GGB Magazine May 2013 by Global Gaming Business

WILL JAPAN SAY NO? | MASSACHUSETTS UPDATE | MAKING YOUR MARK, PART II | ARCHITECT PAUL STEELMAN

May 2013 • $10 • Vol. 12 • No. 5

Cotai Vision Sheldon Adelson’s transformative plan for

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Why cityscape casinos are the wave of the future By Gary Loveman

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Vol. 12 • No. 5

CONTENTS

ON THE COVER

may COLUMNS

Page 24

The Cotai Miracle All discussions about the future of the world’s most successful casino market in Macau center on the district known as Cotai—a district that did not even exist 10 years ago. Here’s how an area that was essentially a giant marsh became the most sought-after real estate in the casino industry.

14 Fantini’s Finance Hitting the Wall Frank Fantini

16 AGA Growing Today, Growing Tomorrow Frank J. Fahrenkopf, Jr.

50 Global Gaming Women All Shapes and Sizes Elizabeth Francisco

By Roger Gros

DEPARTMENTS FEATURES 18 City Living One of the fastest-growing casino resort models moves away from the isolated, all-inclusive integrated resort to tie a casino to the identity of an urban center. By Gary Loveman

44 Rising Sun For years, the prospect of bringing casinos to Japan has been viewed by outsiders as a no-brainer. But for progaming Japanese lawmakers, things aren’t that simple. By Ben Lee

46 Making Massachusetts Some complain the process of creating a new casino industry in Massachusetts is taking too long, but regulators insist on getting it right the first time. By George Brennan

30 Special Report: RD&E Our annual focus on the nongaming side of the industry reveals how retail, dining and entertainment are transforming the revenue model for casinos.

The Agenda

Dateline

13 Nutshell 56 Cutting Edge

30 The New Model Retail, dining and entertainment offerings are now just as important as the tables and slots in the overall casino picture. By Mark Birtha 34 Shopping Nirvana As proven by the Forum Shops at Caesars Palace in Las Vegas, world-class retail is a revenue-generator stacking up to anything a casino has to offer. By Marjorie Preston

58 iGames 62 New Game Review 66 Frankly Speaking 68 Goods & Services 73 People

52 Marketing Revealed The second installment of a comprehensive look at casino marketing focuses on monitoring and evaluating marketing decisions. By Dean M. Macomber

38 Follow the Money Ever since non-gaming revenues first exceeded money from the slots and tables on the Las Vegas Strip, casinos have turned to technology to track and increase total resort spending. By Carolan Pepin and Roy Student

74 Casino Communications With Paul Steelman, President, Steelman Partners

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THE AGENDA

Meeting Needs

Vol. 12 • No. 5 • May 2013 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com

K, let’s talk about meetings and conventions. First, full disclosure. I’m a consultant for the G2E conference program, both in the U.S. and in Asia. My former company (using my ideas) was also the co-founder of the American Gaming Summit (currently defunct, but an innovative idea that brings together the top leaders of the industry to discuss the issues) and the Southern Gaming Summit (SGS), which started in New Orleans and today resides in Biloxi. Both date back to the early 1990s, which is a long time ago, even though it seems like yesterday to me. My current company launched conferences dedicated to casino design (we continue to publish an annual magazine of the same name) and the racino industry, which we sold to the owners of G2E. And finally, my company today produces a conference called the RD&E Experience, which focuses on retail, dining and entertainment, all the non-gaming elements of a casino resort, held this year on May 1 and 2 at Planet Hollywood in Las Vegas. It’s the only conference of its kind. OK, so now you know. So there are two huge gaming shows, Global Gaming Expo, held in Las Vegas and Macau, and ICE Totally Gaming (which used to be called the International Casino Exposition, a name which made much more sense, in my humble opinion, but then again, I work for G2E), held in London. Both of these shows generate millions of dollars, far beyond anything I could have ever imagined. After that, there are dozens of semi-major and minor trade shows and conferences. The Indian Gaming Conference (which everyone calls NIGA, after the organization that produces it) is probably the second most-important U.S. trade show. NIGA brings together the gaming leaders in Indian Country and the companies that operate and supply their casinos. It has traditionally been held in March and April, but next year, it will be held in May just after the Southern Gaming Summit and just before G2E Asia, a scheduling hassle that makes the exhibitors extremely unhappy. There are more than 20 and less than 40 other conferences and trade shows, produced by companies that probably all have the same motive: to make a decent profit and create an ongoing business model. But let’s break down these producers. Many of them are strictly “conference” companies that

Global Gaming Business MAY 2013

have no direct connection to gaming. Their sole purpose is to make as much money as they can, giving back little or nothing to the gaming industry. Other companies are publications or consulting companies within the gaming industry. Again, they are mostly interested in profit, but also with some dedication to gaming. And then, there’s a “type” of conference. I have to confess we started the “regional” gaming conference when we launched the SGS. Today, you can find the “Eastern,” “Florida,” “New York,” “Pennsylvania,” “Canadian,” “New England,” “Asian,” “Midwest,” “Martian” (OK that last one was a joke, but not really) gaming summits. And then you need to consider the online editions. So I constantly hear complaints about how many conferences there are and what it costs the vendors/exhibitors/sponsors. But I point out that it’s a problem that they control. Decide what is important to your company, sponsor/attend the first one or two of them, and it will become clear whether it’s in your company’s best interest to be there. It’s all about return on investment. Not really a difficult choice. I think the big difference that separates one conference from the other is the networking opportunities. Can you meet your clients/competitors/ potential partners at a cocktail party or continental breakfast? Is there enough traffic/attendees to make some serous connections? And then we come to the new cutting-edge conference, the webinars. Truth be told, we’ve considered producing such online seminars and charging attendees to log in. But when there is so much gaming content online, I just can’t justify charging people for information that they can find with a little bit of digging through the garbage that you usually find online. Will there be a few golden nuggets of information at these webinars? Of course, but will they be worth several hundred dollars? Doubtful. And networking? Forget about it! So with the proliferation of information both at conferences and online, every company has to weigh the benefits and drawbacks of each opportunity and make a choice that is best for their particular situation. And next month, we’ll talk about the awards programs. Just joking!

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 ASIA may2013

Great expectations

Solaire opens as Manila’s first Entertainment City offering

Philippines President Benigno Aquino (l.) joined Bloomberry’s Enrique Razon, PAGCOR Chairman Cristino Naguiat and others to launch the new resort.

Let’s Go

Ho Tram receives Vietnam approvals sian Coast Development (Canada) has received approval from the government of Vietnam of all of the amendments it requested to its investment certificate, a move that could free up funding for the company’s delayed Ho Tram resort. Chief Executive Officer Lloyd Nathan called it a “landmark day for the Ho Tram Strip.” The resort, situated on the South China Sea coast about 70 miles from Ho Chi Minh City, has faced funding difficulties and other problems in getting open, though the first phase of the project is reported to be complete, with 541 rooms and suites, a casino for foreign passport holders, restaurants, shopping, a spa, three swimming pools, beachfront amenities and other attractions. In March, MGM Resorts International, which was to manage the property, pulled out, citing the absence of government approvals. U.S.listed casino operator Pinnacle Entertainment is an investor and could possibly be tapped to operate it. The government approval of the project’s financial structure is an important element in continuing the viability of the project. No opening date has been announced, although ACDL says it is already building a second hotel tower of 559 rooms and an 18-hole golf course.

Global Gaming Business MAY 2013

hilippines President Benigno Aquino hailed the opening of Manila’s Solaire Resort & Casino on March 16 as the start of a new era for the country’s tourism industry. “Macau and Singapore are always competing for bigger pieces of this industry’s very lucrative pie. Your presence in the country is proof positive that, above all else, the Philippines works,” the chief executive told a crowd of political leaders, local dignitaries and industry bigwigs at the unveiling of the US$1.2 billion resort. Solaire, owned by Bloomberry Group, a PSXlisted entity controlled by Philippine ports tycoon Enrique Razon, features 500 hotel rooms, 300 table games and 1,200 slot machines, several gourmet restaurants and a high-end food court in its $750 million first phase. Another 300 rooms, a spa, a pool, a nightclub, an 1,800-seat theater and 30-40 retail shops are planned as part of a $400 million expansion already under construction.

Solaire employs 4,500, with 500 more people due to be hired in the second phase, management says. Four hundred or more are returning Filipinos from Macau, Singapore and other resort markets who have assumed management positions at the new casino, which is operated by Global Gaming Asset Management, a U.S.-based company founded by two former top executives of Las Vegas Sands, William Weidner and Brad Stone. Solaire is the first of four large-scale casinos— representing a total of more than $5 billion in capital investment—licensed for 120 hectares of government-owned reclaimed land on Manila Bay known as Entertainment City. The second of these, a joint venture between shopping mall giant SM Investments and Macau casino operator Melco Crown Entertainment, is scheduled to open in the summer of 2014. The others are joint ventures between Philippine companies and Malaysian conglomerate Genting and Japanese pachinko tycoon Kazuo Okada.

Deadbeats Singapore bad debts growing concern he use of the VIP operators in Macau helps casinos there avoid problems of unpaid balances, since it is T the junket operators advancing credit, not the casinos. Since China doesn’t recognize gambling debts, VIP operators play an important role. In Singapore, where the regulations make it difficult to work with Macau-style junket operators, the incidence of Chinese players skipping on their debts is becoming an increasing concern for investors. Three years after the opening of the two casinos, Chinese gamblers account for 50 percent of the VIP revenue at the two casinos. And because no Macau VIP operator has been approved by the Singapore regulators, the casinos themselves grant credit to the Chinese gamblers—and are left holding the bag should they skip on payment. An investigation by news organization Reuters has revealed that the problem is larger than the casinos had previously indicated, with several individuals who have piled up millions in debt to the casinos. To be sure, however, the amount owed is small when compared with the $5.9 billion in gross gaming revenue earned by the two Singapore casinos last year, just shy of the $6.2 billion earned by all the casinos on the Las Vegas Strip.

Over the Top

A new record for Macau casinos acau shattered its previous monthly gaming revenue M record in March, with casinos collecting more than US$3.92 billion from gamblers. Results released by the Gaming Inspection and CoordiVenetian Macao nation Bureau show the take eclipsing the previous single-month record of $3.5 billion set in December 2012 and surpassing March 2012’s performance by 25.4 percent, the best year-on-year improvement since January 2012, when revenues increased by 35 percent. RBC Capital Markets gaming analyst John Kempf said the results were helped by a slightly higherthan-normal revenue rate from high-end customers, aided by the fact that VIP revenue in March 2012 was the lowest of the year.

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DATELINE USA may2013

lone ranGer Texas lawmaker introduces casino bill t

exas state Senator John Carona recently introduced Senate Joint Resolution 64, which would create the Texas Gaming Commission, permit casinos on tribal lands and allow licensed operators to run casinos. Specifically, the bill would allow three large destination resorts in Dallas, Fort Worth and San Antonio and three mid-size resorts at Corpus Christi, Galveston and South Padre Island, among other recommendations. The casinos would create 100,000 new jobs, and total economic impact from the resorts, related development, tax revenue and job growth would be about $50 billion, said Texas Gaming Association Executive Director Jack Pratt, former owner of the Sands Hotel and Casino in Atlantic

State Senator John Carona

City, and one of the founders of the former Hollywood Casinos. “As an economic impact bill it’s the largest proposal I’ve ever seen during my last 60 years in Texas,” Pratt said. License applicants would have to prove their casino project includes land and total development costs from $250 million to $1 billion. Application fees would range from $15 million to $50 million. Recent polls indicate up to 85 percent of Texas wants the chance to vote on the issue. “The time is right,” Pratt said. But with many legislators and Governor Rick Perry adamantly opposed to gaming legalization, experts give the bill little chance of success.

Churchill Chips Away Horse racing giant buys Maine casino hurchill Downs continues its buying streak of casino properties with its latest acquisition, Oxford Casino in Maine. The purchase reiterates the strategy of Churchill to enter the casino industry in small steps that will equal a big move over time. Last month the company paid $160 million in cash for the Oxford property, as Churchill Downs moves to transform itself from a pure racing company into a regional gaming operator. Over the past few years, Churchill Downs has acquired several casinos, including Calder Casino and Race Course in South Florida as well as Riverwalk Casino and Harlow’s Casino Resort & Spa, both in Mississippi. Churchill Downs, which runs the Kentucky Derby and other thoroughbred races at tracks it owns in Kentucky, California and Florida, said the Oxford deal is expected to close in the fourth quarter of this year, pending approval of a gaming license from the Maine Gaming Control Board.

OHIO’S SECOND RACINO OPENS Owned by the owners of the state’s Horseshoe casinos

histledown Racino held its grand opening on April 9 in North Randall, near Cleveland, Ohio, although live racing won’t begin until April 19. It became the second of the state’s seven racetracks—Scioto Downs was the first—to reopen as a racino, with slot machines. The rest will probably follow next year. Thistledown racino, with 1,100 video lottery terminals going 24/7, six bars and eateries, is operated by Rock Ohio Caesars, a consortium of Caesars Entertainment and Rock Gaming, which spent $88 million on renovating it. The state will collect 33 percent of the slot revenues. Thistledown might not stay at its current location. The developer is mulling moving it to the Akron-Canton area. The state says it must decide by June 2014. Cuyahoga County officials have met with Rock Ohio Caesars officials to try to persuade them not to move, and are persuaded that the

company is willing to give the current location a fair try. The Racing Commission has started to assert itself more in the development of racinos. The commission is starting to dig in its heels and require that developers pay more attention to serving the needs of the racing end of the racino. It is demanding hundreds more racing seats per racino as part of an effort to restore the sport. The commission is the major roadblock to the $125 million racino that Penn National Gaming wants to open in Austintown, near Dayton, and a $175 million facility that Miami Valley Gaming, of which Churchill Downs is a subsidiary, wants to build in Warren County. In March it “asked” the developers to add more seats to their planned facilities. This prompted Penn to say that it would suspend building for six months while it redesigned its plans.

Florida Bans internet caFés Scandal led to resignation of state’s lieutenant governor

lorida Governor Rick Scott signed legislation last month prohibiting the storefront gaming halls known as internet cafés. By the end of the week, a number of the cafés had already taken down their shingles and locked their doors. Florida Governor For a long time, Scott Rick Scott and other state lawmakers did not take decisive action on the cafés, which offer sweepstakes-style online games for cash and prizes. Now, in the aftermath of an alleged multimillion-dollar scam involving a veterans’ charity, the politicians are racing to close the unregulated businesses. Federal investigators say a group called Allied Veterans of the World, which ran 49 of the state’s approximately 1,000 cafés, claimed to be giving 70 percent of revenues to veterans’ aid. In fact, say the feds, the group only contributed about 2 percent of an estimated $300 million, and pocketed the rest. The charity scam, which was uncovered in a multi-state sting known as Operation Reveal the Deal, forced the resignation of former Lieutenant Governor Jennifer Carroll, who once did public relations work for Allied Veterans.

MAY 2013 www.ggbmagazine.com

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DATELINE GLOBAL may2013

TOrOnTO Turn-DOwn?

Toronto Mayor Rob Ford, an advocate of a casino resort in his city

OLG preps for possible loss of metro casino

ith support for a resort casino in downtown Toronto unraveling, the Ontario Lottery and Gaming Corporation is quietly revising its municipal wish list. Though no change has been announced, the suburb of Vaughan now appears on the OLG website within the map of 29 casino “zones” designated by the agency as potential host communities. Under the plan originally developed by the agency last spring, Toronto’s downtown waterfront was grouped with two other areas—southern Mississauga and Markham-Richmond Hill—in a single zone. The new map, with a section of Vaughan included, simply says at the bottom, “Revised March 2013.” The OLG views Toronto as critical to its belief that expanded gaming can generate an additional C$1 billion a year for Ontario’s treasury if the province abandons racinos as the mainstay of the industry and instead promotes private casino development in major cities. Markham is considered the front-runner should Toronto pass, according to news reports citing unnamed sources. The city is located far enough from Woodbine Racetrack to not cut into its business but close enough to Toronto to

be viable. It is also near highways and other road infrastructure that could support the increased traffic. MGM Resorts International, one of several companies vying for the downtown casino, has said it is also considering an area near Buttonville Airport in Markham. Cadillac-Fairview, MGM’s Toronto partner, co-owns the land, and the airport is set to close, so there would be enough space for a gaming complex that would also include entertainment, retail and other commercial facilities. Meawhile, Toronto Mayor Rob Ford has circulated an “open letter” to media outlets across the city highlighting the potential benefits of a downtown casino. The numbers contained in the letter are not very different from the ones the pro-casino mayor has been repeating for months, and are reflected in a new report released by City Manager Joe Pennachetti: 10,000 permanent jobs and 7,000 to 11,000 temporary construction jobs, C$150 million in annual revenue to the city, an additional 130,000 business visitors who would spend $392 million. “This is a golden opportunity for Toronto, and one we probably won’t see again for a generation,” Ford said in the letter.

Echo Enhancement

Crown’s plans for a casino in the Barangaroo neighborhood of Sydney

Crown losing support for Sydney casino

pposition politicians in New South Wales are getting antsy to learn more about the government’s position on Crown’s proposed luxury casino in Sydney, but Premier Barry O’Farrell says they will have to wait. One key to the fate of the A$1 billion, six-star hotel and high-roller casino, which is planned for prime real estate at the Barangaroo commercial complex on Darling Harbour, is a Deloitte report that O’Farrell says will not be released until the government hears from an independent panel formed last year to assess the project and its economic potential. The panel’s report was due at the end of April, at which point the government was to make a decision, the Liberal Party leader said. “There is a process under way, arm’s length, independent of government,” he told reporters recently. “Whether that decides to proceed or not proceed, reports will be released after this point. But midway through that process we’re not going to be releasing documents that endanger that 8

Global Gaming Business MAY 2013

process.” Meanwile, Echo Entertainment is asking for an extension of its Sydney casino monopoly, a request which if granted could deal a mortal blow to Crown’s plans to enter Australia’s largest city with a competing resort. “Both of these proposals are going to be considered under the same process because both can’t proceed,” New South Wales Premier Barry O’Farrell told reporters in April. Echo’s Star Casino in Pyrmont on Darling Harbour has six years left on its exclusive license. Crown, which operates casinos in Melbourne and Perth and owns 10 percent of Echo, wants to build a A$1 billion VIP-only casino with supporting facilities on the harbor at the Barangaroo development complex. “The high-roller gaming market in the Asia-Pacific region is worth a lot of money, and if Echo wants to get into it more, if Crown wants to get into

it more, that is fantastic for New South Wales,” O’Farrell said. To sweeten its application, Echo is expected to play down the gaming element and focus its expansion proposal on non-casino attractions. This could include ruling out an increase in slot machines entirely, mirroring a strict condition that was placed on Crown Sydney from the state government and the Barangaroo Delivery Authority. The premier forwarded Echo’s request to an independent panel currently assessing the Crown proposal in a process that opposition lawmakers say is lacking transparency and fundamentally flawed because it was never opened to competing bids. “The O’Farrell government has dropped the ball when it comes to due process, and honesty, openness,” said Labor Party Leader John Robertson. Greens MP John Kaye called the panel’s review a “farce.” “The behind-closed-doors process has raised serious questions of the exercise of influence and the potential loss of revenue,” he said. The panel’s reports on both proposals are expected to be submitted to the government by the end of May.

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DATELINE EUROPE may2013

Football Follies England’s FA launches match-fixing probe t

he governing body of English football and the U.K. Gambling Commission have launched an investigation into suspicious betting on games in one of the country’s lower divisions. The Football Association said it has contacted all 22 clubs in the Football Conference South Division to request anyone with information to come forward. Neither the FA nor the commission provided details. Match-fixing has become a global concern in the wake of a recently publicized Europol investigation that found hundreds of players, coaches, referees, club officials and others have engaged in rigging almost 700 games worldwide in the past three years, almost 400 of them in Europe, including World Cup and continental tournament qualifiers. Much of the fixing is believed to be directed by gambling syndicates operating out of Asia. Over the past year, FIFA, the governing body of world football, has suspended or banned more than 100 players and coaches, match officials, club executives and others in Italy, South Korea and China for involvement in match-fixing.

Betting Central Greece betting on OPAP monopoly he Greek government has submitted new gambling regulations to the European Commission that provide a near-absolute monopoly for state-sponsored operator OPAP. The rules would abolish certain forms of internet gambling, such as numbers-based games, and award that concession, together with sports betting, to OPAP through 2020. The plan will remain under review for four months, and then is expected to be passed into law. Greece holds a 34 percent stake in OPAP, and is trying to sell 33 percent of the company as part of a shedding of public assets required under the bailout plan concluded with the European Union. However, once again, the Remote Gambling Association is challenging the European Commission over the Greek government’s support of the OPAP gaming monopoly. Greece has notified the EC that it will amend its existing gambling law, extending OPAP’s landbased gaming dominance to online operations. These operations include not only sports betting but also other gambling products such as casino games and poker. In 2000, the Hellenic Republic granted OPAP the exclusive right to operate and manage 11 numerical lottery and sports betting games in Greece. Moreover, the company was granted the

Global Gaming Business MAY 2013

exclusive license for the operation of 35,000 VLTs, of which 16,500 will be operated by OPAP itself, while concessionaires that will be selected for that purpose will operate the remaining VLTs. The most recent move into online gaming is seen as an attempt to protect the share price of OPAP in the run-up to the privatization of the remaining OPAP shares. “Unfortunately, they have to distort the market and contravene European law to do so,” stated the RGA. This arrangement has caused outrage among the European online gaming community, as the Greek government continues to flout European law by granting the company a monopoly. The European Court of Judgment recently ruled that OPAP’s offline monopoly was illegal. Now that it is trying to extend this condition to online games, the RGA is asking the EU to intervene. “Having received notification that the Greek government intends to extend what has already been declared an illegal monopoly to online gambling products, the ball is in the commission’s court,” said Clive Hawkswood, CEO of the RGA. “The Greek government has granted an exclusive right to OPAP, and that infringes Article 56 of the treaty on the functioning of the European Union. As defenders of the treaty we believe that the commission must act now to prevent member states from undermining it.”

BACK OFF

Holland Casino nixes RFP

olland Casino has withdrawn a request for proposals from operators looking to take the government-sponsored monopoly’s online business private. The RFP is part of a draft bill on regulation and licensing the Netherlands is preparing for submission this month with an implementation target date of late 2013. The original solicitation was for a free-to-play poker, bingo and casino site to be up and running before the end of next year, with a real-money system in place and ready to go the moment Dutch politicians give the legal green light. The consultation process threw up complaints, however, including one from the state-owned monopoly Holland Casino, that the proposed tax rate of 29 percent is too high.

Bye-Bye Slots Street ban a boon for Hungary’s casinos ungary’s six-month-old ban on slot machines H in pubs and arcades is boosting revenue and visitor numbers in the country’s casinos, where the machines are allowed. Casinos owned by the state lottery operator, Szerencsejáték, saw gaming revenue climb to US$11.5 million in 2012 from $8.5 million the year before. Daily visitor counts have almost doubled from 250 to 400. Szerencsejáték owns a controlling stake in a casino called the Tropicana and a minority stake in a casino in Sopron operated in partnership with Casinos Austria. The Tropicana’s slot count has gone from 44 to 86 since the ban. Sopron houses 60 machines. Hungary’s only other casino, the privately owned Las Vegas, has 65 machines.

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DATELINE TRIBAL may2013

Done Deal? or Dirty Deal?

Mashpees plow through federal approval while state threatens to open bids

assachusetts Governor Deval Patrick and the Mashpee Wampanoag Tribe have signed a revised compact that would allow the tribe to operate a $500 million casino in Taunton if the Bureau of Indian Affairs approves the compact and allows the tribe to put the land into trust. Patrick urged the legislature to quickly approve the compact. The Mashpee tribal council approved the compact shortly after it was signed, by a vote of 7-1. Mashpee Chairman Cedric Cromwell said, ‘‘We look forward to breaking ground in the next year on a development that will bring thousands of jobs and significant economic benefits to our tribe, the people of Taunton and the entire Southeastern Massachusetts region.” The compact, the second bite at the apple by tribe and governor, would pay the state a 17 percent share of casino revenues. The first compact paid the state 21.5 percent, which the BIA said was too high for what the tribe got in return. States are not allowed to directly tax an Indian tribe’s casino, although they are allowed to collect a share in return for granting a tribe some valuable consideration. Under the terms of the compact, the state would collect no revenue at all if

Kill Shot

Arizona congressman introduces bill to halt Indian casino our Arizona congressmen have sponsored legislation that would prohibit new casinos in the Phoenix metro area, effectively blocking the Tohono O’odham Nation’s proposed $500 million casino in Glendale. It would prevent such casinos Trent Franks, Arizona in Maricopa or Pinal counties until 2027. congressman The tribe, which operates three casinos, would still be able to build a fourth, but only in Pima County. This is sort of a Hail Mary pass for opponents of the tribe, which has beaten them at every legal encounter so far. The land is in the unincorporated part of the state, although adjacent to the city of Glendale, which opposes the casino. The tribe bought the land with money from a $30 million settlement the federal government made with the tribe after 10,000 acres of its original reservation was inundated by a federal dam project. The area’s congressional delegation argues that the tribe’s plans violate Proposition 202, by which the state’s voters amended the constitution to allow Indian gaming. “I’m co-sponsoring this legislation because it upholds the will of those voters and the overwhelming majority of tribes who participated in this historic effort,” said one of the congressmen, Trent Franks. Glendale is supporting the legislation. Also supporting the bill is the Gila River Indian Community, which opposes the Glendale casino.

