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Global Gaming Business Magazine
MInnESOTA MIRACLE iGAMInG ODDS CASH HAnDLInG InVEST In YOuRSELF
February 2018 • Vol. 17 • no. 2 • $10
Be a Sport
How to navigate the new world of sports betting
High Flying Fun Scientific Games soars with new direction, products
Cream Crop How to keep
of the
your senior-level executives engaged Association of Gaming Equipment Manufacturers
Official Publication of the American Gaming Association
©2017 AGS LLC. All Rights Reserved. AGS-RiverDragons-GGB-201711.indd 1
10/11/17 3:18 PM
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CONTENTS
Vol. 17 • No. 2
february
Global Gaming Business Magazine
22 COVER STORY
COLUMNS
Riding the Wave
12 AGA Difficult but Productive
Under CEO and President Kevin Sheehan, Scientific Games has multiplied its stock and bond prices, reduced cost and augmented its management ranks with the best and the brightest. Here’s how Sheehan will keep the ride going into the near future.
Geoff Freeman
14 Fantini’s Finance Investment Opportunities Frank Fantini
52 Table Games Downtown Upturn
By Frank Legato and Frank Fantini
Roger Snow
FEATURES
16 Regional Powerhouse
40 Tribal Gaming Model
Penn National Gaming’s purchase of Pinnacle Entertainment and Boyd Gaming’s buy of four Pinnacle casinos create a new strength in the regional gaming market.
Since blazing the trail for tribal gaming at the end of the 1980s, the state of Minnesota has done everything right to foster and grow its Indian gaming industry.
By Patrick Roberts
18 Keeping Good People With competition heating up in gaming markets across the country, retaining the best professionals in management becomes more important.
King Cash The continuing evolution of cash and payment transaction technology does the crucial job of getting money into the hands of players.
By Marjorie Preston
By Dave Bontempo
58 Global Gaming Women Invest in Yourself Virginia McDowell
DEPARTMENTS 6
The Agenda
By Dave Palermo
8
By the Numbers
44
10 5 Questions 15 AGEM Page 48 New Game Review 54 Frankly Speaking
30
30 Sports Betting Futures With legalized sports betting through U.S. Supreme Court ruling or an act of Congress looming, potential sports-betting stakeholders should examine the best ways to turn a profit in the new business. By Andrew Klebanow and John English 4
Global Gaming Business FEBRUARY 2018
56 Emerging Leaders
Feature 34 iGaming Expansion Odds With the legalization of online gaming in Pennsylvania, several other states are likely to follow suit. We’ve calculated the odds of iGaming appearing in each. By Aaron Stanley
38 iGaming News Roundup
With Scientific Games’ Murali Ganesan
60 Cutting Edge 62 Goods & Services 65 People 66 Casino Communications With Vic Salerno, CEO, US Fantasy Sports
INTRODUCING TWO NEW MIGHTY CASH™ LINKED GAMES. Our Mighty Cash™ linked games are seeing incredible performance. And now we’re introducing two more linked games, Nu Xia™ Red Blade™ and Nu Xia™ Green Blade™, with all the excitement and fast-growing jackpots that players love. Contact your Aristocrat Representative today.
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THE AGENDA
Innovative Education Roger Gros, Publisher
W
hen I finally decided to settle down and get a full-time job (I had been a musician for 10 years, living that crazy lifestyle), it seemed that a position in a casino was destined. I was, after all, living in Atlantic City, and the town had gone gaming crazy with the opening of the first casino in 1978. So I applied to become a dealer at Caesars Boardwalk Regency, and I was chosen to go to their dealers school at the Casino Career Institute of Atlantic Community College. I have never graduated college (even though I attended 10 of them), but this was a different experience. Having never been in a casino before, I was really starting from scratch. The weekly poker game around the kitchen table didn’t really cut it. But I was a sponge. I soaked up the information I needed and finally started working as a blackjack dealer in September 1979. But that was just the start of my learning curve. I later took a course to become a baccarat dealer, and picked up a roulette endorsement along the way. I went back to CCI to take a casino management course taught by Bill Downey Sr. and Jess Lenz, two of the good guys in the industry. Later I went to work at the Golden Nugget, and while I didn’t add to my formal gaming education, my informal education—in the form of private chats with Steve Wynn at dead baccarat games—was priceless. When I helped to found the American Gaming Summit and the Southern Gaming Summit in the early ’90s, we were advancing the educational quotient of the gaming industry. It continued when I joined G2E in 2001 as a conference consultant, and I’m proud of the content that we provided to the gaming industry over those years. I believe that education is the key to success in gaming—any industry, really. If you understand the basic tenets behind any business, you’re more likely to adhere to the policies and procedures—while thinking outside the box and being innovative—that will make that business a success. I wasn’t very good at following procedures when I was a dealer. I really liked to put a flair into my style that entertained both the player and myself. But I learned that if every dealer behaved as I did, the guys in the surveillance room would go crazy, not to mention my supervisors who would scream at me from across the pit.
6
Global Gaming Business FEBRUARY 2018
So having learned the hard way about the value of education, I was a convert. And now we’re embarking on a new educational experience that I hope will enrich everyone who attends either in person or via a webcast. GGB has reached an agreement with the William F. Harrah College of Hospitality at the University of Nevada, Las Vegas to develop the UNLV Gaming & Hospitality Education Series. Each month, GGB and Applied Management Strategies will organize a half-day seminar focusing on a single topic crucial to operating a casino resort today. We all know UNLV is the “gold standard” for gaming education, and we’re planning to exceed the expectations of the attendees, either in person or via the online interactive webcast. At the first session, to be held on March 22 at UNLV’s IGI, we’ll focus on casino games and how the next generation will (or will not) be converted into profitable players. A 90-minute panel discussion will include such heavyweights as former Seminole Gaming slot VP Charlie Lombardo, Caesars’ gaming chief Melissa Price, and two of the young guns currently running slots and games on the Las Vegas Strip. They will talk about the changing casino floor and how to adapt. After a networking break, an additional 90-minute session will contain an intense look into trends such as free play, bonusing and hold percentage philosophies presented by Gaming Hall of Fame member John Acres. Every subsequent month through May and continuing in the fall, we’ll cover issues such as non-gaming amenities and ROI, data analytics, payment processing, player development and more. These sessions won’t be just talking heads, however. Attendees will take part in interactive discussions, have the ability to ask questions, and drill down into topics that they encounter every day on the job. In fact, our goal is to provide attendees with the tools to return to their jobs and make a difference the next day. So we hope you’ll sign up to attend at least one of the sessions at the UNLV Gaming & Hospitality Education Series, either in person at UNLV or via the webcast. We believe it’s going to set a higher bar for gaming education, and we want you to be a part of it.
Vol. 17 • No. 2 • FEBRUARY 2018 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Virginia McDowell | Roger Snow Contributing Editors Dave Bontempo | John English | Andrew Klebanow Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Patrick Roberts | Aaron Stanley Michael Soll
EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises
•
Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International
• Julie Brinkerhoff-Jacobs, President, Lifescapes International
• Nicholas Casiello Jr., Shareholder, Fox Rothschild
• Jeffrey Compton, Publisher, CDC E-Reports twitter: @CDCNewswire
• Geoff Freeman, President & CEO, American Gaming Association twitter: @GeoffFreemanAGA
• Dean Macomber, President, Macomber International, Inc.
• Stephen Martino, Vice President & Chief Compliance Officer, MGM Resorts International, twitter: @stephenmartino
• Jim Rafferty, President, Rafferty & Associates
• Thomas Reilly, Vice President Systems Sales, Scientific Games
• Steven M. Rittvo, Chairman Emeritus, The Innovation Group twitter: @InnovGrp
• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University, twitter: @kspilde
• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985
• Roy Student, President, Applied Management Strategies
• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2018 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014 Official Publication
Tap Into Success! See why the Global Gaming Awards named IGT’s Cardless Connect® product the Land Based Product of the Year. Join leading casinos of all sizes in making your floor as easy as tap and play. Ask for your demo today!
©2018 IGT. Except where ownership is otherwise identified, the trademarks used herein are owned by IGT or its affiliates, may not be used without permission, and where indicated with a ®, are registered in the U.S. Patent and Trademark Office.
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BY THE
NUMBERS
ShiPPinG WARS O
ne of the most important metrics used by slot companies when comparing their success to competitors is “ship share.” In the Eilers-Fantini Quarterly Slot Survey for the third quarter of 2017, the “Big Four” of slot manufacturers (IGT, Aristocrat, Scientific Games and Konami) saw some challenges from non-Big Four companies. Companies like AGS and Incredible Technologies were able to make the biggest moves in the shipshare space. These charts reflect casino sales and exclude games sold to route operators in Nevada, Canada, Illinois and Oregon. To obtain a copy of the Eilers-Fantini Quarterly Slot Survey, contact Todd Eilers at teilers@eilersresearch.com or call 714-769-9154.
Adjusted Ship Share for 3Q CY 17 on Total Game Sales — Excluding Route Ops
Parking Power
i
n order to direct more revenue towards the redevelopment of Atlantic City, the New Jersey Casino Reinvestment Development Authority established a $3 parking fee per vehicle at the city’s casino parking garages. The fund was a successful revenue generator for a fund dedicated to redevelopment until four casinos closed in 2014. But things have been looking up since then. Over the past 12 months, with seven operating casinos, the parking fee revenue was up in double digits after several years of decline due to the closings. And with two casinos set to open in 2018, the fund should be very healthy. To download a copy of the Atlantic City Tourism Performance Indicators by the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at New Jersey’s Stockton University, visit stockton.edu/light/documents/actpi20173rdquarterfinal.pdf.
Year over Year (YoY) Change in the Atlantic City Casino Parking Fee per 100 Parking Spaces, October 2016 to September 2017
8
Global Gaming Business FEBRUARY 2018
Month Trailing Total for the Atlantic City Parking Fee per 100 Parking Spaces, January 2006 to September 2017
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NUTSHELL
5QuesTions
Tracey S. Chernay
Senior Vice President, Global Casino, Gaming and Lottery, TransAct racey Chernay joined TransAct in May 2005 as senior vice president, marketing, bringing in-depth Tducesunderstanding and extensive experience in global marketing strategies to the company, which promarket-leading ticket printers, as they expanded international initiatives and implemented growth strategies across the entire business. In May 2007, Chernay moved to Las Vegas and assumed responsibility for product sales and marketing for the casino and gaming industry. She was promoted to her current position in June 2010. To hear a full podcast of this interview, visit GGBMagazine.com. What was TransAct’s product that really made your name when ticket-in/ticket-out (TITO) was introduced?
1
For TransAct, the product that put us on the map was the Epic 950 printer. We brought that out to be the next-generation TITO product that would meet all the needs of the casinos. We did a lot of research to find out what the needs of the casinos were, what they wanted from a technology standpoint. Our first installation was at Wynn Las Vegas when it opened. The Epic 950 has been our flagship product for all these years, but we recently launched the Epic Edge. We’re excited about the performance of TITO in the marketplace for the player and the casino, and how the Epic Edge will improve performance. And every customer has the ability to upgrade to add couponing to the ticket. The Epic Edge offers a higher-resolution print. It’s a 300 dpi vs. 203 dpi with the Epic 950 and all its competitors. It gives us better-looking coupons and better read rates on the bill validator. But the Epic 950 isn’t going anywhere. It remains our flagship. How have the printers improved over the years?
2 3 4 5
The 950 has been enhanced with firmware changes and minor alterations, but overall it had the right set of features, and has the upgradability that has been very popular. We have over 15,000 games with the 950 installed. The addition of real-time couponing has been the biggest change. It’s all about more time on device, creating loyalty and growing your revenue by offering a better experience. With the convergence between gaming and lottery, TransAct’s role in lottery is interesting. How do you work there?
“They
Said It”
“Gambling in Australia is the equivalent of guns in America. The gambling industry has captured politics really in the way the National Rifle Association does in America, so we aim to reform that.” —Tim Costello, Baptist minister and head of Australia’s Alliance for Gambling Reform, on a report that punters Down Under lost almost A$24 billion in a year
CALENDAR February 6-8: ICE Totally Gaming, ExCeL Centre, London. Produced by Clarion Gaming. For more information, visit ICETotallyGaming.com. February 6-8: Western Indian Gaming Conference, Harrah’s Southern California. Produced by the California Nations Indian Gaming Association. For more information, visit CNIGA.com. February 8-10: London Affiliate Conference (LAC) 2018, ExCeL Centre, London. Produced by Clarion Gaming. For more information, visit igbaffiliate.com. February 26-March 1: Mobile World Congress, Fira Gran Via and Fira Montjuïc, Barcelona, Spain. Produced by GSMA. For more information, visit MobileWorldCongress.com. February 28-March 2: Oi Summit 2018, JW Marriott, Las Vegas. Produced by VizExplorer. For more information, visit vizexplorer.com/oisummit.
We are very active in the lottery space. Our Epic printers are in lottery terminals manufactured by IGT, Novomatic and other companies. They have to be extremely reliable. If you think about Powerball, in one weekend they may have to print tens of thousands of tickets. They are highly reliable, high-volume and very professional printers. In addition, our Epic 950 is installed in many video lottery terminals.
March 12-15: World Game Protection Conference, Bally’s Las Vegas. Produced by World Gaming Protection. For more information, visit WorldGameProtection.com.
With no more coin-out slot machines, reliability is critical. How do you ensure that your printers don’t go down?
March 13-15: iGaming Asia Congress, Grand Hyatt Macau. Produced by Beacon Events. For more information, visit iGamingAsiaCongress.com.
It is a critical function. It’s something neither casinos nor VLT operators want to think about. They don’t want to have to worry about down time. We’ve got an excellent quality control department that monitors all the components that go into the printer, the manufacturing process and the reporting process once they’re in the field. For the Epic 950, less than three printers out of 10,000 are returned for any failure in the warranty period. That’s extreme reliability. Even once they’re in the field for longer periods, they are very reliable. It’s all integrated with our quality group to ensure that reliability. Tell us about your applications for table games.
Table-game technology is a big trend in the industry, and TransAct is part of that. At G2E this year, we brought out two new products that will assist operators in their pit games. The Epic 950 TT, for tabletop, and the Epic Edge TT. We had a number of table-game innovators showing the Epic products in conjunction with their table games. The idea is rather than have them take their chips away to the cage, they turn them in at the table and receive a TITO ticket to take to a kiosk in return for those chips. That will save time for fills and depleting the chips on the tables.
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Global Gaming Business FEBRUARY 2018
March 27-29: Vienna International Gaming Expo 2018, Austria Center, Vienna. Produced by EEGMedia. For more information, visit VIGE.world. March 20-22: ASEAN Gaming Summit, Conrad Hotel, Manila, Philippines. Produced by Asian Gaming Brief. For more information, visit events@agbrief.com. April 17-20: Indian Gaming Tradeshow & Convention 2018, Las Vegas Convention Center. Produced by the National Indian Gaming Association. For more information, visit indiangamingtradeshow.com.
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AMERICAN GAMING ASSOCIATION
Difficult But Productive Last year set the stage for potential advances in 2018
A
By Geoff Freeman, President & CEO, American Gaming Association
new year provides a great opportunity to look forward, and also to reflect on the year we’ve just completed. The gaming industry made tremendous strides in 2017, while also experiencing a tragedy that shook our industry, the Las Vegas community and the world. I have often said that we’re stronger as an industry when we stand together, and never was that more evident than in the days, weeks and months since October 1. We are grateful to our industry and all of our partners who rose to new heights at one of our lowest moments, and proud of what we’ve accomplished together. I feel passionately that our industry is strongest when it works together. We witnessed signs of that in 2017, and are on the cusp of accomplishing great things in 2018. The success our industry achieved last year is a direct result of increased engagement, greater unity and stronger collaboration with our membership. Leveraging these emerging strengths and effective research, lobbying and communications campaigns, the AGA advanced key priorities for the gaming industry. Setting the stage for a legal, regulated, nationwide sports betting market
The gaming industry has played a critical role in generating an entirely new national conversation about legalizing sports betting. Our strategy, built in partnership with our members and grounded in research, has defined the issue, cultivated innovative partnerships with law enforcement, elected officials and other influencers in the American Sports Betting Coalition, and proactively educated sports leagues and broadcasters about the opportunities associated with a legal, regulated market. As we await the Supreme Court ruling this spring, we are not waiting to act. Instead, we continue to actively work with our partners to educate key influencers on Capitol Hill and in state capitals, engage sports stakeholders including leagues and broadcasters, and actively inform the public debate about the merits of eliminating the black market perpetuated by the Professional and 12
Global Gaming Business FEBRUARY 2018
Amateur Sports Protection Act. We’ve said for some time that PASPA’s days are numbered, and this could well be the year it is finally eliminated. Ensuring the gaming industry benefits from the most significant tax overhaul in a quarter century
Recognizing the opportunities and challenges presented by major changes to the federal tax code, AGA engaged members of Congress and partnered with business community allies to protect core interests and pass legislation that was a net positive for the gaming industry. We will continue to engage Congress to protect and promote the industry as “fixes” are considered in 2018 and beyond, with a focus on lifting the slot tax reporting threshold, promulgating regulations that work for the industry, and assessing and addressing the impact of certain changes. Advancing NextGen regulation
The gaming industry is hamstrung by outdated regulations based on antiquated, discredited stereotypes. AGA’s NextGen initiative educates lawmakers and regulators about the need for reforms that will enable our industry to innovate and improve the customer experience. In 2018, we will continue to work with regulators to streamline burdensome shipping regulations and look for opportunities to remove antiquated regulatory hurdles that impede industry progress. A plan for the future
Our accomplishments in 2017 were a direct result of an aligned industry, working together to tackle major challenges and create opportunities for success. In 2018, we’ll do even more to shape federal policy, promote the social and economic value of gaming, create a favorable business environment in the states, and more. These are the pillars of AGA’s Strategic Plan 2020, which will guide our efforts to support a growing, thriving casino gaming industry now and in the years to come.
Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.
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FANTINI’S FINANCE
Investment Opportunities Will 2018 be as profitable as 2017 for savvy gaming investors?
