Global Gaming Business, April 2015 by Global Gaming Business

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GGB Global Gaming Business Magazine

WASHINGTON STATE COMPACT CREATIVE KIOSKS LYLE BERMAN LOOKS BACK AU REVOIR RIVIERA

april 2015 • Vol. 14 • no. 4 • $10

Seneca SurpriSe new York tribal gaming giant prepares for competition

Battle Royal Operators, slot-makers debate rising slot hold

Official Publication of the American Gaming Association

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CONTENTS

Vol. 14 • No. 4

april

Global Gaming Business Magazine

COLUMNS

26 COVER STORY The Seneca Story The Seneca Nation of Indians seeks to build on its western New York casino empire and its reputation as a model tribal gaming operator benefiting an 8,000-member sovereign nation with a stellar new Buffalo property. By Marjorie Preston

14 AGA Good Gaming Careers Geoff Freeman

16 Fantini’s Finance Throwing Up the Stop Sign Frank Fantini

Buffalo Creek Casino

Cover image: Seneca Niagara Hotel overlooks the famous falls

The debate between the slot operations and slot manufacturing sectors continues as manufacturers study whether rising slot hold is hurting the slot experience. By Frank Legato

32 Washington Win Washington gaming tribes won amendments to tribal-state gaming compacts that will allow expansion of casino and non-gaming attractions. By Dave Palermo

50 One-Stop Cash Casino kiosks have grown from separate ATMs and promotional machines to integrated, all-in-one cash access and marketing tools. By Dave Bontempo

Sarah Jackson

DEPARTMENTS

FEATURES

18 Hold vs. Income

64 Global Gaming Women The Value of Mentor Relationships

GGB iGames Our monthly section highlighting and analyzing the emerging internet gaming markets. Feature 38 Protecting iGaming Internet gaming sites are safer in their protections against underage and problem gambling than their land-based counterparts. By Marco Valerio

iGNA Outlook 44 Making the Connection, Pt. 2 Paul Girvan

46 iGames News Roundup

4 The Agenda 6 Dateline

12 Nutshell 54 New Game Review 58 Frankly Speaking 60 Cutting Edge 62 Emerging Leaders With MGM Resorts’ Chris Sherlock, Inspired Gaming’s Lucy Buckley and Little River Casino’s Israel Stone

66 Goods & Services 69 People 70 Casino Communications With Lyle Berman, Chairman & CEO, Lakes Entertainment

APRIL 2015 www.ggbmagazine.com

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THE AGENDA

The Price is Right

Vol. 14 • No. 4 • April 2015 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

ast month, I was on the Las Vegas Strip and had dinner at one of the high-end casinos in one of its fine-dining restaurants. And I have to say I was blown away. Easily one of the five best meals I’ve ever had in my life. Lots of different kinds of meat, seafood and vegetables, all cooked to perfection with unbelievable flavor. A very nice bottle of pinot noir chosen by the sommelier. And the best part? Since I was dining with the property president, I didn’t have to pay. And thank goodness I didn’t. While I wasn’t being nosy, I caught a glimpse of a bill that approached $400 (for two). As good as that meal was, as skillfully prepared, and served with superior knowledge and care, I wouldn’t pay that much for any meal. I just don’t have that kind of disposable income, and I don’t think I’m alone in that. Pricing has become quite an issue in the casino business. We’ve been hearing the drumbeat of “non-gaming revenue” for so many years, I think we’re becoming immune to the prices people are willing to pay for our food, beverage, entertainment, and yes, even our games. A few weeks earlier, at the other end of the Strip, I was sitting at a bar at one of the lowerend casinos. I ordered a mixed well drink and my wife had a glass of the house red. The bill came to $35. Now, I wasn’t sitting in the Umbrella Bar at Wynn or even the center bar at the Hard Rock. This was a nondescript watering hole on the casino floor of one of the dormitory hotels that dot the Strip. This one doesn’t even have a nightclub, so you can understand it wasn’t the top of the line. So I was somewhat taken aback by the high price tag. The same thing happens to me when I’m traveling to casinos outside of Las Vegas. Very rarely am I able to find a place that features reasonably priced food and drinks, combined with a good gaming experience. With people gambling less these days across the board, are we chasing them out of our buildings by making them pay double what they might pay in their neighborhood bar? People certainly

Global Gaming Business APRIL 2015

expect to pay more in a casino, but double? We need to think about that. Now, I understand that some casinos can get away with high prices. I went to see the new revue ShowStoppers at Wynn Las Vegas last month. Steve was very proud about envisioning and inspiring the great performances that make this show so special. It’s truly a unique show and well worth the $150 for the better seats (tickets start at $100). People who go to Wynn expect to pay top dollar, but they expect a lot for it, and generally get it. But other casinos are less sure of who and what they are. And the only way you can be sure is to analyze your market and who you can reasonably expect to attract. Remember, price points can be competitive advantages. Great food at reasonable prices, extended happy hours, discount entertainment tickets for your marginal customers… all these things can set you apart from your competition. And if you’ve read Editor Frank Legato’s story about slot hold percentages and the gambling experience on page 18, you already know that there is a great debate about how much you can return to the player on the casino floor. Myself? I fall into the category of giving the player as much as you can, combining it with great service, reasonable prices for non-gaming amenities, and an understanding that loyalty is earned, not automatically granted. In the end, you have to decide how to use price points. Are you going to grab as much revenue for the longest amount of time, or are you going to offer your customers the best price on everything you have to offer, gaming or non-gaming? Is the quality of service and knowledge worth the premium you’re placing on products? This is one of those issues that is particular to each individual property, even if your parent company is a multinational gaming conglomerate. Each market is different and each and every decision is critical.

David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Frank Fantini | Geoff Freeman Paul Girvan | Sarah Jackson Contributing Editors Stephanie Adkison | Dave Bontempo Jennifer Day | Joe Dimino | Dave Palermo Marjorie Preston | Robert Rossiello

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

• Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Director, Maryland Lottery and Gaming Control Agency

• 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. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2015 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014

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DATELINE ASIA april2015

Down But not out Japan’s Diet still looking at casinos

f and when casinos are legalized in Japan, the cities of Osaka and Yokohama may be the first to host a resort with gaming, according to the Japan Times. But experts say the country’s first casino is unlikely to open before 2020. More than 20 municipalities have expressed interest in developing integrated resorts, which would be anchored by casino hotels and fleshed out with theme parks, convention centers, shopping malls and concert venues. The island of Yumeshima in Osaka Bay is one possible location. Osaka Governor

Osaka Governor Ichiro Matsui

Ichiro Matsui says the prefecture wants to open a casino in the next five years if possible, in time for the 2020 Tokyo Olympics. “The Olympics will bring lots of people around the world to Japan, and, along with an integrated resort, all of Osaka wants to have something for them,” Matsui said. Yokohama Mayor Fumiko Hayashi has allocated funds for IR-related research. A 50-hectare (123-acre) plot of land next to Yamashita Park is the optimal location, the Times reported. But Takashi Kiso, CEO of the Tokyo-based International Casino Institute, says it will may be impossible for local governments to develop and open any resorts before the summer games. “The only way an IR will open (by 2020) is if the government allows it to partially open before the Olympic games,” he said.

Half Off in Macau Some analysts foresee change in second half of 2015

VLADIVOSTOK ‘HEIR TO MACAU?’

Low taxes, higher junket commissions

acau enjoyed record-breaking visitation during the Lunar New Year holiday in February, with an estimated 800,000 visitors crowding its borders and airports. Yet the gaming industry’s historic decline has only deepened. Year-on-year gross gaming revenues dropped a startling 48.6 percent to 19.54 billion patacas (US$2.4 billion) for February, the ninth straight month of decline in the world’s leading gaming destination. Accumulated gross revenue for the year so far is 43.29 billion patacas (US$5.41 billion), down more than 35 percent from the 66.74 billion patacas (US$8.35 billion) generated during the same period last year. The drop was not as sharp as some expected, however; eight analysts surveyed by Bloomberg News had predicted revenues could fall off as much as 54 percent. Macau’s unprecedented slump began last summer when the government of Chinese President Xi Jinping started cracking down on graft and money laundering. The high-profile campaign scared off high rollers who once were responsible for up to 60 percent of gross gaming revenue in the city. The slide continued as China enacted new restrictions on visas and smoking, measures that discouraged mass-market gamblers. To make matters worse, mainstream tourists are spending less, to the detriment of the city’s restaurants, retail malls and hotels. Shopping by Chinese tourists dropped 32.8 percent to 1,079 patacas in the fourth quarter of 2014, according to data reported by Bloomberg. Hotel occupancy during Golden Week fell 6.9 percent and average room rates declined 15.4 percent, said the Macau Government Tourist Office. According to the Macau Daily Times, the slump is expected to continue. “The Chinese government is determined to pursue its anti-corruption drive,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, “and that’s negative on the casino stocks.” But some observers believe the industry in Macau will start to rebound in the third and fourth quarters. “There is a good case for a recovery later in the year,” said Tim Craighead, a Bloomberg Intelligence analyst in Hong Kong. “The launch of new resorts that attract mass-market gamblers, and easier comparisons” from the year-earlier period would also ease the pain.

Global Gaming Business APRIL 2015

casino resort zone now under development in Russia near its borders with China and North Korea hopes to reap a bonanza by attracting displaced Macau high Muravyinaya Bay near Vladivostok rollers. Muravyinaya Bay, some 70 kilometers (43 miles) from Vladivostok and less than five hours from Macau, is being touted as an elite tourist destination with five resorts including luxury hotels, ski resorts, golf courses, a yacht club and high-end retail, according to Casinorelease.com. Altogether, the resorts will have 5,000 to 7,000 disposable hotel rooms, with 1,200 tables and over 5,000 slots in a gambling area spread across 620 acres. The first resort to open in the Primorye gambling zone is being developed by Lawrence Ho’s First Gambling Company; its grand opening, postponed from last September, is now set for April. The target demographic is 300 million people from China, Korea and Japan, and the government is making it easy on operators with tax incentives. Russia reportedly charges just 1 percent of gross gaming revenue per gambling unit, including both slots and gaming tables. After that, the commission is fixed. The government also allows 1.7 percent payouts to junket operators, compared to Macau’s 1.25 percent. Among the investors are the First Gambling Company of the East, owned by Lawrence Ho, along with Cambodian NagaCorp. and Russian Diamond Fortune Holdings Prime. It is “Vladivostok’s legacy as San Francisco of the East that qualifies this eastern Russian capital as the true heir of Macau,” reported Casinorelease.com. “Therefore, the current €1.8 billion (US$2 trillion) investments represent only a stepping stone in what might turn a new global gambling destination.”

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DATELINE TRIBAL april2015 The Little River Band’s $180 million off-reservation casino in Muskegon County, Michigan

RacetRack to tRibal GaminG Michigan’s Little River Band bids for off-reservation casino

he Little River Band of Ottawa Indians recently filed a five-inches-thick application at the Bureau of Indian Affairs’ regional office in Minneapolis to have a 60-acre tract at the former Great Lakes Downs racetrack taken into trust for a proposed $180 million off-reservation casino and retail development in Fruitport Township, Michigan. Tribal officials said the project would create more than 1,200 new jobs in Muskegon County. Little River Band Tribal Ogema Larry Romanelli said, “For the past seven years, we have worked with the Muskegon region to bring viable economic development to both of our communities. This project would jump-start the local economy and help provide support for expanded tribal government services for our tribal members.” The tribe currently operates Manistee’s Little River Casino Resort in Manis-

tee, which it opened in 1999. Since then, more than 20 other Michigan tribes have opened or expanded their gaming operations, which has caused the Little River Band’s income to drop, tribal leaders said. Romanelli said the application will be reviewed by the Department of the Interior and if it meets all the requirements, the department will publish a notice of intent to take the land into trust. Romanelli said he hopes that will occur this spring. The Great Lakes Downs racetrack in Fruitport opened in 1999 and closed in 2007. The tribe bought the property in 2008. The proposed casino project would include 69,000 square feet of gaming space, 1,700 slot machines, 35 table games, a 220-room hotel, conference and meeting rooms and dining and entertainment areas.

CAROLINA

Construction Hotel or No Hotel? Tampa’s Seminole Hard Rock considers expansion

he Seminole Hard Rock Hotel & Casino, the fourth-largest casino in the nation, has proposed building the second-largest hotel in Hillsborough County, Florida at its Tampa casino location—a 1.2 million-square-foot, 16-floor tower with 537 rooms. The Tampa Marriott Waterside Hotel & Marina is the largest downtown Tampa hotel with 27 floors and 719 rooms. Seminole Tribe spokesman Gary Bitner said, “It’s still very early in the process and no formal approval has been given by the tribal council of the Seminole Tribe of Florida. It would certainly be wonderful to come out and say this is going to be a great thing for Tampa Bay, and maybe it will be at some point, but it’s too early to get on that bandwagon.” Upon completion of the proposed hotel, the second hotel to be built at the Hard Rock complex, the facility would have a total of 817 rooms. The project also would increase gaming space at the most lucrative of the Seminole Tribe’s seven Florida casinos. Bitner said the tribe had not decided whether it will pursue other proposed amenities that were proposed when the Tampa Bay area and the country were deep in recession.

Cherokee casino set for summer opening he Eastern Band of Cherokee The $110 million Cherokee Valley River Casino Indians’ $110 million Cherokee Valley River Casino near Murphy, work, when deliveries are going to be made.” North Carolina is on track to open in August or Rose said recruiting and hiring the 900 employSeptember, said Tribal Casino Gaming Enterprise ees needed for the operation will begin in April. “We Chairman Ray Rose. “Hotel and casino structures know that Cherokee County has one of the highest are up. Framing is done, but now we’re at the unemployment rates in the state, so we’re hoping we point of interior heating, air, sprinklers, all that can draw on that, including some tribal membership stuff. It won’t be long until everything is in the walls and inspected and wall finishing is going on.” down there,” he said. The Cherokee Valley River Casino, the second Road and infrastructure development surpartnership between the Eastern Band and Caesars rounding the casino and hotel also are moving forEntertainment, will feature 108,000 square feet of ward. Brian Burch, Department of Transportation gaming with 1,200 slots and 75 table games, plus a construction engineer, said, “We’ve had monthly meetings since these projects were started where we 300-room hotel. The tribe owns Harrah’s Cherokee meet and discuss the coordination effort, whatever’s Casino in Cherokee at the edge of the Great Smoky coming on each of the projects, scheduling times to Mountains National Park.

UNSTOPPABLE Arizona tribal casino rising near Glendale

espite opposition from the town, Congress and other tribes, the steel skeleton of the Tohono O’odham Nation’s $400 million West Valley casino has started to rise near Glendale, Arizona. A temporary casino, with 1,089 slots, is scheduled to open later this year while construction continues on the permanent structure. Tohono Gaming Enterprise CEO Andy Asselin

issued a statement commenting on the progress that has been made. “It is great to see dozens of companies and more than 1,300 construction workers coming together to get this fantastic new attraction up and running,” he said. The casino is expected to generate at least $300 million in revenue annually. The casino project is near the University of Phoenix stadium.

APRIL 2015 www.ggbmagazine.com

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DATELINE USA april2015 Lady Luck Casino at Nemacolin Woodlands

Rock on!

Not So Lucky

Caesars sells Ohio interests to Rock Gaming

aesars Entertainment last month sold its 20 percent interest in its Ohio casinos to the majority owner, Rock Ohio Ventures, controlled by Dan Gilbert, the founder of Quicken Loans and the owner of the NBA’s Cleveland Cavaliers. The deal gives Rock Ohio Ventures 100 percent ownership of Horseshoe Cincinnati, the Horseshoe Cleveland and Higbee Building, the Ritz-Carlton in

Cleveland and ThistleDown Racino in suburban Cleveland. Rock Ohio also will acquire controlling interest in Turfway Park raceway in Kentucky. Caesars will continue to manage the two Horseshoe casinos and Thistledown Racino, with full access to the company’s Total Rewards loyalty system. The press release did not reveal a sale price, and Caesars has not yet filed SEC documents related to it. “We will continue to provide the same highquality experience and service guests have come to expect and remain committed to our casino investments and the communities where we operate,” Rock Gaming CEO Matt Cullen said in a statement. Caesars and Rock Ohio Ventures are also partners in the Horseshoe casino in Baltimore, which was not part of this transaction. The deal was part of the bankruptcy proceedings started by Caesars Entertainment in January.

End of a Rivi-Era

Legendary casino sold to Las Vegas convention group

fter an announcement last month by the Las Vegas Convention and Visitors Authority, it’s official: the Riviera will be no more. A deal has been approved for the purchase of the iconic, classic casino for $182.5 million, and another $8.5 million for legal and miscellaneous expenses. The casino will close in May, after celebrating 60 years of operations. Built in 1955, the Riviera was one of six casinos to open in Las Vegas that year. It only took three months for the original Miami-based owners to go belly up, after getting into the casino business with no prior experience. At the grand opening of the casino, guests were greeted by official hostess Joan Crawford, and dazzled by the awe-inspiring, larger-than-life Liberace, who was paid an at-the-time mind-blowing $50,000 per week. Early owners of the property included Harpo and Gummo Marx, and even Dean Martin had a piece of the property while he performed there. However, those days are long gone. The oncerevered Las Vegas icon, in and out of bankruptcy three times during its run, has seen the mystique and 8

Global Gaming Business APRIL 2015

romance of the casino itself fade, and struggled to find its identity after the Strip became what it is now, the land of the mega-resorts. With no celebrity chefs, high-end gaming, nightclubs or other amenities most tourists associate with casino resorts on the Strip, the property will now follow in the footsteps of many from the past, left in the dust to make way for new Las Vegas. After years of struggling to turn a profit, the managers of the casino turned to Paragon Gaming in June 2013, and included major shake-ups, including the firing of then-CEO Andy Choy. Paragon is headed by Diana Bennett, daughter of Las Vegas legend William Bennett, who owned Circus Circus starting in 1974, and was a founder of what eventually became the Mandalay Resort Group, bought by

Pennsylvania casino for sale sle of Capri Casinos is reportedly seeking potential buyers for its co-owned Lady Luck Casino at Nemacolin Woodlands, one of two resort-class casinos in Pennsylvania. The casino, opened in July 2013 at the five-star Nemacolin Woodlands Resort in western Pennsylvania’s Fayette County, is coowned with the Hardy family, Nemacolin’s owners and owner of Pennsylvania’s 84 Lumber. Isle of Capri built the casino in an existing building at the resort, and operates it under a 30-year lease with Nemacolin. The lease consists of an initial 10-year term with four renewals of five years. Isle of Capri distributed a note to investors advising that the company is exploring a sale of the rights to the “operating assets, customer list and rights to manage and operate the Lady Luck Casino.” Lady Luck had flat results initially, laying off 70 of its initial 450 employees within two months after its 2013 opening. As a Category 3 resort casino, access is restricted to hotel guests, or customers who spend at least $10 on a resort gift card or buy an annual $45 pass. It is the state’s smallest casino. Results, however, have improved since the initial flat period. Month-on-month revenues have increased every month since July 2014, and Isle reported $40.2 million in gross gaming revenue for the last fiscal year.

MGM Resorts in 2001. Bennett also owned the Sahara until his death in 2002. The LVCVA has a plan in place for a $2.3 billion upgrade to the outdated Las Vegas Convention Center. The plan will be for what will be called the Global Business District, and it will not just be massive, even for Vegas standards, but will feature cutting-edge technology, and take the convention experience to the 21st century. Jim Murren, MGM Resorts International chairman and LVCVA board member, fully supports the transaction, which would increase the allure of Las Vegas to the meetings and convention business. “I love this deal because it will create an attractive corridor from the Strip to the Convention Center,” Murren said.

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DATELINE GLOBALapril2015 The beach at Acapulco

MoveMent in Mexico Resort areas get OK to consider casinos

he president of Mexico’s Tourism Commission says a newly established gaming board will have the final word on the location of proposed new mega-resorts. Because investors must spend a minimum of US$15 million, “for the first time gaming will become a real attraction,” Agustin Barrios Gomez said. According to sources, the country hopes to draw international travelers who want to gamble but are reluctant to patronize casinos in urban areas, many of which have been ravaged by the war between police and rampant drug cartels. Since the height of the conflict in 2006, the country’s war on drugs has contributed to more than 106,000 deaths and caused a steep decline in tourism. The U.S. State Department, for example, has warned travelers about the perils of visiting

“casinos, sports books or other gambling establishments and adult entertainment establishments” south of the border. With the drug war now largely contained and tourism on the rebound, the Mexican government hopes to build a new, safe and vibrant integrated resort industry. As part of the legislation, law enforcement would also curb illegal operations. The Association of Gaming Equipment Manufacturers estimates that 15 percent of current electronic gaming machines operate without an approved license. The legislation will also increase the minimum gambling age from 18 to 21, and work to combat money laundering. According to Mexidata.com, the new bill is expected to get some pushback from neighborhood grocery stores and other businesses that offer forms

Gambia Bans Gambling Games called “exploitative”

ambian President Yahya Jammeh has announced an official ban on all gambling in the West African nation, and ordered all forms of wagering to stop immediately. In a release from his office, Jammeh said the government “has banned lotteries, casinos and all forms of gambling in the Gambia” effective March 2. “All operators of these services and establishments are hereby instructed to cease operations from the effective date.” Gambian President Yahya Jammeh The action will affect gaming halls, casinos and sports betting shops in tourist resorts and the capital of Banjul, reported Agence France Presse. The government has slammed the gaming industry as “exploitative” and says the prohibition will protect the nation’s youth from becoming “a generation of compulsive and addicted gamblers. “Gambian society has been built on the foundations of promoting positive social values like thrift and integrity rather than negative ones like greed and avarice,” said the statement. “Therefore, it is the duty of the Gambia government to safeguard and promote the public welfare of our citizens.” Supporters of gaming have promoted it as a way to raise tax revenues. Jammeh replied, “It is clearly evident that these vices often hurt those who are poor and disadvantaged. The social and economic costs are enormous, and show up in the shattered lives of individuals and their families. Gambians are predominantly followers of Islam and Christianity, and both religions explicitly or implicitly strictly forbid adherents from engaging in gambling.” An unnamed Banjul lawyer told AFP that religion is not a legal basis for shutting down gaming venues, many located in the resort community’s Senegambia strip. “This decision is illegal and should be rescinded by the executive,” he said. Gambia attracts an estimated 50,000 annual visitors from Britain alone, AFP reported. But it has been “run with an iron fist” since Jammeh took power in 1994.

of gaming to local patrons. Marcela Gonzalez Salas, director of gaming regulation for the Mexican Interior Ministry, says many of the gaming machines, called “tragamonedas,” are illegal and will be eliminated. But it will take time; Gonzalez estimated that up to 120,000 unregulated machines could be in use. The National Union of Gaming Machine Operators, known as Unama, says the number of illegal machines could be even higher. The organization estimates that up to 700,000 venues could now offer illegal games. Unama says some of these street-corner businesses could be using the money to fund “criminal activities.”