Global Gaming Business MAY 2013

Massachusetts Governor Deval Patrick signing the original rejected compact with the Mashpees

another commercial casino is allowed to operate in the southeastern part of the state. The tribe would pay 17 percent if it has the only casino in that part of the state. That percentage would drop to 15 percent if the state allows the one slots parlor authorized by the law to locate there. The tribe would pay 21 percent if its casino is the only one built in the Bay State. That is very unlikely, however. Meanwhile, a meeting of the Massachusetts Gaming Commission last week made it clear that unless the tribe can produce sound reasons to convince the members that it will be able to get federal approval and build a casino within a reasonable time frame, the region will be opened to commercial development. An attorney for the tribe said the commission has no authority to do so. “The commission cannot do what it is proposing to do,” said Howard Cooper. Some who are rooting for the southeastern portion of the state to be opened to competition from commercial bidders argue that the tribe has so many obstacles to overcome that its casino won’t open for 10 years at least.

Reforming Recognition BIA to release draft regulations this summer

ssistant Secretary of Indians Affairs (i.e., the head of the Bureau of Indian Affairs) Kevin Washburn told a congressional subcommittee last month that his bureau will soon release draft regulations to reform the process for recognizing tribes. Washburn said, “We hope to have a discussion draft to roll BIA head Kevin Washburn out and discuss with your staff and with tribes, hopefully before the summer, or during the summer,” and added, “We will then proceed, hopefully, to a rule-making process.” Washburn, appointed in October to head the BIA, has had a group working on revising the regulations ever since. He said he hopes that the whole process will take about two years. “We would love to have it done faster than that, but we also want to be careful to get it right. We have talked about doing this for more than a decade. It’s time to get it done,” he said. The process for recognizing tribes has been called too complex and time-consuming. The controversial process is tied closely to the issue of whether tribes are allowed to operate casinos, which they cannot do if they have not achieved federal recognition.

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NUTSHELL

“They The deluxe Cosmopolitan Las Vegas, which has had a hard time attracting gamblers, has formed a partnership with the Hard Rock Hotel & Casino in Biloxi, Mississippi, that will offer incentives to top players to patronize both resorts. The stand-alone properties are anomalies in an industry in which casino companies typically own a number of resorts and cross-promote them to players through loyalty programs. Vince Lentini, senior vice president of marketing for Hard Rock Biloxi, told the Biloxi Sun Herald that the properties hope to “grow the business on both sides.” VIP customers at both casinos can get tickets to concerts, food credits and airfare based on how long and how much they play. Officials recently unveiled plans for a $250 million expansion at the Muscogee (Creek) Nation’s River Spirit Casino in Tulsa, Oklahoma, and also announced a new partnership with Jimmy Buffett’s Margaritaville brand. The expansion, which will take 18-24 months to complete, will feature a 22-story, 500-room hotel, outdoor and indoor swimming pools, fitness center, world-class spa, meeting room, theater, event center, retail and new dining and lounges including Jimmy Buffett’s Margaritaville Restaurant and Bar. In addition, a new 45,000-square-foot gaming area will be branded as the Margaritaville Casino, with 750 electronic gaming devices and 20 table games. One of the tribe’s competitors is the Cherokee Nation’s Hard Rock Tulsa Casino Hotel, which recently debuted a new hotel tower. The National Labor Relations Board ruled last month that the Little River Band of Ottawa Indians of Manistee, Michigan, may not prohibit its workers from going on strike. The ruling considered whether workers at tribal casinos have the right to U.S. labor protections, or if tribal law supersedes those rights on a reservation. The NLRB said hundreds of employees and the majority of the customers at the band’s Little River Casino Resort are non-Indian. Therefore, the board ruled, the resort/casino is a business operation and separate from government functions that deal specifically with tribal issues like membership and inheritance rules. The casino cannot be described as vital to the tribe’s ability to govern itself, the board said. The tribe, of course, disputed the findings. The Kansas Senate recently voted against revising a 2007 state law authorizing state-owned casinos and slots at dog and horse-racing

tracks. As it stands, a state-owned casino in southeast Kansas appears unlikely. Currently, the law requires a southeast Kansas casino developer to invest at least $225 million, plus pay a $25 million fee to the state. The bill would have lowered the investment requirement to $50 million and reset the state fee at $5.5 million. The bill also would have repealed authorization for slots at Wichita Greyhound Park; Camptown Greyhound Park, north of Pittsburg; and The Woodlands dog and horse racing park in Kansas City, Kansas. All three have been closed since 2008. Delaware Governor Jack Markell has rejected pleas from the state’s three racinos to cut gaming revenue taxes as the operators struggle with increasing competition from Maryland, Pennsylvania and elsewhere. The state Video Lottery Advisory Council, composed mainly of casino executives and gaming vendors, had sent an annual report to Markell proposing a tiered tax structure to replace the current state take of 43.5 percent of slot revenues and 29.4 percent on tables. The request cited plunging revenues resulting from new casinos and the legalization of table games in Maryland. The Bellagio in Las Vegas has opened an ultra-exclusive private gaming room. Called the Villa Privé, the 2,600-square-foot gaming salon is available by invitation only, and is reserved for customers willing to risk at least $300,000 on a visit. Gambling tycoon James Packer is scouting Sri Lanka as a potential investment in a resort-scale casino. The chairman of Australia’s Crown Limited, which owns casinos in Melbourne and Perth and controls 33 percent of Macau’s Melco Crown Entertainment, met with Sri Lankan ministers late last month to tour locations. Maryland Live!, the state’s largest casino, debuted live table games last month. The casino, which is adjacent to the Arundel Mills Mall in the Baltimore suburb of Hanover, went live with 122 table games, including blackjack, roulette and craps, along with a 50-table poker room spread out over two floors. The move into tables is expected to boost overall revenue by as much as 20 percent for the casino, which already records several times the revenue of its nearest competitor, Penn National’s Hollywood Casino Perryville near the Delaware border. Both casinos now operate round the clock.

CALENDAR May 1 & 2: The RD&E Experience—Retail, Dining & Entertainment in the Gaming & Hospitality Industry, Planet Hollywood, Las Vegas. Produced by Global Gaming Business and the Innovation Group. For more information, visit RDEExperience.com. May 21-23: Global Gaming Expo (G2E) Asia, the Venetian Macao. Produced by Reed Exhibitions and the American Gaming Association. For more information, visit G2EAsia.com.

May 27-31: 15th International Conference on Gambling & Risk Taking, Caesars Palace, Las Vegas. Produced by the University of Nevada Las Vegas’ International Gaming Institute and the University of Nevada Reno’s Institute for the Study of Gambling and Commercial Gaming. For more information, visit igi.unlv.edu/conference.

June 3-4: Indian Country Online, Pechanga Resort and Casino, Temecula,California. Produced by Pechanga.net and Spectrum Gaming. For more information, visit indiancountryonline.com. June 3-7: North American Gaming Regulators Association (NAGRA) Annual Training and Education Conference, Virginia Beach Hilton, Virginia Beach, Virginia. Produced by NAGRA. For more information, visit nagra.org.

Said It”

“The internet might not be stopped, but it can be slowed down.” —From a column in Indian Country Today by former Seneca President Robert Odawi Porter urging unity among tribes to oppose online gaming

“It’s almost like an adult Chuck E. Cheese. You’re just not going home with stuffed animals.” —Jan Prieto, of Florida, defending the adult arcades that have been deemed illegal gaming halls

“They advertise poker, they advertise games of chance, they advertise daily payouts. To me, that sounds like gambling.” —Lizbeth Benacquisto, Florida state senator, on the similarity between internet sweepstakes games and gambling

“Let’s be frank here. You’re not going to throw a federal election in the United States. Has football been corrupted? I don’t think so.” —Tick Segerblom, Nevada state senator, on his bill that would legalize betting on presidential elections

“I don’t gamble on anything, except politics.” —New Indiana Governor Mike Pence, who opposes further expansion of gaming, while remaining open to lowering taxes for casinos

“Much of the folklore from the past is being demolished, such as the House of Lords restaurant and the Congo Showroom. It’s kind of sad to see it go, but it is making way for the future.” —Rob Oseland, president, SLS Las Vegas, on its transformation from the old Strip resort, the Sahara

“The substantial construction cost of Revel, the loss of 1,900 of their rooms, the general collapse of the economy, the U.S. unemployment problem and new gaming options in Pennsylvania and New York— all causing a 40 percent decline in casino revenues—are the primary reasons for Revel’s failure, not Kevin DeSanctis. And without him, the property would still be an empty shell like Boyd’s Echelon or the Fontainebleau, on the Vegas Strip.” —Steve Norton, longtime casino executive and former vice president of Resorts in its formative days, defending former Revel CEO Kevin DeSanctis as the casino files for Chapter 11 bankruptcy

MAY 2013 www.ggbmagazine.com

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FANTINI’S FINANCE by FRANK FANTINI

Hitting the Wall The elusive recovery and how investors should deal with it

funny thing appears to have happened on the road to recovery—it’s stopped, or at least slowed to a crawl. After a slow but fairly steady climb back from the recession, U.S. gaming revenues have gotten off to a punk start this year. January was mixed. February was downright dismal with the worst year-over-year comparisons since August 2009. March came in drab, too. The tendency is to blame the economy, which surely has not regained vibrancy. Then there is Washington to blame—higher payroll taxes and all those politicians pointing fingers at each other. But the economy has been getting steadily better, as evidenced by higher auto sales, home sales and prices, and generally improving retail sales. Those other sectors have to endure dysfunctional policy settings, too. Indeed, some of the oft-cited external reasons are starting to sound more like excuses. There just might be a new reality that regional casinos are reaching saturation in many markets, and that their allure is starting to fade in an economy where people are more somber and might not want to party away their discretionary income as freely as before. Las Vegas hasn’t been much better, with the expected accelerating improvement in convention business not accelerating at all, and room pricing still flat, which dents the modern mega-resort business model. A recent University of Massachusetts-Dartmouth survey got attention for finding that a significant number of Massachusetts residents are gambling closer to home, in Rhode Island rather than Connecticut. Less publicized, but maybe more important, is that the number of casino trips overall declined. If we have entered an era where gaming has saturated many markets, it will put a premium on those companies that have managed to find paths to growth, those that return capital meaningfully to shareholders, and those that operate the most efficiently. Returning capital to shareholders often means buying back shares. On the surface, share buy-

Global Gaming Business MAY 2013

backs sound like a great idea. An investor automatically owns a bigger share of the company if less stock is outstanding. Unfortunately, it doesn’t always work that way. In many cases, managements, with the approval of their compliant boards, deluge themselves with so many millions of share options that, in effect, they are using cash that belongs to shareholders to enrich themselves, and not to effectively reduce share counts. The reason given for options is that management interests should be aligned with shareholders, but that’s disingenuous at best in companies where about the only shares executives own come through options. Real shareholders don’t get that privilege. The other frequently used line is that options are needed to attract and retain top executives. This ruse is especially farcical when used in companies that are primarily family-owned. Where else are the family members going to go? Finally, management doesn’t always buy smartly. There have been more than a few cases in recent years where companies bought in shares at what proved to be high prices, thus wasting shareholder dollars. However, it is still worth finding companies that use share buybacks to genuinely and significantly reduce share counts. Among those in gaming is Bally Technologies. Wynn Resorts did so effectively in another way when it forced redemption of former chief shareholder Kazuo Okada’s 20 percent stake. Share repurchases, it is often said, are better than dividends because they aren’t taxed. But dividends are protected by low tax rates, and they have the advantage of being an unvarnished return of capital to shareholders. Two companies that pay significant dividends are Wynn and Las Vegas Sands. Both paid dividends that yielded around 8 percent last year. You can’t beat that in today’s artificially low interest rate environment. Some companies both pay dividends and reduce share count, IGT being an example. Finding a path to growth is tricky in this fast-

maturing industry. WYNN and LVS have done it, though they are concentrated in Asia, and concentration presents risks. Penn National, Pinnacle and Isle of Capri all have casino projects, though they are entering competitive markets. PENN and PNK, especially, face increasing competition in existing markets. All of that creates what analysts like to call execution risk. SHFL entertainment and Multimedia Games have growth strategies beyond their traditional business lines as each expands throughout the U.S. with Class III slot machines. Little Full House Resorts is buying small properties that both are digestible for its size and that are off the radar screens of big casino companies, but that brings risks, too, as FLL must integrate the new properties. Boyd has been buying, too. It has done a great job of making IP in Biloxi into a hot property, and more recently purchased regional operator Peninsula Gaming. That brings us down to efficiency, probably the least glamorous way to improve the bottom line. Among the companies that run tight ships is Monarch Casino. MCRI is fast bringing its operational efficiency to its newly acquired Riviera Casino in Black Hawk, Colorado, and paying down debt at the same time. BYD likewise operates efficiently and is now focusing on its balance sheet. Finally, there is the internet. Among operators, Caesars has the clearest strategy with its World Series of Poker, though it is attacking all areas, including social gaming. BYD could enjoy the greatest initial impact among American casino companies thanks to managing the Borgata in New Jersey. Each supplier company touts its strategy, with IGT placing a big emphasis on social, Bally and SHFL building platforms, and Aristocrat staffed by experienced digital executives. So there are a lot of ideas. None a slam-dunk, but most worth exploration. 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.

CMYK / COATED (362CP » 376CP / 286CP » 60% 286CP)

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AMERICAN GAMING ASSOCIATION by FRANK J. FAHRENKOPF, JR.

Growing Today, Growing Tomorrow

State of the States 2013 reveals continued additions to revenue, jobs and benefits to individual communities

Frank J. Fahrenkopf, Jr., President and CEO, American Gaming Association

he 2013 edition of State of the States: The AGA Survey of Casino Entertainment, which will be released this month, has good news for the commercial casino industry. On the strength of a third consecutive year with increased rates of growth, national gross gaming revenues for 2012 reached their secondhighest level in history—behind only 2007, the last year before the recession hit. Add in the impacts of direct gaming tax revenues, casino employment and wages, and a growing gaming equipment manufacturing sector, and one can see that both the present and the future of the U.S. gaming industry look bright. When compared with figures from 2011, total consumer spending on gambling at commercial casinos—the equivalent of gross gaming revenue—rose 4.8 percent in 2012 to $37.34 billion. The increase in revenues expectedly led to an increase in direct gaming tax contributions as well, with companies returning $8.6 billion to states and local communities—an 8.5 percent increase over 2011 figures. The jobs created by the gaming industry continue to provide vital employment opportunities for more than 330,000 men and women across the country. Another economic bright spot for the industry is the gaming equipment manufacturing sector, which continued its growth, reporting positive gains in all key measures of economic activity. Direct economic output by the gaming equipment manufacturing sector rose to $13 billion in 2012—an all-time high and 5.7 percent increase compared to 2011 figures. Approximately 31,200 workers were directly employed in the sector during 2012, earning $2.3 billion in salaries and wages. Both the employment and wage figures were records. A full analysis of the sector, which was prepared in conjunction with the Association of Gaming Equipment Manufacturers by Applied Analysis, a Nevada-based economic research and analysis firm, can be found in State of the States. There are two primary reasons for the improved economic fortunes of the industry. The

first is commercial casino expansion into new and underserved markets like Maryland, Kansas, Maine, New York and Ohio, which became the 23rd commercial casino state last year. The states that saw the greatest increases in gaming revenue were the same ones where new casinos have recently opened. The second reason for continued growth is the improving economy nationwide. Lower unemployment and greater consumer confidence are leading to increased consumer spending on things like leisure travel, trips to casinos and other entertainment activities. Those casino customers are the lifeblood of the gaming industry, and to provide a better understanding of their gaming habits and behaviors, VP Communications, in conjunction with national pollster Peter D. Hart, conducted a national public opinion survey with specific questions directed at individuals who had visited a casino in the past year. They focused an additional battery of questions on 300 young adults age 21-35 who had visited a casino during the past 12 months. The two surveys reveal a great deal about the casino customer in general and young adult casino visitors in particular. A full discussion of the results can be

“

shape the casino of the future. According to public opinion polling, more than one-third (34 percent) of Americans visited a casino in the past 12 months, with young adults age 21-35 having the highest rate of casino visitation, with nearly two out of five (39 percent) going to a casino. The lottery was the most popular form of gambling for both overall casino visitors (68 percent) and young casino visitors (72 percent) in 2012, but young casino visitors had higher participation rates in other forms gambling like casual betting with friends, playing poker and wagering on the internet. In addition to visiting casinos at a higher rate than other age groups, young adult casino-goers are more likely to come back, as nine out of 10 (90 percent) say they plan to return to a casino in the next 12 months. This is a higher rate than the more than three-quarters (79 percent) of the general population of casino visitors who say the same. As I mentioned earlier, electronic gaming machines are the most popular game for the overall sample of casino visitors (61 percent) and young adult casino visitors (51 percent). However, the gap between machines and the second-most popular game—blackjack—was much smaller for young casino visitors (27 points) than casino visitors in general (42 points). Non-gaming activities are an important part of the casino experience for both young adult and general casinogoers. Fine dining is the most popular amenity for both the general population of visitors (69 percent) and younger visitors (76 percent), but young adult visitors are more likely to take advantage of non-gaming amenities like shopping, live entertainment and recreational facilities like spas or pools. One thing that all of this polling reveals is that our customers enjoy their time at our casinos. From the latest games to world-class non-gaming amenities, the entertainment experience they receive is second to none, and it’s that experience that keeps them coming back. Our customers are truly the reason that the commercial casino industry has been able to achieve its current success, and they will be crucial to continuing that success in the future.

Our customers are truly the reason that the commercial casino industry has been able to achieve its current success, and they will be crucial to continuing that success in the future.

Global Gaming Business MAY 2013

found in State of the States, but here are some of the highlights. Young adult casino visitors have very similar overall gambling habits to those of the general population of casino visitors, with similar percentages setting budgets before casino gambling, visiting outside attractions and restaurants, and listing gaming machines and fine dining as their favorite gaming and non-gaming activities, respectively. However, there are differences that show that young adult casino visitors, as a group, have distinct nuances in their gambling habits that could

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Heart

of the

City

The city-integrated resort and the future of casino gaming

By Gary Loveman

Harrahâ&#x20AC;&#x2122;s New Orleans

olicymakers and social scientists increasingly understand that casino development projects offer the most economic and social benefits when they are specifically tailored to the needs of their host communities. The long-held view that casinos exist across a spectrum anchored at one end by neighborhood slot parlors and other forms of convenience gaming and at the other end by integrated destination resort casinos has become incomplete. Over the past decade, a third dimension of casino gaming has emerged in North America that provides another option for urban policymakers to consider. I call this model the city-integrated or urban resort. Its defining feature is integration with its locationâ&#x20AC;&#x2122;s pre-existing business community and attractions. In this model, the casino itself is both a physical and a metaphorical hub. Its spokes 18

Global Gaming Business MAY 2013

Fulton Street corridor

radiate not only to amenities in the casino complex itself, but also to established restaurants, shops, hotels and recreation offerings in the larger metropolitan area. It is outward-oriented, not inward-oriented. In this way, it is distinct from the integrated destination resort model, yet captures many of that modelâ&#x20AC;&#x2122;s benefits. Many metropolitan areas can choose between two compelling alternatives, one of which offers the benefits of the city-integrated resort model.

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Horseshoe Cleveland

All That and Less? City-Integrated Resorts vs. Integrated Destination Resort Casinos By design, integrated destination-resort casinos are essentially cities unto themselves—the package of gaming, hotel, restaurants, etc., is “integrated” so that the whole is greater than the sum of its parts, all within the footprint of the resort property. No one disputes that integrated destination resorts can be significant drivers of economic development—at least, no one who is familiar with Macau, Singapore or the sleepy desert hamlet that many of us call home, Las Vegas. But because integrated destination resorts are cities unto themselves, they might not be the most appropriate model in some urban locations. The casino and non-gaming attractions within the destination resort are an integrated package, and guests are encouraged to come in and stay. Such casinos are not physically or functionally linked to other attractions in the local metropolitan area. In fact, virtually all of the attractions of a destination integrated resort casino are either literally under one roof or are under common control. The city-integrated or urban resort model, by contrast, intentionally limits the type and scope of non-gaming amenities that the casino offers inside its facility, and requires the casino operator to forge active partnerships with established local businesses to serve the non-gaming needs of casino customers. For example, such a casino reserves blocks of hotel rooms at existing hotels for its guests, sends them to local restaurants and integrates its loyalty card program with local shops and attractions. The urban resort markets the entire city and its attractions, and encourages its guest to sample all of what the city has to offer. Instead of competing with existing attractions, the urban resort model employs them to establish the destination itself as its competitive advantage. The urban resort model is most appropriate for downtown cores and other relatively intensely developed urban areas, especially those that already feature significant performing-arts venues, museums, hotels, restaurants and other amenities in pedestrian-oriented, or potentially pedestrian-oriented, locations. But nondowntown urban locations may take advantage of the benefits of the model by finding creative network linkages between and among the resort and existing hospitality businesses.

The New Orleans Example The pioneering and still principal example of a city-integrated resort is Harrah’s New Orleans. Harrah’s New Orleans has grown the local tourism industry, is ranked second to Walt Disney World as the most visited attraction in the South, and is the largest tourist attraction in Louisiana. Harrah’s New Orleans has invested more than $1 billion and entertained more than 56 million guests since opening in 1999. The New Orleans property offers limited hotel rooms and restaurant offerings, in a city replete with them. Our Restaurant and Hotel Partner program explains its success and shows how the casino encourages its customers to visit all the attractions in a market, not just its gaming floor.

‘

Horseshoe Cleveland, which includes a 200-room Ritz hotel, has preferred relationships with three downtown hotels, and those strategic partnerships are already making a positive impact on the city’s total room nights.

’

Since opening, Harrah’s New Orleans, despite owning and operating 450 hotel rooms, has spent more than $95 million with dozens of local “partner” hotels and in excess of $45 million with scores of local restaurants and attractions over the past 10 years. One of Harrah’s most visible investments in New Orleans is the renovation and restoration of the historic Fulton Street corridor, making available several new, high-traffic leasing opportunities for businesses near the casino and creating a gateway to a part of the city that previously was not connected to the primary tourist areas. In fact, Fulton Street has become a destination in its own right and another reason to visit New Orleans, a new district that doesn’t compete with Bourbon Street or other established tourist destinations. In addition, the project has physically linked the French Quarter, the Central Business District and the Warehouse District, with casino-related pedestrian traffic contributing to the overall vitality of three separate neighborhoods.

The Cleveland Example Another example of an urban resort, albeit on a smaller scale than Harrah’s New Orleans, is the new Horseshoe Cleveland that opened in May 2012. Caesars MAY 2013 www.ggbmagazine.com

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Horseshoe Cleveland

‘

No other program allows patrons to earn reward credits or points at one property in Las Vegas, for example, and redeem them inside the casino in New Orleans or at a Harrah’s New Orleans strategic business partner’s restaurant in the French Quarter.

’

particular market. The experiences and tools that help Caesars deliver the benefits of urban resorts include our Total Rewards loyalty program, which leverages the distribution of our 52 properties and the size of our 45 million-plus patron database, and the business- and community-based organizational relationships we have developed around the country, in particular at urban-based operations such as New Orleans and Cleveland.