T
he year 2018 might turn out to be one of the most interesting ever for investors in gaming companies. Harbingers of activity abounded last year: • Japan legalized casino gaming, and now has to enact enabling legislation. • Consolidation continued among casino companies. • The REIT phenomenon accelerated. • Supplier companies moved more emphatically into the virtual world of online gaming in various forms. • Pennsylvania broke the logjam, becoming the first state in several years to legalize online gaming. • The U.S. Supreme Court took up the issue of sports betting, and legislatures and companies throughout the country are positioning themselves for possible legalization. • New companies went public. Let’s take a look at each of these: • Japan. With authorizing legislation enacted and the ruling Liberal Democratic Party winning the recent elections, passing enabling legislation is all but certain, and will probably happen this year. There is a lot to be decided: how many licenses, locations, tax rate, and local ownership requirements. What we do know is that, assuming a reasonable law, every major casino company will pursue a license. So, with far more unknown than known, we’ll hazard a guess that favorites for licenses would be Las Vegas Sands, thanks to its highly successful integrated resort model; and MGM Resorts, based on the power of the MGM brand and CEO Jim Murren’s willingness to be collegial with prospective Japanese partners. Some think Macau casino operators will be at a disadvantage in pursuing licenses because Japanese decision-makers might think they have a conflict of interest. But Melco Resorts may be an exception, as CEO Lawrence Ho is making Japan his top priority and because he can point to City of Dreams Manila as an example of not allowing
14
By Frank Fantini
a conflict with his Macau properties. • Casino consolidation. There might not be any blockbuster deals like Penn National buying Pinnacle, but everyone talks optimistically about more acquisitions to come as higher valuations tempt prospective sellers, and buyers have learned how to make purchases add immediately to earnings. Boyd, Caesars and Eldorado are likely buyers; and don’t rule out Golden Entertainment and Full House Resorts, which can do some smaller deals. • The REIT phenomenon is finally catching on, though maybe not the way it was envisioned several years ago when Penn National spun off Gaming & Leisure Properties. What has happened is that Gaming & Leisure has shown, most recently with Boyd agreeing to buy four Pinnacle casino operations that they will own, that REITs can facilitate mergers and acquisitions, as well as grow on their own. And, with VICI Properties spun off from Caesars, there are now three gaming REITs (MGM Growth Properties is the third), making for an industry subsection. This might also be the year that REITs acquire properties outside of gaming, broadening their potential to a vast world. • Suppliers moving online is not new, but what has changed is that, after several years of trying to figure out what to do, companies have found their paths. That is evidenced by Aristocrat buying Big Fish from Churchill Downs and Scientific Games’ success at its B2B business, as well as its purchase of gaming and sports betting platform provider NYX Gaming. Look for more acquisitions in this space, and for historic slot machine companies to become social and real-money online casino operators, as well as providing games and platforms to online casinos. • Online gaming. States might not rush to legalize internet gaming this year, and the experience of New Jersey shows that iGaming is not a quick way to enrich state treasuries, but efforts continue. What would really light a fire under iGaming is legalization of sports betting. • Sports betting. We’ll know by June
Global Gaming Business FEBRUARY 2018
whether the Supreme Court clears the way for fullfledged sports betting everywhere and, if so, how states and Congress react. What we know now is that contingency legislation has been introduced in a number of states to allow sports betting if the federal ban goes away. If sports betting is fully allowed, and states permit bets to be made by computers or mobile devices, the competition to jump in will make the 1889 Oklahoma land rush look like a stroll in the park. There will be three sets of winners: Incumbent casino operators, as most states will limit online licenses to licensed casinos. That, in turn, will create a rush of iGamers to sign deals to supply casinos with games and platforms. Sports betting operators who can provide odds-making, technology and sufficient size to allow smaller casino operators to have sports books—this field can include big Las Vegas casino operators and international companies like Paddy Power Betfair. Perhaps no sports betting operator has better positioned itself to capitalize on U.S. expansion than London-listed William Hill. Providers of online platforms and technology, thus the Sci Games purchase of NYX Gaming. • Newly public companies. Games and virtual sports provider Inspired went public last year, as did VICI Properties, the Caesars REIT spinoff. There are other candidates this year. AGS has been prepping to go public for some time and, while owner Apollo Global Management could go in another direction, this might be the year the slot and table game provider does an IPO. Novomatic is a giant international gaming conglomerate owned by Austrian Johan Graf. The company intended to IPO last year but put those plans on hold. This could be the year. Interblock has made no public noises about going public, but an IPO would make sense both to reward its founder and to open the public markets to help fuel the growth ambitions of the electronic table games provider. Frank Fantini is the publisher and CEO of Fantini’s Gaming Report. For a free 30-day trial subscription, email subscriptions@fantiniresearch.com.
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AGEMupdate AGEM MEMBER PROFILE JANUARY 2017 KEY BOARD OF DIRECTORS ACTIONS Incredible Technologies is a Class III gaming manufacturer focused on delivering compelling video slot content to the modern-day casino floor. The company is located in the Chicago suburb of Vernon Hills, Illinois, and specializes in the design and development of digital entertainment products to game operators and players. With products licensed in 27 states and hundreds of tribal jurisdictions, IT products continue to be fueled by innovation and driven by the ROI of game operators worldwide. This year, IT will launch the nationwide rollout of Infinity V55, a new Infinity core form factor utilizing a full touch-screen 4K vertical 55-inch monitor on an Infinity U23 base. Infinity V55 is unlike any other core cabinet as it creates an immersive gaming experience on the largest screen on a core, for-sale cabinet in the industry. Infinity V55 launches with four exclusive titles with quarterly new title releases planned. IT will also continue to provide new content to support its other successful, high-performing product segments including Infinity Super Skybox and Infinity Skybox, as well as new titles for its video high-denomination product line. Unprecedented growth over the past several years has led IT to open its second location in Las Vegas. The newly occupied space houses design teams and a showroom to meet Las Vegas and surrounding markets’ needs. Beyond the 27 states where the company is currently selling, IT will also spend 2018 focusing on expansionary U.S. markets including Pennsylvania in addition to a new international presence in Canada. For more information, visit itsgames.com or contact Dan Schrementi, vice president of gaming sales and marketing, at dschrementi@itsgames.com. AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.
• The 2018 Election of AGEM Officers took place at the January meeting. The officers voted in for a term of one year are Vice President David Lucchese, Everi; Vice President Luke Orchard, IGT; Vice President Robert Parente, Scientific Games; Secretary Mark Dunn, Aristocrat; Treasurer Tom Jingoli, Konami Gaming; and General Counsel Daron Dorsey, Ainsworth. President Tom Nieman is starting the second year of his two-year appointment, and was not part of the slate. • Greg Saint, event director of the ICE Totally Gaming show, gave a short presentation to members, outlining pre-event details. This year’s show sees a total of 509 exhibitors, of which 108 are new to the show. Pre-event registration is going well, and has shown a year-on-year increase of 8 percent at this point. He also informed the group of the new location of ICE VOX, which will be housed in the Platinum Suite of ExCeL, keeping the conference program under one roof and making it easier for visitors, speakers and exhibitors alike. • AGEM members approved to support the forthcoming Canadian Gaming Summit being held June 18-20, with a contribution of US$15,000. The Canadian Gaming Association is currently undergoing changes, and as part of this, the final show format of this important industry event is under discussion. • The Japan Gaming Congress will take place May 10-11 in Tokyo. In light of the proposed changes to gaming legislation in Japan, the Congress will offer an educational forum to all industry stakeholders as well as assist in bringing international operators and suppliers together with Japanese counterparts. AGEM members approved to support the event with a sponsorship of $10,000. • Two new companies were voted in recently and welcomed as Associate members. Comtrade Gaming, based in Slovenia, is a high-end software and technology supplier for the land-based and online sectors; and Rising Digital Corporation, based in Las Vegas, is a gaming content supplier.
UPCOMING EVENTS Association of aGaming Manufacturers December • AGEM will have booth atEquipment the forthcoming ICE Totally Gaming show in London February 6-8.2017 The contributors to the December 2017 booth is located in the North Hall at significant N1-348, and welcomepositive all potential new and existing members. he AGEM Index experienced gainswill Selected AGEM Index included the following: for the fourth month in a row during December • The International Conference which 2017. The Casino composite index closed(ICC), the month at is hosted by the European Casino Association and 516.79 points, awill gainbeofheld 24.14 or 4.90 Aristocrat Leisure LimitedConnie (ASX:ALL) contributed is sponsored by AGEM, onpoints, Monday, February 5 as part of ICE VOX. Jones, direcpercent, when compared to November 2017. The AGEM 20.60 points due to a 9.22 percent increase in stock torIndex of responsible will beincrease attending and27th representing AGEM. reported a gaming, year-over-year for the price to AU$23.70. consecutive month and has climbed 208.64 points, or 67.71 percent, since November 2016.
Konami Corp. (TYO:9766) reported a 4.55 percent increase in stock price to ¥6,200 and contributed During the latest period, seven of the 12 global gaming 4.48 points. equipment manufacturers reported month-to-month increases in stock price. Five manufacturers reported Crane Co. (CR) contributed 3.26 points due to a 4.51 The AGEM Index experienced significant gains forallthe fourth month in a row during December decreases in stock price during the month, with percent increase in stock price to $89.22.2017. manufacturers posting single-digit increases The composite index closed the month at 516.79and points, a gain of 24.14 points, or 4.9 percent, when Selected negative contributors included the following: declines.
AGEMindex
compared to November 2017. The AGEM Index reported a year-over-year increase for the 27th consec Withsince its stock price falling 3.56 percent $26.51, utive has climbed 208.64 points,produced or 67.71 percent, November 2016. During thetolatest The month three and broader stock market indexes International Game Technology PLC (IGT) contributed positiveseven results December. S&P 500 reported manufacturers a period, ofinthe 12 globalThe gaming equipment reported month-to-month increases in negative 2.61 points. month-to-month increase of 0.98 percent to 2,673.61. stock reported decreases The price. Dow Five Jonesmanufacturers Industrial Average increased 1.84in stock price during the month, with all manufactur broader Scientificstock Games Corporation reported to 24,719.22, the NASDAQ increased The 0.43three erspercent posting single-digitwhile increases and declines. market indexes (SGMS) produced posi- a 2.56 percent decrease in stock price to $51.30, percent during the period to 6,903.39. tive results in December. The S&P 500 reported a month-to-month increase of1.61 0.98points. percent to 2,673.61. contributing negative The Dow Jones Industrial Average increased 1.84 percent to 24,719.22, while the NASDAQ increased 0.43 percent during the period to 6,903.39.
AGEM
Agilysys
Exchange: Symbol (Currency)
Stock Price At Month End Dec-17 Nov-17 Dec-16
Nasdaq: AGYS (US$)
12.28
12.24
Ainsworth Game Technology
ASX: AGI (AU$)
2.16
2.05
1.81
Aristocrat Leisure Limited
ASX: ALL (AU$)
23.70
21.70
15.39
Taiwan: 3064 (NT$)
Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC Konami Corp. Scientific Games Corporation Transact Technologies
10.36
13.50
12.95
27.20
NYSE: CR (US$)
89.22
85.37
71.16
NYSE: EVRI (US$)
7.54
8.15
2.17
OTCMKTS: GLXZ (US$)
1.20
1.25
0.58
Nasdaq: GPIC (US$)
11.24
11.22
11.82
NYSE: IGT (US$)
26.51
27.49
24.78
TYO: 9766 (¥)
6,200
5,930
4,860
Nasdaq: SGMS (US$)
51.30
52.65
14.00
Nasdaq: TACT (US$)
13.25
13.60
6.60
Percent Change Index Prior Period Prior Year Contribution 0.33 18.53 0.01 19.34 0.67 5.37 9.22 54.03 20.50 4.25 (50.37) 0.02 25.37 3.26 4.51 (7.48) 247.47 (0.52) 106.90 (0.03) (4.00) 0.18 (4.91) 0.00 (3.56) 6.99 (2.61) 27.57 4.48 4.55 266.43 (1.61) (2.56) 100.76 (0.03) (2.57) Change in Index Value
24.14
AGEM Index Value: November 2017
492.64
AGEM Index Value: December 2017
516.79
FEBRUARY 2018 www.ggbmagazine.com
The AGEM Index is published monthly by Association of Gaming Equipment Manufacturers (AGEM) and Applied Analysis | Copyright © 2017
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Three-Way Deal Links Penn, Pinnacle and Boyd Merger of two companies benefits a third and consolidates Boyd ended up with the regional casino markets By Patrick Roberts Belterra Casino Resort in
I
n the latest action by casino operators to expand their market share, diversify their businesses, move into new geographic areas and cut costs, Penn National Gaming recently announced it will purchase Pinnacle Entertainment in a cash and stock deal worth $2.8 billion. Pinnacle shareholders will receive $20 in cash and 0.42 shares of Penn National common stock for each Pinnacle share, for a total of $32.47 per Pinnacle share. Penn National shareholders will own 78 percent of the combined company and Pinnacle shareholders will own 22 percent. In addition, to avoid objections from anti-trust regulators, as part of the arrangement, Boyd Gaming announced it will purchase, for $575 million, four Pinnacle casinos: Ameristar Kansas City and Ameristar St. Charles in Missouri, Belterra Casino Resort in Indiana and Belterra Park in Ohio. Also, Boyd will sign a lease agreement with Gaming and Leisure Properties Inc. GLPI expects its total rent to increase by $46.1 million annually. Upon closing, Boyd will operate 28 properties in nine states. And one day later, Boyd Gaming announced it had agreed to purchase the Valley Forge Casino outside of Philadelphia. Boyd Chief Executive Officer Keith Smith said Boyd will have acquired four high-quality casinos in new markets at an attractive price with a high return potential. He noted the purchase adds very little debt and eventually will allow Boyd to return more cash to shareholders. Officials at Penn National, the leading U.S. regional gaming operator based in Wyomissing, Pennsylvania, said the purchase is expected to close in the second half of 2018. The deal would raise Penn National’s revenue stream by $2 billion and give it 41 properties across 20 jurisdictions in North America, excluding those acquired by Boyd, offering 53,500 slots, 1,300 table games and 8,300 hotel rooms in the U.S. The combined company will have 35,000 employees, up from 19,000, with annual revenue of about $5 billion, making it the third-largest domestic casino operator after MGM Resorts and Caesars, according to SunTrust brokerage. Penn National Gaming Chief Executive Officer Timothy Wilmott said, “This was a very complex four-party transaction, and we took a look holistically at the deal and what we needed to handle with regulatory approval at the state and federal level. By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners. The combined company will benefit from enhanced scale, additional growth opportunities and best-in-class operations, creating a more efficient integrated gaming company.” Wilmott noted combining Penn National and Pinnacle loyalty programs will allow Penn National to more effectively drive play at its properties, particularly Tropicana Las Vegas and M Resort. Penn National Senior Vice President for Public Affairs Eric Schippers stated, “We grew from a single racetrack back in 1972 to what is today the largest regional gaming operation in North America. We’re getting into new states like Colorado, Louisiana and Iowa, which opens up all kinds of new op16
Global Gaming Business FEBRUARY 2018
Indiana and three other regional casinos, and in a separate deal, added the Valley Forge casino in Pennsylvania, the first entry into that state by Boyd
“By combining our highly complementary portfolios and similar operating philosophies, we will be able to leverage the strengths of both our companies and create an unparalleled experience for our regional gaming customers, while generating significant value for our shareholders and business partners.” —Tim Wilmott, CEO, Penn National Gaming portunities as we diversify our portfolio.” The purchase news comes one month after Las Vegas-based Caesars Entertainment announced it would buy Indianapolis-based Centaur Holdings LLC and its Hoosier Park and Indiana Grand casinos and racetracks in central Indiana for $1.7 billion in cash. The deal would add to Caesars’ portfolio four of Indiana’s top five casinos in terms of gambling revenue. Caesars already owns two Horseshoe-branded casinos in Indiana. The purchase is awaiting approval from the Indiana Gaming Commission and Indiana Horse Racing Commission. In addition, earlier this year, Eldorado Resorts, based in Reno, bought Isle of Capri Casinos Inc. and its 14 casinos for $1.7 billion. Gaming and Leisure Properties bought Bally’s Casino Tunica and Resorts Casino Tunica in Robinsonville, Mississippi for $82.6 million. And to add to its haul, Boyd Gaming announced that it had entered into a definitive agreement with Valley Forge Convention Center Partners, L.P., to acquire Valley Forge Casino Resort in King of Prussia, Pennsylvania, for total cash consideration of $280.5 million. Located 20 miles west of downtown Philadelphia, Valley Forge will be Boyd Gaming’s first asset in Pennsylvania, the second-largest commercial gaming state in the nation. The Valley Forge property is one of two Category 3 casinos in the state, which, under the original 2004 state gaming law, were limited to 600 slot machines and 50 table games, and were required to be attached to a hotel. The property became more appealing as an acquisition target after the state’s new gaming law eliminated “membership” requirements that imposed an annual entry fee or required that money be spent elsewhere on a property prior to entering the casino. The law also allowed for increases in the slot inventory. The gaming law offered to eliminate the restrictions for a fee, which Valley Forge paid immediately.
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Keeping the
CREAM Want to keep your best people on the job? Do this. By Marjorie Preston
I
n a strengthening job market, talent is in demand. It’s a fair bet that your rivals in business will woo, pursue, headhunt and otherwise try to make off with your superstar employees. Be prepared, by ensuring from day one that staffers at every level feel engaged, appreciated and amply rewarded. Arte Nathan, president and COO of Strategic Development Worldwide, says keeping your best people starts the day you hand them a name badge or office key—in fact, it starts before.
Start at the Start “When you talk about retention, I start with recruitment, onboarding and orientation,” says Nathan. “People who get off on the right foot end up on both feet. If they’re stumbling in the first couple of days, it’s hard to recover—for both of you.” During the interview, “be excessively open and honest” about your company’s culture, compensation and opportunities for advancement—all the things that make the difference between a happy employee and one who’s looking for the exit. “Too often, companies oversell and under-deliver,” warns Nathan. “Ask people what they want, what they expect and hope for. And then listen, because sometimes it’s just not a good match. I never wanted anyone to have buyer’s remorse.” Nathan should know. He made his name as chief human resources officer for Wynn Resorts, a position he held for more than 20 years. At Wynn, he says, “we had an extraordinarily low turnover percentage, and senior executives stayed there seemingly forever.” Part of the reason is Wynn created an environment “where people felt they were part of a team. A recruiter wasn’t going to get between a Steve Wynn and a Bobby Baldwin or a Mark Shore, ever.” So, start at the start. On an employee’s first day, have business cards ready, a name plate on the desk, a uniform if applicable. Personally intro18
Global Gaming Business FEBRUARY 2018
duce the newbie to his or her colleagues. Arrange for lunch. From the get-go, such seemingly small courtesies will demonstrate your interest—and your company’s—in that person’s success.
Culture: Not Just Casual Fridays Remember Office Space? The uproarious 1999 comedy featured three miserable IT guys who clocked in, day in and day out, for mind-numbing, low-paying toil under a dictatorial boss. That’s not just the movies. According to a 2017 Gallup poll, 51 percent of Americans are not fully engaged in their jobs, and 17 percent actively loathe the place they spend most of their time. Which brings us to the slippery term “culture.” Just what is it, and why is it so important to a stable, engaged, productive workforce? Gary Kushner, of Michigan-based human-resources consultancy Kushner & Company, says culture is “the air, the oxygen of an organization.”
“What one employee views as a valuable benefit is another’s ‘so what.’” —Gary Kushner, HR consultant, Kushner & Company
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“Like air, you can’t see it—unless, of course, you’re in Beijing— but you can sense if it’s clean and breathable or rancid and toxic,” Kushner says. “Employees want a culture that’s inclusive and openminded, and ensures accountability, not just in the rank-and-file but in the C-suite as well. Without it, they’ll be less engaged, less productive and less committed to the organization and its mission.” Senior managers in the marketplace will often research the turnover of a potential employer, its corporate culture and work environment before accepting a position, says Beth Deighan, president of New Jersey-based Casino Careers. Investigating a company is easier than ever thanks to review-based websites like GlassDoor.com. And watercooler dissatisfaction is contagious. Poor morale can drag down even the highest achievers. David Carroll, senior vice president of human resources at Seminole Gaming and Hard Rock International, says culture “has everything to do” with employee satisfaction. Before he got into gaming, he worked at Southwest Airlines, which is renowned for a culture that has turned its employees into brand ambassadors. Southwest takes the time to hire well (perhaps one reason it has not laid off an employee since 1967). The compensation and benefits are competitive, and the company “markets internally,” selling Southwest’s culture to its own team. That’s a formula that works—and an investment that pays for itself, because it sidesteps costly turnover, which can equal 33 percent of an employee’s total compensation, according to the U.S. Bureau of Labor Statistics. “If you invest in the right person,” says Deighan, “it’s worth it.”
Compensation: One Size Doesn’t Fit All
“What matters most to people often depends on where they are in life, whether they’re starting a family or are empty nesters.” —Beth Deighan, President, Casino Careers
some are young enough to say, ‘I’m going to take a shot, join this company and if I’m not there in a year it’s not a problem because my skills are in high demand.’ We have general managers that have made a lot of money in their lives and are looking for a warmer climate and a smaller organization where they’ll add value and serve in a more visionary role.”
The Cherry on Top Once, when Nathan tried to recruit high-level talent from the Four Seasons, “I had a high hurdle,” he remembers. The luxury hotelier “had a policy when they relocated senior people to buy and sell the old house, buy the new house, pay the movers, and cover the down payment and startup costs.” Most corporate suitors would be hard-pressed to match that kind of generosity, but other perks are doable for almost any organization, and they pay off. “If I hire a CFO, I expect them to join professional associations, so I’ll pay for it,” says Nathan. “I’ll support and pay for their training and professional development, for the annual conferences and CEUs. In the grand scheme, these things—enrolling them in Vistage or the Young Presidents Organization—don’t cost a lot of money. But when people see you’re interested in them, you become kind of partners in this. People leave their bosses, but they don’t leave their partners.” That latitude extends outside the workplace too, he says. “If it’s important to them to volunteer in their church or be involved in their community, make sure they have the time off for that.” And insist that they go on vacation! “Most of us are white-knuckled, holding onto the desk,” Nathan says. But a winning coach factors in downtime, even for the star quarterback.