Casinos in Mongolia? Travelers don’t require visas

he government of Mongolia was expected to vote last month on draft legislation to permit development of two casino resorts. The proposed resorts are already in the initial stages of planning. One would be located at Khushigt International Airport, now under construction. That property would cater to Asian gamblers, especially Chinese players who are avoiding casinos in Macau. An unnamed legislator said the resorts would attract Chinese, Japanese and Russian people, who are “some of the biggest gamblers in the world. Japan and Russia already don’t need visas for Mongolia, and Chinese with official passports don’t either.” Reuters reports the move is an effort to jump-start a flagging economy and add new industry in a country that depends on mining for about one-third of government revenues; Mongolia sits on significant reservoirs of gold, copper and coal. A number of countries across Asia are building largescale casino resorts to lure the region’s high rollers, including those from mainland China. Mongolia’s draft bill includes restrictions that would keep Mongolians from playing at the casinos. Parliament Building in Mongolia’s capital

Global Gaming Business APRIIL 2015

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DATELINE EUROPEapril2015

Scottish Labour Party leader Jim Murphy

LiMiting ProfitS or troubLe? Half of wagers placed by lower-income Scots P

unters in Scotland bet more than £4 billion (US$6.1 billion) on fixed-odds betting terminals last year, reported the Sunday Mail, including £2 billion wagered in low-income areas. Now, Scottish lawmaker Jim Murphy is calling for a dramatic cut in maximum stakes on the machines, from £100 per spin to just £2, according to the Scottish Daily Record. “I find it completely unacceptable that people can lose an entire week’s wages in a few minutes with these machines,” Murphy said. “Of course people can lose the same amount on the horses or dogs in a bookie’s, but these machines lure people in and hook them on a habit that is becoming so destructive.” Adrian Parkinson of the Campaign for Fairer Gambling hailed Murphy’s hard-line stance. “Finally a political leader has taken the bull by the horns and has recognized the only effective way to protect communities from these machines is to cut the stake to £2 a spin,” he said. “Scotland can’t let these addictive high-speed gaming machines continue to overrun our high streets. Westminster parties should take note of Scottish Labour’s decision.” Not surprisingly, Peter Craske, spokesman for the Association of British Bookmakers, has a different take on the controversy. “Betting shop operators put

Closing Up Shop Ladbrokes to shutter more than 100 locations adbrokes Plc., which runs thousands of betting shops in the U.K., has announced it will close up to 150 betting shops due to a hike in the tax rate. The shutdowns will reduce the company’s retail betting portfolio to 2,150 shops, reported the Financial Times. In 2014, William Hill closed 100 shops in the U.K., and Gala Coral closed 25. A change in regulatory requirements for U.K. highstreet bookmakers raised the duty on machine games from 20 percent to 25 percent as of March 1. The big three bookmakers in the U.K. have come under fire over the increase in betting shops and the rise of fixed-odds betting terminals, sometimes called “the crack cocaine of betting.” FOBTs rake in £1.6 billion (US$2.42 billion) in profits a year. In recent months, the bookmakers tried to avert strong government action by launching a major advertising campaign to educate the public about the risks of problem gambling. The campaign was underwritten by Ladbrokes, William Hill, Coral and Paddy Power. Ladbrokes is also searching for a new CEO to replace the outgoing Richard Glynn, who announced he would step down in December.

responsible gambling at the heart of all we do,” he said. “Gaming machine players now can set limits on the amount they spend or time they play for. We have increased responsible gambling messages on machines and stopped all advertising of them. We work closely with the government and Gambling Commission on responsible gambling measures, and will continue to do so.” Of all wagers made, he added, only 3 percent ever reach £100.

Big Greek Bucks VLT revenues would amount to .05 percent of GDP

he Greek Organization of Football Prognostics S.A. of Athens, familiarly known as OPAP, predicts that thousands of VLTs soon to open around the country could generate between €800 million and €1 billion per year. According to the Balkans news site ekathimerini.com, OPAP is the sole operator and manager of lottery and sports betting games in Greece and Europe’s biggest betting firm. The projected revenues from the “Play” mini-casinos, if realized, would come to around 0.5 percent of the country’s gross domestic product. Officials at the public company say that about 4,000 locations have already been confirmed to house the new gaming halls, and hundreds of applications have come in for the management of Play halls through franchise deals. OPAP intends to operate some 660 Play gaming halls with around 25 VLTs each, for a total of approximately 16,500 slot machines. OPAP has a license for a total of 35,000 VLTs. Subcontractors to be named later are expected to manage the remaining 18,500.

Single-Minded Sweden’s Svenska Spel will keep monopoly

weden’s minister for public administration says state-run gaming operator Svenska Spel will retain its monopoly on gambling in the country for now, despite attempts by other entities to penetrate the market. At the same time, Svenska Spel wants to introduce legal online gaming to boost revenues and reclaim market share that has been lost to illegal operators. “We sent in an application last June or July,” Svenska Spel spokesman Johan Tisell said. “When we can anticipate an answer is really difficult to say. There’s been a change in government,

and now they may be focused on entirely different issues than our application. We hope to get an answer before the summer.” Minister Ardalan Shekarabi recently sent a videotaped message to the Nya Spel-Sverige conference in Stockholm saying the country is not currently open to new operators. Meanwhile, the European Court of Justice continues to press Sweden to be compliant with E.U. gaming laws. The European Commission has accused the Swedish government of “not exercising adequate control over the exclusive right-holder.”

APRIL 2015 www.ggbmagazine.com

p. 12 nutshell:Layout 1 3/12/15 4:37 PM Page 12

NUTSHELL Indiana Governor Mike Pence still is not saying what he considers to be expanded gambling. However, in regard to the far-reaching gambling bill recently passed by the House, Speaker Brian Bosma said Pence does not like the provision that would allow live dealers at Hoosier Park in Anderson and Indiana Grand in Shelbyville racinos because he believes that qualifies as an expansion of gambling. House Minority Leader Scott Pelath recently expressed frustration over Pence’s refusal to clarify the issue. Pelath said Pence “needs to decide if he’s going to be involved or not be involved. And if he is going to be involved, he ought to be getting involved to help, and not keep something from reaching his desk that he has some personal objections to.” South Dakota Governor Dennis Daugaard signed a bill that will allow keno, roulette and craps at Deadwood casinos. In November, 57 percent of voters approved a constitutional amendment, which gave the legislature the authority to implement the new games. Supporters said the new games will help Deadwood compete with casinos in Colorado and Iowa. Atlantic City’s Borgata Hotel Casino & Spa, already a leader in entertainment offerings in the resort, announced plans for a new nightclub and an outdoor entertainment venue featuring big-name music festivals. The $14 million project will include financing from the New Jersey Casino Reinvestment Development Authority. A top U.S. intelligence official confirmed Iran was behind the cyber-terror attack on Las Vegas Sand Corp. last year. Many of the computer systems which run the $14 billion operation were breached with customer information compromised. LVS Chairman Sheldon Adelson is a huge supporter of Iran’s sworn enemy, Israel. Scientific Games Corporation announced it has signed a contract with the Atlantic Lottery Corporation to provide a lottery gaming system and internet-based iLottery gaming system. Implementation is expected to begin this month, with conversion to the new system in 2016. The five-year contract, awarded by ALC after a competitive procurement process, includes extension opportunities up to 15 years, for a total of 20 years. The contract extends Scientific Games’ gaming technology service presence to 70 percent of the provinces and all three territories in

Canada. Hong Kong-listed Louis XIII Holdings Ltd. will pay what it described as a “Chinese New Year bonus” to all employees. The bonus was equivalent to up to two months’ salary, the firm said. Louis XIII is developing the boutique Casino Louis XIII on the edge of Macau’s Cotai district and will open in the summer of 2016. A bill in the New Jersey Legislature could allow home delivery of lottery tickets by the New Jersey Lottery. The measure, introduced by state Assemblyman John Burzichelli, would allow courier services to deliver lottery tickets throughout the state. Burzichelli told NJ.com that such home deliveries are common for European lotteries. “If you’re either too busy or can’t get out of the house, you can make arrangements,” he said. Currently, New Jersey Lottery tickets can only be purchased in person at a vendor location. A bill to legalize online lottery sales failed in 2011. Olympic wagering is once again considered legal in Nevada. A regulation was passed with ease by the Nevada Gaming Commission, which voted unanimously in favor of Olympic betting. The U.S. is a -6.5 favorite against China for the most gold medals. The U.S. is also -320 to capture gold in men’s basketball, and a 3-to-1 favorite to win the men’s golf gold medal. Usain Bolt is a -200 favorite to win the men’s 100-meter gold medal. Brazil is -250 to win the men’s soccer gold medal, while the U.S. women’s soccer team is -250 to take home the gold. Westgate Las Vegas has partnered with mobile app developer Gamblino, to offer poker-esque satellite tournaments in their pro football SuperContest. It costs $1,500 to enter the annual event, which tests sports handicapping skills of professional football watchers. The 2014 winner, CH Ballers, took home a respectable $736,675. Atlantic City’s Trump Taj Mahal Casino Resort has agreed to pay a $10 million settlement to the federal government on findings it did not comply with reporting and recordkeeping requirements designed to fight money laundering. The U.S. Treasury Department found the company violated transaction-reporting regulations in 2010 and 2012. The settlement awaits approval by the federal bankruptcy judge handling the Taj Mahal’s Chapter 11 filing in Delaware.

CALENDAR April 14-16: iGaming North America 2015, Planet Hollywood Resort & Casino, Las Vegas. Produced by the Innovation Group, BolaVerde Media, Lewis and Roca LLP and eGamingBrokerage.com. For more information, visit iGamingNorthAmerica.com. April 21-23: GiGSE 2015, Hyatt Regency, San Francisco, California. Produced by Clarion Gaming. For more information, visit gigse.com.

May 5-8: La Fleur’s 2015 Lottery Symposium & Retailing Summit, Capitol Hilton, Washington D.C. Produced by La Fleur’s magazine. For more information, visit lafleurs.com. May 5-7: Southern Gaming Summit, Mississippi Coast Coliseum & Convention Center, Biloxi, Mississippi. Produced by BNP. For more information, visit sgsummit.com. May 13-14: SAGSE 2015 Panama, El Panama Hotel, Panama City, Panama. Produced by Monografie. For more information, visit SAGSEpanama.com.

Global Gaming Business APRIL 2015

May 19-21: Global Gaming Expo (G2E) Asia 2015, The Venetian Macao. Produced by Reed Exhibitions and the American Gaming Association. For more information, visit G2EAsia.com. May 27-28: East Coast Gaming Congress & iGaming Institute, The Borgata, Atlantic City. Produced by Spectrum Gaming, Cooper Levenson and SOSH Architects. For more information, visit EastCoastGamingCongress.com.

“They

Said It”

“This is really going to be bad news for other convention markets.” —Jim Murren, MGM Resorts International chairman, confident the Las Vegas Convention Center remodel and expansion will be a boon against competitors

“The gaming industry in general tends to eat its own.” —Florida Senate President Andy Gardiner, citing the long odds against any gaming legislation in his state

“Atlantic City reminds me of Glasgow. There’s something raw about Atlantic City.” —Gordon Ramsay, celebrity chef, to the Press of Atlantic City at the opening of his new Gordon Ramsay Pub & Grill at Caesars Atlantic City

“This news is extraordinarily disappointing, not just because I, as the co-founder of Wynn Resorts, have devoted my life to making this company a success, but because the decision excludes the last woman director from the board.” —Elaine Wynn, in a statement issued after the board of directors declined to re-nominate her as a director, ending her board position as of the current term’s expiration on April 24

“I’m proud of President Xi because he’s doing something significant and difficult. Who knows whose money those guys in casinos are spending? If they’re officials, they could be spending mine.” —Xu Meihua, Macau tourist, applauding Chinese President Xi Jinping’s crackdown on corruption

“What is important is whether this process in the gaming industry is going to help Macau to become a world tourism and leisure center, as well as whether the industry is developing healthily. I think these are what people should pay attention to.” —Lionel Leong, Macau’s secretary for economy and finance, on the evolution of the world’s dominant gaming location

“We want to introduce the Borgata to a different person. We weren’t looking at this as a moneymaker, rather a learning experience from a regulatory standpoint, from a demographic standpoint.” —Joe Lupo, Atlantic City’s Borgata Hotel Casino & Spa’s senior vice president of operations, to Bloomberg News on the casino’s plan to host a live-action free-throw shooting contest under new gaming rules in New Jersey

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AMERICAN GAMING ASSOCIATION

Good Gaming Careers There’s more than meets the eye

By Geoff Freeman, President & CEO, American Gaming Association

ate last year, we wrote about a first-of-itskind study highlighting the vast impact of the gaming industry on America’s economy. This year, the AGA is building on that research by releasing a seminal report outlining the quality, range and skills associated with the more than 200 types of careers at hundreds of casinos across 40 states. In addition to the research, we launched a video series that highlights real-life stories of gaming employees, and announced an upcoming multi-year national initiative to ensure presidential candidates understand gaming’s significance in strengthening the middle class. News of our industry’s initiative was covered nationwide through stories that ran on the Associated Press wire, reaching more than 100 newspapers and local news stations from coast to coast. PROVIDING A GATEWAY TO THE MIDDLE CLASS Released as part of AGA’s Get to Know Gaming campaign, which aggressively promotes the value of the industry, Oxford Economics’ report revealed that gaming: • Creates Jobs and Opportunities: Gaming offers a wealth of career opportunities to workers from all backgrounds with a wide variety of skill sets. Gaming employs workers in more than 200 job classifications, including high-tech, engineering, software development and law enforcement. According to projections, the industry is on track to add more than 62,000 well-paying jobs in the next decade. (See gettoknowgaming.org/jobs.) • Employs Highly Diverse Workforce: Few industries offer as diverse a workforce as gaming. Forty-five percent of gaming’s workforce is composed of racial or ethnic minority employees—far more diverse than the U.S. average of 33 percent. Twenty percent of gaming employees are Hispanic, compared to the national average of 15 percent. Additionally, women make up nearly half of gaming’s workforce (48 percent)—also higher than the national average. • Offers Exceptional Benefit Programs: In

Global Gaming Business APRIL 2015

addition to on-the-job experience and training, many leading gaming companies support continuing education programs, offer flexibility for employees to pursue education and provide a path to upward mobility. More than 20 percent of gaming employees who remain in the industry continue to further their education and earn a degree. Many companies also provide citizenship assistance, on-site health and wellness, day care centers, fitness centers or gym memberships and other benefits. • Provides Fulfilling Careers for Millennials: For a generation of people that is otherwise struggling to find work—23.3 percent of workers under 30 are unemployed—gaming offers a path to a fulfilling career. More than a third of the gaming workforce is younger than 30, compared to the national average of 25 percent. The average age of a gaming employee is 39, with the national average being 42. • Builds the Middle Class: Gaming jobs pay good wages that allow workers to provide for themselves and their families. Nearly two-thirds of gaming equipment manufacturing workers have a bachelor’s degree or higher and earn an average annual salary of $75,000. More than a quarter of computer and information systems managers in the gaming industry hold a master’s degree or higher and earn a median salary of $90,000 a year (and up to $152,600). The gaming industry serves as a gateway to the middle class. REVEALING THE STORIES BEHIND THE NUMBERS In conjunction with this report, we launched a “Faces of Gaming” video series that includes firsthand testimonials from employees about their experiences in the gaming industry. These videos will be featured on our website and will air nationwide to target policymakers and other industry stakeholders as part of our efforts to aggressively shape the image of the gaming industry. Our goal is to give a voice to the hundreds of thousands of employees who are building their careers in the gaming industry. We encourage anyone whose job is supported by gaming to share his or her story. Visit GetToKnowGaming.org/contest to learn more.

EDUCATING POLICYMAKERS As part of this launch, we also announced a multiyear national initiative, called “Gaming Votes,” which will incorporate in-district events that highlight the gaming industry’s workforce. Our mission is to ensure that as the 2016 election season commences, political candidates understand gaming’s vital role in providing middle-class jobs and driving economic growth in key states across the country. Presidential candidates will be encouraged to embrace policies critical to the gaming industry’s future, including improving infrastructure, developing a skilled and diverse workforce, promoting innovation and thoroughly reviewing increasing regulatory burdens. This first-of-its-kind initiative for the gaming industry launched in Las Vegas in February and will continue in states across the country, including battleground states such as Iowa, Colorado, Florida and many more through Election Day, November 2016. CONTINUING THE MOMENTUM Oxford’s report affirms that gaming empowers its employees to pursue higher education, move up the career ladder and build a better life for themselves and their families. But behind the research, statistics and facts are real stories of U.S. workers that reveal the limitless opportunities the gaming industry provides. In the coming months, employees across the country whose jobs depend on gaming will be sharing their experience online. We encourage you to do the same. Our industry is strongest when working together, so share your story with us and promote these national findings with your state and local elected officials. In the year ahead, we will rally the industry to showcase firsthand the jobs that gaming supports in key political states across the country. We will highlight the many faces and people of gaming so that policymakers may better understand and appreciate the value of our industry’s jobs. Please visit FacesofGaming.org to learn how you may support the AGA’s effort to aggressively shape the image of the gaming industry across the United States.

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FANTINI’S FINANCE

Throwing Up the Stop Sign The Chinese crackdown in Macau doesn’t seem to be a cyclical reaction

e have several times over the years warned that the Communist government in China could upset Macau’s casino applecart. That has clearly happened, as gaming revenues have declined at an accelerating and frightening pace. At first, many investors dismissed the revenue declines as just another of China’s periodic crackdowns on corruption meant mostly to generate headlines and punish political opponents. It should be clear by now, however, that the national Chinese government intends to rein in gaming, not just put on a show. The national government, I don’t think, is much concerned about damaging the industry, which, after all, amounts to foreigners and Hong Kong billionaires making money off mainlanders. And why should it? There’s enough tourism potential to be developed in China without the need for an obscenely rich casino industry. Indeed, keeping the casino industry at current levels, or even scaling it back more through visa restrictions and smoking bans, still makes for a very prosperous Macau, and allows the central government to hold the city up both as a model of conformity and as a warning to much more important and independently minded Hong Kong just a stone’s throw away. Just in case that message wasn’t clear, in the face of 40 percent and 50 percent revenue declines, a top Macau official recently said the city might reduce visas issued to individual mainlanders, a type of visa that provides Macau with 30 percent of its visitors. His rationale: the city is too crowded. Such obedience has got to have the leaders of the national government smiling. Observers have noted the restrictions might reduce visitation by individual visa holders less than 6 percent, but that it also might be another obstacle to scare away Macau’s disappearing high rollers. With all of this, there is growing fear that

Global Gaming Business APRIL 2015

By Frank Fantini

$20 billion worth of casino resort expansion coming to Macau could become an albatross rather than the intended golden goose. For good measure, you can throw in uncertainty about what the Macau government’s pending review of gaming will produce and how upcoming gaming concession renewal negotiations will turn out. All of this has finally gotten through to investors, who, instead of projecting a return to normal soon, are running away from the stocks. But where to run? Sri Lanka has aborted its unborn industry. Japan has yet to generate a consensus for developing casinos. Singapore is what it is. The Philippines, Australia and South Korea plan to entice Chinese players, but President Xi Jinping warns he will not tolerate poaching. Not even the United States is immune, as the number of Chinese high rollers spending big at Las Vegas Strip baccarat tables has begun to fall. One answer might be that long-term investors who believe that Macau will resume growth can look for total returns. Las Vegas Sands pays a dividend yielding better than 4.6 percent. The company generates enough cash to keep that payout coming, and big capital expenditures end after next year, meaning more money available to shareholders. Wynn, though more vulnerable given its greater dependence on Macau and its high rollers, also pays a dividend that, thanks to its lower stock price, is now over 4 percent. SJM just raised its final dividend and noted it amounts to a 70 percent profit payout. MGM Resorts, though not a dividend payer, has some attractions. It will quadruple Macau capacity when MGM Cotai opens, gets most of its EBITDA from rebounding Las Vegas, and has new casinos in Massachusetts and Maryland to look forward to. Jon Oh of CLSA just published a research note making the case for LVS as a dividend payer. The current $2.60-a-share dividend makes LVS stock worth $52 on the dividend alone, he says. A $3 dividend makes it worth $60. Assuming a range of growth rates, Oh comes up with a

possible $135 versus his current target of $80. Further, Sands China can cut its dividend in half and parent Las Vegas Sands would still have double the money it needs to maintain its current dividend, Oh said. And that is conservative, as CEO Sheldon Adelson intends to increase the dividend at least 10 percent a year. Nor is Oh giving up on Macau. He figures LVS’ Parisian resort that opens in 2016 is worth $12 and will generate $1.159 billion in EBITDA in 2018, a 41.4 percent return on a $2.8 billion investment. Oh is also a believer in Wynn, sticking to his $246 target price even as the stock fell all the way down below $135. WYNN also pays a dividend, helped by Wynn Macau, which essentially passes all of its profit along to shareholders, with Wynn Resorts being the majority owner. When Wynn Macau recently announced a special dividend, it meant $511 million pouring into the parent company’s coffers. And even if Oh’s forecast for the Macau operation’s EBITDA to fall 15.4 percent this year proves out, that would still total $1.064 billion. That should keep the dividends flowing, though Wynn Macau might have to scale back next year, Oh said. Much of the Macau story will unveil in the next several months. We’ll see whether a tougher smoking ban is implemented, and, more importantly, whether new properties— Studio City, Galaxy Phase II and Las Vegas Sands’ St. Regis hotel—grow or cannibalize the market. Last fall, we said that U.S. regional casino stocks were the place to be thanks to all the glum news and forecasts. That increasingly appears to have been the right call. We might not be too far away from seeing the same opportunity in Macau. 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.