Loyalty Program Integration

and its partner Rock Gaming invested $350 million to transform the historic Higbee Building, a former department store in downtown Cleveland, into a state-of-the-art casino that retains the unique elegance of the building’s early 20th century art-deco design. The facility is sited in a prominent location in the urban core, adjacent to the professional basketball arena, baseball stadium and entertainment corridor. Similar to the arrangements Harrah’s New Orleans has made in its host city, Horseshoe Cleveland, which includes a 200-room Ritz hotel, has preferred relationships with three downtown hotels, and those strategic partnerships are already making a positive impact on the city’s total room nights. The property has also partnered with nearly a dozen restaurants downtown, offering our loyaltyprogram members the ability to use earned credits for fine-dining experiences. As in New Orleans, and as is the case in most of Caesars’ properties across the U.S., Horseshoe Cleveland also has three partner restaurant concepts inside of the casino (all extensions of well-established local restaurants). The casino also has developed formal sponsorship relationships with several professional sports teams and downtown attractions including the NBA Cleveland Cavaliers, MLB Cleveland Indians, AHL Cleveland Monsters, AFL Cleveland Gladiators and the Rock and Roll Hall of Fame, and supports various civic events.

Making City-Integrated Resorts Work While concept, location and design are integral to the success of a city-integrated resort, far more important are specific tools and strategies brought to bear in a 20

Global Gaming Business MAY 2013

Many commentators have identified Total Rewards as the leading loyalty program in the gaming industry. We agree that Total Rewards provides Caesars with some unique advantages. No other program allows patrons to earn reward credits or points at one property in Las Vegas, for example, and redeem them inside the casino in New Orleans or at a Harrah’s New Orleans strategic business partner’s restaurant in the French Quarter. No other gaming company comes close to matching Caesars’ distribution of 52 properties in the U.S. and on four continents around the world, all of which create marketing opportunities for our home communities. Currently, there are more than 45 million customers in the Total Rewards database that have taken advantage of the program, 8 million of whom have been active in the past 12 months. The program provides for four tier cards or levels based on activity of the guest, with each card having a unique cadre of benefits. Patrons earn Reward Credits (points) while playing slots and table games, by making non-gaming purchases at our properties, or by using our Total Rewardsbranded credit card to make purchases anywhere. These points accrue and can be redeemed across all Caesars Entertainment properties. The integration of a successful loyalty program into a city-integrated resort can drive customers to existing restaurants and attractions. It can simultaneously leverage the geographic reach of the loyalty program to draw customers to the resort’s host city independent of specific loyalty-award propositions. These two dynamics explain why implementation of an urban resort development can boost demand for non-casino amenities in a community far beyond the degree to which introduction of a casino simply shifts consumer spending in a local economy.

Partnerships with Local Hotels Caesars’ Revenue and Lodger Management System allows us to predict lodger demand based on such variables as historical business trends, planned events in a market or region and our own scheduled marketing programs. It is in our best interest, in the community’s best interest and certainly in the best interest of our customers that we have adequate and suitable accommodations to meet demand.

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To that end, when we expect our own hotel inventory is insufficient to satisfy the demand, especially on Friday and Saturday nights, it makes good business sense to depend on our in-market strategic business partner hoteliers to extend our accommodations capacity via a “virtual” hotel program. We rely on this local hotelier strategy in many of our markets. We typically contract with up to a dozen branded hotels in an individual market for 12- to 18-month periods for “block” rooms and/or overflow rooms. In the block agreements, we reserve a certain number of mid-week and/or weekend room nights each month and at an agreed-upon rate, which typically varies each month throughout the year. Once we commit, we pay for these blocked rooms, whether or not the rooms are used. With the overflow partners, there is no agreement regarding number of rooms to be used or availability of rooms. When we anticipate the need for an overflow room (the DiSalvo Development Advisors LLC, Downtown Casino Benefits Analysis: A Case Study night prior or weeks in advance), we simply contact the hotelier and Approach to Identify Benefits of a Casino in Downtown Davenport. Report prepared for the expect to pay the previously agreed-upon rate should they have availDowntown Davenport Partnership, December 31, 2012. ability. In either case, we will have established rates that make it efficient for the respective hotel operators to accommodate lodging guests. ets to the zoo, aquarium, Insectarium and Imax Theater for casino visitors. Our external hotel partners offer high-quality product and, as such, typically Here’s how these partnerships work: In each market where we have strategic involve branded hotels such as Hilton, Holiday Inn, InterContinental, Loews, business relationships, we will have previously established agreements with a list Marriott, Renaissance, Sheraton, Westin, W and Wyndham. Caesars chooses its of service providers where customers may redeem their earned Reward Credits or hotel partners based on a number of quantitative and qualitative factors, including otherwise use a coupon or voucher from the casino to purchase products or servlocation (proximity to the casino is of critical importance to our patrons), availices off the Caesars premises. In most cases the customer will have received a 10able amenities, overall service, condition and economic terms. 20 percent discount off the listed retail price for the product or service just In 2010, Harrah’s New Orleans paid $9.8 million to external hotel partners because that customer was referred to the particular vendor by Caesars. Prior to under its external or “virtual” hotel program, which was instrumental in further using their Reward Credits at an established third-party partner, the patron would maximizing the city’s resources and attractiveness. In 2011, Harrah’s New Orleans secure from casino personnel a voucher to be used as currency. bought, on average, 74 external rooms on weekdays and 530 rooms on weekends, In the two-year 2010-2011 period, Harrah’s New Orleans purchased $8.6 and spent more than $8.4 million with its 10 hotel partners. million of goods and services from strategic business partners (including 30 local partners) using this Reward Credit program externally. Partnerships with Local Restaurants & Other restaurant Support for local restaurants is important in the city-integrated resort model. Attractions But equally important is support for the arts, broadly defined. We know from A patron’s loyalty to Caesars is highly correlated to his or her overall entertaindecades of customer research that casino players love a fun night out, and that ment experience while visiting with us. That experience with us may involve a few casinos are hardly the only vehicles for their enjoyment. Casino players love live hours a year or a few days a month, and may not be confined to our facilities. In music, plays and musicals, street festivals, food fairs, sporting events and the visual any event, we are committed to ensuring each guest and their travel companions arts. The ability to help local cultural institutions grow and prosper is part of the have a great time every time, whether it is playing their favorite game, relaxing in mission of an urban resort and part of what makes it a valued community asset. our spa or other hospitality amenity, touring the market and all of its attractions, Again, New Orleans provides a good example. Harrah’s New Orleans has enjoying an entertainment venue or dining on or off property, to name just a few been an integral part of French Quarter Festival for years by helping it to remain a popular options. true community event that now attracts more than half a million people (about The Total Rewards program provides a framework to facilitate unique experiequally split between tourists and local residents) during its four-day run. French ences, a convenient currency to purchase products and services, and a valuable Quarter Festival has grown, in fact, to become the largest free music festival in the tool for us to develop and facilitate itineraries based on known customer preferUnited States. Harrah’s New Orleans participates not only as a sponsor, but also ences and interests. To maximize the utility of this tool, we form strategic business recruits teams of employees who volunteer at festival each year, and provides partnerships with restaurants, regional attractions and other entertainment venues audio/visual equipment for the festival’s free educational seminars about the hisin the markets where we operate. tory of New Orleans music. In New Orleans, for example, we have partnered with more than 50 entities ranging from Besh Steak and Fuji Hana to Spa Laje, Haunted House Tours and Independent Validation the National World War II Museum. We have also hosted or sponsored commuWhile the city-integrated resort may be new to the casino executive lexicon, the nity events such as the annual French Quarter Festival, as well as events with the economic development and urban planning communities have begun to acprofessional teams, such as the New Orleans Saints and Hornets. The property’s knowledge its ability to contribute to cities both large and small. For example, a support for the Audubon Nature Institute is especially noteworthy: about $2.5 million since the property’s opening in direct support, including purchases of tick- recent independent analysis of casino developments in downtowns across the 22

Global Gaming Business MAY 2013

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While the city-integrated resort may be new to the casino executive lexicon, the economic development and urban planning communities have begun to acknowledge its ability to contribute to cities both large and small.

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United States identified the traits common among urban casinos that most benefit area businesses: • Integration of a casino into a downtown’s urban environment to encourage patronage at other businesses. Casino entrances are near existing food and drink establishments and hotels. Some parking is distributed within one to two blocks of casino. There is a “walkability” in the immediate area. A casino in this environment should not be fully self-contained in terms of other amenities, including restaurants, retail shops and other amenities that may be found in the area surrounding the casino. • Partnership with existing businesses. Each of the casinos includes existing businesses as partners with the casinos participating in their comp programs. Notably, non-comp businesses benefited from the opening of the casinos as well, just not as much as the casino’s partner businesses. In the case of Cleveland, group promotions and sponsored concerts/artists from the casino are anticipated to benefit usage of their theaters. These researchers are documenting effects with which local stakeholders are intimately familiar. For example, Harrah’s New Orleans funds an extensive print destination marketing campaign in association with the city. As Robert Bray, the area general manager for Marriott in New Orleans, recently put it, “Harrah’s continues to be a major marketing partner with the city. By investing in New Orleans’ future, Harrah’s has helped broaden the effectiveness of ad campaigns, ultimately benefiting hundreds of hotels, retail stores and other businesses that operate in the downtown business district and the French Quarter.” Civic leaders in Cleveland also appreciate the urban resort model. Joseph D. Roman, CEO of the Greater Cleveland Partnership, wrote recently that the Caesars/Rock partnership there “has not only maintained but also increased its model to integrate a new casino with the other assets in the city. New infrastructure connecting the casino with our convention center and lakefront museums will amplify everyone’s business. Investment and expansions are occurring as a result of Horseshoe, and business throughout downtown is up and growing.”

The Bottom Line Despite the proliferation of casino gaming around the world during the last two decades, many markets remain underserved—including many large metropolitan areas in North America, Europe and Asia. There is an enormous opportunity for the casino industry to implement additional cityintegrated resorts in many locations, building upon the lessons of New Orleans and other case studies and improving both the concept and its implementation. That’s exactly what we’re doing now with the project Caesars and Rock recently opened in Cincinnati, the project we’re jointly developing in Baltimore and the one Caesars is pursuing in Boston. I maintain that it’s in the industry’s broader collective interest to further test, refine and champion this model. Caesars has always advocated that each community tailor casino development to its own local needs, constraints and aspirations. Policymakers considering the introduction of casino gaming should weigh the advantages and disadvantages of the full variety of options. These policymakers, especially ones representing large urban areas, should include in their deliberations whether and how they might employ the urban resort model to advance the interests of their own communities. By explicitly prioritizing the intent of gaming as a catalyst for broad-based business growth and economic development, this model provides a compelling foundation for the support of gaming by many local communities and their leaders. Gary Loveman is chairman, president and CEO of Caesars Entertainment. MAY 2013 www.ggbmagazine.com

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counting on

COTAI The very fortunes of the Macau gaming industry are now tied inexorably to the Cotai region, which was only a vision of one person less than 10 years ago By Roger Gros

hen the Chinese government eliminated the gaming monopoly enjoyed by Stanley Ho and SJM in 2002, the six winning concessionaires launched a kind of a land rush in Macau. But that buying frenzy was limited to the city’s Peninsula area, where the sole casino, Casino Lisboa, was located, along with the majority of the city’s business enterprises on a narrow strip of land. Some casino companies also looked at Taipa, the next island up from the Peninsula, but since it is a densely populated residential area, the opportunities were few. And the island of Coloane was simply too far, too desolate and hard to reach, and a residential community off limits to gaming. So as the land search continued for months in the Peninsula, one man had a vision that required some thought and preparation. Sheldon Adelson viewed the swampy, marshy land between Taipa and Coloane as the solution to his Peninsula problems. Even though his company, Las Vegas Sands, had scooped up one of the best parcels in the Peninsula to build the hugely successful Sands Macao, Adelson had grander plans, and the desolate Cotai (a combination of the Coloane and Taipa names) promised to provide land for Adelson’s outlandish plan, to create an Asian Las Vegas in Macau. 24

Global Gaming Business MAY 2013

So Adelson went to the Macau government, whose vision for the expansion of gaming in the SAR coincided with Adelson’s, and arranged to buy a huge plot of land in Cotai to build 12 hotels, casinos and the amenities that would make Macau one of the major tourist destinations in Asia, at a cost of $10 billion to $12 billion. The complicated land purchase arrangement was formulated, and Adelson began to fill the marshy land with bedrock to build the first integrated resort in the region, the Venetian Macao, an updated replica of his hugely successful Las Vegas property. When Adelson announced the Cotai Strip project—complete with an LVS trademark attached—he was immediately ridiculed by his competitors, who called it a “pipe dream” and a “boondoggle.” But at the same time, each of the competitors began to buy up land on Cotai and await the approval of the government for permission to build and operate.

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The ramifications of the decision to develop Cotai echoes across Macau to this day. Sheldon Adelson has made a lot of people a lot of money and his vision has contributed to the explosive growth of the city of Macau.

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While the criticisms of competitors can be understood, Adelson even endured doubts from his own staff. Rob Z2 Goldstein has been with Las Vegas Sands since the mid1990s and now is president of global gaming operations for the company. He says he wasn’t alone in questioning the wisdom of the Cotai strategy. “Everyone thought the same thing,” he explains. “The Peninsula was where the action is and that’s where you have to be. Sheldon was the only one who understood. This is one of the defining moments that separate Sheldon from everyone else. He had the vision. No one else was lining up to buy land on Cotai. I thought it was too far away, too difficult to develop and just not worth it. I was wrong.” But the results of that decision were not as apparent as they are today. Considered too far from the ferry terminal that delivered millions of tourists from Hong Kong, Las Z1 Vegas Sands simply started a ferry operation of its own, deZ2 livering players to a Cotai terminal. Goldstein says it was Adelson’s strong belief in his opinion that was the difference. “It’s easy to see now, but back then it wasn’t as black and white,” he says. “I didn’t see it, and plenty of other people didn’t see it either. But that separated us from the pack. It gave us a leg up that we still enjoy to this day. The important thing was, however, he backed up his vision with his bankroll. Not too many people do that.” Goldstein says it was one of two decisions made by his boss that changed the face of the gaming industry. The first occurred in the 1990s when he transformed the old Sands property into a revenue powerhouse that includes the Sands Expo Center, the Venetian and the Palazzo. “People don’t give him enough credit in Vegas, either,” says Goldstein. “He changed the face of Las Vegas more than anyone I can think of. He built the model for the non-gaming-centric property, and that’s what thrives in Las Vegas today. The driver of Las Vegas today is rooms, and that was Sheldon’s great revelation.” 22 23

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Even as companies not related to Las Vegas Sands have thrived on the Strip as a result of Adelson’s choice, the same is happening in Macau. “The ramifications of that decision (to develop Cotai) echoes across Macau to this day,” says Goldstein. “He’s made a lot of people a lot of money, and his vision has contributed to the explosive growth of the city of Macau. Think about where we would be today if Cotai hadn’t been developed. We wouldn’t have the mega-resorts, the Four Seasons, the thousands and thousands of hotel rooms and other amenities because we would have been limited to building on the Peninsula. You wouldn’t have the $4 billion in revenue that was achieved in March because that would have never happened without Cotai. “And it’s really just begun. The great Galaxy development has just gotten started. Melco’s Studio City is going to be a fabulous project. And then when you MAY 2013 www.ggbmagazine.com

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Sands Cotai Central

Macau Studio City

Galaxy Macau

In rapid succession, the government granted Wynn Resorts its land concession and permission to begin construction; land concessions for MGM China and SJM, approval for Phase II of Galaxy Macau, and the OK for Melco Crown to move forward with the development of recently acquired Macau Studio City. add our last property, Wynn, MGM, SJM… It’s almost staggering to think that it was less than 10 years ago that there wasn’t even any land in Cotai.” Grant Govertson, a gaming analyst with Union Gaming Group who lives and works in Macau, says Adelson deserves accolades for taking the chance on Cotai. “We think that Sheldon deserves a lot of credit for conceiving the concept of Cotai,” he says. “Clearly, there was no other party more willing to take a risk to build a single casino (let alone multiple casinos) outside of the Macau Peninsula. History has proven him right and Cotai is becoming, in many ways, the center of gravity for gaming in Macau.” David Bain, an analyst with Sterne Agee, agrees. “While Sheldon Adelson has proven at times to be overly vocal with regard to sensitive issues that can cause small, near-term stock disruption, Cotai is one of several of his big bets that shareholders have extraordinarily benefited from,” he says. “His other visions or big bets include the Sands Convention Center in Las Vegas and Marina Bay Sands in Singapore. Sheldon is not afraid to go first and bet big. To date, he has been right with his company’s cornerstone projects (Sands Convention, Venetian, Singapore, Cotai) and should be considered an early visionary with regard to the Cotai Strip, in our view.”

Growing Pains The explosive growth of Cotai, however, raises questions. Unexpectedly late last year, the Macau government approved projects for all the remaining companies that lacked a presence in Cotai, as well as expansions and new properties by those already there. In rapid succession, the government granted Wynn Resorts its land concession and permission to begin construction, land concessions for MGM China 26

Global Gaming Business MAY 2013

and SJM, approval for Phase II of Galaxy Macau, and the OK for Melco Crown to move forward with the development of recently acquired Macau Studio City. After years of controlled growth and staggered openings of its integrated resorts, the approvals seemed to be a speeding up of the development process. Not so, says Union Gaming’s Govertson. “In reality, the casinos will come online over a three-year period, from 2015 to 2017,” he explains. “I think this is broadly in line with expectations. It is also in line with government commentary that the timing of openings on Cotai would be staggered. What the government wouldn’t want is for all six properties to come online within a very short timeframe (e.g., one year), which would place too much of a burden on infrastructure, labor, regulators, etc.” Sterne Agee’s Bain agrees that the government is still taking a steady approach. “The pace of growth of Macau gaming has moved to manageable levels where a longer-term supply pipeline makes sense, in our view,” he says. “Macau is still a supply-driven market. Cotai developments are also in line with what the Beijing government has stated should be a long-term goal of Macau, to diversify from gaming. This includes a higher weighting of non-gaming amenities, which all the new Cotai developments will possess.” Goldstein says he’s confident that the Macau government knows what it’s doing, judging from previous decisions. “The Macau government has taken a very rational approach to development,” he says. “The government has really taken its time and didn’t rush into anything. It’s very well thought out, and I’m sure the upcoming development in Cotai will be done the same way. They have paced the development to the growth of the market, considering the labor it takes for construction and the labor it takes to run these things. People don’t give the government of Macau

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Las Vegas Sands’ Cotai Jet Ferry

enough credit. It’s very interesting how they master-planned gaming development.” But because the government has placed serious restrictions on the use of foreign labor, the almost non-existent unemployment rate in Macau is a challenge when trying to find enough laborers to build the new properties. Goldstein again places his faith in the government. “I’m confident the Macau government will figure out how to (manage the labor pool) in a way that will be advantageous to its citizens and to the companies. They will take a measured approach. They will figure out how to right-size the labor pool to the demand.” Bain believes it will be easier to loosen up regulations a bit because of the success the government has had in employing Macau citizens and assuring high wages. “We believe the island’s 2 percent unemployment and benefits to Macau citizens via the projects should allow for politically acceptable solutions or exceptions to engage additional outside labor,” he says.

Walking or Riding Since the Las Vegas Sands properties are the heart of Cotai, there are still some questions how traffic—both vehicular and pedestrian—will flow around the region. Today, a robust program of shuttle buses carts customers from one casino to another at no charge to the riders. Macau is developing a light rail transportation system that will span the entire city, but completion is still years away. Bain believes that the transportation model is evolving, particularly when the new Hong Kong-Macau-Zhuhai bridge is completed. “There will certainly be traffic,” he says. “However, current reasons for visitors in Macau to hop from casino to casino is quite different than Las Vegas, in our view. In Macau, our contacts mostly suggest patrons move from casino to casino in order to change their luck. In Las Vegas, it is about getting a larger and more complete experience, outside of gaming. We see some elements of the Vegas model emerging in Cotai already, which includes foot traffic by some patrons broadening from just their gaming experience, but it will certainly take time.” Goldstein acknowledges that the distance between the casinos will continue to be an issue. “Walking from Wynn to the Venetian is going to be a long walk,” he says. “There’s a lot of options for moving people around Cotai. Bussing or light rail, whatever, there’s going to be some solution.” Govertson believes that pedestrian traffic will increase. “There will absolutely be a significant amount of foot traffic between the Cotai properties in the future,” he says. “In fact, there is already a large amount of foot traffic every day walking back and forth between the four larger properties on Cotai. This will only continue to grow once the newer properties start coming online. We think that Sands China and Melco Crown are the most obvious bene28

Global Gaming Business MAY 2013

Today, a robust program of shuttle buses carts customers from one casino to another at no charge to the riders. Macau is developing a light rail transportation system that will span the entire city, but completion is still years away.

ficiaries of increased foot traffic, as their properties essentially make up the core of the Cotai Strip.” Competition with the shuttle service will hinder ridership on the light rail system, according to Govertson. “In a market like Macau, it is tough to compete with something that is free,” he points out. “As such, we believe most customers would still prefer to take the free casino shuttle buses from the various immigration points of entry. It is possible that the light rail system will hold a greater appeal to local residents as a means of going to and from work. That said, we think the light rail will hold higher levels of appeal to get visitors from the primary border gate to the casinos on the Macau peninsula.”

Table Tussle Another challenge will be the division of table games to the new properties. The Macau government has said it will only permit a 3 percent annual growth of the table game numbers over the next 10 years, a level that would not satisfy all the new properties. Although the government says it will be flexible in issuing tablegame approvals, there are still some doubts about how this will be accomplished. “If we look at Cotai development projects Macau Studio City, Galaxy Phase II, MGM, Wynn and SJM, we believe the table cap confines are in line with what (Tourism Secretary) Francis Tam has stated previously with regard to the table cap,” says Bain. “Of course, when you add the Parisian and other potential projects, it can become stretched. Still, there are some projects like the Parisian that may have been gazetted prior to the table cap. Does this mean it is grandfathered in? We believe that is a negotiation.” Goldstein is uncertain if any amount of tables will be enough, given how the entire market is poised to grow, even outside of the new projects. “It’s hard to say whether or not there’s enough table games,” he says, “when you consider the dynamics of this market, unlike any other market in the world, of having 1 billion people who have had trouble getting here, because infrastructural improvements are really just beginning. The market is growing so quickly. The Macau of today will be so much bigger in three or four years when you consider the rail improvements currently under way on the mainland, construction of the bridge from Hong Kong and Zhuhai, the enlarged border crossings… It’s increased the business opportunity for those of us in Macau many times over. So are there enough table games? No, there will never be enough if the growth continues, but we’ll do the best we can.” And Goldstein points out that the VIP market will diminish in importance as Macau grows. “The story of Macau in the future is not going to be the VIP market; it’s going to be the mass-market visitors,” he explains. “That’s the exciting story with the infrastructure improvements, and that’s what the Cotai Strip is made for. We’ll never see this again in our lifetime.”

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The

New Hospitality Reality How RD&E is transforming the revenue model for the gaming industry By Mark Birtha

s the global economy steers its way out of the “Great Recession” and begins to adjust to a “new normal,” gaming operators have to look back at their experiences during the glory days leading into 2008, temper them with the lessons learned from 2009 to 2012, and digest it all in order to reset their understanding of the needs, wants and expectations of what is a very different customer base today and in the future. Welcome to the new casino landscape, where developers and operators reconfigure their businesses in every marketplace and re-evaluate the way they manage their gaming and nongaming revenue centers while attempting to decipher an ever-changing economy and consumer profile. The first phase of the RD&E evolution saw casino properties begin to move away from the traditional approach of building retail, dining and entertainment venues as loss leaders to drive casino revenue. This rang true in the early and mid-2000s as casino executives enjoyed increasing win per unit, robust non-gaming revenues, and escalating profit margins resulting from a hyper economy and a more differentiated guest with excess discretionary spend. Although the economic woes of the past few years saw the pendulum swing back towards RD&E as more of a loss leader again to solely drive visits, the most recent year is beginning to bring a bit more stability to the world, and at the same

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time a reality check for operators realizing that there are new waters to chart. We have reached the next phase in the RD&E evolution, where there is no longer gaming vs. non-gaming: success relies on managing revenues in all areas.

The Next Phase During the first evolutionary phase of RD&E, non-gaming amenities became the buzzword in the industry for many years. Operators infused new celebrity chef restaurants, powerhouse entertainment productions, multi-faceted retail

Those in the know realize that gaming and non-gaming are not separate. To truly unlock the full potential within their four walls, they need to focus on them as one. It is all about synergy.

