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GGB Global Gaming Business Magazine
TaBle GaMe TecHnoloGy calIFornIa’s carD rooM proBleM GaMInG & BlocKcHaIn sKIll solUTIons
april 2018 • Vol. 17 • no. 4 • $10
Cashback to Free Play How we got from there to here and where we’re going next
ToTal Transparency
Why licensing is so crucial in the age of online gaming and sports betting
Higher
Class
Ainsworth Game Technology uses its R&D muscle to expand its footprint in Class II Native American markets and elsewhere Association of Gaming Equipment Manufacturers
Official Publication of the American Gaming Association
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POWERFUL NEW GAMES
POWERFUL NEW CABINET
ONLY ON THE BRAND NEW
SEE IT AT NIGA BOOTH 1137
©2018 AGS LLC. All rights reserved.
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CONTENTS
Vol. 17 • No. 4
april
Global Gaming Business Magazine
COLUMNS
20 COVER STORY New Horizons
12 AGA Coming Together
As it continues to expand in U.S. Class III markets, Ainsworth Game Technology uses its R&D power to achieve new success in Class II, central determination and historical racing—and new growth in the company’s North American footprint.
Geoff Freeman and Ernie Stevens
By Frank Legato
32 Operations Chasing Goldilocks
14 Fantini’s Finance Smaller But Better Frank Fantini
Edvard Toth
DEPARTMENTS
FEATURES
The Agenda
8
By the Numbers
10 5 Questions
16 Free Play Revolution Free play has replaced cash-back as the primary marketing tool used by casino slot departments. Here’s how the transformation happened.
40 The Challenge of Licensing Securing a gaming license in the U.S. is a big challenge, but once the process is done, approval is gold. By Marjorie Preston
By Andrew Klebanow
28 The New Money Blockchain, the revolutionary digital funding and payment method, could be the wave of the future, but faces a U.S. regulatory challenge. By Mark Balestra
36 Making California Work A bifurcated regulatory system reporting to different state officials allows card room oversight to fall through the cracks and often looks the other way. By Dave Palermo
4
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Global Gaming Business APRIL 2018
46 Table Tech The ever-changing technology of the pit is expanding table games to a new generation of customers. By Dave Bontempo and Frank Legato
15 AGEM 50 Frankly Speaking 52 Emerging Leaders With Crown Melbourne’s Daryl Bruce, IGT’s Ryan Reddy, and Incredible Technologies’ Caitlin Harte
56 New Game Review 60 Cutting Edge 62 Goods & Services 65 People 66 Casino Communications With Peter DeRaedt, President, Gaming Standards Association
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THE AGENDA
Penalty Box for Leagues Roger Gros, Publisher
I
t’s really immaterial what the U.S. Supreme Court decides about legalizing sports betting this spring. It’s clear that the Professional and Amateur Sports Protection Act (PASPA), passed in 1992, is a complete failure. Rather than prohibit sports betting, it has driven it underground so billions of dollars have been wagered each year with organized crime. That spawns such crimes as money laundering, racketeering, terrorism and even murder. So it’s only common sense that Congress needs to act, no matter what the Supreme Court decides. Of course, “common sense” and “Congress” rarely go together, so you never know. What is happening now, however, is the attention of states to legalized sports betting if the court decision is positive or Congress acts. And that’s going to be a patchwork of laws that work and other laws that don’t. So let’s start with the most obvious problem: the business model of sports books. Legislators are rarely businessmen, so don’t really understand the margins under which sports books operate. Last year in Nevada, which is the only U.S. state with full-blown sports betting, the state’s sports books retained only 5 percent of the wagers—before rent, personnel and other costs. And that was a good year. Nevada pays 0.25 percent of the handle to the federal government (something all U.S. sports books will have to do) and a 6.25 percent gaming tax on the win. But in Pennsylvania, for example, the law taxes sports betting at the same rate—36 percent—as they do regular casino revenue. That renders sports betting ineffective and profitless. New Jersey will tax it at the current 9.25 percent that is applied to all casino revenue, a reasonable figure that makes sports betting viable. The thing that will really kill sports betting completely in any state will be the so-called “integrity fee” that is currently being demanded by the National Basketball Association and Major League Baseball. They want 1 percent of the handle (that’s all the bets made!), which will translate into at least 20 percent of the profits of any sports books even before taxes are taken out. Layer that onto a state with a high tax rate, and it effectively
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Global Gaming Business APRIL 2018
kills any opportunity to make money on sports wagering. The leagues are taking this very seriously but may be somewhat late to the game. Sports betting laws are already on the books in Pennsylvania and New Jersey (not to mention Nevada) without integrity fees, so the leagues are scrambling to catch up. Lobbying in West Virginia failed to produce the integrity fee (there are no professional sports teams located in that state) but may have better luck in Missouri, which hosts two MLB teams. But “integrity” is the last thing these payments are all about. In fact, by paying these fees, the states would actually damage the leagues’ integrity, because the leagues would have a vested interest in how many bets are made. The more money wagered, the more money the leagues make. So how can you trust any decision that might impact that amount? For example, if the league suspends a valuable player, it will always be in the back of the gambler’s mind that it’s a manipulation of the betting scheme in favor of one team or another to boost betting revenue. It’s a plain and simple money grab, and it’s anything but transparent. And let’s not forget about the Wire Act. In states that are going to allow online sports betting, the Wire Act, which was implemented in the early 1960s to prevent organized crime from taking and conveying sports bets by telephone, there can be no interstate compacts like you see with online casinos. You will not be able to share liquidity, so players will have to be within the confines of the state border. While that doesn’t necessarily kill sports betting, it does make it very much less profitable. So to create interstate online sports betting, the Wire Act would have to be repealed or amended. So you see that a positive ruling by the U.S. Supreme Court or action by Congress won’t create the “silver bullet” that will allow sports betting to spread unchecked across the U.S. It’s going to be a long and complicated process in both technical and legal terms to get sports betting up and running in a large portion of the United States.
Vol. 17 • No. 4 • APRIL 2018 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Ernie Stevens | Edvard Toth Contributing Editors Mark Balestra Dave Bontempo twitter: @bontempomedia Andrew Klebanow | Anthony Mason Dave Palermo twitter: @DavePalermo4 Marjorie Preston | William Sokolic | Michael Vanaskie
EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises
•
Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International
• Julie Brinkerhoff-Jacobs, President, Lifescapes International
• Nicholas Casiello Jr., Shareholder, Fox Rothschild
• Jeffrey Compton, Publisher, CDC E-Reports twitter: @CDCNewswire
• Geoff Freeman, President & CEO, American Gaming Association twitter: @GeoffFreemanAGA
• Dean Macomber, President, Macomber International, Inc.
• Stephen Martino, Vice President & Chief Compliance Officer, MGM Resorts International, twitter: @stephenmartino
• Jim Rafferty, President, Rafferty & Associates
• Thomas Reilly, Vice President Systems Sales, Scientific Games
• Steven M. Rittvo, Chairman Emeritus, The Innovation Group twitter: @InnovGrp
• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University, twitter: @kspilde
• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985
• Roy Student, President, Applied Management Strategies
• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2018 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014 Official Publication
A dynamic dual. Introducing the all-new CrystalDual® 27 cabinet.
The next evolution of the Crystal hardware series is making its North America debut. Industry-leading design, IGT’s best-in-class operating system, and unmatched reliability and serviceability combine with a redesigned player zone featuring large 27” HD touch-screen displays. Add in a stunning 24” video topper that comes standard with purchase, and the backwards compatibility to run the full Ascent® game library, and it’s clear how the CrystalDual® 27 cabinet takes player engagement and reliable performance to a whole new level, creating a true dynamic dual for your floor. Visit our NIGA booth #647 to experience the CrystalDual® 27 cabinet firsthand!
© 2018 IGT. Except where ownership is otherwise identified, the trademarks used herein are owned by IGT or its affiliates, may not be used without permission, and where indicated with a ®, are registered in the U.S. Patent and Trademark Office. Artwork, descriptions, game play, photographs, videos, and other product details depicted herein are subject to change. IGT is committed to socially responsible gaming. Our business solutions empower customers to choose parameters and practices that become the foundation of their Responsible Gaming programs.
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BY THE
NUMBERS
TOP
LOTTERY STATES T
he most profitable lottery organizations are, as you might expect, the large states— New York, California and Florida. But when you consider the per-capita sale of lottery tickets, California didn’t even make the top 15 states. According to a study conducted by LendEDU, these are the most lottery-crazed citizens in America:
TOP 15 STATES TO BUY LOTTERY TICKETS PER PERSON 15. Illinois
$221.68
14. Ohio
$233.57
13. Michigan
$254.40
12. Florida
$256.05
11. South Carolina
$262.61
10. Pennsylvania
$277.42
9. Connecticut
$301.89
8. New Jersey
$316.52
7. Maryland
$354.28
6. Georgia
$356.34
5. West Virginia
$359.78
4. New York
$398.77
3. Delaware
$420.82
2. Rhode Island
$513.75
1. Massachusetts
$734.85 0
$200
$400
$600
$800
Winning By Supplier
I
n a new report released by the Eilers-Fantini team, the Game Performance Report, subscribers can understand the success (or failure) of every slot game. According to Todd Eilers, a principal with Eilers & Krejcik Gaming, he was motivated to create this potentially revolutionary service “based on customer feedback that indicated there wasn’t a good central repository for slot machine game performance in the industry.” In the chart below, “Fair Share” is the percent of total units compared to percent of total net theoretical win by supplier
SUPPLIER FAIR SHARE
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Global Gaming Business APRIL 2018
for the trailing 12 months. For example, IGT and SG have the most floor mix by unit count, 33.6 percent and 25.3 percent respectively, but the share of theoretical net win falls behind units at 29.2 percent and 22.7 percent. To obtain a free copy of the Eilers-Fantini Game Performance Report, contact Robin Coventry at 302-730-3793 or RCoventry@FantiniResearch.com, or D.J. Leary at 310-743-6239 or DLeary@EKGamingLLC.com.
A show “about nothing.” A slot that is really something! Spin the reels with Jerry and his friends in SEINFELD, a slot that celebrates this award-winning, beloved sitcom “about nothing.” Showcased on the immersive Gamescape™ cabinet, SEINFELD is jam-packed with hilarious show footage and game features based on iconic episodes. Laugh along with George, Kramer, Elaine and Jerry as you play for a jackpot that will blow your mind!
“And yada, yada, yada…” Call your Scientific Games Sales Representative today!
www.SGgaming.com SEINFELD and all related characters and elements © and ™ Castle Rock Entertainment. (s18) The look and feel of the game and its individual components and displays are trade dress of Scientific Games Corp. and its Subsidiaries. ™ and © 2018 Scientific Games Corp. and its Subsidiaries. All rights reserved.
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NUTSHELL
“They
5Questions
Vincent Lentini
Chief Marketing Officer and Senior Vice President, Affinity Gaming ffinity Gaming is one of the industry’s best-kept secrets. With properties in Nevada and several other ALentini, states, Affinity is using unique marketing techniques to attract customers to its diverse casinos. Vincent chief marketing officer and senior vice president, explains how the company uses the latest technology combined with unmatched customer service to create loyalty among its players. He spoke with GGB Publisher Roger Gros at the Affinity offices in Las Vegas in January. To hear a full podcast of this interview, visit GGBMagazine.com.
1 2 3 4 5
GGB: Affinity Gaming has so many diverse properties: destination resorts in Primm, Nevada; a convention/locals casino in Las Vegas; locals casinos in Reno and several Midwest states. Is there an overarching marketing philosophy for all? Vincent Lentini: To understand our properties over the last three years has been a journey, which involved
fixing the properties on the marketing reinvestment side. When I first arrived, we had properties that were giving 110 percent in marketing reinvestment. We had to change that, and that was very painful for customers and for employees. They didn’t understand why we were doing it. But now in our third year of a new management team, we’ve completed that task. So we’re calling 2018 our pivot year, which means we’re going to focus on quality, value and experience for all of our guests, no matter what property you visit. How do you segment the properties?
This is going to be a property-by-property approach. We’re going through a brand-positioning exercise at Silver Sevens (the Las Vegas property) and Rail City, our Reno property. For the first time, we’re going through consumer insights and brand development hypotheses, and they test that to set up a framework of what it means for these properties for value and quality for our customers. It’s pretty exciting, and we’ll be doing this for all our properties, but will approach each of them differently. Marketing a property used to be relatively straightforward focusing around advertising and direct mail. What has changed in today’s world?
What has changed for us is our reliance on technology. This year, we’re building a data warehouse that will allow us to give specific offers to specific customers based on their preferences and what they play. We’ve created CRM technologies such as pinging cell phones to send a host out to greet a customer who hasn’t been there in 90 days, for example. We’re moving casino hosts to a more sales-oriented experience where we try to discover how we can extend the stay, convert more trips, or to simply thank them for being there at each stage of their trip.
Said It”
“I think the government has been very clever in not giving too much away because it makes all of us work harder, do more and be more effective in delivering the strategic transformation the government has set out for us.” —Grant Bowie, CEO, MGM China, on the Macau government’s close-mouthed stance on upcoming license renewals
CALENDAR April 10-11: Sports Betting Summit East Africa, Kampala Serena Hotel, Uganda. Produced by Eventus International Limited. For more information, visit sportsbettingevents.com. April 17-20: Indian Gaming Tradeshow & Convention 2018, Las Vegas Convention Center. Produced by the National Indian Gaming Association. For more information, visit indiangamingtradeshow.com. April 22-24: BgC Brazilian Gaming Congress, Tivoli Mofarrej, São Paulo, Brazil. Produced by Clarion Gaming. For more information, visit brasiliangamingcongress.com. April 24: UNLV Gaming & Hospitality Education Series, International Gaming Institute, University of Nevada, Las Vegas. “Non-Gaming Revenue: The ROI Details.” Produced by Global Gaming Business. For more information, visit UNLVGHES.com. April 26-27: Caribbean Gaming Show, Iberostar Hotel & Convention Center, Cancun, Mexico. For more information, visit CGSSummit.com. May 2-3: Southern Gaming Summit, Beau Rivage Casino Resort, Biloxi, Mississippi. Produced by the Mississippi Gaming & Hospitality Association and Global Gaming Business. For more information, visit SGSummit.com. May 10-11: JgC Japan Gaming Congress, Conrad Tokyo, Tokyo, Japan. Produced by Clarion Gaming. For more information, visit JapanGamingCongress.com. May 15-17: IAGA International Gaming Summit, the Venetian Macao. Produced by the International Association of Gaming Advisors. For more information, visit TheIAGA.org.
What is some of the technology that has really performed for you?
We’re lucky because early on in our tenure, we brought in Duetto, and as soon as we plugged it onto the cash side of the business, we saw a 30 percent increase in our cash revenue. We have a motto here: “You can’t beat the machine.” So as a yield manager, the computer program and the machine are always going to be more perfect in the pricing strategy than we could do on our own. And now that Agilysys and Duetto are integrated with our booking engines, we make sure we take advantage of all the technology they have available.
May 15-18: G2E Asia, the Venetian Macao. Produced by American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com. May 17: UNLV Gaming & Hospitality Education Series, International Gaming Institute, UNLV. “Data Analytics.” Produced by Global Gaming Business. For more information, visit UNLVGHES.com.
How effective is social media?
It’s pretty important now and becoming more important within our demographic, which is mostly 55year-old female slot players. Facebook is huge. It gives us the opportunity to interact with our customers at a level which is unprecedented in the marketing world. We use Facebook Custom Audience to go after specific entertainment acts that we have at Primm. For example, we target everyone who likes Styx. And oh, by the way, Styx is at Primm sometime in 2018. It’s an incredibly powerful tool that allows us to target a great but specific market.
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Global Gaming Business APRIL 2018
May 30-31: GiGSE 2018, the Biltmore, Miami, Florida. Produced by Clarion Gaming. For more information, visit GIGSE.com. May 30-31: Vienna International Gaming Expo (VIGE), Danube City Tower, Vienna, Austria. Produced by European Gaming Media and Events. For more information, visit ViennaGamingExpo.com.
CentralCreditÂŽ offers a variety of tools that simplify the credit-granting decision process for casino operators. The CentralCredit KYC Report includes an extensive and comprehensive group of Global Sanctions, Politically Exposed Persons (PEP) and Securities and Exchange Lists. We provide all-inclusive pricing for standard inquiries and offer lower costs for assisted inquiries than the competition. CentralCredit is the most cost-effective and trusted provider of credit data and reporting solutions in the gaming industry.
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everi.com
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AMERICAN GAMING ASSOCIATION
Coming Together Tribal and commercial gaming have collaborated on many issues
2 WE’RE
ALL N IN
From F rom big big to t o small, sm a l l , R RPM PM iiss dedicated de d icat ed to to b building u i ld i ng and a nd maintaining m a i nt a i n i ng ssuccess uccess for fo for eevery ver y client. cl ient . With Wit h nearly nea rly 20 20 yyears ea rs of of experience, ex per ience, we we can ca n deliver de l iver results resu lt s no no matter mat t err the t he ssize ize of of the t he challenge. cha l lenge.
