Casino & Gaming International: Issue 3 by Casino & Gaming International

2006 ISSUE 2

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ALL THE WORLD’S A CASINO STAGE Publishing Director Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Caroline Maguire Email: caroline.maguire@casinoandgaming.net Distribution Manager Tracie Birch Email: tracie.birch@casinoandgaming.net Business Development Manager Toni Hughes Email: toni.hughes@casinoandgaming.net Advertising Mike McGlynn, Sales Director Email: mike.mcglynn@casinoandgaming.net Ray Blunt, Sales Manager Email: ray.blunt@casinoandgaming.net Daniel Lewis, Sales Executive Email: daniel.lewis@casinoandgaming.net

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lmost 10 years ago the Asian financial ‘contagion’ and subsequent political upheaval appeared to very nearly scupper the vast modernising development projects that were sweeping through East Asia and China (PRC). In fact, the crisis that wiped out billions, devalued currencies and slowed economies right down was ultimately contained by China’s huge economic engine which absorbed the shock enabling these countries to begin to get back on track. The analysis was clear, however, that while questions about China’s astounding growth rate grew more sceptical thereafter, very few doubted that the Asia-Pacific region would be the powerhouse in the world economy and China would be the centre of this most populous vortex. Its international commercial assertiveness was not long in coming once Hong Kong SAR and subsequently Macau SAR were returned to China. The rollercoaster of gaming and gambling was set to explode. Macau may be for Asia what Las Vegas is to North American gaming but in double-quick time, or is this really supercharged Las Vegas building the biggest overseas casino platform in history? Has Macau gone from ‘Monte Carlo of the Orient’ to ‘Las Vegas of the East’? The first US-operated casino, Sands Macau, opened in 2004; among some of the chief operators, Wynn Resorts Macau is soon to be built; and MGM Grand Macau is to follow next year. Over a 20-year concession stretch to 2022, casinos are emerging at breakneck speed from the drawing boards while construction companies are undertaking retail, hotel and residential projects as land is reclaimed from the sea. Macau’s tourist influx by 2010 is estimated to equal current levels in Las Vegas; revenues have been variously reported to overtake Nevada by 2008 and did almost draw level last year. By 2012 Merrill Lynch suggests there will be over 50 major new casinos across East Asia as the competition intensifies. The average flow of wagering into the Macau SAR, estimated to be 8-10 times that in Las Vegas, is indication enough of how that may well be the tip of the iceberg. Between Macau and Las Vegas assessment of longevity in the casino industry has, potentially, significant differences. According to HVS International analysis (Mellen/Okada): “For a deep gaming market, gaming revenue is typically supply driven – ie build it and they will come. The Las Vegas gaming market is a perfect example of a supply-driven market, where the significant continuous additions to supply over the past three decades have been readily absorbed…The Macau SAR evidences superior characteristics to Las Vegas in terms of market depth, and it is expected that as the market matures all the new supply will be absorbed.” If the initial (2003) controlled loosening of travel restrictions for Chinese citizens turns out to be a gradual trend, there awaits a startling possibility on the horizon: from Asia and China especially the equivalent population to the United States could be on the move, visiting and potentially gambling in Macau. While the figure of 190 million has been suggested, the realities are quite clear from current Macau Government Tourist Office (MGTO) figures. Last year 18.7 million people, of whom 10.46 million were mainland Chinese, visited Macau. By 2012 that could reach 34.8 million. In fact, 100 million Asians are within a three-hour drive of Macau, while one billion people are within a three-hour flight (Mellon/Okada). The Chinese culture of gambling is well known, but it is so prevalent some suggest that up to 90 percent of Chinese Americans at some point make their way to Las Vegas. It is this unbridled drive that is also on the verge of storming the online, interactive but especially mobile market. Asia-Pacific online, strictly gaming, revenues are expected to reach $1.84bn by 2008 (IDC). Sohu.com’s Dr Charles Zhang announced last month that there are 150-200 million Chinese Internet users, which is getting close to the US. However, it is also the qualitative factor: Chinese users, on average, clock up 15.9 hours per week greatly in excess of the US (Forbes, 04/03/06). That amounts to 1, 765 billion hours per week in China and 129 million hours in the United States. The difference in expansion potential is greater still when we consider that just over 10 per cent of the population is hooked up, whereas around 50 per cent are in the US. The implications will not be lost in the US which continues to grapple with the legislative quagmire of online regulation.

www.casinoandgaming.net

Stephen Lawton is editor of Casino & Gaming International Casino & Gaming International ■ 1

CONTENTS

FEATURES 7

GIGSE: TURNING A GATHERING OF HOPEFULS INTO AN I-GAMING MECCA BY SUE SCHNEIDER

IMPACT OF GAMBLING TECHNOLOGIES IN A MULTI-MEDIA WORLD BY MARK GRIFFITHS

ADAPT, DRIVE AND EXPAND – EXPLORING NEW MARKET POTENTIAL IN ASIA BY GARETH WONG

INTERNET GAMBLING LEGISLATION: INTO LAW OR THE GRAVEYARD? BY JOE KELLY

REGULATION IN EUROPE – QUO VADIS? BY MARTIN ARENDTS

VISION, PLAN & REALITY: PUSHING NEW FRONTIERS BY STEPHEN LAWTON

SKYLINE, GLAMOUR & SIGNATURE: THE ART OF CAPTURING CLIENTS’ COMPLEXITY INTERVIEW WITH FRED W CLARKE

Casino & Gaming International ■ 3

CONTENTS

FEATURES 57

PANEL: VIBRANT, GLOBAL MAINSTAY OF THE POPULAR ENTERTAINMENT INDUSTRY

BUILDING LOYALTY THROUGH CUSTOMER CARE

BY TEX REES

GAMING ACADEMY PREPARES FOR UK CASINO BOOM BY EMMA ELSON AND COLLEEN McLAUGHLIN

SURVEILLANCE IN MACAU...FACING UNIQUE CHALLENGES BY WILLY J. ALLISON

CELEBRATING 10 YEARS OF EXCELLENCE IN RESPONSIBLE GAMING BY PHIL SATRE

PANEL: THE NEXT FRONTIER: RESPONSIBLE GAMING IN ASIA

WOMEN, GAMING REALISM AND RIGHT CHOICES BY CHERYL LEWIN

PANEL: COMMUNITY LEADERS’ PERCEPTIONS OF GAMING INDUSTRY’S EFFECTS Casino & Gaming International ■ 5

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ONLINE BUSINESS DEVELOPMENT

GIGSE: TURNING A GATHERING OF HOPEFULS INTO AN I-GAMING MECCA BY SUE SCHNEIDER

The original aim was to give a very young, emerging industry a gathering place for conducting business, absorbing information, and opening dialogue among individuals and entities with common interests and it hit the mark. For Igaming, it was the start of something big, something that would become the Global Interactive Gaming Summit & Expo. GIGSE’s evolution has been driven largely by demand, but also by willingness on the part of River City Group to test new concepts, and oftentimes the experiments stick.

hat was once a modest gathering of hopefuls representing a promising yet problematic new industry has blossomed into an international summit that plays a critical role in the business development of dozens of companies in the I-gaming space. For three days every year, virtually all business activity outside of the Global Interactive Gaming Summit & Expo (GIGSE) comes to a halt while Igaming companies focus their efforts on building relationships at the industry’s premier event. GIGSE 2006 will take place in Montreal May 16-18, and attendance is expected to jump significantly again. In fact, this could be the year the conference eclipses the 2,000 attendee mark – a remarkable feat, and worlds beyond what was accomplished at the inaugural event in Vancouver in 1999, where 14 exhibitors and 320 attendees took a stab at gaining some traction and exposure via this new vehicle.

FROM TABLE TOP TO ZIP CODE A snapshot of GIGSE in 1999 tells the tale of a hotel-based event with uniform table-top exhibits and a single conference track. The aim was to give a very young, emerging industry a gathering place for conducting business, absorbing information, and opening dialogue among individuals and entities with common interests and it hit the mark. For Igaming, it was the start of something big. Two cities and seven events later, GIGSE maintains its core goals as a full blown conference and trade show with more than 100 booths ranging from the classic Vancouver-style tabletop to the quintessential condominium-within-an-expo hall platinum sponsor exhibit worthy of its own zip code. It is now held at major international conference and exhibition centres that are equipped to accommodate the Casino & Gaming International ■ 7

ONLINE BUSINESS DEVELOPMENT

increasingly complex and demanding needs of businesses in a quickly maturing industry. Participating companies are booking blocks of meeting rooms and executive suites with cooperating hotels. Booths are stocked with state-of-the-art AV equipment and are Internet-ready if necessary. Booth-top placards have been replaced by larger-than-life banners and exquisite marquees. The expo hall has expanded to include a presentation stage, a media centre, an Internet café and a staging area for charity events, which have become a regular part of GIGSE. The cafeteria by itself is larger than the entire expo floor in Vancouver. On the conference side, classroom-style seminars still exist, but they alternate with plenary sessions in lecture halls able to hold upwards of 500 delegates. The smaller seminars, meanwhile, have been broken into conference tracks geared for higher-level, focused sessions. The conference continues to feature a line-up of experienced, successful industry specialists, but also now includes more prominent internationally recognised figures like last year’s keynoters, AGA President Frank Fahrenkopf and Novamatic Chairman Franz Wohlfahrt. By virtue of the reputation GIGSE has earned itself, Visa, National Football League and Publishing & Broadcasting Ltd. have sent representatives to the conference to address the industry, as have government departments from all over the world. While conference producer River City Group strives to add new faces to the mix every year, numerous highly regarded industry leaders, including Sportingbet’s Mark Blandford, former New Jersey regulator Frank Catania and Lasseters CEO Peter Bridge, have spoken regularly over the years at this event. And high-profile gambling businesses like PartyGaming, Betfair and Ladbrokes are frequently represented on the programme. The media presence has increased greatly as well, with film and tech crews from TV, radio and Internet broadcasting becoming a mainstay in the expo-hall backdrop. Journalists from major print and online publications, including the New York Times, Wired, Financial Times, MSNBC, BBC, CBC and the Associated Press have also attended and covered the show. GIGSE’s evolution has been driven largely by demand, but also by willingness on the part of River City Group to test new concepts, and oftentimes the experiments stick. Over the years enhancements and improvements such as electronic onsite registration, multiple tracks, ancillary events, the expo presentation stage, fundraising events, unique sponsorship opportunities and new discussion formats have enabled GIGSE to continue meeting the needs of attendees, presenters, exhibitors and sponsors. This year will be no different and front and centre among new components will be a text messaging service that enables participating attendees to get in contact with associates whom they otherwise may never have had a chance to meet – a feature designed to preserve networking opportunities at an event that has outgrown the intimate setting it once provided. River City Group also now offers a Weblog at www.GIGSE.com so that attendees can stay informed on day-to-day GIGSE-related happenings as the event nears and is considered publishing a show daily to keep visitors informed of happenings within the conference and expo. Most of the major changes to GIGSE took place during the ‘transition years’ of 2002 through 2004. The following 8 ■ Casino & Gaming International

ONLINE BUSINESS DEVELOPMENT

chronological overview offers a glimpse at major changes during this period – changes that shaped GIGSE into the event it is today. In many ways the breakout year for GIGSE was 2002. Most significant on the list of improvements was the transition of venue from hotel conference facilities to international exhibition centres. The theme, of course, was growth, and in addition to boosting attendance by over 30 percent, both the expo and conference components of the event were expanded. In the expo hall, the number of booths nearly doubled, and a presentation stage was added to include more conference sessions. Meanwhile, GIGSE switched in 2002 from a single conference track to multiple tracks, enabling the event to take on more topics and offer higher-level seminars. With all this came the expansion of sponsorship opportunities and the ability for participating companies to gain a higher profile at GIGSE than ever before. The cornerstone was the introduction of Neteller as GIGSE’s first ever Platinum Sponsor. Despite being handcuffed by the last minute relocation to Montreal brought about by the SARS scare in Toronto, GIGSE managed to break new ground in 2003 as well. The biggest change was the offering of a second registration option; since 3003, delegates have had the choice of attending the entire event or having access only to the expo hall. While attendance was hurt that year by the change of date and location, the new option has ultimately led to more expo attendees and consequently more business opportunities for exhibitors and delegates alike. This was also the year that River City Group offered a separate conference focusing exclusively on affiliate marketing. Even though this was a one-time event, it seemed to have opened the door to numerous ancillary functions. For the first time, GIGSE had become a central marketplace supporting a handful satellite meetings, receptions and minievents. Another product of GIGSE’s transition into a major event has been the ongoing refinement of River City Group’s proprietary registration technology, and in 2003 they rolled out a new system enabling walk-ins to self-register at PCpowered kiosk stations. The third year of significant change, 2004, saw the arrival of the first ever GIGSE fundraising event. The sumo grudge matches – featuring prominent industry execs battling one another while wearing puffy sumo costumes – raised over $30,000 for GamCare and established a new tradition of ending GIGSE with a lighthearted, humorous and playfully humiliating competition. More importantly, GIGSE is now raising money for very worthy causes. The charity event in 2005 featured a handpicked group of I-gaming professionals racing Segway scooters around a pylon obstacle course, and this year’s event will have competitors racing one another in giant Velcro shoes. A second very important change in 2004 was the switch to three days of conference sessions, with the conference primer sessions becoming part of the full conference rather than a separate event. Through all these changes and adaptations, GIGSE has developed over the years into an essential component of veteran companies’ business plans, a coming-out for new entrants to the industry, a showcase for industry powerhouses wanting to make a splash, an opportunity for newcomers to familiarise themselves with the industry and Casino & Gaming International ■ 9

ONLINE BUSINESS DEVELOPMENT

>> In many ways the breakout year for GIGSE was 2002. Most significant on the list of improvements was the transition of venue from hotel conference facilities to international exhibition centres. The theme, of course, was growth, and in addition to boosting attendance by over 30 percent, both the expo and conference components of the event were expanded. In the expo hall, the number of booths nearly doubled, and a presentation stage was added to include more conference sessions >> network with potential partners, a launching point for new products and a platform for making major announcements. For many, the conference and coinciding events also present the year’s best opportunities to unwind and socialise – often a very important part of developing solid business relationships, especially in an industry with so many young people. The true mark of validation was in 2003, when GIGSE was all but wiped out by the SARS scare in Toronto and salvaged in Montreal in large part because of industry demand (bordering on desperation). During the process of deciding whether to relocate or cancel the event altogether, it became evident that not only do companies want to be part of GIGSE, they need to be part of GIGSE. A very large portion of many companies’ business comes from relationships formed and strengthened at this event, which plays a critical role in their success. The real value of GIGSE is, of course, realised in the months following the event. When you read about major deals coming together throughout the rest of the year, you are oftentimes witnessing the materialisation of synergies formed at the tradeshow. The best measurement for this is the attendance and exhibitor participation the following the year, so the true impact of GIGSE 2005 will be felt when the doors open to the ‘06 event. A PREVIEW OF GIGSE 2006 Following the SARS setback in 2003 and what amounted to a down year business-wise for I-gaming companies all over the world in 2004, GIGSE got back on track in a big way in ‘05 with a record attendance of 1,500, and the 2006 event is expected to accommodate at least that many – perhaps as much as 2,000 people in a bigger venue. For the first time since 2002, River City Group reached beyond the gambling arena for a keynote speaker, announcing in late March that Stanford Law School professor Lawrence Lessig, a well known expert on the marriage of technology in law, would address the delegation during the opening session of the conference. Lessig promises to be GIGSE’s most engaging keynote speaker since Internet visionary John Perry Barlow captivated hundreds of I-gaming reps in 2001 with a thought-provoking speech on Internet freedom. It will be a unique opportunity to get an industry perspective from an ‘outsider’ who is extraordinarily knowledgeable in the fields of modern media. The rest of the conference includes tracks focusing on marketing; business and investment; legal issues; industry segments; payment processing, poker and European developments. The specific sessions that will span regularly featured topics like branding, risk management, US policy 10 ■ Casino & Gaming International

and financial forecasting as well as new topics like public relations, in-game betting and marketing to poker players. The Platinum Sponsor for GIGSE 2006 is payment and risk management systems provider WireCard, which is joined by Gold Sponsors Neteller and Playtech, Silver Sponsors Boss Media, Orbis and RealTime Gaming and Bronze Sponsors Gateway, Microgaming Systems and Mohawk Internet Technologies.

SUE SCHNEIDER Sue Schneider is the CEO/President of River City Group LLC in St. Louis, Mo. The company publishes a subscription-based electronic magazine, Interactive Gaming News (www.igamingnews.com) as well as syndicated research reports. It offers a wide range of industry-related services such as market research, regional and international Summits, executive placement and brokerage services. She wrote a monthly column on interactive gambling for International Gaming and Wagering Business (IGWB) magazine for several years and now writes for Global Gaming Business magazine. She has been a contributing writer for each edition of the Internet Gambling Report; originally published by Trace Publications, her company has now taken over publication of that book. Schneider served as Chairman of the Interactive Gaming Council (IGC), a trade association, since its inception in l996 until 2004. IGC has a Code of Conduct for its members which aims at enhancing consumer protection as well as a Code of Practice for advertising and Responsible Gaming Guidelines. She is a frequent speaker at international gaming conferences and has testified to both the US Senate, the US House of Representatives as well as the National Gambling Impact Study Commission in that country. She is determined to stay on the information side of the gaming industry after her previous experience in gaming which was a six year stint running charitable bingo.

EVERY ASPECT OF PAYMENT – FROM A SINGLE SOURCE Wire Card is one of Europe’s leading payment service and technology companies. Wire Card’s service portfolio supports the entire range of payment systems, risk management and communication services: online, offline and in real-time.

Payment means more than just transactions. Payment stands for communication, security and trust. It is an instrument to improve business efficiency and customer loyalty. Wire Card is the benchmark company for real-time payment handling and risk management, developing intelligent solutions to drive different business models forward. Whether an online shop, traditional retail, or in a point-of-sale environment, Wire Card’s services and ideas provide advantages in terms of costs and processes, and increase added value with maximum payment security. HOW TO PAY – THE SMART WAY Wire Card stands for full service in payment management. The company offers one-stop solutions which can be seamlessly integrated into any business model and any eCommerce application. Wire Card’s service portfolio supports many local and global payment methods, from card processing via wire transfer to cash-in-advance. In addition, Wire Card sets the standards with CLICK2PAY, its intelligent eWallet solution, for applications such as Internet gaming, auctions, downloading music and betting. Wire Card also offers impressive call center and eMail services for after-sales management and customer support. HOW TO PAY – THE CLICK2PAY WAY With CLICK2PAY, Wire Card has established a payment community for the growing eGaming market. The eWallet solution provides simple, secure payment, and is of particular interest to the gaming sector. Each customer can maintain a free CLICK2PAY account, in which s/he can view and manage all transactions at any given time. More than 5000 companies from all over the world already use CLICK2PAY. As a leading payment provider, what makes CLICK2PAY exceptional is its twofold ability to increase member benefits while simultaneously broadening the merchant’s business capacity. CLICK2PAY is especially suited to meeting the various challenges of payment security and flexibility. By

providing the tools for simple and safe money-transfers, CLICK2PAY guarantees spontaneity and security for users and merchants alike. HOW TO PAY - THE WAY OF THE FUTURE As a leader in payment systems, Wire Card maintains constant development. By launching the Wire Card Bank, the company is underlining its leadership while laying the foundations for further growth. Wire Card is now one of the few independent European players holding a universal bank license, enabling the company to increase its competitive advantage. This acquisition and the coverage of new business area will significantly improve the gross margin, and subsequently, profitability over the medium and long terms. The most decisive benefit, however, is: Wire Card now offers its customers an added value at every level and for every product dimension. The banking services of the Wire Card Bank will range from business accounts and the allocation of acceptance agreements for VISA and MasterCard right through to issuing credit cards within the scope of co-branding and customer loyalty projects. Wire Card Bank will also position itself in the consumer market by rolling out its own card and account products. Issuing prepaid cards in association with the Wire Card Group’s Internet payment solution, CLICK2PAY, will create an absolutely seamless link between the online and offline worlds for the very first time. The Wire Card Group will continue to position itself as an independent provider in the areas of payment transactions and credit card processing. Parallel to the development of inhouse solutions, there will be a specific expansion of existing strategic partnerships with processing banks and, especially, credit card acquirers. By focusing on customer benefits, Wire Card plans to maintain its strategy in providing a solution that is tailor made and as flexible as possible to exceed the expectations of its customers. The course is set for future growth.

Casino & Gaming International ■ 13

REMOTE & INTERACTIVE MEDIA

IMPACT OF GAMBLING TECHNOLOGIES IN A MULTI-MEDIA WORLD BY MARK GRIFFITHS

In many countries there appears to be a slow shift from gambling being taken out of gambling environments and into the home and the workplace. Historically, what we have witnessed is a shift from destination resorts (such as Las Vegas and Atlantic City) to individual gaming establishments in most major cities (e.g., betting shops, casinos, amusement arcades, bingo halls). More recently there has been a large increase in single site gambling opportunities (e.g., slot machines in non-gaming venues, lottery tickets sold in mainstream retail outlets), to gambling from home or work (e.g., Internet gambling, i-TV gambling).

echnological innovation has always played a role in the development of gambling behaviour, primarily through providing new market opportunities (Griffiths, 1999). The introduction of the Internet and other remote gambling developments (such as mobile phone gambling, interactive television [i-TV] gambling) is a potential issue for concern regarding problematic gambling behaviour. As technology develops there will be increased scope to manipulate the potentially addictive structural characteristics of gambling activities to increase the appeal and arousal of the games. To date, knowledge and understanding of how remote media affects gambling behaviour is sparse. Globally speaking, proliferation of remote access is still an emerging trend and it will take some time before the effects on gambling behaviour surfaces. However, there is a strong foundation to speculate on the potential hazards of Internet gambling. For instance, Griffiths (2003) has identified the use of virtual cash, unlimited accessibility, and the solitary nature of gambling on the Internet as potential risk factors for problem gambling development. The impact of gambling technology has been widespread and there are many observed trends around the world that appear to have resulted from technological innovation, e.g., gambling coming out of gambling environments, gambling becoming a more asocial activity, widespread deregulation, and increased opportunities to gamble (Griffiths, 2001). Furthermore, there are many other factors that form the backdrop to examining the increasing use of technology: ■ Governments appear to be fixated on revenue raising ■ Governments and the gaming industry appear to be using every marketing tool to increase revenue ■ Global gambling has grown substantially in the last 10 years

Casino & Gaming International ■ 15

REMOTE & INTERACTIVE MEDIA

>> A 2005 study by Nielsen/Activision reported that 18 - to 34-year-old males (a prime demographic for advertisers of many products) now play video games rather than watching television (Inside Video Games, 2005). As a consequence, media service providers have had to reinvent and reinvigorate the television viewing experience. One of the most potentially lucrative vehicles for this has therefore been interactive television games >>

and is particularly noteworthy in the area of Internet gambling. ■ There appears to be a global expansion strategy ■ Technology is providing ‘convenience’ gambling ■ Technology may be making gambling more socially acceptable to traditional low frequency gamblers (e.g., women, retired people, etc.). In many countries there appears to be a slow shift from gambling being taken out of gambling environments and into the home and the workplace. Historically, what we have witnessed is a shift from destination resorts (such as Las Vegas and Atlantic City) to individual gaming establishments in most major cities (e.g., betting shops, casinos, amusement arcades, bingo halls). More recently there has been a large increase in single site gambling opportunities (e.g., slot machines in non-gaming venues, lottery tickets sold in mainstream retail outlets), to gambling from home or work (e.g., Internet gambling, i-TV gambling). However, gambling can now be done in a wide variety of retail outlets. It is also clear that the “newer” forms of gambling like Internet gambling, mobile phone gambling, and i-TV gambling are activities that are done almost exclusively from non-gambling environments. One major worry about this is that in general, regulation of gambling all but disappears when it is done in non-gambling environments. GAMBLING IN A MULTI-MEDIA WORLD The rise and challenges of Internet gambling cannot be seen in isolation particularly as there is ever-increasing multi-media integration between the Internet, mobile phones, and interactive television (i-TV). It may be that people are more likely to spend money in particular media. For instance, the Internet can be described as a ‘lean forward’ medium. This

16 ■ Casino & Gaming International

means that the user (who is usually alone) takes an active role in determining what they do. Computers are better at displaying text than television and have a wider range of fine-tuning controls through the mouse and keyboards. This makes them more suitable for complex tasks such as obtaining insurance quotations or travel itineraries. In contrast, the television is a ‘lean back’ medium where the viewer (often as part of a group) is more passive and seeks less control over what is going on. The television is better at displaying moving images than computers. This may have implications for the types of gambling done in particular media. Furthermore, i-TV may also help in one other important area – trust. People appear to trust their television even though it is accessing the Internet in the same way as a computer. However, as mentioned, i-TV is a “lean back” service. If a person is relaxed sitting back on their sofa, it will make television the key to creating a true mass market for online commercial activity (including gambling). In addition, some i-TV services can be linked to actual television programmes (such as betting on horse races). Browsing and buying by i-TV are still in its infancy but look set to expand significantly in the future. The emerging youth market is also a consideration. There is a whole Internet generation coming through who may be the most positive about purchasing online services. They may be happier to enter credit card details online and/or meet others online. This has the potential to lead to some big changes as the profiles of these people will be radically different from previous punters. MOBILE PHONE GAMBLING The mobile phone industry has grown rapidly over the last few years. Research by Mintel (2005a) highlights that mobile phone revenues from mobile gambling and gaming is