Global Gaming Business MAY 2013

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EXECUTIVES

centers, elaborate spas, luxury hotels and significant meeting complexes into their assets with increasing cost and expectation. Non-gaming revenues grew quickly and in some markets even outpaced gaming revenues. As the economy declined, operators began to adopt new strategies to react. The business moved closer to a casino-centric focus where non-gaming elements were used oftentimes as credits and promotions to entice customers to visit properties and spend money wherever possible. But this too was just a temporary holding pattern, and not a step backwards for RD&E. Instead, gaming leaders appreciate the fact that a compelling retail, dining and entertainment program continues to make sense for todayâ&#x20AC;&#x2122;s modern casino enterprise. A strategically positioned RD&E program is not only a secret weapon, but more importantly could spell the difference between success and failure. Those in the know realize that gaming and nongaming are not separate. To truly unlock the full potential within their four walls, they need to focus on them as one. It is all about synergy. In todayâ&#x20AC;&#x2122;s world, an enlightened operator is creating a combination of assets that are woven together to provide the highest level of product possible, thereby offering unparalleled guest value and thus strengthening the competitive differentiation and positioning of the entire operation. Customers in casinos are as likely to play a mechanical reel slot machine or hit the BJ table as they are to attend a corporate retreat or spend a weekend in the hotel, pool and restaurants or throw a party in the club and catch a show. We have sophisticated guests who are buying a complete entertainment product: a package of experiences bundled together and delivered seamlessly throughout every square inch of the property. Not all that different than a grocery store, guests have many potential selections competing for their wallet. They come in to gamble, or they come in to dine, or to shop or see a show. And not surprisingly, they come in to do all the above and more.

The Key To Unlock the Door The concept is not necessarily revolutionary, and the theory is currently being executed by many operators in different manners and at varying levels of sophistication, integration and effectiveness. And that is where the opportunity truly exists. Casino operators may look at this convergence as a marketing tool for acquisition and loyalty, or a margin-driven exercise to increase revenues while decreasing associated expenses, or even possibly a new phase in the development or capital refurbishment space where non-gaming venues house gaming amenities and vice versa so there is an integrated offering of experiences. Either way, executives in this space need to harness multiple tools in order to truly reach the next step in the evolution, to reap true success in the future and to completely unlock the door by quantifying and qualifying the complete value of every guest. One of the most compelling discussions and initiatives in the industry today is the focus on the enterprise value of our consumer. A guest spending a night in the luxury suite may be just as valuable as a guest playing hours on a dice table. A corporate traveler coming in regularly and entertaining clients at a nightclub can be more profitable than the player coming in on an RFB comp. When you look at the cumulative consumption data on our guests in every revenue center, you begin to get a full picture of their true value. Then, take that information and understand the profitability of that spend in each area and look at what it cost to drive that trip or maintain that loyalty. And then finally, factor in how often this guest will make the same purchases and how that property can ensure that frequency over time with the associated cost. We have a new strategic formula to drive our marketing and optimize the utilization of each of our revenue-producing assets.

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It is up to us to harness all of this information over multiple revenue centers and sources to give people what they want, exceed their expectations, and truly value a guest based on their enterprise worth— and then provide them with the customized and personalized marketing and incentives that enhance their experience.

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Tech & Transformation This is exactly the theory that is outlined above. We are beginning to define a theo value to a non-gaming guest as we do the gamer. And in many cases they are one and the same. The question is really, “What are they spending their time and money on and how do we get them to come back and do that frequently?” The next evolution in our space is to fully value the real estate in our properties, whether gaming or RD&E and hotel, and to do the same for our guests that consume these different offerings. Casinos are slowly beginning to embrace this philosophy. The challenge is the level of systems in place, the ability to capture all spend data and warehouse it in a manner that generates total customer profitability and value, and last but not least the true operator “buy-in.” Technology is the first threshold that must be mastered, and consultants, data manipulators and even slot manufacturers are beginning to offer solutions to overcome this obstacle. When systems are put in place and we are able to measure consumption in all areas attributed to that one patron, we can begin to apply the costs associated with supplying that product and the marketing expenses necessary to drive that trip into a formula that allows us to synthesize who our best guests are in each and every part of our business. From there, we can ensure we focus on filling our buildings with guests who yield the highest value. New equipment and systems are a constant evolution in our industry, as they are in most others. We continue to focus on improving the overall guest experience while at the same time being profitable, but technology has been and will continue to be an incredible resource that allows us to do both in an efficient and effective manner. Whether it was bill validators or TITO on the slot floor, shuffler devices in the pit, electronic hotel check-ins, or wireless in the rooms, advancements in technology have been core to our success. Areas of interest where there is more opportunity are the convergence of mobile devices that integrate into the entire entertainment experience. These devices will allow us to arrive at the property and be recognized the minute we walk in the door. Check in to our room while we walk by the front desk and activate our hotel room door with the RFID connection. Watch any programming we want in the rooms. Serve as a gaming device in our rooms, on the casino floor, or even out at the pool. Make all our dining and show reservations with just a touch and allow us to manage rewards points, comps, promotions and invita32

Global Gaming Business MAY 2013

tions in the palm of our hand 24-7. Not to mention, share our experiences with our closest friends and family each and every moment along the way. In this vision, the goal for us as operators and marketers is to offer these products in a manner that is not intrusive but complementary to the guest’s needs. It is up to us to harness all of this information over multiple revenue centers and sources to give people what they want, exceed their expectations, and truly value a guest based on their enterprise worth—and then provide them with the customized and personalized marketing and incentives that enhance their experience. And then, imagine the service possibilities when casino hosts and hotel concierge are one and the same. Going above and beyond on the service component is enhanced by our ability to motivate consumption that benefits the property. More importantly, we are providing exactly the types of purchases and/or play that the guest is expecting us to provide them. Everyone wins. This is where our industry is rapidly heading.

Where Do We Go From Here? Although there is no clear-cut strategy that applies to all gaming operators, it is a proven fact that a compelling program of retail stores, dining establishments, clubs and lounges, hotel rooms, spas and meeting space, and a well-conceived entertainment product are still very much critical components of the successful casino hotel. In this challenging time, leveraging an entire campus of amenities will allow operators to build competitive advantage, customer loyalty and long-term profitability. If nothing else, this unique period of time allows everyone to re-evaluate where we have been and where we are going, and retool our boxes to offer the best experience possible. The smart casino operator has already realized this, and has laid out a strategy to address these opportunities to achieve a better tomorrow. Mark Birtha is vice president and general manager of Station Casinos. A highly regarded gaming and hospitality executive, Birtha has over 19 years of experience in both operations and development at leading casino and hotel companies including Mirage Resorts, Las Vegas Sands, Marriott International and Starwood. He has worked domestically and internationally as well as in commercial and Native American gaming. A graduate of the Cornell Hotel School, Birtha has written numerous articles, spoken at multiple conferences, and is an advisory board member of G2E, RD&E, Cornell Hotel School and the Henderson Commission on Cultural Arts &Tourism.

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Shop ’til You Drop

In the once-insular casino environment, high-end retail has changed the game By Marjorie Preston

n Las Vegas, all roads lead to Rome—make that the “faux Rome” known as the Forum Shops. The sprawling, 635,000-square-foot shopping piazza at Caesars Palace would make Caligula himself feel at home. Under its blue painted sky, the three-story supermall is known for its Corinthian columns, ornately carved archways, a replica of Hadrian’s Palace, and the giant fountain where, every hour, the fall of Atlantis is reenacted for gaping tourists. Fittingly, that show—with its animatronic deities, bursting fireballs, and a climactic descent into the sea—takes place opposite the Cheesecake Factory. Cheesy it may be, but that spectacle helped bring some 28 million people to the Forum Shops in 2012—almost three-quarters of Sin Forum Shops at Caesars Palace City’s annual visitor volume. Amid all this opulence, luxury brands are a good fit. Along with the usual mix of mid-level retail—H&M, Victoria’s Secret, Ann Taylor, Ugg—the Forum Shops offer high-end labels that are typically unavailable at the average suburban mall: Versace and Cartier, Baccarat and DeBeers, Gucci and Pucci. Surprisingly in light of the still-tepid economy, these gilt-edged emporiums are not just for the rich and high rolling, says Maureen Crampton, director of marketing and business development for the Forum Shops. “Basically 35 percent to 40 percent of our annual sales are attributed to luxury Grand Canal Shoppes at the Venetian sales, whether it’s Ferragamo, Gucci or Louis Vuitton,” says Crampton—proof that even habitual window shoppers will splurge given the right incentive and environment. in 2011 was $386 per square foot, down from $416 in pre-recession 2007. The Forum Shops also boasts 100 percent occupancy, while the average va‘What Happens in Vegas’ cancy at malls in the top 80 U.S. markets was 8.3 percent in first-quarter Part of it is the giddy fun of being in Las Vegas, where rules (and budgets) are 2013, according to real estate research firm Reis Inc. meant to be broken. Of the approximately 75,000 people who visit the mall each day, more than 80 percent are out-of-towners, and 60 percent are women. The bulk Sometimes a Great Notion of high-end sales—about 30 percent—are arguably in the “splurge” category: luxIt’s hard to believe now that the concept of retail in the casino environment ury jewelry and watches. “The mindset is different when you come to Las Vegas,” was once a hard sell. Back in the late 1980s, when developer Sheldon GorCrampton says. “People are feeling free. They’re ready to spend a little more, eat a don first proposed a high-end retail district to adjoin Caesars, the idea was little more, shop a little more.” seen as ill advised if not absurd. At the time, as Gordon told Forbes magaThe escapism and indulgence embodied by the Forum Shops have made it zine, people considered him “an absolute idiot” for believing gaming and among the strongest retail districts in the United States, with average sales of about retail could not only coexist, but complement each other, boosting both $1,400 per square foot. Compare that to the average U.S. shopping mall; according patronage and profitability. Gambling was the money-maker, and shopping to the International Council of Shopping Centers, the seasonally adjusted average was viewed as a distraction that could keep players away from the slots and 34

Global Gaming Business MAY 2013

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Maryland Live! is connected to Arundel Mills Mall, already one of the most visited attractions in Maryland before the casino opened.

tables. But when the Forum Shops opened in 1992, Gordon’s great notion proved a wild card that would pay off big, and inspire others to replicate the formula. Take General Growth Properties’ Grand Canal Shoppes at the Venetian. Evoking the grandeur of Venice on the Vegas Strip, the shopping district attracts some 20 million patrons per year with its 160 upscale shops and “experiences,” including gondola rides, strolling troubadours and a Madame Tussaud’s Wax Museum. Last year, the stores at the Grand Canal delivered $1,100 per square foot in revenues. Not surprisingly, in its pitch to re-create the “integrated resort model” on Macau’s Cotai Strip, Venetian owner Las Vegas Sands Corp. asserted that retail sales volumes in Vegas have increased 99 percent in the last 10 years, versus a comparatively anemic 22 percent gain in gaming revenues. In one failed experiment, Miracle Mile in Las Vegas, formerly the Desert Passage, attempted to mimic its upmarket sisters in Sin City. With too much competition from established luxury retailers, the mall foundered. The approach changed when the adjoining Aladdin hotel casino became a Planet Hollywood. Since then, in a miraculous turnaround, the mall has successfully laid claim to the mid-market value shopper, and some national stores at the Miracle Mile have achieved top-ofthe-chain revenues.

Look Who’s Shopping Now The sheer breadth of retail options has brought new classes of customers to Las Vegas, says Terri Monsour, Caesars Entertainment’s vice president of retail and a veteran of the Cosmopolitan, Wynn Resorts and the venerable Neiman Marcus department store. “Twenty-five years ago my dad was a craps player who loved to come to Las Vegas, and he wouldn’t think of leaving the resort,” Monsour recalls. “My mother would catch the dinner shows, but otherwise there was very little to do. As the city evolved, my mother had reason to come—she wanted to come—because there were so many more amenities. Retail has really transformed our city and helped elevate it to those 40 million visitors a year.” International visitors are making a big mark too. Fifty percent of customers who patronize the Forum Shops are international tourists, according to Crampton. And at the Grand Canal Shoppes, fully 89 percent of guests are foreigners with a median income exceeding $93,000 per year. “We have an amazing international crowd,” says Monsour. “With our dollar, we’re a bargain in the U.S.”

ONE PLUS ONE EQUALS THREE Adding retail to gaming can generate new profits for both

n 2009, as Maryland legislators considered a casino to be located at the state’s largest shopping center, Gregg Goodman of the Simon Property Group set out to win them over. “The synergy between shopping and gaming leads to both successful retailers and casinos owners,” Goodman wrote in the Washington Post, “and city and state governments that are thrilled with their increased tax revenue.” Lawmakers were persuaded. In June 2012, the Cordish Cos. opened the $500 million Maryland Live! Casino, adjacent to the Arundel Mills Mall in Hanover. In its first 10 months of operation, the slot parlor took in nearly $320 million in gaming revenue, of which the state and county pocketed a handy 67 percent. And the mall side has seen a 12 percent year-over-year sales increase, says Joe Weinberg, managing partner for the Cordish Cos. In this case, Weinberg adds, “One plus one equals three.” In March, the casino won $44.6 million, easily routing its in-state competition. Hollywood Casino in Cecil County and Ocean Downs Casino in Worcester County took in $9.48 million and $3.95 million respectively, down 35 percent and 3.2 percent from the year before. “We have 25 percent more slot revenue than our nearest competitor,” says Weinberg. “We exceed Borgata (in Atlantic City). We exceed Parx Casino in Philadelphia in slot revenue. So it works.” The Baltimore developer had already tested the gaming-retail recipe at the Seminole Hard Rock Casino Hotel

in Hollywood, Florida, where Cordish added a 400,000-square-foot retail entertainment complex. It also worked at the Walk, an open-air outlet mall with more than 100 stores near the Atlantic City casino district. When Cordish sold the Walk to Tanger Factory Outlets in 2011, the collective stores were earning a healthy $500 per square foot, well above the national average. But Arundel Mills may have offered the optimal playing field. The mall, which opened in 2009, had an existing annual customer base of some 14 million people, as well as 1,800 nearby hotel rooms, and easy access from the Baltimore-Washington Parkway and Interstate 95. “A lot of people said we were crazy for doing it, but we had a high level of understanding and confidence we could create a spinoff between the retail-entertainment and the casinos,” says Weinberg. “We get tremendous crossover between the two elements.” Arundel Mills Mall’s value-based lineup of stores (J. Crew, Banana Republic, Old Navy) is a far cry from the luxury retail of the Forum Shops in Las Vegas. But it shows how the retail-gaming alliance can pay off for both sides. In April, the casino added 166 table games and a two-story poker room, which could appreciably amp up the revenues. “With an existing customer base and infrastructure, existing amenities and hotel rooms, we came in and added a world-class gaming-entertainment facility,” says Weinberg. “We created a real category-killer—a unique destination with both gaming and entertainment.”

MAY 2013 www.ggbmagazine.com

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LINQ’D IN Caesars hopes Gen X and Gen Y will buy in to its new open-air retail-entertainment plaza.

‘

If someone comes in wearing tattered, worn-out jeans and an oversized T-shirt, they could lift that T-shirt, unzip their money belt and pull out tens of thousands of dollars in cash to pay for that merchandise. —Maureen Crampton Director of Marketing and Business Development, Caesars Forum Shops

‘

Hey, Big Spender

he typical retail customer in Las Vegas is a 39-year-old female tourist who spends about $150 on shopping during her three- to four-day stay. While she may be coveted by most merchants in town, she’s not the primary demographic targeted by the Linq, the muchballyhooed $500 million open-air entertainment district set to open on the Strip in December. “Everyone will be comfortable at the Linq, but we’ve curated the mix so it’s conducive to the Gen X-Gen Y consumer,” says General Manager Jon Gray of Caesars Entertainment. Flanked by the Flamingo and Quad casinos, the 200,000-square-foot Linq will offer what Gray calls an “experiential” blend of bars, restaurants and about 10 retail spaces, all operating in the shadow of the 550-foot High Roller, touted as the world’s largest observation wheel. “There will be a lot of new-to-market concepts—for example, Koto, which is a cool accessories store from Aspen and Miami,” Gray says. Other tenants include Ruby Blue, a funky women’s boutique, and Bella Scarpa, a footwear store for women that sells “statement shoes” for the young and trendy. “We’re in a very comfortable position; in most spaces, there’s more interest than square footage,” says Gray. “I have the luxury of being able to select who’s the right tenant for our overall mix.” By design, visitors to the Quad, the

Not everyone who visits a luxury retail center in Las Vegas buys a Rolex (which can top out at $450,000) or a pair of red-heeled Christian Louboutin shoes (a steal at about $1,000). But sometimes browsing can be just as much fun. “Maybe most people can’t afford to buy the Louboutin shoes and the Jimmy Choos they see on the awards shows or in In Style magazine,” says Monsour, “but they have a chance to try on those shoes and be a princess for a moment.” And sometimes, they do buy. Monsour tells the story of a particularly flush customer who bought two Christophe Claret watches, dropping a cool $750,000 in one visit. And Crampton remembers the high roller who requested a private shopping spree at a boutique at the Forum Shops. “I received a phone call from VIP services saying this gentleman wanted to close Juicy Couture after-hours and decorate it according to his girlfriend’s tastes, and then bring her and her friends in to shop,” Crampton says. Though the store manager was uncertain—“She said, how can we justify staying open for an extra hour?”—Crampton told her to make it happen. “I said, ‘Honey, if they’re asking for this, I guarantee it’ll pay off.’” The free-spending high roller filled the place with “hundreds and hundreds of pink roses—his girlfriend’s favorite,” and on the stroke of midnight, the boutique opened for a private party. The women were given the equivalent of a blank check and one hour to shop, and spent a total of $20,000— 36

Global Gaming Business MAY 2013

Flamingo, and the upcoming Gansevoort Hotel (formerly Bill’s Gamblin’ Hall) will find the Linq easy to find and to navigate. “We have a lot of touch points from the casino floor out into the Linq and right into those retail spaces,” Gray says. “One is O’Shea’s Irish pub and bar, which has an entry point from the Quad casino floor; if you keep going, you end up right out into the Linq, and vice versa. “We’re adding over 200,000 square feet of retail, dining and entertainment to service all three of those properties. It was very intentional that the Linq was part of this master plan to invigorate our casino and hotel offerings on that side of the Strip.” Gray is confident that location alone will make the Linq a can’t-miss destination. “In 2009, we conducted a video study to watch the pedestrian traffic that walked by the entrance of the proposed Linq—it was 20.4 million people,” says Gray. “Since then, visitorship has gone up. So as the macro environment gets better and we see more visitors to our city, we think obviously we’ll attract even more people. On the Strip, we’re on the 50-yard line.”

more than $330 per minute. Of course, premiere service is always available for celebrities, such as Jennifer Lopez, who once closed the Gucci store for an hour to shop with her entourage. Monsour says the smart retailer knows to dispense the same level of thoughtful service, no matter who walks through the door. “Fortunately, everyone who works here lives here, and when you live here you have a natural understanding that you don’t judge a book by its cover,” she says. “If someone comes in wearing tattered, worn-out jeans and an oversized T-shirt, they could lift that T-shirt, unzip their money belt and pull out tens of thousands of dollars in cash to pay for that merchandise. Our job is to make sure everyone who leaves here is feeling great about it, whether they’re spending a lot of money or just want to pick up a keychain or a magnet for whoever is taking care of their dog. We want people to know we will fulfill their desire no matter what their price point is. Then we know they’ll come back.”

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The Big

Bang The explosion of non-gaming spend in the casino industry By Carolan Pepin and Roy Student

t’s been almost a decade and a half since an interesting statistic was reported that non-gaming revenue out-produced gaming monies for the first time ever on the Las Vegas Strip. What may have started as a local occurrence now has advanced into markets not only all across the U.S. but beyond, into countries and continents all over the gaming world. Looking back, that measurement heralded a new evolution for casinos. From that date forward, the gaming industry changed, grew and matured into what are now described as integrated resorts versus simply casinos. Today, nearly every gaming market reports that combined revenues from rooms, entertainment, food, drinks and retail sales are growing ever faster, and in many instances, far outperforming total gaming revenues. Many experts expect the spending shift to continue well into the future as casinos transform by diversifying and adding even more amenities. “The fact is that the majority of our domestic revenues come from spend on our non-gaming amenities,” explains Josh Swissman, corporate marketing VP of MGM Resorts International. “However, most of our customers don’t see themselves as ‘gaming’ or ‘non-gaming’ customers. Rather, they are interested in a holistic experience.” “Guests come in to gamble, or they come in to dine, or to shop or see a show. And not surprisingly, they come in to do all the above and more,” agrees Mark Birtha, vice president and general manager of Station Casinos. “Today, casino patrons are not purely those who jump on a video poker game or throw the dice on a craps game; instead, they are purchasers of multiple experiences bundled together and consumed at the casino hotels that have the best mix of products available to them.” Birtha states that one of the most compelling initiatives in the industry today is to truly focus on the enterprise value of the guest. A patron spending an evening in the nightclub may be just as valuable as a guest playing hours on a BJ table. A corporate or group traveler coming in regularly and purchasing that highlevel suite or entertaining clients out for dinner can be more profitable than the guest coming in on an RFB comp. 38

Global Gaming Business MAY 2013

Thus, aggregating spend data on guests in each revenue center, applying a profit margin assumption against each consumption, and quantifying reinvestments and frequency are becoming the new formula by which casino operators not only value guests but begin to market to them and build loyalty. “You can see this in the way that gaming companies are approaching their loyalty and rewards programs,” says Natalie Osborn, senior industry consultant for software supplier SAS. Rather than focusing on just high-rollers for gaming, casinos are rewarding patrons who are “high rollers” in non-gaming areas of operations, such as spa, retail, food & beverage and entertainment. Identifying those valuable patrons requires a complete picture of all patrons’ spending behaviors and a careful analysis of their preferences, Osborn says. Casinos need to delve deeper into the patron base and identify those whose activities go beyond the casino floor.

The New Non-Gaming Model “Our M life loyalty program was expanded in 2011 to reward members for their spend on rooms, dining and entertainment in addition to gaming activity,” states MGM Resorts’ Swissman. “M life members earn tier credits for all of their nongaming spend, which allows them to advance to higher tiers and enjoy more exclusive benefits.” MGM Resorts is not alone, as many casino resorts have modified their traditional “gaming revenue only” approach to player rating and have created unique and more customer-centric methods of understanding and taking advantage of both gaming and non-gaming customer spend, says Tom Soukup, vice president of systems R&D for slot-maker Konami Gaming. According to Soukup—who authored the book Visual Data Mining: Tools and Techniques for Data Visualization and Mining—traditionally, players were rewarded on a slot theoretical win value that was calculated as wager multiplied by the theoretical value of the slot machine, and table game theoretical win value calculated as game type multiplied by time played multiplied by decisions per hour multiplied by win percentage.

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EXPERTS SPEAK Gaming executives from the operator and technology sides contributed to this article by detailing the latest developments in how casinos are tracking and understanding the blast of revenue coming from beyond the betting floor.

CONTRIBUTORS INCLUDED: Nick Abruzere, director, casinos and resorts • MICROS Systems, Inc. With more than 15 years’ experience in the software solutions industry and more than a decade in the casino and hospitality market, Abruzere is responsible for the company’s business relations and development into the gaming sector. A global leader in providing hospitality software solutions, MICROS and its solutions, with their scalable and flexible architecture as well as easy deployment, are employed by casinos worldwide. Its host of property management and casino point-of-sale solutions include a complete range of full-featured property management and central hotel solutions as well as integrated restaurant management. Mark Birtha, corporate vice president and general manager • Station Casinos, LLC Birtha has more than 20 years of experience in both operations and development at leading casino and hotel companies including Mirage Resorts, Las Vegas Sands, Marriott and Starwood. He has worked domestically and internationally as well as in commercial and Native American gaming. Station Casinos is a leading provider of gaming and entertainment in the greater Las Vegas area, where it owns and operate nine major hotel/casino properties. These are regional entertainment destinations and include various amenities beyond casinos, including numerous restaurants, entertainment venues, movie theaters, bowling and convention/banquet space. Tom Doyle, vice president, systems product management • Bally Technologies, Inc. For Bally, a leader in casino systems utilized globally by many of the biggest names in the industry, Doyle directs various aspects of systems software product development. He has been general manager of the Spa Resort Casino, vice president of the Peppermill Casino group and with the Nevada Gaming Control Board in his 30 years-plus in gaming. Bally systems now are being utilized for tracking non-gaming aspects of modern casino properties. Natalie Osborn, senior industry consultant • SAS Institute’s Hospitality and Travel practice Osborn is an 18-year veteran of hospitality and hospitality technology solutions development, specializing in revenue management. SAS brings more than 30-years’ experience in analytics, and now works with multiple gaming companies, including helping the Venetian Resort keep occupancy and revenue high, Foxwoods Resort Casino gain a fuller picture of their customer relationships, and Harrah’s/Caesars Entertainment identify those customers with the highest potential to return.