C Call all u uss ttoday odayy aatt 800-475-2000 800-475-20000 rrpmadv.com pmadvv.com 12
Global Gaming Business APRIL 2018
018 will be a monumental year for the gaming industry. Building upon our mutual achievements of the past three years, the National Indian Gaming Association (NIGA) and the American Gaming Association (AGA) are working to tackle federal prohibitions, outdated regulatory regimes and antiquated tax policies that affect tribal and commercial gaming alike. And more than ever before, we’re doing so together. As our segments of the gaming industry have grown over the past two decades, so, too has our working relationship. Moving beyond a limited partnership at the annual Global Gaming Expo, three years ago we agreed to open communications and find opportunities to work together to address common issues we face in the industry. Since our first discussions in 2015, we have sought to break down barriers, making tremendous progress along the way. Together we have: 1. Established regular communication between our organizations, so that both the AGA and NIGA are better informed and united on issues; 2. Worked together to combat the IRS proposal to lower the slot win reporting threshold from $1,200 to $600; and, 3. Continued our collaboration on numerous business issues that affect both sovereign government tribal gaming and commercial gaming operations: a. Advancing anti-money laundering efforts with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN); b. Raising awareness and education around the issue of human trafficking; c. Promoting responsible gambling across the industry; and, d. Educating our industry on the importance of being prepared for security threats. We’ve learned through our successful advocacy and our collaboration in times of crisis like last year’s tragedy in Las Vegas that our industry is strongest when we work together. There are a number of efforts we’re already working on together that will take shape through-
By Geoff Freeman and Ernie Stevens
out 2018, and probably many more that we don’t yet foresee. In the months ahead, NIGA and the AGA will collaborate on: • The potential of a major social policy change regarding sports betting. The outcome of the Supreme Court decision in Christie v. NCAA related to sports betting this spring could have a profound effect on the gaming industry, and we are prepared for each possible outcome. Working together, AGA and NIGA will continue to ensure that all voices are heard as this potential policy change comes closer to reality. • Introducing a joint roundtable for tribal and commercial regulators. Since sensible gaming regulation is vital to the health of every operation, tribal and commercial, we will convene all regulators in a forum where they can hear from the gaming community and share best practices to improve regulation nationally to the benefit of gaming operators. • Enhance our collaborative meetings and engagements. Our two organizations continue to strengthen the tribal gaming education track at Global Gaming Expo and ICE Totally Gaming, and we look forward to this year, where for the first time, NIGA is hosting its annual trade show and convention in Las Vegas, April 17-20. We’ve learned through collaboration that serving our members and working together are not mutually exclusive activities—we can, in fact, do both. Collaborating means seeking opportunities to work together when we can, and respecting that there are times when we cannot. We have worked concertedly to approach complex issues as one united gaming industry with success, and will continue to do so. Understanding one another and collaborating where plausible helps us to make gains that have eluded us in the past. Invariably, when we are in sync with moving the gaming industry as a whole forward, we all benefit and we break down barriers to new opportunity. Geoff Freeman is the president and CEO of the American Gaming Association. Ernie Stevens is the chairman of the National Indian Gaming Association.
DI AMOND
WHE E LNUMBE RSAREST ATI C WHI L EPOCKETSROT ATE !
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FANTINI’S FINANCE
Smaller But Better
While much of the investment attention is focused on the big multi-national gaming companies, the secondary companies are making big gains By Frank Fantini
I
nvestment news is dominated by big companies, obviously and rightly. After all, a Las Vegas Sands with a market cap over $56 billion can be considered of 14 times greater interest than a Churchill Downs at $4 billion or 75 times a Monarch Casino at $750 million. And yet, smaller companies have provided some of the best returns and opportunities. Here are a few casino operators worth noting: • Churchill Downs. Everybody knows Churchill Downs. It’s the Kentucky Derby. It’s the most famous name in horse racing. How many would know that last year, Churchill got more revenue—$333 million— from casinos than from racing, at $268 million? Casinos also provided the biggest chunk of EBITDA at 38 percent versus 24 percent for racing. Casinos will continue to grow, as Churchill is buying Lady Luck in Vicksburg, Mississippi, and Presque Isle Downs in Pennsylvania from Eldorado Resorts for $230 million. Here’s another interesting fact: While many gaming stocks have sold off since January, Churchill is within 1 percent of its high as of this writing. One reason might be that Churchill sold social gamer Big Fish Games for $990 million, then used the proceeds to buy back more than 10 percent of its stock for $500 million, pay down and refinance debt, and buy Presque Isle and Lady Luck. Not bad moves for a company that obviously does more than Derby Day. • Eldorado. The question for Eldorado was whether this family-controlled company could manage the national network of casinos it bought from Isle of Capri. The early answer is, yes it can. Eldorado grew EBITDA 16.3 percent to $91 million by increasing margins 3 percentage points. CEO Gary Carano says there is more to come, given the company is early in the process of rationalizing marketing spending and improving food and beverage operations at the new properties. The sale of Lady Luck Vicksburg and Presque
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Global Gaming Business APRIL 2018
Isle Downs to Churchill Downs also fit with Eldorado’s strategy of focusing on businesses that can generate greater profits. Clearly, Eldorado is benefiting by bringing efficiency to Isle’s operations while maintaining a balance sheet that will permit growth through more acquisitions. • Full House Resorts is a micro cap with a market value of just over $70 million. The story is CEO Dan Lee’s tireless efforts to find ways to grow revenue, even though that was masked by a fourth quarter wracked by bad weather. Over time, Full House will grow. But the big development to look for is whether the city of Cripple Creek in Colorado approves plans to add a luxury-quality hotel at Bronco Billy’s. If it does, Full House can double in size. • Golden Entertainment has not reported fourth-quarter earnings as of this writing, so its big news is a little older, but still worth noting. Golden more than tripled EBITDA with negligible dilution when it bought American Casino and Entertainment properties last year. The purchase converted the mostly slot routetavern operator into a casino company. Threequarters of business now comes from casinos, although slot route and tavern expansions continue on track. Like Eldorado profiting by making Isle of Capri properties efficient, Golden Entertainment has low-hanging fruit with the four acquired casinos—Stratosphere, two Arizona Charlie’s and Aquarius in Laughlin. CEO Blake Sartini and COO Steve Arcana are casino guys as veterans of Station Casinos, now Red Rock Resorts. They are taking over properties that had not been well managed or kept up to date by previous owner Goldman Sachs. Given their pedigrees, Sartini and Arcana can be expected to bring them up to speed. A final note. It isn’t often that a CEO selling stock is good news. But Blake Sartini has been clear since Golden went public several years ago that his goal was shareholder value, not controlling the stock.
Thus, his recent stock sale increased liquidity at thinly traded Golden without diluting shareholders. • Monarch Casino, like Full House, reported a decline in fourth-quarter earnings for what should prove temporary reasons. The underlying business continued to grow, and flagship Atlantis casino continues to benefit from the Reno renaissance. But the stunning figure deep down in Monarch’s earnings news release was the comment by CEO John Farahi that, after the transformative expansion of Monarch Casino in Black Hawk, Colorado, into a destination resort, debt-to-EBITDA will be less than two times. Monarch has financed the project from available cash so far, and has just $217 million left to spend on the $407 million project. Thus, the Monarch expansion could nearly double company EBITDA to $110 million or so, putting Monarch in position to comfortably afford an acquisition. • Tropicana Entertainment is almost a stealth public company. It has no analyst coverage because it is mostly owned by Carl Icahn, leaving few shares for others to buy. It doesn’t help that its flagship Tropicana casino is in Atlantic City, which hasn’t shaken its reputation as being down and out despite steadily growing gaming revenues in recent times. However, those who have bought Tropicana’s shares have been rewarded with a stock nearly doubling in price in the past year. Yet Trop sells for just over seven times enterprise value-to-EBITDA and generated more EBITDA last year at $186 million than it has long-term debt, of $137 million. For those a little insecure about investing in a company owned by wheeler-dealer Icahn, there is some comfort in knowing that he has the most at stake as majority shareholder. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. For a free 30-day trial subscription email subscriptions@fantiniresearch.com.
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AGEMupdate AGEM MEMBER PROFILE
Interblock is a worldwide leading developer and
supplier of luxury electronic table gaming products. Its multi-player gaming devices set industry standards and provide the ultimate in luxury interactive entertainment experiences. The Interblock brand is globally recognized for diamond-quality gaming solutions and technical support in more than 200 jurisdictions. Interblock’s exclusive collection of fully and semi-automated electronic gaming tables and video gaming solutions provides casinos, arcades and gambling halls with superior product performance and their guests with an unforgettable gaming experience. Over the next 12 months, Interblock will continue to diversify its product segmentation strategy. Through technology and innovation, Interblock will be releasing a new portfolio of products designed for all casino segments globally. This has been a multi-year development initiative within our company, which will be released to the industry in the coming months. At G2E this year, Interblock will announce new product segments that address the demand for casinos generating a lower net win per day. These products will deliver the same quality and luxury brand that Interblock is known for, but at a price point that allows all casinos to offer the latest ETG technology. Interblock has partnered with Sun Monticello Casino, Chile’s No. 1 casino, to bring the first-ever Pulse Arena Stadium to Latin America. Located just outside of Santiago, the casino launched “SiSun Gaming Bar” on February 10. The stadium offers an impressive 100-square-meter video wall— the largest in Chile—40 interconnected play stations, three live tables, one automated generator and two video generators. Players have the opportunity to play up to four games from one seat, including roulette, baccarat and multi-hand blackjack. Interblock will have presence at the following exhibitions: Indian Gaming 2018 Tradeshow & Convention, N.O.I.S.E Northeast Oklahoma Indigo Sky Expo, G2E Asia 2018, Belgrade Future Gaming Expo and the Peru Gaming Show 2018. For more information, visit interblockgaming.com.
MARCH 2017 KEY BOARD OF DIRECTORS ACTIONS • Becky Harris, the new Nevada Gaming Control Board chairwoman, met with AGEM members at the March board meeting and gave a short presentation introducing herself. She outlined some of her priorities while also giving the members an overview of her journey to the appointment as the first woman to lead the GCB. Previously a state senator, she brings fresh ideas and looks forward to working with AGEM members and the industry. • The AGA and Reed Expo recently circulated its Business-First Commitment for G2E to ensure some of the issues involving inappropriate booth staff and activities experienced at the ICE Totally Gaming show are not repeated at G2E events. AGEM fully supports the directive that states exhibitors will ensure “employees and entertainers represented on the expo floor will be professional in dress, appearance and manner, prioritizing the company’s business first and reinforcing the level of professionalism, professional learning and networking focus that G2E represents.” • AGEM members recently approved funding to support two key problem gambling organizations. The National Council on Problem Gambling will receive an annual contribution of $40,000. The NCPG serves as a national advocate for programs and services in the U.S. to assist problem gamblers and their families. GamCare, based in the U.K. and the largest provider of problem gambling services, has recently undergone a major change in leadership. AGEM will continue to support the organization with a contribution of £5000. • Dr. Robert Hunter, the founder and driving force behind the Problem Gambling Center in Las Vegas, passed away suddenly on March 9. AGEM has worked closely with Hunter and the PGC for many years, contributing $50,000 annually to support the important work the center undertakes. His efforts to bring awareness of problem gambling to communities around the world will be remembered by colleagues and all those whose lives he touched. • AGEM welcomed two new members in March: PDS Gaming, a finance and lease company that specializes in financing solutions for the gaming industry, based in Las Vegas, was voted in as a Bronze member, and global management and technology consultancy Capco, based in Washington, D.C., was voted in as P an Associate member. In addition, existing members Inspired Gaming and TransAct Technologies were elevated to Silver level, due to increases in gross annual revenue. Overall, the membership total stands at 170 members, an all-time high. • The AGEM-AGA Golf Classic Presented by JCM Global will be held May 1, at the prestigious Shadow Creek course. This will be the 20th anniversary of this important industry event that raises money for the National Center for Responsible Gaming. This year’s event promises to be the biggest and best ever.
AGEMindex The AGEM Index experienced declines across the board during February 2018. The composite index closed the month at 513.47 points, a drop of 26.77 points or 4.96 percent when compared to January 2018. The AGEM Index still reported a year-over-year increase for the 29th consecutive month, and has climbed 162.03 points, or 46.1 percent, since February 2017. During the latest period, two of the 12 global gaming equipment manufacturers reported month-to-month increases in stock price. Ten manufacturers reported decreases in stock price during the month, with one manufacturer posting a double-digit percentage decline.
AGEM
Agilysys
Ainsworth Game Technology Aristocrat Leisure Limited Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC Konami Corp. Scientific Games Corporation Transact Technologies
Exchange: Symbol (Currency)
Stock Price At Month End Feb-18 Jan-18 Feb-17
Nasdaq: AGYS (US$)
11.17
12.00
9.10
ASX: AGI (AU$)
2.03
2.11
1.84
ASX: ALL (AU$)
24.65
23.90
16.61
Taiwan: 3064 (NT$)
12.20
12.00
22.60
NYSE: CR (US$)
92.31
99.94
71.66 3.25
NYSE: EVRI (US$)
7.45
7.74
OTCMKTS: GLXZ (US$)
1.00
1.13
0.56
Nasdaq: GPIC (US$)
9.60
10.17
11.43
NYSE: IGT (US$)
26.50
29.07
26.21
TYO: 9766 (¥)
5,650
6,240
4,740
Nasdaq: SGMS (US$)
44.45
46.65
20.65
Nasdaq: TACT (US$)
13.85
15.00
7.40
Percent Change Index Prior Period Prior Year Contribution (6.92) 22.75 (0.27) 10.33 (0.57) (3.79) 3.14 48.42 (1.13) 1.67 (46.02) 0.01 28.82 (6.32) (7.63) (3.75) 129.23 (0.28) (11.50) 78.57 (0.07) (5.60) (16.01) (0.06) 1.09 (7.17) (8.84) 19.20 (7.93) (9.46) 115.25 (2.84) (4.72) 87.16 (0.12) (7.67) Change in Index Value
(26.77)
AGEM Index Value: January 2018
540.24
AGEM Index Value: February 2018
513.47
AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.
APRIL 2018 www.ggbmagazine.com
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Mystic Lake
Cash Back to Free Play How we got from there to here
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on-negotiable slot credits, or what is more commonly known as “free play,” has emerged as the most often-used tool in the casino marketing arsenal. It has supplanted cash prizes, complimentary dining and invitations to special events as the primary incentive for rewarding player loyalty. Its use, along with its occasional over-use, has had a profound effect on the slot-machine gaming experience, and while free play certainly has a wealth of benefits, both to casino operators and players, its prolific use has had unintended and often deleterious effects on both parties. To understand free play, it is first important to understand how the industry came to rely on it. To do so, one must go back to the earliest days of casino management systems and player reward programs. Until the late 1970s, casinos did not possess electronic methodologies to measure slot machine performance or player participation. In fact, until the introduction of casinos in Atlantic City, slot machine players were not considered to be nearly as important as table game players. That changed with the opening of the Resorts Casino and the subsequent waves of casinos opening on the Boardwalk and in the Marina district. The volume of slot machine handle that was seen in Atlantic City was mind-boggling, and slot machine revenue soon eclipsed table game revenue. While casino operators had previously developed basic manual
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Global Gaming Business APRIL 2018
By Andrew Klebanow methodologies to track and reward table game play, slot machine gaming required electronic methodologies. In Atlantic City, individual operators developed their own internal systems, some of which eventually were acquired by slot machine manufacturers. In fact, most of today’s casino management systems have their roots in Atlantic City casinos. Once casinos were able to link machines to central computer systems that monitored wagering volume, jackpots and hopper functions at the machine level, operators were able to add on rudimentary systems to track individual player activity. Slot clubs were developed so casino operators could identify their more profitable customers and encourage them to return. To get customers to use their cards, operators had to offer some sort of incentive. The term “points” was introduced as an easy-to-understand benefit. Players earned points based on coin wagering volume, and those points could then be redeemed for something of value. While some casinos allowed patrons to redeem their points for logo wear, gift shop purchases or even merchandise in catalogues, the majority of operators opted for cash back, essentially a rebate on slot wagering volume. Cash back was an ideal solution. Merchandise required casinos to keep an inventory of stuff on property and catalogues required frequent updates, as items often changed.
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Accounting standards have evolved, and today the vast majority of free play has moved off the income statement. Free play is now deducted from gross slot revenue to yield net slot revenue. While the free play appears in a contra revenue account, it is no longer an expense on the income statement.
Unlike merchandise, casinos always had a sufficient inventory of cash on hand for point redemptions, and unlike merchandise, a player could always insert the cash they just received back into the slot machine. Casino operators then introduced other marketing programs, most notably in the form of casino “cheques” mailed to players as an incentive to return. These cheques could be redeemed for cash only at the casino’s cashier cage, and more or less guaranteed that a player returning to Atlantic City would stop by the casino to redeem their offer. This became the foundation of today’s loyalty mail programs. Unfortunately, cash was a very real and very large expense that appeared on casino income statements. Points redeemed for cash, direct mail offers redeemed for cash, and cash drawings all had their own line items on the income statement, and combined, made up the lion’s share of casino marketing expenses. Casino leadership closely monitored the cost of each of these marketing incentives and tried to identify the optimal amount to give players.
From Cash to Free Play As cash back became the standard reward for point redemptions and bounce-back mail offers, some casino operators sensed that some of the money that customers received was not getting played back in their slot machines. Casino operators wanted a chance to win some (or all) of the money they gave back to customers. What they wanted was free play, a non-negotiable slot credit that a customer had to cycle through a machine before they could hit the cash-out button. By the mid 1990s, casino operators were clamoring slot system providers for free play. Unfortunately, there were a variety of technical and regulatory hurdles that had to be overcome. Machines from different manufacturers had to have common slot accounting system (SAS) protocols. Regulators also wanted robust technical standards in place since the issuance of free play required a connection to the most valuable part of a slot machine: its credit meter. It was not until SAS 5 protocols were developed in the late 1990s, and tested in each individual jurisdiction, that free play could be introduced and made available on all new slot machines. Then, those new machines had to work their way onto casinos floors through normal replacement cycles. It was not until after 2005 that casino operators were able to offer free play on most, if not all of their machines.