REMOTE & INTERACTIVE MEDIA

>> Consumer surveys suggest a moderate interest in gaming but when offered uptake is usually good. A good example of this is the National Lottery where there was little public appetite for one before its introduction in 1994, but has proved very popular since. Gambling via television clearly has great potential but may be limited in many markets (such as the US) because of regulatory issues >>

increasingly rapidly. In 2004, mobile gaming revenue reached $200 million. According to the Mintel report, by 2009, mobile gambling is set to generate $3 billion in the US alone. Despite the huge figure, mobile gambling is only likely to account for around 1.5% of mobile industry revenues. It will also be a small part of the overall market as Mintel predict that the US casino gambling market will generate revenues of almost $71 billion by 2009 (compared to the $48.3 billion generated in 2004). In the UK, mobile phone gambling has also increased dramatically. Mintel (2005b) reported that the number of betting pages downloaded by the end of 2005 was expected to approach three million, up 367% on 2004. Mobile phone users in the UK spent around £740m on phone downloads by the end of 2005. This is 18 times the £40m spent in 2002. Ring tones for phones account for approximately a third of all mobile downloads. Arcade-style games (26%), screensavers and wallpaper (13%), and music (8%) are all popular. However, the biggest growth area has been in gambling, which now accounts for 9% of all mobile phone downloads in the UK. These predictions also seemed to be backed up by Juniper Research (2005) who predicted mobile gambling revenues will total about $19.3 billion worldwide by 2009, with lotteries accounting for about $7.9 billion, sports betting bringing in $6.9 billion, and casino-style gambling contributing $4.5 billion. Juniper predicts that lotteries will make most money for mobile gambling operators because governments are generally less censorious about lotteries than other forms of gambling. They are also easy to play and relatively low cost compared to other types of gambling. This means that mobile lotteries are likely to become established fairly quickly in a greater number of markets. Given the ubiquity of lotteries worldwide, it only requires a very small percentage of players to buy their tickets via their mobile phone for the resulting global dollar revenues to run into billions. Juniper also claims that the growth in the UK National Lottery is almost wholly attributable to mobile betting. Juniper also predicts that by 2009, mobile gambling revenues will be concentrated in Europe (37%) and the AsiaPacific region (39%.). They predict that North America will produce only 15% of global revenues because of government and societal opposition to wireless gambling. It is clear that mobile phone gambling is still a relatively untapped area and the functional capabilities of mobile phones are getting better all the time. Cell phones are rapidly growing in their functional capabilities. Mobile gambling is available on most of the mobile phones that are powered by Windows Mobile, Symbian OS, RIM including Java and browser based phones. There are now Internet sites that allow mobile phones to download casino-style games to the

gambler’s phone, allowing real money betting from anywhere they can get a phone signal. As the new generation of mobile phones accept Java programming, the high-end graphic display can be used to deliver live video feeds for the various casino games. It appears that sophisticated mobile phone technology is increasingly able to integrate within our culture. This will have implications for the social impact and will need monitoring. The research by both Mintel and Juniper raises the possibility that almost unlimited access to mobile phone gambling will lead to more problem gambling. Like Internet gambling, mobile phone gambling has completely changed the way people think about betting. Mobile phones provide the convenience of making bets or gambling from wherever the person is. On paper, this all sounds relatively simple and is set to get even easier. Many gaming industry observers are claiming that in the not too distant future that people will not go to sporting events like horse races or the football anymore. They will simply watch the sport on television, and to place bets via their mobile phones. INTERACTIVE TELEVISION GAMBLING In recent years the television industry has invested heavily in digital infrastructure in anticipation of the predicted financial boom that was to come from interactive television (i-TV). However, revenue from i-TV has been relatively slow to materialise. Despite this relatively slow start, industry analysts believe i-TV will bring financial rewards for the television industry (Wise & Hall, 2005). Early i-TV revenue projections forecast robust growth in interactive advertising and television-based commerce but are unlikely to be as lucrative as consumer-driven applications, such as video-on-demand or gaming. A report by KPMG and Screen Digest estimated that by 2007 i-TV will generate approximately one half of the $5 billion in online revenues (Indiantelevision.com, 2004). To flourish in an evolving digital landscape, television companies are formulating strategies for targeting particular segments of the industry. Platform operators appear to be deploying consumer-driven applications, such as gaming (including gambling). They are creating an environment where content originators and channel operators can innovate and profitably create interactive broadband content. Interactive television is seen as a way of rapidly expanding gaming, because of its naturalness and ease of use. Interactive television gaming covers a wide range of activities. This includes such activities as playing video games like Tetris, playing along with television game shows like Who Wants To Be A Millionaire?, and wagering on sports events such as horse racing and football. But will gaming be among i-TV’s most profitable applications? Consumer surveys Casino & Gaming International ■ 17

REMOTE & INTERACTIVE MEDIA

suggest a moderate interest in gaming but when offered uptake is usually good. A good example of this is the National Lottery where there was little public appetite for one before its introduction in 1994, but has proved very popular since. Gambling via television clearly has great potential but may be limited in many markets (such as the US) because of regulatory issues. There appears to be an increasing wave of interactive television applications aimed at viewers drawn to the allure of video games and online gambling. This interest in all things interactive directly results from growing competition between Internet service providers, satellite TV, and cable-TV outfits. All these different providers are looking for features to differentiate themselves. Furthermore, they are specifically targeting younger audiences. A 2005 study by Nielsen/Activision reported that 18- to 34-year-old males (a prime demographic for advertisers of many products) now play video games rather than watch television (Inside Video Games, 2005). As a consequence, media service providers have had to reinvent and reinvigorate the television viewing experience. One of the most potentially lucrative vehicles for this has therefore been interactive television games. Media service providers in the US have been piloting interactive programming like NASCAR in Car, which allows viewers to watch races from inside one of seven cars participating in a stock-car race and seeing what the drivers are seeing. Using a television remote control, viewers can switch cars. Viewer loyalty scores highly with advertisers, which contribute the bulk of sales. Media service providers also take its share of the text-messaging revenues when answering the multiple-choice questions on screen. Many media service providers’ networks still need work to enable cutting-edge interactivity like multiplayer gaming but this is likely to happen at some point. Digital pay-TV software makers are beginning to roll out technology that can enable feature-rich games even on “primitive” set-top box. Using software that sits on a provider’s server, games can be made graphically complex (e.g., game sequences that give the viewer an impression of flying through a house). Lots of companies have done well financially in Europe and Asia where more than 30% of television shows have an interactive element to them. Television gambling is particularly popular in Europe. Interactive Systems Worldwide (ISWI) was one of the first companies to develop interactive television play-by-play betting system. Their software system enables interface between SportXction and the satellite television broadcast of its first interactive television partner. SportXction is a patented, real-time, software system that allows TV viewers to make play-by-play gambles on a sporting event while the event is in progress. Gambling can be conducted while viewing a live or televised sporting event, or listening to it on the radio. The wagers offered are mostly oriented to short-term action like the penalty kick, or whether the next play will be a run or a pass. The wagers have odds associated with them, which relate to the probable outcome of the proposition being wagered upon, and the odds are adjusted in real time to balance the pool using proprietary artificial intelligence software to reflect player sentiment, as derived from the betting patterns. The system can be used with virtually any sport. Exactly how successful interactive television gaming will become cannot be answered at present and there are clearly some markets such as the US that are impeded 18 ■ Casino & Gaming International

because of legislative and regulatory issues. And as with mobile phone gambling, there are potential issues of concern surrounding social impact that need monitoring. As Parke and Griffiths (2004) point out, the most effective way to control the effects of the idiosyncratic features of remote gambling on development of problematic gambling behaviour is to provide individuals with a scrutinised, regulated remote gambling industry. All over the world, the recognition of the inability to prohibit remote gambling successfully, has lead various jurisdictions to turn attention to developing harm minimisation regulations. This appears to be the most pragmatic approach. REFERENCES Griffiths, M.D. (1999). Gambling technologies: Prospects for problem gambling. Journal of Gambling Studies, 15, 265-283. Griffiths, M.D. (2001). Gambling market and supporting services for pathological gamblers in Great Britain. In I. Fuchtenschneider & K. Hurrelmann (Eds.), Glucksspeil in Europa (Gambling in Europe). pp.84-102. Geesthacht: Neuland. Griffiths, M.D. (2003). Internet gambling: Issues, concerns and recommendations. CyberPsychology and Behavior, 6, 557-568. Indiantelevision.com Team (2004). ISWI develops ITV betting product. Located at: http://www.indiantelevision.com/tec/y2k4/oct/octtec5.htm Inside Video Games (2005). Advertising within Video Games - Reaching your Target Audience. Located at: http://www.insidevideogames.com/vgp /Spotlight/dowling_interview/index.jsp Juniper Research (2005). Betting on Mobile Gambling. Located at: http://www.spin3.com/in070305mobilegambling.php. Mintel (2005a). Cited in: Mobile Gambling Expected to Sweep the US. Located at: http://www.spin3.com/sweep.php. Mintel (2005b). Cited in: Mobile Phone Gambling On The Increase. Located at: http://www.onlinecasinonews.com/ocnv2_1/article/article.asp?id=8684. Parke, A. & Griffiths, M.D. (2004). Why Internet gambling prohibition will ultimately fail. Gaming Law Review, 8, 297-301. Wise, T. & Hall, D.A. (2005). Interactive TV Services: Take Advantage of Time to Define Roles, Identify Capabilities. Located at: http://www.accenture.com/Global/Research_and_Insights/Outlook/By_Alp habet/InteractiveCapabilities.htm

MARK GRIFFITHS Dr. Mark Griffiths is Professor of Gambling Studies at the Nottingham Trent University. He is internationally known for his work into gambling and gaming and was the first recipient of the John Rosecrance Research Prize for Outstanding scholarly contributions to the field of gambling research in 1994, winner if the 1998 CELEJ Prize for best paper on gambling and the 2003 winner of the International Excellence Award for outstanding contributions to the prevention of problem gambling and the practice of responsible gambling. He has published over 150 refereed research papers, two books, numerous book chapters and over 350 other articles. In 2004 he was awarded the Joseph Lister Award for Social Sciences by the British Association for the Advancement of Science for being one of the UKs outstanding scientific communicators.

THE GIANT JUMP INTO THE RECORD BOOKS AND SOME THOUGHTS ON THE FUTURE OF ONLINE GAMING

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THE CHANGING TRENDS IN PAYMENT MECHANISMS AROUND THE WORLD By Brent Pickles, Vice President of industry leading online payment company Gateway Payment Solutions. They provide online payment services for all sorts of companies and are the acknowledged experts, to whom more internet gaming companies turn. Gateway offers the stability and security of a major financial institution with the flexibility and confidentiality of a service driven company with offices all over the world, including North America, the Caribbean and throughout Europe.

Our eCommercial world is changing and because, by its very nature it is a virtual world, it is changing rapidly. There are definite trends where what is happening on one side of the world seems to be the reverse on the other. But that’s what makes this such an exciting industry in which to work. Practically every jurisdiction around the world is changing its preferred payment mechanisms for internet gaming. From Anchorage to Zurich, there are different trends that all have one thing in common – new legislation and changing rules mean that players and sites must adapt. But, even with all of this uncertainty and change, the industry is still growing at a very healthy rate. With Europe showing a stronger support for online gaming over the last year, many Caribbean & North American based companies have begun to migrate to these jurisdictions, not only for corporate advancement and to be in a regulated environment but also to help them to make a stronger effort to capture European players. This migration meant that they needed to look for additional payment methods, in particular those that are popular with European gaming customers. In a mirror image move, the traditional European-based online gaming sites watched the influx of North American and Caribbean based companies into European markets and reacted by attacking the North American markets. They faced the same problem with a need to provide new, additional payment methods for their new American customers. Happily, Gateway has been able to satisfy our customers on both sides of the Atlantic. On top of this transatlantic migration there have been other changes too. Historically, in North America, credit cards were always the preferred method of payment. But as banks and credit card companies began to restrict payments to gambling and gaming websites, no matter where they were located, customers began in turn to move to electronic checking and other alternative payment methods like debit cards which have proven to be effective because they work outside the credit card network.

Meanwhile, in the UK and in much of Europe, debit cards and direct debits from bank accounts were the most popular payment methods, although there was a gradual shift towards credit cards. But, again, the European banking networks are beginning to block payments to gaming sites. The result is that customers are moving away from their credit cards to direct money transfer solutions. As for the Asian markets, it seems clear at this point that there are again other payment options preferred. Obviously, credit card payments are the optimum method as they are familiar, instant and convenient, but customers are learning that our ACH systems can be just as good. A prime example of this is our Nexum product range that is the best in the business right now. These products feature peerless fraud protection including customer verification and fraud screening tools. We indemnify merchants for transactions and funds are transferred instantly from your customer’s checking account to your website, just like credit cards. Our Nexum product is the most cost efficient checking solution in the industry. Customers are able to transfer funds directly from their checking account to a merchant’s online business, backed by Gateway’s fraud protection services. This immediately eliminates the frustration of high rates of rejection and excessive time used in customer sign up processes and validation. It’s easy to use, very safe and features a customizable player experience. This business is changing all over the world, forced or encouraged by legislation or by the changing preferences of consumers. The good news is that there are already viable alternative payment methods in place and if and when new rules are introduced you can rest assured that Gateway will offer new options for your customers. The nature of your business and the medium through which you operate means that you must be ready to change instantly, because your competitors will react to their customers needs immediately. But that’s ok - you know the ground rules and you have access to the innovators. That’s why your business is growing.

Casino & Gaming International ■ 23

MOBILE MARKET DYNAMICS

ADAPT, DRIVE AND EXPAND – EXPLORING NEW MARKET POTENTIAL IN ASIA BY GARETH WONG

Breaking into a market where regulation of mobile gambling is an even greyer area than online poker in the United States requires sound strategic thinking. The variety of stakeholder interests, both within and outside the country, and indeed how one has to navigate the potential minefields of this market, certainly demands close attention to how the business is unfolding: sustaining investment in this challenging environment, applying informed strategies, energy and resources, is a vital necessity. But with Asia, particularly China, about to become the world’s largest mobile market, what is at stake for the future?

he telecommunications1 industry, particularly as far as the mobile sector is concerned, is highly regulated worldwide, especially in those countries where the industry lifecycle is catching up – notably since the adoption of the Global System for Mobile communications (GSM)2 standard in Asia and the United States. This has enabled countries to build on this process of rapid roaming and, as it were, learn to adopt the best and drop the rest. An example of how this occurs can be seen where the US belatedly adopted the GSM standard, whereas Europe, then Asia, Africa and the Pacific had already done so. The lack of the1800 spectrum in the US, as well as with the enormous market potential easily achieved at scale, made way for the introduction of a new PCN1900 (GSM at 1900MHz in the US, compared to GSM at 1800MHz for the rest of the world) which was well received by the North American market. After several years of negotiation, collaboration and technical development between vendors and mobile telecommunication operators, GSM standard mobiles roamed virtually seamlessly across the world. Cross-border Short Message Service (SMS) sending and receiving in most countries is indicative of this trend. The total number of subscribers to GSM today has reached 1.68 billion of two billion wireless subscribers worldwide. It is hardly any wonder then that there is such interest in exploring the Asian mobile market, particularly since it is over 11 times greater than the nearest combined market, the United States and Canada, with the possible exception of Code Division Multiple Access (CDMA) subscribers. However, with a growth rate projected at about 9.7% for China alone after 20053, “it is expected that 595.46 million

Casino & Gaming International ■ 25

MOBILE MARKET DYNAMICS

Chinese people, 44.18% of the total population, will subscribe to mobile communications services by 2009”. MARKET SIMILARITIES AND COMMON THREADS The following points explain the essential similarities and common threads between the markets: ■ Take up of standards, technologies and services vary within each market. The demand is generally skewed toward certain aspects: 1.) The price when there is over competition (e.g. Hong Kong where there are six mobile operators); and 2.) Some tilt towards business benefits (e.g. Vodafone, with their seamless roaming services and network reliability) or 3.) And toward the trend-setters who combine cost/‘youth image’ (e.g. Virgin mobile, despite being a Mobile Virtual Network Operator (MVNO), tapped into the youth appeal of Virgin). Lack of transparency between price or tariff plans where, due to the bundling and un-bundling of combinations of voice, data, value added services and handset subsidies, it is generally almost impossible to compare the ‘real cost’ of owning and running a mobile in most countries. The market structure of 1.) Direct to consumers (Mobile operator-owned and branded front shops), 2.) Service providers (chain of own branded resellers of multiple

26 ■ Casino & Gaming International

brands/networks), 3.) Online/offline content providers, either through TV, print, or online estates directly to consumers (could be TV stations, branded magazines or TV production companies-owned website/print media surrounding specific TV programmes, like ‘Who Wants to be a Millionaire’), and 4.) Independent shops that sell accessories and value added products/services to the mobile consumers. Consequently, demographics suggest there generally would be varied rather than uniform ownership of specific models of mobile handsets. CULTURAL EQUATION: A PHILIPPINE CASE STUDY Cultural differences are a significant factor in relation to determining the pricing and product/services bundling. For example, in Portugal and Italy there is a very strong ‘cash’ culture where people use ATMs to pay for household bills and other items rather than use credit cards. A company targeting this market with the expectation that high mobile penetration means users will naturally switch to transactions or deposits via this technology, could well be in some trouble unless the national habit were changed. So what constitutes a good market, a country with 46%+ of its population below the poverty line4? It may depend on

MOBILE MARKET DYNAMICS

Chinese

Americans

Conception Of the Self

Collectivist: Higher value placed on group cooperation and individual modesty.

Individualist: Higher value placed on selfreliance. Self-promotion is more accepted. High value placed on "freedom" from externally imposed constraints.

Social Relationships

Formal, hierarchical. People most comfortable in the presence of a hierarchy in which they know their position and the customs/rules for behavior in the situation.

Informal, egalitarian. People most comfortable with their social equals; importance of social rankings minimized.

Friendship

Small number of close, lifelong friends who feel deeply obligated to give each other whatever form of help might seem required.

Large collection of "friends" and acquaintances which changes over time and involves only limited mutual obligations.

Obligation

Relationships with other people involve reciprocal obligations.

People avoid interdependent relationships and situations that might entail long-term obligations.

Task vs. Relationship Orientation

Relationship-oriented: Maintaining a harmonious relationship has priority over accomplishing tasks.

Task-oriented. Relationships are less important than getting the work done.

Harmony vs. "Truth"

Avoid direct confrontation, open criticism, and controversial topics. Concern maintaining harmony and with "face."

Willing to confront directly, criticize, discuss controversial topics, press personal opinions about what they consider "the truth. Little concern with "face."

Role of laws, rules, and regulations

More faith in personal relationships than in written rules and procedures for structuring interactions.

Written rules presumably apply to everyone and are assumed to produce fair, reasonable procedures and decisions.

Time Consciousness

Relatively more attention to the past and to the longer-term future.

Less interested in the past; eye on nearterm future.

Ascribed vs. Achieved Status

Traditionally, a person's status in the society was based importantly on inherited characteristics such as age, gender, and family. This is changing.

People's status is based mainly on their own achievements, including education obtained and level of success realized in their line of work.

the population’s propensity to gamble and how the product/services are priced, while recognising the need, of course, to protect rather than exploit the vulnerable. The pitch and design of service is the key and the first step is to establish what the specific uses are that people make of the mobile. It is a case of applying HSBC’s motto, that one should “Think globally, act locally”. Analysis showing the rate of mobile growth in the Philippines at 43%5 may sound like an unlikely prospect when compared to what we are used to in much of Europe or in Asia today (some countries like the UK had already maximised the market back in January 20056). However, given the percentage of the population that is below the poverty line, that mobile expansion rate begins to look a lot more attractive. Some may argue that the Internet is a channel to this market, but only six per cent of the population are Internet users which therefore makes the mobile sector an all the more interesting proposition.

So, if the market is there for mobile growth, how best should the gaming potential be delivered, via WAP, J2ME (java) or, indeed, via SMS? Well, for a start, this is where local knowledge has a head start in appreciating the possibilities: the Philippines is the SMS capital of the world. Currently, text messaging already dominates communication traffic by a factor of 10:1 (text to voice calls). Mobile data services such as SMS and ring tones provide more than 40% of revenues for the service providers7. Even at the end of 2003 there were 20 million subscribers sending 150 million texts each day8! Therefore, a mobile gaming/gambling product with a value added service and the right pricing for the target audience, could ride on the crest of the SMS wave. It looks, in fact, like the TV stations in the Philippines have done exactly that and shared the revenue with the mobile telecom operators. Most Asian governments do not make public decisions that lead to the regulation of gaming and gambling activities, Casino & Gaming International ■ 27

MOBILE MARKET DYNAMICS

simply because there is enough turn-over in a service that is currently unregulated. The problem with this in today’s world is that it may begin to invite too much unwanted attention from key stakeholders who are in a position to change the dynamics of the market. The lesson is clear for international business: don’t raise expectations too high when targeting new Asian markets; the long view ultimately pays off. Sometimes it is difficult to verify and really qualify how long a company has to invest in a country before they see any return at all assuming business leaders have avoided returning home with their tails between their legs in the meantime. I used to deal with Ericsson a lot in the Asia-Pacific region and this company has been involved in China for a 100 years. The Chinese are, in fact, aware of only two main foreign brands of mobile telephones, namely Motorola and Ericsson. If we were to quantify how long it takes for a gaming operator to ‘break’ into the Asia-Pacific market, there is one good example that illustrates this: Betfair. It started taking bets in Australia without a license from February 20039. Betfair set its sights on the Australian and New Zealand markets for the long haul, but they also aimed to form a partnership with market leaders, like Publishing and Broadcasting Ltd (PBL), with whom they signed a 50:50 joint venture in July 200410. Betfair is the market leader and is recognised as one of the few key front runners in the betting exchange market. However, Betfair has been under a lot of pressure from all sides11 and is bringing in a new betting model as a result, because the company is seen as failing to play by the rules from the point of view of traditional bookmakers. Eventually, Betfair got the license they had pressed so hard for in Australia in November 2005 and Paul Lennon, Premier of Tasmania, made that known in a public speech12. Even with Betfair’s command of resources, connections and agreements, including sending one of the two founders to Australia to lead the charge, it still took the company more than two years to get what they wanted. That is in an industry that has barely 10 or 11 years of history behind it. As was mentioned earlier, due to the high stakes, most of the Asia-Pacific region has not decided specifically on the nature of regulations that should apply to mobile gambling as yet. In other words it is a matter of ‘who dares’, but as to who ‘wins’, that really depends partly on luck and partly on the power of the partners’ influence. The surest way forward is to adopt the method of dipping a toe, as it were. That is to say, gaming operators could launch some skill-based games, or a game show format, to begin to understand and get a feel for the market. In that way a strong link within the market can be built before going ‘all in’. Similarly, it is possible to foresee some collaborative opportunities between governments within and across jurisdictions. Furthermore, due to the offline nature of mobile gambling (e.g. services could be promoted via billboard, print media and TV), the promotion of mobile gambling services could fall under many different regulators’ remits. For example, the UK Government regulator Ofcom13 would officially regulate Telecoms, Broadcasting (TV & Radio) and Radio, but there are also industry self-regulatory organisations like the Advertising Standards Authority14, and icstis15(which regulates the premium rate industry). It is not only important to identify the appropriate partner there is also the issue of identifying key staff, or appointing 28 ■ Casino & Gaming International

the best advisors for the target market. This uncertainty tends to cause companies to err on the side of caution where an historical background of collaboration does not exist. There is also the question of the technological aspects. Knowing what the demographics are, and their appropriate preferences for devices and types of services, payment methods, and the period of time over which they would engage the services, are key factors in the process of devising the ‘killer app’. Before launching a new product/service that is not already available, it goes without saying that it is necessary to plan ahead and seek out relevant market information. Most leading market research firms like Informa or EMC have already established much of the production model: available handsets from each market are already well researched. However, what is really needed is pertinent knowledge of what the users are doing in specific markets. (There are some start-up companies in the market that have begun collecting such data, like M:Metrics, who will be presenting at the next Gambit event). Depending on the mobile market, it is generally divided into everyday essential devices, which has the cheapest tariff, while at the other end of the scale, there is the high-end lifestyle or the business devices/PDAs, like Blackberry or indeed Virtu (premium mobile brand from Nokia). In between there are also, not unusually, mid-market models. The market is complicated further by the diversity of languages and local cultural differences. There are, in fact, similar models of mobiles from the same manufacturers but some have very different firmware. The overall picture complicates further the launch, cost of testing and project planning. Nevertheless, it is not an insurmountable challenge. The key from the gaming operator’s point of view is to identify how to reach either of them with or without the cooperation of the local players. MOBILES, GAMBLING AND THE CHINESE LOTTERY The strong disposition of people in the Asia-Pacific region to gamble is partly why most governments cannot make up their minds about how to regulate the industry while keeping all stakeholders on board. Australia was definitely the leader when it comes to understanding the offline and online gaming gambling world16. However, their chosen remote gambling regulations were not well received, especially when compared to the boom in Caribbean and UK offshore jurisdictions in the same period. The one key licensee in Australia is Lasseters (owner of Hotel Casino in Alice Springs), but their license specifically restrains them from targeting Australia’s citizens. However, given time cultural acceptance and receptivity to the gaming gambling mobile channel format can be tested. As the emphasis has been on the soft aspects of breaking into the Asia-Pacific market, an exclusive focus on China is possible. It is, however, not for everyone. To justify high expectations in revenue results, that must be reflected in superior resources and better business relationships than other competitors. Nevertheless, like the Euro Million Lottery in Europe, where there is a fourteen-million-to-one chance of winning, it is, in fact, still one of the most popular lottery products in Europe’s recent history. If we were to equate China to the Philippines, the market would be 100 times more complex, quite apart from the fact that it is a market economy functioning, strictly speaking,

