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ggB Global Gaming Business Magazine
OBAmA’s INDIAN COuNtRy LegACy stADIum etgs ex-CAsINO OwNeR eLeCteD PResIDeNt sOCIAL CAsINO mOtIVAtIONs
December 2016 • Vol. 15 • No. 12 • $10
Be Prepared
10
trends to watch for ’17
All the Right Notes Konami’s Concerto Collection demonstrates R&D power
Experience Counts
What 5 sages have to say about the state of the industry Official Publication of the American Gaming Association
Association of Gaming Equipment Manufacturers
©2016 MOTÖRHEAD. ALL RIGHTS RESERVED. LICENSED BY GLOBAL MERCHANDISING SERVICES LTD.
CONTACT US AT SALES@NETENT.COM
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CONTENTS
Vol. 15 • No. 12
december
Global Gaming Business Magazine
32 COVER STORY Konami Moves Forward Slot manufacturer Konami Gaming, Inc. has used its newly expanded Las Vegas headquarters to produce several groundbreaking cabinets, form factors and games as it consolidates its spot among the world’s top gaming suppliers.
COLUMNS 14 AGA A Big Player Geoff Freeman
18 Fantini’s Finance Fiscal Trends for 2017 Frank Fantini
64 Marketing My Favorite Casino Scam
By Frank Legato On the cover: Yuji Taniguchi, vice president, research and development, games, Konami Gaming
FEATURES
44 Living Legends
20 Trending in 2017
A look at five of the most influential figures in the modern gaming era: Dean Macomber, Steve Rittvo, Jeffrey A. Silver, Roy Student and John Acres.
Our view of the 10 trends for 2017 that will have the most impact on the future of the industry, from skill games to eSports.
By Roger Gros, Marjorie Preston and James Rutherford
By Dave Bontempo, Carl A. Fornaris, Frank Legato, Dave Palermo, Marjorie Preston, Patrick Roberts and Steve Ruddock
DEPARTMENTS 6
The Agenda
8
By the Numbers
10 5 Questions 12 Gaming History 16 AGEM Page 55 Cutting Edge
38 Obama and
Indian Country
56 New Game Review
President Barack Obama’s legacy as a champion of fair U.S. Indian policy has made him one of the best supporters of Indian gaming as well. By Dave Palermo
Richard Schuetz
59 Frankly Speaking 60 Emerging Leaders
52 Stadium Style One of the hottest new game styles on the casino floor is the hybrid electronic table game, with live action beamed to terminals in a stadium setting. By Dave Bontempo
With Joseph Eve CPAs’ Grant Eve, New Jersey Casino Control Commission’s Matthew Levinson, and CDC Gaming Reports’ Cory Roberts
62 Goods & Services 65 People 66 Casino Communications With Rahul Sood, CEO, Unikrn
Our monthly section highlighting and analyzing the emerging internet gaming markets.
50 iGames News Roundup 4
Global Gaming Business DECEMBER 2016
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THE AGENDA
Be Real
Vol. 15 • No. 12 • December 2016 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com
Roger Gros, Publisher
t the eSports and Casino Resorts conference in Las Vegas in October, one word was repeated over and over again by panelists and experts at the show: authenticity. Said one expert, “Millennials can smell a fake from 10 miles away, so unless the event you’re promoting is authentic, they’ll never show up.” Others said millennials and eSports enthusiasts don’t trust casinos to start with, so anything a casino does in that field is going to have to be extraauthentic to be successful. But wait, aren’t the millennials already coming to the casinos to frequent the high-priced nightclubs and lounges? Yes, explained the experts, but when you bring in the DJs and personalities that they recognize, those nightclubs survive and thrive. It turns out that eSports has its own coterie of superstars. You and I probably have never heard of them, but according to the experts, the way to attract the eSports enthusiast is to bring those superstar players to the casino environment via special events, tournaments or meet-and-greets. But who are these stars that are so recognizable? Like “Cher” or “Celine” or “Elton,” they all seem to go by single names, making it easy to ID them in the complicated world of eSports— FORG1VEN, Bjergsen, Darshan, Froggen, Wolf. But the biggest star in the League of Legends tournaments, where all the aforementioned single names play, is Faker, real name Lee Sang-hyeok, a skinny 20-year-old Korean, who is a “marketable star,” according to a public relations staffer for the league. Faker, who doesn’t even speak English, has a Beatle haircut (finally, something I can relate to!) and recently held 15,000 eSports fans in Madison Square Garden spellbound as he vanquished his opponents. In a post-tournament press conference, the main topic was a new mouse he was using to vault to victory. OK, this sounds authentic to me, but at the same time, it is gibberish to someone who hasn’t touched a video game since I became somewhat proficient in Pac Man in my misspent hours at the bar following my 10-hour shift dealing $5 blackjack. So forgive me for asking, but how do you create something authentic that will appeal to the eSports players that you so dearly want to bring into the casino when you don’t even understand the jargon? Then it occurred to me that every event and promotion that you create has to be authentic, or the
A
6
audience you are trying to attract will sniff it out early and either they’ll just show up for the free food, or they’ll stay home altogether. During the last soccer (or football, for the true aficionado) World Cup event in Brazil, I remember a couple of casino promotions that confused it with American football, thinking it’s just another Super Bowl. Those casinos saw their promotions flop. And when you’re booking entertainment, authenticity is crucial. A few years ago, a Las Vegas casino booked a big superstar from the ’70s for a short residency. The first night on stage the “star” pretty much told the audience he was just there for the money and hated Las Vegas. Clearly, there was no effective communication between the casino and the star on how valued the star was and how the audience was looking forward to the performance. Even in the casino itself, the rules of the games are important to demonstrate authenticity. When a casino decides to switch to 6-5 blackjack from 3-2, it sends a signal to the serious blackjack player that you’re not important to me. Go find another game if you don’t like it. (Yes, this is a little pet peeve for me; changing the rules midstream is a terrible message to send to your customers.) There was lots of speculation at the eSports conference on the possibility of betting on eSports. The most interesting concept, in my opinion, is head-to-head matchups. Like the best poker players, the top eSports gamers can challenge all comers. A casino may have resident eSports superstars who, like the gunslingers of the Wild West, stare down their opponents, who may be quaking in the their boots. And like poker, the casino will take a rake. But the prospect of betting on eSports teams is a bit more problematic. You might think that it’s just an extension of sports betting, but it’s going to take some time to convince me (and regulators, as well, I assume) about the integrity of eSports. Who can tell if you fail to kill a dragon or shoot the villain if it was a mistake or match-fixing? Not to mention, like Faker, many members of the eSports teams are under 21. Whatever the decision, authenticity and integrity go hand in hand. Doesn’t matter if it’s eSports, entertainment or promotions, casino executives need to pay attention to understand that the players respond to their campaigns with enthusiasm, interest and the belief that they are valued. Let’s be authentic, please.
Global Gaming Business DECEMBER 2016
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 Richard Schuetz Contributing Editors Dave Bontempo | Carl A. Fornaris Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Patrick Roberts Steve Ruddock twitter: @SteveRuddock | James Rutherford William Sokolice
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/CEO, The Innovation Group twitter: @InnovGrp
• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University
• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985
• Roy Student, President, Applied Management Strategies
• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2016 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014 Official Publication
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BY THE
NUMBERS
COnneCtinG the DOtS in SOCial CaSinO GameS S
ocial casino games have grown substantially over the past five years. Caesars recently sold its social casino site, Playtika, for $4.4 billion. In Australia, prominent gambling researcher Sally Gainsbury, deputy director at the Gambling Treatment Clinic & Research Group, School of Psychology, University of Sydney, along with four of her colleagues produced a research paper called “Migration from Social Casino Games to Gambling: Motivations and Characteristics of Gamers who Gamble.” The paper was published by ePublications@SCU, which is an electronic repository administered by Southern Cross University Library. With 510 respondents, the chart on the below outlines the motivations for playing social casino games (SCGs), broken down by those who were influenced to gamble real money by playing social casino games, and those who were not. The second chart, featuring 110 respondents, reveals the motivation behind the desire to play realmoney games for those who started with social casino games. To download a copy of the full paper, visit works.bepress.com/sally_gainsbury.
Perceived Importance of Motivations For Social Casino Game Play Gambled due to SCGs
Reason For Playing Social interaction
Aspects of Social Casino Games That Had Encouraged Respondents to Gamble Not Gambled due to SCGs
Not at all important Somewhat important Very important
39.6% 45.5 14.9
65.7% 29.5 4.8
To relieve stress/ escape from my worries
Not at all important Somewhat important Very important
23.8 60.4 15.8
46.2 44.3 9.5
To pass the time/ avoid boredom
Not at all important Somewhat important Very important
16.8 64.4 18.8
35.0 53.6 11.4
To improve my gambling skills
Not at all important Somewhat important Very important
34.7 51.5 13.9
70.0 24.3 5.7
Not at all important Somewhat important Very important
22.8 50.5 26.7
61.0 26.4 12.6
Not at all important Somewhat important Very important
18.8 54.5 26.7
29.8 54.3 16.0
For the competition Not at all important challenge Somewhat important Very important
18.8 55.4 25.7
41.9 45.5 12.6
To make money
For excitement/fun
I wanted to win real money
50.5%
Playing social casino games allowed me to play without risking any money
37.6
I thought I would have a good chance of winning at real-money gambling
31.7
Playing social casino games allowed me to develop my gambling skills
30.7
Gambling for real money is more fun and exciting than social casino games
25.7
Real-money gambling is a better game experience
17.8
I wanted to challenge myself
17.8
Real-money gambling is easier to play
12.9
I didn’t want my play to be connected to a social network
11.9
I wanted greater competition against other players
9.9
I came across advertisements for real-money gambling sites as a result of playing social casino games
8.9
I had gambled online in the past
6.9
Note: Multiple responses were allowed.
Online GamblinG GrOwth
in billions of U.S. dollars
t
30.75
he advance of technology has given the gaming industry another strong growth area. Since 2003, online gambling has grown every year and surged forward impressively in 2015. Even with iGaming legal in only three U.S. states, there are still many avenues for growth for the online gaming market, so 2016 will undoubtedly continue this trend.
28.16 25.77 21.89 19.82 18.00 15.57 12.52 9.67 $7.21
8
Global Gaming Business DECEMBER 2016
15.85
22.36
23.66
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NUTSHELL
“They
5Questions
Andrew Burke
Vice President, Slot Products, AGS
t
he emergence as an industry leader in slot manufacturing of AGS has been remarkable. Andrew Burke, the vice president of slot products for the company, has seen it all. He explains the strategy of the company and the products that he believes will make a difference for AGS in 2017 and beyond. He spoke with GGB Publisher Roger Gros from the AGS offices in Las Vegas in November. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: You’ve been with AGS now for eight years, so you’ve seen a lot of changes. What has been most important? Andrew Burke: Almost all of them! It’s been a tremendous ride. I started working with the owners of the company, Alpine Investors; that’s how I got involved. The vision for the company at that time was what it has become today. We just didn’t know how long it would take and what it would take to get there. We struggled with operations, R&D, almost all aspects of the business. But when we were sold to Apollo and they brought (CEO) David Lopez in, that’s when it began to change. He made a lot of hard decisions pretty quickly. And this is why I stayed; this is what I always hoped it would be.
1 2 3 4 5
AGS was known as a quality Class II company with route operations in Illinois and sales/leases in Oklahoma. Now that you’re a player in the Class III market, how important was that move? It was extremely important. We’ve always known how to build great Class II products, but building and launching Class III products is another ballgame. So to have success doing that is very gratifying. Our Class II business is still very large and very important to us, but to have a growth platform like Class III is really engaging. How will you divide your games between Class II and Class III? We’re going to build every game in both Class II and Class III versions—anything that we can, of course. In some games, there are math limitations that make it work for one or the other, but our goal is to deliver quality games on both platforms.
What is your view on themed games? Well, we did Ripley’s and Family Feud, and we learned a lot from them, but we haven’t done much recently. We are starting to look at some opportunities again. It’s an area of exploration for us in the next couple of years. The economics of these games are really hard. For us, as one of the smaller companies, every dollar we spend on R&D is gold. So we really want to maximize the value. It’s hard to justify these big price tags that some of these brands want.
So you’re focused on proprietary games developed by AGS? Yes, and we’re laser-focused on the high-value gamblers that might make up 5 percent of the player base but contribute at a much higher rate. Our team is thinking about those people every day—the themes they like, the mechanics they like, the payouts they like. We’re developing product directly for those players, and we’ve seen some great early success. It’s a very competitive space, a smaller footprint, but we’re seeing the games we develop are really hitting our mark. And we’re just getting started!
10
Global Gaming Business DECEMBER 2016
Said It”
“When the Chinese government sends agents to scrutinize the behavior of its citizens in its own country, it is called ‘scrutinizing its citizens.’ When the Chinese government sends agents to a foreign country to scrutinize the behavior of its citizens, it is called spying.” —Andrew Klebanow, Global Market Advisors, on Beijing’s attempts to keep Chinese citizens from gambling abroad
CALENDAR December 5-7: University of Arizona’s Global Symposium on Racing & Gaming, Tucson, Arizona. Produced by the University of Arizona Race Track Industry Program. For more information, visit ua-rtip.org/ symposium. January 17-19: Oi Summit 2017, Orleans Hotel Casino, Las Vegas. Produced by VizExplorer. For more information, visit www.vizexplorer.com/oisummit. February 7-9: Western Indian Gaming Conference 2017, Morongo Casino Resort & Spa, Morongo, California. Produced by the California Nations Indian Gaming Association. For more information, visit WIGC2017.com. February 7-9: ICE Totally Gaming, ExCel London, U.K. Produced by Clarion Gaming. For more information, visit icetotallygaming.com. February 9-12: London Affiliate Conference 2017, Olympia National, London. Produced by iGaming Business. For more information, visit londonaffiliateconference.com. February 21-23: World Game Protection Conference, M Resort, Las Vegas. Produced by World Game Protection Inc. For more information, visit worldgameprotection.com. April 10-13: Indian Gaming 2017, San Diego Convention Center, San Diego, California. Produced by the National Indian Gaming Association. For more information, visit IndianGaming.org.
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GAMING HISTORY
Playing the trumP Card
h
illary Clinton was the heir apparent to Barack Obama, the candidate who beat her so soundly in 2008. Obama took to the campaign trail to boost Clinton’s appeal, but even a president with a 55 percent approval rating couldn’t convince enough disgruntled Democrats to vote for her. And then the shocking result was announced in the wee hours of November 9. Donald Trump was declared the 45th president of the United States. The results caused much consternation among industries that were preparing for a Clinton presidency, including the gaming industry. MGM President and CEO James Murren, a registered Republican and chairman of the American Gaming Association, announced in September that he was bucking his party’s nominee to vote for Clinton. Phil Satre, former Harrah’s chairman and former AGA chairman, an avowed Democrat, recounted his regrettable experience partnering with Trump in Atlantic City in the 1980s, and advised voters to reject the New York real estate mogul. At G2E in October, AGA President and CEO Geoff Freeman made it clear that Clinton was the preference for the association. So following the election, Freeman released a letter to the industry, saying in part that the AGA now “turns its attention to proactively engaging with the new administration and incoming members of Congress.” “While we are optimistic a Trump administration will feature significantly more restrained federal agencies than what our industry (and many others) experienced over the last eight years, the challenges before us remain great,” Freeman wrote in the letter. A Republican Congress can also be a challenge for the gaming industry, but Freeman put the best spin possible on it. “Tuesday’s results ushered in a new era in Washington, D.C.,” he said.
The national election in the U.S. proved to be a shocker, as the big underdog Donald Trump swept to victory. Trump, a former Atlantic City casino owner (shown in 1991 at the opening of Trump Taj Mahal), was supposed to lose to Hillary Clinton but awakened a sleeping electorate to win convincingly.
“The gaming industry is well-positioned to thrive in this new environment because of the important steps we have taken over the last several years to unify around issues of common cause, work collaboratively with government officials and highlight our enormous local economic and social contributions to develop congressional champions. “AGA is eager to work with the Trump administration and new Congress and we are optimistic that the coming years will include important victories for the gaming industry.” Trump’s views toward the online gaming industry were also a concern. While he indicated a favorable view toward iGaming five years ago in Atlantic City, his alliance with virulent anti-iGamer Sheldon Adelson, chairman and CEO of Las Vegas Sands and owner of the Las Vegas Review-Journal, the state’s largest daily newspaper, was troublesome for iGaming advocates. However, Adelson only contributed $5 million to the Trump campaign, far less than he gave to Mitt Romney four years earlier, so it’s unclear whether he will have a substantial influence on Trump. Nonetheless, some sources tell GGB that in exchange for the endorsement of the Review-Journal, Trump promised not to oppose the Restoration of America’s Wire Act, Adelson’s pet bill that would ban iGaming in the U.S. It would not take a congressional bill to reverse iGaming in the U.S., however. The basis for legal iGaming in the three states where it occurs—New Jersey, Nevada and Delaware—is a December 2011 Department of Justice memo saying iGaming did not apply to the Wire Act. Another memo reversing that stand is not inconceivable, if Trump was so inclined. For Indian Country, Trump’s election could be rump was a heavy underdog in European bookmakers that made a disaster. Following on the heels of a president that action on the U.S. election. Odds against a Trump victory reached some feel has been the best ever for tribes, Trump’s 10-1 in some countries, but a Clinton win was never doubted. often-stated antipathy for Indian gaming isn’t a Irish bookmaker Paddy Power took a big hit on the U.S. presidential election, paying out $1 good omen. The laid-back and cooperative apmillion early to bettors who wagered on a Hillary Clinton victory and another $4.5 million to those proach taken by Obama’s Interior Department and who wagered on the winner, Donald J. Trump. National Indian Gaming Commission could disapIn October, Paddy Power put Clinton’s odds of victory at 86 percent. Bookmakers often draw pear under a President Trump. Tribal leaders will be publicity by paying out early on political wagers when results are considered a foregone conclusion. watching closely the appointments made by Trump “We’re in the business of making predictions and decided to put our neck on the line by paying in this area. out early on Hillary Clinton, but boy did we get it wrong,” said Paddy Power spokesman Feilim Mac One tribe that may have been impacted immeAn Iomaire, according to Bloomberg. “We’ve been well and truly thumped by Trump, with his vicdiately is the Mashpee Wampanoag tribe. Already tory leaving us with the biggest political payout in the company’s history and some very, very expentied up in court by opponents of the project who sive egg on our faces.” question the land-into-trust decision made by InteThe U.S. election drew record wagering at bookmakers and betting exchange sites. By two days rior, a judge ruled that the DOI’s process was before the election, roughly $130 million had been traded on who will become the next U.S. presiflawed. A Trump appointee in DOI might decide dent, compared with $159 million on the Brexit referendum, Betfair spokeswoman Naomi Totten not to pursue an appeal, upon which the Mashpees told CNBC. By comparison, around $50 million was bet on the 2012 race. are pinning their hopes.
Betting the Election
T
12
Global Gaming Business DECEMBER 2016
®
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AMERICAN GAMING ASSOCIATION
A Big Player Las Vegas debate completes gaming’s emergence onto national scene
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By Geoff Freeman, President & CEO, American Gaming Association
he final presidential debate was held in October, and the attention of 80 million or more Americans was fixed on Las Vegas. That’s fitting, because 2016 will go down as one of the most consequential years for the gaming industry. Once confined to Nevada and New Jersey, gaming now operates in 40 states, supports more than 1.7 million American jobs and generates $38 billion in tax revenues annually for communities across the United States. Gaming’s growth has led to broad public support for the industry, which may be one reason why Las Vegas and industry participants are playing such a prominent role in this year’s election. The president elect has long been connected to the gaming industry. The highestranking Democratic senator has been a longtime supporter of gaming. Casino executives and investors are serving as high-profile public supporters and advisers to Donald Trump on CNBC, CNN and other networks. And the endorsement of Las Vegas Sands Chairman Sheldon Adelson was considered such major news it was delivered through an op-ed in The Washington Post. Interestingly enough, when gaming executives speak out, gambling is never an issue. Instead, the focus is on high-priority policy issues including the national debt, government spending, trade, immigration, health care and even the Iran nuclear agreement. It’s another sign of gaming’s emergence from the political sidelines into the public mainstream. On Capitol Hill, the bipartisan Congressional Gaming Caucus includes a growing list of representatives from roughly 17 states who understand the economic benefits gaming generates in their districts and recognize the many national issues that impact the industry—from immigration to tax policy. And this December, the new MGM National Harbor—a $1.4 billion casino, boutique hotel, conference center,
Global Gaming Business DECEMBER 2016
dining and entertainment destination—will open just eight miles from the U.S. Capitol on a site overlooking the Potomac River. Politics is not the only arena where gaming has come into the national spotlight. Last summer, the NHL announced it is awarding a new franchise to Las Vegas—the league’s first expansion in nearly 20 years. In the 2017-2018 season, hockey fans will attend games just off the famed Strip. For decades, Las Vegas was considered off limits by the NFL because of the presence of sports betting. Today, there is growing discussion about moving the Oakland Raiders to Las Vegas. As far as sports betting goes, Dallas Cowboys owner Jerry Jones says Las Vegas “does not have disfavor with me, in my opinion, relative to being an NFL city.” League leaders seem to agree. NFL Commissioner Roger Goodell says the league has “evolved a little on gambling.” This evolution matches the enthusiasm of sports fans nationwide. Far from having a problem with sports betting, Americans have embraced it. According to research by the American Gaming Association, 80 percent of Super Bowl watchers want to change America’s current sports betting law, which largely prohibits wagering on games outside Nevada. Two-thirds of these football fans say states should decide whether or not to legalize sports betting, just as they do other forms of gambling. In the United States today, millions of Americans visit casinos every year, tens of millions of Americans bet on games every week, President Obama fills out his NCAA basketball bracket each year on ESPN and a casino will soon open a stone’s throw from the U.S. Capitol. Millions of people tuned into Las Vegas to view the last major event in this historically unique presidential election, and the one thing everyone finds to be acceptable: gaming.
Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.