Money—base salary, bonuses and other perks—is the main reason most people take or leave a job. To attract and retain talent, experts say, don’t just offer a competitive rate but tailor the compensation to the individual. “What one employee views as a valuable benefit is another’s ‘so what,’” points out Kushner. “Given today’s HR systems capabilities, there’s no reason to not have significant employee choice and decision-making in the allocation of the total compensation package. I’m not suggesting a Wild West approach, but within certain guidelines, why not let employees pick and choose how their total compensation package is allocated?” A fixed pay schedule “doesn’t make anyone feel special,” agrees Nathan. “We all have 401K plans, but for an employee with young children, for example, why not set up a tax-deferred college plan? If you’re giving a person a senior of Americans are not fully job, give them stock, give them a bonus and profit-sharing. engaged in their jobs, and It’s not something that is formularized.” Obviously, what’s important to millennials may not be actively loathe the place as important to Generation X or baby boomers. “What they spend most of their time. matters most to people often depends on where they are in life, whether they’re starting a family or are empty nesters,” says Deighan. “Some people are looking for stability, while
51%
17%
Balancing Act While money is the No. 1 factor, “a close second is the perks that come with it, including more time off,” says Marc Weisswasser, managing member at Las Vegas-based CasinoRecruiter.com. “It’s a different dynamic, with
FEBRUARY 2018 www.ggbmagazine.com
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“People leave their bosses, but they don’t leave their partners.” —Arte Nathan, President and COO, Strategic Worldwide Development
One caveat: don’t start talking more money or extra perks when your favorite manager or superstar VP is halfway out the door. Like a marriage, your relationship with your employees is a long-term thing, to be nurtured continually. Good Job! people looking for more of a work-life balance than we had 15 or 20 years ago.” One worker demographic is behind this shift. According to a 2015 report from the Pew Research Center, millennials (adults between the ages of 20 and 36) now command the U.S. labor force, holding one in three American jobs. “They’re looking to work from home. They want more flexibility, a better work-life balance,” says Weisswasser, “and that seems to be flowing over a bit to more experienced executives.” “Many senior managers don’t want to be on the clock,” says Deighan. “If enabling them to take time off to be with a family member or take a longer lunch means they’ll work an extra two hours, that type of trade-off can be beneficial for the company, especially when employees work three shifts and guests are on property 24/7.” Working remotely “is rarely a possibility for most positions in gaming, since developing client, employee and peer relations necessitates face-toface interaction,” she adds. “But for positions that are primarily computerfocused, working remotely can be accommodated.” As a boss, as much as possible, encourage that work-life balance. “Companies today, certainly in the gaming business, should consider sabbaticals to help people regenerate,” says Nathan. “Consider retreats. Send people away for one- or two-week programs at Harvard for senior executives. Show you understand the ebbs and flows of their energy, morale and wellbeing.”
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Global Gaming Business FEBRUARY 2018
During the recession, salaries flattened, dropped or disappeared. Many people were grateful just to have a job. That’s no longer the case. Consider this: In December 2007, right before the recession, the unemployment rate was 4.8 percent. “That was a buyer’s market,” says Weisswasser. “In the latest report from November it was 4.1—a buyer’s market and then some.” Employees up and down the chain of command “are not always looking for a huge salary, but they’re always looking for a good fit,” says Carroll. “It’s not just the title or the money, it’s the whole picture: the geography, the location, the people and the potential to grow.” “There’s a growing trend for workers to seek opportunities that offer new growth, even if not necessarily at a higher compensation,” agrees Kushner. “In the end, an engaged employee is less likely to leave the organization and more likely to remain committed to the mission of the team.” One caveat: don’t start talking more money or extra perks when your favorite manager or superstar VP is halfway out the door. Like a marriage, your relationship with your employees is a long-term thing, to be nurtured continually. “If the conversation doesn’t begin until they say they’re resigning, you’re behind the 8-ball, and it’s disingenuous at that point to start throwing out something that wasn’t there before,” says Nathan. “Today’s job —Marc Weisswasser, Managing market is wide open. Member, CasinoRecruiter.com When people have more opportunities, you’re more apt to see their taillights rather than their headlights.”
“It’s a different dynamic, with people looking for more of a work-life balance than we had 15 or 20 years ago.”
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O
S
Orchestrating Success Kevin Sheehan rounds out the team at Scientific Games to continue the company’s amazing run of success Mystic Lake
BY FRANK LEGATO
B
“
Culture is the key element—getting people to understand what the opportunity is, and getting them all working on the same game book.”
—Kevin Sheehan, Chief Executive Officer and President, Scientific Games
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Global Gaming Business FEBRUARY 2018
y just about any measurement, Scientific Games is soaring. Growth is prevalent—consistent—in all three divisions created through the mega-mergers earlier this decade of game suppliers Bally Technologies, WMS and Shuffle Master with the pioneering worldwide lottery supplier Scientific Games Corporation. And, supplemented by the recent acquisition of NYX Gaming Group, Scientific Games is now a leader in digital gaming and sports betting. This rocket flight of Scientific Games had its real takeoff on August 5, 2016, when Kevin M. Sheehan took over as chief executive officer and president of the newly merged Scientific Games. Sheehan wasn’t a gaming-industry veteran, but he had demonstrated time and again in former executive positions that he knew how to marshal available expertise and assets to maximize a company’s fortunes. He had achieved success in turning the fortunes around for Norwegian Cruise Lines as its CEO, which followed other successes at Cendant Corporation, the founding of Spanishlanguage television network Telemundo, and a number of other milestones. At Scientific Games, Sheehan inherited a stable of leading gaming brands, systems and services that are the envy of the industry. But he recognized that the key to restoring investor confidence—in a post-recession supplier sector that had fallen on hard times—was to first cure the hangover that invariably follows large M&A activity. That is to say, debt. When Sheehan arrived, the multiple acquisitions had left Scientific Games with debt that hovered around eight times EBITDA. Less than a year and a half later, it is around 6.7 times and still falling. Scientific Games’ stock price, over the same period, has risen six-fold, and its bonds went from selling at a discount to selling at a premium. Sheehan will be the first to deflect credit for this surge to the pros in charge of the divisions—he likes to call himself the “orches-
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tra leader.” He used his tried and true formula at Scientific Games—taking a business with a stable, reliable recurring revenue source, and using those revenues to pay down debt, exploiting strong global brands and, along the way, making timely acquisitions like NYX Gaming Group to create new revenue streams. “As long as we can show (investors) we’re making progress, the stock will perform,” Sheehan says of the company’s soaring stock price. “It’s all about doing a little bit better every day, every quarter, every year. When you look at the stock price, a lot of it is the leverage on the balance sheet, and being able to show performance—and then the performance leads to more confidence with the bond community. The bond prices trade up, and then all of a sudden, you’re able to go and refinance.” With every refinance, of course, comes savings on interest payments, and subsequently, more cash flow to pay down debt—and to nurture and improve the legacy businesses. “It’s almost like the same game book has played out in everything I’ve done,” Sheehan says. “Culture is the key element—getting people to understand what the opportunity is, and getting them all working on the same game book.” Scientific Games’ game book, of course, was already extensive when Sheehan arrived, allowing him to begin with a stable of strong brands. “We have a wonderful legacy in each of those businesses,” Sheehan says, likening the Bally, WMS and Shuffle Master brands to the legendary brands he managed earlier in his career—from NCL, Prestige and Oceana Cruises to holdings at Cendant that included the Avis and Budget car rental companies and 12 hotel brands, from Wyndham to Ramada to Days Inn. “The one thing I learned from my boss, (Cendant founder) Henry Silverman, was, ‘respect the brands,’” says Sheehan. “We never, ever marketed Cendant, but we marketed the heck out of all of the brands. “But having said that, the other factor critically important to me is that we do understand that we work for Scientific Games, and we’re all part of a great cause.” Scientific Games has in fact “respected the brands” during the first years
of the merged company, maintaining the look and feel of Bally and WMS slots while producing new products utilizing technologies of both legacy companies. “I know that certain people come into a casino for a WMS game, and if they don’t get that experience, they’re not going to be happy,” Sheehan says. He adds that respecting the brands means the company can utilize those brands across divisions and game styles to take the entire company forward. “When you have great products like some of the Asian games, 88 Fortunes and Duo Fu Duo Cai, you utilize them across business segments,” says Sheehan. “We’re doing social and lottery game versions of those. We’ve got a Monopoly game we’re about to roll out on the lottery and social side. We’ve got the Willy Wonka Golden Ticket on the lottery side, which also has been a big success on the gaming side. “We’re trying to leverage brands as smartly as possible, and I think we’re turning the corner on doing that more opportunistically.”
The NYX Fit Beyond leveraging content across all channels, enhancing customer quality and innovating products and services, Sheehan has set the stage for future success with a string of recent acquisitions. This year alone, Scientific Games acquired DEQ’s EZ Baccarat, the world’s leading baccarat brand, Lapis Software Associates for lottery retail management, Red7, a U.K.-based mobile design group, and Spicerack Media’s “Bingo Showdown” social game. But most significant may be the recently completed acquisition of NYX Gaming Group, which, combined with Scientific Games B2B interactive business, “will create a leader in iGaming, iLottery and sports betting,” Sheehan says. Matt Davey, the prior CEO of NYX, will lead the newly combined business unit. Sheehan says one of Scientific Games’ priorities is to work with Davey and the NYX team to merge their vast content libraries, expand their customer distribution base and expand digital platforms to offer gaming and lottery customers new products—including sports betting in regulated markets. “We’re going to morph into the new platforms,” Sheehan says. “The beauty of NYX is that it’s an all-digital platform. Sports will be an imporFEBRUARY 2018 www.ggbmagazine.com
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Setting Sail How Scientific Games emerged from a flat market to become one of gaming’s hottest companies BY FRANK FANTINI
S tant part of that, but so will real-money gaming. (Former NYX subsidiary) OpenBet, of course, is the world’s No. 1 sports betting platform, so we’re going to be able to benefit if/when markets become regulated. “But it really plants a flag for Scientific Games to say, ‘We are fully embracing and leading innovation in digital gaming,’ regardless of whether it’s sports or entertainment.” The addition of NYX will fuel a relaunch of the company’s interactive digital business as Scientific Games Digital, reflecting the division’s expanded capabilities and setting the stage for future growth. “The NYX transaction is a strong strategic fit and financially compelling, as it will be cash accretive in 2018,” Sheehan says.
Loading for the Future Sheehan says the company is beginning its “next phase of growth,” with Scientific Games Digital adding new dimensions to a remarkable collection of brands and content, designed with a particular eye on creating entertainment tailored to the end user—the casino customer—as well as the casinos themselves. “We’re B2B2C, and also B2G2C,” Sheehan says. “So, we have two core customers. Our center is the player, but also our business or government customer. For both of those, we have to provide solutions.” For players, those solutions will be the experiences they have with Scientific Games products. “The experiential economy is here. How players and customers and audiences live into stories has hit an all-time high. So, our brands, whether they are franchises we bring in from the outside, like James Bond or Monopoly, or brands we have developed ourselves, like Gold Fish or Jackpot Party, the common theme is they have fan followings —it is our job to always connect with fans, provide experiences across all of our business units, and allow them to engage and have fun.”
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Global Gaming Business FEBRUARY 2018
o, what do you say about a stock rising nearly six-fold in a little over a year after a new CEO has taken over? Wow! is probably the first response. The second is to ask, “How did he do that?’ The answer can probably be reduced to an essential: keeping the promise to reduce the financial risk of very high debt while starting to show the growth synergies that were the strategic rationale of all the mergers that created that debt. Timing helped. Kevin Sheehan arrived at Scientific Games when gaming supplier stocks were low and investor sentiment gloomy. In the summer of 2016, the slot machine leasing business was basically flat, the North American replacement cycle for game sales remained disappointing years after the Great Recession had caused casino companies to cut spending on slots, and small competitors were eating into the market shares of post-merger giants Sci Games and IGT. And, while leaders of those companies pointed to their broad product lines and innovations, investors had heard that before. Investor sentiment has vastly improved since then, and stock prices show it. IGT is up around 25 percent and Aristocrat more than 50 percent. Everi has had its own rocket ride, soaring more than four times. But nothing matches Sci Games. In a way, Scientific Games owes some thanks to its rival, and sometime lottery ally, IGT, for starting to turn investor sentiment around. IGT held an analyst day in which the company pointed out that, volatility of the slots business aside, two-thirds of their revenues came from lotteries, and that lotteries provide recurring revenues locked up by long-term contracts. Analysts saw the light and began to report about the protection that lotteries presented to the overall company. And, of course, what is true for IGT is true for Scientific Games, which gets about a third of its business from lotteries. Sentiment further improved as casino companies finally have begun modernizing their slot floors, as evidenced by the improving replacement cycle. Meanwhile, Sheehan took actions that convinced many investors that he would turn Sci Games around just as he had Norwegian Cruise Lines in an earlier CEO stint. The biggest albatross for Sci Games was debt that weighed in at eight times EBITDA in a sup-
plier sector that historically had little or no debt, and in a broader world where four times is often considered acceptable. Scientific Games has attacked the issue, reducing debt and, more importantly, growing EBITDA so that the debt-to-EBITDA ratio has fallen to 6.7 times. Plus, the company has refinanced big portions of its debt and will do more this year. That has the double benefit of cutting interest expenses, resulting in yet higher profitability, and putting off the dates that debts mature, meaning Sci Games buys time to further grow its way into a safe debt level. So, improving the balance sheet lessens a weight and a risk, but businesses prosper by growing, and Sci Games has demonstrated it can combine cost and debt reduction with growth. Take third-quarter results, the most recent reporting period. Sci Games grew every business segment: Gaming EBITDA jumped 5.4 percent, lottery 15.4 percent and interactive 70.5 percent. Margins also improved in every segment, increasing a combined 1.2 points to 38.9 percent for the overall company. Further, the growth came for the right reasons. Products like the Pro Wave slot format and TwinStar J43 cabinet drove sales. Replacement sales jumped 30 percent. Average sale price hit a record $17,643. Leasing, called gaming operations, grew over the previous quarter for the first time in three years. And that’s just the gaming business. Lotteries continue to grow with revenues up 2.8 percent and EBITDA a whopping 15.4 percent. For those who think interactive is the future, Sci Games rocked in the quarter with revenues up 30.8 percent to $111.4 million, representing a significant 14.5 percent of revenue, and EBITDA that rose 70.5 percent to $23.2 million. Revenue per active daily user on social casino zoomed 45 percent to 45 cents. Finally, Sci Games has made these gains while continuing to make acquisitions that invest in the future. The most important recent purchase is NYX Gaming, a fast-growing online gaming company that provides both gaming and sports betting platforms. If sports betting is legalized in the U.S. and allowed online, Sci Games will have positioned itself to exploit a significant new market.
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“
We’re not going to achieve great success without making a couple of mistakes along the way, but I’m pushing everyone to be open to making mistakes, so we can push the envelope.
There’s a lot of excitement there.”
—Kevin Sheehan, Chief Executive Officer and President, Scientific Games
Bond, James Bond The combination of proprietary and licensed brands has always been a strength of Scientific Games, but the company staged a coup with last year’s announcement it had secured rights to develop slots based on the legendary James Bond movie franchise. Last fall, Scientific Games launched the first three titles in the Bond series, which includes rights to 24 Bond movies and all Bond actors. At the Global Gaming Expo, the new Bond slot machines were positioned in Scientific Games’ booth around a real Aston Martin sports car, the iconic brand of the Bond character’s fully equipped spy cars. The first game in the Bond series is a game themed around the 2006 Bond film Casino Royale, starring Daniel Craig. The Casino Royale slot is on the new Gamefield 2.0 cabinet, which features a horizontal 43-inch portrait monitor for the base game flowing up to a vertical 43-inch topbox display. Also on display was Goldfinger on the J43 with iReels cabinet. In the high-denomination, wide-area progressive space, the company launched Diamonds Are Forever, depicting the seventh Bond film. “I think James Bond is the Holy Grail for gaming,” says Sheehan. “It’s very unusual to find a property that has an on-ramp for every age. After 24 films, there are clear onramps for a 60-year-old player, a 40-year-old player, a 25-year-old player. “You’ve got this unique property which, first of all, is male and female, which is very unusual. And then, the meaning of the property itself is about glamour, about adventure, and is often tied to gaming—Casino Royale basically shows up in every movie. So, you have this beautiful connection, and you play that out in creating the player experience, whether it’s across slots, social, lottery, or even future gaming
opportunities. “Across the spectrum of all of our lines, we’re looking at what is the art of the possible. We’ve been very focused on how we build something that makes our customers happy, but we also need to get all those customers and guests excited about playing and experiencing innovative new games. We are committed to leading the industry. We have signed on the James Bond franchise, and we are engaging Applied Minds, a digital art and entertainment development firm—founded by two former Walt Disney Imagineers— to create the unimaginable, and think out of the box.” Sheehan says his philosophy in developing the Bond franchise is to produce games that “are exhilarating, will draw people into the category and make our customers more profitable.” He says it’s something he learned while on the board of the Dave & Buster’s bistro-and-arcade franchise. “I would go into the arcade in Dave & Buster’s, and everybody’s screaming and yelling and having fun,” he recalls, “and there is an oppor-
Matt Davey, Former CEO, NYX Gaming
The addition of NYX will fuel a relaunch of the company’s interactive digital business as Scientific Games Digital, reflecting the division’s expanded capabilities and setting the stage for future growth.
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“ what is the art of the possible.” Across the spectrum of all of our lines, we’re looking at
—Kevin Sheehan, Chief Executive Officer and President, Scientific Games
tunity to bring that thrill and excitement back to the casino floor. “We’ve got all these cool people walking through the casino, going to dinner, and the nightclubs, and to the entertainment venues. We believe our James Bond brand, and the immersive experiences we can create with Applied Minds, have the power to create the Dave & Buster experience for a younger demographic on the casino floor.” Sheehan says this kind of innovation is what to expect from Scientific Games in the near future. “We’ve got our eye on the next generation. We’ve got to be careful, but I would say if we don’t make a couple of mistakes, that would be a mistake in itself. We’re not going to achieve great success without making a couple of mistakes along the way, but I’m pushing everyone to be open to making mistakes, so we can push the envelope. There’s a lot of excitement there. “You look at the casino space, especially in a
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place like Vegas, where it’s morphed into more of an entertainment venue, and it’s got these big, massive floors. If we can come up with an offering that makes that space more productive, more exciting and brings more people to the casino, that’s a winwin for everybody.” Sheehan says that “win-win” will be achieved by his leadership team “and dedicated employees focusing on innovation and success, delivering our financial commitments, successfully integrating NYX and using the James Bond experience to create the most immersive, thrilling experiences in the industry. I think that gives us a winning edge and a bit of a multiple pick-up in the marketplace. “There’s a lot of smart people behind this company,” Sheehan says, going back to his original conductor analogy: “I’m just the orchestra leader.” That orchestra is just beginning a new movement.
