Ggbjuly2013 by Global Gaming Business

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Slot Route opeRationS | Mobile GaMinG & Geolocation | aGa pReSident FReeMan’S FiRSt coluMn

July 2013 • $10 • Vol. 12 • No. 7

Mr. JCM Aki Isoi and the

development of the slot machine bill validator

Official Publication of the American Gaming Association

Building a Budget

Cutting Costs or Cutting Throats?

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Vol. 12 • No. 7

CONTENTS

ON THE COVER Page 22

JCM’s Validation JCM Global has moved from the small company started as Japan Cash Machine in 1955 to one of the major innovators in the supply sector of the casino industry. Here’s how JCM, which pioneered the slot bill acceptor, is bringing new innovation to several areas of gaming. By Roger Gros

july COLUMNS 14 AGA An Industry of Opportunity Geoff Freeman

16 Fantini’s Finance Capital Ideas Frank Fantini

48 Global Gaming Women Leading Attributes Cath Burns

DEPARTMENTS 4 The Agenda

FEATURES

6 Dateline 13 Nutshell 38 iGames 42 Frankly Speaking 34 Geolocation Arrives

18 The Art of Budgeting If the recent recession proved anything to casino operators, it is that the process of creating a workable budget must be based firmly in reality. By Marjorie Preston

26 Slots on the Streets The slot route operator makes money for operators in a unique environment that represents a hybrid of casino marketing and mom-and-pop business. By Dave Bontempo

30 Online and Offline Success in the new digital gaming world means using mobile technology and social media to drive players to brick-and-mortar operations. By Rory Shanahan

The success of online gaming in the intrastate form that is emerging depends on reliable geolocation technology. By Rodric J. Hurdle-Bradford

41 Remembering a Legend The 15th Annual International Conference on Gambling & Risk Taking recognizes its founder, the late Dr. William Eadington.

44 Cutting Edge 46 New Game Review

By Dean M. Macomber

50 Goods & Services 53 People 54 Casino Communications With U.S. Congressman Joe Heck (R-Nevada)

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THE AGENDA

School of Hard Knocks Roger Gros, Publisher

Vol. 12 • No. 7 • July 2013 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com

hen I was going to college, I was often flummoxed by how little many of my professors knew about the real world. I remember I had one prof who didn’t even understand how to use public transportation (my primary means of moving around at the time). Another was completely ignorant about how students paid for college (he claimed they simply showed up in his class, so why should he worry about how the got there?). And I actually had a journalism teacher who refused to let us write on the early computers (Apple II in my case), insisting that we use typewriters. So I grew up with what I believe is a healthy disrespect for pure academicians. Full disclosure, however: while I attended college I never received the sheepskin, and my career seems to have trundled along just fine without it and without the “advice” that some of my professors tried to pass along. That’s why the Conference on Gambling and Risk Taking has always been such anathema to me. I truly enjoy many of the topics and my interaction at the conference with many brilliant people, but I always run across those so-called experts who have no real-world experience in gaming and are forever separated from the real world. That was decidedly not the case with the founder of the conference, Dr. Bill Eadington, whose ability to build a bridge between higher education and the gaming industry was unmatched. Since there was no connection at all when he developed the first institute to study gambling at the University of Nevada Reno more than 40 years ago, he had to show gaming executives how more education would benefit them. And he did that very astutely until his death last February. Last month’s 15th conference was the first time it has been held in four years (and the first time without Eadington), so I was looking forward to the event for the solid research, eclectic topics, and sometimes interesting, sometimes downright boring speakers. Others apparently were also interested in attending, and the conference set a new record with nearly 500 attendees. But I found that my disrespect for those pure academicians has only grown. Now, I’m the first

Global Gaming Business JULY 2013

to admit that more attention from the academic world can only be good for gaming. More programs, more courses and more people entering the field at those high levels of education elevate the respect shown for the industry. But part of my problem is the so-called research that is being perpetrated at institutions in the name of “responsible gaming.” In both Canada and Australia, a cottage industry has sprung up to study problem gaming in each country. These studies are fueled by government funding that would be the first to dry up if the results showed that problem gambling wasn’t as serious as they first indicated, or that it was shrinking to a manageable level. In fact, these “studies” consistently find increasing problems with people unable to gamble responsibly. Should they come to any other conclusion, of course, they’d risk shrinking of government funding of these studies, and therefore, the very liveliehood of many of these “researchers.” Unfortunately, some of these studies were given a bit of prominence by being permitted to be presented at the CGRT. When the NCRG holds a conference, all research must be peerreviewed and vetted multiple times with multiple certifying organizations. By not holding their presenters to stricter standards, the CGRT is playing a role in diminishing important and legitimate research into the gaming industry by highlighting sloppy and biased studies. This is not to say that the CGRT was packed with useless presentations; it wasn’t. Most of the sessions revealed studies that were well thought out and professionally designed. But in many cases, even these worthwhile studies seem to have suffered from a lack of real-world experience, breaking down complex data to column after column of dense numbers that only an academic could understand. I doubt many casino executives would have comprehended or even respected the efforts. I’m hoping that the next time the CGRT is conducted the conference chairs will try to eliminate the dubious studies and concentrate on research that would have a true application in the real world. A little less ivory tower and a little more corner bar.

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

• Julie Brinkerhoff-Jacobs, President Lifescapes International

• Nicholas Casiello Jr., Shareholder Fox Rothschild

• Jeffrey Compton, Publisher CDC E-Reports

• Dean Macomber, President, Macomber International, Inc.

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

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

• Jim Rafferty, President, Rafferty & Associates

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

• Steven M. Rittvo, President, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

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

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DATELINE USA july2013

Cuomo’s Casino Plan

No Dice in Chicago

Developers: Catskills need clustered casinos

Illinois’ expanded gaming bill dies

fter months of conjecture and debate, New York Governor Andrew Cuomo has finally unveiled his gaming expansion plan, which includes three Las Vegas-style casinos in upstate New York. Cuomo has envisioned a total of seven casinos statewide. To no one’s surprise, the actual plan— which excludes New York City for now —has sparked even more debate. “For years, neighboring states like Connecticut and New Jersey have benefited from New Yorkers leaving our state to visit their gaming facilities,” Cuomo said in a statement last month. “We want to reverse this trend by putting new resort destinations in upstate New York.” The governor’s plan would also add two video slot parlors in the western part of the state—a barely veiled threat to the Seneca Indians, who owe the state hundreds of millions of dollars in pastdue casino revenues—and prohibit Class III casinos in New York City unless the state legislature separately approves it. The latter element is a departure from Cuomo’s previous plan, which would have allowed a Big Apple casino, most likely at Resorts World racino at Aqueduct, five years after the upstate casinos had been in operation. Cuomo has called for a minimum $50 million licensing fee and a 25 percent cut of gross revenues

New York is divided into five gaming regions under Cuomo’s plan.

going to the state. He unveiled the proposal June 5 and hopes to push it through the legislature by the close of the session June 20. Assembly Speaker Sheldon Silver says he thinks the new proposal is a go. “The governor has presented a comprehensive plan, and I believe we can reach an agreement before the end of session,” Silver said. But Assembly Racing and Wagering Chairman Gary Pretlow is less than enthusiastic. “It’s a plan I have some issues with,” he told the Rochester Democrat and Chronicle. “I think all seven locations, if not authorized immediately, should at least be noted. I think we’re missing out an opportunity if you limit it to one per area. I think the Catskills can handle more than one.”

Rocky Rocks

Casino opens in western Maryland aryland’s fourth casino opened last month, as Rocky Gap Casino Resort in western Maryland opened its doors with 558 slot machines and 10 table games. Rocky Gap Casino The new casino, managed by Minnesota-based Lakes Entertainment, is one part of a resort hoped to transform a money-losing lakeside lodge formerly owned by the state into a successful getaway for Baltimore residents 130 miles to the east. In addition to 250 new jobs in the casino, more jobs will be added as other sections of the property complete renovation. The property offers a boutique lodge feel in a 220-room upscale hotel with a world-class spa, a Jack Nicklaus-designed golf course and proximity to a variety of summer and winter sports. The property formerly known as the Rocky Gap Lodge & Golf Resort in rural Allegany County was built on public parkland with a state subsidy. The project was a financial failure for the state. The lodge fell into disrepair in recent years. After the 2008 gaming law made the lodge one of the approved gaming locations, it took three tries and a changing of the rules before three companies bid on the license.

Global Gaming Business JULY 2013

he Illinois legislative session ended May 31 without an expanded gambling bill. SB 1739 would have authorized new casinos for Chicago, the south suburbs, Lake County, Rockford and Danville, plus allowing slots at racetracks. Proponents said the bill Illinois Governor Pat Quinn would have led to $1 billion in annual gaming tax revenue that would have benefited education and created more than 100,000 jobs. With just a few hours left in the session, State Rep. Bob Rita, sponsor of the bill, decided not to call it for a House vote. Rita said there were two main reasons for the bill’s failure: “First, we need to address the comments made in the final days of session from Governor (Pat) Quinn’s gaming board chairman, Aaron Jaffe, when he said Chicago should be considered in a separate bill. This certainly caused many to wonder what the governor’s intentions are with this proposal,” Rita said. “More importantly, we need a bill that provides fairness, and there are several issues before us now that do not provide the appropriate fairness required for a gambling bill that we must do right.” Rita said slots at airports, revenue sharing for horse breeders and Chicago casino-related issues also needed to be addressed, as well as Cook County Board President Toni Preckwinkle’s lastminute bid for the county to get a share of Chicago casino and racino revenue. But Quinn, who has twice vetoed gambling expansion measures, said, “I will never, ever sign a gaming expansion absent comprehensive pension reform.” Jaffe had called the measure “a Christmas tree bill,” and said the Chicago casino provision should become separate legislation. While the bill called for the other four proposed casinos to report to the Illinois Gaming Board, a new, mayor-appointed Chicago Casino Development Authority would oversee the Chicago casino. Jaffe said that would lead to corruption.

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DATELINE ASIA july2013

Four Seasons Macao

Cotai ConneCtion

Sands OK’d to sell Four Seasons apartments

ands China has received a longawaited approval from the Macau government to sell luxury apartments next to its flagship Venetian Macao casino in the city’s booming Cotai resort district. The units are estimated to number 300 and are located in the 30-story Four Seasons hotel, which is designed to appeal to the territory’s large and lucrative market of affluent gamblers from mainland

Back to Drawing Board

China. The apartments will be sold as co-ops, with prospective buyers purchasing shares that guarantee certain rights to the residences rather than outright ownership. This ensures the deal is in compliance with laws that prohibit Macau’s casino companies from directly selling property in the Chinese gambling enclave. The luxury units could net Hong Kong-traded Sands China, a subsidiary of global resort giant Las Vegas Sands, as much as US$775 million, according to local investment analysts Union Gaming Research Macau.

Goa, Goa, Gone?

Okada’s Philippine partnership shattered

New leader pledges to shut down casinos

aming in the Indian state of Goa has grown via a series of complicated and arcane regulations, so that its shape today is unlike any gaming industry in the world. But it won’t have a shape Goal Chief Minister for long if the new executive in charge of the state has his way. Chief Minister Manohar Parrikar said he’s ready to remove the Manohar Parrikar five boats that currently anchor in the River Mandovi and ferry customers out to them. Parrikar says he has determined to terminate the licenses of the casinos at some future unspecified date. “By the time I complete four years, there will be no casino boat in Goa’s waters,” said the chief minister, giving himself a year wiggle room in the event of any legal licensing issues. While Parrikar has not yet terminated licensing, he says he will only renew licenses after “proper regulations” are instituted. “We have not entertained any new application. Also, one of the casinos which had applied to transfer its license to another management was denied permission to do so,” he said. “This is enough to indicate that we have no intention to encourage offshore casinos.”

hen officials with the Philippine Amusement nd Gaming Corporation (PAGCOR) appeared at G2E Asia in May, a question was raised Manila’s Tiger Resorts about the status of Kazuo Okada and Universal Entertainment. Reports that PAGCOR regulators had cleared Okada of bribery and money laundering were not true, said Francis Hernando, a vice president with PAGCOR in charge of the company’s regulatory system. Those charges, said Hernando, will be considered by the Philippine Department of Justice. But Hernando said Okada was in violation of the Philippine Constitution that requires that Philippine companies be the majority owner of any casino, particularly those in PAGCOR’s Entertainment City complex in Manila, where Universal’s Tiger Resorts owns a casino site. He said Universal has assured PAGCOR regulators that it would enter into an agreement with a Philippine company to become the majority shareholder in the project. “The ball is in their court right now,” said Hernando. Universal has apparently dropped the ball, as it was announced last month that negotiations with Philippine company Robinsons Land have failed, and Universal will be seeking another partner. Foreign ownership of casino sites is limited to 40 percent of the equity, and Universal (through its U.S. subsidiary Aruze USA) currently owns 64 percent of Tiger Resorts. Hernando says Universal must act soon. “The solution is entirely up to them,” he told Reuters. “As long as there is an apparent breach of the constitutional limitation on land ownership, we cannot allow the casino to open; that’s the extent of our regulatory mandate.”

No Locals Casinos Singapore expands limits on citizens gambling ingapore is implementing new measures to combat problem gambling S that clarify and expand on the current

Singapore’s Marina Bay Sands

policy of limiting monthly visits to the city’s two casinos by individuals deemed financially vulnerable. The restrictions, which cam into effect June 1 and apply to citizens and permanent residents, will cap visits at a maximum of eight per month and could limit them to one a month. Some 4,000 to 6,000 individuals could be affected, according to news reports. The restrictions will be of three types: Individuals may apply to the Na-

tional Council on Problem Gambling for voluntary limits. Family members may apply for limits on a person’s behalf. Lastly, persons found to have poor credit records or are otherwise deemed vulnerable to financial harm due to gambling could have limits imposed on them by a committee of examiners appointed by the council. The limits will differ from person to person and will vary with circumstances, the council said. Once imposed, a restriction will be in force until revocation is approved by the NCPG. Individuals will, however, have the opportunity to object. JULY 2013 www.ggbmagazine.com

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DATELINE GLOBAL july2013 Woodbine Racetrack was also a loser in vote by Toronto City Council

ToronTo Casino: r.i.P. Troubled mayor can’t convince council

fter a year of contentious debate, Toronto City Council has voted overwhelmingly to kill a proposed multibillion-dollar downtown casino. The 40-4 vote occurred at a special meeting called by a majority of councillors after Mayor Rob Ford, an outspoken advocate of the casino, had postponed a vote while he tried to wrest for the city a larger share of the casino’s potential revenue from the Ontario Lottery and Gaming Corporation. Proponents believed it would take a minimum of C$100 million to persuade council to back the plan. But after City Manager Joe Pennachetti re-

leased new figures last month showing the city would be paid at most a $40 million hosting fee, Ford tried to cancel the vote outright, declaring the proposed casino “dead.” The administration had sought upwards of C$150 million a year from the OLG, a sum far exceeding the normal hosting fee paid to the rest of the province. A final sum was never formally agreed, but the OLG supported the principle of a substantially larger fee for Toronto. But when other cities protested, the plan was ordered off the table by Premier Kathleen Wynne.

Gaming-Centric Baha Mar taps Global Gaming Asset Management as casino manager he mystery is over. After Caesars Entertainment bailed on his project in 2008, Baha Mar Chairman and CEO Sarkis D. Izmirlian was left in the lurch. When he improbably arranged financing through China Exim Bank and construction via China State Construction, the manager of the property’s gaming operations was suddenly a hot topic. Baha Mar Chairman and CEO Sarkis D. Izmirlian, from left, is joined by Bahamas Tourism Minister Last month, Izmirlian anObediah Wilchcombe and Global Gaming Asset nounced that he has chosen Global Management CEO Bill Weidner for the Gaming Asset Management, which announcement at G2E Asia in Macau is led by former Las Vegas Sands President Bill Weidner, to manage the resort’s gaming operations. And unlike neighbor Atlantis, he says gaming will be central to the property’s success. “It’s hard to find the casino in that property,” he said. “Not so with Baha Mar. The casino is in the middle of everything, and that’s not a mistake. We plan to market aggressively to gamblers around the world. And that’s part of the reason we’ve chosen Bill and his team.” Weidner said he plans to address the Chinese market as part of GGAM’s marketing plan. “While you might think a 12-hour flight from China would be too far,” he says, “there’s a network of business that attracts Chinese to U.S. and Latin American cities. So Baha Mar can be a stop for relaxation between business opportunities for Chinese VIPs.” Weidner’s accomplishments in Macau, in partnership with his team, was the reason Baha Mar chose to announce the casino management choice in Macau. Followed by Bahamian press, a Baha Mar spokesman said the company wanted to show them what Baha Mar could be when it comes to gaming, retail, entertainment, and food and beverage. Baha Mar is a $3.5 billion project on Nassau’s Cable Beach. It will include a 100,000-square-foot casino with 150 table games and 1,500 slot machines. Reformed gaming regulations will allow sports betting, according to Wilchcombe, which will attract sports-crazed U.S. bettors.

Global Gaming Business JULY 2013

Gaming, Mon!