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AGEMupdate AGEM MEMBER PROFILE NOVEMBER 2016 KEY BOARD OF DIRECTORS ACTIONS
BGi is a developer and manufacturer of breakopen gaming tickets and related technologies. Since 1993, the company has been the exclusive supplier of break-open tickets to Canada’s Atlantic Lottery Corporation and also supplies tickets to other Canadian provincial lotteries (British Columbia Lottery Corporation and Lotto Quebec), and to the charitable gaming markets in Canada and the United States. The company’s focus is on the continuing development and deployment of the Playlinxx Intelligent Ticket system, with its associated kiosk hardware and back-end systems. Playlinxx technology marries the physical aspect of breakopen game play with networked kiosk systems, allowing for an immense variety of gaming experiences for the player. Options include automatic winner verification, second chance prizes and games played on-screen at the kiosk, and progressive jackpot games spread across geographically distributed gaming sites. Additionally, the kiosk system allows for targeted advertising as well as live updates on progressive prizes and available second-chance prizing. All of these features are delivered in a secure, controlled, networked environment exceeding lottery standards. BGi’s Playlinxx division has recently deployed it first large-scale break-open promotional product for Chevron Canada (BC’s largest gas station/retailer). Incorporating break-open tickets with 2D barcode technology, the game links to a custom-made smartphone app, designed in house. The app allows players to scan the barcode to discover prizes and to play games on their smartphones related to the promotion. Prizing is dynamic, with prizes from the pool being allotted to players in real time in accordance with parameters established by the client. In June, BGi won the RFP to supply Lotto Quebec with its Bingo Event Lottery Pull Tab Tickets.
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Global Gaming Business DECEMBER 2016
• AGEM continues to work with the Nevada Gaming Control Board (GCB) on two key issues—updating Regulation 5 and submitting language covering adaptive-play features for skill-based games. Regulation 5 addresses potential e-commerce applications at the machine, and public comments are being accepted by the GCB until December 6. AGEM’s suggested adaptive-play language is still under internal review and will ultimately be submitted to the GCB for further consideration. • In a move to show continued commitment to the Mexico gaming market, AGEM is looking to formalize its presence in the market beyond the current AGEM Mexico Committee structure. This will give AGEM increased credibility and the tools to communicate better at the regulatory and legislative levels. In a bid to support the proposed gaming bill that has been pending in the Senate for a long time, individually signed letters outlining AGEM’s support have recently been sent to the group of senators considering the bill, and the contents of the letter ran as an advertisement in the Reforma newspaper. • The board and AGEM as a whole remain focused on the possibility of Brazil legalizing gambling. To share the suppliers’ perspective, AGEM Executive Director Marcus Prater was invited to present at the Brazilian Gaming Congress in Sao Paulo in late November. October 2016 • Two new Associate members were voted in during the November meeting—Finnegan, Henderson, Farabow, Garrett & Dunner LLP, a full-service law firm from New York, and Touch Embedded Solutions, based in Taiwan. This brings to the total number of AGEM members to 152.
UPCOMING EVENTS • AGEM members were present and active at both the Brazilian Gaming Congress in Sao Paulo and the SAGSE trade show event in Buenos Aires. • AGEM will be represented at the ICE Totally Gaming trade show in London in early February.
AGEMindex The AGEM Index posted another increase in October 2016 after gaining 20.46 points in September 2016. The composite index stood at 321.9 points at the close of the month, which represents an increase of 15.04 points, or 4.9 percent, when compared to September 2015. The AGEM Index reported a yearover-year increase for the 13th consecutive month, rising 124.68 points, or 63.2 percent, when compared to October 2015. During the latest period, six of the 13 global gaming equipment manufacturers rep g the period to 5,189.14. ported month-to-month increases in stock price, with three up by more than 10 percent. Seven manufacturers reported decreases in stock price during the month, with four reporting double-digit drops.
AGEM
Exchange: Symbol (Currency)
Stock Price At Month End Percent Change Oct-16 Sep-16 Oct-15 Prior Period Prior Year
Index Contribution
Nasdaq: AGYS (US$)
9.65
11.12
11.37
(13.22)
(15.13)
(0.36)
Ainsworth Game Technology
ASX: AGI (AU$)
1.78
2.25
3.18
(20.89)
(44.03)
(1.16)
Aristocrat Technologies
ASX: ALL (AU$)
15.34
15.81
9.32
(2.97)
64.59
(3.32)
Taiwan: 3064 (NT$)
27.85
34.00
21.00
(18.09)
32.62
(0.15)
NYSE: CR (US$)
68.01
63.01
52.64
29.20
3.84
NYSE: EVRI (US$)
2.01
2.39
4.68
(15.90)
(57.05)
(0.26)
13.04
116.67
0.03
11.96
(0.02)
Agilysys
Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International
OTCMKTS: GLXZ (US$)
0.52
0.46
0.24
Nasdaq: GPIC (US$)
10.39
10.60
9.28
7.94
(1.98)
NYSE: IGT (US$)
28.72
24.38
16.22
17.80
77.07
12.51
INTRALOT S.A.
1.23
1.04
1.51
18.27
(18.54)
0.17
Konami Corp.
TYO: 9766 (ÂĽ)
4,145
3,895
2,758
6.42
50.29
2.45
Nasdaq: SGMS (US$)
12.40
11.27
11.09
10.03
11.81
1.32
Nasdaq: TACT (US$)
7.20
7.48
9.57
(24.76)
(0.02)
International Game Technology PLC
Scientific Games Corporation Transact Technologies
(3.74)
Change in Index Value
15.04
AGEM Index Value: September 2016
306.85
AGEM Index Value: October 2016
321.90
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.
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FANTINI’S FINANCE
Fiscal Trends for 2017 Now that the new normal has been established, what changes are on tap for next year?
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s we start thinking about what 2017 will offer, we can look back on 2016 and see some clear trends marking the road to the future. Indeed, it might be safe to say that 2016 has been a year when changes that began earlier have culminated into a new normal for the casino industry. Here is some of what we see and will be ruminating about as we try to project into 2017 and beyond: • REITs. The innovation begun by Penn National when it spun off its real estate into Gaming & Leisure Properties as a new publicly traded company is now mainstream. Joining GLPI is MGM Resorts’ spinoff of publicly traded MGM Growth Properties. The next REIT will be what is now Caesars Entertainment Operating Company when it emerges from bankruptcy reorganization, probably early next year. There might not be more new gaming REITs created, but there will be growing activity as more companies explore the potential of selling their properties to REITs or joining forces with them as in the deal done by Pinnacle and GLPI. For the REITs themselves, the time will come when they branch out beyond casinos, perhaps into non-gaming resorts or other entertainment industry real estate. • Deleveraging Debt and Improving Margins. Reducing debt, at least as a multiple of EBITDA, has become standard. And much of the improvement in balance sheets and profitability has come through cost containment, or outright cost cutting. Examples include MGM Resorts’ muchtouted Profit Growth Plan to increase EBITDA by $400 million a year, Boyd steadily chipping away at its debt, Las Vegas Sands increasing EBITDA margins in a tough Macau environment, or Eldorado balancing its appetite for growth through acquisitions with the need to keep debt-to-EBITDA in line. This emphasis on cost controls once was a response to declining revenues caused by recession. Now, growth of cash flow through efficiencies is 18
By Frank Fantini
more like the reality for a maturing industry. • Dividends. In another sign of a maturing industry, dividend payments continue to grow. The emergence of REITs is one way that casinos are paying dividends. MGM might not pay a dividend directly, nor does Penn National. But MGM Growth Properties and Gaming & Leisure Properties are ways for investors in the casino operators to earn dividends, assuming they hold onto their REIT shares. Elsewhere, Wynn Resorts has continued to pay its dividend even in the face of Macau revenue declines and its need for cash to finance Macau and Massachusetts expansions. And Las Vegas Sands is keeping to its promise to not only pay regular dividends, but to increase them. It would not be surprising to see other companies initiate dividends over the next year or two. • Selective Growth. As we near the latest— and maybe last—round of casino growth in the U.S., casino companies have no choice but to grow selectively. There is always the possibility of new jurisdictions, such as Texas or Georgia opening, but the odds are slim. Perhaps the biggest U.S. growth opportunities are those now under construction, such as MGM Springfield and Wynn Boston Harbor in Massachusetts. • International Growth. The most exciting opportunities for significant growth would come if major international markets open. As of this writing, it appeared that the Japanese Diet would vote on whether to legalize casinos. Brazil legalizing would open a huge market. There is some thought that if Japan legalizes, South Korea will follow by liberalizing its casino regulations. However, until those markets open, the international pickings are slim, at least for the big American companies. Las Vegas Sands, Wynn and MGM Resorts need big integrated resorts and fair and reliable governments to make big investments. That leaves countries like the Philippines and Russia to draw smaller, second- and third-tier companies like Hong Kong-listed NagaCorp and Summit Ascent in Russia.
Global Gaming Business DECEMBER 2016
• Merger And Acquisition. As growth opportunities diminish, either in number or in ability to move the needle, mergers occur. We’ve already seen this on the supplier side of the gaming industry and among online companies, primarily in the U.K. On the casino side, a couple of companies make growth through acquisition a central part of their strategy. This has long been true for Boyd, and has become true of Eldorado since it became a public company less than two years ago. And the emergence of REITs is a kind of play on M&A. But we have not seen a big deal yet among major land-based casino operators. However, that day might be coming. When Caesars restructures, it could sell or acquire properties. Penn National and Boyd have family-centric ownership that could one day want to change direction. Las Vegas Sands and Wynn Resorts have visionary founder-CEOs still going strong, but also not getting any younger. Nor can big international mergers be discounted. Genting might find buying its way into Las Vegas the best route to grow there. Crown in Australia could be an attractive target. If the Philippines gets its act together and looks like a promising market, some of those investors might want to cash out. • New Ways To Play. It seems that every year casinos are considering the addition of ways to play beyond tables and slot machines: skill gaming, social gaming, daily fantasy sports, eSports. And the future might hold more innovation, such as virtual reality. Then there is online gaming. These new ways to play are still evolving and might, or might not, become big new revenue sources. But one of the best new revenue sources might be an old one—sports betting. If sports betting is legalized throughout the U.S., it will open a new revenue stream for casinos. And perhaps as, or more, important, make them stronger entertainment centers. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.fantiniresearch.com.
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10
TRENDS
for 2017
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s always, with the coming of the new year comes new challenges for operators, suppliers and the gaming industry at large. The gaming business is approaching a crossroads in any number of areas, from the spread of online gaming to the creation of new types of experiences on the casino floor. How soon will the era of eSports blossom? Will the industry’s lobbyists finally convince the U.S. Congress to repeal the federal ban on sports betting? When will online gaming spread beyond the three U.S. states where it is now legal? With help from our editorial board and experts on each of the trends emerging in gaming, here is our view of the top 10 trends to follow in 2017. As always, we welcome your feedback on how you see the new year progressing on these and other topics.
The Era of eSports is Upon Us But how will it work in a casino environment?
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t the eSports and Casino Resorts conference in Las Vegas in October, the gaming industry finally got down to the nuts and bolts about how eSports can become a niche for gaming operators that will create revenue and excitement, as well as attracting the elusive millennial demographic. The Downtown Grand in Las Vegas is one casino that has long been bullish on eSports. Downtown Grand executives are less interested in adding to or transitioning their current lineup of slot games into skill-based machines, but has created a separate eSports parlor. The Downtown Grand’s vision is to become a destination for eSports enthusiasts, as a way to increase foot traffic and generate non-gaming revenue for the property and create an environment where eSports fans might wager on matches in the casino’s sports book. It’s a wholly different approach, but one that has paid some early dividends for the few casinos like Downtown Grand willing to take the plunge and cater to eSports fans. Downtown Grand has already hosted major eSports events in a dedicated games room, along with hosting its own weekly eSports events. Its
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Global Gaming Business DECEMBER 2016
eSports lounge is a work in progress. The lounge is about to move to a third location in the property, this time off the casino floor in a more focused area. It seems the eSports players were distracted by the noise of the nearby slot machines, so now they’ll be on their own. The Downtown Grand’s website now features an eSports section, promoting upcoming events and highlighting the weekly winners of the casino’s eSports contests. This “go big or go home” attitude is how Seth Schorr, CEO of Downtown Grand, believes you win over the eSports crowd. At G2E 2016, Schorr relayed his belief that to win over the eSports crowd, you need to be sincere. It’s not enough to simply host an event; you need to go all-in and create a
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Betting on Sports Betting Attendees at October’s eSports and Casino Resorts conference in Las Vegas got a glimpse at the city’s first eSports arena, scheduled to open in early 2017
gamer-friendly environment. At October’s eSports conference, casino operators were presented with many options for enticing eSports gamers to their properties. From eSports tournaments to daily head-to-head competitions and the possibility to interact with eSports celebrities—who in many instances are more recognizable to their fans that real sports stars—eSports can move the needle in a casino environment just by increased visitation. The opinion that eSports enthusiasts were not gamblers was dispelled by many experts at the conference. Some of them pointed to the recent scandals in “skins betting,” the wagering of game pieces, vibrant colors and other items that go along with eSports games. Even though the items are essentially worthless, millions of dollars changed hands in trying to acquire them via wagering. When it comes to betting on eSports, conference attendees learned of jurisdictions where it is currently legal. But the hurdles of adding eSports betting to the menu of wagering options at U.S. sports books are many and varied. Regulators must be convinced that the games are transparent and above board. In addition, some eSports professionals are well under 21, so the viability of adults wagering on actions of children will also be called into question. But one thing was evident at the eSports conference. It’s an issue that is only going to increase in interest as more and more casino executives strive to find the bridge to the millennial generation. —Steve Ruddock
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The AGA ramps up efforts to bring legal sports wagering to the U.S. eoff Freeman, president and CEO of the American Gaming Association, is a man on a mission. And that mission is supported by every one of his members, something that rarely happens in the gaming industry. The association has pointed out that $90 billion will be bet on sports during the 2016-17 season of professional and college football. Unfortunately for gaming, $88 billion of that total will be bet illegally. “The American appetite for sports betting has never been greater,” says Freeman. The AGA released a survey just days before Super Bowl 50, which found that 80 percent of Americans want sports betting laws to change. Sports betting legalization has been a topic in the gaming industry for the last 10 years. Delaware, one of four states grandfathered in under the terms of the Professional and Amateur Sports Protection Act (PASPA) of 1992 (Nevada, Montana and Oregon are the other three), was ready to legalize full sports betting in 2009. But a decision in a lawsuit by the major professional and amateur leagues stated that Delaware could only offer the kind of sports betting that was legal prior to 1992, which was only parlay betting on the NFL. Following the passage of PASPA, New Jersey was given a one-year window to legalize sports betting, but it never went to the voters, as nervous Republicans blocked a referendum lest it encourage more Democrats to vote and thereby defeat the Republican gubernatorial candidate. More recently, a referendum legalizing sports betting passed overwhelmingly in 2011, but the state was prevented from taking steps to allow the bets by PASPA. Subsequent lawsuits that tried to find loopholes in PASPA have been unsuccessful, so it appears that only federal action can cure this situation. In October, New Jersey Congressman Frank Pallone said he planned to introduce a bill to overturn PASPA. “The laws need a wholesale review to see how they can actually work together and create a fairer playing field for all types of gambling, both online
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NBA Commissioner Adam Silver has come out in favor of legal U.S. sports betting, leading a reconsideration of the issue by major sports leagues
and offline, including sports betting and daily fantasy sports,” the Democrat told ESPN. “We must ensure the laws are actually creating an environment of integrity and accountability, and include strong consumer protections.” The AGA isn’t very comfortable with the bill, according to sources. The organization wants a fullcourt press on a bill that has wide support. And since Pallone didn’t consult the AGA before submitting his bill, the coordination of efforts has not occurred—yet. “We see this as a three- to five-year effort,” AGA Vice President of Public Affairs Whit Askew told attendees at the Arizona Indian Gaming Association conference in October. “We think PASPA has been a failed bill for 25 years, since trillions of dollars have been wagered illegally on sports over those years. And we think that argument will resonate with the sports leagues, with Congress and with all interested parties.” Already on board are NBA Commissioner Adam Silver and Commissioner Emeritus David Stern. Major League Baseball Commissioner Rob Manfred and NHL leader Gary Bettman—whose league will locate a franchise in Las Vegas starting in 2017—have both said it’s time to take another look at legal sports betting. Only NFL Commissioner Roger Goodell—who may also be facing a decision on a Las Vegas franchise in 2017—is still on the other side of the fence. —Patrick Roberts
DECEMBER 2016 www.ggbmagazine.com
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Fading Furor ‘Off-rez’ gaming is declining
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merican Indian casino growth is slowing to a crawl, a trend tribal advocates believe will help end public and congressional criticism of Department of the Interior policy on placing land in trust for tribal governments. Casinos on newly acquired Indian lands—often erroneously referred to as “off-reservation gambling”—have generated the ire of anti-gambling House and Senate members. State and local officials also voice opposition to creating trust land for Indian governments, claiming they have too little input in the process. But slow growth of the 28-state, $29.9 billion Indian casino industry and President Barack Obama administration resolution of the more controversial casino projects on newly acquired trust lands may diminish public and political pushback against tribal gambling. “The big, national issues are pretty much muted now,” lobbyist Michael Anderson, a member of the Muscogee Creek Nation, says of controversial casino land-trust projects recently resolved in California, Wisconsin, Washington and Arizona. “The market has slowed down. I don’t think the next administration will have many big, controversial issues to contend with.” Interior under Obama processed 2,285 land-trust applications for 542,497 acres, ending a Bush-era moratorium on placing land in trust for Indians. Only 21 applications were for casinos, according to Interior. But Congress, state and local officials, and casino tribes fearing competition are seeking to amend the Indian Gaming Regulatory Act (IGRA) to limit the land-trust process. Most tribes oppose amending IGRA. House and Senate leaders also rejected efforts for a congressional remedy the 2009 U.S. Supreme Court ruling in Carcieri v. Salazar, which limits Interior’s ability to place land in trust for tribes not “under federal jurisdiction” with passage of the Indian Reorganization Act of 1934. “The focus on Indian gaming has defined politics and policy with regards to the tribes,” says Kathryn Rand, dean of law at the University of North Dakota. “The focus on gaming has been much greater than deserved.” IGRA allows tribes federally recognized before 1988 to establish offreservation casinos with the approval of state governors. It also permits casinos for newly recognized and landless tribes, those restored to federal recognition and those acquiring lands through a federal land claim. Most controversial proposals have not been newly recognized and restored tribes or tribes seeking initial reservations. The Obama administration approved casinos for the Spokane Tribe of Washington, Tohono
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The Obama administration approved the Tohono O’odham tribe’s Desert Diamond West off-reservation casino in Glendale, Arizona. Lacking a compact with the state, the casino contains only Class II machines.
O’odham in Arizona, Menominee of Wisconsin, and North Fork and Enterprise Rancherias in California. Tribes in 2015 operated 474 gambling facilities generating $29.9 billion, according to the National Indian Gaming Commission (NIGC). The previous year, tribes operated 459 facilities generating $28.5 billion, the NIGC says. Economist Alan Meister, author of the annual Indian Gaming Industry Report, said tribes in 2014 operated 489 facilities, a 1 percent jump over the 484 facilities operated the previous year. Interior’s Office of Indian Gaming lists four applications to place land in trust for casinos “pending final review” by the agency: two applications for three locations from the Chickasaw Nation of Oklahoma; one application from the Pokagon Band of Potawatomi Indians for South Bend, Indiana; and one application from the Puyallup Tribe of Washington state for a Tacoma site. The agency would not provide a complete list of land-trust applications for casinos. “Non-gaming land-trust applications will still continue at a high level,” Anderson says. “Tribes have a lot more money to buy the land. “On the gaming side, the percentage will still be roughly 5 percent of the total.” “We’re still going to see controversy over tribal casinos,” Rand says. “But it’s not the vice it was in 1988.” —Dave Palermo
Interior under Obama processed 2,285 land-trust applications for 542,497 acres, ending a Bush-era moratorium on placing land in trust for Indians. Only 21 applications were for casinos, according to Interior. But Congress, state and local officials, and casino tribes fearing competition are seeking to amend the Indian Gaming Regulatory Act to limit the land-trust process. Most tribes oppose amending IGRA.
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Global Gaming Business DECEMBER 2016
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4 Stagnating iGaming The spread of online gaming in the U.S. has stalled, but will it revive?
The addition of PokerStars to the New Jersey iGaming market was the major change in the U.S. market in 2016.