Free Play and the Income Statement Once free play became available, another issue arose. How should free play be treated on the income statement? Should points redeemable for free play, which are essentially a rebate for past gaming activity, remain as an expense on the income statement as points redeemed for cash back once were? Should direct mail offers, which are essentially incentives to return (and a discount on future wagering activity) be treated the same way? Should the
cost of free play be discounted by the casino’s aggregate slot hold to yield a net expense? Accounting firms, regulators and auditors debated these questions. Accounting standards have evolved, and today the vast majority of free play has moved off the income statement. Free play is now deducted from gross slot revenue to yield net slot revenue. While the free play appears in a contra revenue account, it is no longer an expense on the income statement. The effect of this has had a profound impact on casino marketing practices. No longer shackled by very real and large expenses that used to appear on their income statements, casino marketers were free to increase the amount of free play that they could offer, and they have developed a myriad of ways to issue it. Mail offers, points redeemed, new member incentives, drawings, hot seats, even rewards to people sitting next to a jackpot winner became common methods of issuing free play. With the cost of free play removed from the income statement, other marketing expenses fell under greater cost scrutiny. Complimentary meals (comps) is one such example. At one time, a casino viewed cash incentives and comps as more or less equal expenses. With free play removed from the income statement, the cost of comps became more glaring. Add in the fact that most casinos’ food and beverage departments operate at a loss, and comps are now the most expensive component of a casino’s loyalty program. In other words, it is far cheaper to give a customer $30 in free play than a coupon for a $20 meal.
Free Play and Taxation Free play also has affected the amount of gaming taxes a commercial casino may pay to the jurisdiction in which it operates. Prior to the days of free play, a casino would issue cash as an incentive. Customers would in turn either wager that money or put it in their pockets. If they wagered it and casinos won their money back, the casinos were obligated to pay gaming taxes on the very money they gave to their players. Put more simply, casino operators were their own best customers and the states in which they operated reaped the most benefit. The issue of free play and taxation is treated differently by each state and taxing jurisdiction. For example, in Pennsylvania, with an onerously high tax rate of 54 percent, casinos are permitted to deduct free play redeemed from their taxable gaming revenue. Casinos in some other jurisdictions are not. This allows Pennsylvania’s casino operators to extend more generous free play offers than casinos in other states. Free play is used so liberally there that it accounts for nearly 20 percent of Pennsylvania’s gross slot revenue. While Pennsylvania represents an extreme example, the ability to keep free play costs off income statements has led many operators to issue free play well in excess of 10 percent of gross slot revenue. APRIL 2018 www.ggbmagazine.com
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Free Play and Gaming Experiences
Free play has certainly transformed the casino industry. It has allowed operators to find new ways to stimulate repeat visitation and foster loyalty. It provides customers with convenient ways to redeem offers by eliminating the need for paper coupons. It has made casinos appear more profitable by shifting certain marketing expenses off the income statement, and it has allowed casinos in some jurisdictions to reduce their gaming tax liability.
While one can argue that free play has no downside, the transition from cash back has had a number of unintended consequences. Its greatest impact is on slot floor hold. Since the early 2000s when free play was introduced, slot machine hold rates have steadily increased. This was due to a number of factors, including the growing popularity of higher-hold multi-line video reel slot machines, which reduced the volatility associated with traditional reel machines. Nevertheless, slot directors, faced with ever-growing increases in gross wagering handle, comprised of both cash and free play, observed their slot hold percentages going down. To counteract this trend, they would purchase machines with higher slot hold rates or switch out the chips in those machines already on their gaming floors. This in turn impacted players’ gaming experiences, particularly for those customers who did not receive free play offers. A regular customer at a casino in Pennsylvania may receive a free play offer equal to 25 percent of their daily loss, and would not notice they were playing a very high-hold slot machine. On the other hand, a first-time visitor or anyone without a free play coupon would probably not have a favorable experience.
Where Will It End? Taken to a logical progression, one can see free play being used for virtually all casino promotions. Take for example the time-honored “Win This Car” casino promotion. Often casinos will have a month-long promotion, culminating in a grand prize drawing for a free car. Typically, the winner is offered the option of taking the car or a lesser amount in cash. Since the winner is obligated to pay income taxes on the value of the car, a smaller cash option is often the better alternative. Assuming the car has a retail price of $30,000, the winner would probably have a tax obligation of $9,000. The casino would in turn have a promotional expense of $30,000 that would appear on their income statement. By offering the winner a cash option of $20,000, the casino could reduce that expense by $10,000 and the customer could use a portion of the cash to pay their tax obligation, now around $6,000. Alternatively, the casino might offer the winner a third option: $30,000 in free play, with some cap on the amount that could be redeemed on any one day. The advantage to the casino is that the $30,000 will not appear on the income statement. The advantage to the player is 18
Global Gaming Business APRIL 2018
On the other hand, it has driven up slot hold percentages, created inequities for casinos in states that do not allow for the deductibility of free play from their gaming taxes and, for those casinos that do not monitor and measure the effects of all of their free play campaigns, over-spend on marketing incentives.
that the issuance of free play is not recognized as a taxable event. A regular visitor to the casino may find it more advantageous (and entertaining) to gamble with the casino’s money for a few months. The problem again is the amount of free play that will be cycled through the casino’s slot machines will bring down the slot floor’s hold, thus stimulating the future purchase of even higher-hold machines.
What About Measurement? Prior to the age of free play, when cash was the primary tool in casino marketing, each kind of promotion (points redeemed for cash, direct mail offers redeemed, drawings, etc.) had their own line items within the income statement. Each line item was budgeted, monitored, and their results measured. With free play, these line items have disappeared, and with it, the obligation to measure each marketing program’s impact on profitability. Free play has certainly transformed the casino industry. It has allowed operators to find new ways to stimulate repeat visitation and foster loyalty. It provides customers with convenient ways to redeem offers by eliminating the need for paper coupons. It has made casinos appear more profitable by shifting certain marketing expenses off the income statement, and it has allowed casinos in some jurisdictions to reduce their gaming tax liability. On the other hand, it has driven up slot hold percentages, created inequities for casinos in states that do not allow for the deductibility of free play from their gaming taxes and, for those casinos that do not monitor and measure the effects of all of their free play campaigns, over-spend on marketing incentives. At some point, each casino operator needs to step back and recall how cash incentives were once seen as a very expensive way to reward loyalty and how, getting from there to here, they might have lost sight of the true value of free play. Andrew Klebanow is a senior partner at Global Market Advisors, a hospitality and tourism consulting firm. He has worked in the hospitality and gaming industries since 1975, and in the fields of casino marketing and business planning since 1991. Klebanow has served in a number of management and executive positions in the gaming industry and is a periodic lecturer at the University of Nevada, Reno’s School of Continuing Education and Cornell University’s School of Hotel Administration.
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Class Act Ainsworth continues its march across North America with a new focus on Class II, video lottery and other technologies By Frank Legato
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A
insworth Game Technology has spent the past few years blazing a trail across North America. The trailblazing isn’t done. The Australia-listed gaming supplier founded in 1995 by slot-industry legend Len Ainsworth had been in the U.S. market around eight years when a new era dawned—a commitment to expand its North American presence in a big way, illustrated first by the 2014 groundbreaking for a 291,000-square-foot North American headquarters. By the time that state-of-the-art facility opened two years later, the supplier’s march across America was in full swing. The company has combined its R&D prowess—which had made it one of the top suppliers in its Australian home base and elsewhere around the world—with a remarkable North America team that has grown fivefold from the team in place in 2014. The result has been a litany of success in Class III markets across the U.S., with burgeoning sales and a fast-growing game library that includes hits like Pac-Man on the new A640 cabinet, added to a wealth of other high-performing games on the A600 cabinet and legacy A560 cabinet series. It’s one reason Austria’s Novomatic Group last year bought up the 52.2 percent stake in Ainsworth previously held by the founder. While that was big news for both suppliers, other than some transfers of technology and games, the two companies remain completely separate entities, each employing its own technology to move forward in North American markets. But a separate technological prowess is now paying off for Ainsworth in a completely different category of games—Class II electronic bingo-based slots for Native American markets. In early 2016, the company closed on the $38 million acquisition of South Carolina-based Class II supplier Nova Technologies. The purchase gave Ainsworth an instant presence in the Class II market with an installed base of 1,425 units in 11 states, more than doubling the number of Ainsworth units placed on a recurring-revenue basis in the U.S. That Class II footprint has since more than re-doubled, including last fall’s delivery of 270 games at the Pokagon Band’s new Four Winds casino in South Bend, Indiana—the largest single North American installation in Ainsworth’s history. But the Nova acquisition added much more to Ainsworth than a growing Class II footprint—it added a whole new dimension to the company’s overall R&D efforts with the addition of the former company’s highly regarded design team, and executives like David Waters, the former Nova director of technical compliance who became Ainsworth’s director of technical services and hardware with the 2016 acquisition. “We inherited a ton of their talent, including Dave Waters, who
“We’ve migrated our entire Class II system to work on the same Class III hardware that’s offered by Ainsworth—we’ve added the A600 cabinets, the A640 cabinets and the A600 slant to the product line in Class II, and other serverbased gaming.” —David Waters, Director of Technical Services and Hardware, Ainsworth Game Technology
“We have a great relationship with the tribes throughout North America. What I think is very good for that market is that we brought a brand new product very quickly, with a lot of games.” —Danny Gladstone, CEO, Ainsworth Game Technology is now director of technical services for the entire company,” says Mike Trask, director of product management and marketing for Ainsworth, “as well as an incredibly successful game design studio. It’s just opened up the entire Class II world to us, and it is an area we have truly focused on.” The former Nova team’s expertise in Class II systems brought a skill set to Ainsworth that is easily applied to other server-based gaming technologies. This year, Ainsworth moves into central-determination slot gaming and instant racing—and with it, expands its footprint into Washington state and Kentucky, respectively. Last month, the first Ainsworth games went live in Washington state, at the Tulalip Resort Casino. Initial games, including Twice the Diamonds, Mustang Fortune and Cash Cave, use the company’s A600 cabinet. In the Washington market, each supplier’s games are linked to a central-determination server, which essentially provides an electronic version of a scratch lottery, with the prizes from a predetermined central pool displayed as slot reel combinations. In February, Ainsworth announced a long-term agreement with Churchill Downs, Inc., under which Ainsworth will develop historical racing machines for CDI’s Derby City Gaming, an 85,000-square-foot historical racing machine facility opening next fall around six miles from the Churchill Downs racetrack in Louisville, Kentucky. The new gaming parlor will feature 600 historical racing machines along with a feature bar and several food outlets. Historical racing games, also known as instant racing, replay actual historical horse races in HD animation, providing handicapping information and allowing standard track wagers to be made through a slot-like interface before each race. Ainsworth will supply an extensive library of historical racing games on its A600, A600 Slant Top and A650SL Noir cabinets for Churchill. As the former Nova team was being incorporated into Ainsworth— forming an R&D network with development teams in Las Vegas, South Carolina and Sydney—Ainsworth CEO Danny Gladstone continued to build up his North America team. Early 2016 brought Trask, formerly the longtime Scientific Games marketing and communications executive, and Russell Witt, the former project manager and compliance director for Class II supplier Video Gaming Technologies and national director of tribal development for Gaming Laboratories International. Last December, former Scientific Games and WMS senior sales VP Deron Hunsberger joined Ainsworth as senior vice president of sales and marketing. APRIL 2018 www.ggbmagazine.com
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“Our hardware is very robust. That’s kind of been our trademark. But now, with our Class II game offerings, everything’s been fantastic.” —Russell Witt, Director of Class II Operations and Business Development, Ainsworth Game Technology
The complete North America team is now hitting its stride by directing new growth, and new product groups designed specifically for North America.
Booming Class II Ainsworth’s move into Class II was under way well before the Nova acquisition. “We started looking at Class II companies probably four years ago,” recalls Ryan Comstock, Ainsworth’s vice president of finance and operations. “There were several targets that we had, on which had gone through various degrees of diligence. “Nova Technologies ended up being the one that stuck, and in retrospect, it certainly was the best of the options for Ainsworth, and what our current business model is. Ainsworth has a very vast library of game content software, and we’re a very financially sound company. Nova was owned by a private equity group, and didn’t have the financial capital to reach their full potential. So, from that standpoint, we were able to very quickly port their product and software into the Ainsworth cabinets.” Since the acquisition, the Ainsworth R&D team has merged the technology of the two companies. “Nova had a platform and a cabinet, and was doing great work in Class II,” says Waters, one of the key talents to come from Nova. “And after acquisition, we focused our energies on a unified hardware platform. We’ve migrated our entire Class II system to work on the same Class III hardware that’s offered by Ainsworth—we’ve added the A600 cabinets, the A640 cabinets and the A600 slant to the product line in Class II, and other server-based gaming.” Ainsworth’s expansion into Class II is being driven by Witt, who joined Ainsworth in 2016 as director of Class II operations. The new technologies have expanded Witt’s role—he is now director of central-determined gaming operations and business development. Witt says the Ainsworth hardware—the A640 will debut in a Class II version of the hit Pac-Man game at the National Indian Gaming Association trade show this month—has meshed seamlessly with the Class II technology. “Our hardware is very robust,” he says. “That’s kind of been our trademark. But now, with our Class II game offerings, everything’s been fantastic.” Witt also gives credit to the combined team now in place at Ainsworth for the Class II surge. “One of the biggest reasons (for our success) was our product development,” he says. “Our product roadmap is probably one of the most robust in Class II. We’ve been able to quickly assimilate the Nova product and the Nova hardware into the Ainsworth hardware offering, so right out of the gate, we moved into all the hardware groups. An average of 20 games a quarter are being launched, in all kinds of different flavors.” Class II game development is centered in the South Carolina studio, with help from Las Vegas and Sydney in porting all the strongest Ainsworth titles into Class II. “From the Ainsworth side, we take the best of the best, working 22
Global Gaming Business APRIL 2018
with Mike’s team (in Las Vegas) and also our development team in Australia, to bring them over to Class II,” Witt says. “We do development from the ground up at our South Carolina studio. We’re also doing hybrid games, which take the best of the Ainsworth product and the Nova product and put them together.” The development efforts are now bearing fruit in a big way. “We have had key installs in Class II,” says Trask. “For the first time, Ainsworth put games into the Miccosukee casino in Florida. We opened up in other markets across the country, and most recently and most significantly, of course, we put in 15 percent of the floor in the new Four Winds casino, and that’s all Class II.”
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AnyBet, Any Time Those Class II sales stand to get yet another boost from the development team, in the form of a revolutionary patent-pending technology called AnyBet, introduced in January on 80 Class II games at Jena Choctaw Pines Casino in Dry Prong, Louisiana. AnyBet offers every player on a casino floor the chance to win mystery progressive jackpots with, as the name says, any bet. It is a first for the Class II market. The 25- and 30-line AnyBet linked jackpots start at $250 and $5,000; the 40- and 50-line AnyBet links start at $500 and $10,000. The 80-game link at Choctaw Pines includes 72 new Ainsworth games. “AnyBet is being put on dozens upon dozens of our games, no matter the cabinet,” says Trask. “What is able to link them together is the line count, so we can link dual-screen games with single-screen upright cabinets, slant tops, and so forth.” Trask says that while a minimum bet is all that is required to win one of the progressives, higher bets mean more chances to win. “Minimum bet affords one chance to win, but maximum bet is going to give you 10 chances to win,” he says. “As people bet up, they get more chances to hit an AnyBet jackpot.” The technological innovation doesn’t stop with the $5,000 and $10,000 top prizes, either. Trask notes that the minor jackpots, with resets of $250 and $500, stop incrementing at $1,199 for player convenience, but the electronic meters keep incrementing as a “reserve fund” to seed subsequent jackpots. The Jena Choctaw Pines installation was followed by a second link as part the big order at Four Winds in South Bend, and a third at the Desert Diamond casino in Glendale, Arizona. Soon to follow will be a launch of AnyBet into Oklahoma, into Alabama for the Poarch Band of Creek Indians, and into Texas for the Kickapoo tribe’s Lucky Eagle casino. Trask says that while the top jackpot theoretically hits in the neighborhood of $14,000, some of the installations have seen top prizes rise as high as $18,000. “The players have really picked up on it,” says Witt. “Mike’s team did a tremendous job marketing and branding. We feel we’ve got a product from a hardware and a software standpoint that really puts us in the game now with our major competitors.” “AnyBet was a real winner for everyone involved,” comments company CEO Gladstone. “The players will like it, definitely the casinos will like it as the revenues are increasing, and the popularity of the game looks good.”
On to Washington and Kentucky The same technology team that produced Class II technology like AnyBet is now opening up an entirely new market for Ainsworth in the Washington state central-determination video lottery. “The Washington market was definitely something that we looked at as a possibility before the acquisition of Nova,” says Witt. “The former Nova team felt very strongly that they could take that project on, and be able to create a central-determined product that met the standards for Washington Class III.” “We installed our first lot of machines in Washington before Christmas, and we expect to put more machines into Washington this year,” says Gladstone. “Washington’s really a valuable market, and we’re looking forward to giving the operators some variety in our games.” Gladstone adds that Ainsworth is not an unfamiliar brand to Washington players. “We have a history in Washington, having sold some games there many years ago, back when we were first kicking the company off,” he says. “Some of those games are very popular throughout Washington state, so the Ainsworth product and game is well-known up there.” 24
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“AnyBet is being put on dozens upon dozens of our games, no matter the cabinet. What is able to link them together is the line count, so we can link dual-screen games with single-screen upright cabinets, slant tops, and so forth.” —Mike Trask, Director of Product Management and Marketing, Ainsworth Game Technology
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Comstock says the Ainsworth team’s expertise in Class II system technology allowed the adaptation to the Washington market, but also into the historical racing business. “The systems technology from the Nova acquisition has allowed us to enter into other parallel markets at the same time,” Comstock says. “One example is the Washington electronic scratch-ticket system, but more recently, we announced the partnership with Churchill Downs, and we’re venturing into the historical horse racing market in Kentucky. Those projects would not have been possible without the Nova acquisition. It’s a bigger story for us than just what our install base is today. The story is the doors that have opened for us in other markets as well. “We were extremely fortunate to have some talented people from the Nova Technologies acquisition with the kind of skill set to build those server-based systems, and have a deep understanding of those math models. It certainly made the process a lot quicker and a lot more efficient than would have been otherwise possible pre-Nova technology, when Ainsworth simply just did not have the skill set or technology backbone to start building server-based systems.” Like the move into Washington, the Churchill Downs historical racing agreement is a case of Ainsworth being in the right place at the right time, with the right product. “The partnership with Churchill Downs is fantastic,” says Gladstone. “They are great people to work with; I believe they would say the same about us. We’ve done this together; we worked on this using the technologies that we have. “We believe we’re going to produce a great product, that will certainly make people stand up and look and say ‘wow.’ It’s all on our latest platforms. We’ll start with at least 600 units when the operation opens sometime later this year. It’s a really exciting project, and we’re very pleased to be involved with a company that’s the stature of Churchill Downs.”
