Casino & Gaming International: Issue 9 by Casino & Gaming International

2007 ISSUE 4

WELCOME

LEGEND AND MODERN VISION Publishing Director Jamie Kean Email: jamie.kean@casinoandgaming.net Editor Stephen Lawton Email: stephen.lawton@casinoandgaming.net Publishing Services Manager Louisa Bull Email: louisa.bull@casinoandgaming.net Distribution Manager Tracie Birch Email: tracie.birch@casinoandgaming.net Business Development Manager Stuart Jameson Email: stuart.jameson@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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Woodland Place, Hurricane Way Wickford Business Park, Wickford Essex SS11 8YB. United Kingdom Telephone: +44 (0)1268 766 515 Facsimile: +44 (0)1268 766 516 Annual Subscription (4 issues): £107 UK £117 Europe & Middle East £127 USA & Canada £137 Rest of the World Please make cheques payable to ‘CGI’ and send to: Casino & Gaming International, Subscriptions Dept., Woodland Place, Hurricane Way, Wickford Business Park, Wickford, Essex SS11 8YB. United Kingdom. Photography © 2007 Casino & Gaming International Limited and it’s licensors. All rights reserved. © 2007 Casino & Gaming International Limited (except where otherwise stated). All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means without the prior written permission of Casino & Gaming International Limited. ISBN 190200335 7 www.casinoandgaming.net

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hen comedian Joey Bishop died in October the last of the Rat Pack entertainers rejoined Dean Martin, Sammy Davis Jr, Peter Lawford and Frank Sinatra. Together, this legendary group became an international phenomenon; symbolic of an era passing into memory yet representing still a vital spirit among the bustle of today’s changing Las Vegas. In a relatively short period of time since then, Vegas has evolved into a remarkably transformed centre with modern big city ambitions. And it is that incomparable connection between sustaining great memories of character, time and place, and modern expectations conceived on a grand scale, that epitomises the enduring heart of the gaming, leisure and entertainment world. Peoples’ aspirations and tastes are becoming more complex and discerning, and the consequent responsiveness of the casino gaming industry remains acutely focused. Accordingly, to maintain a chameleon-like longevity of design response requires a close-up understanding of motivations and desires. Casino environments are highly attuned to that today. In part, that is a mutual process of maximising on aggregate and individual experiences, and deciding what changes, enhancements and technologies to implement to meet evolving demands. The integrative trend in hotel-casino relationships is presently both an experimental challenge and a necessity with every new vision looming on the horizon. The industry has acknowledged that with immense growth goes proportionate responsibility. It has become its imperative in some cases that socially responsible codes of practice are visibly effective, and the application of safeguards, prevention and remedial action rigorously applied. No amount of perceived negative effects ascribed to casino gaming, however it is analysed to stretch the relatively low problem gambling percentage, will neuter the exponential revenue streams providing such substantial tax for government spending requirements. Less and less today is the casino or online gaming industry resting on pure gain alone. Gradually, a zero tolerance approach is emerging. As a tremendously pervasive, accessible industry, Internet-based gaming is particularly vulnerable to social scrutiny. The mix of vested (and moral) interests behind campaigns and certain problem gambling assessments, currently means eGaming remains a target despite the fact it is striving for a structure of international legitimacy. Ultimately, it flourishes most effectively in a borderless environment – something that is integral to sustaining the pace of innovation and growth. But as we have seen for some time now, that is also the primary complication facing operators. Arising within and between jurisdictions, with the US Government far from the only resistant government, the battle for regulatory norms continues to ebb and flow amid the disquiet and instability that inevitably results in the interim, not least with sporadic arrests. Although, being selectively frozen out of the US market by the UIGEA has a certain perversity of galvanising concerned parties to begin fashioning credible and workable regulatory principles with the necessary endorsement of a broad spectrum of support. It also precipitated the sudden search for alternative markets, albeit under forced circumstances, and In doing so moved business thinking a little quicker to embrace the culturally diverse demographics that are an essential thread in global corporate reach. The US, however, loses out on revenue. By association, the pursuit of newly integrating technology platforms may actually have benefited the longer term prospects for affected gaming businesses. There may be a depressive effect from UIGEA on the eGaming bottom line, but somewhat askew from this most often highlighted concern, the seminal World Trade Organisation decision in the Antigua-US dispute is proving potentially more instructive. If by the end of November that case goes to a seventh round, with the possibility that the battle continues into 2008, the US may reach a point where it begins to reassess the entire circumstances of online gambling legislation, and that is no doubt a parallel matter to re-examining the UIGEA. CGI

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

CONTENTS

FEATURES 9

`THE MORE THINGS CHANGE…` BY FRANK J. FAHRENKOPF, JR.

FRENCH LICK CASINO: AN INTEGRAL DYNAMIC OF DESTINATION UNIQUENESS INTERVIEW WITH CHRIS LEININGER

THE MAJESTIC ‘EIGHTH WONDER’ — JEWEL OF THE MIDWEST DESTINATION RESORT INTERVIEW WITH GEORGE S. RIDGWAY

ENTERTAINMENT: NEW DEFINITION AND DESIGN OF THE GAMING EXPERIENCE BY MARK BIRTHA

GAMING, HOTEL & MICE DEVELOPMENT IN MACAU’S PEARL RIVER DELTA REGION BY CATHY HSU

THE ‘GREENING’ OF GAMING AND THE COMPETITIVE ECO SHIFT BY NICK HART

Casino & Gaming International ■ 3

CONTENTS

FEATURES 53

COVERING EVERY ANGLE, FORESEEING EVERY POSSIBILITY INTERVIEW WITH JAMES MOORE

UK WHITE LIST BOOSTS ISLAND’S WORLDWIDE eGAMING PROSPECTS INTERVIEW WITH GARTH KIMBER

GAMBLING PSYCHOLOGY: MOTIVATION, EMOTION AND CONTROL BY MARK GRIFFITHS

THE SIDESHOW THAT BECAME A VITAL TRADE ISSUE BY MARK MENDEL

APPLYING SKILL OR LEFT TO CHANCE – BUT DOES IT MATTER LEGALLY? BY JOE KELLY, ZEESHAN DHAR & THIBAULT VERBIEST

Casino & Gaming International ■ 5

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US CASINO GAMING & ENTERTAINMENT

`THE MORE THINGS CHANGE…` BY FRANK J. FAHRENKOPF, JR.

Gaming trends are born and bred in Las Vegas, which despite industry growth around the world remains the epicentre of the global gaming universe. Whether meta-resorts will or can be replicated in other casino markets remains to be seen, but they are certain to forever alter not only the skyline, but the entire landscape of Las Vegas. The commercial casino gaming entertainment segment of the US economy has, in fact, reached a maturity level that ranks it among the nation’s economic staples. It has become a growing force in the world economy and in the internationalisation of global commerce.

omeone once said, “The more things change, the more they remain the same.” The person who coined this phrase obviously did not have much experience with the commercial casino gaming entertainment industry. There have been so many paradigm-shifting events affecting the casino industry this past year that one would be hard-pressed to single out the most significant one. And I’m not going to do that, but what I will do is discuss a few of the more noteworthy changes, provide some thoughts on each and on where I think developments are taking us.

GROWTH AND MATURATION: THE U.S. AND THE WORLD Every year, my organisation, the American Gaming Association (AGA), conducts a survey of American adults to determine the acceptability of casinos as a viable form of entertainment. And while the marketplace may be changing dramatically, over the last 10 years, our survey results have been astonishingly consistent – more than 80 percent say casino gambling is acceptable for themselves or others, a ringing endorsement for our business if I’ve ever heard one. This determination of the legitimacy of our industry easily extends not only across the United States, but to the international marketplace. Consider that commercial casino gaming in the US alone directly employs more than 366,000 people (an estimated one million people if indirect employment is included), pays wages that exceed $13 billion, and contributes almost $5 billion in taxes to state and local governments. There are almost 500 commercial casino gaming establishments in 12 states; a quarter of the nation’s population over the age of 21 visits casinos annually; and the industry is recognised as an engine Casino & Gaming International ■ 9

US CASINO GAMING & ENTERTAINMENT

>> The Internet Gambling Study Act introduced by Representatives Shelly Berkley and Jon Porter from Nevada and supported by the AGA calls for a comprehensive study of the issue to be conducted by the National Academy of Sciences to help determine the best way for the US to deal with the growth of Internet gambling. This study could evaluate whether legalisation, regulation and taxation – on a state-option basis – may be a more viable option than a complete ban on Internet gambling. Currently, this bill has 64 co-sponsors and has the best likelihood of passing. Even that would most likely not happen before next year, although hearings could be scheduled before year’s end >> of economic development in the communities where it is located. Annual growth in the US casino industry has been healthy over time, and last year was no exception. Gross gaming revenues totaled $32.42 billion in 2006, a 6.8 percent increase over 2005 figures. The newer racetrack casinos continued to be a vital segment of the American commercial casino industry this past year, with the 36 racetrack casinos in 11 states generating $3.62 billion in gross gaming revenues, a 16 percent increase over 2005 totals. Employment also grew considerably in the racetrack casino sector, with more than 22,000 individuals employed in 2006, a 30 percent increase over the previous year. Domestic expansion continued with the voters in Kansas approving the addition of casino gaming to the economic mix in several counties in that state. Racetrack casinos are now open in Pennsylvania, and construction on stand-alone slots casinos also is underway. The governor in the state of Massachusetts is currently working with the state legislature

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on his proposal to locate three commercial casino entertainment complexes there. And in Mississippi, the industry has been instrumental in reviving the economic fortunes of the Katrina-ravaged Gulf Coast. All of us in the casino gaming industry should be very proud of the work our colleagues are doing in this area. In another sign of the legitimacy of casino gaming, the interest and activity of private equity companies demonstrate the confidence they have in our industry. Plainly and simply, this segment of the US economy has reached a maturity level that ranks it among the nation’s economic staples. This is not unique to the United States. There is nothing so telling of the maturation of an industry as the exportation (or importation) of its product. Gambling has long been a part of most cultures, but the lavish casino gaming entertainment aspect of the industry is now growing in many parts of the world, including – most prominently – in Asia, Macau being the prime example. Seven new casinos opened in Macau last year, bringing

US CASINO GAMING & ENTERTAINMENT

the total to 24 and doubling the number of gaming tables. Revenues are surging, driven by the double digit growth in visitors and the continuing increase in facilities, led by the opening in August of the 3,000-room Venetian Macao. This impressive addition to the Cotai Strip drew more than 500,000 people during its very first week and is a focus of industry attention, with everyone watching to see how much the gaming market here can sustain. The success or failure of that venture could shape the evolution of gaming in Asia.

AN EVOLVING INDUSTRY: PROMOTING MULTIFACETED ENTERTAINMENT I have talked often about the continuing evolution of our industry into a multi-faceted entertainment product. We see evidence of this everywhere, from the aforementioned developments in Macau to what is going on in the Gulf Coast, with the planned Bacaran Casino Resort complete with shopping esplanade, golf course, state-of-the-art spa and spectacular gaming facilities to Harrah’s recently announced Margaritaville complex – also on the Gulf Coast – a multi-million dollar development. In Detroit, the MGM Mirage opened its $800 million, one million-square-foot luxury hotel last month, and a few weeks ago announced plans to build the biggest casino resort in Atlantic City to feature three hotel towers, 3,000 rooms and suites, and retail and convention facilities. Clearly, the multi-faceted casino resort has become not just a trend, but a staple in industry development. As we know, gaming trends are born and bred in Las Vegas, which despite industry growth around the world remains the epicentre of the global gaming universe. And a

stroll down the Las Vegas Strip today reveals the next big trend hitting the market – the urbanisation of Las Vegas. This trend is typified by the $7 billion MGM Mirage CityCenter project in the heart of the Las Vegas Strip. Set to open in 2009, it features a 4,000 room resort-casino, convention facility, two 400-room non-gaming hotels and four ballrooms. CityCenter will also boast thousands of square feet in retail and restaurant space. This mammoth development will employ 8,000 construction workers and, when completed, will employ 12,000 people. Just up the street, Boyd Gaming is constructing a similarly mammoth project, Echelon Las Vegas, with a collection of hotels, millions of feet of retail and convention space, and a world class casino. Whether these meta-resorts will or can be replicated in other casino markets remains to be seen, but they are certain to forever alter not only the skyline, but the entire landscape of Las Vegas.

INTERNET GAMBLING: PROSPECTS FOR RADICAL CHANGES Change has also not been a stranger in the Internet gambling arena. The landscape of this sector was altered considerably when the US Congress passed the Unlawful Internet Gambling Enforcement Act (UIGEA) in October 2006, requiring banks and credit card companies to block electronic transactions to Internet gambling businesses and prohibiting the use of checks to fund Internet gambling accounts. Just a few weeks ago, the US Treasury and Federal Reserve issued proposed regulations to implement UIGEA. These proposed regulations would require banks, credit card companies and Casino & Gaming International ■ 11

US CASINO GAMING & ENTERTAINMENT

automated payment system companies to implement policies and procedures designed to prevent payments being made to offshore illegal Internet gambling businesses. UIGEA, and before that the aggressive efforts by the United States (including arrests by the Justice Department) to curb Internet gambling, caused ripples of discontent across international waters. Acting on a complaint by Antigua and Barbuda, the World Trade Organisation (WTO) issued a ruling in 2004 that found the aggressive efforts of the US government to curb Internet gambling in violation of WTO commercial services accords by preventing foreign Internet gambling operators from accessing the US market, while allowing domestic race tracks to accept online bets. This organisation’s appellate body upheld that ruling in 2005 and again this March. Antigua and Barbuda have leveled a $3.4 billion claim against the United States for damages. The European Union, India, Japan, Australia, Canada, Costa Rica, Macau and CARICOM – representing 15 Caribbean nations – are also seeking compensation. There is the potential that this situation, more than any other, could force some form of congressional action on the Internet gambling issue. In the United States, the UIGEA has been challenged twice because of questions regarding its constitutionality, and several pieces of legislation recently introduced on the Hill also address the issue. The first is the Internet Gambling Regulation and Enforcement Act introduced earlier this year by Rep. Barney Frank. That bill would license, legalize and regulate most forms of Internet gambling in the United States. It does not repeal the UIGEA, but would create a regulatory structure around the existing laws governing Internet gambling. The entity would be regulated, and user fees administered, through FINCEN. States or tribal lands where online gambling is illegal – or where state laws are passed to make it illegal – could opt out of the legislation. A companion bill introduced by Rep. Jim McDermott (DWash.) calls for a federal tax on Internet gambling if it is legalised under Frank’s bill. Frank and McDermott see this federal tax as a way to generate funding for many Democratic programmes, but the bill has gone nowhere fast. Representative Frank has said he will not move forward with the bill until it has 50 co-sponsors, and he is relying on interest groups like the Poker Players Alliance to get those cosponsors on board. Right now, there are about 38. The AGA has not taken a formal position on this bill, but the legislation is not without its complications since it would introduce a

14 ■ Casino & Gaming International

federal presence into the U.S. gambling industry. Individual states have zealously opposed this in the past, considering any federal profile an intrusion on the sovereign right of each state to make decisions related to permitting and regulating gambling. A third bill was introduced by Robert Wexler from Florida and is a carve-out from the UIGEA and the Wire Act for poker, which he contends is a game of skill, not chance. The bill, strongly supported by the Poker Players Alliance has 16 co-sponsors and was referred to the House Subcommittee on Crime, Terrorism, and Homeland Security, but no action has been taken. Finally, there is the Internet Gambling Study Act introduced by Representatives Shelly Berkley and Jon Porter from Nevada and supported by the AGA. This bill calls for a comprehensive study of the issue to be conducted by the National Academy of Sciences to help determine the best way for the US to deal with the growth of Internet gambling. This study could evaluate whether legalisation, regulation and taxation – on a state-option basis – may be a more viable option than a complete ban on Internet gambling, and would result in recommendations to Congress on the best way to handle the issue. Currently, this bill has 64 co-sponsors. Of all the bills introduced, this study bill has the best likelihood of passing. Even that would most likely not happen before next year, although hearings could be scheduled before year’s end.

AGA STAYS ON TOP OF MARKET CHANGES AND DEVELOPMENTS With all these changes shaping our industry, there has never been a more demanding time for the AGA. Our first priority always will be our US membership, but, with the commercial casino gaming industry developing an international footprint and more of our member companies getting involved in gaming ventures abroad, we also have been active on issues that have cross-border implications. One matter of vital importance to all of us in the industry is the promotion of responsible gaming and continued support of research on gambling practices. As many are aware, the AGA, in concert with our members, founded the National Center for Responsible Gaming (NCRG) precisely for this purpose. This year, AGA members announced new commitments of $7.6 million over the next five years to the NCRG. This brings total industry contributions to this important effort to more than $22.5 million since the organisation was founded in 1996. One of the goals of both the AGA and the NCRG over the next several years is to develop responsible gaming resources for gaming companies in international jurisdictions and to educate global audiences about what the latest scientific research can teach us about dealing with addiction and problem gambling. In the light of the revolutionary changes that are reshaping and growing the commercial casino gaming industry, the AGA has expanded its Global Gaming Expo (G2E) family of events to provide a forum for this type of education and nurture the growth of the global gaming industry both at home and abroad. This year, we debuted the inaugural G2E Asia to better serve the expanding marketplace in this part of the world. Although the flagship G2E event attracts hundreds of attendees from Asia each

US CASINO GAMING & ENTERTAINMENT

>> I have talked often about the continuing evolution of our industry into a multi-faceted entertainment product. We see evidence of this everywhere, from developments in Macau to what is going on in the Gulf Coast, with the planned Bacaran Casino Resort complete with shopping esplanade, golf course, state-of-the-art spa and spectacular gaming facilities to Harrah’s recently announced Margaritaville complex – also on the Gulf Coast – a multi-million dollar development >> year, we recognised the need for the same calibre of trade show and conference event in Asia to specifically address the needs and interests of the industry’s fastest-growing marketplace. We created G2E Asia for just that purpose. The inaugural conference and trade show was held in Macau this June and proved a huge success, attracting 3,000 gaming professionals from more than 50 countries. The 28,000 square foot exhibition space was filled with top-notch exhibitors, including many of the world’s leading gaming manufacturers. The event combined the sold-out exhibit hall with in-depth conference sessions featuring panels of industry experts and one-of-a-kind networking opportunities, providing a world-class business and educational forum for the Asian gaming industry. Space at the Macao Tower somewhat limited our capabilities at G2E Asia this year, but with G2E Asia moving to the brand new Cotai Strip Convention and Exhibition Centre at the Venetian Macao in 2008, the opportunities are limitless. As with all our G2E events, we pay close attention to feedback from our attendees and exhibitors so that we can deliver a superior education and business experience each and every year. G2E Asia 2008 will feature more in-depth conference content, which we will be able to provide largely due to the additional space available to work with at the Venetian. We will be able to develop multiple conference tracks, focusing specifically on security and surveillance issues, gaming technology, marketing, responsible gaming, emerging jurisdictions and more. We’ve also enhanced our programme advisory board to include more individuals from Asia who are assisting us in attracting top-notch speakers who are best-equipped to speak to the needs of specific markets throughout Asia. The show floor at G2E Asia 2008 will be bigger and better than ever. Nine months from the show, we’ve already sold more than double the amount of exhibition space for next year’s event as compared to that available for G2E Asia 2007. We are extremely excited about this progress, and we look forward to seeing everyone 4th -6th June in Macau. Not to be forgotten is the very successful parent of G2E Asia, the stateside G2E that will be held 13th -15th November in Las Vegas. This is the seventh year of this event, and it is – as always – the place to find cutting edge technology, the latest products, the newest developments, and the single best networking opportunities in the business. As always, G2E will offer the best educational opportunities in the industry, including 150 sessions featuring insightful, high-level speakers from around the world. We’re focusing on the issues that matter most in the industry, from security and surveillance and technology to corporate social responsibility, entertainment and human resources and a myriad of other hot-button topics. In addition to providing forums for the world’s gaming

leaders through its conference programme, G2E also is committed to nurturing new industry leaders. To that end, this year’s programme will feature an all-new G2E Leadership Academy designed to empower the next generation of gaming industry executives with the skills and training they will need to be effective leaders. Fine dining continues to be an integral part of the modern casino industry, and G2E 2007 wouldn’t be complete without a visit to Food and Beverage (F&B) at G2E, the only culinary marketplace specifically for the gaming industry. And you will find that G2E has assembled a stellar lineup of keynote events on topics of immediate interest. The popular State of the Industry panel will focus on Internet gambling, bringing together experts from the field to discuss where we are on this issue, where we are going and why. With an eye to responsible gaming, G2E once again has teamed with the NCRG to feature the NCRG’s annual Conference on Gambling and Addiction directly before G2E offering information on the latest research, treatment and policy advancements related to gambling disorders and how these findings can be adapted for practical, real-world applications. And so it is that change has governed our industry these past 12 months. These are exciting times for all of us involved in the commercial casino industry, and we should expect these changes to continue to promote the evolution of gaming for the foreseeable future. We are a growing force in the world economy and in the internationalisation of global commerce. There isn’t a better place to be working today. CGI

FRANK J. FAHRENKOPF, JR. Frank J. Fahrenkopf, Jr. is President and CEO of the American Gaming Association (AGA) in Washington, D.C. In his role as chief executive of the AGA, Fahrenkopf is the national advocate for the commercial casinoentertainment industry and is responsible for positioning the association to address related regulatory, political and educational issues. A lawyer by profession, Fahrenkopf gained prominence during the 1980s, when he served as national chairman of the Republican Party during the presidency of Ronald Reagan.

Casino & Gaming International ■ 15

HABLAMOS TU IDIOMA (AT MICROGAMING WE SPEAK YOUR LANGUAGE) TM

Much is made of the ‘global’ nature of the gaming industry, but global success can only be truly achieved through a local approach. New markets mean new opportunities, but each comes with its own set of differences to address – whether they relate to culture, game preference, technology or simply language. Microgaming – the world’s largest gaming software provider offers its operators a language support network, multicurrency integration, local expertise on the ground and technology and games tailored to every market. This is why Microgaming’s operators are some of the most successful in the business.

MÁS IDIOMAS QUE EN NINGUNA OTRA RED DE PÓQUER (MORE LANGUAGES THAN ANY OTHER POKER NETWORK) Microgaming’s new poker lobby offers poker in 19 languages - more than any other network and with similar multilanguage capabilities available across its casino platform, Microgaming powered operators are in prime position to make the most of emerging markets. TM

A case in point - Newly launched South American poker site, Mamamia Poker – a recent addition to the Microgaming Poker Network is already making waves in Argentina and Chile, but thanks to Microgaming’s multilanguage capabilities, is already planning its European expansion. LOCAL EXPERTS WITH LOCAL SOLUTIONS

With offices in South America and Asia, Microgaming taps into local expertise to provide on the ground support for its operators and works closely with them to ensure that the right games are matched to the right territories. This approach has led to the provision of games such as Dou Di Zhu, Big 2 and Mahjong for Asia and has led to the launch of Dream Bingo in the UK – the first operator to take Microgaming’s new bingo platform. GLOBAL LICENSING DEALS

By signing licensing deals with instantly recognisable global brands, such as The Osbournes and Hitman, Microgaming’s operators are able to implement global marketing strategies at a local level – achieving greater return on investment, as well as providing consistency of game offer across many different markets. News of The Osbournes slot launch traveled far and wide – from Australia to the UK. Hitman, the movie is tipped to be a Hollywood blockbuster and being released across 20 countries in November. This ability to capture the media and players’ attention on such a global scale gave Microgaming’s operators the perfect platform on which to base their local marketing campaigns.

www.microgaming.com

CASINO DESIGN & RESORT RESTORATION

FRENCH LICK CASINO: AN INTEGRAL DYNAMIC OF DESTINATION UNIQUENESS INTERVIEW WITH CHRIS LEININGER

The French Lick Springs Casino opened a year ago in October and is now just beginning to reap the benefits of its vital association with a literally unique ‘twin’ historic hotel location in the Midwest of the United States. Combined with leisure amenities both in place and under construction, the new destination resort in Indiana is a growing attraction for people from all 50 states – a remarkably diverse geographical spread that is expected to go beyond and develop international interest. The Cook Group took a long term investment view to ensure that the grandeur of the once lost hotels – French Lick and West Baden – were stunningly recreated among some of Indiana’s most sought after countryside vistas, while melding seamlessly with modern commercial and gaming requirements.

GI: What are the highlights for you since the French Lick Casino opened on 31st October last year?

