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GGB Global Gaming Business Magazine
GAMING IN NEW MEXICO SLOT PAYBACK PERCEPTIONS COTAI 2.0 TOUCH SCREENS
April 2017 • Vol. 16 • No. 4 • $10
Boardwalk Bounceback
How iGaming saved Atlantic City
the
Turning Tables Will technology take live games to the next level?
Leaking Loyalty How innovative players programs can bring the customer back
Official Publication of the American Gaming Association
Association of Gaming Equipment Manufacturers
A NEW GAMING UNIVERSE AWAITS
SEE IT AT NIGA #PlayAGS
©2017 AGS LLC.
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CONTENTS
Vol. 16 • No. 4
april
Global Gaming Business Magazine
22 COVER STORY Return of the Table
COLUMNS 12 AGA Gaming and Health Care
Table games, all but left for dead as slot machines surged in the 1990s, are in the midst of a revival. The games that once were the domain of the World War II generation are gaining new fans among younger players, who like the social interaction provided by the green felt—not to mention a steady flow of new derivatives and side bets to keep things interesting.
Geoff Freeman
14 Fantini’s Finance Japanese Contenders Frank Fantini
40 Table Games Oldies But Goodies Roger Snow
By Roger Gros Cover photo courtesy of Evolution Gaming
FEATURES
18 Rethinking Players Clubs In the age of social media and the internet, is it time to rethink the longstanding mainstay of casino marketing, the players club? By Oliver Lovat
6
The Agenda
8
By the Numbers
10 5 Questions
52 Golden Touch Touch-screen monitors have changed the game when it comes to versatility for casino professionals. By Dave Bontempo
30 Perfect Together
DEPARTMENTS
Online gaming, and social gaming in the U.S. markets where iGaming has yet to be legalized, has proven that it supports and boosts brick-and-mortar casino operations.
16 AGEM Page 56 Frankly Speaking 58 Emerging Leaders With Cintas’ Ashlee Garnett and Affinity Gaming’s Melani Evans
62 New Game Review 66 Goods & Services
By Todd Haushalter
69 People
32 Power of the PAR
70 Casino Communications
A comprehensive study demonstrates how manipulation of hold percentages on slot PARs can affect a casino’s bottom line. By Katherine Spilde and Anthony Lucas
36
Land of Enchantment Competition is heating up for the Indian casinos of New Mexico, which compete with outdoor recreation as well as each other.
With Brett Abarbanel, Director of Research, UNLV International Gaming Institute
60
Empowering the Operator Scientific Games used its 12th “Empower” customer user conference to launch a new game series and show its partners how to capitalize on new technology. By Frank Legato
By Dave Palermo
48 Cotai Coming As the building boom in Macau’s Cotai district nears its end, it becomes clear that resorts on the former landfill have expanded the market. By Marjorie Preston 4
Global Gaming Business APRIL 2017
MGM Cotai
Our monthly section highlighting and analyzing the emerging internet gaming markets.
Feature 42 iGaming & Atlantic City The New Jersey online gaming market has led to the first year-on-year revenue increase for Atlantic City casinos since 2006, and provides a model for how iGaming can help land-based casinos. By Steve Ruddock
46 iGames News Roundup
Introducing Dragon Link™, the newest must-have game that builds on the wild success of the award-winning phenomenon Lightning Link™. Designed with both high and low denomination players in mind, it offers a premium Hold & Spin experience with new specially tailored $1 and $2 denominations for high limit play. Don’t miss your chance to add this powerhouse of play to your floor today.
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THE AGENDA
The First Step
Vol. 16 • No. 4 • April 2017 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com
Roger Gros, Publisher
hen I was in Boston last summer to interview the chairman of the Massachusetts Gaming Commission, Stephen Crosby, he started to explain, during the course of the conversation, what the state was doing with responsible gaming. It was, indeed, part of the enabling legislation in Massachusetts, so the commission has a statutory obligation to spend money on the issue. The problem was, said Crosby, that there was no direction on how to spend that money. So the state looked at best practices in all gaming jurisdictions and found an intriguing program in British Columbia called “GameSense.” But let’s talk about the history of programs designed to curb problem gambling. The most successful is no doubt the self-exclusion option. The onus is strictly on the person with the problem. They reach a point where they realize gambling is a problem for them and ask to be refused entry into the casino. Sure, sometimes it doesn’t work because the excluded player continues to frequent casinos, but it is clearly the most effective. Others are not so successful, and many contribute to a bad experience for all players, not just those afflicted with the problem. Despite spending millions on problem gambling programs that do get between the players and the casinos, a recent study by the government of Nova Scotia revealed that the levels of the disease have not changed in over a decade. Some of these programs required all gamblers to set a limit, at which time the machine would freeze up and not permit any more play. Australia is also a hotbed of problem gambling programs that go nowhere. The issue there is that problem gambling research has become a cottage industry and overemphasizes the problem so the government, charities and universities will throw more money at it. The proclivity for problem gambling is 1 percent to 2 percent of the population. That has been demonstrated in reputable study after reputable study since the National Gambling Impact Study Commission established it as fact in 1999. Now, that’s not to dismiss the problem, because that’s a lot of people even at that small percentage. And we need to find a way to help them without nega-
W
6
Global Gaming Business APRIL 2017
tively impacting the 98 percent or 99 percent of the people who can gamble without issues. But problem gambling is probably the most important ongoing challenge the gaming industry will confront over the next decade. Casinos don’t want to make money from problem or compulsive gamblers, so it is to their advantage to keep them out. The U.S. industry has long been proactive in its approach to problem gambling by establishing and funding the independent National Center for Responsible Gaming. One of the most promising programs around these days is GameSense. MGM Resorts last month contributed $1 million to this system, which informs and educates customers about gambling without putting up any barriers. Founded in British Columbia, GameSense is being used at the only casino in Massachusetts, the Plainridge racino, and will later be implemented at all state casinos. I met the line workers who administer the programs the day I visited Plainridge, and was impressed with their compassion and enthusiasm for the program. At its root, the casino function of GameSense, PlayMyWay, allows a player to voluntarily set a loss limit while playing slots, and be warned when they approach that limit. Most important, PlayMyWay does not stop a player from gambling, but is a warning that they’ve reached their loss limit. There are still some kinks in the program, but it is working better than anyone had predicted, with thousands of people already signed up. The key word here is “voluntary.” No one is forced to do anything. Other aspects of the program include education about the real odds on slots and the likelihood (or futility, to be more realistic) of shooting for the big jackpots. They advise players about games that have more volatility versus those that give more frequent paybacks and extend their time on device. MGM has committed to implementing GameSense and PlayMyWay across its portfolio of properties, so the impact will go far beyond just Massachusetts, where MGM Springfield will open in 2018. So bravo to MGM for forward thinking and taking that first step. Hopefully all casinos, large and small, will think about problem gambling and what they can do to alleviate the suffering of any people who may be afflicted with the disease.
John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Roger Snow Contributing Editors Dave Bontempo | Todd Haushalter Christopher Irwin | Oliver Lovat | Anthony Lucas Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Steve Ruddock twitter: @SteveRuddock William Sokolic | Katherine Spilde
EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises
• Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International
• Julie Brinkerhoff-Jacobs, President, Lifescapes International
• Nicholas Casiello Jr., Shareholder, Fox Rothschild
• Jeffrey Compton, Publisher, CDC E-Reports twitter: @CDCNewswire
• Geoff Freeman, President & CEO, American Gaming Association twitter: @GeoffFreemanAGA
• Dean Macomber, President, Macomber International, Inc.
• Stephen Martino, Vice President & Chief Compliance Officer, MGM Resorts International, twitter: @stephenmartino
• Jim Rafferty, President, Rafferty & Associates
• Thomas Reilly, Vice President Systems Sales, Scientific Games
• Steven M. Rittvo, Chairman Emeritus, The Innovation Group twitter: @InnovGrp
• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University
• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985
• Roy Student, President, Applied Management Strategies
• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2017 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014 Official Publication
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BY THE
NUMBERS
thE BiG Boys i
n the report titled “Trends for Big Las Vegas Strip Casinos, 2010-2016,” the Gaming Research Center at University of Nevada, Las Vegas has uncovered these interesting pieces of information for the past seven years. The “big” casinos on the Strip are defined as all Strip casinos earning $72 million and over in fiscal 2010-16, which was between 22 and 24 casinos each year. For more information or the compete report, visit gaming.unlv.edu/reports.
Casino Revenues: All Casinos 2011 2,317.1 2,397.9 100.7 29.9 53.4
2012 2,356.5 2,510.7 100.5 25.8 48.0
All $$ in Millions
Pit* Slots Poker Race Book Sports Book
2010 2,116.3 2,367.6 100.2 32.6 65.9
2013 2,568.7 2,557.6 98.9 22.8 46.1
2014 2,779.4 2,545.3 95.5 22.4 73.8
2015 2,507.5 2,595.4 95.9 22.1 72.8
2016 2,485.0 2,725.8 95.3 21.0 60.0
Total
4,682.7 4,899.0 5,041.5 5,293.7 5,516.4 5,293.8 5,396.7
* Includes keno and bingo
Casino Expenses: All Casinos Bad Debt Comps* Gaming Taxes Payroll**
2010 123.4 1,314.2 353.2 886.4
2011 124.1 1,271.0 366.2 889.7
2012 120.5 1,392.3 374.6 951.7
All $$ in Millions 2013 137.8 1,618.4 393.4 948.8
2014 78.0 1,636.2 410.7 949.2
2015 128.5 1,628.1 391.5 965.2
2016 104.7 1,550.0 404.2 979.4
Total Expenses 3,269.7 3,503.8 3,529.3 3,541.1 3,562.1 3,475.4 * Expenses recorded for complimentary items and preferred guest expenses ** Total payroll taxes, employee benefits, and officer and employee pay
EAstERN ACtioN
i
n a report entitled “Factors Affecting Profitability at Casinos in the Competitive Northeast,” compiled by GGH - Morowitz Gaming Advisors, LLC and Global Gaming & Hospitality, LLC, the costs of doing business were revealed in this highly competitive region. Part of that cost is comps and promotions, as a percentage of net revenue. Promotional allowances include the retail value of food, beverage, rooms and other items that are booked to revenue. For a copy of the report, contact Cory Morowitz at cory@morowitzgaming.com.
Northeast Benchmarks—Promotional Allowances and Free Play as % of Net Gaming Revenue
8
Global Gaming Business APRIL 2017
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NUTSHELL
“They
5Questions
Derek Webb
Inventor, 3-Card Poker erek Webb is the inventor of 3-Card Poker, the most successful proprietary table game in the history of D the gaming industry. Now retired after selling his company, Prime Table Games, to Galaxy Gaming, he spoke with GGB Publisher Roger Gros about the cover story in this month’s magazine. To hear a full pod-
Said It”
“If you put up some of the tacky buildings that you have in Las Vegas or Macau here, it would look out of place. Can you imagine the Venetian here?” —Lawrence Ho, CEO, Melco Crown, taking a jab at the Las Vegas Sands Corp. in a statement about Japan’s budding casino market
cast of the interview, visit GGBMagazine.com. GGB: What was your idea for 3-Card Poker, and how did you roll it out? Derek Webb: I wanted to design a three-unit bet game that incorporated what I thought was the best of Caribbean Stud and the best of Let It Ride, and it was going to be naturally faster than Caribbean or Let It Ride. But also, the design needed to make sure that we got the three bet units out more frequently than Caribbean or Let It Ride. And those two combined features meant that it could go with a lower house advantage than either of those games, and give the player a more positive experience, and at the same time, create a higher win for the operator. So, in effect, you’re serving both sides of the table better than what was already out there.
1 2
The game started in Europe at several small casinos. But tell us about your first introduction to the U.S. casinos. Eventually, we got started in Mississippi and Nevada at a pretty similar time. Mississippi was a great installation, and to some extent, that was a personal contact with Lyle Berman, who I played poker with, and he owned the Grand in Gulfport. That was early ’96, over 20 years ago. And they did a great installation, because they put it in a great location, and they gave me all the statistics on it, they allowed me to help write their internal procedures—they spent time with me to get it right. They allocated one full day to train the dealers, get the installation correct. So Barry Morris and the executives there really deserve the credit. In Nevada, we ended up going with the Stardust, and unfortunately—and I’m afraid this is still true today—Nevada operators do not do a diligent enough job with new game installation. They expect their dealers to be able to learn the games quickly, but do not pay attention to the nuances, they do not try to maximize the revenue from the game, and unfortunately, while the game did enough to pass its field trial, and the volume of revenue was adequate, the volume of participation was adequate, the hold percentage was pretty low, and there was a problem with the old shuffling machines at that time. So the rule of thumb for new games is, if you’re going replace a game that’s already performing, that’s already making revenue for the casino, your game has to be at least to that level, if not higher. Yes, in theory. But the operator needs to give it a chance. They’re not really trying it if they’re not giving it enough exposure. They have to be willing to put it in a good location on the floor to start with, so it needs to generate as much revenue as the game it is replacing, theoretically. But, for example, a casino could be rearranging its pit—moving a $100 blackjack table out of the pit, and wanting to try some specialty gaming. In that case, you wouldn’t expect it to do as much as the table it’s replacing, so there are exceptions to that rule.
3 4 5
Do you recommend that game inventors sign with an established table game company? Yes, but you’re probably not going to get a very good deal. In the early days, everybody saw Caribbean and Let It Ride and thought it was easy, and you could get a 50-50 deal. Now, the vendors say they are licensed everywhere, and have a wide portfolio of games, a lot of intellectual property. So it’s unlikely they’ll give you more than 10 percent or 20 percent of the game.
What do you think technology has in store for table games now? The suppliers will want to introduce technology, because it’s easier to get something exclusive, it’s easier to patent it, so it’s a supplier-driven angle. And anything that can help reduce labor costs is also a consideration. Anything that can speed the game up is also a consideration, from an operator’s point of view. But, I’m a little old-fashioned; I’ll look at it from the player’s point of view, from the gambler’s perspective, right? Generally speaking, in most consumer areas, technology benefits the consumer. But in general, technology in gaming actually benefits the operator.
10
Global Gaming Business APRIL 2017
CALENDAR April 3-5: Eastern Leadership Development Conference, SugarHouse Casino, Philadelphia. Produced by Global Gaming Women. For more information, visit ggwscholarships.fluidreview.com. April 10-13: Indian Gaming 2017, San Diego Convention Center, San Diego, California. Produced by the National Indian Gaming Association. For more information, visit IndianGaming.org. April 11-12: Western Front Line Leaders Conference, M Resort, Las Vegas. Produced by Global Gaming Women. For more information, visit ggwscholarships.fluidreview.com. April 26-28: GiGSE 2017, San Diego, California. Produced by Clarion Gaming. For more information, visit GIGSE.com. May 2-4: Southern Gaming Summit, Mississippi Coast Coliseum & Convention Center, Biloxi. Produced by BNP Media. For more information, visit SGSummit.com. May 10-12: IMGL Spring Conference, Turnberry Isle, Miami, Florida. Produced by the International Masters of Gaming Law. For more information, visit IMGL.org. May 16-18: G2E Asia, the Venetian Macao. Produced by American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com.
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AMERICAN GAMING ASSOCIATION
Gaming and Health Care Obamacare changes should uphold gambling disorders as serious public health issue By Geoff Freeman, President & CEO, American Gaming Association
O
ne of the most important duties we face as an industry is to ensure customers enjoy our entertainment product in a responsible manner, which nearly everyone who visits casinos does. But for the fewer than 2 percent of people who do not, we make significant investments in responsible gaming tools and resources. Changes to the nation’s health care and insurance system in 2010 added a key measure that enables adequate funding for research and ensures necessary resources and treatment facilities are available for those struggling with problem gambling disorders. This measure—recognizing gambling disorders under the Affordable Care Act’s essential
health benefits—could be on the chopping block. Gaming is presenting a united front this month in insisting that any changes to the nation’s health care law maintain this provision. Along with the AGA, Ernie Stevens, chairman of the National Indian Gaming Association (NIGA); Keith Whyte, executive director of the National Council on Problem Gambling (NCPG); and Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers (AGEM), endorsed a letter to congressional leaders and the secretary of the Department of Health and Human Services to convey the importance of this provision. As the Associated Press reported, “The casino industry asked Congress on Tuesday to retain
gambling disorders as a serious public health matter in any changes it makes to President Obama’s signature health care law.� Inclusion of behavioral health is critical to ensuring integrated and comprehensive health care in the United States, and this approach has increased access to treatment for gambling disorders. While research shows that the majority of patrons set a budget of under $200 when they visit a casino, those who struggle with a gambling disorder deserve access to treatment. We will continue to work with members of Congress to share our concerns on this issue as any health care legislation advances.
Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.
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FANTINI’S FINANCE
Japanese Contenders Who will win casino licenses in Japan?
T
he rules haven’t been written yet, but the race to win a Japanese casino license has begun. In the past month: • Las Vegas Sands CEO Sheldon Adelson made headlines by saying he could invest $10 billion into a Japanese casino. • MGM Resorts CEO Jim Murren likewise said he could invest $10 billion. MGM is also increasing its staff in Japan to 15 people within 30 days. • Melco Crown released conceptual pictures of what its casino might look like. • Genting Singapore expressed interest, suggesting it is the Genting subsidiary that will carry the ball in Japan. • Hard Rock International CEO Jim Allen said he already has a list of up to 30 prospective Japanese partners ranging from manufacturers to financial firms to landowners. Hard Rock expects it would own 40-60 percent of the project. The prize, as everybody knows by now, is a casino market estimated at up to $40 billion in gaming revenues. What is not known are the important components of enabling legislation to be enacted later this year: How many casinos? Where? Tax rate? How much and what kind of local ownership will be required? For years, casino companies have talked about maybe just two or three destination resorts in the biggest cities, like Tokyo and Osaka. That would be fine for the big operators, allowing them to have a Singapore-like oligarchy. But the political reality in Japan is that smaller metropolitan areas will argue that they should get a piece of the pie, especially if the intention is economic development. Their rationale is that prosperous Tokyo and Osaka don’t need the help, but the declining regional metros do. Local participation is a given. The question will be in what form. Will Japan require local companies as equity partners? Will they require Japanese investors to be 50 percent or even major-
By Frank Fantini
ity owners? Will they settle for a Macau model where parent companies create publicly traded subsidiaries? Until the rules are written, it is too early to handicap the winners, but when they are written, we might get some insight as to the favorites. For example, if Japan adopts the Singapore approach, that could be seen as favoring Las Vegas Sands, which has lobbied for that model. Here’s what we know, or think we can infer, so far: • Las Vegas Sands is being discussed by U.S. analysts as the front-runner. We’re not so sure about that. A strong-willed entrepreneurial leader like Adelson might not fit well into the cooperative, even insular, Japanese corporate culture. And if there is a requirement for 50 percent or majority Japanese ownership, he might not want to try. However, there is no question that Las Vegas Sands is the master of the convention, shopping, tourist-driven integrated resort, and has to be considered a favorite. • Wynn is also discussed in the U.S. as a strong candidate, and certainly the exquisite resorts developed by Steve Wynn would have a powerful appeal. However, to date, Wynn has not developed a resort with as broad a business model as Las Vegas Sands. • MGM Resorts is often mentioned after LVS and WYNN. But MGM might be the best positioned of all. Murren would be a more collegial American partner. The company has experience with joint ventures, and MGM offers the same broad business model as Las Vegas Sands. And then there is the power of the MGM brand, based not on the casino company, but on the movie studio, which provided much of the post-World War II entertainment for Japanese citizens. • Boyd Gaming. If you want a dark horse, Boyd could be it. As mentioned, there will be strong political pressure to allow one or more regional casinos in secondary metropolitan areas, which could fit right into Boyd’s wheelhouse. • Hard Rock International, like MGM, has an internationally known brand.
• Melco Crown. Genting Singapore. SJM. Galaxy Entertainment. There is some thought that Japan might want some Asian involvement. However, it is worth noting that Japan is its own culture, not necessarily Asian, just like another island nation, Britain, isn’t quite European. There is also some belief that Japan might see itself as a competitor to Macau and might not be enthusiastic about awarding licenses to strictly Macau operators. Given those considerations, Genting might be the favorite from Asia as it has the financial heft and, like LVS and MGM, the broad integrated resort experience. • Others. Once the rules are written, a number of other companies could dive in. Caesars Entertainment, Tokyo-listed Universal Entertainment, NagaCorp, Crown and Star out of Australia—even Penn National and Red Rock if regional casinos are approved. Or one of the big Hong Kong-based real estate developers. Philippine developer Ricky Razon. • Japanese partners. It is likely that everyone from Konami to Universal Entertainment to Sega Sammy to pachinko operators to industrial conglomerates will want in on the action. Konami is already actively pursuing interest. Sega Sammy is already getting into the casino side of the business with Korean partner Paradise Gaming in a project near Seoul. Universal CEO Kazuo Okada will have casino experience with his new self-named casino property in Manila, though he might be too controversial for the Japanese to risk one of a very small number of licenses. So, lots of players and lots of possibilities. For now, we’d say LVS and MGM are well positioned and that WYNN and Genting Singapore have also checked off all the boxes, to use the currently popular phrase. 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.fantiniresearch.com.