Key NIGA Ainsworth has had a presence at the annual NIGA Indian Gaming trade show as long as the company has been in North America, but this month’s show is perhaps more important for the supplier than any of the past years. “The NIGA show certainly takes on a lot greater significance when you have this Class II product that the tribes are increasingly interested in, including a number of tribal properties that are Class II only,” says Comstock. “Previously, we were just offering the Class III product at NIGA, but we now have a full suite of Class II products and more.” Adds Hunsberger, “We’ve always had a commitment to the tribal market, and early on, Ainsworth had a lot of success working in the tribal community. So, it’s a natural fit as we move into other markets that are tribal-centric, like Washing-
“We’ve always had a commitment to the tribal market, and early on, Ainsworth had a lot of success working in the tribal community. So, it’s a natural fit as we move into other markets that are tribalcentric, like Washington, that we have these products to display.” —Deron Hunsberger, Senior Vice President of Sales and Marketing, Ainsworth Game Technology 26
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“Previously, we were just offering the Class III product at NIGA, but we now have a full suite of Class II products and more.” —Ryan Comstock, Vice President of Finance and Operations, Ainsworth Game Technology
ton, that we have these products to display.” “We have a great relationship with the tribes throughout North America,” adds Gladstone. “What I think is very good for that market is that we brought a brand new product very quickly, with a lot of games. From our point of view, we are giving the Class II market a bit of variety in games, cabinets and style. We’ve already released the 600 cabinet into the market, which is technically advanced compared to some of the other things in Class II. The A640 release, which is a 40-inch, single-screen machine, is going to carry the Pac-Man game. So we think given the success across American casinos already with Pac-Man, we’re sure this is going to be a winner for all the tribes in Class II.” Gladstone adds that the company’s track record in Class II is getting better all the time. “We’d like to grow our footprint; that’s stating the obvious,” he says. “With these new products, we will be there to take up a bit more floor space. Getting those 290-odd machines into the Four Winds, we’ve proved that we can supply at the large end—and we’ve got a very, very large game library. Since Ainsworth made the acquisition, our people have developed over 80 games for Class II, in under two years.” The recurring revenue from Class II is the latest in several years of success for Ainsworth in North America. “We’ve had success with our proprietary games; Pac-Man’s been a real winner for us, and the recurring revenue out of Class II is lovely,” Gladstone says. “We’ve still got a long way until we can can get a foothold in recurring-revenue (currently at around 10 percent of games sold). We don’t expect to be given anything. We know we’ve got to get it on merit, and we’re going to do that by product performance. We’ve also got a fair bit of product across Latin America on participation, but we’re still a sales-driven company. We’ll increase our participation with more titles.” Growth in North America for Ainsworth is accompanied by the company’s consistently strong growth in Latin America. Moreover, the new Class II surge is incremental business for a company that already was growing quickly in Class III markets. “We believe we’ve got a lot of organic growth in Class III and Class II, but our goals to achieve that growth are going to be driven by performance,” says Gladstone. “So, we’re really ramping up the number of games, and trying to ramp up the quality of games so we can compete. “There’s a very tough group of competitors out there; it’s a tough place to play. So, you’ve got to be on your game.” Gladstone reiterates the key ingredient to Ainsworth’s success as the expertise of the team the company has assembled. “We hired good people, and the good people performed,” he says. “Companies are nothing without their staff, and we’ve got a good sales team across the whole of the Americas. We’ve got a very effective team of production, game development and software engineers in the Las Vegas office. “It’s a pretty exciting time for us, and we’re looking forward to the future. Because there’s more to come.”
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Blockchain:
The Intersection of Gambling and Technology With funding and payment processing advantages, can this technology overcome regulatory challenges? By Mark Balestra
T
he intersection was inevitable. Charging down one road comes gambling, a business where money is constantly changing hands and an industry that is reliant on assurances of fairness and always hungry for innovation. Down the other comes the blockchain, a technology that facilitates the movement of money in a transparent, secure environment that could ultimately reinvent the way offerings in the digital gaming space are designed and brought to market. If you are intimately familiar with the gambling industry, you have undoubtedly heard the word “revolutionary” attached liberally to new (and sometimes not-so-new) ideas. It is a label that is dismissed almost reflexively. But blockchain technology presents a rare instance, like in-gaming betting or the hold-card camera, where the term aptly applies. Amazingly, a couple of years into the “revolution,” the prominent question in the gambling industry remains: “What is it?” Many consumers and entrepreneurs alike, despite being entrenched in the movement, have given up on understanding exactly what it is. The basic explanation is that a blockchain is a digital database that serves as a ledger distributed across a peer-to-peer network of computers. It yields a continuously growing set of records (aka “blocks”), each containing details of a time-stamped transaction and linked to data from the previous block. Each new transaction is authenticated across the network by “miners” using specialized equipment. Looking at it more abstractly, we are accustomed to data in the digital space going through centralized channels. Even peer-to-peer betting involves transactions that flow through host computers. Gaming software is housed on servers, and money is channeled in and out of banks by payment processors. With blockchains, however, data flows from peer to peer without going through centralized channels.
Funny Money At the onset, blockchain technology was utilized as cryptocurrency, with Bitcoin being the first prominent solution available to the public. This in itself had
great utility in the internet gaming industry, which has forever been plagued by payment processing difficulties. As with all innovations in the space, the early adopters were offshore betting sites based in jurisdictions with minimal regulatory oversight, with larger highly regulated services like William Hill and Paddy Power eventually getting in the game upon regulatory approval. But for digital businesses—including gambling operators—blockchain technology offers much more than just a means of paying for products and services. Since the infancy of iGaming in the mid ’90s, when companies commonly raised money by acquiring the shells of corporations listed on smaller exchanges, the industry has sought creative means of tapping startup capital. Introducing blockchain-based tokens to the open market, aka the initial coin offering (ICO), encapsulates that spirit. Gambling ICOs are now commonplace, taking place on a seemingly weekly basis. Business Insider reported in January that the gambling industry now raises more money via ICO than any other industry. ESports startup Unikrn raised over $30 million in October 2017 through an initial coin offering with a presale backed by Mark Cuban. According to Crowdfunding Insider, a token sale through which Dragon Corp. is selling cryptocurrency to be used as gambling chips at a yet-to-be-built floating casino in Macau could end up being the largest ICO ever. It is worth noting, however, that gaming ICOs run the risk of a headon collision with securities law. In the United States, for example, companies running ICOs have to be extremely careful to either register their tokens as securities or structure them to be exempt from the registration requirement.
Powerful Platforms Beyond blockchain technology’s utility as a funding mechanism, online gaming sites are now offering their services entirely through blockchain platforms. The DAO.casino protocol, for example, seeks to replace “traditional” centralized online casinos with gambling systems based on collabo-
A blockchain is a digital database that serves as a ledger distributed across a peer-to-peer network of computers. It yields a continuously growing set of records (aka “blocks”), each containing details of a time-stamped transaction and linked to data from the previous block. 28
Global Gaming Business APRIL 2018
T r i S t a t i o n byGambl i t
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COMI NGSOON!
COMI NGSOON!
COMI NGSOON!
Cont ac tc as i no@gambl i t gami ng. c om t ol ear nmor e. ©2016, 2017, 2018Gambl i tGami ng, LL C. Al l Ri ght sRe s e r v e d. Gambl i t , t he" G" f ac e , Smoot hi eBl as t , Mat c h3v ol ut i on, L uc k yWor ds , andTr i St at i onar et r ade mar k sofGambl i tGami ng, LL C. Cutt heRopei sar e gi s t e r e d t r ade mar kofZe pt oLabUKLi mi t e d. DOODLEJUMPi sar e gi s t e r e dt r ade mar kofLi maSk y , LL C. ©2017Hal f br i c kSt udi os . Al l r i ght sr e s e r v e d. Je t pac kJoy r i deandBar r ySt e ak f r i e sar er e gi s t e r e dt r ade mar k sofHal f br i c k St udi os .© 2016Pr odi gyDe s i gnLi mi t e d.I nt ot heDe adandBr e ak ne c kar er e gi s t e r e dt r ade mar k sofPr odi gyDe s i gnLi mi t e d.Cat apul tKi ngi sar e gi s t e r e dt r ade mar kofWi c k e dWi t c hSof t war ePt yLt d.
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The biggest challenges for operators are regulatory, most notably the know-your-customer (KYC) hurdle. While the transactions on a blockchain are transparent, and therefore verifiable, the users are anonymous, and not having information on customers is unacceptable from a regulatory standpoint.
rative participation of multiple parties. Payouts would be in DAO.casino’s native Ethereum-based cryptocurrency, which hit the open market in June 2017. Independent developers would provide the games as well as the smart contracts that facilitate the transactions, while platform operators would provide the interfaces for playing the games. Players would receive predetermined portions of the tokens accumulated by game contracts immediately upon completion of each game. In some cases, a “referrer” would receive a portion of the payout for acquiring the player. The “revolution” could benefit players and the industry alike. The technology enables the execution of random number generation through entirely decentralized platforms. The transactions on the blockchain are transparent to other parties using the network and are, therefore, verifiable. Further, all blockchain data transfers are protected by powerful cryptography and are almost entirely shielded from human error, tampering and removal. And in addition to eliminating a potential source of cheating, the absence of an operator removes third-party fees. On the other hand, the decentralization of transactions—particularly where the entire platform exists on blockchain—means that the customer has nowhere to point the finger if he or she is cheated. And while blockchain technology greatly diminishes the likelihood of something unsavory happening, it does not entirely eliminate the possibility of fraud.
Regulatory Hurdles The biggest challenges for operators are regulatory, most notably the know-your-customer (KYC) hurdle. While the transactions on a blockchain are transparent, and therefore verifiable, the users are anonymous, and not having information on customers is unacceptable from a regulatory standpoint. Preventing money laundering, underage gambling and problem gambling without KYC tools is essentially impossible. The challenge, then, lies in devising regulatory mechanisms that can be implemented in a decentralized environment. Regulators must nail down the location of whatever equipment is used to deliver the games. If random number generation and record storage are decentralized, they cannot be easily audited. Even if it is possible to locate multiple computers, what happens when the equipment spans multiple jurisdictions? Additionally, regulators would not be able to void bets when cheating occurs. And which jurisdiction’s laws would apply in the case of a dispute? Beyond gambling law, how would a blockchain casino comply with data protection laws? The KYC problem is much more daunting. Ultimately, the industry needs a means of assigning centralized components for accountability to 30
Global Gaming Business APRIL 2018
exist without compromising the advantages of using blockchain technology. But if these challenges can be properly addressed, blockchain technology could make certain tasks easier than ever for regulators. All data available to the regulated operators, for example, would also be available to the regulator. The technology also allows for real-time auditing and makes it easier to trace transactions.
Unstoppable Momentum Perhaps the most compelling reason to regulate blockchain gambling, however, is that it will exist regardless of the law. Consider how long it took U.S. lawmakers to figure out how to contain online gambling and then consider that the enforcement of prohibition relies on going to the sources of funding. This becomes impossible in the decentralized environment. The United States has not directly tackled the issue. The Unlawful Internet Gambling Enforcement Act prohibits “acceptance of any financial instrument for unlawful internet gambling.” The language is probably broad enough to cover cryptocurrencies, but again, an enforcement mechanism for banning blockchain gambling is non-existent. The United Kingdom Gambling Commission (UKGC) addressed the issue by amending its license conditions to include “digital currencies” in its list of allowable cash equivalents. The language allows U.K.-licensed sports books to fund their accounts and receive payment using Bitcoin, although sites that are not licensed by the UKGC are not authorized to provide Bitcoin gambling to U.K. customers. The most progressive jurisdiction to date has been the Isle of Man, where the Gambling Supervision Commission approved cryptocurrencies in 2016. The Malta Gaming Authority, meanwhile, is undergoing a study that will propose a regulatory framework for dealing with cryptocurrencies. Ultimately, regulators will have to undergo a balancing act between difficulties with KYC and superior technology for assuring fairness and efficiency. But in the end, decisions that would otherwise be tough to make will become elementary upon facing the impossible task of enforcement. Blockchain will consequently be a fixture for years to come. Mark Balestra is a special counsel for iGaming law for Segev LLP. Based in St. Louis, Balestra has guided clients in a variety of capacities in the gaming and gambling industry for nearly 20 years. Balestra was named one of Global Gaming Business magazine’s “25 People to Watch” in the worldwide gambling industry.
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OPERATIONS
Chasing Goldilocks Our ride on the skill-game rollercoaster
T
he year 2017 marked when casino games representing the first true intersection of skill-based interactivity and gambling finally started appearing on casino floors in multiple jurisdictions. GameCo released its VGM cabinets in New Jersey and later in Connecticut; we at Gamblit Gaming deployed our Model G multi-player interactive tables and TriStation multi-game systems to Nevada and California locations. A variety of skill-based offerings—both by up-and-coming startups and industry heavyweights—cropped up at the Global Gaming Expo, and just recently, Competition Interactive debuted its skill-based racing game at Planet Hollywood. It’s clear that each of these products, launches and milestones involved years of preparation and the extraordinarily dedicated work of many people. While I can’t speak for all these projects, I can certainly offer a cursory peek into our own journey, which has proven to be far more challenging than we could have anticipated. The bulk of our released content so far has actually been developed internally by the company’s own Game Studio. The studio came into being about four years ago with only a handful of people. Its original mission was to function as an R&D lab—to act as a test bed for integrating with our proprietary gaming platform and to create prototypes to illustrate the process of turning interactive games into viable gambling propositions. As some of these early efforts were met with an enthusiastic audience reception, the team expanded to focus on full-scale content development. Today, the Game Studio consists of 21 very capable and creative people across a range of disciplines: engineers, artists, designers, mathematicians, producers and QA. It functions as a flat hierarchy centered around trust, and has a somewhat unconventional operational philosophy that strives to amplify the inherent strengths of small, agile teams at the expense of more formal corporate processes. Just in the past two years, we have designed, developed and produced 17 titles for our two
32
Global Gaming Business APRIL 2018
By Edvard Toth
platforms. Six of these titles have already launched, with the rest scheduled to roll out over the course of the year, starting with two new games based on the iconic Deal or No Deal license. We embarked on a journey of developing an entire catalog of diverse content equipped with plenty of prior expertise in creating fun, polished, emotionally engaging game content, but finding workable ways to apply all that to the context of a new kind of casino gaming still turned out to be a humbling experience neatly wrapped into a monstrous learning curve. Releasing some of our earliest content as realmoney mobile apps in the United Kingdom represented an important turning point, as it allowed us to field-test our assumptions by collecting large amounts of player behavior data. Many “aha!” moments ensued, and the experience also strengthened our commitment to continuous iterative improvement. Of the many quirks involved in designing these types of games, probably the most characteristic one is the constant need to reconcile factors which normally tend to be at odds with one another: chance versus skill, determinism versus player agency, wagering frequency versus play experience, simplicity versus lasting engagement and so on. When skill is thrown into the mix, it comes bundled with the natural expectation that better performance must equal better rewards, which in turn invokes the need for some form of quantification of player skill to determine the appropriate outcome. This happens in an intuitive and elegant manner in head-to-head multi-player games (such as our Model G tables). As the skill-game and the wagering proposition complement each other seamlessly in multi-player games, players measure their skill against the skill of other players, and if they prevail they collect the prize. This type of zero-sum arrangement presents another unrelated set of challenges of its own, but it does yield the kind of high-energy, unabashedly competitive social experiences these games are known for. However, things get a lot trickier once we venture into the realm of house-backed single-player
games. Obviously, players can’t just be showered with big payouts every time they do well, and ironically, even effectively defining what “doing well” exactly means is no trivial task. If the game is balanced to cater to one particular skill level—or if the impact of skill on the results is too pronounced—the hold may end up fluctuating unpredictably, tracking ebbs and flows in the aggregate skill performance of the player population. Adjusting returns based on comparing the player’s performance to historical aggregate player performance could address this conundrum, if it wasn’t for the fact that it would also qualify as noncompliant adaptive behavior. Ouch. If the significance of skillful play is overly marginalized in an attempt to keep chaos at bay, the entertainment experience invariably turns dull and sterile. This is the area where the tug-of-war between opposing factors truly intensifies, and the audacity of skill ends up being counterbalanced by the sobering influence of cold, hard math. When things ultimately converge in a proverbial “Goldilocks zone,” very compelling experiences can manifest. The ingredients of this process are highly specific to each game, but one thing successful solutions tend to have in common is that they manage to decouple the player’s evaluation of their own performance from the anticipation of a guaranteed reward. After a lot of trial and error, player observation, data collection and tinkering with various abstraction techniques, reward mechanics, degrees of player agency and math models evolving in parallel with the games’ interactive core, we believe a set of workable formulas and best practices is emerging. While it’s very encouraging to witness players— particularly crowds of previously elusive younger players—enjoying our games, we are still in the rapid improvement phase of this new market, and we continue to obsess over its many building blocks that simultaneously present great opportunities and demand increasingly better solutions.
Edvard Toth is vice president of game studio and creative for Gamblit Gaming.