CL: We receive a very broad spectrum of people from across the country, and the historic significance of the resort has certainly attracted people prepared to go considerable distances to come and experience the grandeur of what has been accomplished here. It has also meant an unusual opportunity for those who had been coming here for a number of years in the past to come back and see how their earlier encounters have been recaptured in new circumstances today. It is quite an experience for some people to appreciate what we had some 75 to 80 years ago and for newer generations – somewhat more alert to the Casino perhaps – to come and experience what French Lick represents. CGI: Do you find the restoration has proven to be a valuable melding of the facilities with the riverboat casino? CL: I think it has and what we point out after many years of operational experience is that we see the Casino as one of the amenities in an array of world class facilities here – the spas, golf courses and other recreational opportunities in the region. So we have a broader appeal for people who want to get away and experience a wider range of activities in a resort setting, compared to what most of our primary competitors have which is more of a traditional riverboat environment with facilities that tend toward a limited stay. CGI: What is the attraction of a riverboat design in this particular setting? Casino & Gaming International ■ 19

CASINO DESIGN & RESORT RESTORATION

CL: It was a legislative expectation that we have a vessel-like design to our facility to maintain consistency with what has long been the basis of riverboat gaming in this State except that, unlike ours, the other riverboats are actually floating facilities. Our Casino was only required to adopt the motif of a riverboat appearance while, in fact, it was constructed as a normal building. CGI: Following that traditional design makes it more acceptable in some way then? CL: It may be that some people have difficulty in reconciling the imagery that is created of a riverboat motif in front of a hotel structure, but we are respectful of regulatory expectations and we were consistent with the design requirements. CGI: Do you find many people who come to the Casino also have longer stays at either of the hotels? CL: We really have a couple of distinct markets of people. Many come solely to enjoy the Casino and the entertainment. Predominantly, they are from within a 100mile radius of the property and they tend to be day tripping customers. Complementing them are visitors who come to the resort to stay for a longer period of time and enjoy more fully the facilities available. CGI: Is the environment of the Casino now largely complete? CL: Next Summer we will be introducing the Pete Dye designed golf course. Right now all the fairways, greens and T-boxes have been fully constructed and we are through the better part of the grass seed planting. It is quite an exciting time for us because the course itself sits up above the resort on a hillside that is the second highest point in Indiana. The vistas from there are incredible. West Baden. © Chris Smith

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CGI: You must be expecting the golf course to achieve international status? CL: I think that from the excitement generated by Pete Dye’s hands-on work he feels it could be one of the finest courses he has ever undertaken. CGI: Since the West Baden has opened you would presumably have been experiencing greater customer interest? CL: Yes we have. It has been different from the French Lick Hotel which has really maintained some form of operation virtually over its entire 100 years of history. The West Baden Hotel, on the other hand, was dormant for about 75 years and so it has generated a great deal of enthusiasm and interest. People simply want to come and stay in such a unique structure and that has created a high level of visitor satisfaction with the resort complex. CGI: The West Baden is more costly than the French Lick. Does that have a bigger revenue impact with the Casino? CL: We have positioned West Baden as a higher end facility that has a visitor pattern more on a par with a luxury resort which is different from the Casino-oriented player. In some instances we are seeing prices up by 100 per cent on what we are able to price the French Lick property at, and this creates very significant revenue alongside our Casino customers. CGI: Are you finding an increase in the number of people coming from outside the State and even from abroad? CL: Yes, over the course of the first year we have seen that. In fact, our database has registered customers from all 50

States, which I think must be an unrivalled accomplishment. Yet we still are only just beginning to get a picture of the potential beyond Indiana itself. The Ryder Cup is going to be host to Louisville next year and we have made arrangements in Europe to publicise our facilities during the week of that major event. CGI: Is there a sense now that a Midwest alternative to Las Vegas is beginning to unfold? CL: The basis of our business modelling – creating a resort destination – retains every bit of viability that it did when we first opened, albeit it may be a bit of a longer ramp up to draw people from some distance away. However, we are building a strong reputation for the resort and this is reflected in current satisfaction levels. Certainly, this is clear from people who, once having come to the resort, express their appreciation of the facilities and the uniqueness of what they find. The level of investment that was made has fully revealed the authenticity of a history spanning more than 100 years. Consequently, the resort is defined by its actual American past, unlike something replicated through a thematic approach. Indeed, the attention to detail and meticulous execution of the work of restoration is a story that is central to sustaining our marketing drive. CGI: Do you think you would ever be tempted to go down a thematic route over time? CL: One of the things that we continue to be guided by is Bill Cook’s vision, where he envisaged the two hotels would be returned to public accessibility and would recapture the grandeur that existed during those vital days some 70 to 80 years ago. The principle of this is something we are naturally respectful of so I don’t think you’ll find us shifting to a new product positioning. CGI: This also suggests you differ from traditional resorts? CL: The one unique alternative we have is the casino entertainment product that, coupled with the calibre of our resort and its past, distinguishes us in a very specific way from other traditional resorts.

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INTERIORS

INTERNATIONALLY

CGI: With such a rich history how have you ‘customised’ the Casino’s approach to that? CL: We created a limited amount of association with the resort’s past but, in the process, remained respectful of our origins in promotional activities. It has been possible to utilise some of the photographs from that era to decorate the corridors of the resort; and it is proving to be one of the more popular eye-catchers for guests circulating through the hallway. They realise from this what period in time and what part of the facility is being represented, but more than anything else it gives the facilities a personality by presenting the evolution of the resort. CGI: What has been the general reaction to the idea of restoration as such? CL: Early on we learnt that the word ‘restoration’ can be

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ARCHITECTS + DESIGNERS

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somewhat irresponsible in characterising what we have accomplished because in some peoples’ minds it may have only meant a coat of white paint! We certainly have gone through an extensive recreation of what was a very grand and opulent period for facilities of this sort. CGI: Part of the promotional attention to the past is through resort tours. How is this being received? CL: That’s been one of the more surprising aspects of peoples’ fascination with the history in that, while the West Baden was dormant, there was a tour conducted by the Historic Landmarks Foundation of Indiana. Our judgement was that once it was open to the public there would be less interest in participating in those sorts of tours. In fact, it has turned out that they have actually continued to have a great many visitors take up guided walks through both French Lick and West Baden.

CGI: As elsewhere in the industry slots remain the backbone of revenue for your operation? CL: Yes, it has been. We enjoy a consistent level of slot activity comparable with the percentage that table games and other facilities in the area have. We would expect there to be some additional growth in the table game area once we begin to see stronger visitation from our high worth gaming customer. That will likely come about as the resort develops its reputation for its golf courses and things that allow a more active marketing to that segment. CGI: You originally planned to develop the coinless format. One year on, has that turned out successfully? CL: It has and is widely accepted by our guests. It is something that has allowed us to create a high degree of operating efficiency and to eliminate entirely claims from the floor which has been a great advantage.

CGI: How is the transformation of the historic to the modern reflected in the customer base, between those interested in the Casino and those more attracted to the whole ethos of the resort?

CGI: Given how prevalent traditional slots have been, have you found any difficulty in the transition to the new form?

CL: In a lot of ways that combination is reflected in our philosophy. We are able to target a broad array of visitors whether they are golf enthusiasts, are here to enjoy Casino entertainment or they enjoy the sense of the resort’s history in its own right. In effect, we are able to offer something to virtually everybody.

CL: There is a great deal of acceptance of such a transition given the way that new technologies move so quickly in our society. People are very readily adaptable to change today, which is different to what our industry experienced 20 years ago when the first automation steps were taking place and people were somewhat more resistant to it then.

West Baden Dome. © Chris Smith

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CGI: Technology is all pervasive today and in terms of security and surveillance do you find there is a tendency to be more intrusiveness from players’ point of view? CL: There has been a high level of acceptance that casino environments will be heavily subject to surveillance. After all, you only have to consider the common condition today that surveillance cameras are in convenience stores, banks as well as on street corners for that matter. Consequently, there is not so much of a reaction to their presence; certainly technology has allowed a reduction in the size of the cameras and the manner in which they are displayed from the technologies we had 10 years ago. Actually, ours was an alldigital system that, from an internal standpoint, has enabled us to maintain a level of coverage far superior to the old tape format, ranging from resolution quality to convenience of recording and tracking multiple camera locations. CGI: How different has it been from other experiences to put a team together to create what you might call a winning formula at the Casino? CL: We were incredibly fortunate that there were a number of seasoned casino executives who were drawn to the project from some of the riverboat facilities because it does represent so much more in terms of a resort destination. They saw this as an opportunity to become associated with something that had a little more to offer than simply a boat adjoining a pavilion area. CGI: Is there something to be learnt in management terms from a unique project of this kind? CL: I think it has given people an appreciation of broader customer segments coming into the facility. We have as many novice players entering the Casino out of curiosity as we do avid players that are accustomed to all the technological advances and products that we offer. So our staff are more sensitive and attuned to identifying diverse needs that enable people to enjoy themselves according to the desired level of sophistication when it comes to casino gaming. CGI: In most debates about the value of a casino the issue centres on economic benefits to the community. What is being generated by French Lick Casino? CL: There has already been an early indication of economic benefit to the region. One of the primary factors in the commitment to allow casino gaming in this region was to give it an opportunity to become economically competitive again after the area had lost so many manufacturing jobs. Our Casino dollars are really working in the community. In the town of French Lick there is a very ambitious town centre redevelopment that will have a mix of retail and condo space, while some of the adjoining communities have also begun similar regeneration. That would not have been affordable without the benefit of the Casino’s tax dollars giving those areas the means to grow. CGI: Interesting irony in this case: an historic restoration assisting urban renewal...

CL: Yes, and I really think that’s primary to where I’m spending an awful lot of my time, ensuring that we have further development of the retail sector and other destination amenities to strengthen our position. Visitors can then come to the resort and spend a greater period of time gaining a more comprehensive set of experiences. An indoor water park, for instance, is currently under construction and that will include a 156-room hotel. So we see a further build out in the evolving destination position which, again, takes us beyond the day-tripping scenario. CGI: How does your code of social responsibility operate? CL: Because of the nature of how this Casino license came about, and the vision of our company, we tend to have a stronger moral compass on those principles because the area in which we operate has been so economically depressed. The majority of our effort is directed to ensuring that jobs we provide stay local and that the people, who may have been disadvantaged as past industries have shifted away, are given the opportunity to participate in something that will be central to the community for years to come, bringing stability to their families and livelihoods. CGI: What is your approach to players becoming ‘problem’ gamblers? CL: Well, just last month we were host to the Kentucky Council on Problem Gambling and believe that the best way to be active in support of that is to be visible with the relevant programmes. That could mean so much to somebody who may have an issue with gaming behaviour and who therefore know there are avenues through which to pursue help. CGI: So having moved a year forward are you as confirmed in the future for the resort as you were at the beginning? CL: If I had to characterise it at all I would say we are smarter! We have certainly learned a tremendous amount about the combination of what marketing strategies and product offerings will make these facilities more competitive over time. So, having substantiated that the business model works, we continue to go forward with confidence. CGI CHRIS LEININGER Chris Leininger is Chief Operating Officer of the French Lick Springs Resort Casino restoration and development project. Prior to joining the executive team at French Lick Resort Casino, he served as general manager for Trump Casino and Hotel in Gary, Ind. Previously, he was vice president of finance for Harrah’s Casino and Hotel in East Chicago, Ind., and vice president of operations at Emerald Casino in Rosemont, Illinois. Leininger has also served as director of finance for Blue Chip Casino in Michigan City, Indiana, and controller for Harrah’s Lake Tahoe in Stateline, Nevada.

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THE MAJESTIC ‘EIGHTH WONDER’ — JEWEL OF THE MIDWEST DESTINATION RESORT INTERVIEW WITH GEORGE S. RIDGWAY

The West Baden Hotel in Orange County, Indiana, which reopened in May this year, is a well established national historic landmark and centre piece of the French Lick Resort Casino. The Cook Group, the World’s largest private medical device manufacturer, invested $382m in a painstaking restoration that has brought two uniquely associated grand old hotels back to life. First, the French Lick was restored last year and now the West Baden – the magnificent heart of the Midwest’s evolving destination resort that required years of meticulous attention to architectural and interior design detail.

GI: What is it that makes the West Baden the ‘Eight Wonder of the World’ and why is it of such national historic significance?

GR: The West Baden was given that title when it first opened in 1902 – its predecessor having burned down in 1901; and today it fully justifies that historic recognition. It is simply a remarkable building that has a certain mystical ambience about it that you cannot find anywhere else. It had the world’s largest dome at the time until the Houston Astrodome was built in 1968 and that alone made it a significant structure. Then there is the character of the building that has been restored through detailed and painstaking work bringing it back to life, even though it has in a sense been remodeled. In the 1917 era the elaborate interior lather plaster and marble construction was undertaken, all the period architecture in fact – that is still intact and in place. In my view – and I have put 11 years of my life into that structure so it’s almost like home to me – it is very difficult for almost any human being to walk in there and not simply drop their jaw at the breathtaking impact it has. In southern Indiana of all places! CGI: How would you compare the West Baden with French Lick – separately unique or now seen as a complementary ‘pair’? GR: They were always competing hotels in their heyday and from the beginning vied with each other for patrons. Now that they are under single ownership they naturally complement each other. The French Lick Hotel originally had a minimalist interior but later the ornate plaster work and gold leaf were Casino & Gaming International ■ 25

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added as well as other enhancements over a period of 70 or so years; whereas the West Baden, 17 years after being established, had all the grandeur topping the French Lick and this is so today. We classify French Lick as three to three-anda-half diamond rating and West Baden as four, but it might actually make a five diamond rating. CGI: But they complement each other in terms of the overall resort impact?

from the towers. It has a little bit of glitz, especially at night, and people initially think it is the Casino and hundreds thought that during construction, but you go a mile further and there it is. CGI: I suppose that is a commercial compromise you have to make where the area is partly predetermined? GR: It is.

GR: Definitely. French Lick room rates are a little lower and have different clientele while West Baden rates are considerably higher. It gives the Orange County valley multiple choices in terms of the guest experience especially as it’s all tied together. CGI: Two major hotels in close proximity could mean historic diversity or overkill. What is your view? GR: Diversity for sure, certainly not over kill. After all, initially, this was not something that had been planned. If we had worked on a project in the usual way it would have been done totally differently. Starting in a green field, we would probably have built a single high rise hotel and much closer to a casino. But we were handed this restoration pallete and from that we began painting! CGI: Within the resort do you have an easy choice to make where you go?

GR: When you come into the French Lick-West Baden community from the north the first thing you see to your right is the big West Baden dome with all the banners flying

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CGI: Do you think the combination of hotels – French Lick and West Baden – as a stand-alone without the Casino would fail? GR: I don’t know that it would fail but it would have a very difficult time maintaining occupancy. When we took over the French Lick Hotel it was operating at something like 20-25 per cent occupancy and mid-week, for instance, you might have just four guest rooms occupied. To be honest it had deteriorated to a point where it had become a hell hole. There was nothing there that you would want to write home about. I think without the Casino and the convention business it would be a difficult sell and I doubt you could support two hotels. It might be possible to get by with one and probably a couple of wings would have to be closed in winter time, but I don’t think you would ever make two. CGI: What is different about the clientele between the two hotels historically? GR: In the past both hotels drew movie stars and major politicians, but the West Baden seems to draw people who

CASINO DESIGN & RESORT RESTORATION

today are willing to pay for the experience of the awesome grandeur of this hotel. While French Lick is on the national register of historic places, the West Baden has been a national historic landmark for the past 20 years and that immediately gives it a higher status.

make them up to modern standard. West Baden was almost cosmetic by comparison in its later stages – building partitions, finish FF&E [furnishing, fittings and equipment] – and getting the restaurants up and running. Each of the hotels cost about $90 million.

CGI: There must have been the inevitable difficulties and surprises encountered in a restoration of this scale?

CGI: Is there any reaction from the architectural profession to the course of the restoration and its result?

GR: There are two points here. First, the fact West Baden is circular: Such a building does not lend itself to laying out hotel rooms in an efficient manner – not in any shape or form. Normally, you try to lay out a hotel along the lines of as many room types that are the same as possible. Even French Lick had its challenges because it was spread out in a linear fashion, but then we moved to the West Baden. Its circular design gave us many more challenges, such as getting all the services, like plumbing and the other mechanicals, stacked vertically. The idea was to try and minimise the number of different room types in the hotel design, but unlike the French Lick which has something like 65 different room types, at the West Baden there were 246 rooms but 192 different room types…

GR: Statewide most architectural firms, and anyone involved in any form of architectural practice, are deeply aware of what has been done and they all have much the same comment to make: a remarkable achievement; a structure that deserves restoration for the benefit of generations to come. However, as regards attention paid to this in professional journals, there has been very little response as yet. To be quite honest we haven’t submitted it for any awards or competitions and at the moment we are still landscaping the area, then there is the Pete Dye golf course – but still that time is fast approaching. CGI: Yes, awards seem very likely but I was also thinking of what this experience has to offer professional analysis considering the challenges and uniqueness of this whole project?

CGI: So you decided to alter the rooms? GR: We altered them because the rooms were so tiny in the original layout – something like 12 x 16 foot. We turned them into a room-and-a-half size, so instead of 452 original rooms we ended up with 246, virtually a 2:1 ratio. That way we got larger rooms and we were able to install very elegant bathrooms.

GR: I do think that over a period of time as more is written and discussed about this restoration that it will benefit other people doing similar projects of the same calibre throughout the country if not the world.

Secondly, we did not know there were swimming pools buried on the site of the planetarium. There was, in fact, no way to know from its history. The planetarium building that we currently have is built on the site of the original from 1902, and when we started to excavate the foundations we found the old swimming pools still intact with the original wood frame buildings and all the brick, mortar and debris which had collapsed into the two pools about 1927. That was a $65,000 surprise just for excavation. Remarkably, the blue paint was still on the pool bottom and some of the side walls, but we filled them in and grassed over the top because we couldn’t use pools of that size today. We did, however, create larger and more modern pools inside the same footprint. So you may say it wasn’t a restoration but rather a reconstruction.

GR: Well, although we are very experienced in the restoration business we also learned a good deal as well.

CGI: Almost a model of restoration learning?

GR: The artisans who worked on both hotels in the very ornate and elaborate spaces were from Conrad Schmitt Studios. Overall, about 1,000 workers were employed on the French Lick, the Casino and other facilities at the time, whereas not more than 400 were engaged on the West Baden. That is a smaller facility and most of the dirty work had been done in the 1996-9 period. French Lick was a blank canvass, starting from scratch. We rebuilt those rooms to original size while at West Baden we had a different kind of blank canvass: seeing how many rooms we could combine to

CGI: How did the logistics of manpower and craftwork compare between the two hotels?

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There were several surprises that made me stand back and scratch my head and we had to come up with an equitable solution that would not only work but be carried out in a hurry. CGI: The tendency worldwide today is for an increasing number of large-scale developments right through to the immense projects in the Gulf States. Is restoration and preservation of historic buildings being overshadowed by this, or does this growth mean there is an opportunity for this kind of work to expand? GR: That’s a very interesting question. The first thing that you need in restoration is an end goal. You don’t go into a restoration project not knowing what the final outcome is going to be otherwise all you are accomplishing is the creation of a monument – or a ruin! I have to say that tongue in cheek, because when we started the restoration at West Baden in ’96 we had no use in mind for the building: we thought it could have been a hotel, an office complex, a hospital, almost anything. But the Cook family decided this building needed to be saved and stabilised. So off we went with no particular use for it, but they had the financial wherewithal to do something definite with it and still do. In that regard, the rule that I set down – know what your end result is – didn’t apply! But once we knew that the French Lick area expected the Casino, and it had the draw card, then we had the end-use. We knew we were building hotels as part of a destination resort; we knew we had to do it right, and there was only one chance to do that. You only get one chance to make the right first impression. When I look at other areas in the United States that have grand hotels that deserve to be restored, that is more a question of marketing philosophy. You could go to downtown Memphis, Tennessee and restore a beautiful grand hotel but if that market doesn’t have a need for guest rooms then all you have done is throw your money away, which means you’ve got a restored ruin! It’s a bit like the Roman Coliseum: It’s a beautiful place to visit; remarkable to think about the time frame in which it was built, but you just don’t see too many basketball games or soccer games going on in the Coliseum! CGI: So it is getting that equation of commercial plus restoration that defines a successful project of this kind? GR: Well, the whole Orange County experience is unique in that the restoration was part of it and the Casino is a big player. A prime example is the Grand Hotel on Mackinac Island, Michigan. You go there to experience that hotel, maybe play golf or take a horseback ride or go down to the lack shore, but the primary focus is to see that hotel which was built 120 years ago in 1887. Probably the movie, Somewhere In Time, that was partly set in the Grand, did more to bring that hotel to the forefront than anything that has happened in recent times. That is the problem with the restoration path – it has got to be a very high calibre facility from the very start. 28 ■ Casino & Gaming International

On the other hand, if I had been given the chance to restore the Hay-Adams Hotel, Washington DC – which was restored in 2001 and re-opened in 2002 – I would have jumped at that. First off, it has a perfect location: it’s next to the White House and it has a unique history and what’s more, it’s always full. That’s a no brainer. CGI: Are you finding interest in French Lick coming from beyond the US? GR: From the tracking that we have done most of the visitors come from the Midwest region and as you go further and further away from central Indiana there are less dots on the map. But they do go all the way to Seattle, Florida – all parts of the United States, in fact, and from Europe and Australia. There’s a much smaller number coming from Asia, but there are others from Japan and Hong Kong. CGI: Do you think there will be an increase in European interest noting what you have done in Indiana? GR: That is where the marketing comes in, but I certainly hope it does. There’s no doubt Europeans are becoming more aware of the facility. CGI: Is there much more to be done now? GR: There is more to come. We are looking at condominium timeshares and there is a developer who is considering a lower end 156-room hotel. There are also many minor amenities that are to be put in place over the next two years. As far as the two hotels working together with the new construction is concerned that has turned out better than we expected. People are using shuttles back and forth between the hotels. The convention business is picking up exponentially and we are bringing in bigger name entertainers. This will undoubtedly make French Lick the Midwest destination resort. CGI

GEORGE S. RIDGWAY George S. Ridgway, AIA, NCARB, ISPLS gained his Batchelor of Science from Indiana State University in 1968 and Master of Science in 1975. George has over 30 years experience in architecture and historic restoration, ranging from health care facilities, retirement centres, commercial & industrial buildings to religious and family facilities and historic renovation projects. He is President of G S Ridgway & Assocs, founded in 1979 as a company devoted to providing quality architectural design. George attaches particular importance to complete management from conception of the project through to final completion. However complex, special and unique creative design solutions with attention to enduring aesthetics and structural longevity are the Ridgway hallmark. He is a member of the National Historic Trust of Indiana and on the Advisory Council of the Historic Landmarks Foundation of Indiana.

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CASINO OPERATIONS: INTEGRATION AND RENEWAL

ENTERTAINMENT: NEW DEFINITION AND DESIGN OF THE GAMING EXPERIENCE BY MARK BIRTHA

The gaming scene has a constant capacity for renewal, responding to both changing social and generational expectations and the interactive impact of innovative, competitive technologies. At its heart is the growing integration of gaming with non-gaming, and as Casino Operators begin to embrace the shift, both current experience and the view ahead suggests commercial and customer interest is set on a major global expansion path.

here is no disputing the fact that the gaming experience is undergoing a significant transformation. Casinos continue to appear in new jurisdictions around the world and more and more customers are being introduced to the gaming environment. It is to be expected that the lifecycle of the casino would follow other industries that mature and look to continually refresh and differentiate their product or service in order to remain competitive, appealing, and innovative. The gaming experience is reaching newer audiences of customers and keeping existing guests returning by pursuing a revised business model in terms of design, operation, and marketing—the entertainment business. The casino has always been the hub of activity in destination, regional, and local properties. Retail, dining and live shows were positioned to accentuate the overall gaming landscape and provide attractions and support services to the casino’s customers. However, the emergence of celebrity chefs, Cirque du Soleil entertainers, retail emporiums, massive convention centers, and luxury spas has redefined the gaming product as hotel casinos have become integrated destination resorts. And as these properties began to offer more compelling non-gaming elements, two distinct outcomes have resulted: The growth of non-gaming revenue as a percentage of total sales, and the influx of a changing demographic of customer looking for a completely new hospitality product. This trend has become so strong that in some jurisdictions non-gaming revenue challenges, and even exceeds, gaming. It is easy to see why. The 2007 American Gaming Association Survey of Casino Entertainment validates this visible trend. According to the report, 82 percent of casino customers ate at a fine-dining restaurant, 58 percent attended

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a show or concert, 49 percent went to a bar or club, 44 percent shopped, 28 percent used the spa, fitness facility or pool, and 11 percent utilised the convention or meeting space. What is even more interesting is that twice the number of people in the survey stated that the overall hospitality experience (dining, shows, and entertainment) was more appealing than gaming. Nowhere is this more evident than in the Las Vegas Strip corridor, where non-gaming revenues now represent 60 percent of overall revenues, up from 42 percent in 1990. Other jurisdictions like Atlantic City and even Macau are following (albeit in very different phases of their lifecycle), and emerging markets like Singapore are requiring this mix of gaming and non-gaming amenities.

entertainment zones—“Bevertainers” sing and dance on the casino floor while delivering drinks at The Rio in Las Vegas; Caesar’s Las Vegas has a “Pussycat Dolls” gaming pit with live dancing. The second trend is the exporting of the casino experience into non-gaming venues. Clubs and salons are being designed to feature live music, dining, and a number of slots and high-limit tables. Lushly landscaped pools offer lounge chairs, walk-up bars, cafes, and gaming components. The last change is directly attributed to technology and its influence on the content and delivery of the casino product. Evolutionary technology is ushering in a more convenient, compelling, and efficient experience allowing operators the opportunity to market to newer segments and also improve margins and customer service.

CASINO DESIGN 2.0—A NEW GENERATION OF GAMING EXPERIENCE

A CHANGING GAMING FLOOR

Casino operators have begun to embrace the demand for, and unique characteristics of, these alternative offerings. Casino executives and designers are looking at ways to integrate these very different elements and the customers who frequent them in an attempt to create new synergies and experiences, thereby creating a new breed of entertainment experience. Three distinct trends are evident as these differentiated casino hotels are being introduced and older properties are being refreshed to stay current. The first direction is the importing of non-gaming outlets. Dining, retail, clubs, and entertainment are being seamlessly blended into the casino space. High energy nightclubs pulsate on the edge of the casino floor and patrons move between dance floors and slot floors as they enjoy each experience as part of their overall entertainment package. Chic lounges in the centre of the casino floor and hip restaurants create voyeuristic landscapes, as patrons feed off the excitement of “seeing and being seen” no matter what the venue in which they reside. Luxury retail stores are steps away from VIP gaming salons. Table games pits are becoming

Gaming halls used to be solely focused on table games and slot machines. Non-gaming amenities were provided primarily to attract customers as well as to provide them with the bare necessities to keep them in the casino space as long as possible. Restaurants fed the hungry patron quickly and economically so they had both time and money to spend back in the casino. Retail outlets made sure loyal guests wore logo-wear and high rollers left with a new cache of expensive jewelry, watches, and clothes instead of suitcases of cash. Spas provided massages to keep you loose at the table or keep spouses busy while their partners rolled the dice. Showrooms gave you somewhere to get a secondary dose of entertainment—enough to energise you to hit the machines and tables post-show. “The casino resort industry has evolved though from a one-dimensional gaming driven business model into a complete five star resort destination presenting its customers with world class amenities,” says Paul Heretakis, Vice President and Principal for Westar Architectural Group, a world-renowned design firm based in Nevada. “Today’s

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properties have architecturally raised the bar for newer gaming developments and created a unique Entertainment Architecture that appeals to people around the world.” Casino restaurants were always a house operated product. Steakhouses from property to property offered comparable cuisine, service and ambience—the only thing that varied was the name on the door. However, today’s food and beverage outlets are designed to integrate with the casino floor to create a seamless experience. “Restaurant guests not only feed off the cuisine, they are equally energised by the gaming component. There is a voyeuristic element that the new generation of customer thrives on, and newer food and beverage outlets fuel the fire. Restaurants are integrated with ultra lounges and nightclubs and the party never stops. The line to get in to these outlets winds through the casino, thereby creating an energy and environment that blends very successfully.” The end effect is a removal of the barriers between gaming and non-gaming and an enhancement of experience given the multiple influences of activity, audio/visual and lighting, and varying products. The result is a new sensory stimulation and combination of more diverse offerings that drives a higher level of revenue and a more successful entertainment package.