‘Will Japan require local companies as equity partners? Will they require Japanese investors to be 50 percent or even majority owners? Will they settle for a Macau model where parent companies create publicly traded subsidiaries?’ 14
Global Gaming Business APRIL 2017
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AGEMupdate AGEM MEMBER PROFILE MARCH 2017 KEY BOARD OF DIRECTORS ACTIONS
A leading supplier to lottery and gaming for over 20 years, Carmanah Signs is the gaming division of Stratacache—the world’s leading provider of digital signage network software, hardware and services. From LCD table-limit signs to easy-function slot end bank panels, Carmanah Signs can help improve player engagement, lift casino sales and increase brand value. The Carmanah Signs head office is located in Calgary, Alberta, Canada. Player interaction with the gaming floor is key to repeat visits and player retention. Carmanah Signs’ interactive displays offer players a user-friendly way to view property maps, access walking directions, and opt in for pushed messages to their mobile device. Players can search for slot machines, restaurants and bars, entertainment schedules and poker room wait lists, and can sign up for reward programs. Carmanah extends the digital signage network to tablets, creating limitless opportunities for social gaming, learn-toplay apps, self-serve food and beverage, and access to reward program registration and virtual concierge services. Carmanah Signs is always leveraging the knowledge of its parent company Stratacache, the global leader in retail optimization and large-scale digital signage networks, to elevate player experiences in lottery and gaming. In late 2016, the Stratacache Foundry facility was opened—the largest and most advanced manufacturing and configuration facility for digital signage and digital interactive solutions in the world. Combined with the recent acquisition of Scala, the largest international digital signage company, this new facility allows Stratacache to grow and expand production capacity for several key new products, improve the depth and breadth of innovative digital signage solutions, and increase flexibility to meet customer demands. Carmanah Signs works closely with casino clients to define their project goals and signage network strategies, ensuring optimal placement and usage to drive player engagement and sales. Whether engaging players with stunning video walls, simplifying the player journey with intuitive way-finding displays, or inspiring younger players with targeted interactive features, Carmanah Signs will help find the solution that is right for your next project. For more information, visit carmanahsigns.com or contact Melanie Farkas, mfarkas@carmanahsigns.com. 16
Global Gaming Business APRIL 2017
• Melissa Ashley, the new senior VP of Reed Expo, made a short introductory presentation to the members updating on the G2E Asia and G2E 2017 shows. She shared that this year’s G2E Asia, set for May 16-18 in Macau, will see 180 exhibitors (50 are new), which is a 20 percent increase from last year. They expect 12,000 visitors from 90 countries and regions and the exhibition space now exceeds 11,000 square meters. G2E Las Vegas already has 85 percent of the floor space sold with 21 new companies contracted, which is ahead of this time last year. • AGEM helped coordinate with the American Gaming Association (AGA), National Indian Gaming Association (NIGA) and the National Council on Problem Gambling (NCPG) on submitting a letter to the U.S. Congress to try to ensure that any Affordable Care Act replacement continues to recognize gambling disorders as a public health issue and it is included as an essential benefit. • AGEM continues to work with Mexico’s regulatory body, SEGOB, on the potential for updated machine certification requirements, to keep illegal machines out of the market in the region. • The Japan Gaming Congress takes place May 10-11 in Tokyo. AGEM will be taking an active role in putting together a supplier panel at the event as Japan moves forward toward a new era of legalized gaming. In addition, AGEM members voted to approve a sponsorship to support the Congress and ensure that AGEM has a strong presence in this important new market. • At the March monthly meeting, AGEM welcomed German-based SAP as an associate member, Association of Gaming total Equipment Manufacturers February 2017 high of 159. bringing the membership to an all-time he AGEM Index reached another record high in
February, continuing the momentum from UPCOMING EVENTS previous months. The composite index stood at
Selected positive contributors to the February 2017 AGEM Index included the following:
351.4 show pointswill at the closein ofSan February Aristocrat Technologies (ALL) this contributed • The NIGA be held Diego2017, April 12-13. Pre-registration is strong year, and11.07 which represents an increase of 21.3 points, or 6.5 points due to a 9.64 percent increase in stock price looks promising for a successful event. The show will be moving to Las Vegas in 2018, and will no percent, when compared to January 2017. The AGEM to AU$16.60. Index reported a year-over-year increase for the 17th longer be scheduled for Phoenix. consecutive month, rising 155.4 points, or 78.4 percent, Scientific Games Corporation (SGMS) reported a when compared to February 2016.
21.47 percent increase in stock price, rising to $20.65 and contributing 4.82 points. During the latest period, eight of the 13 global gaming equipment manufacturers reported month-to-month Konami Corp (TYO:0766) contributed 3.74 points increases in stock price, with two up by more than 10 due to a 4.87 percent increase in stock price to percent. Five manufacturers reported decreases in stock ÂĽ4,740. The AGEM Index reached another record high in February, continuing the momentum from previous price during the month with one experiencing doubleSelected contributors included the following: digit losses. months. The composite index stood at 351.4 points at the closenegative of February 2017, which represents
AGEMindex
an increase of 21.3 points, or 6.5 percent, when compared to January The AGEM Index re- Agilysys With a stock 2017. price of $9.10 (-6.47 percent), The broader stock markets continued to gain value in (AGYS) contributed points. ported year-over-year increase forathe 17th consecutive month, rising 155.4negative points, 0.17 or 78.4 percent, Februarya2017. The S&P 500 reported month-to-month increase of 3.7 percent, rising to2016. 2,363.64. Additionally, when compared to February During the latest period, eight of the 13 global gaming equipment Ainsworth Game Technology (AGI) contributed the Dow Jones Industrial Average increased 4.8 percent manufacturers reported month-to-month increases price, with twopoints up bytomore than 10 0.12 the index dueperto a 3.31 to 20,812.24, while the NASDAQ increased 3.8 percentin stocknegative in stock AU$1.75. duringFive the period to 5,825.44. cent. manufacturers reported decreases in stock price percent during decline the month withprice one to experiencing double-digit losses.
AGEM
Exchange: Symbol (Currency)
Stock Price At Month End Percent Change Feb-17 Jan-17 Feb-16 Prior Period Prior Year
Index Contribution
Nasdaq: AGYS (US$)
9.10
9.73
10.45
(6.47)
(12.92)
Ainsworth Game Technology
ASX: AGI (AU$)
1.75
1.81
2.19
(3.31)
(20.09)
Aristocrat Technologies
ASX: ALL (AU$)
16.60
15.14
10.00
9.64
66.00
Taiwan: 3064 (NT$)
22.60
25.60
41.00
(44.88)
(0.07)
NYSE: CR (US$)
72.29
72.04
49.05
0.35
47.38
0.18
NYSE: EVRI (US$)
3.25
2.95
2.94
10.17
10.54
0.27
OTCMKTS: GLXZ (US$)
0.56
0.60
0.22
(6.67)
154.55
(0.02)
Nasdaq: GPIC (US$)
11.43
11.88
9.64
(3.79)
18.57
(0.04)
NYSE: IGT (US$)
27.00
26.41
14.78
2.23
82.68
1.51
INTRALOT S.A.
1.13
1.08
1.13
4.63
-
0.08
Konami Corp.
TYO: 9766 (ÂĽ)
4,740
4,520
2,739
4.87
73.06
3.74
Nasdaq: SGMS (US$)
20.65
17.00
8.51
21.47
142.66
4.82
Nasdaq: TACT (US$)
7.40
6.90
7.24
7.25
2.21
Agilysys
Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC
Scientific Games Corporation Transact Technologies
(11.72)
Change in Index Value
(0.17) (0.12) 11.07
0.05 21.30
AGEM Index Value: January 2016
330.14
AGEM Index Value: February 2017
351.44
AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. The AGEM Index is published monthly by Association of Gaming Equipment Manufacturers (AGEM) and Applied Analysis | Copyright Š 2017 Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.
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Is it time to ditch the players clubs and focus on real loyalty? By Oliver Lovat
Core Customers I
n my work and research into strategic positioning of casino resorts, I repeatedly hear the same message that casinos are not selling the opportunity to play a game or stay in a resort—they are selling “an experience” to the customer. Las Vegas had 43 million visitors last year, with hundreds of millions of “experiences” sold. Not all of these were created or curated by the casino resort operators, but it is clear that aspects of “the Las Vegas experience” work very well. The late management guru Peter Drucker once claimed that the aim of marketing is to know and understand the customer so well the product or service fits him and sells itself, and we are at a stage where casino operators understand who their customers are in a way that few other industries do. At the core of strategic marketing is the customer. Our businesses must place customer centrality at the core of all that we do. The proportion of first-time visitors to Las Vegas has ranged from 14 percent to 19 percent in recent years, thus implying over 80 percent of visitors each year are repeat visitors. I estimate that this imbalance between new and repeat customers will reflect casino visitation across the U.S. Of the new visitors, most or all will have a perception of what Las Vegas is through external media or general consciousness; the brand of Las Vegas and what a casino is, is universal. Yet, with so many return customers and so many businesses selling what is effectively the same product, to the same customers, at the same price, the marketing strategies need to be more sophisticated. There are drivers of differentiation, but fewer than in many industries. So, how can the operators achieve strategic competitive advantage?
Disregarding the Established Rules to Find Transactional Loyalty Classical competitive strategy theory, advanced by the likes of Michael Porter, advocates price leadership and differentiation as key success drivers, but these are not valid in Las Vegas. Price leadership strategies have been used by a range of casinos that can now only be visited in the Neon Mu18
Global Gaming Business APRIL 2017
seum, home of signs of closed casinos. The reality is that when the price of rooms is lowered to a level that is not economic and subsidized by other revenues, the value proposition diminishes entirely. After a period where resorts closed, there was a concerted drive to increase rates across Las Vegas, but today operators with excess inventory are continuing to discount room product. The net effect will be a diminution of the value of their brands and products. The alternative is differentiation, which is much harder to achieve, as the core product is regulated and the periphery products, such as restaurants and amenities, are highly considered. The evolution of the casino resort has done so in the context where management is highly attuned to the needs of the customers and has sought to meet those needs by aligning the offering accordingly. Why differentiate when imitation is equally effective? Hence, the proliferation of lobby bars, steakhouses and buffets within the casino context. Therefore, the only true drivers of competitive advantage are location (whether in proximity to a population center in relation to the com-
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We pose the question that will no doubt cause shudders among CMOs across the industry:
If brands do the segmenting work for us, and with detailed petition, or in a high footfall area) or customer loyalty. This maxim is not unique to casinos, but also in aspects of supermarkets and retail businesses, and was subject to extensive study in the U.K. over the past two decades. The case study used in business schools in the early 2000s is that of U.K. retailer Tesco, which sought to locate stores nearer to population centers than their competitors, supplementing this by launching a loyalty card that rewarded customers with points related to their individual shopping habits. Industry observers will note the similarities with retail and casinos, and without offering a summary of the past 20 years of loyalty thinking, it is clear that the success of Harrah’s Entertainment was due to Total Gold, and successor Total Rewards, which in turn spawned competitors from MLife to Boarding Pass and a host of similar loyalty programs which seek to reward customer play on a transactional basis. This, of course, has benefits. As nearly everything done by the customer is tracked, the operators can profile and segment customers to understand behaviors and maximize marketing budgets, where information is harvested to develop an appropriate marketing offer based on theoretical value for that customer, and attract that customer back. Transactional loyalty programs were a great success.
The Bridge of Insights There is a bridge that crosses the Las Vegas Strip, which is the perfect crossroads of strategic marketing insights. On one side sits Planet Hollywood. The billboards display the offerings within; the buffet of buffets, Britney Spears in the showroom or Crazy Girls burlesque upstairs. To the right is the HarleyDavidson Café. Across the road is Aria, with the world’s largest high-resolution screen fizzing with details of the champagne brunch or the fine dining found within, and the Cosmopolitan of Las Vegas. From a marketing theory perspective, we see both emotional and functional loyalty evident, where cus-
market research available on customers, is the industry
wasting money on players clubs?
tomers can align with the offering that best represents their segment. From a loyalty perspective, function and emotion are important. Customers stay in a resort because they desire the experiences within, whether that be the room product, the dining, service or general range of amenities. The operators, with knowledge of their customers, supply these, so the typical customer at Planet Hollywood is more likely to desire a Britney entertainment package than the Aria or Cosmopolitan customer, and conversely, the high-level food and beverage range is more aligned to the Aria or Cosmopolitan customer. In fact, MGM has recently made great play of using food and beverage as one of the great strategic differentiators within their portfolio, so where once a successful offering was rolled out across the portfolio, this is now more selectively placed for each resort’s specific customer segment. However, marketing theorists have declared that the use of brands as tribal (or emotional) identifiers also encourages loyalty within segments. Harley-Davidson or Britney Spears clearly reach out to customer segments to encourage alignment. Both these brands are more than simple differentiators, as they illicit an emotional response and foster a sense of tribal belonging— as does the Cosmopolitan’s more cerebral declarations to the sophisticated customer, who is primed to be curious about the content, targeting along psychographic if not demographic segmentation. Loyalty to a brand, or a perception of a brand, is emotional loyalty. It is much more powerful than a transaction. We must understand that in the world of modern marketing APRIL 2017 www.ggbmagazine.com
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Today the loyalty is to the experience and not the transaction, while Facebook can offer a plurality of insights to the customer that the players club cannot.
segmentation and orientation, brands are of vital importance to the uninitiated, as they do much of the heavy lifting in customer identification—as in providing both a sign and a symbol of that product. Therefore, we pose the question that will no doubt cause shudders among CMOs across the industry: If brands do the segmenting work for us, and with detailed market research available on customers, is the industry wasting money on players clubs?
The Evidence Driving loyalty via transactional methods has always had limitations, and in today’s world of internet discounters, these have diminished further. First, in a competitive environment, where the use of this platform is ubiquitous, the customer is left with a range of players clubs to join, and the competitive advantage is diminished; over 75 percent of Total Rewards customers also hold MLife membership. Second, we have to assume that the rewards given are of value to the customer. Data suggests that while older customers value these methods, younger customers do not value transactional loyalty; of the under-30s, 25 percent of Las Vegas visitors are not a member of any players clubs, compared to a sample average of 15.6 percent of other ages. Third, to keep players clubs competitive in a crowded space, the incentives need to be greater, thus eroding margins. Let’s revisit the U.K. supermarket study. Tesco, the market leader which once collected nearly 25 percent of all retail spend in the U.K., suffered in recent years as limited stock value offering from German retailers Aldi and Lidl and the big box of Wal-Mart’s Asda ate into the value customer share, while other premium and niche retailers such as Waitrose proved more adept of capturing premium customers. On the other hand, the defenders of players clubs will argue that successful transactional loyalty schemes really do allow them a quantitative data set, which allows for good management decisions. Players clubs also allow operators to target individual customer behaviors to promote particular behaviors, including incremental visitation while incentivizing players to meet revenue targets. These are valid points, but hardly enough to warrant such reliance on these methods for competitive advantage. Moreover, the loyalty game has changed. Sustainable loyalty is not achieved by transaction. Rather, it is the byproduct of meeting customer needs. Based on study of behaviors of the next generation of visitors, we note that players clubs, as a method of driving loyalty, are in decline in usefulness. If resorts are selling experiences as their primary business activity, incremental benefits via transaction are perhaps more reflective of a value-based offering and not aligned with the holistic strategy employed of 20
Global Gaming Business APRIL 2017
increasing margins rather than driving incremental play. In the U.K. and within gaming, this form of transactional loyalty has proved to be fragile under competitive pressure, and today we find functional loyalty and emotional loyalty highly successful, especially when seeking to attract the next generation of customers.
A Pragmatic Solution: Merger and Exit For decades, Harrah’s/Caesars, followed by every other operator, invested in their players clubs and schemes for the dual benefit of promoting loyalty and gaining customer insight. Today the loyalty is to the experience and not the transaction, while Facebook can offer a plurality of insights to the customer that the players club cannot. Yet the data collected and contact information does have value, especially for marketing purposes. My proposal is that Caesars and MGM create a new independent joint venture based on customer insights and contacts. The resulting independent enterprise will be accessible across all properties (and even with other subscribing casinos, such as tribal and regional competitors), truly offering a competitive advantage to those that subscribe. The two market leaders (by rooms) can offer packages to customers based on the customer needs across the network and bill internally, providing all subscribing parties with customer insights from a wider base. On the basis that there are needs for this type of transactional loyalty outside casinos (and there is), there is a case that as an independent company, there are considerable opportunities for other revenues to be gained by the shareholders. The longer play is that while many of the physical assets are now held in REIT form and there is no need for operators to hold all their assets in a single entity, there is no argument that a combined customer loyalty, discount and insight business has real commercial value, with the potential to IPO should there be sufficient growth or investor demand. So that’s the blueprint. Mr. Murren, pick up the phone and call Mr. Frissora, and sort this out. It is a win for your owners who can benefit from increased value, a win for the customer with more choice and a win for your management, who can focus on creating experiences that create real customer loyalty. Oliver Lovat is the CEO of the Denstone Group. He consults on strategy for asset-backed investments in the gaming and hospitality sectors. He is a fellow of the Royal Institution of Chartered Surveyors, visiting faculty at Cass Business School, the University of Nevada, Las Vegas Plus Center for Executive Education and lives in Las Vegas. He can be reached at oliver@denstone-re.com.
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Scientific Games
Table Dance
Does technology improve table games and the table game experience, or is the interpersonal aspect of the games the key?
C
By Roger Gros
learly, there has been a revival of table games over the past decade, reversing the decline that occurred during the previous 30 years. Where once table games feared to tread, slot machines are grudgingly giving up territory. And replacing what once was considered the birthright of millennials—slot machines—table games have rudely stepped in as the favorite of the desired demographic. But what could accelerate the growth of tables (and by “tables” we mean the ones staffed by humans and featuring actual human interaction)? Some believe technology will be the savior of table games. But technology thus far has played a small role in the popularity of the games. Sure, there are scoreboards, bonus counters and some electronic betting spots on the table that recognize chips, but it’s usually been clever design, quirky rules or the chance at a big jackpot that have spurred the popularity of the games. But times may be a-changin’.
chips and cards so the game would instantly report who was playing, what they were betting, and how the table was doing (winning or losing). But challenges with the RFID systems and the optical readers were slow to be resolved. Roger Snow, the table game guru at Shuffle Master, now a division of Scientific Games, likens the development of this technology to scaling Mount Everest.
Table Tech For more than 20 years, the industry has been pursuing the Holy Grail: a table game that prevents collusion and cheating, while delivering data as rich and as detailed as the modern slot machine. It started in the 1990s at Bally Technologies (and others) with systems with names like “SafeJack” and “MindPlay.” The systems had most things in common: optical and RFID tracking of 22
Global Gaming Business APRIL 2017
Walker Digital Table Systems has created the “Perfect Pay” system that eliminates dealer errors, complete with RFID technology that tracks all the chips on the table, player activity and wins/losses at the table.