Jamaica accepting casino proposals

or the first time in the isJamaica Finance Minister Peter Phillips land’s history, the Jamaican finance ministry began accepting proposals for casinos on June 1 to help boost tourism. Investors will have until September 30 to submit plans and a $150,000 application fee for one of three gaming licenses to be granted. Each proposed development must have at least 2,000 rooms and applicants must clearly show funding commitments. In return, the Jamaican government will offer “exclusivity”—or a competition-free buffer zone—to winning bidders. A four-month review period will follow, with winning bids announced in early 2014. The Jamaican legislature passed the Casino Gaming Act last year allowing developers to build casinos offering traditional table games and slot machines. The act established a casino tax rate of 10 percent on gross profits. Currently, the island offers a few gaming facilities in Kingston and popular tourist areas. The casinos would be part of an Integrated Resort Development program that would help grow the hotel sector with casinos, entertainment, banquet facilities and more. Among those expected to bid are the Palladium resort group and state-owned Harmonisation Limited and its partner in the Harmony Cove resort to be developed in Trelawny. Rose Hall Developments Limited also is expected to submit an application. Finance Minister Peter Phillips said the project will lead to expanded and enhanced tourism that will help create jobs for Jamaicans and lead to new investment in the tourism sector. The finance ministry has assembled a technical team including an architect, civil engineer, structural engineer, sociologists, legal adviser, financial analyst, environmentalist, landscape architect, land surveyor, geologist and archaeologist to review the proposals.

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DATELINE EUROPE july2013 Melco Crown’s City of Dreams in Macau

SpaniSh Showdown

Melco Crown and Las Vegas Sands will face off in Spain’s two largest cities

ot content to lose the EuroVegas contest to Madrid, Barcelona has launched plans of its own to host a mega-leisure complex in the Catalonian capital and has invited Macau casino operator Melco Crown to develop an 1,100-room destination resort with a casino. A unit of Melco Crown has been invited to partner on a US$1 billion resort gaming development planned for Barcelona. Melco International Development told Business Daily, an English-language newspaper based in Macau, that it will operate a casino at the complex, dubbed Barcelona World or BCN World, through an entity called Veremonte, whose local partners include the Meliá hotel group and a company called Value Retail. “In the coming months, we shall continue to

work with Veremonte on the definitive casino management agreement and shall make an announcement when the agreement is signed,” Melco said in a statement. The news comes only months after Barcelona was passed over by Las Vegas Sands for Madrid as the location for its multibillion-dollar EuroVegas resort complex. BCN World will open in phases, starting with a 1,100-room resort called Barcelona Dream which will feature a casino and other leisure attractions and could be open by 2016 at a projected cost of €766 million. Plans call for the complex to contain six resorts at full build-out totaling 12,000 rooms and six casinos. Meanwhile, speaking recently at the Jerusalem International Tourism Summit, Sheldon Adelson, the

billionaire chairman and CEO of Las Vegas Sands, fleshed out some of the details of the company’s US$10 billion, multi-stage EuroVegas resort complex, saying it will include 12 hotels “with about 3,000 rooms each” and “a total of about 2,400 meeting rooms.” Las Vegas Sands chose Madrid to host the complex, but not before pitting the capital against Barcelona, securing huge concessions from each in the process relating to labor laws, which in typically European fashion are powerful and protective, and the country’s historically high tax rates.

And The Winner Is…

London group selected to develop Leeds casino

U.K. Report: Minors at Risk Is social gambling morphing into a problem for Britain’s youth? new report ordered by the U.K. Gambling A Commission concludes that broader regulation of so-called “social gambling” is needed to protect minors. The study, completed by the Gambling Lab, is intended to provide an overview of the sector to assist in identifying the potential implications for consumer risk, harm and responsible play. The study includes a number of recommendations. Among them: • Stricter age verification measures are needed across real-money and free-to-play gambling-related content. • The exposure of children and adolescents to gambling-related marketing material should be limited. • Close monitoring and research is needed into some games and features relating to increased accessibility through social media. • “Special consideration” should be taken of social media’s influence, particularly among children and adolescents. 10

Global Gaming Business JULY 2013

ondon-based Global Gaming Ventures has beat out Leeds United football club to win the bidding to develop the largest casino in Leeds. City Council selected GGV after a year of study. In return, the company has agreed to pay the city £1 million up front for the license and a minimum of £450,000 per year for its duration. The £130 million, 50,000-square-foot project will be located at a development called Victoria Gate in the city center. The casino will contain up to 150 machine games capped at maximum payouts of £4,000 each. More than 200 jobs will be created, 90 of which must come from Leeds, according to the terms of the license. Graham Hyde, chair of the licensing committee, said the competition for the license was fair and robust. “Following a detailed consideration of each applicant’s proposal, the licensing committee decided to award the license to Global Gaming Ventures as it was determined that their proposal would bring greatest benefit to the city,” he said. “I would like to thank both applicants for the

Global Gaming Ventures Leeds

time and effort put into their proposals. We received two strong proposals which were both duly considered. “Importantly, GGV has committed to provide significant funds for a council-run social inclusion fund and a range of measures that will help to ensure that any potential harmful effects are managed and mitigated against. “With GGV committed to create at least 205 new jobs and providing significant payments for the council to establish a social inclusion fund, the award of the license will allow the council to invest in activities that support the city’s social and economic inclusion agenda.” Opening is slated for some time in 2016.

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DATELINE TRIBAL july2013

Twin SucceSS

New Arizona casino drawing crowds

ince the Twin Arrows Navajo Casino Resort opened near Flagstaff, Arizona on May 24, Derrick Watchman, chief executive officer of the Navajo Gaming Enterprise, said about 2,000 people have been coming to the casino daily. Visitors tell him Twin Arrows easily holds its own with the best Indian casinos in the Southwest regarding types and numbers of games and dining options. He added the 90-room hotel was sold out over Memorial Day weekend. More hotel rooms, an events center and meetings and convention space will open in the future. Because of the casino’s size, guests did not have to wait in line to enter, Watchman said. However, lines did form for the Four Elements Restaurant and at the player’s club desk. Also, Watchman said the hotel and casino are short-staffed at the moment. As a result, a decision was made to limit the casino’s hours until it reaches full staffing levels. Twin Arrows is the Navajo Gaming Enterprise’s first casino in Arizona after opening two in New Mexico.

Off Rez Wait Cut Washburn proposes tribal homeland rule ssistant SecretaryIndian Affairs Kevin K. Washburn has invited the public to comment on a proposed rule that would provide greater notice Assistant Secretary of Interior Kevin K. regarding land-intoWashburn trust decisions. For gaming decisions, typically made by the assistant secretary, the proposed rule clarifies that the assistant secretary’s decision is final and allows the assistant secretary to proceed with taking the land into trust without a waiting period. Under the proposal, litigants who want to prevent the trust acquisition from occurring will have to come forward and demonstrate irreparable harm would occur. The rule would not affect the right to judicial review of the basic decision. In addition, the proposed rule would omit a 30-day waiting period which, as a result of a 2012 U.S. Supreme Court decision, now is unnecessary. The Mashpee Wampanoags have already referenced the ruling to demonstrate the tribe can put land into trust more quickly than detractors say in the disputed southeastern region of Massachusetts.

Global Gaming Business JULY 2013

supreme snub

Michigan tribe may be able to reopen casino

pon the advice of the U.S. Solicitor General, the U.S. Supreme Court is not expected to take up the case of the Bay Mills Indian Community’s shuttered casino in Vanderbilt, Michigan. As a result, the Court of Appeals ruling stands that the casino may reopen; a federal district judge said the property is not on tribal land and ordered the casino closed, but a panel of federal appeals judges reversed that order. In the meantime, an amended lawsuit is working its way through the court, so the facility will stay closed. The tribe purchased land in Vanderbilt with trust earnings and opened an 84-slot casino in 2010. The tribe’s reservation is located in Chippewa County in the Upper Peninsula. It operates a casino and resort there. Soon after, the state and the Little Traverse Bay Bands of Odawa Indians, which operates a casino in Petoskey, filed a lawsuit stating Bay Mills violated the tribal-state compact, and broke state law by opening the casino without proper approvals. NIGC assoCIate CommIssIoNer reappoINted Daniel Little has been reappointed associate commissioner at the National Indian Gaming Commission by Secretary of the Interior Sally Jewell. Little’s appointment will run through April 2016.

Miccosukee Millions IRS says tribe owes back taxes he Internal Revenue Service said the Miccosukee Indians of West Miami-Dade, Florida, owe $170 million for failing to report and withhold taxes from the tribe’s 2000-2005 distributions of gambling profits to tribal members, according to federal tax lien notices filed in Miami-Dade Circuit Court. Hundreds of individuals in the 600-member tribe also received separate IRS bills totaling $58 million for failing to pay personal income taxes on those distributions. Those numbers could dramatically rise as the IRS currently is auditing Miccosukee’s gambling distributions for 2006-2010, when payouts to each member reached $160,000 annually. In response, Chairman Colley Billie said, “The Miccosukee people will continue to pay all applicable lawful taxes, as they always have, and we will continue our efforts to find a fair and workable solution to this dispute. The Miccosukee people, however, will not be intimidated or coerced by these tax liens into surrendering tribal sovereignty or principles for which so many of our ancestors have paid a very high price in blood, lives and tears.” Under federal law, the tribe’s status as a sovereign nation means the entity itself is not subject to taxes. But once the tribe distributes casino profits to members, they are individually responsible for reporting and paying income taxes on their annual returns. And, the tribe itself must withhold taxes on the distribution income and forward those deductions to the IRS.

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NUTSHELL James Packer and Crown Casinos are teaming up with a partner in Sri Lanka on the development of a US$350 million non-gaming resort hotel on the Indian Ocean island. The plan, which had been rumored since the Australian casino tycoon met with Sri Lankan officials in February, was announced in June by Investment Promotion Minister Lakshman Yapa Abeywardena. Hollywood Casino Toledo in Toledo, Ohio drew more than 3.4 million visitors in the first year since it opened its doors, which is 600,000 more visitors than what officials initially expected, according to General Manager Richard St. Jean. The great majority of those visitors came from outside of Lucas County, where the casino is located, and 44 percent came from out of state. Toledo Mayor Mike Bell greeted the one-year anniversary: “If all 1-year-olds could do what they have been able to do in one year, we really would be moving as a city and as... a world,” he said. The casino has so far paid $4.3 million in taxes to the city and $1.6 million to the county. Lawmakers in Delaware have moved to make slots in veterans clubs permanently legal. The state ordered clubs and fraternal lodges, along with private social clubs, to shut down gaming machines last year. After an outcry, a temporary measure permitted the veterans clubs and fraternal lodges to operate the machines through the end of this month. The new bill makes the exception for veterans clubs and fraternal lodges permanent, with 40 percent of slot revenues to the state. The clubs would have to spend 40 percent of the remainder on charitable causes. Gaming machines will remain banned at private social clubs, regardless of charity work they may do. An influx of Chinese visitors is driving South Korea’s casino industry to record annual results. The 16 casinos that are restricted to foreign passport-holders hit US$1.2 billion last year, according to official statistics, and it was the first year that the number of Chinese customers surpassed the Japanese, accounting for 40.7 percent of total visitation to Japan’s No. 2 share of 33 percent. Nationwide, Chinese tourism also outstripped Japanese tourism for the first time in 2012, increasing 27.8 percent to 3.74 million. Australia’s Prime Minister Julia Gillard said legislation will be introduced in Parliament to ban the promotion of live betting odds during sports broadcasts. Gillard

said Australians were becoming “increasingly frustrated” with the promotion of live odds during matches, some by bookmakers who appear to be part of broadcast teams, and vowed that “from the moment that the players step onto the field to the moment that they leave the field, there will be no live odds.” Protecting children is a principal motive for the action, she said. Isle of Capri Casinos announced that the Lady Luck Casino at Nemacolin Woodlands in Pennsylvania will officially open July 1. The casino, which Isle is managing for the Hardy family, Nemacolin’s owners, will be the state’s second Category 3 resort casino, with 600 slots and 28 table games. The Louisiana Gaming Control Board has given Jimmy Buffett’s Margaritaville Casino and Hotel in Bossier City, Louisiana a soft opening on June 15. The official grand opening will take place the week of July 4, said developer William Trotter. Christy Wood, advertising and publicity manager, said management is working around Buffett’s tour schedule with the expectation that he’ll make an appearance at that time. Macau junket operator Asia Entertainment & Resources Limited has concluded a combined cash and stock deal to acquire a VIP gaming room at Macau’s Le Royal Arc Casino. Hong Konglisted AERL is paying an initial US$10 million for the sixtable space and another $10 million on the room’s next renewal with Le Royal Arc’s license holder, SJM. The terms call for additional cash payments to the seller through 2016, plus 625,000 shares of AERL, if the room achieves at least $2.5 billion in rolling chip turnover every month for the next three years. The acquisition boosts AERL’s VIP room holdings to 39 table games. The California Senate last month voted unanimously to approve the state tribal gaming compact with the Shingle Springs Band of Miwok Indians, owners of the Red Hawk Casino, which opened in 2008. The compact changes the terms of the original compact, so that the financially troubled tribe will pay less money to the state for several years, giving it time to get its financial state in order. The Assembly will now take up the compact. The compact is tied to the tribe being able to restructure and refinance $500 million in debt. The tribe stopped making payments on the principal of one of its start-up loans two years ago.

CALENDAR July 19-20: National Council on Problem Gambling’s 27th Annual Conference, Seattle, Washington. Produced by the National Council on Problem Gambling. For more information, visit ncpgambling.org.

September 23-26: Global Gaming Expo (G2E), Sands Expo Center, Las Vegas. Produced by the American Gaming Association and Reed Expositions. For more information, visit globalgamingexpo.com.

Aug. 12-14: Oklahoma Indian Gaming Association (OIGA) Conference and Trade Show, Cox Center, Oklahoma City, Oklahoma. Produced by OIGA and Event 1 Productions. For more information, visit okindiangaming.org.

September 29-October 1: International Association of Gaming Regulators, Grand Hotel Oslo, Norway. Produced by the International Association of Gaming Regulators. For more information, visit iagr.org.

August 13-15: Australasian Gaming Expo, Sydney Convention and Exhibition Centre, Darling Harbour, Sydney. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com.

October 8-10: European iGaming Congress, Fira Barcelona, Spain. Produced by Clarion Gaming. For more information, visit eigexpo.com.

“They

Said It”

“He’s a bully. I’ll say it again—he’s a bully.” — Seneca President Barry Snyder Sr. to The Buffalo News after meeting with New York Governor Andrew Cuomo, who is pressuring the Seneca Nation of Indians to make revenue-sharing payments by threatening to place one of three casinos in a bill he drafted in the neighborhood of the Senecas’ Buffalo casino

“They didn’t listen to the people of New Hampshire and the priorities they support and the way to fund those priorities.” —Maggie Hassan, governor of New Hampshire, criticizing the House for killing a bill that would have authorized a single casino in the Granite State

“I really don’t enjoy gambling, which I know, because I’m a poker player, sounds kind of crazy. But actually, poker is very different from gambling.” —Annie Duke, on poker being a game of skill as opposed to a game of chance

“A few weeks ago, we were all lining up for Powerball tickets. That’s fine, but online poker is not fine? Where is the logic there?” —Ben Mezrich, author of Straight Flush and other gambling-related books, on regulating and taxing online gaming in the U.S.

“Leveraging existing brick-and-mortar customers to online or mobile will be the key. iGaming will be hugely profitable for tribal gaming and commercial casinos.” —Amaya Gaming’s CEO David Baazov, on the potential of online gaming in California

“I will never call this place a resort. We’re going to be a casino that has two and a half billion dollars of nice stuff.” —Randall Fine, on the Fine Point Group’s new marketing strategy for Revel casino

“We have a huge advantage over these regional competitors because of our diversified experience. These regional competitors are, for the most part, Walmarts with slot machines and a bar and a restaurant.” —Tony Rodio, chief executive officer at Tropicana Casino and Resort and president of the Casino Association of New Jersey, on the appeal of Atlantic City

JULY 2013 www.ggbmagazine.com

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AMERICAN GAMING ASSOCIATION

An Industry of Opportunity After Frank Fahrenkopf laid a solid foundation, where does the AGA go from here?

By Geoff Freeman, President & CEO, American Gaming Association

his is my first column since taking the reins as the new leader of the American Gaming Association. As I expect to do for years to come, I’d like to begin by thanking Frank Fahrenkopf for the incredible foundation he built and the talented team he put in place. Over 18 years, Frank, his team and other industry leaders made possible the expansion the gaming industry has enjoyed in the United States and beyond. When the AGA was created, the movie Casino was on its way to becoming a box office success, and the perception of our industry was one not conducive to growth. In this environment, Washington could have done much to inhibit the gaming industry’s success. But it didn’t. The AGA made great strides in placing a new face on the gaming industry under Frank’s leadership, convinced policymakers of its enormous economic impact and made a commitment to responsible gaming that made our industry a model for many others. The result was a relatively stable operating environment where the commercial gaming industry could work with regulators in more than 20 states and many more nations around the world to build a product that best suited the needs of individual communities. With such great success under the AGA’s belt, the question I most often hear is: “What’s next?” What’s next for online gaming? What is the role of the AGA at the federal level, state level and globally? What is our relationship with tribes and lotteries? What are the three-to-five most important things the AGA wishes to accomplish over the next several years? These are some of the many questions that need to be answered.