The Bellagio recently opened Club Prive on their casino floor which masterfully blends these various components. What would ordinarily seem like just another high limit pit on the gaming floor housed in a separate walled off room with discreet entrance, the Bellagio’s facility is striking in terms of exterior and interior design making it a design statement within itself, and a visual landmark and destination for gamers and non-gamers alike. The room has a number of various table games, lounge furniture, a walk-up bar, and its own music soundtrack thereby differentiating it from the rest of the casino landscape. Patrons can enjoy any and all amenities, and can entertain in the facility whether their guests are playing or not. At the same time, a certain visual stimulation is created between the inside world and the outside as the energy flows out of the room and the fascinated interest of others flows in. Interestingly enough, it was not only the casino operators who realised that having retail, dining and entertainment integrated with the casino space was a worthwhile endeavour: food and beverage and retail tenants quickly understood the powerful sales potential that exists when you have tens of thousands of people passing through these gaming properties. There is tremendous opportunity available when your outlets are readily available and visually

>> As much as the non-gaming elements are being fused into the casino space, it is also gaming itself that is added to retail, dining, and entertainment facilities outside the casino proper. Private gaming clubs far off the casino floor and high end salons on hotel rooftops create a differentiated casino product for the highest level VIP player. But the trend is now for existing outlets to inject a small gaming component into their space to further round out the entertainment vehicle, thereby offering a more complete bundle of options for their guests >> Casino & Gaming International ■ 33

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inviting and create a natural transition from space to space. Many believe that we will begin to start seeing ‘districts’ created which offer bundles of different experiences that cater to varying customer segments. Heretakis believes that fusing these non-gaming elements into the casino space will allow marketing experts to sell a new type of hospitality experience. “Casino spaces are moving in the direction of a lifestyle experience. Much like Starbucks, this is your space and you do not need to leave your area in order to enjoy a gaming or non-gaming service or amenity.”

CASINO ‘OUTSIDE THE BOX’ Ironically, though, as much as the non-gaming elements are being fused into the casino space, it is also gaming itself that is added to retail, dining, and entertainment facilities outside the casino proper. Private gaming clubs far off the casino floor and high end salons on hotel rooftops create a differentiated casino product for the highest level VIP player. But the trend is now for existing outlets to inject a small gaming component into their space to further round out the entertainment vehicle, thereby offering a more complete bundle of options for their guests. The more significant influence though is customers who normally might not step foot in the casino floor or never intended to game are now motivated to either try it or include it as part of their overall ‘purchase’, while still enjoying the amenities and services they set out to enjoy initially. You can imagine the heightened return on investment per square foot when you fuse all of these elements together and increase utilisation. The perfect case study of this concept is the new Playboy Club in The Palms Hotel Casino in Las Vegas. Their website describes it best: “A scene that merges the past with the present, The Playboy Club introduces a complete integration of lounging and gaming, which has never been attempted before in Las Vegas. Custom design elements from the bunny buttons on the sofas to the collage wallpaper featuring every centrefold from the last 25 years reflect the image of the Playboy logo and capture the Playboy lifestyle.” The Club itself is located at the top of The Palms Fantasy Tower, and is the new version of the iconic Playboy Club that brought the Playboy lifestyle to the masses. The Playboy Club experience is a complete package: Playboy bunnies in Roberto Cavalli uniforms dealing blackjack, a 9,000 square foot Hugh Hefner Sky Villa, dining and ultra lounge service, and even a Playboy Boutique, which offers the hottest clothing, high-end jewelry, accessories and lifestyle products. This fusion of gaming in a traditionally non-gaming venue has been so successful that the prototype Playboy Club is now making its way to the other side of the world. Macao Studio City, one of Asia’s first integrated leisure resort properties combining studios, retail, gaming, entertainment and world-class hotels, plans to open a multi-faceted entertainment destination in Macau named the Playboy Mansion Macao. Comprised of nightlife and entertainment options, dining, specialty retail elements and a Hugh M. Hefner Villa, the Playboy Mansion Macao will be designed as a modern expression of the Playboy lifestyle with local Asian flavor. Playboy has defined the ultimate luxury lifestyle for the past few decades. The brand is as popular today as it ever was, introducing new generations to the best that life has to offer. Jeff Georgino is Division Senior Vice President for 34 ■ Casino & Gaming International

Playboy Enterprises and is responsible for the business development and operation of Playboy’s location-based entertainment initiatives. “The Playboy Clubs are all about bringing the Playboy lifestyle to life through integrated entertainment venues that offer an extravagant experience. Each market and destination will be unique. In addition to gaming, we look to flawlessly integrate bars, lounges, nightclubs, accommodations, dining and retail. The Playboy brand has always been about the finer things in life. Playboy venues focus on creating an environment through interior design and then offer excellent service for people to see and be seen.” The decision to open new Playboy Clubs in gaming spaces, particularly Las Vegas and Macau, was a natural progression in the development of the brand. “Gaming is a logical brand extension for Playboy, and Las Vegas and Macau both make sense for the Playboy brand,” says Georgino. “They are both important gaming markets where the brand is well-received. Playboy has a very long history in China with an extensive retail licensing business. Our strategy is to select a limited number of markets where a multi-faceted Playboy branded entertainment destination can be successful and to develop it with partners who will provide capital and operating expertise. Our focus is on locations with gaming. We’ve said publicly we are interested in London, eastern Europe and the Caribbean.” The Playboy Club in Las Vegas has delivered a seamless integration of non-gaming amenities fused with casino activities. However, the vision behind combining these two different elements in the same space was never executed in Las Vegas before. “We were looking to create something new in the market. There are plenty of destinations in Vegas that have a gaming component and a nightlife component, but no one had fully integrated the two. “We found a great partner with George Maloof and Palms and were able to make the dream a reality.” Georgino goes on to say “we wanted to create a boutique and more intimate feel for both the gaming and the nightlife. The club has a more lounge feel than casino feel through its interior design. You have tables and couches with bottle service a few feet away from blackjack tables. There is a DJ booth and people are dancing while others gamble. Sound and lighting were crucial so that both activities, partying and gambling, could coexist.” Given its initial success, it is only reasonable that this trend will begin to appear in gaming properties around the world. “Yes, others have already started to follow,” laughs Georgino. “Again, each market is different and Vegas is difficult to replicate anywhere in the world. Our vision is to be a trendsetter for entertainment and bring fresh concepts into markets while always understanding local flavours.” It is obvious that a product such as the Playboy Club caters to a wide range of customers, some gaming-centric others not. At the end of the day, what is the value of integrating casino elements into traditionally non-gaming envelopes? Is the risk of offending customers overcome by the potential reward of introducing new customers to gaming or providing regular gaming customers with a differentiated experience? These are the questions that a developer or operator must ask when considering whether to implement this style of product in their property. This evolutionary statement could be considered revolutionary and/or downright unacceptable depending on the market and the

CASINO OPERATIONS: INTEGRATION AND RENEWAL

customer you cater to. “You can’t try and please every customer demographic,” says Georgino. “Each market and each venue because of their unique characteristics will have different challenges and opportunities. First and foremost we adhere to local regulations, determine who our demographic is, and create an environment where customers can live the Playboy lifestyle.” Interestingly enough, Georgino has come to learn that his product appeals to many customer segments and creates a much better entertainment experience that guest’s of the Palms have come to appreciate. “It appeals to a casino customer that views gambling as entertainment,” he says. “There is a great cross over, but some people go for the dancing while others like to hit the tables and everyone is there to have fun. The Playboy brand is a very dynamic brand and appeals to a wide group of customers. From our Vegas experience, if done right the integration of gaming and nightlife complement each other.”

TECH SAVVY INFRASTRUCTURE Technology has always played a role in changing the casino enterprise. From slot content and reels to video, to bill validators and automatic shufflers, technological innovations and solutions have allowed us to enhance the overall customer experience while still remaining profitable. Recently though, the interest and influx of non-traditional IT companies into the gaming world has ushered in an entirely new wave of products and services that are not only improving efficiencies and customer entertainment, but are actually changing the casino floor itself. Ticket-in, Ticket-out (TITO) and electronic fund transfers began a wave of technological inventions that have allowed operators to better position their overall gaming offering. We are now on the brink of truly extraordinary changes that will create an entirely new dynamic of gaming, on and off the casino floor. Server based games are on the horizon and quickly approaching and will be the first true test of providing customised content in an already personal driven media universe. Communal slot carousels and electronic table games are popping up everywhere and are changing the way customers interact with the games, the casino staff, and each other. Mobile gaming devices (PDA’s) are just beginning to appear off the casino floor, allowing customers to gamble almost anywhere on the property and at anytime. All of these new systems and gadgets have an affect on customer service, payroll and operations and, of course, financial performance. They also impact the casino floor space itself. The elimination of change booths and carousels, and the decrease in number of positions and equipment on the floor due to the introduction of server based games and PDA’s, may result in smaller casino spaces. However, larger slot carousels and communal gaming experiences may require the casino floor to actually expand. Given that most innovations result in positive results for both the customer and the operator, it seems rather obvious that we will continue to invest in multiple technological opportunities in the future. And what will those advancements look like years from now? Atmospheric changes on the casino floor driven by animated lighting, audio, and aromatic programming may become the norm. Paul Heretakis thinks we may see video, retail, and music being integrated into the games. “iPod ports in slot machines or tables are coming. The social experience and the

entertainment component will be targeted to appeal to a younger generation of gamer in the future.” And that customer already has a very different expectation of how their video game experience may translate into a gaming product. Finally, the ability to communicate directly to customers via text messaging and email will usher in a whole new opportunity for casino marketers. These elements as well as instant Internet access will change the need for signage and customer service, thereby changing the aesthetics and design of the casino floor.

THE ROAD LESS TRAVELED There is no doubt that these influences are creating a new foundation for an entirely different gaming experience in the future. At the end of the day, the goal is and will always be to deliver an entertainment proposition that your customer deems valuable and customised to their needs and wants. Given the explosive growth of gaming around the world, and the equally compelling success of various non-gaming elements woven together into the fabric of these integrated resort properties, it is only to be expected that change will be the only constant. With today’s sophisticated operators, technology experts, and innovative architects, we have a lot to look forward to. An always evolving competitive landscape and an ever changing customer expectation will only prove that these changes can not come soon enough. CGI

MARK BIRTHA Mark Birtha has been in the Las Vegas gaming market for over 13 years and is currently Vice President Development Las Vegas for Marriott International Lodging Development. He is also Project Manager for the 3,000-room Marriott Las Vegas Hotel Casino Convention Center property currently in development. Prior to joining Marriott, Mark was VP Development and Operations for the Edge Group’s W Las Vegas Hotel Casino and Residences. His responsibilities included overseeing planning for the casino, food and beverage, retail, spa, convention and entertainment, in addition to overseeing business and strategic planning, administration, and operating areas including HR, IT, Residential Operations, and Hotel Sales. Before Edge he was an executive with the Venetian for six years where he managed casino marketing and served in management positions including corporate development/Macau and conference management. He opened the Bellagio Hotel in 1998 as Director of Beverage and started his career at the Mirage in food and beverage operations. He can be reached at 702-496-1116, mark.birtha@marriott.com or at markbirtha@msn.com.

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USB GAMING REELS CONTROLLERS Up to 6 reels Supports tamper detection Extensive error detection Support all major reel types Supports 3 lights per reel

USB DEVICE HUBS Supports any cash device peripheral Supports ticket in-ticket out Supports up to 64 GPIO Gaming devices e.g. metres

UDM DEVICE MANAGEMENT SOFTWARE Supports all peripheral device protocols Complete hardware abstraction layer Supports remote firmware / currency updates Complete gaming device management layer

LCD TOUCHSCREEN PLATFORMS Intel Celeron / Pentium M Easy to integrate fanless platform Custom interfaces available

SMART TECHNOLOGY FOR AN INTERACTIVE WORLD

Full range of touch options

www.e2c.ie

MANAGING PERIPHERAL DEVICES IN A PC BASED GAMING MACHINE BY DR DONNY MCDONALD, FOUNDER/CEO E2C TECHNOLOGY

Most new gaming products we see today are based on standard PC architecture, with only minimal additional functionality compared to conventional desktop PC’s. Whilst a simple concept in theory, experience has shown that there are a number of significant challenges in utilising personal computing technology for real world 24/7 “impersonal” computing in a gaming application, where multiple complex peripherals need to be controlled.

One of the key challenges faced in any gaming machine design, is interfacing the user application to the physical peripheral devices. A typical machine may include several peripherals including: coin acceptors, note validators, card readers, hoppers, ticket printers, scanners, lights, switches and reels. As we know, our standard desktop PC running Windows was not really designed for a “realtime” environment like this. What’s more, neither are most of our application developers! As application development migrates to become ever more graphic design oriented, our engineers become less skilled in the languages and protocols used to communicate with low-level peripheral devices. Project timelines are too short today for software engineers to wade through and code pages of arcane protocol specifications just to know a $10 bill has been received! With the emergence of standards like GSA’s Gaming Device Standard, life may be about to get easier, but it may still take considerable time for standards compliant devices to become readily available and widely used. Even with widespread adoption of device communication standards, experience shows us that creating reliable machines is not just about communicating with single devices – it’s about managing all hardware devices in the machine in a coherent and robust way. There’s no standard for that! Experience has shown that the machine’s hardware needs to be managed in its entirety to succeed in maintaining the system operational. In an “asynchronous” system like this, decisions have to be made about time prioritisation of commands and polling. The management solution needs to be implemented to deal with fast device servicing and be implemented, generally, on a non real-time operating system like Windows. In some instances, this is not possible and control needs to be implemented in firmware running on a dedicated processor external to the PC client, such as driving multiple gaming reels. Getting the application to simply communicate with peripherals is one thing: keeping the machine alive and working is another. Many of the complex peripherals have moving parts and they break or occasionally fail and need to be reset, or new firmware

loaded or currencies updated. It’s not just about “blue sky” operation – it’s about managing the devices when they go wrong! In terms of providing a complete management function, it is of major benefit to separate hardware management from the application. Firstly, this allows device “abstraction,” providing the freedom to use a broad range of peripherals from any manufacturer without changing the application. Secondly, it also allows game applications to be easily ported to different machines. Designing in a device management (abstraction) layer effectively allows the application to be decoupled from the physical hardware. Designed correctly, it creates a reliable foundation layer for the application to build on. At e2c, our mission is providing enabling technologies which simplify the development of reliable, PC based terminals. Our device management solution, Universal Device Manager, has been developed over 10 years working with leading gaming and kiosk organisations. This product, coupled with our range of hardware interconnect solutions, allows any gaming peripheral to be integrated into a machine. It presents the application developer with a simple and coherent API, taking care of all complex device management functions. It provides wide support for all major peripheral manufacturers without preference and supports all major device protocols, including GDS! Employing e2c’s UDM significantly reduces development risk and time to market. With UDM, running an application on any machine requires no detailed knowledge of device protocols. It is applicable in all programming environments. In addition to client-side device management, UDM also incorporates robust remote management services, which allow machines to be monitored and managed from a central server, including provision for firmware/currency updates. UDM is designed to play a role in all aspects of the product lifecycle, from product feasibility, through development, to longterm operational management. To learn more, please visit www.e2c.ie

REGIONAL FOCUS: ASIA

GAMING, HOTEL & MICE DEVELOPMENT IN MACAU’S PEARL RIVER DELTA REGION BY CATHY HSU

Tiny Macau has attracted immense integrated resort developments in an extremely short period of time and with equally staggering financial success. However, with the vast flagship Venetian Macao complex, numerous challenges arise concerning adequate professional staffing and, especially, developing an infrastructure that preserves and keeps pace with Macanese culture and gaming-based economic growth.

he winning numbers have kept coming in during the past few years in terms of the performance of the gaming industry in Macau: the Sands Macao recuperated its investment in less than one year’s time; Macau’s gaming revenue surpassed that of casinos on the Las Vegas Strip; 60,000-80,000 visitors arrive each day at The Venetian Macao during the first month of its opening. Many believe the opening of The Venetian Macao represents a paradigm shift, from the traditional gaming dominated Macau to one of integrated resort environment providing entertainment, convention, retail, and hotel and spa. While this transformation is possible and highly desirable, numerous challenges exist. Because of the minute size of Macau geographically and the proximity of Macau to other cities in the region, future development, especially in hotel and MICE (Meeting, Incentive, Convention, and Exhibition), should be discussed in the context of the Pearl River Delta region rather than of Macau by itself.

RECENT AND FUTURE DEVELOPMENT IN MACAU The latest casino openings include the Galaxy StarWorld Macao, Crown Macao by Melco-PBL, and The Venetian by the Las Vegas Sands. Particular media attention was paid to The Venetian Macao-Resort-Hotel because it is the biggest casino in the world and the first of a series of properties to be open on the Cotai Strip. The Venetian has 3,000 suites, a full service spa, and the biggest shopping mall in the region, twice the size of its older sister in Las Vegas. The Venetian Macao also more than doubled the MICE facilities in Macau and will compete with Hong Kong by attracting sellers from China to its exhibition facilities. FortyCasino & Gaming International ■ 39

REGIONAL FOCUS: ASIA

>> Continued new openings mean strong competition among Macau casinos and hotels for skilled and experienced employees. When new properties are hiring, there is always an overwhelming number of local applicants who already have jobs in other operations. As a result, employee turnover is high and labour costs have increased dramatically. With a large number of newly trained dealers who have to be local Macanese and an even larger number of front-line service employees who are new to Macau and new to the hospitality industry, evidence has suggested that service quality in those new mega facilities has room for improvement >> four major conventions are scheduled in the next two years, with convention business expected to fill about one-third of its rooms. The Cirque du Soleil show will be brought to Macau in early 2008. With its gigantic size, The Venetian employs 11,000 labourers or five percent of the Macau’s entire work force. To facilitate the movement of visitors from the various entry points of Macau, a fleet of more than 80 buses runs back and forth transporting guests from the land border crossing check points for visitors coming from Mainland China, as well as from ferry and airport terminals, to the premises. When all phases of The Venetian Macao complex is completed, it will have 20,000 rooms and over 10 hotels and service apartments. Hotels coming up include Four Seasons (400 rooms, April 2008), St. Regis (450 rooms), Sheraton (4,000 rooms, biggest Sheraton in the world), Shangri-La (600 rooms), Traders (1,200 rooms), Hilton, Conrad, Hard Rock, Hyatt (2), Fairmont & Raffles, Dorsett, Marriott, RitzCarlton, and a David Tans boutique hotel. Overall, the number of rooms in Macau is set to triple the number in 2006, reaching more than 30,000 by end-2009. The Las Vegas Sands has also initiated the Venetian Hanqin International Convention and Resort Project, which

40 ■ Casino & Gaming International

proposed to build additional resort and convention facilities on the neighboring Hanqin Island. Since Hanqin Island belongs to the Mainland city of Zhuhai, government approval is required for the Las Vegas Sands to purchase the land. Due to the size of the land required, the Zhuhai city government has relayed the decision to the Beijing central government. Besides the Las Vegas Sands’ projects, additional openings include MGM Grand Hotel and the City of Dreams by Melco-PBL.

CHALLENGES OF MACAU Infrastructure and human resources are two of the major challenges of Macau’s future development. Based on a study of the projected needs of the hotel and gaming industries in Macau, 70,000 workers are needed for the hospitality sector and another 30,000 for the gaming industry for properties to open in 2007 and 2008. With a current unemployment rate of three percent, additional staff will have to be imported. The current demographic profile of Macau shows that more than half of its resident population were born elsewhere, of which 47.1 percent were born on the Chinese Mainland. Many of those residents emigrated to Macau way before the gaming boom. However, non-resident workers

REGIONAL FOCUS: ASIA

now represent about one-third of the labour force, with China as the biggest provider. Virtually absent four years ago, workers coming from Hong Kong have increased their numbers swiftly and represent close to one-fifth of the total. In addition to construction workers and front-line employees, Hong Kong has been a source of supervisory and managerial staff. Most hotels in Hong Kong have lost an average of three to four supervisory to mid-level managerial staff, particularly in the food and beverage area. Continued new openings also mean strong competition among Macau casinos and hotels for skilled and experienced employees. When new properties are hiring, there is always an overwhelming number of local applicants who already have jobs in other operations. As a result, employee turnover is high and labour costs have increased dramatically. With a large number of newly trained dealers who have to be local Macanese and an even larger number of front-line service employees who are new to Macau and new to the hospitality industry, evidence has suggested that service quality in those new mega facilities has room for improvement. With an increase in population and the rapid development of the gaming industry, prices for residential property have risen between 25-28 percent over the past few years. Rental and capital value of high-end residential properties is projected to continue to increase at 10-15 percent rate per annum. As a result, about 20 percent of the local population now live across the border, mostly in Zhuhai. When the border control extends its opening hours and eases the immigration process, this figure is set to rise as property prices spike and living environment (e.g., congestion and crowds) continue to deteriorate in Macau. While this will facilitate further integration with the Chinese Mainland, it will also have a potential undesirable side effect of Macau people’s identity becoming increasingly blurred. In addition to local residents’ identity issue, Macau as a tourist destination is facing challenges in terms of its destination image. In the past few years, Macau has tried to position itself using its cultural heritage as a focal point with several world heritage sites prominently displayed in all media promotion. However, in most of the newly built casino-resort properties one cannot see a trace of Macau or the Macanese

culture that makes Macau so notably unique and attractive. These developments have made Macau a generically built destination. The newly provided shuttle buses from various casinos to tourist entry points and their sister properties have certainly make movement from point-to-point easier, if the sole purpose of visiting Macau is staying in the casino-resort environment. However, if the tourists step outside of the designated areas and would like to visit other tourist attractions that could represent the culture and history of Macau, transportation would be a challenge because the public bus system is quite confusing for short-staying visitors (the average length of stay for visitors is 1.1 night) and taxis are difficult to come by—the local taxi union has lobbied against issuing additional taxi licenses to protect their market share. Even when one can get a taxi, the traffic congestion is problematic on old narrow streets that were built for less than half a million residents, not for the 20+ million visitors a year. There is a planned metro link to ease the surface traffic and modernise the city transportation structure. However, it is still at the planning stage.

HOTEL AND MICE DEVELOPMENT IN THE REGION A casual review of the newspapers and news releases of major hotel corporations will reveal that new hotel projects, especially high-end hotels, are being introduced in China on a regular basis; the Pearl River Delta region is certainly a major development area. For example, the InterContinental Hotels Group, which has 65 hotels across the Mainland, Hong Kong and Macau in early 2007, will add 60 more hotels to their China portfolio by the end of 2008. That means they will need to hire 20,000 more people. In Guangdong province where major cities of the Pearl River Delta region on the Mainland are located, there were 47 five-star and 158 four-star hotels in 2006, with 16 five-star hotels in Dongguan, 11 in Shenzhen, 7 in Guangzhou, and 5 in Zhuhai. In addition to the 16 5-star hotels in Dongguan, Sheraton, Sofitel, and Shangri-La are opening in the next couple of years. The city of Shenzhen recently saw the Casino & Gaming International ■ 41

REGIONAL FOCUS: ASIA

opening of the Marco Polo, Kempinski, InterContinental, and Interlaken, with the Sheraton and Grand Hyatt opening in 2009 and Mandarin Oriental and W Hotel opening in 2010. The city would have nearly 30 five-star hotels within 2-4 years, double the number from 2006 and amounting to nearly 8,000 extra rooms. The city of Guangzhou, the capital of Guangdong province, currently has seven 5-star hotels with approximately 5,000 rooms. By 2010, the room number will more than double to 13,000. Before hosting the Asian Games in 2010, Guangzhou will have 40-50 new high-end hotels, including a dozen or so 5-star hotels. The newly opened properties include the 700-room Shangri-La, the Westin, and Ritz-Carlton (October 2007). Sofitel, Grand Hyatt, and W Hotel are some of the future additions. Besides the Mainland cities, the Pearl River Delta region consists of the two Special Administrative Regions of China— Hong Kong and Macau. The table below shows the growth of hotel supply in these cities. End-2006 Supply Macau Hong Kong

83 Hotels 12,954 Rooms 129 Hotels 46,000 Rooms

Estimated End-2008 Supply 100 Hotels 26,185 Rooms 150 Hotels 52,000 Rooms

Sources: Macau Government Tourist Office and Hong Kong Hotels Association

One would assume that with all the new hotel investments, the demand for room must be very high. However, a review of average occupancy rates show that Guangzhou’s 5-star and four-star hotels’ annual occupancy rate was 74.4 percent and 68.1 percent, respectively, in 2006. Shenzhen’s rate was 69.8 percent and 68.4 percent,

respectively; whereas the rate for Macau was 68.4 percent and 78.0 percent, respectively. Provided that the gross operating profits for hotels in China are higher than hotels in Western countries, the breakeven occupancy rate would be lower. However, the moderate hotel occupancy rates could be further reduced with all those new hotels being built, if not enough of new businesses are brought into the market. Of course, some of the older hotels may not fare very well compared to new properties with international brand names and professional management teams. As for the MICE facilities, cities in the Pearl River Delta region also appear to be racing against each other. The table below shows the recent development in the various locations. The Guangzhou International Convention and Exhibition Centre is the second largest venue in the world and the largest in Asia. Plus, in various parts of Mainland China, there is a possible oversupply of venues. This kicks off a new stage of development together with fierce competition in the region. Location Dongguan

Venue Guangdong Modern International Exhibition Centre, Changping Exhibition Hall, Dongguan International Conference and Exhibition Centre.