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“I use the metaphor of language, that people know the poker language, they know the blackjack language; don’t make them learn another language.” —Roger Snow, Senior Vice President, Scientific Games
“I imagine this occurred to Sir Edmund Hillary more than once looking up at the summit,” says Snow. “‘Oh, I’ll get to that; oh, it’s not that hard.’ Then you get up to about 28,000 feet and you can’t breathe. “It’s analogous to what’s happened here. Everybody wants to get to the top of the mountain. Everybody wants to do this. But that mountain is littered with a lot of corpses. And I think some of my coworkers over the years, smart people with great ideas, have really tried to do this. But I think we’re getting closer.” Robert Saucier, CEO of table-game developer Galaxy Gaming, believes there is still some work to do. “There is a need for the casino operators to be able to have meaningful data,” he says. “And I think the advantage that the slot department has over the table game department is that they have lots of data, and it’s highly accurate. “The problem was that MindPlay was too much, too soon. I think that if it came in certain stages, it could have been more accepted. I also think that
we have realized that RFID is not the answer. It serves a function in places like the cage, or the vault, or being able to verify that the chips are not counterfeit. But I think that as far as being able to track play, and being able to use it to track patterns of play and specifically, to use with player tracking systems, RFID is not robust enough or accurate enough to really give that picture.” Both Snow and Saucier agree that the most promising technology in this area is currently being developed by Walker Digital Table Systems (WDTS). Longtime gaming executive Steven Moore, who is president of the company, acknowledges there are still some hurdles to overcome, and his company has to provide a product that satisfies three desires from casino management. “Accuracy, efficiency, and integrity,” he says. “With our technology, there’s a 25 percent to 30 percent increase in game speed, there can be no collusion or cheating, or even dealer mistakes because of the accuracy of the system. Payouts are always accurate. So, if the game goes faster, the payouts are always accurate—because in table games, mispays are always in the cus-
Scientific Games DJ Wild Stud Poker
APRIL 2017 www.ggbmagazine.com
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“If you take a traditional table game and you remove the ability for the player to see and touch the cards, hold and wager the chips, you take away a lot of that tactile experience that people enjoy about table games.” —Robert Saucier, Chairman and CEO, Galaxy Gaming
tomer’s favor. It’s like giving them free play, which reduces hold percentage. “So if you speed up the game, and you get rid of the free play through mistakes, the hold percentage gets driven massively up. And then you add in all the efficiencies of watching that game, so the computer system manages and understands everything that’s going on, so you don’t have to have as many eyeballs on it. You save a lot on staff, as well. Sometimes staff goes down from one supervisor per table in Asia, to four tables per supervisor.” WDTS acquired all the MindPlay intellectual property, so Moore understands how the process has evolved and that it’s a granular process. “The parallel, we like to say, is the electric grid,” he says. “When electricity was invented, the only use for it was to light a light bulb. There may or may not have actually been an ROI on that, but it was exciting enough that people did that. But after the light bulb, you started being able to plug other things in to the electrical grid—washing machines, refrigerators, stoves, microwaves and computers, and now everything runs on the electrical grid. So right now we’re building the electrical grid for table games. The best applications that are going to ride on that, we haven’t even thought of yet. That will take more people in the industry with the same vision we have.” John Hemberger, vice president of table games for AGS, says accuracy is the most important aspect. “It’s reliability,” he says. “That’s the No. 1 thing. Anytime you’re trying to provide real data, you have to be 100 percent accurate. There’s a lot of different technology that probably can even get you up around 92 percent or 95 percent of the time. But if you’re missing that other 5 percent, that’s a problem. It gets you closer, but it doesn’t quite give you the level of confidence that you expect in that type of data, to be able to invest from the casino side. “And the investment isn’t cheap. You can give them the degree of certainty that they need to be able to say, ‘We’re rating these players accurately, 100 percent of the time. We’re capturing their true average bet. We know their win and buy-in and everything else that goes along with it.’ Until that time, unfortunately, you’re going to see a little bit of a resistance to make that sizable investment.” Randy Knust, president of Genesis Gaming Solutions, says table game executives have never fully embraced technology. “Some might argue that when RFID first emerged and was adopted by operators, the technology wasn’t nurtured appropriately,” he says. “Today, we all recognize how sophisticated analytics have become and how important the value of detailed and accurate data is to an operator. This, coupled with the fact that integration with technology has become much more seamless 24
Global Gaming Business APRIL 2017
nowadays, suggests that we could start to see more RFID and other technology adoption quickly taking place.” Tristan Sjöberg, president of TCSJohnHuxley, says cost has always been the barrier, and is still a concern today. “There’s no shortage of innovation in this area, and we have been continually developing and evolving our smart table products, as have other suppliers,” he says. “However, some of these technologies being developed are extremely expensive to implement, and the value they return can be disproportionate. Data is a powerful tool, but too much data or inaccurate or outof-date information is worthless to the operator if they don’t utilize it properly. “ But Knust says the value offered to casinos will soon outweigh the costs. “With the increasing demand for accurate reporting, we believe that RFID is coming back to the forefront,” he says. “Yes, it is still considered to be an expensive option. However, when evaluated over the long term and taking into account the proven data accuracy it delivers, we believe casino operators will make the investment. Our belief is that the value of accurate data for player reinvestment, cage security, marketing, chip tagging, AML compliance, etc., will deliver ROI and operating efficiencies that will justify the investment. It is extremely hard to ignore the overall value that RFID offers.”
Game Centric Because the basic casino games haven’t changed since the demise of faro (the most popular game of the 19th century), Snow says any successful proprietary game should be a derivative of what people know. “I’ve always warned people about deviating outside of blackjack and poker,” he says. “I use the metaphor of language, that people know the poker language, they know the blackjack language; don’t make them learn another language.” And while the game has to be easily explained and simple to play, Snow says you have to walk a tightrope. “Keep your game simple, but you have to keep it interesting,” he says. “If simplicity were the only criterion, then Casino War would be our most successful game, where it is not. Yes, it’s a successful game, but it’s not in the upper echelons with Ultimate Texas Hold ’em and 3-Card Poker, and games like that.” Saucier agrees that games must be simple. “It’s been said, and I agree with this, if the game of craps was invented today, it probably would not succeed,” he laughs. As the company that bought out the industry’s most successful table game
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TCSJohnHuxley’s Qorex Terminals are active in London’s Hippodrome casino
inventor, Derek Webb and 3-Card Poker, Saucier says his company is constantly approached by individuals who claim to have invented the next 3-Card Poker. “For every hundred games that we look at, there might be three that might warrant further consideration,” he says, adding the secret to a successful table game is numbers— the numbers that prove it would be successful in a casino environment. “When you find that person in a table game operation that has an interest, what you need to do is make a deal with them. And I would say that the deal to make would be, ‘Give me numbers on how it performs, and you can have this game in your casino for life.’” Baccarat is an up-and-coming game, not just because of the explosion of the Asian casino market, but also because it’s being discovered by mainstream casino gamblers who never understood the game. Hemberger says AGS is coming out with a new version of baccarat called Dai Bacc that has a variety of different side bets enticing players with payouts as high as 40-to-1. “The baccarat commission-free games that have these side bets with the high house edge, I think there’s energy and excitement that comes from those tables. If you’re in California, for instance, they’re three deep at a bacc table, and there’s just natural curiosity. That leads other players to maybe take a look at what’s going on. “And when they find out it’s that simple, and that in a lot of instances, you’ve taken the whole commission idea out of the game, I think it really simplifies it, and keeps the excitement at a high level. So, it’s been a long process, but baccarat has really transitioned from the traditional game, to what it’s morphed into today, which is with some widely popular variations.” “Mathematically, baccarat is one of the best games in a casino,” says Snow. “A lot of the blackjack games have been 6-to-5. Astute players are leaving that game. So, look at baccarat. The house edge is something like 1.1 percent if you blend it between a player and the banker. And no strategy necessary.” Scientific Games recently acquired DEQ, which, among its products, distributed EZ Bacc, the first no-commission baccarat game introduced into the casinos. There is nothing to stop casinos from also using a no-commis-
26
Global Gaming Business APRIL 2017
sion game with rules like EZ Bacc, but Snow says there’s a certain loyalty there. “The thing with EZ Bacc is our company tried to create a copy (before the DEQ purchase)—and we’re the biggest player, by far, in the table game industry—but could not make it work. That brand, the brand those guys created, has been incredibly resilient. And table games players like what they like. So the brand is important, but they also have a couple of proprietary side bets on the game. People are used to it, people are loyal to it, and we learned the hard way that they don’t accept imitations.”
People vs. Machine How far can technology venture into an area where the human element is so important and attractive? Snow believes that it is the interpersonal aspect of table games that will attract the coveted millennials. “Everyone has been talking about skill-based gaming as being the Holy Grail that will attract millennials,” he says. “Well, skill-based gaming, that’s table games. Community-type gaming, that’s table games. I don’t have to do anything. I just have to wait for the customers to show up. And you see it, and I like to be a customer of our own company. “I will go out there and I’ll play games, and I’ll look around, and you notice younger people playing table games, more so than slots. My opinion, from what I’ve seen, is that if you look at everything that young people do with their phones, it’s just a vehicle for some sort of interaction. And, table games give you that interaction. And it’s something you get to touch.” Saucier believes it’s also the experience of the table that attracts the players, something that technology can’t reproduce. “If you take a traditional table game and remove the ability for the player to see and touch the cards, hold and wager the chips, you take away a lot of that tactile experience that people enjoy about table games. I’ve never been a fan of placing, in the felt, a touch screen where people place wagers, because you can do that on your computer. “Now, that being said, I think that we’re finding that some of the stadium-type games are actually doing well. Even some of the e-tables are doing well. From what I see, however, those games are not necessarily taking away from the traditional table game players, but rather, they’re acting as some-
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“I think tables have the ability to be social, and that’s what these people are looking for. I think they have the ability to not focus entirely on cash awards, but on things that winners could share with their friends or family, or make things experience-based.” —John Hemberger, Vice President of Table Games, AGS
what of a feeder system for people who are gravitating from slots into electronic table game play.” TCSJohnHuxley is all in on table-game technology with its Gaming Floor Live platform. “This complete network platform and gaming table management system provides a groundbreaking solution for operators and their table games,” says Sjöberg, “allowing a wide range of data gathered from each table to be analyzed in real time, enabling active and proactive management of gaming floors. For the first time, it’s possible to provide the same levels of real-time data collection that operators currently enjoy from their slot systems. You only have to think about the multiple vendors’ products there are on a single table that stand alone unable to connect and interface, to understand how compelling the GFL solution is.” Genesis, which offers a robust poker-room solution, has developed Bravo Card & Chip Detection, a tracking and ratings management system. “This system significantly improves overall efficiency, as it can measure exact hand counts and side bet participation, resulting in major improvements in the overall measurement and management of pit ratings, game performance and dealer audits,” says Knust. For those mobile gaming applications within a casino, Sjöberg says his company is developing Qorex Terminals, which feature touch screens that allow customers to play live table games. “We don’t believe there will be any detrimental effect on table games when handheld devices are approved,” he says. “In fact, we believe our system will only enhance and improve the player experience, as they have the freedom to play their favorite games in all areas.”
Table Game Growth Optimism about the growth of tables is almost universal. Moore believes technology will drive this growth by speeding up the games, making them more accurate and providing operators with a rich data set. “In the end,” he says, “a gambler is a gambler is a gambler—a real gambler. There’s really no difference in an Asian gambler, an American gambler or a European gambler. They want to play a lot of things, and as they gamble, they like incremental volatility. And a fast game’s a lucky game. Baccarat and roulette are historically slow games. So, you speed them up, and a player is going to enjoy it. You make fewer mistakes, then you frustrate the player less. If you under-pay a player, they get upset, they have to stop the game, it kills the mojo, everybody gets upset. It’s just not good for the flow and the momentum of the game. So providing a fast game, where the dealers can’t make mistakes that stop the flow and the mojo of the game—they all love that.” 28
Global Gaming Business APRIL 2017
Hemberger believes the human element will ensure the continued success of table games. “As everybody focuses on millennials and younger folks gambling in casinos, it certainly appears that the data supports the fact that these folks are playing tables,” he says. “I think that’s a great thing. I think tables have the ability to be social, and that’s what these people are looking for. I think they have the ability to not focus entirely on cash awards, but on things that winners could share with their friends or family, or make things experiencebased. That’s a very natural segue to capture the attention of young people and get their interest, and also have the skill element at the same time. They feel like they’re maybe not just pressing a button and getting a random outcome, but they’re influencing the outcome through their decision to play, or raise, or whatever it may be, that the game is allowing them to do.” Sjöberg says casinos must be prepared to serve the changing desires of younger players. “There will always be space on the casino floor for table games, and they continue to be popular with all demographics,” he says. “However, in order for the segment to grow significantly and gain new, younger players, operators will need to offer cross-platform table gaming and a greater variety of games.” Knust says Genesis will be ready. “We believe table games will continue to grow, given the wide demographic that they appeal to,” he says. “Evolution will certainly take place, and we will continue to work on the operational and the technical challenges that still exist.” Snow is a bit more pragmatic. “Table games will continue to grow,” he says. “But everything in the industry is always changing. You’re so close to it, you don’t feel it. But it’s changing constantly. If you go back maybe 10 or 15 years, they were ripping out table games to put in more banks of slot machines all the time. I wouldn’t say that we have re-conquered that territory, but we’re making some progress in table games. “But that could change over time. You can never be satisfied. One thing that I hope people know about Scientific Games, when it comes to table games, is that we’re relentless. We are constantly working on things for the benefit of the casino industry.” Snow applauds his competitors for some amazing innovations, and hopes that will continue. “I love table games, I’ve been in table games for the last 20 years, and anything that can move the ball forward, advance the cause of table games, is something I think is terrific. As to where it lands, I think you’ll see more and more table games going in. Hopefully they’re ours, and hopefully they have a shuffler on them.”
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Perfect Pair How online gaming can super-charge land-based operations By Todd Haushalter
I
n five years, the online gaming divisions of U.S. gaming companies could represent as much as half of the market cap of many wellrun online divisions. For the major players, this could represent billions in market value. This, however, does not necessarily mean it will come at the expense of the land-based business, as many often suggest. As online gaming trickles into the U.S. and land-based operators find themselves with the privileged licenses to conduct online gaming, there will be a race to ensure each casino’s database of players becomes loyal to their online offering rather than a competitor’s. This battle will be fierce, and not all land-based operators will be equal winners. The astute operators who become efficient at search engine optimization; convert free-trial players into depositing players; have a tight product that loads fast, is easily navigable, and has a great selection of games; and perhaps above all tie their landbased offering to the online offering in a relevant way will gain an outsized share of the online business. While there will be winners and losers in the race to compete online, this does not mean that online as a category will eat into land-based gaming.
Land-Based Strength Over the last decade or so, the land-based gaming industry has been forced to beef up its non-gaming offerings as gaming itself has become somewhat commoditized. As competition increased, simply having slots or blackjack tables was not enough of a differentiator to get customers through the door. Operators stepped up their game and added more bars, restaurants, showrooms, shopping and special events. The properties basically became places you would want to visit even if there were no casino. When we look at the impact online gaming 30
Global Gaming Business APRIL 2017
has had on land-based gaming in Europe, we see more evidence that online is not a threat to landbased. The casinos in Europe are a far cry from being the complete offering they are in the U.S., and they have still seen growth over the last decade in the face of the online gaming industry’s rise to power. But while there is no evidence that online gaming has hurt land-based growth in Europe, the winners of the online gaming race are almost exclusively pure-play online operators with no land-based operations. So the land-based sector as a whole has weathered the storm just fine, but it is not necessarily getting its share of the massive online pie. Now let’s explore how the gaming companies in the U.S. can ensure they get their piece of the pie and even use the online business to bolster more visitation to their properties. The first step to winning online business is to recognize that the skills it takes to win online business are very different and almost certainly not present in most land-based gaming companies today. This is easy for the land-based casino executive to dismiss—I know I did. But now, having held executive roles in the biggest land-based operations in the world and now the biggest online casino in the world, I can say with certainty that winning in each space requires radically different skills and thinking. If a major online operator in Europe announced plans to build a $2 billion property in Las Vegas, most industry observers would rightfully consider them as good as dead. It is likely their stock prices would reflect this. They simply do not have the skills to compete against the likes of MGM Resorts, Sands, Wynn and Caesars. It is not by accident that online winners in Europe have never operated a land-based casino. It is because the businesses are very different, even if they do share the same customers.
Driving Online Play to Property With the core skills in place and a full online offering (one that offers players an enjoyable online experience that is optimized for desktop, tablet and phone, for Android, Apple and the lesser operating systems, and for all major internet browsers), the land-based operators can focus on making the online business drive play to the properties. Without these online fundamentals in place, there is no chance of creating a cycle where play online augments play offline. The primary reason is that players will simply not tolerate a slow app that is thin on features and games. We live in a world where few will go to page 2 on a Google search, or wait even six seconds to load before abandoning. Online gaming is no different. It is easy to overestimate how easily the loyalty of players to the property will translate to getting their online play. All over America, people shop at their local WalMart then go home and shop online at Amazon. With a strong online offering in place, there are significant opportunities to use this business to drive land-based play. Customers already understand the loyalty programs at their favorite casinos. They usually have some understanding of the benefits of the different tiers, what they can earn, what days are double point days, and what sort of offers they get from the casino. This is especially true for the most valuable players. This sort of mindshare is an incredible benefit to the land-based operator when building an online business. This benefit, however, comes with great player expectations. Players will expect their online activity will be earning them points, comps and perks, and that they can elevate to the next tier if they play enough online. When this single view of the customer is taken and a player realizes he just became a plat-
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ANNIVERSARY A NNIV E R SAR RY
inum player by playing blackjack on his phone, it is a near certainty he will be coming to the property more often to cash in on those perks. Furthermore, he will receive better offers from the property, which will further drive play to the land-based operation. In an effort to further bridge the worlds of online and offline gaming, casinos can make their physical table games available online through live gaming. This concept of playing live table games online has become the dominant form of online table games played in Europe. The dealer in the casino conducts the game as normal, while the activity is streamed via live video to players who can play along online. With this service available online, players can play with their favorite dealer from anywhere. This not only brings an enhanced level of integrity to the online player, but also creates a deeper loyalty to the property as they never have to bet anywhere other than their lucky table. Since they are being rewarded for play no matter where it happens, they get better perks on property and a virtuous cycle is created that drives both online and land-based play.
Different Aspirations With all that said, it is still easy to think that players have a fixed gambling budget—that if a portion of it goes online, then it must come at the expense of the land-based business. This is just not the case. They are very different activities. Online play happens when one has a few free minutes and wants to be entertained. It therefore is competing with social gaming, online shopping, browsing through Facebook or playing other online games. Going to a casino is more of an event, while playing online is an activity. They do not compete against each other. In fact, the big losers in a world where online gaming is legalized are likely to be the social online casinos, which currently serve as an outlet for the pent-up demand for real-money online gaming. It is not going to be easy to launch a whole new division and seamlessly blend the worlds of online and land-based operations, but for those that do this well, the prize will be huge. It will also be in addition to their land-based operations, not at the expense of it. Todd Haushalter is the chief product officer of Evolution Gaming, the largest online table games operator in the world. Prior to this, he was vice president of gaming at MGM Resorts, and also worked and lived in Macau with Shuffle Master as vice president of business strategy.
2 0 0 0 A T T O R N E Y S | 3 8 L O C A T I O N S W O R L D W I D EE˚ ˚
FFocusing ocusing on on Your Your DData ata Privacy Privacy Needs Needs Lori N Lori Nugent ugent and and Mark M ark Clayton Clay ton h help elp lead l ea d a m multidisciplinary ultidisciplinar y tteam ea m o off Greenberg who G reenberg Traurig Traurig aattorneys t torneys w ho assist assist ggaming aming companies companies with wit h Cybersecurity, Crisis Traurig C ybersecurit y, PPrivacy rivacy and and C risis Management. Management. Greenberg Greenberg Tr raurig our our aadds dds o ur sk sskill-set ill-set to to that that of of o ur cclients’ lients’ knowledge knowledge aand nd eexperience xperience data tto o address address ttheir heir d ata security, security, iincident ncident response, response, privacy, privacy, aand nd inforinformation m ation management management nneeds eeds on on a gglobal lobal basis. basis. first-responder > LLori, ori, a fi rst-responder tto o data data ssecurity ecurity incidents incidents since since 2003, 2003, helps helps well--protecting while building cclients lients rrespond espond w ell--protecting their their rreputations eputations w hile b uilding defenses with sstrong trong legal legal d efenses tthat hat aare re eeffective ffective w ith rregulators egulators and and iinn data llitigation. itigation. LLori ori aalso lso helps helps clients clients eenhance nhance their t h ei r d ata security s e cu r i t y and an d pr p privacy ivacy pr practices ac tices an and dd documentation, ocumentation, improving improving their t h ei r rresilience esilience aand nd legal legal d defensibility. efensibility. Mark Co-Chair off tthe firm’s Gaming has > M ark is is C o-Chair o he fi rm’s G aming PPractice. ractice. He He h as sserved erved as as aann executive executive and and as as counsel counsel for for many many ccasino asino ccorporations orporations aand nd member off the Gaming Board. iiss a former fo former m em ber o the Nevada Nevada G aming Control Control B oard. The Greenberg Traurig Data T he G reenberg T raurig D ata Privacy Privacy tteam eam iiss prepared prepared tto o ffocus ocus on on yyou. ou.
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Global G Global Gaming am ming Practice Practice RRegulatory egulator y | Operations Operations | AML AML | IP IP | Labor Labor | Litigation Litigation | Privacy Privacy | Real Real Estate Estate AAcquisitions cquisitions | FFinancing inancing LLearn earn more more at at gtlaw.com/gaming gtlaw.com/gaming GREENBERG G R EEN BERG T TR RA AURIG, U R I G , LLLP LP | A ATTORNEYS T T O R N E YS AT AT LAW L AW | W WWW.GTLAW.COM W W. G T L AW. C O M The hiringg of a llawyer awyer iss an important mpor p tant decision and shoul should d not not be bas based ed solely solely upon advertisements. advertisements. Before Before yyou ou decide, ask us tto d yyou free iinformation formation about our qua qualifications o send send ou fr ee written written inf lifications and our experience. exper p rienc i e. Prior rresults esults do not not guarantee g antee a similar guar similar outcome. Greenberg Traurig, G eenbergg Traurig Traurig, P.A. out come. Greenberg Gr Traurigg iss a sservice ervice mark and trade trade d name of Greenberg Greenbergg Traurig, T aurig Tr i , LLP and Gr eenbergg T P.A. ©2017 Greenberg Traurig, Law. 28436 Gr eenbergg T raurig, LLP. LLP. Attorneys Attorne o ys aatt La w. All All rights reserved. reserved. 284 36
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By Katherine Spilde and Anthony Lucas
That Winning Feeling
Can customers really perceive differences in slot hold percentages?