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under communist rule. There may be an ever-expanding range of books being written on how to get ahead in business in China, but with the present running of the new economy everyone is actually in the same boat as far as being presented with the business opportunities is concerned. (See Patricia McQueen on the Chinese lottery market in International Gaming & Wagering Business [IGWB] February 200619). So how is it possible to know where the real opportunities are and with whom they should work, do we trust what we read in the papers or what companies, whether public or private, are doing? Developing successful business ‘relationships’ over a number of years in China depends very much on judging how close to get to those in power and how well to form connections with those yet to find their way to the apex of power. Hedging bets, in other words, is a significant constant of business risk in China. The Chinese lottery is a prime example of some of the new joint ventures currently being established within its lottery market, involving some high profile public companies including western firms. There are privately-owned operators in the same sector that have high operating revenue percentages to share with their joint venture partners. It is higher than those publicly listed firms which have less than one per cent of the revenue shared together within their operation. A consequence of this interest has been to draw too much publicity around the public companies, which has led the Chinese government to begin slowing down the roll out of the offline lottery centres. Similarly to what has previously transpired in the Philippines, the rules might just be changed (in this case it could be unilateral without needing any outside approval), which means the landscape of the Chinese lottery market could be dramatically altered. Mobile growth through the massive lottery market in China is, of course, unfolding in the medium term, since China Gloria Lottery technology already links users through the process of ‘checking’ their lottery results. The venture is partly owned by China Gloria Industry Investment20 and has government backing. They are probably in a better position than any of the other foreign firms that aim to move into the mobile lottery market. But of course, there may still be opportunities for forming join ventures with selected partners that are capable of bringing something new to the scene. BUILDING BRIDGES AND SECURING BUSINESS Understanding cultural practises in China is vital to the business process. This can be explored by representing the issues in a number of ways. The chart is an example of how differences can be discerned. (Li Qing’s presentation (p27) is listed in the References21. Another important source is the Aguilar and Stokes publication, also listed in the references.) There is no substitute for engaging agencies of government and industry which facilitate missions to encourage mutually beneficial trade. This tried and tested route is essential when it comes to moving into the Asia-Pacific mobile gambling market. There is, however, no substitute for engaging government and industry which facilitate missions to encourage mutually beneficial trade. This tried and tested route is essential when it comes to moving into the AsiaPacific mobile gambling market, and the major obstacles tend to concern regulatory status. At present, the advantage lies with indigenous business enterprise. But in all business

matters, even if the company’s financial base is limited, if you are prepared to accept the risks in an unproven market, the rewards can certainly be great. This is, after all, the world’s largest market with tremendous prospects for the patient. 1 2

3 4

5 6

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Section on Mobile gambling, within the Internet Gambling Report, IIIV edition, July 2005, ISBN 0-9717718-3-9 Global System for Mobile Communications within ETSI and collaborated within ITU, which was devised through the collaboration of government agencies, equipment manufacturers and also mobile operators, initially within Europe. www.itu.org Chinese Mobile Market Forecast and Carrier Strategy 2005-2009, Full Year 2005, Research On Asia, Group, Inc., March 2005 According to United Nations, statistical institute for Asia and the pacific (SIAP), between 1990-2001, 46.4% of Philippines’ population has less that $2 a day income. The Next Phase, Philippine Business Magazine: Volume 12 No. 9 Technology Mobile Data Association (MDA) announced that mobile penetration in the UK market has exceeded 100%, based on contract and pre-paid subscriptions. 25 January 2005 Philippines Mobile and Mobile Data Market - Outlook to 2010, Asia Pacific Research Group, November 2005 Text Craze, Philippine Business Magazine: Volume 10 No. 10 – Technology The legitimised business of text gambling, Manila Times, 1 September 2003 We’ll regulate, not engage in, mobile phone gambling—Pagcor, INQ7.net, 14 April 2005 PBL punts on Betfair wagering revolution, The Age, 23 July 2004 Betfair races into Aussie market, BBC, 22 July 2004 Battle of the bookies, BBC, 2 June 2004 Betfair licensing agreement, from The Premier’s Desk Episode 338, 7 November 2005 http://www.premier.tas.gov.au/desk/ep338.html http://www.ofcom.org.uk http://www.asa.org.uk Independent Committee for the Supervision of Standards of the Telephone Information Services http://www.icstis.org.uk The inquiry report Australia’s Gambling Industries was released on 16 December 1999, Australia Government, Productivity Commission http://www.igwb-digital.com/igwb/200602/ http://www.chinagloria.com http://www.china.nafsa.org/references.htm

GARETH WONG Gareth Wong founded GamBond (www.GamBond.com) in 2004 and the Gambit (www.TheGambit.info) special interest group, formed in conjunction with Cass Business School, which organises both public and private forums attracting key industry players. This year Gareth founded the Gaming Money Summit (www.GamingMoneySummit.com), which took place at the London Stock Exchange (co-sponsor), and launched a private collaborative network of influential cross-sector companies: (www.CXOEurope.org). For over 10 years he worked in the B2Btelecom market with mobile operators in EMEA and Asia-Pacific regions. He specialises in identifying and securing market niches and has devised a number of specialised products and services (see www.GarethWong.com). He was awarded an Executive MBA from Cass Business School in London, an MSc in Telecommunication Technology from Aston University and the BEng (Hons) from Liverpool University.

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INTERNET GAMBLING LEGISLATION: INTO LAW OR THE GRAVEYARD? BY JOE KELLY

Since the mid 1990s, anti-Internet gambling bills have been introduced into the U.S. Congress but have not been enacted into law. The arguments used by many of their Christian right supporters are reminiscent of those 17th Century Puritans who were terrified that someplace somewhere somebody was having fun.

resently, there are three bills before or about to be introduced in the 109th Congress that would penalise Internet gambling operators who accept customers from the United States. One reason for prohibition is that U.S. laws concerning Internet gambling are unclear, and the number of Internet gamblers from the United States has continued to increase drastically. The Justice Department has consistently opined that statutory law, dating from the 1960s, prohibits offshore gaming operations. The Wire Act, the statute primarily relied upon by the United States Department of Justice (DOJ) to support its argument that all interactive gaming is illegal under federal law, prohibits the use of wire communications for transmission of sports bets or wagers, or information assisting in the placement of such bets or wagers, in interstate or foreign commerce, unless the transmission is a news report of a sporting event or contest, or information relating to sports betting that is legal in both the state from which it was sent and the state from which it was received. See 18 U.S.C. § 1084(a) and (b). Case law from federal courts has questioned whether these laws actually prohibit most interactive gambling transactions. For example, in In Re MasterCard (313 F.3d 257, 5th Cir. 2002) the Court of Appeals held that the Wire Act of 1961(18 U.S.C. § 1084) only prohibited interactive sports betting. The Justice Department had not been a party in this case and disagrees with the decision. Although In Re MasterCard supports the arguments that have been made that the Wire Act should be narrowly construed to concern only sporting events and sporting contests, and not encompass traditional casino games or other games of chance, the DOJ has taken the position that the Wire Act prohibits any wagering activity accomplished by use of any

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electronic communication. Therefore, it believes the Wire Act and other related federal law could be applied both inside and outside the United States to prosecute an operator of an online poker wagering site. Still, it does create a reasonable doubt has to whether a federal law was violated by interactive casinos that accept U.S. customers. While the U.S. has a federal system of law, the Attorneys General of 49 states (Nevada, where gambling is the state’s major industry and largest employer, is notably absent from this request) want the federal government to ban Internet gambling because “Internet gambling transcends state lines and should be addressed federally.”i Anti-Internet gambling bills have been introduced in Congress since 1995 when Sen. Jon Kyl (R. Arizona) introduced a bill that died in committee in the 104th Congress. Generally, subsequent bills have been introduced since then by Rep. Robert Goodlatte,(R. Virginia) a conservative, Rep. James Leach, (R.Iowa )a moderate; as well as Senator Kyl, a conservative. In the House of Representatives, the bills are referred to committees such as the Judiciary for revisions and amendments. In the Senate, Sen. Kyl has often attempted to attach the bill to some other measure in order to prevent revisions or amendments. The bills often target financial transaction providers such as credit card companies or the Internet service providers (ISPs). The bills basically were unsuccessful because of the “poison pill” dilemma. If an anti-Internet gambling bill did not grant exemptions for powerful interest groups such as the horse racing and the state lottery interests, the bill would be dead. In December 2000, the Interstate Horse Racing Act (15 U.S.C 3001 et seq.) was amended so as to allow state licensed interactive pari-mutuel wagering limited to horse races, which supported existing powerful interactive, interstate horse racing companies. If any bill did grant exemptions to these horse racing interests or state lotteries, the bill would be criticised by some fundamentalist religious groups as well as the U.S. Department of Justice for expanding Internet gambling. Both Reps. Goodlatte and Leach would have preferred no exemptions, but recognise political reality. In 2003 Leach stated, “I would be all for a bill with no exemptions [but a strict ban] wouldn’t move.” Goodlatte, likewise stated, “I would ban all gambling if I could … but it wouldn’t pass the Congress.”ii In the 106th Congress, Rep. Goodlatte, one of the congressmen most vehemently opposed to Internet gambling, introduced an anti-Internet gambling bill (H.R. 3125), which contained exemptions for horse and dog racing, and any future interactive state lottery. On June 7, 2000, a House committee eliminated by a 24 to 11 vote the state

>> It is doubtful whether any bill will be enacted into law given the short remaining time in the 109th Congress and the lack of interest in this topic by most members of Congress. The bills do have one impact—a drastic lowering of publicly traded stocks on the London Stock Exchange of the interactive gaming companies that accept U.S. customers on the day the bill is introduced to Congress or is approved by a Congressional committee >>

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lottery exemption. Goodlatte then decided to utilise a special procedure that would mandate a vote before the entire House of Representatives without allowing a lengthy debate and amendments that would have killed the bill by further eliminating exemptions. However, a required two-thirds vote for this special procedure failed on July 17, 2000, by 25 votes less than the required two-thirds (245-159). One hundred sixty-five Republicans and seventy-nine Democrats voted for the bill. Forty-four Republicans and one hundred and fourteen Democrats voted against the bill. There was some surprise that the bill was not passed. At the time it was noted that the members from states with strong lotteries were more likely to vote against the bill than

non-lottery House members. Opponents of the bill did include entities such as the U.S. Justice Department who were concerned that the bill does not really prohibit Internet gambling, but rather facilitates certain types of gambling from the home and, therefore, arguably expands gambling opportunities. Specifically, the Department recognises that H.R. 3125 exempts parimutuel wagering from the prohibition against Internet gambling. The result is that people will be able to bet on horse racing, dog racing, and jai alai from their living rooms.iii Some staff of Democratic congressmen who were opposed to the Goodlatte Bill gave credit to a conservative Republican, Rep. Christopher Cox from California, who did not like the provisions in the Goodlatte Bill that he believed would have required Internet service providers to become Internet cops.iv Cox asserted: “[T]he bill would unfairly make Internet service providers and search engines and other interactive service providers, ISPs, who have nothing to do with gambling, … it would make them responsible for policing the behavior of their subscribers… [T]his bill would have the federal government dictate, indeed amend, the terms and conditions on which ISPs today offer service. It would require that every ISP terminate the account of any subscriber who is suspected of using the service to gamble… [T]he bill contains price controls. It requires every ISP to offer gambling filtering software at, quote “reasonable cost,” putting the federal government in an unspecified way in charge of determining what is a reasonable price for filtering software.v Goodlatte, at the time, blamed the opposition of the democratic Clinton administration for the bill’s defeat.vi Later, with the disclosure of the Abramoff/DeLay scandals, Goodlatte blamed the defeat as the result of lobbyist Jack Abramoff’s efforts. This legislation, which was previously introduced in the 106th and 107th Congresses, was derailed after Jack Abramoff led a lobbying effort against the legislation. The original legislation received support from more than sixty percent of the House of Representatives but fell victim to Abramoff’s campaign of misinformation and lacked the twothirds required for passage under suspension of the rules. Abramoff’s total disregard for the legislative process has allowed Internet gambling to continue thriving and it’s now a $12 billion industry.vii Admittedly, there might be some truth in the “Abramoff conspiracy theory.” For example, the supporters of Internet gambling prohibition convinced Christian Right spokespersons such as Rev. Pat Robertson and Rev. Jerry Falwell to support the bill even though it had “minor” horse racing exemptions, but the Christian Right refused to exempt state lottery interests. A powerful lottery company, ELottery Inc., had retained Jack Abramoffviii who recruited the Christian right spokesperson Ralph Reed to help defeat the bill by claiming the horse racing exemption would actually expand interactive gambling. Through direct mail and other tools, Reed’s task was to persuade religious conservatives in the districts of wavering congressmen that the exemptions agreed to by Pat Robertson and the others had turned the ban on Internet betting into an endorsement of gaming. ELottery paid Abramoff’s firm $1.15 million to defeat the Internet gaming ban. Expense money from eLottery was routed to Reed’s firm Casino & Gaming International ■ 35

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through two organizations. Documents and copies of e-mails from Abramoff, obtained by The Washington Post last year, documented the flow of cash.”ix Moreover, Abramoff paid $25,000 to Rev. Lou Sheldon of the Traditional Values Coalition to ensure the bill’s defeat by pressuring “about 10 social conservatives in their home districts, accusing them of being soft on gambling for supporting Goodlatte’s bill.”x Goodlatte again introduced in the 107th Congress the “Combating Illegal Gambling Reform and Modernization Act (H.R. 3215) on November 1, 2001, which targeted credit cards rather than ISPs. Interstate horse racing interests and supporters of state lotteries supported the bill, since it had carve-outs and exemptions for those powerful interests. The bill, specifically, would have allowed purchase of lottery tickets through an electronic communications device located at a retail outlet, but not permit purchase of lottery tickets from the same type of device in a person’s home.xi In fact, Rep. Goodlatte was proud that his bill was “supported by pro-gambling groups, such as the National Association of State and Provincial Lotteries and the National Thoroughbred Racing Association, because the legislation protects states’ rights.”xii H.R. 3215 was referred to the Judiciary Committee, which is often the graveyard of anti-Internet gambling bills. An opponent of the bill managed to use the poison pill to kill the bill by proposing an amendment that eliminated the exemptions. When these exemptions were struck in June 2002, the Goodlatte bill was dead and never was voted on by the entire House. A different bill, the Leach Bill (H.R. 556), was approved by a voice vote in the waning days of the 107th Congress with little expectation that there was time to approve a similar bill in the Senate. In the 108th Congress, Cong. Jim Leach introduced an anti-Internet gambling bill on January 7, 2003 (H.R. 21, Unlawful Internet Gambling Funding Prohibition Act), but the bill died in the House Judiciary Committee when the carveouts were eliminated by a 16 to 15 vote. Another bill introduced on May 19, 2003, by Cong. Spencer Bachus (The Unlawful Internet Gambling Prohibition Act) (H.R. 2143), which circumvented the Judiciary Committee by not having criminal penalties, actually managed to be approved overwhelmingly by the House of Representatives. It narrowly survived a poison pill amendment on June 10, 2003, which would have eliminated the exemptions for state licensed operations.xiii A companion bill in the Senate, the Kyl Bill (S. 627), never managed to be voted on by the entire Senate since Sen. Harry Reid blocked a vote because it contained a state interactive lottery exemption.xiv In the 109th Congress, two bills have been introduced in the House of Representatives, viz., the Leach Bill (H.R.4411) and the Goodlatte Bill (H.R. 4777) and one bill is about to be introduced in the U.S. Senate. It is doubtful whether any bill will be enacted into law since the 109th Congress will effectively end by the end of this December. In past congresses, anti-Internet gambling bills have been subject to debate and amendments during the first year of any two-year session. The Leach Bill, which presently has 34 cosponsors (“Unlawful Internet Gambling Enforcement Act of 2005”) was introduced on November 18, 2005, and was referred to the House Committee on Financial Services. On March 15, it was approved by the committee, and it is now before the House Judiciary Committee. It specifically targets those in the “business of betting or wagering” who accept “financial 36 ■ Casino & Gaming International

interest” payments from credit cards, checks, or electronic fund transfers (sec. 5363). The bill states that the “business of betting or wagering” does not include a financial transaction provider (sec. 5362(2)) unless it operates or controls an online gaming facility (sec. 5367). The bill has carve-outs for interstate horse racing and its “intermediate” routing facilities (sec. 5362(a)(D)(E)), and Native American interactive gaming (sec. 5362(9)(C)). There is no exemption, however, for interactive, interstate lotteries. Criminal penalties were increased from two to five years imprisonment (sec. 5366). The second bill is the Goodlatte Bill (H.R. 4777, the Internet Gambling Prohibition Act), which was introduced on February 16, 2006, has 130 cosponsors, and was referred to the House Committee on the Judiciary. The bill would amend the Wire Act definition of bet and wager to include a lottery and “the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game predominantly subject to chance, upon an agreement or understanding that the person or another person will receive something of greater value than the amount staked or risked in the event of a certain outcome” (sec 2(3)) (emphasis added). The bill has no exemption for an interactive, interstate lottery.xv There are exemptions for Native American wagering (sec. 3(d)) and interactive horse racing (sec. 3(f)). It also increases criminal penalties to five years imprisonment (sec. 3(a)). The bill essentially would criminalise offshore gaming activity such as casinos, which presently operate in a gray legal area, but might not criminalise interactive poker, which is a game that is not predominately subject to chance. No one believes that this will increase criminal prosecution of offshore gaming operators, but it may have a chilling impact on advertisers and financial transaction providers in the U.S. who might be accused of aiding and abetting criminal activity by assisting interactive casinos or poker operators. Interestingly, among the 130 cosponsors of the bill is Tom DeLay, formerly the powerful Republican Whip who is presently under indictment. DeLay had voted against the Goodlatte Bill in 2000(H.R. 3125) because “exemptions for Jai Alai and horse racing might have expanded gambling.”xvi He has not explained how he can support Goodlatte’s present anti-Internet gambling bill that contains more carve-outs than any other bill. Finally, Sen. Jon Kyl is due imminently to introduce a bill in the Senate. Kyl had failed in September 2005 to attach his “Unlawful Gambling Enforcement Act of 2005” to an appropriations bill. The Kyl Bill was cosponsored by Sen. Mark Pryor (D. Arkansas). The bill is almost identical to the Leach Bill except that it contains no criminal penalties and no provision for civil remedies. Since it does not contain a carveout for future Internet state lotteries, it may not incur the opposition of the powerful Sen. Harry Reid who killed the last Kyl Bill. Sen. Kyl had hoped to attach his bill to the Lobby Reform Act (S. 2349), but the bipartisan managers of that bill will not allow any non-germane amendments/attachments. There have been bills introduced into Congress that might have regulated and taxed interactive gaming operators. They got nowhere. The U.S. Justice Department has also prevented the U.S. Virgin Islands from implementing interstate, Internet gambling legislation and has stopped North Dakota from legalising interactive interstate poker games.

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It is doubtful whether any bill will be enacted into law given the short remaining time in the 109th Congress and the lack of interest in this topic by most members of Congress. The bills do have one impact—a drastic lowering of publicly traded stocks on the London Stock Exchange of the interactive gaming companies that accept U.S. customers on the day the bill is introduced to Congress or is approved by a Congressional committee.xvii The bills might also have one other effect—they fly in the face of the Arbitrator’s award/decision in the dispute between Antigua and the U.S. before the World Trade Organisation that the U.S. had until April 3, 2006,xviii either to prohibit interactive horse racing or allow foreign entities access to the U.S. market. The U.S. exemptions in the three bills are a clear violation of GATS.xix This was clearly explained by the Antiguan representative to the WTO in a February 16, 2006, letter to the U.S. Trade representative. As of today, with less than two months remaining on an 11 month and two week compliance period, to our knowledge no legislation has been introduced into the Congress that would seek to bring the United States into compliance with the DSB [Dispute Settlement Body] recommendations. Further, your government has given no indication to Antigua and Barbuda as to how the United States intends to effect such compliance. The only legislative efforts so far, the Goodlatte Bill and the Leach Bill, are baldly contrary to the rulings and recommendations of the DSB. All three bills target interactive gambling operators who accept U.S. financial transactions. Yet, it is rare “to find a U.S. credit card that can be used to deposit funds at an online casino.”xx Furthermore, with the exception of Pay Pal, which no longer services the U.S. interactive gaming industry, the major eleven e-processors of financial transactions are located outside the United States (six in Canada, two in London, one in Germany, one in South Africa, and one without an area of identification).xxi Experts thus believe the transaction payment restrictions will have little effect since credit and debit card transactions have already fallen from up to 90 percent of payment processing in 2002/2003 to below 50 percent.23

i ii iii

iv v vi

vii viii ix

“Attorneys General for 49 States Seeking Congressional Help,” Journal Record Legislative Report, March 23, 2006. “Casinos Seek Deal on Internet Gaming Bill,” Roll Call, Oct. 22, 2003. Kevin DiGregory, Deputy Assistant Attorney General, U.S. Department of Justice House Testimony on HR 3125 (the “Goodlatte Bill”), June 15, 2000. Cox is now head of the Securities and Exchange Commission. He has an impeccable reputation for integrity. Remarks during debate on the Goodlatte Bill, July 17, 2000, http://thomas.loc.gov. The Clinton administration opposed the bill because of the horse racing and other exemptions that would allow wagering from the home of individuals, which would give “children and other vulnerable populations unsupervised, unlimited access to such gambling activities.” Statement of Administration Policy, Office of Management and Budget, July 17, 2000. Vice President Gore opposed the bill because it could expand gambling. “Gore Against Online Gambling Ban,” Las Vegas Review-Journal, July 3, 2000. “Congressman Goodlatte Reintroduces Legislation to Prohibit Online Gambling,” Press Release, Feb. 14, 2006. “Reed Fought Ban on Betting,” Atlanta Journal, Oct. 2, 2005. “E-mails Undermine Reed Claim,” Cox News Service, March 4, 2006.

“’Lucky Louie’ Throws the Dice,” San Francisco Chronicle, Jan. 8, 2006. House of Representatives Committee Report, 107-591 p3. Cong. Bob Goodlatte, “Viewpoints: On Sponsoring the Bill to Enact the Combating Illegal Gambling Reform and Modernization Act,” (6)(1) Gaming Law Review (2002) at 2. xiii The Amendment vote that failed (186-237) was actually much closer(202-221) since certain representatives switched votes after the tally to be on the successful side. xiv Washington Internet Daily, Aug. 1, 2003. Nevada is one of a minority of states that has no lottery. A Senate committee did eliminate the state lottery exemption. xv Goodlatte, in an interview, stated that his bill would not permit an intrastate online lottery because it is technologically not feasible to exclude minors. “Online Gambling Controversy,” CEO Wire, Feb. 16, 2006. xvi “Records on DeLay U.K. Trip Sought,” Austin American-Statesman, Feb. 2, 2006. xvii “Online gaming shares plummet as U.S. lawmakers threaten clampdown,” The Independent, Feb. 15, 2006; “Threat of American crackdown on online gaming hits shares: U.S. politicians want to curb the industry but legal fog and lobbyists may save it,” The Guardian, March 17, 2006; this was after the Leach Bill was approved by a House committee. xviii “United States—Measures affecting cross-border supply of gambling and betting services,” WT/DS285/13, Award, August 19, 2005. xix “Antigua accuses U.S. of being unfair in its effort to ban Internet gambling ”Financial Post ,March 18,2006 xx Comments of Rick Smith, Executive Director of the Interactive Gaming Council. “Online Gaming—Regulation or Prohibition,” Morgan Stanley Research, Feb. 16, 2006 at 4 xxi Information provided by the Interactive Gaming Council. xxii “Online Gaming—Regulation or Prohibition,” Morgan Stanley Research, Feb. 16, 2006 at 2. xxiii “Online Gaming-Regulation or Prohibition”, Morgan Stanley Research, Feb. 16, 2006 at 2. x xi xii

JOSEPH M. KELLY Joseph M. Kelly, Ph.D., J.D., is a consultant with Catania Consulting Group and a Professor of Business Law at SUNY College at Buffalo. He is licensed to practice law in Illinois, Nevada, and Wisconsin. He is also coeditor of Gaming Law Review. Dr. Kelly has been a speaker on gaming topics throughout the world, including Berlin, Barcelona, Madrid, Cannes, Edinburgh, New Delhi, Australia, Costa Rica, South Africa, and Switzerland. He has written extensively on British, German, Native American, West Indian, and Internet gambling law. His law review publications have been cited as authority by federal district and appellate courts, as well as state appellate and supreme courts, e.g., Confederated Tribes v. Johnson, 958 P.2d 260 (Wash. 1998). Dr. Kelly’s article on Internet gambling law has been cited in the chapters on Internet gambling by The Gambling Review Report, which was presented to Parliament by the Secretary of State of Culture Media and Sport in July 2001. He co-authored Antigua’s interactive gambling regulations and had been a consultant for Antigua in Washington D.C.

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REGULATION IN EUROPE – QUO VADIS?

BY MARTIN ARENDTS

The Federal Constitutional Court of Germany declared the state monopoly’s hold on sports betting, under the brand name ODDSET, to be unconstitutional on 28th March. In the absence of serious gambling addiction and social responsibility policies, something that is currently regarded as unlikely ever to be addressed in reality, the Court considered the state monopoly a violation of the constitutional right of freedom of occupation for aspiring sport betting bookmakers. The implications of the ruling in relation to casino gambling are also indicated given the possibility that bookmakers suggest there is likely to be a liberalisation of the legislation due to strong public demand for regulation. The Court has charged legislators with formulating a framework by 31st December 2007.