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DIVE
DEEP
Mystic Lake
The Future of Sports Betting in the United States By Andrew Klebanow and John English
A
s the nation awaits the upcoming decision by the Supreme Court of the United States (SCOTUS) in Christie v. NCAA, various stakeholders are evaluating their next steps, and how to maximize the revenue potential from legalized sports betting. Today, a federal law known as the Professional and Amateur Sports Protection Act (PASPA) limits most legal sports betting to Nevada and three other states. This article examines the critical success factors for sports wagering in the United States and the operators that will be best positioned to provide the products and services that sports wagering customers will seek. At the outset, it must be stated that sports wagering is already widely available throughout the United States, within and outside of the four states that are currently allowed to offer some versions of sports betting. The vast majority of sports betting in the U.S. is handled by illegal sports book operators. They provide their customers with convenient forms of betting along with trusted relationships, short-term credit, favorable odds, rebates, VIP benefits, and convenient methodologies to place bets. For any legal sports book operator to succeed against this entrenched competition, they must provide the right product at the right price and deliver that product through efficient channels of distribution so that sports betting is convenient and offers a high degree of entertainment value. 30
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Price As with any product or service, price is a critical success factor. In sports betting, price is comprised of a number of components. The most obvious are the odds that a sports book places on a game and the event’s outcome. Bookmakers rely on a network of disseminators to provide basic information on point spreads and game/event outcomes. These odds are often calculated with algorithms that take into account a number of variables such as weather, past performance, and team/athlete strengths. More seasoned bookmakers rely on qualitative and quantitative information, often by employing observers at team practice facilities. They look at possible injuries, off-the-field player behavior, and other factors that might affect performance. Finally, they watch the movement of money bet on a game. Human factors still play a significant role in the decision-making process. What bookmakers today are not concerned with, with the exception of those licensed sports book operators in Nevada, is taxation. Taxation impacts price for legal sports book operators because it is a cost of doing business. Nevada’s licensed bookmakers are fortunate in that they have a reasonable tax rate of 6.75 percent of gross win, along with a federal tax on wagering handle of 0.25 percent. Those costs must be factored into the price of the
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Anticipating PASPA’s repeal, a handful of states have started the process by passing enabling legislation. Pennsylvania is one notable example. Unfortunately, the tax rate that state legislators set on sports betting revenue, currently at 34 percent, will require operators to offer odds that are significantly less generous than what illegal
bookmakers can offer.
product. Illegal bookmakers have considerable advantages, as they do not have to concern themselves with taxes, required reserve accounts, or regulations. Nevertheless, they may have other costs, such as customer acquisition expenses, and the payment of royalties to criminal elements for market exclusivity, licensing or protection. As legislators look at sports betting as a new source of revenue, they must be cognizant that to compete with illegal bookmakers, tax rates must be fair and reasonable. Also, user-friendly technologies such as mobile phones, kiosks and online offerings will make a major difference in each state’s considerations. It is very important to note that convenience will need to be a key consideration to engage and retain customers. If not, each state’s chosen operators will be unable to offer sports betting products at a price and convenience that will divert bettors from illegal bookmakers.
Product The products are the kinds of wagers that an operator can offer and features that are unique to that operator. Among states that offer sports betting today, only Nevada offers straight bets, futures bets, a wide variety of parlay bets, wagers on all major professional sports, collegiate sports, boxing, and other major sporting events. Oregon and Delaware’s products are limited to parlay cards on professional football. Illegal bookmakers will take bets on any sporting event that customers have sufficient interest in. Any state that fails to permit a full suite of sports betting options limits the kinds of products that operators can sell to their customers. Failure to provide a full range of betting options will not disrupt the current relationship bettors have with illegal bookmakers. Rather, it will allow those bookmakers to maintain their current share of the nation’s sports betting market.
Channels of Distribution Channels of distribution refers to the places consumers can purchase their products. The more places that a bettor has to place a bet, and the more convenient the act of placing bets is, the greater the revenue potential for sports betting. In Nevada, bettors can place bets at point-of-sale terminals in licensed
casinos and at kiosks. Some casino operators and licensed sports book providers have developed mobile betting applications where players can place wagers on their mobile devices. This process requires bettors to first open up an account at their favored casino or sports book and place money on deposit. Once their account has been approved and funded, they can then place bets on their phone from any location within the state of Nevada. These apps rely on geo-fencing and know-your-customer procedures to prevent wagers from being placed outside of state boundaries. Should a player extinguish his funds, he must return to the casino (or a kiosk at a tavern) to recharge the account. Again, illegal bookmakers currently have an advantage over licensed Nevada operators. They offer credit, where customers can settle up their accounts on a weekly basis. Illegal bookmakers even offer mobile apps where customers can place bets. Since illegal bookmakers are located within neighborhoods where players reside, they also offer convenience, allowing customers to place bets, collect winnings and settle up debts.
The Landscape in 2018 New Jersey Governor Chris Christie predicted that, should SCOTUS determine that PASPA is indeed invalid, Atlantic City’s casinos will have sports books operational within two weeks after the decision. While this timeline appears aggressive, one can expect New Jersey’s seven casinos and three racetracks to begin taking sports bets in fairly short order. William Hill, a European provider that operates in Nevada, has already entered into a strategic partnership with Monmouth Park Raceway, and their terminals are expected to be operational shortly after the state of New Jersey gives the green light to commence sports wagering. Anticipating PASPA’s repeal, a handful of states have started the process by passing enabling legislation. Pennsylvania is one notable example. Unfortunately, the tax rate that state legislators set on sports betting revenue, currently at 34 percent, will require operators to offer odds that are significantly less generous than what illegal bookmakers can offer. Furthermore, given the prohibitive costs of licensing, the number of operators in the state will be limited, making sports betting inconvenient for those who do not reside near a casino. FEBRUARY 2018 www.ggbmagazine.com
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Residents of nations in Europe have long enjoyed sports betting, and sports book providers have developed myriad products and services to satisfy consumer demand. For example, sports bettors can use their mobile devices to place wagers while observing sporting events. To be successful, states will have to balance their needs for tax revenue with a tax environment that allows operators to provide wagering products that are appealing to sports bettors.
The Future of Sports Betting As state governments and operators await SCOTUS’ decision, it is important to look at the potential providers of sports betting, along with their strengths and weaknesses: Land-Based and Riverboat Casinos Commercial casino operators of land-based, barge and riverboat casinos are all anxiously awaiting the SCOTUS decision, and are poised to add sports book wagering once their respective state legislatures provide authorization. Some of the larger casino operators such as Caesars, MGM and Penn National, along with several others, are positioned to begin taking bets immediately, provided regulations are in place, and they have the infrastructure to expand their operations rapidly. State Lotteries State lotteries are uniquely positioned to offer sports betting, and lottery providers can quickly enhance their IT infrastructure to process sports betting transactions. With thousands of retail outlets, state lotteries will be able to provide convenient venues where sports bettors can place wagers. Lottery systems can be modified to handle these kinds of bets, with bettors filling out wagering slips much like they do when placing a lotto bet. The challenge will be for lotteries to provide the wagering options and odds that are competitive with illegal sports betting operators. Lotteries, accustomed to providing stingy odds in their lottery products, will be hard pressed to change their culture and create a system that employs a certain degree of risk. Their business models rely on betting programs that maximize revenue to the state with no risk. Both legal sports betting operators in Nevada and illegal bookmakers accept a certain amount of risk when pricing their products. For them, it is a small-margin, high-risk business. Nevertheless, a lottery that offers casual sports bettors the option of playing parlay cards at convenient locations throughout the state is a compelling reason for states to look at this distribution model. Racetracks Racetrack operators continue to be a formidable political force in several states, particularly in Texas and Kentucky. They will lobby for the exclusive right to offer sports wagering, and are uniquely suited for the task. Tracks and parimutuel facilities already have facilities with ample seating, video displays, IT infrastructure and employees that know how to conduct wagering transactions. Racetracks are also eager to attract a younger demographic, and sports betting will help them achieve that goal. The problem is that racetracks offer limited channels of distribution,
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since there are only a few outlets in each state where parimutuel wagering takes place. Currently New Jersey, Nevada and Delaware have adopted alternative pay methods such as Pay Near Me, which allows customers to deposit cash at a convenience store and top off their accounts. To date, successful applications from TVG and Churchill Downs have dominated in the horse-racing sector with thousands of daily users, betting with real money. If PASPA is repealed, expect to see an explosion in sports betting technology. European Sports Book Providers Residents of nations in Europe have long enjoyed sports betting, and sports book providers have developed myriad products and services to satisfy consumer demand. For example, sports bettors can use their mobile devices to place wagers while observing sporting events. They can choose from a steady stream of betting propositions as the game progresses. European providers have developed technologies, regulatory framework and infrastructure that can easily be exported to the United States. European companies such as William Hill already provide a comprehensive sports wagering solution in Nevada, and are prepared to bring their systems and technology to New Jersey. Other European providers offer comparable products and solutions, and are poised to introduce them in U.S. states. In many European jurisdictions, multiple providers compete within the same market, which forces them to create ever more compelling gaming products. Taverns and VLT Facilities A growing number of states, such as Illinois, Montana, Oregon and Nevada, offer slot machines and video lottery terminals in taverns. Taverns offer an attractive option for some states. Taverns are age-restricted and offer fairly robust channels of distribution. Customers need not travel far to place wagers or reload their accounts. Many taverns in Nevada feature kiosks, where patrons can place bets or recharge their accounts.
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2 0 0 0 AT T O R N E Y S | 3 8 L O C AT I O N S W O R L D W I D E˚
Tribal Casinos Tribal casinos face a number of obstacles, not the least of which are revisions to their compacts. Each tribe is obligated to negotiate a compact with the governor of the state in which its casino(s) are located, and any new game must also be negotiated. Some governors may take these negotiations as an opportunity to renegotiate their revenue-sharing and exclusivity agreements. Once negotiations are complete, each tribe’s gaming regulatory authority will then have to establish rules, policies and procedures for the conduct of sports wagering. Like other land-based and barge casinos, Indian casinos will face similar challenges in their ability to reach customers who wish to wager remotely or live too far away to conveniently place a bet.
The Next Step Ultimately, each state must balance the needs of all stakeholders, including the sports betting public, commercial casino operators, tribes, racetrack operators and lottery providers, against their needs for tax revenue. Failure to address these competing interests will result in a legal sports betting environment that fails to meet consumer demand, fails to optimize tax revenue, and fails to create sports betting products that move market share from illegal sports betting operators. The Pennsylvania model, which proposes onerously high tax rates and limited channels of distribution, will most probably fail to meet the state’s goals of enhanced tax revenue. The Nevada model, which provides a reasonable tax rate, multiple channels of distribution, attractive betting odds, and environments throughout the state where sports bettors can place wagers and enjoy their favored games, has proven to be successful, and is one that other states should examine more closely. State legislators are advised to not simply rush out and select the sports betting solution that would appear to generate the most tax revenue. As may soon be revealed in Pennsylvania, 34 percent of nothing comes out to nothing.
Global Reach The Global Gaming Practice at Greenberg Traurig Covers U.S. and International Markets With hands on experience in Asia, Latin America and Europe, our 40 attorneys know there is more to understanding gaming law than just operating a casino. Our attorneys have diverse backgrounds in all aspects of gaming company operations. We have experience in working with governments and with regulators worldwide. The Greenberg Traurig Global Gaming Practice can address casino operations, lotteries, charitable gaming, tribal gaming, Internet gaming and AML. Our backgrounds include representing casino owners, operators, executives, gaming manufacturers and suppliers, private equity firms and investment banks on gaming related matters.
Global Gaming Practice Regulatory | Operations | AML | IP | Labor | Litigation | Privacy | Real Estate Acquisitions | Financing Learn more at gtlaw.com/gaming
Andrew Klebanow and John English are partners in Global Market Advisors, a leading consulting firm in the gaming industry.
GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2018 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 30229
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Odds Are… Now that Pennsylvania has legalized iGaming, how long will it be before other states join the club?
Mystic Lake
By Aaron Stanley
T
he year 2013 was the momentous time that saw online gambling legalized for the first time in three U.S. states, setting in motion high hopes that a critical mass of other states would soon follow suit. But the underwhelming performances of New Jersey, Delaware and Nevada in their respective trial runs didn’t offer sufficient fodder to incent any other states to join the party. As a result, talk of online gambling expansion in the U.S. in the ensuing years was just hot air. But things changed in 2017. A strong performance by New Jersey’s online casinos, an interstate poker compact forged between New Jersey, Delaware and Nevada that creates a shared player pool, and a dramatic lastminute push in October to authorize internet gambling in Pennsylvania—as part of a massive package expanding gaming—were all, in and of themselves, monumental developments. While many may be bemoaning Pennsylvania’s iGaming tax structure, which could very well prove punitive to interested operators, the passing of enabling legislation was an iconic victory that proponents hope will have spillover effects on legalization efforts in other states. Already the country’s second-largest gambling market, a successful rollout of iGaming in Pennsylvania could indeed induce other states to take a heightened interest in exploring the activity to generate new tax revenues and bolster their land-based casinos. At the federal level, iGaming proponents received quite a scare in January 2017 when then-attorney general nominee Jeff Sessions stated that he was “shocked” by the Justice Department’s 2011 decision to reinterpret the Wire Act so as to permit online gambling on a state-by-state basis. Sessions went on to indicate that he would revisit the ruling and “make a decision on it based on careful study.” For a multiplicity of reasons, that revisiting didn’t happen in 2017. Sessions has since pledged to recuse himself in the event such a review should occur under his watch because of his hiring of Charles Cooper, a lawyer who was simultaneously working for the Coalition to Stop Internet Gambling, to represent him amid a congressional investigation of possible Russian interference in the 2016 presidential election. Obviously, the potential black swan event that threatens the viability of the entire nascent industry in the U.S. would be an undoing of the 2011 Wire Act reinterpretation. While the prospects of this occurring are low, 34
Global Gaming Business FEBRUARY 2018
iGaming opponents are mounting enough of an effort to merit concern. What does 2018 hold in store at the state level? New York, Illinois and others appear positioned to make a legislative push to legalize online casinos or online poker once again in 2018, and a few new sleepers seem poised to get in on the act as well. Will the momentum continue in 2018? Where will the activity be centered? Just how serious will these endeavors be? 2018 is also an election year—what impact will that have? Here is a state-by-state scorecard gauging the likelihood of any form of online casino or poker being enacted this year.
California One of the first states to seriously consider legalization of any form of internet gambling, never does a year pass in which California doesn’t have serious conversations about online poker. For the last decade, the gambling industry stakeholders in the state, namely Indian tribes, card rooms and racetracks, have always seemed to find just enough common ground among them to make a serious push on the legislature front, only to come up short each year. The main reason for the perennial failures has been an inability of the state’s 16 largest tribes to agree among themselves on what an acceptable framework would look like, particularly with regard to “bad actor” provisions aimed at keeping international operators with less-desirable track records out of the state. The needle didn’t advance too much in 2017, and arguably moved backward when the powerful San Manuel tribe threw in the towel and withdrew from one of the leading iPoker advocacy coalitions, which also includes PokerStars and several card rooms, to redirect resources elsewhere. It seems to be a safe assumption that we’ll see some sort of online poker legislation introduced in California yet again in 2018, but don’t hold your breath. It won’t advance unless there’s a major breakthrough. Odds of Passage: 30%
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Michigan Connecticut While Connecticut is not typically regarded as a potential iGaming hot spot, it could emerge as a sleeper candidate in 2018 as neighboring states expand their gambling offerings. The most formidable of the new competitors will be MGM Springfield, which is slated to open its doors in late 2018, and Wynn Boston Harbor in mid-2019. While no formal efforts have been made to push the concept through the legislature in recent years, Foxwoods and Mohegan Sun—the two tribal casinos that have dominated Connecticut gambling for almost three decades—could find online gambling to be an appealing defensive bulwark against the powerful new players in the New England market. Also working in Connecticut’s favor is the interstate poker compact that was forged by the current iGaming states last year. Being a small state of just 3.5 million residents, Connecticut could potentially benefit heavily from being able to join such a compact and potentially access a much broader market. Odds of Passage: 20%
Illinois Sitting atop the list of states in desperate need of new revenue, Illinois’ Senate came out of nowhere in 2017 to pass a bill enabling online gambling and daily fantasy sports. That legislation will kick off 2018 in the House, which didn’t pick it up last year but may have more interest this time around—particularly as Illinois’ budget deficit now tops $6 billion. “Will House Speaker Mike Madigan, a gambling-expansion opponent who moonlights as the state’s most influential politician, agree to move the internet gambling cum daily fantasy sports bill?” said Chris Krafcik, research director at GamblingCompliance. “If Madigan does, will his political archrival, Governor Bruce Rauner, sign it? Call us curious.” Other questions will need to be resolved, particularly as Illinois’ land-based casinos continue to feel the pinch from the explosion of video gaming terminals throughout the state. Will they push back against online play over cannibalization concerns or see it as a potential lifeline? Odds of Passage: 70%
A Hail Mary attempt in late 2017 to rush through legislation that would authorize online casinos and sports wagering through Michigan’s House predictably went nowhere. But the effort was not a complete loss. A crucial mile marker was crossed in that the state’s three commercial casinos in Detroit signaled their support for iGaming, at least conceptually, removing what had been a formidable impediment. However, tribal interests in the state still upset over losing market share to the Detroit casinos remain wary about potential cannibalization impacts of new forms of gambling, even though the proposed legislation would allow tribes a piece of the iGaming pie. This will likely prove to be the major roadblock moving ahead unless a deal is brokered. But because iGaming has an aggressive proponent in state Rep. Brandt Iden, who held a hearing on the topic last September in his Regulatory Reform Committee, a House floor vote in 2018 doesn’t appear to be completely far-fetched. Advancing such legislation through Michigan’s Senate will be a much tougher sell. While an iGaming bill has been introduced, there are questions about its constitutionality, and the chamber’s leadership has signaled that it isn’t keen to move on it in 2018. Odds of Passage: 40%
New Hampshire New Hampshire became the fifth state to legalize online lottery sales in 2017, raising hopes that a more aggressive gambling expansion might be in the cards. Later in the year, a stripped-down placeholder bill was introduced in the state legislature that would have decriminalized, but not regulated, online gambling—only to be killed by a unanimous vote in the House Ways and Means Committee in late October. The prospects of a further iGaming push in 2018 will likely depend on the success of online lottery sales, which were slated to commence at the beginning of the year. In the absence of that, it’s unclear where the necessary momentum would originate and who the potential licensees would be, though the state could adopt a model similar to Delaware whereby online gambling is housed under the state online lottery’s umbrella. “With no land-based commercial casino industry to lobby for internet casino gaming expansion in New Hampshire, we are doubtful there will be another push for internet gaming expansion in 2018,” said Krafcik. Further throttling momentum is that the state representative who introduced the 2017 iGaming bill is facing sexual assault charges and is currently awaiting trial. Odds of Passage: 30% FEBRUARY 2018 www.ggbmagazine.com
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New York The underperforming bricks-and-mortar casinos in upstate New York may have some in the Empire State skeptical about the merits of authorizing even more gambling, but online play might also prove to be a steady complementary revenue stream. Against that backdrop, along with the state’s $4 billion budget deficit and pent-up momentum from 2017, the prospects for the enactment of online poker legislation in 2018 seem favorable. Indeed, iPoker bills that were introduced in both the New York Assembly and Senate in 2017 are still in play for 2018. 2017 nearly saw a breakthrough, but the Assembly bill was ultimately torpedoed in the summer when other interests came in at the 11th hour to lobby for the inclusion of online slots and table games. While Senate passage in 2018 seems to be a slam dunk, getting a bill through the Assembly figures to be the logjam once again. “We think legislative movement in New York is likely, particularly in the Senate, which approved internet poker legislation by near-unanimous margins in 2016 and again last year,” said Krafcik, noting that movement in the lower chamber will be much more challenging. The level of interest in the Assembly will be the key indicator to watch. Bill A5250 will kick off the year in the Codes Committee, but there are signs that Gary Pretlow, chairman of the Assembly’s Racing and Wagering Committee and a champion of the 2017 effort, is less enthusiastic this time around. Notably, Pretlow’s concerns that online poker will cannibalize revenues from the already underperforming land-based casinos is shared by the office of Governor Andrew Cuomo, who would need to sign off on any enabling law. All in all, New York is the most promising candidate of all the states in 2018 for iGaming, particularly as both of its neighbors to the south have now legalized the activity. Odds of Passage: 80%
Massachusetts Massachusetts, which first opened commercial casinos just three years ago, emerged as a dark-horse online gaming candidate in 2017 before short-term hopes were derailed in the summer. In July, a special commission recommended that lawmakers hold off on looking at online gambling until after Wynn Boston Harbor opens in 2019. While there’s eagerness to explore the concept, it will likely have to wait a few more years. “We think Massachusetts is a near-term candidate for internet casino gaming expansion but that lawmakers are unlikely to take up enabling legislation until after the state’s full complement of casinos is operational,” said Krafcik. Odds of Passage: 20%
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An uptick in optimism that sports betting will soon be legal nationwide prompted a sudden rush of interest in online gambling legalization in Rhode Island toward the end of the year.