T
ribal governments rely upon casino revenues for economic development, nation-building and critical community prerogatives. For many tribes, governmental revenues rely heavily on profits from slots, which often represent the super-majority of the total operating profit for an entire tribal gaming enterprise. Tribal governments hire and empower casino operators with the task of maximizing the revenues of their gaming floor using multiple strategies. For tribes that cater to a more local (repeater-market) clientele, the gaming floor is the main attraction. For other tribes, the casino is just one component of a much larger integrated resort that offers hotel rooms, restaurants, entertainment, a spa and other services. No matter where a tribal gaming facility lies on the spectrum from repeater market property to integrated resort property, it is likely that a large share of the profits (usually the largest) is derived from the slot floor. Slot machine revenues are so important to tribal governments that they are willing to sign gaming compacts (and sometimes share gaming/slot revenue) with states in order to add these machines to the casino floor. Given the centrality of slot machines to tribal gaming revenues, it is curious that tribal casino operators and slot operators have conducted few experiments in their properties to determine the best ways to maximize slot revenue. Interviews with slot operators across the United States (in both commercial and tribal properties) reveal that much of the strategy on the slot floor is “inherited wisdom” wherein marketing strategies (e.g., free play) and slot floor positioning assume certain player responses based on past experience rather than well-designed research or empirical evidence. For example, tribal casino operators typically position their slot floors via the casino advantage, which is known in the industry as the PAR— for probability and accounting report, which is the manufacturer’s report on each game’s theoretical hold percentage. 32
Global Gaming Business APRIL 2017
This practice is largely borrowed from Las Vegas, where there are clear demarcations between submarkets. For example, it can be inferred from long-term aggregated results provided by the Nevada Gaming Control Board that the Strip’s mega-resorts offer the greatest PARs (the highest hold for the casino), the Downtown Las Vegas casinos feature the next greatest PARs, and the casinos catering to the local clientele provide the lowest PARs. Of course, further demarcations occur in the casinos competing for players within these markets. Like so-called locals properties in Las Vegas, many tribal casinos who cater to a repeater-market clientele try to differentiate themselves in the marketplace by advertising “loose slots,” the popular name for low hold percentages. This strategy seems to rely on the long-held assumption that regular players in repeater markets can perceive differences in PAR that will affect their decision about which casino to patronize. Whether true or not, casino operators fear that the perception of “tight” slot machines will lead to bad publicity for their property and send customers to other properties that offer “looser” slots. This fear can be particularly pronounced for tribes with new or expanding tribal properties, where locals have been known to gossip about operators “tightening the machines” in order to pay for the property’s construction or expansion. We performed a study to empirically examine how changes in PARs affect game performance at a tribal casino. In particular, we created an experiment to determine whether slot players at this property can, in fact, detect considerable differences in theoretical payback percentages. The answer to this question is especially important for tribal casinos that cater to repeater-market players who experience the games over long stretches of time. The temporal component is introduced here, because some researchers claim that the ability to detect changes in PARs improves with time. The long-held idea that changes in hold percentages can be detected
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by players has been cited by some organizations and individuals as the cause of declining slot win in U.S. casinos, most of which cater to a local repeat clientele. If this assumption is true, then the tribal casino operator we worked with should expect to earn less on slot machines that offer higher holds, provided their savvy players have a sufficient amount of time to detect the relative “tightness” of the machines. It is important for tribal casino operators to understand the relationship between PAR and player behavior, because if players cannot detect differences in hold percentages, then casino operators may be able to improve game performance by increasing the theoretical hold. For this study, performance data was gathered from slot machines located within a tribal casino that catered to and relied on a frequently visiting clientele. This was an important criterion for participation in the study, as highly involved players are assumed to be most likely to detect differences in PARs. The property features fewer than 500 hotel rooms, but offers in excess of 1,500 slot machines. The property offered an array of dining options ranging from gourmet/specialty restaurants to quick-service outlets. No further property-level details can be provided, as the data donor wishes to remain anonymous. The game-level performance data were collected from two different banks within the tribal property, abbreviated as TRI-A & TRI-B. All game pairings comprised two identical games, save the difference in theoretical percentages. The paired games featured the same visible pay table, the same theme/title, the same credit value (i.e., $0.01) and the same cabinet design. Table 1 provides additional details for the specific pairings.
Table 1
PAR Comparisons within Two-game Pairings 2-Game Pairing Game Theme/Title PAR 1
PAR 2
PAR Diff PAR Diff. (% Pts.) (%)
TRI-A TRI-B
8.01% 8.01%
2.10 2.10
Chili Chili Fire Mystical Ruins
5.91% 5.91%
35.53 35.53
From Table 1, the far right column indicates the percentage increase in “price,” assuming hold percentages are perceived as prices. The increases in PARs within each pairing were affected by (1) the availability of the licensed PAR options for each title; and (2) the experimental willingness of the casino operators. The latter concern stems from the fact that these experiments were conducted in live casino environments, with real customer experiences and real operating profits at stake. This tribal gaming facility located one game of its two-game pairings on the lateral end of a bank, with the second game located directly adjacent to the first game (i.e., a side-by-side configuration). The second game occupied an interior/middle-unit position within the bank. As researchers have found end units to be associated with increased game performance, the side-by-side configuration could introduce a competing source of influence on game-level performance. However, the adjacent location would also make it easier to switch games, if a player suspected a difference in the PARs. This property collected its daily performance data from May 1, 2016 to October 27, 2016. Two-tailed, two-independent-sample t-tests were conducted using the daily theoretical win for each game shown in Table 1. Because this experiment was conducted within a live commercial setting, there were limitations on the number and types of PAR comparisons. All hypothesis testing was conducted at the 0.10 alpha level, as this was an exploratory study. Further, the extant literature provided no clear basis for a directional test, supporting a two-tailed test of the null hypothesis. All t-tests were conducted assuming unequal variances. This approach has been found to mitigate Type I error rates, as compared to the traditional two-stage method involving a preliminary test of equal variances. The null hypothesis for the two-game pairings was as follows: μ0: μLOW = μHIGH μLOW represented the mean, daily, theoretical win for the lowPAR game within each two-game pairing, while μHIGH represented the same for the high-PAR game within the same pairing. Table 2 lists descriptive statistics reviewed prior to hypothesis test-
APRIL 2017 www.ggbmagazine.com
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Table 2
Descriptive Statistics by Game Pairing 2-Game Pairing
Mean
TRI-A: Chili Chili Fire (n = 180) T-win: 5.91% 232.17 8.01% 372.51
Median
Std. Dev.
Min.
Max.
204.38 338.00
103.33 151.64
65.36 138.22
814.59 1,158.06
Coin-in:
5.91% 8.01%
3,893.93 4,609.51
3,429.60 4,194.80
1,743.54 1,878.35
1,105.80 1,715.60
13,703.20 14,207.60
Win:
5.91% 8.01%
295.94 380.40
317.73 423.11
466.24 502.30
-1,108.04 -984.06
1,462.32 1,878.36
TRI-B: Mystical Ruins (n = 180) T-win: 5.91% 217.28 8.01% 384.90
201.49 353.40
114.36 178.31
36.35 89.53
973.89 930.46
Coin-in:
5.91% 8.01%
3,646.27 4,755.98
3,350.70 4,373.20
1,923.74 2,210.37
615.00 1,017.80
16,444.00 11,606.40
Win:
5.91% 8.01%
264.64 207.04
305.93 237.95
677.36 931.53
-2,110.85 -3,323.95
1,818.35 2,657.50
Notes. All statistics were derived from daily observations. Rounding percentages to two decimal places may result in minor differences. For example, minor differences may exist between (1) the product of a game’s coin-in and PAR; and (2) the same game’s T-win. All win data are listed from the casino’s perspective. For example, negative numbers represent a loss for the casino.
The findings did support a strategy of increasing the theoretical hold percentages to improve game performance. Such results could be valuable to operators seeking to improve slot revenues, as gains may be possible via increased theoretical hold percentages.
PAR produced a significantly greater daily theoretical win. The results did not support the notion that players could detect the differences in the PARs over extended periods of time (e.g., 180 days). The findings did support a strategy of increasing the theoretical hold percentages to improve game performance. Such results could be valuable to operators seeking to improve slot revenues, as gains may be possible via increased theoretical hold percentages. Of course, further research is necessary, and the results cannot be generalized beyond the parameters of this study. Based on the importance of slot win to tribal gaming operators, we are collecting additional data across tribal properties with a variety of PAR hold levels. Ultimately, gaming executives are charged with optimizing slot revenues. By increasing hold percentages, operators may be able to improve overall slot revenues. Additionally, these resulting revenue gains would be associated with very little incremental operating costs, leading to strong gains in departmental profit margins. For properties with a heavy reliance on slots, such gains could translate to imporTable 3 tant increases in overall EBITDA. For tribal governments, these increases mean Results of 2-Independent Samples more governmental revenues can be dit-tests on Mean T-wins for each Game Pairing rected toward tribal priorities, including nation-building and supporting tribal programs. Mean S.E. 2-game Pairing (PARs) Diff. Diff. t-stat p df Katherine Spilde, Ph.D, is an associate TRI-A (8.01% vs. 5.91%) US$140.33 US$13.68 10.260 >.0005 315.760 professor at San Diego State Universit,y and can be reached at kspilde@mail.sdsu.edu. TRI-B (8.01% vs. 5.91%) US$167.62 US$15.79 10.616 >.0005 304.946 Anthony Lucas, Ph.D, is a professor at University of Nevada, Las Vegas, and can be Notes. All positive mean differences indicate a greater mean for the game with the reached at anthony.lucas@unlv.edu. greater casino advantage. Unequal variances assumed for all t-tests. ing. Although hypothesis tests were not conducted on daily coin-in and win observations, these variables were shown in Table 2 to give those more familiar with the gaming industry a broader view of the individual game performance. All data are shown from the casino’s perspective. For example, all positive win numbers indicate house wins. Within both pairings, the mean T-win was greater for the game with the greater PAR. The mean win was also greater for the high-PAR game in TRI-A. The mean coin-in was greater for the games with the least PAR in both pairings. As expected, the standard deviation for win was considerably greater than that of T-win for all four games. This is due to the short-term volatility associated with daily actual win/loss results at the game level. This is why win was not used as a performance measure in this study. Table 3 summarizes the results of the two-independent-sample t-tests. From Table 3, the null hypothesis was rejected for both two-game pairings, indicating that the differences in mean T-win identified in Table 2 were statistically significant. Within each pairing, the game with the greater
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The Buffalo Thunder casino resort, owned by the Pueblo of Pojoaque, is considered an “illegal gambling operation” by the state after the tribe refused to renew its gaming compact
Stiff Competition New Mexico tribes cope with an overheated gambling market By Dave Palermo
N
ew Mexico is known for its panoramic landscape of desert, forests and mountains stretching from horizon to horizon under an oceanic sky. When it comes to scenic wonder, the license plates are correct: New Mexico is, indeed, a Land of En-
chantment. But at least a few casino managers for the state’s American Indian tribes must view New Mexico more as a difficult and unforgiving place to do business. Fifteen Native American tribes and pueblos operate 21 casinos, a bingo machine parlor and four travel plazas equipped with slot devices that in 2015 generated $830 million in gross gambling revenue, according to state officials. Unfortunately for the indigenous communities dependent on casino revenue to fund services for their citizens, the gambling enterprises are competing in a state with less than 2.1 million residents. Indian casinos are not only embroiled in a hotly competitive marketing war against each other, but they are confronted with five state-licensed racinos, each with up to 600 slot machines. A license for a sixth New Mexico racino is out for bids. Then there’s the lottery. Sales last year reached $46 million.
Locals Market New Mexico does have a robust tourism industry along heavily trafficked Interstates 25 and 40. But most of the approximately 33 million yearly visitors are not drawn to the casinos. They come for outdoor recreation, indigenous culture and the aforementioned scenery. “It’s pretty stiff competition,” says Derrick Watchman, who stepped down last year as CEO of Navajo Nation Gaming Enterprises, operators of three New Mexico casinos and a fourth near Flagstaff, Arizona. “Is the New Mexico gaming market saturated? My contention is yes, it is.” “What’s unfortunate about New Mexico is it only has a little over 2 million people and there are 12-14 major casino properties,” says Jerry 36
Global Gaming Business APRIL 2017
Smith, president and CEO of Laguna Development Corporation (LDC), the economic arm of the Pueblo of Laguna. “New Mexico in terms of Indian gaming is probably one of the most competitive gaming markets in the country. Being able to compete with each other in this market is very difficult. It is a major challenge.” “The opportunity for growth in New Mexico is limited,” agrees Skip Sayre, chief of sales and marketing for LDC, which owns two Albuquerque casinos and a travel plaza. LDC in August announced it is purchasing the Isle of Capri Casino Hotel in Lake Charles, Louisiana. “If we want to show any significant growth, we’re going to have to look outside the state,” Sayre says. “That’s what we’ve been doing. The Lake Charles, Louisiana, acquisition is an example of that.” State casino revenue rose slightly in 2015 after a 3.1 percent dip in revenues in 2014, says economist Alan Meister, author of the annual Indian Gaming Industry Report. But Meister is not optimistic there will be much significant growth anytime soon. “After seeing declines in gaming revenue in 2013 and 2014, New Mexico Indian gaming saw a rebound in 2015,” Meister says. “However, slow growth is expected in the short term absent any new major developments or changes.”
State Budget Struggles Tribal revenue-sharing payments to the state in 2016 dipped below $60 million for the first time since 2007, according to New Mexico Gaming Control Board figures. The drop was blamed on new and amended tribalstate regulatory compacts approved by the state legislature in 2015. The agreements, which expire in 2037, call for a graduated revenuesharing rate of 8 percent to 10.75 percent of the net machine win. Sixteen of the state’s 17 tribes signed the agreements. The Zuni and Jemez Pueblo have compacts but do not operate casinos. The revenue-sharing rate under the new agreements dropped at least
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“Is the New Mexico gaming market saturated? My contention is yes, it is.” —Derrick Watchman, former CEO of Navajo Nation Gaming Enterprises
temporarily for several tribes, allowing them more flexibility in doing business in the state. In an acknowledgment of the highly competitive gambling market, the compacts also allow tribes to discount free-play marketing expenditures in calculating net machine win. The machine win is used to calculate the revenue share paid to the state. “The state was willing to be flexible in areas important to the tribes,” Jessica Hernandez, former counsel to Governor Susana Martinez, said in a 2015 interview. Hernandez, who has since left the governor’s office to become city attorney in Albuquerque, said the compacts “address free play going forward” and “demonstrate how willing the state has been to consider and accept new compact terms that are important priorities for the tribes.” “I think they were trying to stabilize the gaming landscape in New Mexico,” Smith says. “I think they achieved their objective.” But the drop in revenue sharing comes at an inopportune time for a state that has been operating at a deficit for two years and faces additional shortfalls in fiscal 2017-18. “We have both an economic problem and a revenue problem,” economist Jon Clark told the New Mexican newspaper. The state, which depends heavily on oil and gas revenue, is primarily impacted by the volatility in crude oil prices.
Legal Battles Complicate Matters The state’s share of revenue from the upscale Buffalo Thunder resort, Cities of Gold casino and two travel centers near Santa Fe ended in the second quarter of 2015, the result of a compact dispute with the Pueblo of Pojoaque, which owns the gambling operations. The case is winding its way through the federal courts. Pojoaque is among New Mexico’s more lucrative operations, its net machine win totaling $60.6 million in the last year before it allowed the compact to expire, according to state figures. But the pueblo encountered serious financial problems shortly after the resort opened in 2008, and the following year, it defaulted on repayment of $240 million in bonds used to build the facility. The debt was restructured in 2014 with about $84 million forgiven. Meanwhile, the Fort Sill Apache Tribe in Oklahoma is suing the National Indian Gaming Commission for the right to conduct gambling on its ancestral lands in southern New Mexico. Pojoaque contends revenue sharing in the compacts violates provisions of the Indian Gaming Regulatory Act. IGRA prohibits state taxation of casino revenues without tribes getting a benefit, usually statewide or regional exclusivity to operate gambling. The U.S. Department of the Interior allowed the new and amended 2015 New Mexico agreements to go into effect, “deeming” them in compli-
ance with federal law. In letters to Interior, the 16 tribes endorsed the deals. “Every one of them had to write to Interior saying the agreement was in their best interests and economically more advantageous” than existing compacts, says a source in the governor’s office who requested anonymity. But Kevin Washburn, then Interior assistant secretary for Indian affairs, said in letters to tribes and state officials that he was “troubled” by the rate of revenue sharing in such a highly competitive casino market. Pojoaque, claiming the state was negotiating in bad faith, is seeking to use Interior secretarial procedures to negotiate a compact directly with the federal government. New Mexico has filed a lawsuit against Interior challenging the process. The case is awaiting a decision by the 10th Circuit Court of Appeals. Fees normally paid to the state as revenue share under the expired Pojoaque compact—roughly 8 percent of the net machine win—are going to an escrow account pending the court ruling. In a related matter, federal Judge James Browning in February ruled that Governor Martinez did not violate the law in instructing vendors to stop doing business with Pojoaque Pueblo’s gambling enterprises. That matter also is being appealed to the 10th Circuit. But in March, the casino turned off slot machines made by several major vendors as a result of this court order. “The federal court reaffirmed what we’ve said from day one: Pojoaque Pueblo is operating as an illegal gambling enterprise,” Mike Lonergan, Governor Martinez’s press secretary, said in an email. “Pojoaque Pueblo continues to believe they can break the law and play by a different set of rules than other New Mexico tribes. In this ruling, the court recognized the state’s right to license and regulate non-tribal vendors.” Pojoaque attorney Scott Crowell says he has a “high level of confidence” the pueblo will prevail in the 10th Circuit on the vendor issue as well as the compact negotiations dispute. “IGRA doesn’t give the states a sledgehammer to force tribes into what are essentially illegal deals,” Crowell says, characterizing New Mexico compact revenue-sharing provisions as “an illegal tax.”
A Blip In New Business Albuquerque area casino revenue grew roughly 3 percent last summer, Sayre says. “The state is showing a little bit of improvement. There’s some single-digit growth going on,” he says. “Travel has been good on the interstates. Commercial traffic has been good. The lower fuel prices are putting more dollars into peoples’ pockets. We think we’re benefiting from that.” But the uptick is largely due to a rise in discretionary income and not an increase in gamblers. “There’s no population growth in New Mexico,” Sayre says. “In fact, the state is losing people.” Competition for players is forcing casino operators to offer extensive free play coupons in an effort to draw customers, a practice that for many has been abused, eroding the bottom line. APRIL 2017 www.ggbmagazine.com
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Tribal gaming compacts negotiated with Governor Susana Martinez allow tribes to discount free-play marketing expenditures and drops revenue sharing for some of the tribes impacted by the heated competition in the state
While the state claims it took pains to negotiate a compact enabling tribes the flexibility to compete in a crowded market, at least one highranking official in the governor’s office does not believe Martinez can be held responsible for the native demographics. “Geographically, there’s still more room for casinos. Most of the tribes are located in the northwest quadrant of the state,” the source says, with more than half New Mexico’s population in metropolitan Albuquerque area. “The racetracks, with two exceptions, are located far afield from the tribes. “Intertribal competition is something the state cannot really negotiate into a compact. “We tried hard to provide tribes as many options to attack new business as we could,” the source says. “That’s reflected by the fact all the tribes except Pojoaque accepted the new compacts.” The Navajo Nation, which was late to legalize gambling on its sprawling, three-state reservation, noted a drop in business at tribal casinos in Colorado, Arizona, New Mexico and other areas that drew from the Navajo reservation. “When NNGE (Navajo Nation Gaming Enterprise) was created in 2004 there was some reduction in the performance of the competition,” Watchman says. “Many Navajos were commuting to Cliff Castle, Skye City and Mountain Ute, casinos in proximity to Navajo. “When gaming came to Navajo we kept that gaming dollar on Navajo land.” The New Mexico compact allows Navajo to build a fourth casino on its To-Hajiilee Chapter near Albuquerque no sooner than 2021, at which time market saturation in the metropolitan area is expected to have eased. The current competitive war between eight Albuquerque-area pueblos makes a major investment and debt load problematic. “There’s really not enough growth in this market to justify a large casino and hotel,” Sayre says. “There’s certainly no question about that. It would just be cannibalizing what is already here.”
Tribes Turn To Non-Gaming Amenities As is the case in highly competitive markets in the 27 other states with Indian casinos, New Mexico’s indigenous communities are taking steps to enhance their facilities with hotels, restaurants, retail shops and other non-gambling amenities. “The New Mexico market is trying to diversify, from gaming and with gaming,” Watchman says. Santa Ana Pueblo, owners of the upscale, non-gambling Hyatt Regency Tamaya Resort and Spa near Albuquerque, announced in February plans to build a $50 million hotel at its nearby Santa Ana Star Casino. The pueblo in 2000 broke ground on what was supposed to be a seven-story, 288-room hotel, but it was never finished. The tribe did not disclose specifics about the new planned development. 38
Global Gaming Business APRIL 2017
To diversify its economy, the Santa Ana Pueblo bought the upscale, non-gambling Hyatt Regency Tamaya Resort and Spa near Albuquerque, and is planning a $50 million hotel at its nearby Santa Ana Star Casino
“You need play and stay,” Watchman says. “That’s the footprint you need to maximize casino investment—the gaming floor, food and beverage and a hotel.” But there’s no longer any guarantee in New Mexico that expansion will translate into additional customers. “There was a time you built it and they would come,” Smith says. “There was a time you could grow market share very easily, by building a hotel or adding more machines on the floor. It didn’t take a whole lot of brainpower to add 100 machines and get more revenue. “But because of the competition and what has been reported as negative population growth, the market is saturated. “We have seen competitors build huge properties and not see any growth in revenues,” Smith says. “It doesn’t make any business sense to be investing major dollars in New Mexico. What you have to do is improve what you’ve got.”