Guangzhou

Guangzhou International Convention and Exhibition Centre, Liuhua Complex of the Chinese Export Commodities Fair, Guangzhou Jinhan Exhibition Centre.

Shenzhen

Shenzhen Convention and Exhibition Centre.

Zhuihai

Commodity Exhibition Centre of ZHFTZ, China International Aviation and Aerospace Exhibition Center.

Hong Kong

AsiaWorld-Expo, Third expansion of the existing Hong Kong Convention and Exhibition Centre.

South Korea

9 new venues opened in since 2000, including COEX at Seoul and the International Convention Centre in Jeju.

Thailand

IMPACT Exhibition and Convention Centre at Bangkok, Bangkok International Trade and Exhibition Centre.

Malaysia

Kuala Lumpur Convention Centre.

Singapore

Marina Bay.

The shortage of MICE professionals has been more and more obvious as the industry is developing rapidly in recent years. Although the region has a very large group of people engaged in the industry, there is still the lack of a large number of high-level planning and managerial personnel. MICE professionals include core professionals, auxiliary professionals and supporting professionals. The core professionals include those engaged in 42 ■ Casino & Gaming International

REGIONAL FOCUS: ASIA

THE WAY FORWARD Hong Kong has been a regional MICE centre due to its strategic location, financial and physical infrastructure, professional managerial experience, and multi-lingual ability of the local population. Due to the signing of the CEPA (Closer Economic Partnership Arrangement) between Hong Kong and the central government, Mainland China contributed to the largest market share of 35 percent and spurred the recent growth of MICE development in Hong Kong. As other locations build more venue and gradually mature in terms of their supporting infrastructure and ‘software’, Hong Kong’s leading position will be challenged. For the long-term sustainability, cities in the region need to work cooperatively both in planning venues strategically and in positioning each city differently to provide a win-win situation for all. Facilities in the Mainland are more suitable for the exhibition market where they are geographically closer to the manufacturers. Venues in those locations are also gigantic in size, and there is plenty of land for future expansion or other associated needs. For Hong Kong, rather than competing based on the size of the exhibition venues, it maybe better off focusing on the convention and meeting market where attendees could take advantage of the local tourism and leisure services. Singapore is likely to attract the convention and meeting market as well, thus posing threat as a competition, especially when the integrated resort with casino completes its development. As for Macau, The Venetian facility is big enough to attract major trade shows (i.e., the exhibition market), however, maybe too big for the comfort of medium-size or smaller convention and meeting attendees. To serve those mega events well, both accessibility and infrastructure are critically important. Because attendees are likely to arrive in Macau by air or by ferry (through Hong Kong), airport and ferry terminals need to be expanded to accommodate a large number of visitors and fright containers, and receive bigger airplanes for the airport. Border immigration and custom services also need to be expanded to accommodate people

and product flows. These issues related to accessibility are easier to address than those associated with infrastructure. Infrastructure challenges discussed in the above section need comprehensive planning from the government. Issues to be resolved include limited land mass, transportation, human resources, housing, and utilities, among others. Leaving any of these issues unresolved will limit future growth of the hospitality, exhibition, and gaming industry in the territory and reduce the quality of services provided. CGI CATHY HSU Cathy Hsu is a Professor and Associate Director in the School of Hotel and Tourism Management at The Hong Kong Polytechnic University. Prior to joining the Hong Kong PolyU in July 2001, she was on Kansas State University (USA) faculty for 3 years and on Iowa State University (USA) faculty for 9 years. She is the editor and chapter author of the book, Legalized Casino Gaming in the US: The Economic and Social Impact, published in 1999, and of the book, Casino Industry in Asia Pacific: Development, Operations, and Impact, published in 2006, both by The Haworth Hospitality Press. She is the lead author of the Marketing Hospitality textbook, published in June 2001 by John Wiley and Sons. Her research foci have been tourism destination marketing, tourist behaviors, service quality, and the economic and social impacts of casino gaming. She has over 120 refereed journal and proceedings publications. She has served as a consultant to various tourism organizations, such as the World Tourism Organization, Garden Hotels in Guangzhou, Kansas Travel and Tourism Development Division, and Lawrence Convention and Visitors Bureau. Professor Hsu is a member of the Travel and Tourism Research Association International Board, the Honorary Chairman of the Board of the International Society of Travel and Tourism Educators, and the Editor-in-Chief of the Journal of Teaching in Travel and Tourism. She also serves on 7 journal editorial boards. She received the Best Article of the Year award from the Journal of Hospitality and Tourism Research in 2000. She is listed in Who’s Who Among Asian Americans.

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CASINO DESIGN & SUSTAINABILITY

THE ‘GREENING’ OF GAMING AND THE COMPETITIVE ECO SHIFT BY NICK HART

Environmental sustainability is, literally, a force of nature that every industry must adapt to in order to remain part of the competitive world market, and casinos are no exception. But what would specifically entice a casino or hotel owner to adopt ‘green’ and sustainable measures and what does this entail?

hen people speak of ‘green’ in relation to the Casino industry, they generally aren’t referring to the environment. In gaming vernacular, the word means profit for the operator or losses for the player or vice versa. Consumers head to casinos with the hope and intention of leaving with more ‘green’ than when they arrived, while operators see each guest’s visit as potentially adding to profit By the very nature of gaming, when one side is up, the other side is down. But, if the definition of ‘green’ refers instead to environmental sustainability, management, players, and indeed the entire world, can ‘win big’ simultaneously. Being eco-friendly has become an intrinsic part of virtually every area of commerce around the globe. Businesses of all kinds are increasingly incorporating practices which have a low ‘life-cycle’ cost, leaving the environment better off than past methods. Meanwhile, on the consumer front, customers are progressively becoming more ‘green-savvy’ and have begun to use their buying power to demand more environmental responsibility from the businesses they patronise. Environmental sustainability is, literally, a force of nature that every industry must adapt to in order to remain part of the competitive world market, and Casinos are no exception. At this point, readers might be wondering what would specifically entice a Casino owner, or management of any company for that matter, to start down the path towards a sustainable operation. Aside from the obvious benefits of being good stewards of the Earth, there are numerous, concrete advantages to running an eco-friendly business, which can withstand the scrutiny of even the shrewdest business analyst. The benefits of adopting environmentally responsible methods span the entire business, from beneath

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CASINO DESIGN & SUSTAINABILITY

the casino floor to above the penthouse, and including every product, system and service in between. The best news about this ‘green’ business is that it contributes to the bottom line.

‘GREEN’ BEGETS GREEN Contrary to early skepticism, this shift to ‘green’ operating practices pays for itself quickly and leads to continued, permanent savings. A green and sustainable building will create opportunities and efficiencies that result in bottom-line profits (not to mention public good will and marketing opportunities) for casino owners. The positive affects of the adoption of eco-friendly practices are now being felt in the casino industry, making clear-cut the financial benefits. A perfect first place to look for potential cost savings in casinos is energy use. The energy overhead of a casino environment is an integral part of creating the electrifying casino experience. With interiors designed to allow little or no natural lighting, combined with continuous, elaborate light displays, sound effects, lighting for entertainment venues, restaurants, guest rooms and power for other special attractions and guest facilities, energy costs are among the greatest expenses faced by a gaming property. Even simple measures can make a big difference, both financially and environmentally. For example, in 2006, a large hotel in California conducted an extensive lighting retrofit and replaced 4,440 incandescent bulbs with energy-efficient fluorescent lighting. The new bulbs save the hotel more than 203,000 kilowatt-hours of energy, which translates to a cost saving of $61,000 per year. The savings paid for the entire initiative in only two months. This relatively simple way of incorporating sustainability into normal business operations is appealing idea to casino number-crunchers.

46 ■ Casino & Gaming International

One of the most recent indications that casinos are adopting the financial incentives of ‘greening’ the industry, is the planned construction of a $600-million eco-friendly Native American casino project in New York State. A joint venture between Empire Resorts, Inc. and the St. Regis Mohawk Tribe, the project is registered with the US Green Building Council and is slated to become one of the first LEED® -certified casino facilities in the United States. Similar to the UK BREAMM standard, the LEED® (Leadership in Energy and Environmental Design) rating system was created to define ‘green buildings’ by establishing a common standard of measurement. Administered by the US Green Building Council, its standards cover criteria such as human and environmental health, sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality. With professional collaboration between LEED® rating system consultants, project architects, and tribe members, the entire casino operation was designed and engineered with the goal of creating efficiencies, particularly in regard to energy consumption. The most dramatic of the many advanced environmentally-friendly systems which are expected to be implemented is the use of micro-turbines, which are small engines fueled by natural gas (or another energy source), which generate electricity. Using micro-turbines enables the facility to use its own power at a fraction of what it would cost to buy it from a utility. Since they run on natural gas, which can be considerably less expensive than electricity, the turbines themselves will be economical to operate. Additionally, the heat generated by the micro-turbines will be harvested to produce hot water and heating for the casino. Building LEED® designation directly into a new casino is

CASINO DESIGN & SUSTAINABILITY

a sure road to ‘eco-savings,’ but besides changing light bulbs, what can already existing properties do? There are two basic frameworks to being a ‘green’ building; one involves the physical aspects of the building and site, such as water use, materials selection and the energy efficiency of heating, ventilation, air conditioning, lighting and computer systems. The second part is about adopting the three eco-friendly principals of reducing, reusing and recycling as well as selecting sustainable products. This includes everything from towel and linen reuse options, eco-friendly soap and shampoo, to water-saving shower heads and the selection of sustainable furnishings throughout the casino property. The continued good news is that there are many easy-toimplement ways of integrating ‘green’ into a casino.

PUT SOMETHING ‘GREEN’ IN EVERY ROOM At Decca Hospitality Furnishings, we manufacture high-end and custom furnishings for casino customers including Station Casinos Red Rock and the Venetian Hotel in Las Vegas. Our corporate culture has always been one that is mindful of the environment, and our strong commitment to sustainable business practices spans all aspects of our company. By early 2008, we expect to have converted our entire product line, as well as the China-based manufacturing operation, to being sustainable, making Decca the first in Asia to meet these rigorous environmental standards. Decca’s move to ‘green’ involves a series of refinements to its furniture products as well as process improvements. From the raw materials used to create the products to the waste disposal of shipping materials, Decca is creating a new benchmark of excellence and quality for designers and customers around the world. All furniture and fixtures produced by Decca will utilise post-consumer recycled content, and low-emitting paints, coatings, adhesives and sealants. In addition to offering rapidly renewable and sustainable harvested wood, the company is adopting new construction waste management practices, and will use packaging and shipping materials that are reusable, recyclable or compostable. Our goal is to change our manufacturing process with little or no increase in prices while ultimately offering our clients better, more sustainable products. As a kind of environmental ‘pay it forward,’ Decca’s efforts will then allow our customers to realize the value and benefits of ‘green’ production. The company’s initiative will ensure that all of our products will contribute points toward the LEED® rating systems and the Green Building Initiative’s Green Globes certification. By using Decca’s furniture throughout a casino property, the facility will be working towards being a ‘green’ business. Properties such as the Hilton Vancouver Washington (Vancouver, Washington, US), which is the world’s first LEED® -certified Hilton, and the University of Maryland University College and Marriott International, Inc.’s UMUC Inn & Conference Center Marriott (UMUC), which is designated as the first eco-friendly hotel and conference facility in the United States, indicate that the industry is clearly shifting. Decca supports the ‘greening’ of these and other hotels, and is responding to customer need by being a product source for sustainable businesses. Utilising sustainable products, practices and methods additionally provides a competitive marketing advantage by attracting business from the growing eco-friendly

THE NEW GREEN BREED: CASINOS AND HOTELS Many casino and hospitality industry developers and owners have recently announced or undertaken ecofriendly, ‘green’ initiatives. In Las Vegas, officials expect that most casino companies and other big developers will be opening new casinos that use less energy and feature new ‘green’ amenities for customers. In the meantime, a few new projects are already underway: ■ The 4,000-room, 18 million sq. ft., $7 billion citywithin-a-city CityCenter resort in Las Vegas. When it opens in late 2009, it is expected to be the largest LEED® -certified structure in the United States. ■ Nearby, in Colorado, there is Vail Resorts which offsets 100% of energy use for its five mountain resorts, lodging properties, 125 retail locations and corporate headquarters by purchasing nearly 152,000 megawatt hours of wind energy. This makes Vail Resorts the second-largest corporate purchaser of wind power in the US Vail has begun work on ‘Ever Vail,’ a $1 billion multiuse LEED® certified resort project. ■ The Chumash Casino and Resort in Santa Ynez, California, received the 2007 Santa Barbara County ‘Green Award,’ which recognises companies which demonstrate environmental conservation. Chumash Casino was referred to as an “environmental leader among California Casinos” by an award spokesperson. The Casino is only five points away from achieving LEED certification for its buildings and its goal of becoming the first LEED-certified casino in California. In addition, entire hotel chains are being planned with green values as their foundation. Starwood Capital Group has launched ‘1’ Hotel and Residences, which, when completed is expected to be the first luxury, ecofriendly global hotel brand. ‘1’ will adhere to green construction and operating principles and commit to limited consumption of natural resources. Marriott recently announced it was on track to reduce its greenhouse gas emissions by nearly one fifth over a 10-year period from 2000 to 2010. The company said that would be the equivalent of taking nearly 140,000 cars off the roads.

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CASINO DESIGN & SUSTAINABILITY

Hong Kong factory.

demographic. Research indicates that this group is a loyal customer base to its ‘green’ proprietors.

GREEN CUSTOMERS CHOOSE SUSTAINABLE BUSINESSES Establishing and maintaining customer loyalty is a key element in any industry. When all else is equal, consumers gravitate towards businesses that reflect their personal style and values. If they put importance on environmental sustainability, as is increasingly the case, customers will notice and appreciate the measures taken by a ‘green’ casino. Industry analysts believe that consumers seek out ‘green’ qualities in a property much like they do gym or spa facilities and free wireless Internet. A recent survey of 4,000 business travelers revealed that 16 percent chose accommodations specifically because of their environmental policies. Most responded that they would even pay a small premium for ‘green’ features, as they were initially willing to do for highspeed Internet service. Casinos that demonstrate their commitment to sustainability will stand out as leaders in the world’s effort to address global environmental concerns, and will both attract

and retain a like-minded customer base. Being ‘green’ creates a great marketing value and creates the opportunity for memorable brand identification. Casinos that adopt ‘green’ practices will have the advantages of a ‘must see’ attraction and will generate an interest simply by their environmental stance. Getting customers in the door is the first step towards establishing their loyalty. Once there, environmentally aware guests will notice and remember those sustainable elements of the casino. At Decca Hospitality, we have progressively incorporated environmentally conscious and responsive practices into our operations, both as a reflection of our own personal beliefs but also in response to the needs and goals of our customers. We have a number of top hotel operators, such as Four Seasons Hotels, who have partnered with Decca and were closely involved in developing our plan to accomplish the highest levels of sustainability in our furnishings. In our continuous quest for excellence in the products and services we offer, we have taken cues from our valued customers and responded to the ever-changing needs of the industry. The fact that shifting to ‘green’ has promoted positive

>> Casinos that demonstrate their commitment to sustainability will stand out as leaders in the world’s effort to address global environmental concerns, and will both attract and retain a like-minded customer base. Being ‘green’ creates a great marketing value and creates the opportunity for memorable brand identification. Casinos that adopt ‘green’ practices will have the advantages of a ‘must see’ attraction and will generate an interest simply by their environmental stance. Getting customers in the door is the first step towards establishing their loyalty. Once there, environmentally aware guests will notice and remember those sustainable elements of the casino >> 48 ■ Casino & Gaming International

CASINO DESIGN & SUSTAINABILITY

customer relations and allowed us to effectively take on an issue that the entire globe is concerned about, makes it a successful endeavour. There may not be any other marketing strategy which accomplishes both significant savings on operations and conveys the message of global good-will to every constituency and demographic group in our marketing plan. With odds like that, ‘green’ casinos win the business jackpot, and share the profits with the planet.

HAPPIER, HEALTHIER, ‘GREENER’ STAFF Another very important, though less tangible benefit, is the ability of a ‘green’ casino to attract and retain the best employees. By providing an eco-friendly environment, management directly impacts the well-being of the people who work there. From frontline management, service and gaming staff to C-level personnel, employees who are in good health perform better on the job. Worker satisfaction and health have been empirically linked to the physical and environmental qualities of the workplace. Although it’s not as easy to calculate as energy savings, green buildings are designed to be a healthier and more enjoyable working environment, which reduces absenteeism, dissatisfaction, staff turnover, and the financial and managerial impact these problems have on a business. The high cost of worker illness and compromised productivity due to environmental toxicity can be significant. Often, sickness is caused by pollutants within the building that the casino staff is not even aware of. Materials found in floor and ceiling tiles, carpeting, cleaning products, paints, adhesives and sealants, are all known to cause health problems. Only 43 percent of high volume chemicals used in building interiors have been tested for potential human toxicity. According to 2003 statistics from the US Environmental Protection Agency, the concentration of indoor pollutants is between ten and one hundred times higher than outside. By incorporating the use of non-toxic materials throughout the facility, the quality of indoor air will be noticeably improved, resulting in a reduction of chemical side effects which can cause a range of acute and chronic illnesses. ‘Green’ building improvements, especially when incorporated into new construction, are very cost effective when measured by worker performance. A recent Massachusetts Technology Collaborative study indicates that productivity and health benefits are by far the most significant category of savings in a ‘green’ building, with a 20year net present value of $36.90 to $55.30 per square foot, depending upon the level of LEED® rating. This relatively large impact of productivity and health gain is far greater than the cost of construction or energy and is a savings of ten times the additional expense of incorporating sustainability into a building. At Decca’s manufacturing plant in China, we put great value on the general well-being of our employees. We addressed the concern of poor nutrition in our staff by growing organic food on a roof garden above our manufacturing facilities. Our kitchen staff prepares wholesome meals, which we hope will convey our intentions of good will to our staff. Not only is this a sought-after and unique job perk, but worker loyalty has increased due to this and other green operations we have instituted. Decca management sees employee-retention and

customer-retention as equal goals in our move to ‘green.’ As the sustainability movement spreads across the globe and permeates every industry, the standards and degrees of how ‘green’ an operation is will increasingly determine the ability to accomplish both of these.

GREEN AND GETTING GREENER Many hospitality businesses are already at least ‘greenish,’ if not well on the way to being completely sustainable. According to the American Hotel & Lodging Association, two-thirds of US hotels currently implement the familiar linen/towel reuse program. But most industry developers and owners are thinking of bigger eco-friendly initiatives. Within the next five years, Las Vegas officials expect that most casino companies and other big developers will be considering and constructing their own LEED® -certified projects. The immediate future looks a bright shade of “green” as new and existing casinos and resorts take on sustainability. There are a number of precedent-setting ‘green’ casino and hospitality projects in the works which will pave the way for the rest of the industry to follow (see SIDEBAR). As a LEED® -certified hospitality business, Decca is proud to be amongst the growing number of businesses in the industry who have taken a stance and committed to environmental sustainability. Decca Hospitality Furnishings supports the ‘greening’ of the hospitality industry, and is responding early as a product source for sustainable businesses and casinos. Given the significance of the issue and the inherent risks of not taking action, eco-friendly practices must become a priority for every individual and every aspect of the industry as soon as possible. At stake is the well-being of our global home, and those are odds that we should not be willing to gamble against. Instead, we can work together and mutually reap the profits of a healthy planet. CGI

NICK HART As President and CEO of Decca Hospitality Furnishings LLC, a wholly owned subsidiary of Decca Ltd, Nick Hart is responsible for strategic direction, business development and client relations, and further oversees the company’s financial performance and other aspects of operations. His vision and leadership over the past five years has enabled Decca Hospitality to become the leading supplier of high-end luxury furnishings to the lodging industry while providing highquality furniture to luxury hotels and resorts throughout the world. Nick also provides market and product leadership to Decca Ltd.’s corporate sustainability initiative, spearheading its development in the hospitality sector. This reflects his company’s role as a strategic partner with hotel and casino executives focused on environmental objectives. He has over 25 years experience in the hospitality furniture industry and prior to his tenure with Decca, Nick worked with such notable manufacturers as Baker Furniture, Drexel Heritage Furniture (Contract Division) and American of Martinsville.

Casino & Gaming International ■ 49

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SECURITY & SURVEILLANCE

COVERING EVERY ANGLE, FORESEEING EVERY POSSIBILITY INTERVIEW WITH JAMES MOORE

The range of security related technologies ensuring the efficiency of casino environments continues to evolve, providing a seamless, preventative and cost effective layer to operations. Centralised and integrated systems are increasingly all-embracing, from day-to-day tracking and monitoring to early identification of gambling behaviour problems with information assessed in moments. As the global gaming market expands so the performance and versatility of security and surveillance systems become an increasingly fundamental requirement.

GI: Why did you decide to enter the gaming industry or was this a natural move?

JM: With decades of experience within the security and surveillance industry, and many of those within the gaming environment, it was a natural move for iView to work within the gaming market. iView Systems has focused its development resources over the past five years to provide enterprise platforms enabling modular integration of inter-dependent security, surveillance and risk management related transactions. The core product iTrak has evolved in ‘real world’ environments to provide centralised security information, and a transaction system enabling rapid transition from existing paper and independent systems to a single cohesive converged platform which can be configured to comply with the specific requirements demanded by iView Systems’ clients. CGI: What are the major drivers in today’s software security systems? JM: Integration has been and continues to be the primary focus of the security technology industry. In the security and risk management world, information is the currency for any security related department to operate efficiently. The need created is for risk management environments to pull real-time information together in order to be able to defend those environments. Casino & Gaming International ■ 53

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Risk assessment, risk and liability mitigation, corrective action planning, implementation and performance metrics rely upon effective information collection, management and secure dissemination. Modern security practices have evolved from a compartmentalised approach toward a structured and orderly â&#x20AC;&#x2DC;Best Practiceâ&#x20AC;&#x2122;/SOP based operational structure. The key to achieving this is a centralised information management system providing a unified system for security information management and reporting in a secure manner from multiple sources. When you move into a converged system environment, you are able to capitalise on the information that is coming in and use it efficiently. This in itself becomes a return on investment by reducing admin overhead. CGI: What specific challenges do the casino and gaming sector pose compared, for instance, with banking and finance? JM: As within all loss prevention markets, there is a great need to track and report on all incidents that occur on your property. Within the gaming industry not only are you faced with these mundane tasks, but there is also the element of patrons that enter your doors everyday that are not supposed to be there. These people may be on a status of banned, watch, or self exclusion. With over 20,000 people each day walking in and out of your establishment it is quite literally impossible to ask your security staff to recognise all of them

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by a picture that they were once shown in a file. This issue is one of the most pertinent for the casino industry. CGI: Gaming establishments increasingly require highly streamlined systems to get the job done, but is the level of sophistication near to its limit now? JM: Gaming establishments increasingly require highly streamlined systems to get the job done; some believe that the level of sophistication is near to or at its limit now. However, as you look through history, developments are continually removing these limits. The gaming industry is evolving at a rapid pace, and although that pace may slow from time to time it is highly inevitable that it will continue to surprise us and rise to new levels of sophistication, to continually meet the needs of the industry. CGI: Given the vast differences in scale between individual casinos and integrated resorts, what is your general reach? JM: Our platform can grow from one single property to a global corporate enterprise, and is designed to run seamlessly at all levels. CGI: In your experience is the level of IT infrastructure in casinos significantly varied to test the full range of applicability, efficiency and value of your software? JM: IT infrastructure is a key component to a well managed business and we see a vast range of high quality efficient

SECURITY & SURVEILLANCE

infrastructure to legacy environments. Our systems have been optimised to run across the full gamut of systems and networks to ensure value of our platforms.

enhance the subject database search, instantly narrowing down possible subjects from 1000’s to one or more individuals in seconds.

CGI: Can you explain the feedback you get from the deployment of software security platforms and what results have been achieved?

Facial Recognition systems such as iGWatch can also be configured to capture a ‘Biometric Face Log’ of patrons over a period of time. This log provides instant access by time, date and camera name to stored faces that have been isolated and tracked by the system. Historical images can then be enrolled directly from the face log, based on missed or active criminal or selected activities, thereby potentially identifying the same individuals in the future who have been involved in historical incidents.

