Global Gaming Business, December 2018 by Global Gaming Business

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GGB Global Gaming Business Magazine

CALIFORNIA’S CHANGING REGS UNREASONABLE EXPECTATIONS IN NEW YORK ONLINE GAMING PLATFORMS AGA’S FAB YEAR

December 2018 • Vol. 17 • No. 12 • $10

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CONTENTS

december

Global Gaming Business Magazine

COLUMNS

30 COVER STORY The Case for ETGs

12 AGA Amazing Achievements

Thanks to technological innovation, a unique player base and more space on casino floors, electronic table games have earned their keep by bringing incremental revenue into casinos with a variety of side bets, unique presentations and a non-intimidating, low-cost way for new players to learn table games.

Stacy Papadopoulos

14 Fantini’s Finance Trends and Forecasts Frank Fantini

41 Making My Point Beware the Birds Roger Snow

By Frank Legato On the Cover: Installation of Scientific Games stadium-style ETGs at Sands Casino Resort Bethlehem

FEATURES 18 Top Trends for ’19

DEPARTMENTS 6

The Agenda

By the Numbers

10 5 Questions 16 AGEM 46 New Game Review

36 Broken System

48 Spotlight on New York

Experts continue to view California’s bifurcated system of gaming regulation as a hindrance to progress for the industry and an easily politicized system.

A respected gaming analyst offers a view of the diverse gaming offerings and the various regions set up for casinos in the state of New York.

By Dave Palermo

By Andrew Klebanow

42 Security Model

54 Platform Power

Okada Manila at Entertainment City provides a shining model for what security and surveillance in the casino industry must be in this day and age.

The new business of iGaming and legal sports betting in the U.S. will be powered by wagering platforms that have been proven to be successful in other parts of the world. By Dave Bontempo

Global Gaming Business DECEMBER 2018

Ann Nicholson

Bruce Merati

By Marco Benvenuti, Brendan D. Bussmann, Frank Legato, Oliver Lovat, Dave Palermo, Marjorie Preston, Richard Schuetz, Kit L. Szybala, and Brian Wyman

By Willy Allison

45 Global Gaming Women Perfect Storm 57 Sports Betting Not Your Father’s Casino Game

Alexa, what can machine learning do for me now?

Our annual take on the 10 top trends in the casino industry for the coming year reveals what will affect the industry in 2019, from in-game sports wagering to new Las Vegas developments to the shift of power to more women in the gaming industry.

Vol. 17 • No. 12

51 Frankly Speaking

52 Emerging Leaders With Fox Rothschild’s CJ Fisher and NIGC’s Dustin Thomas

58 Cutting Edge 60 Goods & Services 65 People 66 Casino Communications With Brian Decorah, CEO, Snoqualmie Casino

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THE AGENDA

Reinvest. Reinvigorate.

Vol. 17 • No. 12 • DECEMBER 2018 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | mcooley@ggbmagazine.com

Roger Gros, Publisher

hen I went to Reno last month to attend the Gaming Standards Association’s Technology Conference, it had been about five years since I had been to northern Nevada. I had heard much about Reno’s diversified economy, and I wasn’t disappointed. The town is booming with new businesses, attractions and enthusiasm. I booked a room at Harrah’s Reno, the first time I had stayed there since the 1990s. Unfortunately, Harrah’s was mired in the 1980s. I was disappointed in the public areas, and when I got to my room, I was shocked. It hadn’t changed since my ’90s visit. It had only gotten worse. Ripped wallpaper, holes in the rugs, lights not working, dingy curtains… It was certainly not indicative of the top properties in the Caesars organization. As the first casino opened by the legendary Bill Harrah, I imagined him rolling over in his grave at the thought of what his baby had become. While there were new slot machines on the casino floor, they rested on worn-out carpet. Some of the chairs at the table games had ripped upholstery. Like all casinos of the era, where you didn’t want the players to know the time of day, it was dark and unwelcoming. But to be honest, Harrah’s Reno isn’t the only dated casino hotel I’ve visited in the past few years. And Caesars Entertainment isn’t the only company (or tribal gaming enterprise, for that matter) that lacks a certain reinvestment in particular properties. We all know the major casino companies emphasize some properties over others; some properties are considered their flagships, the others just are along for the ride. Why reinvest in rooms when your average daily rate or occupancy rate is unlikely to increase? Until a couple of years ago, Reno hadn’t been a destination of any sort, so it didn’t make sense. And we all know that there are different levels of clientele at different casinos, even within the same company. If you’re going to cater to mainly low rollers, why spend the money to upgrade the property when it’s not likely you’ll change the clientele? Thinking like this only contributes to a vicious cycle of lowered expectations and even lower