The legalization of gaming in Brazil and Japan is closer than ever
ver the past five years, legal regulated online gambling has been spreading across the globe. But the most desirable market, the United States, has proven to be one of the tougher nuts to crack. After a promising start that saw multiple states seize on the Department of Justice Office of Legal Counsel’s 2011 reinterpretation of the 1961 Wire Act, limiting its scope to sports betting and allowing states to legalize online lottery, poker, and/or casino games within their borders, legal online gambling was all the rage. By the time 2013 came to a close, just two years after the DOJ opinion was made, legal online gaming sites were available in Nevada, Delaware and New Jersey. Three other states— Minnesota, Georgia and Illinois—were selling lottery tickets online, and in the ensuing years, Michigan and Kentucky have also launched online lotteries, while Minnesota has ceased selling lottery tickets online. In 2013 it seemed inevitable; online gambling was destined to spread across the country. But as 2017 approaches, we’re still waiting for the inevitable. Continued legalization has proven problematic, with efforts slowing to a snail’s pace. The momentum from 2013 may have dissipated, but like a surfer missing the first wave, another, perhaps even larger wave can be seen in the distance. For 2017 is shaping up to be a wave year for online gambling expansion. Land-based casino companies in New Jersey, Nevada and Delaware now have firsthand experience with online gambling, and these companies, along with their peers in other states, are realizing the many opportunities online gambling can provide to grow and expand their business. With the land-based casinos companies largely on board, the task has turned to educat-
ing lawmakers that legalizing and regulating online gambling is the right thing to do: for the state, for the gaming industry, and for the customer. This has been a slow process, but it’s beginning to bear fruit, and online gambling legalization once again seems inevitable. Online gambling bills were seriously considered in no less than four statehouses in 2016: Pennsylvania, California, Michigan and New York. At the time of writing, the online gambling bills in Pennsylvania and Michigan were still active. Further, nine states legalized daily fantasy sports in 2016, with dozens of others introducing DFS legislation. The legislative progress made by the DFS industry has been extremely helpful, hastening the education of lawmakers and the general public on everything from geolocation technology to the efficacy of know-your-customer checks. Online gaming activity will continue in 2017, and it seems inevitable that several more states will legalize online gambling within the next one to two years, for the following reasons: • Online gambling is no longer an abstract idea—between DFS, lottery, poker and casino, legislatures across the country are growing more familiar and confident with the idea of legal online gaming, and the ability to provide robust regulatory oversight. • More states are turning to gambling to raise revenue, and on that front online is one of the last frontiers, and an option that has proven to be beneficial, not cannibalistic to land-based casinos. • Increased awareness of the existing black markets and the amount of money that is leaving the U.S. via these channels, coupled with the need for consumer protections, has become a leading driver for regulation. —Steve Ruddock
razil and Japan have little in common. They are on opposite sides of the world, on opposite hemispheres, with climates that are vastly different. Their economies are completely different. Their cultures have no commonalities. Yet to the gaming industry, Brazil and Japan have one important thing in common: They are countries with very large populations with a propensity to gamble, and two countries where traditional casino gaming is not legal. And more importantly, lawmakers in Brazil and Japan have made significant strides in the past year toward legalization. Brazil is probably the more curious choice politically. For years under the former president, Luiz Inácio Lula da Silva, gaming proponents hit a brick wall. However, Lula’s successor, Dilma Rousseff, was more accommodating, and realized that gaming could help jump-start the nation’s struggling economy. So, she actually was moving solidly toward legalization when she was impeached and resigned the presidency under corruption charges. The country’s interim president, Michel Temer, has picked up the mantle and is supporting legalization as well. The terms are still unclear about how much gaming would be introduced and where, but there is clearly a momentum. Unfortunately, momentum can come to a screeching halt in a country where political upheaval is the norm. But it seems likely that, at the very least, there will be a robust and transparent discussion about the benefits and challenges that will come with the legalization of gaming in Brazil. Meanwhile, longtime gaming observers are extremely skeptical of talk of gaming legalization in Japan. For at least two decades, the discussions have ebbed and flowed with the various political
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regimes in power and the overarching issues facing Japanese governments of all stripes. So, what makes this year’s legalization drive different? A few things: Last summer, Prime Minster Shinzo Abe was re-elected along with enough members of his party to completely control the Diet (Japanese legislature). Abe has been a strong supporter of integrated resorts in Japan, but had to work with minority parties in the past, which was enough to derail his plans. “This time, it’s 100 percent happening,” former Japanese cabinet member and casino supporter Kotaro Tamura told CNBC—and Tamura’s optimism may be well-founded. Not only does Abe support the gaming proposal, he has been joined by three pro-casino officials who were promoted to high-level positions in August. But now, with the support of his own party, the Liberal Democratic Party, and newly appointed casino supporter Toshihiro Nikai as secretary general of the party, the path is clear for Abe to make a major push. “Integrated resorts are an extremely effective tool when soliciting private investment for making exhibition sites and other such facilities,” Deputy Chief Cabinet Secretary Koichi Hagiuda said at a recent press conference. While China is clearly the biggest market for gaming in Asia, Japan is no slouch either, if you cite the existing gambling options in the country, principally pachinko parlors—which reportedly generate ¥19 trillion (US$187 billion) a year. Pachinko is a pinball-style game immensely popular in the country. While players can’t win money directly, prizes can usually be redeemed for money at a separate location. Although there isn’t much public enthusiasm for casinos, some believe that an education campaign would change opinions. “If the public were to understand that there would only be a couple of casinos and that they would be massive entertainment destinations that extend well beyond gambling, there would be a favorable opinion,” said Grant Govertsen of investment bank Union Gaming Asia Securities Ltd. Those IRs would become very profitable, very fast, he believes. “We believe that two IRs in Japan would quickly surpass the revenue story in Singapore, which in turn would make Japan the secondlargest gaming market in the world behind Macau,” Govertsen said. —Patrick Roberts
6 Managing Revenue Effective interpretation of data makes job easier for casino executives ig Data. The words denote industrial-strength analysis, a prolific improved presence to the gaming, hotel and resort spectrum. As casinos expand their vision by building special palaces—from state-of-the-art entertainment venues to upscale restaurants and convention areas—they relish the assessment prowess of Big Data. This tool serves as advanced information, with two characteristics. It is available to those willing to pay for it, and most useful to those who can discern it. Big Data targets optimal hotel-room pricepoints, the appropriate range for comps or a snapshot of a gambler’s loyalty tier. It removes or reduces guesswork in a time-crunched industry. Millions of dollars can ride on making the right deal to the right audience mere seconds ahead of a rival. The companies who serve operators know the role of actionable intelligence. Agilysys, Duetto, Rainmaker and VizExplorer are among gaming’s data stalwarts. While their products vary, collectively they enable casinos to make snap, accurate decisions. The outfits enjoyed a strong 2016, watching the data world blossom. As the market expands, they have something valuable for operators. “Big Data will be used to create a ‘smart casino,’” says Dr. Ralph Thomas, chief data scientist and general manager, gaming division, for VizExplorer. “Operators will be able to differentiate the entertainment experience they offer guests through the optimization of their slot floors to the players that matter, and will be able to drive meaningful interactions with players by enabling their hosts with sales intelligence, customize the offers, and respond to events on the slot floor in real time with the use of data to drive player engagement and loyalty.” Once the data materializes, operators fashion a creative interpretation plan, according to Marco Benvenuti, co-founder and chief analytics and product officer at Duetto. “What makes all this data actionable for casinos are deep integrations across the properties’ entire tech stack,” he says. “The better that a casino’s property management system talks to its CRM and
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revenue management system, the better that casino is able to take its valuations of guests—gaming and non-gaming customers alike—and develop a profitable strategy for reinvestment and direct marketing. “Integrated systems optimize casino profitability by identifying high-value guests and getting them to the property at the ideal reinvestment rate, according to demand for any booking date.” Robert Shecterle, director of marketing for Agilysys, acknowledges data’s emerging force. “Casinos already rely on Big Data to help drive revenue today, and this trend is growing at light speed,” he asserts. “Data is leveraged to build a competitive advantage at some of the largest operations across the globe. Operators will have to embrace Big Data to remain competitive in their markets. “The information will provide answers to questions like ‘What’s the value of a particular guest or guest segment?,’ ‘Which guests are most and least likely to respond to an offer?,’ and ‘What is the ratio of gaming to non-gaming spend by guest segment?’ These are all very important questions that can be easily answered with data analytics. “Big Data provides, in detail view, the alternative places where guests are spending their dollars, enabling operators to better accommodate shifts in revenue opportunities and guest expectations.” This information has enormous value if multiplied. Rainmaker has made groups a focal point of product strategy, according to Angie Dobney, its vice president of pricing and revenue management services. “Groups are one of the most significant sources of non-gaming customers, and this is an area where Big Data is starting to make a big difference,” Dobney indicates. “There are multiple providers of data that tell group hotels about the relative quality and behavior of groups. We partnered with clients at an event this this year to bring their lead-scoring data into our group revenue management process. “In addition to the information about group business, the behavior of groups is an area where Big Data is changing the game. Imagine if you had historical information about a particular group. If you knew, for example, how many rooms washed from the group block between the booking date and the arrival date, that could enable the hotel to refine its forecasts.” —Dave Bontempo
DECEMBER 2016 www.ggbmagazine.com
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Skill Wave As the first skill-based slot games arrive at casinos, the industry waits to see how the genre will evolve
n early November, Atlantic City Mayor Don Guardian joined executives of Caesars Entertainment and New York-based startup slot manufacturer GameCo, Inc. at Harrah’s Atlantic City to cut the ribbon on GameCo’s Danger Arena, the first slot machine in a U.S. casino on which the return-to-player (RTP) is variable based on the skill of the player. Danger Arena is on GameCo’s patent-pending Video Game Gambling Machine, or VGM, which looks more like an arcade game than a slot machine. It is a first-person shooter game, played with an Xbox-style controller attached to the front. The object is to use the controller to shoot robots, or “bots,” in a video environment much like that seen in Xbox or arcade shooter games. Killing six bots earns the player money. Shooting all 10 bots on a screen yields the top win. GameCo’s VGM, which won the Silver Medal in the Global Gaming Business Gaming & Technology Awards presented at Global Gaming Expo 2016, is the first example of a practical solution to the challenge presented two years ago by regulators in New Jersey and Nevada to the industry’s slot suppliers—to produce new types of slot games, including skill games that will appeal to the millennial and Gen-X customer that is the future of the industry. New Jersey officials formulated new regulations under existing gaming laws to accommodate skill play, while Nevada lawmakers passed Senate Bill 9 to provide a legal path to the consideration of skill. The New Jersey Division of Gaming Enforcement gave its final approval of the VGM in October. The call from regulators was accompanied by a call for new game styles from the Association of Gaming Equipment Manufacturers. AGEM officials, representatives of slot manufacturers and operators participated in workshops to determine the best way to solve the math puzzle of creating a game in which more skilled players receive a higher RTP, with the overall RTP still falling within minimum government guidelines. GameCo’s VGM achieves this by creating “maps”—video sequences of varying difficulty in which the player battles robots of varying skills—and using a random number generator to choose one of the maps for each play session.
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The game has 10,000 maps, and the RNG picks which map the player receives on each play. After that, skill takes over to allow the player to receive the highest possible RTP. As for the other end, the programming of the maps provides a hedge against advantage play by professional-level gamers. GameCo’s solution is only the first example of how manufacturers will ultimately incorporate skill. Moreover, it’s only one of many skill-game styles likely to crop up in the coming year. At G2E, several manufacturers presented their unique visions of the best ways to incorporate skill into slot machines. Some showed shooter-style games that will appeal to customers from millennials to Gen X to even the younger baby boomers. Scientific Games showed a new skill-based version of Space Invaders that plays just like the legendary arcade game. Konami brought forth one of its own legendary arcade games in Frogger: Get Hoppin’—which brings the classic arcade activity of getting the digital frog across a traffic-clogged street into the casino environment. Other skill games previewed at G2E seek to recreate the multi-level games played by millions on their smartphones. Gamblit Gaming showed several examples. Everi launched two casino versions of the mobile-game hit Fruit Ninja, in which players swipe at fruit flying across the screen to accumulate points. International Game Technology showed Lucky’s Quest, a mobile-style matching game that will be available for play on the CrystalCore cabinet, as well as on a mobile device using IGT’s On Premise mobile on-property network. In Lucky’s Quest, players can unlock characters, win credits and advance to new levels based on performance in the title’s symbol-matching game. Players with more skill achieve more opportunities to win the prizes. One element all the new skill games have in common is a carefully engineered and tested combination of skill and chance—a formula that rewards players with greater skill while maintaining a minimum RTP for the less-skilled players. In the coming year, the industry will watch the skill trend play out, and slot suppliers will learn, by doing, the most effective ways to solve the math puzzle of skill-based gaming—and which games will result in incremental revenue gains and new players for casinos. —Frank Legato
Global Gaming Business DECEMBER 2016
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Doing the Numbers
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What will happen when you can buy a lottery ticket on your smartphone? hen big lottery jackpots come up for grabs—like the recordshattering $1.6 billion Powerball prize awarded last January— even non-gamblers line up for a chance to strike it rich. Who hasn’t daydreamed about bagging the big prize, holding the giant check, winning millions of bucks and hundreds of new-found friends? In the U.S., more often than not, those instant millionaires bought their tickets from convenience stores or other retailers. That may seem downright quaint in the ecommerce era, but since 2011, when the U.S. Department of Justice ruled that online lotteries do not violate the Federal Wire Act (the snag that’s kept sports betting illegal almost everywhere), only six states have legalized online lottery games. “Many were saying that lottery games were going to be on your mobile phone in the next two years,” says Jim Kennedy, executive vice president and group chief executive of lottery for Scientific Games. “When you start hearing conventional wisdom passed around like an old piece of fruitcake, you have to be very skeptical.” The slow rollout has been tied to concerns about player protection and online security (or insecurity), as well as fears that too-easy access to gambling will cause some people to literally bet the farm. Kennedy says those concerns are overblown. “We have the ability to provide the necessary protections and controls. Scientific Games’ technology is already well-established. So this is not a technical issue for us as a lottery technology provider. It is much more of a regulatory and policy question.” Paul Riley, vice president of product innovation and R&D at IGT, agrees. “Being concerned about interactive wagering is an oxymoron, because you never have more control than when people are registering and you’re tracking absolutely everything they do. Lotteries can set up wagering and deposit thresholds and also allow players to set their own. They allow player self-exclusion. That’s basic 101 functionality in the interactive space—you have far more control to help people help themselves.” Another problem for online lottery may be the sheer success of retail sales— the old “if it ain’t broke” mentality. “Selling over the internet has just been slow to move, and in the places where it’s moved, it’s been relatively tepid,” says Riley. “”We can’t ignore the power of learned behavior, or the success of buying lottery at bricks-and-mortar retailers.” One of the great appeals of lottery is its “simplicity,” says Kennedy. “That little scratch-off game you think would have gone the way of the eight-track tape is still the largest contributor to the growth of lotteries in U.S. Last year alone, it grew over $3 billion year-on-year, and last year’s number was $43 billion in scratch-off tickets. The run rate for Powerball and Mega Millions was in the neighborhood of about $9 billion. So the scratch-off ticket, in all its immediacy and simplicity, seems to fundamentally capture the imagination of players.” As lotteries move toward a more digital environment, providers are adding free apps and free-to-play games to goose the games and build up player rolls ahead of online lottery regulation. “You can add extra features to your interactive mobile products like secondchance drawings and loyalty rewards,” says Kennedy. “We supply most of the instant products to the New Jersey Lottery. Just go online and take a look at their
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offers and you’ll see this mix of excitement and simplicity, which is kind of the sweet spot. What we’re seeing is the marriage of technology to lottery, and how technology makes it easier for retailers to sell the product and easier for the consumer to see and get access to the product. When you marry that to peoples’ sixth sense—their mobile device—you can create a window into that product using technology like augmented reality and smart apps, interactive loyalty programs and interactive promotions. This is really where I see lottery heading: a use of in-store and mobile technology to surround the product, making it more exciting and more convenient to play.” There is precedent for the slow adoption of online lottery technology; European jurisdictions, now well established online, dipped in their toes before taking the big dive. “Veikkaus (the Finnish Lottery) is approaching 50 percent of sales on interactive channels rather than bricks-and-mortar,” observes Riley. “In the U.S., only a few jurisdictions—Illinois, Georgia, Michigan—are doing full iLottery, and Kentucky just started. But the international jurisdictions also started small and grew. It’s going to take time, but we’ve got to follow the consumers, who are used to ecommerce. One of the areas we’re keenly focused on is mobile, because it’s become everything to consumers—our news feed, our payment mechanism, our identity.” He foresees the day lottery tickets are routinely sold on existing retail infrastructure. “So in a large retailer multilane environment you could go down every aisle, grab a little fob and scan a lottery ticket like you scan Slim Jims. We’re working hard to try to get those standardized APIs (application program interfaces) set up so we can approach the retail industry and say, ‘Hey, you can actually sell lottery on your existing retail equipment.’ It would be a win-win for everybody.” The industry is also testing cashless sales, which may require a major upfront investment but would pay off later. And digital in-store sales technologies—dedicated channels available to consumers on mobile devices only inside the store—could also be in the offing. The U.S. lottery industry does about $70 billion in sales across 200,000 retailers, says Kennedy. “To put this in perspective, I think the music industry did about $10 billion last year. So you can get very excited about a Candy Crush game that might generate $1.2 billion in total sales, but when lottery already has a $70 billion base, you want to take that enormous business and make games more entertaining and easier to interact with. You want to create a relationship with a player, rather than a transaction.” —Marjorie Preston
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9 Getting Better All the Time The future of FinCEN enforcement largely depends upon the new administration hen Jennifer Shasky-Calvery, at the time the director of the Financial Crimes Enforcement Network (FinCEN), addressed attendees at G2E 2013, she brought a stern message to the industry. She called for a complete culture change in the industry with a dedication to rooting out financial crimes… or else. Since then, Bank Secrecy Act (BSA) and anti-money laundering (AML) compliance shortcomings have caused FinCEN to bring some civil and criminal enforcement actions against licensed casinos. To illustrate, of FinCEN’s five enforcement actions in 2016 to date, three came against casinos. This followed four FinCEN enforcement actions against casinos in 2015. So what will 2017 bring to the casino industry with respect to BSA/AML enforcement? On October 3, 2016, FinCEN Acting Director Jamal El-Hindi blogged about FinCEN’s desire that casinos promote a “culture of compliance” with respect to BSA/AML issues. The post came just a day after a multimillion-dollar civil penalty against one Nevada casino and three months after another multimillion-dollar civil penalty against a casino based in Hawaii. Despite the penalties, El-Hindi wrote that casinos continue to improve their AML compliance efforts, noting that in 2010 casinos filed less than 14,000 SARs, but that by 2015, casinos had filed almost 50,000 SARs. “Those numbers tell us that casinos are paying more attention to their AML responsibilities,” according to the acting director. There is no question that casinos are very much front and center of FinCEN’s enforcement agenda. But will the BSA/AML enforcement trend against the casino industry continue in 2017? With the new Trump Administration set to appoint new, politically conservative leadership at Treasury and FinCEN, the expectation is that the aggressive and severe enforcement environment against the entire financial services industry (including casinos) will, at the very least, not worsen in 2017. The best indicator of which way FinCEN will go in 2017 is who will be appointed FinCEN director by President-elect Donald Trump. Will that individual be an ex-prosecutor like the immediate past FinCEN chief, Shasky-Calvery, who, during her tenure, ratcheted up FinCEN’s enforcement caseload unlike any prior FinCEN chief? Or will that individual be a banker or other financial services industry professional that might take a more pragmatic, and noticeably less heavy-handed approach to perceived compliance shortcomings? Only time will tell. —Carl A. Fornaris is a shareholder and co-chair of the Financial Regulatory and Compliance Practice for Greenberg Traurig.
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With the new Trump Administration set to appoint new, politically conservative leadership at Treasury and FinCEN, the expectation is that the aggressive and severe enforcement environment against the entire financial services industry (including casinos) will, at the very least, not worsen in 2017. 30
Global Gaming Business DECEMBER 2016
Back in the Black
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The rebound of Macau will be the top story in Asia in 2017 he world’s No. 1 gaming mecca is back in business. Following an unprecedented two-year slump— some analysts called it a recession—China’s only legal gaming jurisdiction seems to be pulling out of a graveyard spiral. The uptick started in August, when gross gaming revenues turned positive for the first time in 26 months. The numbers for September continued the positive trend. October beat expectations and landed the city squarely in the black. The good news coincided with the openings of two new mega-resorts on the city’s glittering Cotai Strip, Macau’s answer to the iconic Strip in Vegas. Wynn Resorts’ $4.2 billion Wynn Palace debuted in August, followed by the $2.9 billion Parisian Macao, a Sands China property, in September. They joined a growing cluster of new properties on Cotai including Broadway Macau, a Galaxy Entertainment property that opened in January 2015, and Melco Crown Entertainment’s Studio City resort, which cut the ribbon in October of that year. And there’s more to come: a new $3 billion casino resort from MGM China will open next year, and SJM Holdings’ $3.9 billion Grand Lisboa Palace will round out the Cotai offerings in 2018. Macau’s historic downturn began in mid-2014, when Chinese President Xi Jinping ordered a crack-
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down on corruption, graft and money laundering in the city. That campaign sent VIP players and junket operators heading for the hills (and other jurisdictions). At the same time, Xi ordered the city to diversify its economy beyond gaming. Operators have responded. Studio City has a Hollywood theme and includes family-friendly entertainment like a Batman virtual reality ride. Pundits have speculated that tourists will spend less time gambling at the Parisian than taking selfies in front of its half-scale faux Eiffel Tower. The Grand Lisboa Palace will have its own theme park. Angela Leong, an executive director at SJM Holdings, says VIP play will be all-important to the resort’s success, but it will concentrate on mass play. “The direction we’re going is that we have to make the hotel residents here spend more at the property,” Leong says. “We cannot really go always for the very high-end customer.” Tourism to Macau broke records during the October Golden Week holiday, which drew more than 190,000 visitors a day to the MSAR. Hotel occupancy for the month hit 92 percent of capacity, even though new resorts added 6,000 rooms to the city. Occupancy at five-star hotels increased 5.5 percent to more than 94 percent of capacity. It all adds up to a big plus and renewed optimism in the jurisdiction. The slow and steady improvements in mass market traffic and the gradual return of VIPs could mean sustained buoyancy for Macau. But many analysts have asked if this is a true rebound or merely a bump linked to new openings on Cotai. And the October arrests of 18 Crown Resorts employees working in mainland China, including Executive Vice President Jason O’Connor, promised to have a chilling effect on the industry in Macau and around the world. The Crown staffers were reportedly in China to drum up VIP business for the company’s Australian casinos. It was a big mistake, and in flagrant defiance of mainland laws. The arrests threw a scare into operators and investors, and could have the potential to drive down VIP and premium mass play at least for the short term. One informed observer—Steve Wynn—declined to forecast a quick rebound for Macau. Before the opening of his lavish, VIP-oriented Wynn Palace, he said, “The last two places that opened did not cause the market to grow, did they? No. Will this one? Good question. I’m anxious to see myself.”