s n tu i 1 si A 93 Vi NIGh # at o t bo

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slot Floor

Exodus Manufacturers and operators debate whether rising slot holds are causing players to abandon the machines By Frank legato

en years ago, few questioned how operators managed the industry’s cash cow, the slot floor. Over the past couple of years, though, the cow has become a lot harder to milk, and what was once unthinkable is now one of the few things on which everyone agrees: Everywhere you look, slot revenues are down. Six or seven years ago, it was easy to blame the national economic crisis for slumping revenues across the industry, from slots to tables to non-gaming amenities. However, as hotel and even table-game revenues rebounded with the recovery of key economic indices, revenues on the slot floor have remained mired in an unprecedented funk. Slot players have long been suspicious of casino operators, imagining everything from slot managers in back rooms flipping a payback switch to tighten games when players were winning to wholesale modifications of payback percentages on the fly. Focus groups, letters to consumer magazines and feedback from loyal players always ended up with the same complaint: their money doesn’t last as long as it used to on the slot floor, and as evidenced by declining slot win, they are simply not visiting the casino as often. Ask a player, and he or she will always point a finger directly at the casino operator, with an oversimplified charge that all operators have jacked up slot holds to recover revenues lost to the recession. During the past year, however, similar charges have been coming from the industry itself. The first questions came from industry analysts and suppliers. Last July, New York-based Buckingham Research Group released a study titled, “How Higher Slots Holds Have Damaged the Regional Gaming and Equipment Business.” The study examined published slot hold statistics in seven regional gaming markets, including Nevada, from 2004 through 2013, finding operators have increased overall slot holds by 40 percent or more in some markets. “As slot holds move higher, time on device declines as customers lose their money faster,” wrote Buckingham’s Brian McGill, the study’s author. “We es18

Global Gaming Business APRIL 2015

timate that in 2004, a player could budget $100 to play slots and gamble for 3.2 hours on a 75 cent-per-spin bet. With higher holds, $100 may only last 2.6 hours, a 22 percent decrease. If we assume the average bet moves from 75 cents to $2 for the most popular games, the average time goes from 3.2 hours to one hour. “We think operators have looked to offset the competition by increasing holds to boost margins. The proliferation of penny games on slot floors due to the introduction of ticket-in/ticket-out technology is another driver.” In addition to the players themselves, the rising cost to play slots has damaged the slot manufacturers, McGill continued. “This is a major negative for the slot manufacturers,” he wrote. “We think operators will continue to limit CAPEX on slot floors, which is a negative for replacements and game sales. Operators have also continued to remove costly participation games, which hurts gaming operations revenue.” Manufacturers soon took note, initiating research of their own. In September, the Association of Gaming Equipment Manufacturers (AGEM) announced that it was initiating a study to determine whether rises in slot hold can be linked directly to declining slot revenues. According to Marcus Prater, executive director of AGEM and formerly a longtime marketing executive of slot-maker Bally Technologies, the decision to research the issue came out of a request from Scientific Games CEO Gavin Isaacs and Executive Vice Chairman Richard Haddrill, not long after the Buckingham study came out. “After some brainstorming, they both singled out the hold-percentage issue as a hot-button item that required further investigation in terms of the correlation between the tightening of machines and the overall decline in slot revenue,” Prater recalls. “And at the heart of it, you have two games guys who want the product of all the work that goes into creating these games to be enjoyed and embraced by the playing public.” Among other things, the study—still in its early stages—will examine sales

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“

Money is not going as far. There’s no question there is an outcry, and there is an outcry for a reason.

Complicated Issue

”

—Marcus Prater Executive Director, AGEM

records of AGEM members, looking for changes in the hold programs purchased for games over the past few years. But first, the study is going much farther back in history. “Applied Analysis, a respected firm in Las Vegas, is analyzing slot holds in 15-plus states going back to the beginning of the riverboat era, and matching those changing slot holds to the revenue numbers in each of those markets,” Prater explains, adding that AGEM is in discussion with the International Gaming Institute at the University of Nevada, Las Vegas for a secondary component. WMS Gaming, one of the newly merged Scientific Games’ main divisions, initiated a study of its own on the subject, releasing a white paper at last fall’s Global Gaming Expo by Allon Englman, WMS vice president and design chief, titled “Keeping Players In The Game: Breaking the Cycle.” Englman’s study revealed that declining slot revenues can be traced to much more than just operators raising the holds. However, factors such as increased cost to cover, the speed of the games themselves due to technology, higher volatility and the increasing popularity of the penny denomination still end up with one factor affecting the experience of the player—high holds, and less time on device. “The net effect is that it doesn’t matter what anyone says or does—if you have a higher-hold game, the player will lose quicker,” Englman says. “That’s undeniable. Some players don’t notice. In fact, I would say most players would not notice a 2 percent or 3 percent hold difference. I’ve played hundreds of millions of slot games, and I can’t tell a difference of 3 percent. But after everything you’ve said and done, you’re losing 30 percent faster. “And eventually, you will notice it. You may not notice it from one game to another, but you’ll notice it if you have to drive an hour to a casino and you play 30 percent less over the course of a year.” “Money is not going as far,” says Prater. “There’s no question there is an outcry, and there is an outcry for a reason. Players obviously would like nothing more than 99 percent games, but I do think the outcry is one of basic fairness and entertainment value, and clearly, there is something to all of this discussion.”

Prater says the AGEM study will look at all factors contributing to declining slot revenues and the erosion of the slot player experience, and, as Englman’s white paper showed, the issue goes way beyond operators jacking up holds to shore up revenues. Declining slot revenues are, in fact, the result of a perfect storm of changing game style, faster play, increasing minimum wagers, free play replacing cash coupons and yes, the economy, as many believe consumer confidence has not yet returned to the free-betting ways of 10 years ago. “The consumer is still struggling,” says consultant Jeff Jordan, principal of Jordan Gaming Consulting Group and former director of slot operations and marketing at Bellagio. “They’re not earning income the way they were before the crisis. I think that’s still the No. 1 issue we’re facing. Also, the whole social gaming phenomenon, if you argue that’s a substitute product to slots, means we’ve discounted our product. It’s cheaper to play Cleopatra on a social casino than in a real casino.” Slot hold, in itself, is both a cause and result of all these factors, which is why it can be a sensitive issue both for manufacturers and operators—evidenced by the reluctance of just about anyone currently in the industry to even discuss the issue. Officials from MGM Resorts, Station Casinos, Boyd Gaming, Penn National Gaming, Hard Rock, Isle of Capri Casinos and Seminole Gaming all declined to comment for this article. Among the largest manufacturers, IGT, Konami and Aristocrat declined requests for interviews. The largest operator in the U.S., however, defends its pricing decisions on the slot floor, and Caesars Entertainment has nearly two decades of empirical data to back up its policies. Caesars Executive Vice President Melissa Price has been in the thick of the slot evolution since joining the operator as vice president of slot technology and operations in January 2006. Price notes that Caesars has been studying the slot pricing issue since long before the recession. CEO Gary Loveman brought in a team of MIT mathematicians in 1999, and that same team has advised the company on optimal pricing for slot machines, using the same principles that retailers use in setting the price for any variety of goods—the price is set at the highest level acceptable to the customer, or the lowest that will return a profit for the company. “We’ve been studying this since early 2000, and we’ve done lots of different tests over all these years,” Price says. “And I’ve been in a role where I’ve had an opportunity to either be directing that or to be advising on the hold percent the last six or seven years. We don’t have a hold percent policy that says ‘let’s pick the highest or lowest.’ We’re looking for competitive, and we’re looking for an entertainment experience for the guest that will allow them to have the right play experience and allow us to meet our budgeted numbers. It’s a balancing act, just like it would be with any retailer.”

Historical rical Hold Percentages rcentages HISTORICAL HOLD PERCENTAGES

Illinois Indiana New Jersey Pennsylvania Iowa Missouri Average

2003 6.49% 7.16% 8.10% N/A 6.65% 6.60% 7.00%

2004 6.58% 7.44% 8.20% N/A 7.01% 7.33% 7.31%

2005 6.74% 7.72% 8.30% N/A 7.39% 7.63% 7.56%

2006 7.01% 7.95% 8.30% N/A 7.89% 8.04% 7.84%

2007 7.27% 8.25% 8.40% 8.65% 8.33% 8.40% 8.22%

2008 7.54% 8.52% 8.70% 8.78% 8.61% 8.80% 8.49%

2009 7.80% 8.62% 8.90% 8.76% 8.85% 9.02% 8.66%

2010 8.04% 8.88% 8.90% 9.57% 8.96% 9.06% 8.90%

2011 8.42% 9.01% 8.90% 9.76% 9.06% 9.08% 9.04%

2012 8.81% 9.08% 9.00% 9.87% 9.15% 9.18% 9.18%

2013 8.84% 9.18% 8.93% 9.87% 9.18% 9.27% 9.21%

2014 9.00% 9.30% 8.96% 9.84% 9.31% 9.30% 9.29%

Absolute Change 03'-14' 2.51% 2.14% 0.86% 1.19% 2.66% 2.70% 2.01%

% Change 03'-14' 38.67% 29.81% 10.62% 13.74% 40.00% 40.91% 28.96%

Source: Global Market Advisors

APRIL 2015 www.ggbmagazine.com

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WMS White PaPer: reaSonS for increaSed Player loSSeS

Source: WMS Gaming

Caesars’ researchers also have continuously evaluated what is wrong with the slot floor, and the conclusion is similar to what Englman found in his study—slot hold is only one of many factors, but a comparatively minor one in relation to what she says is the big issue: how the style of the slot machine has become dominated by high-hold, multi-line penny games. “The player’s money doesn’t last as long on a penny game as it used to when they played a quarter reel game,” says Price, “but it’s not tied one-forone to the hold percent. I think more of a contributing factor is how the games have evolved.” Many operators and former operators agree. “The greatest misnomer we have is that we continue to refer to these multi-line video reel games as penny machines,” notes Andrew Klebanow, a principal of consultancy Global Market Advisors who was a longtime marketing executive for various casinos and general manager of the Santa Fe in Las Vegas. “When I was a general manager, our lowest denomination game was a nickel machine. Because it was a nickel machine, we probably had an average bet of 20 cents. And because of that, we priced the game higher than quarter and dollar machines. “When you look at a multi-line video reel machine today—what they call a penny game—the average bet is $1.90, $2 a spin, certainly more than what an average 25-cent bet was 10 years ago. And yet, we continue to consider these games penny games, and we price them, in terms of hold, at a much higher rate than other games.” Frank Neborsky, who recently left Connecticut’s Mohegan Sun after 18 years as vice president of slot operations, agrees that the rising cost to play penny games has been a factor in players losing money faster than in the past. “When you play a higher-denom game like a quarter or dollar, you had a noticeably lower hold percentage, because you were really pricing your product based on the risk involved,” he says. “If a player was going to risk 75 cents a spin on a quarter game, you may price it at one level, but if you have a dollar player willing to risk $3, you set it higher. Pennies came in and operators said OK, it’s a penny game, so we’re going to ratchet down the RTP (return to player) and increase the hold. 20

Global Gaming Business APRIL 2015

“Early on, you had a nine-line game, and people were betting 9 cents. But then, the manufacturers began to put a lot of emphasis on the development of these games, so it changed the way the game played.” “Pennies didn’t start out as 500-coin events,” comments Prater. “They were 45-coin and 90-coin events. When pennies came onto the floor at less than a dollar per max spin, yes, the payback percentage was probably appropriately in the 86-88 percent window. But now we’re in 500-coin penny games, and operators continue to put 86-88 percent penny games on their floor. That’s where the line gets crossed on what’s fair and reasonable to the player.” Price says Caesars does take average bet and cost-to-cover into consideration in pricing decisions. “For example, when high-line count video games are placed in the high-limit room, we review pricing to align hold on like bet-sized games,” she says. “Also, Total Rewards (Caesars’ national payer’s club) plays a key role. If a player chooses the entertainment of a multi-line video game, and plays at a higher bet level, they receive greater TR rewards.”

Free Play Factor Player’s club rewards, in fact, constitute one of the key factors in rising slot hold. When automated free play replaced the old coin coupons, those rewards went off the books of the marketing department and onto the revenue books of the slot department. “When I was a general manager back in the 1990s, I would have this very real and hard number on my income statement every month—direct mail offers redeemed for cash,” says Klebanow. “It was the biggest number on my marketing P&L. Once we started moving to free play, where free play replaced direct mail offers and points redeemed for cash, that direct-mail cash number vanished from the income statement. “That very real, hard number—say half a million dollars a month—simply disappeared from my income statement. So where did it go? It went into what’s called a contra revenue account. That number was deducted from gross slot revenue, and what appeared on the income statement was net slot revenue. Now, the slot director had to deal with another half-million dollars of free play going into his machines, and to maintain his slot-floor PARs, he had to in-

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“

It’s not coincidental that the desire for volatile-style games has increased as hold percentages have increased, because the best way to disguise hold is through increased volatility. You can win or lose larger amounts of money, and you’re more likely to blame the luck of the game than to say the holds are high.

”

—Allon Englman, WMS Vice President and Design Chief

crease hold.” Steve Gallaway, Klebanow’s partner in Global Market Advisors and a former slot operations executive, says the free-play situation is key to understanding the slot hold issue. “In Pennsylvania, we look at the percent of handle that is free play, and it’s around 35 percent,” he says. “That’s a huge number. It means 35 cents of every dollar going into the machine is free play. If you still want to get all of your customer’s wallet, you have to increase the slot hold. “Now, if I’m a new customer coming to the casino with $100, my $100 is going away much more quickly than the guy from my database who’s coming in with $140 including $40 of free play. The new customer loses money quickly because the machine has a high hold percentage and he doesn’t have free play going in. And he doesn’t return, because he had a lousy experience.” “If you’re giving away free play, there is an impact on slot hold, an impact on the profitability of the game,” says Neborsky, now a principal of consultant Power Strategies. “If you’re giving away hotel rooms, if you’re giving away food—it’s all a matter of the full value and full worth of that player. If I give a 10 percent premium over and above what the slot hold is, that’s going to diminish the profitability of the game, and the only way some of these casinos may look at continuing to be competitive is to give these other offers, but raise slot hold on the back end to make up for it.” Other promotional costs diminish slot profitability. “We took a holistic view of the true profitability of a slot machine, and we factored in all the ancillary expenses,” Neborsky says. “If we’re doing free play, if we’re doing other bonusing offers, if there is a lease fee or wide-area progressive fee associated with the game—those fees come off the back end.” The final characteristic of penny slots affecting slot hold is the rising volatility of the low-denomination, high-payline game. As ancillary factors contributed to increasing slot hold, and as average wagers went up, the manufacturers injected the kind of volatility formerly reserved to reel games into the multi-line video slot. “If you look at the history of these games,” says Klebanow, “they came to the U.S. from Australia in the late 22

Global Gaming Business APRIL 2015

1990s, and they were very popular, because they had game algorithms that reduced the volatility of the slot machine; you were able to play a little bit longer.” Players soon complained they were constantly receiving “wins” that were actually losses. “You’re getting a 70 percent win frequency on some of these games, but you’re often not winning enough to cover your bet,” comments Neborsky. The remedy? Manufacturers designed video slots with reel-style volatility. “Volatility has increased dramatically from a decade ago,” says WMS Gaming’s Englman. “It’s not coincidental that the desire for volatile-style games has increased as hold percentages have increased, because the best way to disguise hold is through increased volatility. You can win or lose larger amounts of money, and you’re more likely to blame the luck of the game than to say the holds are high.” The final piece to the high-hold puzzle is technology—namely, the speed of the game. “On old-school Reel ‘Em In, you couldn’t physically get more than eight spins a minute out of the game,” Englman says. “It was on an old processor. Nowadays, on the average game, you can get 14-17 spins per minute out of every game.” He says faster play combines with volatility, increased cost to play and higher hold to erode the slot experience for the penny player. Jordan adds that one more factor exacerbating the pricing situation is overcapacity. “Each casino’s decision on where it should price depends on the supply and demand of gaming devices inside that population corridor,” he says. “The less competitive the market is, the more room there is to have higher hold percentages.” The WMS white paper acknowledges that operators increasing slot hold is only a small factor in the erosion of the slot experience—Englman’s study concludes slot hold is only 20 percent of the reason people are playing slots less. The largest reason is the cost to play, at 35 percent. (See pie chart, page 20.) “It was so interesting to me that 80 percent of the change in how much faster the guest’s money is taken is due to everything other than hold,” comments Price.

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“

Unfortunately in an existing casino game today, it’s lacking many of the key attributes of a social game. The things like achievement, and advancing through levels, multiple ways to win with virtual coins and power-ups… Those kind of things are lacking in the casino game today.

”

—Melissa Price, Executive Vice President, Caesars Entertainment

Changing the Game So, why have manufacturers kept pumping out high-hold penny games, and why have operators kept buying them? Because players love them, says Price. “Caesars actually was slow to get into a big percentage of the floor with lower-denomination games,” she says, “but then, in ’05 or ’06, we started to get more aggressive there, and the customers would say to us, ‘We love these games; they’re so much fun.’ So we keep adding the games, and all of a sudden, we find ourselves with 60 percent of the floor covered with penny games.” The manufacturers haven’t helped with a variety of other game styles, she adds. “The challenging thing from the seat I sit in as somebody that buys slots for a very large organization is that we’ve had very little that we can purchase outside of a low-denomination video game,” she says. “And there were several years in there where our dollar reel games and that dollar reel player were not getting any new product at all.” Neborsky agrees. “One of the arguments I’ve had as an operator over the past six to eight years is that there are no good quarter games anymore, and no good dollar games,” he says. “There has been some development there to try to create a better game mix, but that’s only within the past two years.” “There are more slot manufacturers than ever before, and the products all look similar,” says Jordan. “They’re all competing for the same market segment; it’s monkey-see, monkey-do. We’re not seeing the kind of innovation we saw when Wheel of Gold came out, or when Triple Play Poker came out.” “I think that we also created some of the pickle that we’re in now,” says Price, “because we, the industry, devoted too much R&D money to one place, and everybody was in the race to sell low-denom penny games. Well, now you’ve seen some players like Aruze, Ainsworth and MGAM, some of the smaller guys over the last couple of years come in and say, listen, we feel like there are these niches of players who have been left without any new product. And those companies have done very well by coming in and finally introducing some reel product back in.” But Price isn’t sure more reels are the answer—she suggests an entirely new paradigm for the slot floor, one that does not involve sitting on a stool in front of a row of boxes. “It almost feels like a bit of a perfect storm happened around the ’07-’08 time frame, because the recession hit, and at the same time there has been such an expansion of social games and the mobile, social casino games… Now I have all these other potential substitute products (to slot machines),” she says. “Myself and my team, we play the social games like crazy, because we’re very interested in trying to understand what that customer experience is on

Global Gaming Business APRIL 2015

the social game. And unfortunately in an existing casino game today, it’s lacking many of the key attributes of a social game. The things like achievement, and advancing through levels, multiple ways to win with virtual coins and power-ups… Those kind of things are lacking in the casino game today. “We have four or five iPads at our house, and someone has one in their hands at all times. Everyone has their smart phones on them. The casino floor is well behind that. There has to be the opportunity for people to have the option to address technology as they address it in their leisure time. And comfortable chairs! I don’t sit in an upright chair at my house.” In a March earnings conference call, Loveman said the current slot product is “antiquated.” Price suggests the sameness of slot machines could be a big reason revenues are down, and that a radical reassessment of what a slot machine is could be in order. “I have a lot of meetings with manufacturers, and tell them it takes two weeks to create an online game. And in our world, it takes 12 months to create a game, and that’s not counting regulatory. Do you imagine for one minute that maybe we’re just focusing on the wrong thing—maybe we’re just spending far too much time trying to get to some level of perfection that the customer really doesn’t give a hoot about?” Price suggests spending some of the R&D money used to create those breathtaking 3D graphics and using it to produce a new style of game. “When you play online, whether it’s Angry Birds or Trivia Crack or whatever the latest game is, those graphics are goofy, and they’re not perfect, and they’re not as crystal as the things we’re trying to create in our industry,” she says. “I question if we spent all this R&D money to make things a certain way when you could spend half that and make something that would be just as exciting for the customer. Then, you could spend the other half on trying to create something new, instead of just making the same old thing the same certain way.” Price sums up the problem with what she calls her “Best Buy story:” “I’m Best Buy, and I sell DVD players to the public. The public is telling me, ‘I’m not really interested in buying DVD players, because I can play DVDs on my Xbox, and I can stream all kinds of things through Netflix.’ I turn to Sony, the manufacturer, and say, ‘I just can’t get the customer interested in that DVD player.’ Sony says to me, ‘Well, Best Buy, why don’t you lower your price to the customer so you can sell more of them? You’ll have to take less of a margin, but go ahead and do that, because me, Sony, I’m just going to keep making more DVD players.’ “And that just seems like such a ludicrous discussion if you put it in the context of a different business than ours, but it feels like that’s the discussion we’re having.”

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United Nation With a corner on gaming in scenic western New York, the Seneca Nation of Indians is confident it can withstand competition from three new megaresorts.