Global Gaming Business DECEMBER 2018

results. If you’re not going to upgrade your property, you have no chance at upgrading your clientele. Let’s look at what Station Casinos has done in Las Vegas recently. A few years ago, Station bought the Palms casino in Las Vegas, an offStrip casino that had experienced a decline since it was owned and operated by the Maloof brothers. Station bought the property for a reasonable price, a little over $300 million. They could have simply maintained the property at its current level or added a few incremental attractions, and made about the same amount of money or a little more than previous owners had. Instead, Station invested more than $450 million in the Palms and created a showplace off-Strip property that is just as nice as the company flagship, Red Rock in the Summerlin area of Vegas. While the jury is still out, the Palms can now approach a better level of player and charge a higher ADR for its renovated rooms. But what really impressed me was the company’s $192 million reinvestment in its original casino, Palace Station. Just a mile or so away from the Palms, Palace Station was somewhat dingy and worn out, even with a few upgrades over the years. Now, with totally renovated rooms, upgraded restaurants, a new sports book and more, Palace Station has been brought into the 21st century. And hopefully, the return will justify that investment. So rather than getting caught in that vicious cycle of low expectations and little capital reinvestment and the same low-earning customers, casino corporations can plan to succeed by keeping even their lowest-level properties up to date. Now, immediately after my Harrah’s Reno experience, I stayed at Harvey’s in Lake Tahoe, where I had the honor of helping to open this year’s iconic Executive Development Program. Harvey’s is almost as old as Harrah’s Reno, but the rooms were modern, clean and well-maintained. Same company owns it, but manages to find the money to reinvest in a property that undoubtedly has a higher profile and a clientele that spends more. What would happen if you apply this same plan to Harrah’s Reno? Let’s find out!

Lauren Byrge, Director, Sales & Marketing LaurenB@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 | Bruce Merati | Ann Nicholson Stacy Papadopoulos | Roger Snow Contributing Editors Willy Allison | Marco Benvenuti Dave Bontempo twitter: @bontempomedia Brendan D. Bussmann | Andrew Klebanow | Allison McCoy Oliver Lovat | Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Patrick Roberts | Richard Schuetz Kit L. Szybala | Brian Wyman

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

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Vice President & Chief Compliance Officer, MGM Resorts International, twitter: @stephenmartino

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

• Steven M. Rittvo, Chairman Emeritus, The Innovation Group twitter: @InnovGrp

• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University, twitter: @kspilde

• Ernie Stevens, Jr., Chairman, National Indian Gaming Association twitter: @NIGA1985

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2018 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014

Official Publication

Electronic Table Games

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BY THE

NUMBERS

STricT PAreNTS

Top Grossing Parent Games — Premium (Lease & WAP)

he September edition of the EilersFantini Game Performance Report noted the powerful brands in the slot world and how they often dominate the casino floor. A parent game is the overall brand that has many derivations. For example, Lightning Link has at least four variations: High Stakes, Sahara Gold, Happy Lantern and Magic Pearl. And Lightning Link leads all parent games by gross win in the premium segment by a considerable margin, followed by Dragon Link and Wheel of Fortune. To subscribe to the report, visit ekgamingllc.com/gpd or contact Todd Eilers at teilers@ekgamingllc.com.

Tight Tables

espite complaints from regular players on the Las Vegas Strip about new table game rules that give a greater edge to the house, the actual data shows that the table-game hold percentage—the portion of money gambled that the casino retains—has been declining over the past 20 years, sometimes precipitously in the case of baccarat. You would think 6-5 blackjack, triple-zero roulette and higher overall table limits would result in a higher hold percentage, but the opposite is true. Hold percentage declined between 1992 and 2010, but it seems to be making a modest comeback in recent years, perhaps as a result of those tighter table game rules. This chart was produced by the Center for Gaming Research at the University of Nevada, Las Vegas. For more information, visit gaming.unlv.edu.