Meanwhile, the Cotai Strip seems to more closely fit Xi’s definition of a tourist destination with staying power. It has more to see and do at a number of price points. That’s just what the Xi government wants to see. Needless to add, two months of gains does not make a recovery. The openings on Cotai added a total of 4,700 guest rooms and more than 200 new retail outlets to the city, but it may not be all smooth sailing from here. Galaxy Entertainment Chairman Lui Che Woo has said he will not call it a recovery until the city’s main industry sees two full years—not a few months—of progress. —Marjorie Preston
DECEMBER 2016 www.ggbmagazine.com
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CONCERTO PERFORMANCE Konami Gaming hits its stride with increased R&D and a wealth of new game styles By Frank Legato
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ast year, the big news for slot manufacturer Konami Gaming, Inc. was the unveiling of its expanded Las Vegas headquarters, which doubled its size with an additional 200,000 square feet of space. This year, the big news is how that enhanced R&D and manufacturing power is being used. Konami is using the jump in capacity to double down on the variety of form factors and game styles the company is offering—much of it calling on the inherent strengths of the slot-maker’s legendary parent company, Tokyobased Konami Holdings Corporation, to create new experiences for the gaming space. The increased capacity also has allowed Konami to offer its fast-growing content library within a collection of hardware that rivals anything in the industry. “Our Las Vegas expansion has brought a strong increase in volume and momentum to our team in the U.S., which our team in Japan works to mirror and support,” says Yuji Taniguchi, Konami’s vice president, research and development, games. “Both teams feature top-tenured talent with ingenuity and expertise. The technology and development resources we have from our parent company in Japan are best-of-breed, and it’s our pleasure to bring those advancements to the casino gaming industry.” Those advancements serve the dual purpose of bringing new game styles to the industry and building on the framework Konami already established in a game library which, over the past decade, has catapulted the company to its status as one of the top four suppliers of slot machines and systems worldwide. Steve Sutherland, Konami’s chief operating officer and executive vice president, says the increased capacity is already paying dividends. “We’re already seeing the central benefit to our product pipeline,” Sutherland says. “As our core product offering has expanded to new formats, our team has the necessary development bandwidth to support each release with a stable, robust content library. We continue to maintain significant collaboration with our design studios in Japan, Australia and through key third-party relationships to maximize our creative potential for leading original products and to support exploration of further product sectors such as VLT, multi-station, and next-generation millennial/skill-based games.” “Next-generation,” in fact, has been an ongoing theme for Konami over the past decade—a period marked by often-radical new game formats that have complemented a continuously improving core base of video slots in the KP3 and KP3+ platforms. “You see it in the market today through products like our Rapid Revolver hybrid machine, Titan 360 multi-station machine,
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and the SeleXion multi-game,” says Taniguchi. “We collaborate daily on details spanning hardware and software, with the end goal of bringing the industry’s next greatest developments to casinos.”
Concerto Collection The expanded R&D capacity in Las Vegas has freed Konami’s engineers to design new form factors for Konami games—proven KP3 and KP3+ content featured in everything from core cabinets to the largest-format platforms. The core cabinets are dubbed the Concerto Collection. “Our new Concerto Collection is the most immediate example of Konami’s increased R&D capacity that you’ll see arriving at casinos around the globe over the next nine months,” Sutherland says. “With everything including slant, multi-game, tall single screen and curved single screen, we have a record volume of new cabinet formats—all with the signature elements popularized by the debut upright machine. Our customers have shown resounding enthusiasm for the new core product lineup, and our game designers are dedicated to delivering the original content needed to support success.” The signature elements of the Concerto Collection are those that made the original Concerto video upright popular. “We’re now taking those proven elements—the sleek black finish, extra-large HD video screens, holographic side lighting, and top-performing Konami game content—to an array of video slot formats for a complete collection,” Sutherland says. The Concerto Collection includes cabinet styles that are firsts for Konami, like the Concerto Crescent, the company’s first to use a 43-inch curved LCD monitor. It joins Concerto Stack, featuring a 43-inch cinematic portrait monitor; Concerto Slant, bringing the core Concerto elements to the slant-top format; and Concerto SeleXion, the newest version of the company’s well-regarded multi-game offering. “The slant is a favorite for a number of core gambling audiences, and helps operators plan sightlines at the property,” Sutherland notes. “We’ve also brought our leading SeleXion multi-game technology to Concerto, featuring up to 10 different themes in a single upright or slant machine.” Each will be launching with content designed to best utilize that particular form factor. “Crescent, in particular, will be the launching point for premium content like the Castlevania-themed slots we unveiled during G2E 2016, based
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on the iconic Konami video game series,” Sutherland says. “Each Concerto machine carries a unique role, to serve different needs on the floor.” “Our team maintains a robust development pipeline, to ensure Konami’s customers have a great mix of the newest releases available,” adds Taniguchi. “Just considering the products we saw at G2E, Concerto Slant and Concerto SeleXion multi-game are already available; Concerto Crescent and Concerto Stack will arrive next summer; and in terms of the skill-based and multi-station concepts presented, we will likely begin navigating final products through approvals early next year, and targets for market release will stem from those results. “The next-generation skill-based and multi-station concepts carry new hardware, game play mechanics, math and design, so they’ll be subject to extensive review.”
Tapping the Potential While the Concerto Collection is poised to become the company’s defining game series, as Taniguchi notes, Konami’s increased production capacity has allowed the development of innovations in game styles at the heart of the newest trend in the slot supply sector—that of creating games that go beyond the traditional reels to appeal to new groups of players. At the forefront of that trend are games that employ skill in the outcome, and games that offer social interaction—both factors that appeal to the millennial customers the casinos seek to lure to the slot floor. Few could imagine a company better suited to fill both needs than Konami. Its Japan-based parent company, Konami Holdings Corporation, was in the business of making skill-based games and arcade-style amusement games long before it developed its first slot machine. Creator of legendary arcade and video skill-based hits from Metal Gear Solid to Frogger to Castlevania, the company has bided its time in waiting for the right moment to tap into that expertise—not to mention those legendary brands—for its casino slot business. It’s clear that moment has arrived. Two years ago, regulators in both Nevada and New Jersey appealed to the slot sector for new game styles incorporating skill. Nevada passed what’s known as Senate Bill 9 to specifically authorize
skill games. New Jersey wrote regulations into its existing law to accommodate skill, while Gaming Laboratories International declared skill to fall under its GLI 11 technical standards. Konami was one of the manufacturers working with regulators to ease the approval of skill-based games under current regulations, prominently those setting minimums for return-to-player (RTP) percentages in slot games. “Knowing its potential for driving new audiences to the casino floor, and hearing strong feedback from our customers to that effect, Konami recognized the importance of skill-based legislation, and early on we contributed in advising legislation,” says Taniguchi. “The primary factor was the challenge of balancing skill with chance. There must be some element of chance to ensure profitability and provide the property with the necessary payout ranges to carry the product. So, the recommended solution is that skill-based components should influence a player’s RTP range, and random components should provide balance therein to deliver the intended range.” Manufacturers are now beginning to release games with variable payback percentages, and Konami is one of the suppliers at the forefront of the effort.
DECEMBER 2016 www.ggbmagazine.com
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Our customers have shown resounding enthusiasm for the new core product lineup, and our game designers are dedicated to delivering the original content needed to support success.” —Steve Sutherland, chief operating officer and executive vice president, Konami Gaming
“As limited U.S. jurisdictions have legalized casino games with elements of skill, we’re actively exploring this emerging product sector,” Taniguchi says. “In order for us to develop, it was important to know we had legal markets to introduce the new skill-based concepts, and to have general guidelines for the regulatory framework by which these products would be evaluated. With both those items affirmed, Konami brought its first skill-based games to this year’s G2E Las Vegas show, with outstanding response from visitors.” Those games included a new version of its Frogger game that actually plays like the legendary arcade game. Frogger: Get Hoppin’ allows players to apply the skills they learned in the arcades to win money in a casino game. Another skill game launched at G2E is Beat Square, utilizing skill to anticipate rhythms in music for higher payouts. “In terms of executing video game play in a for-wager, skill-based environment, we now have available regulatory jurisdictions to support and explore that sector,” says Sutherland. “With standards and regulations finalized for markets like Nevada and New Jersey over the last year, we have the framework for bringing our technology to the space. “In the coming months and years, we’ll see many different skill concepts from the industry. Some will be successful and some will not, so manufacturers including Konami will work to refine and innovate this sector to help operators reach new audiences. The market is hungry for these next-generation product types, and we’re excited to be a part of pioneering its development.”
Gathering ‘Round the Game The other new game style that Konami has used its new R&D capacity to refine is the multi-station genre, which Konami entered three years ago with the release of the Titan 360 platform—eight individual slant-top slots around a central mechanical, arcade-style bonus unit. The inaugural game, Rise to Wealth, featured a large physical wheel into which balls were launched, falling into one of several slots to award a bonus prize or progressive. 34
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This year, in addition to launching a second Titan 360 game in Dragon Orb Jackpots, Konami called once again on its amusement-game roots, adapting a Konami concept popular in Japanese amusement arcades to create Crystal Cyclone, another arcade-style game that launches balls into a giant roulette-like wheel for payoffs. Sutherland says that while the Titan 360 was a hit, its size limited volume sales. “To this day, we hear from players and properties around the country about the attention (Titan 360) attracts, and the crowds that gather,” he says. “Due primarily to its size, it was a limited-release product with less than 30 units manufactured, but our casino customers are very interested in this highentertainment, multi-station product niche, because the effect has a crossover appeal to traditional gamblers as well as new audiences.” Crystal Cyclone features personal video slot stations around a central bonus arena that players access during random feature events. The machine can release as many as 60 balls around a slotted circular track with colorful light and highimpact sound. “It has even more collaborative effect because the bonuses can be simultaneous for all players,” Sutherland says. “Anyone who attended this year’s show can speak to the energy and attention this game creates. “Konami has an emerging niche in multi-station development, with great customer demand. This style product is a huge attraction for a lot of properties.” As is the other multi-player game Konami launched at G2E, a multi-station horse-racing game called Fortune Cup that brings the mini-track experience pioneered 30 years ago by the legendary Sigma Derby into the modern age. Fortune Cup combines digital components with intricate miniature race horses that move around the track much in the manner real horses do. Players are given wagering options that mirror the options at a real racetrack, from win, place and show wagers to trifectas and quinellas. Sutherland says Fortune Cup is another example of how the slot-maker is tapping into the expertise of its Japanese parent company. “Our Fortune Cup multi-station horse racing game has a level of mechanical and software ingenuity that can really only be produced by a company with our background through Konami Holdings Corporation,” he says. “Digital components of the game are powered by the Fox Engine, our company’s proprietary game development engine used in titles such as Pro Evolution Soccer and Metal Gear Solid. “Individual player stations feature a robust betting structure and real-time interface. The mechanical horse racing track allows horse figures to move side-
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“
We collaborate daily on details spanning hardware and software, with the end goal of bringing the industry’s next greatest developments to casinos.”
to-side and change direction on the course; and their actions are mirrored through LCD displays with pristine digital demonstration of the game as it occurs. Casinos have the flexibility to connect satellite terminals and displays for an arena participation environment. And similar to Crystal Cyclone, Fortune Cup undoubtedly achieves the shared community excitement that operators are looking to create.” “Crystal Cyclone and Fortune Cup are our latest developments, and each exemplifies the development and engineering expertise we have available with our parent company,” adds Taniguchi. “We expect that these products will contribute to inviting new patrons to casino floors.” Within from all these new form factors, if Konami’s enviable collection of content has one overriding characteristic, it is its reliance on proprietary themes. “This has been our approach from the beginning,” comments Sutherland. “Licensed IP is an exciting part of our portfolio—games like Dungeons & Dragons, Frogger and Castlevania (the latter two Konami-owned brands) provide an excellent mix and variety to Konami’s offering, but it’s not a focus. Just because a company has a popular licensed brand doesn’t offer any assurance that it will become a profitable game for the casino or its supplier. Any new IP projects have been given heavy consideration and research, and that practice of responsible development will continue.”
System Strength No discussion of the Konami library is complete without logging more innovation in the company’s highly regarded Synkros casino management system. One of the fastest-growing system products in the industry, Synkros is
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—Yuji Taniguchi, vice president, research and development, games, Konami Gaming best known in for its reliability, marketing tools and robust data. “Synkros has the core infrastructure to support leading-edge solutions for our customers across a variety of competitive markets,” says Sutherland. “Recent advancements have included Synkros Dashboards, which provides a visual breakdown of guest activity—from macro trends to the smallest spend details—to drive actionable intelligence insights across all areas of business. In addition, Synkros Offers Management expands the power of our marketing suite by making multiple loyalty offers available to players at a wide range of touchpoints. “Tools like these help ensure that patrons feel connected and valued, and casinos, in turn, are able to target specific player behaviors—rewarding and engaging players accordingly.” One significant addition to Synkros this year is a module developed in partnership with Acres 4.0, the innovative system company founded and led by industry legend John Acres. Synkros now includes the option to incorporate the Acres tool Kai, which uses mobile technology to improve customer service through alerts to the smartphones of employees from executives to front-line hosts. “As a leading casino systems provider, we’re committed to empowering our Synkros customers with the flexibility to leverage best-of-breed third-party providers to meet their unique business needs,” Sutherland says. “That considered, earlier this year we launched a collaboration with Acres to give Synkros users optimal ability to leverage the Acres 4.0 Kai mobile solution. Through powerful data integrations with Synkros, casinos can use Kai’s intelligent mobile app platform to recognize player activity and efficiently dispatch an employee to welcome and assist customers in accordance with their circumstance, spend and personal preference—resulting in personalized service to drive player loyalty and business profits. “The patron experience is obviously very integral to our sector, so it’s important our technology improves and reinforces service and hospitality initiatives—always strengthening interactions between the casino and its guests.” With the new Las Vegas headquarters providing the basis for expansion of the product library everywhere from core games to Synkros, Sutherland says Konami Gaming will continue to utilize the unique identity of its parent and sister companies (Konami Digital Entertainment is the company’s world-renowned video game subsidiary) to gain ground using resources few, if any other companies can boast.
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“Konami Holdings Corporation has a steep tradition of innovative entertainment and decadelong proven popularity,” says Sutherland. “We have tremendous mechanical, software and hardware engineering resources available through our parent company in Japan, with vast video game and arcade entertainment legacies spanning everything from Metal Gear Solid to Dance Dance Revolution. We maintain close collaboration with their team to leverage that longstanding infrastructure and innovation for the gambling space, and bring that technology to the casino properties around the world.” Adds Taniguchi, “For Konami, myself and my team, each day we are focused on developing casino games for players around the world to enjoy. We want them to enjoy these games at a maximum number of places permitted by regulators, which for many jurisdictions would include online, social and/or iGaming. This is why our games are available at a variety of platforms through our remote gaming server (RGS) and other distribution channels, with the goal of empowering operators to grow their businesses with the content they need to reach today’s audiences.” Taniguchi says Konami is focused on being a “strong, reliable and top-tier leader for the industry” for the near future. “Our games have long been recognized for quality, and we aim to maintain that commitment as we work diligently to bring our latest game lineup to market and explore new creative opportunities.” Sutherland takes near-term goals one step further, taking aim at a goal he set out for the company when he used the Olympic reference to the Gold/Silver/Bronze “podium” to describe the company’s market-share goals—and to launch a new product brand of the same name: “Our Konami team is focused on becoming one of the top three slot suppliers in the world,” Sutherland says. “All our efforts surround that goal, and we put it to action by equipping our casino customers with a diversity of proven games and technology to optimize their business.”
Focusing on Your Global BSA/AML Needs Mark Clayton and Carl Fornaris lead a multidisciplinary team of Greenberg Traurig attorneys who assist gaming companies with the Bank Secrecy Act and Anti-money Laundering regulations. Their focus is laser sharp, helping address the needs of gaming executives and general counsel, utilizing decades of experience on a global level, all within a single firm. > Mark is Co-Chair of the firm’s Gaming Practice. He has served as an executive and as counsel for many casino corporations and is a former member of the Nevada Gaming Control Board. > Carl is Co-Chair of the firm’s Financial Regulatory and Compliance Practice. He helps clients in their dealings with federal and state financial authorities, including AML and OFAC compliance.
The Greenberg Traurig BSA/AML team is prepared to focus on you.
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GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM 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. ©2016 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. 28336
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A President for Indian Country Obama, the adopted Crow, was hero on federal Indian policy By Dave Palermo
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n 2009, while keynoting the first of what would become a landmark series of annual White House conferences with American Indian leaders, President Barack Obama mentioned a campaign visit he made the previous year to the Crow Nation in Montana. Crow leaders adopted the then-presidential candidate as an honorary member of the tribe, bestowing on him the name Barack Black Eagle. “Only in America could the adopted son of Crow Indians grow up to be president of the United States,” Obama quipped at the inaugural White House Tribal Nations Conference. Eight years later, the adopted Crow Indian is being heralded for creating one of the most progressive and inclusive administrations on federal Indian policy in U.S. history. The annual conferences—coupled with improved tribal consultations and the appointment of Native Americans to key departments and cabinet-level positions—have empowered Indian governments largely ignored by prior administrations. 38
Global Gaming Business DECEMBER 2016
Trust Land for Tribes The hallmark of the Democratic Obama administration is placing 542,000 acres of land in trust for tribal governments, breaking a logjam of applications created when previous Republican President George W. Bush imposed a virtual moratorium on new trust lands for tribes. Tribal advocates claim Bush-era policies, particularly the land-trust moratorium, seriously limited the ability of largely deprived indigenous communities to strengthen their governments and grow their meager economies. “Land repatriation is the key to strengthening our governments and advancing our governmental authority,” says Fawn Sharp, president of the Quinault Nation and vice president of the National Congress of American Indians (NCAI). “That singular, deliberate and very strategic decision by the Obama administration created a tsunami across Indian Country. “It was huge. It was not only an incredible benefit to today’s tribal na-
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tions and citizens, but future generations. That’s a legacy achievement for tribal nations.” Along with reclaiming tribal lands, the Obama administration increased the U.S. Department of the Interior’s Bureau of Indian Affairs (BIA) budget 25 percent, from $2.3 billion in fiscal 2013 to $2.8 billion in 2016. It hiked funding of the Indian Health Service by 50 percent and allocated $3 billion of Recovery Act funding for housing, infrastructure and economic development projects in Indian Country. Obama promoted legislation to combat crime in indigenous communities, signing into law the Tribal Law and Order Act and reauthorizing funding of the Violence Against Women Act. The administration amended tax laws and revised BIA land lease rules to encourage economic growth on tribal reservations. It began implementing provisions of the Indian Child Welfare Act and launched reorganization and reform of the Bureau of Indian Education with the goal of turning control of 183 BIA schools to native communities. Meanwhile, Interior and BIA aggressively pursued Indian land and water rights settlements and approved often-controversial tribal casino projects, generating the ire of states’ rights advocates, local governments and, occasionally, other tribes. Taken together, Obama programs, policies and legislation have enabled tribes to enhance and strengthen sovereignty and self-governance while growing and diversifying their economies. “What I hear from tribal leaders is pretty much a consensus that Obama has been the best president Native American people have ever had,” says John Echohawk, a Pawnee and executive director of the Native American Rights Fund. “There’s a long list of achievements,” Echohawk says. “I couldn’t begin to recite them all.” “The best thing that’s happened to Indian Country has been President Obama being elected,” Standing Rock Sioux Chairman Dave Archambault told the Washington Post.
Reaching Out to Tribes The White House conferences were “more than a photo op,” says a tribal lobbyist forbidden by clients from publicly discussing Indian politics. “Restoring trust lands are an important part of the Obama legacy,” the lobbyist says. “That cannot be understated. That is huge. “But the most important part of his legacy is that for the first time Indian issues were really taken seriously by the administration, at the highest level.” Obama directed federal agencies to establish formal tribal consultation
“Tribes care about the land more than anything else, except, perhaps, their children. You can’t have a government without land.” —Former BIA chief Kevin Washburn
President Barack Obama wears a ceremonial blanket and cedar hat given to him during the 2016 White House Tribal Nations Conference
policies, expanding an executive order by former President Bill Clinton. Obama also created the White House Council on Native American Affairs to coordinate joint department action on Indian issues. High-level Native American appointments outside traditional positions with Interior and BIA sent the message throughout the White House and Congress that Obama was intent on addressing indigenous issues. Navajo Hilary Tompkins was named solicitor general for Interior and Kimberly Teehee, an Oklahoma Cherokee, was appointed senior policy advisor for Native affairs, a cabinet-level position. (Teehee was succeeded by Jodi Gillette, a Standing Rock Sioux, and later Karen Diver, a Lake Superior Chippewa.) “Obama understood there were basic needs in Indian Country, from health care to education to economic development,” says Ron Allen, chairman of the Jamestown S’Kallam Tribe and treasurer of NCAI. “He said, ‘We’re going to make a difference.’ He wasn’t going to simply have a liaison on tribal government affairs in the White House. He had a Native American advocate on his domestic policy team. That was a big deal.” “This administration has taken a major step in making sure tribal nations are no longer invisible,” Sharp says. “The acknowledgement and recognition of tribal nations by all governmental agencies is significant.” “This administration reset the dialogue with Indian Country,” says Larry Roberts, a Wisconsin Oneida and Interior’s interim assistant secretary for Indian affairs. “It has not shirked its trust responsibility, but engaged tribal leaders to work collaboratively on the needs of Indian Country.”