My intention is to work closely with the board and staff to produce a compelling strategic plan that addresses these issues and many more, to drive alignment around our key priorities and to ensure that all those who touch the AGA are equipped to answer the question, “What’s next?” The first step in this effort is to listen. The gaming community is full of experts, veterans of battles long since past and visionaries of a brighter future. Listening to and learning from these individuals has already been richly rewarding, and is certain to open new doors for the AGA to enter. With the input we receive, the team at AGA will work together to assess the strengths, weaknesses, opportunities and threats confronting our

“

strengthening local communities, providing educational funding for millions of children and doing so from coast to coast. Effectively telling this story will remain critical to growth, protecting the industry from passionate critics and positioning the industry to be an even more respected player in important public policy discussions. • Capitalize on Our Unique Assets—My background in health insurance, pharmaceuticals and other “vilified” industries teaches me that gaming has several unique and positive traits that other industries are desperate to obtain. Widely recognized brand names, passionate customers, proud employees and a culture of innovation are assets that we are certain to capitalize on when it comes to strengthening our industry’s foundation. • Deepen Our Partnerships—The gaming industry has diversified in recent years, developing an expertise in lodging, retail, restaurants, meetings and conventions and other important components of the American economy. Deepening our partnerships with these sectors and associations will help to increase the list of allies supporting our efforts and expose our increasingly sophisticated industry to broader public policy matters. I am humbled and excited to be a part of this vibrant industry. Gaming is well positioned to thrive in the years ahead, and we possess a unique set of assets that, if leveraged effectively, promise a new era of thrilling and rewarding opportunities. The AGA team is excellent, the AGA’s reputation in Washington is strong and the AGA’s opportunities are significant. It is an honor to succeed Frank Fahrenkopf and to build upon his organization’s many successes. I look forward to working with you as together we write our industry’s next chapter.

The AGA made great strides in placing a new face on the gaming industry under Frank’s leadership, convinced policymakers of its enormous economic impact and made a commitment to responsible gaming that made our industry a model for many others. The result was a relatively stable operating environment where the commercial gaming industry could work with regulators in more than 20 states and many more nations around the world to build a product that best suited the needs of individual communities.

Global Gaming Business JULY 2013

association and industry. This analysis is a critical first step in producing a durable and compelling platform that the industry can rally around as it enters a new era. While we do not yet know all of the components of our future strategy, a sneak peek at three things likely to be at the center of our efforts are to (1) continue to tell our industry’s story, (2) capitalize on those things that make our industry unique and (3) deepen partnerships with like-minded organizations: • Telling a Favorable Story—The gaming industry is producing hundreds of thousands of jobs,

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HSVL BLUEWAVE

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FANTINI’S FINANCE by FRANK FANTINI

Capital Ideas For years, gaming companies didn’t offer dividends, but times have changed

verybody knows about return on capital. It’s what we expect to achieve when we make an investment. The most common return is making a profit on a trade, whether that be selling a stock or bond at a higher price than purchased, or capturing a profit on the short side when prices drop. Part of that return can be dividends, or interest paid on bonds or other debt, but that also is seen as part of the total return, of which appreciation is the greater part, especially for stocks. But there is a trend toward a different kind of return: return of investment, more commonly called a return of capital. Increasingly, companies say they are returning capital to shareholders through dividends or share repurchases, or both. IGT, in its March quarter earnings announcement, boasted that it returned $94 million to shareholders in that three months by buying back $75 million in stock and paying $19 million in dividends. When the company was fending off a challenge by a Jason Ader-led group for election to its board of directors, IGT several times made the case that it had returned $546 million to shareholders in recent years through dividends and stock purchases. Las Vegas Sands made headlines recently announcing that it would buy back $2 billion in shares. And CEO Sheldon Adelson now famously cheered “Hooray for dividends!” on a third-quarter conference call right before LVS announced a special $2.75-per-share, year-end dividend to go with its 25 cent quarterly payout. LVS has since raised its regular dividend to 30 cents a share per quarter, and would not surprise anyone by paying a special dividend this year. Wynn Resorts has become a regular big dividend payer, doubling its own regular dividend from $1 to $2 a quarter. There are other examples of companies believing that one way to benefit shareholders is to help the stock price by buying in shares. Indeed, IGT has borrowed at times to do so, Bally both borrowed and refinanced debt costs down and

Global Gaming Business JULY 2013

dramatically reduced shares a couple years ago. There is speculation that LVS might borrow to repurchase, too. So, why the trend? The reason often given for repurchasing stock is that the price is too low and a company can do better buying its own stock cheaply rather than investing it somewhere else at a lower return. Today, there is also the matter of whether companies want to invest in growth, especially in a low-interest rate environment. LVS doesn’t fit that category as it is openly on the hunt for growth opportunities.

thanks to very low interest rates. A dividend-paying stock looks very good when the yield is higher than U.S. government bonds, and the stock price can increase. The knock on dividends is that they are taxed twice, once on the corporate level and a second time on the shareholder. But with today’s favorable longterm capital gains rates and paltry returns on bonds, dividends can give a powerful kick to total returns. Let’s again use WYNN and LVS as examples. In 2012, WYNN stock rose 10.65 percent, not bad. But add in the $9.50 paid out in dividends and total return was 20.14 percent. Obviously, the divi-

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The reason often given for repurchasing stock is that the price is too low and a company can do better buying its own stock cheaply rather than investing it somewhere else at a lower return. Today, there is also the matter of whether companies want to invest in growth, especially in a low-interest rate environment.

In the case of LVS, it is simply generating huge amounts of cash and can afford to buy back shares, whether it borrows to do so or not. The attraction to a share repurchase is that it theoretically increases the value of an investor’s holdings without immediate tax consequence. For example, LVS can buy back 4 percent of its shares for $2 billion at recent prices. All else being equal, that should make the stock 4 percent more valuable, or better than $2 a share. One caveat on share repurchases is that some companies with generous stock option programs don’t buy enough shares to really reduce the number outstanding. In those cases, management is using shareholder money primarily to enrich itself. Thus, it pays to look at the track record. IGT, for example, has genuinely returned capital to shareholders through repurchases. It has around 265 million shares outstanding today compared to 310 million in 2008. Dividends are increasingly popular in part

’’

dends have made for a great return. LVS has done even better, with stock appreciation last year of 17.41 percent and total return of 27 percent. And the stories for both stocks have gotten even better. As of this writing, their stocks have further appreciated and each paid another quarterly dividend, making for a total return of 50 percent for WYNN and 57.5 percent for LVS, with each having yet another dividend due soon. And if LVS follows through on its share repurchase, it will be calculating its earnings on a small base of shares, which should give returns another kick. So, in today’s environment, and for the right companies, return of capital is a big part of return on investment. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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Building a Budget

Cutting costs or cutting throats?

by Marjorie Preston

magine running a multibillion-dollar business without a budget. For decades, Nevada’s casinos did just that. From the 1950s into the 1980s, the gaming halls were run by guys with names like “Bugsy,” “Lefty,” “Joe Batters” and “Momo.” Dealing in cash enabled the bada-bing crowd to skim the receipts and render less unto Caesar―in this case, the Internal Revenue Service. And boy, did they rake it in. According to the Las Vegas Mob Museum, which celebrates Sin City’s mobbed-up past, the skim at the Stardust amounted to about $7 million per year, and the count room at the Tropicana gave up an average $150,000 per month. Then the FBI cracked down, the wise guys died off or retired, casinos went corporate, and many became publicly held. In 1978, when gaming came to New Jersey, then-Governor Brendan Byrne famously told the mob to “keep your filthy hands off Atlantic City.” That state’s strict regulatory system became the industry standard and Nevada quickly followed suit.

Enter the Bean Counters “The industry grew up,” says Dean Macomber, gaming consultant and president of Macomber International Inc. “In the ’80s and ’90s, we become a measured industry, getting into metric-based operations, total quality management, ISO standards, kaizen management principles we took from Japan, reinforced behavior―budgeting went beyond things with a dollar sign into a whole performance system.” Swimming in data, charged with meeting or surpassing day-to-day averages and annual revenue projections, department heads learned to match top-line revenues to bottom-line growth. And for many years more, it was still easy to come up aces. It seems quaint now to observe that during the recession of 1980, Vegas actually worried about competition from Atlantic City. In retrospect, that recession (with a small “r”) was minor compared to the sledgehammer that hit in 2007. Five years in, though the Great Recession is now

officially over, it hasn’t fully released its grip on the global economy. Along with widespread and ever-growing competition, it has made effective budgeting even more important in the casino industry. “When the financial crisis struck, everything got blown up into the air like a World War II movie, then reassembled like a Transformers movie,” says Macomber. “People realized they had to cut costs because revenue was going down, whether they wanted it to or not. One could argue that the budgeting process became a survival process―not done once a year but sometimes once a quarter, once a month, once every half-month. Because cutting costs meant survival.” As the economy edges toward recovery, some casinos remain in survival mode, as witnessed by Atlantic City, where year-over-year revenues continue to cascade and gaming halls once valued in the hundreds of millions are selling for pennies on the dollar. Trump Plaza, for one, which cost $214 million to build in the early 1980s, sold for just $20 million in February (currently on hold).

No Brag, Just Fact For a budget to work these days, it has to start with a measurable goal based on an accurate assessment of the marketplace. It is less a fixed directive than a yardstick of past and present performance, a tool to develop effective marketing strategy and tactics, and a guide that enables companies to develop achievable expectations for the year to come. Most of all, it must be based on the truth, and nothing but the truth. George Haldeman, founder of Strategic Gaming Advisors in Las Vegas, recently consulted with a bankrupt casino whose owners developed a budget based on equal parts optimism and denial. Instead of a management tool, it read like a wish list. “They did a budget that showed they were going to be able to cover

“People realized they had to cut costs because revenue was going down, whether they wanted it to or not. One could argue that the budgeting process became a survival process not done once a year but sometimes once a quarter, once a month, once every half-month. Because cutting costs meant survival.” —Dean Macomber President, Macomber International Inc. 18

Global Gaming Business JULY 2013

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“That’s my No. 1 rule of thumb for budgeting. After you understand your market, you can put what I call a chain of activities in place to service that market and differentiate yourself from the competition. Then you build a budget around that chain to support your strategic positioning. If you follow that process, it’s a good start.” —Cory Morowitz Morowitz Gaming Advisors

their debt payments, but it wasn’t realistic―it called for much higher spending levels in an attempt to get unrealistic revenue,” says Haldeman. “We still benchmarked against that budget, but we explained to the bankers―who essentially were in control of the property at the time―that it wasn’t going to drive our decisions.” Though the property started out on tenuous footing, the right strategy led to an acceptable outcome. “We went on a year-over-year basis, 2012 compared to 2011, and increased profits by $6 million on $1 million less in revenue by extracting $7 million in costs out of the business,” says Haldeman. “If we had followed the owners’ budget, it would have been a financial disaster.” That property has since emerged from bankruptcy, and with a budget based on reality, “they are actually ahead of expectations through May.”

Position Statement Prior to setting its budget, a casino should identify its strategic position in the market in relation to its competitors, and the customer demographic it hopes to attract and retain. “That’s my No. 1 rule of thumb for budgeting,” says Cory Morowitz, of Morowitz Gaming Advisors outside Atlantic City. “After you understand your market, you can put what I call a chain of activities in place to service that market and differentiate yourself from the competition. Then you build a budget around that chain to support your strategic positioning. If you follow that process, it’s a good start.” Say a casino in a highly competitive market wants to be tops in slots. Its chain of activities will include everything that supports that end: an effective marketing campaign, a compelling loyalty program, a good mix of machines, as well as enough slot hosts and food and beverage outlets to serve its target demographic. If the same casino doesn’t stake out its position and do so decisively, it can end up diluting its message, casting its net too wide, yet still fall short of planned profit margins. It may spend more on promotions to drive bodies in the door, but if those promotions attract low-end play, revenues will suffer. And low-end play still has to be serviced, Morowitz observes, which adds labor costs. Operators in a less competitive or monopolistic market can minimize their marketing and labor costs―the two biggest expenditures outside gaming taxes― without a negative impact on revenue. “If I don’t have to differentiate myself, I can staff up my cage a little less and my food and beverage outlets a little less,” says Morowitz. “I can let people wait seven minutes instead of four minutes for service. It’s really recognizing the marketplace you’re in.”

Cost Cuts and Shortcuts In 2006, Kentucky hotel company Columbia Sussex acquired Aztar Corp., the owner of the Tropicana casinos in Las Vegas and Atlantic City. At the time, CEO William Yung issued a fulsome statement calling it “a breakthrough for our company which will significantly enhance our gaming assets in key growth markets and strengthen our position as one of the leading owners, developers and operators of hotels, resorts and casinos.” Or not. In less than two years, amid draconian staff cuts that led to complaints of substandard service, Columbia Sussex got the boot, and the New Jersey Casino Control Commission appointed a trustee to run the Atlantic City Trop. The hotelier was kicked out in part because it failed to establish an independent audit committee, but what the public remembered were lurid headlines about bedbugs and squalid bathrooms. Yung defended the mass layoffs―under his brief tenure, about 1,000 people lost their jobs―as a way to rein in costs in the face of new slots competition. It’s an extreme example, but any cost-cutting measure that negatively affects the guest experience probably is not worth the savings. But some labor-saving strategies―many that resulted from new technologies―have turned out to be winners both for the properties and their best customers. In years past, for instance, some casino operators were slow to warm to cashless slot machines, fearing players would miss the thrill of scooping up buckets of quarters. Those fears were unfounded, says Morowitz, who cites the Pareto Principle (the “80-20 rule”) as one reason why. “In gaming, normally 80 percent of slot revenue is driven by 20 percent of customers. They come a lot, they play at high levels and they play for long periods of time. Anything that minimizes distractions and allows them to keep doing what they want to do―to play―is good. These new technologies mean less human interaction, but they allow people to stay on the device longer.”

Micro vs. Macro For some tribal casinos, like the Potawatomi Bingo Casino in Milwaukee, the budget is driven by the need for cash flow, says Chief Financial Officer Rodney Ferguson, a veteran of both commercial and Indian gaming. From a projected revenue figure, expenses and capital expenditures are subtracted; what’s left must be enough to support the tribal membership and run the government of a selfsustaining sovereign nation. Though Potawatomi enjoys a relative monopoly in its region, profitability can be affected by forces as significant as an economic downturn or as relatively minor as a spike in gas prices or even the weather. Ferguson takes a zero-based approach, justifying every dollar of revenue and every expense, down to the number of pens and pencils. But his budget process is “a barometer and a starting point,” part of an overall strategic plan that optimally positions the property for growth over a number of years. And he revisits the budget on a monthly basis JULY 2013 www.ggbmagazine.com

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according to inevitable fluctuations. “Let’s say you budget a $5 million profit for the month and trends are showing you’re going to be 5 percent short. So going forward you have to say, ‘Well, we don’t think we’ll be able to meet those original budget numbers, and we can expect a 5 percent decline for the rest of the year if things stay the same.’” If shortfalls are expected, Ferguson looks to the two largest departments, payroll and marketing, for savings. “My philosophy is if payroll is too high, reduce it through attrition because every casino and every business has turnover, and if you can get your numbers down that way you don’t put individuals out of work. From a marketing standpoint, cut down on the billboards or the TV and radio commercials—just do the ones that are really important. Use more of a tactical approach to get the information out.” That can include replacing direct mail with digital outlets to communicate with the customer base. “The trend now is to capture as many email addresses as possible, doing the email blasts and the Facebooks to reach players and guests instantaneously. It’s saved a lot of dollars.” He also doesn’t try to save on payouts. “The guests who come here on a regular basis know whether the machines are tighter or not. The goal is to have high utilization of machines so jackpots are paid out more frequently and guests feel they’re getting a good bang for their buck. They know for sure if there’s been some tweaking.” One area is sacrosanct in Ferguson’s view: “In general, don’t eliminate or have staffing levels go down to where you have an effect on service. Guest services is probably the most important piece of your business; you have to have to make sure folks still come back to your property. If they have choices, they might just go somewhere else.”

Penny-Wise? At the Motor City Hotel Casino―one of three casinos that regularly battle for primacy within a 1.5-mile radius in Detroit―one seemingly modest technological development has led to meaningful savings with no downside for the casino or its clientele. Motor City created its own brand of self-serve kiosks for the property’s restaurants, enabling customers to bypass the cashier and pay for dinner with a club card, credit card or cash. Chief Financial Officer Bruce Dall does the math: “If I add them up, that’s four outlets times two shifts; cashiers in Detroit make $19 an hour with benefits, for about $50,000, so if we reduce our staff by eight people it probably saved us $400,000 a year.” But Dall views cost efficiencies like this as a function of everyday business―“It should be regular and ongoing”―and annual budgeting not as gospel but as guide. “Being a CPA, I don’t find budgets very useful in today’s world,” Dall says. “They’ve become a numbers game with operators guessing where their revenues are going to end up.” For proof, he looks to recent history. “Just look at what happened in late 2008. When you got to September or October 2009, were those numbers even close to what they expected? We do a formal budget, but my preference is to look at it as an opportunity to think strategically: where we’re going, what we’re doing, what we can think of to change, how we can utilize our resources to improve customer service, and how that will impact the numbers. Does it really matter how much toilet paper we’re going to use or how much chicken we’re going to fry up?” The finance team spends a lot more time on the capital side. Over the

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“It’s a very risky situation for a lot of casinos today, because a lot of these companies and tribes really don’t do a proper feasibility study and impact analysis about where the future competition is going to come from. What happens when a new casino opens up across the state line?” —Steve Karoul Casino marketing expert

Advance or Retreat past five years, even as the economy faltered, Motor City expanded its gaming space and invested $330 million to add a hotel theater. It continues to freshen up with periodic and cost-efficient re-designs, which can be as simple as moving a pit, adding a cage or rearranging the furniture. “You can do it without spending a boatload of money,” says Dall. “The budget process should be strategic and capital-oriented rather than combing through the numbers to find minor savings here and there. You should be doing that every day, not once a year.” The company also looks for innovative ways to trim expenses, boost revenue and increase customer loyalty. One novel idea has managed to accomplish all three. Last year, says Dall, Motor City CEO Gregg Solomon announced that he wanted to make the property’s Reward Play program “as irrelevant as possible” and so reduce the marketing dependency on free slot play. The result was a new rewards program that allows customers to redeem rewards toward a lease or purchase of a new Chrysler, Ford, or GM―stalwarts of Detroit manufacturing. “We have over 100 customers driving cars on us,” says Dall. “Now that’s strategic thinking. And yes, it fits our brand perfectly.”