The Seneca Nation converted the former Niagara Falls Convention Center to a casino in only six weeks in late 2002

By Marjorie Preston

Seneca Salamanca

ast December, a New York government panel approved three lavish new casino resorts to be built upstate. Though some operators are quaking at the prospect of additional competition—in state and out, including Massachusetts, where both Steve Wynn and MGM Resorts plan billion-dollar casinos—the Seneca Nation is remarkably unfazed. “The nation has been here forever. The nation isn’t going anywhere,” says Cathy Walker, president and CEO of Seneca Gaming Corp., which operates Class III casinos in Niagara Falls, Salamanca and Buffalo. “There’s going to be more competition for the gaming dollar,” Walker concedes, “and we’ll feel some effect from new operations. But we actually may grow our business by expanding the market among people who haven’t had casinos readily available. We think our locations will give us an advantage.”

Global Gaming Business APRIL 2015

Seneca Niagara

“The challenge will be how to grow these markets,” says Doni Taube, senior vice president of marketing for Seneca Gaming, who came to this relatively small market from stints in Las Vegas and Singapore. “But it’s an exciting time for western New York. We have a great vision for five, 10 years down the road to grow not just the company but the whole region.” As for those new casinos—including the $425 million Lago Resort, which will be located less than a two-hour drive from Seneca Buffalo Creek—Taube says, “I don’t necessarily view them as competition. Bring ’em on in.”

All for One The nation’s business portfolio includes a chain of convenience stores, a telecommunications firm, a construction management company and a hydroelectric

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“We actually may grow our business by expanding the market among people who haven’t had casinos readily available. We think our locations will give us an advantage.” —Cathy Walker, president and CEO, Seneca Gaming Corp.

Hotel rooms at Seneca Niagara were renovated in 2011

business. Last year, a nation representative acknowledged it’s looking at yet another growth industry: marijuana sales. But the economic driver for the 8,000-member sovereign nation is gaming, and it all began with a handful of low-stakes bingo halls that opened in the 1970s, about the same time Atlantic City launched its first Boardwalk casino. It took 30 years and the impact of a terrorist attack for New York to expand the state’s gaming industry; after 9/11, scouring for new revenues to stabilize a reeling economy, lawmakers approved VLTs at racetracks and a cluster of tribal gaming halls. Since then, Seneca Gaming has developed three allied but distinctly different Class III casino resorts: an international destination, a regional attraction, and a downtown urban resort targeted primarily at locals. Their collective feeder market includes Ontario to the north, Ohio and Pennsylvania to the south and west, and southeastern New York. Over the past dozen years, the nation has invested more than $1.1 billion in the economy of western New York, and contributed almost a half-billion in tax revenues to state and local governments. It has also created jobs for some 4,000 New Yorkers, Indian and otherwise, and sparked development in each of the communities it serves.

The Games Begin: Seneca Niagara Casino & Hotel After years of resisting full-scale gaming, the flagship property of the Seneca Nation was approved in September 2002, after the tribe engineered a gaming compact with then-Governor George Pataki. Along with the agreement came an ambitious deadline: the Indians were given just 100 days to convert the aging Niagara Falls Convention and Civic Center into a world-class gaming hall. It would be no small task. The civic center, part of a failed urban renewal project launched in the mid-1970s, once had been likened to an oversized Quonset hut. The Senecas, assisted by legendary tribal gaming executive Mickey Brown, invested $80 million to refurbish the complex, adding a casino with almost 3,000 slot machines and 100-plus tables, as well as a 400-seat showroom theater. “Against insurmountable obstacles,” says Walker, “they opened on December 31. And they really never looked back.”

In the years to come, reflecting the nation’s growing prosperity, they added a 22,000-car parking lot, a 26-floor, a 600-room luxury hotel and spa and a 2,400occupancy event center. In 2014, they completed a $26 million renovation to give “a more Las Vegas-like experience to Niagara Falls,” said Walker. “The evolution of this property in the heart of downtown Niagara Falls from a site of urban decay to one bustling with activity stands as a testament to quality, which is what our guests demand, and that is exactly what the Seneca name stands for,” says Barry E. Snyder, Sr., president of the Seneca Nation of Indians. Today, Seneca Niagara is part of an ongoing plan to turn the Cataract City— which lost more than 50 percent of its manufacturing jobs between 1970 and 1990—from “a land of lost economic opportunities (to) a region on the rise,” according to a February report in the Niagara Gazette. The resort takes advantage of a built-in tourism trade. Still renowned as the Honeymoon Capital of the World, the city’s chief attraction, the magnificent Falls, attracts some 8 million people per year; in the recent sub-Artic winter, tourism actually increased 67 percent as people flocked to witness an extraordinary phenomenon: Niagara Falls, frozen over. With the Canadian dollar now worth less than 80 cents compared to the U.S. dollar, Canadians regularly cross the border to shop and take advantage of the favorable exchange rate; approximately 30 percent of patrons at the casino are Canadian. “From a market perspective, I think the future is bright,” says Walker.

Outside the Box: Seneca Allegany Resort & Casino The Senecas’ second gaming hall debuted as a temporary structure in 2004; the permanent $160 million resort opened in 2007, with a 68,300-square-foot casino floor, three restaurants and a 212-room hotel (the temporary facility was then retrofitted as a 2,400-seat event center). In 2012, a $53 million expansion almost doubled the size of the hotel. Now the largest employer in Salamanca, Seneca Allegany attracts more than 3 million people each year—and they come for much more than gambling. Just minutes away from the 65,000-acre Allegany State Park, the resort makes the most of its proximity to the great outdoors and four seasons of recreation. “It’s really an incredible outdoor region, a great place to experience nature,” APRIL 2015 www.ggbmagazine.com

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says Walker. “Many people compare our skiing to Colorado. Likewise, there’s really great fishing, golfing, camping and summer and winter sports.” In fact, one of its most popular annual events is the AMSOIL Championship Snocross tour, “a grueling gladiatorial battle of man and snow machine” that is broadcast live on NBC Sports. Snowmobiling is so ubiquitous around here—it’s a billion-dollar business the Empire State—the Senecas have even established a snowmobile trail that connects the eastern side of the Salamanca property to a warren of trails in the state park, which in turn travels all the way to Buffalo. Such diversity of choices in entertainment is vital in a mature market, where gaming alone is no longer enough. More casinos have opened in the Northeast in the past decade than in any other area in the United States, with 26 casinos opening since 2004. “A lot of new casinos in the area have popped up—Ohio, Presque Isle, Hamburg Fairgrounds—but none of them has the property that goes beyond the box (slot machine),” said Marc Papaj, vice president of resort operations, in 2014. “We have a pool, spa and salon, two restaurants, and we offer a level of sophistication and luxury that none of the area competitors can even approach.”

The Next Boom Town: Seneca Buffalo Creek Casino In 2006, the third Seneca property broke ground bought on nine acres in in a former “brownfield” section along the Buffalo waterfront. Originally conceived as a $330 million casino hotel, the project was stalled by the recession and later downsized. A more streamlined $130 million casino, sans hotel and built with steel salvaged from the original framework, opened in the city’s Inner Harbor in August 2013. The urban casino was designed to complement the city’s downtown, a former port and manufacturing hub in search of its own renaissance—with a big assist from Governor Andrew Cuomo’s “Buffalo Billion” economic development program. Though the numbers aren’t in yet, Cuomo is already hailing Buffalo as a “national success story.”

Global Gaming Business APRIL 2015

“I don’t necessarily view (the Lago resort) as competition. Bring ’em on.’’ —Doni Taube, senior vice president of marketing, Seneca Gaming

“If you can bring back Buffalo, in truth, you can bring back Syracuse, you can bring back Rochester, you can bring back Utica,” he said last year. “There has been a real resurgence in development downtown,” says Walker. “We got in ground with Buffalo Creek and a couple of months later, they announced HarborCenter”—the $172 million mixed-use sports arena and home of the NHL Buffalo Sabres that opened last October. “Now the city of Buffalo enjoys two great anchors. That provides us not just local customers but that frequent business traveler as well.” More investment is coming with the University of Buffalo’s new School of Medicine and Biomedical Sciences, now under construction on Main and High streets. Walker compares the buzz around Buffalo to the dramatic recovery in Cleveland, which will show off billions in new development when it hosts the Republican National Convention in 2016.

It’s Time to Play In 2014, Seneca Gaming upgraded its entire customer management system, consolidating three loyalty programs into a universal player’s club card that can be used at all three properties. The rewards are generous by design, offering one point equaling one dollar for every $170 spent, versus a competitor who offers one point worth 10 cents for every $20 spent. “We are almost $30 less, so customers earn faster with us, and they recognize that,” says Taube. The company uses web monitoring and geofencing to track player activity and frequency, offers perks based on customer preferences, and keeps tabs on what its patrons are saying on social media. “These are very important tools that can really make or break your reputation as a company, what they’re saying about you, good or bad, on Twitter and Facebook,” says Taube. “We pride ourselves on our service levels, and we’re very fortunate that we have more positive write-ups than negative.” As technological changes extend from personal mobile devices to the gaming floor, the casinos are exploring new ways to entice players who otherwise might be uninterested in slots, especially younger players. “We don’t presently offer mobile gaming, but we’re starting to introduce community gaming, where groups of people can play at a bank of connected machines to make the games more interactive,” says Audrey Oswell, COO of Seneca Gaming. “We’re going to start testing it this year at the Buffalo property.” Other changes are also up: last summer the company introduced new branding with new logos and a new tag line, “It’s Time to Play.” Officials said the change better reflects the casinos’ “best-in-class” status in western New York. The corporation is in good fiscal shape too, having restructured $379 million in debt and lowered its interest rate from 8.5 percent to 1.5 percent. The reduced rate will help save 20 percent on costs annually and make Seneca

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Making the Connection Seneca Gaming Corp.’s third casino property, in historic downtown Buffalo, was designed with community in mind.

“The evolution of this property in the heart of downtown Niagara Falls from a site of urban decay to one bustling with activity stands as a testament to quality.” —Barry E. Snyder, Sr., president, Seneca Nation of Indians Gaming debt-free by 2019. Even in a crowded market, Moody’s last year forecast that the opening of the Buffalo Creek permanent facility “will help grow SGC’s gaming revenues over the next 12 months, despite increasing competition.” As for those three proposed New York casinos, expected to open in the next few years, Walker says Seneca Gaming will stay the course, making prudent capital investments and partnering with its host communities to offer distinct but rewarding integrated resort experiences. Taube, who is a veteran of the gaming industry in both Las Vegas and Singapore, says all of the properties have a neighborly feel that give them a competitive edge. “People are sincere when they talk to you. They are very caring, and listen to your needs and wants. I think those things translate to how well the operational team does at various properties. Our employees grew up together, they went to the same high schools and universities. Everyone knows each other. Though we have an international, local and regional destination, it feels like a hometown. I don’t know if it’s the water in western New York, but it’s a wonderful experience.” “Competition is fine,” concludes Oswell. “We’ll stay a couple steps ahead of them.” 30

Global Gaming Business APRIL 2015

he Seneca Nation’s Buffalo Creek Casino showcases tribal culture in an urban industrial setting—and does it all with contemporary flair. The casino, built on the site of a historic H-O Oats grain elevator, incorporates numerous symbols important to tribal cultures. They range from the emphatic (an illuminated single-feather headdress that rises 80 feet above the porte cochere, and is visible from the nearby interstate) to the subtle (a carpet pattern that resembles rain-dappled water). Before guests enter the casino, they walk along the landscaped Seneca Walk, with pylons representing the eight tribal clans of the Seneca Nation: Turtle, Bear, Wolf, Beaver, Snipe, Heron, Deer and Hawk. A collage of shimmering blue metal panels above the front doorway creates a wave-like pattern reminiscent of the moving waters of Buffalo Creek. And stamped metal canopies in many of the public areas include repeating geometric patterns inspired by the Hiawatha Wampum belt. “Before we embarked on the design, we had extensive workshops with the tribe’s cultural committee to really absorb the meaning of all that,” says Paul Bell, project manager for Memphis-based Hnedak Bobo, principal architect for the permanent Buffalo Creek facility. “The Hiawatha belt is a symbol of peace among the five tribes that were originally part of the Iroquois Nation, so they wanted to show that as a sign of welcome with mosiac tiles above each entryway.” “It’s very interpretive, very respectful, but not literal,” adds Hnedak Bobo architect Rick Gardner. “A lot of people walking through don’t even realize so much of the design was inspired by Seneca culture. But you know you’re successful in terms of interpretation when it takes two or three times for somebody to see the canopy on the ceiling and say, ‘OK, I get it.’ That’s a powerful response.” Perhaps the most striking feature of the $130 million casino is the 17-foot gilded Tree of Life, a dramatic floor-to-ceiling sculpture placed for maximum impact at the edge of the casino floor. The abstract interpretation of a towering white pine is said to represent “peace, strength, the will to not fight against one another, and protection when abiding by the great law of peace.” There are nods to tribal culture everywhere, even underfoot. The flooring that leads to the high-limit slots area includes an intricate mosaic of Sicis art glass and polished and honed Italian marble, crafted in shades of charcoal and inky black. It seems to change color depending on the light, and creates “a jewel-like space that speaks to their traditions of beadwork and jewelry-making,” says interior designer Jennifer Smith. “Everywhere you look, there’s a reminder of their culture.” Other factors influenced the look of the 65,000-square-foot downtown casino, including Buffalo’s reputation as a diehard sports town. The Stixx Sports Bar, centrally located on the main floor, includes a 360-degree sculpture of Baltic birch plywood that looks like a collision of hockey and lacrosse sticks—a clear salute to the NHL Buffalo Sabres, who make their home at the new HarborCenter complex, and the Buffalo Bandits, who play at the First Niagara Center. Mirrors behind the bar are backlit to resemble rink ice. In addition to form and function, the Senecas looked for connectivity and community in their new gaming hall. “The nation was very clear about wanting to be a partner” in the Buffalo renaissance, says Bell. “We took a master-plan approach,” agrees Gardner. “It’s not just this facility; it is a connector to everything around it, with a relationship to future development” planned for Buffalo, a former shipping port and manufacturing hub that fell on hard times in the post-industrial era. The Seneca Walk, for example, was designed to link to future pedestrian corridors, which in turn could lead to future retail, restaurants and hotels in downtown Buffalo. “We made the walk big enough so they can do a summer art series, invite vendors in and do other kind of events in this corridor,” says Nathan Peak, principal architect for Seneca Buffalo Creek. “Where there’s no development at all right now, the casino has generated a lot of traffic, and that will create a vibrancy” that could stoke future investment. “This is not a solo anchor,” Peak says, “but a major contributor.” —Marjorie Preston

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Meeting the

Demands

Washington state OKs market-driven tribal casino compact BY DAVE PALERMO

strong relationship between Washington state and its American Indian tribes apparently paid off handsomely this year with newly amended gambling regulatory compacts that allow future increases in video lottery machines based largely on market demands. The amendments, approved in a February 8-1 vote by the Washington State Gambling Commission, are expected to help the state’s 23 casino tribes expand hotel and non-gambling amenities needed to cope with a leveling-off of machine and table game revenue. State tribal gambling revenues have largely plateaued at about $2.3 billion a year, according to several sources. Tribal governments don’t disclose revenue figures. “These amendments are an important milestone for the people of Washington state and the Indian tribes,” commission Chairman Chris Stearns says. “The commission is proud to have worked on a government-to-government basis with the tribes as well as with the governor’s office.” Commissioners and tribal leaders largely applaud the shift to marketbased increases in the machine inventory, a move they contend will avoid time-consuming and often difficult negotiations. In return, the commission secured a commitment from tribes to reimburse the state for the full cost of regulating the industry. The current fee arrangement falls short of covering all costs.

Ron Allen, chairman of both the Washington Indian Gaming Association (WIGA) and Jamestown S’Klallam Tribe, credits decades of fruitful relations with officials in reaching the amended compact. “It’s another progressive step by Washington state, being respectful of the tribes and the needs of their communities,” Allen says. “These compact adjustments allow the tribes to continue with the moderate growth we’ve experienced over the last five years. “This agreement ensures that if we need more machines in the future, they will be available.”

Fishing for Deals Tribal-state relations are highlighted by the 1974 federal-court Boldt decision giving fishing tribes half the state’s salmon resources and the 1989 Centennial Accord establishing a government-to-government framework between tribes and state agencies. “This is a historical agreement between the state and tribes that builds on previous agreements and the Centennial Accord of 1989,” says Leonard Forsman, chairman of the Suquamish Tribe. “This is an example of economic development in Indian Country which mutually benefits tribes and the state.” Meanwhile, tribal governments, through WIGA, have strengthened ties with House and Senate leaders. “We’ve done a very good job of developing a relationship with the leadership

“There is no need for us to come back to the state in the future for more machines. We can let the market demand drive the industry.” —Ron Allen, chairman of the Washington Indian Gaming Association and the Jamestown S’Klallam Tribe

Global Gaming Business APRIL 2015

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“This is an example of economic development in Indian Country which mutually benefits tribes and the state.” —Leonard Forsman, chairman of the Suquamish Tribe

A new hotel recently opened at the Stillaguamish’s Angels of the Winds casino

of both parties,” Allen says. “We’ve won some issues and lost some. But we’ve won more than we’ve lost.” The political ties were important in convincing Governor Jay Inslee and legislators—particularly three of the four House and Senate members on the Gambling Commission—that the compact amendments would not result in an unbridled explosion of new machines. A compact agreed to in 2007 with former Governor Christine Gregoire provided each tribe with 300 additional device permits and set a statewide cap of 28,000 machines. The new amendments allow 27 of the 29 federally recognized tribes in the state to increase their allotment from 975 to 1,075 devices, generating roughly a 10 percent increase in the current statewide inventory of some 27,000 machines. The agreement includes 21 tribes with casinos as well as non-casino tribes with allotments available for leasing. The Puyallup and Muckleshoot tribes did not sign the agreement. Individual tribal inventories could also increase by 50 machines a year under a complicated formula if permits are available. If one tribe gets an increase, other tribes in the state will be eligible for a similar jump in machines. The statewide inventory will likely increase by another 1,350 machines if the Cowlitz Indian Tribe moves forward with a planned southwest Washington casino that is tied up in the courts. Theoretically, the amended agreements could cause the statewide inventory to double in 10 years, but market constraints are expected to limit the industry’s growth. “It took 20 years for us to achieve that relationship and the level of confidence between the tribes and the state that the growth in gaming will be moderate from this day forward,” Allen says. The amendments were not without detractors. “In my opinion, this is probably the last shot we’ll ever get” to secure revenue sharing through negotiations on machine inventory, state Senator Mike Hewitt told the Olympian newspaper.

Just In The Nick Of Time The additional 300 machine permits allowed to each tribe under the 2007 compact were largely used up when tribal officials and the state sat down a year and a half ago to work on the amendments. “There were very few permits available to complement expansion projects,” WIGA Executive Director Ernie Stebbins says. “There were fewer than 100.” Meanwhile, because of the 28,000-machine cap in the Gregoire agreement, Stebbins says non-casino tribes with machines to lease “were forced to sit on the sidelines.” The fact it has taken nearly eight years for tribes to use up their additional 300 permits is evidence of the growing saturation of the Washington state market. “The new machines will eventually get absorbed into the market,” Stebbins says of the amendments. “It won’t take seven, eight years. It might take three or four years.” The additional machines will provide tribes with the financial leverage needed to expand casino development with hotels, restaurants, parking garages and other amenities. Angels of the Winds casino, an enterprise of the Stillaguamish Tribe of Indians, recently opened a new hotel. The Nisqually Red Wind is building a restaurant and non-smoking casino space. And the Lummi Nation is building a new tower for its Silver Reef Hotel Casino, growing the room inventory to 205 and expanding its meeting space to 28,000 square feet.

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“There’s no major expansion going on,” Stebbins says. “But just through the development of more hotel rooms and other projects, tribes feel they are going to have more players.” “You’re seeing moderate growth as tribes enter into the hospitality industry,” Allen says. “That is helping adjust their market in a positive direction. The state is saying, ‘Yes, this works for us, too.’ “There is no need for us to come back to the state in the future for more machines. We can let the market demand drive the industry. The state is telling tribes that if we need more machines to leverage capital, we can do that. The state wants us to be successful.”