JM: The feedback that we receive from our customers is always very positive with remarks about the software in regards to how easy it is to use, how applicable it is to day-today operations and its low maintenance overheads. CGI: Where do you see the most innovative software solutions now emerging within and beyond gaming in loss prevention, monitoring and security? JM: Security and surveillance professionals in today’s high technology gaming environment are faced with handling and processing vast amounts of both real time and recorded video information from hundreds or thousands of cameras. Combined with their existing security, auditing and investigation workload, the task of identifying banned/selfexcluded patrons, shoplifters, gang members and other undesirables becomes practically impossible. Facial Recognition systems such as iView’s iGWatch offer an additional tool that delivers an automated active real time surveillance and identification solution, providing event driven alerts based on selected individuals under watch or excluded status. This biometric solution replaces manual systems such as operator comparison of surveillance subjects to ‘mug’ books. Typically, surveillance environments will not have enough operators on shift to watch every camera at all times. Facial Recognition systems act as additional ‘eyes’, allowing existing cameras to be configured as ‘face ready’. Any individual that appears in front of these pre-selected or live cameras is automatically run through the existing enrolled subject database. If a match of a certain confidence level is made, then an alert is sent to an operators’ desktop also displaying the next closest matches with details such as camera, time, and subject information. These systems automate and

Integrated into an investigation and subject management system such as iView’s iTrak platform, this information provides the ability to not only manage existing risk, but also better deploy personnel and isolate potential problem locations, subjects and incidents (i.e. slip and falls, assaults, and so on) before they occur. Ultimately, these linked systems will provide better analysis of incidents and subjects, while delivering more accurate occurrence statistics and better analysis of risk trends. This information will enable refinement of policies, procedures and staff deployment to efficiently address current and future criminal or risk managed issues. CGI: Of the systems you install in casinos are they generally all-embracing or provide a seamless component with other vendors? JM: Our system is typically a mixture of both standalone or seamlessly integrated into other systems. CGI: As a condensed case study, what do you believe to be the one gaming establishment that has best demonstrated iView platform performance? JM: Foxwoods Resort Casino, owned by the Mashantucket Pequot Tribal Nation, is the world’s largest casino resort with nearly five million square feet of entertainment, gaming, dining, shopping and resort experiences — all under one roof! Not only has Foxwoods been honoured with NAC’s 2006 Sexiest Casino Award, it has received AAA 4-Diamond

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Awards for both its Paragon Restaurant and Grand Pequot Tower Hotel. Foxwoods features 1,416 luxury hotel rooms and suites in three hotels; 55,000 square feet of meeting space as well as world-class entertainment in its 1,400-seat Fox Theatre. Six distinctive casinos with over 7,400 slot machines, 380 table games, the largest poker room on the East Coast, high-stakes Bingo and the Ultimate Racebook offer visitors the gaming experiences of a lifetime. Foxwoods is also about security for its patrons. It has purchased and installed iView Systems’ iGWatch Facial Recognition System and has selected iView’s Incident Reporting and Surveillance Information System (iTrak), with the integrated Intelligent Gaming Network (iGNet), to provide a complete end-to-end surveillance solution. CGI: How extensively does iView invest in R&D and what store do you place on this for the future? JM: R & D investment is ongoing at iView driven directly from customer feedback, to meet their and the industry’s needs in general now and in the future. CGI: The gaming market goes through twists and turns, so you will no doubt have an eye to new markets? JM: iView is well entrenched in the gaming market and has expanded its clientele to all Loss Prevention environments including, but not limited to, corporate, transit, healthcare, education and government. CGI: Corporate observance of responsible gaming is becoming a necessary part of strategic thinking, but how much does that influence your mission? JM: Traditional industry responses to problem gambling have tended to be passive and reactive. They have been passive in the sense that the industry provides information materials such as pamphlets, posters, decals, 1-800 numbers and other static messaging systems such as responsible gaming messaging on ATM receipts. And reactive in the sense that the industry waits for visible problems: people exhibiting ‘red flag behaviours’; people self excluding, or referrals to treatment programmes or counselling. The establishment of responsible gaming centres with on site health professionals hired to inform, educate and refer players is an important step towards a more proactive approach. Responsible gaming has been partially integrated even into the responsible gaming centres. The Saskatchewan Gaming Commission (SGC) realised that they could be proactive and preventative in their approach to responsible gaming and address problem gambling issues. This approach needed to be integrated into the daily operations of the casino. The iCare – Intelligent Player Care System delivers a comprehensive, proactive responsible gaming approach. iCare offers a cohesive suite of products and services that enable the introduction or augmentation of a prevention based responsible gaming environment. 58 ■ Casino & Gaming International

Firstly, it provides the ability to capture and interpret data from the casino operator’s Casino Management Systems, identifying players at risk. Secondly, it provides a management system that can notify operators when high risk players are in the casino providing casino staff with information about player behaviours and the appropriate standardised interactions. In addition, it delivers a tracking solution to document interactions between staff and patrons. The iCare system enables casino operators to continuously measure, evaluate, monitor and improve their approach to problem gambling through a set of advanced monitoring and measurement tools in addition to managing consistent interactions with gaming patrons while continuously meeting a minimum duty of care for their patrons and casino operations. It delivers a prevention focused problem gambling solution contributing to social responsibility, risk management, and long term gaming sustainability while potentially preserving gaming revenue streams and industry jobs. It integrates responsible gaming into casino operations and allows casinos to act to protect players and themselves. www.icaregaming.com CGI: What position do you take on the need for an international code of responsibilities to be effective across the industry? JM: There is a great need for an international code of responsibilities, but given the multiple jurisdictions and diversity in cultures, this poses a major undertaking by the industry and key stakeholders as a whole. CGI: If you were to project future possibilities where would you expect expansion technologically and geographically? JM: Geographically, Asia is proving and will continue to provide explosive growth in the gaming industry. Additionally, this growth is driving technology (for example, RFID) for true real-time systems (player and related) given the scale of facilities and the requirement to isolate and track all aspects of their gaming and general activities. CGI

JAMES MOORE James Moore is vice president of iView Systems. James brings more than 15 years in the security product management, project management, product marketing, marketing communications and sales fields. His extensive security product experience includes a broad background in product management, marketing and technology, having worked for a number of organisations including the Ontario Provincial Government, Canadian Department of National Defence, Canadair (Bombardier), Chubb Security Systems, Guardall North America and with the Danish Telecommunications company, NetTest.

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OFFSHORE: ISLE OF MAN

UK WHITE LIST BOOSTS ISLAND’S WORLDWIDE eGAMING PROSPECTS INTERVIEW WITH GARTH KIMBER

The Isle of Man (IoM) has established a consistent reputation for eBusiness flexibility with an incremental development of assured jurisdictional and regulatory management. Companies so domiciled on the Island have consequently found a commercially enticing and stable environment. Now, with the UK Government’s White List acceptance of the IoM, the moment has arrived for building a significant location on the World stage.

GI: What criteria did the Isle of Man meet to ensure its inclusion in the UK Government’s ‘white list’?

GK: The Isle of Man ironically may well have been one of the places that the UK looked to when formulating its own legislation. As one of the first places to introduce gambling legislation we have had high regulatory standards from the start in 2001. However, during the process we were asked to clarify and expand on certain parts of both the regulations and the method of applying them. The main criteria we believe the UK were looking for jurisdictions to meet were control methods and standards for problem gamblers, under age gambling and player protection. Put simply, we were required to show that as a minimum our standards were set at the same level as those in the UK. As part of the process we reviewed and simplified our processes for applying for an Online gaming (OGRA) licence and the UK wanted to ensure the necessary changes were in force and being applied by the 1st September 2007. CGI: The history of UK-IoM relations will surely have provided an underlying confidence in such a decision? GK: I would like to think so. The Isle of Man has a strong regulatory authority in the financial sector and we have built up good relations with the UK in the eBusiness sector. We have a close relationship with the UK and have a Customs and Excise Agreement treating the two territories as one for nearly all excise duty purposes. We are also represented by the UK Casino & Gaming International ■ 61

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Government in a number of areas such as Consular Services and Defence. Through these areas, a level of trust in the Isle of Man will have built up and the UK Government will be aware that we have both the skills to apply the legislation and the track record of doing so in a number of areas. CGI: In what way has this acceptance given a green light to companies considering, or reconsidering, locating to the IoM? GK: There has been a significant increase in the level of interest in the jurisdiction. During the application process there were a number of jurisdictions that gave companies located in them a high degree of confidence that they would get on the list. Once the list was published the companies in those that failed have had very little time to carry out their due diligence on the jurisdictions available and make a decision. This is leading to a number of discussions where we are getting the message across that the Isle of Man has modernised and adapted our processes and licensing regime. CGI: Where is most of that interest coming from? GK: Obviously, there is a lot of interest from companies with operations, or part of their operations, in the places that

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failed to get on the list. However, and slightly more surprisingly, there are also a significant number of enquiries from well funded start-up businesses that had held off choosing a base from which to open their business until they knew which jurisdictions would be included. There now appears to be a time where a number of companies are looking to consolidate their operations and pull them together into the same jurisdiction rather than running different sections from different places. CGI: Will inclusion enable the Island to create enhanced benchmarks of quality assurance from companies? GK: Unquestionably. The industry, although anticipating the inclusion of the Isle of Man on the list, has waited patiently for the UK Government to confirm. When one considers that the legislation has been in place for six years it demonstrates how high the standards set by the Isle of Man have been. Inclusion on the list confirms that it is now the open and visible conclusion of another jurisdiction that these standards are high. As the number of quality businesses based on the Island grows the reputation of those choosing to be based here will grow and their customers will understand that an Isle of Man base means high standards.

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The Isle of Man - gaming’s safety net

When your business is online you need it to stay online Continuous service to your customers can be a reality. Host with Netcetera in the Isle of Man from our world class datacentre, and also enjoy the benefits of a well-regulated, offshore, low-tax regime. You may already have a primary gaming site elsewhere, but what if it fails? Transition to a second centre at Netcetera in the Isle of Man is achievable with no need for an immediate licence thanks to the Government’s Disaster Recovery regulations. You’ll also benefit from all of the advantages you would expect from a leading centre. Isle of Man • 0% Corporation tax • Low personal income tax – maximum rate 18% • Personal income tax cap at £100,000 • No capital gains or inheritance tax • UK Whitelist access • 0.5% - 1.5% online gambling duty Netcetera Dataport • 18,600 sq ft world class, resilient state-of-the-art datacentre • High availability, low latency network connectivity • 2x11000v transformer input – unique in offshore hosting • VESDA and FM200 fire suppression

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OFFSHORE: ISLE OF MAN

CGI: Depending on the company sector and operation, what differences are there in how the Island is valued? GK: The Isle of Man is a World Class jurisdiction in areas of legal framework, stability, legislation, taxation and technology. The only area where it is challenged by others is in respect of the Protocol relationship with the European Union (EU) which does not give automatic market access across EU member states. Given the number of ‘Default’ notices [11] issued by Brussels to member countries not meeting their obligations under Article 49 of GAT it will be some years before the benefit of full EU membership is a practical reality. UK-centric sports books still paying 15 percent tax on gross profits must see the Isle of Man as attractive now market access through the white list is confirmed. CGI: That must mean a stronger Government hand in generating or stimulating innovation and technology trends? GK: The Isle of Man economic strategy review to 2014, the Charteris Reports on e-business strategy and opportunity,

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and the ‘Freedom to Flourish’ campaign all recognise the importance of e-Business growth and diversification of the Isle of Man economy and within this the importance of eGaming as the ‘engine’ that is driving the broader e-Business development. This extends from infrastructure investment through to legislation to match the needs of the sector to business requirements. The Island has a very strong partnership between business and Government and by working closely, as has happened for many years; successful growth has been and, will continue to be, achieved. It is the strength of the partnership rather than one of the participants that generates the flexibility required for success. CGI: What are the implications for IoM’s regulatory body? GK: We have implemented a number of changes, these include: ■ The Gambling Control Commission has been re-named the Gambling Supervision Commission and has moved from the Department of Home Affairs – a department

OFFSHORE: ISLE OF MAN

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also responsible for the prison, the police, the fire brigade and emergency planning to the Treasury, a department responsible for economic growth and diversification. A new Chairman has been appointed – Claire Milne, a local advocate who is very well respected in her profession and who also has considerable prior involvement in and knowledge of, the e-gaming industry. A vacancy on the Commission has also been filled with the appointment of another well known and highly respected local advocate. A new director of e-gaming regulation position has been created and it is hoped to be able to fill this post in the near future. A greater emphasis will be placed on working even closer with industry to ensure that the Commission is fully up to speed with industry developments, changing technology and any need for further regulatory change.

CGI: To what extent are both non-domiciled and domiciled companies now viewing IoM as a primary business location? GK: Obviously, the domiciled companies view the Isle of Man as a primary business location. They already knew the benefits of the island both as a place to do business and as one of the top locations in the UK to live. Non-domiciled companies are all looking at different jurisdictions all the time. The Isle of Man has presented the message at EiG in Barcelona that as a jurisdiction we are more business facing and processes are slicker and easier to navigate through. This has been heard and companies are looking seriously at basing larger amounts of their business on the Island. An OGRA licence now covers all aspects of online gaming under the one licence and at one price. That encourages companies to base all their offerings here. CGI: Do you expect corporate strategies, consequently, to become more IoM-centred with greater expansion intentions locally? GK: The companies that have businesses on the Island have started to show a tendency to bring other parts of their business to the Island. Where sports books were initially happy to have poker and casino operations based in different jurisdictions there is now a move from many of them to consolidate their operations into one place.

It was our belief that once a company started operating from the Isle of Man it would lead to growth of the operation as the benefits of the business environment become more obvious. This has turned out to be the case. CGI: The Island has, however, been described as being defined by jurisdiction rather than by geography. Are there limitations to physical expansion looming? GK: No, there are virtually no restrictions on further expansion. The Island still has a relatively low population density and development plans still have ample land designated for development. The Government has invested heavily in the infrastructure in recent years and has built a new power station, constructed an electricity inter-connector to the UK, built a new all Island hospital, a new incinerator, two new all Island water treatment works and an all Island sewage treatment works. Work is also about to start on extending the Islands’ main airport runway. Additionally, within the superb telecommunications infrastructure there are no barriers to expansion that would deter a company from relocating to the Island. Indeed, the Isle of Man is probably the only jurisdiction that not only has no barriers, but has virtually all the necessary infrastructure in place already. CGI: Could there be an issue of security for the eGaming and eCommerce industry if internal growth in company operations steadily advances? GK: No, there are no security issues associated with internal e-gaming/e-business growth. The Island has two self healing SDH fibre rings guaranteeing resilience. The main fibre cable is less than 0.02 percent utilised and therefore has ample capacity for expansion. Island based ISPs have employed Cisco to successfully combat any Distributed Denial of Service (D-DOS) attacks. These protection systems are all applied upstream. Border Gate Control is applied across all the various ISP’s and network providers. This effectively redirects traffic should an accident occur. The Island has a reputation for successfully defeating such attacks and contributing forensics to the likes of the High Tech Crimes Unit which has lead to successful prosecutions. There are also four state of the art data hosting centres – Manx Telecom, Domicilium, Continent 8 and Netcetera

>> There is a lot of interest from companies with operations, or part of their operations, in the places that failed to get on the list. However, and slightly more surprisingly, there are also a significant number of enquiries from well funded start-up businesses that had held off choosing a base from which to open their business until they knew which jurisdictions would be included. There now appears to be a time where a number of companies are looking to consolidate their operations and pull them together into the same jurisdiction rather than running different sections from different places >> Casino & Gaming International ■ 65

OFFSHORE: ISLE OF MAN

>> The Island still has a relatively low population density and development plans still have ample land designated for development. The Government has invested heavily in the infrastructure in recent years and has built a new power station, constructed an electricity inter-connector to the UK, built a new all Island hospital, a new incinerator, two new all Island water treatment works and an all Island sewage treatment works. Work is also about to start on extending the Islands’ main airport runway >> recently completed or approaching completion which all employ the very latest security measures. CGI: Is the Government planning new eGaming and eCommerce policies following the listing or is this seen as consolidation? GK: This is far from a point to consolidate at. The Isle of Man was first to recognise the need to regulate the industry and constantly has the needs of the business community balanced with this. The legislation was amended and coincided with the white list announcement. The different business models we are being presented with continue to challenge the regulations in a number of ways. The Government will continue to respond to these developments whilst maintaining the integrity of the jurisdiction. We are constantly reviewing the regulations to see what changes are required in order to allow the plans that were never envisaged at the time of writing the legislation. This will continue to be an ongoing process. CGI: Is there stronger mobile technology input in the IoM? GK: Yes. There are a number of discussions going on with companies in this area. While these are obviously commercially sensitive it can be said that the Isle of Man will be in the forefront of mobile technology.

gaming company and I do not believe that at this stage in the industry’s development the companies looking at different jurisdictions are looking for more than the Isle of Man’s present financial offering. CGI: Could such a development, by its scale in the long term, attract major gaming interests by association irrespective of the ‘white list’? GK: There is no doubt that a strong financial sector is a major advantage to an e-Gaming company but it is not the only consideration. We have concentrated on developing the whole environment to support the industry and as an AAArated jurisdiction the financial sector is undoubtedly one of our attractions. The IOM now has a strong track record in taking companies to AIM through IPO’s. This has always been a major consideration for some companies and I believe will only grow in importance to others. Many e-Gaming companies have been around for a while now and I would expect a number of owners to focus on their exit strategies over the next couple of years. The Isle of Man has the necessary reputation and expertise, not to mention personal tax legislation to make it a very attractive place to have the business based at this point in its evolution. CGI

As the first 3G network in Europe was set up on the Island there is a strong pool of talent and resource in the sector. It is clearly an area where a number of companies are expanding the offering and a number of Isle of Man companies are involved in the process. GARTH KIMBER CGI: Since the IoM is now being talked of as a possible alternative financial centre to the Caymans, what effect do you estimate that objective will have on gaming companies observing this development? GK: There is already a very well respected and regulated financial base on the Island that offers virtually all the banking activities and products that a gaming company require. The duty rates, licence fees and corporate tax rates are the main financial areas that companies look at initially. It is a requirement for a licence holder to bank on the Island and they find what they need is already here. There are many aspects to the decision of where to base a 66 ■ Casino & Gaming International

The new Head of E-Gaming with the DTI Garth Kimber has a wealth of business development experience globally. Previously having set up a company in 2004 to supply major brand owners and the Outdoor Advertising Industry with innovative interactive communication solutions to increase customer attraction. Prior to this Garth was International Operations Director with the US Media giant Clear Channel. Tendering for major contracts and setting up new businesses across Asia, Australasia and South America.

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GAMBLING PSYCHOLOGY: MOTIVATION, EMOTION AND CONTROL BY MARK GRIFFITHS

Motivations and influences that govern players’ gambling interests are more complex than often suggested, arising as they do in a wide range of circumstances with often distinctly different consequences. An insight into the nature of player activity, the emotional effects, impact on rational decision-making and an understanding of gambling purpose varies from player to player. Here, on a personal and professional level, some of these factors are explored.

n the 20 years that I have been studying gambling, the question that I am most asked is ‘Why do people gamble?’ and variations on it, such as ‘Why do people gamble when most people consistently lose?’ All surveys of gambling have shown that there are a broad range motivational factors that are central to gambling, and that attitudes towards gambling are positively related to availability and cultural acceptability (Griffiths, 2006). However, this perspective fails to take into account many key findings and observations in gambling research. Surveys have also shown that not everyone gambles and some people gamble more than others (e.g., professional gamblers, problem gamblers). Research has consistently shown that people often gamble for reasons other than broad social and economic reasons. These other motivations may vary according to personal characteristics of the gambler and the type of gambling activity. Additionally, broad social and economic theories fail to explain why certain gambling activities are more popular or ‘addictive’ than others (Griffiths, 2006).

GAMBLING MOTIVATION Variations in gambling preferences are thought to result from both differences in accessibility and motivation. Older people tend to choose activities that minimise the need for complex decision-making or concentration (e.g., bingo, slot machines), whereas gender differences have been attributed to a number of factors, including variations in sex-role socialisation, cultural differences and theories of motivation (Griffiths, 2006). Stereotypically, women tend to prefer chance-based games and men tend to prefer skill-based games. Even some games that are predominantly chance-based, men attempt to Casino & Gaming International ■ 71

PLAYER PERSPECTIVE

impose some level of skill. For instance, poker – which people regard as skill-based – has a massive amount of luck involved. Similarly, men often, in their own minds, change playing a slot machine from a chance-based event into a more skillbased activity via cognitive processes such as the illusion of control. The other factor to consider is that (in general) women don’t like it when other people see them losing. On a slot machine, no-one sees the player is losing so it’s very often a very guilt free, private experience. Men, on the other hand, even when they lose big, there’s a machismo attached to it that says: “Yes, I’ve lost £500 but I can afford it.” Variations in motivation are also frequently observed among people who participate in the same gambling activity. For example, slot machine players may gamble to win money, for enjoyment and excitement, to socialise and to escape negative feelings (Griffiths, 2002). Some people gamble for one reason only, whereas others gamble for a variety of reasons. A further complexity is that people’s motivations for gambling have a strong temporal dimension; that is, they do not remain stable over time. As people progress from social to regular and finally to excessive gambling, there are often significant changes in their reasons for gambling. Whereas a person might have initially gambled to obtain enjoyment, excitement and socialisation, the progression to problem gambling is almost always accompanied by an increased preoccupation with winning money and chasing losses (Griffiths, 2006). Gambling is clearly a multifaceted rather than unitary phenomenon. Consequently, many factors may come into play in various ways and at different levels of analysis (e.g., biological, social or psychological). Theories may be complementary rather than mutually exclusive, which

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suggests that limitations of individual theories might be overcome through the combination of ideas from different perspectives. This has often been discussed before in terms of recommendations for an ‘eclectic’ approach to gambling or a distinction between proximal and distal influences upon gambling. However, for the most part, such discussions have been descriptive rather than analytical, and so far, few attempts have been made to explain why an adherence to singular perspectives is untenable (Griffiths & Larkin, 2004; Griffiths, 2005a).

GAMBLING PSYCHOLOGY Gambling is one of those activities where people effectively can get something for nothing, which is why some people will take risks. The attraction of a lottery for example is that, for a very small stake, the punter can have a life-changing experience (and things are further complicated by the fact that most lottery players don’t see the activity as gambling) (Griffiths & Wood, 2001). People who enjoy playing roulette or betting on a football match enjoy the betting or gaming experience itself. In short, each gambling activity has its own unique psychology (although there are undoubted overlaps). Most economists claim that gamblers are primarily driven by the profit motive. However, the psychological evidence is overwhelming that other desires affect gambling actions. Put simply, for most gamblers, our actions contradict the desire to maximise profits. Whilst I am no Freudian, there appear to be a whole range of unconscious factors at play in gambling situations (Griffiths & Delfabbro, 2001). For instance, if players make a successful bluff during a card game, it’s human nature to want to let people to know how smart they are. The golden rule in poker is never to give anything away, but the human psyche works in such a way

PLAYER PERSPECTIVE

that we usually want to show off once in a while. Our psychological make-up also means that we let pride get in the way of minimising losses. There are always games that should have been avoided but players end up staying in them long after they knew it was a mistake. None of us like to lose to who we think are weaker players, or admit that the game was too hard. How many times does a player continue playing because they want to try and get the better of a great player or show off because there is someone they are trying to impress? Although it’s a cliché, pride before a fall is commonplace. These short-term psychological satisfactions will almost always have a negative impact on long-term profits. Because there are many non-financial types of rewards from many different sources while gambling (Griffiths, 1999), some people view losses as the price of entry. To these players (and I include myself as one of them), winning may be a bonus. However, most of us don’t like losing – and we especially don’t like persistent losing, regardless of whether there are other types of reinforcement. In the cold light of day, we are all rational human beings. In the height of action, rationality often goes out the window. I’ve done it myself at the roulette table and standing in front of a slot machine. While gambling I have felt omnipotent. It is only after I walk away penniless that the non-financial rewards are short-term and not worth it (Griffiths, 1990).

INDIVIDUAL PSYCHOLOGY Understanding our own psychological motives is clearly important while gambling. Most players know the strategies they should be adopting but fail to apply them in real gambling situations. Players do not lack the information. It is far more profitable to learn why we don’t apply the lessons we have already learned, then ensure that we apply them. Until we understand and control our own motives — including the unconscious ones — we cannot possibly play to our best ability. Despite studying problem gambling, I am most definitely not anti-gambling. I’m pro-responsible gambling. To be antigambling would be hypocritical as I’m an occasional gambler myself and in the small minority of players who regularly go to the casino. I enjoy playing roulette. I used to call it ‘research’ but now play for pleasure. I personally see gambling as buying entertainment. When I go to the casinos in my home town, I’ll have a cordon bleu meal, a drink and spend my twenty or thirty pounds that I have put aside to play. When I go in at 6pm and leave at 11.30pm, I know that the amount of money I have spent equates to a good value leisure experience. It is the same as going to a football match or a rock concert. When individuals start gambling to win money, and that is their only objective, that is when problems can start. That’s when a proportion of vulnerable people can get into difficulty.

WINNING PSYCHOLOGY As an academic who studies the psychology of gambling, I expect to lose in the long run. However, that is not to say that I don’t have a set of rules that I apply in gambling situations (see Griffiths, 2005b). Some might say my rules are about the psychology of winning but I would prefer to describe them as the psychology of minimising losses! In some situations, there is a very fine line between psychology and common sense. In short:

I never gamble without some kind of pre-set plan. Winning gamblers set themselves win/loss goals before they enter a betting shop or casino. Only foolish gamblers play hand after hand or bet upon bet without direction. Planning and goals are the catalyst to life success and gambling is no different. I never let the excitement of a gambling environment detract from the pre-set plan I entered with. For instance, when I am in a casino, I remember that the alcohol, the music, and the attractive women are there for a reason. They are there to make me spend more money. I only do what I planned to do and I don’t get side tracked. I always remember that the excitement of gambling itself can lead to irrational thought processes. Psychological research has consistently shown that when gamblers are in the thick of their gambling ‘action’, they tend to be more irrational in how they think. Irrationality leads to poor decision-making and pre-set plans often go out of the window. Just like alcohol, gambling can make the player do things that they would never have done in the cold light of day. I am never tempted to use in-house cash machines and ATMs. Although they provide an ultra-convenient way to get more cash, they are there – in general – for one purpose. To entice those who are gambling not to stop or go home when they have run out of money that they walked in with. By walking out of the casino to get more money, there is more of a chance that I will have time to reflect during this ‘cooling off’ period and not return. The psychology of casino management is to keep punters in there as long as possible. When it comes to in-house cash machines, I’m invariably paying over the odds to get the money out in the first place. I always find it sad to see the desperation on some gambler’s faces as they are waiting in line to get some money out. I always make sure that I have the proper bankroll for the strategy and denominations that I intend to gamble with. The general rule that seems to do the rounds on most reputable websites and advice books is to take at least three times 400 credits of the highest denomination you are going to gamble with. There are obviously variations to this rule depending on the strategy you employ, but by and large this is the rule. I only stay at the same betting shop, gaming table or slot machine for a pre-set amount of time. I always move onto another area or establishment if I feel physically or psychologically uncomfortable. This gives me a ‘cooling off’ period. If possible (and I am the first to admit it’s not always), I try to spread my gambling around. In most big towns and cities there are numerous gambling establishments. In my research experience, those gamblers who sit at the same tables or machines for hours and hours are often miserable and unsatisfied gamblers. They are playing with money rather than for it. Where possible, I ignore promotions. As a general rule, gambling promotions are the highest money earners for the gambling establishment’s marketing department. They are designed to get me in the gaming establishment or to get me gambling on something new. I avoid gambling with offers that seem too good to be true. They usually are! I gamble at the establishment of my choosing and not Casino & Gaming International ■ 73

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where someone else advises me to gamble. This is all part of sticking to my pre-set plan and not letting others influence my gambling behaviour. 9. I have learned to think for myself. General advice is one thing. Winners learn to sort things out for themselves and not rely on others. They are comfortable with how they approach their gambling. I also disregard rumours. Gambling can often invoke certain urban myths, such as “your first bet after opening an Internet gambling account is always a winning one’.” Banking on such speculation while gambling is a recipe for disaster. Only factual information is used to inform my decisionmaking. 10. Finally, I do my own ‘research’. As with any other product that involves the exchange of money, a gambler needs to do research to establish the best deals around. This is especially useful on Internet gambling sites but can be applied to offline gambling too.