Looking Beyond Gambling With a history of natural resource management and defense contracting and more than three decades of economic diversification, much of it under LDC, Laguna Pueblo has the management and corporate expertise to meet the demands of a challenging gambling market. “We’ve prepared for this. Now we’re executing our plan,” Smith says. “We have competent general managers and site teams to manage the existing operations,” he says of the tribe’s portfolio of casinos, hotels, travel plazas, retail stores and a luxury RV park. “I also have a cadre of corporate leaders out there not only looking at potential investment opportunities and businesses, but also making sure we have the structure in place to be able to engage in those enterprises.” Tribal businesses also include a technology company and a transmix processing plant to produce diesel fuel. “We want to seek opportunities to invest in our core competencies, which are in the hospitality business: gaming, food and beverage, hotel, those kinds of things,” Sayre says. The pueblo plans to expand distribution of its Laguna Burger and is seeking additional opportunities in commercial gambling, such as the Isle of Capri in Louisiana. The pueblo also wants the state’s sixth racino license with plans to build a racetrack and casino in Clovis, in eastern New Mexico. It’s a sparsely populated area on the Oklahoma border, with little competition.
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TABLE GAMES
Oldies But Goodies Are the original proprietary games the best or just survivors? By Roger Snow
I
n April 1973, The Dark Side of the Moon— an album by a commercially obscure British quartet; an album that went on to launch zero top-10 hits; an album with spoken-word soliloquies on violence and mortality; an album with the F-word mumbled in opening track; an album with the sound of cash registers ringing and alarm clocks dinging; an album with one song that was nothing more than a woman wailing in anguish for four and a half minutes—entered the Billboard Magazine Top 200 sales chart. And it stayed there for the next 15 years. Even more impressive, after this ridiculous, Ripkenesque streak of consistency ended in 1988, the Pink Floyd opus to insanity and greed and conflict has since—a week here and a week there—logged another two years’ worth of chart time, most recently in 2014. So, not only have they been “mad for f——— years, absolutely years,” they’ve been madly popular for just as long. Hanging on in quiet desperation? Uh, not this time. Record albums—do they still call them that?—aren’t the only entertainment products able to put the “long” in longevity. In the world of proprietary table games, we love chattering on and on about the new, new thing, but look around any casino pit (and choose your own ground) and it’s apparent the old, old things are still going strong: Caribbean Stud Poker: Regarded as the granddaddy of specialty tables, Caribbean Stud debuted in Aruba in the late 1980s… or in Las Vegas a few years before that. It’s a great debate. According to the United States Patent and
Trademark Office, at least, the game was co-invented by a casino owner named Danny Jones and a casino gambler named James Suttle. Some believe, however, its true genealogy traces back to David Sklansky, the poker player and author, who called it “Casino Poker” in the early 1980s and then changed it to the eponymous “Sklansky Stud” while working at Vegas World Casino a few years later. Despite its daddy drama, Caribbean Stud was the first major success in this industry, with more than 1,000 placements around the world at its peak. And while it’s no longer the preeminent force in it once was, the game still flourishes in pockets of New Zealand, Australia, Asia, South America and Europe. Pai Gow Poker: If you thought Caribbean Stud’s beginnings were a soap opera—or an episode of The Jerry Springer Show—grab a tub of popcorn and listen to this checkered chronology: 1. Employee at a California card room creates pai gow poker in the early 1990s; 2. He considers filing a patent on the game, only to be told by a lawyer you can’t patent game rules; 3. Pai Gow Poker, as he dubbed it, starts gaining popularity among players; 4. A year or so later, he gets a second legal opinion that contradicts the first, and he files for a U.S. patent; 5. The patent office rejects his application because he waited more than one year submit his application; 6. The game becomes a mammoth success. Fact or fiction? Legend or legit? Tell you what, if it were me, and even half of this tale were true, the next step would have been 7. Finds a tall building and jumps off it, preferably landing on the lawyer that gave him the bad advice. Casino War: It doesn’t get any simpler than this. You get a card. The dealer gets a card. High card wins. And in the event of a tie, it’s W-A-R, flip! Just like you used to play at home. As an 8-yearold. At your kitchen table. The grown-up version has been around since the mid ’90s and remains a staple on the Las Vegas Strip. You can also find it in Asia, particu-
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Global Gaming Business APRIL 2017
larly Macau, where it’s—believe it or not—a favorite among some high rollers. Spanish 21: The first major blackjack derivative is still the most successful blackjack derivative, with 500 tables in the market. The game, which debuted around 1995, uses a modified deck containing no 10s (but does have Jacks, Queens and Kings). This, for boring mathematical reasons, raised the house advantage enough that its creators could ladle out all sorts of goodies for the player: doubling down on any number of cards; automatic wins for blackjacks and 21s; being able to surrender after doubling down. The result is the fun—albeit a bit crazy— twin sister of blackjack. Let It Ride: By the time Shuffle Master founder John Breeding introduced his singledeck blackjack shuffler to casinos in the early 1990s, the industry had moved on to six- and eight-deck shoes. Oh, snap. Now what are you going to do with a warehouse full of shufflers that nobody needs and nobody wants? Duh. Just go out there and on your first try, conjure up one of the biggest table games in history. And that’s exactly what Breeding did. Let It Ride, as a counter-punch to Caribbean Stud, had players compete against a paytable, not against the dealer. All they needed was a pair of 10s or better. The game featured an ingenious— even by modern standards—betting structure that allowed players to risk their bets or, in the preferred parlance, let them ride. As with Caribbean Stud, Let It Ride is playing out the back nine of its pre-eminence, but additions like a three-card bonus bet and a progressive jackpot have helped it remain competitive with the newer, flashier offerings out there. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates.
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Seeing the
Light
How online gambling is shepherding Atlantic City through its darkest days By Steve Ruddock
A
tlantic City casinos were able to take a long overdue victory lap following the release of the 2016 casino revenue numbers by the New Jersey Division of Gaming Enforcement. When the DGE revealed the final tally for 2016, it showed total casino revenue growing by 1.5 percent in 2016. As modest as the growth may seem, it marked the industry’s first year-overyear revenue increase since 2006. You could point to any number of plausible explanations for 2016’s positive numbers, but there is one undeniable truth: Without online gambling, Atlantic City’s downward trend would have continued in 2016. Even a shallow dive into the numbers shows the industry’s growth was all on the online side. Land-based casino revenue ticked down for the 10th consecutive year, albeit only by 0.3 percent. So, make no bones about it, Atlantic City’s first YoY revenue increase would not have been possible without the $196,709,327 the state’s licensed online gambling operators generated, and the incredible growth of the industry, which is now in its third full year, as online gambling revenue was up 32 percent year-over-year.
Non-Stop Growth Since Launch
Direct and Indirect Revenue As much as online gambling has helped prop up Atlantic City casinos, it’s also been a boon for the state. As of January 2017, New Jersey’s online gambling industry was a few million dollars shy of half a billion dollars in gross gaming revenue since launch, which means they’ve handed over nearly $75 million in taxes to the state of New Jersey, based solely on the 15 percent tax on gross gaming revenue online operators pay. In 2016 alone, this amounted to close to $30 million. But, in addition to the 15 percent tax online operators pay to the state, they also contribute money in a variety of other ways. There is: • An additional 2.5 percent tax to the Casino Reinvestment Development Authority—around $5 million; • A $250,000 annual permit renewal fee per operator—$1.25 million; and, • A $250,000 annual responsible gaming fee per operator—$1.25 million.
New Jersey’s online gambling industry went live in November 2013, and since that time (39 months), the industry has yet to experience a year-over-year monthly revenue decline. And so far, it hasn’t even been close to one. Monthly YoY revenue increases in 2016 ranged from 18 percent to 42 percent, with 30 percent or better growth in 10 of the 12 months. Furthermore, there is no end in sight to the current growth trend, although it might start slowing down—this, according to two of the industry’s top analysts, Chris Grove and Adam Krejcik of Eilers & Krejcik Gaming. In a recently released forward-looking research report (U.S. iGaming Industry Update-2017) the duo surmised total online gambling revenue in New Jersey would reach $230 million in The PokerStars Festival drew thousands to 2017, a 17 percent jump from 2016’s impressive tally. Atlantic City for a poker tournament 42
Global Gaming Business APRIL 2017
Only sites certified by the Division of Gaming Enforcement are permitted to accept online wagering in New Jersey
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PartyPoker signed sponsorship agreements with the New Jersey Devils of the NHL and the Philadelphia 76ers of the NBA
The CRDA uses the money it receives from Atlantic City casinos â&#x20AC;&#x153;as a catalyst for meaningful, positive improvement in the lives of New Jersey residents statewide.â&#x20AC;? When all is said and done, online gambling operators sent about $37.5 million to the state of New Jersey in 2016. But these numbers only represent the direct revenue from fees and taxes. There is also a lot of indirect revenue generated by online gambling. This indirect revenue can be hard to measure, as it ranges from local marketing spend to the W-2G tax forms issued to big winners. However, as problematic as measuring it might be, online gambling has a larger economic footprint than most people suspect.
Invisible Job Creation Online gambling isnâ&#x20AC;&#x2122;t generally thought of as a job creator, particularly when compared to the thousands of jobs the land-based industry has created and sustains. At the same time, the jobs that exist because of online gambling shouldnâ&#x20AC;&#x2122;t be scoffed at. Contrary to the narrative, online gambling isnâ&#x20AC;&#x2122;t an automated industry. Rather, it requires a full team of dedicated employees, many of whom are high-skilled workers. You may not see them, but each online operator requires dozens of employees to handle customer support, technology, payments, VIP relations and marketing. Employees run the gamut from compliance officers to real-world casino employees for live dealer games. Suffice it to say, the New Jersey online gambling industry is responsible for many dozens, if not several hundred direct jobs.
Impact of Marketing Spend Marketing is one of the hardest economic drivers to quantify, but now that online gaming is legal in New Jersey, and companies are free to market on TV and radio and beyond, marketing dollars are flowing freely. Year in and year out, online operators are spending millions of dollars locally on advertising. Here are just a few examples of the marketing campaigns that are having an economic impact on Atlantic City, New Jersey, and in some cases neighboring states:
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“
As Atlantic City’s online operators are discovering, the conventional wisdom that kept land-based gaming interests at odds with online gambling for so many years turned out to be not simply overblown, but flat wrong.”
• Online operator 888 ran advertising campaigns on the popular Boomer & Carton sports radio show on CBS New York—888 is far from the only online operator using radio and TV advertising. • PartyPoker’s multi-year marketing deal with the New Jersey Devils, Philadelphia 76ers and Prudential Center, that saw PartyPoker advertised on basketball stanchions at 76ers games and on the boards around the rink at Devils games. Additionally, the arenas had dedicated PartyPoker kiosks. • The use of online and offline affiliates, including a PlaySugarHouse.com affiliate which has his own storefront in Atlantic City and generates additional revenue by referring players to the PlaySugarHouse.com online casino. • The multitude of billboards advertising online gaming websites that can be seen on the Atlantic City Expressway.
All of these marketing efforts require a team of employees, and more importantly, create jobs outside of the gaming industry in New Jersey and beyond.
Taxes, Taxes, and More Taxes As much as the players despise them, at the end of the year, all New Jersey online gaming sites are required to send players whose total winnings exceed $1,200 for slots and/or $5,000 for table games W-2G tax forms. The federal government and the state of New Jersey tax these gambling winnings. The best example of how this works is Cathy Ruela. In 2014, Ruela hit the jackpot while playing online slots at HarrahsCasino.com, and she won a cool $1.3 million. The regulated nature of the industry also meant she would definitely receive a 1099 form at the end of the year, with the winnings reported to the IRS. Because of the regulations and the issuance of a 1099, the federal government received its 25 percent of Ruela’s big win, while the state received about $115,000 (9 percent) in additional income tax revenue from just this single online player. In the olden days, before online gambling was legal and regulated by the state of New Jersey, nobody would have been the wiser to her windfall, and it would have been up to Ruela and any other online player profiting by $1,200 or $5,000, respectively, to declare the winnings.
Increased Visitation—Poker Tourism The gaming industry loves its buzzwords, but even conference pros are probably still trying to wrap their heads around one of the latest entries to the gambling lexicon, the “poker tourist.” Poker tourism was first coined by legal online poker advocates to help sell the benefits of legal online gambling to skeptical lawmakers and potential stakeholders who still harbored misgivings about online gambling. That being said, poker tourism is a very real thing. Last fall, PokerStars, one of Resorts’ online gaming partners, came to town with the PokerStars Festival New Jersey, a week-long tournament se44
Global Gaming Business APRIL 2017
ries that attracted players from as far away as Kazakhstan—yes, there was a player from Kazakhstan who came to Atlantic City to play in these tournaments and check off a U.S. visit from his bucket list. Another example of poker tourism occurred soon after PokerStars NJ launched. In May 2016, PokerStars and Resorts hosted the RunItUp: Resorts Rumble, where online poker and Twitch legend Jason Somerville hosted a full day’s worth of activities. When I spoke to him following the event, Amaya Vice President of Corporate Communications Eric Hollreiser put the turnout for the Resorts Rumble into perspective: “We brought a couple hundred people to Atlantic City on a May weekend.” There were even more people in town for the PokerStars Festival, and these events sell hotel rooms, require additional event staff from dealers to caterers, and increase food and beverage sales. Plus, if the visiting poker player is married or has a significant other, they might bring that person along, who in turn might spend money shopping or at the spa. Neither of these events would have occurred if online gambling wasn’t legal in New Jersey.
Better Late Than Never Shockingly, it took the land-based casino industry a long time to warm up to online gaming, and some casino corporations are still reluctant to believe their lying eyes. At first glance, online gaming and brick-and-mortar gaming might seem like direct competitors, since online offers essentially the same product in a different venue—a venue that is often seen as more convenient and unshackled by space constraints and employee overhead. Conventional wisdom dictated people would be less likely to visit a casino if they could gamble from the comfort of their own home, particularly if they were given more rewards and bonuses and able to find any game at any stakes at any time of the day. After all, why would someone drive to the casino to hopefully find a seat at a $25 minimum bet blackjack table if they could just sit at home and play for $1 a hand? As Atlantic City’s online operators are discovering, the conventional wisdom that kept land-based gaming interests at odds with online gambling for so many years turned out to be not simply overblown, but flat wrong. As the land-based casino industry has come to learn, online gambling is no more cannibalistic to their land-based gaming revenue than their blackjack tables are to their slot machines. The addition of online gaming, be it social (free-play) or real-money, has opened a number of doors for land-based casino operators, increasing their gaming options, creating a number of new cross-promotion marketing opportunities, and most importantly, connecting them to a previously untapped demographic—a demographic that has started turning up at
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Cathy Ruela was the first million-dollar jackpot winner in New Jersey iGaming and received much attention—for taxes due
Atlantic City Poised for A Resurgence their land-based properties. Testifying in front of the Pennsylvania House Policy Committee in 2014, David Satz, the senior vice president of government relations and development for Caesars Entertainment Corp., stated, “91 percent of the players that we have derived in our New Jersey experience are customers who we did not know,” and of the remainder “that we did know, we’ve actually seen increased play and increased visitation to our (brick-and-mortar) sites.” This crossover play and increased visitation is not unique to Caesars, or even to real-money online gambling. As Seth Young, director of online gaming at Foxwoods told us last month, Foxwoods is seeing “an increased level of engagement at Foxwoods Resort Casino” from users of its social casino app, FoxwoodsOnline. Eilers & Krejcik’s report also made mention of the ability of online to drive land-based visitation. “Online gambling is becoming a highly effective tool for Atlantic City’s casinos,” Grove and Krejcik state. “Revenue from online gambling reversed a decade-long revenue slide in Atlantic City in 2016, and increased integration between the online and live casino appears to be driving additional play and visitation at land-based properties.”
Atlantic City has gone through the ringer in recent years. Five of the city’s 12 casinos have closed their doors since 2014, with the iconic Trump Taj Mahal the latest casualty. Its doors were padlocked in October 2016. These closures have had a devastating effect on the local economy, but much like ripping off the proverbial Band-Aid, the contraction in Atlantic City was seen as inevitable—the city hitting bottom before its eventual rise. With the market beginning to right-size, the remaining casino properties are posting significant revenue gains with increased operating profits, which means more reinvestment into their properties and the city. There is also a renewed interest in innovation spurred on by the success of online gambling. From the iGaming Lounge inside Resorts to the skillbased slot machines that have been proliferating across the city, casinos are no longer sitting on their hands now that they’ve had a taste of the possibilities that can be had by embracing new forms of gaming. As bad as things may seem—the city barely avoided bankruptcy in 2016 and is under the control of an emergency manager—there are reasons for optimism. And any way you want to slice it, online gambling was the star of the show in 2016, and other states looking into online gambling legalization should be paying very close attention to not only the direct revenue from it, but the myriad of ways it benefits the brick-and-mortar casino industry.
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States Debate iGaming Pennsylvania, Michigan, New York and Massachusetts are considering bills or studies focused on iGaming
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erhaps considering the comments of U.S. Attorney General Jeff Sessions during his confirmation hearings, when he said he would examine the 2011 Department of Justice memo that exempted online gaming from the Wire Act, four states are examining the legalization of iGaming or iPoker. Sessions has not mentioned the issue again since the hearings, but the widest consideration for legalization is currently under way. In Pennsylvania, the General Assembly began debate on an omnibus gaming expansion package last month with a three-hour joint hearing of the state House and Senate committees overseeing gaming. The House Gaming Oversight Committee and Senate Community, Economic & Recreational Development Committee hearing featured 15 witnesses discussing issues surrounding online gaming. Both chambers debated online gaming bills last year, with the House passing a measure the Senate ultimately killed due to extraneous expansion measures added as amendments. Bills introduced this session generally mirror those debated last year. Both House and Senate bills would create a full range of online poker and casino games, with the largest difference being lower taxes and fees in the House measure. Both bills also provide for regulation of daily fantasy sports, and include expansion measures such as tablet gaming at airports. Also included in the package under debate are measures that would replace the local casino host fee declared unconstitutional last September by the state Supreme Court. Among those testifying in opposition to iGaming was Anthony Ricci, CEO of Parx Casino, which may become the only casino to oppose iGaming now that Sands Bethlehem will be sold to MGM Resorts. Ricci cited the casino’s healthy revenue stream, alleging that iGaming would cannibalize profits. Senators Lisa Boscola and Robert Tomlinson also aired concerns that online gaming could cannibalize land-based casino revenue—a claim refuted at
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the hearing by Kevin O’Toole, executive director, and Doug Sherman, chief counsel of the Pennsylvania Gaming Control Board, both of whom noted that no such cannibalization has occurred in New Jersey, Delaware or Nevada (which has only online poker). Caesars Entertainment Senior VP David Satz called such claims “scaremongering” in his testimony, adding that regulated online gaming provides consumer protection that unregulated offshore sites do not have. “The regulations do work,” he said. SugarHouse Casino, which already operates an online casino in New Jersey, was among those promoting iGaming. General Manager Wendy Hamilton testified that online casinos help the business of brick-and-mortar facilities. “These are the facts,” she said. “Multi-channel engagement empowered the brand.” In Michigan, a hearing before the Senate Committee on Regulatory Reform turned last month to SB 203, a bill to legalize and regulate online gaming with strong consumer protections. Providing the main testimony at the hearing was John Pappas, executive director of the Poker Players Alliance. “For more than a decade, the PPA has been at the forefront of advocating for sensible public policy that authorizes and regulates internet gaming,” Pappas testified. “We know a good bill when we see it, and that is why I would like to thank Senator Mike Kowall for his leadership on this issue.” The bill is called the “Lawful Internet Gaming Act,” and has been re-introduced by Kowall, who sponsored a similar bill in 2016. The bill would require online sites in the state to offer online poker as well as slots and casino games.