Rhode Island An uptick in optimism that sports betting will soon be legal nationwide prompted a sudden rush of interest in online gambling legalization in Rhode Island toward the end of the year. In December, Senator William Conley, chairman of the state’s Senate Finance Committee, expressed in an interview with local media his enthusiasm for online gambling and online sports wagering should the Professional and Amateur Sports Protection Act, which prohibits single-event sports betting outside of Nevada, be undone. While it seems that Conley may have been conflating the concepts of online sports betting and online gambling, his comments—along with the rapid expansion of gambling in neighboring states that will undoubtedly put more financial pressure on Rhode Island’s casinos—are reason enough to be pay attention, though movement this year on legalizing online casinos or poker seems unlikely. Odds of Passage: 20%
Washington While there was no action to report in 2017, Washington state has flirted with online gambling and poker legislation in prior years dating back to 2015, and it is a dark-horse candidate to take up the matter again this year. A 2016 report by Spectrum Gaming, commissioned by the state, estimated that Washington has all of the characteristics to become a $100 million gross gaming revenue market for iGaming. So there’s appetite and interest. Whether or not that translates into real momentum is a different story. The upshot: don’t hold your breath, but Washington state is certainly worth keeping an eye on. Odds of Passage: 20%
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Federal West Virginia West Virginia has been eyed for several years as a potential iGaming sleeper candidate due to a willingness among key state officials to explore the concept, and because its land-based casinos have been continually pummeled by new competition in the midAtlantic region. Those predictions seemed to materialize, at least in part, last March when a bill that would legalize internet gambling and delegate licensing and regulation responsibilities to the West Virginia Lottery Commission was introduced by state Rep. Shawn Fluharty and three co-sponsors. The euphoria proved to be a flash in the pan, however, as House Speaker Tim Armstead quickly indicated that he had no interest in advancing the legislation. While the bill is still alive at the committee level in 2018, and it has not been objected to by the state’s commercial casinos or the lottery commission, brokering a deal with Armstead or convincing him to change his mind will be a challenging proposition. But there is a wild-card factor in play: Will witnessing the massive gambling expansion being rolled out in neighboring Pennsylvania be enough to give Armstead second thoughts? Odds of Passage: 50%
In Congress, a number of key proponents of the Restoring America’s Wire Act in the House of Representatives, including Jason Chaffetz (RUT) and Charlie Dent (R-PA), have indicated they will retire at the end of 2018. The RAWA bill, versions of which have been floating around and resurfacing for several years but were not reintroduced in 2017, would effectively reverse the reinterpretation by legislative mandate. While a respectable anti-iGaming contingent still remains in Congress, it appears that heading into 2018, the efforts of Coalition to Stop Internet Gambling and other iGaming opponents are acutely focused on lobbying the Justice Department to reverse the ruling—seemingly a simpler route than pushing for a legislative solution. In late November, Senators Lindsey Graham of South Carolina and Dianne Feinstein of California sent a letter to the Justice Department urging the agency to revisit and withdraw its 2011 opinion. The week before Christmas, four members of Congress—Daniel Donovan of New York, Brian Fitzpatrick of Pennsylvania, Tom Garrett of Virginia and Louie Gohmert of Texas—sent a similar letter to the agency with the same ask. Regardless of the strength of these efforts and whether they are targeted at Congress or the Justice Department, opponents still face an uphill battle when it comes to potentially reversing the interpretation. Odds of a change in status quo: 30%
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GVC Buys Ladbrokes Coral
I
n a deal that has created one of the world’s largest betting companies, GVC Holdings announced it has agreed to purchase gambling group Ladbrokes Coral Plc. for at least £3.2 billion. The official valuation is fluid because of a new regulatory scheme that is still being determined by the British government. The Ladbrokes name will no longer be attached to a corporate structure, for the first time since it was established in 1902, but will remain a brand under the GVC umbrella, joining a collection of other powerful gambling brands such as Bwin, Sportingbet, PartyPoker and Foxy Bingo. The deal took nearly a year to put together, and was complicated by the pending new regulations as the government conducts a gambling review and ponders reducing the maximum bets and jackpots at the fixed-odds betting terminal games currently being offered at all British betting shops. The maximum bet now stands at £100, but observers expect that to be cut to between £2 and £50. The final pricing of the purchase will remain unclear until that limit is set. Just last year, Ladbrokes completed a £2.3 billion merger with the Coral Group, which consists of betting shops and bingo parlors across Great Britain. The merger gives GVC increased access to the U.K. market, in addition to its presence in Germany, Italy and Australia, as well as a possible role in the expansion of iGaming and sports betting in the U.S. GVC Chairman Lee Feldman and CEO Kenny Alexander will remain in those roles in the new company, with Ladbrokes’ financial director Paul Bowtell taking over as finance chief for GVC. Prior to completion of the deal, GVC sold its Turkish assets for €150 million to avoid any complications, since most forms of gambling are illegal in Turkey. Over the past year, shares in both GVC and Ladbrokes Coral have increased nearly 50 percent. On the announcement of the merger, Ladbrokes rose 1 percent and GVC declined by 3 percent.
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Iden’s two bills would take effect. Under the proposed laws, any existing Michigan casino property hree measures that would establish a would be eligible to apply for an onframework to legalize and regulate line license for $200,000 plus a online gambling and sports betting re$100,000 annual renewal fee. Softcently passed the Michigan House Reguware platform providers would pay latory and Reform Committee. HB an application fee of $100,000 plus 4926, sponsored by state Rep. Brandt $50,000 per year thereafter. Ancillary Iden, would allow and license internet services also would be licensed. Rep. Brandt Iden gaming, create a Division of Internet GamBesides including sports betting, ing in the Michigan Gaming Control Board, imthe changes to Iden’s legislation also require onpose a tax of 10 percent on gross gaming revenue line gambling servers to be located on casino on licensed internet gaming, establish the Interproperty, to cover any concerns over the Michinet Gaming Fund and specify civil sanctions and gan state constitution’s requirement that casino criminal penalties for act violations. It recently gambling take place “in the casino.” Observers was amended to include sports betting. said this change was made to appeal to Sheldon Iden’s original bill received a hearing with Adelson’s Coalition to Stop Internet Gambling. the same House committee in September. But Another change reduces the online gambling the measure stalled there, partly as a result of a tax rate from 15 percent to 10 percent. That rate lack of support from Detroit’s three commercial could drop to as low as 6 percent, Michigan casino operators and strong opposition from the Gaming Control Board Deputy Director David state’s tribal gaming operators. Murley warned, because the state’s 12 tribal gamThe legislation now is headed to the full ing compacts will have to be renegotiated. House for consideration in the 2018 session. The changes were enough to convince Michigan would be the fifth state to legalize onMichigan’s three major commercial casinos to line poker if the bills pass. support HB 4926. Tribal operators still remain HB 4926’s sports betting amendment states neutral or strongly opposed. They could be lian internet gaming licensee may “conduct intercensed for online gaming directly through the net wagering under this act on any amateur or state by negotiating existing or new compacts. professional sporting event or contest, if that inSix of Michigan’s 12 federally recognized tribal ternet wagering is not prohibited by federal law.” nations currently operate one or more land-based Iden said, “That language is in there to start the tribal casinos and pay taxes of 4-12 percent of next round of conversations. I don’t want us to gross gaming revenue. Under Iden’s bill, “Tribal get ahead of ourselves, but we know that is comcasinos that currently make revenue-sharing paying. The repeal of the Professional and Amateur ments could choose to withhold payments if they Sports Protection Act is likely coming in the deem online gaming to be an expansion of gamspring, and we want to put Michigan in position ing. Each tribe would have to determine whether to put our best foot forward as it relates to sports revenues generated from online gaming would gaming.” exceed revenues saved from withholding state Iden also introduced a companion bill, HB payments.” 4927, which would clarify that gambling activiIden stated, “What’s going to be acceptable ties conducted in accordance with HB 4926 to some tribes isn’t going to be acceptable to all. would not fall under earlier laws included in I’m willing to work to get common-ground lanMichigan’s penal codes. State Rep. Klint Klesko guage with as many as I can, and others will consponsored HB 4928, outlining civil and criminal tinue to be in opposition. You can’t always get punishments for online gaming violations, if every stakeholder’s support.”
Michigan iGaming Bill Adds Sports Betting
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Minnesota Miracle Mystic Lake
Grand Casino Mille Lacs
Treasure Island
Fortune Bay
Jackpot Junction
Grand Casino Hinckley
Making casinos work, as IGRA intended By Dave Palermo
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y Kauchick, a onetime lobbyist for the Bois Forte Band of Chippewa in Minnesota, was at the Iron Rangers Party, an annual political gathering in late 1988, when an anxious Democratic Governor Rudy Perpich approached him with an idea to create jobs. “OK, here’s what I want to do,” Perpich said, and he proceeded to outline plans to form a legislative committee to negotiate tribal-state casino agreements, or compacts, with Minnesota’s 11 American Indian tribes. The compacts would allow the seven Chippewa (Ojibwe) bands in North-
“There’s not a better lobby tool than educating legislators, showing them exactly how Indian gaming benefits Minnesota.” —Kevin Leecy, former chairman, Bois Forte Band of Chippewa 40
Global Gaming Business FEBRUARY 2018
ern Minnesota and four Sioux (Dakota) tribes to the south to expand their bingo operations with casino-style slot machines, creating jobs for citizens of their impoverished reservations and nearby communities. Expanded gambling permitted under the recently enacted Indian Gaming Regulatory Act (IGRA) of 1988 would be particularly beneficial in rural Minnesota, notably the economically deprived Iron Range, a region of 11 struggling iron ore mines near Lake Superior. “Let’s get it done,” Perpich told the lobbyist and longtime friend. “Perpich’s plan was to develop something in rural Minnesota that would generate employment and income revenue without costing the state a ton of money,” recalls John McCarthy, executive director of the Minnesota Indian Gaming Association (MIGA). “This fit the bill. It was as perfect as you could get.” “In his heart of hearts, Perpich saw an opportunity to benefit not only the tribes, but surrounding communities,” says attorney Henry Buffalo. “It would create jobs and it wouldn’t cost the state a cent.”
Billion Dollar Baby Nearly 30 years later, the 11 slot machine compacts agreed to in 1989— and separate blackjack agreements negotiated and signed into law two
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in the 1980s of tribal gambling. years later—are credited with creating a $1.5 billion gamTribes were led by leaders such as Leecy of Bois Forte bling industry employing roughly 15,300 people. Tribal and Art Gahbow, Marge Anderson and Melanie Bengovernment gambling is Minnesota’s 14th largest employer. jamin of the Mille Lacs Band of Objibwe, Norman and Minnesota compacts mirror the original intent of IGRA Stanley Crooks and Leonard Prescott of the Shakopee as envisioned by Congress. The agreements created a partMdewakanton Sioux Community, Myron Ellis of the nership between equally sovereign tribes and the state to Leech Lake Band of Chippewa, Roger Jourdain of the strengthen tribal governments and economies and, in doing Red Lake Band of Chippewa and others. so, benefit surrounding, non-indigenous communities. Sev“It was important that there was an existing relationenty percent of casino jobs in Minnesota are held by nonship between the state and the tribes,” says attorney Mary Indians. Magnuson, who as head of the state attorney general’s Tribal government gambling in Minnesota is an unmitigaming division served as counsel for the legislative team gated success, providing health care, housing, education and negotiating the Minnesota casino compacts. other social and government services to Indian communi“There was familiarity with all the parties and their ties. respective legal positions.” Although the needs of many indigenous citizens remain —John McCarthy, executive It also helped that tribal leaders in Minnesota and unmet, there has been remarkable social and economic director of the Minnesota throughout the Great Lakes region were active on Capiprogress on Minnesota Indian reservations, where the 11 Indian Gaming Association, tol Hill monitoring court rulings and drafting federal legtribes operate 18 casinos, many with hotels. on why negotiations to allow islation that would later become IGRA. They also were Tribes pay some $500 million a year in wages and benegaming were not contentious instrumental in founding the National Indian Gaming fits and another $126 million in payroll taxes. They also Association. contribute millions of dollars to state and local charities. They included Buffalo, a Red Cliff Chippewa from Minnesota lawmakers were the first in the country to Wisconsin who represented the Fond du Lac Band of Lake Superior approve Indian casino compacts, agreeing to the slot machine agreements almost Chippewa, operators of an off-reservation casino in Duluth, and Kurt Bluea year to the day after the October 1988 enactment of IGRA. The negotiations Dog, a Sisseton-Wahpeton Sioux and attorney for the Prairie Island Indian were relatively amicable. Community. But elsewhere in the United States, the birth and evolution of what is now a “We were all in a better place to go back to our states and start negoti$31.2 billion tribal government gambling industry in 29 states has been anything ating compacts when IGRA was signed,” Buffalo says. but smooth. Nor do compacts reflect the congressional intent of IGRA. Compact negotiations, casinos on newly acquired lands and other gamblingrelated controversies have in many regions of the country driven a political wedge The Perpich administration agreed to compact provisions as stated in between tribal, state and local governments. IGRA. The state did not seek revenue sharing, caps on the numbers of maRevenue sharing, machine limits, casino exclusivity, regulatory authority, juchines or waivers of tribal sovereignty in settling civil liability disputes and risdictional issues and new forms of gambling have created a myriad of legal and government jurisdictional matters—issues that would later generate contropolitical problems in many states with tribal gambling. versy in other states. Perpich was confident tribes could regulate gambling. Meanwhile, gambling disputes in the Land of 10,000 Lakes—when they do “The governor was not insistent on a lot of state control or regulatory arise—have been resolved constructively and relatively free of political strife. requirements,” Magnuson says, beyond limiting the facilities to video maCredit for the success of casino gambling in Minnesota goes to enlightened chines. state and tribal officials who nurtured a respectful relationship while settling law“Compacts in Minnesota, in many ways, are the closest to the original, suits over tax issues and hunting and fishing treaty rights long before bingo halls stated intent of IGRA,” says James Klas of KlasRobinson, a Minneapolis and casinos appeared on the horizon. marketing and financial research firm doing business in Indian Country. “Minnesota tribes have more agreements with the state than perhaps any “I used to joke that we in Minnesota tend to follow the rules. If the other state in the country,” McCarthy says. “There were several lawsuits involving rules say, ‘This what you’re supposed to do,’ we say, ‘OK, that’s what we’ll treaties that went to court. There were hunting and fishing treaty rights and a tax do, then.’ And so we did. case. “It worked out great.” “The tribes beat the crap out of the state every time they went to court. FiIGRA was intended to allow tribes to operate bingo-style games, innally, the state woke up and said, ‘Why don’t we work with these guys instead of cluding machines, as Class II devices without interference from the state. going to court?’ IGRA requires tribes operating Class III, casino-style gambling and ma“There was history between tribes and the state,” McCarthy says, when gamchines to enter into regulatory compacts with states in which they are lobling became an issue in the early 1980s. “There was a relationship. It was kind cated. of unique.” The Minnesota compacts are in perpetuity and do not require tribes to “We have a lot of history in Minnesota, working on hunting and fishing share gambling revenues with state and local governments. rights, which kind of helped during compact negotiations,” agrees Kevin Leecy, The Minnesota agreements subject tribes to minimal state oversight, former chairman of the Bois Forte Band of Chippewa. “We had an understandbut do not require waivers of tribal sovereignty in civil disputes and enviing. ronment and regulatory issues. “We have to respect other governments, whether they are federal, state or Most compacts since the Minnesota agreements have termination tribal.” dates, infringe on tribal sovereignty and require tribes to share casino revThe strong, traditional leadership in Minnesota that fought to protect treaty enues with states and local jurisdictions, despite the fact IGRA generally rights in the 1970s era of tribal self-determination continued with the emergence
“There was history between tribes and the state. There was a relationship. It was kind of unique.”
IGRA: Intent and Reality
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“We were all in a better place to go back to our states and start negotiating compacts when IGRA was signed.” —Henry Buffalo, attorney and member of the Red Cliff Chippewa
prohibits revenue sharing as a form of illegal taxation. The compacts require varying degrees of state oversight of Class III, casino-style gambling. “Once the Minnesota compacts were adopted and people began to see there was more money involved than they imagined, states that came after were very aggressive in their compact negotiations,” says Marsha Kelly, president of MSK Ventures and director of communications for MIGA. IGRA provisions require that states enter into good-faith negotiations on Class III compacts. It specifies that states failing to negotiate could be sued in federal court. But the U.S. Supreme Court in Seminole v. Florida (1996) ruled that such lawsuits violate states’ 11th Amendment protections. The Seminole ruling tipped compact negotiation leverage to the states. Tribal advocates accuse states of using leverage in compact negotiations to extort revenue and other concessions from tribes. IGRA also intended that compact negotiations be limited to the scope and regulation of gambling on Indian lands. But compacts enacted after the Seminole decision include not only revenue sharing with state and local governments, but regional or statewide casino exclusivity, governmental jurisdictional issues, land and water rights and even labor relations. With the exception of Mississippi—where the late Choctaw Chief Phillip Martin in 1992 negotiated a tribal-friendly compact with then-Governor Kirk Fordice—few native governments have agreements as favorable as those in Minnesota. The Mississippi compact has no termination date or revenue sharing. The Mississippi Choctaw is the only tribe in the country with no oversight by the state or National Indian Gaming Commission.
Bingo was Priority Minnesota tribes were among some 108 indigenous communities throughout the country operating “gray area” bingo machines or pull-tab gambling in the decade leading up to the U.S. Supreme Court ruling in California v. Cabazon Band of Mission Indians (1987). The late Norman Crooks, then chairman of the Shakopee Mdewakanton Sioux Community, is credited with introducing high-stakes bingo machines to the state after a 1979 visit to the pioneering Seminole facility in Florida. “Norman came back, and that’s when it all started,” McCarthy says. “He kind of figured out, ‘This is not rocket science. We can do this.’” Draft legislation on Capitol Hill to regulate what was approaching a $100 million bingo industry shifted in favor of the tribes after lower court rulings supported the right of indigenous governments to operate gambling on Indian lands. However, when the Supreme Court in late 1986 agreed to hear the Cabazon case, tribes feared justices would overturn lower court rulings, wiping out a bingo industry facing opposition from states, Nevada casino companies and parimutuel gambling interests. But the Supreme Court in Cabazon came down for the right of tribes to operate gambling on Indian lands without interference from the state. The final draft of IGRA largely supported indigenous governments, with the exception of compact provisions that subjected tribes to oversight by the state, an infringement on Indian sovereignty and self-governance. 42
Global Gaming Business FEBRUARY 2018
Ojibwe leader Roger Jourdain, chairman of the Red Lake Band of Chippewa, joined Mescalero tribal Chairman Wendall Chino and others in filing a lawsuit to do away with IGRA’s compact provision. The case was dismissed. As was the situation with many Indian reservations, the Ojibwe and Dakotas of Minnesota in the 1970s and ’80s were impoverished and in dire need of a means of driving economies, rebuilding communities and governments and creating jobs. “I think for many of its weaknesses, the bottom line for many of the tribes was there will be an overall positive benefit for us,” Buffalo says of IGRA and its controversial compact provisions. Unlike the Ojibwe bands—with leasable lands and hunting, fishing, timber and other natural resources—the Dakota tribes in the south were particularly destitute. “They were the poorest of the poor,” Kelly says. “They had no natural resources. They had no fish and game. They were out there on the prairie, between a rock and a hard place.” “The Sioux reservations were a lot poorer than the Ojibwe, who had a lot more going for them,” Kauchick says. “The Sioux were selling pottery.” With the pace picking up in the months before and after the Cabazon decision and the final drafting of IGRA, tribal lobbyists in Minnesota begin working legislators in St. Paul. Perpich backed away from his earlier opposition to gambling and conceded to allowing tribes to operate slot machines. He remained opposed to table games. He also convinced Attorney General Horatio “Skip” Humphrey to drop his opposition to tribal gambling. A bill was passed giving Perpich authority to negotiate a deal with the tribes, who agreed to negotiate as a group. “There were not a lot of lawyers in Minnesota who knew Indian law,” recalls John Jacobson, an attorney for the Lower Sioux Indian Community. “We talked a fair amount about how to approach negotiations in the first round. It made sense for everybody to go in together.” Those appointed to the negotiating committee—Rep. Rebecca Kelso, Senator Don Dicklich and Dorothy McClung of the Department of Revenue—were empathetic, if not sympathetic, to the tribes. Meanwhile, legislators were not aware gambling on Indian lands would become a large and powerful industry. Their interest and input in the negotiations was minimal. “I don’t recall any legislators having any strong views about what a compact should look like or what should be in it,” Magnuson says. The term “revenue sharing” did not come up. “I have never believed that the purpose of IGRA was to provide economic benefit to the states,” Magnuson says. “I believe the purpose of IGRA—as stated in the preamble—was to provide economic self-sufficiency to tribes. “Does that create some spinoff economic gain to the states? Of course it did. Now you have people employed. You have economic offshoots that benefit the states. I think Minnesota did what the federal law envisioned.” Within months after the slot machine compacts were signed into law, the Lower Sioux Indian Community filed a lawsuit seeking the right to offer blackjack at the casinos. Other tribes joined in the litigation, which they won before a federal magistrate.