Thomas Soukup, vice president of research and development, systems • Konami Gaming, Inc. Soukup leads the team whose goal is to integrate new and existing technology into the company’s casino management system. Now evolved into its Synkros version, the system provides accurate, real-time, game-level accounting and patron tracking information to property operators. A 20year technology veteran and engineer, he is also the author of the book Visual Data Mining: Tools and Techniques for Data Visualization and Mining. The company, long known for its slot games, now provides one of the industry’s fastest-growing systems, which includes its Konami Enterprise Intelligence (patron worth, segmentation, campaign management, dashboards, visualizations and reporting). The company has also recently been granted a patent on its methodology for tracking and rating nongaming activities. Josh Swissman, vice president of corporate marketing • MGM Resorts International In his role, Swissman is responsible for M life development, the company’s rewards program that is described as providing “the power to earn benefits for virtually every dollar spent.” In addition, his responsibilities include strategic oversight and execution for cross-regional marketing and trigger-based marketing as well as being involved in the development of the corporate social media strategy. Swissman began his career with the company in 1999 as a front desk clerk at the company’s Monte Carlo property, and since has been promoted into executive positions including marketing, analytics and, most recently, as the vice president of slot operations at the Mirage. John Wallace, managing director, gaming/hospitality • The Rainmaker Group A recognized expert in the practical application of pricing and revenue management, Wallace has more than 20 years of experience delivering consulting as well as packaged and custom software to U.S.-based and international clients in the travel and hospitality industry. A world leader in automated forecasting, pricing and profit optimization solutions, the Atlanta-based firm manages more than 125,000 rooms for casino-hotel properties ranging in size from 128 rooms to 5,000 rooms, with datastorage and processing needs that cover the spectrum of complexity and sophistication. Its solutions support the operations of world-renowned casino operators including Caesars Entertainment, Melco Crown, MGM Resorts International and Wynn Las Vegas, as well as leading Native American gaming clients such as Mohegan Sun, Foxwoods Resort Casino, Seneca Gaming Corporation, Agua Caliente and Grand Casino.

MAY 2013 www.ggbmagazine.com

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With non-gaming, explains Soukup, the theoretical value can be calculated as the total spend (less any discount) multiplied by the profit margin of the item, meal or non-gaming service. Casino marketers can use the theoretical win value as one of a number of key statistics to determine the level of rewards, offers, cash back, promotions and complimentaries to make available to the customer, to garner a larger share of wallet while the customer is on property and to encourage additional future trips. The theoretical win can be a good estimate of the customer’s worth. A percentage of this number is often established to gauge customer rewards and is used for marketing reinvestment through enticements. Many casinos have a theoretical reward for players, and it depends often on location, adds Tom Doyle, vice president of systems product management for Bally Technologies. “It will be as much as 25 percent in some places. Others may be only 5 percent. It depends on the property and the customer and the competition in the market. Typically, casinos do not reward as much for non-gaming purchases as they do for traditional casino gaming.” Today’s systems are flexible, and allow for variable reward rates and criteria depending on the source of the spending. The different rates often depend on the profit margin. While the components for calculating guest value are different from one operator to the next, they all include common factors, such as total spend, recency, length of stay, proximity to the property, and frequency, says John Wallace, managing director, gaming/hospitality for The Rainmaker Group. “Ideally, you want to treat casino and non-casino customers the same, and group them into segments based on the value they bring to the property,” he says. His view is that gaming customers still bring more value with more frequency, and so in order to reward non-gaming customers in a manner which encourages them to increase their spend during a current visit or to increase the likelihood 40

Global Gaming Business MAY 2013

they’ll return, different methodologies are used to value and/or reward non-gaming customers. According to Nick Abruzere, director of casinos and resorts for MICROS Systems, a key casino marketing goal is to reward spend and redeem rewards seamlessly at every transactional touch point, both gaming and non-gaming, across properties and throughout their enterprise. Casino resorts are utilizing a centralized, single-card approach for gaming and non-gaming rewards, barcode scanners capable of reading sophisticated codes delivered by smart phone at the point of sale, and social media marketing which often touches non-gaming resort guests. “All of our source systems at the front desk, restaurants and box offices are integrated utilizing TIBCO technology and a custom-developed ‘Loyalty Marketing Engine’ to track and reward our members’ non-gaming spend in real time,” explains Swissman at MGM. “We track all spend charged to a hotel folio or associated with an M life card back to the customer’s account. “We have already moved beyond the traditional notion of theoretical win to value our customers. We use advanced analytical models to predict our customer’s future value and offer appropriate promotions and incentives. We incorporate both gaming and non-gaming activity as well as other variables into these models.” “At SAS, we are seeing casinos moving towards master data management initiatives to deliver accurate information into the hands of line-level employees based on a patron profile,” adds Osborn. This information enables employees to deliver “mass” personalized service, encouraging patron loyalty and spend.

Technology To The Rescue “It’s all about having one view of a customer,” explains Bally’s Doyle. For years, Bally enabled casinos to track players at gaming machines, table games, race and sports books, poker rooms and elsewhere. Now, the company is enabling casinos to

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‘

Due to the competitive nature of our marketplace, as well as the ever-changing needs, wants and expectations of guests, casinos are constantly re-evaluating the way they manage their gaming and non-gaming revenue centers.

track players’ spending at hotels, restaurants, nightclubs, swimming pools, theaters and everywhere in a modern casino property, he says. Casino operators not only want this single view of the customer, they want to be able to see everything a customer is doing at the property to reward them and to use that information to help bring them back to the property. An example Doyle cites is Bally’s BOSS Systems (Online at the Slot Machine—Beverage Ordering Service System), which allows players to order their favorite drink easily and remembers the customers’ preferences. The system also allows players make restaurant reservations or key in the valet ticket number for the valet to get their car. Numerous options allow customers to have a better experience, while giving the casino operators more data to successfully reward the customers. Another example is the Bally iVIEW Display Manager interaction, which enables casinos to reward players right at the game or at a kiosk by giving free play or a buffet, or anything else the property wants. Konami’s Synkros enterprise management system is designed to facilitate the tracking and analysis of both gaming and non-gaming spend, says Soukup. Through a robust and extensible web-services layer, hotel, food & beverage, retail point-of-sale, and other revenue sources can be interfaced to Synkros to track nongaming spend. Similar to player ratings for table and slot play, Synkros assigns a profit margin to a non-gaming revenue source, so a comparable non-gaming player rating is recorded which includes the customer’s theoretical win. Not only does Synkros use these non-gaming ratings to generate a non-gaming profile, but it also scores and ranks the customer’s non-gaming data. According to Soukup, casino marketers, hosts and players club who use Synkros can view the customer by their gaming rank, their non-gaming rank, or their blended rank to design customized offers and accurately comp or reinvest in the customer. Furthermore, the Synkros Konami Enterprise Intelligence engine (KEITM) can be customized to calculate the customer’s true worth to the casino based on the customer’s behavior—that is, their recency and frequency as well as the monetary value of both their gaming and non-gaming activity. Konami’s Synkros system is unique in that the tracking and integration of gaming and non-gaming can be accomplished without investing in an expensive, large and complicated data warehouse infrastructure. Abruzere says MICROS works with gaming systems companies and other systems companies within the resort to interface and share data. More and more data is being gathered and shared with the advanced gaming interfaces in the company’s Simphony Point of Service and Opera Property Management Systems. “Managing all of the data coming from these disparate systems becomes challenging, so casino resorts, from the largest multi-property enterprises to local-market, single-property operations, are creating enterprise data warehouses in an effort to centralize data and streamline business intelligence.” Rainmaker’s GuestREV revenue management solution and best practices are focused on measuring and tracking both room and non-room revenue, explains Wallace. “Our system has the ability, for example, to classify guests’ non-room spend into nine separate non-room revenue ‘buckets,’” Wallace says. “These buckets include everything from gaming (with slots and table games either combined or separated), dining and spa to golf, events/shows, retail shopping and more. The casino resort ultimately defines the buckets that fit their property and align with their needs.” Each non-room revenue “bucket” can be marginalized separately to measure and track profitability by revenue stream. All information is then used to assign 42

Global Gaming Business MAY 2013

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each guest a value, which determines whether or not they will get a room at the hotel and, if so, at what rate. Typically, casino resorts do not want to comp noncasino guests or even give them a reduced room rate, says Wallace. Instead, they would use their TGV to give them preference on rooms and/or perhaps offer them other incentives, such as free play or food and beverage credits. In addition to assigning different margins to different revenue streams, other costs such as gaming reinvestment (e.g., free play and gaming taxes) are explicitly being factored into customer profitability. Osborn at SAS appreciates that many casino companies collect information about patron visits through the use of loyalty or reward cards. According to Osborn, this gives a historical view, but lacks analytical insights into the patron life cycle to predict future behavior. Information about when and how often patrons stay, which outlets they frequent, which offers they respond to and how much they spend can lead to predictions about what offers they are likely to respond to, what services they would desire in the future and their lifetime value. Tracking the patron life cycle allows gaming companies to nurture behavior they desire, and discourage behaviors that are detrimental to patron value. The SAS for Patron Value Optimization helps casino companies gain a 360degree view of the patron by capturing all of a patron’s activities across the resort from rooms and restaurants to the casino, spa retail and entertainment. Using advanced segmentation strategies and predictive analytics, microgroups of patrons with similar preferences and purchase behaviors are identified. Using the advanced analytics in SAS Patron Value Optimization, casinos can identify the elements of service that drive patron value and track these over time. Once the most valuable patrons are identified, casino management can then understand their activities and behaviors and identify the drivers of value. SAS for Patron Value Optimization takes that information and helps create targeted promotions designed with the specific patron in mind.

No Longer Gaming vs. Non-Gaming Due to the competitive nature of our marketplace, as well as the ever-changing needs, wants and expectations of guests, casinos are constantly re-evaluating the way they manage their gaming and non-gaming revenue centers, explains Station’s Birtha. The sophisticated operator today is not only developing properties that have the most unique combination of bells and whistles; they are co-mingling these amenities so they maximize a value offering to the guest while at the same time strengthening the critical mass of the whole enterprise. The traditional approach of building retail, dining and entertainment venues as loss leaders to drive pure gaming play is no longer a consistent way to manage a profitable business entity. “Instead, savvy operators are looking at maximizing the ROI on every square inch of their property, in every revenue center,” says Birtha. “There is no longer gaming vs. non-gaming: success relies on managing revenues in all areas.” Over many years and from key corporate positions, Carolan Pepin and Roy Student of Applied Management Strategies have introduced new technology, tools and games into the worldwide gaming market. Using well-developed relationships and contacts, key marketing initiatives and road-tested strategies, they now help companies enter the gaming sector, move into new jurisdictions or move to the next level. They can be reached through the company’s website, appplied-management-strategies.com.

Getting product to market is a critical performance factor for gaming manufacturers and product developers. In addition to the highest integrity standards in the testing industry, BMM prides itself on delivering the fastest, most accurate product certifications to regulators in the gaming industry worldwide. So for all of your Casino, Online, AWP & VLT product certifications, contact your local BMM for superior performance.

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Japan Can Say No It is not a foregone conclusion that casino gaming will come to the Land of the Rising Sun. By Ben Lee

ith eight prime ministers in seven years—the current being a recycled prime minister, Shinzo Abe—the eternal hope that gaming in Japan is inevitable must be weighed in the following light. Lobbyists on behalf of Western gaming companies regularly cite that the annual revenue derived from the pachinko industry is between US$240 billion and $380 billion, but they do not explain that this refers to the amount paid for “steel ball rental,” or in gaming parlance, the “drop.” The real amount of revenue received is 10 percent of that, representing 5 percent machine take and 5 percent conversion commission (conversion of the steel balls back to prizes and eventually cash). Thus, the actual revenue is between $25 billion and $38 billion—but again, some caution here, as most analysts assume that these figures would translate into actual gambling revenue. According to Japanese researchers, pachinko is both a form of leisure and a gambling activity. Pachinko activities are acknowledged as a unique Japanese form of stress relief in which the individual indulges to find personal psychological space. And yes, there is still that gambling element there as well, although no research to date has quantified the split between these two types of behavior.

Japan Prime Minister Shinzo Abe

Shintaro Ishihara (left), the former governor of Tokyo, and Toru Hashimoto, mayor of Osaka, are both big supporters of casino gaming in Japan. 44

Global Gaming Business MAY 2013

‘This Year Will Be The Best Chance Yet’ Already, this well-worn mantra is being cranked up again, recently by Genting and the casino lobbyists pointing to Abe’s re-election and the pro-business LDP regaining power. It may be worthwhile pointing out that when Abe was PM in 2006-2007, he did not advance the casino issue. Right now, Abe’s priority, apart from ensuring that he lasts longer than one year, is a much bigger hot potato—to change the Japanese constitution. Abe’s LDP currently controls the Lower House of the Diet, and he needs to gain a two-thirds majority of the Upper House in the forthcoming mid-year elections to be able to push the issue to a public referendum. Assuming he succeeds, he will then have to convince the public that the country needs to ditch its pacifist ideals before he can move on to something like promoting casinos. We do not envisage that this will happen until probably sometime mid2014, assuming it all goes to plan and Abe beats the one-year jinx.

Timeline The whole casino initiative is broken into two parts: the IR Promotion Law, and the IR Implementation Law. Drafted by the IR-Giren (a bipartisan group of congressmen), the first law merely lays out the political road map to drafting the second law, and the anticipated time frame for achieving that is two years from the enactment of the first. It’s anybody’s guess, however. Given the history, one would need to be circumspect about any time frames suggested. The time frame for passing the first law itself is unknown. However, in earlier presentations at gaming conferences, the pro-casino academics hinted at an overall time frame of five years purely for the legislative process.

Initiative Hijacked The latest news released by GamblingCompliance reported that yet another new IR committee has been formed, this time by the new ultra-nationalistic Japan Restoration Party. Notably, the IR-Giren has not convened any formal meetings since the beginning of this year due to the loss of its chairman, who was not returned at the recent election. Additionally, the office holders in this new IR committee are former officers of the IR-Giren, so it sounds like apart from a loss of impetus, the issue may now have been taken over by the ultra-nationalists. What investors have been told repeatedly is that the ex-governor of Tokyo, Shintaro Ishihara, and the mayor of Osaka, Toru Hashimoto, are both strong supporters of the casino initiative, but what has been conveniently ignored is the fact that both these politicians can only be euphemistically described as holding extremely colorful views on most foreign cultures, in particular the U.S. Ishihara co-authored the book The Japan That Can Say No together with Akio Morita, founder of Sony, and The Voice of Asia with the former prime minister of Malaysia, Mahathir Mohamad. They would certainly not be predis-

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According to Japanese researchers, pachinko is both a form of leisure and a gambling activity. posed to having any U.S. companies come in and control a sunrise industry. Ishihara is also well known as an unrepentant ultra-nationalist who maintains that the 1937 Nanjing Massacre never happened and was the Tokyo governor who personally escalated the Diaoyu/Senkaku island conflict between China and Japan when his proposal to buy the island from the private owner forced the Japanese government to step in. Incidentally, Ishihara and Hashimoto are the co-founders of the Japan Restoration Party and are both initiators of the constitutional amendments proposed by Abe.

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Nation vs. Nation Most importantly, the pachinko industry, the single largest service industry, which is estimated to be 75 percent controlled by Japanese Koreans, may have been in favor of the advent of casino gaming if they are to be given a slice of the action. However, we have long been aware of “advice” given to the global gaming companies seeking to position themselves in Japan—advice that stated that “the Japanese government would not look kindly upon any casino bids that include any form of partnership with Japanese Korean pachinko companies.” Japanese Koreans have long been subjected to the same outspoken discriminatory views from Ishihara, which included derogatory descriptions of them as third-world nationals. The industry would certainly gather its massive lobbying resources (the pachinko industry has often been referred to as the Japanese police pension fund due to the fact that a high number of retired police officers often end up with cushy jobs there) to fight this casino initiative if there is a risk that they too would be excluded. In short, investors could expect a time frame of much longer than a mere five years for this to play out, particularly if the ultra-nationalists were to say no to the incumbent 500-pound gorilla already in the room with them. Ben Lee is the managing partner of IGamiX Management & Consulting Ltd, a Macaubased gaming consultancy with real-time and in-depth knowledge of gaming jurisdictions in the Asia-Pacific region. IGamix regularly consults to investors interested in the region’s growth. This is a revised version of the original article published in the Macau Gaming Gazette, March 7, 2013. MAY 2013 www.ggbmagazine.com

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Tortoise &THE Hare

THE

BY GEORGE BRENNAN

The process of legalizing gaming in Massachusetts has already been long and arduous, and the end isn’t in sight.

he Massachusetts Gaming Commission got what it wanted, robust competition for the two casino licenses and one slot parlor license up for grabs. Eleven companies, including some Las Vegas giants, paid the $400,000 non-refundable fee and submitted the paperwork to be pre-qualified to bid for the licenses. The commission is in the process of poring through 21,000 pages of documents that are part of the criminal and financial background checks for 300 of the key players involved in the applications. Commissioners hope to license the slot parlor by the end of 2013—earlier if possible—and the two casinos by early 2014. The process of writing the regulations and seeking bids has been described as glacial by some, and one Boston Globe columnist referred to it as “turtles on Ambien.”

Encroaching Competition While Massachusetts licensing plods along, competition is heating up in bordering states. Rhode Island will introduce table games at Twin River Casino in Lincoln, Rhode Island, in July, the New Hampshire Legislature is debating whether to jump into the game, and New York is planning a major expansion. That has left Massachusetts Governor Deval Patrick and gaming commission Chairman Stephen Crosby answering questions about the threat of competition to the fledgling Bay State gaming industry, even before a single dollar is played. Both Patrick and Crosby deflect criticism about the speed of the Massachusetts Gaming Commission Chairman Stephen Crosby (front) and Governor Deval Patrick have defended the “deliberate” pace of gaming in Massachusetts.

Global Gaming Business MAY 2013

process and seek to calm any fears that Massachusetts stands to miss out on jobs and revenue if it doesn’t move at a quicker pace. Patrick, as he has from the beginning, says Massachusetts has only “one chance to get it right.” Crosby says the commission is attempting to strike the balance of moving as quickly as possible, while ensuring the “quality and integrity” of the process. “We’re still going about building an organization from ground, absolute, zero,” Crosby said at an appearance in early March at a convention for building and trades unions clamoring for the construction jobs casinos are expected to bring. “We are as committed as we possibly can be to getting this done as quickly as we can get it done, but it has to be done in a way that ensures the quality and integrity of the process.” Commissioners have debated the possibility of issuing the slots-only license earlier, but with four companies filing Phase 1 applications for that license, the commission has extensive background checks yet to complete and doesn’t want host cities holding required referendum elections when voters might be out of town on summer vacation. Developers wrote their $400,000 checks understanding that Rhode Island, New Hampshire, Connecticut and New York would make moves of their own, Crosby said. According to a study of gambling habits recently produced by the University of Massachusetts Dartmouth’s Center for Policy Analysis, Massachusetts sends more gamblers to Rhode Island and Connecticut than those states send to their own facilities.

Making a Market It’s that market share that has some of the biggest names in the gaming industry jockeying for the licenses. Included in the mix are Caesars, MGM Resorts, Wynn Resorts, Hard Rock, Rush Street Gaming, Penn National Gaming and Warner Gaming. “These are all top-flight companies,” says Clyde Barrow, director of the UMass center that conducted the behavior study of Massachusetts gamblers. “There is a sufficient number of bidders.” Foxwoods Resort Casino and Mohegan Tribal Gaming Authority, the two Connecticut tribal behemoths, are also involved in the Massachusetts

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posals are located, developer David Nunes of Warner Gaming has been joined by Foxwoods. The proposal is for a $1 billion casino that would include a 350-room hotel, three or four name restaurants, 125 table games, 4,200 slots and 50 poker tables, Milford officials have been told. With Wynn and Warner in the hunt, Suffolk Downs, the site of a horse-racing track near Boston’s Logan Airport, is no longer considered a shoe-in for the license. Caesars has proposed a $1 In Springfield, Penn National Gaming (l.) and MGM billion investment that will include a 350- to Resorts are presenting competing plans that will cost 400-room hotel, as many as 16 restaurants, at least $800 million for the state’s smallest market. 4,000-5,000 slot machines, 200 table games and a World Series of Poker room. A model of the facility, built to garner local support for the project, shows a horseshoe-shaped commercial bidding, in an attempt to expand their businesses and protect their hotel, a second hotel and a revamped racetrack. flanks. The Suffolk Downs project hit a bump in late March when one of its key In the Greater Boston region, where Suffolk Downs owner Richard Fields has investors, Vornado Realty Trust, announced it would divest its 19.9 percent teamed with Caesars Entertainment, competition intensified as the commission’s share in the project. Nearly a dozen Vornado representatives declined to file disJanuary 15 deadline for the first phase of bidding approached. closure forms required in the gaming commission’s background check. Steve Wynn, whose initial plans with New England Patriots owner Robert Kraft were torpedoed by community criticism, is back with a proposal to build a Wild West $1.3 billion casino on the Mystic River in Everett. Wynn’s plans include a hotel Still, it’s the license in Western Massachusetts that has garnered the most comthat faces the Boston skyline. A rendering of the project revealed in late March petition with four bidders. shows a glass tower and a promenade filled with stores and restaurants stretched In Springfield, MGM Resorts and Penn National are battling for the city’s out along the waterfront. In Milford, which is part of the same region where the Caesars and Wynn pro- affections. MGM is proposing an $850 million facility in the city that features a

MAY 2013 www.ggbmagazine.com

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The principal competitors for the Boston-area license are Suffolk Downs (l.), backed by Caesars Entertainment, along with investors that include former Trump executive Richard Fields, and Wynn Resorts for a complex in Everett.

274-room hotel, 70,000 square feet of retail stores and restaurants, a spa, 3,100 slot machines, 75 gaming tables, 25 poker tables, movie theaters and a bowling alley. The facility would be located in the city’s South End. Penn National is looking to invest $809 million in its proposed Hollywood Casino Springfield in the city’s North End, a location that would relocate the city’s newspaper, the Springfield Republican. The company has partnered with local businessman Peter Picknelly and would also relocate Picknelly’s family business, Peter Pan Bus Lines. The casino hotel would have up to 500 rooms, 3,0003,500 slots, up to 100 table games and 30 poker tables. A spa, restaurants and retail are also part of the proposal. The two companies made news in late March with conflicting estimates of how many Springfield residents they’re committed to hiring. Penn National has said it will hire 90 percent of its workers from the city, while MGM has committed to more of a regional approach, saying that 35 percent of its employees will come from the city and the rest from surrounding communities. Two other proposals—one by Hard Rock in West Springfield at the site of the Eastern Exposition Fairgrounds and the other by the Mohegan Sun Gaming Authority in Palmer—are also vying for the lone Western Massachusetts license. Hard Rock has said it could spend up to $800 million on a 400- to 500room hotel, spa and “tropical, indoor pool deck.” The casino would feature up to 3,000 slot machines and 125 table games, as well as restaurants, retail stores and a live music venue. Facing stiff competition for the Western Massachusetts license, Mohegan Sun Massachusetts upped its proposed investment by $200 million to $800 million in Palmer. Mohegan has released few details of its proposal, except that it will be a rural casino, similar to its successful tribal casino in Connecticut. Barrow, the UMass casino expert, says he’s doubtful the Western Massachusetts market can sustain the type of investment that’s being proposed by the companies. “Everyone agrees that’s the smallest market,” Barrow says. “Now they’ve ratcheted it up to $800 million. That’s one of the risks of competitive bids. I don’t think they’ll ever build to that level. They’ll lay it out in phases and may never get to Phase 3. They’ll stop when they reach the saturation point.” At its weekly meetings, the gaming commission is discussing criteria that will be used to evaluate the proposals. They’ve also discussed ways to ensure that the proposals become reality.