If passed, only Michigan’s brick-and-mortar casino operators and federally recognized tribes with ongoing gaming operations would be eligible to apply for licenses. However, it’s unclear if the state’s tribal gaming entities will support the bill, which could bring about tribes having to waive their immunity under federal law against being taxed on gaming by the states. One of the pitfalls of the Michigan bills, however, is the support of Amaya, whose PokerStars website was banned for several years after it continued to operated following the 2006 Unlawful Internet Gambling Enforcement Act. Although Amaya bought the company from the owners during those years and is currently licensed in New Jersey, that time of illegal operations continues to haunt the website. And any support by Amaya taints the legalization effort. In Massachusetts, the operators of the state’s operating and proposed casinos communicated through the state’s gaming commission chairman, Stephen Crosby, that they won’t oppose the legislature if it looks at legalizing online gaming in the Bay State. Such a bill could be introduced as early as this summer. Although currently the only online gaming allowed in the state is fantasy sports, a special committee appointed by the legislature to look at a possible omnibus bill that would embrace everything online except the lottery may be ready to give a report in a few months. The Massachusetts State Lottery is in favor of online lottery sales and has been lobbying the legislature to authorize it for two years under state Treasurer Deborah Goldberg and lottery Executive Director Michael Sweeney. Last August, a bill that included regulation of daily fantasy sports and the lottery was considered, but the provision dealing with the lottery was later dropped. Crosby, who serves on that commission, said, “I would say by the middle of this year there might be something for the legislature to look at.” And in New York, Assemblyman J. Gary Pretlow, who pushed an iPoker bill to the brink of success in 2016, is confident he can get it over the finish line in 2017. After an examination of the issues related to iPoker, including geolocation and processes to prevent cheating, Pretlow says he is satisfied, and believes that will be good enough for his colleagues.
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Last year, the bill sailed through the Assembly but was never taken up by the Senate. This year, starting in the Senate, the bill was unanimously released for the Committee on Racing, Gaming and Wagering and now heads to the Finance Committee, where Pretlow predicts a similar passage. The bill allows 10 iPoker licenses presumably limited to casinos, racetracks and tribes with a fee of $10 million each. Players must be 21 years of age and be within the state borders, although it does permit for interstate compacts that would pool players from those states.
Baazov Sells Amaya Shares Worth $99 Million Company adds poison pill to prevent purchase by Amaya Gaming ex-CEO
A
maya founder and former CEO David Baazov has sold about $99 million in Amaya’s shares, representing about 30 percent of his former stake in the company. Baazov announced the sale of about 7 million shares of Amaya for C$19 apiece for a total consideration of C$133 million (US $99 million), according to a report on CalvinAyre.com. The shares are about 4.8 percent of the company’s outstanding common shares and about 30 percent of Baazov’s holdings in Amaya. Baazov still controls roughly 17.6 million Amaya shares, equal to 12.1 percent of the company, the website said. The sale comes after Amaya announced a refinancing of its long-term debt. Officials said they expect the refinancing will save it around $15.4 million in annual interest expense. The credit agreement waives the company’s required 2016 and 2017 excess cash flow repayments. This will free up around $48 million that Amaya will use for its remaining deferred payments to Isai and Mark Scheinberg, from whom Amaya purchased PokerStars in June 2014. The refinancing included a requirement that the debt would become payable ahead of schedule if “a certain current shareholder” (presumably Baazov) made further attempts to acquire the company. “At the request of certain lenders,” Amaya’s board said in a press release, “the amendment also modifies the change of control provision to remove the ability of a certain current shareholder to directly or indirectly acquire control of Amaya without triggering an event of default and potential acceleration of the repayment of the debt under the credit agreement for the first-lien term loans.” Baazov has made previous attempts to acquire the company.
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Cotai 2.0: The Next Chapter Pool deck at Galaxy Macau
MGM Cotai, which will open later this year
As the ultimate tourist destination, Macau’s Cotai district may never out-Strip Las Vegas. But new developments there may mean a stronger future for the Chinese SAR. By Marjorie Preston
I
n the folklore of the gaming industry, it’s an oft-told tale: In 2002, Las Vegas Sands honcho Sheldon Adelson got his first look at a swampy landfill in the Chinese territory of Macau, and saw the next Las Vegas. Well, not quite. At first, Adelson was less than impressed by a twosquare-mile tract of what he called “the boonies,” wedged between the islands of Taipa and Coloane. But with China about to welcome global gaming operators for the first time, the entrepreneur Fortune magazine called “the man with the golden gut” jumped in with both feet, developing a sister property for his flagship Venetian in Las Vegas. Make that a big sister: at 10.5 million square feet, the 40-story, $2.4 billion Venetian Macao, which opened in August 2007, is still the largest casino resort in the world. And today, the former landfill Adelson christened the Cotai Strip is home to billions of dollars’ worth of investment. In the past two years, despite a cataclysmic downturn in Macau’s gaming sector that only started to ease last August, five multibillion-dollar megaresorts have opened in what’s been called Cotai 2.0: Galaxy Entertainment Group’s $3 billion Phase 2 and Broadway expansions; Melco Crown’s $3.2 billion Studio City; Wynn Resorts’ $4.1 billion Wynn Palace; and the $2.7 billion Sands Parisian, with its half-scale model of the Eiffel Tower. Still to come are MGM Resorts International’s $3 billion Macau development, set to open later this year, and SJM Holdings’ $4 billion Lisboa Palace, scheduled for completion in 2018.
Vegas East At the opening of the Parisian last September, Adelson compared Macau to Las Vegas in its evolution from strictly gaming to a more well-rounded tourism-based economy. “Before our very eyes, Macau is making a similar transition,” he said, with “a wide variety of activities, attractions and amenities for people of all backgrounds, income levels and interests.” It’s business as usual for the 83-year-old billionaire, a former trade show organizer whose COMDEX computer expo made a mint and gave him a springboard into the gaming business. In the 1990s, when Adelson built the Sands Expo Center followed by the 3,000-suite Venetian, he introduced then48
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unheard-of amenities that now are standard, like mini-bars, cable TV and high-end restaurants. Naysayers who scoffed at the plan were soon silenced by thundering herds of tourists who came not only to gamble but to stay, to play and to shop at the Venetian’s famous Canal Shoppes. “In Las Vegas now, non-gaming revenue accounts for about two-thirds of the city’s revenue, with business travel during the week and leisure tourists during the weekend,” says Ron Reese, senior vice president of marketing for the Las Vegas Sands Corp. “It was a heck of a model for Cotai.” It was also a master stroke of prognostication. In 2014, seven years after the Venetian Macao opened in Cotai, Chinese President Xi Jinping cracked down on corruption and money laundering in Macau, sending high rollers into hiding and the local economy into a tailspin. For 26 punishing months, the decline persisted; some $46 billion in market value was wiped out in 2015 alone. Calling for an end to Macau’s reliance on gaming, the government issued a Five-Year Development Plan ordering the city’s six major gaming concessionaires to reap at least 9 percent of revenue from non-gaming amenities by 2020. The operators met that benchmark way ahead of schedule. According to Macau’s Statistics and Census Bureau, the industry brought in a total of MOP 23.9 billion (US$3 billion) in non-gaming revenues in 2015, a ratio that continues to hold, thanks in part to Adelson’s prescience. “It was his vision for Las Vegas that led to what’s happened in Macau and what’s happening in Cotai,” says Reese of his boss. “He sees around corners that others normally can’t see.”
Growing the Pie Despite investor fears that new resorts on Cotai would take a bite out of casinos on the Macau peninsula, so far that hasn’t been the case, says Union Gaming analyst Grant Govertsen. “What we’re seeing is flattish revenues at the legacy casinos, while the new properties are effectively capturing incremental growth in the market. “The good news is that mass-market has generally been leading the re-
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covery. It’s good for the casino operators simply because that’s a higher-profit margin business. And it’s good as it relates to the government mandate to diversify gaming away from VIPs.” “Because critical mass is important, you’ll lean more towards people choosing Cotai over downtown,” says Fitch Ratings analyst Alex Bumazhny. “Longer term, it will be interesting to see if both can coexist in a viable sort of way.” While business on the peninsula has proven “very resilient,” largely due to a surge in VIP play that began late last year, “you need growth in the mass market to make the whole story work,” says Bumazhny. “We’ve seen increased visitation. We’ve seen increased length of stay. That supports the whole thesis that as the middle class grows in China, Macau will grow and benefit. Our longterm positive outlook on Macau is really anchored in mass-market.” Growth of mass gaming and non-gaming aside, he doubts that Macau, a former Portuguese colony that was returned to Chinese control in 1999, will ever become the next Vegas. “Las Vegas is unique in the sense that it has a lot of millennials coming to clubs and businesspeople coming for conventions, but that took years to develop,” Bumazhny says. “I’m not sure Macau is going to diversify that way— though if it can, it would be healthy.” “It’s hard to imagine a day when non-gaming in Macau constitutes even close to half of revenues,” says Govertsen. “Gaming revenue, that’s the base. But over time, non-gaming should be a steady grower. In the next five, 10 or 20 years, you’ll probably see a lot more experimentation on the part of casino operators. “They’re under the gun to increase diversity,” he says. “And that means more non-gaming.”
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Something for Everyone Another early adopter of a broaderbased, gaming-plus business model in Macau was Galaxy Entertainment Group, which opened its Galaxy Macau Phase I in Cotai in 2011. Global Gaming Business talked to GEG President Michael Mecca about the past, present and future of Cotai and its impact on global jurisdictions. GGB: How is the market changing in the era of Cotai 2.0? Mecca: Across Asia, leisure travelers are becoming far more sophisticated and discerning. They expect a wider choice of hotels, dining, shopping and entertainment experiences, which in turn drives up quality and
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The Lion’s
Share service across the industry. Since 2002, when gaming was liberalized in Macau, it’s witnessed remarkable changes. Visitation has grown from 11.5 million in 2002 to almost 31 million in 2016 with guests staying longer. It’s the success of places like Cotai and integrated resorts such as Galaxy Macau that have awakened and encouraged many jurisdictions across Asia Pacific to look at liberalizing their markets to take advantage of the tourism boom. How are new resorts affecting Macau’s peninsula? The peninsula and Cotai successfully coexist because they offer different customer experiences. The peninsula has a certain unique appeal to day-trippers who enjoy its ease of accessibility and clustering of properties. Despite new resorts coming online in 2016, our StarWorld property is as popular as ever, with 99 percent hotel occupancy in Q4 2016 and Q4 adjusted EBITDA increasing 14 percent year-on-year and 19 percent quarter-on-quarter to HK$637 million (US$82 million). How have you attracted more mass-market gamblers, mainstream tourists and even families? In 2015 when we launched Phase 2 of Galaxy Macau and Broadway Macau, we extensively increased our non-gaming offering to meet the needs of an everchanging marketplace. Non-gaming across Galaxy Macau and Broadway Macau’s combined 1.1 million square meters now accounts for over 90 percent of the total gross floor area. At Broadway Macau we created a unique family-friendly resort—without a VIP gaming component. We added 2,000 rooms and suites across three brands: Ritz-Carlton, JW Marriott and Broadway Hotel; unveiled a 200-store shopping mall, the Promenade, and a 3,000-seat Broadway Theatre. We expanded the Grand Resort Deck to over 75,000 square meters of gardens and pools, complete with a 575meter Skytop Adventure Rapids. We increased our food and beverage offering to over 120 outlets, from casual fare to Michelin-star fine dining. We allocate tables to various segments so long as they’re able to push yields up, no matter whether they are in junket VIP, direct VIP, premium mass or mass business. Are most of your guests from mainland China? Approximately 66 percent of visitors to Macau come from the mainland and 20 percent from Hong Kong. But in recent years, we’ve seen greater numbers of international tourists from North Asia, Southeast Asia, the Americas and Europe. What does Galaxy plan next on Cotai? With Phases 3 and 4, GEG will expand its non-gaming footprint even further. Our new developments will focus on non-gaming elements, primarily MICE, performing arts, contemporary boutique hotels and family entertainment, offering diversified accommodation and recreational choices for guests. In recent years, Macau has shifted from VIP to mass market, attracting far more middle-class families in particular. With their longer length of stay and higher spend compared with day-trippers, we’re continually reviewing our development and operation plans to maintain our competitiveness. In the years ahead, we’ll continue to focus on mass-market family customers as well as comply fully with the Macau SAR government’s long-term vision to diversify the city’s offering and economy.
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Sarah Rogers, Senior Vice President, Strategy & Corporate Responsibility, MGM China GGB: MGM is soon to open one of the final megaresorts in Cotai. Are there advantages to being last? Rogers: It’s an advantage in the sense that we could take a pause and wait for some market improvement, which we’re seeing year-on-year. We’ve seen what’s working and not working at some of the other properties. In addition, Cotai is a developing area, and it does help to have more critical mass, which drives greater foot traffic. Talk about the design of the new resort.
It’s an iconic building in rose, white and yellow gold—we’ve described it as stacked Chinese jewel boxes—by KPF, the award-winning architect that built the International Commerce Centre in Hong Kong and the Shanghai World Finance Center. We wanted something that’s never existed anywhere else in the world, something unique to help Macau develop as a global destination. Obviously, MGM Cotai is a destination you must see when you’re here. How does this resort answer the government mandate to diversify? MGM is a leader in entertainment and non-gaming offerings. We haven’t given out a lot of the details, but I can tell you we’ll have something called the Spectacle, a big open area loaded with exciting digital content, covered in glass similar to our Grande Praca or even the Bellagio Conservatory. We’ll have a dynamic theater, the first of its kind in Asia that can change its configuration for different kinds of events, from fashion shows to boxing matches to traditional theater productions. Are you going after a piece of the VIP business? Do you know your table allotment?
We must apply for those gaming tables, and it’s still too early to have the discussions. On the VIP side, even in Macau the bulk of our profit comes from mass gaming, probably over 80 percent. At MGM Cotai, we have an opportunity to work toward diversification in entertainment, and that’s the trend in Cotai. Do you feel long-term confidence about the market?
In light of market changes, we’ve made some pivots to focus more on mass-driven market and diversification. All price points are available for all types of visitors. Though there was a short-term hiccup in the market, we’re here for the long term.
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That
Magic
Touch
The screen is the star in new products for customer service and slots By Dave Bontempo
T
ouch ‘em all. Baseball’s home-run phrase reflects an all-inclusive gaming term. Touchscreen technology unfurls its magic across numerous industry spectrums. Witness the versatility of slot machines, the instant dining and checkout information from kiosks, the implementation of signage. For the past five years, gaming has steadily enhanced its touchscreen versatility. Properties find endless ways to use it. The touch screen is an important input and output device, normally layered on top of an electronic visual display of an information processing system. A user can give input or control the information processing system through multi-touch gestures by touching the screen via stylus (in places like pharmacies) or by using one or more fingers (video games, machines). The medical field, heavy industry and supermarket chains are major purveyors of it. Gaming takes a prominent place alongside them. Mobile apps champion touch-screen efficiency. The smartphones, tablets and varied informational appliances drive acceptance of touch screens for portable and functional electronics. Gaming further intersects the touch screen world with ATMs, kiosks, slot machines and room reservations, along with player tracking. Everybody loves the conveneince. Everybody tailors it differently. And from varied perspectives, everybody touches them all.
Agile with Touch Screen
From grab-and-go to buffet solutions, to more complex café and food court-style environments, rGuest Buy fits seamlessly into any workflow. With kitchen display, printer and scanner accessories, there isn’t much you can’t do with it. 52
Global Gaming Business APRIL 2017
Agilysys, the Georgia-based hospitality company, uses touch-screen proficiency to enhance gaming products. Its major 2016 innovations included the tablet-driven mobility of InfoGenesis Flex and the business insights of rGuest Analyze, along with rGuest Buy. In a report compiled for GGB, the company says touch-screen technology has been a significant part of its solutions for many years, in both stationary and mobile solutions. The restaurant reservations, table management and floor management apps all operate via touch screen and the POS (point of sale) solutions are available with mobile and touch-screen technologies built in. Property management systems include touch-screen remote access monitoring and reporting capabilities. A novel touch-screen technology, rGuest Buy,
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Konami Gaming’s Concerto Collection of video slots is available with a touch-screen button panel display called TouchDash, which Konami leverages to showcase game theme graphics and animation. has been designed as a solution that reimagines the guest experience, according to the report. This technology has been built from the ground up to serve guests directly with capacitive touch. It’s an attractive, easy-to-use touch-screen kiosk with unparalleled accuracy. Order data is transmitted to back-of-the-house and kitchen operations, where touch technology is used to manage, prepare and dispatch orders, rather than using kitchen printers and manual paper chits. Most other offerings in this space are little more than a repackaging of older commercial solutions, some with a few inherent problems, the company maintains. The user interface requirements are different, and because flexibility is important in guest-facing solutions, the use of consistent UI technology is essential to create a streamlined and accurate user experience. Security concerns are different as well. Even basics such as location and access to power have different challenges, often more complicated, with older technologies that eventually become guest-facing. The company’s rGuest Buy is a guest-facing, self-service point-of-sale system that is secure, customizable and exceptionally flexible for food and beverage ordering, preparation and work-flow management.
It was designed to serve guests directly at an enterprise level. Integrated with the award-winning InfoGenesis POS, rGuest Buy brings the most advanced point-of-sale functionality together with the mature and reliable foundation found in InfoGenesis, the reports says. At its simplest, rGuest Buy offers the ability to sell anytime, anywhere, directly to guests. This can occur at an unattended buffet kiosk solution, or a grab-and-go style hotel sundries solution. However, it’s far more flexible than grab-and-go might suggest. Customers are deploying this in coffee shops, pools, cabanas and other venues with heavy guest traffic. Various configurations enable cafes, multistation food courts and similar venues to transform any space into a self-service venue capable of customizing food and beverage orders, placing more of them and processing secure self-checkout payments. Touch-screen kiosks can also be used—perhaps most effectively—to augment the guest-facing staff. There is significant interest in these hybrid uses, the report indicates. The kiosk helps free staff to pursue higher-value guest engagements. One product benefit, Agilysys contends, is the experience people already have with touch-screen technology. Guests find the product straightforward
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to use and customers consider it easy to deploy, configure and launch. Flexibility is another strong point. From grab-and-go to buffet solutions, to more complex cafe and food court-style environments, rGuest Buy fits seamlessly into any workflow. With kitchen display, printer and scanner accessories, there isn’t much you can’t do with it. Third, the product is easy to configure, deploy and manage at scale. It incorporates a flexible hierarchical business mapping capability that permits centralized menu creation and even pushes that information to remote locations. This simplifies the real work of enforcing policy in terms of menu item availability, pricing, taxation and tender types. At the same time, rGuest Buy can be unwrapped and in service in just 48 hours. Fourth, rGuest Buy delivers a 7-to-1 return on investment in its first year, the report contends. Customers are seeing 60 percent reductions in operational costs and discovering new revenue opportunities from locations that previously had high demand with limited service availability. The touch-screen kiosk empowers guests to order and pay wherever they are, regardless of how well that area is staffed.
With Konami’s Castlevania-themed slots on Concerto Crescent, for instance, the digital button panel backdrop has the appearance of an aged map with symbolic art characteristic of the iconic video game series by Konami’s parent company, Tokyo-based Konami Holdings Corporation. And even base game titles like Hoppin’ Fish are programmed with a unique TouchDash display. Because Hoppin’ Fish is centered around an adorable white house cat and her mission to collect unsuspecting goldfish from the fish bowl, the game has a plush velvet upholstered button panel display during primary game play and a bubbly underwater animation when she goes fishing during the free games. “The button panel provides a key point of connection because that is where the players manages their transaction with the machine,” says Steve Walther, senior director, marketing and product management for the company. “Konami is using that space as an extension of the game’s unique appeal with vivid art animation.”
The Dash Slot manufacturer Konami Gaming’s Concerto Collection of video slots is available with a touch-screen button panel display called TouchDash, which Konami leverages to showcase game theme graphics and animation. The traditional push buttons with generic inserts are replaced by a high-strength touch-screen display that is custom-designed and programmed to reinforce the game theme’s unique aesthetic and bonus feature events.
The Versatility of Touch Screen Housed in state-of-the-art hardware, the DiTronics DFS-500 Kiosk utilizes touchscreen technology to maximize efficiency through exclusive software enhancements for ticket redemption, bill breaking, ATM,
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“BackBarUSA “B ackBarUSA b believes elieves in su supporting pporting their the eir co community mm munit ty and ha has s pr proudly rou r oudly partnered UNLV for years. have worked colleges p ar rtnered with UNL LV V fo rm many any year rs. s. We ha ave ve wo rked with m many any co lleges across campus, Foundation, acr ross ca ampus, mpus, the he Fou nda ation, Rebel Rebel Athletics, A Athleti thl letics, and hired hired UNLV UNL LV V interns in inte terns and young young graduates. gradu ua ate tes. es. While Vegas Vegas can seem seem like ike a city cit ty y of of transients, transients, we feel feel it’s it’s as contributing as warm warm and close-knit clos se-knit as as a family fa famil ly - and we feel feel that tha at t we are co ntributin buting to to that tha at atmosphere. a at tmosphere e. You You really reall ly y need need to to focus us on on what wha at t you you believe belie eve in and what wha at t you you feel feel makes makes an n impact imp pac act to to your y you our community, communit ty, your y you our business, business, and your y you ou ur heart.” hear rt t.” Tim T im H Haugh Haughinberry inberr ry Founder Founder and and CEO, O, BackBarUSA BackBarUSA President’s President’s Corporate Corporate Council Coun ncil Platinum Platinum
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IGT CrystalCurve Ultra cabinet
cash advance and check cashing transactions. Proprietary DiTronics software options include Check Express, which allows players to simply swipe their player card and enter a personal identification number to cash checks directly on the DFS-500 Kiosk’s 17-inch color touch-screen monitor. Another option is the Jackpot Pay technology that makes jackpot payouts available on one, several or all of a casino’s ticket redemption kiosks. This enhances customer service by saving time and money while eliminating costly additional equipment, company officials say.