A YEAR OF DECISIONS This is a year of fundamental legal decisions which might well significantly change the gambling market in Europe. State operators will have to radically reduce the advertising and marketing of their gambling products or they will lose their comfortable situation as the only legal provider under national law. The status quo of fragmented regional and national markets will probably not survive in the years ahead. On the other hand, private operators will have to begin accepting ‘responsible gaming’ and not simply regard it as a trendy perception. Decisions, both on the national as well as European level, will continue to show the growing inter-dependence between national and Community law. The European Court of Justice, in its Gambelli decision of 2003, highlighted that public policy on betting had to be systematic and coherent. Otherwise, any restriction on the freedom to provide services would not be justified. In the meantime, the Gambelli Criteria, in particular the consistency test, have been applied not only to betting, but also to the introduction of a monopoly with regard to gaming machines (EFTA Surveillance Authority v. Norway) and on Holland Casino´s monopoly in the Netherlands (District Court of Breda decision, 2nd December 2005). The Court of Breda considered that the Dutch state does not carry out a policy aimed at protecting customers and highlighted the lack of reliability of recent research on gambling addiction, as well as the intensive marketing policy of Holland Casino. The Dutch State cannot rely on the general interest argument to justify restrictions and to make it impossible for private operators to access the Dutch market. The consistency test, in terms of German constitutional law, has also been used by the German Federal Constitutional Casino & Gaming International ■ 39

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Court (Bundesverfassungsgericht) in its recent landmark decision on sports betting. Fiscal reasons were found to be irrelevant in upholding a monopoly, both under Community law and constitutional law. So, the outlines of European gambling regulation have been evolving, although gambling has not been included in any European Union (EU) directive yet. Gambling was expressly not included in the Directive on Services in the Internal Market. Also, gambling was excluded from the Electronic Commerce Directive. This means that the country of origin principle does not apply to gaming operators, although the European Court of Justice, in its Gambelli decision, referred to regulation entailing controls and penalties in the Member State where the bookmaker is established. Furthermore, competition law might play a crucial role for the opening of the gambling and betting market. The German Federal Court of Justice (Budesgerichtschof), in its Faber decision, already held a few years ago that the cartelising of state operators in the Deutscher Lotto- und Toto-Block was problematic. The German Cartel Authority recently pointed out that the remaining private competition had to be protected. The Deutscher Lotto- und Toto-Block must not dictate the conditions of distribution. On the European level, the Commission ordered a comprehensive study on the gambling market. Offering gambling cross-border services in the EU has become more and more important. However, the market is still fragmented. While technical barriers are gone thanks to the Internet, new legal barriers have been built up. In recent years, there were several criminal proceedings against licensed operators from other EU Member States (one against Stanley International Betting Ltd. and its Italian agents leading to the famous Gambelli decision of the European Court of Justice). Bank accounts of Austrian bookmakers were frozen in Germany based on the argument that offering cross-border sports betting from Austria to Germany constitutes â&#x20AC;&#x2DC;illegal gamblingâ&#x20AC;&#x2122;, a serious criminal offence. Apart from that, also state operators are trying to bar foreign operators. The Deutscher Lotto- und Toto-Block is still attempting with all the means at their disposal to prevent cross-border offerings. Alongside intensive political lobbying, members of the Block sued almost all private operators from other Member States, invoking unfair competition and breach of trademarks. The European Commission has recently sent letters of formal notice to seven EU Member States (Denmark, Finland, Germany, Hungary, Italy, the Netherlands and Sweden), requesting information on national legislation and measures restricting the supply of sports betting services. The Commission will use the information to review its compatibility with the free movement of services. The Commission will check in particular whether the restrictions on the free movement of services are justified by the protection of the general interest and whether the measures are proportionate and non-discriminatory. The Commission has for sometime examined the situation, based on complaints by several bookmakers who were effectively barred from entering the market. The complaints concern, in particular, the prohibition of advertising sports betting services (in Germany a criminal offence according to Art. 284 par. 3 German Criminal Code) and the prohibition on placing bets with a bookmaker, 40 â&#x2013; Casino & Gaming International

licensed in another Member State (in Germany, customers are committing a crime according to Art. 285 German Criminal Code, punishable by up to six months imprisonment). FEDERAL CONSTITUTIONAL COURT ON SPORTS BETTING The landmark decision of the German Federal Constitutional Court of 28th March 2006 in the longer run will probably change the gambling market quite dramatically, although the state monopoly was upheld for a transitional period (which is possible only under German law, not under Community law). However, the state monopoly in its current form was clearly held to be unconstitutional and incompatible with the basic

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right of freedom of Profession (Art.12, German Constitution). Fiscal reasons, even for the promotion of sports, cannot justify the state monopoly. The current legal situation and exercise was held to be incompatible with the German constitution. The regulation was not coherent and sportsbetting was effectively marketed by the state operators as a ‘generally harmless leisure activity’, mainly motivated by (irrelevant) fiscal reasons. There are no structural safeguards, eg a neutral control authority, that fiscal reasons should preponderate over the containment of gambling. According to the Constitutional Court, the state monopoly with regard to sports betting can only be justified by fighting gambling addiction effectively – something that has not been practised by the state operators thus far.

Instead of declaring the act in question – the Bavarian Act on Lotteries (Bayerisches Staatslotteriegesetz) – to be null and void, the Court ordered the legislator to change the law. The law governing sports betting must be reconsidered and amended until the end of 2007. The amendments do not necessarily have to be implemented by the German states, but may also be implemented on the federal level. The legislator may choose between two ways to regulate sports betting. He may either keep the state monopoly, but with clear limitations for marketing and sales, or he may liberalise the market by opening it up to private operators (thus abandoning the state monopoly). Until then ODDSET, the sports betting offering of the state operators, must not advertise anymore, but the state operators may only report factually on the state betting offer. The state operators are also not allowed to introduce new products. From my point of view, the Court pointed out both alternatives because of its respect for the legislator. Being inefficient as well as pushing customers towards Internet betting operators, a ‘castrated’ monopoly with limited sales and prohibition on advertising would probably only pretend to constitute a real option. As the Court raised the bar this high, the state offer would not be able to survive in the market. Initially, state operators greeted the decision, since they hoped that politicians were committed to maintaining the monopoly. The state operators rightly expected that the states would try to close down the existing betting shops collecting bets for private operators (mainly from Austria, Malta, Gibraltar and the UK). In my opinion, the consequences of the decision for the gambling market will not be so enjoyable for the state operators in the longer run. Ultimately, a state monopoly accommodating all forms of gambling (except betting on horse races), as in Germany, can only be justified by fighting gambling addiction, the only common welfare criteria left according to the decision of the Federal Constitutional Court. In this context the Constitutional Court pointed out that the danger of addiction is far higher for gambling machines and casino games than for sports betting. Ultimately, this can be understood as a call to amend the laws regarding gambling machines. The extensive advertising run for state lotteries so far is unconstitutional in the light of the Constitutional Court’s remarks. Following the Court’s reasoning, one has to call either for a constitutional reduction in state advertising (with only lean information about the product to be promoted to customers) or allow private operators access to the market. Nearly all other state operators in Europe have, at least in some respect, gone too far and allowed their profit to predominate over their key objective of limiting and controlling gambling. In the Italian market for example, lottery operators are publicly traded companies focusing, above all, on shareholder value and less on gambling controls. UPCOMING DECISIONS OF THE EUROPEAN COURT OF JUSTICE AND THE EFTA COURT Several Italian follow-up cases to Gambelli (i.e. Placanica, case-no. C-338/04) have been pending before the European Court of Justice since 2004, after an increasingly inconsistent jurisdiction on this subject had emerged in Italy. The Court may use these cases in order to further clarify the Gambelli Casino & Gaming International ■ 41

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>> A change of the status quo is inevitable. The European Union might play a decisive role. It is unlikely that Member States will adopt, on their own initiative, fair betting regulation in the near future… So the Commission should propose harmonised rules in this field, which would meet the same consumer protection and public order objectives as under the exclusive rights system. With harmonised rules betting and gaming can be conducted in a fair, crime-free and socially responsible way, on a par with other businesses >> Criteria as they have been grossly disregarded by some national courts. The European Parliament’s recent decision to exempt gambling from the Services Directive represents a political compromise and does not signify that the freedom to provide services and the Gambelli Criteria do not apply to gambling anymore (as several state operators have argued). As mentioned, Germany and other Member States sealing off their markets are now facing Infringement proceedings. In the court trails fallowing these proceedings, the European Court of Justice is not limited to the questions referred to in preliminary proceedings, but can comprehensively comment on the whole issue (in particular on competition law). As the Gambelli decision unfolds, it has an effect outside the EU. Parallel to the provisions of the EC Treaty, the freedom to provide services is guaranteed by the Treaty on the European Economic Area between the EU and the EFTA Member States. The EFTA Surveillance Authority brought an action against Norway on 13th March 2006, after the Norwegian government had failed to comply with a reasoned opinion of the Authority (case-no. E-1/06). The Court will have to decide on a national monopoly on gaming machines granted to state-owned Norsk Tipping. As the workload of the EFTA Court (which only has to deal with Norway, Iceland and Liechtenstein) is not so heavy, a decision might be announced quite soon. WHERE TO FROM HERE? At the moment, there is no mature and thoroughly workedout legal concept for regulation of gambling services at the European level. It might be helpful to look at how other business sectors are regulated. Clearly, securities regulation is decades ahead of a European regulatory framework for gambling. This is strange as some gambling products, like spread betting and financial bets, converge with the financial and insurance sectors. In the era of globalisation, national monopolies are outdated. Recent case law has shown that outlawing private operators will not work in the longer run. There is a simple truth about betting and other forms of gaming: you can make it illegal, but you cannot make it unpopular. Outlawing all private operators also poses a quite practical problem. You can only regulate what is legal (and effectively tax, which is sometimes even more important for the state). So, from my point of view, a change of the status quo is inevitable. The European Union might play a decisive role. It is unlikely that Member States will adopt, on their own initiative, fair betting regulation in the near future (except for Germany which will have to follow the guidelines of the Constitutional Court). So the Commission should propose 42 ■ Casino & Gaming International

harmonised rules in this field, which would meet the same consumer protection and public order objectives as under the exclusive rights system. With harmonised rules betting and gaming can be conducted in a fair, crime-free and socially responsible way, on a par with other businesses. In the past, private operators were well ahead of state operators with regard to dealing with gambling addiction. Customers were allowed to set limits to their wagers. Also customers could block themselves either temporarily or permanently. If you look at the financial sector, highly regulated services can be offered in a very competitive and reliable way. However, the prerequisite for this is a level-playing field for all operators. Liberalisation of the gaming market would certainly benefit the customers. Competition would mean higher pay-outs. Customers would also be encouraged to have a closer look at the products and to make comparisons. The main aim should be to safeguard honest and fair gaming.

MARTIN ARENDTS Attorney-at-law Martin Arendts, M.B.L.-HSG, is founder of ARENDTS ANWÄLTE, the leading law firm for gaming and betting law in Germany (www.gaminglaw.de). He is an expert in gambling law, Community law and securities regulation. Mr. Arendts regularly speaks at international gambling conferences and publishes on gaming and betting law (co-author of the Internet Gambling Report, chief editor of German Gambling Law updated). He is engaged in several civil, administrative law, criminal, unfair competition and trademark proceedings on cross-border internet gambling before German courts.

CASINO DESIGN

VISION, PLAN & REALITY: PUSHING NEW FRONTIERS BY STEPHEN LAWTON

In pursuit of the ultimate casino, the expertise of design professionals has never been more significantly engaged. This is, after all, both a riot for the imagination and a highly attractive challenge: there is fertile ground for new ideas and concepts; unusual scope for professional interaction; demands for a highly crafted client environment; and irresistible levels of financing to make it work in the subtlest of ways. Such ideal circumstances, rarely as compelling as it is today, produces some of the more imposing landmarks with many soon to emerge from the drawing board. The inaugural G2E Institute conference in May, bringing formerly separate annual casino design and racino/gaming & technology events together, provides an opportunity to explore the implications of what it takes to move from vision to plan to reality.

fter just a few short decades and very much in keeping with leisure and tourism growth worldwide, casinos are setting down in some of the most challenging locations. Its virtually uninterrupted success globally is providing the means for pushing out the boundaries of gaming possibilities, almost to the four corners of the world. The strategists and visionaries at the helm sometimes appear almost as though charged with engineering an alternative way of life, from embracing everything under one roof to mapping out ‘casino cities’ where gaming is a vital part of the nerve centre rather than a singular, focal attraction. Frontier geographies, meanwhile, are being re-fashioned and transplanted most notably from Las Vegas to the city-state of Macau. In the process, the intense pressure for constant renewal and innovation has made the drive to achieve industry advantage by breaking new ground particularly competitive. By definition, since the casino must consistently justify itself by ensuring high long-term revenue from its increasingly discerning clients, it invariably produces one of the most creative results: striking structures, opulent interiors and precisely engineered gambling environments calculated above all, to hold, mould and make bold. Many a captivating scheme, aiming to be something of a ‘kingdom of the imagination’ writ large, has failed to materialise over the years under the weight of contending financial clout and rival dreams, only to re-emerge in another incarnation as new projects mushroom thick and fast. Indeed, among the most substantial master plans it is more a matter of co-operation between many leading architects and designers, such is the magnitude of what is before them to satisfy modern, sophisticated aspirations and appetites. The heightened public profile of casinos enhances, rather

Casino & Gaming International ■ 45

CASINO DESIGN

than detracts, from the input of casino owners who draw architects and designers together to create cutting-edge structures. The cross-sector expertise that is cultivated invariably has a formidable property portfolio: it ranges from recognisably established leaders in casino design to high-end newcomers breaking into the industry and bringing some astonishingly accomplished perspectives to bear. Collectively, a great deal of their knowledge and experience is being channeled into the contemporary casino scene and as the pace of international expansion picks up so too does the breadth of their portfolios. A commercial boom with a built-in learning curve applicable beyond the casino world internationally is well underway. And who knows, with the current attempts at creating design synthesis with mathematics, science and geometry, perhaps even more daring casino structures will begin to appear. Few would disagree that the prospect of realising an architectural and design vision required of even the most modest casino has attractions not often afforded property development in any other field, at least not in as relative abundance as it is today. Over the last three decades novel ideas and themes have evolved stretching the bounds of the aesthetically, if not structurally, possible. Even in that respect, advances in technology and materials are a significant undertow to the quest for the most noted landmarks and that, in fact, is a broad industrial advance. The property highway, littered as it is with initially discarded master plans from which the one and only triumphs, is a maelstrom of multi-billion dollar unrealised sensations revealing how the approach – conception, location, organisation and marketing – has to be flawless and overwhelming to convince. For the most high profile developments, especially in Asia, the location is almost geo-strategic for international corporate interests as much as it being one of internal national decisionmaking. Inevitably, the fundamental functionality that defines the casino’s age-old purpose is carefully sustained, for failure to do so could significantly affect client interests, both on the floor and in respect of indirectly related services and pursuits.

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Ensuring that the gaming action per se is never compromised, but rather kept ‘on edge’, is the central discipline of casino management and the true test of interior design effectiveness. Nevertheless, while the casino is intended to be the hub of a living organism that enables the gaming spirit its release, the understanding is clear that modern thinking and experience requires an enlightened touch built upon the ‘old world’. The present examples of architecture and design – including redesign and refurbishment – are beginning to reflect the multifaceted, monied tastes and expectations of versatile clientele in an accelerating age. Until relatively recently, Las Vegas alone epitomised that dynamic, but now ‘The Strip’ is attempting to outdo itself in Macau as though it has gained its second breath. And yet that looks like a tantalising precursor of immense international property ventures looming on the horizon, but as yet held at bay by cultural and religious sensitivities, typically in the Middle East. Highly attractive locations with colossal project areas that lack nothing bar gaming at the centre are already rapidly rising. The magnetic and lucrative allure of Dubai’s ‘desert canvass’, sometimes known as the ‘Vegas of the Gulf’, pervades so much of the scintillating frontier architectural, construction, civil engineering and property development impetus. This is metropolis-scale wonderment, almost amounting to the invention of a country within a country if property alone were the gauge. The vastness, self-contained and all embracing, of this creative constellation is the prevailing activity now, while leisure destination developments booming in China are set to overshadow everywhere else. And no one is ignoring the potential that flows from legal changes in a number of pressured jurisdictions. As the demography of gaming and gambling evolves, with the generation of ever more inventive and accessible virtual media, the casino industry has gone from strength to strength, asserting its essential human interactivity. Sophisticated technology that is discretely settled into the fabric of casino operations does so with heightened

CASINO DESIGN

sensitivity to the status of clients and what they accordingly expect. The perpetually innovating electronic system exercises an imperceptible but precise engagement with clients’ gambling interests. At the end of the day, this battle of wits on the floor and how smoothly it is facilitated is what the entire point of the enterprise is all about. In that sense how desire is cajoled, managed and converted in clients of gambling into casino revenue is the kernel of the grand design. Many, however, choose not to win or lose; they chose to enjoy the hospitality and entertainment. The delicate balance that has to be struck in that connectivity goes to the heart of overall client retention. BREATHING SPACE AND NATURAL DISTANCE The success or failure of how the spatial characteristics of a casino are controlled has much to do with the designed use and non-use of space. Every commercial and industrial situation calls for a specific insight into how open areas are best used to suit a particular enterprise. For most pursuing how to gain spatial advantage it is either inherently dictated by a production process, an administrative environment or service facilities. For each, maximising the bottom line requires factoring human capabilities and limitations into spatial decision-making. There is that in common with the ‘player engine’, as it were, at the heart of the casino: to achieve the most effective result management has to balance the rigour of gambling risk taking with the seductiveness of the service and its interior environment. One thing is certain: there rarely are wasted, purposeless areas where casinos are concerned. Shopping precincts or malls, for instance, have a ‘draw you in to stay’ layout that feeds on the consumption motive by inducing extended stays. It is a natural layout persuasion. Casinos, for their part, finesse this to a seductive fine art. Players’ motives for staying are far more compelling

and intensely focused than the softer buyers’ intention. In casinos more than anywhere else, calculating how to keep that active can never be hit or miss. The new Red Rock Resort Casino & Spa, due to open on 18th April (as we go to press) north west of the ‘The Strip’ and host to the new G2E Institute conference, celebrates its location with commanding views of the mountains. The new casino’s President Scott Kreeger told Klas-TV Eyewitness News in the run up to the opening that the casino features desert design themes, has an emphasis on open spaces and incorporates 1950s elegance. He told the TV news station families are able to go to the music theatre and hotel without needing to go to the casino. Of the 15 Station Casinos brothers Frank and Lorenzo Fertitta have now built, this is receiving the best accolades, exactly 30 years after they built their very first casino. Hotels for far longer have been positioned in the most ideal locations with views that often paid little heed to who or what was affected. Until governments began to step in to protect landscape and environment, that meant compromising the view for everyone else beyond the hotel, quite apart from local considerations. Similarly, with a casino duly considering its wider place in the locality, it tends to find a more concerned public that, while not automatically flatly opposed, seeks an engagement that constructively resolves legitimately held perceptions of the local impact. How the casino concept comes across in the public domain is far less of an assumption today, so design and architectural issues are sharper in the final analysis about what and whom it has to take into account. The design is almost in disguising that there is any design, since this is an extension of the natural. Or rather that there is a recognition of the natural environment as the primary focus where the imposition of imitation is unnecessary and unacceptable. There could be Casino & Gaming International ■ 47

CASINO DESIGN

serious loss of standing if those mountains were actually hidden from clients by shutting them out. There was once a fixture of thought that nothing should distract players to maintain extended player commitment. Today’s sophisticates might even tend toward the idea of the casino being built into such a mountain outcrop, like a natural history experience close up and real. There are a number of reasons why that is so much more problematic: limitations will range from environmental sensitivities to accessibility to costs, even though technological change is making possible what was formerly an impossible venture. The design is in facilitating the best viewing positions to ‘let it in’ to positively flare occupants’ senses: points of light, points of sight – it adds up to a genuine ambience. A good deal has been created in the hotel industry to demonstrate the vital emphasis on the client’s wellbeing. There are, by now, substantially educated and trained professionals whose comparative knowledge of leisure and entertainment management and hands-on hotelier abilities that the casino industry is intimately connected with, to be sure of a smooth approach ensuring design meets client expectations. The point Scott Kreeger makes about the option of ‘by-passing’ the casino, if so desired, is an important facet of client-led social design. Worldwide, casino owners, operators, developers, architects, civil engineers, builders and government departments and regulatory authorities are increasingly factoring in social, environmental, occasionally even historic issues and, since Hurricane Katrina, that includes sharpening elements of disaster planning. The more publicly debatable and de-mystified sense of a casino’s place in social and economic life, especially through their commitment to causes unrelated to the industry, are gradually re-orienting the value and values of the industry. This is an attribute of gambling demand while flexibly adapting to, or absorbing, the predominant cultural characteristics of society. Appearances, of course, can be deceptive and socially artificial in reference to the built result, but the growing attention to clientele and community does at least demonstrate a conscious effort to belong and to connect. And belonging is at the heart of a casino’s long term sustainability. Las Vegas, historically secure as casino pioneer, is equally at the forefront of large-scale integrated resort transformation. In Europe, that linkage was established more than two centuries ago among the wealthy who knew how to make their leisure and leisurely pursuits very exclusive. Las Vegas has re-created architecture and design from virtually every Continent, ancient and modern, while also incorporating the diversity of American ideas and themes, quite apart from the flourishing, distinctive Native American styles. The story for tomorrow, however, is going to be how far that fertile and expansive range can be taken; how far the depth of satisfaction, requiring an ever-more responsive need to meet both immediate gratification and intelligent desire, can be reached. Not simply the growth now sweeping North Las Vegas, or the consolidation and limits to expansion and rejuvenation in ‘classical Vegas’, but what happens once ‘all the world’s a casino stage’. CASINO EVOLUTION AND DESIGN PRESERVATION? Historical interest is likely to gain ground as the years draw away from the earliest casinos and that must include 48 ■ Casino & Gaming International

representative properties that are both culturally and socially unique. There is scope for retaining certain ‘classics’ of the form – a retrospective art form perhaps, though certainly archetypal – and even in rebuilding lost examples. The cases of design change and development are, however, often dependant on this social and cultural significance. A prime example is the Moulin Rouge in Las Vegas. It is one of the paradoxes that whether an astounding or humdrum building, the casino is likely to be demolished, sooner rather than later, to make way for something more spectacular. But equally, in Europe, the depth of architectural history is somewhat richer and now sits alongside the new central and eastern European developments. That is also part of the industry’s evolution in design that suggests it will constantly re-invent itself, partly as a distillation of the recent past without totally discarding it. So the counter argument might suggest that since it can all be re-created today, what purpose is there in preservation? As the client base grows with the expansion of the industry, however, authenticity can also be seen as widening appreciation and the options for gambling styles. While there is a limited argument for a special grade listing of original casino properties, there certainly can be a case made for selective preservation. No one wants a historically barren building however; the best scenario will always be that period style is retained. Occasionally, casino operations inhabit a building already so protected, but that is quite rare. Indeed, many of the earliest structures that had specific historical associations were demolished to make way for urban development just as historic buildings occupied by casino operations were too. Since saturation development has not been reached yet in countries with a firmly rooted gambling history, such interests are generally muted. In the UK as decision time nears for new casino developments, part of at least one London bid includes preserving the original building’s exterior. That can certainly work in an exclusive sense, but one thing is certain about most casino infrastructures: few specifications will fit in with any historically aging interiors. In Las Vegas, the very earliest of landmarks that included fledgling casino operations with period character have hardly anywhere survived intact. There may well be a case for taking a retrospective view by recreating a ‘living period casino’, in order to re-capture the authenticity of the atmosphere of the time. That would be quite different from the purely themed ideas that have been incorporated into a number of modern casino complexes. Preserving a snapshot of social history by this means actually helps to reinforce the sense that for a location without an extensive historical city background there is still a history of substance. Design, a sense of past value and awareness of sophisticated desires that look to the future, is more than the sum of any casino’s parts. Today, that has become a thoughtful feature of development planning. Casino owners, designers and architects are at the apex of immense innovation potential which we are beginning to see dramatically bear fruit. So long as that continues to reflect clientele aspirations, the fascination with the casino world is likely to go from strength to strength. STEPHEN LAWTON Stephen Lawton is editor of Casino & Gaming International.

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CASINO DESIGN

SKYLINE, GLAMOUR & SIGNATURE: THE ART OF CAPTURING CLIENTS’ COMPLEXITY INTERVIEW WITH FRED W CLARKE

I am seeing a genuine belief in the power of design. I think that previously design was a kind of appliqué to a business plan. Today we see design and the business plan inextricably related and mutually supportive. That has tremendous power, something that we will all be able to learn a great deal from in the future. I also think it represents, the growing sophistication of the market and clearly keys into how the customer base has become more educated. It is a trend that we all need to keep our eyes on.

Fred Clarke FAIA, RIBA, JIA, Senior Principal, Pelli Clarke Pelli. One of the firms’ founding members, Fred Clarke is Collaborating Designer for most commissions in the studio. In 1977, he joined Cesar Pelli in founding their present firm. Over the past 29 years, the commissions for which he has been responsible have covered a wide range of programmes. These projects have included: ■ Project CityCenter Hotel & Casino, Las Vegas ■ Minneapolis Central Library, Minneapolis ■ Nihonbashi Mitsui Tower and Mandarin Oriental Hotel, Tokyo ■ National Museum of Art, Osaka ■ International Finance Centre, Hong Kong He was a Keynote Speaker at the VIII Bienal de Arquitectura de Quito, the Colegio Arquitectos de Chile and, most recently, the Fifth International Conference on Tall Buildings in Hong Kong. He has chaired design juries and panels for many professional organisations, including the Urban Land Institute and national, state and regional affiliates of the American Institute of Architects. Mr. Clarke served as Guest Lecturer and Speaker at the Iberian-American Forum of Architecture & Urbanism of Sao Paulo; The Asia Society in New York; and, most recently, Soft City, a symposium on the unique role of Tokyo in the future of Urbanism. Fred Clarke met Cesar Pelli in 1969 while still a student. In 1970, upon graduating with highest honours from the University of Texas at Austin, he joined Gruen Associates in Los Angeles where Mr. Pelli was Partner for Design. For the following seven years, Mr. Clarke served as Senior Designer and Associate for the design of the United States Embassy in Casino & Gaming International ■ 51

CASINO DESIGN

Tokyo, Japan; the School of Music for Yale University in New Haven, Connecticut; and, the headquarters for the Daehan Kyoyuk Insurance Company in Seoul, Korea.

degree of cross-over from one sector to another, cross fertilisation perhaps? FC: From one building type to another?

In 1992, Mr. Clarke was elected to the College of Fellows of the American Institute of Architects. In 1997, he became a Registered Architect in Japan. He received a Fellowship from the MacDowell Colony in 1998 to research the social responsibilities of architects in large scale urban projects. CGI: There seems to be a growing number of architects, designers and builders taking on casino developments today. Is this a significant expansion for your profession; do you see this growth continuing – what is your view in general? FC: There are two reasons for the interest: Some of the biggest and most challenging projects in the world now are casinos/hotels. That’s a global phenomenon as you know. But at another level – slightly more intellectual, if you will – is the fact that contemporary architecture and art, are starting to be seen as appealing to the clientele, the customer base, one finds in casinos and particularly in cities like Las Vegas. This is a sophisticated group of people: they read all of the most interesting magazines; see all of the latest films; they take serious note of interior design in good hotels around the world and they have come to expect and appreciate a high level of design. In a sense, design is beginning to become the theme, rather than themes being applied to design. So, for a serious architect, the intrinsic convergence of a projects demands and good architecture is something exciting. Good architects don’t like imposing themes on their projects, but if design itself is the theme, it presents a wonderful opportunity. CGI: Although I imagine there are always commercial considerations constraining you to some degree…

CGI: Yes, whether it is a casino, on the one hand, or something completely different… FC: The way we are approaching our work for MGM-Mirage is that it really is unrelated to anything else we’ve ever done. In approaching it that way, we come at it from a fresh vantage point. But there are some things we are learning, some things that are additions to our education and applicable as an approach to other work. One important notion is that both casino and hotel design, particularly in CityCenter, is all about customer experience. What we are learning to do – and I think we are getting particularly good at it – is to imagine what it is like for the customer, the user to experience the building at every point in his or her journey through the casino or hotel - at every turn, every junction, there is something interesting to look at or a memorable place to be. Much of contemporary architecture contrasts foreground and background experiences. However, in casino architecture literally every public place is foreground. CGI: To continue to hold you… FC: Exactly, we weave a whole story, if you will. The building is a series of episodes. Architecturally, that makes it a great deal of fun. CGI: Is this something you would consider particularly unique or radical in the way it enhances your professional expertise?