Strategic thinking will be even more essential as the industry continues to expand. Casino marketing expert Steve Karoul was CEO of Foxwoods in Connecticut when its primacy in the market was challenged by competition. “Foxwoods was the largest and Mohegan Sun was second or third largest (in the Northeastern U.S.) when all of sudden Pennsylvania cropped up on the landscape,” he says. “Rhode Island just legalized table games, and Massachusetts has passed a referendum that will legalize casinos. You have Aqueduct in New York, which made $70 million in slot revenue (now $1 billion), and all that money or a good portion of it was siphoned off from Foxwoods and Mohegan Sun… It’s not going to get any easier with online gaming, and lotteries are another challenge that will siphon off money from casinos.” In Karoul’s view, in the midst of expansion in the industry, some retraction may be in order. “It’s a very risky situation for a lot of casinos today, because a lot of these companies and tribes really don’t do a proper feasibility study and impact analysis about where the future competition is going to come from. What happens when a new casino opens up across the state line?” In that case, he says, “Maybe they don’t need a $700 million casino. Maybe they need a $200 million glorified slot operation.”

Validationof Success

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JCM Global moves to new levels as the gaming industry changes BY ROGER GROS

he “golden age” of Japanese entrepreneurialism occurred during the 1950s. Companies like Sony, Honda, Hitachi, Mitsubishi, Toyota and many others were formed in the decade following World War II, changing forever how the world shopped for goods and services. The explosion Unlike other manufacturers of bill validaof new technology ushered tors, JCM’s primary business is in the in by these companies gaming industry. The company was born quickly surpassed more esin the industry and hopes to maintain its tablished American and Eudominant position there. But that’s not to ropean companies. say that JCM is not looking to expand. One smaller company “Diversification is a key word for started in 1955 may not have JCM,” says Isoi. “We are always looking had the worldwide impact of for new opportunities inside and outside of JCM President Aki Isoi is joined by former AGA President & CEO Frank Fahrenkopf at the AGA/AGEM Golf Tournament sponsored by JCM at Boulder those Japanese giants, but its gaming, such as kiosks, banking, transCity, Nevada's Cascata Country Club, owned by Caesars Entertainment importance to the gaming inportation—parking—wherever we can sell dustry could be measured in our products. Wherever we can see the need similar increments. for bill validators, that’s where we’ll go.” Japan Cash Machine began its life in Osaka producing cash registers, and Isoi says JCM would never have become successful if it wasn’t for the cooplittle changed for the first 20 years, except for the development of electronic eration of the governments in being able to recognize the currency. At the same cash registers. It wasn’t until 1981, when JCM developed one of the first bill time, the process is long and complicated. validators for the Japanese yen, that the future of JCM Global began to form. In “It’s been challenging,” he admits. “But we’re always on top of it. We work 1986, the company developed a validator for U.S. currency, as well as the very closely with government agencies such as Secret Service or the Department Deutsche mark, expanding its reach internationally. of Engraving and Printing. And nowadays, government agencies are very coopAki Isoi was a young executive ready to change the face of his company. He erative in helping us to make sure that our products are performing at the optispent a few years in the U.S. researching different industries where JCM prodmum level.” ucts could play a role, when he stumbled upon Las Vegas. To serve the market, Isoi says the company has opened regional offices in “We didn’t know where to market it,” says Isoi, who everyone calls Aki. “I Germany, England, Australia, Macau and Thailand, in addition to its hubs in went around the world, and traveled with a suitcase with a sample bill validator Japan and Nevada. inside. I landed in Las Vegas, and met the right people at the right time. I was The proliferation of new currency seems to be speeding up in recent years, very fortunate.” but Isoi says the governments are always willing to help keep the bill acceptors But success was not immediate in the United States. It actually began at up to date. home in Japan, where a pachinko manufacturer produced a change machine “They show us the new currency well in advance before it’s ready,” he says. using a JCM bill validator. “So by the time the new currency hits the street, we have already developed soft“This pachinko parlor was making a lot of change from a separate kiosk, ware to handle it. So there’s very minimal disruption to operators.” but there was no bill validator used inside of a pachinko machine,” explains Isoi. And that’s part of the deal when a casino or a manufacturer buys a JCM bill “So I took the same bill validator to IGT in July 1990 and met the key people acceptor. It’s good for the lifetime of the device complete with updates about there. Together, we designed the first bill validator precisely for use inside slot new currencies being issued, at no additional cost to the customers. machines, and two years later, the product became available. It revolutionized “Software support is a major part of our costs,” he says. “But that’s the the industry, and the rest of it is history.” promise we give to our clients.”

Gaming Validation

Global Gaming Business JULY 2013

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“

Diversification is a key word for JCM. We are always looking for new opportunities inside and outside of gaming, such as kiosks, banking, transportation—parking—wherever we can sell our products. Wherever we can see the need for bill validators, that’s where we’ll go.

”

And JCM is very good at what they do. Tom Nieman, senior vice president of marketing for JCM, says the company has always stood by all four generations of bill validators in the gaming industry. “We have gained the trust of customers because they know we will go to any length to keep them satisfied, and… our products work! As counterfeiters deploy the latest attempt to cheat casinos, JCM is working arm in arm with all the critical stakeholders to secure the gaming operators’ revenue.” As a vendor to the casino industry, JCM is in a unique position in having the casino operators as customers, as well as the slot manufacturers (OEMs). It’s a delicate balance, according to Isoi. “Whenever the manufacturer sells their new slot machines, we bring our bill validator to the slot machine manufacturers,” he says. “But the casinos are ones who specify our components. So, more than 50 percent of our sales and marketing efforts are directed toward casino operators, making sure that both parties are happy with our products. So, if you ask me who my customers are, it is both OEM as well as the casino operator.” Nieman says that dynamic has changed in recent years. “The paradigm shifted some years back,” he explains. “It used to be, if you were in communication with three of the big OEMs, your day was done. You didn’t need a lot of marketing. You didn’t need a big sales staff. Today, the OEM

—Aki Isoi

President, JCM

side has now expanded with many more manufacturers. At the same time, literally every casino is our customer as well. So, our message has to be delivered to that end user, the casino operator. We want them happy; we want them excited to get the JCM technology on the floor, at the same time, staying close to being part of our marketing efforts with the OEMs.”

That’s the Ticket The fourth generation of bill acceptors released by JCM, the iVIZION series, is the most sophisticated yet. The technology—which now must scan tickets, as well as currency—provides the utmost in security to the operators, as well as recording an acceptance rate north of 99 percent, an important milestone for operators. “That’s what they’re most concerned with,” says Isoi. “They want to make sure that currency the player puts into the slot machine is accepted, and we’ve achieved that rate.” In addition to validating the bills, the iVIZION captures images of bills and tickets and will allow the images to be sent to a central server if the operator chooses to implement the required infrastructure, allowing operators to archive that information for as long as they want it—or regulators want it. Almost as soon as the industry began to accept bill validators, the need to scan bar codes became apparent. An experiment with tickets at MGM Grand in JULY 2013 www.ggbmagazine.com

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“

I was JCM. I did everything when the bill validator was first introduced. And to me, customer satisfaction was always the No. 1 priority. I did whatever it takes to keep the customer happy. —Aki Isoi

JCM’s Dynamic Network Applications (DNA)

the 1990s was a failure, but the lessons learned during that period were valuable and form the basis for the ticket/bill acceptor industry today. “Whenever we design a bill validator,” says Isoi, “we always are sure that we incorporate the right sensor to read the bar code coupons.” In addition to the iVIZION bill acceptor, JCM has recently introduced Dynamic Network Applications (DNA) that provides operators with a wide range of analytical tools. “We’re always looking to bring more value to operators,” says Isoi. “And DNA provides a tool for us to monitor the health of the bill validator, to download software, to—on a real-time basis—see what’s going on within the bill validators. And it provides better service to operators. So, DNA is a big differentiator for JCM product to bring the technology to a next level.” Nieman says there’s more to it than that. “And it’s not only the bill validator; it’s really a component management device,” he says. “So any component that’s in the machine, whether it’s the printer, a card reader, or another sub component inside, the bill validator almost becomes a communication hub to do that. And DNA provides this real-time communication. “In addition, DNA has the ability to gather information via SAS and directly from the peripheral. So DNA knows whose machine it is. DNA knows what peripheral firmware version they’re using; DNA knows what model it is. DNA also knows details that SAS does not provide including detailed peripherals status and information that is not provided via SAS.”

Branching Out While JCM bill acceptors work with all ticket printers, even their own for a while, the company has formed a partnership with Canadian-based Nanoptix. Isoi says printers were never JCM’s core business. “Our first printers were successful,” he says. “Many casinos purchased JCM printers. But just like bill validator business, unless you keep investing money in new R&D, you can’t be a long-term player.” Nieman says Nanoptix provides the technology and flexibility needed in today’s printers. “Nanoptix gives us some of the new features that are part of all modern printers: color, branding, instant messaging, things like that; those elements were not part of our original printer,” he says. Isoi says the relationship is growing. “When the opportunity came to JCM to work with Nanoptix, we jumped at it,” he says, “and today we are not just a distributor of Nanoptix printers; we are a partner with Nanoptix, and we are working just like one business unit today.” 24

Global Gaming Business JULY 2013

”

President, JCM

Another new division of JCM is digital signage. While JCM does not produce the digital signs, it has reached distribution deals with some of the major manufacturers: Samsung, LG, NEC, Sharp and others. The advantage of working with JCM is its gamingcentric culture. JCM understands the needs of casino operators as well as anyone in the business, according to Isoi. “JCM provides the digital media segment of the market because of our relationship with suppliers and with casinos, with our long-term experience,” he says. “We would be able to find the right partner for the right customer. So it’s been a good business for us, and we have a lot of plans to do more within that segment of business.” Nieman says it’s an opportunity for the company to get in on the ground floor of this expanding market. “The technology in that industry is just starting to explode,” he says. “It goes so far beyond what we think of today as a digital display. We’ve been fortunate to strike these relationships with some of the biggest brand names in the world. They realize that the best way into the gaming industry is with someone who knows where the front door, the back door, and the side door. And that’s JCM.”

Giving Back Isoi recognizes that the gaming industry has been largely responsible for the success of JCM, and that’s why he decided to help organize the annual AGEM/AGA Golf Classic Presented by JCM Global. The 15th edition has just been completed, and during those years, more than $1 million has been raised for the benefit of the National Center for Responsible Gaming, the premier research organization on problem gambling in the nation. “To me, that’s the way for me to show my personal appreciation to the industry,” he says, “to give something back to our industry. When I was trying to sell the first bill validator by traveling throughout the United States, this was the first business that welcomed JCM, creating the first opportunities for us. And JCM has grown along with these businesses. And we know that there may be some players who cannot gamble responsibly, and I want to be able to help them. So the JCM/AGA golf tournament is something I’m very proud of. And now with AGEM involved, I’m sure we can sustain it for many years.” Nieman says the superior commitment to the tournament from everyone involved continues to make it a success. “In any event like this, it’s tough to maintain interest and to keep it fresh with

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everybody involved after 15 years,” he says. “But I think with Aki’s commitment, and JCM’s commitment, to make this a priority, along with the AGA and AGEM, it’s going to continue to be important. Remember everybody is welcome into it; our friends, our competitors; everybody’s welcome. I think that’s made a big difference and kept it compelling for everyone to say, ‘I have to be there because the cause is important.’”

Service Feature Because JCM’s products are so hardware-oriented, and as such, are subject to malfunctions, Isoi stresses the service component of the company. He says that’s because he was so intimately connected with the start of the business. “I was JCM,” he says. “I did everything when the bill validator was first introduced. And to me, customer satisfaction was always the No. 1 priority. I did whatever it takes to keep the customer happy. When the bill validator first hit in the market, people didn’t understand how to use it. I used to receive a phone call at 2 a.m. or 3 a.m., and I assembled a team to come to the casino or OEM just to coach them how to use the bill validator and prove that there was nothing wrong with the product.” This helped to establish the reputation for JCM service, he says. “But by showing that kind of response,” he says, “you gain credibility from the OEM, credibility from the operators. Today, that is still the most important thing. And I would be very upset if my team doesn’t take care of the customers the way I used to take care of the customers. The customer is king. We will do whatever it takes. We view the bill validator as the most important component in any machine. That’s where the money goes in, that’s where the game starts. And if that product is down, then nobody is making money. So we take customer service very seriously. We’re not always 100 percent right. We make our mistakes, but how we correct those mistakes is a differentiator from the other companies.” Like all gaming companies—operators and suppliers alike—JCM went through some tough times during the recent recession. Isoi says that the company has spent the time refining its products for when the hard times are over. “JCM has a very strong balance sheet,” he says. “So the cash position we had kept us going. There is a time when the economy will come back, and we just have to be patient. During the tough times, we continued to invest money in new products and new technology. In fact, it was during this time that we began planning on how to grow our business to the next level when the economy comes back, and it seems to be coming back. And with the right product like iVIZION and the new partnerships we have created, it seems to me we are building momentum.”

Overwork me.

Please. He’s never late. He never gets sick. And he never goes on break. Meet the future of casino operations. Meet Kai. Think of Kai as a virtual slot manager, who is on the job 24/7/365, eliminates the need for a human dispatcher, and replaces handheld radios. Kai helps you keep players happy while dramatically dropping response and completion times for jackpot lockups, bill jams, ticket paper fills and customer service requests of all kinds.

“

In this business time is money… and Kai has managed to give us more of both.”

ART NAVARRO, GENERAL MANAGER BLUEWATER CASINO & RESORT PARKER, ARIZONA

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Road to Riches Route operators deliver games to customers, profits to owners, and taxes to governments BY DAVE BONTEMPO

aming flaunts a complex, secondary revenue stream. Say hello to slot-route operators, who bring gambling to restaurants, bars and taverns. They won’t garner the headlines of companies with monolithic, glitzy casinos buildings. Yet, their presence feeds state governments, local economies, small business and companies that supply game content. This intimate environment—no more than 15 devices are allowed inside any Nevada property, and the number is far lower elsewhere—produces a unique gaming hybrid. Four-of-a-kind has met happy hour, bonus games accentuate dinner. Low-limit games flourish as a sideshow, where customers congregate. This business is, in the realm of gaming action, a mere “taste.” But it’s an important one. The battle for this slice of the pie features several angles. Nevada is the industry kingpin, offering a regulatory climate second to none. It takes a small fee per property instead of taxation and it lets operators and game suppliers divide profits. Nevada thus encourages investment and lets the market determine the industry. This model fits well in a state with abundance of wide-open space and a natural setting for small, “outpost” gaming. Other states see the industry differently. Oregon parlays its lottery into half a billion dollars of annual revenue, primarily from video slots. The state garners more than three quarters of the profit, but allows entrepreneurs to function with a small up-front investment. Louisiana’s government takes different amounts from bars and truck stops and uses the state police to run its affairs. Illinois scuffles in local politics, and has finally begun accelerating its licensing process four years after voters legalized it. The state claims 30 percent of the win, enabling perhaps just enough for operators and companies to split. Those who provide products in these states plan accordingly. Some tweak their lineup and are in no rush for a major rollout. Others keep new devices coming without regard to politics. However they proceed, companies enjoy this game. They know that the tavern owners have a manageable operation cost and a high chance for success via walk-up, as in someone just throwing two bucks in the machine. There are many ways to prosper, one coin at a time.