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Republican Governor Arne Carlson, who succeeded Perpich, agreed not to appeal the case if all 11 tribes signed identical blackjack compacts and agreed not to pursue other forms of gambling. The blackjack compacts were signed in 1991.
“We need to invest gaming dollars in our young people so they can go out and get the education they need to achieve careers and provide for their families.” —Norman Deschampe, Chairman, Grand Portage Band of Lake Superior Chippewa
Protecting What They Have Minnesota tribes have always been politically astute. In the early years of self-determination—struggling to protect hunting and fishing treaty rights but lacking resources—they hosted legislators and elected officials at fish fries and social gatherings. “When they couldn’t write checks, they fried a lot of walleye,” Kelly says. “They worked to get out the vote. They got people mobilized on behalf of legislators.” “We would do 50, 60 fish fries a year: walleyes and wild rice,” Kauchick says. “We didn’t have money, but we were involved.” Today, Minnesota tribes have the resources to discourage occasional efforts by state officials to expand lottery and commercial gambling. They have political consultants, research statistics, a unified MIGA and McCarthy, a veteran advocate who has worked for tribes since the Lyndon Johnson administration, before the era of tribal self-determination. Tribes generally keep a low profile but worked with the state in allowing limited charitable gambling machines in taverns. A financial partnership between the Shakopee Sioux and Canterbury Park discouraged talk of slot machines at the racing facility.
“I’ve been at the front lines of many of these fights,” Leecy says. “There’s not a better lobby tool than educating legislators, showing them exactly how Indian gaming benefits Minnesota.” There is occasional uproar over the lack of revenue sharing, Leecy says, but casino jobs create revenue for the state and its citizens. “There is revenue sharing. A portion of the revenue does go to the state,” Leecy says. “It may not be termed a revenue share, per se, but it is. We pay the employees who pay the taxes.” And life on the reservations has become more tolerable. “There were tribal leaders who stood up and said, ‘We have this federal law, IGRA. We need to find a way to make it work in Minnesota,’” says Norman Deschampe, chairman of the Grand Portage Band of Lake Superior Chippewa. “They were very courageous people. They did a great job. “We need to invest gaming dollars in our young people so they can go out and get the education they need to achieve careers and provide for their families. “We also want to create an atmosphere on our reservations where our band members have a place they can come back to and make a living and make a better life for themselves, because this is their home.”
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MONEY Matters
Mystic Lake
Cash is the engine that drives casinos and technology, and getting it into the hands of the players is on the upswing. By Dave Bontempo
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ase, simplicity and speed, with multibillion-dollar implications. That’s the realm of cash handling, a simple yet complex gamingworld component. Within the mandate of perpetual instant-funds necessity, companies offer subtle product enhancements, convenient new features and massive rollouts. The innovations must be economical, user-friendly and tailored to individual properties. Competition is steep, but rewards are substantial. Casinos covet the free-flowing artery of cash, funds or electronic checks. Their wish is a vendor’s command.
An Effective Fleet These are prosperous times for Everi Payments, credited with the Everi Holdings stock surge over the last year or so. It unfurls several cash-handling products, timed perfectly with ascending world economies. The company touts solutions to enhance both casinos and patrons. For operators, the RecyclerXchange and CageXchange products help lower cash handling costs by casino/cage staff, while QuikTicket lowers the amount of cash dispensed from a kiosk without reducing funds available to gamblers. The RecyclerXchange cash recycler removes the need for cashiers and tellers to verify currency. It automatically counts, stores and sorts cash, allowing casinos to maximize cash inventory and tighten controls. RecyclerXchange increases a casino’s ability to flex services and spaces to meet evolving customer demands, company officials say. How does it work? Banknotes are placed into the note recycler feeder and passed through the internal bill identifier. Loose coin is placed into either the loose coin counter or the coin recycler and passed through to determine denomination and validity. Cash is then stored in separate internal cassettes and trays for dispensing future transactions. Everi’s CageXchange cash dispenser speeds up transactions and reduces exposed cash. By eliminating tedious manual cash counting, the product reduces wait times and frees casino staff to perform other cash-room functions. CageXchange helps improve cage accuracy and stores cash securely, providing additional protection of funds while reducing counting and balancing times, Everi officials say. With a space-saving design, it easily fits under stan44
Global Gaming Business FEBRUARY 2018
Everi kiosk
dard-height teller windows, making cash access quick and convenient for casino staff. A dispenser is placed between two cashier locations, resulting in a 50 percent reduction in required teller drawers. The dispenser is loaded with banknotes under dual control. Currency is distributed based on amount passed to the device through a web service call from integrated software, such as Everi’s CashClub. Officials say this product reduces vault buy times by up to 90 percent, and that duties can be handled by a single cashier. The QuikTicket transaction is authorized as a point-of-sale debit purchase. When QuikTicket is offered, and upon bank approval, a gaming ticket is given to use as casino currency. An effective alternative to ATM cash withdrawals and cage-processed POS transactions, QuikTicket lowers casino operating expenses and helps reduce the chances for counterfeiting and theft, according to company spokesmen. For players and customers, the company features Everi Cares Giving Module and CashClub Check Services. Everi Cares Giving Module enables one to donate all or part of a ticket, at the end of play, to charity. It also reduces cash and coin dispensed from the machines. CashClub Check Services gives players an opportunity to withdraw funds directly from their checking account. Everi and Casinos Care have teamed up to manage the accurate collection and distribution of funds for select nonprofit organizations. Casinos Care works directly with all 501(c)(3) organizations interested in participating in the giving module by conducting full fiscal diligence on all charities and entering into a marketing agreement with them. CashClub Check Services automates the check acceptance process, giving operators greater check-cashing capabilities and casino cage overhead. Everi assumes all risk associated with properly accepted returned checks. Its proprietary FlexChex feature grants patrons a 24-hour check-cashing limit. This is designed to eliminate patron frustration and improve casino cage efficiency. Self-service check cashing provides casino patrons with the flexibility and convenience of cashing checks electronically at Everi’s full-service kiosks, rather than at the cage, after an initial enrollment through CashClub Check Services. Players can enroll multiple checking accounts, and are informed when additional funds are available.
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Keep Counting
Mystic Lake
Germany’s CountR GmbH obtains more with gains with TITA, a product small enough to fit at every gaming table, big enough financially to justify its presence. The company landed a substantial Oklahoma casino deal last year with its revolutionary innovation. TITA made employees, not players, the prime users. The product is a micro ticket-redemption machine, allowing casinos to issue and redeem tickets for table-game play. With the device installed at a table game, casinos can validate tickets and display their amount, accept tickets at a table game to be partly exchanged for chips and issue and print tickets in exchange for chips. TITA has two major connection modules. Operators can scan tickets above the table and print tickets below. The company reported new growth in the wake of a recent full rollout, and entered 2018 with a bullish forecast, according to Chris Bennett, its vice president for the Americas. In mid-2017, he told GGB that TITA, five years in the making, had 3,000 orders pending. On the compliance and installation level, CountR continues to advance, he says. “The CountR TITA technology was accepted during 2017 in many state and tribal casinos,” Bennett asserts. “We are able to successfully communicate with almost all slot and table game systems. To provide casinos more options, we have new solutions for small, medium and large properties. The beauty of the TITA is that a casino can ‘mix and match’ TITA models within the property to provide the best solution for each area’s need.” The original TITA is the “Silver.” This is the android scanner with the undertake or vertical printer, he indicates. The “Gold” TITA has the JCM TBV note acceptor, which will allow 30 pieces of currency/tickets per pass and reject
suspect notes and stacks media, just like a slot. The “Platinum” version uses either printer. It process 720 pieces of tickets/currency per minute with the ability to hold up to 8,000 pieces. These models can be mixed within the casino, depending on table/pit need for optimal flexibility and cost savings, he says. Bennett calls TITA one of the most revolutionary products he’s ever distributed. It maintains the pace of the game, keeps one currency running throughout the property and helps employees engage more customers, thereby increasing the possibility for tips. TITA was the first GLI-approved ticket redemption system for table games, according to CountR Chief Financial Officer Dominik Winau, who co-founded the company in 2003. TITA can be retrofitted to any gaming table in any casino. It consists of an on-table device as small a cellular phone, and an under-table device with logic and a ticket printer, he asserts. He considers the benefits abundant. Players no longer must take chips to the cage to get cash. They can take a ticket from the dealer at the table and go to the next table, slot or a ticket redemption unit. Players do not leave the gaming area or get bored waiting in line at the cage. The patron can play at the table directly if he already has a ticket. The buyin is much faster and safe, Bennett says. Dealers just scan the ticket, with no need to count bills.
More Innovation Las Vegas-based JCM Global enjoyed an “InFuzion” of success last year. The company obtained a silver medal in GGB’s 17th Annual Gaming and Technology Awards in the “Best Consumer Service Technology” category for its Fuzion product, chosen from a record number of nominations. The company is a leader in innovative and award-winning automated
FEBRUARY 2018 www.ggbmagazine.com
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transaction technologies and solutions. It uses cutting-edge thinking related both to cash handling and TITO, including the presence of Fuzion, which combines areas of operation. When a slot machine uses the iVizion bill validator and the new GEN5 printer, it can then utilize the new Fuzion technology. With Fuzion, each slot machine can become a multi-line profit center. It has the capability to vend and redeem lottery tickets, and to enable race and sports betting. Fuzion can also facilitate DFS wagering, the casino’s own or a third party. The product can conduct cross-enterprise promotional couponing for carded and uncarded players. It also can enable real-time currency exchange with rates that can be pre-set in real time. Finally, there’s compliance reliance. Fuzion can streamline the tax processes by printing system-generated forms and delivering required documentation to the customer while the back-end system stores signature forms and other IRS-mandated data. Fuzion technology and the GEN5 printer help expand TITO capabilities with a faster processor to enable promotional printing and couponing. It can also print dithered graphics, enabling the printing of promotional tickets and other graphics associated with Fuzion technology. That includes printing lottery tickets, race and sports tickets, even tax forms, taking TITO to a new level. Companies with iVizion and GEN5 will be able to utilize Fuzion, which, among other things, connects bill validators and printers to the casino management system.
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Good and Direct G + D Technology closed 2017 with a significant, multi-faceted rollout. At G2E, the Germany-based industry stalwart unveiled the BPS M3 and BPS C2 for a unique, two-pronged market delivery. It targeted BPS C2 for properties looking to utilize a small machine for the back office, cage or count room and BPS M3 for operators who can utilize large products. Gaming continues to be a significant venue for this establishment, which also partners with central banks, financial institutions, banknote printers and cash-in-transit companies. G + D officials say it has printed more than 135 trillion banknotes and has a presence in more than 150 countries. The BPS C2 system sorts at a consistently high speed of 1,050 banknotes per minute, checking the authenticity of banknotes, and can read serial numbers if required. Sensors detect the banknotes’ denomination, orientation and fitness for circulation, while recognizing potential counterfeits. The work steps required to operate the machine can be reduced to a minimum, officials say. Versatile and secure interfaces also allow easy, seamless networking of the system with customized environments, cutting-edge tools and applications, as well as web services in the cash management process. The BPS C2 aptly fits commercial banks, cash-in-transit companies and casinos that want to enhance their cash processing activities. What about the big machines? BPS M3 builds upon the success of BPS M5, an ongoing product still viable in the market. This addition to the product line provides some economic flexibility. Rising cash volumes and increasing outsourcing by central banks forecast a
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The BPS C2 system (left) sorts at a consistently high speed of 1,050 banknotes per minute, checking the authenticity of banknotes, and can read serial numbers if required. The larger BPS M3 system (below) counts, checks, registers and sorts up to 76,000 banknotes per hour, along with banding them.
rise in the amount of cash commercial centers will process. This requires solutions offering optimum productivity, security and efficiency. The BPS M3 high-performance system is the company’s response. Equipped with the new NotaScan InOne sensor, the system counts, checks, registers and sorts up to 76,000 banknotes per hour, along with banding them. This reduces manual work steps to a minimum, officials say. The manpower and time required to operate the system are correspondingly low, while security is enhanced. The design of the BPS M3 offers an operation via touch screen. In addition, the singler has a capacity of up to 4,000 banknotes to ensure constant processing. Following the tradition of high-speed systems from G + D, the BPS M3 offers several options for customizing the system itself, as well as preand post-processing solutions. The benefits include high productivity. An ergonomic design and advanced user interface make the system easy and intuitive to use. The BPS M5 is the system for commercial applications. As successor to the BPS 1000 (with over 1,400 installations worldwide), it processes mixed de-
nominations of banknotes with different formats and substrates. The system achieves speeds of up to 33 banknotes per second (around 120,000 banknotes per hour), even in continuous operation: 24 hours a day, seven days a week. Casinos constantly monitor their cash and funds lineup. Money must be available to customers, but can’t idle in ATMs. It must be readily available, yet safe from hacking. And that process must be seamless, almost an afterthought. Operators juggle several considerations. One is customer service. Another is streamlined production, along with the need for increased internal efficiency. Products addressing them must justify the space they occupy. For companies that fill these needs, it’s an exciting, lucrative balancing act.
FEBRUARY 2018 www.ggbmagazine.com
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NEW GAME REVIEW by Frank Legato
Game of Thrones: Fire & Blood Aristocrat Technologies
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his latest video slot in Aristocrat’s group of games based on the hit HBO show Game of Thrones concentrates on the fourth, fifth and six seasons of the program, introducing new characters and a multi-site progressive to the mix. The base game is on Aristocrat’s new flame55 cabinet, which features a 55-inch vertical monitor curved in two places, forming the shape of an “S,” with the bottom and top areas of the monitor tilted toward the player. The base game is a “Reel Power” ways-to-win format that gives a nod to the three seasons on which the game is based—the outer reels each have four symbols, the second and fourth reels each have five symbols, and the middle row has six symbols. In this configuration, the base game offers 5,400 possible ways to win on each spin. The base game offers three different Dragon bonuses and a main game bonus. All dragons appearing on the reels guarantee a win, and each time a dragon passes over the reels, a player may be awarded extra wilds, reel growth with high-paying symbols, or wild multipliers.
A 100-credit wager activates the Fire & Blood mode, where players can find added entertainment, such as more frequently triggered Dragon features and added 3X Wild symbols in the Forge of Honor feature. The Forge of Honor feature offers a new “realigning symbols” mechanic with an innovative reel and pay structure. At the end of a bonus spin, the reel symbols realign after they land to create the biggest win possible. The progressives are symbol-driven, with five Game of Thrones symbols returning the top multi-site prize, which resets at $500,000. Three lower-level progressives, also symbol-driven, reset at $50, $100 and $1,000. Manufacturer: Aristocrat Technologies Platform: Reel Power Format: Five-reel, 5,400-ways-to-win video slot Denomination: .01 (MSP) .01-20.00 (stand-alone) Max Bet: 500 Top Award: Progressive; $500,000 reset Hit Frequency: Approximately 60% Theoretical Hold: 10% (est.)
Mystic Moon
Ainsworth Game Technology
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his four-level progressive video slot features a unique mix of free-game events that award accumulative prizes on the way to a top progressive jackpot resetting at $5,000. The base game is a five-line video slot available to casinos in 25-line and 50-line configurations. During primary-game play, six, seven, eight or nine scattered “Moon” symbols trigger the “Big Hit Feature,” one of the paths to the progressives. The Moon symbols stay in place for three free re-spins. A total of 15 Moon symbols triggers the top progressive. The lower-level prizes—static bonus prizes, consisting of a $10 Mini, a $50 Minor and a $150 Major—are awarded for varying numbers of Moon symbols. Randomly during primary game play, the “Extra Bonus Big Hit Feature” will be triggered. Three free re-spins are awarded, with a big Moon symbol appearing over each of the three middle reels and counting as nine Moon symbols toward the Grand Jackpot. Every Moon counts for one or two free games. If one or more additional Moon symbols appear, they are held in position as a random bonus credit prize is awarded, and the number of re-spins is reset to three.