Cobell, Land-Trust Were Priorities Obama, on taking office, quickly pressed for settlement of the Elouise Cobell classaction lawsuit and related breach-of-trust litigation filed against Interior by roughly 100 tribes. The Cobell settlement cost the federal government $3.4 billion. The 13-year legal war over mismanagement of tribal trust assets had strained the ability of Interior and BIA to serve some 563 federally recognized tribes and Alaska Native villages. There are roughly 2 million members of the 366 American Indian tribes, according to the latest Interior and U.S. Census figures, with about half living on trust lands. “Getting Cobell settled was a high priority,” says Kevin Washburn, a member of the Oklahoma Chickasaw Nation who resigned in January as Interior’s assistant secretary for Indian affairs. “You can’t litigate against Indian Country and serve Indian Country at the same time.” About $1.9 billion of the Cobell settlement funded the buy-back of fractionalized ownership of 2 million acres lost by tribal governments through the failed Dawes Act of 1887. The act, which attempted to allot communal tribal land to individual Indians, resulted in the loss of 90 million of 148 million acres of tribal land. Obama appointees then trashed Interior policies held over from the Bush administration preventing tribes from acquiring trust lands needed to strengthen their governments and provide services to their citizens. DECEMBER 2016 www.ggbmagazine.com
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Despite the oftenlengthy bureaucratic scrutiny and Carcieri-related litigation, the Obama administration since 2009 has managed to process 2,285 applications, placing 542,497 acres in trust for tribes, according to Interior figures. Indigenous leaders had demanded an end to the land-trust moratorium, a policy blamed on Bush administration fears of legal liability in taking on additional trust responsibilities as well as political opposition to tribal casinos on newly acquired lands. “Tribes care about the land more than anything else, except, perhaps, their children,” Washburn says. “You can’t have a government without land.” “Restoring tribal homelands is about housing,” Roberts says. “It’s about making sure tribal communities are secure for future generations.” Interior Secretary Ken Salazar (replaced in Obama’s second term by Sally Jewell) and Assistant Secretary Larry Echo Hawk (Washburn’s predecessor) scuttled the land-trust moratorium and a “commutability” policy for newly acquired casino lands, often termed “off-reservation gaming.” “After assessing the situation and looking at the law, they said we had to make these land-trust decisions. That’s our role as the Department of the Interior,” says attorney Bryan Newland, a citizen of the Bay Mills Indian Community and former Interior senior policy advisor. “It was a moral issue. It has been federal policy dating back to the 1930s that we put land in trust for tribes, so they have a homeland. That premise served as the foundation for what followed—that we needed to work with tribes to ensure they have a homeland.” The land/trust issue became further complicated weeks after Obama took office in 2009 when the Supreme Court in Carcieri v. Salazar ruled Interior could not place land in trust for tribes not “under federal jurisdiction” with passage of the Indian Reorganization Act (IRA) of 1934. The ruling stemmed from a lawsuit filed by Rhode Island Governor Ronald Carcieri, who feared land the Narragansett Indians said was purchased for housing would instead be used for a casino. Carcieri posed a serious legal challenge to the 366 tribes in the lower 48 states, particularly the roughly 50 tribes recognized after 1934 that needed to prove they were in to some degree “under federal jurisdiction” with passage of IRA.
Dealing With Carcieri Salazar and Echo Hawk were not deterred by the Bush policies or the Supreme Court ruling. Interior directed that land-trust applications undergo a “Carcieri test” to determine whether tribes met the Supreme Court’s vague definition of having been “under federal jurisdiction” in 1934. It could have meant having 40
Global Gaming Business DECEMBER 2016
children enrolled in Indian boarding schools. Non-gambling applications were subject to review by the five Interior regional offices while the often-controversial casino land-trust applications underwent scrutiny by Interior’s solicitor and lawyers in D.C. Despite the often-lengthy bureaucratic scrutiny and Carcieri-related litigation, the Obama administration since 2009 has managed to process 2,285 applications, placing 542,497 acres in trust for tribes, according to Interior figures. Only 21 of the 2,285 applications were for casinos, according to Interior. There were 812 applications for agricultural lands, 606 for government offices and infrastructure, 396 for economic development and 328 for housing. Despite the few more controversial gambling applications, the Obama administration failed to make good on a pledge to get a congressional remedy to the Carcieri decision. A Carcieri “fix” remains blocked by House and Senate opponents to tribal casinos as well as state and local government officials seeking greater input in the land-trust process. “Carcieri continues to be a significant hurdle for Indian Country,” Roberts says, with significant money and recourses directed to the lawsuits and legal scrutiny surrounding the process, particularly for casino-related applications. “Those resources could be going to social services,” Roberts says.
Some Tough Decisions Interior has historically demurred taking action on controversial issues, particularly when confronted with lawsuits or potential litigation. That hasn’t been the case under Obama. A 2011 Supreme Court decision in Patchak v. Salazar extended for several years the deadline for opponents to land-trust decisions to file lawsuits. Washburn responded by speeding up the process of placing land in trust. Obama’s Interior acted on controversial casino land-trust proposals and rejected or voiced concern with tribal-state casino agreements, or compacts, that appeared to violate rules and tax prohibitions in the Indian Gaming Regulatory Act (IGRA) of 1988. It rejected and later approved a compact for the newly recognized Mashpee Wampanoag Tribe in Massachusetts. It approved an initial reservation casino for the Cowlitz Tribe of Washington against the wishes of local citizens and at least one nearby tribe. Off-reservation casinos were approved for the Spokane Tribe of Washing-
THE RUSH
BEFORE THE
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“This administration reset the dialogue with Indian Country. It has not shirked its trust responsibility, but engaged tribal leaders to work collaboratively on the needs of Indian Country.” —Larry Roberts, a Wisconsin Oneida and Interior’s interim assistant secretary for Indian affairs
ton and Menominee Tribe of Wisconsin, although the latter was rejected by Governor Scott Walker. Interior also supported controversial casino projects for the North Fork and Enterprise rancherias in California. Washburn’s Patchak remedy allowed tribes rebuffed in efforts to secure tribal-state gambling compacts to instead stock their casinos with Class II bingo machines that did not require state regulations. Washburn supported Tohono O’odham’s right to build a casino on Phoenix-area property obtained in a federal land claim, a project opposed by nearby tribes, state officials and members of Congress, particularly Senator John McCain of Arizona. The two squabbled at a Senate hearing. Obama appointees to the National Indian Gaming Commission (NIGC), the federal regulatory oversight agency for roughly 480 tribal casinos, focused on consultations and training of tribal regulators, much to the chagrin of congressional critics seeking more enforcement actions. “Obama’s legacy in Indian gaming was to treat it as a still-much-needed economic development tool for tribes,” says Kathryn Rand, dean of the University of North Dakota law school. Interior established a land-trust regulatory process for Alaska villages and streamlined what Indian law scholars called a “broken” administrative process for acknowledging native groups as recognized tribes. The new federal acknowledgment rules angered several tribes, some with casinos who feared increased competition and others afraid the revisions would dilute standards for federal recognition and diminish tribal identity. When a federal court in October denied an injunction to temporarily halt construction of the controversial Dakota Access crude oil pipeline that threatened the water supply to the Standing Rock Sioux Reservation in South Dakota, Obama’s Interior Department, Army Corps of Engineers and Department of Justice stopped the project, the target of at times violent protests. “Within minutes of that court decision being announced, the administration agreed to do just what the tribes were asking, to temporarily halt that project and conduct a review,” Newland says. “We have work to resolve issues and not simply litigate,” Roberts says.
A Historical Perspective The tribal government gambling industry—largely created with President Ronald Reagan’s enactment of IGRA—has been credited with generating social and economic progress on Indian lands. But scholars point to a federal policy of tribal self-determination adopted in 1975 by then-President Richard Nixon as having a greater, more positive impact on indigenous communities. “Tribal sovereignty and self-determination are the keys to progress in Indian Country,” Rand says. “Tribes know gaming alone is not the answer. It is a tool, an aspect of tribal progress.” Tribal gambling is a $29.9 billion industry, according to the NIGC, but 42
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much of the revenue is generated by small-enrollment tribes near major population centers. Gambling has enabled many of the 240 casino tribes to subsidize inadequately funded housing, health care and social-services programs. But it has not had a significant economic impact on many larger, remote reservation tribes in the Midwest, Southwest and Great Plains. About $16 billion of $28 billion generated by tribal casinos in 2014 came from California, Oklahoma, Washington and Florida, according to economist Alan Meister, author of the annual Indian Gaming Industry Report. Twenty-three percent of Indians continue to live below the poverty line, according to Interior and the U.S. Census, and only about 50 percent are employed. About 20 percent work for federal, state and tribal governments. The Obama administration is credited with helping to enhance tribal self-determination by empowering Indian governments and courts and eliminating tax and regulatory barriers to creating businesses on and off the reservations. “Under the Obama administration, it was made very clear from the very beginning that tribes are in the best position to govern indigenous people and native lands,” Sharp says. “The administration wanted tribes to formulate their vision and consult with the U.S. government.” “Obama returned the country to a place of government-to-government respect and mutual relations with tribes,” Rand says. “I don’t think his work in that area was groundbreaking,” Rand says of Obama, noting the historic swing of federal policy from paternalistic support to terminating tribes and, eventually, Indian self-determination. “But he returned the country to a place from which it had deviated.”
The Future Remains Uncertain Obama’s commitment to Native America may have stemmed in part from tribal political support and more than $1 million in contributions to his 2012 re-election campaign. Individual contributions from tribal citizens expanded the total. Obama did not endorse the Tribal Labor Sovereignty Act, legislation intended to give tribes parity with states in exemptions from the National Labor Relations Act, indicating an equal if not greater loyalty to organized labor. “Between the unions and the Indians, the Democrats usually go with the unions,” says attorney Michael Anderson, a member of the Muscogee Creek Nation and former Interior deputy assistant secretary for Indian Affairs. But Indian leaders say they are hopeful the next administration will mirror Obama’s cooperation and collaboration on indigenous issues. Tribes fear the prospects of a Republican Donald Trump presidency, noting his anti-Indian rhetoric in congressional hearings on Indian gambling.
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Wisdomof the
Ages
Five ‘seasoned’ members of the gaming industry share their experiences and predictions
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ith the gaming industry seemingly obsessed with millennials, the people who built the industry into what it is today can often be overlooked. And that would be very unfortunate, because within the older members of the industry resides history, experience, wisdom and integrity. As the saying goes, you can’t know where you’re going until you know where you’ve been. The five men profiled in this piece all know where they’ve been. And most of them have a good idea where the industry is going. They’ve been gaming innovators, casino executives, enlightened regulators, casino developers, brilliant academics and much more. But they are far from the end of the story when it comes to the seasoned observers of the industry. Most companies and organizations have these people in the ranks. It’s always a good idea to seek them out, because understanding where you’ve been will always be a good guide to where you are going.
Mystery Man John Acres, President and Founder, Acres 4.0
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ou would think the man behind such groundbreaking innovations as player tracking, progressive jackpots and instant bonusing—technologies that now largely define the machine gaming experience as we know it—has seen it all. But John Acres will tell you no. “Right now, gambling is no longer growing,” he says. “For the first 40 years of my career, gambling was a growth industry. And now it’s not. If we define casinos not as resorts but as gambling spaces, casinos are dying.” He doesn’t see a lot out there that promises to substantially change this. From the Las Vegas headquarters of Acres 4.0, his newest and boldest venture yet, he’s surrounded by the physical evidence of the massive sums companies have invested on the Strip to create entertainment experiences whose effect has been to relegate the casino to a relatively minor place in the profit picture. Successful as this has been, and Acres readily acknowledges as much, for him it only highlights what he describes in blunt terms as a “crisis.” “The crisis we have is one of gambling,” he says. “There are lesser amounts of money being gambled now than there was last year, and the player base is aging.” He applauds the move toward skill-based games, but as he’s quick to point out, “Skill-based games are not new. Video poker is a skill-based game. This is not new stuff.” At best, it’s a Band-Aid. “If all we do is focus on the game con44
Global Gaming Business DECEMBER 2016
tent, then ultimately the consumer can simply turn to the internet and play at home, and land-based casinos die. The only edge land-based casinos have is their environment and people. Human interaction and inspiring environments, that’s what land-based casinos offer, and we don’t go a good job of featuring that.” At its core it’s a “psychological problem,” he says, “a marketing problem that has a technological solution.” It’s a problem he’s devoted his now-legendary career to pondering. It began in the early 1970s, when as a 19-year-old Air Force recruit stationed in Las Vegas he decided to earn some extra money repairing slot machines on the Strip in a small arcade-style casino of a kind that have long since disappeared. What intrigued him was the personal touch that was ubiquitous in the town in those days, how his casino manager would scan the floor, spotting valuable players by sight, sometimes intervening in a losing streak by walking over and introducing himself and taking out a key to open a machine and reset it to fill a coin tray. Inspired by Bill Harrah, who’d invented a system of “premium points” that rewarded players with paper coupons exchangeable for gifts and small ap-
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pliances and the like, Acres started a company called Electronic Data Technologies. EDT refined Harrah’s invention with ticket dispensers attached directly to the slot machines at Steve Wynn’s Golden Nugget. Then, on a visit to South Africa’s Sun City, Acres was given a card punched with holes, not a key, to open the door of his hotel room. A light went off. He took the card home. That Christmas he noticed his wife had bought a Texas Instruments Speak and Spell toy for one of the kids. What grabbed his attention was the game’s sophisticated display. What if he could combine something like this with something like that Sun City room card? Conceivably, it could do far more inserted into a slot machine than a stream of paper tickets or coupons. It could render them both obsolete. Modern player tracking was born. He went on to co-found Mikohn Gaming, inventors of the progressive jackpot. With his third company, Acres Gaming, he wondered if it wasn’t possible to reward deserving players in real time right at the device, and from that sprung an equally novel idea: instant bonusing. With Acres 4.0 he’s set himself what may be his greatest challenge yet, no less than “changing the systemic way in which we entertain our guests on the casino floor.” It envisions mobile technologies, cloud computing and a cutting-edge package of artificial intelligence tools called Kai, all working in tandem to learn more about players in the moment than anyone has bothered to know up to now, and using that knowledge to enrich the realtime relationship between player and device in ways never imagined. It’s about energizing employees, too, steering this revolutionary assemblage of mind power to identifying morale issues and developing solutions to resolve them. In the end, it’s about restoring to the casino experience the all-important human factor, the thing that made it fun and emotionally rewarding in the first place. It’s what inspires Acres to believe that gaming can be a growth industry again. But it hasn’t been an easy sell. “Our business is about offering risk. But we ourselves won’t take that risk,” he says. “We won’t play with these multibillion-dollar investments. And we’re going to have to change that.” Resistance is nothing new to Acres. It’s been his life’s purpose to overcome it. He remembers how it took years for player tracking to become accepted. He’s encountered it every step of the way. “We want to do tomorrow what we did yesterday,” he says. “And that’s not going to work. It’s not working today. It’s sure not going to work tomorrow.” —James Rutherford
Playing In Traffic Dean Macomber, President, Macomber International
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n today’s parlance, he would be a geek, but in the phraseology of his time, he would have been described as an “egghead.” Dean Macomber has one of the most analytical brains in the industry, able to drill down to the core of a problem. Along the way, he explains not only how he draws his conclusion but why, and lists all the elements he weighs to make that decision. And his conclusions will be clear and concise, and more often than not, spot on. Macomber’s path to gaming was rather traditional for someone that looks at the industry from a unique perspective. “I ran backwards into this industry,” he laughs. “I never intended to stay in it, but I liked to ski and bike in Lake Tahoe, so when a casino in Tahoe had an opening for a craps dealer, I took it while I was waiting to get accepted to law school. I expected to think of it as a fond memory. But I didn’t get accepted to law school; it precipitated a career in the business. I eventually got hired in Atlantic City and opened Bally’s Park Place. I worked there for five years and later was hired at the old MGM (the new Bally’s) in Las Vegas as vice president of casino operations. And the rest is history.” Macomber bounced around between working for different projects and consulting, but then landed in the job that he considers his “Camelot.” “I went with Larry Woolf to open Casino Niagara in Canada,” he says. “Larry’s one of the best bosses I ever worked for, and it was enjoyable coming to work each and every day. It certainly was the best business experience in my life. We went from zero employees to 3,200 and opened the casino in 137 days.” He later worked with Indian gaming enterprises, and moved to Asia, where he helped to operate Sands China properties in Macau. He ran a casino in the Philippines and has worked with casino companies in Vietnam, Cambodia and most recently, Russia. “I know a little about a lot of things and a lot about some very specific things,” he says. “It’s put me in a position where I can do some real interesting and very fulfilling things in executive-level consulting.” Macomber has no intention of retiring, and looks forward to addressing some of the challenges facing the industry. “Like most industries, gaming has to face problems that are both internally and externally influenced,” he says. An issue that includes a little of both is the issue of saturation. “I don’t think it is saturated,” Macomber says. “It’s only saturated in the context that gaming has always been a privilege, not a right. It’s one of the few indus-
tries where you can’t go attract investors, design a facility and open a business. But that was the only way the industry was going to grow in the beginning. To legitimize the industry, we’ve gone from gambling to gaming to entertainment to destination resorts to integrated resorts… anything that would avoid the ‘sin’ label. “However, other ‘sin’ industries—alcohol, tobacco, etc.—exist in most states on every corner. Contextually, gaming has evolved into an industry that can only exist in a few places. It has evolved to where they prefer big casinos, which limits the number of bidders and people who can participate. “On the other hand, you have places like Beale Street in Memphis, Bourbon Street in New Orleans, South Beach in Miami, Lan Kwai Fong in Hong Kong, which contain many multiple units in one location. There is no reason why there couldn’t be six or more casinos in one location to offer their customers a different experience in each one. And when you only have one integrated resort in a state, distance reduces the number of people who will participate. If we can loosen that knot, saturation won’t be an issue.” Macomber believes the industry needs to deal better with problem gambling. “It’s our problem; it’s our ‘wart,’” he says. “Every industry has one. If we can discover how to better deal with this issue, we can grow exponentially. The industry would be well served to never give up on this issue. It’s another knot we need to untie.” He also says the attitude of governments toward the industry must change. “They treat us as income,” he says, “they don’t treat us as businesses. When governments require billions of dollars of investment with tax rates of 40 percent, they’re only considering the revenue we produce. It’s a problem in many areas—the number of casinos you will permit; what kinds of gaming you offer; what amenities you can offer. When governments determine what casinos are going to be like rather than the businesses themselves deciding what works best for the market, the industry suffers.” Macomber has lots of opinions on how the industry will grow and prosper in the future, and he hopes to get the chance to lend his years of expertise and analysis to all those who are shaping the future of gaming today. —Roger Gros
DECEMBER 2016 www.ggbmagazine.com
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Playing In Traffic Steve Rittvo, President, The Innovation Group
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t’s the early 1990s, and the casino industry is the farthest thing from Steve Rittvo’s mind. He’s built a successful company, Urban Systems, that does traffic surveys and studies traffic patterns for large developments—residences, retail, manufacturing, resorts and more. But when he was hired by Chris Hemmeter to do a traffic study for a casino that he planned to build in New Orleans, Rittvo was hooked. Even though Hemmeter’s casino did not get developed, Rittvo jumped into gaming with both feet. Gaming in Louisiana was legal on rivers, and Rittvo saw an opportunity. “I looked at a map and saw that riverboats were permitted on the Sabine River, off Lake Charles, which was very close to Texas,” he explains. “A friend had an airplane, so we jumped into it and took a ride.” They found a location on the Sabine that would work, optioned the land, and worked the market. “Nobody liked it,” he laughs. “We went to more than 20 companies and got turned down. Finally, Players International decided to get on board. We ended up as the second license in the state. At the end of the first year, it was the most successful riverboat in the state.” That led to the start of his consultancy, which soon became the Innovation Group, spun off from Urban Systems. “Through my work in the Lake Charles project, I got to meet a lot of people,” he says. “I found I liked the people and loved the industry, and had a lot of fun.” Soon, the Innovation Group was one of the most sought-after consulting firms in the business. Rittvo produced an annual gaming almanac for Jason Ader and Bear Stearns. “It gave us great exposure,” he says. “We began to consult for major gaming companies that were trying to get into riverboats and Native American gaming, and later racinos. Our first Native American project was with Pechanga in Temecula, California. We started with them in a tent and today it’s grown into a massive integrated resort.” One of the companies that employed Rittvo early on was Las Vegas Sands. After working for the company examining some U.S. casino opportunities, the Innovation Group expanded internationally. “We’ve worked for Sheldon Adelson in Macau and Singapore,” he says. “We did the first non-PAGCOR casino in the Philippines with Caesars. Overall, we’ve worked in 70 countries and 43 states.” With the slowdown of gaming development in the U.S., Rittvo says the Innovation Group has adjusted its focus. “I don’t like the term ‘saturation,’ so we use ‘fully developed,’” he says. “In those fully developed areas, the game has changed. The focus is now on growing market share as opposed to growing the market. That has put more emphasis in our organization on marketing, foodand-beverage, retail, entertainment and the like.” The focus of the Innovation Group has shifted much more to the international market, he says. “Five years ago, 80 percent of our business was North America,” he
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says. “At this point, it’s probably only 40 percent to 50 percent.” The Innovation Group was an early adopter of iGaming, as one of the four partners to launch the iGaming North America conference, the first U.S.-based conference about online gaming. “Internet gaming and social gaming have become a very large part of our business, and we’re trying to advise companies where the industry is going in these areas,” he says. The evolution of the industry is continuing to progress, according to Rittvo. “Gambling/casinos had more of a cache when they were considered a ‘sin’ activity,” he says. “They’ve been accepted now as part of mainstream entertainment. In one sense, that’s good because people are comfortable going to casinos—there is no stigma. But on the other hand, it’s not as edgy. “We also haven’t done a great job in backfilling our customers as the clientele grows older. We’ve done better than horse racing, but we need to create an environment that attracts people under 40. It has to return the excitement that was there when casinos were more edgy.” Rittvo says slot machines don’t carry the same excitement because they are so ubiquitous. “They’re in bars, they’re in restaurants,” he says. “I’m watching the skillbased gaming activities, which I think has some legs. Not sure if it’s really going to attract younger people, but I like where the thought process is going.” The business model is also changing, which challenges some of the traditional gaming operators. “The evolution of food-and-beverage and entertainment from loss leaders to profit centers is an important development,” he says. “Operators who understand this can transform their casinos into entertainment centers—multi-dimensional, multi-generational, multi-experiential.” Rittvo says his personal opinion is that the gaming industry does not do a very good job of outreach to minorities. “African Americans are very under-represented in the casino player base,” he says. “There is a real opportunity with the Hispanic community. The industry has done a great job with the varied Asian communities, but I think there’s still more growth to come with minorities.” —Roger Gros