Nevada Sets The Tone Nevada’s business-friendly climate has spurred companies to be aggressive with new products. Even while the number of statewide locations dropped slightly— from 2,163 to 2,002—since 2008, this only mirrored the larger gambling industry ravaged from the recession. And for someone trying to catch the beginning of a rebound, why not start small? United Coin Machine Co. and Golden Gaming account for more than half of 26

Global Gaming Business JULY 2013

the state’s 2,000 locations, while several additional operators find creative ways to function. Las Vegas-based United Coin has invested in the hope of increased demand. It launched five new products last August and an updated version earlier this year. United services more than 400 statewide locations, according to Brad Fredella, its manager of gaming analytics. One of its most recent rollouts, Interactive Gamblers Bonus Advantage or iGBA, made an instant impact, he says. “The demand for iGBA went through the roof,” Fredella says. “Over 100 of our locations signed up to take the technology before we even released it. We are installing one now at the rate of every seven to nine days.” This is an upgrade of the Gamblers Bonus Advantage reward program featuring an interactive component that allows players to participate in bonus games (like spinning a point prize wheel or running a pig race) rather than just getting a static point award. The iGBA system supports a virtual drawing system, allowing local bar and tavern operators to offer promotions previously only available at larger casinos. An integrated player tracking system called Game Tender provides real-time player activity data to location staff members at the touch of a button. From a player’s standpoint, this is a combination of action and bonus activity, draped around a beer, a ballgame or a meal. “What makes my eyes pop out is watching the reaction of the players at the bar when somebody triggers an event,” Fredella says. “In our race game, for example, you can have the Pig Race or the Wiener Dog Race. By whatever means you have gained to earn this game (a certain hand or an amount of play, etc.), a player can qualify to have one of five pigs or dogs in this race. Their pig or dog is highlighted during the race and when people in the restaurants see this, they stop eating to see what’s going on in the screen. And the way they start rooting shows how well this has been received.” Fredella says the big deal here is linking an award to what happens in keno or slots. “We are, to the best of my knowledge, the only system able to automatically trigger an event based on a keno or slot outcome,” he maintains. “All other such systems in the local Nevada market use hand recognition technology, which has been around for a while but only works on video poker games, not slots or keno.” The edge for a small property over a big casino is that one system is linked to 15 machines, he says. Any hit that triggers the racing event draws immediate attention and a reward. A player does not have to wait for a slot host or any other casino employee to recognize the accomplishment, find him on the gaming floor and set

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United Coin branding

PT’s Pub in Las Vegas

“

We are, to the best of my knowledge, the only system able to automatically trigger an event based on a keno or slot outcome. All other such systems in the local Nevada market use hand recognition technology. —Brad Fredella

”

Manager of Gaming Analytics, United Coin

up an award. How do partnerships work? In most of them, United provides the machines, the iGBA and Game Tender systems, collects money and maintains the machines, usually for a 30-70 share of the split. In a smaller number of deals, it leases player tracking and bonusing systems for a weekly fee to the bar owner who owns the machines. Nevada’s other big route operator is Las Vegas-based Golden Gaming, which underscored its faith in this market last year. The company’s purchase of Affinity Gaming LLC’s slot machine route makes it the largest slot machine route operator in Nevada. The deal gives this company 8,500 slot machines at 650 locations. Golden Gaming operates three divisions. Golden Route Operations (GRO) is a market leader in player tracking, rewards, player recognition and communication technology. It is a licensed local route operator for gaming devices in bars, taverns, truck stops, convenience stores and grocery chains. Last May, it announced the first-ever player rewards program specifically geared toward the grocery-store gamer. That program is in more than 110 locations statewide. Last September, GRO announced a significant commitment to slot manufacturer IGT. GRO places its own tracking technology onto the machines. Another division—PT’s Entertainment Group (PTEG)—is the state’s largest tavern operator with 41 establishments. Each tavern features the innovate Sports Bet Live Account wagering kiosk. Every Nevada location also has a rewards program for instant cash and logo merchandise. Golden Casino Group completes the lineup. Its realm includes Pahrump Hotel & Casino, Gold Town Casino and Lakeside RV Park.

In shoring up one of its major arms—GRO—Golden Gaming adds to its self-perpetuating prosperity. With GRO and PTEG, it occupies both ends of the slot-route operator and business-owner relationship. By having its own casino, it also owns a place to put any new games.

Illinois Picking Up Steam Illinois took a deliberate route into this market, but looks geared to gather momentum in the near future. “You have 1,620 video locations and 6,673 video gaming terminals out there now, but that number should be vastly higher in the next three to five years,” says Don Pesceone, senior vice president of sales for Incredible Technologies, based in Vernon Hills, Illinois. “The rollout has been far slower than anybody anticipated, but that’s because the gaming board is doing a thorough job with its due diligence. It is challenging for operators to go through that whole licensing process. But you are seeing about 150 licenses being approved each month now.” Illinois cannot move quickly enough to satisfy bean counters. It had the nation’s worst deficit of $43.8 billion in 2012 and gaming revenue is one of the few areas which can provide funding. While it tries to fast-track licensees, it also considers legislation to put casinos in racetracks and dramatically increase the size of the gambling industry. So while the state tries to ferret out “bad actors” in the licensing process, it hustles to rake in new good money. Pesceone believes the state had little choice but to move slowly at first. While legalization of slots in bars and restaurants gained state approval in 2009, its implementation required subsequent approval in each municipality. Then the teJULY 2013 www.ggbmagazine.com

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Oregon VLT

Louisiana truck stops have rooms with slot machines.

dious licensing process ensued. So did logistics like keeping operations away from schools and churches, a significant matter. Pescone says Illinois did not want to repeat what happened in Iowa, when operators put devices in gas stations, convenience stores and dry cleaners, prompting the governor to pull the operation. Minors had too much access to gambling. Illinois faced another hurdle: legalizing something that had recently functioned underground. Operators were slow to come forward for licensing scrutiny. They were replaced by newer business owners, but that process took time. What encourages operators now is the fact the state wants them in business. It collects 30 percent of the win, while the location and the company installing the equipment split the remaining 70 percent. Incredible Technologies supplies an array of games (30 in poker, for example) to the companies who deal with the restaurant and tavern owners. The devices must be specific: Illinois demands an 88 percent-90 percent payback percentage and the top payout of a single pull is $500, Pesceone says. Each location is allowed up to five machines. Even that relatively small amount, however, prompts significant up-front costs for a route operator. Five VGTs with devices to get the ticket and dispense cash, plus the money needed to put in the machines can run $130,000-$140,000, Pesceone says. It will take someone well into the second year to recoup the initial outlay. For some, that’s no problem. For others, it’s a deal breaker. That’s why another avenue has unfolded. Aristocrat is one of the big companies that have dangled a proposition to those facing stiff up-front costs: The company offers a leasing plan for a few dollars a day, allowing business owners to get into the game quickly. While market conditions unfold around them, Incredible Technologies braces for an anticipated market surge. “We used the slow rollout period to tweak our software and get ready for a fullblown launch when that makes sense,” Pesceone says. “We came into the casino market with no visions of grandeur. At the end of the day, you need to provide a game that is good and makes the customer money.”

Oregon: Always Hitting The Lottery Oregon had an early jump in the slot route game: It made lottery terminals in restaurants and taverns part of the state lottery in 1992. The move, coupled with an important addition, pays huge dividends. Of the $549 million generated in 2012, $482 million came from the video terminals, according to Chuck Baumann, a spokesman for the Oregon Lottery. The lottery has poured more than $8 billion into state coffers since its 1985 inception. That in turn has funded public education, economic development and job creation throughout 28

Global Gaming Business JULY 2013

the state. VLTs are a major part of the revenue picture. “From 1992 until 2005, poker was the only game available on the machines,” Baumann says. “In 2005 we added slots, and that became a huge factor in our revenue. Retailers had been clamoring for that, and once we got the green light, we enjoyed some big years. Once we got the video slots, we had what people really wanted to play.” The Oregon model contains nearly 2,300 retailers, who have liquor licenses, another 1,600 in places like convenience stores, and more than 12,000 terminals. Each location is allowed up to six machines once the operator has cleared a background check with the state police. Operators are spared the burden of up-front risk. The lottery owns, provides and services the machines. It also collects 76 percent of revenues and has a liberal ceiling for players. The maximum win on any game event is $10,000. In this case, the risk-reward end of the equation rests with the state. Operators meet specific space requirements and are given flexibility in some important areas. They can, for instance, offer machines in a bowling center, where kids would reside, if the devices are in a separate room which minors cannot access. Baumann says that although business has flattened, the video lottery terminals continue producing well. The state refreshes at least one machine every quarter with new game content.

Louisiana: The Truck Stops Here A 1996 referendum brought several aspects of this type of gaming to 31 parishes in Louisiana. Business is conducted by state police and broken up into video poker at bars, lounges, hotels, racetracks and truck stops. All told, the state took in more than $180 million in the fiscal year ended last June. This total is down slightly over recent years. Bars, lounges and restaurants are taxed at 26 percent, racetracks at 22.5 percent and truck stops pay 32.5 percent. The state operates more than 14,000 devices at more than 2,000 locations. Truck stops provide the interesting wild card in this state. The stops produce the lion’s share of revenue, attracting a large drive-through market. Some establishments have refurbished through the years in order to become more service-oriented. Each state grapples with its unique logistics for modern slot marvels. If governments can’t bottle and sell it, they will at least tax and regulate it. Entrepreneurs will make small or large investments depending upon the environment they operate in. Maximum leverage could mean capitalizing on a market monopoly to some. It may also entail being patient with a minimal investment to others.

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Counting on

CONVERGENCE Moving Online Players to Your Land-based Casino Harnessing the power of convergence between online and offline properties can increase round trips to, and revenue on, your casino floor. Here are a few suggestions on how land-based casinos can take advantage of the evolving digital world. By Rory Shanahan

Platinum loyalty player at her local casino plays her favorite slot theme on the casino’s website for the third day in a row. She receives a text message offer the next day with an offer for two-for-one drinks at the casino bar for redemption any Wednesday night that month. A VIP at the casino 100 miles away from where he lives drives within 25 miles of the casino on a business trip one day and receives a text message on his phone offering him a free dinner, tonight, at the casino. With an online player community with the right features and capabilities, there are limitless user cases that bring incremental visits from your players online to your casino floor.

Just the Facts Let’s start with a baseline of our current situation: More than 26 million people are playing the top 10-rated Facebook casino games each month. There are more than 130 million smart phones in the United States alone, with Google activating over 1.3 million new Android devices each day. According to the 2013 Active Gambler Profile report, 72 percent of U.S. active gamblers play casual games online—up from 56 percent in just two years. Growth and change in these areas evolve so rapidly that there’s a good chance these statistics will be out of date by the time you read this. Don’t worry—this isn’t an editorial about the evolving digital landscape. Many industry experts and various subject authorities have covered that already. The goal here is to empower land-based casino operators with information to evaluate and implement solutions that exist today to drive players from online— on desktop, laptop, tablet or mobile devices—to your casino floor, regardless of your current online gaming regulatory environment. Three things will greatly enhance your opportunities to benefit from the convergence of offline and online gaming options: • an engaged player community customized to your casino’s brand; • a platform that exposes your online player community to games with mar-

Global Gaming Business JULY 2013

Don’t Play

Play Don’t Play

Play keting and promotions that increase loyalty and engagement while driving them back to your casino more often; and, • a data-driven approach to integrating all marketing channels and maximizing ROI.

Community Chest Online player communities already exist for your casino. Some you may own and manage, like a Facebook page, Twitter feed or YouTube channel. Others exist at the whim of the internet and its patrons— pages that cover your casino on Wikipedia, threads on fan sites like SlotMachinesForum.com, and countless others built and run outside the confines of your planned marketing mix. The methods available to harness players’ online activity to drive visits to your casino vary by the platform you choose, with options including: • a destination branded entirely to your casino, where your player data is kept secure and confidential; and, • a destination where your brand shares space with others, where your player data is accessible to a number of third parties. If you prefer the first choice, there are options to expand your brand online and build your own player community wholly branded to your casino, complete with marketing capabilities and free-play gaming experiences. And research shows players may prefer you pursue this option: according to the Active Gambler Profile, while over 90 percent of active U.S. gamblers would be

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NOTHING BEATS

THE RIGHT

United Coin branding

‘

This is the sweet spot for engaging your players online—it’s where in-casino players, online gamers and mobile users meet.

Active Gamblers

Can You Hear Me Now?

interested in gaming through a branded i-gaming website, only 15 percent of those would be interested in gaming through a social networking site. Everyone can agree on the importance of maintaining the privacy and integrity of your player data, which becomes more difficult when utilizing platforms like Facebook where your player data is used to serve ads from other companies (including competitors). Facebook has its appeal, including 1 billion users and a low cost to participate, but your organization could benefit more by using your casino’s Facebook page as an acquisition and retention tool for your own digital player network. Compelling content and offers can bring fans to your network, and free games that mirror those on your casino floor can keep them engaged and returning more often, but a key benefit of creating your own digital player community can allow you to best monetize these players—an integration with your player loyalty system. By connecting your casino management system and your online player community, you get access to a 360-degree view of player activity, both on and off your casino floor. You can leverage this information to deliver hyper-targeted offers to players, uniquely tailored to their preferences and activities to increase the likelihood of redemption.

’

Zynga announced last month a layoff of almost 20 percent of its workforce, partly as a result of the ongoing struggles to keep pace with player migration from Facebook and other social game platforms to mobile and multi-platform gaming experiences. The current purchase rate of mobile devices is 3 times faster than that of PCs, while the adoption of tablet devices has already matched the growth rate of PCs. Among key casino player demographics—of people over 45, up to 65 percent who recently acquired mobile phones purchased a smart phone. This is the sweet spot for engaging your players online—it’s where in-casino players, online gamers and mobile users meet. Mobile experiences require content tailored to the device, and as online players continue moving from desktop to mobile for both browsing and gaming, it would seem prudent that a casino looking to build an online player community should ensure that, in addition to having a solution branded to their casino, they offer their players the ability to engage on any internet-enabled device they choose—desktop, tablet or smart phone. A majority of smart phone users rarely find their devices outside of arm’s reach—one of the additional benefits of building your online player community with full mobile capabilities. Offer redemption rates on mobile coupon campaigns are five times higher than those on traditional printed coupons, and in a note more specific to our industry, mobile marketing communications (SMS and “push” notifications) see average open rates over 30 percent, compared to a casino industry average of 12.5 percent for e-mail campaigns, according to Casino Marketer statistics. Finally, there’s the cost savings from mobile mar-

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Open Rates

keting campaigns—mobile promotions can easily be sent daily or weekly, as opposed to monthly direct mail campaigns, at a fraction of the cost and lead time required in traditional printed coupon campaigns. Less cost, better results—is that something you might be interested in?

Drive Incremental Casino Visits We’ve covered some basic best practices for building your online player community: • It’s branded to your casino and is customized to your casino’s offerings. • It’s connected to your player loyalty program to give you the best insight into your players’ activity online and on your casino floor. • It offers an integrated experience across your players’ online access points, everything from desktop computers to tablets and smart phones. Build your network on the right platform and you’ll have access to impressive marketing capabilities. Some of the best strategies to drive players from your online community to your brick-and-mortar property harness these marketing capabilities and the power of mobile to reach your players anywhere. “Push technology” allows mobile apps to generate pop-up notifications users can click to learn more. This can be set to trigger at times that best benefit your casino’s slower periods; set an offer for midday on a Tuesday redeemable that night if you’d like to drive incremental visits to your floor Tuesdays. “Geofencing” allows you to set coordinates on a map and trigger events when members of your target audience enter or exit those boundaries. Some platforms will allow you draw these areas on a map, and set offers to trigger for specific players using your app on their mobile device if they cross the geofencing line. Harness this technology to reward players as they enter your property, or to extend them an offer for their next visit as they exit your parking lot. Rules-based campaigns allow you to “set and forget” offers on some available platforms, inclusive of start and end times, caps on your liability from offer redemptions, and more, allowing you flexibility to tailor your digital marketing to best complement your current marketing mix for maximum benefit.

Casino Connection Connect your digital player network with your loyalty program to leverage tools like push technology, geofencing and rules-based campaigns in harmony to craft personalized offers based on a player’s value to your casino, offers triggered based on time, player activity or both. Using the three above marketing capabilities, here’s an example of a campaign you could run through your network: 32

Global Gaming Business JULY 2013

Coupon Redemption Rate

Campaign Goal: Drive additional traffic to your casino on Wednesdays. Setup: Configure a campaign that offers any of your Gold tier members living within 15 miles of your casino a free buffet. The buffet offer will appear as a push notification on their mobile device should they travel within five miles of your casino anytime Tuesday or Wednesday before 5 p.m. The offer is only extended to the first 100 players who meet your campaign’s criteria. You could distinguish the above offer further by offering a different incentive to players based on their preferences, such as an appetizer at your sports bar for some players instead of a buffet. With the right tools, your offers can only be limited by your imagination, and will allow you to drive the right players from online to your casino floor in the manner most beneficial to your operation. When evaluating potential offers, you may see better success with offers that are more compelling than any of your players would find elsewhere. You can train your players to associate offers through your player network with the highest value, which will both encourage them to check the network (online or on their phones) more frequently and make them more likely to redeem the offers they see there. You could benefit further by extending an additional reward to players you drive from your online network to your casino. A welcome message on their phone with a dinner discount coupon (triggered behind the scenes as they enter the “geofencing” of your casino) is the perfect extra touch to increase player loyalty to your growing online community, and by extension each player’s future revenue potential for your operation. A recent study by AlixPartners, a research firm in New York, found that “online enthusiasts”—those that like to game online and in casinos—have an average theoretical that is 10 percent higher than brick-and-mortar-only players. These “online enthusiasts” have higher gaming budgets and visit land-based casinos more frequently than their offline-only counterparts. Regardless of your jurisdiction’s current legalization status in regards to online real-money wagering, these are the players you want to start engaging today to drive the future success of your casino floor. Your casino can build and benefit from this digital network today—where will you start? Rory Shanahan is the head of marketing for Williams Interactive LLC, a wholly owned subsidiary of WMS Industries Inc. and sister company to WMS Gaming Inc., founded to provide premium products and services to the global i-gaming industry, from the Play4Fun Network to full real-money wagering online casinos. Contact Shanahan at rshanahan@williamsinteractive.com or www.linkedin.com/in/roryshanahan/.