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The feature is complete when no re-spins remain or the Grand Jackpot is won. At the end of the feature, the bonus credit prizes are awarded and the accumulated free spins begin. During the fee games, the Goddess symbol is wild on each of the three middle reels. “Goddess Stack” substitutes for all symbols on reel 5 only. The progressive and all three bonus prizes also can be randomly triggered with three bonus symbols during primary game play. Mystic Moon is one of four initial games in Ainsworth’s Big Hit series. Manufacturer: Ainsworth Game Technology Platform: A640 Format: Five-reel, 25- or 50-line video slot Denomination: .01, .02, .05, .10 Max Bet: 100, 200, 500 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 8%, 9%, 10%
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Pot of Riches
Aruze Gaming America
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his new slot on Aruze’s Cube-X video platform features a unique free-spin feature that can ultimately lead to one of three progressive jackpots. The base game is in a “ways to win” format—there are no paylines, and wins are registered through adjacent symbols. In this configuration, there are 243 possible ways to win on each spin. At the start of any game, the player can elect to move a “My Choice” icon to correspond with any of the three positions on the fifth reel. That choice comes into play if the player reaches the progressive bonus round. Bonus symbols on three or more consecutive reels trigger the Expanding Wild Free Games event. A special set of bonus reels appears for the free-game round. During the free spins, if the main game character appears, it transforms into the game’s wild symbol and fills the entire reel. The free-spin round can be retriggered. The pot-of-gold symbol can overlay any symbol in the primary game or free spins. In the free-spin round, a pot of gold in any position on the first reel together with a pot of gold in the “My Choice” position on the fifth reel triggers the
progressive bonus event, called Happy Treasure Jackpot Chance, with an initial three “chance spins.” During this round, each row of symbols is marked with a corresponding jackpot—Minor, Major or Grand. During the three spins, a man throws coins onto the reels which may or may not stick. Each that sticks is held in position, and the number of remaining chance spins returns to three. Each time a coin sticks, the player’s chance spins are reset at three, until the spins run out or one of the jackpots is won. Five stuck coins on any of the rows returns the corresponding jackpot. Each coin also displays a credit amount. At the end of the bonus round, the player is awarded the accumulated credit amounts, multiplied by a random multiplier ranging from 1X to 50X. Manufacturer: Aruze Gaming America Platform: Cube-X Format: Five-reel, 243-ways-to-win video slot Denomination: .01 Max Bet: 1,000 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 60% Theoretical Hold: 2.08%-16.98%
Star Watch Magma Konami Gaming
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his unique new video slot makes full use of the 43-inch flat vertical monitor of the new Concerto Stack cabinet, or alternatively, the 43-inch curved vertical monitor of the new Concerto Crescent format. The base game is available in several line configurations, with the main form being a five-reel, 60-line game. The top of the large vertical display is occupied by a lively, volcano-shaped bonus wheel and four prize displays—two static bonus displays and two progressives, each won through one of the bonus events. In the primary game, Konami’s signature “Action Stacked Symbols” feature will replace a number of adjacent reel spots with the same symbol prior to each spin. A message to the player indicates better chances at higher jackpots are awarded for higher wagers. Three, four or five Fireball symbols trigger eight, 12 or 20 free games, respectively. All wins are doubled during the free spins. If PRIZE lands on a reel inside a frame, after any line or scatter wins are paid, all reels with PRIZE are nudged until all positions on that reel display PRIZE. Each prize displayed in a frame is awarded. 50
Global Gaming Business FEBRUARY 2018
The prize displayed on PRIZE is randomly selected from one of the following: CREDIT PRIZE, MINI BONUS, MAJOR BONUS, MEGA, MAXI or WHEEL. Each credit prize is randomly selected from 50 to 1,500. Each credit prize displayed on PRIZE is multiplied by the bet per line at the beginning of each spin. One spin on the wheel is awarded for each PRIZE WHEEL appearing on a reel in a frame. The player presses the spin button to spin the wheel to win Mini Bonus, Major Bonus, Mega or Maxi. The Maxi progressive resets at $5,000; the Major at $500. The static bonus prizes are $100 for the Mini and $250 for the Major. Manufacturer: Konami Gaming Platform: KP3+ Format: Five-reel, 60-line video slot Denomination: .01, .02, .05, .10 Max Bet: 300 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 6%-15%
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TABLE GAMES
Downtown Upturn The Strip’s alternative has plenty of the V-word
By Roger Snow
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hink you’ve seen it all? Well, pardner, until you’ve seen a grown man wearing a diaper—and only a diaper—while licking a Shirley Temple lollipop while directing tourists to a restaurant that gives gratis grub to anyone 350 pounds or heavier while a Def Leppard cover band on one stage is dueling decibels with a Bon Jovi cover band on the other stage, then you ain’t seen nothing. And you definitely ain’t seen Downtown Las Vegas. At least not lately. For decades, Fremont Street and the surrounding area was Andrew Ridgeley to the Strip’s George Michael, the Sonny to its Cher, the Garfunkel to its Simon, the Dunkleman to its Seacrest. Second banana? Yes, but that’s because there were only two bananas in the bunch. Had Reno or Mesquite or Laughlin—or perhaps Pahrump— been a smidge closer to the state’s epicenter, Downtown might have been even further down. That was then. Then is now: Downtown Las Vegas finds itself in the midst of a renaissance, one that’s fueled in equal parts by innovation, gentrification, the Zappos halo, and some good old-fashioned clean, dirty fun. More about those in a bit. For now, chew on this: Through the first 11 months of 2017, gaming revenue in Downtown Las Vegas was up 12 percent versus the same period in 2016. And that’s no anomaly. In fact, in aggregate, in four of the last five years, in casinos like the D and the Plaza and the Four Queens, gaming revenue has increased over the previous year. The only exception was 2013. Even with that hiccup, Downtown casino revenue jumped from $493 million in 2010 to an estimated $635 million last year. “Downtown has led the way with the highest percentage growth in Clark County the past three years,” says Michael Lawton, senior research analyst for the Nevada Gaming Control Board. “And with new investments being made throughout the Downtown corridor over the last several years, we are starting to see this begin to spill over into the
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gaming floors of the Downtown operators.” Spill, baby, spill. The first—if not literally, at least symbolically—major capital influx this decade came in 2013, when online shoe retailer and business-culture icon Zappos transplanted its corporate headquarters from an office park in Henderson, Nevada to the old city hall building on Stewart Avenue. Others followed, and others followed them. Next thing you know, there’s the Container Park, the Mob Museum, the SlotZilla Zip Line, the Heart Attack Grill (of the aforementioned 350-pound rule), and most recently, the Fear the Walking Dead attraction.
“Today, and every other day, the canopy above Fremont Street serves as a circus big top, with anything and everything going on— and coming off— underneath it.” As goes the neighborhood, so go the neighbors. The fun, hip vibe Downtown has attracted fun, hip inhabitants. The kind who drink at speakeasies with no signs out front. The kind who sip their lattes and stroke their goatees. The kind who— gasp!—walk to work. The kind who turn some ratty old shop into an elegant, upscale coffee house. (Yes, PublicUS, we’re looking at you.) The kind that make Downtown fun again. And they’re not doing it alone. Today, and every other day, the canopy above Fremont Street
Global Gaming Business FEBRUARY 2018
serves as a circus big top, with anything and everything going on—and coming off—underneath it. Musicians. Contortionists. Kiosks stocked with trinkets and baubles. Some sort of mobile barbecue eatery. Scantily clad hotties posing for pictures (and that’s just the men). And, every 100 feet or so, a slushee machine that dispenses copious amounts of pina coladas and frozen margaritas. “I think the whole scene out there has had a huge effect on gaming and hotel revenue,” says Glenn Casale, the director of casino operations at Binion’s and the Four Queens. “There’s something going on every night, and it’s reflected in our numbers.” He should know. Better than most, as in his 11 years of running casinos Downtown, Casale often finds himself awash in Fremont’s fun and frivolity. “I’ve been to almost every major concert we’ve had down here,” he says. “And keep in mind, everything out there is free. You can’t beat it for entertainment value.” Casale repeats the V-word—more than once— when explaining the other ingredients in Downtown’s revival. “We’ve got tremendous gaming value Downtown,” he says. “We offer lower-limit tables than you’ll find on the Strip, and our payouts are generally better. And it’s the same thing on the restaurant side. We’ve got some terrific gourmet restaurants, and the value’s there as well. You’re not going to pay $8 for a beer or $12 for a baked potato.” Man, that must be some tater. When it comes to the V-word, it’s hard to Bword the F-word. As in free. And, in closing, Casale takes a gentle jab at the big Strip resorts with two more examples of finding value Downtown. “Our properties don’t charge resort fees,” he says. “The room rate is the room rate. And something else we don’t charge for is parking. If you want bang for your buck, you can’t beat it here.” Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates.
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FRANKLY SPEAKING by Frank Legato
Gadgets for Gaming
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Back on the gaming floor, the casinos could keep players relaxed, thereby keeping them at the tables or slots, with “patented relaxation technology” by Nucalm. According to its description at CES, it combines a topical cream, “microcurrent stimulation via the Nucalm Visor,” and the “Nucalm neuroacoustic software.” There must be some way to work all that stuff into an immersive slot chair, although the topical cream could get messy, and “microcurrent stimulation” sounds like they’re going to stick electrodes into my brain. But hey, if it improves my gaming entertainment, have at it. Moving on from the consumer show, Western States Drilling & Blasting blew a hole in the desert last month for the foundation of the $1.8 billion stadium that the Las Vegas Raiders will open in 2020. The Raiders coming to town, of course, is another sign of the evolution of public opinion on gaming, and its capital, as part of mainstream America. The gaming capital already has a hockey team, and that’s great. I’m from Pittsburgh and thus a Penguins hockey fan, but my second team is definitely the Vegas Golden Knights. Unless they’re playing the Pens, I can say “Go Knights Go!” with a modicum of enthusiasm. However, also because I’m from Pittsburgh, I’m going to have to draw the line on being a Raiders fan. I’m old enough to have been a Steelers fan in the ’70s, so I still have this thing about the Raiders... Do you think it’s time to bury that hatchet, and say “Go Raiders?” Maybe... No! Never! Go Steelers! And no, Franco did not trap the ball in the Immaculate Reception. VIC TOR RINAL DO
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or years, Bryan Kelly has run what Scientific Games calls the “Innovation Lab.” It’s where Kelly, senior VP of technology, brings wacky ideas from the wider world of consumer technology to the attention of game people who might find some new thing that would be really cool in a slot machine. Kelly travels the world going to conferences to get these ideas, and one of the biggest certainly is the one that happened last month in Las Vegas, the famous Consumer Electronics Show, put on by the Consumer Technology Association. Held the second week of January, the CES typically reveals stuff that ends up in slot machines, or at any rate, in casino-hotel resorts in one way or another. As your reliable reporter on the “Casino Beat,” the chief called me over to the City Desk and told me to get over to the convention center to see if I could find any “scoops” at the CES on what’s coming “next” in “casinos.” (And in “quotation marks.”) I scoured the show floor to find some stuff that Kelly and his Innovation Lab may have missed. As you may guess, virtual reality stuff was everywhere at the Consumer Electronics Show. Black Box VR displayed a “virtual gym.” You basically become a superhero, wearing a superhero-like virtual reality headset, and exercise by overturning cars to save various non-superheroes in distress. OK, this isn’t going into a slot machine. There’s nothing to bet on. You have to think. You have to exercise. You have to do everything I don’t want to do when I’m playing a slot machine. I suppose it could end up on the hospitality side of our industry, over in the spa. But for my gaming entertainment purposes, it needs some work. Maybe a bonus spin every time your heart fibrillates or something. Or a bonus ladder that rises with every wheeze. The only way I could possibly do this is if the virtual gym offered “virtual exercise.” I generally don’t like any athletics that cannot be accompanied by beer-drinking, which pretty much leaves me bowling, and maybe rugby. Staying on the hospitality side, there was a robot “porter” by LG that will get your luggage, check you into the hotel, accept payment, and spread gossip about other guests on your floor. There’s another robot from Industrial Technology that actually has hand-eye coordination. It can pour you a drink. (Presumably, it can also pour a drink on you, if you get it mad.) It can play the violin while dancing the Charleston and singing Don Ho’s “Tiny Bubbles.” OK, I made the last bit up, but it does say on the website that the robot in question can actually sit down and play Scrabble with you. Seriously. I can’t count the times I’ve gotten up to my room after a marathon session at the craps tables or video poker machines, and all I’ve wanted was a nice game of Scrabble to top off the night. Having a robot pour my drink is just gravy.
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EMERGING LEADERS PUBLICATIONS
Work Ethic Works Murali Ganesan Vice President, Sales, Scientific Games
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urali Ganesan is the vice president of sales at Scientific Games, a role that he has held since the company’s 2014 acquisition of Bally Technologies, where he oversaw business development and sales for Europe, Africa and Latin America. Ganesan’s nine-year career path in gaming has seen the most innovative era for gaming technology and equipment companies. Ganesan has embraced this transformation and collaborated closely on delivering product and differentiated service to the industry’s largest operators, while cultivating a progressive culture within the companies served, backed by an infectious work ethic stemming from his childhood and obvious to his peers. Although Ganesan began at Bally in 2008 with emphasis on cultivating a presence for the company from an international perspective with focus on Africa, Europe and Latin America regions, he picked up additional responsibilities for the Northeast and Midwestern markets in the U.S. In time, with the recognition of Ganesan’s success, the Western, Central and Midwestern regions of the United States were added to his portfolio. Ganesan holds an electrical engineering degree from Purdue University. Prior to entering the gaming industry, he held various consultative positions with companies in the sales and distribution of retail, wholesale, consumer and pharmaceutical products, among other goods. Prior experience in these verticals included leading major accounts in Europe and Asia that exposed Ganesan to a diverse international marketplace. With Bally Technologies, he was able to learn about the gaming industry on the fly and identify areas for each geographical region in both international and domestic markets that needed solutions to address operational pain points to serve the players/patrons. Starting from scratch helped Ganesan access balanced exposure to gaming technologies and market development trends. In discussing the future direction of the gaming industry, Ganesan’s education in engineering, consultative mindset and early exposure to multiple sales channels, plus international experience, truly resonate. He sees the dynamic changes in gaming technology today as an indicator of further industry growth potential and a bridge to new opportunities and partnerships with other industries. Ganesan also sees gaming development as becoming more and more data-dependent, and integrated across the leisure activities of consumers including discretionary spending, including where and how they access gaming options. Ganesan credits his success to an enriching childhood where his parents instilled a stellar work ethic that has helped carry him to where he is today. The sales and marketing team at Scientific Games clearly recognizes Ganesan’s professional enthusiasm, his hard-working team enhancing dedication to meeting company goals with mutual interpersonal respect. Ganesan’s exposure to international markets suits his personal interests well. He enjoys travel and has revisited many of the regions in which he has worked to experience them as a leisure traveler. Highlights include Cape Town and Ushuaia in Argentina. Although, not surprisingly, he does not go long without checking in with the team. In addition to travel, Ganesan is a sports enthusiast as a spectator and an avid runner and player in polo, tennis and squash. And in his spare time, Ganesan volunteers in a variety of organizations. Ganesan is a well-rounded and exemplary gaming executive, destined to make a substantial impact on gaming’s convergence and the industry’s adaptation to a new generation of leaders and players. —Michael Soll, President, The Innovation Group
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GLOBAL GAMING WOMEN
Invest in Yourself Getting ahead by focusing on your goals
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asten Your Oxygen Mask First” is a metaphor for those who take care of everything and everyone except themselves. Traditionally as we enter a new year, we make resolutions to improve certain aspects of our lives—maybe to lose weight, get better organized or become a better person. But according to a Marist Poll of Americans who planned to make a resolution in 2018, 9 percent wanted this to be the year they got a better job. And the best way to do this is to invest in yourself by taking advantage of educational opportunities to improve your competitive advantage. When talking to women who participate in various Global Gaming Women programs, our board members often hear that there are two big obstacles to expanding a resume—time and money. But with the myriad of free or nearly free educational opportunities from prestigious universities that are available online, both obstacles are easily overcome. According to Mark Wayman, a successful talent agent for highly compensated executives in the gaming/casino and technology industries, the job market is extremely competitive right now because of the low unemployment rate. In the gaming industry, he suggests that marketing, technology and finance are great career choices, and he has recently seen greater demand for senior executives in marketing and planning and analysis (P&A). Within the technology sector, he has seen demand for professionals with skills in software development and cybersecurity. There are dozens of robust websites that offer high-quality online courses from major colleges, taught by teachers highly accomplished in their professions, which students can complete on their own, without enrollment in a full-time program. Many are free, or available with a certificate for a small fee. To help take advantage of some of the opportunities Wayman noted, for example, edX.org offers a free course in analyzing and visualizing data with Excel, which is part of its larger Microsoft Professional Program Certificate in Big Data, and the Microsoft Professional Pro-
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By Virginia McDowell
gram Certificate in Data Science. EdX is a nonprofit which relies on verified certificates to help fund free education for participants globally. According to the course description on the website, Excel is one of the most widely used solutions for analyzing and visualizing data, and the curriculum includes an introduction to the latest version of the tools, in Excel 2016. Students will have the opportunity to learn a variety of valuable skills, including how to gather and transform data from multiple sources, data model creation, and to explore, analyze and visualize data. The course is self-paced, and taught by a solutions architect for DataRails and a senior content developer for Microsoft. A verified certificate is available for $99. When it comes time to apply for that promotion, after completing your chosen courses, visit Coursera.org to gain a competitive edge by taking their online course “Successful Negotiation: Essential Strategies and Skills,” taught by a Williamson Family Professor of Business Administration and Thurnau Professor of Business Law from the University of Michigan. The course can be taken at the pace desired by the student, and is offered in English with subtitles available in Ukranian, Chinese, Portugese, Russian and Spanish. Coursera was founded in 2012 by two Stanford computer science professors who wanted to share their knowledge and skills with the world. They have now created a platform where anyone, anywhere can learn and earn credentials from the world’s top universities and education providers. The Coursera course curriculum includes the four steps to a successful negotiation, as well as the ability to test newly acquired negotiation skills with a local friend or a partner from another part of the world. Participants learn by watching interactive short videos (from five to 20 minutes) and receive feedback, free negotiating planning tools and a free app. The course is free without a certificate and only $49 with one, and financial aid is available for qualifying students. To expand the mind and nourish the soul, Coursera offers a free course entitled “Modern
Global Gaming Business FEBRUARY 2018
Art & Ideas” offered by the Museum of Modern Art. This course is designed to help anyone interested in learning more about modern and contemporary art, exploring four themes that educators at the Museum of Modern Art use frequently in their teaching. No prior knowledge of art history or museum-based teaching practice is required, and the course gives students the opportunity “through videos, slideshows, and a variety of resources, readings, and activities, to explore the content and context of works of art in MoMA’s collection.” Global Gaming Women offers a pyramid of educational classes which feature a core curriculum that includes modules to improve business skills and promote personal business growth. One of the best benefits of these courses is the ability to build a network of professional relationships with women in gaming at the same career stage, outside of the participant’s own company. These Global Gaming Women educational opportunities are offered regionally throughout the United States, and most of the classes are offered via scholarship, meaning that there is no charge to the individual or their employer, except lodging and travel. To participate in the GGW programs, individuals must be registered with Global Gaming Women through the GGW website. After registration, GGW will provide notice of upcoming opportunities and events. Registration is free—to sign up and see a list of benefits, please visit globalgamingwomen.org/ participation-benefits, or call Global Gaming Women Director Felicia Gassen at 702-4925320 for more information on upcoming classes and events. Join Global Gaming Women, take some online courses, and make 2018 the year that you finally invest in yourself! Virginia McDowell retired as president and CEO of Isle of Capri Casinos in April 2016, after a 35-year career in the commercial gaming industry. She currently serves as vice chair of Global Gaming Women, and sits on several charitable and educational boards.
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CUTTING EDGE by Frank Legato
Real-Time ID Product: FaceVACS-VideoScan Manufacturer: Cognitec
ognitec has introduced FaceVACS-VideoScan, a video screening and analytics technology that allows users to perform complex searches and analyses on persons appearing in real-time camera streams and video footage. The latest product version introduced a user-friendly interface to quickly import sets of recorded video and then carry out detailed investigations. For example, security and law enforcement agents can upload the video files of a specific location at a specific time to find possible participants in or witnesses to a crime. Users can find a person that was previously enrolled in an image database or search for an unknown person and find their appearances in multiple videos. Person searches can also make use of filters that specify age ranges, gender and ethnicity. FaceVACS-VideoScan employs leading-edge face recognition technology to analyze the count, flow, demographics and behavior of people visible in video streams. Surpassing traditional video surveillance systems, the technology detects and extracts people’s faces in live video streams or video footage and uses anonymous facial analysis to count individuals, generate demographical information, track people movement in time and space,
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detect frequent visitors and crowds, and much more. The product applies Cognitec’s premier face recognition technology to compare faces to image databases and instantly find known individuals. Businesses and organizations can detect and prevent unwanted behavior in much faster and more efficient ways, as operators can track individuals in real time, or receive alerts on mobile devices to act within the immediate vicinity of a suspect. On the other hand, FaceVACS-VideoScan can identify authorized individuals or high-ranking customers in real time. Positive authentication can prompt access to restricted areas or alert personnel to provide special treatment. For more information, visit cognitec.com, email info@cognitec.com, or call +61-2-9006-1510.
Push-Button Innovation Product: PKT Manufacturer: SuzoHapp
uzoHapp’s PKT is a leading-edge technology in tactile controls—all the adaptability of touch screens with the tactile satisfaction of mechanical push-buttons. PKT is a panel system featuring a dynamic button array with a flexible design option for gaming cabinets. The button deck can be custom-designed, with each button displaying millions of colors and high-resolution video to suit almost any design requirement or budget. Through a patented technology, SuzoHapp enables clients to bring dynamic content via a highly configurable user interface. Game designers are no longer limited by the user interface, and end users now receive eye-popping content through a tactile button, creating a more rewarding and comforting experience. Users can easily program the entire deck at once with dynamic and customizable visuals, allowing for unprecedented interaction between games and buttons, as well as ease of transition between game themes. SuzoHapp PKT assemblies feature a single LCD screen with an injection-tooled plastic lens cap assembly. The dynamic content is then transmitted to the surface through a fiber-optic polymer image conduit that can be cut in any shape or size. There is no image distortion, and the display features millions of colors
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in the exact same colorcast and quality from button to button. Content can be driven through VGA, DVI-D or even the LVDS directly. DisplayPort and HDMI are available upon request. The button interface is available in RS232 or USB. Touch-screen, hybrid integration is available for all assemblies. For more information, contact a SuzoHapp representative or visit suzohapp.com.
