ segments and an unparalelled collection of premium Licensed and linked games. And through the imposing presence of a growing range of eye-catching, ultra modern cabinet solutions. If you missed THE BIG PLAY reveal at G2E in Las Vegas, then make a date to catch it ON TOUR in London this February. It could turn out to be the biggest play you’ve ever made!

SEE US ON STAND S3-250 AT ICE 2016

www.aristocratgaming.com © 2015 Aristocrat Technologies Australia Pty Limited

Casino Life December 2015  

www.casinolifemagazine.com

Casino Life December 2015  

www.casinolifemagazine.com