Global Gaming Business DECEMBER 2018

Nevada Table Game Hold Percentage 1992-2018

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NUTSHELL

“They

5QuesTions

Max Bichsel U.S. Director, Kambi

“My dad doesn’t need to give me any suggestions on this project; his presence in my life already tells me what I should do for the project.” —Arnaldo Ho, son of Stanley Ho, announcing that he will open a HK$5 billion (US$641 million) Macau-themed resort called Lisboeta in 2020 adjacent to the Lisboa Palace in Cotai

CALENDAR

he legalization of sports betting in the United States has created opportunities for companies that have made a name in the European market. Sweden’s Kambi is one of those companies that supplies a full range of sports betting services, whether land-based or online. U.S. Director Max Bichsel outlines how Kambi works with casinos to deliver their services, the potential for the U.S. market and how Kambi has set itself apart from other suppliers. He spoke with GGB Publisher Roger Gros at G2E in Las Vegas in October. To hear a full podcast of his interview, visit GGBMagazine.com.

1 2 3 4 5

GGB: What is Kambi? Bichsel: Kambi is a global B2B sports book supplier. For operators around the world in regulated

markets, we’re able to supply sports books from the trading to the management, everything required to operate a sports book. Kambi has a couple of contracts in New Jersey with the Hard Rock and Rush Street Interactive’s PlaySugarHouse sports books. What has the experience been like so far?

It’s been in the process for a long time, but we’re pleased with the results in New Jersey. And now we’re looking toward the rest of the country as legislation gets introduced and passed. How has Kambi navigated the regulations in New Jersey?

We take the compliance and regulatory aspect very seriously. We have in-house counsel to guide us. We’ve created relationships not only with the regulators but the legislators as well, to make sure they’re knowledgeable about what they’re hoping to regulate. It’s gratifying for us to get into some of these markets. Our goal is to be regulated across the U.S. and in any other regulated market in the world. We’re a listed company on the exchange in Stockholm, so regulation is very important to us. Kambi is known for its technology. What do you offer that others do not, or how is your technology better than others?

We come from a long line of traders that make markets, so we take it very seriously. We trade everything in house. We don’t scrape other sites or take information from other sources. We’re able to set odds on almost anything, not only pre-match, but also on outcomes in game. So if your team is driving down the field, Kambi can not only increase the entertainment value, but offer a wide variety of wagers. Take golf, for instance. There are some significant time stoppages in that sport, giving the opportunity for players to wager on whether or not one player will hit the green or make the putt. All these micro-markets make it very entertaining, and make it much more attractive for the player to stay with that offering. If you’re going to accept sports bets in states across the U.S., how do you account for the “local” bettors? For example, in New Jersey, you’ll have lots of bettors on the Jets, Giants and Eagles.

Good question, but for us, the price is the price based on the information we have. We have a relationship with our operators to make sure we’re setting the lines effectively. There are outliers, of course, about what that handle looks like and how we need to accommodate that. If you are a local or regional sports book in a regulated market, that is going to happen. That’s the nature of being a bookmaker, and it’s something we have to take into account. Volatility happens, and that’s why there’s such a small margin in sports betting.

Said It”

Global Gaming Business DECEMBER 2018

December 4-6: World Gaming Expo 2018, Grimaldi Forum, Monaco. Produced by Monaco International Events. For more information, visit World-Gaming-Expo.com. December 5: GambleAware Conference 2018, The King’s Fund, London. Produced by GambleAware. For more information, visit GambleAware.org. December 10-12: Class II Immersion Workshop, New York-New York Hotel Casino, Las Vegas. Produced by the National Indian Gaming Commission. For more information, visit IndianGaming.org. December 13: UNLV Gaming & Hospitality Education Series: Modern Player Development, Stan Fulton Building, University of Nevada, Las Vegas. Produced by GGB Magazine & UNLV William F. Harrah College of Hospitality. For more information, visit UNLVGHES.com. December 13: UNLV Gaming & Hospitality Education Series: The Perils and Possibilities of AML and Payment Processing, UNLV’s Stan Fulton Building, Las Vegas. Produced by GGB Magazine & UNLV William F. Harrah College of Hospitality. For more information, visit UNLVGHES.com. February 4-7: Western Indian Gaming Conference, Harrah’s Southern California, Valley Center, California. Produced by the California Nations Indian Gaming Association. For more information, visit WIGS.CNIGA.com. February 5-7: ICE Totally Gaming, ExCel Centre, London. Produced by Clarion Gaming. For more information, visit ICELondon.uk.com. February 26-27: Strategic Platform for iGaming Conference and Exhibition (SPICE) India, Goa, India. Produced by Eventus International. For more information, visit sportsbettingevents.com. March 3-6: World Game Protection Conference, Tropicana Las Vegas. Produced by World Game Protection, Inc. For more information, visit WorldGameProtection.com.