Machine Issues Remain State law restricts tribes to central-determinant video lottery terminals (VLTs) and prohibits tribes from operating traditional, casino-style slot machines. Casino general managers have complained that they are constrained by the compacts from competing with surrounding states and generating more profits. “If you go to the NIGA (National Indian Gaming Association) tradeshow, 85 percent of the products on the floor cannot get into Washington state,” Allen says. “That’s a problem. That makes it difficult for us to be competitive.” “There have been some concerns,” Gambling Commission Executive Director Dave Trujillo says. “Often, what you see advertised

The Tulalip tribe has one of the largest casinos in Washington state.

at the trade shows are not authorized in our state. A lot of it has to do with slot machines. Slot machines are prohibited by statute.” GMs also expressed concern at the time and expense machine companies are faced with in getting approval from the Gambling Commission’s testing laboratory. “The big issue is the need to streamline the review process with regard to vendors who want to bring their products into Washington state,” Allen says. “We need much quicker access to the new devices. “Right now, we’re the last in line. The vendors go everywhere else in the United States because the entrance hurdle is so much lower.” Trujillo says efforts have been made to speed up the regulatory review process. Most of the applications are processed within time guidelines set down in the compacts, he says. “Generally, we’re better than the compact demands in turnaround time,” Trujillo says. “We think we have found the magical number

iPoker’s Steep Climb in Washington fforts to legalize internet poker in Washington state gathered little momentum in the 2015 legislative session, with American Indian tribes largely remaining on the sidelines as online bills were unceremoniously scrapped. But moves by lawmakers to decriminalize fantasy sports were generating progress with bills introduced in the Senate and House scheduled for hearings. Again, however, tribal leaders were standing clear of the debate. Washington state has one of the harshest antiiGaming laws in the country, with 2006 legislation later upheld by the state Supreme Court making it a felony to wager online. The sentiment remained strong when House Bill 1114, an effort to legalize iPoker sponsored by Democrat Rep. Sherry Appleton, was dumped in February without benefit of a committee hearing. The effort was pushed by poker player Curtis Woodard and the Washington Internet Poker Initiative, a grassroots lobby that for years has attempted to move a bill. “It’s not the end, it’s just the beginning,”

Global Gaming Business APRIL 2015

Woodard tweeted. “We’ll be back!” While American Indian tribes have studied internet gambling through its trade association, the Washington Indian Gaming Association (WIGA), it has not taken a formal position on the issue and did not participate in the lobby effort on HB 1114. “There’s never been a resolution passed at a WIGA board meeting one way or the other,” WIGA Executive Director Ernie Stebbins says. “They’ve shared information and each tribe is going to go in their own direction.” “We’re continuing to explore the issue,” WIGA Chairman Ron Allen says. “We have to position ourselves to be ready if things happen at the state or federal level.” While online poker appears to be a steep climb, political observers contend Washington state legislators will eventually legalize fantasy

sports. The sentiment is not shared by the tribes. “For the most part, we haven’t lobbied on the issue,” Allen says. “We’ve stayed on the sidelines. Our advisers told us it was not going to go anywhere. “We haven’t talked about it extensively. We’re keeping a watchful eye on it. There is interest. But that’s as far as it goes.” Fantasy sports have exploded in popularity, growing into a $1 billion industry with more than 41 million players, according to the Fantasy Sports Trade Association. Wagering on fantasy websites is legal in all but Washington state, Arizona, Iowa, Louisiana and Montana. The federal government’s assessment is it constitutes a game of skill and not chance. “In most states, the fact that you’ve spent all this time pouring over stats and making your own spreadsheets, that’s the skill part, and that weighs most heavily,” Chris Stearns, chairman of the Washington State Gambling Commission, told the Easterner newspaper. —Dave Palermo

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for staffing.” Allen believes Trujillo is sensitive to tribal concerns. “I think under the new leadership at the Washington Gaming Commission and Dave Trujillo, we are going to be able to obtain improved technology,” Allen says. “He doesn’t want the commission to be an unnecessary burden to the ability of the tribes to obtain new products out there. “It’s a much faster and cleaner process. And it’s much less expensive to the vendors, who normally pass the additional costs onto the tribes.” The commission welcomes tribal efforts to negotiate for casino-style machines. “I think technology will likely bring the tribes back to the table,” Amy Hunter, head of the commission’s communications and legal division, told the Olympian. But any move from VLTs to casino-style slot machines will likely require approval by the state legislature or, perhaps, a public referendum, a move tribes are not anxious to make. “I would be surprised if the state wouldn’t want to ask for a ballot initiative or public referendum on the issue,” Allen says. “At this point we don’t view that as necessary. We think the current criteria in our compacts and what is allowed in the state give us enough leverage with regard to machine opportunities.”

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First,

Do No Harm... A balanced look at iGaming consumer protections By Marco Valerio

t was right here in Global Gaming Business magazine that we first heard it directly from Sheldon Adelson that he was none too fond of internet gaming. In late 2011, Adelson told GGB Publisher Roger Gros he was “officially neutral” on internet gaming, and most in the iGaming industry wish Adelson had officially stayed that way. But then, Adelson began to mount an aggressive offensive against the spread of U.S. iGaming legalization, forming and funding the Coalition to Stop Internet Gambling, which continues to employ numerous lobbyists and former lawmakers to do Adelson’s oratory bidding when he’s not taking the trouble to do so personally. Why does Adelson dislike iGaming so much? Despite routine comparisons, his reasons seem markedly different from those of his supposed ideological ally Steve Wynn, who told Nevada political reporter Jon Ralston in early 2014 he did not consider iGaming “a good entrepreneurial opportunity.” (It’s no secret many people within the iGaming world are starting to agree with him.) But the bulk of Adelson’s rhetoric against internet gaming has little to do with revenue. His camp does occasionally bring that up as part of a broader effort to undermine iGaming in every possible way, but for the most part, Adelson doesn’t say iGaming is unprofitable. He says iGaming is unsafe. The majority of Adelson’s talking points are focused entirely on iGaming consumer protections. He claims repeatedly that iGaming exploits youth and the vulnerable by enabling addiction and being too easy to access. When he’s told that underage and problem gambling affect the landbased industry as well, Adelson credits a land-based gaming environment with being much better equipped than the internet to confront and diminish both challenges. Practically everyone who has some sort of investment in U.S. regulated iGaming has come to resent Adelson for his incendiary remarks, and there has been no shortage of online literature rebelling against him. Sometimes, the bitterness he instigates among his adversaries gives way to the total op-

Global Gaming Business APRIL 2015

posite of the same extremism: a passionately defensive belief that internet gaming isn’t just as safe as brick-andmortar—it’s safer. But is that really true? Disparaging Adelson has certainly become fashionable among some circles; so has taking it for granted, if you’re against him, that he’s just “wrong,” even if you don’t understand algorithmic science any better than he does. But that isn’t an honest way to address the controversy—nor is it necessary in view of all the re“Kids can get around sources available to the anything these days.” iGaming industry in support of this issue. If you —Sheldon Adelson, Chairman, took Adelson’s claims at Las Vegas Sands face value, you would think there’s practically nobody in the world who goes the extra mile to make sure kids can’t gamble on Daddy’s computer. In reality, by the time a regulated internet gaming platform goes to market, it’s been vetted by an industry the size of an army dedicated exclusively to the study, development, testing and refinement of iGaming consumer protection technology, carried forward by the work of thousands of smart, eloquent people who can tell you exactly what Sheldon is missing. We were lucky to talk to a few of them.

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BEST IN THE BUSINESS?

DAMN “A 12-year-old sat at a slot machine for at least half an hour, and the only reason she was ever identified is because she won a jackpot.” —Kevin Mullally, Vice President of Government Relations, GLI

Safety First Most of the time, iGaming operators aren’t even required to develop their own consumer protection devices; they are free to outsource this to any one of the numerous suppliers who exist to make sure Junior can’t play. CAMS, run and founded by Matthew Katz, is one of the companies that leads this space. Even vendors like CAMS are often subject to additional scrutiny by independent testing and compliance labs such as Gaming Laboratories International (GLI), which specialize in making sure gaming platforms, analog or digital, function exactly the way regulations require them to. Regulatory standards can vary by jurisdiction, but the “big three” principal preoccupations of iGaming consumer protections can be listed thus: operators must make sure access to the iGaming product is denied to a) the underage, b) people outside the geographic area in which the product is allowed to operate, and c) the “vulnerable”—typically this means those given to problem gambling, and the self-excluded. Coincidentally—or not—Adelson thinks iGaming fails at all three. In his personal criticism of iGaming—for reference, see his keynote interview, also with Roger Gros, at G2E 2014—Adelson frequently claims the reliability of age and identity verification online is questionable, because you can’t ever be completely sure—meaning, see with your own eyes—who is behind the computer screen. By contrast, Adelson says, land-based casinos like the giant ones he owns in Vegas and Macau are stalked around the clock by well-trained patrolmen. This, supposedly, would make land-based gaming less permeable to illegitimate play. What Adelson glaringly fails to mention is that unlike its regulated online counterpart, the land-based gaming environment is completely without a sign-in requirement. In online gaming, users are asked who

they are up front, before being granted access to the product. Not so in land-based. There is no preemptive device of any kind standing in the way of a child and a slot machine. It is certainly fair to acknowledge the presence and competence of the casino employees who do keep an eye out for underage players and act appropriately when they think they’ve spotted one. Adelson’s properties undoubtedly employ many of these fine workers. But the enforcement is almost always retroactive—the child is apprehended after he has started playing—instead of proactive—the child is denied play before accessing the product. This isn’t just theory. As anyone who has worked the floor knows, underage gamblers are busted all the time. Prior to his current role as vice president of government relations for GLI, Kevin Mullally was the executive director of the Missouri Gaming Commission. “I can recall very vividly two instances of an underage player gaining access to a physical casino,” he told GGB during the GLI Regulators Roundtable in Las Vegas earlier this year. “One was a 6-foot-4, fully mustached, slightly balding 20-year-old, with sunglasses on. He was caught because he was intoxicated, not because he was ever ID’d as an underage player. “Another was a 12-year-old who sat at a slot machine for at least half an hour—that we know of—and the only reason she was ever identified is because she won a jackpot.” Let’s consider what would happen if the same 12-year-old girl tried to gamble on a U.S. regulated iGaming site. It is extremely doubtful she would have as easy a time of it as she did in Missouri, where she was able to literally just walk in and start placing bets. Online, the very first thing she is asked is: Who are you? Date of birth? Address? Social security number? Credit card information? This isn’t a mere formality, or some useful way

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to keep records, explains Matthew Katz from CAMS. If not designed for the concept of state borders, and the info she enters doesn’t check out, access is denied, therefore, the risks are greater for geolocation on the plain and simple. “Online, we take the information prointernet than they are for land-based.” vided by the user and we hit it against hundreds—if not So in spite of the deployment of notoriously strinthousands—of different public and private databases gent geolocation technology like we’ve seen in New (consumer information, credit bureaus, etc.) plus milJersey—where people who live too close to the border lions of different data points, to compare the informacontinue to have trouble signing in—there is always a tion provided by the user to as many available resources possibility, no matter how small, of a glitch, or an “Internet gaming has not as possible.” error, or a server crash, which will always account for This does not sound like the kind of thing you see a been a problem. It has an online geolocation success rate under 100 percent. video poker machine do very frequently. Ironically, this technical Achilles’ heel is the one not been a regulatory But Katz goes on: Adelson brings up the least often—perhaps because headache for us by “We can cross-reference this information against it’s not as dramatic. It certainly evokes a lot more outany stretch.” these databases and determine: Does what the user is rage to envision a child playing online poker versus a saying match what we see? If there is concern, we can go hipster doing the same in Bucks County. It is also up—A.G. Burnett, Chairman, Nevada back to the user and ask additional questions—this is setting to imagine that a ubiquitous internet gaming Gaming Control Board called knowledge-based authentication (KBA). For explatform could enable the self-destructing habits of ample: ‘Of the following five addresses, which one have people who are at risk of gambling addiction. (Adelson you not lived at in the last 10 years?’” and the like-minded have a catchy proverb for this: “Click Adelson says all the measures are doomed to fail, since “kids can get around a mouse, lose a house.”) anything these days.” Adelson says internet gaming won’t just endanger problem gamblers; it It’s worth dwelling on this incredible generalization only to marvel at what will also create new ones. But Connie Jones, director of responsible gaming for the average child would need to do to successfully “get around” this system. Bethe Association of Gaming Equipment Manufacturers (AGEM), argues that cause it’s certainly possible. If a child can lay his hands on Daddy’s wallet, he these are only speculative suppositions at best. As far as we can tell, no body of could reasonably expect to find Daddy’s license (DOB: check), credit card inwork or research exists that demonstrates a correlation between regulated information and, with any luck, a Social Security card. ternet gaming in the states and countries that have it and an increase in the inBut this enterprising young degenerate will also need Daddy’s cell phone. All regulated iGaming sites in the U.S. make use of mobile phone verification for every registration and successive login. Primarily, this is for geoverifica“A digitized gambling tion purposes—but at a time when kids and adults alike are more reluctant to product is the only one part with their phones than their wallets, it’s also a very convenient way to assume the person behind the screen and the owner of the phone connected to that can offer the unique the account are the same person. Additionally helpful are mandatory PIN codes, ability to detect, monitor which are texted anew every time a user wants to withdraw or deposit funds. and subsequently try to Maybe Daddy came home, left his jacket at the entrance with all his stuff in mitigate problem it, and went to take a nap. Score! Wallet in one hand, phone in the other, Junior is now guaranteed to get away with this illicit infiltration scot-free. gambling.” As long as he also has control of Daddy’s email and can intercept his bank —Connie Jones, Director of Responsible statements. Gaming, Association of Gaming That’s because all regulated iGaming transactions would come with an Equipment Manufacturers email receipt. “Your $1,000 deposit has been approved,” is what WSOP.com would dutifully let you know. Of course, he might never find out if Junior had the good sense to delete that email, which he can probably access on Daddy’s mobile—as long as he can also figure out Daddy’s unlock code, an increasingly cidence of gambling addiction. Jones points to the U.K., where internet standard feature of smart phones today. gaming has been regulated for years, no discernible spike in problem gambling was ever recorded. Location, Location, Location This is not the same as saying that internet gaming absolutely, positively This is the part where some iGaming proponents stop reading and proudly exdoes nothing to upset or complicate people’s lives—particularly for those who claim, “See? We told you iGaming was safer!” are already at risk for problem gambling—because maybe it does, or it might Not so fast. Take geolocation. Can even the most cutting-edge geoverificain the U.S., and we simply haven’t got the means to measure it yet. tion platform match the land-based industry’s 100 percent success rate ensuring But Adelson does the credibility of his argument no scientific favors by the gambler is within the legally permissible gambling area? trying to support it with repeated references to his family’s past struggles with “Geolocation is a totally different animal,” Katz explains. “If you’re in a addiction. This would not be admissible evidence in any laboratory. With apland-based casino, you are obviously physically there. Online, geolocation was propriate respect to the hardships the Adelson family has undoubtedly en40

Global Gaming Business APRIL 2015

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dured, it’s just hard to see how gambling on a computer will cause one harm because Adelson Sr. had a fondness for the racetracks. If anything—and here the iGaming cheerleaders can record another win for their cause—a digitized gambling product is the only one that can offer the unique ability to detect, monitor and subsequently try to mitigate problem gambling. The power of being able to track every hand, decision and transaction is simply too great to ignore or undervalue. The mandatory signin process allows an iGaming operator to connect and deal with every user up front in a manner completely foreign to the land-based environment. Come to think of it, the meager standards of problem gambling mitigation in the land-based environment are—there is no better word—embarrassing when compared to certain iGaming measures, like what Jones tells us is called “reactive messaging,” which are mandatory in some states, notably New Jersey. Reactive messaging was adequately illustrated in a YouTube video showing UFC President Dana White playing online blackjack on now-defunct Ultimate Casino inside a hotel room in Atlantic City. “I like how this thing tells you how long you’ve been playing,” White says before humorously paraphrasing what the system is telling him: “You’ve been playing for two hours, you sick bastard; go home!” Which is exactly what he did, shortly after.

Once again, this is not to say that this system is foolproof. White could have easily ignored the message and kept playing; undoubtedly, many users in his position would. But when we compare the mere existence of these measures, and their modest ability to achieve some success, to the utter absence of anything even resembling reactive messaging in today’s U.S. land-based environment, one can’t help but wonder why it is iGaming that gets all the heat. When was the last time a slot machine asked you who you were? Or bothered to inform you how long you’d been playing, and how much you had wagered? The answer is: never.

Better or Worse? Compelling as it may be, this side-by-side comparison of online consumer protections versus their land-based equivalent does little to determine whether internet gaming should be legal. Nor is the end goal to award recognition to which side is “better.” An impartial and rational examination of all issues inevitably leads to the conclusion that consumer protections on each side are vulnerable to some failure, and online and land-based regulations alike are limited in their capacity to prevent all wrongdoing before it is committed. But this incapacity is hardly singular to gaming, live or online. Nothing tangible beyond plain good conscience can consistently stop an adult from buying alcohol legally and handing it to his kid the moment he gets home.

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Ultimately, with gaming as with every controlled product or potential vice, we are forced to rely on the general good sense of responsible adults. As for minimizing the damage perpetrated by the opposite of good sense, the best we can ever do is develop reasonable punitive measures that can discourage violation and contend with it when it’s discovered. “I don’t think you can ever be sure. I don’t think there is ever 100 percent certainty, in online or land-based casinos, that everything is being done legally every minute of every day. But that’s why you have regulations and compliance functions to alleviate the risks and to minimize the damage as much as possible.” Those are the words of A.G. Burnett, chairman of the Nevada Gaming Control Board, which has overseen the regulation of intrastate online poker for almost two years. And if there has been some sort of outbreak of iGaming addiction or widespread incidence of super-kids besting the system during this period, Burnett certainly hasn’t seen it. “Internet gaming has not been a problem. It has not been a regulatory headache for us by any stretch,” Burnett says. “Age and ID verification, protecting the vulnerable... Those were all at the forefront of our minds when we went forward with the iGaming regulatory process. Looking back, none of those things has been a serious issue.” When Burnett concludes by claiming that the threats to game integrity are practically the same online as they are for land-based, it should make us realize

this debacle is becoming way too divisive—and the only loser will be the gaming industry as a whole. By continuing to degrade the vitally important issue of consumer protections down to a contest over which form of regulation is “better,” we forget that live and online gaming regulations are supposed to work together to address many of the same problems. An especially powerful viewpoint to this effect is supplied by Mackenzie Haugh, director of engineering for GLI, who has tested, evaluated and tinkered with more iGaming consumer protection platforms than possibly anyone else in this space. “There is some truth in many of these arguments,” says Haugh. “It does not matter what ‘side’ you’re on. If you’re trying to make internet gaming fail, you will. If you’re trying to make it a success, you will. So what are your goals? Regulation is about urging prevention and coupling it with disciplinary action. It’s not about absolute prevention. Nothing is ever absolutely preventable. “What I would say to Adelson is: Give us a list of what you have a problem with. Because I guarantee that, on a technical level, all of it could be addressed.” It’s hard to imagine Adelson changing his mind about internet gaming in the near future. But it’s not impossible that Las Vegas Sands may one day decide to enter the space. Should that day ever come, the company would be glad to find that much, much progress in the way of iGaming consumer protections has already been achieved by the very same people who are presently under accusation of enabling kids and the vulnerable to do harm to themselves.

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iGAMING NORTH AMERICA

Making the Connection The role of social gaming in the opening of the U.S. iGaming market, Part II

ast month, we began a discussion of how social gaming is playing a part in preparing the gaming industry for real-money iGaming. While some companies draw a bright line between the two forms of iGaming, others are using social gaming to ramp up their expertise in preparation for legal real-money iGaming. According to a survey by the Innovation Group, in the fall of 2014, 85 percent of operators were preparing for real-money iGaming while 75 percent and 67 percent, respectively, were preparing for social gaming and free play. Operators appear to be hedging their bets, but they, I believe, see real-money gaming as a thorny legislative issue and have also invested heavily in assessing the value of free play and social gaming.

In the same survey, operators were asked to characterize their level of commitment to social media. Of the total, 89 percent said they had a moderate to major commitment to social media.

Global Gaming Business APRIL 2015

By Paul Girvan

This suggests that land-based operators do take social media seriously, and more than a few already see social gaming as the way forward. This coupled with the analytical capabilities inherent in social gaming provides a strong rationale for land-based companies to get fully engaged in social gaming as part and parcel of their overall social media program. I expect land-based operators will look to social gaming in the next couple of years as efforts to legalize real-money iGaming flounder. To maximize the impact, land-based operators will need to view social gaming the same way as any other marketing program that needs to show a positive ROI. To achieve this, land-based companies need to leverage the data mining and marketing expertise of the social gaming operator (or other third-party experts) to induce the maximum monetization of social gaming itself, and to drive customers from the online platform to the landbased casino (and vice versa). Social gaming operators should view U.S. land-based casinos as a major market. This should not only include the potential for initial software sales and installation, but should also include specific data mining and targeting efforts on an ongoing basis to help monetize the social gaming offering and to achieve the cherished goal of the land-based casino by increasing visitation. Eventually, land-based operators will catch up, and will develop these skills through training or new hires. But for now, the opportunity exists for social gaming operators to show how their products and expertise can result in long-term, measurable benefits to land-based operations. Land-based operators need to be open to the concept

that their marketing and IT staffs will be required to work closely with the social gaming operator to craft effective marketing and promotional campaigns launched through social gaming, with the view to increasing landbased visitation and revenues. Several companies have already moved in this direction, with Caesars Interactive as a prime example. Others such as Penn, MGM and Wynn could follow suit, looking to acquire social gaming companies to provide them with the needed expertise. Churchill Downs has proceeded in both directions, hiring an in-house staff of up to 50 individuals while also buying Big Fish Games, a social gaming company with a focus on mobile games. Others will likely build the expertise incrementally over time through in-house hires. Many others, especially smaller landbased casino companies and Native American tribes, will look to the social gaming operator to provide the solution in terms of the platform. Critically, though, it is the data analytics capabilities that will provide these smaller land-based operators with the effective programs needed to achieve their goals, and these services should be central to any outreach from social gaming operators (and other third-party experts) to land-based casinos. Once social gaming has been implemented, the road to real-money gaming will eventually become smoother, and the expectations more realistic than they have been up to now. Paul Girvan is a managing director with the New Orleans office of the Innovation Group with 25 years of experience advising clients across the gaming industry. Girvan leads the firmâ&#x20AC;&#x2122;s iGaming practice. Contact Girvan at girvan@theinnovationgroup.com or 504-5230888. The Innovation Group is one of the partners in iGaming North America, being held at Planet Hollywood Las Vegas, April 14-16.