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Legal Eagle Jeffrey A. Silver, Partner, Dickinson Wright
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eff Silver was in his mid-20s, not many years out of law school and an up-and-comer in the Clark County District Attorney’s Office, when he was appointed to the Nevada Gaming Control Board and was confronted one day with the contents of a wiretapped conversation among a group of mobsters discussing whether to kill him. It was the Wild West of Las Vegas in the late ’70s, and the state would soon be engaged in an epic battle to remove mob associate Frank “Lefty” Rosenthal from the gaming industry, an event whose twists and turns, thanks to the movie Casino, would become enshrined in the popular imagination. It was expected to be smooth sailing for Rosenthal in his application for a Nevada gaming license. That is, until a retired FBI agent sent Silver copies of the transcripts from a series of congressional hearings into organized crime that had been held more than a decade earlier. They were the hearings famous for the testimony of Mafia soldier Joe Valachi. But they also ranged into mob involvement in point shaving and bribery in college sports. And they implicated Rosenthal. From then on, Rosenthal’s days in Las Vegas were numbered. But not before Silver got a call from the FBI about the plot on his life. “Obviously, there were some very sinister people who were around at that time. It wasn’t just Rosenthal,” he says. “There were people at the Tropicana, at the old Aladdin, there were a lot of influences going on in other properties.” So the young lawyer sat in the local office of the FBI and listened as word for word the idea of his murder was considered and then discarded. “They decided at the end of the transcript that it was going to create too much heat if they did that,” he says. It was frightening, nonetheless, as he remembers all these years later how he felt at that moment. “Pretty puckered, I’d have to say,” he chuckles grimly. Last year, Silver joined the Las Vegas office of the national firm of Dickinson Wright, capping a distinguished career heading his own practice and highlighted by top-level executive stints at the historic Riviera and Landmark hotels and at Caesars Palace. At Dickinson Wright he specializes in gaming, liquor licensing and regulatory law, planning 48
and zoning, contractor licensing and transportation with an A-list clientele that includes Las Vegas Sands, Gaming Laboratories International, the Mohegan Tribal Gaming Authority, Dubai World, Westgate Resorts, Sega Sammy Holdings, Bell Transportation, Ryan’s Express and TopGolf International. His expertise has been sought by the American Bar Association, the International Association of Gaming Advisors, the U.S. Travel and Advisory Board, the Las Vegas Convention and Visitors Authority and the Greater Las Vegas Chamber of Commerce. He has testified before Congress and the Nevada Legislature on gaming law issues and has consulted on regulatory matters for a variety of jurisdictions. Looking ahead, he sees a dynamic and ever-fluid gaming landscape in which the battle against money laundering has become more important, in which new technologies are clamoring to be embraced, new jurisdictions are emerging at home and abroad, and internet gaming, skill-based games, fantasy sports and eSports all pose unique regulatory challenges. As he said when he joined Dickinson Wright, “It’s an exciting time to be a gaming lawyer.” Yet it’s difficult to imagine how these brave new worlds would be possible without the foundation laid by a band of determined Nevada regulators all those years ago. “What’s changed,” he says, “is that everyone knows and understands that the background capabilities of the investigative side are at the highest levels, and the cooperation with other law enforcement authorities is at the highest level.” It’s difficult as well to imagine a time when this wasn’t taken for granted. “I refer to Rosenthal as the quality control inspector for gaming regulation,” Silver says. “Every aspect of the gaming regulatory process was in some way tested by him, unsuccessfully.” Certainly, gaming would never have evolved into the force in entertainment it is today, Wall Street could never have had the impact it’s had, if Nevada hadn’t waged and won its war on organized crime. The importance of Silver’s role in that victory received fresh, and somewhat ironic, recognition in his recent appointment as chairman of the National Museum of Organized Crime and Law Enforcement— the “Mob Museum,” as it’s popularly known, located in a former state courthouse in Downtown Las Vegas. “That’s a passion for me,” he says. “I’ve been involved in that pretty much from its inception.” Does he see the job as a natural fit? “Yeah,” he laughs, “I definitely have institutional knowledge, if nothing else.” —James Rutherford
Global Gaming Business DECEMBER 2016
The Long View Roy Student, President, Applied Management Strategies
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or someone who’s spent decades in the 24/7 casino industry, Roy Student keeps surprisingly early hours. We’re talking farmer’s hours: Student is early to bed (9 p.m. nightly) so he can rise at 4 a.m. to talk to gaming clients around the world. His company, Applied Management Strategies, has one purpose: “To build companies—startups and established companies, small, mid-sized and big companies, and companies around the world,” says Student. “Wherever they’re starting, we set them on the ‘yellow brick road’” to success in the casino industry. He first landed in Oz—make that Las Vegas—in 1973. A native New Yorker with a degree in industrial engineering, Student was working at a racetrack equipment manufacturer when MGM tapped him to automate the casino floor at its first integrated resort, MGM Grand. “I was a poor kid from the South Bronx tenements,” says Student. “I had never heard of Las Vegas.” Yet, suddenly he was hobnobbing with the wizards of the industry, people like Carl Cohen, Al Benedict, Major Riddle, Bernie Rothkopf and Sidney Wyman, among others. He palled around with junket runner Big Julie Weintraub, who pulled gamblers from East Coast racetracks and imported them to “this little tinsel town” in the Nevada desert. “These were the true gamblers: the scrap metal guys, the jewelry and garment district guys who shot craps in the foxholes of World War II and became wealthy after the war,” he says. “These guys loved to gamble, and they loved Vegas, with its glamorous resorts, fantastic shows and famous stars like Frank Sinatra, Sammy Davis Jr. and Henny Youngman.” Before Wall Street and corporate America took over Las Vegas and the larger gaming world, “You’d do a deal in a lounge on a cocktail bar napkin and next day send it up to the controller, who wrote up a contract,” says Student. “Your bond was your word. It’s a different atmosphere now.” Such reminiscences may make Student seem like an old-timer, but he knows today’s game. Just some of his credits include launching the first CMS system in the industry and introducing casinos to server-based gaming, and now he’s focused on building non-gaming revenues. “We’ve developed a generation of video gamers who would rather go to a nightclub and
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pay $5,000 for a bottle of wine than gamble,” he says. “Today it’s all amenities; there are 1,001 things you can spend your money on. Over the last couple of years, the question has been promoting the non-gaming patron: How do you qualify him as a player and how do you rate him?” Though the ring-a-ding casino of old has gone the way of the wooly mammoth, Student is confident gambling itself will survive. Over the course of 40 years, he’s seen the industry endure and adapt, again and again, and personally presided over some pivotal changes. As past president of Cyberview Technology, Student and company helped usher in the era of server-based gaming in the U.S. As a founder of Gaming Systems International, a world leader in the development and implementation of casino management systems, his team helped “put casinos together on four continents—we flew all over Africa, the Philippines and the Caribbean besides the United States.” In his latest passion, he is pushing for the diversification of revenue streams in casinos and integrated resorts. The millennials of today “will be players in the next generation,” he says. “Maybe the next thing will
be skilled gaming, but I think we’re going to have evolutionary, not revolutionary change. We’re going to see lots of gaming and more gaming, but it will be a side issue. People will come in for all the amenities, and it just so happens you can play craps and go to slot machines. It will part of the entertainment experience.” The multibillion-dollar infrastructure of gaming—bricks-and-mortar casinos in dozens of states and in jurisdictions around the world—also will survive, Student says. “In Las Vegas, for one, it will be fed by the 42 million people coming in each year, and technology is going to help us enhance it. We’ve seen less slot machines on the floor, and they may take different forms, shapes and sizes and the cabinetry may change to be more appealing. But they’ll always be there, and tables will always be there.” And if gaming revenues continue to taper off? “The overall revenue will constantly rise as people spend a little less on gaming and more on entertainment. “We are not in the hardcore gambling business anymore,” says Student, who’s been around long enough to know. “We’re in the entertainment business.” —Marjorie Preston
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have one or more feet in the internet. Wagner told the State House News Service, “It is one of those subject matters that seem to capture the attention of the public and public policymakers, and so we’re going to give it a pretty good look.” The commission is expected to make a recommendation to the legislature by July 31. Donoghue has said that the panel will meet every four to six weeks. Earlier this year, the legislature passed a bill that legalized daily fantasy sports, but which will expire in July 2018. That will give the commission enough time to recommend a bill that will be ready by that time—or so the theory goes.
DraftKings and FanDuel Expected to Merge
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fter months of speculation, reports now say DraftKings and FanDuel—the two largest daily fantasy sports companies—are planning to merge. Bloomberg News cited unnamed sources in saying the merger was imminent and that the new company would be run under DraftKing’s CEO and co-founder Jason Robins. FanDuel co-founder Nigel Eccles would be chairman of the board for the merged company. The board itself would draw evenly from both companies, Bloomberg said. ESPN News also confirmed the discussions. The two companies offer almost identical fantasy sports contests, and investors in both companies have been urging a merger for months, the report said. The companies would also be able to unify their efforts to have DFS contests legalized in U.S. states. The two companies have been fighting a state-by-state battle for regulatory approval and legislation in more than 30 U.S. states for more than a year. According to Bloomberg, one major stumbling block for the merger has been which of the two companies’ CEOs would run the merged company. No reason was given for Robins being chosen, and sources told the news service the deal leaves open the possibility of hiring an outside executive to lead the companies. After a merger, the new company would likely start another round looking for new investors.
Special Massachusetts Commission to Study iGaming, DFS
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he Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports, created by legislation signed by Massachusetts Governor Charlie Baker in August, began meeting October 31. 50
It is composed of experts from both the gaming industry and the law, and its brief will be to study online gaming and fantasy sports gaming with an eye towards crafting future legislation to regulate the two industries. In setting the commission’s parameters, the law said that it will look at “economic development, consumer protection, taxation, legal and regulatory structures, implications for existing gaming, burdens and benefits to the commonwealth and any other factors the commission deems relevant.” Its brief does not include making recommendations for an online expansion of the state lottery. Massachusetts Gaming Commission Chairman Stephen Crosby
The commission’s members include Senator Eileen Donoghue and Rep. Joseph Wagner, who will be the joint chairmen, Massachusetts Gaming Commission Chairman Steve Crosby, Senator Jennifer Flanagan, Rep. James Kelcourse and Assistant Attorney General Dan Krockmalnic. Other commissioners will be appointed by House Speaker Robert DeLeo and Senate Minority Leader Bruce Tarr, although those members have not been announced. Peter Schoenke, chairman of the Fantasy Sports Trade Association, has also been named to the panel. Wagner and Donoghue are also co-chairmen of the Massachusetts legislature’s Joint Committee on Economic Development and Emerging Technologies. Crosby has long advocated an “omnibus” approach to legislation on all forms of gaming that
Global Gaming Business DECEMBER 2016
Singapore Pools Launches Online Gambling Site
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nline gambling has launched in Singapore, as state-owned lottery firm Singapore Pools has gone live with an online site. According to Yahoo! Finance news service, the lottery firm’s service began operations with online versions of the 4D and Toto games and sports betting. “Many who like our lottery and sports-betting games play for just a little flutter or social recreation,” read a statement from Singapore Pools. “However, we recognize there may be a minority who may play beyond their means. As such, we have safeguards in place to help create a responsible gaming environment for all. We design and communicate our products in a manner that will not promote excessive and irresponsible play. We have low minimum bet amounts and offer a conservative range of sports bets.” Horse-racing operator Singapore Turf Club has also received the exemption, and is expected to launch an online gambling service via its iTote platform this month. Under the exemptions, Singapore’s government will conduct routine audits as well as physical inspections to ensure the domains are providing sufficient player safeguards including gambling limits. Players cannot use credit to play the sites.
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eSports Takes Center Stage in Las Vegas
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he inaugural eSports and Casino Resorts conference was held in October at the SLS in Las Vegas, bringing together executives in the casino and eSports industry to discuss mutual possibilities. Organized by Narus Advisors, topics included hosting eSports events, wagering on eSports, regulatory aspects of eSports, opportunities in Indian Country, the demographics of eSports enthusiasts and more. Bottom line? Casinos should not embark on any eSports initiatives without consulting experts in the industry. Authenticity is crucial to the success of any venture because of the fickle nature of the eSports market.
Christina Alejandre, vice president and general manager of eSports for Turner Sports, explained the possibilities for broadcasting eSports events.
Steve Arhanset, the owner of Team Liquid, explained how eSports teams are organized and compete.
Narus Advisors partner John Caldwell led a panel discussing how casinos could succeed by holding eSports events aimed at a younger demographic.
Robert Rippee, director of the new eSports lab at UNLV’s International Gaming Institute, revealed the research that the lab would undertake in 2017 and beyond.
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Why stadium games could be part of the future of the casino floor By Dave Bontempo
Packing I
the House
n a gaming-industry heartbeat, ETGs are the EKG. Electronic table games once comprised a faint pulse. Small companies reached the gaming-floor fringe with electronic versions of classic games. The low-maintenance, low-denomination products serviced slowgame areas and patron recruitment. Now, the heartbeat grows stronger, with large companies acquiring small competitors or enhancing their ETG menu. The emerging stadium concept has ignited. It offers excitement, perceived largesse and faster play resembling Las Vegas and Macau, the worldwide ETG mecca. Gaming-industry kingpins like IGT, Scientific Games and Interblock see substantial sector potential. They have baptized the emerging ETG niche by launching a string of worldwide deals for stadium setups—ETGs that typically use live dealers and beam games to individual play terminals set up in a stadium configuration. This market area, long considered an expansion target, has begun reaping rewards. “The growing popularity of ETGs means increased revenues and new money flowing into casinos, at growth rates exceeding other product categories,” says Colleen Stanton, vice president of global marketing for Interblock, the Slovenian-based manufacturer and supplier of luxury electronic table games. “Recent data confirms that not only are new carded players more likely to use ETGs than almost anything else on the casino floor, but existing slot players and table-game players are spending incrementally more on ETGs. “Stadiums attract core gamblers who enjoy playing their favorite table games from the comfort of their own play station,” Stanton adds. “They marry the concept of a live dealer with the security and privacy of a standalone gaming device. This gives players the feel of a live table, but without
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the high minimum bets or the worry of being watched by five other players with a stake in the same hand.” Electronic table games also lure the millennial set accustomed to multi-tasking and consuming digital entertainment. Players can use bill validators and TITO technology, checking in and out of games as if working a self-service checkout counter. They are tech-savvy. They are not only at the game, but in the game.
Quickening the Pulse Interblock unfurled a stadium display to highlight its latest G2E presence. One of its major products is Pulse Arena, which boosts a stadium environment into an immersive, multi-sensory gaming experience. It allows operators to change the atmosphere to attract any player segment. The operator can offer a club-like environment, core gaming experience, or an educational mode for beginners. The company recently announced partnerships with some of the world’s largest casino groups on both stadium and Pulse Arena deployment. Some are already operational. The ETG deals include SkyCity, Auckland, which will bring a Diamond Stadium with 67 play stations to its casino floor; Seneca Niagara, which will install a 39-seat Pulse Arena; and Hit Group’s Perla Casino in Slovenia, set to have a 45-seat Pulse Arena. Interblock has a varied approach to stadium deployment. “With our Diamond play stations, players can play up to four games at once, at their own pace, on one play station,” Stanton says. “With a dealer-assisted stadium, you have a live dealer in the middle of the stadium who can be seen on video at each play station, orchestrating the play and helping to maintain the excitement. “Mirroring the benefit to the casino, pace of game is also a reason that players prefer stadium-style play in comparison to a traditional table game. The
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Interblock’s Pulse Arena boosts a stadium environment into an immersive, multi-sensory gaming experience. It allows operators to change the atmosphere to attract any player segment. The operator can offer a club-like environment, core gaming experience, or an educational mode for beginners.
games are played at a faster rate, as the player is making all decisions and payments electronically. When players are ready to leave the table, they simply hit a button and grab their voucher, without needing to wait.” Seneca Niagara recently launched the Pulse Arena, displaying what could be considered a custom-made fit. “Each Pulse Arena is customized to meet the needs of a specific casino’s floor,” Stanton says. “We take into consideration variables including player demographics, size and the casino’s overall needs to create a stadium-style solution designed specifically for that casino. With this product, operators can select different game-enhancing themes to attract any player segment, whether it’s a dynamic vibe, VIP gaming experiences, or even an educational mode for beginning players—by simply pressing a button. Doing this changes the lights, volume and music in seconds, which allows casinos to target their demographic by the time of the week, to celebrate holidays, or by running your live shows.” Seneca Niagara’s Pulse Arena configuration combines five automated generators and 39 interconnected play stations offering roulette, sic bo, craps, blackjack and baccarat. In addition, the seven StarBar bar tops configured around the Stir bar in the center of the arena provide traditional table and video poker games. This allows guests to continue playing if they don’t simply want to relax at the bar. StarBar is an innovative play station accessible directly from the bar’s counter, Stanton says. It maximizes casino space and fits stylishly into any bar area. StarBar allows guests to play up to four games simultaneously. With its own internal random number generator, it can be configured as a standalone machine, can be connected to any Interblock live video, automated with dealer interaction or automated game generator, or can be a combination of both options. “StarBar can stand alone or be connected to Interblock generators located on different areas of the casino floor and linked to any Interblock stadium,” Stanton says.
Scientific Synergy Scientific Games, the gaming, lottery and interactive giant, continues to think big. Stadium-sized big. In late summer, it rolled out a bold product with Stadium Blackjack at Mohegan Sun, which became the first North American casino destination to offer Stadium Blackjack on Scientific Games’ Fusion Hybrid Electronic Table systems. By early November, when Americans were voting for a president, Scientific Games believed it had passed its own referendum. “The reaction has been very positive,” says Gabe Baron, general manager and senior director of electronic table system products for Scientific Games. “Players are finding it exciting to begin with a shared starting hand, and then make their own decisions without affecting the results of those around them. The installation areas themselves are lively, too. “The best example of that is the effect of a dealt winner, like a blackjack, to all patrons simultaneously. This provides a similar effect to rolling the point at a craps table, when everyone gets excited and celebrates together. We’ve also seen players wager on the other connected games concurrently, by using the tabs available on the Fusion Hybrid player terminal. Players can make their Stadium Blackjack decisions at the same time they’re playing roulette, baccarat, or even another Stadium Blackjack hand, all from one seat.” The Fusion Hybrid is a terminal-based system that connects players to live baccarat, roulette and sic bo games, as well as the new Stadium Blackjack title. Fusion Hybrid is suitable for both stadium-style and smaller environment configurations, Baron says. The system enables modular, configurable floor layout options and comes with a variety of exciting terminal lighting color options, as well as cameras at each live table display and player touch-screen interfaces. Betting timers are configurable for each of up to four games of concurrent play. Gamblers at Mohegan Sun can play two Stadium Blackjack games as well DECEMBER 2016 www.ggbmagazine.com
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IGT unfurled a gaming stadium with a rollout of 150 Dynasty ETG cabinets at the Sands Bethlehem. That stadium consumes a sprawling, 5,900-square foot area of the casino floor and is comprised of 150 of IGT’s Dynasty ETG cabinets and four live-dealing tables.
as roulette and baccarat on the Fusion Hybrid system on one of 61 seats. Mohegan’s 119,000-square-foot Casino of the Sky houses the two Stadium Blackjack podiums surrounded by a 41-seat, stadium-configured setup. The remaining 20 seats are centered on two podiums inside the 180,000-squarefoot Casino of the Earth, and feature roulette and Dragon Bonus Baccarat. All four games can be played concurrently and on any of the terminals. “Stadium Blackjack on the Fusion Hybrid system really hits the nail on the head, when it comes to the low-limit blackjack niche,” Baron asserts. “A casino can deal a hand to any number of players with just one dealer, and realistically achieve a hand per minute or more, while offering $5 minimum games. Stadium Blackjack also carries another advantage, because it offers the Shuffle Master suite of blackjack side bets simultaneously. “Players can choose their favorite wagers or bet them all on every hand. With the two most popular side bet offerings in North America (Royal Match 21 and Bet the Set 21), in addition to King’s Bounty, there’s something for everyone,” Baron adds. “I’d be remiss if I didn’t mention everyone’s favorite buzzword, ‘millennials,’ but I’ll do that in a way you may not assume. Stadium Blackjack is definitely not just a low-limit millennial title, but instead has found a strong following from a wide variety of ages and genders in the early research we’ve conducted. That data is reassuring that we’re doing something right.” Baron says that from the Fusion Hybrid product angle, the excitement centers on the ability of players to wager concurrently on multiple games. From the Stadium Blackjack perspective, the strength lies in tying together groups of people with a common title like blackjack, and then presenting it in a way that is novel to the audience. That could mean shared starting cards and just a dealer’s up card, followed by the dealing of all subsequent cards to a community location where their destinations vary depending on each player’s decision. “The strong reaction we’ve had already lends itself to future stadium titles we can leverage from the Shuffle Master library to bring fresh content to our customers and their players,” Baron says. “At G2E, we showed for the first time Stadium Casino War, where players can bet on up to seven hands of Casino War at once, rather than just receiving a single card.” Synergy continues to benefit Scientific Games. Its recent purchase of DEQ provides access to a library of table games, table progressives and bonusing systems. The move would figure to work in concert with the stadium concept.