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THERE’S A HELIX FOR EVERY PLAYER ™
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READING BETWEEN THE
LINES
Golden State gambling in a regulatory quandary BY DAVE PALERMO
C
alifornia’s apparent inability to police its $1.8 billion card-room industry is angering American Indian tribes and jeopardizing future expansion and regulation of what is arguably the country’s largest and most diverse statewide gambling industry. Tribes are threatening litigation against state regulators and card rooms over the legality of banked games being played in California’s 87 card rooms. The card rooms have over the past decade been the target of more federal fraud, loan-sharking and money laundering investigations than any segment of the nation’s legal gambling industry. A six-year-old dispute between tribes, card rooms and state regulators boiled over at a February meeting of the California Nations Indian Gaming Association (CNIGA), a group of 34 casino and non-casino tribes. “It’s time to quit messing around with these guys,” Bo Mazzetti, chairman of the Rincon Band of Luiseño Indians, said of the California Gambling Control Commission (CGCC) and its enforcement agency, the Bureau of Gambling Control (BGC). “Tribes need to get together, file a lawsuit and be done with it,” Mazzetti told a cheering crowd of 400 attendees gathered at Harrah’s Resort Southern California near Temecula. Potentially landmark litigation could have a major impact on the future of what is arguably the nation’s largest and most diversified gambling empire with casinos, card rooms, parimutuel racing and a lottery generating more than $11 billion a year and employing nearly 100,000 workers.
Card-Room Conundrum California over the past decade has been struggling with gambling expansion, including online poker, sports betting, daily fantasy sports (DFS) and wagering on the internet. Tribes at the CNIGA conference called for a clear policy on all forms of gambling expansion. Meanwhile, legislators question the lack of resources needed to regulate card rooms and provide oversight of tribal government gambling.
Critics contend the state’s politically bifurcated regulatory system—a BGC under Attorney General Xavier Becerra and a GCC under Governor Jerry Brown—failed to adequately police the card-room industry as it evolved from strict poker to highstakes versions of blackjack, pai gow poker and other games more commonly offered at Nevada casinos. Perhaps more disturbing, Indian tribes and others accuse regulators of acting on behalf of the industry in crafting regulations aimed at facilitating the card-room evolution to banked card games in an effort to compete with the state’s $8.4 billion tribal casino industry. Tribal attorneys contend CGCC regulations governing third-party proposition player (TPPP) banking firms and BGC game rules on rotation of the deal—directives enabling the facilities to offer what are known as “California/Asian” games—conflict with state laws and business codes. California/Asian games also fly in the face of a constitutional amendment giving tribes the exclusive right under tribal-state regulatory agree-
“Tribes need to get together, file a lawsuit and be done with it.” —Bo Mazzetti, chairman of the Rincon Band of Luiseño Indians, advising action against illegal card-room games
Potentially landmark litigation could have a major impact on the future of what is arguably the nation’s largest and most diversified gambling empire with casinos, card rooms, parimutuel racing and a lottery generating more than $11 billion a year and employing nearly 100,000 workers. 36
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California’s bifurcated gaming regulatory system has Attorney General Xavier Becerra responsible for one body—the Bureau of Gambling Control—and Governor Jerry Brown responsible for the other— the California Gambling Control Commission.
ments, or compacts, to operate casino gambling—specifically, slot machines and banked and percentage card games. A laissez-faire regulatory climate by the GCC and BGC has enabled many of California’s 87 licensed card rooms to evolve into pseudo-casinos with hundreds of table games and upscale restaurants and hotels. “The state seems to have this Faustian bargain with the card rooms—if you provide jobs and taxes, we will not fund an appropriate regulatory environment, and you can open up a great many additional sources of revenue,” former CGCC Commissioner Richard Schuetz says. “I always was of the impression that many in the state had the attitude that the tribes make enough, and let’s give the card rooms a break—even if it does totally contort the law.” Belated GCC and BGC efforts to walk back regulations to comply with state laws and the constitution promise to be politically problematic. The card-room industry now generates roughly $1 billion a year in gross revenues, employs some 22,000 workers and contributes millions of dollars in taxes to several municipalities. Card-room advocates contend getting regulations to comply with state law could cripple their business. “Every card room has an assemblyman and senator in its district,” CNIGA Chairman Steve Stallings says. “Then they have the cities and the impact on tax revenues and employment. “The fact this has gone on for so long and the fact they have built bigger facilities and hired more employees creates a political and economic justification to let this go on.”
An Official Veil of Secrecy Brown senior aide Joginder Dhillon, state Attorney General Xavier Becerra and his predecessor, U.S. Senator Kamala Harris, and officials with the GCC and BGC have declined several requests for interviews. That’s not surprising. Much of the GCC and BGC criticism stems from the bifurcated nature of the system, a product of the Gaming Control Act of 1997. The system is the only one in the country under two elected officials, the governor and the Office of the Attorney General. “One of the mistakes made was this concept of bifurcating the system under two constitutional models,” says a former high-ranking state official who worked with Attorney General Dan Lungren in drafting the act. “They said it was trouble,” says the official, who requested anonymity. “They said, ‘You guys should get rid of it.’ You end up with two agencies competing for jurisdiction and resources, both wanting to do the same things and not trusting each other. “It hurts the industry. I’ve come to believe that probably is true.” Brown in a 2012 budget shuffle compounded the problem when he shifted the commission’s investigatory, auditing and compliance duties to the AG’s Department of Justice, despite the fact Harris and Becerra had left the
BGC poorly funded and lacking staff and resources. Schuetz, former GCC Chairman Richard Lopes and other industry experts say the system is fraught with problems. CGC commission vacancies are filled with career bureaucrats with scant experience in gambling law and regulations. Meanwhile, there has been a high turnover of BGC agents and supervisors. Civil Service and union rules limit efforts to hire experienced regulators from outside the DOJ. “It’s very difficult to get the right person in the right job,” Lopes, a former high-ranking DOJ official, said before his retirement in 2014. BGC supervisory agent Tyler Burtis at February’s CNIGA conference acknowledged there have been difficulties staffing the BGC with other than sworn law enforcement officers lacking experience in regulatory compliance. “We had issues,” Burtis said. “We all knew we had issues. There was always talk that we were knuckle-dragging narcotics agents that don’t know about gambling. “We’ve had a solid crew of people for several years now. They’ve all gone through training. It used to be when we first started we were hiring people on the way out. We now have a full staff and a list of people waiting to get in. We’ve come a long way.” But the regulatory morass created by the state’s bifurcated system is problematic. “California is one of the world’s largest gaming markets with diverse constituents, including tribes, racetracks and card rooms,” says Mark Lipparelli, former chairman of the Nevada Gaming Control Board. “That it does not have a consolidated gaming regulatory body presents tough challenges and complexities.”
Seeking a Solution Tribes in recent meetings with Brown and Becerra’s staffs have tried without success to mediate the dispute over card-room games. “Tribal leaders pressed the flesh and said, ‘This is a priority,’” lobbyist Afrack Vargas told attendees at the CNIGA meeting. “We will continue to push the issue and explore all the options, which could include legislation, which could include a lawsuit,” Vargas said, or any measure “to ensure the card rooms are following the law.” Meanwhile, Dhillon is reporting meeting in private with the Assembly and Senate Government Organization Committees in an effort to devise a legislative solution to the tribal/cardroom dispute that would head off litigation. “The governor’s office and the GO chairs are trying to come up with a
Artichoke Joe’s was just one of almost a dozen card rooms that have been charged with violating money laundering regulations over the past several years.
APRIL 2018 www.ggbmagazine.com
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“I always was of the impression that many in the state had the attitude that the tribes make enough, and let’s give the card rooms a break— even if it does totally contort the law.” —Former Gambling Control Commissioner Richard Schuetz
grand solution, to incorporate all of this,” says a tribal source who requested anonymity. “I think that’s a pipe dream. It’s not going to happen.” Tribes for nearly six years pressed GCC and BGC officials to get card-room regulations in compliance with state law, and their constitutionally guaranteed exclusivity to operate casino gambling. The initial anticipation was the issue would be quickly resolved. “That was the first thought that I had, that this was an issue that was going to be so easy to explain,” tribal attorney Jeffry Butler says. “Just enforce the law. That’s all we’re asking.” Nothing came of promises by Dhillon, Harris and more recently Becerra to look into the matter. The GCC for three years has pledged to revise TPPP regulations. The AG has failed in efforts to force card rooms to rotate the deal as required by law. The profitable use of TPPPs by card rooms conflicts with Business and Professions Code Section 19984, which states “in no event shall a gambling enterprise or the house have any interest, whether direct or indirect, in funds wagered, lost, or won.” California Penal Code 330 prohibits banked and percentage games. Meanwhile, game rules adopted by the BGC appear to violate the intent of California Penal Code 330.11, which states “the player-dealer position must be continuously and systematically rotated” among players. The deal is seldom if ever rotated in California/Asian games. Business and professions codes allow card rooms to contract with banking services, which profit from a statistical advantage in the pay of the games. Twenty TPPP firms are listed as licensees on the GCC website. But the codes do not define how contracts are to be structured and what services can be provided by the TPPPs—advertising, supplies, etc.—without violating state law prohibiting card rooms from having a “direct or indirect” benefit from the outcome of wagers. Tribal lobbyist David Quintana is skeptical of a solution—legislative or otherwise—that would prevent tribes from pursuing legal action. Walking back regulations to comply with state law would likely cripple the card-room industry. “One of the problems is that people are trying to seek a solution that more or less keeps the card rooms whole,” Quintana says. “But you can’t keep them whole when they achieved their success by playing games that are unconstitutional. “The solutions are sympathetic to any losses the card rooms would suffer. But the games were, in our opinion, not level. Being sympathetic is not in the equation.” Meanwhile, the political ramifications will likely prevent any serious reformation of the dysfunctional regulatory system. “This entire system—this bifurcated system with the governor’s of-
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fice and the Attorney General’s Office—the way it is set up leads to this problem,” Quintana says. “It’s the classic finger-pointing conundrum. Each regulatory body can point at the other one, ‘Oh, that’s their problem.’ “You need one regulatory body. Then that regulatory body can’t point the finger at somebody else. That’s what we’ve seen for the past eight years.”
‘Worst-Regulated Industry’ Schuetz, who has operated commercial and American Indian casinos in several states, says card rooms constitute “the worst-regulated segment” of the nation’s gambling industry. “I’m not saying that to be mean,” Schuetz said. “I’m saying that to be honest. We need to tighten up the regulations.” Consultants and other industry experts agree with Schuetz. Efforts to draft and enforce internal operating controls for the California/Asian games have been woefully inept. Much of the lack of financial transparency and internal operating controls center on TPPPs. Nefarious business arrangements between TPPPs and card rooms have been blamed for at least a few of several recent federal money laundering, skimming and loan-sharking investigations. Beginning with Artichoke Joe’s and the Oaks Card Club in suburban San Francisco in 2011, there have been more federal and state anti-money laundering and skimming raids, investigations and shutdowns of card rooms than the nearly 1,000 commercial and tribal casinos nationwide. The list includes Hawaiian Gardens, Bicycle Club and Normandie Club in suburban Los Angeles, M8trix Casino in San Jose and the Palomar and Seven Mile card rooms near San Diego. Lucrative TPPP partnerships enable card room operators to stop taking collection fees on the wagers. Dropping the fees enable clubs to lure high rollers from tribal casinos. Tables account for up to 25 percent of a tribal casino’s revenues.
“The fact this has gone on for so long and the fact they have built bigger facilities and hired more employees creates a political and economic justification to let this go on.” —CNIGA Chairman Steve Stallings
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“That (California) does not have a consolidated gaming regulatory body presents tough challenges and complexities.”
2 0 0 0 AT T O R N E Y S | 3 8 L O C AT I O N S W O R L D W I D E˚
—Former Nevada Gaming Control Board Chairman Mark Lipparelli
Tribes Caught by Surprise It’s been more than three years since BGC chief Robert Lytle brought down a web of political corruption and official misconduct on the state and its regulatory system. Lytle in December 2014 was charged in a formal accusation by the state Attorney General’s Office with violating conflict of interest and confidentiality laws in connection with his consulting work for a card room targeted in a $119 million skimming investigation. It was also disclosed that Lytle, later stripped of his card-room ownership and consulting licenses, issued an opinion letter days before retiring from the BGC in 2007 that the player/dealer position in California/Asian games needed not be rotated, but merely offered each player at the table. The Lytle opinion, which meant untold millions of dollars to the card rooms, angered the tribes. The AG would later rescind the opinion, but it remains a guiding directive for much of the industry. Meanwhile, card rooms in the Los Angeles area began stopping the collection fees in California/Asian games, clear evidence they were profiting off TPPPs in apparent violation of state law. Although long suspicious the BGC exhibited a sympathetic bias toward the card rooms, the tribes were nonetheless not at all concerned with the industry’s evolution toward banked games. They made light of the industry’s inability to control its internal operations and the GCC and BGC’s failure to regulate and enforce gambling laws. “The tribes kept their eye off things for a few years,” says a tribal regulator who trained BGC agents. “The card rooms weren’t a threat. We didn’t pay any attention them. “So the card rooms kept pushing the rules. Nobody was interested in tangling with the card rooms because it wasn’t worth the time, and they had all these campaign contributions going to the state. “Then all of a sudden you have all these violations of the rules and regulations. Then the Lytle thing flares up. Then the card rooms stop taking the collection fees, which is supposed to be their only legal source of income.” Cutting into the tribes’ market of high-end table game players was the proverbial straw. The play at the tables for some Indian casinos amounts to 10 percent or more of gross revenues. And unraveling the morass that is the California gambling regulatory system won’t be an easy task. It will certainly make sports betting, internet gambling, online poker and DFS a quandary for both stakeholders and state officials.
Navigating the Gaming Convergence Edward R. Winkofsky and Erica L. Okerberg are members of a multidisciplinary team of Greenberg Traurig attorneys counseling some of the leading casino, iGaming, social gaming, skill-based gaming, fantasy sports, sports betting, lottery, VLT and horse-racing owners, and operators in the industry. • Ed focuses his practice on gaming regulatory compli-
ance, licensure, and internal investigations. He also advises clients on transactional and general corporate matters. Ed has served as regulatory counsel to licensed gaming industry suppliers and operators, horse tracks, video gaming and online providers, lottery providers, tribal licensees, and social gaming operators and investors. • Erica focuses her practice on gaming licensing,
compliance, and operations. Additionally, Erica regularly advises clients on sports wagering as well as social games, sweepstakes, and contests.
Edward R. Winkofsky
Erica L. Okerberg
312.456.8440 winkofskye@gtlaw.com
702.599.8073 okerberge@gtlaw.com
Global Gaming Practice Regulatory | Operations | AML | IP | Labor | Litigation | Privacy Real Estate Acquisitions | Financing | Learn more at gtlaw.com/gaming
G R E E N B E R G T R A U R I G , L L P | W W W. G T L AW. C O M The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2018 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 30469
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Full Disclosure To win a gaming license in the U.S. or elsewhere, honesty is the only policy By Marjorie Preston
H
ave you ever committed a crime? Had your wages garnished? Has your spouse or any of your kids been arrested in the past? Have you ever had to take a polygraph exam? And by the way, do you have any scars or tattoos? These questions may seem intrusive. But if you decline to answer them, odds are you won’t qualify for a gaming license, at least in the United States. They are all part of the Multijurisdictional Personal History form, which, as the name suggests, is required of gaming license applicants in some parts of the U.S. The exhaustive 66-page questionnaire wants to know you—all of you, from your eye color to any aliases you may have to the amount of child support and alimony you pay. It wants to know if your car has ever been repo’d, if you’ve ever owned a race horse, and if you’ve ever worked as a boxing promoter. In a nice Catholic-school touch, at least one jurisdiction demands that applicants use only blue ink to initial and date the form. Differing jurisdictions require other paperwork, along with authorizations to cross-check your claims with law enforcement, the Internal Revenue Service, etc. The same disclosures must be made by others in your organization: partners, board members, and investors up and down the chain. Because you are, in effect, forming a business with the state, you must prove that you and yours are worthy partners. But you don’t have to be a Boy Scout.
Past Imperfect Gaming attorney Greg Gemignani, of Michigan-based law firm Dickinson Wright, says would-be licensees in Nevada can have colorful backgrounds and even criminal convictions, as long as the incidents are in the past and can be explained. “Maybe you had a drug conviction a long time ago, but you’ve been sober 35 years. Maybe there was a vehicular homicide when you were drunk and stupid, but you’ve led a saintly life ever since. This industry is not populated by angels. You have a cross-section of people, some from rough beginnings. (Investigators) look at totality of the person.” His advice: fess up, no matter how distant the episode or how personally embarrassing it may be. “They will find out, no doubt, even if you had a conviction that was expunged. They have relationships with law enforcement everywhere. They’re really good at following financial trails.” When questions arise, these sleuths are within their authority to “go to your home, check out your safe deposit box, and ask you to turn over your computer,” says Gemignani, who is also an adjunct professor of gaming law at the University of Nevada, Las Vegas. “They can download the last maybe three years of emails as a matter of course—personal emails, too. You waive all your rights in this process.” Don’t want the scrutiny? Don’t go into gaming. Gemignani recalls one client whose black book included girlfriends in several countries, all of
“This industry is not populated by angels.You have a cross-section of people, some from rough beginnings. Investigators look at totality of the person.” —Greg Gemignani, gaming attorney, Dickinson Wright 40
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“Once you’re licensed, you have a continuing duty to maintain good character, honesty and integrity.” —George Rover, former deputy director, New Jersey Division of Gaming Enforcement
whom had bank accounts and homes funded by him. The amorous gent’s counsel told Gemignani, “He will never disclose that—ever.” Gemignani replied, “Then he can’t apply. And if he can’t apply, your company can’t apply.”