Tribal Tussle In Southeastern Massachusetts, the state’s third casino is in limbo. State legislation provided the Mashpee Wampanoag Tribe with the first crack at the region’s casino provided it could get the federal approvals necessary for an Indian casino. The tribe recently finalized a renegotiated compact with Governor Deval 48

Global Gaming Business MAY 2013

Patrick that would pay the state on a sliding scale from zero to 21 percent of gross gambling revenues, depending on the level of competition. The state legislature and the federal Bureau of Indian Affairs still have to approve the deal. Meanwhile, the tribe’s application to have land taken into federal trust is also under review by the BIA. That process faces a legal tangle that some experts say is insurmountable. In late April, the Massachusetts Gaming Commission was expected to open the region to competitive commercial bids, saying the time line for a tribal casino remains too much in flux. That decision will likely open a flurry of activity among potential developers seeking a Massachusetts license. Already, KG Urban Enterprises has unveiled plans to build on the New Bedford waterfront should the commission open up the bidding. A Bridgewater landowner said casino developers have kicked the tires on purchasing the 170 acres he owns near two major highways, but have stopped short of making a deal because of the prospects of a tribal casino. Four companies are seeking the state’s lone slot license. Two of the companies—Raynham Park, a former greyhound race track, and Plainridge Racecourse, a harness horse-racing track—have been in the hunt since the expanded gaming legislation was first proposed in 2007. Plainridge is proposing a 73,000-square-foot addition to its existing building, which would feature 1,250 slot machines, a sports bar, banquet halls, a restaurant and a food court. They are joined in the competition for the license by Neil Bluhm’s Rush Street Gaming, which announced in late March they have a deal to build a slot facility in the city of Worcester. The facility would include a hotel, which is not a requirement in the legislation. Another company, the Cordish Companies, a Maryland-based casino developer, is also seeking the slots license, but has not yet officially announced a location, Elaine Driscoll, a spokeswoman for the Massachusetts Gaming Commission, said. The company has discussed the possibility of locating its facility at a mall in Danvers, but has not made it official. The commission is in the process of completing the background checks, with the slot parlor applicants being the top priority. The commission has targeted the end of June to finish background checks on all 11 companies. Bidders who pass the criminal and financial background checks will be allowed to submit their completed proposals to the commission for consideration. The commission will evaluate those based on job creation, economic impact, financial strength, marketing plans and other criteria in order to choose a licensee from among the applicants. “We have to be careful as we analyze these proposals that perhaps the biggest may not necessarily be the best,” Commissioner Enrique Zuniga said at the commission’s March 14 meeting.

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GLOBAL GAMING WOMEN by ELIZABETH “LIBBY” FRANCISCO

All Shapes and Sizes Mentorship can come in many forms if one is open to learning. Elizabeth “Libby” Francisco

COO, Tohono O’odham Gaming Enterprise

n recent years, women have made great strides in the workplace as a result of the increased focus on mentorship such as the Global Gaming Women initiative and other efforts. But we all know there is still a long way to go. In addition to supporting one another in the workplace, we can look at life in general for everyday mentorship opportunities to learn from. My first mentors were my parents, both members of the Tohono O’odham Nation. They never had the privilege of education and were employed in manual labor jobs all of their lives, but the lessons they taught me shaped my whole outlook on life. From a young age, I learned the value of hard work in overcoming adversity. One of seven children, I was raised in a single-bedroom house in Tucson, Arizona. I began working at age 13. My parents were very conscientious, hard-working people, and they instilled in me the importance of a strong work ethic and a good education. I promised my father that I would get my college degree. It wasn’t easy. I attended Stanford University for two years on scholarships from the university and from my tribe, the Tohono O’odham Nation. The culture shock was enormous. I remember one particular Sunday night when everyone was going to the movies where a ticket cost $1. All I had to my name was $1, and I really needed to do laundry. I ended up doing hand wash and going to the movies, but promised myself I would not be in that position again, and that this situation would not be my life. It was definitely one of those “As God as my witness...” moments.

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After two years at Stanford, I returned to Tucson and worked for 13 years at the University of Arizona, starting as a secretary and rising to business manager. During that time I also completed my bachelor’s degree and kept my promise to my father. In 1995, I was asked to interview at my tribe’s Desert Diamond Casino by thenCasino Manager Ned Norris, Jr., who currently serves as the chairman of the Tohono O’odham Nation. I was hired as a shift manager. It was quite a learning experience, going from an academic institution to the gaming industry, but my management and business skills were very much utilized and appreciated by the enterprise. Ned helped me adapt to the culture shock of transitioning from an academic to corporate environment. He taught me key lessons in leadership and how to operate successfully in this different workplace. It wasn’t all smooth sailing. When I was promoted to poker room manager, I was not welcomed by the players, management staff or employees, each for different reasons. I asked that they give me a chance to prove myself, and after three months I can say that I had successfully transitioned into an environment that was primarily male-dominated. During this time one of my strongest supporters was a poker dealer who told me that bets had been made on whether I would succeed or not. She told me her money was on me! As these few experiences illustrate, mentorship opportunities come in all shapes and sizes—whether it be a family member, a super-

visor, a poker dealer or even a situation. What is most important is that I was willing to be receptive to them. I had made the decision at a very young age that I wanted a different life; I wanted more and I wanted better. So now I realize that I was paying attention and being receptive to these informal mentorship opportunities, which have dramatically impacted my career and my life. I absolutely love the opportunities and challenges that come from working for a dynamic and non-stop industry such as ours. I want to encourage women, particularly Native women, who are considering a career in gaming to know that they can succeed in a gaming environment and that they will have the support they need to flourish. It’s been a tremendous pleasure to witness the strong reception to the Global Gaming Women initiative, and to see so many great women leaders come forward to embrace the values of mentorship. Although each of us has her own journey to travel, it is only by supporting one another that we can truly succeed. Elizabeth Francisco is chief operations officer of Tohono O’odham Gaming Enterprise and has been committed to mentoring. She supports and oversees three programs within the enterprise that focus on mentoring and developing tribal employees. The Foundations program provides mentorship to management-level employees; an internship program reaches out to tribal members with degrees to bring them to the enterprise; and the Pathways program provides mentorship to those in supervisory positions.

I realize that I was paying attention and being receptive to these informal mentorship opportunities, which have dramatically impacted my career and my life.

Global Gaming Business MAY 2013

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Making a Mark Part II A one-stop shopping center for evaluating the efficacy of marketing programs By Dean M. Macomber In the first installment of “Making a Mark,” published in the April 2013 issue of GGB, Dean Macomber explained how modern casino marketing encompasses many theories, terms, principles and approaches. He talks about product marketing, demand stimulation marketing, business growth phases and more. Reviewing that article will help readers grasp the concepts in this final installment.

enue, $200 million in annual non-gaming revenue, and a total of $600 million annual total revenue. See the chart below for a summary of this and other market data points used in this case study. The marketing team has forecast it can realistically expect to capture a maximum 110 percent of its fair market share of TMS 5.10.3 or 17.5 percent market share. This results in a forecast of $105 million maximum potential annual total revenue and approximately $37 million in annual EBITDA, using cost accounting to allocate overhead expenses to TMS 5.10.3. Using cost accounting again to allocate $185 million of the company’s total investment to this TMS leads to a 19.9 percent return on invested capital (ROIC). See the chart on the following page for a summary of this and other property data points used in this case study. The marketing team conducted a risk analysis of TMS 5.10.3 that resulted in a forecast low and high maximum potential revenue, profit and ROIC indicating the upside was greater than the downside, i.e., annual profits could be greater than the expected forecast by $20 million-plus but less by $10 million.

anaging marketing, like many aspects of casino gaming, is part science, part art and part voodoo. All is not lost, however: proactive, predictable and effective marketing management tools do exist to complement and leverage the more intuitive, creative and impulsive side of marketing. One of the best marketing tools in the quiver is monitoring, evaluating and making marketing decisions based upon what happens “at the margin.” In this context, “at the margin” refers to the results, and the forces at work that caused those results at the last consumer purchase. In gaming, this would be the last day trip or multi-day visit to a casino. Marginal return is rich in information useful to marketers. The discussion below describes how to extract this value. Part 1 of this two-part article established the foundation upon which to develop, understand and use the marketing management tools described in this Part 2, i.e., marketing theory and terms which introduced such concepts as target market segments, product marketing, demand stimulation MARKET DATA – TMS 5.10.3 marketing, demand cycle, business growth phases, and the business growth curve.

Setting The Scene: A Case Study To set up a hypothetical case study useful to understanding the application of marginal return, let’s say a company has been focusing on developing a particular target market segment (TMS) designated and labeled internally as TMS 5.10.3. TMS 5.10.3 was identified and added to the company’s optimal TMS mix by the marketing team 12 months ago. Their optimal TMS mix is the list of segments upon which the marketing team has chosen to focus among all of the TMSs that exist in the marketplace in which it competes. Currently, the TMS includes an estimated 100,000 potential players. Each player in this TMS is estimated to make eight casino trips per year averaging 1.5 days per trip, with an average per-trip gaming budget of $500, a per-trip non-gaming budget of $250, a gaming servicing cost (expense ratio) of 60 percent of theoretical win, and 75 percent non-gaming cost of non-gaming revenue leading to an average profit margin of 40 percent and 25 percent, respectively. These assumptions lead to a forecast market potential for TMS 5.10.3 of $400 million annual gaming rev52

Global Gaming Business MAY 2013

TMS TMS5.10.3 5.10.3. MARKET Population – total Percent gaming age Population – gaming age Maximum Estimated Potential Market Penetration Maximum Estimated Gamers Average trips per year Visitor-trips per year Average days per trip Visitor-days per trip Average gaming budget/trip Average gaming cost/trip Ave. non-gaming budget per trip Average non-gaming cost/trip Total annual revenue Total profit (defined) Profit margin

GAMING GAMING

NON-GAMING NON-GAMING TOTAL TOTAL

285,000 70% 200,000 50% 100,000 8.0 800,000 1.5 1,200,000 $500 60%

$400,000,000 $160,000,000 40%

$250 75% $200,000,000 $ 50,000,000 25%

$600,000,000 $210,000,000 35%

PROPERTY CAPTURE AND PERFORMANCE DATA – TMS 5.10.3 TMS TMS5.10.3 5.10.3. MARKET … from previous table Total annual revenue Total profit (defined) Profit margin PROPERTY Fair Share property capture Expected % Fair Share capture Forecast market share Total annual revenue Total profit (defined) Profit margin Assets allocated to this TMS Return on Allocated Assets Risk Low Total Revenue Profit Profit Margin Return on Allocated Assets Probability of Occurrence Weighted Revenue Probability Weighted Profit Weighted Profit Margin Weighted ROAA TMS Risk Adjusted Rank

GAMING GAMING

NON-GAMING NON-GAMING

TOTAL TOTAL

$400,000,000 $160,000,000 40%

$200,000,000 $ 50,000,000 25%

$600,000,000 $210,000,000 35%

$ 70,000,000 $ 28,000,000 40%

$ 35,000,000 $ 8,750,000 25%

Expected $ 95,000,000 $ 28,500,000 30.0% 15.4% 20%

High $105,000,000 $ 36,750,000 35.0% 19.9% 50% $109,000,000 $ 38,100,000 35.0% 20.6% 6th

Currently the company markets to 50 different TMSs. They analyzed each TMS in addition to TMS 5.10.3 and relative to the other 50, TMS 5.10.3 was ranked as the sixth most important TMS in their optimal TMS mix.

Shakespeare And Marketing: ‘How Much To Market Or Not To Market. That Is The Question.’ A vocal minority in the marketing team feel TMS 5.10.3 is still in the growth phase, and deserves continued full-force effort, where others feel it is approaching or has entered the maturity phase, making other TMSs more worthy. The marketing team has been watching TMS 5.10.3 closely, following a fairly strict process established by the executive vice president of casino marketing prior to opening. At launch, TMS 5.10.3 was generating triple-digit month-tomonth growth rates. That was followed by a classical post-launch reverse power curve decline to double-digit growth that was still high at 12 percent at the end of the eighth month. However, in the most recent reporting period, the 12th month since launch, growth dipped below the magic 10 percent threshold to 7.5 percent, causing some concern. Still, the marketing team tracked the market growth in parallel with property growth and determined that the overall annualized market growth for TMS 5.10.3 was 6 percent. This meant that with a 7.5 percent growth rate, TMS 5.10.3 was still growing at the property level 25 percent faster than the market. The marketing team also noted that their estimated fair market share is only 65 percent of their maximum potential target, suggesting there is still significant room to grow TMS 5.10.3. Turning back the clock, during what became a rather active discussion about the pros and cons of TMS 5.10.3, the supporters of TMS 5.10.3 recalled that toward the end of the launch phase the EVP of casino marketing asked the marketing team to conduct a series of primary market research efforts to determine if the players in TMS 5.10.3 were satisfied with the product, or target guest experience (TGE), the company delivered to them. Despite a few concerns that were immedi-

ately addressed, the response was 85 percent positive that the needs, wants and expectations of the players in TMS 5.10.3 were being met or exceeded. The product or TGE of TMS 5.10.3 was not then or currently the issue. As triple-digit launch growth expectedly fell, on cue the EVP of marketing asked the marketing team to begin the earliest stages of experimenting with demand stimulation programs to determine what resonated with these players. By the time the growth rate fell below 20 $125,000,000 percent month over month, the EVP “took off the $ 46,875,000 brakes” to eke out remaining demand. 37.5% At the earliest point in introducing demand simula25.3% tion marketing programs, the marketing team added no30% or low-cost options—e.g., perquisites such as free valet parking and various other forms of preferential treatment such as “first in line” status at restaurants, lounges and entertainment venues and automatic upgrades in the hotel (space available). Hosts were added and asked … out of 50 to pay particular attention to players in TMS 5.10.3. The better players in TMS 5.10.3 were assigned a host/hostess to become a one-on-one personal contact with the company supported by the entire host/hostess team in their absence. These and other efforts caused a slight “bounce” in the demand generated by TMS 5.10.3, but the growth began to level out again and even show signs of decreasing growth, although the data were admittedly uneven and “bumpy.” The EVP of casino marketing did not want to wait too long before using price/cost motivators, however, as this was one of the company’s top 10 TMSs. The EVP of casino marketing also knew that competitors were making moves to claw back their market share of this important TMS. And so, price/cost motivators were soon put into motion. For example, promotions (two-for-ones, bring-a-friend, celebrate your birthday, and off-peak period-only incentives), a continuous trial of multiple entertainment events to see “what worked,” and most recently, some aggressive aspirational marketing comp rates with available dollars allocated more and more to toward the upper tiers. The addition of a fourth tier for the über-players was being discussed. The EVP of marketing, however, made it clear that they should not just throw money at TMS 5.10.3; rather, they should throw a continual array of options— monetary and non-monetary, with monetary at varying levels—to determine what motivators worked, rather than the amount/cost of the motivator.

16.0% 110% 17.5% $105,000,000 $ 36,750,000 35% $185,000,000 19.9%

Advanced Marketing Evaluation: Marginal Results The marketing team continued to analyze TMS 5.10.3. They already tracked the cost-benefit of every marketing initiative for TMS 5.10.3 and every other TMS. This cost-benefit of any and every marketing initiative could be analyzed by player, type of offer, period (day of week, week of month/year, season), and any number of a myriad of other attributes. The historical and current analysis revealed that as the results from the “no-cost” to “low-cost” initiatives took hold, they precipitated growth, but this growth seemed to plateau. Time was given to the marketing team to experiment MAY 2013 www.ggbmagazine.com

with the aforementioned variety of price- and non-price-driven motivators of different types and amounts. As expected, during this experimentation period, early results were mixed, and it was unclear what was working and not working, and why for both. But, as the number of initiatives increased over time, a pattern emerged. The non-monetary efforts were showing only slight marginal improvement (i.e., net increase in player-trips, player revenue per trip, and player profit per trip). And, the limit was being reached to what the marketing team could keep offering without beginning to spill over into the perquisite entitlements TMSs with higher theoretical win and profit were receiving. As emphasis shifted to price-cost-driven programs, small to medium batches of trial incentives were offered—for example, discounted or free food, beverage, admission, gifts, overnight accommodations and transportation. Such incentives were offered mid-week and on weekends at different levels, and at peak and offpeak periods of the day to determine what worked to elicit demand during different periods, and at what profit margin. As what worked became more clear, the marketing effort—time, resources and cost—focused on those trial programs that worked, and they were then offered to the entire TMS. But, for the remainder, in the 12th month from the start of the launch of TMS 5.10.3, a discernible trend was evolving. By the ninth month of the growth phase, it was clear that increasing cost was still working. At the start of the process, the percent increase in cost was generating a greater increase in additional revenue, profit and ROIC. Shown below is what the trend looked like: MARGINAL CHANGE IN …

TMS 5.10.3 5.10.3.

COST

PROFIT

PROFIT-TOPROFIT TO COST RATIO COS

Initiative 56 – month 9 Initiative 57 – month 9 Initiative 58 – month 9 Initiative 59 – month 9 Initiative 60 – month 9 Initiative 61 – month 10 Initiative 62 – month 10 Initiative 63 – month 10 Initiative 64 – month 10 Initiative 65 – month 11 Initiative 66 – month 12 Initiative 67 – month 12 Initiative 68 – month 12 Initiative 69 – month 12

+ 5.00% + 5.50% + 5.00% + 5.75% + 5.00% + 5.00% + 6.00% +10.00% +10.00% +12.50% +15.00% + 5.00% +12.00% + 9.00%

+ 7.00% + 6.75% + 5.75% + 7.48% + 5.50% + 5.50% + 6.30% +12.00% +13.50% +15.00% +16.50% + 5.50% +14.40% +10.35%

1.40 to 1.0 1.25 to 1.0 1.15 to 1.0 1.30 to 1.0 1.10 to 1.0 1.10 to 1.0 1.05 to 1.0 1.20 to 1.0 1.35 to 1.0 1.20 to 1.0 1.10 to 1.0 1.10 to 1.0 1.20 to 1.0 1.15 to 1.0

The above table shows that “at the margin” each of the 14 marketing initiatives offered TMS 5.10.3 from Month 9 through Month 12 yielded greater increases in profit than the increase in cost. The ratio of increased profit over increased cost ranges from a low of 1.05-to-1.00 to a high of 1.40-to-1.00. In Month 9 and into Month 10, Initiatives 56 through 62 were deliberately held in the 5 percent range. While the two first initiatives worked well—yielding ratios of 1.40 and 1.25 to 1.00—and later Initiative 59 turned in ratios of 1.30 to 1.00 respectively, the trend for the next three initiatives lowered to 1.10, 1.10, and 1.05 respectively. At this point the marketing team felt they had to increase the cost to the 10 percent range as the initial benefit of providing discounts and additional comps 54

Global Gaming Business MAY 2013

wore off among the players in TMS 5.10.3. The higher dollars seemed to be a threshold for players in TMS 5.10.3 because increases of 9 percent to 15 percent resulted in increases in profit of 10.35 percent to 16.5 percent or ratios of 1.10 to 1.35 to 1.00. When the marketing team met early in month 13, the overall trend was still showing positive responses of greater than 1.00 to 1.00, and so the marketing team almost unanimously decided they were still in the growth phase, albeit probably somewhere in the late-middle, early-late phase of it. In fact, on this performance metric, TMS 5.10.3 had moved up in marginal contribution from seventh to sixth. Because of the continued accretive results and performance relative to other TMSs, the marketing team decided that TMS 5.10.3 deserved continued support for the next quarter, Month 13 through Month 15. In fact, additional dollars were allocated to TMS 5.10.3. Had the ratio dropped below 1.10 to 1.00, the marketing team probably would have kept spending levels the same for months 13 through 15 unless there was business intelligence or “gut feel” otherwise. Depending upon the status of the other TMSs, access to operating expenses and risk tolerance, another marketing team may have advocated for increased spending levels in Month 13 under the same conditions arguing that TMS 5.10.3 was worth the risk given its importance, and still “bumps” of greater than 1.10-to-1.00 performance. Had the ratio dropped into the 1.05-to-1.00 range, the marketing team would probably continue the levels of expenditure in Month 12 but place TMS 5.10.3 on a “watch list.” If performance in other TMSs warranted, the marketing team The table shows that probably would have taken re“at the margin” each of sources away from TMS the 14 marketing initiatives 5.10.3 and given them to the better-performing TMSs, paroffered TMS 5.10.3 from ticularly if the percentage of Month 9 through Month fair share for TMS 5.10.3 was reaching its forecast maximum 12 yielded greater limit.

increases in profit than the increase in cost.

Squeezing More Value Out Of Marginal Return

The marketing team was applying the same process used in evaluating TMS 5.10.3 to the other 49 TMSs. The marketing team maintained a constant rank order list of the marginal revenue, marginal profit, marginal profit-to-cost ratio and marginal ROIC of each TMS in the optimal TMS mix. To smooth out variances of outlier initiatives, a moving average was employed. The length of the period covered by a moving average depended upon how many initiatives the marketing team was undertaking each period, and the volatility of the results. All markets are different, and markets change over time. Consequently, the oversight process needs to change as well. But, a moving average of two- to four-month periods and/or, say, the last six to 12 initiatives should smooth out outliers under most conditions. Where performance sagged, the marketing team became adept at identifying cause-and-effect. In other words, a drop in marginal performance was perhaps explainable by non-business, temporary reasons, unexpected “hits” that could be overcome, and/or recognition there may be a new normal. For example, bad weather in the TMS’s point of origin prevented travel one month, causing performance to drop for those TMSs affected.

In another instance, a competitor initiated an aggressive cost-driven demand stimulation program aimed at several of the companyâ&#x20AC;&#x2122;s TMSs. The marketing team chose to immediately match the competitor to remove the competitive advantage, and to let the competitor know that anytime they try to â&#x20AC;&#x153;buy the business,â&#x20AC;? the company will match them immediately so there is no benefit doing so. In yet another situation, a new casino opened that changed the ballgame because there were only five casinos in the market. The marketing team had to reset metrics, standards and expectations for what was now a six-casino environment. All attempts to eke out the final potential of a TMS need not be via demand stimulation marketing programs. Indeed, a tweak or reset of a casinoâ&#x20AC;&#x2122;s product or TGE may generate as good if not better results than operating cost-driven demand stimulation programs. If, for example, a restaurant concept has been in the marketplace for more than two years, refreshing the restaurant with a new menu or new â&#x20AC;&#x153;lipstickâ&#x20AC;? (e.g., new paint, carpet and wall coverings) might reinvigorate the TMSs that respond to restaurant offerings. Closing the restaurant and starting with a completely new idea can work as well. This same approach applies to bars, lounges, entertainment, special events, retail, recreation and relaxation activities, not to mention overnight accommodations. Finally, a marketing team should not ignore the soft approach to marketing. There are times where deference must be given to a creative new idea for which

there is no history or experience. Your players may not have even thought about it to determine whether they would like it or not. Better sometimes to try an idea, measure results, fine-tune it if necessary, and then reject it if it fails than to lose a potential marketing idea that just might work Marketing requires the input of more different types of personalities, skills, experience, creativity and innovation than perhaps any other casino activity. This potential must be assembled and then harvested, however, using a management process and tools that do not stifle but rather unleash, stimulate and nurture the marketing effort. Despite the seemingly relentless pressure and insatiable nature of marketing, the theory and approach outlined in this article provide the means to do just that. Conducted correctly, there is perhaps no better place to work in a casino than in marketing. Marketing can, should be, and is business fun. Dean Macomber is president of Macomber International, Inc. With 35 years of diversified experience in the gaming industry ranging from dealer to president, development to operations involving mega-destination resorts to locals-oriented casinos in numerous domestic and international venues, Macomber provides executive-level consulting in the areas of strategic and business planning, feasibility and all other project development phases, and pre- and post-opening management and profit improvement engagements. He can be reached at macomberinc@gmail.com.

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CUTTING EDGE by Frank Legato

Key to Security Product: KeyWatcher Touch System Manufacturer: Morse Watchmans

orse Watchmans has launched a product to help ensure that keys are properly secured when not in use and that access is controlled yet convenient. Called the KeyWatcher Touch System, it is designed as a scalable solution with easy-to-use, time-saving features. Each key stored in the tamper-proof key cabinet is locked into place using the patented SmartKey system, and authorized users can only access keys for which they have been pre-programmed to use. All transactions are automatically recorded in the system SQL database to ensure accountability. An easy-to-use interface with large buttons offers step-by-step instructions, and keys available to a user are displayed on the 7-inch full-color touch screen. The illuminated key slot quickly identifies the requested key, and if not found, the system will locate which KeyWatcher Touch cabinet the specified key is in, or determine who has it out and when it will become available. Reservations and notes can also be entered at the KeyWatcher Touch screen. Keys can be returned to any KeyWatcher Touch cabinet in the system, and random return capability (i.e., return to any key slot in the cabinet) makes the procedure faster and more convenient. Suitable for use in any size or type of facility, the KeyWatcher Touch additionally features USB connectivity and built-in Ethernet for online monitoring. KeyWatcher Touch users can create alerts for specific users, keys or events,

and select exactly who will receive each alert and how (e.g., email or text). Every alert is fully customizable. Additional conveniences include shared database capability and an audio output jack. KeyWatcher Touch also allows full interoperability with other security systems. For more information, visit www.morsewatchmans.com, email morse@morsewatchman.com or call 800-423-8256.