FC: Well there are commercial considerations in all projects of course. No one has a completely free hand!

FC: Absolutely. That way of designing a continuous spatial experience is a fresh approach and we are going to see that idea appearing in the other things that we do, even if it is not a casino.

CGI: What is the challenge that casino design poses that other projects do not; do you think there is a

CGI: You refer to MGM-Mirage CityCentre. Is it correct that this is the first major casino foray for you?

52 ■ Casino & Gaming International

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CASINO DESIGN

FC: It’s the first casino we’ve ever done– it was brave of them to hire us! One of the reasons they took a chance on us is that we create buildings that really alter a city’s physical profile. Our large, urban buildings always have something to contribute to the skyline, enhancing its glamour and signature. We are certainly doing that at CityCenter. The intensity of programme at CityCenter is also fascinating and represents an advanced level of design, not only in commercial terms but in urban design terms. I think that they are genuinely recreating the nucleus of Las Vegas and that is always a very interesting circumstance to be in. It’s similar to what we did in Kuala Lumpur in Malaysia. Obviously, nothing like that building [Petronas Twin Towers] had ever existed there. The whole building culture was decades behind that level of advancement but in one project, over a six-year period of time a new structure changed the fortunes of the city and country. CGI: Given the social aspect to this can you explain a bit more about the way the walkway idea fits into this project in Las Vegas? FC: What is essentially being created is a city within a city: it is an entirely self-sufficient pedestrian environment which, not only, has a casino and hotel, but also has year-round living and rich shopping environment. We are now working on the cultural aspects as well. From that point of view, it’s a seminal 21st century endeavour; something that urban designers will be learning from in the future. CGI: I imagine you see this as lift-off in this field… FC: Absolutely. CGI: Changing tack slightly, to the G2E Institute conference in May, what are your thoughts about this, the value of this event, the sort of companies being brought together and issues to be discussed? FC: What I am seeing, is a genuine belief in the power of design. I think that previously design was a kind of appliqué to a business plan. Today we see design and the business plan inextricably related and mutually supportive. That has tremendous power, something that we will all be able to learn a great deal from in the future. As I was saying earlier, I also think it represents, the growing sophistication of the market and clearly keys into how the customer base has become more educated. It is a trend that we all need to keep our eyes on. CGI: Do you think that is something that will lead to better co-ordination in the industry internationally when architects look at projects in Asia and Europe? FC: No question about it. CGI: You sometimes make the point that it is necessary to have a social commitment in architecture and I am wondering how you would explain your professional philosophy, your strong belief in social responsibility and the role of education?

FC: Well, that’s a big topic, but let me try to sum it up. We bring a set of values to every project. We believe that, when a client brings us a project, whether it is a 4,000-room casinohotel or a single family residence, we are being entrusted with resources that are not just financial but cultural and environmental. We discharge those responsibilities very carefully. Extending from that value is our belief that each project is entirely different from the other. Each has its own constraints and opportunities; we are not in the business of simply repeating ourselves from project to project. Each one is new and fresh. When we are working at the scale we are at CityCenter, those responsibilities magnify hundreds of times, so we focus on its environmental impact, its cost, and its complex functionality. It increases the sense of responsibility tremendously, but underlying it all is our value system. We are being entrusted with a part of society, a piece of a city, and for us that is the highest calling that an architect can have. Working on the casino-hotel at CityCentre has been a thesis in functional complexity, the organisation of teams, how one participates in a large collaborative process with other designers and how one works under significant limitations of time and budget… CGI: I was interested to note that you had a particular view that you did express in a more encapsulated form on your website where, as far as you are concerned, you will only involve yourself in specific projects where you know you can devote yourself pretty much 100%, rather than overstretch your resources. This presumably applies in the case of CityCentre. FC: Well, in the case of CityCentre it went even further: we told them that if we were chosen to work with them that we would turn down new projects for a year or more. We essentially closed our doors and did not accept any new work for nearly 18 months. That’s allowed us to devote ourselves to the project. CGI: Not many companies would do that I suspect. FC: No, most of our colleagues were shocked when they heard us make this offer and they urged us not to tell that to any one else! CGI: That expresses a degree of commitment to the finer details in ensuring that the end result is indeed as it should be. Do you feel that is something that is beginning to develop among the architectural community? FC: I would think so. MGM-Mirage has chosen the very best architects for CityCenter. Each of us is going to want to create the best building we can. However for us, it is both the detailing of the building and a personal commitment to the relationship with the client. This is very much a client-driven process. The client is complex and we needed the time and presence of mind to get under their skin, to understand them thoroughly, to be here 24 hours a day. These have been our watchwords for the last year and a half. Casino & Gaming International ■ 55

13 - 14 June 2006 Macau Tower Macau - the world’s most exciting gaming market – welcomes the Asian Gaming Expo in June 2006. Casino Gaming Equipment Exhibition • Major exhibits showcasing a full range of the latest in Gaming Equipment, Technology and Services. • Exhibitors include Ainsworth, Aristocrat, Aruze, Bally, Elixir Group, IGT Asia, Interblock Asia Pacific, Jumbo Technology, Konami, Paltronics, Progressive Gaming Int’l, RGB Games, R.Franco, Stargames, Unidesa.

The Asian Gaming Expo Conference • Keeping up-to-date with the latest thinking in gaming in the Asian region. Sessions include the New Mega-Resorts – a Look Inside; Regulating the Revolution; Impacts on Macao; Asia’s Slot Machine Opportunities; Talking Technology – the 21st Century Gaming Machine; Globalisation - its Impact on Operations; What Now – the Next Decade.

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AMERICAN GAMING SCENE

VIBRANT, GLOBAL MAINSTAY OF THE POPULAR ENTERTAINMENT INDUSTRY From January 2007 CGI will include a year-end assessment of the United States’ gaming scene with an emphasis on its international impact. In the following edited speech made at the Governor’s Conference on Tourism on 18th December 2005 – the American Gaming Association’s 10th anniversary year – Walton Chalmers, AGA vice-president, outlined the state of the US industry. A snapshot of a unique year: Hurricane Katrina & Rita , on the one hand, and planning for the May 2006 G2E Institute, on the other. 2005 was marked by both triumph and tragedy for the gaming industry. On the one hand, when we put out our annual State of the States survey this spring, it revealed that the commercial casino industry in 2004 had enjoyed the largest annual percentage increase in gaming revenues since 2000. Last year, the 445 commercial casinos in 11 states generated nearly 29 billion dollars in gross gaming revenue, surpassing 2003 gross gaming revenues by more than 7 percent. The nearly 350,000 direct industry employees earned wages of more than twelve billion dollars in 2004. In addition to these strong numbers, the past year was marked by several major developments that have changed the face of the commercial gaming industry. This summer, mergers were finalised between Harrahs Entertainment and Caesars, MGM MIRAGE and Mandalay Resorts, and Penn National Gaming and Argosy, creating three out of the four largest gaming companies in the country. Elsewhere, voters in Broward County, Florida voted to allow slot machines at four pari-mutuel facilities in the area, despite stiff opposition from critics of gambling. After initial delays in its implementation, it appears now that a tax and regulatory scheme will move forward that will result in the installation of 6,000 via [Gulfsream & three other parimutuels] machines by next summer. Delays in developing regulatory policies also continue to slow the introduction of slot machines at racetrack facilities in Pennsylvania, although we expect many of these issues to be resolved or finalised in the coming year. Current plans call for slot machines at several of its tracks, as well as two free-standing gaming facilities in the state. Once these facilities are open, there will be a total of 12 states with racetrack casinos in the U.S. The first racetrack casino in Maine opened early last month. Other domestic expansion has primarily been concentrated in proven existing markets like Las Vegas and Atlantic City. MGM MIRAGE this fall announced details of its Project City Center, an enormous multi-use community that will feature a number of hotel, shopping, residential and casino experiences. The condo boom in Las Vegas is hard to ignore, what with all the construction cranes looming in the background of the Strip. Even the Strip itself is expanding. This beautiful property opened to worldwide fanfare this summer, and several additional properties are slated for construction or expansion. This growth is not just a Las Vegas phenomenon. Markets from Atlantic City to Kansas City are witnessing an increase in capital investment, creating more rooms and more amenities for an increasingly sophisticated clientele. In fact, the growth in amenities is another major trend of which we should all take note. Properties continue to offer a wider variety of entertainment options, ranging from five-star restaurants and shopping complexes to spas and worldclass performance experiences. As you are well aware, Las Vegas has become one of the premier dining destinations in the world. But make no mistake—this trend is not limited to the Strip. It has taken the industry by storm. Other markets are beginning to follow Vegas’ lead, and it’s paying off big. With so many options, casinos are attracting visitors looking to do more than gamble. More than half of MGM MIRAGE’s annual revenues now come from non-gaming amenities. This would have been unheard of 15 or even 10 years ago, and

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it is attracting a whole new kind of customer to gaming markets nationwide. In fact, according to a public opinion poll we commissioned earlier this year, Americans by a more than two-to-one margin say they enjoy casinos more for the food, shows and entertainment than for the gambling. Beyond proven markets in the U.S., the other major opportunities for gaming expansion clearly lie overseas. Several U.S. companies have set their sights on Asia – particularly Macau and Singapore – as the next big markets for the industry. While these recent developments no doubt present exciting opportunities for the future of our industry, perhaps no events this year had a more significant impact on the commercial gaming industry and its future than the twin disasters of Hurricanes Katrina and Rita. Frank Fahrenkopf has always said that, at the AGA, the strong commitment we demonstrate to our companies and our colleagues is a reflection of the industry we serve. Nowhere was that commitment more evident than in the days, weeks and now months following the hurricanes. When Hurricanes Katrina and Rita tore through the Gulf Coast this fall, tens of thousands of industry employees were affected by the disasters. Industry reaction to help displaced employees was swift. Gaming companies affected by the storms immediately set up individual relief funds for their employees. They also set up employee assistance hotlines, established employee relief centres at neighbouring properties and other venues, and most continued to provide pay and benefits to employees for several months. Many companies have assisted employees in locating jobs at sister properties and some have hired displaced employees to help with cleanup and rebuilding efforts. And, whether or not they were affected by Katrina, nearly every other gaming company in the country made sizeable contributions to the American Red Cross, Salvation Army and other relief organisations. Right after the storms, the AGA also established its own organisation, the Gaming Industry Katrina Relief Fund, to unite those in our industry who did not already have a way to donate to the victims. To date, the fund has raised more than $600,000 for gaming employees in Mississippi and Louisiana. Thanks to these and the efforts of nearly every individual gaming company in the country, the gaming industry along the Gulf Coast has a solid foundation on which to begin again. And that rebuilding has already begun. The resilience of our industry is visible everywhere along the Gulf Coast. Several of the least damaged facilities in Lousiana already are back up-and-running, and several casinos in the hardest hit areas of Biloxi and Gulfport have plans to reopen their casinos – albeit in temporary facilities – before the end of the year. Since the Mississippi legislature has agreed to allow casinos along the Gulf Coast to build onshore, rebuilding efforts can begin in earnest. I have spoken with many of our industry representatives along the Coast, and there is a palpable excitement about this decision and what it could mean for the future prosperity of the Mississippi Gulf Coast. We have a long way to go, but if the past few months have taught us anything, it is that our industry is strong and capable of great things in the face of adversity. Helping our industry fully recover has been and will continue to be a key priority of the AGA in the coming years. As many of you know, the AGA’s first and foremost role is to represent the gaming entertainment industry and protect its interests back in Washington, and, not surprisingly, Katrina relief has dominated the headlines and legislative calendar for the last few months of the year. The AGA has worked closely with members of the congressional gaming caucus and other allies on Capitol Hill to ensure gaming companies in the Gulf Coast region receive the support they need to rebuild their properties and bring renewed economic vitality to the area.

>> With so many options, casinos are attracting visitors looking to do more than gamble. More than half of MGM MIRAGE’s annual revenues now come from non-gaming amenities. This would have been unheard of 15 or even 10 years ago, and it is attracting a whole new kind of customer to gaming markets nationwide. In fact, according to a public opinion poll we commissioned earlier this year, Americans by a more than two-to-one margin say they enjoy casinos more for the food, shows and entertainment than for the gambling >>

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I am confident our industry will prevail in returning to even greater glory the communities along the Gulf Coast that have come to depend on us for their livelihood. Another issue that seems to be in the news nearly every day now is internet gambling, and the AGA continues to monitor legislation related to the topic. Congressman Jim Leach recently introduced legislation in the U.S. House of Representatives to prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling. Leach’s bill is identical to draft legislation prepared by U.S. Sen. Jon Kyl. The approach of this new legislation is similar to bills from the 108th Congress, which would have prohibited the use of financial instruments in Internet wagering transactions. The new legislation is characterised as an “enforcement bill” that gives certain state and federal law enforcement agencies the tools to combat illegal, off-shore Internet gambling. Previous versions broadly defined Internet gambling, while the latest bill specifies that current statutes, such as the Wire Act of 1961, would have legal authority over the practice. This bill will allow intrastate Internet gambling with certain restrictions, as well as ensuring that the horseracing industry can continue simulcast and account wagering. On other legislative and regulatory fronts, after years of attempting to ban betting on college sports in Nevada, the NCAA now regards the gaming industry in Nevada as a partner in helping to ensure the cessation of illegal wagering on college sporting events, and the AGA has reached out to begin building a strong working relationship with that organisation. Additionally, the AGA has worked with member companies, the Access Board and the Department of Transportation to evaluate the effects of proposed rules that would update the Americans with Disabilities Act (ADA) Accessibility Guidelines for Transportation Vehicles, which affect large passenger watercrafts including riverboat casinos in several states. The AGA submitted comments to the Access Board, which has expressed an interest in working with the AGA to tailor specific guidelines for the riverboat gaming industry. The AGA continues to monitor and address new developments on the issues surrounding suspicious activity reporting and terrorism risk insurance. And just two weeks ago, representatives from our member companies met with FBI officials from the Las Vegas field office to discuss national security letters, which have been in the news quite a bit as Congress has been discussing the renewal of the Patriot Act. These meetings helped secure an ongoing dialogue between the industry and the FBI, and further established that the security of our customers and employees are of utmost importance to the commercial casino industry. The industry has long been a willing partner with our local, state and federal law enforcement officials in the ongoing war against terrorism, and we will continue to recognise our duty to ensure maximum possible legal compliance with all regulations affecting our business. The AGA also is monitoring ongoing activities in Washington related to Indian gaming, depreciation of casino equipment, potential new withholding rules for poker tournament winnings, and more. Another issue that could have major implications for the gaming industry is smoking. In the face of efforts in nearly every gaming state to ban smoking in public establishments, including casinos, the AGA continues to emphasise our support of reasonable, science-based solutions to indoor air quality concerns. We continue to work closely with the American Society of Heating, Refrigerating and Air Conditioning Engineers, a standards-setting organisation, on the issue, and the AGA recently established a working group to begin establishing new industry design guidelines for indoor air quality, which should be finalised next year. Beyond our work in Washington, the AGA also is committed to a number of industrywide initiatives that help our member companies function as better corporate citizens and address issues that are important to our employees, customers and our communities. Responsible gaming always is near the top of our agenda, and this year we launched a number of ambitious new programmes in that arena. In August, we launched “Banding Together to Keep it Fun,” one of our largest and most proactive responsible gaming awareness campaigns to date. We introduced bright orange “Keep it Fun” wristbands to give all responsible gaming stakeholders a way to unite in a common effort to support awareness of the issue. To date, we have sold more than 120 thousand of the one-dollar bands, and proceeds are being donated to the National Center for Responsible Gaming. We also launched our first television public service announcement focusing on responsible gaming in 2005. The 30-second spot aired nationally on networks in viewing areas of our member casinos, on in-room programming in many casino hotels, and continues to run on The Travel Channel in conjunction with all its gaming-related programming. Print PSAs featuring the same characters debuted last month.

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The AGA remains committed to funding important research on disordered gambling through a number of generous contributions to the National Center for Responsible Gaming. In fact, next year marks the 10th anniversary of the NCRG [see Phil Satre in this issue], and there will be many changes in store for that organisation in the years ahead. The AGA also renewed its commitment to diversity issues in 2005. A pair of diversity programs conducted in conjunction with the Congressional Black Caucus (CBC) provided insight for minority-, women- and disadvantaged-owned businesses seeking to do business with the gaming industry. Next year, the AGA plans to launch a new diversity e-newsletter, as well as release the Gaming Industry Vendor Diversity Snapshot, a study being conducted by PriceWaterhouseCoopers, that will analyse corporate diversity in the purchasing and contracting arena of the industry. This is the first study of its kind, and the report will serve as a benchmark for measuring future “diversity spend” activities. In 2005, the AGA also demonstrated its ongoing commitment to promoting business innovation and opportunity through the continued growth of Global Gaming Expo, which has become the largest international trade show and conference for the international gaming community. Since its inception in 2001, we have worked to make G2E the most cutting-edge and relevant trade show and conference for our industry, and this year’s show did more than ever to capture the emerging trends affecting the global gaming marketplace. G2E 2005 attracted more than 700 exhibitors and a record 26,600 attendees, including a major international and Native American presence. 2006 holds exciting changes for G2E, with the shift to November dates for our flagship event and the debut of new event that will expand G2E’s educational offerings. The G2E Institute, our newest event, will debut this May at the new Red Rock Station Casino outside of Las Vegas. G2E Institute will combine G2E’s existing Casino Design and Racino events with the recently acquired Gaming & Technology Conference, and will incorporate a new series of seminars addressing developments and growth opportunities in tribal gaming. The G2E Institute will provide a unique, tailored and intimate educational platform where industry professionals can learn the latest trends in key industry growth areas, as well as how those areas interact with one another in the casino setting. Additionally, the AGA and our trade show partners are looking at a number of international expansion opportunities for the event, which could be finalized as early as this year. Clearly, this year has been one of great change and great challenge for the industry, but in the midst of these challenges, we have been resilient and exhibited tremendous growth. The gaming industry has truly become a major part of the mainstream entertainment culture and continues to make significant contributions in the communities where we operate. But don’t take my word for it. The true testimony of casino gaming’s impact is best evidenced by the opinions of the civic and community leaders who live and work in gaming communities. Earlier this year, the AGA commissioned national pollster Peter Hart to conduct a survey of opinion leaders in communities with commercial and racetrack casinos. He interviewed 201 top local decision makers across the country, including mayors, city and county council members, state legislators, police and fire chiefs, and other community leaders. Most of these leaders lived and worked in these areas before the introduction of casinos, giving them a first-hand and well-informed view of the effects of casino businesses on their communities. The results of this survey underscore what other studies have shown: Elected officials and civic leaders are strikingly positive about the impact casinos have had on their communities. They welcome the additional tax revenue, jobs, secondary economic development, and the contributions casino gaming makes to the community and charitable organisations. After the casinos opened, more than 90 percent of those leaders believe the casinos have either met or exceeded their expectations. Fully 73 percent of community leaders also say that tax revenue and local development agreements with casinos have allowed their communities to undertake projects that otherwise would not have been possible. And by a margin of more than three to one, community leaders are more likely to say that casinos have done more to help rather than hurt other businesses in the community. More than eight out of 10 report that casinos are good corporate citizens. But possibly the most telling result of this survey is that if given the chance to vote again, a full three-quarters of civic leaders and elected officials would vote again to bring casino gaming to their communities. These results are a testament to the positive force of our industry, and they point to many successful years to come. The AGA ends its first decade as the voice of a vibrant industry that has become a mainstay of popular entertainment culture. We look forward to the exciting changes ahead and to watching the commercial gaming industry continue to evolve, contribute and grow.

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CONTINUING SALES GROWTH FOR ONLINE CASINOS AND BETTING SHOPS: PAGO REPORT 2006 PAGO HELPS OPERATORS TO PREVENT FRAUD AND LOWER RISKS The online gambling industry’s image has been improving during the last years. These operators are no longer considered to be high-risk customers by companies like Pago, one of the leading international acquiring and payment service providers. At the same time, the European market is not yet been developed entirely. Whereas in the UK nearly every second online purchase (49.88%) is an online bet, online gambling accounts for only 25.94% of turnover in Germany according to the Pago Report 2006, a unique market study based on the analysis of real-life transactions. The share of online gambling has now grown to 46.49% of transactions analysed, compared to 31.91% last year. This means that Pago has processed over €1.6 bn since 2001. Pago currently has over 650 gambling merchants in its portfolio. With many years of experience with merchants in this industry, Pago confirms that online gambling operators are mostly very professional and react quickly to any dangers and warnings and generally take “security” very seriously. Operators implement optimised software tools for data encryption and monitoring of transactions. Online casino and gambling operators are the most demanding when it comes to customer identification too. Even though security awareness is very high in the industry and in-house anti-fraud mechanisms are often very effective, many online gambling merchants are turning to Pago’s risk experts for advice and implement special risk management tools from them. The tools available range from comprehensive packages like Pago Fraud Screening, Verified by Visa, MasterCard SecureCode and Address Verification Service to Pago Account Check for credit card transactions. In this way, these operators are able to safeguard their systems from the vast majority of fraud attempts. This leads to lower debt losses and to increased security, which is a key factor for success in online gambling. Many of the fraud prevention tools, now common in e-commerce, were fire-tested in the online gambling industry; all the larger and more serious online gambling operators deploy large risk teams to prevent fraud. For an Acquirer and Payment Service Provider like Pago, which offers a comprehensive range of risk management tools, this means that only very few fraudulent transactions get through to the Pago platform because most of them are Raise your Odds for Success – filtered out in the operator’s registration process.

Join the Pago Partner Program! As from May this year, Pago will also offer payment processing for the UK Maestro Card, alongside its acquiring activities for MasterCard and Visa credit card acceptance. Pago is the first Acquirer to offer online Maestro acceptance to merchants both inside and outside the UK. Pago also processes American Express, Diners Club and JCB payments. And from April 2006, Pago will also offer its merchants giropay, a newly developed payment method very similar to an online bank transfer. Like the Pago Online Bank Transfer, giropay is based on German home banking systems allowing customers to pay for online shopping carts directly by triggering wire transfers using familiar PIN and TAN procedures. Additionally giropay offers the merchant a payment guarantee. This means that once the consumer’s bank accepts a giropay transaction, it guarantees payment to the merchant. This will obviously provide online gambling operators with an attractive alternative with increased security of punter payment.