CONTROL PSYCHOLOGY One of the most psychologically interesting questions concerning gambling is ‘Why do so many people play so badly?’ It’s clear that most players know better, but they appear to make the same mistakes repeatedly. Take poker as an example. Given the hundreds of thousands of poker strategy books that are sold every year, we can only reach the conclusion that just a small percentage of poker players apply the skills they have read about. My hunch is that most people understand what they have read but when it comes to playing a competitive hand it’s simply more ‘fun’ to play badly than to play well. I’m not saying losing is more fun than winning (because quite clearly it isn’t), but the pursuit of profit maximisation forces players to do things they don’t like doing. On a psychological level, maximising profit makes extreme demands. Therefore, only a few, extraordinarily disciplined people play their best game most of the time – and nobody always plays it. At a fundamental level, what separates good (professional) gamblers and novice or problem gamblers is the factor of self-control. The general rule of thumb for players is to avoid becoming emotionally involved in the game. Inducing emotional (rather than logical) reactions from gamblers is what makes the gambling industry so profitable. By remaining unemotional, players can protect themselves from recklessly chasing losses and avoid going on ‘tilt’. Online gamblers are particularly at risk from engaging in chasing losses for the simple reason that they have 24-hour access from and are constantly subjected to temptation. Furthermore, they often lack a ‘social safety net’ to give objective appraisals. There are ways to avoid becoming emotionally engaged. These include reflective ‘time outs’ and having an objective attribution of outcomes. Reflective time-outs equates to playing slowly, making gambling decisions with accrued knowledge (i.e., knowledge of probability and of opponents). It is advisable after a ‘bad beat’ for players to be disciplined enough to sit out one or two hands to regain composure before playing again. Extending the concept further it is probably wise after a particularly ineffectual session to sustain play for an elongated time-out. Reckless and unintelligent play from knowledgeable players emerges from not being able to deal with frustration appropriately. Determining objective attributions of outcomes involves 74 ■ Casino & Gaming International

the player having an external locus of control when assessing the cards they have, and an internal locus of control regarding what the player does with the cards available to them. The mantra of poker players is that ‘You can only play the hand you were dealt’. All players will experience streaks of desirable and poor hands, and it is how the player responds to these streaks that will determine their success. It is very easy for players to become frustrated while in a negative streak. It is also easy in a positive streak to become narcissistic and complacent. It is the knowledgeable player that understands probability and who realises that over a continuous playing period that streaks (both positive and negative) are inevitable and transient.

USING PSYCHOLOGY I have to admit that I am not a good poker player. However, if I was, I would certainly try to use the psychology of nonverbal communication to my advantage. Back in 2003, Peter Collett published a book on the psychology of ‘tells’ (Collett, 2003). Professor Collett deliberately lifted the core topic of his book from the non-verbal world of poker players. A ‘tell’ is basically an action that reveals what a person is thinking and are often so tiny that they may not even be noticed. In poker, many players try to infer what kind of hand a person has by looking at the way the card player holds their cards, gazes at the chips or scratches their face. Tells can be both conscious and unconscious. Collett spent time studying politicians and has highlighted the ‘tells of power’ such as the way George W. Bush bites the inside of his cheek when he is highly nervous or anxious, and Bill Clinton’s tendency to bite his lower lip as a way of demonstrating his sincerity. Most of these behaviours are intended to be hidden, but are what we psychologists call ‘emotional leakage’. Many psychologists have carried out research into non-verbal communication. However, as soon as a non-verbal ‘rule of thumb’ is well known by the general public, the knowledge can be used to their advantage. When it comes to playing poker (or any card game of skill for that matter), an already skilful player will have the upper hand if they can learn to read the non-verbal cues of the other players. One of the problems is that most ‘tells’ differ from person to person. The trick is to try and memorise what the person did at a particular point such as the way they act when they raise the amount of money being staked, or the behaviour they display just before they are about to fold. Unconscious tells are linked to negative emotions such as anxiety. If a player has been dealt a bad hand, naïve players are likely to show their psychological discomfort through nervous reactions such as unconscious leg or finger tapping. Serious poker players will already know all about tells and will usually have learned to develop their own type of ‘poker face’ to bluff opponents. This is all part of the psychological battle in playing most card games of skill. There are also what have been described as ‘transition tells’ where people display common but repetitive behavioural patterns in times of uncertainty and/or where people cross psychological boundaries. Collett (2003) provides the examples of politicians such as Gordon Brown who plays with his shirt cuffs and strokes his hair. Obviously, with so much television footage, psychologists have a much easier time in trying to analyse the unconscious everyday tells of those in the public eye. Playing cards with someone you’ve only met a few times

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PLAYER PERSPECTIVE

where there is no opportunity to replay the event over and over is clearly much harder! But some good poker players do appear to have the ability to read other players and it is this ability that can separate the very good poker player from the great. Players can also learn to use false tells as a way of bluffing their opponent. The most common that Collett (2003) has described is the ‘power tell’ which is often used by political leaders in some of their actions (such as the way they walk). Just like at the way George W. Bush walks next time you see him on television. His arm swing and swagger. His shoulders are very exaggerated. He is trying to show the public that he is the leader of the Western world and what a powerful position he is in. In a game of cards, poker players will also try to assert their dominance by using more subtle ‘power tells’ by smoking a cigar in a particular way or showing off when shuffling the cards before dealing. The whole point of power tells is to look sincere and dominant and they can be used in a wide variety of contexts including poker. In essence, power tells are about ‘one-upmanship’ and this is the bedrock of most skill-based card games. Even the language of power tells is lifted from the gambling world. In everyday human behaviour, Collett describes power tells as behavioural actions which “raise the stakes” and allow people to metaphorically or symbolically “put their cards on the table”. While power tells are usually conscious and deliberate, most non-verbal human behaviour is totally unconscious and the vast majority of people can’t help but show their inner thinking through actions such as folding their arms. The whole area of non-verbal communication is a fascinating area of psychological study. Human behaviour is complex and there are too many individual differences to predict what any given person will do in a given situation (such as playing poker). However, by learning to understand what all these unconscious movements mean, we can start to gain access to the window of the gambler’s mind.

HEDGING ONE’S BETS When I started researching in gambling in October 1987, I remember being asked by my supervisors how I was going to do research in the area. I also remember one of my supervisors jokingly saying to me “The best way you could study the problem is to become a gambler yourself!” To some extent I took this throwaway comment on board and did start gambling during my PhD (even though at the time I called it ‘research’). Rather than become a compulsive gambler I became a compulsive “gambler watcher’! I find it hard to go into a pub, wait in a chip shop queue, or walk past amusement arcades without watching the players(s) at the slot machines. Gambling has become an important part of my life (both personal and professional). My favourite strategy in gambling involves sports betting. When it comes to gambling on sports matches I try to employ strategies that leave me feeling good whatever the outcome. That is why (from a psychological perspective) I tend to bet against my own team. My logic has always been that I win either way. If my team wins I am on a high. If my team loses I at least have the winnings to soften the blow of my team losing. Before the 2003 Rugby World Cup Final I put £50 on Australia to beat England. Best £50 I ever lost! CGI 76 ■ Casino & Gaming International

REFERENCES Collett, P. (2003). The Book Of Tells: How To Read People’s Minds From Their Actions. London: Doubleday. Griffiths, M.D. (1990). The dangers of social psychology research. BPS Social Psychology Newsletter, 23, 20-23. Griffiths, M.D. (1999). The psychology of the near miss (revisited). British Journal of Psychology, 90, 441-445. Griffiths, M.D. (2002). Gambling and Gaming Addictions in Adolescence. Leicester: British Psychological Society/Blackwells. Griffiths, M.D. (2005a). A “components” model of addiction within a biopsychosocial framework. Journal of Substance Use, 10, 191-197. Griffiths, M.D. (2005b). The psychology of gambling: Who wants to be a winner? Inside Edge: The Gambling Magazine, September (Issue 18), p. 71. Griffiths, M.D. (2006). An overview of pathological gambling. In T. Plante (Ed.), Mental Disorders of the New Millennium. Vol. I: Behavioral Issues. pp. 73-98. New York: Greenwood. Griffiths, M.D. & Delfabbro, P. (2001). The biopsychosocial approach to gambling: Contextual factors in research and clinical interventions. Journal of Gambling Issues, 5, 1-33. Located at: http://www.camh.net/egambling/issue5/feature/index.html. Griffiths, M.D. & Larkin, M. (2004). Conceptualising addiction: The case for a ‘complex systems’ account. Addiction Research and Theory, 12, 99-102. Griffiths, M.D. & Wood, R.T.A. (2001). The psychology of lottery gambling. International Gambling Studies, 1, 27-44.

MARK GRIFFITHS Dr. Mark Griffiths is a Chartered Psychologist and Europe’s only Professor of Gambling Studies (Nottingham Trent University). He has won many awards for his work including the John Rosecrance Research Prize (1994), International Excellence Award For Gambling Research (2003), Joseph Lister Prize (2004), and the Lifetime Achievement Award For Contributions To The Field Of Youth Gambling (2006). He has published over 185 refereed research papers in journals such as the British Medical Journal, British Journal of Psychology, British Journal of Social Psychology, British Journal of Clinical Psychology, Journal of Community and Applied Social Psychology, British Journal of Sports Medicine, Personality and Individual Differences, Archives of Sexual Behavior, Journal of Adolescence, Addictive Behaviors, British Journal of Addiction, Addiction Research, CyberPsychology and Behavior, Journal of Psychology and extensively in the Journal of Gambling Studies. He has also published a number of books, over 35 book chapters and has over 550 other non-refereed publications to his name. He has published more papers and articles on gambling and computer games than any other academic in the UK. He has served as a member on a number of national and international committees (e.g. European Association for the Study of Gambling, British Psychological Society Council, BPS Social Psychology Section, Society for the Study of Gambling, Gamblers Anonymous General Services Board, National Council on Gambling etc.) and was former National Chair of Gamcare (1997-2003). He also does some freelance journalism with over 120 articles published in The Guardian, The Independent, The Sun, Sunday Post, Daily Mirror, THES, Bizarre, etc. and as had regular columns in Arcade and Inside Edge. He has also appeared on over 1500 radio and television programmes since 1988.

POKER: DAMNED IF YOU DON’T… How land-based casinos and cardrooms from restricted jurisdictions can profit from the online poker explosion - without investing a dime.

Forward-looking land based gaming operations have long recognized that adding an online cardroom to their offerings is essential to continuous profitability. The burning question is: “How to do it?” Billions of dollars have been and will be wagered at online poker rooms which every day welcome thousands of new and seasoned players. Virtual poker tables have become the battleground where new fortunes are made, professional players are created, and an army of new poker celebrities-in-waiting is primed to win record-breaking poker tournaments. I regularly speak with gaming and non-gaming executives who are eager to profit from this enormous market. Many of them are based in countries with a variety of restrictions on online gaming. How can companies from restricted jurisdictions benefit from online poker without getting into legal troubles? Depending on where your customers are coming from, there are two major ways of operating an online cardroom: Free play and Real money play. It is possible to legally profit from either model. Here, we’ll focus on the Play for Free option. Play for free is the most “innocent” way of offering poker online. There are different approaches in monetizing this model. Serving adverts to players and getting paid for them is one option. This can be achieved by employing an inhouse sales force or using one of many specialized agencies or ad networks. Those with a robust web presence and sizeable online traffic will benefit most from this model. Another revenue source is the monthly membership fee. Players can upgrade to an ad-free poker experience and win prizes if they buy a subscription. Land-based gaming operations enjoy the highest level of profit opportunity in Free Play poker. They will gain most from using a virtual poker room, available at no cost, to bring players back to their land-based property again and again. Casinos always use promotions to attract new players, drive traffic to their properties and encourage repeat visitors. Using the ad space they can promote certain games, bonuses, events, etc. More interactively, they can offer players benefits with real cash value, such as free chips, buffet, hotel room, branded items, etc, in exchange for points players earn in the free online cardroom. Free offers work better in pushing players back to the gaming floor when players feel that they have Players Who Find Your Cardroom Online Players in Your Casino/Cardroom “earned” the gifts and are entitled to them. Promoting these benefits online to new potential customers by offering them free entertainment is the one of the cheapest marketing vehicles out there. Your Cardroom Online Where Players Can Earn Points

Your casino. Online Players Exchange Points For Gifts, Meet Each Other For Real Games, Etc

Needless to say, your fully-managed free play cardroom will work to position your online brand name while building a database of poker players. A priceless benefit when your market opens up to online gaming. Vahe Baloulian is the CEO of Red Planet Marketing GmbH (www.redplanetgaming.com). Red Planet offers uniquely flexible solutions to own and operate online cardrooms/networks and enhance the performance of existing online and offline gaming properties.

Introducing Cornelius Electronics, Your Cost Efficient UK Manufacturer of Wire Harnesses and Cable Assemblies In terms of quality, cost, ease of communications and product delivery, Cornelius Electronics represents a very real alternative to its global competitors. The company continues to broaden its customer base throughout Europe and the Americas to include many key companies in the electronics and electrical industries. Contact us today for a fully competitive quotation. One-Offs to Mass Production Cornelius offers a full design and development facility to its customers, providing the basis for a lasting and mutually profitable business relationship. We are uniquely positioned to offer the expertise of highly skilled design and production engineers to meet customers’ prototype and special product requirements. In addition, the company imposes no minimum order quantities, offering a rapid and competitive solution for small batch production. At the other end of the scale Cornelius has the advantage of total production flexibility, with access to its manufacturing partners in China and the Far East in addition to its Port Talbot workforce of 170, depending on customer demand. Continuous Investment in People, Systems and Plant Highest quality production, product consistency, reliability and on-time delivery are the foundations of Cornelius’ success, developed over three decades servicing a demanding customer base. This success is due in no small part to our continuous investment in people and plant. The company’s audited quality levels are evidenced by key customer approvals and achievement of ISO 9001-2000 standards. Key members of our production team are qualified to IPC standards and all production staff are encouraged to study for National Vocational Qualification courses, resulting in large numbers of NVQ certificates awarded to Cornelius staff. Continuous reinvestment of profits in the latest automated systems and equipment is a vital part of our continuing success. ■ ■ ■ ■ ■ ■ ■ ■ ■ ■

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Cornelius Electronics Ltd Cornelius Electronics is dedicated to becoming the UK’s leading supplier of high quality electrical and electronic cable assemblies and cable harnessing products through continuous and consistent investment in plant, equipment and the skills of our people. We remain committed to serving existing markets and expanding into appropriate new markets for the company, driven by the ever changing requirements of our customers. Cornelius Electronics Ltd Purcell Avenue, Port Talbot, West Glamorgan, SA12 7TZ, UK Tel: +44 (0) 1639 898114 Fax: +44 (0) 1639 898111 Email: sales@cornelius-electronics.co.uk www.cornelius-electronics.co.uk

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ANTIGUA-US INTERNET GAMING DISPUTE

THE SIDESHOW THAT BECAME A VITAL TRADE ISSUE BY MARK MENDEL

This discussion is intended to be a concise, but comprehensive summary of the dispute between Antigua and the United States over Internet – or remote gambling. This fascinating case has gone from an unnoticed sideshow to what is currently the most important international trade dispute facing the World Trade Organisation today, with enormous implications for the global trading system.

THE FIRST ROUND The proceedings began in March 2003 when, as a result of increasing US efforts to prevent Antiguan service providers from offering remote gambling services to American consumers, we requested “consultations” with the US under World Trade Organisation (WTO) rules regarding the maintenance of what we considered illegal measures by the US to prohibit these services. The “consultations” were fruitless, and at the request of Antigua a WTO panel was formed in July 2003 to consider the dispute. Our claim had four principal components: ■ First, that under the WTO’s General Agreement on Trade in Services (or GATS) the US had made a full commitment to allow the cross-border provision of gambling and betting services to consumers in the US; ■ Second, that the US had adopted measures and taken actions that effectively prohibited the cross-border supply of these services; ■ Third, that the measures violated the GATS; and Fourth, that the measures could not be justified by the US under the “public morals defence” contained in the GATS. The US, on the other hand, argued that it had made no such commitment and that its laws did not violate the GATS. It also, very late during the course of the proceedings, alleged that even if its laws were contrary to the GATS, they were entitled to be maintained under the “morals defence” on the grounds that so-called “remote” gambling presented “special risks” not present in “non-remote” gambling and that accordingly, the US prohibited all forms of remote gambling. In November 2004, the panel issued its report, in which it ruled that (i) the US had made a full commitment to allow Casino & Gaming International ■ 81

ANTIGUA-US INTERNET GAMING DISPUTE

remote gambling services; (ii) three federal laws–the socalled Wire Act, Travel Act and Illegal Gambling Business Act were contrary to the GATS; and (iii) the US had not been able to demonstrate that the three federal laws were entitled to the “morals defence”. It observed that to maintain the “morals defence”, the US had to prove both (1) that the otherwise GATS-inconsistent laws were apparently ‘necessary’ to protect the public morals and health and (2) that the defence was not actually a disguised restriction on trade.

THE SECOND ROUND The US appealed the loss to the Appellate Body of the WTO, and on 7th April 2005 the Appellate Body issued its report on the dispute. This group upheld most of the determinations of the panel, but in certain circumstances for slightly different reasons. However, the Appellate Body also (i) determined that, contrary to the conclusion of the panel, the US had shown that the three federal laws appeared to be “necessary” to protect the public morals and health, and (ii) while upholding the ruling of the panel that the US had failed to meet its burden of proof that the defence was not being used as a “disguised restriction on trade”, held that the US had not demonstrated that the federal laws were applied in a manner not constituting a disguised restriction on trade – “in light of the existence of the federal Interstate Horseracing Act” (IHA). Whereas the panel report was a clear defeat for the US, poor drafting work and faulty consideration of many issues led the decision of the Appellate Body to be ambiguous in a number of material respects. We immediately hailed the decision as a confirmation of our original victory, but conceded that the language of the report probably meant that the US could bring itself into compliance with the GATS in one of two ways – either by (i) allowing Antiguan operators access to the US market or (ii) prohibiting all forms of remote

82 ■ Casino & Gaming International

gambling in the US–whether domestic or foreign and whether intrastate or cross-border. The US jumped upon the lack of coherency of the Appellate Body decision to itself claim victory in the matter, publicly asserting that the WTO had held the US entitled to maintain the illegal laws under the “morals defence”, but that it just had to “tweak” the IHA to make things somehow “clear”. The poor quality of the report combined with the desire of the US to claim victory led to much confusion as to what the decision really meant. It took some time before our interpretation of the decision was confirmed correct – but it was.

THE THIRD ROUND Under WTO rules, the US had a “reasonable period of time” to correct its offending laws. Not surprisingly, we were unable to agree on what the period should be and so under the rules had to request arbitration to set the compliance period. During the course of the arbitration proceeding Antigua argued that the period of time for compliance should not exceed six months. In light of the powerful gaming interests in the US, we believed it very unlikely that the US would prohibit all remote gambling across America. So, we approached implementation from the perspective of the US providing Antiguan service providers with market access to consumers in the US. Before the Arbitrator, Antigua argued that the US could comply almost immediately with respect to most of the services covered by the rulings either by a reversion back to the pre-1998 government policy that remote gambling services supplied from other countries was not subject to American law. With respect to remaining services, Antigua expressed the belief that the US would need legislation, which we said could be enacted by the US Congress within six months.

ANTIGUA-US INTERNET GAMING DISPUTE

In contrast, the US told the Arbitrator that it needed only to “[clarify] the relationship between the IHA and pre-existing federal law” to comply with the rulings. The US went on to argue that it would require at least 15 months to accomplish this through legislation which would “have the effect of clarifying that relevant US federal laws entail no discrimination between foreign and domestic service suppliers in the application of measures prohibiting remote supply of gambling and betting services.” The Arbitrator decided to give the US a little less than a year to comply, and this period passed on 3th April 2006 without any laws being adopted by the US to implement the rulings. Shortly thereafter however, the US submitted a status report to the WTO, saying that it was in compliance with the Rulings based solely upon a statement of the US Department of Justice in which it said it “views the existing criminal statutes as prohibiting the interstate transmission of bets or wagers, including wagers on horse races. The Department is currently undertaking a civil investigation relating to a potential violation of law regarding this activity. We have previously stated that we do not believe that the Interstate Horse Racing Act . . . amended the existing criminal statutes.” The US further told the WTO “in view of these circumstances, the US is in compliance with the recommendations and rulings of the [WTO] in this dispute.” Antigua expressed its disagreement with the US’ claim, noting that the quoted statement was just a restatement of one of the arguments made by the US to the panel and the Appellate Body during the course of the original proceedings.

THE FOURTH ROUND Because the US said it was “in compliance” and because we strongly disagreed, in June 2006 Antigua again sought recourse under WTO rules by requesting consultations with the US over the matter. Again, not surprisingly these consultations did not result in agreement so on 6th July 2006 Antigua requested the establishment of yet another WTO panel to resolve this latest disagreement. In this next round of proceedings, we advanced what the straightforward argument that since the US had done nothing at all to come into compliance with the rulings, it could not, therefore, be in compliance. The US returned with the incredible claim that it actually was in compliance, and that what the WTO had really asked of the US was for it to convince this new “compliance” panel that the three laws were not in fact “disguised restrictions on trade” so that the US would, in its view, thus be entitled to the “morals defence” after all. As might be expected, we were taken aback by this absurd assertion, and claimed that the US was not entitled to reargue its original, failed case before the compliance panel – but that even if it were, it would still lose. Antigua pointed out that not only had the US failed to “tweak” or “clarify” that the IHA prohibited remote gambling, but in fact had done the opposite with the late-September 2006 legislation known as the “Unlawful Internet Gambling Enforcement Act” or UIGEA. Further, the UIGEA confirmed an argument we had made to the original panel but that the Appellate Body had inexplicably bungled – that US law did not actually prohibit “remote gambling” at all, but really just prohibited most remote gambling that crossed a border. Wholly-intrastate

remote gambling was, is and remains completely untouched by federal law. ■ In its report, issued this past March, the panel made precisely the findings we had asked it to make. The three major findings were: ■ The US had taken no action to comply with the rulings and thus remained out of compliance; ■ The US was not entitled in to reargue the case that failed before the first panel and the Appellate Body; and ■ Even assuming that the US was entitled to reargue its failed case, based upon the evidence presented the US “morals defence” case would still fail. The panel also made findings or came to conclusions that were not directly related to compliance but that have had a significant impact on the case going forward. These include: ■ A key ruling that the US was not entitled to maintain its offending measures; ■ An important clarification that, because the US measures were inconsistent with the GATS and the US did not satisfy both parts of the “morals defence” exception, it had lost in the original proceeding; ■ A clarification that the “morals defence” of the US was based upon an assertion that its laws do not discriminate at all between domestic and foreign service providers–that is, that remote gambling is completely prohibited in the US; ■ With respect to the IHA itself, a conclusion that the language of the statute appears to allow interstate remote gambling notwithstanding the Wire Act; ■ Based upon evidence provided to the panel by Antigua regarding State regulatory schemes for remote gambling on horse racing as well as facts regarding specific operators, a conclusion that there is “a flourishing interstate remote account wagering industry on horseracing in the US operating in ostensible legality”; ■ A key finding that the Wire Act does not prohibit remote wagering within the US if wagers do not cross State lines, affirming our argument that the individual States themselves are by and large free to permit or to prohibit remote gambling within their own borders as they see fit; ■ A key observation that, in light of recent prosecutions by the US of foreign operators combined with a clear lack of prosecutions of domestic operators, remote, interstate, wagering under the IHA is “tolerated, even if not authorized under federal law”; and ■ With respect to the UIGEA, key observations that the US Congress (1) appears to have recognised that regulation of remote gambling is feasible and (2) affirmatively decided to retain any ambiguity regarding the IHA rather than “clarifying” it in the way the US had argued. ■ ■ ■

This latest decision had three major implications: The US remains out of compliance with an adverse WTO decision; As a result, Antigua is entitled to impose trade sanctions against the US to “encourage” the US to meet its international trade obligations to Antigua; and It is now impossible for the US to continue to maintain the pretense that it had somehow “won” the dispute or that the WTO had ruled that the US was entitled to prohibit the provision of remote gambling services from Antigua. Casino & Gaming International ■ 83

ANTIGUA-US INTERNET GAMING DISPUTE

THE FIFTH ROUND In the face of this clear and comprehensive victory for Antigua, rather than deciding to come into compliance with the rulings or to settle with Antigua, the US took the unprecedented step of declaring that it was going to withdraw the original commitment to allow the cross-border provision of gambling and betting services that had resulted in the adverse rulings in the first place. While there is a provision of the GATS that allows the withdrawal of a commitment, it has never before been used as a means of settling an adverse WTO ruling, and in fact has only been resorted to once before, by the European Union to balance out commitments as the result of the accession of new member-states to the EU. Under the applicable WTO provision, before the US can withdraw the commitment, it must find means of compensating “any affected” WTO members as a result of the withdrawal of the commitment. If the parties cannot agree on the “compensation”, then there is a procedure for arbitration of any dispute in that context. As this provision has never been used before, and never taken to arbitration, immense uncertainty exists as to what kind of “compensation” or “compensatory adjustments” complaining members are entitled to. As a result of the US announcement, in addition to Antigua, the EU, Costa Rica, Canada, Macau, Canada and Australia filed claims for compensation with the US. As of the date of this writing, all of these parties, including Antigua, continue negotiating with the US over this issue. It must be said that the considerable uncertainty surrounding the proposed withdrawal continues and it is virtually impossible to predict how this will play out in the coming months. The EU itself has made rumblings about expecting a very high level of compensation, causing many to speculate that the US might have to reverse its hasty and unsound decision to withdraw the commitment, and come to a more rational assessment of and solution to the entire remote gambling and “free trade” issue.