But Wait—There’s More Full disclosure means turning over at least five years’ worth of financial records—promptly, and in their entirety, says Nick Casiello, chairman of the gaming practice group at Philadelphia-based law firm Fox Rothschild. “If it takes you forever to produce the documents and then you forget some of them, first, it delays the process because of lack of attention to detail. And second, it makes the agents wonder if you’ve got something to hide.” Most jurisdictions have disqualifying offenses—“bribery, corruption,
murder, mayhem—it’s a long list nowadays,” says Casiello. “The focus is mostly on your financial background, where you get your money from. As long as it comes from a legitimate source, you should be fine.” The rules vary depending on the jurisdiction. In Illinois, for example, a felony conviction is “an automatic knockout,” says Ed Winkofksy, gaming attorney with global law firm Greenberg Traurig. “In a state like Nevada, that’s not necessarily the case if there are circumstances behind the issue and you disclose it.” Personal history is just the half of it. The other half is operational. The state must be assured that a property will have the required number of hotel rooms, the right-sized casino floor, proper internal controls, adequate staffing, the best security and surveillance systems, and so on. “It all has to be installed and inspected, and it’s all part of the casino licensing process throughout the U.S.,” according to Casiello.
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“A new casino operator is going to go through a very extensive process including operational testing before the lights get turned on,” says Winkofsky. If you are a supplier to the industry or seeking a restricted license, “that’s much less involved.” Elsewhere, it may be a different story altogether. “I just completed an application outside the U.S.,” observes Casiello. “We filed the forms, there were a few follow-up questions, then we got an email saying, ‘Congratulations, you are licensed.’”
“If New Jersey or Nevada comes out with a finding of unsuitability on an applicant, that in itself is usually enough to keep the applicant from going into any other state.” —Martha Sabol, Co-Chair, Gaming Law Practice, Greenberg Traurig
Keep It Clean While time-consuming and tedious, the licensing process—which may take months or longer to complete—is “front-end loaded,” says Gemignani. “A lot of work goes into separating people out during the application, but once you’re licensed, nobody’s standing over you on a day-to-day basis making sure you’re doing the right thing. The state wants people who will self-report, conducting themselves in accordance with the laws and regulations.” Operators that run afoul of those high standards do not go unnoticed. Take the case of Columbia Sussex, a Kentucky hotel company that acquired the Tropicana in Atlantic City in January 2007. At the onset of the recession, the firm laid off some 1,000 employees out of the gate. That led to damning reports about dirty hotel rooms, bedbug infestations, unfilled food and beverage orders and long waits for slot payouts. The response was swift and punitive. In December 2007—less than a year later—commissioners rejected the hotelier’s license application, citing a “lack of business ability” and “defiance of the regulatory process.” The Trop was turned over to a conservator pending its 2009 sale to Carl Icahn. Columbia Sussex eventually got out of the gaming business altogether, and the resort has bounced back nicely; Tropicana is now the No. 2 casino in Atlantic City in terms of total gaming revenue. “Once you’re licensed, you have a continuing duty to maintain good character, honesty and integrity and financial stability,” says George Rover, former deputy director of the New Jersey Division of Gaming Enforcement and now managing director of Princeton Global Gaming.
“Some investigations can be handled gradually. Sometimes there’s an urgency based on the facts or the perceived derogatory information. “After looking at the underlying facts, the statute and the regulatory goals of the Casino Control Act, usually the answer is pretty clear about the right result, whether it be a fine, a warning letter, a suspension, a revocation or no action at all.”
CoverYour Assets A gaming license is “a valuable asset,” Rover says. “You definitely want to ensure that there are no regulatory actions against it. More so, if you get a license in New Jersey, it’s fair to say it carries a lot of weight elsewhere in the United States and around the world”—meaning the next application may be a little more streamlined. The reverse may also be true, says Martha Sabol, co-chair of the gaming practice at Greenberg Traurig. Though each jurisdiction conducts its own investigation, “if New Jersey or Nevada comes out with a finding of unsuitability on an applicant, that in itself is usually enough to keep the applicant from going into any other state. It’s going to be a slippery slope, and forget about other jurisdictions.” In the U.S., Nevada and New Jersey have been at it the longest, but “Missouri would consider itself to be a tough regulatory environment, and Illinois says the same thing,” says Sabol. “Indiana and Massachusetts come out very strong, and of course, so does New York. I think every single one of them would say they are very good at what they do—and what they do is protect their state.” From state to state and one jurisdiction to another, the process can change in large and small ways, says Sabol. “In Illinois, for example, all the confidential details are discussed in closed sessions, but when you file an application with the Nevada Gaming Control Board, you can expect an open hearing where everything is up for discussion.”
“A new casino operator is going to go through a very extensive process including operational testing before the lights get turned on.” —Ed Winkofsky, gaming attorney, Greenberg Traurig
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Wynn’s Loss Past misdeeds or personal peccadilloes sometimes don’t count with regulators. But chronic bad behavior does. In February, following allegations of sexual harassment, gaming powerhouse Steve Wynn stepped down from his role as chairman and CEO of the company he founded. Wynn has denied the allegations against him. If he had remained in the corner office, could it have imperiled his operations in Las Vegas, Massachusetts and Macau? “If there is a culture of sexual harassment—well, that’s not legal,” says Gemignani. “One policy concern in Nevada is the
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image of the state and the industry, and if you bring disrepute on that, it can be a problem. I’m not picking on Wynn. It could result in disciplinary action for any licensee.” In Massachusetts, where Wynn is building a $2.4 billion casino resort on the Mystic River, the Boston Globe demanded “how a supposedly exhaustive investigation” into the billionaire and his company failed to turn up any information about allegations first reported by the Wall Street Journal. The editorial called the lapse “a losing hand when it comes to Wynn’s suitability.” And in Macau, where Wynn’s gaming concession will be up for renewal in 2020, some analysts think his holdings could be largely unaffected by “reputational issues,” largely because he has no direct holding in the Asian subsidiary. Even so, Wynn Macau stocks took a hit following news of the scandal, and Macau’s Gaming Inspection and Coordination Bureau has said it is “concerned” about the claims made against Wynn at home. In an interesting aside, during the 2016 presidential election, Nevada Senator Harry Reid said Donald Trump would never qualify for a gaming license in the Silver State because of multiple bankruptcies and other reported misdeeds. So he went to the White House instead.
History Lesson In his 1995 blockbuster Casino, author Nicholas Pileggi called Las Vegas “the nation’s only morality car wash”—a place where mobsters, thugs and others of dubious merit almost got licenses to print money. That was then. The end of mob rule in Nevada began in the 1960s, when Governor Grant Sawyer’s newly established Gaming Control Board barred undesirables from even entering casinos. In appointing members to the board, Sawyer wrote in
“The focus is mostly on your financial background, where you get your money from.” —Nick Casiello, gaming attorney, Fox Rothschild
his memoir, Hang Tough, he sought people who “wouldn’t even take free tickets to a ball game.” Those lofty standards migrated to New Jersey. In 1977, when Governor Brendan Byrne signed the Casino Control Act, he famously warned the mob to “keep your filthy hands off of Atlantic City.” New Jersey is now considered one of the most stringently regulated jurisdictions in the world. Today, the shady characters of Casino have mostly been supplanted by corporate executives. Even among them, there may be a few sinners, says Gemignani. “A gaming license is a privilege, not a right, and it’s incumbent upon the applicants to prove they’re suitable,” he says. “The question is, what were the sins, are you willing to own up to them, and what are you going to be like as an operator?”
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the g n i p p Ti Tables
Automated rating, hybrid games By Dave Bontempo
B
and Frank Legato
ring on the new, enhance the “old.” Table games, the original industry kingpin, flaunts new fortifications. Some embrace slick devices, with Android phones and tablets becoming smart data-collection cameras. Others reflect automated bonusing, security and player rating capability. Another blends skill-based and classic games in a demographic melting pot. Combined, it’s a welcome boost for a sector sharing its once-exclusive prominence with slot machines, lounges and social-media platforms. A crowd around the table once described people elbowing up to the craps and roulette arena. That has morphed into a projection that by 2019, more than 400 million people will regularly watch competitive video gaming. Many will be millennials, gaming’s youth movement. For table-game operators, this does not have to be an age-based passing of the torch. It can be a burgeoning market that they, by way of technology, tap.
Automate and Improve Walker Digital Table Systems (WDTS), headquartered in Las Vegas with sales and support in Macau, provides innovative casino systems, tools and contents supporting the expanding global table games market. It empow46
Global Gaming Business APRIL 2018
ers operators to maximize their table game productivity by automating the most iconic games—those played with live cards, live chips and live dealers. Automation is the company’s stock in trade. Walker Digital embraces several dynamic industry trends, according to Neil Crossan, general manager of Asia operations. A big one is the uptick of live-dealt table games. The casino expansion in Asia, where baccarat is the dominant revenue-driver, fuels this surge. The demand for automation, data collecting and bonusing for table game operations is another significant area. So is total game integrity, with counterfeit protection provided by systems that track gaming chips from the chip float to the bet spot. Automated table ratings comprise another major industry movement.
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Into that backdrop comes one of WDTS’ prime products, Perfect Pay. The company thinks it is, well, perfect. “With automation comes rich data, business insights and never-beforeseen capabilities such as cash chip rolling, insurance bet propositions by player position and off-table betting,” Crossan says. “The Perfect Pay table generates ratings for player sessions that automatically—and exactly, in real time—log every wager for cash chip, program or promotional play including start time, stop time, bet amount, bet type, win/loss, turnover, rolling and many other dealer and game performance metrics. Ratings are directly integrated into any casino management system and detail true handle, house advantage, exact win/loss and insights into bet mix and patterns of game play.” Crossan says Perfect Pay supports total game protection from the time a bet is placed until it is paid, taken or exchanged in the chip tray. The casino is protected from bad actors on either side of the table. Capping, pinching and past posting are eliminated because the table generates an alert indicating when a bet changes at any point from when the first card is pulled to when the last bet is paid. If bets are overpaid or underpaid, the game will not resolve until errors are corrected. The chip tray checks for the correct balance at the end of each game and reports variances for any reason. “Perfect Pay is an integrated table games system that uses radio frequency identification (RFID) and computer vision technology to track play and assist dealers to complete transactions quickly and without errors,” Crossan says. “The system tracks every player bet, every chip and every dealer transaction in real time. Perfect Pay does this while remaining indistinguishable from a traditional table game. “Perfect Pay Baccarat is the most comprehensive table automation solution available today. Now, WDTS is applying the Perfect Pay platform across
lift your game SenSen Networks SenGAME 3.0 delivers the highest accuracy of mixed stack height valuation including back betting. It is a plug and play solution which retrofits to existing tables that does not require changes to layouts, chips, dealer or player behaviour. It is inconspicuous and cost effective which is easy to install, calibrate and maintain.
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all game types, enabling a total-floor product. We can provide comprehensive solutions to any table games operation in the world.” Crossan says a critical point of differentiation for his company is that table games automation and content leveraging RFID is Walker Digital’s core business. Perfect Pay automates the most time-consuming and labor-intensive table game procedures. “The gaming day roll has traditionally required a series of manual procedures that disrupt play and result in fewer games played,” he indicates. “With Perfect Pay, an entire gaming floor rolls in just a few minutes without stopping play, manually closing or entering ratings, or starting a new shoe. Closers and openers are automatically generated and sent to integrated systems, player ratings are automatically closed and reopened, and the new gaming date is automatically updated across table and cage locations while players continue to place bets.”
Smart Software Australia-based SenSen is one of the leading suppliers of data-driven business process enhancement solutions, specializing in the Video-IoT (internet of things) data analytics software realm. Its groundbreaking software combines enterprise video and sensor data acquisition, data fusion and big data analytics into a highly scalable and configurable platform, according to company CEO Subhash Challa. SenSen is well positioned in the new era of artificial intelligence, IoT and data-driven decision making, he asserts. “Since the data is collected for every table and every game for every player and dealer, we can support data-driven approaches to manage the floor and optimize yield as opposed to model-driven approaches to yield management,”
Highest accuracy with no changes to layout, chips, dealer or player behaviour
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Challa says. “When there is no data, you need models, which are approximations of ground truth or the world; however, when there is data the ‘data becomes the model’ and one can use the data directly to optimize yield. I believe the impact of this will soon go beyond yield management of tables to all areas of casino business.” Challa says the company’s latest generation of technology, built in collaboration with Crown Casino, is operational in Crown Melbourne. The product, SenGAME 3.0, was formally launched in October at the Global Gaming Expo. Challa says the SenSen system involves a set of Android phones/tablets, primarily used as smart cameras. They are installed on either side of tables, away from dealer hands and players, yet positioned to get a good view of the card and betting areas. “A small-form-factor PC (video processing unit, or VPU) is installed under the table to capture and process images captured by the cameras,” Challa indicates. “SenGAME 3.0 software is installed both on the Android phone/tablet and on the VPU. A central server within the premises or on the cloud is installed with SenBOS (SenSen’s Back Office Software) that collects data from the live table games for storage and processing. Various third-party business applications like yield management, rating and loyalty programs can pull the data from a centrally hosted database like SenBOS to drive business applications.” The company advanced its algorithms with deep-learning-based AI technology to use low-cost cameras embedded in Android devices, Challa asserts. “The latest solution SenGAME 3.0 supports all types of table games and the technology retrofits to existing tables,” he says. “There is no change to layouts, dealer behavior or any other aspects of operations to start getting this data. The latest developments in SenSen technology do not need time-of-flight cameras, further reducing dependence on specialist proprietary technologies helping casinos to be more adaptable and less prone to critical dependencies in supplychain solutions.” A property will purchase a hardware and software system that provides realtime operational data relating to every table, dealer, player and bet placed on the live gaming floor. Raw data includes when games begin and end, each bet (including side wagers and back bets), the number of active players and people around the tables, along with the time spent by players at each game. The raw data is transformed into valuable metrics helping casinos optimize the floor with operations like average bets per table, a running calculation of each table and the update of side bets versus main bets. This helps operational decisions like opening and closing of tables to optimize turnover and dealer speed, early detection of card counters, and fraud and compliance information, Challa says.
One-Stop Shop A worldwide pioneer in this type of data collection and management in the table-game arena is London-based TCSJohnHuxley, which also happens to be one of the world’s leading suppliers of table-game equipment. TCSJohnHuxley’s premier product in this area is Gaming Floor Live, billed as the first and only platform to give casinos real-time visibility and total control over the gaming floor. Drawing data from every aspect of the table, Gaming Floor Live provides the opportunity to quantify every connected table and its devices. A constant flow of gaming data feeds into the system, offering never-before-accessed in48
Global Gaming Business APRIL 2018
The Chipper Champ Pro incorporates new features including a built-in camera to identify suspected jams or rogue items in the hopper and a unique fold-away 10-inch digital screen that can display chip column counts. Wheel bias reporting and Inclinometer leveling information are available as an optional feature.
sights into operations, highlighting areas and process that can be improved upon in real time. Built as a modular system, Gaming Floor Live is scalable, and allows operations to build their own table management platform using varying combinations of the seven modules. TCSJohnHuxley is constantly adding to the modular system. The latest addition is GFL Optimisation, recently installed at Greektown Casino in Detroit, soon to be rebranded Jack Detroit by owner Jack Entertainment. “The GFL Optimisation module enables the operator to see accurate realtime data from all their connected tables, allowing them to make instant changes to increase efficiency and help implement change processes which can save them time and money,” explains Tristan Sjöberg, executive chairman of TCSJohnHuxley. “Jack Detroit is particularly keen to utilize the wheel analysis element of the system, which provides historical wheel and maintenance information as well as highlighting any potential drop zone or leveling issues.” Roulette Wheel Analysis allows operators to assign wheels to tables and collect data in the background so they can generate concise and detailed reports to monitor a wheel’s integrity in real time. The reports provide easy-to-read diagrams that illustrate acceptable and unacceptable levels of performance and bias. If anything untoward is detected, detailed reports provide drop zone information, number of spins and date ranges. “We have some exciting new table game technologies due for release this year which include a new addition to Gaming Floor Live platform,” Sjöberg says. “GFL Marketing Rewards is a new module that features an innovative multi-level award system funded by a marketing promotions pool that allows players to enjoy the excitement of winning jackpot prizes, without the need to place a separate side bet.” Other new additions to the TCSJohnHuxley product line were launched at the recent ICE Totally Gaming trade show in London. These include Chipper Champ Pro, the next generation of the supplier’s widely popular chipping machine. “This latest model has been developed to incorporate all the key attributes of the Chipper Champ 2, but packs a punch with even greater security and operational features that bring unbeatable benefits to the casino,” Sjöberg comments. “The launch of a new chipper is always momentous for us as it’s at the core of our company’s DNA. The new Chipper Champ Pro does not disappoint. Once again, we have listened to our customers to develop a chipper that has enhanced security features as well as delivering key information at the touch of a button, providing real-time data and operational indicators, right at the source.” The Chipper Champ Pro incorporates new features including a built-in camera to identify suspected jams or rogue items in the hopper and a unique fold-away 10-inch digital screen that can display chip column counts. Wheel bias reporting and Inclinometer leveling information are available as an optional feature.