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Enemy of My Enemy?

he acquisition of PokerStars by Amaya Gaming seems to be melting away opposition to the online gambling company entering a possible California online poker market. Caesars Entertainment officials are the latest to back PokerStars’ bid in the state. Jan Jones Blackhurst, executive vice president of communication and government relations at Caesars Entertainment Corporation, told GamblingCompliance that PokerStars “should be considered for legalization in the U.S.” Blackhurst also said Caesars needs “to focus on where our opposition really lies, and clearly it’s not Amaya and PokerStars. They are a strong ally in the space.” That “opposition” may be a move to enact a federal ban on online gaming in Congress. A bill to outlaw online casino games in the U.S.—backed by Las Vegas Sands owner Sheldon Adelson—has been re-introduced in Congress. Reports say Caesars and PokerStars want to work together to oppose the ban. Caesars had backed a proposed “bad actor” clause in any potential California online bill that was seen as blocking PokerStars due to its past

Portugal OKs Online Poker Regulation

n February 26, the Portuguese Council of Ministers approved legislation to regulate online poker. “The bill will proceed with the regulation of online gambling in line with the recommendations issued by the European Commission on this matter and the international best practices,” the government said in a press release. Portugal’s former state monopoly was perceived as technically going against the E.U.’s freedomof-trade rule. The regulatory structure, to be authorized by President Aníbal Cavaco Silva, will oversee

Global Gaming Business APRIL 2015

Caesars Entertainment communications exec Jan Jones Blackhurst

problems with the U.S. Department of Justice. The DOJ shut down PokerStars in the U.S. in 2011 for accepting U.S. players’ bets after passage of the 2006 Unlawful Internet Gaming Enforcemant Act. PokerStars did not admit wrongdoing, but paid a $700 million fine to settle the lawsuit. The company has also lobbied against the licensing of PokerStars in New Jersey—where there is no bad-actor clause—where the license investigation continues. But last year’s sale of the company to Amaya divested the company from any PokerStars executives involved with the DOJ’s lawsuit against the company. Caesars and Amaya clearly have a better relationship. “We no longer are seeking a bad actor clause in any state,” Blackhurst said in an email to the Las

online poker, online casino and online betting, and hopefully reap new fiscal revenues of approximately €25 million (US$27.5 million). Once signed into law by the president, the regulations will launch a new license-based market similar to those in Spain, Italy and France. Authorities say the first licenses, which will be renewable and valid for three years, could be issued during the third quarter of 2015. The Turismo de Portugal will be in charge of enforcing the regulations through a newly established gambling commission. Games of luck and chance, gambling games and horse-race betting will be taxed at between 15 percent and 30 percent of gross gaming revenue, based on revenues generated; casino and poker operators will pay 15 percent tax if they generate less than €5 million a year, with a 3 percent increase for every additional €1 million. Sports betting also will be taxed on a sliding scale, from 8 percent to 16 percent. As for the landscape of the market, there is considerable tax disparity between the types of online gambling.

Vegas Review Journal. “With the purchase by Amaya, we believe PokerStars is cleansed of the taint, and regulatory approval should be left to the regulators.” PokerStars has an agreement to operate online gaming in California with the Morongo Band of Mission Indians and the San Manuel Band of Mission Indians, as well as three Los Angeles-area card rooms. Blackhurst’s comments also come after the Rincon Band of Luiseño Indians, Caesars’ online and land-based partner in California, as well as the Pala Band of Mission Indians and the United Auburn Indian Community also softened their attitude toward PokerStars. The three tribes had been among about 13 tribes in the state pushing for a strong bad-actor clause that likely would block PokerStars in the state. The Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians remain strongly opposed to any bill that would permit the entry of PokerStars, however, and their support is seen as vital to any online poker bill passing in California.

William Hill Ends 888 Takeover Talks

t barely started, and now a move by British bookmaker William Hill to acquire 888 Holdings appears dead. 888 announced it had ended talks about the possible takeover. William Hill reportedly offered to pay £700 million, about US$1.1 billion, for 888, but the companies were unable to reach a deal because of a “significant difference of opinion on value” by a major investor, 888 Holdings said in a press release. “Due to a significant difference of opinion on value with a key stakeholder, it has not been possible to reach agreement on the terms of a possible offer, and the board of the company has agreed with William Hill to terminate discussions,” 888 said in the statement. The company did not identify the investor. However, trusts tied to the Israeli Yitzhak and Shaked families that founded 888 Holdings control about 60 percent of the company’s shares, according to data compiled by Bloomberg News.

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Pennsylvania Partners?

ennsylvania may be the second-largest U.S. market for casino gaming, but a new bill to allow online poker in the state recognizes that when it comes to online games, the more players the better. The bill was introduced by state Rep. John Payne and is seen as the first serious attempt by the state to legalize online gambling. The bill has been submitted to the Pennsylvania House Gaming Oversight Committee. The bill speaks primarily to online poker, but could allow for other types of online casino games. Proponents of online gaming in the U.S. immediately noticed the bill’s provisions for allowing interstate player sharing, which is seen as vital if online poker is going to grow as an industry. Pennsylvania Rep. John Neighboring New Jersey, for example, Payne has introduced an iGaming bill has had online gaming for more than a year, but online poker play has only been successful at four sites, as opposed to casino games and slots, which have thrived at several sites. Nevada and Delaware—the other two states allowing online play— have already signed a pact to combine player pools. Both states have small populations and have only seen limited play. Their agreement is expected to go into effect in the next month. The Pennsylvania bill also gained attention for not including a “bad actor” clause. That could help PokerStars finally get a foothold in the U.S. Other aspects of the bill include: • a 14 percent tax on gross revenue; • licensing exclusive to companies already licensed by the state; • a licensing fee of $5 million per license; and, • limits on deposits and losses, along with tough determents against underage or problem gamblers and criminal activity.

California iPoker Remains Murky

he iGaming Legislative Symposium held last month in Sacramento gave few clues as to whether iPoker will actually be legalized by the California legislature. The keynote address was given by Assemblyman Mike Gatto, who introduced the first such bill (AB 9) at the beginning of 2015. He told the audience that originally he felt that a bill’s passage had a 5050 chance. Now he thinks the odds of passage are about 35 percent. He blamed the various interest groups, dominated by gaming tribes, but includ- California Assemblyman ing card clubs and even racetracks, for refus- Adam Gray will control the iPoker legislation in ing to compromise enough for a bill to his house garner sufficient votes. He said the intransigence of the major players has led some lawmakers to wonder, “Why do I even want to vote for this bill?” The bill, he said, is not especially interesting to most residents, so

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politicians are not excited by it. He said he has received very few emails from constituents about the issue out of more than 57,000 emails he received last year. During the symposium, Steve Bodmer, attorney for the Pechanga Band of Luiseño Indians, said the tribe—although it supports Gatto’s badactor clause that could prevent PokerStars from participating—is more concerned about preventing racetracks from getting into the game. “You can’t play poker at a racetrack,” he observed. Allowing this expansion of “non-Indian” gaming would violate the state-tribal gaming compacts, he argues. Racetrack lobbyist Robyn Black didn’t buy this line of reasoning, asserting that iPoker is a new form of gaming and that all entities now engaged in gaming have a right to be included. The racing industry’s support may be needed to pass such a bill, said Black. Estimates are that seven gaming tribes remain rock-solid in their opposition to racetracks as well as to PokerStars. At the same time, Assemblyman Adam Gray and Senator Isadore Hall, chairmen of the Government Organization committees of their respec-

tive chambers, have introduced what are known as “shell bills,” that would give them control of the particulars. That doesn’t necessarily mean they support online poker, just that they want to control the bills, say Sacramento insiders, including Gatto. However, Keith Sharp, who represents several of the largest card rooms, commented, “This is the first time we’ve had both GO chairs step up and say, ‘We are taking control of the issue.’” He added, “I think this has sort of suggested there’s a newfound momentum.”

Resorts Atlantic City Goes Live With Online Gambling

esorts Casino in Atlantic City has become the latest player in New Jersey’s approved online gambling sites. The state Division of Gaming Enforcement approved Resorts’ online site for full online gambling after the casino completed a five-day test. The test verified that the casino’s equipment and systems are working properly. The casino said it will now begin several

weeks of beta testing. Gamblers at ResortsCasino.com will play for real money during the beta test, and a full launch of the site is planned within a few weeks, Resorts President Mark Giannantonio said. “During our beta period, we will invite players to sign up and provide feedback on the user experience, while we add additional features before our official launch,” Giannantonio said in a press release. “Real-time feedback will be an important aspect of our beta period as we further enhance the gaming content and features to produce the best casino experience in New Jersey.” Resorts becomes the sixth of Atlantic City’s eight casinos to offer internet gambling, along with the Borgata, Golden Nugget, Tropicana, Caesars and Bally’s.

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Resorts is also partnered with PokerStars to provide online gambling, but the online giant is still waiting to be approved for online gaming in New Jersey. The new site offers only casino games and slots, but not online poker. Resorts’ site is offered in partnership with Sportech and NYX Gaming. Rich Roberts, president of digital, U.S. for Sportech, said, “We are delighted to have received approval from the division following their review of www.resortscasino.com. We are now processing bets in the largest U.S. state to have legalized online gaming to date. Our joint venture with NYX for real-money gaming and play-for-fun platforms will be made available to both our existing and new customers in the U.S. and Canada as regulation permits.”

Online Gaming Back in South Africa?

nline gaming is once again on the table in South Africa. Democratic Party MP Geordin Hill-Lewis has introduced the latest in a line of bills to legalize the activity. Hill-Lewis’ latest legislation would expand online gaming beyond sports betting to include online poker, bingo

tion on the part of the government to propose the legislation of online gambling.” And Themba Ngobese, CEO of the Casino Association of South Africa, blames illegal online games for a decline in revenues at South African casinos. Growth slowed from 10 percent in the 2012-13 fiscal year to just 0.6 percent in 2013-14. Presently, South Africa only allows sports betting online. South Africa lawmaker Geordin Hill-Lewis

and casino games. He is going up against the African National Congress, which commands a significant majority in parliament and opposes the expansion. Hill-Lewis is a member of the South African Parliament representing the Democratic Alliance (DA), who have been the official opposition at national level since the 1999 general election. According to CalvinAyre.com, the latest Remote Gambling Bill is “largely identical to Lewis’ previous efforts,” and like previous versions, “is expected to die from neglect” due to strong opposition. Last month, South Africa’s Department of Trade and Industry asserted there is “no inten-

Italy Eases Up Online

his year could be a good one for online gaming operators in Italy, with a less onerous tax structure and better wagering options. The biggest change would be in the burdensome tax on betting turnover, which now ranges from 2 percent to 5 percent. The new framework would levy a 20 percent tax on gross gaming revenue, the same framework now in place for online poker and casino verticals. The tax rate would also be flexible; depending on market performance, the 20 percent rate could be reduced. Sports betting operators also would see an end to the so-called “palinsesto ufficiale,” the official list of accepted wagering types.

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Being Self-Served Why kiosks are an important link to your customers By Dave Bontempo

iosks remain the heartbeat of gaming functionality. Find them in gaming lobbies and floors, enabling customers to gain faster cash access, loyalty information and specialized betting opportunities. Beyond dispensing cash, the modern-day kiosk needs ticketin/ticket-out capabilities, check cashing, credit-card access, PCI-compliant PIN pad, bill validators and a partridge in a pear tree. Gaming obtains a slice of the worldwide interactive kiosks market, estimated to exceed $1.2 billion before this year ends. Creativity continues to abound. MGM Resorts in Las Vegas installed some iSports terminals about six months ago. Positioned near the sports book, they give patrons a self-serving option to place bets, gain handicapping information and access local promotions after becoming operational later this year. For now, customers are using these kiosks to make dinner reservations and buy show tickets. They use different kiosks, at lobbies, for checking out and printing boarding passes. Vendors can approach the market from varied directions, but one common denominator looms: speed. Touch-screen checkout kiosks enable customers to play another half an hour before leaving. Jackpot dispensers put players back into the game faster. Specific software stores long-term promotions information, accessible by a single kiosk card swipe. These promotions inspire prolonged customer loyalty by way of a game that can go on for months.

Jackpot Software Las Vegas-based DiTronics handles nearly $3 billion annually, or about $7 million a day. It has long specialized in in check-cashing, ATMs, kiosks, etc.,

Global Gaming Business APRIL 2015

servicing 450 casino operators. It helps casinos in the compliance area by offering a comprehensive library of more than 70 reports. They encompass market offerings as well as financial audit and balancing reports across all applications. Access is provided securely and is available from any internet-enabled device. On the hardware side, it showcases DFS-200 All-N-1 ticket redemption solution, rated to handle more than 1,000 daily transactions, according to Jim Kirner, senior vice president of sales and marketing. In the software area, DiTronics offers innovations it might consider in-“dispense”-able. Jackpot Dispense debuted at a midsize casino in March and will be fully unveiled at NIGA. Speed is paramount. “Now, you won’t need a separate $55,000 device that is used just for jackpots,” Kirner asserts. “Jackpot Dispense can be used in any kiosk that has this new software. It enables the player to gain the payout at a kiosk near where he is playing. It also eliminates a trip to the cage. If he hits for DFS-200 All-N-1 ticket redemption solution, rated to handle more than 1,000 daily transactions.

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more than $1,200, casino personnel will get the tax form and bring it to him.” The system alleviates the mixed blessing that comes with hitting big. The payout is nice but the paperwork can be time-consuming, especially when a long cage line exists. And even worse if someone gets stuck behind another player who nailed a jackpot. Kirner recently experienced an event that underscored his faith in another DiTronics software feature, Smart Dispense. It allocates bill denomination for appropriate areas, supplying large notes in machines near the high-roller area and smaller bills, like 20s, in a kiosk near estaurants. The system addresses situations in which customers gain a large bill in a place they can’t break it. As Kirner discovered. “I never have money on me,” he laughs, “so one day when I decided to take my 5-year-old daughter to the movies and a park, I took out $300 from a machine. What do you think it gives me? Three $100 bills. Now we have a half hour to kill before the movie and we are right next to a bowling alley and an arcade, and I can’t break it there. “It required a trip to another machine to break it, but for the $100, all I got was five $20 bills. You still can’t use that in the arcade. I had to go back to the kiosk and finally break the 20 to give me the note I can use in the arcade. “Think about the wear and tear on the kiosks. Three transactions instead of

one. All of the time involved. You also end up with an irate and unhappy customer.” Playing his experience forward, the absence of applicable bills may cause frustrated customers to walk away from the establishment rather than patronize it. Kirner says Smart Dispense is set up by kiosk, gaming floor and zone. In the not-too-distant future, it will probably contain personalized information. Someone using a card will be able to obtain notes customized for his level of play. DiTronics constantly writes new software to speed play, service and an operator’s ability to see the customer, Kirner says. The company’s interface to the casino player database provides configurable, variable cash-access pricing and enhanced check-cashing features. Another company product, Transaction Rewards, offers greater insight into player cash-access usage and patterns that also provide value-added data for marketing, Kirner asserts. Features include play-driven check-cashing limits, automatic segmented fee discounts, fee payment via club points or comps and consolidated player tracking and cash-access reporting.

APRIL 2015 www.ggbmagazine.com

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The MGT promotional system allows casino marketing departments to configure and automate several types of promotions with a touch-screen kiosk. They include electronic drawings, new member bonus, earn-and-get, swipe-to-win, bounce back, demographic and play-based promotions. Good Micro Manager Las Vegas-based Micro Gaming Technologies has capitalized on the first word in its name. Micro could define the micro-managing demands upon casino marketing departments. “There is constant pressure to outperform budgets,” says Travis Carrico, vice president of sales and marketing for the company, which designs and develops software to automate, track and report casino promotions. The MGT software applications interface bi-directionally with existing player tracking systems (Aristocrat, Bally, IGT, Konami) and a touch-screen kiosk. “They need tools to automate the marketplace,” Carrico adds. “We not only turn these kiosks into employees, but very sophisticated employees. They know every single player in their database, the value of each player and what marketing reinvestment is suitable for that player. The kiosk is an extension of the player’s club.” With speed as a catalyst. Carrico says promotional and rewards lines are long enough—30 minutes in some instances—to discourage participation. But take an email offer, make it available via the swipe of a loyalty card and customers can begin playing. Continued demands upon kiosks have produced a fertile market for MGT. Carrico says the company has enjoyed significant growth, from 15 casino properties several years ago to 180. It has installs throughout many Boyd, Pinnacle and Affinity Gaming properties. MGT software exists primarily at kiosks specifically designed for marketing. A general rule of thumb calls for one marketing-specialized kiosk for every 300 slot machines, Carrico says. A swipe of the loyalty card puts the company’s software into motion. Its latest product, Promo App Module, is an extension of its Promo Intelligence Suite now in version 4.5. Promo App Module launched last September. It is a logical extension of the Intelligence Suite, which debuted in 2001 and is an integrated set of computer applications interfaced to the player tracking system. The MGT promotional system allows casino marketing departments to configure and automate several types of promotions with a touch-screen kiosk. They include electronic drawings, new member bonus, earn-and-get, swipe-to-win, bounce back, demographic and playbased promotions. The Promo App Module expands the concept to games, even long-term ones. Lucky numbers and keno have become popular promotions, Carrico says. As has bingo. “Think of the Monopoly game at McDonalds in which you can win 52

Global Gaming Business APRIL 2015

prizes instantly or collect each prize to fill up your game board,” Carrico says. “You want to keep coming back. It’s the same thing in a casino environment. If you ran that type of promotion and tried to keep track of it manually, that would be next to impossible, and a nightmare. But now you can automate it, track the progress of the player, know how many game pieces he has and control the game through the kiosk. A player can check and see that he needs a few more points to get four ball draws and maybe cover one or two more numbers to get $50 of free play.” Promo App Module enables casinos to store the information long-term. It can instantly post prizes to a player tracking system, including points, comps, slot free play and multipliers.

Financial Advantage For Cincinnati-based Vantiv, the kiosk is one spoke in a colossal wheel. The company provides payment and technology services to merchants and financial institutions in the United States. It processes more than 20 billion payment transactions along with more than $700 million in volume annually. Vantiv supports approximately 400,000 merchant locations and more than 12,000 automated teller machines in 46 states and eight countries. Those numbers are constantly rising.

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Vantiv services industry giants Walmart and CVS, Walgreens, Nordstrom and Kroger, among others. So what attracted this heavyweight to the casino world? Gaming, and the payment systems required to make it run, spiked the companyâ&#x20AC;&#x2122;s interest to enter this realm by forming Vantiv Gaming Solutions in 2013. Joe Pappano, who had cultivated contacts with operators, banks and vendors for several years, brought his companyâ&#x20AC;&#x2122;s resources into what he considered an industry ripe for double-digit growth. If someone wants to use a card to fund gaming purchases, Vantiv provides the connectivity to allow that transaction to occur. â&#x20AC;&#x153;We are bringing all legs of the stool together,â&#x20AC;? says Pappano, a 23-year Vantiv veteran and the senior vice president and managing director of Vantiv Gaming Solutions. â&#x20AC;&#x153;Somebody may want to go online to play. Somebody may wish to use a mobile device. Somebody may want to have a transaction in the casino. Whether it is online, mobile or the brick-and-mortar structure, we have the infrastructure to allow an operator to follow their customers. We connect all points of interaction. â&#x20AC;&#x153;I think, in a Utopian world, the kiosk becomes an extension of the land-based operator or the state lottery,â&#x20AC;? Pappano adds. â&#x20AC;&#x153;What everybody is learning is that you canâ&#x20AC;&#x2122;t be one-dimensional. â&#x20AC;&#x153;The kiosk is a way to drive additional revenues, to extend the reach for the customer. It also remains valuable for checking in at the hotel or with loyalty status. Itâ&#x20AC;&#x2122;s the heartbeat extending my broader distribution.â&#x20AC;? Pappano says he is pleased with the convergence of the gaming and payment industries, and considers the growth sustainable. Vantivâ&#x20AC;&#x2122;s array of merchant service includes credit and debit card processing, loyalty programs, ACH and other alternative payment services, PCI and breach assistance, prepaid loyalty and rewards programs, encryption and tokenization, along with data analytics. The areas they serve include iGaming, state lotteries, advanced deposit wagering, casino operations, fantasy sports, social and digital gaming. Lotteries and race-and-sportsbook operations, including those that augment their live book with 24-hour stand-alone kiosks, also appear to be fertile revenue opportunities. Pappano considers electronic gaming devices, security and the evolution of the relationship between gaming and credit-card companies as major areas for potential.

â&#x20AC;&#x153;Somebody may want to go online to play. Somebody may wish to use a mobile device. Somebody may want to have a transaction in the casino. Whether it is online, mobile or the brickand-mortar structure, we have the infrastructure to allow an operator to follow their customers. We connect all points of interaction.â&#x20AC;? â&#x20AC;&#x201D;Joe Pappano, senior vice president and managing director, Vantiv Gaming Solutions

Toward that end, he believes a major breakthrough has occurred. New merchant category code regulations for gaming have been adopted by Visa and MasterCard. They go into effect April 17, unlocking methods of funding gaming that had previously been blocked, he says. It is a substantial development, given the longstanding concern for security breaches expressed about gaming by the banking and creditcard industries. The companies that sell kiosks to casinos want to help them streamline operations by becoming faster. To accomplish these objectives, vendors may need to ask casinos one significant question: Whatâ&#x20AC;&#x2122;s in your kiosk?

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NEW GAME REVIEW by Frank Legato

Birdy Bucks AGS

his is one of the first new games released by AGS on the Colossal Gaming platform the company acquired when it absorbed that company last year. The base game is a four-reel, 81ways-to-win video slot presented on a 42-inch vertical monitor. Comical animated bird characters celebrate different levels of wins, and six animated birds sit atop the game screen at all times. In a random base-game feature, one or more of the birds—up to all six—can fly over to the tree and perch over one of the reels, turning symbols wild. The wild birds increase the base game to 375 ways to win. Three or more bonus symbols trigger a pick-‘em bonus. The bonus sym-

bols, eggs, crack open and birds fly out of the shells to initiate the picking screen. Players are also awarded 50 credits times the bet multiplier for three triggers or 500 credits times the bet multiplier for four triggers. In the bonus, the screen shows a fountain with birds perched on multiple levels. The player receives three initial picks, revealing credit amounts, credit amounts plus extra picks, or bonus multipliers. A maximum of 10 picks can be awarded, with two 2X multipliers. The game reveals the values of the unpicked birds when the bonus ends. The game is available in both Class II and Class III versions. Manufacturer: AGS Platform: Colossal Gaming Format: Four-reel, 81-ways-to-win video slot Denomination: .01, .02, .05 Max Bet: 250 Top Award: 2,500 times line bet (Class III); 120,000 times line bet (Class II) Hit Frequency: 25.82%-27.19% Theoretical Hold: 7.95%-14.7%

Peek-A-Boo Pixie Bally Technologies

his new game on Bally’s V22/32 cabinet—featuring a 22-inch game screen topped by a 32-inch vertical top-box monitor—presents a magical pixie theme in high-definition animation. The base game, a five-reel, 40-line video slot, includes a “Mystery Stack” feature. Each reel has mystery symbol positions that are randomly replaced by qualifying symbols, increasing chances for five-of-a-kind wins. The random feature also is included in the free-spin round. There are two main bonus features. The main bonus is a wheel spin. Up to 12 Wheel Bonus symbols on the middle reels trigger up to three spins on a giant wheel depicted from the side on the tall vertical top-box monitor. It is a “U-Spin” wheel; players can touch the screen to spin the wheel, which will turn at different speeds depending on the amount of pressure applied to the spin. According to the manufacturer, the feature occurs every 156 spins on average, and returns an average of 1,296 credits times the line bet. Three scattered Free Games symbols on the middle reels trigger a freegame bonus. Players select one of four windows displayed on the screen to reveal an award of seven to 15 free games with all pays tripled. The game’s top award of 50,000 credits is won with a full screen of Peeka-Boo Pixie symbols.