THE SIXTH ROUND Compounding this uncertainty is that under yet another WTO rule, Antigua is entitled to “the suspension of concessions or other obligations” of Antigua with or to the US in order to “induce compliance” by the US with the rulings. We have accordingly submitted authorisation to level concessions against the US in the amount of US $3.4 billion a year – which is what our independent economists have determined to be the economic effect of the continuing failure of the US to comply with the rulings and to allow our providers with access to American consumers. Although the concepts are complicated, in general under the applicable provision, the country being harmed can impose higher tariffs on services and goods from the offending country, block certain of its products altogether or otherwise put in suspension the harmed party’s trade agreements until such time as the offender complies with the adverse WTO rulings. As a voluntary trade organisation, the WTO has no army, no police force and no right to levy fines or penalties on it members. Thus, its only “enforcement mechanism” against recalcitrant members is to allow the member in the right to impose these concessions. In determining what concessions to impose, we are entitled to ensure that they be a “practical and effective” way 84 ■ Casino & Gaming International

of inducing US compliance. We have requested approval to achieve our concessions by suspending intellectual property rights with respect to American copyrighted and trademarked products under the WTO’s intellectual property rights agreement, or “TRIPS”. Our reason for this is that putting higher tariffs on or prohibiting various American goods and services would have a very small impact, if any at all, on the US because the small volume of trade could easily be redirected by American businesses elsewhere and would in most cases drive the cost of replacement services, if they could be acquired at all, to Antiguan consumers. The WTO rules acknowledge this, and directly provide for what is called “cross-agreement retaliation”. It is a rare right and has been authorised only once before, in a dispute between Ecuador and the EU. Under the principles elaborated in that decision, we are pretty confident that Antigua will be given authority to do this “cross-retaliation” under the TRIPS, with the primary question being what the annual level of concessions will be. True to form, the US complained not only about the level of concessions Antigua demanded, but also that we are not entitled to pursue them under the TRIPS. So, once again the dispute has headed before another panel of the WTO, this time to finally resolve those issues. This proceeding was commenced in August 2007, and we remain in the thick of it. A decision by the Arbitrators is anticipated by the end of November 2007. Arbitrations such as this are notoriously unpredictable, but we remain guardedly optimistic that Antigua will be authorised by the WTO to suspend concessions in some substantial amount under the TRIPS until the US complies with the Rulings. This issue remains how to square the attempt by the US to withdraw its commitment for gambling and betting services with the adverse decision in the Antigua case. From our perspective, even if the US can withdraw the commitment, it will only affect its obligations to other members and not to Antigua–we have a final ruling in our favour and under general international legal principles, you cannot simply “change the rules” to comply with an adverse decision. The US, predictably, has stated that if it withdraws the commitment, it will then be in compliance. Unless the United States finally complies with the rulings or can bring itself to come to some kind of negotiated settlement with Antigua – which is what we have been pleading for to no avail from the very beginning – expect this astounding battle to continue into yet a seventh round! CGI

MARK MENDEL Mark Mendel has been pursuing legal cases and causes for more than 25 years, primarily in the area of securities and finance. In late 2002, his El Paso, Texas-based law firm of Mendel Blumenfeld LLP developed Antigua’s Internet gambling position, and was hired by the Government to represent the country in early 2003. Mark has since spearheaded Antiguan representation at the World Trade Organisation. He lives in County Cork, Ireland.

EELEX-2007: FULL OF CREATION AND INNOVATION! The 16th EELEX expo has become a symbol of stability and new hope for the Russian gambling industry despite a period of uncertainty, establishing it as a major international event.

EELEX-2007 again became a major landmark for the gambling world having collected under its roof more than 5,000 guests – from the Commonwealth of Independent States (CIS) to North America, the Americas and Australia. This once again proved the Russian expo remains one of the industry’s key events on the international gambling stage. The Texas Hold’em NL Freezout poker tournament with a draw prize of $50,000, launched on the expo’s first day, took place in one of the most prestigious gambling locations: Moscow’s ‘Metropol’ slot-club in the famous hotel of that name near Red Square and the Kremlin. At the tournament sports and other celebrities mingled with poker professionals and leading businessmen. The celebrations soon turned into the EELEX-2007 opening party and an unforgettable gala show including famous rock and pop singers. To crown it all, some absolutely fascinating and charming female artistes provided racy entertainment. EELEX-2007 proves its importance as a crossroads for the worldwide gambling industry elites’ interests and has strengthened its reputation as a highly dynamic event, always brimming with innovative and creative potential.

For more information visit our web-site www.eelex.ru or contact the EELEX PR-manager Alina Khudova on phone: +7 (495) 380-03-08 (ext 1289), fax: +7 (495) 781-23-08 or e-mail: pr@eelex.ru. Additional information regarding the event:t Unicum Gaming Group of Companies: 6 Proizvodstvennaya str., 119619, Moscow, phone +7 (495) 380-03-08, fax: +7 (495) 781-23-08, www.unicum-gaming.com

POKER IN COURT

APPLYING SKILL OR LEFT TO CHANCE – BUT DOES IT MATTER LEGALLY? BY JOE KELLY, ZEESHAN DHAR & THIBAULT VERBIEST

Poker continues to elude a clear legal view of whether it should be considered a skill or subject to chance or what balance – or imbalance – of the two can ever be considered a standard in law. The way different jurisdictions are approaching the various cases currently gives no indication of how this will be resolved. The numerous proceedings reveal much about the contradictions and difficulties underlying any legislative intent based on current circumstances, but the outcome from the UK, France, United States and Australia may well decide that poker is, after all, a legal game of skill.

he parameters of legal poker playing are still unclear. On 2nd November 2005, Baltimore police raided the Owl’s Nest, a private club, charged 80 Texas Hold ‘Em poker players with illegal gambling, and seized more than $25,000 in cash and more than $16,000 in poker chips. It may have been the largest raid since 1932 during Prohibition. A vice detective opined that the players “could receive a year in jail or a $1,200 fine.”i Fortunately for the players, the charges were dismissed because the police had used the wrong statute.ii In contrast, California allows local governments to regulate and tax its approximate 94 card rooms.iii The games are essentially parimutuel events, unlike banked games. Parts of the California regulatory process might seem to border on the absurd, e.g., poker operators may only take money out of a pot (‘rake the pot’) three times.iv Farther north, a bill introduced in the North Dakota Legislature would have amended that state’s law so that “gambling does not include: (a) lawful contests of skill, including Internet live poker. . . .”v But it did not succeed. Whether poker is a game of skill or of chance seems to be an issue left to the judiciary. There are five major cases before various courts, in the United States and beyond its borders, on whether poker is primarily a game of skill, and if so, whether the law prohibits it. Cases are currently pending in North Carolina, London, Northern Ireland, France and South Australia.

UNITED STATES In North Carolina on 15th November 2004, the Joker Club, LLC, sought a declaratory judgment in a North Carolina Superior Court on whether poker was a game of skill, which in Casino & Gaming International ■ 87

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the opinion of its attorneys would make it legal since North Carolina law only prohibits games of chance.vi The Joker Club had leased facilities for poker games, but claimed it could not open for business until it received a favourable court ruling.vii The defendant, James Hardin, then the county district attorney, responded to the inquiry by the attorney for the Joker Club by stating that poker “does not comply with North Carolina law”viii and that even if it were a game of skill, “that’s [prohibited] gambling in North Carolina.”ix Hardin, who stated that even poker games at a player’s home were “illegal technically speaking”, continued: “If a complaint were filed with, say, the Durham City Police Department or Durham Sheriff’s Department and they went to a location and found folks playing cards for money, they would be subject to arrest under our law. . . . Now what’s the probability of that happening?”x The Attorney General’s Office of North Carolina, representing Hardin, filed a motion to dismiss for failure to state a cause of action. Assistant Attorney General David J. Adinolfi II stated: “We’re not talking about shuffleboard here. . . . We’re not talking about archery. Poker is simply not legal. . . . The turn of a card is what settles it all. The best player in the world can get beat by an amateur. Chance predominates. Chance overwhelms skill. The cards are dealt face down. You can be as skilled as possible. You can do all the statistical analyses. But chance predominates when you flip the card over. It’s just that simple. You can’t will the card to be an ace when it’s a deuce.xi” North Carolina law concerning poker and skill was unclear. N.C. Gen. Stat. § 14-292 states: any person or organisation that operates any game of chance or any person who plays at or bets on any game of chance at which any money, property or other thing of value is bet, whether the same be in stake or not, shall be guilty of a Class 2 misdemeanor. Caselaw had long required that a gambling violation required proof for a conviction that chance alone or that chance predominated over skill. In State v. Eisen,xii the North Carolina appellate court concluded that blackjack as a matter of law could not be considered a game where skill predominated over chance: “Whether blackjack as described in the evidence was a game of chance or one of skill was a question for the jury to decide from the evidence. . . .”xiii The court did opine that “the element of chance clearly dominates the element of skill. . . . ”xiv In Collins Music Co. v. North Carolina Alcoholic Beverage Control Commission,xv the appellate court concluded that chance in video poker machines predominated over skill. In dicta, the court stated all of the skill elements associated with the ordinary game of draw poker are absent in the video version. The game of draw poker, played against other individuals, permits a player to use psychology, bluffing, and knowledge of the law of probabilities relative to the game of poker, to increase his potential win relative to the total number of games played. Psychology and bluffing have no effect on the final outcome of play when playing electronic video poker. Thus, it was a reasonable possibility for the judge to conclude that poker was a game where skill predominated over chance. Yet there is an archaic 1848 Supreme Court of North Carolina case, State v. Gupton,xvi which discussed “the idle and vicious practice of gaming” and the North Carolina statute that prohibited games of chance. In interpreting what 88 ■ Casino & Gaming International

constituted a game of chance, the court concluded that chess, bowls, billiards and so on, were games of skill. The court, however, opined that dice games and “the hand at cards [which] depends upon a dealing with the face down, exhibit the [two] classes of games of chance.”xvii Joker Club, at a hearing on 23rd May 2005, introduced testimony from various experts. Roy Cooke, a 16-year professional poker player and author of books and articles on poker, responded to the following question as to what might happen if the lawyer and Cooke “played a single hand of poker. Cooke said Powell [the lawyer] had a chance of winning. ‘How about if we play 1,000 hands?’ ‘You’re dead,’ Cooke said.”xviii The defendant utilised an employee of the Alcohol Law Enforcement agency who testified he played poker for more than 39 years. On 1st July 2005, the judge issued a seven-page order. More than half of the findings of fact summarised the plaintiff’s expert witness testimony, especially that of Roy Cooke. For example, the court cited Cooke’s testimony that “7. . . . when a player is successful in engaging his opponents in situations that are mathematically favourable he will create positive expectations for the long run and although he will not win every hand, he will win more chips over the course of time. 8. Mr. Cooke testified that he spent years developing control of his own mannerisms so as to not give away his hand or strategy and so he could give false reads to other players. 9. Mr. Cooke testified that in poker a large percentage of the hands do not get to the showdown where the cards are compared. Many of the hands are folded prior to the showing of the cards.xix” The order summarised the single defence expert testimony almost derisively: “20. He said that he enjoys poker and agreed that there was skill involved in poker, but he believes that luck prevails every time. He testified that he had seen a television poker tournament in which there was a hand that had a 91 percent chance to win and yet it lost to a hand with only a 9 percent chance to win. He opined that this was absolute proof that in poker, luck predominates over skill. The defendant offered no other witnesses.xx” The court opined that it “21. . . . could not determine the meaning of the term ‘predominates’ and therefore the court cannot apply the proper standard to determine whether poker is predominately a game of skill or predominately a game of chance. 22. That this court is not the proper forum in which this issue should be decided.xxi” The court concluded that the matter should be resolved by the Legislature and that the court “is satisfied after reviewing North Carolina case law, that card games similar to poker where hands are dealt face down and the participants cannot control which cards they receive are games of chance. This Court therefore determines that under North Carolina law poker is a game of chance.”xxii A newspaper reporter quoted the judge in the case as stating orally that the “statute dated from the 19th century and might be antiquated. ‘The culture is different now. . . . Society is different. The law is ambiguous in a number of different ways.’”xxiii The judge also stated the skill/chance determination is unclear: “‘How do you measure that?’”xxiv the judge asked. “If the legislature told us what they had in mind, I’d understand. But they didn’t tell us what it means.”xxv The judge, however, concluded that “he was bound to follow the law as it was written.”xxvi On 1st May 2007, the North Carolina Court of

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Appealsxxvii affirmed the trial court determination that in poker, chance prevails over skill. In its petition before the State Supreme Courtxxviii the plaintiff stressed that: “The appellate court’s factual determination contravenes at least a century of Supreme Court precedent, (brief at 4).” The Joker Club case has been the most recent detailed decision on whether skill prevails over chance. Should the appellate decision stand, it will be used by many prosecutors as proof that poker is a game of chance and therefore prohibited gambling. Recent US Cases have not been favourable to poker players who claim poker is a game of skill and therefore not prohibited wagering or gambling. In Tschetschot v. Commissioner of Internal Revenue,xxix the plaintiff, a database project engineer, claimed she was a professional tournament poker player. She claimed she should be taxed for activity resulting from “entertainment and professional sports” rather than as a professional gambler. Specifically, she claimed that: “Petitioners argue that tournament poker is conducted in much the same way as other professional sporting tournaments. Participants pay an entry fee and compete to win prizes through their good fortune and superior skill.” The tax court concluded that there were no meaningful differences between tournament poker and other forms of poker in that they both involve betting. In a footnote, the court referred to the Gutshot London case where the jury concluded Texas Hold ‘Em poker was a game of chance. In Garrett v. State of Alabama,xxx the Alabama Court of Criminal Appeals upheld a conviction based on a business allowing illegal poker parties. In a concurring opinion, one judge stated: “I agree with the majority that ‘Texas Hold ‘Em’ poker is fundamentally a game of chance, in that the outcome of the game ultimately depends on a random draw of the cards. I do not disagree with the appellants’ argument that a person must possess a certain amount of experience and skill in order to be a successful ‘Texas Hold ‘Em’ poker play. However, a player’s skill does not change the fundamental nature of the game…. Because ‘Texas Hold ‘Em’ poker is, in my view, chance predominant, I agree with the majority that the appellants’ convictions for promoting gambling … are due to be affirmed.” On the state level many, if not most, cases discussed whether poker should be distinguished from a lottery. The Supreme Court of Rhode Island opined that proposed casino gambling would violate the Rhode Island constitutional prohibition of lotteries.xxxi The court did admit that poker that would be operated at a casino, like blackjack, had some degree of skill, but since chance was “the predominant factor,” it was a form of lottery and therefore prohibited. A recent federal appellate court, interpreting New York law, concluded that poker was prohibited because the outcome depended “in a material degree on chance.”xxxii Other courts have concluded that poker is not a prohibited lottery because of the skill involved.xxxiii Several state statutes have included poker as a game of chance, e.g., Maine, New Mexico, and Ohio.xxxiv Recent opinions of attorneys general generally have concluded that poker is a game where chance predominates over skill.xxxv In a classic example of doublespeak, the attorney general of Massachusetts stated if chance in poker predominates over skill, then it is prohibited. “Massachusetts appellate courts have not been called upon to determine whether traditional forms of poker are 90 ■ Casino & Gaming International

considered games of chance rather than skill.”xxxvi Concerning Internet poker, the recently passed Unlawful Internet Gambling Enforcement Actxxxvii probably did not expand prohibited gambling, but there was no carve-out for games where skill predominated over chance. In the newly elected 110th Congress, the Skill Game Protection Act (HR 2610) was introduced by Rep. Robert Wexler (D. Fl.) on 7th June 2007. It would exclude from liability poker, chess, bridge, and other games where skill predominates over change as long as the player bets against other players. Its chances of being enacted into law are remote. Some within the gaming industry would prefer the bill of Rep. Barney Frank (D. Mass.), who introduced the bill (HR 2046) that would legalise and regulate online gambling. They would prefer this bill because it would seem to create a more level playing field.

UNITED KINGDOM London, England In London, there are about 26 poker clubs that presently have been declared to have violated British gambling law as a result of a Crown Court jury decision, R. v. Derek Kelly (Gutshot), on 16th January 2007.xxxviii The relevant statute, the Gaming Act of 1968, had been interpreted not to prohibit games of skill such as chess or bridge,xxxix but did prohibit games of chance such as roulette and blackjack, which may be played legally only in Great Britain’s approximately 165 casinos. US judicial decisions had often concluded that there was an ‘English Rule’ and an ‘American Rule’ concerning the role of chance in defining a lottery. Under the American Rule, chance had to predominate over skill in order to establish a prohibited lottery. As a US court opined, “Under the English Rule, only a scheme that exhibits or involves ‘pure chance’ is a lottery. 34 Am. Jur. Lotteries § 6 (1941). As a result, a scheme involving any skill, no matter how de minimis, will not be classified as a lottery.”xl English courts interpret the ‘skill’ requirement differently concerning card game wagering. In R. v. Tompson, the court interpreted the Gaming Act of 1845 and card games. The court overturned a lower court bench decision that poker and bridge were prohibited wagering as a matter of law. Instead, the appellate court concluded that it was up to the jury to determine whether these games were ‘mere skill.’ The court rejected applying the ‘predominate’ test to poker and instead concluded that “the proper question for a jury, when dealing with a game of cards, is: Is this a game of skill, ie.., a game in which the element of chance is so slight as to render the game one which can properly be said to be a game or mere skill.”xli Derek Kelly, however, was prosecuted under the Gaming Act of 1968, which had barely mentioned card games. Specifically, Derek Kelly was accused of a violation of the Gaming Act of 1968 §§ 3 (no charge for taking part in gaming), 4 (no levy on stakes or winnings), and 8 (all participating in the organisation and management have committed an offence). At first glance, the Gaming Act language did not seem helpful to the defendant. In § 52(1), a game of chance was defined as one that “does not include any athletic game or sport, but, with that exception, and subject to subsection (6) of this section, includes a game of chance and skill combined and a pretended game of chance or of chance and skill

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combined.”xlii Section 52(6) states, “In determining for the purposes of this Act whether a game, which is played otherwise than against one or more players, is a game of chance and skill combined, the possibility of superlative skill eliminating the element of chance shall be disregarded.”xliii Thus, when game of chance, § 52(1), is read with § 52(6), it would seem that a game played against other players may not be a prohibited game. Thus, Texas Hold ‘Em would not be prohibited, but blackjack and Caribbean Stud poker (where players play against the house) would be prohibited gaming. The Gambling Act of 2005 has statutory language that seems to close the loopholes that were legally available to Gutshot. Section 6(2) defines a game of chance as one that (a) includes—(i) a game that involves an element of chance and an element of skill, (ii) a game that involves an element of chance that can be eliminated by superlative skill, and (iii) a game that is presented as involving an element of chance, but (b) does not include a sport. Thus, gaming that involves “an element of chance that can be eliminated by superlative skill” does not have the exception where a player played against other players. In early 2004, Derek Kelly had set up two legal entities in London in order to comply with the law concerning poker and with the exemption in § 40 of the 1968 Gaming Act. Gutshot Limited owns a bar, restaurant, Internet café, and an online card room.xliv Gutshot Private Members Club, a nonprofit organisation now consisting of about 25,000 members, pays rent to Gutshot Limited for use of its premises for poker tournaments. All monies from profits/service charges would eventually be returned to its members. Thus, Gutshot has asserted it makes no profit from gambling. Its owner, Derek Kelly, has claimed: “Poker is a game dominated by skill. . . . Provided you are more able, ultimately you will be the winner. Like any game or sport, there are elements of luck. However, the more skillful player will win out in the end.”xlv Gutshot has been hosting poker tournaments since early 2004. According to Kelly, “I think the Gambling Commission will have great difficulty in finding anyone who will take the stand to say that poker is not a game of skill. . . . In any case, I don’t think there is a single game that is purely about skill. Take chess, it comes down to skill but to start a game, you have to toss to decide who starts, so even then there is an element of gambling. How do you decide whether a game is say 43 percent skill or 60 percent?” The director of operations for the Gambling Commission has determined to crack down on poker: “Poker has become increasingly popular in the past 12 months and people are seeking to cash in on the demand to play. The problem with pub tournaments is that they are unregulated. In a casino you have to give your name and address and the whole thing is monitored. In a pub, people may get in over their heads, start playing for very high stakes and be exploited by far more experienced players. This is about protecting people.xlvi” In July 2006, the Gambling Commission issued guidelines on gaming on alcohol-licensed premises. In order to be covered by the “club” exemption, a member’s club must follow strict criteria. ■ The genuine establishment of a bona fide club for the purposes of other than gaming; ■ A club membership of 25 or more. . . . ; ■ Bona fide fees;

■ ■ ■

No public access; No other charges to engage in gaming beyond those currently set by the section (60p per day); and No rake or levy on stakes.xlvii

In November 2006, the government proposed that poker, with a capped player loss of £10 per evening, be permitted at pubs without any necessity of a license.xlviii The Metropolitan Police Club and Vice Unit, after a year-long investigation, filed charges in September 2005 against Derek Kelly for breaches of the Gaming Act of 1968. Its spokesman stated: “There seems to be a prima facia case of breaches of the Gaming Act, but there’s no test case. . . . The Gaming Act is a book as wide as Wales but there are a couple of specific offences. It’s a very unusual police case in that the defendants and the police are saying exactly the same thing is happening. We’re saying ‘You did this,’ and they’re saying ‘Yes we did. But we don’t think we’re doing anything wrong.’”xlix The specific statute concerning the alleged violations are Gaming Act of 1968 §§ 3(1), 4, and 8(1).l The charges were brought against Derek Kelly, and the matter was tried at the Snaresbrook Crown Courtli from 9th -16th January 2007.lii At the trial the defence attorney implied that the prosecution was unfair since it had been influenced by other interested parties, including a casino. The Crown Prosecutor utilised a police officer, a gaming board (Commission) employee, and a casino executive as expert witnesses. The defence relied on Professor Joseph M. Kelly, who was the only witness giving testimony on 12th January, and on Nic Szeremeta, editor of Poker Europa, and on the defendant Derek Kelly. During the trial, the prosecutor tried to get the defendant’s experts to admit that poker was 70 percent skill, while the defendant stressed it was at least 70 percent skill. At the trial, barrister Zeeshan Dhar, on behalf of Derek Kelly, briefly stated the relevant law: “The 1968 Act defines ‘gaming’ as ‘the playing of a game of chance for winnings in money or money’s worth.’ The 1968 Act further defines ‘games of chance’ as ‘not including any athletic game or sport, but, with that exception, and subject to subsection (6) of this section, includes a game of chance and skill combined.’” The defence stressed that whether playing any game, including Texas Hold ‘Em, amounts to gaming within the meaning of the 1968 Act depends on whether it is a game of chance. At first glance the Act seems to define the crucial phrase games of chance as including any game containing a mixture of skill and chance in any proportion. During legal submission in the absence of the jury, the defence for Derek Kelly argued that the Act appeared to label all games as games of chance if the phrase includes a game of chance and skill combined was to be read as including all games of mixed chance and skill without regard to the proportions of each within the game. This consequence, it was argued, was due to the fact that all games fall into one of two categories: 1.) pure chance, and 2.) a mixture of chance and skill. The defence argued that interpreting the act in this fashion would lead to an absurdity as all games that are conventionally regarded as games of skill would be deemed games of chance. Furthermore, the defence submitted that as the Act did not state that a game of chance includes all, every, or any game of chance, it was open to the jury to conclude that Casino & Gaming International ■ 91