Rating the Pit Product: BRAVO Pit Manufacturer: Genesis Gaming Solutions

enesis Gaming Solutions has launched BRAVO Pit, a complete table game management and player tracking system designed for more efficient player ratings and pit management utilizing electronic data collection. The on-table BRAVO Dealer Unit allows for easy data input including dealer log-in, player or guest check-in and check-out, player buy-in, chipsin, marker buy-in and average bet. With the Pit Watch monitor program, the system also enables dealer tracking, supervisor tracking, marketing tracking, shift roll, table fill, table credit, table inventory and table rundown. Through Pit Watch, players are rated electronically and given credit for play immediately. The patented BRAVO Pit Card and Chip Detection (CCD) System tracks table play using correct hand counts for more accurate player rating and reward calculations. The CCD system comprises technology that features embedded light sensors located under the table felts. These light sensors are designed to read through fabric and can detect where objects such as cards and chips are placed on top of the table felt. When cards are dealt to each betting position or chips are placed in betting spots, the sensors are covered, signaling to the system that a hand is being played at that spot. Through this technology, exact hand count information is available to dramatically improve player-rating accuracy and correctly measure operational metrics. Dealer speed and efficiency can be easily evaluated and

Global Gaming Business MAY 2013

hands-per-hour goals can be set and measured on all game types. In addition, by placing a sensor under any designated betting area, casino management can better track any proposition on a game, enabling more accurate data for costbenefit analysis of a particular side bet. The BRAVO Pit system also gives casinos the ability to market to table players the same way they market to slot players. Customers get credit for play regardless of their wager. Comps are justified and reward points are easily tracked. With the Promotion Watch Software Module, promotions can be set up, tracked and tied into the player tracking history features and drop numbers to analyze the success of each promotion. For more information, visit www.genesisgaming.com.

Call for nominations EMERGING LEADERS OF GAMING Emerging Leaders of Gaming is the industryâ&#x20AC;&#x2122;s only networking group dedicated to young professionals assuming senior level and C-Suite management positions. Membership is by nomination only. Please submit your recommendation along with CV or Bio to: LEADERS@THEINNOVATIONGROUP.COM

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For More Information contact: The Innovation Group Renese Rhoden rrhoden@theinnovationgroup.com www.theinnovationgroup.com

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Australian Report Supports State-Sponsored Online Poker

ould the Australian government offer online gambling as a way to protect its citizens? That’s the conclusion of a new study by the Department of Broadband, Communications and the Digital Economy. In its Review of the Interactive Gambling Act 2001, the agency recommended the implementation of a regulatory framework that includes making online poker tournaments legal as a means of consumer protection. The IGA allows for sports betting and lotteries, but all other forms of internet gambling, including online poker, are prohibited. The DBCDE study concluded that Australians could be at risk because the IGA lacks the necessary mechanisms to control illegal gambling. “IGA may in fact be exacerbating the risk of harm because of the high level of usage by Australians of prohibited services,” the review concluded. The government’s recommended solution to the problem is to establish comprehensive gambling regulations that include online poker but prohibit “higher-risk types of online gambling” such as slot machine games. Senator Stephen Conroy, Minister of the DBCDE, called for “a consistent approach to online gambling regulation across all Australian states and territories.” Conroy outlined a national standard that would set the use of credit for making bets, impose limits on inducements offered by gaming operators and include the mandatory imposition of self-imposed loss limits. Greater enforcement measures against unlicensed operators would also be part of the plan. Until such regulations are in place, Conroy said “the government will not be pursuing the recommended changes relating to the trial of online tournament poker or ‘in-play’ sports wagering.” But not all members of Parliament were behind the plan. Parliament member and gaming opponent Andrew Wilkie believes the very premise of the report is flawed. “The best response is not to liberalize the Australian market, but rather to tighten it up and put in place strategies to deter Australians from accessing the dangerous offshore sites,” Wilkie said. State governments would have to agree on a consistent set of gambling policies before federal regulations could be enacted. 58

Global Gaming Business MAY 2013

New Jersey Poll Sees Spike in Online Gambling Supporters

hough a majority of New Jersey residents oppose online gambling, a new poll by Farleigh Dickinson University shows that the gap is lessening. A PublicMind poll released last month found that 46 percent of respondents were against the state’s new adoption of internet wagering, while 41 percent supported the measure. That is a significant contrast from just two years ago, when 67 percent of respondents said they opposed online gambling. “It’s possible that the growth in support for the practice is a consequence of the legislation’s passage,” said Krista Jenkins, the poll’s director and a professor of political science at Fairleigh Dickinson University. “Voters may be accepting the inevitable, or have acquired new information that brought about a change of heart, given the heightened exposure any new legislation brings with it.” In February, Governor Chris Christie approved a bill that would allow Atlantic City casinos to offer online games through servers based at their properties. The state Division of Gaming Enforcement is currently working on rules and regulations for the activity, with the goal of implementing a workable system by September. Surprisingly, the convenience of online gambling was not the most compelling reason for the registered voters that supported it. Sixty-six percent of those who support online gambling said additional revenue for the state was the main reason they favor it. For those that oppose online gaming, 33 percent believed

that compulsive gambling would hurt families, while 26 percent cited the ease to gamble as a negative factor. As to the question of sports betting, a majority of respondents believed that individual states are better equipped than the federal government to decide if they should be allowed to offer legal sports betting. New Jersey has appealed an injunction to prevent it from establishing a sports betting program at casinos and state racetracks. “Right now, only a handful of states are permitted to allow legalized sports betting, and New Jersey is not one of them,” Jenkins said. “New Jersey voters clearly see this as an example of federal overreach into state sovereignty. In a rare moment of agreement, voters of both parties agree the federal government should stay out of the matter and let New Jersey have its spoils.”

Online in Delaware

ourteen operators and suppliers of online gaming platforms worldwide have responded to a request for proposals from the state of Delaware for contracts to operate online gaming and poker through the state lottery. The Delaware Lottery’s RFP stipulates that suppliers must be capable of going live with online casinos by September. The 14 bids come from some of the most well-known names in online gaming worldwide, including 888 Holdings, PokerStars, Amaya Gaming’s Ongame Network, London-listed Stan James Plc., table game supplier SHFL entertainment, and slot-manufacturing giant International Game Technology. The RFP was very specific that any licensee must be ready to go with a poker or gaming platform by the fall. “All proposed components of the solution must be delivered, installed, implemented, acceptance-tested and ready to be operational by the agreed-upon schedule,” says the RFP. The RFP specifies four major classes of supplier being sought: Backend Technology Platform Provider, which will provide foundation software; Operations Management Provider, experienced online gaming groups that will manage the components of the sites; Game Content Vendors,

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which will “develop and offer games that are found in a typical casino environment;” and Support Services Vendors, to “provide third-party expertise required for a robust and secure internet gaming operation.” Among other conditions, all operators must have at least one year of experience in online gaming operations, offering real-money games in North America or Europe.

888 Wins Gaming License in Nevada

Mattingley said the United Kingdom is now 888’s largest market, representing 43 percent of the company’s overall revenues. In 2012, 888 Holdings collected $376 million in gaming revenues, the largest single-year total in the company’s history. The figure was a 13 percent increase over 2011’s total. Mattingley told the gaming commission the company has no longterm debt.

U.S. States Eager for Foreign Online Compacts

he Nevada Gaming Commission has approved online gaming operator 888 Holdings and the Treasure Island Hotel and Casino for interactive gaming licenses in the state. 888, which owns and operates 888poker outside the United States, will provide the software for Treasure Island’s online poker room when the site is up and running in Nevada. The independent operator will also provide an online poker platform for Caesars Interactive Entertainment and slot machine manufacturer WMS Industries in the Silver State. “888 has chosen Nevada as its first U.S. market, and we are hopeful that future developments will present even greater commercial opportunities for 888’s Nevada-facing business,” CEO Brian Mattingley told commissioners during hearings on the licensure. 888’s licensing agreement with Caesars Interactive Entertainment will see Dragonfish, the business-to-business division of 888, power a selection of Caesars’ online poker brands. 888 and Caesars already operate a real-money World Series of Poker site in Europe. Commissioners in Nevada have already approved 21 companies for interactive gaming licenses, including MGM Resorts International, Fertitta Interactive (Ultimate Gaming), Boyd Gaming and the Golden Nugget. While income from its U.S. dealings could eventually be considerable, the games in Nevada and elsewhere, if interstate games are legalized in the states, would likely not have a significant bottom-line impact until 2015, the company said.

.S. casino operators are looking to play on the world stage when it comes to online gaming. States that are pursuing legalization of internet gambling are looking to join forces with foreign countries to create a global market of regulated jurisdictions, according to report by the Financial Times. These international compacts would greatly increase player pool liquidity, benefiting operators on both sides of the Atlantic. Currently, only three states in the U.S. have approved online gaming legislation—Nevada, Delaware and New Jersey. All are moving forward with plans to implement a working internet gaming system by year’s end, and all three have stipulations in their laws that allow for interstate and international compacts. New Jersey, the largest jurisdiction in terms of population, passed an online gaming bill in February that includes a provision allowing for “compacts with foreign countries.” Nevada was the first state to pass online poker legislation, and recently expanded that measure to include compacts with other U.S. states. Nevada has also recently published a provision allowing for “international compacts” to be added to the law in the current legislative session. Other U.S. states, including Pennsylvania, California, Iowa and Illinois, are also exploring online gaming legislation. A provision in the Illinois bill allows the state “to enter into agreements with other gaming entities, including foreign entities.” Europe remains a lucrative market for online gaming. Compacts between the U.S. and the U.K., which has a regulated online gaming market, would increase the player pool dramatically. The U.K. has 68 million residents, and linking with states in the U.S. would be a significant step to establishing a global online network. Many European companies are eager to reenter the American market after being locked out

by the passage of the Unlawful Internet Gambling Enforcement Act of 2006. The bill put a ban on electronic gambling transactions that effectively prevented foreign-based operators from attracting American players. Additional crackdowns on poker sites last year by the Department of Justice eliminated almost every overseas company from the U.S. online market. Since then, Congress has been unable to ratify online poker legislation on the federal level. The states have taken up the challenge, and are moving rapidly to establish an online presence.

Zynga Launches RealMoney Casino Games in the U.K.

ocial gaming company Zynga has made the leap into real-money casino games. Last month, Zynga launched its “ZyngaPlusPoker” and “ZyngaPlusCasino” to U.K.-based players on the internet and as desktop applications. The company has developed poker and casino-style games through a partnership with bwin.party Digital Entertainment, the world’s largest publicly traded online gambling firm. Zynga, which has applied for a Nevada gaming license, could be preparing itself for the introduction of real-money online gambling in the United States, which is currently approved in only three jurisdictions. With a player base of nearly 300 million, Zynga could emerge as one of the top casino game providers in the U.S. The company is expected to expand beyond the U.K. into other European markets this year. Creators of the popular “FarmVille” and “CityVille” social media games on Facebook, Zynga began concentrating its efforts on casino-style games as its revenue slipped and its player base dwindled. In September 2012, Zynga hired Maytal Olsha, a former senior executive at 888 Holdings, to helm its expansion into the real-money market. Though the details of its partnership with bwin.party have not been disclosed, gaming analysts believe Zynga coveted the company’s U.K. license and its online expertise. ZyngaPlusPoker and ZyngaPlusCasino will allow the company to gauge interest among its core users for online betting on everything from poker to blackjack and roulette. Zynga is expected to announce Facebook and mobile-based versions of the games in the near future.

MAY 2013 www.ggbmagazine.com

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Full Tilt Founder Bitar Strikes a Plea Deal

“Our long term vision is to offer our players the next generation of real-money games on multiple platforms in regulated markets worldwide,” posted Zynga’s Chief Revenue Officer Barry Cottle.

Philippine Online Provider Eyeing Asia

nline gaming in Asia is in its infancy, but one organization has a jump on the others. The Philweb Corp., affiliated with government-owned operator and regulator Philippine Amusement and Gaming Corp. (PAGCOR), has been operating online wagering parlors since 2004. Today, the company operates 277 e-games cafés across the country. Philweb President Dennis Valdes says the company is thriving even with the introduction of two integrated resorts in Manila over the past several years, Resorts World Manila and Solaire, which debuted last month. “We found that the gamers are very different,” he said. “You see in our track records or revenue that there has been no effect on e-games. The reason for that is the Resorts World Manila and Solaire are in a very small section of the entire country, which is the city of Manila and Paranaque, while e-games are in every island.” The demographics of Philweb players are much different than casino gamblers in the country, explains Valdes, with a mostly male market age 25-45. “We are the 7-Eleven of gaming,” Valdes said. “It’s your corner convenience store.” In addition to the Philippines, Valdes says Philweb is considering expansion into other Asian countries. “Asia in general is booming,” he said. “We are looking at Thailand, Myanmar, Palau, Nepal, Sri Lanka and Mongolia as new areas of opportunity.” It is unclear, however, if Philweb plans to enter the online gaming market where players log on from their home computers.

Pro Poker Player Signs on as Ultimate Poker Ambassador

wo-time World Poker Tour champion Antonio Esfandiari has signed a deal with Ultimate Poker to promote its website as a brand ambassador. Esfandiari, known in poker circles as “The Magician,” is the first professional poker player to pro-

Global Gaming Business MAY 2013

Antonio “The Magician” Esfandiari

mote a U.S.-licensed online poker company. Ultimate Poker is owned by Nevada-based Station Casinos, which also owns the Ultimate Fighting Championship brand. While licensed by the state, Ultimate Poker has yet to go live with its website in Nevada, as it awaits approval of its gaming technology. Along with winning two World Poker Tour titles and three World Series of Poker individual championships, Esfandiari is a commentator for ESPN’s coverage of the World Series of Poker. He is No. 1 in all-time tournament poker winnings in the world. He has won more than $23 million playing professional poker. “We’re thrilled to have Antonio Esfandiari represent our company,” said Tom Breitling, chairman of Ultimate Poker. “Antonio is the ultimate champion and modern poker player. He brings the gaming lifestyle to the online arena with his work-hard, play-hard attitude.” Breitling said the company is “working hard” to become one of the first poker websites to go live in the state. According to Brian Balsbaugh, CEO of Poker Royalty, a Las Vegas-based firm that manages the careers of poker players, Ultimate Poker is taking the same marketing strategy that PokerStars and Full Tilt Poker took before being shut out of the U.S. market. “History has proven the one clear way to attract new poker players is through professional endorsement,” Balsbaugh told the Las Vegas Review Journal. “I think we will see that strategy used with success again in the U.S. online poker market.”

ay Bitar, one of the founders of internet poker giant Full Tilt Poker, has struck a plea deal with U.S. authorities in his illegal online gaming case as he awaits a heart transplant. Bitar’s lawyer, John Baughman, confirmed to the Guardian that an agreement has been made with the criminal prosecution pursuing the case. Details of the agreement, including how long Bitar will remain behind bars, have not been disclosed. Full Tilt Poker was one of several foreign-based online gaming operators to be shut down by the U.S. Department of Justice in April 2011. Licensed in Alderney and in the U.K., the company allegedly bilked players out of some $1 billion. Bitar was one of 11 senior company officials to be indicted on five counts relating to money laundering, bank fraud and online gaming offenses. Further investigations alleged that Bitar and his co-conspirators had secretly plundered purportedly ring-fenced customer accounts, where poker players thought they had safely deposited cash and winnings. He Ray Bitar was extradited to the U.S. last July. “Full Tilt was not a legitimate poker company, but a global Ponzi scheme,” said U.S. Attorney Preet Bharara in a previous release about the multiyear case. “Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company.” Full Tilt was formed in 2004 by a group of poker professionals including Howard Lederer, Phil Ivey and Chris Ferguson. Unable to repay its customers, Full Tilt was eventually bought by the Rational Group, which also purchased PokerStars in a plea agreement that saw the U.S. government dismiss with prejudice all civil complaints against the two companies. Criminal charges against the founders remain in place. Bitar, 41, has now abandoned his defense against those criminal charges as he awaits a heart transplant in California. He faced a maximum jail sentence of 65 years. Baughman confirmed that an unusual plea bargain had been struck, which took account of his exceptional health circumstances.

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NEW GAME REVIEW by Frank Legato

Big Africa

Konami Gaming

his is one of the first games on Konami’s new “Podium Goliath” cabinet, a giant version of the company’s workhorse Podium format. The cabinet features dual 32-inch, high-definition LCD monitors, 360-degree attract lighting and an improved sound system. Big Africa is a five-reel, five-line video slot designed for high denominations. (It is also available in a three-line configuration.) In the base game, the diamond symbol is wild, substituting for all but the bonus triggers. The wild symbol appears on the third, fourth and fifth reels. Two or more tree symbols trigger four “re-spin” games. This feature transforms the tree symbol into any one of nine symbols. The transformed symbols will be held on the first two reels during the re-spin games. If a five of a kind is triggered on the line that triggered the re-spin feature, the pay will repeat throughout the remaining re-spin games. During the feature, all pays are on the line that triggered the re-spin feature only. The feature cannot be re-triggered during the feature.

Manufacturer: Konami Gaming Platform: KP3 Format: Five-reel, five-line video slot Denomination: .25, .50, 1.00, 2.00, 5.00 Max Bet: 250 Top Award: 62,500 Hit Frequency: Approximately 25% Theoretical Hold: 4%—18%

Hot Roll Big Time

International Game Technology

his game uses a three-reel, spinning-reel format, but it is a video slot using IGT’s “Multi-Layer Display” technology, or MLD, which uses two layered video monitors to create a very convincing 3D effect. The base game is a 20-line slot with a maximum wager of 200 credits per spin. It offers low volatility, with a hit frequency topping out at 79 percent. The base game features a very popular IGT reel-spinning feature, the multiplying wild symbol. There are 2X and 5X wild symbols—multiplying the payoff in line wins by two or five, respectively. Two like wild symbols on a payline multiply the win by four or 25. A 2X and a 5X will multiply the jackpot by seven. The top portion of the pay table consists of jackpots for various combinations of three wild symbols, topped by

Global Gaming Business MAY 2013

50,000 credits at max coin for a 5X flanked by two 2X wild symbols. The main bonus is a dice game using gesture-control technology. Triggering the “Hot Roll” feature enables an interactive roll of virtual dice. In the bonus, players are able to slide their fingers across virtual dice on the touch screen to roll dice across the top and bottom displays. The dicethrow gesture uses a real-time physics engine to display realistic accelerations and speeds of the virtual dice as they tumble and ricochet around top and bottom displays. Players collect credits based on the accumulated value of the dice on each roll, and continue rolling until “crapping out” with a total of seven on the dice. Hot Roll Big Time Pay Roll can be banked with other Hot Roll games, such as Hot Roll Triple Double Diamond and Hot Roll Super Times Pay. Manufacturer: International Game Technology Platform: AVP Format: Three-reel, 20-line video slot Denomination: .01 Max Bet: 200 Top Award: 5,000 times line bet Hit Frequency: 79% Theoretical Hold: 1.9%—14.5%

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The Great West

American Gaming Systems

his new game on the AGS Roadrunner video platform is a 30-line video slot with minimum bets of either 40 credits or 50 credits (the minimum bet covers the paylines plus a 10-credit ante). The Old West theme is played out in animation during the base-game spins and in several interactive bonus events. The reels are superimposed on the video screen over a Western sunset. There is a seven-level “Rapid Hit” progressive jackpot feature won through a base-game feature. If three to five progressive symbols land on an active payline with a maximum bet, the player selects one of the symbols for a guaranteed win of one of the seven progressive amounts displayed in the top box. If the player wagers less than the maximum and triggers the progressive jackpot, a guaranteed win is still delivered via the “Pick Your Prize” bonus game. Other bonus features are triggered through the “Pick A Revolver” feature. The player is prompted to pick one of five revolvers appearing on a payline to trigger the “Barrel Bonus” or the “Saloon Spins Bonus.” In the Bar-

rel Bonus, the player selects from a field of barrels to reveal credit awards. This bonus includes the “Chain Reaction” feature. Certain barrels explode when touched, and reveal the awards behind several other barrels for a combined credit award. If all the barrels are cleared without revealing a collect symbol, it triggers a secondary “Star Bonus” in which the player selects from three sheriff stars for an additional award. The other bonus is a free-spin event called “Saloon Spins.” When wild symbols land on the reels during the event, they lock in place and remain wild for the rest of the free spins. Manufacturer: American Gaming Systems Platform: Roadrunner Format: Five-reel, 30-line video slot Denomination: .01, .02, .05 Max Bet: 120, 200, 250 Top Award: Progressive; resets $7,500, $12,500 or $15,000 Hit Frequency: 47% Theoretical Hold: 6.59%—13.49%

Hot Shot Progressive Bally Technologies

his game combines a few tried-and-true Bally concepts into a new version of the popular “Hot Shot” concept, in which miniature video versions of classic Bally reel-spinners are used in a progressive bonus event. The game uses the Bally double bonus wheel—a dual-purpose bonus display that spins a wheel with credit awards on top and free games with multipliers on the bottom. The base game is a 40-line version of Triple Blazing 7s, with paying line combinations dominated by single, double and triple seven wins. Among the reel symbols are icons of five different classic Bally reel games—Blazing 7s, Diamond Line, Double Jackpot Triple Blazing 7s, Triple Jackpot Triple Blazing 7s and Blazing 7s 7X Pay. Landing three or more of the classic slot icons triggers the main “Game-in-Game” feature. (This happens every 22 spins, on average.) Each of the slots represented by the triggering symbols then becomes a miniature reel-spinner that spins for a possible credit amount or progressive jackpot. Players can win multiple progressive jackpots by hitting the top line jackpot on more than one of the tiny slots. The top jackpot combinations on the mini-slots yield progressives with reset amounts ranging from 10 credits times the total bet for the Blazing 7s icon to 10,000 credits times the total bet at max coin—4 million credits, or $40,000 in the penny version—for 64

Global Gaming Business MAY 2013

three 7X symbols on the Blazing 7s 7X Pay bonus game. Three matching bonus symbols on a payline trigger the top wheel, which is the credit wheel, for one spin. The credit amounts on the wheel range from 8,000 credits to 400,000 credits. Landing three mixed bonus symbols on the reels triggers the Free Games Wheel Feature. This lower bonus wheel is two-tiered. First, the outer ring spins to award a number of free spins ranging from five to 50. The inner ring then lands on a multiplier from 2X to 5X, which applies to all wins in the free-spin round. The free-spin round can re-trigger within the free spins, up to a total of 100 free games. The game features the “U-Spin” wheel-spinning method—the player can touch the screen and physically spin the wheel, which responds to how much pressure is applied in the spin. Manufacturer: Bally Technologies Platform: Alpha 2 Format: Five-reel, 40-line video slot Denomination: .01—1,000.00 Max Bet: 400 Top Award: 10,000 times total bet Hit Frequency: 51.36% Theoretical Hold: 3.99%—14.59%

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FRANKLY SPEAKING by Frank Legato

Can I Get A Witness?