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BUILDING LOYALTY THROUGH CUSTOMER CARE BY TEX REES

Before making any decision on disqualifications, lock-outs or restricted promos, managers should first consider the player’s history. This is not only to safeguard against losing profitable, regular gamblers but also to avoid discarding those with future potential if treated respectfully and fairly. In many instances, mediators find that a manager has banned a ‘bonus abuser’ after only one or two transactions at the casino, thus losing the potential of a regular future visitor.

any new operators now entering the industry have both knowledge and the financial resources to become quickly competitive, and they know that one of the key areas where they can distinguish themselves lies in how well they practice customer care. This is the sort of company that plans ahead and puts profits aside until year two or three while concentrating on the construction of a solid client base. This is the CRM-cognisant management style that will emerge victorious and help to improve the wider reputation of the industry. Fundamental wisdom tells us that a satisfied customer is the essential element in creating and maintaining a successful business, yet there are times when the contemptuous manner in which legitimate players are treated defies belief. Even a cursory visit to the reputable message boards and watchdog sites where frustrated and aggrieved players go for advice and solace illustrates the point; some casino and poker room operators seem through lamentable decisions to be chasing business away almost as fast as they are, at considerable cost, bringing it in. The lack of independent and enforced international regulation is one reason - integrity-challenged casino managers often treat players badly simply because they can, making arbitrary and unfair decisions for which they are not held accountable by the world outside their company. The concept of medium or long term damage to the company through their lack of ethics or expertise eludes them. Many professional operators are determined not to be tarred with the same brush at these unscrupulous managements, and seek to distinguish themselves by committing their companies to self-regulation through eCOGRA, which delivers a form of disciplined and ethical

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best practice. This provides the player with the assurance of probity checked managements, tested gaming, a disputes resolution service and enforced standards at every level of operational practice. Another reason for bad practice is the inexperienced and untrained nature of many young managers who are hired by owners that are themselves not well versed in, or committed to, customer care. The third reason could be that some owners are themselves insufficiently trained or equipped to run a casino at all. The Internet gambling world was at one time not difficult to enter if you had enough cash to buy a virtual operation and found one of the down-market suppliers. Especially in its early years, the industry attracted many operators with no real gambling industry background prior to arriving on the scene: lawyers, building contractors, mobile phone company entrepreneurs, deli owners and a host of other entrepreneurially inclined people were initially attracted by the prospect of low investment and fast profits, and the rapidly growing business at that point provided these. So if the operator does not have the experience or commitment to identify who the best customers are, their preferences and how to treat them in such a way as to keep them coming back how can professional and efficient customer relationships be achieved? And consequently how can loyalty and extended lifetime value be retained? THE RESEARCH IMPERATIVE Fortunately, this competitive industry has matured and many of the small, under-funded and crafty venues have been squeezed out. But there still exist enough bad apples to make research before play an imperative for any smart player, and speaking generally a culture of true customer care is not yet sufficiently well developed or practiced by marketers or casino operations staff in the industry. The customer’s needs are well known and defining these does not involve any rocket science: ■ Fast payouts, ■ Honest games, ■ Good and multi channel communications, ■ Efficient and professional operations, ■ Fair incentives, ■ Personal privacy and security of private information, ■ Responsive and helpful Support, with access to supervisory levels when necessary, ■ Responsible marketing practices ■ ....and simple respect.

standards for “Play It Safe” seal casinos and poker rooms. Yet in a general industry sense the players’ needs are frequently not addressed, as the following distillation of typical player complaints from the message boards illustrate:

In this the player is no different from any other online consumer, and the general run of player will rarely create problems if these basic requirements are met, as my own organisation, eCOGRA strives to encourage through its

BONUS ABUSER Accusing the customer of not playing “in the spirit” of a promotion and arbitrarily classifying him or her as a “bonus abuser” when he or she has met all the terms and conditions is

>> Building loyalty and holding on to customers is a necessity which is at odds with some of the casual attitudes towards hard-won customers that have prevailed in the past. Shedding customers through bad CRM or ill-considered disqualifications, lockouts and conduct could be more dangerous than in the past >>

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eCOGRA (eCommerce and Online Gaming Regulation and Assurance) was founded in 2003 with the mission to establish standards to make online gaming safer for players everywhere. Due to a lack of uniform regulations across countries and jurisdictions, the industry’s leading software suppliers and their online casinos and poker rooms came together to create an independent, nonprofit, regulatory body with global audit firms to develop, monitor and enforce standards equally across the industry. In addition, eCOGRA assists players identify sites that are safe, fair, and responsible to their users by awarding approved sites the eCOGRA “Play It Safe” Seal. Today, eCOGRA regulates, monitors and certifies 66 major online gambling sites, handling over 50 percent of the total online casino market and used every day by millions of players around the world. To ensure fair gaming and responsible operator conduct, eCOGRA publicly informs players of their rights, responsibilities and of eCOGRA’s findings through the media and its website, www.eCOGRA.org. In the unlikely event of disagreements between players and ‘Play It Safe’ sealed sites, eCOGRA’s Fair Gaming Advocate serves as the player’s advocate to rapidly resolve disputes. In 2005, player disputes were resolved on average by eCOGRA in less than 48 hours, an industry benchmark that remains unmatched. eCOGRA ensures that its rulings are respected, and was the proud recipient of Gambling Online Magazine’s 2006 Watchdog of the Year Award.

one of the most common causes of disputes. More often than not it is used as a non-specific, all-embracing vehicle for taking away a player’s hard-won bonus and winnings, returning only the deposit (if the player is lucky!) Other questionable, bonus-related sins include changing the terms and conditions after the player has accepted and been allowed to play…and then enforcing the new requirements; unilaterally inserting a “phantom” bonus in the player’s account with onerous wagering conditions or maximum payout limits attached, without telling the player and then applying the conditions; sending the player a promo invitation that does not include all of the conditions pertinent to the offer, and then after the fact invoking some deepburied condition on the website T&Cs. Another slick trick is to include a clause that forbids a player to have more than one account across a particular casino group, but then not to have on clear display what of the other casinos are members of the group to which this ruling applies. When all else fails, some casinos will even resort to the

notorious “Management can do whatever it wants without providing an explanation” clause that lawyers so frequently insist on including. These catch-alls in terms and conditions documents are designed with more regard for shielding the operator against all eventualities short of the Apocalypse rather than giving the client a fair deal. And this sort of clause should not be necessary in a fair and expertly run casino. Casino managers tend to make arbitrary and over-hasty decisions to disqualify winnings and lock players out, and industry mediators who follow complaints are often astonished that so much effort and expense in acquiring a customer can be so casually thrown away in many of the cases in which they become involved. THE FOLLOWING IS NOW ESTABLISHED FAIR CONDUCT IN THE INDUSTRY Where a promo has been offered by the casino and accepted by the player who then wagers, a tacit contract is in force and the operator must meet his or her promised obligations before locking a player out or taking punitive action such as confiscating monies or loyalty points earned. The only exits for the operator are if the player has not complied with the practical terms and conditions, or if there are dishonesty elements such as multiple accounts or charge-backs. Once the casino has met its obligations in terms of the current offer, the player can be locked out or, as a practical alternative that is frequently overlooked, simply removed from the promo lists…but then the onus is on the casino to ensure that through in-house inefficiency the player is not sent another promotion. Bungled communications between casino departments such as Promotions, Security and Support are more common than is generally thought, and frequently lead to highly embarrassing incidents and the loss of players and reputation. Customers are entitled to fair and honest bonus dealings by casino managements, who after all are the authors of the terms and conditions being offered in the first place. If a mistake is made consider it as school fees but do not pass on the penalty to a player. Players, and remember they are not all bonus hunters, are far more likely to return and spend more money with the casino if they are treated with respect when it comes to bonus matters. SUPPORT BLUES If I had a nickel for every time I have heard the plaintive wail: “The casino ignored my emails / live-chat complaint / telephone calls / request for a supervisor” I would be a prosperous Fair Gaming Advocate! The majority of player-casino disputes can be resolved without acrimony by simply connecting an experienced and decision capable manager or supervisor with an aggrieved customer and discussing the issue. Yet casinos continue to resist providing an escalation system to get players beyond the essential but lowly Customer Service Representative, who is usually rigidly bound by what the manuals contain – and these are often not sufficiently updated anyway. Online casinos use cutting edge communications and the latest Internet-based technologies, and slow or no responses are inefficient, discourteous and potentially costly when a disgruntled client heads for the exit and does not return. Casino & Gaming International ■ 65

CUSTOMER RELATIONSHIP MANAGEMENT

Worse still, players now communicate among themselves more than ever before, and one fed-up player can infect several others. Almost as bad as ignoring the client is responding with an irrelevant form letter that shows no understanding or sensitivity to the problem at hand. Inexpert CSRs will often do this when they do not have a specific form letter available or have not taken sufficient time to analyse the problem. It can chase away forever a $400 customer with good future potential, and can be avoided if CSRs are properly trained and supervised. CSRs with inadequate language skills are another client irritant. For example, most gamblers in the key US and UK markets are English speaking, yet you would be surprised by the number of Support reps who are challenged in this respect, creating problems on top of the player’s original grievance. Some CSRs are simply not intellectually or emotionally equipped for the job and can turn expensive customers into departing customers. Frontline CSRs are some of the most important people on the casino staff and should be carefully picked for initiative and personality. And once employed, substantial investment in a training and motivational respect should be made so that a top, player-sensitive service can be delivered every time. That critically important human element has to be backed by an efficient enquiry tracking, database and information system to ensure that no customer communication falls through the cracks, is left unresolved or simply ignored. Support is usually contacted because the customer needs some human interaction. The answers may be in the FAQs or somewhere else on the site, but that does not excuse inarticulate, rude or inadequate responses to someone who, at the end of the day, provides the revenues that keep the casino in business. MARKETERS BEWARE Perhaps the problem is one of outsourcing, but it sometimes appears that marketers are too far removed from the gambling coalface, resulting in silly and insensitive conduct that can cause a haemorrhage of players. Sending out inexpertly designed and uneconomic promotions that have not been minutely checked and rechecked for errors or unintended consequences to the casino bottom line is a failing which crops up regularly. It is then too often exacerbated by frantic efforts to make the customer pay for the blunder by clumsy disqualifications and retroactive amendments. Sending the wrong promos to the wrong people and then trying to extricate the casino from the resulting mess by prejudicing the player is another. Here’s a good recent example: Casino puts an unannounced “birthday bonus” in a player’s account…then hammers him on wager-through requirements on it, or subsequently classifies him as a bonus abuser, completely negating the desired effect! Too many marketing entities neglect to adequately police their affiliate marketing operations, and this can lead to substantial damage to reputation and lost business. Many affiliates are accomplished and responsible marketers, but it is an unfortunate truth that others are untrained in marketing or are in other ways unsuited to the disciplined and ethical conduct of marketing per se. Marketing departments need to realise that the player oft 66 ■ Casino & Gaming International

times does not distinguish between the conduct of an affiliate and that of the casino itself – if the affiliate is unprofessional it reflects on the casino and cannot be excused, and it is therefore important that marketing departments carefully vet affiliates and act immediately to quash any suggestion of unfair or dishonest conduct in the marketplace. Common affiliate-generated complaints are promo errors, advertising content mistakes and spamming. In company with the rest of the Internet, players have a strong aversion to spam – unsolicited emails selling the casino’s wares and promotions – yet it remains a basic staple of many marketing campaigns. Little or no effort is made to ascertain whether the player has “opted in” for email or private messaging offers, and marketers do not take a player off a list when he objects to uninvited mail or wants to “opt out.” Cute tricks here are a vague, omnibus style of “opt in” clause in the fine print of a voluminous general T&C, or denying complicity in spamming runs by “outsourcing” to a supposedly reputable contractor who “assures” that the lists are professional and opt-in when they clearly are not. Persistent, uninvited spam is a sure way to disaffect players, as is the lack of privacy implicit in selling or trading player lists with other marketers. Online gaming marketers today have probably the most formidable array of tracking and data-mining electronic and software based aids ever known in the history of marketing, and the truly innovative and professional practitioner will find ways to use this wealth of information to improve player relationships and create loyalty and respect. Marketers with a genuine interest in what the customer wants will regularly and conscientiously assess this and add it to the mix. A word of advice: do your company a favour and enroll a manager with authority on the fora of major portal and watchdog sites like Casinomeister and Winneronline. This has three significant benefits if managed with subtlety and player-sensitivity: It keeps you in touch with what’s happening and the allimportant player perceptions; It enables you to immediately address and resolve problems through the private message system before these spiral out of control and become high profile and damaging and It shows the players you are interested in what they are saying. One of the most admired (in a player sense) online casinos on the Internet makes customer relations the high profile focus of senior executives in the company, who are accessible, identified upfront and friendly…and it works. IT ALL COMES TOGETHER IN ACCOUNTS They may be down in the engine room, but Accounting staff are every bit as critical to favourable player perceptions as their colleagues in Support…and just as much in the frontline. Survey after survey has shown that a prime player requirement is fast and efficient financial processing, and the casino that can process deposits and payouts quickly and with the minimum amount of fuss has a definite edge when it comes to choice of venue. And players want accounts queries answered now – this is the Internet and the casino is offering round-the-clock action anywhere on the globe, so having to hang around until the Accounts department returns from holiday is not an option.

CUSTOMER RELATIONSHIP MANAGEMENT

Competent and flexible partners in the sense of payment processing are essential and the selection and day to day liaison with these companies may be remote from the player, but has a real impact on his or her treatment. Offering a range of financial options for the maximum convenience of the player is critical. If potential customers perceive that a casino is having trouble taking deposits or paying out winnings then it is likely that the perception will grow that other problems exist, and that inevitably works against giving the casino business. No-no’s are long drawn out delays and inarticulate communications on ID verifications that are not clear enough first time round; reversing cashed out amounts to player accounts in the hope that the player will be unable to resist the temptation to play again and lose the money back; the “stealth” imposition of maximum weekly or daily cash-in levels; advertising multi-currency capability but then penalising players for using it; and exorbitant “service charges” on transactions. Polite, efficient and above all fast Accounts departments can make a hugely positive contribution to good customer relations. TERMS AND CONDITIONS The T&Cs are the rules set by the casino management by which the player must abide, and despite their increasing complexity, experienced players will usually play to the letter of the T&C. However, this works both ways and the casino is also bound by those rules, making it imperative that staff understand the requirements every time the T&Cs are applied, and that the rules themselves are clear and unambiguous. As I outlined earlier, most T&Cs have iron-clad, lawyerdrafted clauses that allow a casino management to do pretty much anything it wants to. However, in unreasonably exercising this sort of clause in the absence of real and fair evidence of misconduct or non-compliance, a manager is not only unethical, but impractical because the word gets round and reputation and business suffer as a consequence. Before making any decision on disqualifications, lock-outs or restricted promos, managers should first consider the player’s history. This is not only to safeguard against losing profitable, regular gamblers but also to avoid discarding those with future potential if treated respectfully and fairly. In many instances, mediators find that a manager has banned a ‘bonus abuser’ after only one or two transactions at the casino, thus losing the potential of a regular future visitor. Next, the promotion offered by the casino should be examined for errors, followed by the player’s action to ensure that it has complied with the T&Cs. If it has, honesty and professionalism dictate that the player be paid before any other action against him or her is taken. DON’T SCRIMP ON CRM Scrimping on customer relations management is one of the biggest follies an online casino operator can make. Established online casino groups are spending millions on advertising and promotional work to bring players to their virtual doors, and it is illogical to then chase the new arrivals away by insufficient or ineffective customer care. To a large extent the small and under-funded online casino operator using weak gaming and administrative

software, small marketing spend and almost non-existent customer relations management is becoming an anachronism in today’s climate of consolidation and well established groups. Many new operators now entering the industry have both knowledge and the financial resources to become quickly competitive, and they know that one of the key areas where they can distinguish themselves lies in how well they practice customer care. This is the sort of company that plans ahead and puts profits aside until year two or three while concentrating on the construction of a solid client base. This is the CRM-cognisant management style that will emerge victorious and help to improve the wider reputation of the industry. In this sort of environment, building loyalty and holding on to customers is a necessity which is at odds with some of the casual attitudes towards hard-won customers that have prevailed in the past. Shedding customers through bad CRM or ill-considered disqualifications, lockouts and conduct could be more dangerous than in the past. Smart operators have already realised this and are taking measures to improve the quality and knowledge of line managers and the efficiency and resources of the customer services they provide, but the end objective should be professional and honest behaviour and respect. The old maxim “Do unto others as you would have them do unto you” is not entirely out of place here.

TEX REES TEX REES, eCOGRA Fair Gaming Advocate, with more than 15 years of management and customer relations experience in both land-based and online gaming businesses, Tex Rees personally handles player disputes as they occur, resolving most cases in 48 hours or less. Most recently, Rees managed customer relations for LiveBet Online, where she was the primary point of contact for clients regarding development and operational issues. Responsibilities included interpreting client needs to develop a software solution and overseeing the installation, testing and training of the platform. Prior to that, Rees managed a staff of 40 administrative and call center employees for SuperBet, which ultimately became South Africa’s first online gambling operation. While there, she managed customer dispute resolution, established a customer care protocol and oversaw its implementation. Rees also assisted in wagering software development and testing for SuperBet and served as a liaison to the Gaming Board regarding compliance issues. Rees is available to comment on: • Current trends in player advocacy • Players’ rights • Player vs. Casino/Poker Room dispute resolution • Common complaints • Tips for resolving

Casino & Gaming International ■ 67

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GAMING EDUCATION, TRAINING & MANAGEMENT

GAMING ACADEMY PREPARES FOR UK CASINO BOOM BY EMMA ELSON AND COLLEEN McLAUGHLIN

A phone call to Atlantic City’s Community College in the United States started the ball rolling. Four years later, after a fact finding delegation, subsequent research, casino industry advice and programme development, Blackpool’s Regional Gaming Academy, the first region-wide venture in the UK, was launched by Blackpool and Fylde College on 22nd February, 2006.

he Gaming Academy takes up an entire floor of the College’s Bispham Campus and is a spectacular selfcontained facility incorporating a training casino, coin slot workshops, seminar rooms, a customer service laboratory and a hospitality area. The initial idea of the Regional Gaming Academy was born when Blackpool revealed it was going to join the race for the country’s first ‘Super Casino’. Blackpool and The Fylde College recognised that there would be a huge skills gap in the industry and set about ways in which to help the gaming industry meet the needs that a future casino would be crying out for. It is hoped that the Gaming Academy will support the anticipated development of a successful and competitive resort casino industry in Blackpool and the North West region by taking a proactive approach in identifying skills requirements needed and providing training and development to establish a skilled and motivated workforce. On the back of studies done in Atlantic City, the College decided that a training facility was something that they wanted to create.Research into developing the UK’s first Regional Gaming Academy began in May 2002 with a conference call to Atlantic City’s Community College followed by a four-day visit to Atlantic City the following October. The College needed to familiarise itself with the industry and because there was nowhere in the UK to carry out the research the decision was made to visit Atlantic City, itself a former holiday resort – turned – casino town. The delegation from Blackpool consisted of Reg Chapman, OBE, then Principal and Chief Executive; Felicity Greeves, then Vice Principal for Academic Programmes; Gerry Woolfenden, then Project Director of Centre of Vocational Excellence in Customer Service Quality and Head of Computing and IT and

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GAMING EDUCATION, TRAINING & MANAGEMENT

>> “Recent and forthcoming legislative change means the industry is changing rapidly. We are investing in the development of our own staff and recruiting more. Part of that is educating people to work within the industry which makes out relationship with Blackpool and The Fylde College vital.” Chris Clarke, Regional Operational Director for Gala Casinos >> Maggie Dollin-Evans, Head of the School of Tourism, Leisure and Hospitality. The team spent a whirlwind two days in Atlantic City hearing all about the services offered by the Community College in relation to the gaming industry and departmental overviews of all related courses. This research proved invaluable in the design of the suite of courses now being offered at Blackpool and The Fylde College. Also included in the visit was a tour of the city centre, tours of five resort casinos and another with the New Jersey Division of Gaming Enforcement and the New Jersey Casino Control Commission. Further research was carried out over the next two years, with help from Blackpool Council, resulting in a bid to the European Regional Development Fund (ERDF) and the Learning and Skills Council (LSC) for funding to help get the project up and running. The College was duly granted funding from the ERDF and the LSC. Many other generous contributions were made in kind from businesses keen to support the project, including coin slot machines and a range of equipment to begin building the Academy infrastructure. Additional funding came directly from the College. Work began on the building of the Academy in the

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Summer of 2005 and was completed in December. The building work was managed by the College Estates Team who put all jobs out to tender and used, wherever possible, local companies to carry out the work. The first course at the College was run in May 2004 and was the Edexel BTEC Advanced Diploma in Casino Operations. This was followed in September 2004 by the first coin slot technology course. When these courses began, it could never have been envisaged that the UK’s first ever Regional Gaming Academy would be opened less than two years later. But demand for these and other related courses grew and grew and now, with the Academy, the College can meet all of these demands and has been able to design a suite of courses specifically for the gaming industry. Paul Roden, formally of Bally Gaming (the College’s main sponsor), commented: “Our relationship with the College began when its gaming provision operated out of just one classroom. Since then the whole concept has moved along fantastically with its Regional Gaming Academy now occupying an entire floor.” The standard of these courses is reassuringly high. They have been accredited by the two leading UK awarding/examining bodies, Edexcel and City and Guilds,

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>> The Academy is just a small part of the Blackpool Masterplan. It is set to be a permanent fixture whether Blackpool wins its bid to have the country’s first ‘Super Casino’ or not…Blackpool and The Fylde College does indeed have the potential to become a leading facilitator of personnel to the gaming industry. We have created a solid foundation on which to build. We need to extend the work that we have already done with the national casino chains. Gala, for example, is already putting its junior management through the Academy’s BTEC Advanced Diploma courses and is continually looking at the courses we run as a way of training its staff >> which constantly examine and evaluate its training methods and standards to ensure it delivers the best training possible. At the recent Association of Colleges annual conference, these programmes secured the College a much-coveted Beacon Award for Innovation in Curriculum Leadership Development. Paul Brown, Technical Support at Mars Electronics, said: “I think what the College is doing is just what the industry needs and in just one year its gaming provision has seen enormous growth. Generally, it can take an engineer anything from two to four years to learn about these machines. Thanks to the College however engineers can now learn everything they need to know within a classroom environment, working on real machines that use real products.” The College has also received praise from Rodney Dofort, Vice President of Corporate Casino Operations, The Casino Division of Carnival Corporation Plc that owns Carnival Cruise Ships. “This is a truly special place to learn

about the gambling experience”, he enthused. “It has tremendous potential to make excellent croupiers for the future. These students have the knowledge at their fingertips to become the best at their chosen profession.” It was a huge compliment to Blackpool and The Fylde College that Mr Dofort asked to use the Gaming Academy as a venue in which to invite people from across the whole of the UK to attend an interview for a place on one of his ships. But as Maggie Dollin-Evans, Head of the School of Tourism, Leisure and Hospitality, explained: “A Super Casino will mean much more for Blackpool and The Fylde College than just gaming experts. The College has a long standing history in the delivery of internationally renowned catering, hospitality and tourism provision. These experts, who can progress to degree level with us, will be in as great a demand as gaming practitioners (and there will be far more of them).” She believed “Our efforts in these areas have led to us being awarded CoVE (Centre of Vocational Excellence) status

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GAMING EDUCATION, TRAINING & MANAGEMENT

by the government in the wide field of Customer Service Quality for Resort Tourism. “Our full curriculum offer is also prepared for the demand in Performing Arts, Health and Care, Security, Customer Services, Business Services and high calibre management professionals.” Courses at the College’s Gaming Academy range from the BTEC Level One Introductory Certificate in Hospitality, Travel and Tourism to Level Three City and Guilds and BTEC Advanced Diplomas and Level Four Foundation degree courses in Coin Slot Technology and Casino Operations. Courses range in length from 12 weeks to two years and parttime to full-time. As well as the more complex aspects of the gaming world being taught, students are also taught many other basic skills on other related courses which will be transferable if Blackpool does not win the race for the Super Casino. These basic skills will increase the employability of all graduates from the Academy in all aspects of Leisure, Hospitality and Tourism. The final component that completes the training of students at the Academy is a seminar on Social Responsibility in Gaming. The College has developed a strong alliance with GamCare, an organisation that has a commitment to promote responsible attitudes to gambling and to work for the provision of proper care for those who have been harmed by gambling dependency. Students are taught to recognise customers that may have a problem with gambling and the protocol used in helping them. The Academy is just a small part of the Blackpool Masterplan. It is set to be a permanent fixture whether Blackpool wins its bid to have the country’s first ‘Super Casino’ or not. There are many reasons we consider this to be the case. One being that we don’t just teach students from Blackpool and the North West at the Regional Gaming Academy, we have national and even international students here as well. Our doors do not close to anyone. At the moment we have one student from Ireland and another from Italy as well as local students from Blackpool and the surrounding areas. This in turn means that we have helped our graduates into employment not only in the local area but also in casinos throughout the country. We therefore know that there will always be a need for this Gaming Academy because if Blackpool gets the big casino, the fine, we are ready to support them with their training needs. If not, then our graduates are happy to work in the local casinos or go back to the casinos in their home towns, or indeed to go off and see the world. There will be a skills gap in the industry whether the big casino is at the top of the road or 100 miles away and that gap needs to be filled. The Gaming Academy is helping the industry to up-skill existing staff with accredited qualifications. It is trying to help the industry set its own standards with its qualifications. Gaming is an industry with no tradition of accredited training. The training is either in-house or on-the-job, neither of which are recognised outside of the industry. Blackpool College’s nationally recognised qualifications will be recognised universally from one casino chain to the next, providing an industry standard of skills. Therefore, when prospective employers see a CV they know immediately that that person is qualified for the job they have applied for. 74 ■ Casino & Gaming International

The College has approached the educational and training requirements for its courses by replicating the conditions of a fully operational casino. This was done by working with people in the industry and by employing and using people from within the industry. Upon entering the Gaming Academy, using a special key fob to gain access – it is after all a gaming environment and as such only over 18s are allowed onto the floor – you are greeted at the reception desk. To your right as you walk down a long corridor are IT suites, lecture theatres and seminar rooms for all the theory-based learning. To your left is a state-of-the-art coin slot training facility and next door to that is a workshop where the students learn and are practically assessed on their ability to identify faults and fix them. The next room on your left is the cash desk, where all money (funny, of course) must be exchanged for chips. The set of double doors now directly in front of you leads to the jewel in the crown – the gaming room. With four American Roulette tables and four flip-top card tables, used to teach Blackjack, 3 and 5 card poker and Punto Banco, all equipment is up to industry standard. Even though it is quite obvious that no training environment can replicate the real thing, Blackpool and The Fylde has gone as far as possible whilst maintaining that it is, indeed, a training facility. Students learn their trade with music playing in the background while noises and flashing lights from the fruit machines contribute to the atmosphere and CCTV records their every move. The College cannot pack the place with customers and allow them to game at the tables so instead role play situations are used and fun casino nights are staged. The fun casino nights are used as an assessment tool. Gala managers host the evenings as part of their development and they use the Academy’s students as their staff for the evening. Students from other courses within the Academy act as customers. Tutors from other areas of the College are invited to the fun casino evenings as customers and are used purely as an assessment bed. These evenings help to create an even more realistic environment as a lot of ‘customers’ have never played the games on offer at the casino and it is the croupiers’ job to explain it to them. The students learn how to deal with all sorts of different real-life situations. The evenings help them to understand the casino hierarchy of how things work and the organisational structure of within casinos. Blackpool College has the potential to become a leading facilitator of personnel to the gaming industry. We have created a solid foundation on which to build. We aim to extend the work that we have already done with the national casino chains. Gala, for example, is already putting its junior management through the Academy’s BTEC Advanced Diploma courses and is continually looking at the courses we run as a way of training its staff. As Chris Clarke, Regional Operational Director for Gala Casinos, said: “Recent and forthcoming legislative change means the industry is changing rapidly. We are investing in the development of our own staff and recruiting more. Part of that is educating people to work within the industry which makes out relationship with Blackpool and The Fylde College vital.” The course for Gala Managers is staffed by specialists in management training, led by Curriculum Manager John Swannie, all of whom have familiarised themselves with the

GAMING EDUCATION, TRAINING & MANAGEMENT

casino environments provided by Gala throughout the country. Our College believes it also has the potential to become a leading national institution. Vice Principal in charge of Curriculum and Standards, Andy Forbes, noted: “We believe that we could develop further the higher education aspects of this course – in conjunction with a partner university we could most definitely become an international institution.” Ambitious plans, should Blackpool win the race for the Super Casino, include building a new training facility next to the casino to allow the original Academy at Bispham to develop Further Education whilst the new site adjacent to the Super Casino would focus on Higher Education. Andy Forbes continued: “We are a very ambitious College, with over 30,000 students and four main campuses. There is no reason at all, with the aid of more funding, that we should not be able to expand as the industry does to meet more needs and train more people. This will involve either getting them started on a career path at the age of 18 or helping more mature students to return to work.” At a national and international level the College is always working hard on its profile. The College’s attendance at national and international trade shows and exhibitions has already raised the industry’s awareness of the Regional Gaming Academy. We will be attending the Global Gaming Expo (G2E) as we did last year at and the College is also looking into putting in an appearance at the EELEX tradeshow in Russia in September. There were also representatives from the College at the International Casino Exhibition (ICE) in London earlier this year and a team will be going to the International Professional Tradeshow of Gambling and Entertainment Equipment in Moscow, Russia in June. One of the objectives of this visit is to raise the profile of the Gaming Academy as a leading international trainer. Also, to make ourselves known to prospective international students and in doing so offer them a trip overseas to learn a worthwhile trade whilst also learning all about a different culture and way of life. Blackpool and The Fylde College has an excellent reputation for welcoming international students and for supporting them with their studies and settling into a foreign environment. There are technological changes occurring all the time within the gaming industry but that does not affect the Academy and how it teaches and the equipment that is needed. Games like Roulette and Blackjack are being played now the same way they were played 10 or 20 years ago. The casino operations courses have the equipment in place now to last a long, long time with industry-standard equipment throughout. The coin slot courses are a little different, however. With the coin slot machines changing all the time the Academy has to rely a little on the generosity of leading machine distributors in lending or donating their machines to the Academy. But for these companies the end result – the Academy’s graduates – it can only be of benefit to them. So what has the College’s rate of success been so far? It is early days yet to rush to judgement, although the feedback from the industry with regard to the training we have undertaken so far has been very positive. We aim to keep that up, which means the Academy will continue to go from strength to strength. This confidence is reinforced by the steering group that has been developed specifically for the Gaming Academy, bringing together the key players within

the College and the key players from the industry, including general managers from local casinos and representatives from the Learning and Skills Council. The steering group determines the overall direction of the Academy, reflecting employer needs and ensuring course delivery meets the requirements that maximising individual employability demands. It monitors progress against targets and receives quarterly reports from the Gaming Academy Manager. With its first graduates all gainfully employed and the gaming industry booming, it is probably fair to say that the future looks bright for the UK’s first ever Regional Gaming Academy.