Pennsylvania, Here We Come Holy Cow. Is that the look of Macau? In Pennsylvania? IGT performed an impressive two-step in 2016. The company enhanced its commitment to electronic table games with one deal and unfurled America’s largest EGT stadium in the next. The multi-layered global-gaming company completed the largest EGT installation in the United States at the Sands in Bethlehem, Pennsylvania a few months after entering a patent assignment agreement with Hong Kong-based Paradise Entertainment. That deal, announced in April, provides IGT with exclusive rights to Paradise Entertainment’s table game intellectual property for the development, manufacturing and distribution of live-dealer and random 54
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number generator electronic table games worldwide, except in Macau. In July, IGT quickly become a major ETG player. It unfurled a gaming stadium with a rollout of 150 Dynasty ETG cabinets at the Sands. That stadium consumes a sprawling, 5,900-square-foot area of the casino floor and is comprised of 150 of IGT’s Dynasty ETG cabinets and four live-dealing tables with eight outcomes. The new terminals are expected to entice younger, less experienced players attracted to their $5-per-hand minimum. The terminals will offer blackjack, baccarat, roulette and sic bo on the same machine. A fast player can handle multiple games at once. IGT quickly turned conceptualization into clout and became a major market player. It will be interesting to see how the enormous popularity of ETGs in Macau will extend west, primarily in Canada and the United States. IGT, based in London, commands a huge presence in the gaming, lottery and interactive space. “We were reminded of the enormous global potential of the ETG segment on the day that we announced IGT’s deal with Sands Bethlehem,” says Nick Khin, IGT senior vice president of sales, North America gaming and interactive. “Our customers from all parts of the world express interest in our ETG portfolio and wanted to explore how our products could be leveraged to engage new audiences and capture the attention of loyal baccarat and roulette players.” The Dynasty ETG cabinets are programmable, enabling players to choose from two different languages and seamlessly opt in and opt out of game play without disrupting the experiences of surrounding players. From the operator perspective, ETGs can streamline efficiencies and offer greater game security, as players utilize a bill validator and TITO technology when entering and exiting a game. “Each operator has a unique vision for their ETG destination and a different motivation for bringing live ETGs to their casino floor,” Khin says. “Our Dynasty product is versatile—it can be leveraged to create a high-energy, partytype vibe, or a more serious, high-velocity gambling environment similar to what you might see in Macau—and every type of environment in between.” The Sands in Bethlehem hired additional workers and braced for an earnings spike from a well-populated Asian gambling market. The move showed that automation does not have to mean elimination, regarding jobs. At G2E, IGT demonstrated a card-dealing robot amid its ETG portfolio. It figures to bet heavily on the future of this market segment. Major gaming powers have reached a consensus on electronic table games. Stadiums help them dramatize the validation of this ever-increasing revenue niche. The stadiums are a link to millennials. And each industry powerhouse has its own way to play “Take Me Out to the Ballgame.”
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CUTTING EDGE by Frank Legato
Tracking the Tables Product: Bet Recognition Solution Manufacturer: ARB Labs
RB Labs provides casino operators with a technologically advanced bet recognition solution, offering automatic and scalable optical bet recognition and hand count systems that bring the kinds of analytics enjoyed by the slot department to the table-game area. ARB Labs utilizes state-of-the-art proprietary hardware and software solutions to generate slot-like analytics for popular casino table games including blackjack with side wagers, baccarat and carnival games. The technology delivers accurate player ratings by capturing data from each wager in real time, without requiring special tables, table tops or gaming chips. As a result, player ratings will no longer need to be estimated by the floor supervisor, who is typically tasked with the management of multiple tables. The end result is player ratings with unprecedented accuracy, generating keen insights into players’ betting habits that will allow table game operators and casino marketing professionals to be more informed when targeting players with reinvestment strategies. ARB Labs systems will enable casino supervisors to redirect their focus to providing impeccable customer service, while player ratings update automatically.
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In addition to tracking player and dealer performance, ARB Labs technology also measures game performance through the capture and analysis of key metrics like rounds per hour and table utilization. By understanding the performance of each game title across the gaming floor, in contexts ranging from one player position to a full table, table game operators will acquire a critical tool for optimizing table game performance. The data yielded will help operators make better decisions with regard to game mix and the number of units installed across the gaming floors. More than just a table games management solution, ARB Labs recognition systems are flexible and can integrate third-party systems and hardware to help drive additional operational efficiencies and cost savings. Working with other leading industry solutions providers allows for a broader scope of innovation that can be tailored to fit the specific needs of regional, global or Strip operators. For more information, email info@arblabs to schedule a demonstration.
Auditing Efficiency Product: Casino Insight Manufacturer: Casino Cash Trac
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asino Insight is the most efficient way to track every cash and chip transaction for casinos, and according to supplier Casino Cash Trac, it is the only casino audit system (CAS) in the market. Casino Insight captures financial transactions in the cage and vault, and merges data from additional systems throughout the enterprise into a one-ofa-kind audit and operational analytics tool. Currency and chip management is central to casino operations. Developing a comprehensive cash management strategy is a key component to optimizing staff efficiency, reducing paper usage and enhancing profitability. Casino Cash Trac’s technology can transform cage, vault and revenue audit processes from a labor-intensive data entry process into a dynamic system that adds to the bottom line and improves accountability.
• Ensure appropriate levels of cash are maintained for kiosks, ATMs, cash dispensers and recyclers with gauges that can easily tell when it is time to refill, with reports in real time; • Automate the revenue audit process; • Support policies and procedures through an automated work flow that includes digital signatures; • Perform cash balancing using a proprietary reporting tool and digital revenue audit process, reducing the risk of fraud and unidentified variances; and, • Recognize operational efficiency with a recognizable return on investment.
Casino Insight enables customers to: • Streamline processes for cage/vault employees, increasing efficiencies; • Create a virtual library of all cage/vault documents, creating immediate savings by reducing paper and storage costs;
Topping the list in its home state, Casino Cash Trac ranked as the No. 1 company in Oklahoma, the No. 19 software company in America, and the No. 251 fastest-growing company on the Inc 500 list. For more information, visit www.casinocashtrac.com.
DECEMBER 2016 www.ggbmagazine.com
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NEW GAME REVIEW by Frank Legato
High Voltage Blackout Everi Holdings
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his new game on Everi’s Core HDX cabinet features unique visual effects in a bonus that depicts a big-city blackout. The base game in High Voltage Blackout is a five-reel, 40-line video slot with a mystery re-spin feature. Random winning combinations trigger the reels to respin one or more times, with each re-spin a guaranteed winning spin. Some of the winning symbols are marked as “Lightning Multiplier” symbols. When part of a winning combination, the symbol multiplies the pay up to 50X. The main feature is called the Blackout Bonus. When it is triggered, the game’s top screen displays a silhouetted skyline with 24 buildings, while the bottom screen shows a field of 28 pick buttons from which players choose. Each pick “powers up” anywhere from two to six buildings, awarding “supercharged credits” to some players. Players also receive credit awards for powering up all like-colored buildings—pink awards 15 times the total bet, blue awards 25 times the total bet and green awards 50 times the total bet. If the full skyline is powered up, players receive an additional award of 100 times the total bet.
Manufacturer: Everi Holdings Platform: Core HDX Format: Five-reel, 40-line video slot Denomination: .01, .02, .03, .05, .10, .25, .50, 1.00 Max Bet: 300 Top Award: 30,000 Hit Frequency: Approximately 50% Theoretical Hold: 2%-15%
Leonidas II
Incredible Technologies
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his new three-level progressive video slot is a sequel to one of Incredible Technologies’ most popular titles, Leonidas: King of the Spartans. The base 40-line game maintains the same game play as the original while adding three bonus events, one of which can lead to one of three progressive jackpots displayed on large overhead signage. Two bonus shield scatter symbols on reels 2 and 4 spin to reveal one of the three main bonus events— Respin Battle, Free Spins War or Epic Progressive Bonus. If the bonus shields turn to reveal the Queen, the Respin Battle begins. Fans of the original will recognize the anticipation of this event as all Spartan symbols draw their shields to protect the Queen. Any soldier lucky enough to survive the attack is then transformed into a locked wild symbol for a re-spin. The Free Spin War is initiated when the bonus shields reveal Xerxes. Five free spins are awarded as the Spartan Army enters the top screen of the game and the Persian Army takes over the main game screen. Before each spin, the Persian Army attacks the Spartan Army with an onslaught of arrows,
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and those soldiers that shield the attack successfully are added to the free-spin reels as locked wilds for the remainder of the event. As the war wages on, the Persian Army sends both Ogres and Xerxes to battle, and if either is defeated by the Spartans, a 2X wild or 3X wild is awarded, respectively. If the two shields reveal Leonidas, it triggers the Epic Progressive Bonus. Leonidas is pitted against Persian Foot Soldiers, Ogres and Xerxes in multiple interactive one-on-one battles. Players must swipe the screen to take the enemies out, each one collecting on the top screen toward one of three progressive amounts. The end goal is to defeat Xerxes for the Grand Progressive before Leonidas’ “health meter” runs out. Manufacturer: Incredible Technologies Platform: U23 Format: Five-reel, 40-line video slot Denomination: Multi-denomination Max Bet: 50, 100, 150, 200, 250 Top Award: Progressive; $2,500 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.83%-14.88%
ExCeL, London 7-9 February 2017
the world theatre of gaming
To join the world at ICE visit icetotallygaming.com
#theatreofgaming
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Quick Fire Flaming Jackpots Aristocrat Technologies
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ith this game, Aristocrat places its popular Wonder 4 platform into the J*Series line of multiple-progressive slots. The Wonder 4 platform offers four reel-sets, each with a 50-line game drawn from the slot-maker’s core game group. Players wager on all four games, and can select any combination of games for the screen—from four screens of a single game to playing all four games at once. Quick Fire Flaming Jackpots places this setup under a five-level progressive jackpot display. Players can win more than one jackpot on the same spin, in fact. Housed on the Helix cabinet, the game brings together four of Aristocrat’s most popular core games—Electric Boogaloo, Golden Peach, Panda Paradise and Pharaoh’s Ransom. The successful stacking mechanic from Golden Peach now is available on all four titles, adding to the game play of each original title. Quick Fire Flaming Jackpots offers a five-level stand-alone progressive. Players have the chance to chance to achieve a bonus wheel feature, which rewards Grand, Major, Minor or Mini jackpots, or free games. Players can win multiple jackpots per spin and even multiple jackpots per spin per game. The fifth jackpot is a Super jackpot, which is a fifth-level jackpot prize that can be won when playing all four games.
Manufacturer: Aristocrat Technologies Platform: Wonder 4 Format: Four 50-line video slots Denomination: .01-20.00 Max Bet: 800, 1,000 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 4.79%15.52%
Sapphire Wins AGS
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his new 40-line game on the sleek Icon cabinet is a follow-up to the high-performing Asian-themed Jade Wins and Golden Wins games. The newest addition to the “Wins” family, Sapphire Wins, features high and mid symbols in “lucky gold.” The game’s two main features are free spins with a volatility picker and a Progressive Pick. Bonus symbols on the three middle reels trigger the free-spins bonus, which awards eight, 12 or 20 free spins with various multipliers up to 100X applied to wins. Free Spins can be won again during the Free Spins Bonus at the current volatility. Using the PowerXStream pay evaluation, the five-reel, 40-line game offers hundreds of ways to win, and features a four-level progressive jackpot, part of the Da Ji Da Li Progressives series. The Progressive Pick Bonus is triggered randomly when at least one bonus symbol lands. Players pick for jackpots including a Mini resetting at $10, a Minor starting at $25, a Major starting at $800, or the top Grand jackpot, which resets at $10,000.
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Manufacturer: AGS Platform: ICON Format: Five-reel, 40-line video slot Denomination: .01 Max Bet: 880 Top Award: Progressive; $10,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 2.15%-11.16%
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FRANKLY SPEAKING by Frank Legato
Smoking Monkeys, Gambling Pigeons Some may view the story of John the Chimp as a cautionary tale and warning against permitting smoking in casinos, or of the dangers inherent in giving free drinks to gamblers, or in employing croupiers who smoke big cigars, swill booze, and are chimpanzees. I view the story as a shining example of one thing: If you’re a columnist looking for a monthly topic, your first fallback should always involve a drunken ape in a tuxedo. Hey, at least it wasn’t a pigeon. That’s right, pigeons were in the casino news last month as well. According to one newspaper, a lecturer on pathological gaming at a Melbourne university invoked legendary psychologist B.F. Skinner in trying to explain the draw of slot machines, or pokies as they call them. Skinner once said slot machine players behave like the pigeons he’d trained to peck for scraps of food. The lecturer said the first winning spin of a slot machine elicits a release of dopamine, and additional wins trigger more surges of the hormone. Skinner trained a pigeon in a box to peck a disc to receive food. He found that if food appeared intermittently, rather than after each peck, the pigeon would repeatedly tap the disc in anticipation. He said the system of random rewards was the same as a slot machine, and concluded that the pigeons behaved like pathological gamblers. Personally, I’ve never bought into this branch of research. I mean, it’s a pigeon. And, it’s a hungry pigeon who has just realized that the disk is a possible food source. Whether pecking it produces food every time or once in a while, I’m guessing that if the pigeon is hungry, he’s going at that thing like a woodpecker. Up in Canada, university researchers performed similar tests on rats, having them hit a button and intermittently giving them a cheese reward. (Or alternatively, free slot play or points for a free toaster or set of carving knives.) Again, I question the theory that any of these tests proves anything with respect to humans. How many of you out there have eaten every disgusting piece of candy in a box looking for that one with the cherry inside? Does that make you a pathological gambler? OK, there’s a much better analogy out there somewhere, but I don’t have time to find it. I have to go feed my chimpanzee a shot and a beer.
VICT OR
RINALDO
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ay what you want about Russia, but they sure know how to attract people to casinos. At least they did in the old days, when there were scores of casinos in Moscow. A chimpanzee named John found out the hard way. John the Chimp used to draw people to the roulette tables at the Kosmos Casino in Moscow—they put him in a tuxedo, called him a croupier and sat him down to spin the roulette wheel. Everything was fine until the bad habits of all us degenerate gamblers rubbed off on him. Players started giving him whiskey, cigarettes and cigars. Eventually, he was the life of the party at Kosmos, swilling booze, smoking fat cigars and “ooh-ooh, ah-ah-ing” into the wee hours with all of his gambling buddies. Last month, the high life finally caught up with John the Chimp. He died of a heart attack at the ripe young age of 24. Chimps in captivity normally live past 50. It’s a shame, because John was trying to kick all his nasty habits. In 2008, the year before all the Moscow casinos officially closed, Kosmos sent John to rehab. Yes. Chimps in rehab. It’s the name of my next rock band. Anyway, John the Chimp had seemed to be progressing nicely. His keepers thought he had overcome all his vices. At one point, the Russian monkey had even recovered enough to hack into Hillary Clinton’s emails. But just as at the casino, visitors to the Gelendzhik safari park—evidently, sort of a Betty Ford Center for monkeys— started slipping him the smokes and the booze again. Before you knew it, John was in was a period of backsliding followed by new periods of teetotaling—or bananatotaling, in any event. The director of the Gelendzhik park reports that ultimately, though, it was his hard-partying life at the casino tables that did John in, causing him to arrive at the Bonzo Clinic, if you will, with diabetes, oedema, dermatitis, and a nasty, hacking cough that must have sounded like my Uncle Ralph.
DECEMBER 2016 www.ggbmagazine.com
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EMERGING LEADERS More Than Counting
Whiz Kid
Grant Eve
Cory Roberts
Partner, Joseph Eve CPAs
Associate Publisher, CDC Gaming Reports
rant Eve grew up surrounded by numbers. His father’s accounting company, Joseph Eve CPAs, had so much work that it was a natural for Grant to pitch in at an early age. A graduate of Montana State University-Bozeman, Eve spent three years after college working for the accounting firm Deloitte in Las Vegas. But home is where the heart is, and Eve returned to Montana with a full knowledge of gaming to launch the firm’s gaming practice. Today, it’s almost all they do. “We’re a niche firm that focuses on gaming work,” he says. “We do a fair amount of commercial work, but more tribal. And then tribal governments are a large part of our practice as well.” Joseph Eve CPAs focuses on audits and compliance work, with a technology division that focuses on accounting systems implementation, which he says are cloud-based accounting solutions. The company is also called upon to set up accounting systems and AML/Title 31 compliance programs for new and existing casinos. “This is not your typical CPA work,” he says. “You’re counting millions of dollars in a pleasant environment, for the most part. I like to tell our staff that one week you may be in San Diego, the next week you’ll be in the middle of nowhere in South Dakota. We get to see a lot of the country.” For casinos, Eve says his firm recommends software that makes it easier and more efficient to follow the money. “Our system is fully automatic,” he says. “It links up to your phones, your tablets and your computers. You can call up the bills you have to pay versus what money is expected to come in. It can all be done from your phone, and it ties into your audit paperwork. It’s so much more efficient than going through endless files. And it’s a great return on investment because it will save you thousands of hours of paperwork.” Eve says casinos are considered like banks and other money service institutions by the government, and therefore they must meet the highest standards of financial probity. He points out that the Financial Crimes Enforcement Network (FinCEN), the U.S. agency responsible for overseeing financial transactions, set up a special enforcement division in 2013 specifically designed to investigate casinos. “In 2015,” he says, “there were more enforcement actions taken against casinos than any other industry. So we’re really seeing casinos take a look at the AML-compliance programs, risk assessment and independent testing. They want the processes streamlined and to be able to use technology for training. In addition, we’ve seen the IRS at more properties over the last two years than we ever did before.” He points out that everyone is on tender hooks when it comes to compliance, and it affects all sorts of business relationships. “Every casino has a bank,” he says. “And those banks have to comply with Title 31 regulations, as well. So if you’re a casino, you’re deemed a high-risk customer right from the start, so the banks want that risk assessment done. During the past year we’ve seen four banks that ended their relationships with casinos because that risk assessment wasn’t done correctly. You would think a casino would be a great client for a bank, but they don’t want to take the chance in some cases.” Another government requirement is to know your customer (KYC), and understand where the money that he’s gambling with came from. “Most casinos are doing a good job these days in determining the source of funds for the gambling budget of their big players,” he says. “They’re not being intrusive or rude, but making a good effort. Players are there to have a good time, but a casino needs to know if someone is up to no good or has a criminal history and is using the casino just to launder money.” —Patrick Roberts
ids sometimes imagine themselves as musicians when they grow up. Cory Roberts took it beyond imagination. He studied classical guitar, an instrument he learned from his parents, both music teachers. “Since I started at a young age, playing guitar is almost like an extension of my hands,” he says. The 26-year-old, who grew up in Cleveland, majored in classical guitar performance at Case Western Reserve University. But what brought Roberts to these pages is not his virtuoso handling of a guitar. His position as associate publisher for CDC Gaming Reports harkens back not to his music affinity but his other lifelong passion: technology. “Computers and video games have always been a huge part of my life since my grandfather gave me his old Commodore 64 when I was about 4,” he says. “From learning web programming in elementary school to running my own websites in high school and college, I have always kept myself busy and up to date with technology.” Right after college, Roberts landed a tech job with CDC Reports founder Jeffrey Compton, charged with upgrading the computer system and other technology concerns with the nascent website. “I am forever thankful for his confidence in me,” he says of Compton. At that point, Roberts had little interest in the casino industry. “As Jeffrey and I got to know each other, I started learning a bit more about his work and got involved,” he says. Compton is a natural leader, Roberts says, taking CDC Gaming Reports from a tiny unranked casino website based in Cleveland to one of the top casino news websites in the world. “Jeffrey has always kept a great team of people by his side,” he says. Roberts assists with day-to-day operations as well as long-range planning. “I helped bring to life several of Jeffrey’s crazy ideas, such as a searchable casino news database with over 30,000 articles. I also manage many of the projects that come up.”
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“Casinos will need to provide an increasingly social environment, and should resist providing similar experiences to what people can get at home, on their cellphone or TV.”
A typical day begins with updates on the CDC Reports website and organizing the news items for the Flash, the morning report. By midday, Roberts is researching and putting together the stories for Last Call, the afternoon report. While his knowledge of the industry was nil when he began with CDC Reports, he now has enough of a feel for the ins and outs, ups and downs to formulate his own views. “Casinos will need to provide an increasingly social environment, and should resist providing similar experiences to what people can get at home, on their cellphone or TV. I think that many of the successful casino machines of the future will be a sort of resurgence of the video game arcades in the ’80s and ’90s.” As for casinos as a career choice, the door is open, Roberts says. “The gaming industry is where two people can be successful in similar ways with wildly different and seemingly irrelevant backgrounds. Care for your relationships, express yourself, and you will find an industry that is incredibly friendly and full of opportunities.” —William Sokolic
The Finance Regulator Matthew Levinson Chairman, New Jersey Casino Control Commission atthew Levinson became not only the youngest chairman of the New Jersey Casino Control Commission, but the only accountant in the history of the regulatory agency. That a numbers cruncher could run the commission speaks to the importance of finance in the oversight of the gaming industry. “I got my first job in the accounting and finance department at the Tropicana Casino and Hotel,” says Levinson, who majored in accounting at Villanova University. After college, the Atlantic County native worked in forensic accounting on the 9/11 attacks in 2001 and the collapse of the parking garage at the Tropicana in 2003. “Later, I worked for Resorts Hotel Casino as casino accounting manager and senior operations analyst. Those positions gave me insight into how casinos operate as well as the importance of proper regulation,” says Levinson, 37, who holds an MBA from Thomas Edison University. Prior to the commission, Levinson served as chief financial officer of SOSH Architects, which has done architectural work for every casino hotel in Atlantic City. “I also handled human resources, information technology, business development, operations and marketing,” he says. As head of the CCC, Levinson has guided the agency through uncharted waters after an overhaul of the regulatory system. He reduced the budget, streamlined operations and enhanced productivity. Despite the reorganization, the commission still issues licenses for casinos in Atlantic City and for all of their key employees. “I have a staff that conducts in-depth research into gaming issues and their impact on Atlantic City, and also analyzes laws and regulations in other gaming jurisdictions to see if there are ways that we can do better,” says Levinson, oversees over 40 employees with a
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budget of approximately $8 million. As chairman, Levinson also serves on the Casino Reinvestment Development Authority, where he helps decide funding for redevelopment of Atlantic City. “I also sit on the CRDA’s audit, Special Improvement District and development committees.” On a daily basis, Levinson meets with his top staff to go over questions about licensing, reviews of financial reports and other materials, administrative actions and the status and impact of any pending legislation that could affect the commission or New Jersey gaming. He owes his success to date to the influence of his parents. Levinson’s father, Dennis Levinson, is the longtime county executive for Atlantic County, home of Atlantic City. “They taught me to work hard for what I wanted, and when I hit a roadblock, work harder,” he says. “And they showed me how to treat people with dignity and respect, regardless of who they are.” The industry has to be more than just gambling, Levinson says of the future. “Casino hotels have to offer great entertainment, clubs, food, rooms, spas, shopping and other attractions,” he points out. “If all you have is gambling, your customers will abandon you when someplace more convenient opens. We have learned that in Atlantic City.” To succeed in the industry workplace, Levinson recommends learning the latest technology and how it applies to every aspect of operations, even though it will be out of date in a couple of years. “Gaming is no longer just a path to economic growth or development; it is a destination industry that offers people a wide range of experiences, and gambling is just one of them.” —William Sokolic
DECEMBER 2016 www.ggbmagazine.com
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GOODS&SERVICES
Sun Time Square purchase includes the Bally iView.