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AMERICAN GAMING ASSOCIATION

Amazing Achievements Looking back at 2018 for the gaming industry

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Global Gaming Business DECEMBER 2018

By Stacy Papadopoulos

s we approach the end of the year, I can’t help but reflect on the great strides our industry has made in the last 12 months. From making responsible gaming a key priority with the creation of the Responsible Gaming Collaborative to the Supreme Court overturning the failed federal ban on sports betting, there’s no doubt that 2018 was a noteworthy and productive year. First and foremost, this year we saw the success of the commercial casino industry is at an all-time high, having surpassed $40 billion in revenue for the first time. The sector has solidified its role as an economic engine, supporting 1.8 million jobs nationwide with an annual economic impact of $261 billion in the U.S. What’s more, the gaming industry continues to serve as an active partner with the communities in which we operate, supporting local, small businesses, providing career opportunities and good-paying jobs, and contributing to local nonprofits and philanthropic initiatives. One way we honor our promise to our communities is through responsible gaming. In 2018, the gaming industry doubled down on our commitment to promote responsible gaming and tackle problem gambling head on. Earlier this year, the American Gaming Association brought together renowned thought leaders, stakeholders and academics to form a new Responsible Gaming Collaborative designed to identify the programs and policies that best address responsible gaming issues and hold government accountable for supporting

proven, effective solutions. The establishment of the collaborative this year signifies our ongoing efforts to make responsible gaming more than a pledge and a true priority. When the Supreme Court struck down the federal ban on sports betting in May, we recognized that more people than ever could soon enjoy more gaming opportunities. As such, we are making it a priority to ensure that everyone—seasoned participants and new bettors alike—is aware of how to bet responsibly. This year, AGA updated its Code of Conduct for Responsible Gaming to include wagers on sports, as well as new advertising provisions to ensure casino and sports betting marketing is targeted to an age-appropriate demographic with tasteful content and reasonable frequency. The Supreme Court’s landmark decision to overturn the Professional and Amateur Sports Protection Act of 1992 (PASPA) this year also opened a wide array of new opportunities for the industry to innovate and grow. As states and sovereign nations explore whether to establish legal sports betting markets in the new year, AGA will continue to work with all interested stakeholders to advocate for common-sense provisions that empower the legal market to thrive and shut down the vast illegal market enabled by PASPA. Looking back on 2018, we can’t help but feel proud of the progress we’ve made as an industry and look forward to continuing to work together in the year ahead.

This year we saw “the success of the

commercial casino industry is at an all-time high, having surpassed $40 billion in revenue for the first time.

”

Stacy Papadopoulos is the acting CEO, general counsel and senior vice president of industry services for the American Gaming Association.

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FANTINI’S FINANCE

Trends and Forecasts How will the big issues impact the success of the gaming business in 2019 and beyond?

s we near the end of 2018, it is time to start thinking about the big events of the year and current trends, and ask what they foretell about the coming year. This year has been perhaps the best year gaming has seen in a decade or more, helped along by a strong U.S. economy and the U.S. Supreme Court opening the floodgates to legalized sports betting. It seems unlikely to repeat in 2019, but here are some topics and to consider: • The economy and interest rates. As fast as the U.S. economy raced ahead in 2018 in terms of jobs and consumer confidence, there are reasons for caution about the near-term future. Among the concerns: The federal tax cut has had its initial impact, so there is a boost that won’t repeat. The booming economy might be planting the seeds of the next recession in wage inflation and higher interest rates. Interest rates should be of special concern because gaming is a capital-intensive business in which casino companies have grown comfortable with debt leverage ratios of four to five times, and gaming equipment companies have high debt. Higher interest rates could raise borrowing expenses, slow growth projects and, if they lead to a general economic slowdown, put some balance sheets under stress. And, while there might not be a collapse as in 2008, there could be pain for leveraged companies. Further, the Great Recession put an end to the belief that casino companies are recession-proof. Today’s casino resorts are clearly more sensitive to the economy than when gambling was the sole driver of profitability. And that is more true today than in 2008. Finally, nobody yet has repealed the business cycle. • Sports betting has generated a lot of excitement, and early results from New Jersey, Delaware and Mississippi show its potential.