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Gamblit Gaming’s Model G debuted last March and has launched in roughly 18 locations
The Formation of Model G Gamblit Gaming is a leading technology provider of real-money and skill gaming in video games, enabling a wide range of game genres. But it has a table-game presence too, what company officials consider a stroke of good fortune. This realm had a unique origin, according to Edvard Toth, vice president of game studio and creative for Gamblit. “The Model G is a textbook case of a happy accident more than anything else,” Toth says. “Back in 2014 a generic interactive table—normally used as an information kiosk or a ‘digital coffee table’ to read sports results and weather forecasts on—somehow ended up in our game studio. One of our designers started tinkering with it in his spare time, and a quick prototype emerged. “It could be best described as a goofy combination of a pachinko machine and button football; it combined wagering with a skill-based, twoplayer head-to-head game mechanic.” Toth says the second game prototype—which ultimately evolved into the four-player, competitive Gamblit Poker—confirmed this, as people around the office kept lining up for a turn to play. “Spectators regularly turned into an unruly crowd of cheering, clapping, shouting, high-fiving nutcases,” he laughs. “The most unpredictable part of designing games is the often-maddening process of trying to find the ever-so-elusive ‘fun.’ I have been creating games for nearly three decades, but witnessing this kind of unbridled and joyful player reaction still felt like winning the lottery.” The Model G product line was officially born after several of these games were met with a similarly enthusiastic audience reception at the 2015 Global Gaming Expo. The Model G debuted last March and has launched in roughly 18 locations throughout Nevada, Oklahoma and California, including Caesars Palace, Linq, Planet Hollywood, Paris, MGM Grand, the Venetian and Harrah’s Lake Tahoe, he says. “Some locations decided to put multiple tables in a ‘next-gen gaming area’ along with other younger-skewing games, while others have placed them in multiple locations throughout the casino,” Toth indicates. Up to four players competing on a single device in a shared game space creates an intense, high-energy, social experience, and a lively atmosphere that’s unlike anything else on the floor, according to Toth. There are many ways to enhance the table-game sector. They include helping the house monitor players, speeding play and merging the interests of table and skill-based gamers. The crossroads of younger players, traditional games and slick technology upgrades is a rich intersection.
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FRANKLY SPEAKING by Frank Legato
Bull Markets
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maintaining a controlled dangerous substance production facility, possession of methamphetamine and criminal mischief. So, I’m trying to wrap my brain around the criminal genius at play here. You decide you’re going to cook up some meth, but you don’t want to attract attention in your neighborhood. So you come to the conclusion that it would be a really good idea to rent a hotel room, in your own name, at a leading Boardwalk resort, and set up your meth lab there. “Dude, we need someplace to cook up the meth.” “Hey, I have a free room at the Trop! Let’s do it there!” “Great idea! I’ll bring the beer!” For the record, the notion that it was a comped room was totally made up by me. The Tropicana is not in the business of giving free rooms to illicit drug manufacturers. At most, they get the casino rate. Calm down! I’m kidding! Finally, an Oklahoma man was arrested last month at a Tulsa casino after he allegedly faked his own kidnapping and tried to collect ransom for himself from his wife and friends. He reportedly sent a message from the supposed captors to his wife’s cellphone containing a picture of a broken finger, saying they were going to “keep breaking fingers until they pay,” according to what the local police told People magazine. (Boy, not much gets past People, huh?) The messages came from her husband’s cellphone. Sooo... Police simply pinged the cellphone to River Spirit Casino in Tulsa, where they found the mastermind at a gaming table, carrying the cellphone used for the ransom text. “He wasn’t very good at this,” Tulsa Deputy Chief Jason Woodruff told People. Get this: the messages demanded that the ransom money be deposited into a PayPal account. Doesn’t this guy watch old movies? Whatever happened to unmarked small bills? I think he needs to find another profession. Like cooking meth in hotel rooms. No bull. (Sorry.) VIC TOR RINAL DO
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ou know, I thought I’d seen everything in Las Vegas entertainment, but last month there was something different: the first annual Las Vegas Running of the Bull. As in one bull. One morning, Las Vegas police and animal control officials were advised of a bull roaming through the middle of the city. The bull in question was first spotted around 3 a.m. at Turquoise Road and Silver Lake Drive. I know that neighborhood. Bovine animals are always hanging around, the tougher ones wearing leather jackets and smoking cigarettes. But seriously, police and animal control followed this real, actual bull through the streets of Las Vegas. The Metropolitan Police sent out special bull-tracking helicopters to follow the bull. Elite bull-hunting SWAT teams were called out. Remarkably, they had experience with this, as it was the second time in a year a bull took a stroll in the gaming capital. This second time, streets were blocked off before any revelers could start running with the bull, or take him into the casinos to shoot crap. (Hey!) The authorities caught up with the bull near Washington Avenue and Martin Luther King Boulevard. I believe that’s close to the Twin Lakes Country Club, so obviously, the bull was just trying to make his tee time, and someone shoots him with a tranquilizer gun and hauls him off to jail. Jeez. (Please insert your own “shooting the bull” joke here.) According to news reports, the apprehension of the bull was aided by two officers from the Henderson Police Department who are experienced dealing with livestock. Thank goodness. Our office is in Henderson. It’s good to know that there are experts at hand in case a bull crashes into our conference room during a meeting. Or a milk cow, for that matter. At press time, police were still searching for the bull’s owner. I heard the bull himself was being held without bail, out in back of the steakhouse at Binion’s. Hey, it’s what I heard, OK? Of course, things are much calmer on the opposite end of the U.S. casino industry. Well, mostly. Firefighters responding to a fire at the Tropicana Atlantic City last month found that a blaze on the 44th floor had been caused by an explosion in a makeshift meth lab one of the guests had set up in his room. Man, don’t you hate when that happens? You get a comped room at a casino hotel, and you just have your meth lab set up, and boom! South Jersey resident Michael Pillar, 49, was arrested, and then sent to the hospital for treatment, and then to the county jail, charged with
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EMERGING LEADERS Globalized Gaming Ryan Reddy Vice President, Product Management and Product Marketing, International Game Technology ith gambling facilities located in jurisdictions ranging from Louisiana to Laos, there is no doubt that gaming is truly a global industry. The globalized nature of the gaming industry was one of the primary reasons Ryan Reddy—vice president of product management and product marketing at International Game Technology—was drawn to the industry. With graduate degrees from both Bryant University and Northeastern University, he says “the opportunities to learn about cultures and economies outside the U.S.” attracted him to gaming. For someone who wants to take advantage of international career opportunities in gaming, a global equipment company such as IGT provides one of the best paths. Recalling the early days of his career at IGT, Reddy says, “There were always opportunities for career advancement for people who wanted to be involved and were eager to learn more. Junior employees were afforded significant opportunities to travel and to contribute to challenging projects.” Reddy believes his inclination for global travel was a key differentiator in his professional development. “It was evident early in my career that members of IGT’s senior management team all had significant global experience,” notes Reddy. “I was extremely fortunate to spend extended periods of my career in the U.K., Austria and
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Italy.” This international experience made Reddy a more seasoned employee and, in his own words, “added tremendous value both from a professional and personal development perspective.” Reddy, who now holds a senior and leadership-oriented role at IGT, is quick to give credit to his personal and professional mentors. “First and foremost, my father has had a tremendous influence on my career largely by emphasizing the values of hard work and honesty,” he says. “From a professional perspective, I have been fortunate to have worked for excellent managers throughout my career, and I learned a great deal from them.” Now in a position to be on the other side of the mentor-mentee relationship, Reddy is eager to nurture professional and personal development. “I feel compelled to mentor others and share my experiences with motivated individuals who are early in their gaming careers,” says Reddy. A global traveler and professional, Reddy has leveraged his international experience and receptivity to a wide variety of opportunities to advance his gaming career. Young gaming professionals can learn from his advice and experience as they look to develop their own careers. “I recommend that people starting their careers explore the full scope of the industry, jumping into every project and opportunity they can possibly learn from,” Reddy encourages. “Later in their careers, they can specialize, but at the beginning, I would strongly recommend developing general expertise.” —Michael Vanaskie, The Innovation Group
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Thriving in the Face of Change Daryl Bruce Group Head of Commercial Development & Electronic Table Games, Crown Melbourne efore advancing to group head of commercial development and electronic table games at Crown Melbourne, Daryl Bruce long admired the lure of the property in his hometown, noting, “Crown is a genuine icon of Melbourne. Having grown up in this city, I was always fascinated by the mystique and glamour of the casino.” Bruce began building his network in the gaming industry while studying at university, where he forged a friendship with a fellow student and Crown employee who suggested that there may be a role for him upon graduation. “I was given the opportunity to prove the value of my math and stats skills with a six-month contract role in the gaming machines analytics team,” Bruce says. “You could say it was a case of right place and right time.” Asked about industry trends relating to electronic table games, Bruce is keen to point out Crown Melbourne’s position at the forefront not only in the implementation of the latest games—currently featuring 660 player stations—but historically as a partner for game developers, citing, “When Rapid Roulette was created all those years ago, it was a joint development between Crown and Stargames, now part of the Scientific Games stable.” Further, Bruce has been involved with developing original content that is now part of both the gaming floor he manages and other gaming properties. “It was quite a buzz to see table games I invented installed on the floor here at
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Crown Melbourne last year—Dice Duel and S7REAK,” he says. “Crown formed a subsidiary by the name of Club Gaming to facilitate the sharing of our in-house game inventions with the rest of the industry.” As electronic table games continue to grow as a product category, Bruce believes ETGs are uniquely positioned to serve VIP customers due to the relative privacy, comfort and convenience of the experience. Additionally, the category is a key acquisition tool appealing to the next generation of gamers searching for lower price points and the opportunity to sample and learn games without the fear of embarrassment. “These products appeal to the younger customer and could play a significant role in what many in the industry believe to be a ‘millennial problem,’” he says. Bruce is enthusiastic about the future of gaming, and wants to see it thrive in the face of changing economic dynamics. “There has never been stronger competition for discretionary entertainment spend, and the industry needs to keep up with the experiences and digital integration that customers are being offered by the competition,” he says. “This comes back to both the gaming experience itself and the complementary amenities offered.” His professional goal is to continue to grow into a general management role with full oversight of a casino property. When he has time away from work, Bruce travels with his wife, having enjoyed ventures to Europe, Japan, Indonesia and the Maldives, with their next stops being North America and a return to Europe. He is an avid basketball player, one of his lifelong hobbies. He also enjoys cooking and cheering on his two favorite sports franchises, saying, “I’m a passionate supporter of the Collingwood Magpies in the AFL (Australian Rules Football), and also the Melbourne United basketball team in the NBL (the Australian National Basketball League).” —Anthony Mason, The Innovation Group
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Incredible Progress Caitlin Harte Director of Product Marketing, Incredible Technologies o Caitlin Harte, the future for women in managerial positions in gaming is now. “The current climate is encouraging, and it seems like there is no better time,” says Harte, who has risen up the ranks at Incredible Technologies in less than six years. When interviewed for an entry-level marketing position, Harte knew little about casinos. She only visited Las Vegas once and played a slot machine twice. “I had no idea that accepting the position would mean one day I would be able to walk a casino floor and know everything that changed since the last time I was there,” says Harte, who went from marketing associate to marketing manager to director of product marketing. She’s worked with warehouse teams, mechanical engineers, technical writers, even mathematicians. “I work very closely with our game design studios from initial proposal to in-game feature recommendations based on the market. I also conduct monthly usability testing and one-on-one interviews with groups of real slot players to make sure our games meet expectations before the design is finalized,” says Harte, who is pursuing an MBA from DePaul University. Like other executives, Harte achieved success with the help of supportive people. She counts Dan Schrementi, vice president of sales and marketing at Incredible Technologies, as her biggest mentor. “He conducted my interview, so he’s been with me since day one. He saw potential in me that I wasn’t sure I saw in myself. He’s always encouraged me to take on more responsibility.”
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Harte also credits the company’s owners Elaine Hodgson and Richard Ditton. “They still walk through the building, chat with employees and create a comfortable work environment. They enable us to bring innovative ideas to the table. Elaine, as a female CEO in a male-dominated industry, has been a huge inspiration for me.” The future for casino consumers depends on millennials like herself, and that future includes eSports. Incredible Technologies created Golden Tee Golf, one of the most popular pay-to-play amusement games in history. “The industry is buzzing about eSports tournaments, but we’ve been holding live, head-to-head tournaments since the late 1990s,” says Harte, who explores the wonders of Chicago in her spare time. “This year we will partner with Boyd Gaming to bring the Golden Tee World Championship to the Orleans in Las Vegas. Some 64 players will compete for over $100,000 in prizes.” For her own future, Harte wants to continue her upward growth at the company. “I hope in five years I am able to look back on my career thus far and see that I’ve done something to change the gaming industry for the next generation of females beginning their careers.” Harte’s prescription for women—and men—interested in the industry is don’t be dissuaded by a reputation as an old boys club. “This is an exciting time. The industry is changing every day with new legislation, rules and regulations, and that means there is also room for new insights, innovations and most importantly, voices.” —William Sokolic
IGT congratulates Ryan Reddy, Vice President of Product Management and Product Marketing, for being recognized as a 2018 Emerging Leader by Global Gaming Business magazine. Ryan exemplifies IGT’s pioneering spirit and passion for providing best-in-class gaming solutions to our partners worldwide.
© 2018 IGT.
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NEW GAME REVIEW by Frank Legato
Dragon Fa AGS
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his new Asian-themed game on the new marquee-style Orion Slant cabinet features a four-level progressive jackpot won through a picking bonus and a re-triggering free-game event. The base game is in the AGS PowerXstream group, in this case a threeby-five array returning 243 possible ways to win on every spin. (There are no paylines; wins are registered by adjacent symbols.) At least one Bonus or wild symbol on each of the first three consecutive reels triggers 10 free spins. The free-spin feature can be retriggered for an additional 10 games with bonus and/or Free Games symbols on a free spin. Dragon Fa features a link to the Xtreme Jackpots progressive system. The top screen displays the four progressive levels, with the top jackpot
resetting at $10,000. The fireworks display on the top screen may show one of multiple levels of activity, from none lit to all lit. The Xtreme Jackpots progressives are not local to the machine on which they are configured, and are shared when configured through a server. The progressive bonus is triggered at random, displayed by fireworks exploding to reveal a pick screen. The player selects icons until matching three, and wins the corresponding progressive. Manufacturer: AGS Platform: Atlas Format: Five-reel, 243-ways-to-win video slot Denomination: .01 Max Bet: 880 Top Award: Progressive; $10,000 reset Hit Frequency: 28.8% Theoretical Hold: 5%–14%
Fortune Cup Konami Gaming
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onami’s new take on the classic mechanical horse-race game—based on parent Konami Holdings’ successful arcade game—has a new generation of players crowding in to cheer with the same enthusiasm as the original casino racing game, the 1980s-era Sigma Derby (the new game stands side-by-side with one of the few remaining Sigma units at the D Las Vegas). Konami applied its modern digital technology to the format—a miniature racetrack with players wagering on races by tiny jockeys at 10 slot-style player stations. Powered by Konami’s cross-platform game engine, the game features mechanical horses that move around the track to simulate the movements of real race horses. The mechanical race is combined with real-time digital animation of the race on a large LCD monitor. The 10 individualized betting stations are each equipped with a 27-inch intuitive HD touch-screen interface, displaying a betting screen that allows players to select different chip amounts and place them with participating horses for win, place (first- or second-place) or quinella bet (for the top two finishing horses). A period is provided prior to each race in which players can modify their bets by adding, doubling or deleting the wagers. Between races, the primary betting screen also shows handicapping information—information on individual performance of the horses, rankings on an increasing scale, odds, running style and the five most recent race results. When the race begins, players can watch the mechanical horses or the HD animation on either the large screen or the individual betting-station screen.
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There also is a progressive jackpot chance that is randomly initiated. Players are alerted to the horse which provides the chance at the jackpot, and if it wins, players who wagered on the horse can win one of four jackpot levels. Finally, Fortune Cup can also can host up to 100 stations for a stadiumstyle play experience. Manufacturer: Konami Gaming Platform: Konami Cross-Platform Engine Format: 10-player mechanical horse race Denomination: .10, .25, .50, 1.00, 2.00, 5.00 Max Bet: 1,499.90 Top Award: 149,900 credits Theoretical Hold: -.01%-17%
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Fu Fu Fu
Aristocrat Technologies
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his new Asian-themed game on Aristocrat’s sleek Arc Single cabinet features elaborate, colorful artwork in a highly volatile penny game in the “E*Series” of entertainment-style games, which the manufacturer bills as having “thrilling game play, enchanting music, and multiple chances for big wins.” Dragons, lions and other lucky symbols comprise the attractive Asian art package in a game available in five-reel, 20-, 25- or 30-line configuration. A form-changing symbol triggers a mystery feature called “Wild Shower.” At the beginning of a random spin, wild symbols with multipliers up to 3X are dropped onto the reels for big line hits—a player-favorite feature that was well-received in the hit game Sharknado. There is a five-level static (called WYSIWYG, for “what you see is what you get”) bonus mystery jackpot, with the top level returning $2,000. When triggered with a Free Games symbol on the fifth reel, the jackpots are multiplied up to 3X. Three or more Free Games symbols trigger a random number of free games, with multipliers of 2X or 3X applied
when the special Free Games symbol lands on reel 5. Retriggers can take the free-spin round up to a maximum of 120 free games. Fu Fu Fu is available in multi-denomination options ranging from $.01 to $50. Manufacturer: Aristocrat Technologies Platform: Arc Single Format: five-reel, 20-, 25- or 30-line video slot Denomination: .01-50.00 Max Bet: 200, 250, 300 Top Award: $6,000 Hit Frequency: Approximately 50% Theoretical Hold: 4.6%-11.75%
Vegas Delights
Ainsworth Game Technology
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his is the latest game in Ainsworth’s Big Hit Bonanza series, featuring a top progressive jackpot that is won through a unique respin event. The base game, featured on any of the company’s A600 series of cabinets, is a five-reel video slot in 25-line or 50-line configuration. The top LCD monitor displays a top progressive Grand Jackpot resetting at $5,000 and three bonus prizes—the Mini at $10, the Minor at $50 and the Major at $150. During any paid game, six, seven, eight or nine scattered Gaming chip symbols trigger the Big Hit Feature, awarding three free re-spins. Randomly, an Extra Bonus Big Hit feature will trigger to award three re-spins with a big chip symbol over the three middle reels counting as nine chips toward the Grand Jackpot. Every chip symbol awarded during
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the triggering spin is held in position to count toward the Grand Jackpot. Every chip that triggered the feature is held in position and awards one or two free games. Additional chips that appear during re-spins award one or two free games. If one or more additional chip symbols appear, they are held in position and award a random bonus credit prize, and the re-spins are reset to three. The feature continues until no re-spins remain or until 15 chips are accumulated to trigger the Grand Jackpot. At the end of the feature, the bonus credits are awarded and the accumulated free spins begin. Free games accumulate through the Big Hit features display chip symbols on the first and fifth reels only. The static bonus awards are won through a separate trigger—three Bonus symbols on any paid game randomly triggers the Major, Minor or Mini prize. Manufacturer: Ainsworth Game Technology Platform: A600 Format: Five-reel, 25- or 50-line video slot Denomination: .01, .02, .05, .10 Max Bet: 100, 200, 500 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 8%-10%
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CUTTING EDGE by Frank Legato
High-Speed World Product: BPS M3 Banknote Processor Manufacturer: G+D Currency Technology
+D Currency Technology recently released the BPS M3, a new entry for high-speed banknote processing systems that is ideal for mid-sized to large casino count rooms. BPS M3 has a throughput of up to 76,000 banknotes per hour with a large continuous feeder that holds up to 4,000 banknotes, the latest sensor technology and an intuitive 15-inch touchscreen. The output modules have options which enable large-capacity output, multiple currency stackers or a combination of both. With the most reliable sensors in the industry, suspect notes are reliably detected and rejected, reducing potential fraud losses due to counterfeit items. G+D has leveraged its expertise in very high-end systems for casinos, central banks and other high-volume cash centers into the BPS M3. It offers exceptional performance and an affordable entry point to the high-speed world.