COLLEEN McLAUGHLIN & EMMA ELSON Colleen McLaughlin was born in Manchester in 1973. She moved to Blackpool at the age of 13 when her parents decided to buy a guest house in the resort. Colleen started her career in the gaming industry, the minute she turned 18, at the old Tiberius casino in Blackpool. Over the following five years Colleen travelled the world returning to England ten years ago to work for Stanley Leisure in Manchester and then the Clifton Casino in St Annes. She then returned to Stanley Leisure and spent nine years in various locations throughout the country working her way up to the position of Senior Gaming Manager at Star City in Birmingham. Colleen started at Blackpool and The Fylde College in June 2005 as Regional Gaming Academy Manager. She is passionate about the training needs of the gaming industry and is very proud to have been picked with a background in the industry as opposed to education for the position. Colleen believes it was a good move by the College since coming from the industry she has managed to maintain close links with many key players. Emma Elson, 24, is Blackpool and The Fylde College’s Press Officer. She joined the College in December 2005 from the Lancashire Evening Post newspaper, based in Preston. After graduating from Edgehill University College in July 2002 Emma joined the Evening Post as Editorial Assistant. She spent three years learning the ins and outs of local newspapers and was taken on at the College partly for her background in the newspaper industry. Emma applied for her current job as she was looking for a challenge and thought that co-ordinating press activity for one the largest colleges in the country would provide that challenge. With her first big job being the launch of the Gaming Academy she has not been disappointed.

Casino & Gaming International ■ 75

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GAME SECURITY TECHNOLOGY

SURVEILLANCE IN MACAU...FACING UNIQUE CHALLENGES BY WILLY J. ALLISON

A word of advice for casino managers thinking of packing up the golf clubs and moving to Macau. There’s an old saying that goes something like this: There are those that make it happen, those who watch it happen and those who wonder what just happened. From what I hear there is a big demand in Macau for managers that can “make it happen”.

hen Macau opened its doors four years ago to foreign owned casinos it caused great excitement in the industry. Companies eager to get a foot in the door of the Asian market mustered all their resources and energy to put their bid into the lottery. It reminded me a little of the story about Charlie and the Chocolate Factory. Golden licenses are awarded and the lucky licensees get to spend the rest of their days making candy. A sweet story with a nice ending. So two years after the opening of the first US-owned casino in Macau the candy is flowing. By the end of this year all three licensees (Sands, Galaxy and Wynn) will have new casinos up and running in Macau. All three have already started making plans to expand their operations. In effect they are creating an Asian Las Vegas. The projected revenues over the next few years are phenomenal. Sands Macau, the first US casino on the block, continues to pull huge crowds on a daily basis. The casino consistently expands its gaming table numbers to cope with the demand. They now have 450 table games and the count continues to grow like a bodybuilder on steroids. Macau is truly the land of opportunity for companies looking for growth. From a career perspective, if you are a casino professional looking for a challenge, Macau is the place to be. For those of you that miss the old days when casinos were built and run for gamblers, Macau is the place to be. If you’re tired of checking the rating system to see if your player has enough play to get a comp at the buffet, Macau is the place to be. If you’re looking for a regular early-out on a swing shift, well maybe Macau is not the place to be. Now if you’re in the game protection business and love

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>> Now if you’re in the game protection business and love the thrill of the chase, Macau is definitely the place to be. Casinos in the region have taken some huge hits in the last two years. The new casinos, inexperienced staff and sheer volume of gaming activity make Macau very susceptible to cheating and scams. Having had the opportunity to tour the front and back of house of some Macau casinos I can safely say the guys upstairs in surveillance are just as busy (if not busier) than the guys on the floor >> the thrill of the chase, Macau is definitely the place to be. Casinos in the region have taken some huge hits in the last two years. The new casinos, inexperienced staff and sheer volume of gaming activity make Macau very susceptible to cheating and scams. Having had the opportunity to tour the front and back of house of some Macau casinos I can safely say the guys upstairs in surveillance are just as busy (if not busier) than the guys on the floor. SURVEILLANCE CHALLENGES So how does a Surveillance Director prepare for battle against the sheer mass attack of gamblers and other “interested parties?” Well a good way to start is to throw away the surveillance manual you photo copied from the last casino you worked. You will need to sit down and re-write the book after you have conducted a thorough threat analysis. Here are some of the things you should consider: ■ High volume gaming activity: 85% of gaming revenues come from the game of baccarat. On most games the

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cards are handled by the players which make the game vulnerable to threats like card mucking. The players control the pace of the game. The baccarat limits are high and it is not uncommon to see chips or plaques with six digit numbers on them. A table can lose large amounts of money at the flip of one card. Staff may be laissez faire regarding these large bets and after a while may become complacent and don’t question large wins. A table that seats nine players can often cater to three times the amount of players. It is not unusual for players to stand two-deep behind a table to participate in a “lucky streak” on the table. Remember that the average amount wagered by a player in Macau is 8-10 times the average amount wagered in Las Vegas. ■ Inexperienced croupiers: There’s a very good chance that at the time of opening most of the croupiers have never dealt a game using real money before. Hopefully training has been adequate enough to provide a competent level of proficiency but it can take a few

GAME SECURITY TECHNOLOGY

months before croupiers really feel confident. This period is valuable work experience and procedures should be enforced without compromise (it sets the tone for the future). The first three months of a casino opening is usually marked down in a professional cheat’s yearly planner. ■ Inexperienced surveillance staff: Where do you get surveillance people? Contrary to popular belief, there is not a Top Gun Academy in the Nevada desert graduating elite game protectors and assigning them to casinos around the world to uphold gaming integrity and the casino way. According to their job description surveillance officers are supposed to have an excellent knowledge of all facets of the casino operation including every game offered and internal accounting controls and procedures. They are highly skilled at detecting criminal activity and have a wealth of knowledge on the latest cheating scams. This is probably the Surveillance Directors’ biggest challenge working in Macau. Actually it is probably the Surveillance Directors’ biggest challenge anywhere. The problem is compounded in Macau because of the need to staff entire operations from scratch in a short period of time. There really is no option for the new casinos on the block. They have to provide their own induction training programmes. This is not unusual but consideration must be given to the fact that game protection is a skill developed from a combination of training and hands-on experience. Like new croupiers the first three months on the job will be a transition period. TECHNOLOGY TO THE RESCUE Casino executives in Macau are concerned about the shortage of expertise. The threat of cheating is high. Good experienced surveillance managers are very hard to come by. Macau is not everyone’s cup of tea and attracting qualified candidates for management positions can be difficult. Keeping them is just as difficult. The frantic pace in which the new casinos are building and expanding means that managers are in big demand. Experienced casino managers that have already acclimatised to the “Macau way” are seen as highly favourable by casino recruiters. The Macau immigration laws place tight restrictions on the issuance of work permits. Companies opening new casinos can apply to sponsor experienced managers from overseas but there are budgetary considerations that make recruitment of foreigners limited. The current situation is a challenge that some of the casinos are tackling head on with a new and innovative approach. They say the solution is simple. Don’t have management. Ok, maybe it’s not that simple. Let me explain. The casino licensees in Macau are permitted to build and run multiple casino properties. Some of these licensees plan to build at least five casinos in the next three years. Normally five casinos would require five management teams but the chances of developing trainees into managers in that short time frame are highly improbable. This is where technology comes in to play. Instead of having a surveillance room in all five casinos, a large central monitor room would be used to monitor all five casinos. This way one management team could oversee and monitor all five casinos. Remote monitoring is not new. Security companies have been monitoring facilities for years from a central location.

The technology is very similar but the bandwidth demands required by a casino surveillance system are much greater. Casinos require 30 frames a second video at high resolution while most security type applications may only require two frames a second at low resolution. Until recently, real time video was difficult to stream over a network but bandwidth capabilities have increased to the point where it is now possible. Let’s examine some of the advantages and challenges of centralised monitoring from an operational perspective: ADVANTAGES ■ Management costs: The Company saves money by using one management team and technical support crew to oversee multiple properties. ■ Space savings: No monitor rooms needed for satellite properties ■ Communication: Easier to keep gaming management in all properties alerted to suspicious activity and persons of interest (one alert to all) ■ Centralised database: One corporate database serving all properties CHALLENGES ■ Cost of bandwidth: Although technically the bandwidth required can be achieved it does come at a price. ■ Operator knowledge: Operators of the camera system will have to remember thousands of camera locations spread across multiple properties. ■ Flat organisational structure: A restricted career path for front line surveillance personnel. There is no doubt that if successful the casinos in Macau could revolutionise the way casino surveillance is conducted around the world. In fact, in the near future we could see surveillance professionals in one part of the world monitoring casinos in another part of the world. This is a real example of how Macau is leading and pioneering the way in the development of gaming technology and using it effectively to solve an immediate problem.

WILLY J. ALLISON Willy J. Allison is President and founder of Las Vegas based World Game Protection Inc, organisers of the World Game Protection Conference. Willy started in the casino industry in 1987 and specialises in casino surveillance. Willy has international casino management experience, having worked in the U.S., Australia, Asia and Argentina. He also gives casino game protection lectures, writes articles for various U.S. gaming publications and puts out a free monthly e-newsletter on casino game protection called The Catwalk.

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CELEBRATING 10 YEARS OF EXCELLENCE IN RESPONSIBLE GAMING BY PHIL SATRE

The National Center for Responsible Gaming (NCRG) celebrates its 10th anniversary this year. In the decade since it was founded in Kansas City, Missouri, the Center has provided unparalleled international leadership in advancing the research, education and treatment of disordered gambling. The NCRG has distributed millions of dollars to the leading researchers in the field and remains committed to doing so far into the future. And, we plan on doing much more.

n order to best explain where the NCRG is going, it is first important to examine how far we have come. Understanding the reasons why the NCRG was needed in the first place begins with an understanding of the state of pathological gambling research before 1996. In the early and mid-1990s, the field of gambling research was under-funded and, frankly, replete with questionable “science.” This condition existed in spite of the fact that pathological gambling was determined to be a psychiatric disorder in 1980. Prior to 1996, methodological inconsistencies and a lack of peer-reviewed studies meant that much of the “research” available in the public domain lacked scientific credibility. This situation was most evident in the wildly disparate estimates of the prevalence of pathological gambling. These estimates, which since have all been proven to be far overstated, placed the prevalence rate at anywhere from five to fifty percent of the population. This state of gambling research was caused, in no small part, by a lack of sufficient funding for research into pathological gambling, making it nearly impossible for interested researchers to conduct meaningful studies of the disorder. It would not be long before the gaming industry would step up to the plate to fill this void and pave the way for a new era of expansive scientific inquiry into disordered gambling

THE SEEDS OF CHANGE Three critical factors contributed to the creation of the NCRG in 1996. First was the incredible growth and subsequent increase in popularity of the US commercial casino industry beginning in the early 1990s. For the first time, commercial and Native American-owned casinos entered into jurisdictions Casino & Gaming International ■ 81

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>> The University of Missouri, Kansas City (UMKC) offered to host the new organisation, and Boyd Gaming Corporation not only provided the start-up funds for the NCRG in 1996 but also made a 10-year pledge of $875,000 to the organisation. Other leading gaming companies, including International Game Technology, Mandalay Resort Group, MGM MIRAGE, Caesars World, Inc. and my company, Harrah’s Entertainment, Inc., also contributed substantial funds to support the newly formed NCRG >> beyond Nevada and Atlantic City, coinciding with the development of newer, bigger and more spectacular casino resorts in more mature jurisdictions. This expansion and the new challenges it presented resulted in the creation of the American Gaming Association (AGA), a national trade association that would serve as the voice for the US commercial casino industry nationwide. Upon its creation, the AGA identified a commitment to addressing the industry’s role problem gambling issues as one of its first priorities. The third and ultimate catalyst for the creation of the NCRG was a new Missouri law requiring gaming license applicants in the state to make a financial commitment to addiction prevention programmes in order to receive a gaming license. At that time, as chief executive officer of Harrah’s Entertainment, my company and many others in the industry were already implementing measures to promote responsible gaming at our own properties among our employees and patrons. But, as the industry expanded into new jurisdictions and with the new regulations in Missouri, it became increasingly evident that a strong body of research would help greatly improve existing responsible gaming programmes and also could inform the development of new initiatives. Boyd Gaming Corporation and Station Casinos, Inc. were two companies with licenses in the nascent Kansas City market, and my colleagues at those companies wanted to ensure the funds they were required to contribute would be spent to good purpose. Thus, the AGA brought together a group of industry executives, researchers and regulators to discuss how best to address the Missouri requirements. The group agreed that effective addictions prevention programmes must be based on sound science, and that the only way to increase study into gambling disorders would be to provide a steady funding stream to interested researchers. Additionally, the group insisted on the creation of a strong firewall between any funding from the casino industry and the people who ultimately would make the decisions about what research projects would receive grants. Taking all this into consideration, the AGA and industry leaders determined the best way to promote advances in problem gambling research would be to create an independent, not-for-profit organisation called the National Center for Responsible Gaming (NCRG) to fund research in the field and conduct education and awareness activities. Governed by a board of directors consisting of an equal number of industry and non-industry representatives charged with raising funds for disordered gambling research, the NCRG also organised a separate research review board that would make research funding recommendations. The 82 ■ Casino & Gaming International

review board, which provided the firewall the industry had been seeking, was tasked with reviewing grant applications and choosing grant recipients. The University of Missouri, Kansas City (UMKC) offered to host the new organisation, and Boyd Gaming Corporation not only provided the start-up funds for the NCRG in 1996 but also made a 10-year pledge of $875,000 to the organisation. Other leading gaming companies, including International Game Technology, Mandalay Resort Group, MGM MIRAGE, Caesars World, Inc. and my company, Harrah’s Entertainment, Inc., also contributed substantial funds to support the newly formed NCRG. These initial funds were instrumental in creating a stable organisation with the primary mission of supporting rigorous science-based research and educational programmes on gambling and health. Less than a year later, in January of 1997, a number of other gaming companies joined in supporting the NCRG, bringing the total commitments made to the NCRG – just one year after its creation – to $4.41 million to be allocated over a 10-year period. To date, commercial casinos and related businesses through the NCRG have raised an unprecedented $15 million for research on gambling disorders, which is more than any other source, including the federal government. BUILDING A REPUTATION With these funds secured, the NCRG became the first serious funding source in the problem gambling research field and represented a commitment to rigorous scientific standards, including an insistence that all research be peerreviewed. The NCRG’s very first objective was to fund research that would accurately identify the prevalence rate of pathological gambling, which as previously noted was a source of great confusion and debate in the years before the creation of the NCRG. To meet this objective, the first project funded by the NCRG was a meta-analysis — begun in 1996 and published in 1999 — by Harvard Medical School’s Division on Addictions. In its findings, the meta-analysis placed the national prevalence rate of pathological gambling at 1.29 percent, a number that since has been confirmed by numerous studies. This prevalence rate, which to date is still the most widely cited and accepted figure for the disorder, also was confirmed by the National Research Council of the National Academy of Sciences as the most reliable estimate of pathological gambling prevalence rates available. Having successfully met one of its initial objectives, the NCRG in 2000 embarked on an historic collaboration with Harvard Medical School, resulting in a shift of the evaluation of gambling research projects and grant-making

SOCIAL RESPONSIBILITY AND PROBLEM GAMING

responsibilities to Harvard. The collaboration consisted of the NCRG awarding a multi-million-dollar contract to Harvard Medical School’s Division on Addictions to establish the Institute for Research on Pathological Gambling and Related Disorders, which would carry out the academic and scientific functions previously performed by the NCRG. This transfer of duties to the Institute allowed the NCRG to focus more fully on its mission to develop and support public education programmes and develop research-based, practical applications to be used in the casino setting. Since its inception, the Institute has supported both internal core gambling research and competitively funded external research at educational, medical and research institutions worldwide. Its internal research programme is led by a true pioneer in the field of gambling addiction research, Dr. Howard Shaffer, director of the Division on Addictions. The Institute, which employs scientific peer-review panels to evaluate all research proposals, has to date distributed onethird of its funds for research to non-Harvard institutions. The Institute employs an independent review board to make grant decisions. The review board consists of established scientists who use the standards and procedures of the National Institutes of Health (NIH), including peer review panels comprised of distinguished, independent scientists, to determine the scientific merit of the study results. The creation of the Institute provided an incredible opportunity, both to further separate research decisions from the funding companies — a safeguard to protect the integrity of the science — as well as to enable one of the world’s leading academic institutions to take over grant-making responsibilities. ADVANCING THE SCIENCE Since the creation of the NCRG in 1996, tremendous progress toward the understanding of gambling disorders has been made, and the field of research is fuller and more respected than ever before. Though it cannot capture the full scope of the NCRG’s impact, a quick review of the numbers shows just how much the NCRG has accomplished in its 10-year history. NCRGfunded studies have been published in more than 130 highly competitive, peer-reviewed scientific journals, clearly indicating that scientists believe the organisation is supporting sound scientific contributions to the field.

Additionally, the amount of research conducted on gambling disorders since the NCRG’s inception has exponentially increased; fully one-third of the total amount of research on gambling disorders was published between 1999 and 2003. This indicates that much of what is known about the disorder has been learned only in the past few years, a fact due, in part, to the availability of funding from the NCRG and other sources, including the federal government. In many cases, funding from the NCRG has also served as crucial seed money for larger projects, leading to major grants from sources such as the highly competitive National Institutes of Health, which began offering grants in the field of gambling research in 1998 – two years after the creation of the NCRG. The NCRG has enabled a remarkable increase in the volume and scope of disordered gambling research. Thanks to the NCRG, we now have reliable statistics of how many people have the disorder, promising treatments for gambling disorders, more evidence for the role of genetics in the development of pathological gambling, a greater understanding of youth gambling, new instruments for accurately measuring, screening and diagnosing pathological gambling and results from the first national survey of gambling on college campuses. We also have a more sophisticated understanding of the brain’s reward system and a new understanding that all addictions are part of a single underlying addiction syndrome. Within the commercial casino industry, the research now available has allowed us to better understand and deal with health risks among our employees. It also has helped evaluate the effectiveness of intervention programmes, including self-exclusion, and has led to important advances in the development of treatment options based on science rather than speculation. SHIFTING THE PARADIGM These research advances not only have increased our knowledge, they also are changing the way people think about disordered gambling. NCRG-funded research has fueled a shift in the traditional paradigm, encouraging clinicians, researchers and public policy-makers to consider gambling from a public health perspective, which promotes the examination of health-related phenomena through a population-base lens rather than focusing solely on the

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individual impact. The public health perspective takes into consideration the impact — both positive and negative — of gambling on the community and also looks at the ways government, industry and the health care sector all respond to people struggling with a gambling problem. This concept of a public health perspective was born through international collaboration of three leading researchers in the field of pathological gambling from the US, Australia and Canada, and was featured at the NCRG’s 2005 Conference on Gambling and Addiction, which is jointly sponsored by the Institute. Each year, the annual conference brings together approximately 400 researchers, clinicians, gaming industry executives, policy-makers and regulators from around the world to learn about the newest research results, discuss the effectiveness of common practices, and address regulatory and public health concerns related to disordered gambling. The conference incorporates issues relevant to research, public policy and industry interests, allowing all of these diverse groups to find common ground and determine strategies for working together to address disordered gambling within the public health context. This international information exchange also is fostered through the distribution of the Responsible Gaming Quarterly (RGQ), a joint publication of the NCRG and the AGA. In circulation since 2001, RGQ has become one of the leading international resources for news and analysis of disordered gambling issues. Counting industry representatives, government officials, academics and treatment community representatives among its subscribers, RGQ highlights initiatives from each of these populations to address disordered gambling. ENTERING A NEW ERA Many prominent researchers and regulators agree that in the 10 years since its creation, the NCRG has legitimised the field of disordered gambling research, broadened its scope and impact, and attracted the top minds and most promising young talent from some of the most prestigious academic and scientific institutions around the world. The NCRG has supported more than 30 research projects at more than 20 institutions including Boston University Medical School, Harvard University, Johns Hopkins University, McGill University, University of Colorado, University of Illinois, Champaign-Urbana, University of Michigan, University of New Mexico, VA Medical Center Cleveland, Washington University School of Medicine and Yale University School of Medicine. In our 10th anniversary year the NCRG has renewed its mission to be the leading source of science-based research and information on gambling and health, advancing education, prevention, treatment and public policy. We’re also broadening our focus to increase the positive impact of this vital research within the gaming industry and in casino communities nationwide. We plan to do this by providing the casino industry with practical, science-based tools, by increasing public awareness of problem gambling and methods for gaming responsibly, and by serving as a resource and repository of responsible gaming educational materials for the media and the general public. To help achieve this new mission, we have entered into a new, formal partnership with AGA member companies and their properties, both at the national and local levels, to 84 ■ Casino & Gaming International

create, facilitate and coordinate practical, science-based responsible gaming efforts. The industry’s public education efforts in this arena have been quite successful, and we hope that by working more closely with the gaming industry, we can ensure that all responsible gaming programmes are based on the best available science and incorporate a public health approach to this important issue. The NCRG will provide the seed money, expertise and coordinating capabilities needed to make industry initiatives as effective as possible. I am confident that, by working more closely with the AGA, the impact of new NCRG outreach programmes will be greater than if we worked alone, as our efforts will have both elements needed for success – independent science as their foundation and industry support for implementation. A LOOK TO THE FUTURE Today, the NCRG remains the only national organisation in the US exclusively devoted to the funding of peer-reviewed research on disordered gambling and public education about responsible gaming. With the commercial casino industry’s continued commitment, the NCRG will remain a leading source of research funding for decades to come. And, by expanding our education efforts, forging a stronger partnership with the gaming entertainment industry and continuing to encourage collaboration, the NCRG can take what we have learned from that research and use it to create programmes that the industry and gaming communities can use to promote responsible gaming programmes and help those who cannot gamble responsibly. I look forward to leading the NCRG as we embark on this new era and am confident our next decade will see even greater advancements in research and public education in this important arena. PHIL SATRE Phil Satre is chairman of the National Center for Responsible Gaming and has long been considered a leader in the Nevada business community and an innovator in developing effective industry initiatives to promote responsible gaming. He dedicated 25 years of service to Harrah’s Entertainment, Inc. before retiring in January 2005 as chairman of the board. During Satre’s tenure, Harrah’s was recognized as a leader in the responsible gaming arena, and several of its early programs, such as Operation Bet Smart© and Project 21© have served as models for the entire gaming industry. Satre also serves as a board member of the Nevada Cancer Institute, Rite Aid Corporation, Sierra Pacific Resources and TABCORP Holdings Limited (Australia). He is a trustee of Stanford University, on the board of trustees of the National D-Day Museum Foundation and a member of the UC Davis School of Law Alumni Association Board. Satre has received several distinguished awards, including “Gaming Executive of the Year” from Casino Journal in 1998, the 2002 “Lifetime Achievement Award” from the American Gaming Summit. He was deemed one of the nation’s top 100 Chief Executives by Executive Magazine and in 2003 was inducted into the Gaming Hall of Fame.