Global Gaming Business APRIL 2015

Manufacturer: Bally Technologies Platform: Alpha 2 Format: Five-reel, 40-line video slot Denomination: .01-1,000.00 Max Bet: 2,500 Top Award: 50,000 credits times line bet Hit Frequency: 30.98% Theoretical Hold: 3.94%-14.77%

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The Romance of Fire & Rain Aristocrat Technologies

Stacks” consisting of one of five symbols. When a bonus Mega Symbol appears, it triggers a freegame feature. A special set of bonus symbols appears, and the player is awarded 15 free spins. The free-game feature cannot be retriggered.

his new video slot in Aristocrat’s E*Series of games designed for entertainment is housed in the advanced Helix cabinet. The base game has a unique reel layout—twin game screens display five-reel layouts, each reel containing eight symbols. There are two initial base games, “Journey of Fire” and “Strength of Rain.” Each game features a five-level progressive jackpot, with prize levels determined by the number of jackpot symbols appearing scattered on the game screen. Five to 15 jackpot symbols return jackpots resetting at $10 (Mini), $30 (Minor), $100 (Maxi), $250 (Major) or $1,000 (Grand). During the base game, if one of five matching symbols occurs in the same position on both game screens, they both become wild. The base game also features “Mega Symbols,” large symbols spanning three symbols wide by four or eight symbols high appearing on the three middle reels. Those occur randomly at the start of a spin, as do “Max

Manufacturer: Aristocrat Technologies Platform: E*Series Format: Five-reel, 40-, 60- or 80-line video slot Denomination: .01-20.00 Max Bet: 400, 600, 800 Top Award: Progressive; $1,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.25%-14.63%

Gong Xi Fa Cai

International Game Technology

his new video slot features beautiful artwork depicting the Chinese New Year theme, also reflected in the game’s name Gong Xi Fa Cai, which means “Happy New Year” in Mandarin. The five-reel, 50-line base game features an optional bonus. The minimum bet to cover the paylines is 75 credits, but if a 25-credit side bet is added, a multiplier feature is activated for both primary-game spins and free games. Some of the regular winning symbols are marked with a multiplier from 2X to 5X. With the side bet made, that multiplier is applied to any wins involving those symbols. The manufacturer says the side bet also causes the bonus features to occur more frequently. The primary game also features a mystery bonus event that leads to one of four progressive jackpots. When the mystery trigger occurs on a random spin, the screen depicts a field of jewel-filled envelopes. The player selects envelopes until three of the same jewel are revealed, triggering the progressive jackpot displayed on the corresponding color. According to the manufacturer, the reset values for the progressives are determined by the casino, but the pictured example suggests resets of $10 for the Mini, $50 for the Minor, $1,000 for the Major and $5,000 for the Maxi jackpot. Finally, a free-spin bonus features only major winning symbols, which are frequently stacked to generate large wins—particularly with the side bet adding multipliers into the mix. Manufacturer: International Game Technology Platform: AVP Format: Five-reel, 50-line video slot Denomination: All Max Bet: 500 Top Award: Progressive; Varies by Casino Hit Frequency: Approximately 50% Theoretical Hold: 3.99%-14.91%

Global Gaming Business APRIL 2015

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FRANKLY SPEAKING by Frank Legato

Evening News

ood evening. Turning to the casino industry news this evening, how good an idea is this more-casinos-in-Connecti-

Global Gaming Business APRIL 2015

VICT OR R INALD O

cut thing? A bill in the state legislature in Connecticut would create three new casinos in the state. According to the measure, they would be three “smaller casinos”—which, in a state already hosting two of the largest casinos in the world, is a fairly relative term. Not even considering that those two current casinos, Foxwoods and Mohegan Sun, are coming off fairly rough periods, three new casinos in a state the size of Connecticut would make five—theoretically employing every man, woman and child in the state. OK, Connecticut’s not that small, but still, to me, five casinos in Connecticut just doesn’t really sound a good idea right now. Not when casinos across the Northeast are attacking each other’s markets like ravenous wolves. Maybe it’s just me. I’m sure some day, you’ll be able to walk from one end of Connecticut to the other completely indoors, through casinos and skywalks. Another funny thing about this story: I read it in the online version of the Hartford Courant, and all through the story on the site flashed the other big headlines of that day, evidently a slow news day in New England: “Burger King Drops Soft Drinks from Kids’ Meals.” “Mom Shot TV Because Kids Were Watching Too Much.” “Carpenter Fired After Releasing Trapped Raccoon.” Yes, I remember seeing a piece about that trapped raccoon on Dateline. In other news, Indiana Governor Mike Pence says allowing “live dealers” (human, presumably) at Hoosier Park would qualify as an unconstitutional “expansion of gambling.” Asked how he defined such an expansion, Pence did not offer an answer. An aide assured reporters that cock fighting and rat racing are off the table in any event. No, an aide did not say that. I made it up. It’s a joke. Sorry, but it never hurts to insert a disclaimer. In still other news, they’re trying to legalize big integrated gaming resorts in Florida, in a bill that would require investors to build resorts costing at least $2 billion. The legislation would also allow slot machines at dog tracks in Palm Beach and Lee counties, presumably some distance away from the actual dogs. I’m still waiting to hear from Mickey Mouse on this one. If you recall, the last time this was proposed, Walt Disney Company fired up its lobbying corps (is it corps?) to oppose it, because it would tarnish the image of the Sunshine State. Whether it would have or not didn’t really matter. What mattered was that when it comes to lobbyists and lawyers, the Magic Kingdom is the Happiest Place on Earth. (Again, a joke. Disney is great. I give them wheelbarrows full of money every time I go.)

Next, it has become evident to me, through a story about Alice in Chains and Pixies appearing at the Horseshoe Cincinnati, that the Cincinnati Enquirer refers to the casino as “The Shoe.” Just saying. In Baltimore, the Horseshoe Casino is known alternatively as “The Shoehorn” and “The Shirt.” I’m going to stand by that one. I have it on solid information from a confidential source, who requested anonymity. Now, in a breaking news story, a current casino company official and a current slot-manufacturing executive both actually went on the record commenting on the subject of raising slot hold percentages (see page 18), marking, I believe, the first time since Benny Binion was alive that anyone has commented publicly on the subject. And finally, as of this writing, they are still planning to get what they’re calling the “Bet Beat Band” together at Planet Hollywood for the reception at the iGaming North America show on April 18. The plan is a rock combo made up of people who work in and around the gaming industry. I’m supposed to play bass for this outfit, and as of this writing, I’m hoping my pals Mick and Jason end up in the band. In case you guys haven’t decided yet, don’t let this shame you into it or anything. Oh, yes, I do the “rock thing,” as the hipsters

say. I also dance, juggle and do assorted parlor tricks. Available for birthday parties, bar mitzvahs and smokers. Rates reasonable. And that’s the news this April. Good night, and good luck.

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CUTTING EDGE by Frank Legato

All In One

Product: FABICash Kiosk Solution Manufacturer: FABICash

new kiosk solution from FABICash combines multiple functions in one cash-advance stop. The company’s proprietary cage software, FABICash, was developed by a team of in-house senior-level software engineers to provide a user-friendly solution to process credit card cash advance, debit advance and check cashing. The FABICash application is loaded with technology bells and whistles such as electronic signature capture, driver’s license capture, banned patron list and customizable fee tiers. The solution interfaces with the company’s proprietary Title 31 software, FABITrack, and with the other two major Title 31 software providers. FABI’s goal is to provide a reliable and easy-to-use system that will put more money back on the gaming floor while keeping the casino federally compliant and preventing fraud. On the kiosk front, partnering with Glory and a couple of other kiosk manufacturers, FABI engineers built a software application that takes the traditional TITO and bill-break kiosk, and turns it into an ATM. On top of the ATM feature, the cash access company is in the final stages of providing two new features on its kiosks—e-check transactions through Certegy and ATM payout with the option to print the

funds to slot ticket. The print-to-ticket ATM payout option is designed to improve customer experience and convenience, while putting more money back on the gaming floor. This also saves on the wear and tear on the kiosk cash dispenser, and will reduce the amount of cash the casino will need to have on hand to drop in the kiosks. Another example of their commitment to new technology is being unveiled at NIGA, FABICash Mobile. FABICash Mobile is a tablet device that will allow cage cashiers or slot attendants to roam the high-limit areas of the gaming floor to perform credit card cash advances, debit advance and ACH checks right at the players’ games or tables. For more information, visit fabiatm.com.

Universal Progressive Product: Infinilink Manufacturer: Scientific Games

alk across the table game area of a casino floor and you’ll see several different progressive jackpots. A table game like Ultimate Texas Hold’em will feature one progressive jackpot, while Three Card Poker will have another. Until now, these games have had separate links because the math for each game is different. Scientific Games’ Infinilink progressive system allows casinos to link multiple table games to a single progressive jackpot. With more games on the same link, operators can offer bigger, faster jackpots. Infinilink is expected to be a game-changer for table game progressives, which are becoming more popular. The system enables specialty table games with different math models to feed into one jackpot. Games featuring the Infinilink progressive play the same as they always have—players make their progressive wager to qualify for normal and Infinilink payouts, and a portion of their progressive wager goes to the Infinilink meter. The hands and rounds selected for Infinilink payouts are completely random. If a player makes a progressive wager during one of these randomly selected rounds and hits the randomly selected hand, it wins both the regular and Infinilink payouts.

Global Gaming Business APRIL 2015

Infinilink works by combining the use of a random number generator with underlying hand odds to provide the same chance of winning an Infinilink payout. This allows operators to link any pay table and any game type, regardless of the math model used, to a common jackpot. Offered exclusively on the Game Manager 2 progressive platform, an Infinilink jackpot can be used in addition to game- and title-specific jackpots to provide a flexible, tailored offering that will resonate with table game players. For more information, visit ballytech.com.

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EMERGING LEADERS Are You Experienced? Chris Sherlock

Targeting Youth

Corporate Director of Guest Experience, MGM Resorts International

t takes an incredibly versatile person to be able to not only be successful on the analytical side of gaming, but also the operational side. A strong believer of hard work and determination, Chris Sherlock is an excellent example of how one can break the barrier between the two realms of gaming. Recently promoted, Sherlock currently serves as the corporate director of guest experience for MGM Resorts International. If Sherlock was asked in the beginning of his career where he thought he would be in five to 10 years, he probably would have answered with a position that is very different than what he is doing today. Although he has been with MGM Resorts International since 2010, Sherlock has shown his versatility through the various roles he has held with the corporation, such as operations specialist, financial analyst, senior financial analyst, project manager, strategy manager and director of hotel operations initiatives—the most recent position before his promotion. When offered the promotion to director of guest experience, Sherlock gladly accepted the chance to expand his horizons, noting that this position “makes me look at the totality of the business instead of just the hotel.” Prior to his time at MGM Resorts International, Sherlock held an internship at Raymond James Financial and also earned a place in MGM Grand Corporation’s Hospitality Internship Program. In 2009, he graduated from Bentley University in Boston with a bachelor’s degree in finance, but was involved in the gaming industry from an early age due to his father’s career. Chris’ father, Bill Sherlock, worked his way up from a front desk audit clerk to the president and CEO of Foxwoods Resort Casino, a position he held for 10 years before his retirement in 2008. Sherlock credits his father with not only introducing him to the world of gaming, but also serving as an inspiration. “He has and always will be the greatest mentor to me,” he says, “because he has accomplished all of the goals I wish to achieve and exceed one day.” When asked what he sees as the most challenging part of his position in the gaming industry, Sherlock responds, “The most challenging part to

Lucy Buckley Director of Strategy and Communications, Inspired Gaming Group

Global Gaming Business APRIL 2015

s the gaming industry continues to evolve, shifting toward more innovative technologies such as mobile and social gaming, it becomes increasingly important to maintain a connection with the younger demographic. Lucy Buckley serves as a natural fit for connection with this key demographic, serving as one of the youngest executives with London-based Inspired Gaming Group. Having spent many years in the communications industry, representing a broad range of clients including the Economist newspaper, Buckley began her career in the gaming industry five years ago when she was offered a position by her client, Luke Alvarez, the founder and CEO of Inspired. Buckley remembers this as “an opportunity too good to pass up” and, without a second thought, accepted the position as marketing director of Inspired. Since then, she hasn’t slowed down, and was recently promoted to her current position as director of strategy and communications. Alvarez is not only the one who hired Buckley, but he has also held a key role in her successful career with Inspired. “He has high expectations, but is great at inspiring the drive and confidence to be up to any challenge,” says Buckley. She goes on to say that Alvarez is also an exceptional mentor for many people in the company, and that developing fresh talent is an integral company value at Inspired. Another great mentor for Buckley at Inspired is Gerhard Burda, who previously served as CEO of Atronic and senior vice president at GTECH/Lottomatica. Burda has not only offered an international perspective, but has also

“The most challenging part to my job is trying to enact the right change in an industry that dates back to the 1930s (at least in Nevada) and adapting to an entertainment city from a gaming city.” my job is trying to enact the right change in an industry that dates back to the 1930s (at least in Nevada) and adapting to an entertainment city from a gaming city.” This challenge has appeared since the shift toward amenity-driven integrated resorts has taken Las Vegas by storm. To those who are looking to get started in the gaming industry, Sherlock recommends “being open to changes and seeing different perspectives every day,” to which he credits his continued success in the industry. Another important piece of advice from Sherlock is to take others’ advice into account when making decisions, to have a wellrounded opinion. Over the next 12 to 18 months, Sherlock looks forward to experiencing the responsibilities and challenges associated with his new position. He is eager to use his experience to help with the several new openings that will be occurring in Maryland, specifically as it relates to helping design the ultimate guest experience and continue MGM’s successful history on the East Coast. Between Sherlock’s wide range of experience and strong determination, his continued success in the gaming industry is all but guaranteed. Having accomplished so much under 40, his experience will only continue to grow, and could lead him to exceed even his father’s impressive career milestones. — Stephanie Adkison, The Innovation Group

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Seven In! Israel Stone Director of Organizational Development, Little River Casino Resort srael Stone is always looking for new challenges and opportunities for not only himself, but the staff at Little River Casino Resort. As the director of organizational development, Stone has been a driving force in the creation and implementation of the Sevens training program, which seeks to identify and cultivate leadership from within. The Sevens program draws from the traditional “Seven Grandfathers” teachings, laying the foundation for the training and leadership program at Little River Casino Resort. Sevens has been a resounding success within the organization, providing individuals with the skills and opportunities to learn and grow within the organization. As Stone notes, “Given the right training and education, people can overcome life circumstances and rise to success.” Success is no stranger to Stone; at 22, he became a training and building sergeant within the criminal justice field. Stone does not shy away from an opportunity to meet a new challenge head on; he worked hard to earn the respect of his team, leading a department that included people twice his age. “Never pass on an opportunity. Each opportunity, no matter how challenging, is an opportunity to increase your value with your employer,” he says. His path to Little River began when he was elected to serve a four-year term as a tribal councilor and appointed to the business board/board of directors for Little River. During this time, he oversaw a $26 million hotel and gaming floor expansion and a $52 million amenities expansion as a member of the construction management team. Since then, he has played various roles in casino operations, gaining a comprehensive knowledge of the gaming industry. Stone has had a number of mentors over his career, first and foremost his father, a decorated U.S. Marine who taught his children the importance of working hard and having a purpose-driven life. Being raised to have such strong work ethic set Stone up with the foundation he needed to be successful. In the gaming industry, he points to the general manager of Little River Casino, Wendell Long, and chairwoman of the board of directors, Elaine Porter. Stone says their vision to create a training program focused on growing talent within the community and Little River provided him with the springboard to create the Sevens program. Based on the success the program has seen within Little River Casino Resort, Stone is looking to expand the program to other casinos throughout the country. “Too many times, companies look for ways to improve their brand or relevancy in the market and overlook the most important resource, their employees,” he says. The Sevens program focuses on building employees from within to provide the best experience to their patrons. —Jennifer Day, The Innovation Group

taught Buckley how to bring more “big-corporation processes” into strategy and management, while still maintaining Inspired’s start-up spirit. While she was new to the gaming industry when she joined Inspired’s team, Buckley enjoys many aspects of the industry, including its high growth potential and the global connectively of the industry as a whole. She also feels that the industry can benefit from having younger people, particularly women, take on executive-level positions in the gaming world. The younger audience is “just as into gaming, but are interested in a more convenient, ‘quickplay games via mobile on the bus to work’ or ‘place a quick bet during my lunch break’ experience… more than having to visit a special destination,” she says. Having younger employees will help target this shift in interest with “everyday” entertainment products and continue high levels of growth in the industry. In her spare time, Buckley is currently working toward an MBA from Cass Business School in London, and is excited about where her career heads next. She looks forward to becoming a more integral part of the executive team and leading the business into the future in terms of attracting younger audiences, and targeting social and mobile gaming. Looking back on her career to date, Buckley names her current position as her greatest accomplishment. Being a director with a games and gaming technology company in an industry that typically doesn’t see young women in such a position is a particular point that makes her proud to be where she is. As a successful industry professional who started her career with limited gaming experience, Buckley has advice for anyone looking to advance their career within the gaming world. “Don’t let yourself be held back by hierarchy,” she says. “Always respect your elders and ask lots of questions, but speak up when you have something to say. Your opinion is just as valuable as anyone else’s.” —Joe Dimino, The Innovation Group

“Never pass on an opportunity. Each opportunity, no matter how challenging, is an opportunity to increase your value with your employer.”

APRIL 2015 www.ggbmagazine.com

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GLOBAL GAMING WOMEN

The Value of Mentor Relationships A successful career means interacting with successful people By Sarah Jackson, Senior Vice President, Human Resources, Isle of Capri Casinos, Inc

t wasn’t too long ago when I was invited to join a superb gaming company, Isle of Capri Casinos, as head of the human resources department. I knew that the skills and experiences I gained from my senior leadership position in the international polished casual and fine dining hospitality industry would transfer over nicely to gaming. Fast-forward almost four years, and I feel right at home in my robust network of mentors. From our president and CEO Virginia McDowell to her team of experienced gaming professionals, I am surrounded by living role models of excellence at all levels of the organization, and continue to gain insights from so many talented

Global Gaming Business APRIL 2015

women leaders. These bright women work for me, work with me and work above me. In a short time, I’ve built strong, enriching relationships within my own company and continue to enjoy meeting exceptional leaders throughout the industry. Early in my career, I learned the value of mentoring and its positive impact on employee engagement, loyalty, organizational culture and overall business performance. My career began in the front-line operational ranks. With every move up the career ladder came guidance, support and valuable advice through mentor/mentee relationships. This “strategic recognition” drove my desire

to do more, engage more and be more. In the food service industry, women have a large and evergrowing leadership presence, and can tap into numerous internal and external networks. As I progressed in my career, I participated in many women’s forums and networking opportunities from large conferences to small nonprofit organizations focused on helping others. In 2011, I had the privilege to attend the AGA’s Global Gaming Women (GGW) inaugural meeting, and was introduced to an inspiring group of gaming women leaders. As each senior-level executive candidly shared her story with the others around the table, I listened intently. I admired other women’s journeys, drive, commitment and how each utilized mentoring to build their careers, both as mentees and mentors. It became evident that this group of women leaders had a genuine passion to become advocates for women in gaming and to build transformational relationships within the industry. I wanted more, and jumped at the opportunity to become co-chair of the GGW Mentorship Committee this year, along with my colleague Holly Gagnon, president and CEO of Pearl River Resort. Today, I am certainly still a “mentee,” and continue to broaden my knowledge of the industry, expand and learn new business perspectives, and enhance my connections with other gaming women. I also aspire to be a beneficial “mentor” to other gaming women by helping strategize their careers and personal development plans, nurture emerging leaders, spark interest in other operational disciplines and act as a valuable HR and operational professional. We have so many exceptional women in this industry with remarkable stories to share. Whether you’re in executive role or are an emerging leader, I encourage you to join us in shining a spotlight on gaming women—attend a GGW networking event, apply for a scholarship or nominate someone deserving, connect with other gaming women on LinkedIn and check out our many educational and mentoring resources on our website, GlobalGamingWomen.org.