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Marks the Spot The growing importance of geolocation in gaming By Rodric J. Hurdle-Bradford

he amazing growth of mobile gaming in both domestic and foreign markets is one of the casino gaming industry’s most talked about trends halfway into 2013. What is often overlooked by industry insiders and the general public alike is the importance of geolocation, the technology that powers the ability to have mobile gaming. “Location data is a key requirement for any wage-taking gaming website or application,” says Rip Gerber, president and chief executive officer for Locaid, which provides secure and accurate network mobile location data that is approved by the Nevada Gaming Control Board. “Obtaining approvals from regulatory agencies requires that a user’s physical location within a state or territory be verified to allow bets to be placed. GPS location can be easily spoofed, and WiFi or geoIP data are insufficient to provide validated location beyond country level.” The pressing need for accurate geolocation services is exhibited by the demand from legalized online poker. According to the American Gaming Association, legalized online poker will create 10,000 new jobs and over $2 billion in new tax revenue. It took just over two weeks for UltimatePoker.com to deal a million hands of legal poker, demonstrating a widespread technological demand never seen in the gaming industry. “For applications like Ultimate Poker we do not do a location fix for every hand played, but per player per session,” says Gerber. “Since the launch of the application at the end of April we are noting that the average number of hands per session is around 12. It is a sign of both the intense demand and breathtaking potential of internet gaming.”

Location, Location, Location “Geolocation” is the generic term used for the identification of the real-world geographic location of an inanimate object like a computer terminal, mobile phone or radar. The term may also refer to the practice of identifying the location or to the actual identified location. The specificity of geolocation can range from broad targeting, like geographic coordinates, to a more specific target like a street address. “We recognize that geolocation is a very specialized field requiring custom technology for gaming proposes,” says Anna Sainsbury, chief executive officer of GeoComply, a geolocation services provider. “We work with a wide range of stakeholders in gaming, from operators of casinos and lotteries to platform providers, as well as a number of partners providing services in payments, fraud and other forms of verification. Our team includes very experienced i-gaming operators from Europe’s leading regulated companies, and that helps us work hand-in-hand with our clients.” 34

The competition among vendors in the geolocation sphere is fierce, especially because there is no one single way to obtain geolocation. The actual locating engine often uses radio frequency location methods, such as time difference of arrival (TDOA) for precision. TDOA systems often use mapping displays or other geographic information systems. In early years of geolocation, radiolocation technologies were used to find a line of bearing to a transmitter as part of the process. Internet and computer geolocation is performed by associating a geographic location with the internet protocol (IP) address, MAC address, a hardware embedded article or production number, embedded software number, an invoice, WiFi positioning system, or device GPS coordinates. Geolocation usually works by automatically looking up an IP address and retrieving the registrant’s physical address. IP address location data can include information such as country, city, region, postal zip code, latitude, longitude and time zone. Additional data that can be retrieved are domain name, connection speed, language, ISP, proxies, company name, federal business and industry codes, and if the location is a business or private residence. “We currently use a third-party partner to provide location verification of the device by the associated carrier coupled with our proprietary technology to ensure there are stringent controls,” says Abe Hong, chief information officer of Station Casinos. “These controls are over the device, the phone number or SIM of the device, the user account, and the location of these attributes together to ensure we are complying with Nevada gaming regulations. We continue to look at enhancing and providing more online or mobile gaming opportunities to our guests, as a way to enhance their experiences with Station Casinos both in and outside of our properties.”

Seeing the ‘Spoof’ The tracking technology of geolocation is ongoing. It starts out obtaining the user’s current location, and then if the position data changes, a callback function sends the new updated position information. While there are various ways to track geolocation, experts agree that the old ways of solely tracking one variable (i.e., IP address) are outdated and ineffective. “Spoofing” is a technological trick in which the user manipulates his or her location to access regulated mobile gaming. It is on the rise, along with the

Global Gaming Business JULY 2013

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“Spoofing” is a technological trick in which the user manipulates his or her location to access regulated mobile gaming. It is on the rise, along with the entire online and mobile market. entire online and mobile market. “Given that many veteran online players are well-versed in methods to spoof their location, stopping them from doing so is no small task,” says Sainsbury. “However, GeoComply has been in this business a long time ourselves, and we address all possible avenues an unauthorized player may take to breach the system. We check for the use of proxy servers, VPNs and remote desktop programs, as well as other potentially malicious running processes, to ensure the integrity of the location data collected. “Location and device information is also cross-verified through the many geo databases we use to address any (potentially) suspicious outliners in the data that may indicate a risk or incidence of fraud.” To combat the presence of spoofing, Locaid provides multiple location sources to provide a quality of service at or above the “reasonable certainty” level cited in the federal Unlawful Internet Gaming Enforcement Act. “IP location or WiFi location alone is not enough,” says Gerber. “Our secure Network Mobile Location plus IP location or WiFi is the only way to create reasonable certainty. We provide these solutions to our gaming customers with secure

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Network Mobile Location being the primary resource due to the ‘un-spoofable’ nature of the data.” Along with expert “spoofers,” the mere challenge of physical presence is also a real obstacle for geolocation. Many of the country’s most popular gaming destinations lie near the border of one or more states. This includes Las Vegas, Lake Tahoe, Kansas City and St. Louis. High-quality geo-intelligence also helps reduce these false positives from accepting bets near these border areas. “Locaid uses network-based location with carrier-grade security that returns the actual location of the bettor, regardless of the location reported by their mobile device,” says Gerber. “Our location service is not susceptible to malicious applications, end-user manipulation or third-party interception, making it the only secure way to find out exactly where bettors are at any given point in time.” In addition to location information, Locaid uses a geographic IP lookup technology that provides the internet routing type, which may be from a fixed location, mobile or proxy. By utilizing only fixed IP routing types, location spoofing can be effectively eliminated. Additionally, secondary location infor-

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Geolocation is only going to increase in importance for this industry. And not just for casinobased mobile games but for online betting applications in general. —Rip Gerber President and CEO, Locaid

mation from a mobile device or a WiFi access point can be identified to review any suspect location information. “Geolocation is only going to increase in importance for this industry,” says Gerber. “And not just for casino-based mobile games but for online betting applications in general.” For land-based casinos, there is no time like the present as they look to stay in compliance with Nevada and New Jersey gaming regulations. “We created our four-prong authentication strategy to enable geolocation with our Sports Connection Gaming Platform,” says Hong of Station Casinos. “We deliver this sophisticated authentication method to prevent spoofing of the systems. With our proprietary technology platform and our third-party services, we are able to ensure the device, phone number of the device, the user and the physical location of all of these are where they should be.”

The Reality of Regulation As with every aspect of the gaming industry, the implementation of regulations will loom large with geolocation in regards to online and mobile gaming. Obtaining approvals from either state or federal regulatory agencies requires that the user’s physical location within a state or territory be verified to allow bets to be placed. Specifically, the New Jersey regulation states that the online or mobile gaming system must detect the physical location of the user once they log into the gaming system, and check on the location every hour afterwards. The regulation further states that if the user is in an area unauthorized for online or mobile gaming, the system has to stop accepting wagers immediately and disable the user’s account until they return to an authorized location as identified by the law. “We continue to build products and services that will conform to the evolving state regulations,” says Hong. “Products like Sports Connection, our online sports and racing application, were built with flexibility in mind so we can potentially extend these to other locations and partnerships.” For GeoComply, there are both consumer and regulatory benefits in keeping its technical product device-neutral. It is a central requirement for an interactive industry that is at the mercy of constantly changing consumer trends, but it helps in the regulation environment as well. “We are always looking in the long term,” says Sainsbury. “This is not just about getting a solution through the test lab and the regulator. It is about doing that and enabling our customers to operate successfully while minimizing false negatives and customer imitation.” For many vendors, keeping score of all the regulation requests and guidelines is a difficult task. Gaming Network Solutions, an Atlanta-based software company, is taking a more passive role in observing the regulators to ensure they implement the 36

Global Gaming Business JULY 2013

correct technology developments to their product. “The U.S. rules are still evolving, along with the technology, making it difficult to ensure full compliance within state requirements,” says John Cramp, chief executive officer of Gaming Network Solutions. “We will follow, not lead this process for working out the regulatory and technical challenges. Geolocation is not a fail-safe solution. We will monitor the situation to see how and what solutions are considered acceptable, and comply with state-bystate rules.”

Tracking the Future of Geolocation The future of geolocation technology is as infinite as the growing demand will be in our domestic market, not to mention a foreign market that is already years ahead in mobile product implementation. Several state lotteries have already established an online presence by offering ticket sales through mobile devices. The same trends are also occurring in the fantasy sports and sports book sector. “Geolocation is critical for all of these growth areas because any mobile gaming application that will offer real-money wagering must have the ability to verify the location of the bettor,” says Gerber. “Also, in the next few years I believe we will start seeing the industry incorporate it into their mobile marketing efforts. Much like how retailers are offering mobile coupons and investing in location-based advertising to drive higher visibility, mobile gaming can use the geofences they have set up for regulatory and compliance purposes to add value to their mobile marketing campaigns.”

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Congress Back in Action powerful casino lobbying group, is ew York Congressman Peter King has looking for bi-partisan support for a introduced a bill that would legalize federal online gaming bill. internet gambling on the federal level. The AGA is currently looking The Republican representative has put for Republicans in the Senate to forward the “Internet Gambling back its online gaming initiative, Regulation, Enforcement, and Consumer after similar legislation died last year Protection Act of 2013,” which would see due to lack of support. Last year the U.S. government tax and oversee Senate Majority Leader Harry Reid, casino-type games in states that wish to Congressman Peter King who represents Nevada, partnered participate. with Arizona Republican Jon Kyl Similar legislation—restricted to online on a failed effort to launch a federal online poker—was introduced last year by Senate Majority poker bill. Kyl has since retired, and the AGA is Leader Harry Reid and Arizona Senator John Kyl, looking for a new non-Nevada Republican to but could not find enough support for a vote. Since champion the cause. The AGA has taken no then, states have taken it upon themselves to draft position at this time on the King bill. their own online gambling regulations. Currently Despite the effort, federal legislation is still Nevada, Delaware and New Jersey are the only opposed by the National Governors Association, states to pass online gaming bills, but at least 10 which sees a comprehensive bill as curtailing other states are looking into the matter. states’ rights and impinging on their sovereignty. “A common federal standard will ensure strong State lottery directors also opposed the online protections for consumers, protect against problem poker bill, traveling to Washington last year to and underage gambling, and make it easier for busilobby against it. With casinos, racetracks, Native nesses, players, lawmakers, and regulators to naviAmerican tribes and state lotteries all coming gate and freely participate,” King said. into play, developing a consensus around a fedKing’s bill would allow for all forms of online eral bill could remain an uphill battle. gambling, with the exception of sports betting, One supporter of King’s bill is the Poker when offered by federally licensed and regulated opPlayers Alliance, the leading poker grassroots aderators who meet strict standards for integrity and vocacy group with more than 1 million memconsumer protection. bers nationwide. The group issued a statement The federal government would create an Office to commend King. of Internet Gambling Oversight in the Department “On behalf of the PPA membership and of the Treasury. The government would retain overmillions of poker players in the United States, I all jurisdiction and oversight over online gaming, thank Congressman King for his commitment but would rely on state expertise for licensing and to protecting Americans’ freedom to play poker enforcement under a common federal standard. on the internet,” said former Senator Alfonse States or Indian tribes would be able to opt-in or D’Amato, chairman of the PPA. out of the program. There is a personal connection between The act treats casinos, Indian tribes, lotteries, King and the PPA, as well. Sean King, Peter’s and other potential operators equally. None would son, is a partner in D’Amato’s lobbying firm, receive preference in licensing, and once licensed an Park Strategies, based in New York. operator would have the authority to take play on all types of online gambling as authorized under the act. Other sections of the bill call for strict oversight Ultimate Poker Drops of underage gambling, tough penalties to unlicensed Iovation, Deals with operators, and allow for federal funds to be used to Technical Issues treat gambling addiction. Currently the Public Health Services Act does not allow federal funds to hough internet gaming has only been up be used for gaming addiction. and running for less than two months in The bill comes at a time when the American the U.S., it has already faced its first regulatory Gaming Association, the country’s largest and most hurdle and a slew of technical glitches.

Global Gaming Business JULY 2013

Ultimate Poker, which launched in Nevada April 30 to become the first legal online poker site in the U.S., has severed ties with unlicensed service provider Iovation after a probe by the state Gaming Control Board. Iovation supplied its sophisticated security and player identification technology to Ultimate Poker as a subcontractor for CAMS/Verifi. Nevada’s internet gaming legislation restricts play to within its borders, along with other age and identity requirements. Though CMS has a license to operate in Nevada, Iovation does not. The Oregon-based company has a questionable past—it was aligned with UltimateBet (no relation to Ultimate Poker), which was involved in a cheating scandal dating back to 2005. For two years employees of former UltimateBet owners—including Iovation CEO Greg Pierson—were able to bypass security and see the hole card of other players, reaping millions in illegal winnings. UltimateBet was eventually sold to Absolute Poker, and both sites were shut down by the U.S. Department of Justice crackdown in 2011. Iovation’s involvement as a supplier for Ultimate Poker came to light within days of the site’s launch. Poker players pointed out the connection on several gaming websites and chat rooms, forcing the Nevada Gaming Control Board to step in. As a result, Ultimate Poker, whose parent company is Fertitta Interactive, which is associated with the Nevada-based Station Casinos chain, dropped Iovation within days of player protests. It is not the first issue Ultimate Poker has had to contend with. Though the site has proved popular among eager online players, some believe it was rushed to market in an attempt to be first before its technical issues were resolved. Players have had trouble logging in as well as accessing the site from mobile devices. A compatibility issue prevented Virgin Mobile, Cricket and Verizon mobile users from being identified. In addition, gamblers that were attempting to log in along Nevada’s borders were having problems because cell phone towers in other states were picking

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up their signals. Ultimate Poker has addressed those issues, fixing the log-in and compatibility problems. It is working on the geolocation issues as well, according to 4Flush.com. Then there are the banks. According to Gaming Control Board Chairman A.J. Burnett, some banks were initially declining credit card activity associated with the poker site, because they have not installed the software that enables a computer to recognize a “7995 transaction.” The numbers are part of the string of numbers that identifies a legal transfer of cash for gaming purposes. “It’s really a ramping-up process that will take a little time and education,” said Burnett. “But I think the biggest banks are well on the way to having the software in place because as internet gaming spreads, customers will be demanding it.”

Three’s a Crowd in California

s eight of the largest gaming tribes in California lobby lawmakers in

favor of an online gaming bill that tribal leaders have agreed to, online gaming was the subject of much discussion at the Capital Weekly’s Online Gaming Conference held May 7 in Sacramento. Topics that took place during the conference, held at the California Chamber of Commerce office, included how tribes will participate in online gaming, how online gaming will impact existing brick-and-mortar casinos, and who might be able to apply for a license. There are competing bills out there, the most prominent being Senator Rod Wright’s online poker bill. That bill would allow any entity that currently offers gaming in the state to be eligible for an online gaming license, including racetracks. The tribal proposal would limit licenses to gaming tribes and card rooms, and would edge out racetracks. The tribes argue that any law governing online gaming must be consistent with existing state tribal gaming compacts. They say they are continuing to work San Manuel Band Chairwoman Carla Rodriguez

with Wright to promote a bill that will benefit all those who are involved. However, Senator Lou Correa has introduced a bill—SB 678—that contains all of the tribal suggestions. His bill is called the Authorization and Regulation of Internet Poker and Consumer Protection Act of 2013. “A broad coalition of California Indian gaming and non-gaming tribes participated in an inclusive and transparent process over several months regarding the development of draft bill language,” said San Manuel Band Chairwoman Carla Rodriguez. The bill would be limited to online poker, would limit players to 21 years old or older, would license existing gaming operators in the state while disqualifying operators who have violated the existing federal internet gaming ban, and would specifically ban so-called “internet cafés.” The Pechanga Band of Indians and seven other gaming tribes sponsored the third bill. It would give gaming tribes a dominant role in regulating such operations and limit licenses to gaming tribes and card rooms.