SOCIAL RESPONSIBILITY & PROBLEM GAMING

THE NEXT FRONTIER: RESPONSIBLE GAMING IN ASIA Last [October], analysts from Merrill Lynch announced they anticipate there will be 50 new casinos in Asia by 2012. This incredible growth, evidenced by the flourishing market in Macau, Singapore’s decision this spring to legalise and create two integrated casino resorts by 2009, and the consideration of new and expanded gaming operations in a host of other Asian countries, demonstrates the increasingly global nature of the gaming entertainment industry. At the same time, Asian countries and U.S. companies seeking a place in the Asian market are already taking actions and making plans to promote responsible gaming and address disordered gambling in these new jurisdictions. SINGAPORE’S ‘SOCIAL SAFEGUARDS’ In conjunction with its historic move to legalise casinos earlier this year, Singapore unveiled a national framework to address problem gambling four years before the expected completion of the first integrated casino resort in the country. Announced in April, the comprehensive framework includes the creation of a National Council on Problem Gambling, public education efforts, community-level counseling and support services, medical treatment for compulsive gamblers, gambling-related research, and industry regulation and enforcement measures. The announcement of the national framework followed the release of survey results on Singapore residents gambling participation. Conducted from December 2004 through February 2005 by Singapore’s Ministry of Community Development, Youth and Sports (MCYS), the survey determined that more than half (58 percent) of Singaporeans over the age of 18 engage in some kind of gambling activity, but that only a small percentage (2.1 percent) showed symptoms of probable pathological gambling. According to MCYS, this prevalence rate is comparable to those reported in surveys conducted in other Chinese-majority locales such as Macau (1.8 percent) and Hong Kong (1.9 percent). One core aspect of Singapore’s efforts is the creation of the National Council on Problem Gambling (NCPG), a board of individuals with diverse areas of expertise charged with advising the MCYS on public education and awareness programmes focused on problem gambling. Chaired by Lim Hock San, president and CEO of United Industrial Corporation Ltd., the NCPG also will determine funding applications and assess and advise the government regarding preventive and rehabilitative programmes. The NCPG kicked off its public education programme in October with the launch of its Web site, which features information on problem and pathological gambling, helpful links to research and information on how problem gamblers can get help. Among these resources is the Institute of Mental Health’s Community Addictions Management Programme (CAMP), which was established in 2001. CAMP employs a multidisciplinary team of doctors, nurses, psychologists and counselors to provide treatment for individuals with various addictions. The public education programme also will be prominently featured in newspapers and magazines, as well as radio talk shows and television documentaries. In addition to these public outreach and treatment programmes, Singapore is imposing what it terms ‘social safeguards’ for casinos, ranging from entry levies of SGD $100 (USD $60) per day to advertising restrictions and a variety of exclusion programmes. One proposed exclusion programme, which would give family members the power to have their loved ones banned from visiting the casinos, already has proven controversial among sociologists and others. The safeguards are laid out in the Casino Control Bill released for public discussion last [October] and now under consideration in Parliament. In an April 14, 2005 speech to Parliament, Dr. Vivian Balakrishnan, Minister for MCYS, explained that the safeguards were developed after a project team visited several major jurisdictions with casinos including Nevada, the Bahamas, Macau,

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Australia and London, holding discussions with key gaming stakeholders and examining the social safeguards, legislation and regulations in these other jurisdictions. According to Lim Hok San, the NCPG plans to track public awareness of its outreach efforts and messaging as the programme continues, and will further refine its programmes to improve their effectiveness. HONG KONG PROMOTES PROBLEM GAMBLING SUPPORT The casino-free territory of Hong Kong, where popular forms of gambling include lotteries, horse racing and betting on soccer matches, among others, has developed an extensive system of resources to address problem gambling. Established in 2003, the Ping Wo Fund is a charitable trust fund overseen by the Secretary of Home Affairs. Created through a five-year contribution of more than HKD $70 million (USD $9 million) from the Hong Kong Jockey Club, the Fund finances problem gambling research, public education and prevention efforts, and counseling and treatment services for problem gamblers. Hong Kong’s government has initiated many educational and outreach efforts, including the commissioning in 2003 of Hong Kong Education City, an educational institution wholly owned by the Education and Manpower Bureau, to launch a two-year campaign on gambling-related issues targeting school-aged youth, parents and teachers. The campaign included the launch of the ‘Say No to Gambling Action’ Web site, which offers online activities and resource information for youth on problem and pathological gambling. Additionally, the Ping Wo Fund finances two dedicated counseling and treatment centres for problem and pathological gamblers, the Caritas AG Counselling Centre and the Even Centre at the Tung Wah Group of Hospitals. These centres provide specialised counseling for individuals with gambling problems and their families on-site, as well as via e-mail and problem gambling hotlines. Perhaps the most significant indicator of Asia’s increased focus on problem gambling issues was the inaugural Asian Pacific Problem Gambling Conference (APPGC), held Nov. 23-24, 2005 in Hong Kong. Sponsored by the Ping Wo Fund and organised by the Even Centre, the annual conference aims to foster communication of best practices in gambling prevention, intervention and research; raise awareness of cultural issues in problem gambling, particularly within Chinese and Asian communities; advance theory and model development in prevention, practice and research in problem gambling; and promote responsible public and social policy addressing the prevention and treatment of gambling disorders. Targeted to a broad range of international gaming stakeholders, from treatment professionals and researchers to educators and policymakers, APPGC featured simultaneous interpretation in Putonghua, Cantonese and English for the keynote sessions. Among the leading problem gambling experts delivering keynotes were Robert Ladouceur, Ph.D., of the UniversitÎ Laval in Quebec; and Jeffery L. Derevensky, Ph.D., of McGill University. U.S. COMPANIES ADAPT TO ASIAN MARKETS U.S. casino companies also are busy adapting their established responsible gaming education and outreach programmes to the needs of the Asian communities in which they are opening and operating properties. “We’ve worked very hard in the U.S. to make sure that our responsible gaming training speaks the language of our employees,” said Dean Hestermann, corporate director of public affairs for Harrah’s Entertainment, Inc., which is bidding for one of the two casino licenses in Singapore and is looking to expand into other Asian markets. “As we move forward in Singapore and other non-U.S. jurisdictions, we’re committed to making sure that our responsible gaming programmes fit the cultures not only of our local employees, but also the cultures of the population centres from which we might attract customers.” In September, the Las Vegas Sands Corporation, parent company of the Venetian and the Sands Macao, announced its cooperation with the Division on Addictions by piloting the EMERGE (Executive, Management and Employees Responsible Gaming Education) programme, which trains all employees to recognise customers and co-workers displaying signs of problem gambling. Reports say that employees at the Sands Macao are to receive a version of the training program tailored to reflect Asian culture. Hestermann also pointed out Harrah’s practice of developing Responsible Gaming Ambassadors, employees who are specially trained to discuss the company’s responsible gaming concerns with certain customers, and how the company will continue this programme as it expands into Asia. “We want these interactions to, first, ‘Do no harm.’ And second, we want them to lead to positive changes for customers who desire change,” he said. “Translating these programmes to other cultures might require extra training in how to avoid being confrontational or accusatory during these conversations, and might place additional emphasis on confidentiality when self-exclusion or self-restriction options are discussed.” The responsible gaming programmes currently underway in Asian gaming markets already are making an impact, but as those markets expand in the coming years, the challenge of creating effective and culturally appropriate programmes to address disordered gambling will continue. Building on the solid foundation already in place, an increase in the number and variety of programmes addressing problem gambling will facilitate more in-depth research and better data and will help increase awareness of the importance of responsible gaming in these new jurisdictions. Source: Responsible Gaming Quarterly, Fall 2005, American Gaming Association (AGA), with minor adjustments.

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WOMEN, GAMING REALISM AND RIGHT CHOICES BY CHERYL LEWIN

The increasing incidence of women finding themselves in gambling difficulties in the United States, as increasing numbers participate, is a recently understood trend. While studies – national and international – are grasping the potential for this to grow and what can be done about it, the present realities suggest a number of concerns can be met by paying greater attention to prevention: targeted information, an educational process and a professional environment of checks and balances. Nevertheless, personal choices weight heavily, but understanding what lies behind the problems assists the task of prevention.

here casinos were once considered male dominated arenas, the typical visitor to today’s casino floor is just as likely to be female. Generally speaking, the types of games males and females choose may be different, as are the reasons that bring them to the casino. Have women become the next generation of gamblers and if so what barriers to treatment may prevent them from accessing available services? In certain areas, as a release by the Department of Human Services of the State of Oregon indicates, “women with gambling problems outnumber men,” states Jeffrey Marotta, PhD., problem gambling services manager. A recent study from the Connecticut Council on Problem Gambling which was based on a 1999 Helpline Summary, states that “women now constitute the fastest growing number of Connecticut residents seeking help for their gambling problems.” The top four types of problem gambling reported in this study for women were casino slots, lottery scratch-off tickets, lottery-daily numbers, and casino blackjack. The 800-GAMBLER Hotline in Chicago, Illinois reports an almost equal number of calls from men and women seeking help for their gambling problems. A recent CBN news commentary noted that, “in a game that has traditionally been dominated by men, women have established themselves as major players in online poker”. The article adds that “figures show that more than half of online casino players are now women, a statistic that took the online gambling community by surprise”. What draws these women to games of chance? Are they at equal risk for developing gambling problems, and if so, are they able to find available treatment options? In their book

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Behind The 8-Ball, Linda Berman and Mary-Ellen Siegel conclude: “Women are increasingly encouraged to participate in risk-taking activities like gambling. Because of changing values and life-styles, women of all ages now have the time, money, and access to legal and illegal gambling. Women turn to gambling for the same reasons as men; to alter their moods, especially if they have suffered a loss or major blow to their self-esteem”. While women sometimes gamble to meet social needs, if they are drawn to the casino as a way to avoid loneliness, loss, grief, depression or painful emotions, escape emotionally from past or current trauma, get out of poverty by winning money, or to relieve stress, they may be vulnerable to developing gambling problems. These women can develop a numbness that renders them unaware of time passing, money lost, or others around them. Women with gambling problems may also have a cross-dependence to alcohol or drugs. Studies suggest that women who are problem gamblers have a 2 to 3 time’s higher incidence of substance abuse. In general males are often considered “action” gamblers, drawn by the live-games and the thrill seeking environment. Women, in contrast, are often considered to be “escape” gamblers. They are often found on the machine segments of the casino floor. Their reasons for gambling are sometimes escaping or avoiding relationships, health problems, and personal demands; trauma; avoiding conflict or abuse at home; mental health concerns; substance abuse or dependence; or other painful circumstances. They may be trying to avoid thoughts, feelings, pain, addiction and trauma. Gambling can provide a temporary escape. A woman struggling with urges to gamble may be secretive, as the shame and guilt are difficult to share. They may feel isolated with little support. Like many people they can become trapped, and winning can create the urge to play more in hopes of bigger wins. Women in general have access to less disposable income so they can find themselves in financial trouble sooner than their male counterparts. Several community health-based organisations in the United States and Canada have designed programmes specifically to address the unique needs and concerns of women with problem or compulsive gambling behaviour. Nevertheless, women tend to be underrepresented in treatment for problem gambling. In Ontario, Canada, a Survey of Women Gambling reported, “a recent prevalence study indicated that 3.8% of adults in Ontario have moderate or severe gambling problems. While the ratio of male to female gamblers with problems is 4.6 to 3.1, current treatment utilisation data indicates a gender ratio of 1.9 to 1. This confirms that female problem gamblers are underrepresented in treatment in Ontario”. This research concluded a needs assessment should be

established for women to learn more about the needs of women who gamble including; the problem gamblers personal history, gambling behaviour and perceptions on various issues. Gamblers Anonymous, a 12-step support group with no gender bias, has meetings available in all 50 of the United States and is represented internationally in 40 countries from Argentina to New Zealand. Gamblers Anonymous was inspired by the work of Alcoholics Anonymous and functions according to similar principles. By participating in GA meetings individuals can open up and share with others who have experienced similar feelings and situations. In this way gamblers do not feel so alone or isolated and can gain and/or offer support. Research in all areas of problem and compulsive gambling is ongoing; however the reasons for women gambling and developing problems are specific and need to be addressed and represented in research studies to better target at-risk individuals and create effective treatment strategies. NORC (National Organisation for Research) at the University of Chicago, in its Gambling Impact and Behavior Studies Comparison, found that between 1975 and 1998, “despite the equal proportions of males and females who

>> For many women, gambling is a form of entertainment. They can enjoy a fun, social outing that does not interfere with other normal functioning. For these women their view of gambling and the odds of winning are realistic. They do not hold erroneous beliefs about wining nor do they gamble with money that is needed for house payments, food, or basic necessities. They are considered social gamblers >>

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have gambled in their lifetimes, the actual percentage of all women who have ever gambled has risen 22 percent, while for males, the percentage has increased by 13 percent.” Their findings also concluded that, “past year bingo players were more likely to be female in both 1975 and 1998 and we found this relationship even stronger today, with women comprising about two-thirds of the adults who have played bingo in the past year.” In a recent research study titled ‘Is There More To Gambling Than Just Winning Money…Bingo!’ published in The Wager Weekly Addiction Gambling Education report at Harvard Medical School, the data gathered by Chapple and Nofzinger (2000) “suggest that bingo players, overwhelmingly middle-aged and elderly females, play for the monetary and social aspects of the game.” The journal adds: “Specifically, the money available to win from bingo games is not usually excessive ( i.e., unless players get involved in high stakes bingo games), and the odds of winning these bingo games arguably are similar to other games for chance regardless of skill, luck, and regularity of attendance and play. However, the socialising aspect of playing bingo remains reliable for its participants according to their reports. These participants report avoiding communal isolation and befriending demographically similar women in a safe environment to play bingo.” Like other developments of abuse or dependence, a small percentage, approximately 1.8-3.6% of people who gamble, can develop problem or pathological gambling disorders. These gambling problems can bring about similar negative consequences. Left untreated, a gambling problem may become worse over time, and suicide may be considered as a way out. According to the National Council on Problem Gambling, pathological gamblers have the highest rate of suicide of any other addiction. Approximately

one in every five pathological gamblers has attempted suicide. There is positive information that may override the current barriers for women seeking help. Sheer lack of information has sometimes kept women from understanding their particular problem and needs to address and treat it. Research and programming today is taking into account the needs and barriers specific to women gamblers. Problem gambling help lines give information regarding services and support groups to women 24 hours a day seven days a week. Individual counseling is available to female gamblers in many communities. Some areas offer out-patient and residential gambling treatment programmes. Resources for women problem gamblers are limited, yet strides are being made in public and professional acceptance of this issue. For many women, gambling is a form of entertainment. They can enjoy a fun, social outing that does not interfere with other normal functioning. For these women their view of gambling and the odds of winning are realistic. They do not hold erroneous beliefs about wining nor do they gamble with money that is needed for house payments, food, or basic necessities. They are considered social gamblers. That said, as the number of women who gamble increases, so does the need for early prevention and intervention programmes so women can make more informed choice with regards to their gambling behaviour and develop coping strategies should they develop problems related to their gambling activities. The Department o f Community Health in Michigan offers these safeguards for those who chose to gamble: ■ Always gamble with others and not alone ■ Having friends, family, or colleagues nearby can keep gambling form getting out of hand. ■ Set limits on how much time and money you spend on gambling. ■ Almost everyone who gambles loses money in the long run. The final decision to gamble is up to the individual. Having the most information available can help women make choices that are not based on false or erroneous perceptions regarding illusions of control, but rather, realistic views of games of chance. CHERYL A. LEWIN Cheryl A. Lewin is the president of Gaming Solutions and Associates. She consults with responsible gaming operators and treatment professionals in the United States. as well as international locations. She has worked extensively in both the inpatient and outpatient field of mental health and addiction. Cheryl sits on the Board of Editors of BASIS, a Brief Addiction Science Information Source, at Harvard Division on Addictions, Harvard Medical School. She is a member of the Illinois Counseling Association. Cheryl received her Bachelor of Science at Loyola University Chicago and her Master of Science at National-Louis University Chicago. She is a Licensed Professional Counselor, CADC, National Certified Recovery Specialist, and has completed the training for Problem and Compulsive Gambling.

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COMMUNITY LEADERS’ PERCEPTIONS OF GAMING INDUSTRY’S EFFECTS OVERVIEW AND METHODOLOGY When commercial casinos first began to expand outside Nevada nearly 30 years ago, gaming opponents predicted that casinos would destroy communities by attracting organised and petty crime, corrupting government officials, cannibalising local businesses, and preying on poor or addicted gamblers. Yet today, a starkly different picture emerges in communities that have adopted casino gambling. To help explore the impact that casino gaming has had on communities around the country, Peter D. Hart Research Associates conducted a telephone survey among 201 local community leaders in jurisdictions with commercial casino gaming, including racetrack casinos. The sample included 108 elected officials, such as mayors, city and county council members, and state legislators, plus 93 non-elected civic leaders, such as chiefs of police, chamber of commerce leaders, and economic development officials.1 Most of these opinion leaders lived and worked in their communities before the introduction of casinos, giving them a firsthand and well informed viewpoint on the benefits and costs associated with casino gaming. In the broadest sense, elected officials and civic leaders are strikingly positive about the impact that casinos have had on their communities. They welcome the additional tax revenue, jobs, secondary economic development, and contributions to community and charitable organisations. At the same time, the negative effects predicted by casino opponents have largely failed to materialise. Taking everything into consideration, these public officials strongly endorse the decision to allow gaming in their communities—with the benefit of hindsight, fully 75 per cent say they would vote to allow casinos if they could go back and do it all over again. CASINOS MEET HIGH EXPECTATIONS In most communities, casinos arrived to high expectations. Nearly six in ten (58 per cent) opinion leaders say they had a positive initial reaction when casinos were first proposed in their community. Just 24 per cent remember having a negative reaction, and another 10 per cent say they had mixed feelings. Elected officials were especially favourable toward casinos, with 62 per cent reporting a positive reaction (including 31 per cent who felt very positive toward the idea), compared to 55 per cent of civic leaders (17 per cent very positive). Opinion leaders’ highest expectations were for casinos’ potential contributions to the tax base, and area jobs and economic development. Fifty-eight per cent thought that their community’s tax base and government revenue would benefit a lot by introducing casinos, and another 30 per cent expected their communities to benefit at least some. Similarly, 54 per cent believed that casinos would help their region a lot by expanding economic activity and jobs, and 50 per cent expected significant expansion in tourism. Expectations were somewhat more modest in other areas. Four in ten community leaders expected substantial benefits from casinos’ contributions to community and charitable organisations (42 per cent), and providing entertainment (40 per cent). Most community leaders, however, expected at least some benefits in these areas. Community leaders today believe that the benefits provided by casinos met or exceeded their initially high expectations. This is particularly true when it comes to increasing the tax base and government revenues. More than eight in ten (85%) found that casinos generated even more tax revenue than they had anticipated or lived up to their expectations, which was already the area in which community leaders expected to see the greatest impact. Indeed, large majorities of community leaders believe that casinos lived up to or exceeded their expectations for each of the five potential benefits tested in the survey, and in each case, opinion leaders were more likely to say casinos exceeded their expectations than to say they fell short. After taking everything into account, 58 per cent of opinion leaders say that the introduction of casinos turned out better than they expected. Only 9 per cent believe that the addition of casinos turned out worse than they expected, while another 31 per cent say things turned out just like they expected. CASINO TAXES Local opinion leaders highly value the additional tax revenue that casinos have generated for their communities. When

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asked in an open ended question to describe the ways in which casinos have been good for their community, 46 per cent of respondents cite the additional revenue for their community (the top response), and 20 per cent suggest that the casino tax revenue allowed them to fund key priorities without having to raise other taxes. In a separate question, fully 73 per cent of community leaders say that tax revenue and development agreements with casinos have allowed their community to undertake projects that otherwise would not have been possible. Gaming opponents sometimes contend that casinos do not generate net increases in tax revenue and economic activity, but instead merely redistribute money that would have been spent in other ways. Community leaders roundly reject this claim. Two-thirds of the community leaders surveyed believe that casinos have, in fact, generated a net increase in tax revenue for their states and local communities, while just one in five believe that casinos simply redirect revenue that would have come in from other sources. When it comes to casino taxation, public policy is often out of step with community leaders’ personal attitudes. Policymakers in gaming states often treat casino taxes as a pain-free way to reduce budget deficits or generate additional revenue. This reaction was clearly on display during the economic doldrums of the past few years, when virtually every state’s budget was in the red. Many gaming states increased casino taxes to help balance their budgets, while other businesses and individuals were asked to share less, if any, of the burden. This may seem like an easy fix, using as cover the widely held but misleading image of casinos as ultra-profitable cash cows. Yet while policymakers often turn to casinos as a fiscal solution of first resort, a majority of community leaders in our survey (58 per cent) say that if their community needed to raise additional revenue to meet its needs, all businesses, including casinos, should pay the same tax increase, compared to 30 per cent who believe that casinos should pay a larger tax increase than other businesses. These community leaders who sit at the intersection of gaming issues and public policy may recognise that, in most jurisdictions, casinos already pay a higher tax rate than other businesses and that they cannot continually be treated as a bottomless source of revenue. These officials recognise the potential repercussions of over-taxing a single industry, and therefore they prefer to distribute the tax burden more broadly. CASINOS’ IMPACT ON JOBS AND ECONOMIC DEVELOPMENT A question about casinos’ impact that is often debated when states or local communities consider introducing gaming is whether casinos help or hurt other businesses in the community. Supporters argue that casinos generate secondary economic benefits, while opponents claim that casinos “cannibalise” other businesses. Officials who have watched the development of casinos in their communities have little question that, on balance casinos have been a positive force for other area companies. Survey respondents were asked to react to the following statement: “Some people say that casinos help other businesses in the area by attracting visitors, providing jobs, and buying goods and services from other vendors, and stimulating economic development. Other people say that casinos hurt other businesses in the area by monopolising all the revenue spent on entertainment.” By 63 per cent to 17 per cent (more than three to one), community leaders are more likely to say that casinos have done more to help rather than hurt other businesses in their communities, including 32 per cent who feel that casinos have helped other businesses a lot. Another 16 per cent say that casinos’ impact on other businesses has been mixed. Opinion leaders are also very complimentary about the number and quality of the jobs generated by casinos. Among community leaders who have a good idea of how many people are employed by casinos in their area (which represents 53 per cent of community leaders), the vast majority say that employers of that size have rarely (43 per cent) or almost never (24 per cent) come to their area. A quarter (24 per cent) report that their community occasionally gets major employers such as the casinos, while just 8 per cent say this happens frequently. Comparing jobs at the casino to equivalent jobs in their community that would require a similar level of education, a plurality (47 per cent) of community leaders believe that casinos offer their employees better pay and benefits than do other businesses in the area. Only 8 per cent assert that casinos offer workers worse pay and benefits than other businesses, while 28 per cent say workers at casinos get the same level of pay and benefits that they would get elsewhere (17 per cent are not sure how casino jobs compare to other jobs). CASINOS AS COMMUNITY CITIZENS One area in which community leaders deliver somewhat mixed reviews is in their evaluation of casinos as community citizens. As we highlighted earlier, a majority of community leaders say that casinos lived up to (45 per cent) or exceeded (26 per cent) their expectations when it comes to contributing to community and charitable organisations. Many local opinion leaders, however, do not recognise that casinos’ commitment to the community goes much beyond writing checks.

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Although nearly two-thirds rate casinos as doing an excellent (27 per cent) or good (37 per cent) job of donating money to community and charitable organisations, most opinion leaders have seen less evidence of casino involvement when it comes to other methods of community involvement, such as providing facilities for charitable events (34 per cent fair/poor job, 19 per cent not sure), having executives sit on boards of local organisations (33 per cent, 23 per cent), and encouraging employees to volunteer in the community (34 per cent, 27 per cent). These are not necessarily negative ratings, but clearly the gaming industry can do more to reach out to local communities, and do a better job of telling the story of the activities it already supports. Yet when asked to evaluate casinos as corporate citizens overall, including their treatment of customers, community leaders give the gaming industry an overwhelmingly favourable evaluation. Fully 82 per cent of community leaders say that “casinos act responsibly, are good corporate citizens, and look out for the interests of their customers,” compared to just 8 per cent who believe that “casinos do not act responsibly, are not good corporate citizens, and take advantage of their customers.” CASINOS’ NEGATIVE EFFECTS Opinion leaders’ generally favorable evaluation of the decision to allow casino gaming in their communities is also partially attributable to the fact that they believe casinos’ negative effects have been relatively minor. In an open-ended question about the benefits and drawbacks of casinos, community leaders are twice as likely to volunteer a positive outcome (93 per cent) as a negative one (43 per cent). The area of concern that stands out the most is that casinos have led to an increase in gambling addiction, which 19 per cent volunteer as a problem. Community leaders express little concern about other potential problems that gaming opponents sometimes link to casinos. Few officials volunteer problems with increases in poverty or bankruptcies (9 per cent), crime (6 per cent), congestion and traffic (5 per cent), or other social or family problems (4 per cent). ALL THINGS CONSIDERED When community leaders weigh all the positive and negative aspects associated with casinos, a large majority conclude that the preponderance of evidence confirms their state and community’s decision to permit casino gaming. Taking everything into consideration, community leaders are six times more likely to say that casinos’ net impact on their community has been positive (79 per cent) rather than negative (13 per cent). Perhaps most pointedly, given the chance to go back in time with the benefit of hindsight, three-quarters say they would vote to allow casinos in their community if the decision were up to them. This is an instance in which community leaders’ attitudes diverge somewhat from broader public opinion. Only a slight majority of all adults nationwide (51 per cent) agree that they would favour the introduction of casino gaming in their local community because of its, benefits to the local economy2. It is a compelling endorsement of gaming that such a large percentage of community leaders — those who are closest to the issue and best understand the benefits and costs associated with casino gaming — remain so strongly favourable toward the decision to bring casinos to their communities. 1 A detailed description of the sample can be found in the appendix. Officials from Nevada were not included because of its unique and heavy reliance on casino gaming. 2 Source: February 2004 “State of the States” survey, conducted by Peter D. Hart Research Associates and Luntz Research on behalf of the AGA, among a sample of 1,200 adults nationwide. HART RESEARCH Peter D. Hart Research Associates is one of the leading survey research firms in the United States. Now in its 34th year of operation, the firm has conducted well over 5,000 public opinion surveys and has administered and analysed interviews among more than three million individuals. Hart Research also has undertaken more than 4,000 focus group sessions. Hart Research’s client list reflects virtually all major facets of society: business and organised labor, education and health care organisations, media and the journalistic community, public interest groups, as well as politics and government. The firm has done work on every continent except Antarctica. Peter D. Hart, the firm’s CEO, has studied public opinion toward gaming issues for the past 28 years, and has partnered with Republican pollster Frank Luntz to conduct the American Gaming Association’s annual “State of the States” survey since 1999. In addition, since 1989, Peter Hart, in conjunction with a Republican partner, has been conducting the public opinion surveys for NBC News and The Wall Street Journal. The data and comments presented in this white paper are solely those of the author and do not represent the positions of the American Gaming Association. The AGA assumes no responsibility for errors or omissions in these materials. Note: The data and comments presented in this white paper are solely those of the author and do not represent the positions of the American Gaming Association (AGA). The AGA assumes no responsibility for errors or omissions in these materials.

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FORTHCOMING ISSUES 2006 ISSUE 3 - JULY Expo Way Forward ranges over the expansive calendar of expo trade events and assesses how business interaction impacts company and corporate strategy, competitive performance and leaders’ visions. From newcomers to established players, expo proliferation is a dynamic yet crowding platform for influencing cross-sector commercial integration. Virtual Media and Innovation examines the way in which the market for virtual gaming-gambling is persistently driving cutting-edge technology companies to ever higher levels of product sophistication. There is a sense that creative thinking is in overdrive with tech-based acceleration. Reflection is barely afforded before the next change strikes, and an embryonic synthesis of media forms is now discernible.

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