TEE OFF TO 20 T U E S D A Y, M A Y 1 , 2 0 1 8
The 20th Annual AGEM/AGA Golf Classic Presented by JCM Global is one of the gaming industry’s premier events with proceeds benefiting the National Center for Responsible Gaming. This year is sure to be the most prestigious, exciting and successful event yet as we move to the exclusive, world-renowned greens of Shadow Creek North Las Vegas. To date the Golf Classic has raised more than $1.75 million to advance the NCRG’s important research. And we’re teeing up for another amazing year with exciting contests and a wide range of terrific raffle prizes. Golfing positions are sold on a first-come/first-served basis and are filling up fast. Be sure to reserve your spot today. Visit jcmgolfclassic.com now or call 702.651.3472 for registration and sponsorship opportunities. Global Gaming Business
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GOODS&SERVICES GGB MAGAZINE LAUNCHES THE UNLV GAMING & HOSPITALITY EDUCATION SERIES
GAMING & HOSPITALITY
EDUCATION • SERIES • 2018
C
asinos are no longer just about gaming. Gaming is now completely entwined with hospitality from the smallest gaming hall to the largest integrated resort. Yet executives with casino companies and gaming vendors often have training in only one area, gaming or hospitality. The Gaming & Hospitality Education Series at the University of Nevada, Las Vegas will remedy that. Presented by the William F. Harrah College of Hospitality, the Education Series will show how the two disciplines meet in more ways than first apparent. The UNLV Gaming & Hospitality Education Series will commence monthly half-day episodes that will include two 90-minute seminars on different aspects of one topic. The series will start in March 2018 and continue in April, May, October, November and December. The series will also be available as a webcast, opening up this important educational opportunity to executives all over the world. The series will be organized and produced by GGB magazine, the leading trade publication and leading undisputed source of up-to-date information for global gaming, and Applied Management Strategies, one of the industry’s leading consulting companies, in collaboration with the William F. Harrah College of Hospitality at UNLV. Speakers and participants at the series will be the leading experts in their fields, providing cuttingedge and innovative information for all attendees, who will receive a certificate of accomplishment from UNLV upon completion of the six series sessions. The episodes will be a mix of intense panel discussions, individual learning sessions by one instructor, and interactive feedback to provide all attendees with a wide range of opinions and facts. The series will benefit all attendees from any segment of the gaming industry with unique information, take-away tips and unbeatable networking. “We feel the UNLV Gaming & Hospitality Education Series will be a groundbreaking and ongoing educational opportunity for gaming executives around the world,” said Stowe Shoemaker, dean of the UNLV William F. Harrah College of Hospitality. “These high-level seminars will keep executives informed on a variety of cutting-edge issues, challenges and opportunities that are affecting the industry around the world.” The first seminar will be held on March 22,
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and the topic will be Casino Games: Spanning Generations. A panel discussion will be moderated by GGB Editor and the world’s most respected slot expert Frank Legato, and consist of Melissa Price, senior vice president in charge of gaming for Caesars Entertainment; and Charlie Lombardo, a slot consultant and most recently the corporate senior vice president of casino operations at Seminole Gaming, along with several dynamic young slot executives currently managing gaming in high-profile casinos and gaming companies. Price and Lombardo have a combined gaming experience of more than 50 years directing slot and gaming operations at some of the largest casinos in Las Vegas and around the world. Following a networking break, industry legend and AGA Gaming Hall of Fame member John Acres will break down the “free play” programs in the industry, examine slot promotions and bonusing, and demonstrate what works and what doesn’t in today’s slot world. Subsequent episodes in 2018 will include Non-Gaming Revenue, Data Analytics, Player Development, eSports & Sports Betting, and Payment Solutions. Other episodes will include skill games, foodand-beverage, non-gaming amenities and ROI, customer behavior, entertainment, customer service, hotel operations, loyalty programs, leadership and mentoring, and more. The target audience will be the middle management of the industry, giving those executives the tools they need to understand the intricate relationship between gaming and hospitality. The knowledge they gain at the series will immediately pay dividends for any company in or serving the gaming industry. “The exciting part of this seminar series is that it will cover the wide range of disciplines that are a part of today’s casino industry,” said Roger Gros, publisher of Global Gaming Business. “Whether you run an integrated resort or a small regional casino, the information will be valuable and productive for your executives immediately.” For more information about the UNLV Gaming & Hospitality Education Series, contact Gros at rgros@ggbmagazine.com or visit the UNLV Gaming & Hospitality Education website at UNLVGHE.com.
NOVOMATIC COMPLETES AINSWORTH ACQUISITION
A
ustrian gaming supplier and operator Novomatic AG announced that it has completed the acquisition of a majority share of Australian slot supplier Ainsworth Game Technology. The European gaming giant concluded all regulatory approvals of the transaction, in which Novomatic paid just over €300 million for the 52 percent stake of the Australian company’s founder, gaming legend Len Ainsworth.
Harald Neumann, chairman of Novomatic
“All the necessary international regulatory confirmations are in place, allowing Novomatic to move ahead with the purchase of approximately 52 percent of the Australian gaming company Ainsworth Game Technology Limited (AGT),” Novomatic announced in a press release. “The process involved regulatory approval from multiple gaming jurisdictions, including in Australia, South America and the United States. One of the authorities’ main tasks was to carry out comprehensive compliance checks, not just for Novomatic itself, but also for all owners, supervisory board and executive board members.” The company reports that the transaction officially closed on January 5. With that, Len Ainsworth resigned as an executive director of AGT, but will continue as a consultant to the company for 12 months. “Novomatic is now one of the few European Union-based companies to have passed strict compliance checks from these international authorities,” the company wrote in the release. “For this reason, a variety of independent licensing boards undertook lengthy probity investigations and have confirmed the deal can go ahead. “Novomatic is particularly proud of its successful approval with the Nevada Gaming Control Board in Nevada, U.S., which required rigorous compliance scrutiny. Novomatic is now the first Austrian company to receive regulatory approval in the gaming metropolis of Las Vegas.” Harald Neumann, Novomatic chairman,
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stated, “The compliance investigations carried out as part of this registration were extremely thorough. They included all corporate divisions of Novomatic AG.” The purchase of shares in AGT is the largest investment an Austrian company has ever made in Australia. “Our shares in Ainsworth are strategically very important for Novomatic,” said Neumann. “After all, the joint plan is to increase market share in the U.S. to about 10 percent over the next five years. In the long term, Novomatic may become the world market leader in the area of gaming.”
RELM XL uses a unique 43-inch J-curved monitor with full touch-screen capabilities, large classic reel symbols, traditional wheel plex, stereo sound, and vibrant LED edge lighting. RELM XL games are featured in a three- or five-reel mechanical reel set configuration for high-, middle- and low-denomination placements, and industry-first bulging reel sets. RELM XL houses a physical bell that celebrates big wins.
ARISTOCRAT LAUNCHES DRAGON LINK, BUFFALO RELM XL
I
A
ristocrat Technologies has officially launched the Dragon Link progressive product in North America, and has launched new versions of its award-winning Buffalo brand on the RELM XL
INTERBLOCK LAUNCHES RECORD ETG FOOTPRINT nterblock Luxury Gaming Products announced that Resorts World Casino New York City now offers North America’s largest electronic table game footprint within one casino with more than 1,000 ETG units—896 are recurring-revenue Interblock units, showcasing a variety of configurations and formats from Organic Video units to large-scale Diamond Stadium configurations. Most recently, Interblock placed 104 seats at the casino’s newest gaming destination, Central Park. The new gaming lounge is located on the third floor of the property, hosting 336 video lottery terminals and ETGs. These products range from Diamond Roulette and Craps to Stadium
Gaming, including two Diamond Roulette units with 12 seats, two Diamond Craps units with 12 seats, one Big Six wheel with nine seats, and a Diamond Stadium with 41 seats. The Stadium is equipped with an extensive video wall composed of six LCD displays and two automated card generators. The video wall displays automated games in play, statistics and game history. Players can play up to four games from a single play station within the Stadium including roulette, craps, multi-hand blackjack, sic bo and baccarat. Craps, roulette and multi-hand blackjack results are generated by external generators located on the casino floor.
giant-format stepper cabinet. A partner to the company’s super-hot Lightning Link, Dragon Link builds on that success in an allnew collection of games carefully designed to coexist with Lightning Link, and according to the company, the game is already receiving great customer support and player interest. Dragon Link improves upon the innovative “Hold & Spin” mechanic found in Lightning Link to provide an exciting gaming experience using a common “Orb” trigger symbol that makes it simple for players to easily recognize the Hold & Spin trigger across all game themes. Plus, the Hold & Spin feature may be triggered in base or free games. In a separate release, Aristocrat announced the launch of Buffalo Thundering 7’s and Buffalo Inferno, versions of the company’s industry-leading Buffalo game theme on the new RELM XL largeformat stepper cabinet. Standing nine and a half feet tall, RELM XL features an eye-catching mechanical wheel topper. FEBRUARY 2018 www.ggbmagazine.com
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GAMING & HOSPITALITY
EDUCATION • SERIES • 2018 Presented by
Want to REALLY learn about the important issues in the gaming industry? ✓Enroll in the UNLV Gaming & Hospitality Education Series With monthly episodes, the UNLV Gaming & Hospitality Education Series will provide executives from all segments of the gaming industry insight into one topic each month.
Attend in person or subscribe to the webcAst
The first episode, Casino Games: Spanning Generations, held on March 22 at UNLV’s Stan Fulton Building, will examine how casinos have transitioned from one generation to the next. Moderated by Frank Legato, speakers include Melissa Price, senior vice president of enterprise gaming for Caesars Entertainment; Charlie Lombardo, former slots vice president for Seminole Gaming and Caesars Palace; and two current slot executives. In the second session, gaming legend and AGA Hall of Fame member John Acres will examine the current issues, such as free play, cash back, slot promotions, win-percentage strategies and unique customer service.
The UNLV Gaming & Hospitality Education Series is unlike any seminar you’ve ever experienced and will provide attendees with tools to use at their jobs the very next day.
For more information and to register for the conference, visit unLVGhes.com
A M S APPLIED MANAGEMENT STRATEGIES
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PEOPLE STAN FULTON PASSES
S
tan Fulton, the man who first marketed a “wheel” slot machine, which eventually became the Wheel of Fortune game, the most successful slot game of all time, died last month at the age of 86. Stan Fulton After developing the “Wheel of Gold,” Fulton sold his company, Anchor Gaming, to IGT for $1.3 billion. He later donated $6.7 million to the University of Nevada, Las Vegas to construct a building that now bears his name and houses the International Gaming Institute. After selling Anchor, Fulton used the proceeds to buy the Sunland Park Racetrack in New Mexico. Fulton arrived in Nevada in the 1970s developing a company called Fortune Coin, where he developed the industry’s first video slot. He expanded into a Nevada slot route, Anchor Coin. Anchor Gaming also ran Colorado casinos. Wheel of Gold was introduced in 1995, and quickly became popular as the first machine to offer a bonus. IGI Executive Director Bo Bernhard explained what Fulton’s donation meant to UNLV. “Over the years, the building has convened leaders from every major gaming company and global jurisdiction, and those discussions have led to breakthroughs in everything from sports wagering and the NFL to gaming innovation to slot operations to public policy to responsible gambling,” he says. “Without Stan, this never becomes the truly ‘international’ center its founders intended, and the thousands of students, government officials and leaders who have benefited from his generosity will be forever grateful.” Patty Becker, a former member of the Nevada Gaming Control Board and gaming attorney, as well as a one-time leader of IGT, said Fulton was down to earth. “When I headed the International Gaming Institute, Stan negotiated with Jim Rogers (two tough guys) to financially incent me to build IGI as a business unit so he would be proud of having his name on the building,” she said.
NEW JERSEY’S BYRNE DIES
O
ne of the first politicians to support the legalization of gaming outside of Nevada died last month. Former New Jersey Governor
Brendan Byrne backed South Jersey politicians in 1974 that wanted to bring gambling to Atlantic City to revive the down-on-its-luck resort. The referendum in 1974 allowed any community in New Jersey to legalize casinos with a local option. That vote went against legal gambling, so the wording was changed to allow casinos in Atlantic Brendan Byrne City only in 1976. It passed by a 55-45 margin. When Resorts International opened its doors on Memorial Day 1978, Byrne showed up to cut the ribbon, famously warning organized crime to “keep your filthy hands off Atlantic City.”
NOVOMATIC AMERICAS NAMES MCLAUGHLIN MARKETING VP
N
ovomatic Americas, the Chicago-based subsidiary of Austrian slot manufacturing giant Novomatic AG, announced that Kathleen Kathleen McLaughlin McLaughlin has been appointed to the executive team as vice president of marketing. McLaughlin brings over 28 years of casino industry experience and results-driven integrated marketing to the role, where she will oversee all marketing and communications. She will report to Rick Meitzler, president and CEO of North America, and will be based in the Chicago area. McLaughlin began her 28-year career in gaming by launching the first-ever player tracking system at the Las Vegas Hilton, and moved into slot operations with Mirage Resorts, Inc., in the early 1990s. She led riverboat expansion into Illinois as the director of slot operations and slot marketing for Hollywood Casinos, and was recruited to spearhead marketing for WMS Gaming, Inc., where she launched the Monopoly product into the North American Gaming market. McLaughlin also held senior corporate slot operations positions with Caesars Entertainment, where she was vice president of gaming, vice president of product development and director of slot operations.
WILLIAM HILL NAMES DEVLIN CHAIRMAN
R
oger Devlin will succeed Gareth Davis as group chairman of U.K. bookmaker William Hill after nine years as chairman of Sports Information Services. According to the bookmaker, Devlin will serve as a Roger Devlin chairman designate until April, when Davis is scheduled to step down. Sir Roy Gardner, senior independent director of William Hill, said about the appointment, “Roger Devlin has extensive experience as a listed company chairman, in the city from his early days in corporate finance and across his sector relevant appointments at Hilton Group, Gamesys and SIS.” Sports Information Services said the company has started a search for a new chair.
GGB
February 2018 Index of Advertisers
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . .13 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . .21 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Atrient . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Casino Trac/Table Trac . . . . . . . . . . . . . . . .39 Cognitec Systems . . . . . . . . . . . . . . . . . . . .47 CountR . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 del Lago Resort Casino . . . . . . . . . . . . . . .43 Dickinson Wright . . . . . . . . . . . . . . . . . . . .17 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . .11,29 FABICash . . . . . . . . . . . . . . . . . . . . . . . . . .46 Fantini Report . . . . . . . . . . . . . . . . . . . . . .63 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 GGB Publications . . . . . . . . . . . . . . . . .56,57 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Greenberg Traurig . . . . . . . . . . . . . . . . . . .33 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 JCM Golf Tournament . . . . . . . . . . . . . . . .61 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . .25 Konami Gaming . . . . . . . . . . . . . .Back Cover NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 RPM Advertising . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . .9 TCSJohnHuxley . . . . . . . . . . . . . . . . . . . . . .2 UNLV Foundation . . . . . . . . . . . . . . . . . . . .55 UNLV Gaming & Hospitality Series . . . . . . .64 World Game Protection . . . . . . . . . . . . . . .53
FEBRUARY 2018 www.ggbmagazine.com
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CASINO COMMUNICATIONS
Q
&A
Vic Salerno CEO, US Fantasy Sports
V
ic Salerno is a member of the AGA’s Gaming Hall of Fame because of his legendary career as a legal bookmaker in Nevada. As head of American Wagering, Salerno launched the first mobile sports betting app, just before the company was acquired by wagering giant William Hill. Salerno’s new company, US Fantasy Sports, uses a parimutuel system to allow players to enjoy fantasy sports in all jurisdictions where fantasy sports are legal. His long background as a legal bookmaker allows him a unique viewpoint on the possibility of legal sports betting in the U.S. He spoke with GGB Publisher Roger Gros from his offices in Las Vegas. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: Everyone is waiting for the Supreme Court decision in the New Jersey case challenging the Professional and Amateur Sports Protection Act. But does it even matter these days? There is so much attention being drawn to how PASPA has failed so miserably that there seems to be some momentum in Congress to fix it, no matter what the Supreme Court says.
it tomorrow; it’s worked for us for 60 years, or more, so why not take that? But states will want to do it their own way. I think the biggest fear that I have is the states don’t understand the business is really gambling, and it’s really a low return on your investment. You can see that here in Nevada; it’s 1 percent to 2 percent of our gross revenue, paying a tax rate of around 6 percent. We have a hard time making it with 6 percent, so if you consider the rate Pennsylvania wants to impose—approximately 36 percent—I don’t know how people can make it.
“
Salerno: Oh, I agree with that. I think that if (SCOTUS) allows it to stand, Congress will go and change the law. We all know illegal sports betting is happening. It’s not regulated and nobody’s benefiting—not a city or a state, or at the federal level. And it’s getting more popular, and it’s harder to detect now, with the advancing technology. Let’s say PASPA is overturned or Congress passes something that puts it in the hands of the states to legalize it. What will the shape of the industry look like if that’s the case?
I think it’s going to be a Pandora’s box, if it opens, because every jurisdiction—and you’ve seen it in the past with gaming—creates different tax rates and different regulatory limits that will really affect it. And states don’t like to get along with each other, or do things the same way. They could take the Nevada model, and do 66
Global Gaming Business FEBRUARY 2018
Other states will come around, just like anything else in gaming.
”
When Delaware approved sports betting, before the courts said they had to limit it to parlay wagers, there was one property that built a Vegas-style sports book, spending millions, and ended up having to eat that investment. How do you recommend casinos approach sports betting?
Well, if you take Nevada, for example, the sports books are coming down in size, even in the big properties. They’re not as large. We used to build them for the Super Bowl, but it’s the same thing that’s been said many times. If you build a church for Easter, what do you do the rest of the year? So I think that they should start off minimally. Use existing space. They all have conference or ballrooms where they can televise the events, and with today’s ways that you can wager, especially with the mobile application, why do you need to build these huge theaters? And I don’t think it’s going to attract that many new people. Especially in New Jersey, I don’t think people are going to drive to Atlantic City just for a Sunday football game, if they can
wager on a mobile device or go to a racetrack that may be closer. Let’s talk about mobile betting. That has really exploded here in Nevada. How important will it be for states to approve that kind of wagering? You were a pioneer in this field.
It is the convenience. Other states will come around, just like anything else in gaming. We saw what happened to Native American gambling, going across the country. We saw racinos come in across the country. I think the same thing’s going to happen here. It’s going to be a progressive thing, and the states that have the lower tax are going to do much better than the other states, because they’ll be able to give the customer the benefit. So, if you have a budget, do you want to spend it on a huge facility, or would you rather spend it on marketing to a mobile app, where the person’s going have it 24/7? To me, it’s really a no-brainer. You mentioned what a narrow margin sports betting has. How would you go into a state and convince them that you can’t tax this out of existence, because you won’t get the benefits that come from it?
In our good years—let’s say the average of the past 20 years—we averaged about 5 percent of the handle that we put through. Of that 5 percent, first of all, we have to pay the 6 percent to the state, and then the federal government has an excise tax, where whether we win or lose, we pay one quarter of 1 percent. So, you start off with those, and then you have your overhead. So, I think the customer is going to go where he gets the best deals. We see that play out here. The places that have the better odds do much better than the other places.
B:8.625” T:8.375”
B:11.375” T:11.125”
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Job info None 8.375” x 11.125” 8.625” x 11.375”
Fonts Avenir LT Std (85 Heavy, 35 Light, 65 Medium), Trajan Pro (Bold) Images 561_SKY__C.tif (CMYK; 480 ppi; 62.39%), Star Watch Fire Logo. psd (CMYK; 1058 ppi; 14.17%), Star Watch Magma Logo.psd (CMYK; 1471 ppi; 20.39%), Fog.psd (CMYK; 413 ppi, 545 ppi, -546 ppi; 72.51%, 55.02%, -55.02%), Star w_stars.psd (CMYK; 12711 ppi, 19801 ppi, 9232 ppi, 32969 ppi, 15388 ppi, 8548 ppi, 26124 ppi; 2.36%, 1.52%, 3.25%, 0.91%, 1.95%, 3.51%, 1.15%), 4 POD Star Watch.psd (CMYK; 988 ppi; 30.36%) Inks Cyan,
Magenta,
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