JULY 2013 www.ggbmagazine.com

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A Fitting Tribute to a Legend The 15th International Conference On Gambling & Risk Taking pays respects to conference founder Bill Eadington | BY DEAN M. MACOMBER

or many, the 15th International Conference on Gambling & Risk Taking was more than a gaming conference; it was the 15th gathering of the “Eadington Clan,” those students, industry colleagues, friends and admirers of its intellectual and spiritual leader, Dr. Bill Eadington. Those who did not know Bill must have wondered what all the fuss was about. They would find out. The germination of the Eadington Clan began with Eadington’s inspired first incarnation of the conference in1974. Many regard this conference as the first conference on gambling. It is easy to speculate that attendees who entered the conference center for the first time were much like freshmen far away from home, starting their first day of college full of anticipation and expectation yet accompanied by a small but nagging, unsettling tinge of uncertainty. By the end of the conference, the novitiates of the clan were no doubt hooked by the commitment, passion, honesty and integrity of the pursuit of knowledge about all things gambling put in motion by Eadington. They left as full-fledged clan members with Eadington’s message embedded as a late addition to their DNA chain. Membership and future participation in the clan would become an extricable part of who they are for years to come. Between conferences, clan members spread the good work and good intentions of Eadington, breeding and multiplying new clan members around the world in every nook and cranny of the gaming industry. This was a good thing. A wonderfully good thing. It is testimony to Eadington’s role that the spread of this thirst for knowledge and quest to find the truth about gaming occurred at a time when gaming was still trying to escape the gravity of an illegal past and find a legitimate future. It is easy to forget the force of the headwinds from naysayers, critics and opponents that far outnumbered supporters during this time. It may be said that the “good guys” and the “right guys” won as first Eadington, then the original clan members, followed over the years by new clan members, collectively played a critical role making the industry what it is today: a legitimate, worldwide industry. The industry is not perfect, still grappling with problem and compulsive gaming as well as other community impacts that may not be all positive, but all the more reason for the clan and the conference to continue

their work. As most know, Eadington passed away in February from one of the few arguments and fights he could not overcome with his own knowledge, logic, and seeking of the truth: his argument and fight with cancer. The clan mourned individually, in groups, and collectively. But, in this 15th conference—the conference that the clan will probably always refer to as “Bill’s Conference”—Eadington was remembered with the reverence he deserved, and he was loved and celebrated out loud. Gaming researcher Eugene Christiansen, a close friend and industry colleague of Eadington, spoke about Bill’s “ecumenical approach” to the gaming industry, referring not to a religion or religious exercise but in the context of his general, unconstrained, academic and worldwide approach to the subject versus the majority at the time, who were single-mindedly focusing on the industry’s criminal history and need to rid it of those remnants. Mrs. Margaret Eadington was in attendance with their two children, Michael and Diana. At the conference dinner, she would tell us more about Dr. Eadington, her husband, our leader. Bill the Academic was clearly equally adept at being Bill the Husband, Bill the Father, and Bill the Guy Who Liked to Party and Have Fun. Almost everyone in the room made a faux move to cover up their need to wipe a tear from their eyes, me more than once. Bill was, indeed, a great man. At the risk of over-using a quote I still find poignant, “They say you die twice. One time when you stop breathing and a second time, a bit later on, when somebody says your name for the last time.” By this measure, within the gaming industry at least, Dr. Bill Eadington will live to a well-deserved forever. Dean Macomber is president of Macomber International, Inc. He can be reached at macomberinc@gmail.com. For a full report on the 15th International Conference on Gambling & Risk Taking, visit ggbnews.com/issue/vol-11-no-22june-3-2013/article/a-fitting-tribute-to-a-legend. JULY 2013 www.ggbmagazine.com

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FRANKLY SPEAKING by Frank Legato

Magic Stuff

Global Gaming Business JULY 2013

South African hoodoo lady I wrote about in January. The woman, 34-yearold Nancy Shanelle Naidoo (“Hoodoo by Naidoo”), was expected to plead guilty to more than 50 charges of fraud after preying on customers’ superstition with “dark arts” to steal their money and jewelry. According to court records, in exchange for cash and jewelry, Naidoo offered “good luck charms” that would fend off ancient demons responsible for bringing bad luck. So, all this time, it was ancient demons that brought me bad luck in the casino. Who knew? Ah, but warding off demons was only half of the prescription. She offered to bring players in contact with a “tokoloshe,” a mythical African spirit certain to bring luck at the roulette tables. You know, I can never find a tokoloshe when I need one. “Honey, I’m heading to the casino. Have you seen my tokoloshe?” “He’s helping Junior with his homework.” What is most incredible is that all this actually worked with customers to the tune of more than 2 million rand—more than $193,000—in money and valuables happily handed over to Hoodoo Naidoo. In addition to cash, they gave up bracelets, necklaces, watches, luxury perfumes from Gucci and other expensive items, all in the name of expelling demons and luring the tokoloshe. Can you imagine this happening in a U.S. casino—like, say, Resorts World in New York City? She’d get clobbered with her own good luck charms. You think ancient demons are scary? New Yorkers regularly put their fists through slots when they lose, and then eat the shards of glass for breakfast. I’d like to relate more about gaming and the dark arts, but I’m overdue at the casino. I’m meeting a clairvoyant at the Blazing 7s machine. Now, where’s my tokoloshe?

VIC TOR RINAL DO

ack in January, I told you about the lady in South Africa who was arrested for bilking casino players out of cash by telling them she could turn their luck around through some sort of bizarre hoodoo rituals. I remember wondering what kind of tricks she used, other than scoping the slot floors for people who look like they watch Jerry Springer. Well, the court date came up for the lady—a selfdescribed “clairvoyant”—so we have more details on the trickery she used to dupe some apparently braindead casino patrons of cash. But first, another kind of magic: Slot-maker Bally Technologies held its annual Systems User Conference last month, an event that updates operators on the latest innovations the company is bringing to the slot floor. As for me, being somewhat slow on the uptake of modern technology—for instance, I only recently discovered that clothes can be washed without pounding them on a stone by the river—I am particularly amazed by the new technology that comes out of this annual Bally event. I also make notes at every year’s conference on things I can subsequently lampoon in this column. I’m sorry, Bally. It’s my job. One of the things at the conference catching my attention was something they call “augmented reality.” The technology involves data superimposed on a video monitor or transparent screen—like the one used for “Google Glass,” those glasses that superimpose Google searches, text messages and other information right on the face of your glasses, so you can view it as you walk in front of a bus. A lot of casinos have banned the glasses, because there’s an app that lets you take pictures by just winking. Casinos don’t like you taking pictures on the gaming floor—it’s a holdover from the old days, when no respectable person wanted to be seen gambling in mobster-run joints. (I remember people snapping pictures of me with Sam Giancana and having their cameras smashed… Good times…) But Bally is proposing a neat use of the technology by hosts and floor people: A jackpot is hit by a loyal customer, and it pops up on the host’s glasses. In the time it takes him to walk across the floor, the host can know the player’s history, and arrive at the machine to congratulate him with his favorite drink. If a known high-roller has been on a losing streak, it pops up and the host can go offer a free dinner, a suite upgrade or some other perk to calm the guy down—again, in the time it takes to walk across the floor. That is, unless the host walks into a wall while viewing the data. Maybe the glasses can be equipped with air bags. There were many other intriguing nuggets of info at the conference, but back to the trial of the

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CUTTING EDGE by Frank Legato

Industry Standard Product: Deck Mate 2 Manufacturer: SHFL entertainment

riginally introduced in 2002, SHFL entertainment’s Deck Mate shuffler revolutionized poker, and has been an industry standard for 10 years. The company has further improved on the proven design with Deck Mate 2, which features the following enhancements: Speed: The Deck Mate 2 is twice as fast as its predecessor, and shuffles a deck in just over 20 seconds. This means no waiting or hand shuffling on a heads-up or fast game. Security: Utilizing card recognition, the Deck Mate 2 identifies and displays missing, extra or unknown cards on a new remote touch-screen display. In poker, a missing or extra card dramatically affects the game—it’s no

longer enough to just count the cards; players and operators have to know the right cards are there every time. Card recognition also brings sorting of the cards to the table, allowing faster setups and table closing. Service: The Deck Mate 2 operates in a tough environment. By redesigning the shuffling method and optimizing card handling, reliability is increased and downtime is minimized. In its debut, the Deck Mate 2 has performed beyond expectations. It is currently featured at the 2013 World Series of Poker in Las Vegas. For more information, visit shfl.com.

Picture-in-Picture

Product: PlayItVision Integrated System Manufacturer: Tipping Point Gaming and Table Trac, Inc.

able Trac, Inc. is positioned to launch Tipping Point Gaming’s PlayItVision system, which delivers interactive marketing, media, bonus games and game-in-game wagering applications at the point of play—resulting in enhanced player loyalty, increased revenues and new revenue opportunities on any game manufacturer without interrupting game play. The Table Trac PlayItVision casino management system interface allows operators to use the primary game screen on the video slot machine to create unique marketing and service window/picture-in-picture style functionality that provides players with the opportunity to manage certain aspects of their player account directly at the machine level (versus having to use a promotional kiosk or traditional players club station). More so, operators now have the ability to deliver timely interactive marketing messages directly to players at the machine with targeted promotions (e.g., promote tickets to special events or shows, dispense vouchers for food offerings). Taken together, the operational efficiencies and player loyalty features of this product provide operators with multiple revenue opportunities. This new interface is compatible with most casino management systems, and easily connects using a powerful graphics hardware accelerator installed into each gaming machine. The open architecture enables operators and third-party developers to design innovative applications and manage content. Further, PlayItVison’s innovative game-in-game feature enables play-

Global Gaming Business JULY 2013

ers to opt-in to play two completely separate games simultaneously, thus increasing the excitement by increasing the player’s action. These games can be designed as promotional, bonus games for extended play or revenue-generating games. Tipping Point’s Mega Wealth series of games, such as Mega Mega, a keno-style game with life-changing jackpots, provides casinos with an attractive set of games which drive incremental revenues by offering players a chance to wager on these side games through their favorite base games, throughout the casino floor. For more information, visit tippingpointgaming.com or tabletrac.com.

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NEW GAME REVIEW by Frank Legato

Dragon’s Lair Cadillac Jack

his game celebrates the 30th anniversary of the original video arcade game Dragon’s Lair, with a multi-bonus slot version of the legendary game. Dragon’s Lair wraps the theme of the classic game into several bonus features and a four-level progressive jackpot. The game features new and original animation by Dragon Lair’s animator Don Bluth. The video slot, a fivereel 40-line game, follows the game’s intrepid hero, Dirk the Daring, as he encounters multiple challenges (bonus games) in his attempt to rescue Princess Daphne from the evil dragon Singe, who has locked the princess in the foul wizard Mordroc’s castle. Bonus features include “Symbols Stacking,” a feature in which stacked symbols create a win that triggers video from the original arcade game; “Mystery Wild Substitution,” in which the Dirk or Singe character appears to add

mystery wild symbols to the reels, up to entire wild reels; the “Mystery Multiplier Feature,” in which multipliers appear to increase pays for winning combinations; and four Dragon’s Lair-themed bonus events. The Dragon’s Lair bonuses include two picking events—“Forge Pick” and “Robot Knight Pick”—and two free-spin bonuses. The four progressive jackpots are tied to line combinations involving four different characters from the arcade game. Manufacturer: Cadillac Jack Platform: Genesis 2 Format: Five-reel, 40-line video slot Denomination: .01—25.00 Max Bet: 200 (configurable) Top Award: Progressive; $5,000 Class II reset; $2,500 Class III reset Hit Frequency: Approximately 50% Theoretical Hold: 5%—14%

Ultra Stack Dragon Aruze Gaming

his is the latest game in Aruze’s “G-Series,” a group of video slots dedicated to the classic video-slot experience. To this end, the game concentrates on features that have been among the favorites to video slot enthusiasts—namely, stacked symbols, stacked wilds and lots of free spins. The base game is a five-reel, 50-line video slot. The mediumvolatility video slot uses program math to offer extended play time on a five-by-four configuration: five reels, four rows of symbols per reel (instead of the standard three). To this steady stream of winning combinations is added stacks of symbols which apply to the bonus game. Scattered bonus symbols on the middle reels trigger Ultra Stack Free Games—eight free spins in

Global Gaming Business JULY 2013

which winning symbols and wild symbols stack on the reels for increased wins. Special reels are used in the bonus that include extra wild symbols. The feature can be re-triggered for more free games during the feature. It all combines for a game that offers the player action, time on device and a frequent bonus with good win opportunities— a formula based on simplicity that has made the G-Series very popular with players. Manufacturer: Konami Gaming Platform: KP3 Format: Five-reel, 50-line video slot Denomination: .01 Max Bet: 250, 500, 750, 1,000 Top Award: 1,000 credits times line bet Hit Frequency: Approximately 50% Theoretical Hold: 3.76%—12.91%

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GLOBAL GAMING WOMEN

Leading Attributes What makes a great and successful leader? By Cath Burns, CEO, TCSJohnHuxley Group

have never thought of myself as a woman in gaming—only as someone who has been lucky enough to have a career that I have loved that has spanned the globe in an exciting, fun and challenging industry. My parents instilled in me from a young age to find a career that I loved, because you spend most of your life working. I was also fortunate to have parents that supported my dreams in any way that they could. My family is full of strong, successful women. I grew up believing that I could do or be anything that I wanted. As I got older, I realized that it was women like my mother and grandmothers that gave me the freedom to go, do and be. They were the true trailblazers and heroes. Also, being born into the right family at the right time in history has given me opportunities that my mother or grandmothers simply did not have. Looking back and reflecting over a career is something that I haven’t done a lot of. I’m not a very reflective person, but in thinking about this article and what value, wisdom or inspiration I could pass on to an up-and-coming group of young women in gaming, I thought a bit a of reflection was a good thing. So what makes a great and successful leader?

Having the Right (Positive) Attitude is Key Being positive even in the face of adversity is critical. It doesn’t mean that you are not candid and frank, but we are all in the problem-solving business, so tackling problems in a positive way will always have a better outcome. It will also create an atmosphere of collaboration and teamwork. Understanding Opportunity When opportunity presents, you must assess it objectively and understand what will happen based on the decision you make. Opportunity often comes at inconvenient times, but whether it is a new job offer, the chance to move to a new country or a promotion, the ability to understand an opportunity and make the best decision is a skill that must be cultivated. 48

Global Gaming Business JULY 2013

Luck I was lucky enough to be a part of the building of the Macau casino market from 2006 to 2012. I use the word “luck” on purpose, because it was exposure to the Chinese culture that really helped me to understand why luck is such an important part of a person’s success. The Chinese believe that luck + hard work = success. On reflection I realize that I have been very lucky throughout my life when I have worked incredibly hard and surrounded myself with smart, demanding and talented people. Hard Work There is no way around it. Hard work is a must. Going that extra mile every time will set you apart from other people. It does pay. Listen, Listen, Listen Listening is one of the most vital skills that anyone can possess. Listening is an essential part of communication, and good listeners will understand people better. It is much harder to listen than talk. Constantly Learning There is no time in life when we can’t learn. Keeping educated about your business, your customers, technology, human resources and what is going on in the world will make you a more wellrounded person. Being Flexible or Unwavering When Necessary Knowing when to be flexible or unwavering in a leadership position is another skill set that gets better with understanding and practice. Flexibility to change direction quickly because the business requires it, not being afraid to say I don’t understand, please help me understand, or being completely unwavering when you know it is absolutely the right course of action will build support and respect from employees. Empathy You must be able to empathize with people. Everyone has something going on in their life, and keeping attuned to people and their lives will

help you build strong teams and understand what motivates them. You can’t fake empathy. We all know people in our careers that truly display empathy and those who don’t. Once you can respect and understand people’s lives, you can achieve a better relationship with your employees. Clear Thoughts and Goals Understanding and communicating what you want to achieve will allow a team to focus and deliver. Consistent and Timely Decision-Making Following a consistent process to make a decision will instill fairness across your team. Decisions will not always be agreed to by everyone, but if the same consistent process to make a decision is followed, it will be respected. Timely decisionmaking when required is another characteristic that will set you apart. Sharing your decisionmaking approach with your team will help with understanding and support. Surrounding Yourself With People Who Are Smarter Than You I started my career in sales with IBM, one of the greatest companies in the world. Their commitment to hiring the brightest and best employees has built a company that has been around for over 100 years that continues to change, grow and innovate. IBM hires the smartest people from all disciplines, which creates an energy and level of thought that is hard to match. Having an organization that is top-heavy in “A” players will make you a better company. Mediocrity does not build great companies, and it does not inspire people to do great things. Belief In Self You must back yourself. You must believe that you can make things happen. You must have the confidence to go against the grain if you know that the current direction is incorrect. You must believe in yourself. To our future women-in-gaming leaders—go for it! There has never been a better time in gaming history to seize your place. Good luck and best wishes.

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GOODS&SERVICES

MGM Forges Marketing Alliances

International Certification Services for its China Research and Development Office (CRDC) in Beijing. IGT’s Quality Management Systems, along with the design, development and manufacturing processes, have successfully completed extensive external evaluation on a regular basis to ensure ongoing conformity to the international ISO standards.

collaboration of loyalty programs between A MGM Resorts International and Hyatt Hotels Corp. will allow customers to earn points

Aristocrat, Grand Vision in Licensing Agreement

and redeem credits at properties owned by both companies. Tier credits earned with the M life player’s club card at MGM properties will apply to the Hyatt Gold Passport loyalty card, and vice versa. The relationship connects Hyatt’s more than 450 hotels and resorts worldwide, and MGM Resorts’ 12 properties in Las Vegas, which covers 40,000 hotel rooms. MGM Resorts announced a similar collaboration last month with Southwest Airlines. Customers must be enrolled in both Southwest’s Rapid Rewards and M life to earn benefits. Points in both programs can be earned for flights on the airline and upgrades at MGM Resorts’ Las Vegas properties, including hotel room upgrades and pre-sale concert and fight tickets. Southwest is the largest carrier at Las Vegas’ McCarran International Airport.

rand Vision Gaming (GVG), a manufacG turer of video gaming devices headquartered in Billings, Montana, and slot manufacturer Aris-

IGT Announces Dividend Increase, Chinese Certification eading slot manufacturer International Game LtorsTechnology announced that its board of direcdeclared a cash dividend of $ 0.09 per share on its common stock for the second quarter, a 50 percent increase compared to the dividend paid in the same quarter last year. This marks the 41th consecutive quarter that the company has paid a dividend—the longest current streak in the gaming industry. “We are pleased to announce another significant increase in our quarterly cash dividend,” said Patti Hart, CEO of IGT. “This is a clear signal that our strategy is driving strong financial performance and that we are committed to returning capital to shareholders in an effective and judicious matter.” The company also announced that it has received ISO 9001:2008 certification from SGS 50

Global Gaming Business JULY 2013

tocrat Technologies have entered into an agreement that grants GVG an exclusive license to place three popular Aristocrat slot games on GVG gaming devices in Montana. The titles include Buffalo, which was named “Best Video Slot Game” by Goldman Sachs’ independent survey of slot managers across the country for the second consecutive year. According to Tim Carson, one of GVG’s four partners and a 34-year industry veteran, this agreement comes one year after the two companies entered into their first agreement in May 2012 that made GVG the exclusive distributor of Aristocrat games in Montana. This new agreement “combines games from two manufacturers on a single gaming device,” said Carson. “Players will now have the opportunity to choose games from two distinctly different and separate manufacturers while playing on one machine. It’s a simple but revolutionary concept that puts the player first by expanding their game options that are no longer limited by a single manufacturer. This is a highly strategic arrangement that gives both companies significant competitive advantages in the marketplace.”