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GOODS&SERVICES IRS PROPOSES LOWER REPORTING THRESHOLD he Internal Revenue Service has proposed Tuallowering the threshold that requires individgamblers and casinos to report a jackpot from $1,200 to $600. The limit was established in 1977 and created a cottage industry of $1,199 jackpots over the years. The new proposed regulations could be bad news for the casino industry. “This potential policy change could create additional burdensome and unnecessary reporting requirements for our industry,” Sara Rayme, senior vice president of public affairs for the American Gaming Association, said in an email last month. Rayme said the changes are not guaranteed, and the AGA will participate during a 90-day comment period. “Rather than going backwards, the gaming industry seeks forward-looking policies that enable our industry to reinvest, innovate and create more jobs,” she said. The measure would affect all casinos in the U.S., commercial and tribal alike. The IRS is taking comments on whether it should normal-

ize all kinds of jackpot games like keno, bingo and VLTs. The IRS is also taking public comments on a proposed procedure that would provide a “safe harbor” that would allow taxpayers to use a different method for determining profit or loss from slot machine play. The proposal uses a different interpretation of what the statutes mean by “transactions,” and would make it less onerous for a player to determine profit and loss from a slot machine. The problem of determining such profits is complicated by advances in gaming technology, which obviate the need for cashing out tickets on many machines. If the procedure were approved, it would provide a “safe harbor” method, but not relieve taxpayers of the need to keep records. The new procedure would not permit losses and gains from separate sessions to be used against each other. It would also not apply to non-wagering expenses that are related to gambling.

Scientific Games General Counsel and Executive Vice President Katie Lever (c.) chaired the American Heart Association’s Go Red For Women Luncheon February 27 at the Bellagio Resort & Casino in Las Vegas. More than 500 people attended this annual event, which brings together the Southern Nevada community to raise awareness, share heart disease survivor stories, and ultimately combat the disease which is the No. 1 killer of women. This year’s Las Vegas Go Red For Women Luncheon raised almost $400,000, which is a record in the Las Vegas Chapter of the American Heart Association’s 10-year history. Lever was supported by Scientific Games President and Chief Executive Officer Gavin Isaacs (l.) and Richard Haddrill, Scientific Games vice chairman (r.).

Global Gaming Business APRIL 2015

GOLF FACILITY PLANNED AT MGM GRAND opgolf International, Inc. confirmed long-standing rumors that it is building a state-of-the-art Tflagship location at MGM Grand Hotel & Casino on the Las Vegas Strip. Topgolf hosted its groundbreaking ceremony last month, revealing the renderings for Topgolf Las Vegas. The entertainment destination is expected to open in spring of 2016. Topgolf offers competitive golfing games for all ages and skill levels and advanced technology to track the accuracy and distance of players’ shots. The four-level, 105,000-square-foot Topgolf Las Vegas will sit on eight acres and overlook a 215-yard outfield. There will be 102 hitting bays among the first three levels while the fourth level will showcase VIP areas with water features. The building’s plans also include a stage for live musical performances and 3,000 square feet of private meeting space. The facility will cater to intimate events ranging from 10 to 2,000 people. “Topgolf Las Vegas is unlike anything we have ever endeavored to build,” said Topgolf Executive Chairman Erik Anderson. “After three years of planning, Topgolf and MGM Grand are bringing the boldest new concept in sports entertainment to the entertainment capital of the world. This gleaming flagship location will host millions of Topgolf fans when they come to Las Vegas, bring our exciting new concept to MGM’s global clientele, and introduce the millions of other visitors to Topgolf who are attracted to Las Vegas every year in search of the latest innovations in entertainment and fun.” The facility was designed by YWS Architects, and the general contractor is McCarthy Construction with ARCO/Murray National Construction acting as consultants. Las Vegas native Bryan O’Reilly, working as Topgolf’s local partner, was instrumental in bringing the deal to closure. Topgolf noted that 34th Floor Hospitality is providing consulting services on its facility operations.

NEVADA TENTATIVELY OKS IGT/GTECH he Nevada Gaming Control Board approved the Ttionalacquisition of leading slot manufacturer InternaGame Technology by Italian lottery giant

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GTECH S.p.A. The proposed acquisition now goes before the Nevada Gaming Commission for final approval. During more than two hours of private meetings, company officials told regulators that the combined company will be branded as IGT, and the holding company for the two former entities, located in the United Kingdom, will be named International Game Technology PLC. The company will maintain corporate headquarters in the U.K. and operating headquarters in Las Vegas, Providence, Rhode Island and Rome, the report said. IGTâ&#x20AC;&#x2122;s Reno facility will become the merged companyâ&#x20AC;&#x2122;s primary manufacturing facility. The combined company will be traded under the symbol IGT on the New York Stock Exchange. Current IGT Chairman Phil Satre will serve as the merged companyâ&#x20AC;&#x2122;s chairman, and CEO Patti Hart will become vice chairman. GTECH executive Renalto Ascoli will become CEO of the companyâ&#x20AC;&#x2122;s North America Gaming/Interactive Division. GTECH is acquiring IGT for $4.7 million in cash and stock, and assumption of $1.7 billion in debt. GTECH completed $5 billion in high-yield financing to complete the acquisition.

GLI ACQUIRES SLI

and experienced staff and enhanced by innovative tools and techniques. eading gaming testing company Because of this, SLI has been able to Gaming Laboratories International provide significant value to both priannounced the addition of SLI Global vate and public sector clients as they Solutions, a leader in quality assurdevelop their most strategic IT prodance and software testing services, to ucts. We are excited to join the GLI its portfolio of companies. family of companies to rapidly scale â&#x20AC;&#x153;Just as GLI is recognized for its and deliver these solutions to a much global leadership in gaming testing broader range of clients.â&#x20AC;? James Maida, President and professional BMMâ&#x20AC;&#x2122;s services,Travis SLI Foley has long and CEO of GLI SLI brings a broad portfolio of been recognized as the leader in govservices and solutions to GLI includernment solutions, testing for certifiing world-class software test automation, quality ascation of health IT, and voting system certification surance, and independent verification and validation testing, software testing and quality assurance,â&#x20AC;? said for commercial and government agencies. GLI President and CEO James Maida.

â&#x20AC;&#x153;Those similarities extend to the culture of each company. With testing and certification at our core, both GLI and SLI have shared beliefs in excellence, passion and commitment to our clients and to providing the best services available anywhere. Moving forward together, we will share that culture and commitment to excellence, providing even more customers with broader levels of testing, certification and professional services.â&#x20AC;? SLI President Mark Phillips said, â&#x20AC;&#x153;SLI has built a scalable delivery model using documented and repeatable processes delivered by highly credentialed

LUXURY LEISURE PICKS JCM CM Global and its FutureLogic printer group JLeisure have entered into an agreement with Luxury to install its innovative Ticket2Go ticketing system solution at Luxury Leisure gaming venues located throughout the U.K. Luxury Leisure is part of the Novomatic UK Group of Companies, a leading operator of luxury adult gaming centers in the U.K. It is the first major rollout of Ticket2Go in the U.K. arcade market following the introduction of

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new U.K. TITO protocol standards. The Ticket2Go system allows Luxury Leisure to take advantage of the benefits associated with ticketin/ticket-out. “We have had the pleasure of working closely with Luxury Leisure during the installation of Ticket2Go, and we are thrilled that the product meets their expectations and look forward to our continued partnership with Luxury Leisure,” said Rob Wheeler, director of product management for FutureLogic. “With Ticket2Go, U.K.-based operators, such as Luxury Leisure, can now implement TITO within their gaming venues and enhance the player experience leading to increased customer satisfaction and retention, as well as optimize their existing operation and achieve a reduction in operating costs.” Ticket2Go is a retrofit ticketing solution for gaming and AWP devices that do not support standard ticketing protocols, and it is the first and only system to work across all the post-2007 legacy machines in a location.

GORDON RAMSAY OPENS AT CAESARS AC orld-renowned celebrity chef and TV star W Gordon Ramsay and Caesars Entertainment announced that the Gordon Ramsay Pub & Grill is now open at Caesars Atlantic City. The 250-seat restaurant offers an authentic English pub experience for the East Coast, following enormous success of the chef’s Pub & Grill at Caesars Palace in Las Vegas. “We’re really excited about the opening after such a great success in Vegas,” said Ramsay. “We have an amazing team and partnership with Caesars, and we’re looking forward to bringing it to

the East Coast.” Veteran gourmet chef and longtime Atlantic City culinarian George Galati will oversee all kitchen operations for the outlet. Best known for his co-starring role alongside Chef Robert Irvine in Dinner: Impossible on the Food Network, Galati adds nearly 30 years of gourmet experience to an already wellequipped culinary staff. The Hell’s Kitchen Season 13 winner and fan favorite Chef La Tasha McCutchen has been tapped as head restaurant chef, under Galati.

ORTIZ PARTNERS WITH BET RITE electronic bingo supplier Ortiz GamFbasedinglorida-based announced an agreement with ManitobaBet Rite Inc. to introduce, distribute and service Ortiz Gaming’s video bingo games in Canada. “We are very excited about our new partnership with Ortiz Gaming, and are pleased to continue to represent another best-in-class product offering for the Canadian market,” said Richard Cone, president of Bet Rite. “We believe Ortiz Gaming is a first-class organization, which Canadian customers will find out through the excellent quality and excitement of their electronic bingo games, cabinets and systems.” Bet Rite is the leading Canadian-based gaming supplier, serving all gaming jurisdictions in Canada. “It’s a great combination of Bet Rite’s Canadian gaming business focus and customer service along with Ortiz Gaming’s superior products,” Cone said. “Ortiz Gaming is excited to partner with Bet Rite to fulfill the already-requested player demand for our fast-paced games,” said Maurilio Silva, president of Ortiz Gaming. “Designed for customer service, player interaction and excitement, our games are an ideal match to the discerning needs of Canadian players.”

BELLAGIO LAUNCHING INTERACTIVEPRO TABLES HIFT Interactive, a division of Suzo-Happ, and SsionMGM Resorts International announced extenof a multi-year agreement to allow Bellagio Resort & Casino in Las Vegas to launch InteractivePro Tables (IPT) in advance of the NCAA basketball tournament. The tables, through the InteractiveProVision platform, offer a combination of four user screens for television, video, web browsers and interactive content eventually expected to include casino games. The individual screens are part of one 42-inch, highdefinition LCD monitor embedded in the table. IPT provides users a unique 10-point multitouch, interactive experience as well as the Interactive Multi-Dimensional Sound System, featuring eight high-fidelity speakers and 16 headphone jacks. 68

Global Gaming Business APRIL 2015

IPTs are manufactured from industrial-grade components, ensuring reliability and suitability to withstand harsh public environments.

THREE RIVERS PICKS IGT lot and system manufacturer International Game SCasinoTechnology announced that the new Three Rivers in Coos Bay, Oregon has selected the IGT Advantage 9.2 System Suite with Service Window as its casino management system, in addition to 80 IGT slot games. “Three Rivers Casino Coos Bay serves as a great example of how IGT Systems innovation creates successful partnerships,” said Mark Wiedemer, IGT’s director of global system sales. “We’re building upon our track record of helping Three Rivers Casino in Florence, Oregon leverage IGT Systems to create player excitement and engagement. With the new installation of IGT systems at Three Rivers Casino Coos Bay, we take it to the next level by empowering players to gain seamless access to their club benefits at both properties.” The Three Rivers Casino Coos Bay will feature all Class II machines connected with IGT Systems, featuring IGT’s Point Play and Xtra Credit bonus applications. Multi-site Patron Management will enable personalized experiences for players across multiple casino properties. In addition to IGT systems, Three Rivers Casino Coos Bay has selected 80 IGT Class II machines, specifically chosen for this market. Titles include the Hot Roll family, Dolly Parton and Lucky Larry Lobstermania 2, with the built-in Class II prize-banking capability to award players large jackpot prizes such as cars, boats and ATVs.

GROSVENOR PICKS TCSJOHNHUXLEY able-game supplier TCSJohnHuxley announced a Tice three-year contract with Grosvenor Casinos to servand maintain traditional and electronic table game products in multiple venues throughout the U.K.

A number of service providers entered the RFP process, which included evaluations of quality of service delivery, value, capability, sustainability, broad product knowledge and experience. TCSJohnHuxley met all the required criteria, in addition to having a strong track record and comprehensive experience in this sector.

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PEOPLE WYNN BOARD SEEKS TO OUST ELAINE WYNN

ome are suggesting spite as the reason for the recent announcement that Elaine Wynn will lose her position on the board of directors from Wynn Resorts Ltd. After all, following a 2010 divorce from Chairman and CEO Steve Elaine Wynn Wynn, she sued him in 2012 over an updated stockholder agreement which removed Japanese billionaire Kazuo Okada. Following the removal, Steve Wynn redeemed Okada’s 20 percent stake at a 30 percent discount. However, the company paints a different picture, where Wynn Resorts spokesman Michael Weaver said, “Mr. Wynn supported the candidacy of Elaine.” She is far from going down without a fight, and has already planned her next move. A letter penned by her last month said she “intends to nominate herself for election as a Class I director” and will solicit votes from shareholders. The annual meeting for shareholders is April 24 in the Encore Theater. In their 2010 divorce, both Steve and Elaine received 11 million shares in the casino company. The 9.5 million shares she currently owns contributes to her wealth at $2 billion, according to Forbes. The former married couple co-founded Wynn Resorts in 2000, and she has been a board member since 2002.

SOPER NAMED HEAD OF MOHEGAN GAMING

ohegan Tribal Gaming Authority (MTGA), parent company of the Mohegan Sun casinos in Connecticut and Pennsylvania, announced that Bobby Soper, president of Mohegan Sun in Connecticut, is being elevated to president of MTGA. Soper succeeded Mitchell Etess as MTGA president efBobby Soper fective March 30. Etess announced in November that he is retiring as president and CEO of the authority. Soper has been with MTGA for 20 years, first as executive vice president of the Connecticut casino, then as CEO of Mohegan Sun at Pocono Downs in Pennsylvania prior to being named CEO of the Connecticut flagship property. Ray Pineault has been appointed president and general manager of the Mohegan Sun in Connecticut, and Thomas Burke was appointed to the new post of chief operating officer of MTGA. He is acting president of Mohegan Gaming Advisors, the au-

thority’s management consultant firm. In addition to owning and operating the two Mohegan Sun casinos, MTGA operates the Resorts Casino Hotel in Atlantic City, and is exploring potential locations in other jurisdictions. The authority was one of the losing bidders in the recent Massachusetts casino competition.

SISK APPOINTED COO OF RW SENTOSA

asino financial and operations executive David Sisk has been appointed the new chief operating officer of Resorts World Sentosa, a Genting Singapore Plc. property. A gaming industry veteran David Sisk with more than 20 years of experience in Las Vegas and Macau, Sisk will oversee day-to-day operations at the island resort in Singapore, reporting to Tan Hee Teck, chief executive of Genting Singapore, a subsidiary of Malaysian conglomerate Genting Bhd. Genting Singapore, the property’s developer and operator, just announced a 30 percent year-onyear decline in fourth-quarter profit attributed to a loss of volume and the accumulation of bad debt in the VIP player segment in Sentosa, reported GGRAsia. Sisk previously worked for the Macau unit of Las Vegas Sands Corp., at Caesars Palace and Wynn Las Vegas as chief financial officer, and more recently at Macau casino operator Sands China. He joined Sands China in 2010 as chief casino officer. He was subsequently appointed executive vice president and chief operating officer, but resigned in September 2013. No reason for his departure was given by Sands China.

VENETIAN AND PALAZZO WELCOMES NEW PRESIDENT

ince 2011, John Caparella has served as the president of the Venetian and Palazzo. George Markantonis In just a few weeks, Caparella will bid farewell to the resort, and will be replaced by George Markantonis, who most recently was the top executive in the Bahamas, at the Atlantis resort. Sands spokesman Ron Reese said Caparella is “leaving to pursue new career opportunities,” but left it at that. Markantonis brings with him a long track record in the hospitality industry, where he has worked for decades, including 16 years with the Westin hotel and resort chain. He also served as senior vice president of hotel operations at Caesars

Palace. He started his new job at the Venetian and Palazzo on March 17.

AGEM EXTENDS PRATER’S CONTRACT

he Association of Gaming Equipment Manufacturers (AGEM) announced that gaming industry veteran Marcus Prater has signed a new three-year contract extenMarcus Prater sion that will keep him as the organization’s executive director into 2018. Prater has been AGEM’s executive director since 2008. Prior to joining AGEM, Prater was vice president of marketing for Bally Technologies.

GLI PROMOTES KELLEHER

eading gaming testing company Gaming Laboratories International has promoted Justine Kelleher to manager of supplier development. Kelleher has been with GLI since 2012, serving as a supplier development representative prior to her new role. She has worked in-casino at both tribal and non-tribal operations. Kelleher is based in GLI’s Las Vegas office and reports to Vice President of Global Services Ian Hughes.

GGB

April 2015 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 American Gaming Systems . . . . . . . . . . . . . . . .25 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Casino City Press . . . . . . . . . . . . . . . . . . . . . . .65 Casino Data Imaging . . . . . . . . . . . . . . . . . . . . .49 Casino Design magazine . . . . . . . . . . . . . . . . . .59 Dataspade . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 DiTronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . .53 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 GCA + Multimedia Games . . . . . . . . . . . . . . . .15 GGB News . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 GLI . . . . . . . . . . . . . . . . . . . . . .Inside Back Cover Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . .35 GTECH Interactive . . . . . . . . . . . . . . . . . . . . . .21 Hnedak Bobo Group . . . . . . . . . . . . . . . . . . . . .29 IAGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36,37 Incredible Technologies . . . . . . . . . . . . . . . . . .43 Indian Country Online conference . . . . . . . . . .48 Innovation Group . . . . . . . . . . . . . . . . . . . . . . .41 Konami Gaming . . . . . . . . . . . . . . . . .Back Cover MGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 Red Square Gaming . . . . . . . . . . . . . . . . . . . . . .5 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . . .39 Rymax Marketing . . . . . . . . . . . . . . . . . . . . . . .13 Scientific Games . . . . . . . . . . . . . . . . . . . . . .2, 31

APRIL 2015 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Lyle Berman Chairman & CEO, Lakes Entertainment

yle Berman is a legend in the casino industry. His first taste of gaming came as a poker player, where he gleaned bits and pieces of information about casinos. When an opportunity was presented to get in on the ground floor of tribal government gaming, he jumped at it, and the rest is history. Berman’s Grand Casinos became the largest operator of tribal casinos in Minnesota, and later in other states. A few years after Berman sold his company to then-Bally Entertainment, now Caesars, he launched Lakes Entertainment, another tribal gaming operator that he recently sold to Golden Gaming. He spoke with GGB Publisher Roger Gros at his building in Las Vegas in March. To hear a full version of the podcast, including Berman’s views on saturation, iGaming and social gaming, visit ggbmagazine.com.

ness, we were a perfect fit with each other. Quite frankly, they needed additional equity in their business. But they have very good expansion opportunities, and it just worked well.

GGB: You’ve made a lot of deals in your life—some big, some small. Where does this recent merger fall between Lakes Entertainment and Golden Gaming?

Well, I think it evolved. Two friends of mine had obtained a contract with one tribe in Minnesota, to open up two casinos, back in the late ’80s. When they came to me looking for financing and help, I knew the power of a slot machine, they knew the power of my money, and we formed a joint venture. But as soon as we opened them, we realized how popular they were, and what opportunities there would be throughout gaming. So probably by ’92 or ’93, is when we really realized there was a major opportunity in Native American gaming.

Lyle Berman: Well, this really falls as a very large enterprise, and we’re really excited about it. It’s really transforming Lakes. Lakes was a company that specialized in Native American gaming. It was formed in 1999, and over the years, we developed a number of Native American gaming projects, but as of a couple years ago, we had been bought out of our last contract, so we were sitting with this public company, with quite frankly a lot of cash, which is a nice thing to have, but really no major business. We also own a smaller, very profitable casino in Maryland, but that was it. So we spent a year and a half to two years looking for new opportunities. We got very close to a couple things, but for whatever reason, they didn’t work out, and finally we were introduced to Golden Gaming, from our investment banking adviser, Macquarie, and things clicked right away. We liked the busi70

Global Gaming Business APRIL 2015

In Las Vegas, with the PT pub chain, and several other brands, Golden Gaming is very strong. They have great expertise. I had lunch yesterday with Blake (Sartini), at Sierra Gold, one of the brands, and I thought the food was fabulous. I think that concept, without slot machines, would work all over the country, and he agrees. So there could be some major opportunities to expand in the restaurant industry, without gaming as a component. When did it occur to you that tribal gaming was going to be a real important part of the gaming industry?

You were a poker player long before you got officially involved in the industry. Was that how you got drawn into the industry? I started playing poker in the early ’80s, and played quite a bit. So when my partners came to me with the idea of Native American gaming, I knew the power of the slot machine. I’d become friends with Bobby Baldwin, Jack Binion, Bob Stupak, and thought it would be a very good endeavor. If there was a day of reckoning that sold me

for Native American, I went to a casino that was a couple hours’ drive west of Minneapolis. It was managed by some local businessmen. It was on July 4. It was the most gorgeous day you could imagine in Minneapolis. It was 82 degrees, which we don’t see very often. So we walk into the casino, it’s smoky, it’s horrible, and it’s packed. And I think, “If on the Fourth of July these machines are packed in this environment, just think what will happen when it’s 10 below zero.” So I believe we were the first company to really develop a first-class Native American casino in Grand Casino Hinckley that really would compete with a Vegas casino. And of course, since then, we’ve built even bigger and better ones. A number of our casinos would stand tall on the Strip. We have to say the one in Michigan, the Four Winds Casino, if it were on Vegas Strip, would have the second-largest capacity of any casino there. Mississippi was one of the early entrants into riverboat gambling, but the one difference that Grand Casinos brought is the barge location, rather than a docked riverboat. How did that come about? We did really set the standard, in all three regions: Tunica, Biloxi and Gulfport. We built these huge casinos on barges, which were custom-made for us. They were 630 feet long, three stories high, and 50 feet wide. And I remember in Gulfport, we went around the clock, and built it in 156 days. Today they talk about building big casinos, two-year development, three-year development. Now, we didn’t build any hotels in those days… We were a huge hit. Today of course, they’re land-based. And that’s another thing I predicted. That law that made them first cruise and then float, I said it the day we built it: “The first hurricane comes along and wipes this out, they’ll be land.” And that’s of course what happened.

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