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even though poker required a significant or not insignificant element of chance, owing to the overriding amount of skill involved in playing, it could not properly be called a game of chance. Lastly, the defense submitted that, given that common sense called for an assessment of both the level of skill and chance involved in the game, it would entirely appropriate and practical to apply the American “predominance” test in determining whether Texas Hold ‘Em was a game of chance or skill. The test was approved by the Supreme Court of California in the case of In re Allen.liii In simple terms, where skill predominance chance, the game in question is deemed a game of skill and the converse where chance predominates skill. The trial judge accepted that some gloss ought to be added to the wording of the statute to avoid it resulting in absurdity. Since, under the Act, even chess, by virtue of the minute advantage that the player who moves first has over the other, has an element of chance involved and would therefore be deemed a game of chance under the Act. However, in his direction to the jury, the trial judge advised them that provided they were satisfied that playing Texas Hold ‘Em involved a “significant” element of chance that was more than “token and infinitesimal”, the game satisfied the requirement of the 1968 Act. The jury was not directed to focus on the element of skill involved in Texas Hold ‘Em but merely the element of chance. Furthermore, the trial judge did not direct the jury to apply the predominance test in considering whether Texas Hold ‘Em was a game of chance. As a result of the legal direction to the jury, the element of skill in the game was effectively deemed irrelevant. Derek Kelly’s defense argued that it was not the intention of the 1968 Act to disregard the element of skill in relation to games of equal chance played between players as the requirement to disregard “superlative skill eliminating chance” in subsection (6) was only applicable to games played as between a player and the bank and not those played between players. On 29th March 2007, Derek Kelly was fined £10,000 (payable at £500 per month). The case is currently being appealed on the grounds of the trial judge’s direction to the jury. In the Kelly case, the outcome would likely have been very different had the predominance test, or, any other test that required an assessment of the level of skill to be made, been applied to determining whether Texas Hold ‘Em is a game of chance. Applying the predominance test on the evidence before the jury in Kelly, it is likely that it would have concluded that skill predominated chance in Texas Hold ‘Em and therefore playing the game did not constitute gaming under the Act. Under United Kingdom caselaw, there are no precedents interpreting the phrase ‘game of chance’ within the meaning of the Gaming Act 1968. The decision of the Court of Appeal in Rex v. Tompson [1943] related to the Gaming Act 1845, which prohibited all ‘card games’ unless such games were games of ‘mere’ or ‘pure’ skill.liv Under the 1845 Act, unless one could show that a game involved no chance whatsoever, playing the game constituted gaming under the Act. The 1845 Act was clearly designed to prohibit all card games. One would struggle to think of any card game that was one of pure skill. Indeed games such as Bridge or whist, whilst predominately skill based games, would fall foul 92 ■ Casino & Gaming International

of the old Act as they involve chance by virtue of the random distribution of cards. Arguably, games such as Bridge would, by virtue of the trial judge’s direction in Kelly, would also be deemed games of chance under the 1968 Act as the random distribution of cards in bridge introduces a significant element of chance into the game. Under the new Gambling Act 2005, which comes fully into force on 1st September 2007, a game of chance is to include “a game that involves both an element of chance and an element of skill”. As under the Gaming Act 1968, a literal application of the definition of game of chance under the Gambling Act 2005 has the same if not greater potential for absurdity. Arguably, under the new Act, the requirement that a game have merely an element of chance in order to be branded a game of chance, gives rise to greater absurdity than under the previous Act. Under the new Act, it would be easier to argue that chess is a game of chance as the entitlement to the first move introduces an element of chance as opposed to a significant element of chance into the game. It is likely that even under the new Act with its stricter wording, any jury confronted with the question of whether a game is one of chance or skill will still require direction on the interpretation of the provision. If Kelly were to be followed, a trial judge would advise the jury that a significant element of chance needs to be present prior to any conclusion that the game is one of chance. It is significant to note that, the new Act like the old, does not state that a game of chance includes every, any or all games that involve an element of chance and an element of skill. Accordingly, lawyers will still be able to invite the judge to direct the jury that even if they conclude that the game in question contains an element of chance, they are still entitled to conclude that overall the game is not one of chance. The success of those arguments will depend on any decision of the court of appeal in Kelly. Until then the matter remains unresolved. However, at least in the United Kingdom, the lawyers are not so troubled by the question of whether in fact Texas Hold ‘Em is a game of skill or chance, but rather whether it is one or the other in the eyes of the law. Notwithstanding the complexity of the legal issues, the jury took barely an hour to conclude that Derek Kelly was guilty. The matter has been appealed. It is set for a hearing before the Court of Appeal on 20th November 2007. Pursuant to the Gambling Act of 2005, the government has issued regulations concerning exempt gaming in clubs (Statutory Instrument 2007, no. 1944) which would maximise the stake of any poker game at £10 and “the aggregate of the amounts that may be staked on games of poker in any period of seven days must not exceed £1,000.” Participators’ maximum fee for bridge and whist are significantly higher than poker. Bridge and whist clubs are also treated more favorably than games such as poker (Statutory Instrument 2007, no. 1942). These differences are being challenged before the courts on grounds that they are irrational. Unlike land-based poker, should the poker operator be located offshore and online, he could accept British players legally as long as all activity remained offshore, i.e., no newspaper advertising within Britain.lv

NORTHERN IRELAND Northern Ireland is not included in the Gaming Act of 1968, which legalised casino gambling. Instead, the relevant statute

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is The Betting, Gaming, Lotteries, and Amusements (NI) Order 1985.lvi In 2004, Sean Murphy opened the Cavendish Club in Belfast primarily for poker games. He had met with police, who assured him they would let him know if there were legal problems. It is undisputed that the players were often businessmen, physicians, and lawyers.lvii On 28th January 2006 about 40 police raided the club, seized £23,000 as well as equipment, and detained the approximate 80 players who were playing in a poker tournament. Subsequently, the magistrate’s court ordered the monies be returned to Murphy for distribution to the players and most of the seized equipment was also returned, although damaged.lviii On 8th February 2007 the magistrate ordered Murphy to pay £3,000 and that £2,000 seized by the police be given to the Northern Irish Hospice Charity. Seized slot machines were ordered to be disposed of, but roulette and blackjack tables were returned to Murphy with the understanding they would be used only for legal purposes.lix

FRANCE Only games of chance are covered by the prohibition Act n°83-620 of 12th July 1983. The French Supreme Courtlx has decided that poker is a game of chance when played for money. It is prohibited to organise this game without an administrative authorisation, even if public access to poker rooms is restricted. Under 30th June 1923 law and 15th July 1947lxi Act, poker games may only be held in a private ‘gaming circle’ that obtained an authorisation from the Home Affairs ministry. However, a new provision allows casinos to hold poker games and to organise international poker tournaments.lxii The 1959 Act that governs casino games is being amended to include stud poker. The sanctions contained in the Law of 12th July 1983 are heavy. Infringements to this law are punished with three years of prison and fines of €45,000. Those sanctions are increased to seven years of prison and to fines of €100,000 when infringements are committed in an organised group.lxiii Two main criteria, also used for other games of chance, are used by the courts to determine the limits of the 1983 Law: the mathematical criterion and the criterion of social risk for players. Games of chance are those where chance alone decides and where the physical or intellectual capacities of the player do not intervene. Equally there is no ambiguity about games where chance does not play any role (chess for example). In this case, even if it is played for money, the French legal doctrinelxiv deems that this game is not a game of chance. Poker is a game that mixes chance and skill. In this type of situation the French Supreme court qualified games of chance, those where chance prevails over skill.lxv The principal criterion used by the court is ‘mathematical’. This criterion determines if chance or skill precedes, in a mathematical way. That supposes a thorough examination of the rules of the game and an analysis of the theory of probability. If it is demonstrated before a court that for poker, skill prevails over chance, the court could conclude that it is a first step to exclude poker from the field of the law governing games of chance, and avoid its sanctions. The criterion of the social risk for the player is a second criterion to assess in order to determine whether, in a game, skill prevails over chance. The existence of a stake is central in this second criterion. It takes into account the social consequences of the game and the losses for the players.

The relevant caselaw of 8th November 1956lxvi qualified a special game, where chance does not prevail over skill, as a game of chance because it involved ‘considerable stakes’lxvii in a usual way. The legal French doctrinelxviii deems that a game where the stake is very low and only practiced as a simple distraction is not a game of chance. If the stakes are low, there are no negative social consequences for the players. On the other hand, if stakes are high, the game becomes a game of chance.lxix A French courtlxx on 15th March 2007 concluded Patrick Partouche, chair of French Group Partouche, and two other individuals, each had violated French law because of their involvement with an online poker site that accepted French players. Partouche and the two others each received a oneyear suspended prison sentence and a €40,000 fine. According to his lawyer, Partouche had three grounds for appeal. First, CasinoPartouche.com was a free play site and was linked to a play-to-pay site. Second, the website was more about Hold ‘Em poker, which should be qualified as a skill game, therefore legal in France. “Also the French legislation regarding casino style games and poker does not explicitly prohibit the online games.”lxxi Finally, the ruling may be in violation of a recent European Court of Justice decision (Placanica/c 338/04). On 5th March 2007 a new law increased the penalties concerning games of chance, especially poker. Penalties have been increased to up to seven years imprisonment and fines of €100,000 when the violation or infringement was committed by organised groups.lxxii

AUSTRALIA The law is also unclear in Australian states. In South Australia more than 60 poker players out of over 100 arrested refused to pay fines when arrested for participating in an alleged illegal poker game in June 2005. Lawyers representing 62 men appeared in Adelaide Magistrate Court on 28th September 2006, facing charges “including being an occupier of a place used for unlawful gaming, being guilty of unlawful gaming and attending an unlawful game.” One lawyer representing 27 of the defendants arrested said: “There is a judgment from 1998 where, after hearing from mathematicians and various experts a magistrate found that poker was not a game of chance and ruled a defendant was not guilty.”lxxiii The magistrate suggested that the trial could be as early as February 2007. “There seems to be much understanding between the parties . . . when that turns into a reality, we will set the first matter down for trial.”lxxiv In perhaps the most bizarre poker situation, “[h]undreds of Canberrans are crossing the border to Queanbeyan and Goulburn to play the increasingly trendy game of poker and tournament organisers are calling for the ACT Government to change its laws. The usually liberal ACT appears to be out of step as 1964 legislation makes it illegal to play poker outside the Canberra Casino.lxxv” The games are free and each player receives 1,000 chips. Players can win prizes and a chance to enter the Sydney and the World Series of Poker in Las Vegas.lxxvi CANADA Canada has eliminated the skill/chance determination. In Ross v. The Queen,lxxvii the Supreme Court of Canada had to determine whether a bridge club violated the law for charging a fee for playing bridge. The court stressed that Casino & Gaming International ■ 93

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Canada had not adopted the predominant factor test as to whether skill predominated over chance. “It seems clear that the Parliament of Canada sought to avoid the uncertainties involved in trying to ascertain the predominate factor in mixed games by enacting that they would be treated in the same way as games of pure chance.”lxxviii Most commentators have suggested that unlicensed poker games might be in violation of some part of the Canadian Criminal Code.lxxix For example, Michael Lipton, an expert on Canadian gambling law, stated, where people have been prosecuted and convicted of playing poker for stakes, the courts have used section 201 [the Canadian Criminal Code] (keeping or being found in a common gaming house), or section 202(1)(b) (keeping a device for gambling or betting). . . . Online poker is far more difficult to prosecute where the only thing physically located in Canada is one of the poker players, owing to the difficulty of applying the provisions used to prosecute ‘regular’ poker games, and the legal and practical difficulties of prosecuting persons not located within Canada. Advertising of poker in Canada, however, “appears to be legal, due to a gap in the two provisions that deal specifically with advertising.”lxxx Predictably, “[t]here has been concern at the lack of government reaction to advertisements of online poker.”lxxxi Despite the ambiguity as to the legality of online poker, PartyGaming, the largest online poker company, decided to move its servers to Gibraltar from Kahnawake, where it had interactive gaming licenses from the First Nations. It had concluded: “The Directors have been advised that the extent of the Group’s operations and presence in Canada may be sufficient for criminal or civil action to be taken against the Group, the Directors and for other persons and entities associated with PartyGaming’s online game activities. If the prosecuting authorities in Canada regard the computers of PartyGaming’s customers in Canada as ‘a device for gambling or betting’ prosecutions could also be brought in Canada, under the Canadian Criminal Code against such customers.lxxxii”

law. In Austria, poker is considered a game of skill. Its acceptance is due largely to the efforts of Peter Zanoni who eventually obtained legal recognition for private card rooms.lxxxix In the Netherlands, the Concord Card Club case held that poker was a game of chance and not skill.xc Poker is legal only in casinos. In Norway, poker is illegal, and regulators have stated the public is opposed to any further expansion of gambling. Sweden has licensed its state-owned company Svenska Spel to operate online poker. During a two-year experimental period, advertising would be permitted only on the Internet and in newspapers and the maximum wager set at US$11,300.xci Since its introduction in April 2006, 95,000 players have registered, wagering over SEK 2bn (US$280m) in the first three months of operation. Sverska Spel has reported SEK 52m (US$7.2m) during this period.xcii Ladbrokes has challenged the Swedish monopoly by applying for an e-poker license and “will consider legal action if the application is denied.”xciii Denmark is presently updating its poker laws, especially since poker has been ruled primarily a skill game in a Danish court. Within Ireland, the government has established a commission that has made recommendations that will probably recommend the licensing and regulation of poker. Presently, there are members-only card clubs where a member may play poker as well as blackjack and roulette. The Gaming and Leisure Association of Ireland welcomes regulation and already mandates that members take measures to know their players, minimise suspicious transactions, and minimise compulsive gambling by requiring members to share databases of self-excluded individuals. In Israel, according to the Israeli Poker Association, a study by Professor Ehud Lehrer of the University of Tel Aviv convinced Israeli authorities to allow a poker championship tournament because poker “is unequivocally more dependent on knowledge, understanding and ability than luck.”xciv

CONCLUSION COUNTRIES BEYOND THE UNITED KINGDOM In Europe (excluding the UK), the law concerning poker is unclear,lxxxiii perhaps because there are no government monopolies or powerful national interests concerning that issue. Similar to the US, there have been bizarre results. In Romania, an Orthodox priest caught playing poker in a pub was fined US$470 and could be defrocked for “activities incompatible with the service of a clergyman.”lxxxiv In Germany, poker “is still considered a game of chance” and only state-owned or licensed casinos “are officially authorised to organise games of chance.”lxxxv The most recent German court decision on poker was in 1906.lxxxvi “However, this decision did neither consider the elements of skill in certain versions of poker nor the monetary value of the stakes involved [emphasis in original].”lxxxvii In Russia, the sports minister classified poker tournaments as official sports competitions and not gambling. Italian legislation has considerably liberalised permitted gambling. The Finance Act, 2007, states that “card games… are considered skill-based games, provided (i) they are organised in the form of a tournament, and (ii) the stake is limited to the tournament entry fee only.”lxxxviii It is expected that Belgium and Spain might liberalise their countries’ poker 94 ■ Casino & Gaming International

Presently, there has been no judicial victory for poker players who had hoped that a court might conclude poker is a game that is exempt from gambling laws. It is possible that any of the cases in the UK, France, the United States, or Australia might ultimately decide poker is a legal game of skill. Until then, poker may be forced underground—much to the satisfaction of criminal elements. Meanwhile, respective governments lose much needed tax revenue. CGI Note:

This article, with minor style changes, first appeared in Gaming Law Review, Volume 11, N 3, June 2007, pp190-202.

Lynn Anderson & Gus G. Sentementes, Police raid folds poker game; 80 are charged with illegal gambling at private club near Camden Yards, Baltimore Sun, 4th November 2005, at A1. “On the door, signs and stickers announce that that building is a private club for ‘members only.’ One sign on an outside wall reads: ‘No Trespassing. Violators will be shot. Survivors will be shot again.’” Id. Prosecutors drop charges in Md. Poker raid, Yahoo! News, 10th November 2005, http://news.yahoo.com. “Had these 80 players been charged appropriately, we might have taken a different route and prosecuted them,” said Assistant State’s Attorney Patricia Deros. Id. CAL. BUS & PROF. CODE § 19960. I. Nelson Rose, Prohibiting Cross-Border Wagers, 9 Gaming Law Review 599, 600 (2005). 2005 N.D.H.B. 1509 (N.D. 2005). The Justice Department was

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primarily responsible for the defeat of the bill. See Letter from Laura H. Parsky, Deputy Assistant Attorney General, U.S. Department of Justice, to Wayne Stenehjem, Attorney General of North Dakota (7th March 2005) (on file with authors). vi John Stevenson, Bets are off while firm sues DA, Herald Sun (Durham, N.C.), 30th November 2004, at C14. vii The lease agreement required the Joker Club to “provide landlord with satisfactory proof from the Durham County District Attorney that the operation of a poker game upon said premises will not violate any criminal laws of the State of North Carolina.” Joker Club, LLC v. Hardin, 4CVS06034 (N.C. Super. complaint filed 15th November 2004). viii Letter from James E. Hardin Jr., District Attorney, 14th Prosecutorial District, Durham, N.C., to Marcus E. Hill, attorney for the Joker Club, 24th September 2004, attached as Exhibit C to Joker Club, LLC v. Hardin. ix Stevenson, supra note 6. x Benjamin Niolet, Chance or skill? Suit asks; Poker club owners put issue to courts, News & Observer (Raleigh, N.C.), 30th November 2004, at A1. xi Dan Katz, North Carolina judge nixes proposed poker club, Poker Source Online, 24th May 2005, _http://www.pokersourceonline.com/news/north-carolina-judgeproposed-poker-club.asp_ (quoting Assistant Attorney General David J. Adinolfi II). xii 192 S.E.2d 613, 616 (N.C. Ct. App. 1972). xiii Id. at 616. xiv Id. xv 451 S.E.2d 306, 308 (N.C. Ct. App. 1994). xvi 1848 N.C. Lexis 67, at *4 (N.C. 1848). xvii Id. xviii Benjamin Niolet, Chance still rules poker, judge finds; Club sought to open card parlor in Durham, News & Observer (Raleigh, N.C.), 24th May 2005, at B1. “Besides Cooke, the judge heard from a poker tournament organiser from Florida, a casino operations vice president from the Bahamas and a Morrisville chemist who studies the game.” Id. xix Joker Club, LLC v. District Attorney, No. 4 CVS 6034 (N.C. Super. Ct. 1st July 2005) (Order determining that poker is a game of chance under North Carolina law), at 3. xx Id. at 5. xxi Id. at 5–6. xxii Id. at 6. xxiii John Stevenson, Judge lays cards on table, forbids poker; Ruling that it’s a game of chance precludes opening of betting club, Herald-Sun (Durham, N.C.), 24th May 2005, at A1 (quoting N.C. Super. Ct. Judge Orlando Hudson). xxiv Id. xxv Id. xxvi “Judge lays cards on table, forbids poker; Ruling that it’s a game of chance precludes opening of betting club,” Herald-Sun, 24th May 2005. xxvii 643 S.E. 2d 626, *627; 2007 N.C. App. LEXIS, 3rd July 2007 xxviii The appellant’s petition for review. xxix U.S. Tax Ct., 2007 WL 518989. xxx 2007 Ala. Crim. App. LEXIS 18. xxxi In Re Advisory Opinion of the Governor (Casino), 856 A.2d 320 (R.I. 2004). xxxii United States v. Gotti, 459 F.3d 296, 342 (2d Cir. 2006) (discussing joker-poker machines). xxxiii Gallatin County v. D & R Music & Vending, Inc., 208 Mont. 138 (1984); State v. Barnett, 488 P.2d 255 (Wash. 1971). xxxiv 17 ME. REV. STAT. ANN. § 330 (2001); N.M. STAT. 15.4.9.9 (2004); OHIO REV. CODE § 2915.01 (D) (2003). See Anthony Cabot & Robert Hannum, Poker: Public Policy, Law, Mathematics and the Future of an American Tradition, 22 T M Cooley Law Review, 443 (2005). xxxv 91 Md. Op. Atty. Gen. 64 (2nd March 2006); 2004 WL 235411 (South Carolina A.G., 22nd January, 2004); Tenn. Op. Att. Gen. No. 05-159 (14th October 2005); Texas Att. Gen. Op. GAO 335 (20th June 2005); but see Ark. Op. Att. Gen. No. 2005-034 (9th March 2005), which concluded that whether poker is a game of chance or skill should be decided by the trier of fact. xxxvi Massachusetts A.G. opinion (30th June 2005). xxxvii Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. §§ 5361-5367 . xxxviii R. v. Derek Kelly (Gutshot), [16th January 2007], Crown Court, T20060579. xxxix Howard Swains & Adam Fresco, Chips are down as poker clubs await court ruling, The Times (London), 26th October 2005, at 30.

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Opinion of the Justices No. 373, 795 So. 2d 630, 635 (Ala. 2001). Rex v. Tompson, [1943] KB 650, 661. Emphasis added. Emphasis added. Its Web site states it has 12 million hits a month and has a staff of more than 50. Gutshot.com, Speech of Derek Kelly at International Gaming Conference and Expo, 7th November 2006, http:/www.gutshot.com/e/article. Howard Swains & Adam Fresco, supra note 39. Maxine Frith, Is poker a game of skill or chance? One pub landlord bets his freedom on skill, Independent (London), 10th July 2006, at 16. Julian Harris, Poker and the Law: Commission Steps In, iGaming Business, Sept/Oct 2006, at 21. Simon Bowers, Government considers allowing poker in pubs, Guardian Unlimited, (United Kingdom), 17th November 2006, n.p. Howard Swains & Adam Fresco, supra note 39. Gutshot.com, The Legal Fight – Have Your Say, _http://www.gutshot.com/e/legal/index.php_(last visited Apr. 6th April 2007). URN 25E 54405. Telephone interview with Derek Kelly, Chairman, Gutshot Private Members Club, 11th November 2005. In re Allen, 59 Cal. 2d 5, 27 Cal. Rept. 168 (1962). Rex v. Tompson, [1943] KB 650. Gambling Commission, Frequently Asked Questions, http://www.gamblingcommission.com (“Can I Run an Online Poker Site? Yes, but the server and any facilities for processing the transactions must be based abroad.”) The Northern Ireland statute contains a virtually identical definition of a game of chance to that of the Gaming Act of 1968. Deborah McAleese, Police Raid Poker Game in Private Members’ Club, Belfast Telegraph, 30th January 2006; Poker Players to Get Seized Cash, BBC News, 31st January 2006. The Cavendish, News Update, 1st August 2006, http://www.thecavendishclub.com. Club Owner Fined £3,000, Irish News, 8th February 2007, at 5. Cass. crim., 20 avr. 1945, S. 1945, 1, p.126. Arrêté du 15 juillet 1947 instruction sur la réglementation des jeux dans les cercles texte partiellement ABROGE: ART. 33 Publié(e) au Journal officiel “Lois et Décrets” du 19 juillet 1947. Act (décret) n°2006-1595 du 13 décembre 2006 modifying the Act (décret) n°59-1489 du 22 décembre 1959 et relatif aux casinos. The advertising of an unauthorised game of chance is also punished by the rules governing criminal complicity. D. Veaux, S. Durand, Contrats en matière de jeux.-jeux d’argent, JurisClasseur Contrats – Distribution Fasc. 3320, spéc. n°11. First case of the French Supreme Court: Cass. Crim., 5th January 1877. French Supreme Court (criminal section): Cass. Crim., Nov. 8, 1956: Bull. Crim., n°727. Id. The court explained: Attendu que pour déclarer les demandeurs coupables d’avoir tenu une maison de jeux de hasard, l’arrêt attaqué énonce que, dans le débit de boissons géré par la femme Mounigan, étaient habituellement pratiqués des jeux d’argent comportant une part de hasard; que Formose, concubin de la tenancière, faisait office de banquier; que ces jeux se renouvelaient fréquemment, en particulier les jours de paie des dockers; que les mises étaient relativement considérables et que certains joueurs allaient jusqu’à perdre en une seule soirée, quarante ou cinquante mille francs. . . .Id. [Emphasis added.] P. Decheix, Jeux, Loteries et paris, Jurisclasseur Pénal annexes, Fasc. 10, spéc. n°45. French Supreme Court (criminal section): Cass. Crim. 8th November 1956: Bull. Crim., n°727. Ministere Public C. Patrick Partouche, et al., no. 0601845194. Group Partouche to Appeal Ruling, Attorney Says, Interactive Gaming News, 20th March 2007, http://www.igamingnews.com. “Exploring the Status of Poker Europe-France,” July 30, 2007, http://www.gamblingcompliance.com. Sean Fewster, Poker accused raise stakes in legal fight, Advertiser (Australia), 29th September 2006, at 14. Id. Full House as Canberrans Cross Border for Game of Poker, Canberra Times, 30th May 2006; Pub League Founder Predicts Future, A.P., 9th November 2006. Id. 70 D.L.R.(2d)606; [1968] SCR 786, 789. Canadian case law has interpreted sections of its Criminal Code to require for a violation that card games be pure chance. R. v. Shabaquay [2004] O.J. 2357. (Bingo is a game of mixed skill and chance.)

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70 D.L.R.(2d)606; [1968] SCR 786, 789. However, no Canadian court has held that online poker playing is either legal or illegal. Legal odds on your side, Winnipeg Sun, 10th July 2005. Michael D. Lipton, Q.C., Poker—A Canadian Perspective, in Internet Gambling Report 637–40, 640 (9th ed. 2006). The advertisements are for ‘play’ money. Keith McArthur, Crackdown on net poker room ads urged, Globe & Mail (Canada), 11th August 2005, at B3. PartyGaming Prospectus, 14th June 2005, at 52. For an excellent article on taxation issues, see Arne M. llin Ottosen, Taxation of Online Poker in Denmark, 10 Gaming Law Review. 358–62 ( 2006) (concluding that poker winnings in a Gibraltar-licensed site were exempt from Danish taxation on winnings). What in the Weird, MXS, 18th January 2006, at 8. Speech of Dr. Wulf Hambach, Can Europe Fuel the Next Online Poker Boom?, Speech at the World Poker Congress (Stockholm, 28th June 2006). RG JW 06, 789; Stuttgart ZStrW vol. 44 (1924)(620). Most of the information in the above paragraph is from a speech of Dr. Wulf Hambach, Can Europe Fuel the Next Online Poker Boom?, Speech at the World Poker Congress (Stockholm, 28th June 2006). “Exploring the Status of Poker in Europe-Italy,” 24th July 2007, http://www.gamblingcompliance.com. Michael Keiner, The Current Legal Situation of Poker in Germany and Austria, Card Player Europe, http:// www.cardplayer.com/cpeurope/article/15976 (last visited 6th April 2007). Zanoni is now attempting to get poker recognized as an Olympic sport. Id. Concord Card Club case [Supreme Court of the Netherlands], 3rd March 1998, N.J. 1999, 59 (Neth). The author is indebted to Justin Franssen for information in this paragraph. Much of the information on Swedish internet poker is from Per Binde, Report from Sweden: The First State-Owned Internet Poker Site, 11 Gaming Law Review 108–15 (2007); see also, Swedish government approves online poker, Deutsche Presse-Agentur, 24th November 2005. Nambling Notes, Interactive Gaming News, 25th August 2006, http://www.igamingnews.com. Ladbrokes Applies for Swedish E. Poker License, Interactive Gaming News, 7th April 2006, http://www.igamingnews.com. Dani Lotem, Police Approved National Poker Championship, Poker News, 8th April 2007, http://il.pokernews.com.

JOE KELLY, Z. DHAR & T. VERBIEST 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 Europe, India, Australia, Costa Rica and South Africa. 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, appellate courts, 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 coauthored Antigua’s interactive gambling regulations and had been a consultant for Antigua in Washington D.C. Zeeshan Dhar is a London barrister and is chief counsel for Derek Kelly, the chairman of the Gutshot Private Members Club. Thibault Verbiest is the founding partner of Ulys Law Firm, which has offices in Paris and Brussels.

96 ■ Casino & Gaming International

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