Rolling Out New Winners International Game Technology continues displaying new methods for touch-screen utilization. The company that produces slot machines and other gaming technology, headquartered in London and with major offices in Rome, Providence, Rhode Island, Reno and Las Vegas, unveiled a plethora of new players at G2E 2016 in Las Vegas. The 2016 gaming summit was the world debut for IGT’s CrystalCurve Ultra cabinet. The towering hardware solution features a 32-inch curved landscape touch-screen display topped with a 50-inch curved portrait display. Both host pristine visuals via Ultra HD, 4K resolution graphics. The cabinet includes an embedded camera that gives players the opportunity to incorporate their images into game play. The CrystalCurve Ultra cabinet is also equipped with intelligent lighting and is paired with an ergonomic multimedia sound chair. IGT also set sail with its CrystalDual+ Stepper cabinet and its new
content library. The CrystalDual+ Stepper cabinet combines the mechanical reels from the S3000 cabinet with a 40inch upper LCD screen, and its top box can be paired with custom facades to make the hardware stand out on a casino floor. IGT celebrated its 20th anniversary of Wheel of Fortune slots with the introduction of new game themes on a variety of hardware solutions. One of its big new players is the Wheel of Fortune Double Times Pay 3X4X5X 3D game on the AXXIS 3D cabinet. Following the success of the company’s first Wheel of Fortune 3D title, this new game features True 3D technology and utilizes the math and symbol set of the classic Double Times Pay 3X4X5X game. With the number of touch-screen devices of various sizes and capabilities on the rise—from increasingly complex mobile phones and tablets to steadily increasing gaming applications for both slot machines and funds access—the evolving technology of the touch screen is a vital part of all industry trends.
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FRANKLY SPEAKING by Frank Legato
Fistfights and Rock Gods
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Palace this summer for shows at the Colosseum, the firstever resident rock band at the venue. What’s this world coming to? The Who always played the Hard Rock. It’s where their late bassist John Entwistle croaked in his room, reportedly after a night of speedballs and hookers. But Caesars Palace? Will Wayne Newton be sitting in? Maybe Celine Dion can join them to belt out her rendition of “Magic Bus.” (Actually, I’d pay to see that.) They could probably use the help, since it’s really only half of The Who. The other half’s dead, and the remaining original members, Roger Daltrey and Pete Townshend, are in their 70s, having failed in their quest to die before they got old. For you youngsters out there, that’s a lyric from The Who’s “My Generation.” You know, “talkin’ ‘bout my g-g-generation?” Oh, never mind. Anyway, even half of The Who at Caesars Palace is making me feel old. I still expect Steve & Eydie or Sinatra to be playing there. At least it’s not a tribute band. It’s half of the real Who. I hope they play stuff from their new album, Osteoporosis. Next, Gettysburg businessman David LeVan is trying once again to get a license to open up a casino in the area of the historic Gettysburg National Park and battlefield. It’s the third time LeVan, who in another life was my boss when I worked at Conrail (really), has tried to create a casino near the hallowed ground. This one is three and a half miles from the battlefield, and surprise! The locals are objecting. The last two tries, in 2005 and 2010, nearly had preservationists gathering pitchforks and getting the burgermeister. LeVan, like The Who, is in his 70s, and he thinks this might be his last chance at a license. He’s going for the last Pennsylvania racino license, which is still tied up in Lawrence County, where no one has been able to get money to build the racetrack casino planned by, like, around 10 potential operators. LeVan’s racino, in Freedom Township, would be called Mason-Dixon Downs. The odds of it happening are roughly the same as those faced by Confederate General George Pickett, just down the road, in 1863. Oh, look it up. So, how many people are considered too many for group sex, anyway? I just want to avoid upsetting someone in case the situation ever comes up. Talkin’ ‘bout my g-g-generation... VIC TOR RINAL DO
T
his month, we look at the wonderful effects of alcohol on the discerning casino patron. To wit: The Rivers Casino and Resort in Schenectady, New York, was only open for a few weeks when its first fistfight took place. It was between a man and woman. Or, two women, or a man and two women. The details are foggy. All I know for sure is a man and two women were arrested, and the man and one of the women are a couple, and details of the incident depend on which participant is asked. The initial police report said the fight was over a proposed “sex romp.” Police said the people arrested had planned to retire from the casino for a threesome, and a fight broke out when one of them wanted to bring in a fourth. I hate that. You’re settling in for a nice threesome, and some schmuck wants to horn in and ruin everything. The woman who is part of the couple—a 50-year-old grandmother—hotly disputes the police claim of a planned tryst. She says the other woman, 28, spoke to her briefly at the steakhouse bar earlier that evening when she and her boyfriend were having drinks, and the woman gave her a card for a modeling agency. Later, she says she got up to go play slots, and she was attacked by three women, one of them the modeling lady. “I stood up at my chair and she bum-rushed us,” she told The Daily Gazette. “She ran in between me and Dmitri, and put her arm around me.” She said the woman touched her breast while another of the women tried to talk to her boyfriend. (So, I guess it was kind of a threesome.) Man, people will do just about anything to stay warm in upstate New York, huh? In any event, the boyfriend was arrested along with the two women for misdemeanor obstruction, because he stood in the way of police when they were trying to watch the girl fight. I’m kidding. It was when they arrested everybody. (After they watched the girl fight.) Moving on, it says here The Who is taking up residency at Caesars
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EMERGING LEADERS Dress to Impress Ashlee Garnett Style Consultant, Cintas isitors to casino resorts probably pay little attention to the uniforms worn by employees, except perhaps by cocktail servers. Ashlee Garnett’s job is to make people pay attention. Garnett is a style consultant for hospitality and gaming at Cintas, the uniform people. Designs should have a purpose, she says. From hotel operations to the casino, each job function has its own unique look that complements the others. “The public does notice the uniform, even if it is subliminal,” Garnett says. “The most impactful part of the uniform is its appearance. Is it clean and pressed? “For some properties, Does it fit properly?” we are designing At Cintas, Garnett believes in an individualized approach when marketing to the gaming industry. In uniforms that give other words, it’s important to be close by. “We have gaming image consultants throughout employees options the country,” says the graduate of the University of based on their personal North Dakota. “I mainly work with the gaming customers in Minnesota, which also includes the upscale style and preference.” hotels in Minneapolis and Saint Paul. The tribes in Minnesota have purchased many of these hotels in the last few years.” Garnett works to create styles with the entire apparel line and brand vision in mind. “Our programs are both functional and fabulous,” she says. “One of my customers is currently partnering with us in a wear test of new gaming uniform designs. This particular test is for a new environmental services/housekeeping line of garments. This uniform was designed specifically with our gaming customers’ needs in mind.” The feedback is already impacting the future of this product line relative to color preferences and features, adds Garnett, honored last year with the Diamond Level President’s Club Award, the company’s highest award for sales performance. These kinds of casino hotel trends mirror the hospitality industry at large. “Retail-inspired garments and accessories are a fun and easy way to brighten up a program that feels stuffy or tired. And employees want to wear apparel that does not feel like a uniform. For some properties, we are designing uniforms that give employees options based on their personal style and preference,” Garnett says. Like so many up-and-coming employees, Garnett, who came to Cintas after a 10-year career in retail, appreciates mentors. “The most influential partner in my career at Cintas is our national director of gaming, Karla Perez,” says Garnett, who lives in Minneapolis. “When we met, I knew I wanted to work with her. I was drawn to her knowledge, passion and very strong work ethic. Along with being an innovator and visionary in the gaming industry, Karla wins because she cares about the partners on our team and our customers. She is a coach and champion to her team. This knowledge still impacts how I run my business and approach my customers.” Those who want to follow in Garnett’s footsteps would be wise to “become a student of the gaming industry. The best way to impact business and build trusting partnerships is to understand what is important to customers.” — William Sokolic
V
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Marketing Momentum Melani Evans Director of Corporate Marketing, Affinity Gaming elani Evans joined Hard Rock Hotel & Casino Biloxi at age 21 as social media specialist and media buyer, where she put her business administration and marketing degree to good use. To get a full view of the business, she quickly transitioned from the social media aspect to advertising and public relations, then to event promotions and calendar planning to round out her time with Hard Rock. From there, Evans joined the Affinity Gaming team in March 2015. There, she has served in various marketing management positions and currently holds the title of director of corporate marketing. Being in marketing, a job that is ever changing and evolving, she loves the “chaos” that keeps her mentally engaged and always moving forward to the next goal. Says Evans, “The fun part of all of this is the path to get to the goal,” the goal itself being the ever-present driving force. To say that Evans has had success is an understatement. During her time at Hard Rock, she was recognized as a leader of the year in 2014 and was instrumental in developing both social media and advertising campaigns that enhanced the brand and monetized both mediums. After joining the Affinity Gaming team, Evans was in charge of the rollout of centralized services for the entire organization, including integrating a new agency of record for all creative, media and direct mail functions, and expanding the reach to all properties. Her help directly led to EBITDA growth via increased marketing efficiencies. Given her success, Evans is quick to point out that she has had tremendous help from mentors along the way. She specifically identifies Vince Lentini, who was instrumental early on in her career. He gave her early opportunities to prove herself and grow both her career and herself as an individual. He saw great potential in her and allowed her skill set to shine by creating many of the opportunities she had at Hard Rock. These helped shape and develop skills that have led to her success and the
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“To see all of the effort of what you are working for make an impact on the business and see the product of what you work for actually come to life is important to me.”
upper management position she currently holds. Communication and hard work were two of the important driving forces that got her to where she is today. She considered revamping and relaunching many of the older policies and programs that were already in place to be a challenge. “To see all of the effort of what you are working for make an impact on the business and see the product of what you work for actually come to life is important to me,” Evans says. This has also played out in her work with the Alzheimer’s Association, a community partnership that Affinity Gaming launched in 2016. She plans major events such as the Walk to End
Alzheimer’s and Wine to Remember for the Southern Nevada branch of the Alzheimer’s Association. These are important events that helped raise over $100,000 in donations for the Alzheimer’s Association in 2016. Gaming is a 24-hour business and is ever evolving, especially with a drastic change in the gaming demographic that many people have talked about over the last several years. Evans sees social media and social gaming as the way of the future to get the millennials to the gaming floor. As the times move forward, it will be important to keep up with the technology that is out there, especially for an industry that has historically been stuck in its ways and has had difficulty keeping up with new trends. —Christopher Irwin, The Innovation Group
APRIL 2017 www.ggbmagazine.com
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EMPOWERed
A major licensed theme announcement, technology workshops and customer networking highlight Scientific Games’ Empower 2017 customer conference By Frank Legato
F
uture technology, a major new game license, and peerrun panels highlighted the annual give-and-take with customers staged by end-to-end gaming supplier Scientific Games. Called “Empower,” the conference inaugurated 11 years ago by the former Bally Technologies as the Bally Systems User Conference staged its 12th annual event last month at Planet Hollywood Resort & Casino in Las Vegas. The Empower Conference is a three-day event designed to bring Scientific Games executives, R&D staff and game designers together with their customers from markets around the world. The conference gives customers an advance look at technology and products that are sometimes a year or more from commercialization. Scientific Games officials use the event to get feedback from customers on new products, and address concerns about the products and services they currently get from the supplier, across all three of Scientific Games’ core divisions—casino slot machines, table-game products and casino systems; lottery products, systems and services; and interactive solutions and services. Empower 2017 drew more than 700 attendees from more than 200 casinos. Golf and wine-tasting events on the first day were followed by two days of panel discussions, more than 30 how-to workshops, and more than 40 individual breakout sessions. Attendees learned about current and future products from each of the company’s business divisions, and how products and themes are now converging across all of those three businesses. “We are here to provide the tools, solutions and services to deliver highperforming games designed to increase your revenue, your engagement with your guests, and of course, your operational efficiencies,” Scientific Games CEO Kevin Sheehan told attendees. “That’s why we’re here today. We’re here to listen to your needs, interact, and to come up with collaborative solutions so we can all be successful as we move into the future.” It was the first Empower conference for Sheehan, who was named CEO last August after seven years as CEO of Norwegian Cruise Line. He told the Empower attendees that one key to success both for the supplier and its customers is continuous partnerships that will result in taking the industry forward. “The cornerstone of all of that is innovation, and the art of the possible,” he said. “And that’s the key to all of our shared success.”
‘Shaken, not Stirred.’ Before the start of the two-day conference portion of the program, there was a quotation on the large video screen in the Planet Hollywood Showroom: “Shaken, not stirred.” It was referring to the news with which Scientific Games was opening this edition of Empower—the announcement of what the company is calling its biggest-ever licensing deal for themed slot machines. Sheehan announced the company’s new license to use the James Bond film franchise for themed games spanning land-based gaming, lottery games, and interactive/social games. The exclusive agreement with EON Productions Limited, Danjaq, LLC
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Clockwise from top left: Scientific Games President and CEO Kevin Sheehan; Group Chief Executive, Gaming Derik Mooberry; Customer exhibit area at Empower; Customer Panel moderated by Buddy Frank
and MGM Interactive Inc., a subsidiary of Metro-Goldwyn-Mayer Inc., gives Scientific Games the rights to leverage all past and future James Bond films, as well as all the franchise’s talent portraying the suave British spy created in 1953 by novelist Ian Fleming. Scientific Games will capitalize on the James Bond experience across its omni-channel portfolio. “The Bond franchise is clearly a long sought-after and incredibly exciting brand for our industry,” Sheehan said. “James Bond is synonymous with action, excitement and next-generation technology. We look forward to harnessing the power of the Bond brand to drive innovation across the company in the years ahead.” Scientific Games expects to showcase the first James Bond-themed slot
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Empower was attended by over 700 professionals from more than 200 casinos.
games at the Global Gaming Expo, October 3-5 in Las Vegas. Sheehan commented that Bond is a perfect theme for gaming, the lead character having frequently been portrayed in casinos. Bond was a frequent patron of high-end gaming rooms, beginning with Sean Connery at the chemin de fer tables in the first of 24 Bond films, Dr. No. The company will use images and movie video clips of all seven actors who have portrayed Bond on film throughout the years—Connery, David Niven, George Lazenby, Roger Moore, Timothy Dalton, Pierce Brosnan and Daniel Craig. The Bond announcement was the first of many highlights of Empower 2017. This year’s conference included product introductions in the TwinStar cabinet range, technological advances in the iVIEW4 system of picture-inpicture communications and bonusing display, future technology peeks into cashless play, and a report on the development of new types of games designed to appeal to the millennials and other younger casino players. One session concentrated on how to monetize skill games and casual games favored by the millennial generation; another highlighted game hardware designed to take casinos into the future with a new generation of players. The first day’s general sessions included panels that are consistent attendee favorites at Empower, like the CTO Forum, in which the technology heads of all Scientific Games divisions report on the evolution of their products and services. Moderated by Roger Snow, senior vice president of tables and shufflers, it included Phil Gelber, senior vice president of product development in the Gaming division; Walt Eisele, senior vice president and chief technology officer of the Lottery division; Sethuram Shivashankar, senior vice president and CTO of gaming systems; and Nathan Wadds, senior vice president and CTO of gaming. The panelists covered the evolution of game styles in the form of the TwinStar cabinet platform, the first to accept both Bally and WMS-branded content. Oher subjects included the iVIEW4 display system, which now features web-based content management—allowing casino operators to instantly change communications with customers in an HTML format—as well as a brighter display, a faster boot time and more power. The panel also discussed how the technology gap the casino industry once dealt with is closing. “We went from being 10 years behind (other industries) in technology to right on the front edge,” Wadds said. Gelber added that the 4K displays now being deployed in Scientific Games’ slot products are not
even in the consumer market yet. The panel was joined midstream by Tom Wood, chief product officer, interactive B2B; and Bryan Kelly, senior vice president of technology and iLab. Kelly, who runs Scientific Games’ forward-looking iLab—which seeks to apply new technologies in the general business world to gaming—ran a separate break-out session on the iLab’s newest technologies that was, typically, one of the highest-attended sessions of the conference. The other Empower favorite among the general sessions was the Customer Panel, in which former Pechanga Resort & Casino Slot Operations Vice President Buddy Frank moderated a roundtable discussion that included Mohegan Sun Vice President and General Manager Ray Pineault; Jack Entertainment Vice President and CIO Van Baltz; Angel of the Winds Director of Gaming Jeff Wheatley; and Jim Lightbody, president and CEO of British Columbia Lottery Corporation. The panel discussed the emergence of Big Data, the task of managing data, serving the millennials with new types of gaming spaces, and the emergence of new technologies such as virtual reality, which Lightbody tested at BCLC casinos. Technology forums and how-to workshops covered everything from lottery systems to the nuts and bolts of game design both on the slot side and the table game side. One highlight of Empower was a keynote address and roundtable panel led by Frances Fragos Townsend, homeland security expert, TV personality and aide to former President George W. Bush. Townsend described how methods she used in surveillance and prevention efforts battling terrorism after 9/11 can be applied to innovation in businesses like Scientific Games. Townsend’s panel included Nicholas Negroponte, founder and chairman emeritus of the Media Lab at the Massachusetts Institute of Technology; and Bran Ferren, chief creative officer of Applied Minds and a former president of R&D and creative technology at Walt Disney Imagineering. Discussions centered around creating attractions in the entertainment world using various emerging technologies. One discussion went back to the James Bond franchise, and ideas from the distinguished panelists on how Scientific Games can maximize the value of the license. Sheehan said the Empower conference is meant to further the mission of Scientific Games by working with the supplier’s customers to provide products that fill their needs and move industry innovation forward. “Our mission here at Scientific Games is to empower our customers by creating the world’s best gaming and lottery experiences,” Sheehan said. “It’s really important to us. It gets me up in the morning. “Our sense is that today is the day; we don’t have tomorrow. We need to be thoughtful of doing the next great thing at every moment in time.” APRIL 2017 www.ggbmagazine.com
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NEW GAME REVIEW by Frank Legato
999.9 Gold Wheel: Money Rush Aruze Gaming
T
his is the latest in Aruze’s 999.9 Gold Wheel series of progressive reel-spinning slots featuring a classic bonus wheel. It is a five-reel, 30-line game centered around a very frequent wheelspinning bonus—according to the manufacturer, the wheel bonus occurs once every 40 spins, on average. As other games in the series, Money Rush features an elegant sculpted top cabinet depicting gold bars surrounding the main bonus wheel. There are four progressive jackpots, which can be won through the wheel spin, either on primary-game or free-spin bonus events. Three scattered “SPIN” symbols on the reels trigger a spin on the Gold Wheel. The wheel slices contain credit prizes of 200, 300, 400, 500, 750, 1,000, 1,200, 1,500, 2,000 and 3,000. The wheel also contains slices corresponding to the four progressives. The levels of those progressives rise with the chosen bet multiplier (the per-line wager). The player can wager one, two, three, five or 10 credits per line, and the progressive meters change according to the bet. One credit per line returns a Mini jackpot resetting at $10, a Minor starting at $30, a Major starting at $100 or the Grand jackpot, resetting at $999. Raising the bet increases the jackpot level proportionately. The maximum 10-credit bet multiplier returns jackpots resetting at $100, $300,
$500 or $9,999. Three scattered cash symbols on the middle reels trigger the Money Rush Free Games. The player is awarded eight free spins, with all wins tripled. Also, if the Gold Wheel is triggered during a free spin, all credit amounts on the wheel are tripled—that means the wheel, in addition to the four progressives, contains credit wins ranging from 600 to 9,000. If the wheel lands on one of the four jackpots, it spins again. The wheel bonus continues until the wheel lands on a credit amount. Manufacturer: Aruze Gaming Platform: Cube-X Ultimate Format: Five-reel, 30-line stepper slot Denomination: .01 Max Bet: 250, 500, 750, 1000 Top Award: Progressive; $9,999 reset Hit Frequency: Approximately 50% Theoretical Hold: 2.06%-12.98%
Quick Hit Ultra Pays Scientific Games
T
his latest game in the popular Bally multiple-progressive Quick Hit series is on the new J43 cabinet, with its novel curved monitor shaped for player viewing comfort. Quick Hit Ultra Pays is being introduced with two base themes— Monkey’s Fortune (pictured) and Sun Dragon. Both games have the same features. The base game is a five-reel, 243-ways-to-win video slot— there are no paylines; wins are registered through adjacent symbols, for 243 possible ways to win on every spin. The familiar Quick Hit progressive is the central feature in the base game. As with other games in the series, the five progressive prizes are achieved by landing five or more Quick Hit symbols scattered anywhere on the reels. The jackpot amounts range from 10 times the total bet times the denomination for five symbols to 1,500 credits times the total bet for nine or more symbols. On the most common penny version of the game—assuming the 1,000-credit max bet is made—that means five symbols return a progressive resetting at $100, and nine or more symbols return a prize resetting at $15,000. This popular progressive system is accompanied by several bonus features. In the primary game, a random feature can occur at the start of any spin that expands the reels up to
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six rows high. The number of ways to win expands accordingly, up to a maximum of 7,776 ways to win on every spin. The expanded reels can come into play in the free-spin bonus as well. Three scattered bonus symbols trigger eight free games, which can be retriggered during the bonus round. Before the free games begin, the screen transforms to display 30 fireworks. The player picks icons until three match, for one of six different levels of expanded reels—returning between 576 and 7,776 ways to win on each free spin. Finally, the Quick Hit symbols pay more than the five progressives. Landing three or four scattered Quick Hit symbols return a scatter-pay jackpot of 10 times or 40 times the total bet, respectively. Manufacturer: Scientific Games Platform: Alpha 2 Format: Five-reel, 243-ways-to-win video slot Denomination: All Max Bet: 1,000 Top Award: Progressive; resets at 1,500 times total bet Hit Frequency: 30.05% Theoretical Hold: 4.03%-14.51%
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7 Salute
Aristocrat Technologies
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his is one of the first new stepper slots to be developed by Aristocrat since its acquisition of Class II supplier VGT, which specializes in steppers. It is on the new cabinet developed by the merged R&D team, called RELM. The RELM cabinet and format is designed to offer classic reelspinning games with the more modern styles of features for which Aristocrat has always been known as one of the top producers of video slots. The stylish cabinet features bright, oversized reels configured in a protruding “reel basket,” with a flush translucent lens and rear LED display paired with high-definition top glass and meter display. 7 Salute is a traditional threereel mechanical slot with 27 paylines and seven levels of
progressive jackpot. The pay table includes traditional slot symbols dominated by various “7” combinations. A unique bonus event is a frequent free-spin bonus round called “Burning Spins.” It is randomly triggered on any winning spin in the primary game. All spins during this event are winners, with each subsequent spin returning a payoff equal to or greater than the previous spin. The Burning Spin round lasts a random number of spins. The progressives are won through a separate event, triggered by stacked “7” symbols on all three reels. When this occurs, the top LCD screen transforms into a virtual bonus wheel, which spins to award one of the seven progressives. These progressives pay off at any bet. The bottom progressive is 10 credits times the denomination; the top is 25,000 credits times the denomination. That means in the penny version, progressives range from resets of $10 to $250. Manufacturer: Aristocrat Technologies Platform: RELM Format: Three-reel, 27-line stepper slot Denomination: .01, .02, .05 Max Bet: 200, 400 Top Award: Progressive; resets at 25,000 times denomination Hit Frequency: Approximately 30% Theoretical Hold: 6%-12%
Super Red Hot Jackpots International Game Technology
T
his is one of a new group of IGT games that capitalizes on the classic reel-spinning genre that has been the slotmaker’s bread and butter over the years. These newer games place classic reel-spinning setups in a five-reel, multi-line setup that utilizes the features normally found in lower-denomination video slots. Super Red Hot Jackpots is a new mechanical reel-spinning series on IGT’s S3000 cabinet. The base game is a five-reel, 20line slot with a four-level progressive jackpot—a “Hot Jackpot” resetting at $5, a “Hotter Jackpot” resetting at $15, a “Hottest Jackpot” resetting at $100, and the “Red Hot Jackpot” resetting at $5,000. Each is won by lining up five of the corresponding jackpot symbol on a payline—the top Red Hot Jackpot is returned for five of the symbols on the horizontal middle payline. This progressive setup is accompanied by a free-spin bonus when three or more Red Hot Jackpot symbols land scattered on the reels. Additionally, there is a side bet that triggers a multiplier of 8X on certain winning combinations in the bonus round. The Super Red Hot Jackpots series is initially placed with
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three popular classic IGT reels-spinners as the base games—Sizzling 7s, Double Sizzling 7s and Jackpot 7s. All three games feature several “7” jackpots of different colors that return the top wins under the jackpot combinations. Manufacturer: International Game Technology Platform: S3000 Format: Five-reel, 20-line stepper slot Denomination: .01 Max Bet: 450 Top Award: Progressive; $15,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 4%-14.1%
CS_fullpg.2017.qxp_Layout 1 1/27/17 3:28 PM Page 1
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JOHN BUYACHEK Sales Director 702-248-1565 ext. 227 jbchek@ggbmagazine.com
FLOYD SEMBLER Business Development Manager 480-231-8433 fsembler@ggbmagazine.com
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technology innovations, including casino manageGOODS&SERVICES ment system solutions, slot platforms, game con-
AGS SIGNS DAI BACC DISTRIBUTION DEAL
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lot and table supplier AGS announced that it has signed an exclusive distribution agreement with EGC LLC that will allow the company to begin worldwide distribution of the popular commissionfree baccarat table game Dai Bacc, outside of California card rooms. Over the last year, Dai Bacc has gained a following among players in Southern California card rooms, thanks to its three bonus bets that offer the possibility to hit at least 30-to-1 odds on every round. “Dai Bacc’s distinctive bonus bets offer very high payout potential with the introduction of the Kill Bet, which means players have an added advantage of winning even if the other two side bets lose,” said John Hemberger, AGS senior vice president of table products. “Because of its appealing bet structure, we believe Dai Bacc has the potential to become one of the most popular baccarat variations in the world, and our goal is to bring the power of Dai Bacc to casinos worldwide through our well-established sales network.” “Dai” is a universal Asian term meaning “big” or “large,” and it’s used to describe “the best” of something in multiple Asian languages, thus immediately appealing to a large audience. Dai Bacc’s game-play experience is unique because it follows the same game rules and procedures as traditional commission-free baccarat, but with three bonus bets—the Tiger 7 and Ox 6, which pay 40-to-1 odds; and the Kill Bet. The combination of all three bonus bets offers an extremely high payout potential and gives players a chance to win even if they lose the Tiger 7 and Ox 6 bets. Additionally, there is also a possibility to win two bonus bets during a single round, which means players can win up to 70-to-1 odds.