SUN PICKS SCIENTIFIC GAMES
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cientific Games Corporation has been awarded its 12th contract with South African casino and entertainment group Sun International, to supply games, systems and table products to the operator’s new Sun Time Square casino in Pretoria, South Africa. Sun International awarded Scientific Games a comprehensive order to provide the full spectrum of the company’s casino-management solutions to drive floorwide operating efficiencies and player engagement at its new 92,000-square-meter (1 million square feet) casino resort, slated to open in April 2017 with 2,000 slot machines and 60 table games. The new casino will attract players with a number of popular Scientific Games slot products, including the TwinStar, Bally Pro Series V22/22, Bally Pro Series V27/27, Bally Pro Series Wave and WMS Blade stepper game cabinets. Sun International selected a broad scope of Scientific Games’ high-performing game content, including titles such as Super 88 Fortunes, Dancing Drums, 5 Treasures, Diamond Eternity, Zhen Chen, Fu Dao Le, Dragon Rising, Lock It Link, Dragon Spin and numerous other titles. To support its large casino pit, Sun International chose Scientific Games’ Shuffle Master card shufflers and utility products, including MD3 and Deck Checker, along with a number of other Scientific Games innovations, including Business Intelligence, Elite Bonusing Suite, iVIEW4 and iVIEW Display Manager, Power Loyalty, Power Progressives and TableView.
IGT ACQUIRES LFG SAFFARINET TECHNOLOGY
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nternational Game Technology Plc. announced that it has acquired assets including several patents and other intellectual property from now-defunct Leap Forward Gaming, Inc. relating to LFG’s SaffariNet Patron Display Interface (PDI) picture-inpicture multimedia ecosystem technology. IGT also agreed to dismiss its litigation with LFG, which was 62
founded by former IGT executive Ali Saffari. SaffariNet Patron Display Interface picture-inpicture multimedia ecosystem technology works with gaming machines and systems to enhance casino operator communications and marketing capabilities to patrons. Thin Client Gaming (TCG) and SmartFloor technology plus a host of additional gaming apps are also included in the acquisition. Leap Forward founder and CEO Saffari will serve as a consultant to IGT to ensure a seamless integration of the solutions and applications related to the acquisition.
NOVOMATIC PARTNERS WITH GAMEVY
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ovomatic Lottery Solutions (NLS), a wholly owned subsidiary of Austria’s Novomatic Group, announced that it has signed a memorandum of understanding with Gamevy Ltd. to provide new instantwin games to government-regulated lotteries. The service will combine NLS’ market-leading lottery platform with Gamevy’s unique content and flexible development capability, to deliver customized games to lottery operators. Through their strategic partnership, NLS and Gamevy will bring new content to lotteries, providing a range of interactive instant-win and digital scratch games. Gamevy’s digital scratch instant wins are designed expressly for mobile, with different mechanics matched to differing games, as well as playful animations and reveals that distinguish their products. NLS and Gamevy’s games and content ideas will be showcased at the World Lottery Summit 2016 in Singapore.
NEVADA TO TEST GAMECO SKILL GAMES
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he skill-based shooter games produced by startup manufacturer GameCo, which made their debut in October in Atlantic City, are set for field trial in Nevada, according to state gaming regulators. GameCo’s games provide Xbox-style game play with a controller, on cabinets that resemble arcade games dubbed
Global Gaming Business DECEMBER 2016
the Video-Game Gambling Machine or VGM. Danger Arena, the first game launched in Atlantic City, uses 10,000 “maps” of varying difficulties to achieve payback percentages within state guidelines that are higher for more skilled players. Blaine Graboyes, founder and CEO of GameCo and one of the holders of the pending patent on the game, told the Las Vegas Sun the game’s only random element is selection of the map by a random number generator. After that, it’s up to the skill of the player. The hedge to advantage play is that some of the maps are unbeatable. “Even the best blackjack player sometimes gets a hand that they can’t beat,” he said. “So in this game there are more than 10,000 maps. And the only random element to the game is which map you’re playing in each game session.”
CYPRESS BAYOU PICKS AGILYSYS
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ospitality software supplier Agilysys announced that Cypress Bayou Casino Hotel in Charenton, Louisiana has selected a comprehensive solution suite—including InfoGenesis POS, InfoGenesis Flex, rGuest Analyze and rGuest Pay—to enhance efficiency and streamline food and beverage service. The property, which is owned and operated by the Chitimacha Tribe of Louisiana, is a longtime user of the Agilysys Eatec inventory and procurement system. Cypress Bayou’s food and beverage operation includes five on-site venues as well as a wide range of private and off-property functions. The property’s executive team wanted fixed and mobile point-of-sale solutions that would optimize food and beverage delivery, along with a payment gateway solution that would secure sensitive cardholder data. They also wanted a business intelligence application that would help managers make strategic data-driven decisions. The Agilysys solutions met the property’s criteria, with state-of-theart features and functionality that will enable Cypress Bayou to modernize its entire F&B operation. “We’ve been very pleased with Eatec, so when shopping for other technology solutions, we once again turned to Agilysys,” said Debbie Young, food and beverage director at Cypress Bayou Casino Hotel. “InBlaine Graboyes, CEO of GameCo, foGenesis and InfoGenesis Flex demonstrates Danger Arena at offer an ideal combination of fixed G2E in October.
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and mobile point-of-sale solutions that deliver comprehensive functionality, yet offer maximum flexibility, while rGuest Pay reduces the risks associated with credit card acceptance. “We’re also excited about using rGuest Analyze to gain insight into our F&B operation, so that we can make more informed and profit-driven business decisions.”
JOSEPH EVE TO CONDUCT INTERNAL AUDIT ‘BOOT CAMP’
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oseph Eve CPAs announced that it will host Nevada Gaming Commission staff, inspectors, finance officers and others for its next “Internal Audit Boot Camp.” The series on how to protect casino operations, now in its 17th year, will take place December 7-9 at Red Rock Casino Resort Spa in Las Vegas. Instructing at the boot camp are three of the gaming industry’s leading audit experts: Grant Eve, partner at Joseph Eve CPAs; Glen Galt, manager of Joseph Eve; and Billy David, owner/consultant at Bo-Co-Pa & Associates. Over the course of the seminar’s three days, attendees will learn about audit requirements, Class II 543 internal audit responsibilities, communication within the commission, gaming ordinances, internal audit charters, recent and possible regulatory changes and more. Registration is available at the events page of josepheve.com.
DEQ SHAREHOLDERS OK SCIENTIFIC GAMES DEAL
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EQ Systems Corp. confirmed that its shareholders have approved a special resolution authorizing the previously announced plan of arrangement pursuant to which SG Canada Acquisitions, Inc., a wholly-owned subsidiary of Scientific Games Corporation, will acquire all of the outstanding common shares in the capital of DEQ for a cash payment of C$0.38 per common share of DEQ. The special resolution, which required the approval of at least two-thirds of the votes cast by shareholders, was approved by 96.49 percent of the votes cast by shareholders. The plan of arrangement is also subject to the approval of the Superior Court of Québec (Commercial Division). It is anticipated that the arrangement transaction will be completed in the fourth quarter of 2016 or the first quarter of 2017 following the satisfaction or waiver of all the conditions of closing, including among other things, receipt of the court’s approval. DECEMBER 2016 www.ggbmagazine.com
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MARKETING
My Favorite Casino Scam “What’s measured improves.” —Peter F. Drucker By Richard Schuetz
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n the early 1990s, I had the honor of being hired as Lyle Berman’s marketing person for Grand Casinos, Inc. We, like so many firms, had statements defining our mission, goals and vision that basically suggested that we loved our employees (we loved them so much we called them associates), we loved our customers (we loved them so much we called them guests), and we loved our shareholders (we actually just called them shareholders). We were also committed to making sure we would make our shareholders happy by driving money to the bottom line, and we would also make our guests happy (in fact, we would delight them), by delivering excellent guest service. In other words, we were making solemn commitments on paper to the same groups and in the same spirit that essentially every other company on the planet was making. When I was working within the industry, I noted that often the leadership of firms would make these commitments to both profitability and guest service. I also noted that these firms spent substantial financial and human resources developing metrics and capturing data in the financial realm of things, yet committed few financial and human resources in developing metrics and capturing data in the guest service realm of things. In other words, we had a ton of bean counters working to make sure that we understood what was going on financially, but just a person or two empowered to figure out just what was going on in guest service. The point being, of course, that often guest service, while applauded as an important goal of so many organizations, is starved of talent and funding by these very same organizations. It is easier to talk the talk than... Well, you know. Lyle, as the leader of Grand, actually did believe that guest service was important (he seriously wanted them delighted), and he was also ready to commit resources to make an effort to measure the level of delight that we provided our guests. This ushered in our Exit Survey Program.
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This program was designed to capture the impressions of our guests as they exited one of our properties in an administered intercept format, and we spent a substantial amount of time and money to ensure our efforts were methodologically correct, and we tried to avoid most of the common traps that can trouble these survey efforts. And each and every month we would publish the results for each of our properties, and this all became very important to damn near everyone in the company, mainly because it was important to Lyle. In executing the Exit Survey plan for Grand’s two Mississippi Gulf Coast properties, we engaged a college student from the area, and this was his task. He was thoroughly trained on what was expected of him, and the many and varied steps he needed to execute to ensure the statistical integrity of the process. He then began providing us with his results. This Exit Survey Program was an immediate success, and what I mean by an immediate success is that not only did we gain great insight into what our guests thought of us, but as a result of us capturing and distributing this information, the measures showed improvement each and every month— clearly testament to modern management and our brilliance. Month after month, our surveys showed minor but positive gains, and Lyle was happy, and therefore, the folks in the divisions were happy. Then came a sad end to all of this. We came to understand that the individual who was handling the project found it was easiest and most efficient for him if he simply did the surveys from his home. After all, Mississippi can get hot, it rains a lot, and actually asking people questions is a pain in the butt—so he simply filled the forms
Global Gaming Business DECEMBER 2016
“
out at his house, tallied the results, and sent them on to us for distribution. And what was absolutely brilliant was that he knew that as long as the results were improving, no one was going to be exploring any of the details of his efforts. It was clearly necessary for us to stop our use of this gentleman once we discovered his scam, and we allowed him to leave our company to utilize his creative efforts someplace else. We replaced him with someone who was less disposed to completing these surveys at home. The initial results were, predictably, a lessening of the scores the two Mississippi properties had been receiving. Furthermore, sometimes the scores would demonstrate a decline on the month-to-month comparisons, and both of these facts often led Lyle to be less happy. And when Lyle was less happy, we found a great many people in property management began questioning the sample size and other elements of the research methodology. It was this fact that led me to understand the true brilliance of this scam, and it is that people are quite accepting about getting good news about their efforts… even when it is nonsense.
People are quite accepting about getting good news about their efforts… even when it is nonsense.
”
Richard Schuetz is the executive director of the Bermuda Casino Gaming Commission, and was formerly a commissioner for the California Gambling Control Commission. The opinions expressed in this article are his alone, and do not necessarily reflect the position of the government of Bermuda, the Bermuda Casino Gaming Commission, or any other entities or individuals within that country.
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PEOPLE ARISTOCRAT’S ODELL RETIRING
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ustralian slot-machine giant Aristocrat Leisure, Ltd. announced that Jamie Odell, the company’s chief executive and Jamie Odell managing director for the past eight years, will retire at the end of February. The company’s board appointed Trevor Croker, Aristocrat executive vice president for global products, to succeed Odell as CEO. “An orderly and phased transition process has begun, with Jamie continuing to lead the business until Trevor assumes the CEO role formally from March 1, 2017,” the company said in a statement. The company reported that Croker, who is CEO-elect pending regulatory approvals, will relocate to the U.S. in 2017 to assume the permanent CEO role. “North America generates Aristocrat’s largest revenues,” the company said, “and offers the business its most significant strategic opportunities.” It was in North America that Odell did the most to turn Aristocrat’s business around, bringing in game design talent and pursuing licensed brands to boost the company’s gaming operations business. During Odell’s tenure, Aristocrat’s market capitalization grew from AUD1.7 billion (US$1.3 billion) to an all-time high of approximately AUD10.6 billion. Croker joined Aristocrat with Odell in 2009 from beverage company Fosters. He served as managing director of Australia and New Zealand, led the company’s operations in the Asia Pacific region, and served as interim chief digital officer before being appointed executive vice president.
MELCO CROWN COO CHAN RESIGNS
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elco Crown Chief Operating Officer Ted Chan Ying Tat resigned last month “for personal reaTed Chan Ying Tat sons,” according to the Asian casino operator and developer. He has been responsible for operational leadership of the company since February 2012. Chan will not be replaced. Instead, Chairman and CEO Lawrence Ho will take over operational leadership of the company, according to a news release. In September, JD Clayton, president of Melco
Crown’s struggling Studio City casino resort in Macau’s Cotai Strip, left and was replaced by David Sisk, former COO for Sands China Ltd.
OSCEOLA WINS SEMINOLE TRIBE ELECTION
STEPHENS NAMED SKYCITY CEO
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kyCity Entertainment announced that Sun International CEO Graeme Stephens will join the AusGraeme Stephens tralia-New Zealand casino operator as chief executive officer effective May 2017. He follows Nigel Morrison, who resigned the post in April. “Graeme has extensive experience in developing and opening world-class casinos, hotels and resorts,” said SkyCity Chairman Chris Moller in a statement announcing the appointment. “He has deep expertise in the gaming, hospitality and leisure industries. His record managing a diverse and fast-growing listed company, operating in a variety of locations, makes Graeme the best person to lead SkyCity as we progress the New Zealand International Convention Centre and Hobson Street hotel projects, redevelop our Adelaide Casino and plan the next stage of SkyCity’s strategy.” Moller said Interim CEO John Mortensen will remain in the role until Stephens and his family relocate to New Zealand. “I’d like to thank John for his continued leadership and his support during this period.’’
NEW BIA DIRECTOR NAMED
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Trustee for American Indians (OST) as a financial trust services officer and as a fiduciary trust officer.
eldon “Bruce” Loudermilk has been named to head the Bureau of Indian Affairs by U.S. Secretary of the Interior Sally Jewell. He succeeds Michael S. Black, who has served since 2010. Loudermilk is an enrolled member of the Fort Weldon “Bruce” Peck Assiniboine and Sioux Loudermilk Tribes of the Fort Peck Indian Reservation. He takes the BIA’s top job as the bureau has recently implemented new rules for granting federal recognition, and has begun to create a bigger role for tribes in the management of federal lands. He has been BIA regional director for Alaska since 2014. He was Great Plains regional director from 2010 to 2014. Before joining the BIA, he worked at the department’s Office of the Special
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he Seminole Tribe of Florida recently announced Marcellus W. Osceola Jr. has been named its new chairman. Osceola Marcellus Osceola Jr. replaces James E. Billie, who recently was removed by the Tribal Council over conflicts concerning policies and procedures. Tribal officials said 843 votes were cast, with 319 for Osceola and 297 for Billie, who ran for his job again. Billie was tribal chairman when the Seminoles opened a bingo hall in Hollywood in 1979. He helped expand the business to a $2.1 billion gambling operation including seven casinos; its Seminole Casino Tampa is one of the 10 largest in the U.S. After serving as chairman for 22 years, Billie was fired in 2001 on charges of sexual harassment and financial mismanagement; neither was proved in court. He was re-elected in 2011 and again in 2015, but was ousted on September 28, following a recall petition and a Tribal Council vote of 4-0. According to a statement released by the tribe, Osceola, 44, will serve out the remainder of the current four-year term for the position of chairman, which will run through May 2019.
GGB
December 2016 Index of Advertisers
AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .63 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Gasser Chair . . . . . . . . . . . . . . . . . . . . . . . . . .31 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13,51 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . .37 ICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Incredible Technologies . . . . . . . . . . . . . . . . .49 Innovation Group . . . . . . . . . . . . . . . . . . . . . .35 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Konami Gaming . . . . . . . . . . . . . .29,Back Cover NetEnt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .14 San Manuel Indian Bingo & Casino . . . . . . . . .41 Sightline Payments . . . . . . . . . . . . . . . . . . . . .19 Spin Games . . . . . . . . . . . . . . . . . . . . . . . . . . .27
DECEMBER 2016 www.ggbmagazine.com
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CASINO COMMUNICATIONS
Q
&A
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he rise of eSports has brought many questions about how or if it could be integrated into the casino industry. Rahul Sood’s Unikrn has done just that. The company, whose investors include Mark Cuban, is taking legal eSports bets in Australia and has designs on other sports betting jurisdictions. Sood says he’s representing eSports wagering as no different than wagering on traditional sports, and suggests that any betting on eSports should be subject to the same regulatory scrutiny that all sports face. He spoke with GGB Publisher Roger Gros in November. GGB: Give us short outline of how you got involved in eSports and what your company does.
Rahul Sood: My first experience was to design hardware that you could play PC games on. Hewlett Packard eventually bought the company. I’ve been playing games ever since I was a kid, and as soon as that company got sold to HP, I wanted to get back into games. I’ve been keeping an eye out in the eSports area. At that time, it was amateur gaming tournaments where people would lug their PCs with them to community centers to play. After selling to HP, I joined Microsoft and ended up starting Microsoft Ventures, a strategic partner for startups. I was working with startups from around world, and met a lot of great people. One of the companies Microsoft invested in was the company I ended up acquiring to start Unikrn. This company, Pinion, helped gaming communities build and monetize their traffic. I became friends with their CEO and we decided to start Unikrn. Unikrn is a company that sits at the intersection of video games, sports and gambling. So Unikrn takes bets on eSports. Tell us how that works.
Unikrn is a sports book for eSports. Not only do we take bets on professional eSports events, 66
Rahul Sood
CEO, Unikrn
but we also have some really great skill-based technology. I didn’t want Unikrn to begin taking bets via a loophole like DFS did. We wanted to go down a path of working with regulators to make sure our events and wagering were transparent, so we can build a real, sustainable business around eSports— legal, regulated, safe responsible gambling. One of the first things we did when we started Unikrn was to visit Tabcorp in Australia, probably the largest bookmaker in the country, and a publicly traded company. They do in the neighborhood of $14 billion in turnover. We gave them our idea about eSports and skillbased betting and they fell in love immediately. They got it. They quickly became our largest investor and great partner. So now we’re accepting bets on eSports in Australia. We have more regions coming soon. And because we own some and have such great relationships with other gaming communities, we’ve set up a free-to-play system where players can earn “Unikrns.” There’s no exchange between players or third parties, but you can trade your Unikrns for prizes. It’s a way for us to get people interested and involved until we can offer real-money betting in those areas. We can test out things there before we add them to the real-money site. The thing that makes us unique is we’re the only dedicated eSports book in the world right now.
tial for match-fixing. We’ve seen it in tennis, soccer, cricket… It doesn’t happen much, but it happens. And you know what? We usually catch it. It won’t be any different with eSports. We’re dealing with competitive integrity issues. Our systems can spot betting anomalies, and we’re working on making it better every day. It’s better to support it and embrace it rather that turning your head and saying it doesn’t exist.
So how does the betting work?
Do eSports enthusiasts have a propensity to gamble?
It’s kind of like the NFL. People are betting which team will beat another. But the cool thing about eSports is that there is so much potential for in-play markets. It’s that instant gratification that people want these days. People are always worrying about possible match-fixing in eSports if bet as a traditional sports bets. What do you say to make them comfortable with eSports’ integrity?
It’s like any other sport. There’s always the poten-
Global Gaming Business DECEMBER 2016
There are so many kids playing these games. How do you keep them from gambling?
Like any other sports betting operation, we have very sophisticated KYC systems in place. We know who the customer is. They’re registered with their ID, they have to be geolocated in order to legally place a bet. You can’t get into our system from the U.S., even with a proxy server. It just cannot happen. What is the demographic of the eSports gambler?
Our players are of legal age, so it’s mostly between 18 and 32. When we first started, it was people who just loved eSports. They were very adept at understanding eSports. But over time, we’ve found there are lots of younger people who bet on traditional sports, and now they’re starting to bet on eSports on our platform because they’re learning about it. They’re realizing that once they learn about it, it’s really fun to watch.
It’s not that they just want to gamble, but if you go to an eSports event, you see how long it is and how engaged the audience is. That’s going to tweak the interest. If you go to a sporting event, you see people using their phone to text their friends or get the stats, and occasionally look up when something happens. At eSports events, they tend to be fixated on the action—for days, not just for a couple of hours. So when you add an in-game betting element, it’s very popular.
B:8.625” T:8.375”
LEAVE NO SPACE UNPLAYED
When it comes to your casino floor, every machine matters. The Concerto Slant™ is everything you love about the classic Concerto™, reimagined in a low-profile design. With an easy-reach center spin button, touchscreen button panel, and improved sightlines, the newest addition to Konami’s Concerto Collection is engineered to keep patrons in the driver’s seat even longer. gaming.konami.com
with topper for merchandising
KO_16_Concerto Slant_GGB_Ad_8375x11125.indd Live Trim Bleed
Saved at
Fonts & Images
Job info None 8.375” x 11.125” 8.625” x 11.375”
Fonts Avenir LT Std (35 Light, 85 Heavy) Images Slant-ad-02.tif (CMYK; 304 ppi; 98.44%), Latest Brand Logo_ CMYK_8_16_13.ai (11.25%), BornFromFun_Tag.eps (134.92%), Concerto-Slant_logo_w.ai (14%), Type-lines-k30_v3.ai (40.31%) Inks Cyan,
Magenta,
Yellow,
Black
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Printed at
None
B:11.375” T:11.125”
without topper for improved sightlines