Global Gaming Business MAY 2013

VIC TOR RINAL DO

just got back from Las Vegas, where I testified as an expert witness in a lawsuit over slot machines. All I had to do was testify as to how slot machines work, but I was still really nervous—my only experience with courtroom drama has been from TV shows and movies. I imagined the opposition’s lawyer grilling me like Perry Mason. “Mr. Legato, are we really expected to believe that you know anything about anything? Who are you trying to fool? You killed Kirk Robin, didn’t you? DIDN’T YOU?” Then, I would crack under the pressure: “Alright, I did it! And Kirk Robin deserved it! I pointed my gun and… Wait, this was about slot machines, right? Never mind what I just said.” I did get to relate some knowledge on the history of slot machines, though. I even mentioned Charles Fey, who invented the three-reel slot machine in 1899. He came up with the basic design of the three-reel slot that exists to this day—a monumental occurrence, considering the fact he was trying to build a toaster. Anyway, the court experience wasn’t scary at all. To my astonishment, there was no packed gallery. No one was leaning on every word I said from the stand about random number generators and probabilities and whether or not you can predict what a slot’s going to do. OK, one guy who opened the door did seem surprised, but I think he was looking for the men’s room. Anyway, the trial behind me, I turned to my usual job of trying to come up with a segue to the next part of my column, a job that handily is taken on by the sentence you are reading. That accomplished, let’s look at the casino news of the day, as summarized in the deadline-day issue of our fine weekly, GGB News. It seems that Australian billionaire James Packer is among those looking at Sri Lanka as the next spot for a destination casino. This item leaves me with one question: Does anyone else think James Packer looks like Robbie Robertson from The Band? I looked at the picture of him in GGBN and started to look around for Levon Helm. That picture was right before the image of Mark Pincus, the CEO of Zynga, which is looking to augment his “FarmVille” social gaming millions with real-money gaming. The Pincus picture just made me feel old and poor. Like Packer, this guy’s a billionaire, but he looks like one of my kids’ friends. Does it sound like I look at the pictures a lot when I read? I do. For instance, I just saw a picture of Full Tilt Poker founder Ray Bitar. He looks a lot like a biker. (He should fit right in when he goes to prison.) I saw another picture of another rich

guy, developer David Cordish, who was presiding over the launch of table games at his Maryland Live! casino. He rolled the first dice, doing a spot-on impression of Steve Lawrence throwing the first bones at Resorts International in 1978. There was other casino news this month that didn’t even need a picture. For instance: • A state senator in Texas is advancing a measure that would create casinos in the Lone Star State, to stop the state from hemorrhaging tax money to Oklahoma. In the Enchanted Land of Governor Rick Perry, the bill has chances of passage similar to the chance that giant purple lizards will eat Las Vegas. • To comply with an order from the National Labor Relations Board, Sands Casino Resort Bethlehem must now negotiate a union contract with its guards. The NLRB rejected all of the casino’s arguments, which included allegations that the union, the Law Enforcement Employees Benevolent Association, was secretly a branch of the United Steelworkers; that the union bullied employees into approving the union; that the NLRB itself had no legal standing because of questionable recess appointments by President Obama; and that the union chief was actually the reincarnated spirit of Attila the Hun. (OK, I made the last one up, but you get the picture.) • The marketers of Atlantic City are ramping up their “Do AC” marketing campaign in Baltimore and other cities, attempting to snatch gamblers back from competing states with the catchy slogan, which only recently replaced the lessthan-successful “For The Love Of God, Please Come Here!” By the way, this was my most effective expert testimony in that lawsuit: “This whole trial is out of order! You can’t handle the truth!” Well, it was something like that, anyway.

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GOODS&SERVICES PAGCOR Defends Move to TITO, Slot System he Philippine TGaming Amusement and Corporation last month issued a statement defending its plan to spend millions to upgrade the slots in its casinos to ticketin/ticket-out operation and to install an electronic slot management system to link all the games. “To date, PAGCOR is perhaps the only casino operator in the world that uses a manual system in the payment of slots winnings to players and in verifying and documenting winnings from its slot machine operations,” the statement said. “This means that PAGCOR has to upgrade its slots operations by installing an electronic slot machine system.” The online slot management system will link 5,083 machines at 18 different casinos and arcades across the Philippines. “The system has several enhanced functionalities, and the TITO component is only a small part of it,” the statement said. “Included in its other functionalities are audit, internal controls, financial accounting and monitoring, patron management, and marketing modules.” PAGCOR will pay P516.6 million (US$12.5 million) for the entire system, including printers costing P147 million (US$3.6 million).

Aristocrat Slots Top Survey

he video slot machine “Buffalo” from Aristocrat Technologies has topped the Goldman Sachs Slot Managers Survey for the second year in a row. The 2013 independent survey of slot managers from across the U.S. also ranked Aristocrat’s “Wicked Winnings II” and “Tarzan Lord of the Jungle” games in the top 10 of all slot games, and Aristocrat’s Oasis 360 was named the most widely used player tracking system for the second year in a row. “We are absolutely thrilled with the results of the independent Goldman Sachs survey,” said Aristocrat Americas President Atul Bali. “Of course, we believe we make the industry’s best games and casino management system, and when slot managers across the United States confirm those beliefs, it is very exciting indeed.” 68

Global Gaming Business MAY 2013

The survey forecast that 2013 will be bright for Aristocrat, with operators indicating they will buy at least the same amount from Aristocrat this year as they did last year because of the high-quality game performance. The survey reads, “Looking at why some slot managers plan to buy more Aristocrat games, ‘performance’ was the No. 1 cited reason at 54 percent, up strongly from 32 percent last year.” In the systems area, Aristocrat was at the top of the list when asked, “Which manufacturer do you plan on switching to?” Aristocrat topped all competitors, cited by 36 percent of respondents. The annual slot manager survey was based on interviews with slot managers from 130 casinos in 26 states. The survey was commissioned by Goldman Sachs and conducted by a third-party market research firm.

GLI’s Barcelona Roundtable Detailed aming Laboratories International and its EuG ropean entity, GLI Europe BV, have released the details of the European Regulators Roundtable, to be held May 13 and 14 in Barcelona, Spain. GLI expects more than 60 regulators from across Western and Eastern Europe to attend. Leading global experts from across the gaming industry have been recruited to lend their insights and expertise on today’s most relevant topics concerning emerging technology and their impact on the modern land-based and i-gaming operations. Land-based topics that will be presented include staying compliant in 2013, barriers to common standards across jurisdictions, ISS and security audits, new game features and potential challenges to current regulations, and ways to ensure proper forensic evaluations. Internet gaming topics include regulating the transformation from “bricks to clicks,” technology migration and the online system, i-gaming change management processes, regulating social gaming, the risks and differences of sports betting and wagering in a live environment, and challenges of testing an i-gaming system. There will also be a legislative outlook for 2013 and beyond, as well as a review of GLI’s exclusive tools for regulators, including the new GLiCloud, an advanced casino inventory management system. The event is presented free of charge for regulators. More information and registration is available at gaminglabs.com.

Cantor Launches ‘Mobile Millions’ antor Gaming has C announced the release of Mobile Millions, its newest casino game from its Cantor Mobile Casino platform, now at Colusa Casino Resort in California. Colusa paLee Amaitis trons can play the game on their mobile devices while they are at the casino by downloading the Cantor Mobile Casino application. Mobile Millions is “a variation on the standard game of roulette with two additional side bets, (which) offers players the chance to become a millionaire,” according to a statement from Cantor. Instead of one roulette wheel, there are five wheels, so each wager gives players five times the likelihood of winning. Available in 25-cent denominations, players have the opportunity to win a progressive jackpot starting at $2.5 million. “We are pleased to announce an exclusive new game for casino game enthusiasts from our popular Cantor Mobile Casino platform,” said Lee M. Amaitis, president and CEO of Cantor Gaming. “We believe Mobile Millions is one of our most exciting, innovative releases, offering players five roulette wheels instead of one, and multiple side bet options, offering high rewards and a multimillion-dollar progressive jackpot.”

NEWave Creates Compliance Training Website supplier and gaming consultant SJosephoftware NEWave announced that it has partnered with Eve Certified Public Accountants, a financial firm serving Indian casinos, to create NWJE University, a website devoted to compliance training. The website (newave.tlnstaging.com/ home) is an online training university that helps casino staff stay on top of the latest compliance issues and maintain adherence to regulatory compliance training requirements. NWJE University’s course content was developed by leading CPAs at Joseph Eve specifically for casino compliance personnel. NWJE University is designed to assure that every department in the casino is trained on compliance issues relating to anti-money laundering as required by varying laws and regulations. The system also conducts tests and automatically sends notifications when retest-

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ing is due. The course content, “Title 31/AML Compliance Training Program,” consists of several modules, including History of Title 31, Suspicious Activity Reporting and Currency Transaction Reporting.

Gaming.” Players unlock more features and additional bet options as they progress through the game during one session, and they can save and reactivate their achieved status during the next play session.

KGM, Spin Games Sign Deal

FutureLogic, IGT Extend Agreement

a PhiladelphiaKcensedGM, based casino supplier lito distribute slots in

rinter supplier FutureLogic, Inc. announced Pogythat it has signed to extend its global technolagreement with leading slot manufacturer In-

the state, announced that it has signed a letter of intent with Reno-based Spin Games LLC, under which KML will license game content and interactive techKent Young nology from Spin Games in anticipation of the spread of online gaming in the U.S. Spin Games is a content company formed by longtime Aristocrat and Aruze Gaming executive Kent Young. The letter of intent provides a definitive agreement for the licensing of game content and interactive technology for regulated markets throughout the United States and Canada. Spin Games will license to KGM a portfolio of interactive content, including slots, bingo, keno, video poker and table games, along with its interactive gaming technology for use within KGM’s licensed regulated interactive markets. The content and technology will be available for both desktop and mobile applications.

ternational Game Technology. According to the agreement, FutureLogic’s peripherals will continue to be the preferred printers in IGT’s current gaming platforms. With operator demand increasing, IGT will be transitioning to the GEN3 Evolution printer in 2013. The award-winning GEN3 Evolution printer has the industry’s largest standard paper capacity, 450 tickets. Also, FutureLogic printers eliminate paper waste by consuming the ticket stack down to the last ticket. The GEN3 Evolution printer is also the fastest printer in gaming, printing and presenting a ticket/coupon in less than one second.

ermany’s Casino Aachen has installed the G modular G4 Organic multi-player automated roulette system from Interblock.

Global Gaming Business MAY 2013

Casino Aachen Chooses Interblock

Caesars Entertainment Earns Three 2013 Gayot Restaurant Recognitions

Spielo Partners With Olympic lot manufacturer Spielo International has partnered with Olympic Entertainment Group, the leading casino operator in Eastern Europe, to install more than 100 gaming machines in Olympic Casino properties in five countries. Trials began in late 2012, and they have been so successful that the casinos have ordered more machines for 2013 installation. The installations were supported by Spielo International’s marketing team, which provided brochures and giveaways to the casinos in Estonia, Latvia, Lithuania, Poland and Slovakia to encourage players to try the new games, as well as technical training for casino staff. Olympic Casino Poland launched the “Hot & Wild” slot machines with hostesses dressed as the popular nurse character from the game. The casinos also are installing Spielo’s 10game multi-game unit. The Olympic Casino in Estonia has installed Egyptian Gold, Spielo International’s first progressive link using “Episodic

lishing in 1981. Of Restaurant Guy Savoy, listed in Gayot’s Top 40 Restaurants in the U.S., Gayot.com said, “Breads are phenomenal as is the cheese and dessert impresses. Service comes close to perfect.” The restaurant is Michelin two-star rated and recently received Forbes Travel Guide’s Five Star Restaurant rating. Gayot stated of Central at Caesars Palace, “The restaurant is located in prime real estate. A lively atmosphere prevails with opportunities for peoplewatching available in the bar, with a view of the lobby and an outdoor patio area overlooking the entryway into Caesars.” Chef Michel Richard’s James Beard award-winning restaurant ranked in Gayot’s Hot 40 Restaurants in the U.S. list. Gordon Ramsay Steak at Paris Las Vegas was named to the list of Top 10 Steakhouses in the U.S. Gayot said, “Starters shine in their own light. We like the tender Kobe-style rib cap. End with the sticky toffee pudding cake with brown sugar-batter ice cream.”

Gordon Ramsay Steak at Paris Las Vegas

aesars Entertainment Las Vegas resort restauC rants recently earned three honors in the prestigious 2013 Annual Gayot Restaurant Issue. Restaurant Guy Savoy at Caesars Palace was named to Gayot’s Top 40 Restaurants in the U.S. list, Central at Caesars Palace made the Hot 40 Restaurants in the U.S. list and Gordon Ramsay Steak at Paris Las Vegas ranked among the Top 10 Steakhouses in the U.S. Launched in 2002, Gayot.com offers rated restaurant reviews by a worldwide team of professional reviewers. The website was created by André Gayot, along with Henri Gault and Christian Millau, who in the early 1970s published Le Nouveau Guide, a French monthly magazine devoted to food and wine. Gayot guides began pub-

The installation, with a total of 18 player stations linked to automated roulette wheels, is the second for Casino Aachen parent WestSpiel, Germany’s largest casino group. WestSpiel’s Casino Hohensyburg in Dortmund installed the G4 system at the beginning of the year, with a total of 30 player stations. “As soon as I saw the Interblock at Casino Hohensyburg, it struck me what an excellent design it has,” commented Thomas Stobberg, slot manager at Casino Aachen. “It has true style, and is so different than the conventional alternatives. It is a real eye-catcher.”

Bally Hunts Talent at Conference lot and system manufacturer Bally Technologies Sers Conference sent its recruiters to the March Game Developin San Francisco with a mission—to

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fill more than 100 new high-tech jobs for the slotmaker. Bally executives, hiring managers and recruiters exhibited at the conference seeking to fill openings for mobile and interactive content developers, programmers, web developers, graphic artists, digital illustrators, motion-graphics artists, 3D animators, mathematicians and other high-tech positions. â&#x20AC;&#x153;As an innovation-driven leader in the casino gaming industry, our thirst for extraordinary talent continues to grow as fast as our business,â&#x20AC;? said Bally Technologies Senior Vice President of Operations and Human Resources Gary Kapral. â&#x20AC;&#x153;With a focus on developing the most entertaining content for casino games, i-games, mobile and social, the Game Developers Conference is a fertile environment for us to showcase our career growth opportunities, competitive benefits, and award-winning innovation to Ballyâ&#x20AC;&#x2122;s future innovators and leaders.â&#x20AC;?

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Leap Forward Receives Nevada Approval

ystem supplier Leap Forward Gaming announced that it has received regulatory approval from the Nevada Gaming Control Board for its SaffariNet Patron Display Interface (PDI) picture-inpicture multimedia ecosystem technology for use in gaming machines and systems, after completing a successful regulatory field trial at the Atlantic Casino Resort Spa in Reno. PDI is a scalable, low-cost, turn-key solution that works seamlessly with all brands and generations of gaming machines and systems to develop, dynamically manage and present content to players. It is a completely customizable system utilizing existing machine displays and supports all screen sizes, resolutions and aspect ratios by utilizing web-based technology. PDI offers targeted marketing and bonusing campaigns, progressives, drink ordering, live keno and straightforward integration with multiple player tracking and CRM systems. As part of the patented SaffariNet ecosystem, PDI agnostically provides operators with high flexibility and agile content production, and implementation utilizing web-based technologies such as HTML5, Silverlight, Flash, etc.

VGT Moving to Reno ennessee Class II supplier Video Game TechnolTIII ogy, in the first move of a bid to move into Class markets, is relocating its game development division to Reno, Nevada, the home of leading slot manufacturer International Game Technology. The move is part of an effort by the company to expand its business beyond Oklahoma, where it accounts for a third of the market for machines in the stateâ&#x20AC;&#x2122;s Indian casinos. MAY 2013 www.ggbmagazine.com

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PEOPLE TRAVEL EXEC TO SUCCEED FAHRENKOPF AT AGA

eoff Freeman, currently the chief operating officer of the U.S. Travel Association, has been chosen to succeed Frank J. Fahrenkopf Jr., the retiring president and CEO of the American Gaming Association. Fahrenkopf, the only Geoff Freeman leader the AGA has had over its 18-year history, will step down in June. Freeman is familiar with Las Vegas and the gaming industry. Las Vegas Convention and Visitors Authority Chairman Rossi Ralenkotter is just wrapping up a two-year term as chairman of the travel association and has worked closely with Freeman. During his time with the travel association, the organization has almost doubled its resources. It has also been instrumental in making travel easier by reducing visa wait times for international travelers, helping to reform the Transportation Security Authority, and improving travel infrastructure across the country. Freeman has frequently testified before Congress as well. A search committee formed by the AGA board and assisted by the firm Korn Ferry identified four candidates, with Freeman getting the nod.

NEW REVEL CEO TO STEER CASINO THROUGH BANKRUPTCY

he New Jersey Casino Control Commission has given Jeffrey Hartmann approval to run the Revel casino as the new interim CEO. The casino veteran takes over for Kevin DeSanctis, who stepped down from the post as part of a Chapter 11 restructuring agreement but will remain with the company. Hartmann takes over at the end of a difficult first year Jeffrey Hartmann for the financially troubled Atlantic City resort. Plagued by steady losses since opening last April, Revel filed for pre-packaged bankruptcy, eliminating about two-thirds of its $1.5 billion debt. In return, lenders will acquire a bigger equity stake in the property. Expectations are high for Hartmann, who now carries the weight of the $2.4 billion casino—perhaps the last luxury resort Atlantic City will see for quite some time—on his shoulders. Hartmann has been working for Revel behind

the scenes for several months through his consulting firm, Hartmann Group LLP. He formed the group after leaving his post as president and CEO of Mohegan Sun in Connecticut after almost two years. Ironically, it was Kevin DeSanctis who first hired him in 1996 as chief financial officer for the Mohegan Tribal Gaming Authority.

LITTLE REAPPOINTED TO NIGC

he National Indian Gaming Commission will continue the path blazed by Chairwoman Tracie Stevens, now that commission member Daniel Little has been nominated for reappointment by President Barrack Obama. A notice published in the Federal Register noted the president’s intention and solicited public comment. “Daniel J. Little worked closely with the Tribal Advisory Committee to review changes to part 543 of the commission’s regulations regarding Class II Dan Little Minimum Internal Controls, which successfully resulted in a final rule issued on September 21, 2012,” the notice stated. “Mr. Little’s accomplishments are invaluable contributions to the commission, and his proposed reappointment seeks to ensure continuity for this good and valuable work.” The three-member panel will operate with only two members for the foreseeable future now that Vice Chairwoman Stefani Corcoran stepped down after her term ended in January. The commission’s bylaws require that at least two of the members be Native Americans and no more than two be members of the same political party. Prior to joining the commission in 2010, Little worked for the Mashantucket Pequot tribe, although he is not a member of any Native American tribe. Stevens, a citizen of the Tulalip Tribes of Washington, hasn’t indicated whether she will seek reappointment when her term expires in June.

MARC SCHORR EXITS WYNN RESORTS

arc Schorr, chief operating officer of Wynn Resorts Ltd., will retire in June, the Las Vegas-based gaming company has announced in a Marc Schorr filing with the Securities and Exchange Commission. Schorr has already stepped down from Wynn Resorts’ board of directors. “On June 1, my great friend and colleague will

retire from Wynn Resorts after an illustrious 33-year career,” Wynn Resorts CEO Steve Wynn said in a statement. “Prior to Wynn Resorts, Marc held many senior executive positions at my former company, Mirage Resorts.” Schorr was president and chief operating officer of both the Mirage and Treasure Island in Las Vegas. Schorr’s exit follows recent departures by former Wynn Las Vegas CEO Marilyn Spiegel and COO Tim Poster. It’s unclear if all the resignations were connected in any way.

DAHL STEPPING DOWN AT MTR

est Virginia-based MTR Gaming announced that Jeffrey Dahl will be resigning his positions as group president and CEO, Jeffrey Dahl and as a member of the operator’s board of directors, to “pursue other business opportunities.” Dahl’s resignation from the board is immediate, but company officials say he will remain as president and CEO until a successor is named. Dahl has headed MTR since January 2011. Before that, he managed Harlow’s Casino Resort in Greenville, Mississippi, through his consulting company.

May 2013 Index of Advertisers Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 American Gaming Systems . . . . . . . . . . . . . . . . . . . .33 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Bally Technologies . . . . . . . . . . . . . . . . . . . . . . . . .2, 49 BMM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Cantor Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . . .75 Casino City Press . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Casino Design magazine . . . . . . . . . . . . . . . . . . . . . .69 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 FutureLogic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63, 67 GGB Subscriptions . . . . . . . . . . . . . . . . . . . . . . . . . . .72 iGamix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Innovation Group . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 JBA Consulting Engineers . . . . . . . . . . . . . . . . . . . . .15 Konami Gaming . . . . . . . . . . . . . . . . . . . .9, Back Cover Lifescapes International . . . . . . . . . . . . . . . . . . . . . . .51 LT Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Multimedia Games . . . . . . . . . . . . . . . . . . . . . . . . . . .21 NEWave . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Rymax Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Spielo International . . . . . . . . . . . . . . . . . . . . . . . . . .27

MAY 2013 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Paul Steelman

aul Steelman is one of the most visible architects in the casino industry. He learned under Steve Wynn and has been responsible for many of the most striking building designs in the casino business. His success in Asia paid dividends recently when officials of Genting bhd used his Las Vegas offices to announce the development of Resorts World Las Vegas, which will be built on Boyd Gaming’s site of the former Echelon project. He spoke with GGB Publisher Roger Gros at his offices in Las Vegas in March. To hear a podcast of the full interview, visit www.ggbnews/podcasts. GGB: Tell us about the new Resorts World Las Vegas that was recently announced at your offices by Genting executives, including Chairman K.T. Lim, and Nevada Governor Brian Sandoval. Steelman: It’s a very sophisticated design. We’re going to use the footprint that was designed by Bob Boughner and Boyd Gaming more than five years ago to save time, but also wanted to be sure that we can create a competitive product for today’s market. We’re going back to a themed resort, going back to paying homage to the pedestrian and suburban elements of Las Vegas Boulevard, and will be able to create the elements that Genting wanted to include in the property. The tower is well-designed and curved, as the great towers in Las Vegas are today. There are already 2.2 million square feet under construction, as well as a typical great Las Vegas parking garage. The theater is a beautiful theater designed in the spirit of the great classical theaters, and the convention center is in the right spot. It’s our intention to re-start construction as soon as possible, certainly by the 2014 date set by Genting. It will include a series of must-see, must-participate-in 500-year-old attractions like the Great Wall of China and the Terra Cotta warriors, in addition to an indoor water park. You’ve had remarkable success in Asia, starting with the design of Sands Macao as the first Western-style casino to open there. What is it that attracted you to Asia?

Global Gaming Business MAY 2013

President, Steelman Partners

Our first Asian projects were for Hyatt back in the early ’90s in Manila. PAGCOR was looking to upgrade their casinos, and we were invited to bid. That was the same trip I went to Macau for the first time. I went to the Lisboa, with the smoke and the crowds, and just said, “Wow!” It was an incredible experience. I was fortunate enough to be awarded the project to build Sands Macao. The government wanted Las Vegas resorts, so I think that was why I got the job. Still, I wasn’t trying to import Las Vegas at that property. I had significantly studied the gambling and culinary habits of the Asian customers and came up with a different solution. We built it for $181 million from design through construction and opened on Labor Day weekend, less than 600 days start to finish. Our success in Asia can be credited to three things. We know the market, we understand gambling and we also understand the role architecture plays in the gambling experience. We understand the player and how they want to be treated. It’s pretty obvious now that every Asian country can have a successful casino industry. Remember, in the U.S. there are something like 9,000 places you can make a bet. In Asia, there are still under 100. And there are a lot more people in Asia than there are in America.

“

building one very large Singapore-style resort, they may consider four or five smaller resorts that would combine to form a bigger destination resort. It just made it easier, because of the capitalization requirements, etc. Vietnam is a gorgeous country. It has over 900 miles of shoreline. It has some of the most remarkable ecological architecture. And of course, it’s close to China and Thailand. It’s a vacation mecca and very inexpensive. When I took many people, they all remarked about the beauty. There are some drawbacks, of course. That 70-mile drive from Ho Chi Minh City to Ho Tram was bad when we first got there, but it’s getting better. We thought Vietnam has a triple-threat appeal. Vegas excitement, a beach and right next to an amazing jungle where you can have great adventures. It’s a beautiful building that was built for a very reasonable amount of money. I’m certain it will be a success, particularly with the junket business.

Our success in Asia can be credited to three things. We know the market, we understand gambling and we also understand the role architecture plays in the gambling experience. We understand the player and how they want to be treated.

You’ve been working in Vietnam for years, and it’s not just design. You helped educate officials there on what gaming is all about and how it is regulated. Tell us about that process. We were contacted very early on by a group of Canadian developers, who were interested in buying a very large plot of land in Vietnam. That was nine years ago. We started design and we convinced the Canadian developers that instead of

’’

You have been retained by the Meruelo Group to redesign Trump Plaza in Atlantic City, your hometown. Do you think Atlantic City can come back? The Boardwalk is one of the greatest pedestrian attractions in the world, but people turned their back on it. It got worse as the casinos got richer. But now, Atlantic City has to go back to being the “Queen of the Naughty Resorts,” so to speak. And that’s reflected in the master plan that Jerde did a couple of years ago. And I truly believe that every casino owner, the CRDA and the governor should be focused on completing that master plan. And the biggest point of that plan is to make Atlantic City a “T”—that is, the Boardwalk connecting to the Walk Outlet Mall—and getting that coordinated. Bringing the piers back is important, as well. But I think it can come back if they concentrate on those elements.

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