NEWave Wins Cherokee Contract

oftware supplier NEWave announced it has won a major corporate-wide contract to install its leading Title 31 Manager and TINCheck software at all eight casino locations in Oklahoma owned and operated by Cherokee Nation Entertainment LLC. The installations will include Hard Rock Hotel & Casino Tulsa, Cherokee Casino & Hotel West Siloam Springs, Cherokee Casino Fort Gibson, Cherokee Casino Ramona, Cherokee Casino Roland, Cherokee Casino Sallisaw,

Cherokee Casino Tahlequah and Cherokee Casino Will Rogers Downs in Claremore. Including these properties, NEWave now serves 36 Oklahoma casinos.

Rank to Offer New Greentube Games reentube, a slot content subsidiary of AusG tria’s Novomatic Group, announced that Britain’s Rank Group will be launching six new Greentube games at the end of July, in both landbased venues and online. The new titles include Cash Farm, Fruit Farm, Rumpel Wildspins, Jolly Star, Indian Spirit and Pharaoh’s Tomb. Rank has been working with Greentube since September 2009 and earlier. This year, the popular Greentube games Fairy Queen, Spinning Stars, Dazzling Diamonds, Flame Dancer, Golden Ark and Jewel Action were added to Rank’s gaming portfolio.

Cadillac Jack Places in Mexico maya Gaming Group announced that its A Cadillac Jack slot manufacturing subsidiary has executed an agreement with one of its largest customers in Mexico to expand Cadillac Jack’s leased install base by 890 gaming units. Under the multi-year agreement, the customer will replace 890 of its own units with leased units from Cadillac Jack across 13 locations throughout Mexico. “This is a tremendous opportunity to expand our partnership with one of our top customers and maximize the entertainment value for their players,” said Mauro Franic, Cadillac Jack’s chief operating officer. “It also bolsters our stature within the Mexican gaming machine market, which is expected to grow significantly over the next few years.”

GLI Certifies Ultimate Gaming esting organization Gaming Laboratories InTits testing ternational announced that it has completed and certification of Ultimate Gaming’s intrastate interactive gaming system for Nevada. The testing was exclusively done by GLI in its Las Vegas and Colorado laboratories. The certified system has since been approved for field trial by the Nevada Gaming Control Board, making Ultimate Gaming the first interactive gaming service provider in Nevada to go live with intrastate interactive gaming.

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Bally Systems Shine Tenth annual Systems User Conference displays cutting-edge products lot and system supplier Bally Technologies dazzled its systems customers last month with its 10th annual Systems User Conference, held in the East for the first time at Connecticutâ&#x20AC;&#x2122;s Mohegan Sun casino resort. The event hosted some 451 attendees, including 328 officials from casino operators across the country, for an exchange of ideas, introductions of new system technology, and educational sessions on the ways to best use what have become the most sought-after system products in the industry. According to Bruce Rowe, senior vice president of sales support and customer consulting, while the attendance figures were upâ&#x20AC;&#x201D;particularly the number of operators, up to 320 from last yearâ&#x20AC;&#x2122;s 180â&#x20AC;&#x201D;what was more impressive was the diversity of the attendees. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re getting more and more participation from marketing, gaming operations and senior management than we have in the past,â&#x20AC;? he said, â&#x20AC;&#x153;because these (system) tools are being seen more as competitive weapons, and the general managers want to know how to use them.â&#x20AC;? Those tools are related to two main Bally system areasâ&#x20AC;&#x201D;the Elite Bonusing Suite (EBS) of networked products for slot floors, and the Bally platform for mobile and online gaming. Operators such as Buddy Frank, vice president of slots for Californiaâ&#x20AC;&#x2122;s Pechanga Casinoâ&#x20AC;&#x201D;where the previous two Systems User Conferences were heldâ&#x20AC;&#x201D; joined Eldorado IT Director Peter Broughton and Moheganâ&#x20AC;&#x2122;s own Slot Operations VP Frank Neborsky in a panel discussion on the benefits of the EBS stable of products, including iVIEW DM Tournaments and Virtual Racing, two products rapidly spreading across the industry which link slots on the floor via Ethernet to

Pechanga Slot Operations VP Buddy Frank, Eldorado IT Director Peter Broughton, Bally Senior VP Bruce Rowe, Mohegan Sun Marketing VP Bethany Seidel and Mohegan Sun Slot Operations VP Frank Neborsky discuss networked slot bonusing

ANNUA THE 4th

community bonus events that can encompass anywhere from a bank of games to the entire floor. One major product launch announced at the User Conference was Super Slotline, a technology that allows customers to switch from a serial to a network-capable floor without the cost of retooling for Ethernet. The technology, not unlike a modem that allows digital television reception, creates what Rowe calls a â&#x20AC;&#x153;faux Ethernetâ&#x20AC;? that allows the networked capabilities of EBS for around $100 per slot machineâ&#x20AC;&#x201D;as opposed to around $500 per slot for complete conversion from serial to Ethernet. The Bally interactive product group used the conference to demonstrate how casinos can link the mobile, online and land-based casino worlds to create a cycle of business that benefits all three types of gaming. Finally, the company rolled out return-on-investment numbers for many of its most popular system products. Among the statistics presented were numbers showing a 28.5 percent increase in coin-in during community bonus events and huge jumps in the number of players enrolled in loyalty clubs.

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Cantor, William Hill Duke It Out

antor Gaming has filed a lawsuit in Clark County, Nevada, District Court, claiming rival sports book operator William Hill poached sensitive information and may have stolen William Hill U.S. clients when it acquired CEO Joe Asher Brandywine Bookmaking in 2011, founded by former Cantor executive Joseph Asher. After paying $15.7 million for Brandywine in June 2012, William Hill also hired Asher as CEO for its stateside operations, reports the Las Vegas Review-Journal. Asher launched Brandywine in 2008, a year after exiting Cantor, then developed 16 sports and race books in Nevada under the Lucky’s label. The suit, filed in May, alleges that William Hill “participated in, and plans to benefit from, Asher’s usurpation of business ideas and opportunities that belong to (Cantor). (Cantor is) informed and believes that the William Hill defendants have acted in concert with Asher and Brandywine for this unlawful objective.” Asher contends that top executives at Cantor Fitzgerald, the Wall Street firm that owns Cantor Gaming, OK’d his plans for Brandywine Bookmaking before he left the company in 2007. Asher claims he was ousted, while Cantor contends he walked out.

Bally Launches NASCAR Slot

lot manufacturer Bally Technologies launched its Smonth, new “NASCAR” slot in Southern Nevada last with simultaneous debuts at several Boyd Gaming properties in Las Vegas. The NASCAR slot features five of racing’s top stars—Clint Bowyer, Dale Earnhardt, Jr., Jeff Gordon, Kevin Harvick and Jimmie Johnson—in a video slot with several different styles of bonus event. The player has the option to select his favorite driver at the start of the game, and the selection changes the color scheme, icons and images to reflect that star. The main bonus is a stock car race, with awards based on where the player’s driver places. 52

Global Gaming Business JULY 2013

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PEOPLE HANSBERRY NAMED PRESIDENT OF DELAWARE NORTH

. Brian Hansberry has been named president of Delaware North Companies E. Brian Hansberry Gaming & Entertainment. Hansberry, a 30-year veteran of the casino gaming industry, will replace William Bissett, who will remain as chairman of the gaming division to assist with the executive transition before he retires later this year. Prior to joining Delaware North, Hansberry spent three years as general manager and chief operating officer at Agua Caliente Casino Resort Spa in Rancho Mirage, California. From 2007 to 2009, he served as president and chief executive officer of Seneca Gaming Corporation, overseeing casinos in Niagara Falls, Buffalo and Salamanca, New York. He had joined Seneca Gaming as a table games manager in 2002, and rose to the positions of chief operating officer and general manager, leading the three-year development of the $350 million casino in Salamanca. Upon returning to Niagara Falls as general manager, he subsequently was appointed president and chief executive officer within five months.

CAESARS NAMES NEW EXECS

aesars Entertainment announced a shakeup in the ranks of upper management last month. Former Las Vegas Sands Corp. executive Tom Arasi was Tom Arasi appointed president of hospitality. Veteran Caesars executives Tom Jenkin and John Payne also assumed new roles. Jenkin was named global president of destination markets and Payne was elevated to president of central markets and partnership development. Arasi, who most recently was president and CEO of Marina Bay Sands in Singapore, will oversee a number of departments in Las Vegas, including the company’s food and beverage offerings, hotel, nightlife, pools and spas. He will be in charge of the upgrades now under way at Caesars properties on the Strip, including the Linq development, the renovation of the Quad and the creation of the Gansevoort Las Vegas in the former Bill’s Gamblin’ Hall. Jenkin will oversee operations across the company’s largest markets including Las Vegas, Atlantic City, Philadelphia, Northern Nevada, Laughlin, and

Hammond, Indiana. He will continue to have operational oversight of Harrah’s Ak-Chin near Phoenix, Harrah’s Rincon near San Diego, and the company’s international properties. Payne will have operational responsibility for the company’s properties in Indiana, Missouri, Iowa, Mississippi, Illinois, North Carolina, Ohio and Louisiana. Payne will also oversee Caesars’ development efforts in Maryland and Massachusetts.

PINNACLE PROMOTES RUISANCHEZ AND SHANKS

innacle Entertainment recently announced two executive leadership promotions. Carlos Ruisanchez has been promoted to president and chief financial officer and Ginny Shanks was named executive vice president and chief administrative officer. Ginny Shanks With more than 15 years of gaming industry experience, Ruisanchez, who joined Pinnacle in 2008, previously served as executive vice president and chief financial officer. In his new position he will continue to be responsible for the company’s overall strategy and development activities, and also oversee the financial and administrative functions of the finance department. Shanks joined Pinnacle in October 2010 and has more than 30 years of marketing and operations experience in the gaming industry. Previously she held the position of executive vice president and chief marketing officer. In her new position she will continue to be responsible for the company’s enterprisewide marketing strategies, including the ongoing development of distinct brand positioning for its gaming entertainment properties and overall branding strategies, database marketing efforts and continued evolution of the mychoice guest loyalty program.

GALEA RETURNS TO MALTA’S LGA

fter five years in retirement, Mario Galea has returned to his roots with an appointment as chairman of the Lotteries and Gaming Authority in Malta. Mario Galea Galea, who retired as CEO in 2009 due to ill health after four years setting up and running the regulator, has been appointed chairman by Edward Zammit Lewis, the Malta minister responsible for regulation. Galea, who has been operating his own online gambling con-

sultancy, returns at a crucial time for the authority. In recent years the LGA has been criticized for its lack of oversight and regulation enforcement concerning several internet poker operators under its watch. Its mishandling of player complaints and the shutdown scandal of Media Corp.’s Purple Lounge in 2012 was a particular embarrassment to the agency.

MGM NAMES HOSPITALITY CHIEF

GM Resorts International has named Michael Evans as chief operating officer of MGM Hospitality, the company’s subsidiary that operates hotels and resorts in international destinations. Evans was previously executive vice president of global development for MGM Hospitality. Prior to MGM, he held key senior management positions with Marriott International from 1998 to 2008, and was an attorney in private practice in Miami. He replaces Gamal Aziz, who left last year for a similar position at Wynn Resorts.

CORRECTION In the June issue, Casino Communications with Matt Levinson, chairman of the New Jersey Casino Control Commission, contained a transcription error that had Levinson claiming the licensing of casino vendors remained with the CCC, when that function has moved to the Division of Gaming Enforcement. We regret the mistake.

July 2013 Index of Advertisers Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . .20, 21 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Bally Technologies . . . . . . . . . . . . . . . . . . . . . .2 BEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 BMM Test Labs . . . . . . . . . . . . . . . . . . . . . . . .33 Cantor Gaming . . . . . . . . . . . . . . . . . . . . . . . .55 FutureLogic . . . . . . . . . . . . . . . . . . . . . . . . . . .11 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40, 47 Galaxy Entertainment . . . . . . . . . . . . . . . . . . .52 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Innovation Group . . . . . . . . . . . . . . . . . . . . . .43 JBA Consulting Engineers . . . . . . . . . . . . . . . .37 Konami Gaming . . . . . . . . . . . . . .9, Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Multimedia Games . . . . . . . . . . . . . . . . . . . . .17 NAGRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 NEWave . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .31 Sherpie Awards . . . . . . . . . . . . . . . . . . . . . . . .51

JULY 2013 www.ggbmagazine.com

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CASINO COMMUNICATIONS

oe Heck is a member of the U.S. House of Representatives from Nevada’s Third Congressional District, first taking the seat in January 2011. A native of New York and raised in Pennsylvania, he first moved to Nevada in 1992. He is a medical doctor, and until 2011 was the owner of Specialized Medical Operations, which provided medical training and support to law enforcement agencies and the military. Along with Congressmen Bennie Thompson (D-Mississippi), he recently announced the restoration of the House Gaming Caucus, a group of congressmen from states where gaming is legal that considers issues that affect the industry. This interview was conducted before Congressman Peter King (R-New York) introduced a bill in the House to legalize online gaming. He spoke with Global Gaming Business Publisher Roger Gros at his offices on Capitol Hill in April. To hear a full podcast of this interview, visit our website, ggbmagazine.com. GGB: You recently started or re-started a gaming caucus in the House of Representatives. Why has this become an issue?

Heck: Gaming is critically important to my district and the state of Nevada. There have been many issues that have been debated in Washington that have a direct impact on the gaming industry, so Congressman Thompson and myself decided it was time to reinvigorate the gaming caucus. We want to have members from both gaming and non-gaming states so they can hear how gaming impacts the overall economy and make sure they’re informed about these issues. Rep. Thompson is a Democrat, so how did you come to an agreement on this? When you look at gaming across the nation, it’s a bipartisan issue. It has to do with the economy, jobs, regulations… things that give us an opportunity to work together across party lines to do things that will benefit everyone, not just for their own districts.

Global Gaming Business JULY 2013

Congressman

Joe Heck (R-Nevada)

There are plenty of other states that have gaming. How are you going about recruiting members from those states? First, we do what is called a “Dear Colleague” letter that is sent out to all members announcing the caucus. I walk around on the House floor with copies of that letter, targeting members from gaming states, and inform them of what we’re trying to do. Since we rolled it out, we’re in the process of building membership. Once we hit a critical mass, we plan to have a roll-out reception where we’ll talk about what the goals of the caucus will be. What are some of the issues you want to address with caucus members? One of the issues that people want to see addressed is internet gaming, whether it be i-poker, sports gaming or full-scale online gaming. We want to evaluate the Department of Justice memo that opened this up and see what that holds. But there are other issues like the impact of gaming on local economies, and how we help create jobs and foster an environment that is conducive to development by the gaming industry. There will be tribal issues. We’re reaching out to members whose districts include Native American casinos so we can be all-inclusive. Online gaming has been frustrating to the gaming industry. With the failure of either house to get anything passed during the last session, states have taken the initiative. Why didn’t that get traction in the last session of Congress? It’s hard to understand. Part of it was a strategy of finding a bigger bill in which to insert it versus a stand-alone bill. There are still some representatives that don’t look upon gaming in general favorably, so it’s a matter of trying to find that balance and that critical mass of “yes” votes that would make it successful. The last thing we want to do is try to move a bill that wouldn’t pass. Some perceived Senator Harry’s Reid’s bill in the last Congress to be too favorable to Nevada. Do

we need a more balanced approach to get the support of all senators and congressmen? The most important thing about internet gaming is to make sure you have entities with well-documented track records that know how to regulate and license gaming establishments. And there’s really no other place in the world that has the experience that we have in the state of Nevada. It doesn’t mean that’s the way it will always be, but when you’re breaking new ground, you want that experience and exemplary track record. Do you believe the current efforts to legalize online gaming on a state-by-state basis will improve the chance to pass a federal bill? I think it might go either way. As you see more states going out on their own because of the DOJ’s interpretation of the Wire Act, some people may wonder why we need any federal bill at all. On the other side, it could be an increased impetus to get something done. We’ll just have to see how that shakes out. We don’t want that patchwork quilt of regulations, and when and if gaming takes place across state lines, it will have that interstate commerce connection. So I think before we reach a critical mass of online gaming states, there will be an effort to put some meaningful but not onerous federal regulation in place. Some people believe that Republicans are the problem… They’re the ones trying to keep online gaming bills from being introduced. That’s not my impression. We have many Republican members with gaming in their states and districts. What we have to do is figure out how you measure the importance of this issue for this audience. For some, it’s not the jobs and the economy, it’s the idea of enforcement. They don’t want internet gambling in their areas; there needs to be a way to enforce that. So if we can emphasize that enforcement role in the bill, they hopefully will support it.

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