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GOODS&SERVICES
(L.-R.) Duetto founders Chief Technology Officer Craig Weissman, Chief Marketing and Strategy Officer Marco Benvenuti and CEO Patrick Bosworth
DUETTO CLOSES $80 MILLION SERIES D FINANCING
D
uetto recently announced the closing of an $80 million Series D financing round led by funds affiliated with Warburg Pincus, a leading global private equity firm focused on growth investing. The round is the largest ever non-acquisition investment in a software company serving the hotel industry. Duetto was founded in 2012 by CEO Patrick Bosworth, Chief Marketing and Strategy Officer Marco Benvenuti and Chief Technology Officer Craig Weissman, the former CTO at Salesforce.com. The company’s flagship softwareas-a-service (SaaS) application, GameChanger, brought machine learning, new consumer-centric data and the breakthrough innovation of open pricing to the industry, enabling hotel companies to independently price all distribution channels, customer segments, room types and stay dates in real time. Duetto, headquartered in San Francisco and with offices in Las Vegas, Cleveland, London and Singapore, has quickly grown to serve more than 2,500 hotels and casinos in more than 60 countries. Those customers have consistently outperformed the market, beating their competition’s rate of revenue growth by more than 6.5 percent since the launch of the company.
TURNING STONE PICKS SCI GAMES SYSTEMS
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cientific Games Corporation announced that the company will replace a competitor’s system with a comprehensive suite of system products and devices at the Oneida Indian Nation’s
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Turning Stone Resort Casino in Verona, New York, as well as its Yellow Brick Road Casino, Point Place Casino, and several SavOn convenience stores. Scientific Games’ casino management systems will manage all 2,921 slot games located across all of the Oneida Nation’s gaming properties in upstate New York. The management systems being installed include the SDS slot-management system, TableView real-time table management system and CMP player-tracking system, which will assist all three of the Oneida Nation’s casinos and its other gaming venues in managing and evaluating player activity.
FORTUNE CUP JOINS DERBY AT D LAS VEGAS
K
onami Gaming has installed its new Fortune Cup multi-player mechanical horse-racing game in the second-level Vintage Vegas casino floor at the D Las Vegas.
It is a fitting installation for the horse-racing attraction, a 10-player machine featuring a 9-footwide mechanical eight-horse track enhanced by synchronized real-time digital animation and innovative horse figures that move around the track to simulate real race horses. Konami styled the game on its own mechanical race games in Japanese arcades, but also on the legendary casino game Sigma Derby, a 10-player mechanical track that first appeared in the 1980s. The D’s Vintage Vegas room, which also features coin-operated video poker and slots, is one of only two Las Vegas locations still operating the original Derby game from the now-defunct Sigma Game. Fortune Cup sits next to the beloved Sigma Derby in the Turning Stone Resort Casino in Verona, New York casino.
Global Gaming Business APRIL 2018
CROKER: ARISTOCRAT STRONG DESPITE CHALLENGES
T
he chairman of Australian slot supplier Aristocrat Leisure Limited used the company’s annual general meeting to stress that the company continues to perform at a Aristocrat Leisure high level, recording a 15 CEO Trevor Croker percent rise in revenue to a record $2.45 billion despite a flat market and new competition. Earnings before EBITDA also rose 24 percent as compared to the prior year, with an operating cash flow of over $799 million, up 17 percent. “This result was achieved right across the group’s global portfolio,” said Aristocrat Chairman Dr. Ian Blackburne at the meeting, “in particular with outstanding momentum in the Americas, significant growth in the digital and international Class III segments and sustained strength in our Australian business.” Aristocrat CEO and Managing Director Trevor Croker added that a number of strategic acquisitions have allowed the supplier to evolve its business and drive growth. “The business is significantly bigger, and more geographically and operationally diverse than at any time in our history—and now includes a material presence in unregulated, large and fast-growing non-casino game segments,” Croker said.
FABICASH SUPPORTS NATIVE AMERICAN EDUCATION
F
ABICash has made a $100,000 donation to the Kiowa Tribe of Oklahoma’s Educational Trust Fund. Nick Rabito, the national sales manager of FABICash, presented the check to the Kiowa Tribe on February 27 at the Kiowa Tribal Facility. FABICash has given back over $1 million to its casino partners over the last few years, mostly for education. “My father (Anthony Rabito), the president of FABICash, has always had a passion for education, understanding how important it is to the future of the young people in this country,” said Rabito. FABICash is a nationwide provider of cash access services including ATMs, kiosks, credit and debit card cash advance, check cashing and Title 31 compliance software. The company is based in New Orleans.
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Geoff Freeman
Phyliss Anderson
SOUTHERN GAMING SUMMIT ANNOUNCES KEYNOTE SPEAKERS
T
he Mississippi Gaming & Hospitality Association (MGHA) last month announced that it has confirmed two important keynote speakers for the Southern Gaming Summit, May 2-3, along the Mississippi Gulf Coast. Opening the SGS conference following a breakfast at the Beau Rivage on May 3 will be American Gaming Association President & CEO Geoff Freeman. Later that day, highlighting the business luncheon (sponsored by Global Gaming Women) will be Phyliss Anderson, the tribal chief of the Mississippi Band of Choctaw Indians. “We’re excited to present these two dynamic speakers at this year’s Southern Gaming Summit,” said Larry Gregory, executive director of the MGHA. “Geoff Freeman will bring his message of legal sports betting and industry unity to the show, and Chief Anderson will highlight the importance of the tribal government gaming segment of the Southern gaming industry. These two speakers once again illustrate the importance of the Southern Gaming Summit to the U.S. gaming business.” In his role as chief executive of the AGA, Freeman is the leading advocate for the commercial and tribal gaming industry, and is responsible for positioning the association to address regulatory, political and educational challenges and opportunities. Anderson, a native of the Red Water community, serves her people as tribal chief of the Mississippi Band of Choctaw Indians. Anderson was officially sworn in as the first woman chief in Choctaw history during an inauguration ceremony on October 4, 2011. She is currently serving her second term in office. Southern Gaming Summit is the most important regional conference in the gaming industry, covering gaming in the South, the Midwest, the Rockies and the Mid-Atlantic states. Southern Gaming Summit is owned by the Mississippi Gaming & Hospitality Association, the organization representing 28 casino resorts in Mississippi. SGS is being managed by Casino Connection International, the parent company of Global Gaming Business magazine. For more information on SGS, visit the website at sgsummit.com. APRIL 2018 www.ggbmagazine.com
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PEOPLE HARRISON LEAVES UK GAMBLING COMMISSION
U
K Gambling Commission head Sarah Harrison has stepped down from the post to join the U.K.’s Department for Business, Energy and Industrial Strategy as a senior executive. Neil McArthur, general Sarah Harrison counsel for the commission, will act as interim chief executive of the regulator as it continues a search to fill the position. McArthur has served as the commission’s general counsel since 2006, leading the regulatory body’s legal oversight on licensing, enforcement and compliance directives, the commission said in a press release. Harrison leaves the post warning the U.K.’s gambling businesses that they need to improve their funding of industry charity GambleAware, which researches problem gambling and runs programs for prevention, treatment and education. The group has been routinely underfunded by the industry. It is currently in the process of preparing a £7 million public awareness campaign scheduled to launch in August. However, many U.K. broadcasters have pledged to provide the campaign with free media, according to local reports.
MADDOX NAMED CEO AT WYNN RESORTS
W
ith the resignation of Steve Wynn from his positions at Wynn Resorts as a result of sexual harassment allegations, Matt Maddox has added Matt Maddox the title of chief executive officer to his president role to lead the company. Boone Wayson, a longtime Wynn board member, has taken over as non-executive chairman of the board. Maddox, 42, joined Wynn Resorts in 2002, when Steve Wynn was building his new company following the sale of Mirage Resorts to MGM. Maddox served in a variety of roles, spending some time in Macau, being appointed chief financial officer and finally becoming president in late 2013. Maddox is from Mena, a small town in Arkansas. He studied at Southern Methodist University and worked for Park Place (later Caesars) Entertainment before joining Wynn.
KERZNER NAMES MICHAEL WALE CEO
K
erzner International Holdings has named Michael P. Wale chief executive officer. The company Michael P. Wale owns Atlantis Resort and Residences and One&Only Resorts and manages destination resorts, luxury hotels and residences and entertainment venues worldwide. The company just opened the $1.6 billion Atlantis Sanya resort in China. According to a statement from the company, “Michael will be responsible for building on this momentum, developing continued strategic growth, driving the successful operation of the existing collection of award-winning resorts and developing talent across the company.”
JOHN BRUNETTI, HIALEAH PARK OWNER, DEAD AT 87
J
ohn Brunetti, 87, owner of the historic Hialeah Park casino and racetrack, died Friday, March 2 at his home in Boca Raton. He owned a successful construction company in New Jersey, then bought Hialeah in John Brunetti 1977. He had first seen the racetrack in 1957, when he was a student at the University of Miami. “We went to Gulfstream, Tropical Park and Hialeah. I loved Hialeah right away. It was breathtaking,” Brunetti said. Opened in 1925, Hialeah featured Mediterranean architecture, pink flamingos and rich history, as well as Miami’s first elevator. The venue attracted celebrities and world leaders, and some of racing’s greatest horses. A statue of Citation still stands there. Brunetti also developed and owned King’s Court, a fronton and casino in Florida City. In addition, he was a philanthropist, supporting medical research and higher education. In 2017, he donated $2.5 million to St. Thomas University’s Human Trafficking Academy. He also supported the Wounded Warrior Project and helped those born with a cleft palate.
BABILINO NAMED TO HEAD SALES AND MARKETING FOR HARD ROCK
H
ard Rock International announced the appointment of Danielle Babilino as senior vice president of global sales and marketing for Hard Rock Hotels & Casinos. In her new position, BaDanielle Babilino bilino will have overall responsibility for the Hard Rock Hotel sales division, as it supports the expanding global portfolio of Hard Rock Hotels & Casinos. Babilino will report to Jon Lucas, Hard Rock International COO. She will manage all hotel sales and marketing incentives, sales training, customer events, sales program implementation and the recruitment and retention of sales professionals.
GGB
April 2018 Index of Advertisers
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Aristocrat . . . . . . . . . . . . . . . . . . . . . . .34,35 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Casino Trac/Table Trac . . . . . . . . . . . . . . . .45 Cintas . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Dickinson Wright . . . . . . . . . . . . . . . . . . . .23 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 FABICash . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fantini Report . . . . . . . . . . . . . . . . . . . . . .63 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Gamblit Gaming . . . . . . . . . . . . . . . . . . . . .29 Gaming Support . . . . . . . . . . . . . . . . . . . . .49 Greenberg Traurig . . . . . . . . . . . . . . . . . . .39 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . .7,33,54 Incredible Technologies . . . . . . . . . . . . . . .44 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . .13 JCM Global . . . . . . . . . . . . . . . . . . . . . . . .19 Konami Gaming . . . . . . . . . . . . . . Back Cover Merkur Gaming . . . . . . . . . . . . . . . . . . . . .43 Novomatic . . . . . . . . . . . . . . . . . . . . . . . . .31 Royal Prinzing Motors . . . . . . . . . . . . . . . .52 RPM Advertising . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . .9 SenSen Networks . . . . . . . . . . . . . . . . . . . .47 Southern Gaming Summit . . . . . . . . . . . . .55 Subway . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 TransAct Technologies . . . . . . . . . . . . . . . .60 UNLV Foundation . . . . . . . . . . . . . . . . . . . .53 UNLV Gaming & Hospitality Series . . . . . . .57 US Bank . . . . . . . . . . . . . . . . . . . . . . . . . . .41
APRIL 2018 www.ggbmagazine.com
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CASINO COMMUNICATIONS
Q
&A
Peter DeRaedt
T
wenty years ago, the formation of the Gaming Standards Association was a seemingly innocuous event that had a huge impact on the gaming industry. The GSA rapidly began setting technical standards for the industry that proved to be profitable for operators and manufacturers alike. Peter DeRaedt was there in the beginning and remains the GSA president today. He spoke with GGB Publisher Roger Gros in Las Vegas in February about the 20th anniversary of one of the industry’s most important organizations. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: Congratulations on 20 years of progress with the Gaming Standards Association. Tell us how it started.
Peter DeRaedt: In 1997, we informally met
with about five companies on behalf of John Acres, who at the time had patents with respect to bonusing. The only way that he could promulgate these patents and this technology was with some kind of a standard that would be agreed to by the industry. Following that, the organization was officially created in California as a nonprofit organization in 1998. What were some of the first actions taken by the organization?
It shifted quickly to the creation of the exchange of information data standards, which predominantly was SAS. We wanted to come up with something that’s more open, more flexible, that’s architected for the future, and we did that. That was in 1998, and we soon attracted the attention of some of the larger operators like Park Place, Mandalay and Caesars. So, moving forward, it was a challenging time. Operators joined us, a company would leave and come back. Intellectual property became an issue, antitrust laws, all the things you have to do in an organization to make sure that people are comfortable participating. And I 66
Global Gaming Business APRIL 2018
President, Gaming Standards Association
think we did that. It’s not been an easy road; I’m incredibly grateful for all those engineers and especially those companies at the beginning and today that support us. I think we created a significant number of standards to a variety of success. But do not ever forget that the mission of the organization is trying to help the industry. The mission of the organization is not to become an innovator and go out there and find out what the industry needs. Generally, the industry identifies a problem, and they come to GSA for a solution. And we will do that. So it was the operators that really were the genesis behind this. In the early days, slot machines had to be connected by the twoand three-wire systems because they were all talking different languages.
It was a challenge. Don’t forget this is a very small industry, with a few suppliers—and now there are even fewer than there were at that time. So when we moved from a manufacturers’ association to the Gaming Standard Association, meaning where the operators, which are part of the industry, participate, that was a big shift. Everybody needed to start feeling comfortable; we did that. Initially it was BOB—Best of Breed, which was demonstrated at the gaming show at the time, and that evolved into the G2S, the Game to System, which was a combination of BOB and SuperSAS. Then the industry decided, “Let’s create a single standard.” Remember that creating these kinds of standards with these kinds of technologies, in a gaming industry that’s very heavily regulated, takes time. And it takes time from multiple levels, including resources: you might have had the right resources to deal with the XMLs, and the Ethernet standards. If you don’t have the right hardware, hardware needed to be redeveloped and redesigned and approved. These are cycles of multiple years.
Once that was done, we got finished, probably about 2007, when G2S was first released as an open communication standard. I think the value we created at the time, and the flexibility, if operators would only understand, I think it would circle back around. But some operators have left. And that’s very unfortunate, because we all understand that if customers want something, they demand that things happen. If you don’t do that, well then, you have to buy whatever is on the shelves. And that is what happened in this industry, for now, even 20 years later, almost. Canada is a bit different, and Europe and the rest of the world are different, as well. You recently started GSA Europe.
Yes, last year. It’s taken us a year to work through the mechanism of the legal issues, as to how to establish it, where to establish it... a lot of policies. We chose the country of Malta because of the large number of online gaming companies located there. They have very clear regulations for the online gaming, which is important for us. They spoke English, which was a benefit. And they were less expensive than some of the other English-speaking countries in Europe. So iGaming is a big factor in Europe?
Yes, GSA got involved in identifying needs in the online gaming industry in 2012, believe it or not. And it was our land-based casino suppliers who identified certain areas that we should be focusing on. And we did. It’s taken four years. By that time that we got some of the larger online gaming manufacturers and suppliers on board—the Playtechs and the Microgamings—because they saw the need for standardization in this space. We’re just about to release our first product, TPI, which is a third-party game content interface. In other words, TPI connects the remote gaming servers with the platforms. It reduces the stack of the software needed to accomplish this. That is one of the first initiatives of GSA Europe.
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Fortune Cup™ is out of the gate and here to put your floor on the fast track to success. Konami Gaming, Inc.’s new multi-station horse racing game invites players to experience the thrill of a day at the races. An astounding mechanical track, combined with real-time digital animation of the race, puts players right in the action as they cheer their horse to victory. Every round gives players the enjoyment of traveling to different race events and selecting picks for win, place, and quinella through personal touchscreen betting stations. Contact your Konami sales representative today for information and availability.
www.gaming.konami.com
KO_18_FortuneCup_GGB_Ad_8375x11125in.indd Saved at
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Fonts Avenir LT Std (65 Medium), Avenir (Book, Book Oblique, Black) Images Fortune Cup_Ad.tif (CMYK; 300 ppi; 100%), Latest Brand Logo_ CMYK_8_16_13.ai (14.16%) Inks Cyan,
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