SCIENTIFIC GAMES WINS ILANI CONTRACT
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cientific Games Corporation announced a comprehensive new contract to provide ilani, Washington state’s newest casino, with a full suite of
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tent, table products and the SG Universe mobile suite. After a competitive bidding process, ilani, developed by Salishan-Mohegan LLC in collaboration with the Cowlitz Indian Tribe, chose Scientific Games as its principal casino technology partner for the April opening of the new casino resort located in southwest Washington, just north of Portland, Oregon, directly off Interstate 5. The order includes 1,427 slot and table games—making up 57 percent of the floor—as well as system and mobile solutions. The collection of games will consist of Scientific Games’ newest and most innovative slot product lines, including the TwinStar family and the Alpha 2 Pro Series line of cabinets that will host the most popular titles from Scientific Games’ dominant gaming brands—Bally, Shuffle Master and WMS— as well as those from a variety of game manufacturers. Ilani will open with some of Scientific Games’ most beloved slot titles like Quick Hit, Copper Dropper and Li’l Red, and premium offerings such as 88 Fortunes, Michael Jackson Wanna Be Startin’ Somethin’, Titanic and Friends. From its Shuffle Master table products suite, Scientific Games will provide Ultimate Texas Hold ‘Em and Three Card Poker proprietary poker games, along with an extensive baccarat layout featuring 12 tables with the Dragon Bonus baccarat side bet. The company will also provide its Fortune Pai Gow and Kings Bounty Blackjack side bets. “We are focused on providing our guests with a world-class casino gaming experience,” said ilani President and General Manager Kara Fox-LaRose. “That is why, after years of a trusted partnership with our partner, Mohegan Sun, we chose to invest in Scientific Games solutions for ilani.”
AGILYSYS CEO SRINIVASAN BUYS 60,000 SHARES OF COMPANY
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gilysys, Inc. CEO Ramesh Srinivasan purchased 60,000 shares of Agilysys stock in a transaction that occurred on February 15. The shares were bought at an average price of $9.62 per share, with a total value of $577,200. The acquisition was disclosed last month in a document filed with the U.S. Securities and Exchange Commission. Shares of Agilysys, Inc. Agilysys CEO (NASDAQ:AGYS) traded up Ramesh Srinivasan
3.01 percent during mid-day trading on February 25, reaching $9.58. 51,196 shares of the company traded hands. The stock’s 50-day moving average is $9.98 and its 200-day moving average is $10.39. Agilysys, Inc. has a 52-week low of $8.17 and a 52week high of $12.15. The company’s market capitalization is $216.6 million.
IGT LAUNCHES CABINETS IN CHILE, CZECH REPUBLIC
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nternational Gaming Technology Plc. announced that it has introduced its Axxis 23/23 cabinet for the first time in Chile, at the Casino Marina Del Sol properties. Casino Marina del Sol Calama, Talcahuano and Osorno will deploy IGT’s Axxis 23/23 cabinets, which feature two 23-inch LCD screens and are designed for engaging multi-game player experiences. Additionally, the Company’s Oxygen and CrystalDual hardware solutions will be installed. “We are excited to build upon the global success of IGT’s Axxis 23/23 cabinet by introducing it to the Chilean market,” said Jessica Luna, IGT’s senior director of sales for Chile, Andean, Central America and the Caribbean. “We have established a strong partnership with Casino Marina del Sol, and with these new cabinets and advanced multi-game solutions we can help to enrich the entertainment value of gaming across multiple properties.” In a separate news release, IGT announced that American Chance Casinos in the Czech Republic will feature CrystalDual cabinets and content at Casino Route 55 and Casino Route 59, and the IGT CrystalSlant cabinet and content at Casino Ceska Kubice. “We are very pleased to introduce a multi-game selection of some of IGT’s strongest-performing titles to the Czech Republic,” said Colin Stewart, American Chance director of casino operations. “By featuring the CrystalDual and CrystalSlant cabinets at our properties, we are enhancing the appearance of our casino floors while offering players the latest technology.” As part of its agreement with IGT, American Chance Casinos maintains one-year exclusivity in the Czech Republic for the CrystalDual and CrystalSlant cabinets and a nine-theme multi-game suite including top-performing themes such as Golden Egypt, Ocean Magic and longtime player favorites Golden Goddess and Shadow of the Panther.
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INNOVATION GROUP ANNOUNCES NATIVE INTERN PROGRAM
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he Innovation Group (TIG) last month announced the rollout of its Native American Internship Program as well as a new collaboration with online gaming developer BetConstruct to bring data science services and social gaming together to tribal gaming operators. TIG has partnered with the Native American community for more than 25 years, seeking new ways to support tribes in reaching their broader development goals. Beginning in May, tribal members seeking professional careers in gaming will be invited to participate in comprehensive studies being undertaken by their The Innovation Group tribe—involving expansion President Michael Soll feasibility, economic development and database analysis— as paid interns side by side with the TIG project team. In addition to offering interns valuable insights to bring back to their careers and operations, the program will also invigorate TIG’s work. Longtime TIG Tribal Division leader Dennis Balyeat sees a deeper relationship. “The decades-long effort by tribes to integrate membership into management just got a big boost, while TIG gets perspective that will really bring its research to life,” he said. Director Chris Irwin says TIG’s Native American Internship Program initially will be open exclusively to college and graduate-level students, and to gaming enterprise staff from TIG’s broad network of tribal clients. Candidates must be recommended by their tribal leadership. More information is available on The Innovation Group’s website. Meanwhile, Innovation Analytics, TIG’s data science arm, has partnered with with BetConstruct, industry-leading developer and provider of online and land-based betting and gaming solutions. “We will offer live data science sessions at NIGA using our analytics programs and BetConstruct’s online technology platform,” said Innovation Analytics Principal Anthony Mason. Attendees also will learn how TIG’s data science services increase player engagement, expand loyalty and drive incremental revenue for Native American casino operators. TIG President Michael Soll sees an important connection between these two new initiatives. “TIG’s data services will make tribes more competitive today,” said Soll. “And, in conjunction with our internships, they will be more self-sufficient by preparing the next generation of tribal leaders for the convergence of online and bricks-and-mortar gaming.” APRIL 2017 www.ggbmagazine.com
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PEOPLE CROKER TAKES OVER AT ARISTOCRAT
WYNN RESORTS NAMES BILLINGS AS CFO
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revor Croker has officially begun his term as chief executive officer of Australian slot-machine giant Aristocrat Leisure Limited. Croker was formally appointed CEO at Trevor Croker Aristocrat’s Annual General Meeting. He takes over for Jamie Odell, who retired late last year after eight years, during which time the slot-maker expanded its gaming operations business through a parade of hit licensed brands. Matt Wilson Croker told Aristocrat investors at the meeting that he will prioritize “shareholder growth and product renewal” as the new head of the company. He noted that the manufacturer is off to a strong start in the current fiscal year, with EBITDA up nearly 30 percent year-on-year for the first four months. He said he will build on the “outstanding momentum” the company experienced during the Odell years, when the manufacturer’s market capitalization grew from $1.7 billion to $10.6 billion. Like Odell, Croker came to Aristocrat from beverage company Fosters. He joined the slot manufacturer in 2009 as part of Odell’s “turnaround team,” and last year was appointed executive vice president and chief digital officer. Just before Croker took over, the company announced that longtime marketing and gaming operations VP Matt Wilson has been promoted to managing director of the Americas, based in Las Vegas. Wilson most recently was senior vice president of global gaming operations. “Matt’s leadership has been instrumental to Aristocrat’s recent growth both in the Americas and across other key markets,” said Croker. “Matt comes to the role with proven commercial and strategic skills and a genuine passion for product and helping our customers succeed. We are delighted to welcome Matt to the position of managing director of the Americas.” Wilson has been with Aristocrat since 2004, and has held several significant positions in a variety of the company’s key markets. In his recent position as global gaming operations chief, he helped to grow the company’s recurring-revenue product line with landmark new titles.
ynn Resorts last month announced the appointment of Craig S. Billings to the executive team as chief financial officer. Billings is a veteran of both the gaming and banking industries, and brings extensive Craig Billings experience in business innovation to the company. Billings has been a key executive in the gaming industry, specializing in digital innovation, mergers and acquisitions and capital structure management. He has held leadership positions at Aristocrat Leisure Limited, including chief digital officer and managing director of strategy and business development, and at International Game Technology. Billings also was an executive in the investment banking division of Goldman Sachs, where he served numerous clients in the gaming industry, and he began his career in the audit practice of Deloitte & Touche. Billings is a certified public accountant and a director of NYX Gaming Group.
REID, BOEHNER TO CHAIR UNLV THINK TANK
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he University of Nevada, Las Vegas is organizing a public policy think tank on tourism, hospitality and gambling, and has recruited former congressional rivals Harry Reid and John Boehner to co-chair it. The institute, backed by MGM Resorts International, is expected to focus on a broad range of national and Harry Reid international issues that affect the three industries and the communities in which they operate. Reid and Boehner served in Congress a combined 50 years. Reid, a Nevadan, was the longtime head of the Democratic Party in the U.S. Senate. Boehner, from Ohio, John Boehner was the top Republican in the House of Representatives for 10 years, five of them as speaker. “While our public opposition on issues may be more storied than our private friendship, we have
successfully collaborated on complex problems and signature ideas and look forward to doing so again,” the two said in a joint statement.
CAESARS’ KEVIN ORTZMAN NAMED TO CRDA
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evin C. Ortzman, president of Bally’s Atlantic City and Caesars Atlantic City, has received a two-year appointment to New Jersey’s Casino Reinvestment Development Authority Board of Directors. Kevin Ortzman The appointment comes from New Jersey Governor Chris Christie. Ortzman joins Mark Giannantonio, president and CEO of Resorts Casino Hotel, as the casino industry’s representatives on the board. Also reappointed to new terms were Chairman Robert E. Mulcahy III, Debra P. DiLorenzo, Gary L. Hill, Frank Spencer, Edward H. Gant and Howard J. Kyle. The authority—which is funded by a tax on city casinos—oversees Atlantic City’s tourism district and funds redevelopment projects in the resort and around the state, although recent legislation has directed much of the authority’s redevelopment funding to be used to offset Atlantic City’s large municipal debt.
GGB
April 2017 Index of Advertisers
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Casino Style Magazine . . . . . . . . . . . . . . . . . . . . . . . .65 Cintas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Ditronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Gamblit Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Gaming Support . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . . . . . . .31 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Incredible Technolgies . . . . . . . . . . . . . . . . . . . . . . . .12 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Joseph Eve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Konami Gaming . . . . . . . . . . . . . . . . . . . . .Back Cover Merkur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .71 Novomatic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Scientific Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 SG Interactive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Subway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 SuzoHapp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 TCSJohnHuxley . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 UNLV Foundation . . . . . . . . . . . . . . . . . . . . . . . . . . . .54 US Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 VizExplorer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Walker Digital Tables . . . . . . . . . . . . . . . . . . . . . . . . .29 Zebra Technologies . . . . . . . . . . . . . . . . . . . . . . . . . .43
APRIL 2017 www.ggbmagazine.com
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CASINO COMMUNICATIONS
Q
&A
Brett Abarbanel Director of Research, UNLV International Gaming Institute
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rett Abarbanel is director of research for the University of Nevada, Las Vegas International Gaming Institute, joining the college almost a year ago. Since then, she’s concentrated on eSports and what it may mean to the casino industry. She’s a graduate of UNLV who spent some time doing gaming research at UCLA before returning to her alma mater. She’s also a serious poker player. She met with GGB Publisher Roger Gros at her offices at the IGI in March. For a full podcast of this interview, visit GGBMagazine.com. GGB: You’ve been concentrating on the eSports discipline since you joined the UNLV International Gaming Institute last year. How did you get into that?
Brett Abarbanel: I’ve been doing that for a very long time. Decades actually, but casually. I’ve never played that frequently, mostly because of time constraints. As fun as it is, I simply am not 8 years old anymore, so I just don’t have the time. And as I was playing, my husband actually plays quite a lot of video games, and I was noticing that gambling kept sort of cropping up in all of these, even if it was in just a simple RNG function in World of Warcraft, where you can bet on random games with coins of value. So, this kept cropping up, and we started seeing, as these tournaments were getting more and more popular, the sport was starting to become legitimized. And it’s fairly established, sociologically speaking, and as something becomes more and more mainstream and acknowledged, we generally see gambling on it. And once I started seeing that coming up around January or February 2014, I really started paying attention to how the two were merging together. And previously, I’d been doing a fair amount of research in online gambling, and that’s a lot of the gambling that you see in this space. And so, the transition to in70
Global Gaming Business APRIL 2017
clude videos games and competitive video games, eSports into that, was fairly natural. It also allows me to play video games at work and have it actually be work, so that’s always a nice bonus. What does eSports mean for the gaming industry?
We still seem to be in the somewhat preliminary stages. We’re certainly farther along than we were when I first started looking at this a couple of years ago. We’ve had initial interest, I think, in many of the tournament events. Last spring, Mandalay Bay brought in the League of Legends Championship Series. Since then, we’d had major eSports events in Las Vegas, but this really seemed to be the major catalyst for change, in terms of bringing in major events. But we’ve also seen other applications of eSports. So, usually when we talk about eSports, we are specifically referring to competitive video gaming. This is the professional stage of video gaming. And then, in some cases, we also have used it to refer to amateur competitions as well. The eSports Lounge at the Downtown Grand is one of the manifestations of eSports that we’ve seen. Then we also have Level Up over at MGM Grand, and that also is a slightly different iteration of the gaming space, but I’m not sure I would call it “eSports space.” You recently formed an organization dedicated to the growth of eSports in Nevada. Tell us about that.
Seth Schorr (chairman of the Downtown Grand) and I have been talking about this now for about a year: How does eSports look in the gambling world? Narus Advisors’ Chris Grove came in. We both like him very much. And then, Jennifer Roberts, my colleague here at the IGI, is the associate director of the International Center for Gaming Regulation. And so, the four of us have been having meetings for about eight months or so. The eSports world, as quickly growing as it is, and as
huge it is, as much interest as there is, it’s still fairly fragmented. There are a number of different developers. It’s unlike traditional sports, in the sense that nobody owns football. The National Football League runs a league for football, but so does the Canadian Football League. And football exists in many different forms. You and I could go down to the park right now and throw a football around, and nobody’s stopping us from doing that. But if we wanted to sit down and play a game of League of Legends together, we would have to pay for that. That game belongs to Riot Games. So, that’s one of the ways in which it’s fragmented. It’s not necessarily a bad thing; it’s just that the proprietary nature of these games means that there are different segments who have different interests—and that’s just in the game development component. We also have different tournament organizers who are trying to put together their own tournaments, we have different teams, and there’s no formal league like there is with the NFL. There are a number of different leagues. So, it’s almost as though we have NFL 1, 2, 3, 4, 5—some of course with more prestige than others. And why the focus on Nevada?
This is a state that has a very large established tourism infrastructure. Las Vegas is not just gambling; it’s a major tourist destination, and at the Las Vegas Convention and Visitors Authority, we can back that up with about a thousand different data points. Las Vegas has the capability to bring in these types of events. And then as far as the gambling component goes, Nevada has one of the highest standards of gambling regulation in the world. We see Nevada as having the opportunity to be a major hub for eSports. It’s a global phenomenon, this eSports thing, and we’re trying to establish Nevada’s place in that global network.
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