By Frank Fantini

The excitement is justifiable, because what will happen throughout the country isn’t just the old-fashioned “sports betting is just an amenity.” Sports betting will include mobile in-game wagering and lead to legalization of online gaming. In other words, a significant gaming expansion to be carried out over several years. • Consolidation appears to be accelerating with the likes of Caesars being mentioned as a target and REITs seemingly accelerating their deal-making pace. It also wouldn’t be a surprise to see international players move into the U.S. Genting would seem a likely buyer for some or all of Caesars, for example. A number of companies might want a Strip presence if Caesars would be forced to sell some Las Vegas properties. Boyd has long expressed an interest in returning to the Strip. Melco and Galaxy Entertainment might see the cross-marketing potential as enjoyed by their Americanbased counterparts, Las Vegas Sands, Wynn and MGM. • Valuations. One question that could be answered in the coming year is whether valuations awarded to casino companies at around 10 times debt-to-EBITDA are the new normal thanks to REITs facilitating acquisitions, or whether “this time is different” will prove itself false as it so often does, and valuations revert back to seven and eight times. • When is too much too much? It isn’t quite 2007 with Las Vegas mega-resorts proposed by everybody from “the Israelis,” as they were called, to George Clooney. But it isn’t the past decade of abandoned projects, either. However, big projects are in the works at a time when growth in Las Vegas visitation is slowing. Two of them aren’t so much new as revivals of Great Recession victims—Genting building Resorts World where Boyd’s Echelon was begun and Steve Witkoff reviving the 70 percent-finished Fontainebleau as the Drew. However, combined with Wynn’s new project on the long-vacant New Frontier site, Las Vegazs is adding significant capacity that will

Global Gaming Business DECEMBER 2018

raise the question of whether Las Vegas remains a “build it and they will come” destination. It would seem that Las Vegas can absorb more hotel rooms after a decade without growth. Perhaps the real building boom today is in convention space and arenas. Right now, every one of those projects appears on paper to be headed for success, but that is the nature of booms—until they don’t. • Las Vegas and Macau. As gaming and sophisticated casino resorts proliferate, Vegas and Macau face greater competition. But those cities are still enormous destinations, and they continue to develop the infrastructure and add the amenities that give them ever-stronger appeal. In Macau, the bullish story remains penetration of the huge-growth Chinese middle class market just a stone’s throw away. Having said that, there is always a measure of risk in Chinese government policy. And, as the current slowdown in Macau illustrates, growth does not come in a straight line. In Las Vegas, the convention and arena boom, plus the addition of major-league sports teams, is adding attractions, and the growing Sun Belt population in southern Nevada and nearby California and Arizona continues to grow the regional market. Put another way, Las Vegas and Macau appear likely to be growth markets for years to come, though with hiccups along the way. • Japan might finally get around to laying down the rules of casino development this year or early in 2020. At present, Las Vegas Sands and MGM Resorts appear the favorites to land two of the three licenses, but there are a lot of issues ahead about ownership structure that will determine whether Japan licenses are gamechangers, or just nice big additions. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. For a free 30-day trial subscription email subscriptions@fantiniresearch.com.

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AGEMupdate AGEM Board of Directors Actions – November 2018

AGEM MEMBER PROFILE

Wells-Gardner Technologies, Inc. is a wholly owned subsidiary of HT Precision Technologies, Inc. of Taiwan (HTP). Wells-Gardner’s corporate office is located in Burr Ridge, Illinois, just outside Chicago. The company recently opened a new office in Las Vegas as well. Wells-Gardner continues to focus on the gaming and amusement markets, building on the strong Wells-Gardner brand name representative of world-class quality, service and innovation. Wells-Gardner has enhanced its capabilities with additional engineering resources and a continued focus on lean manufacturing principals driven to provide the superior quality and the highest return on investment for existing and new customers. In addition, the recent relationship with HTP now provides Wells-Gardner with best-inclass audio products. Wells-Gardner is a longstanding Bronze member of AGEM. Wells-Gardner provides a niche value for the markets served by providing customized monitors, which meet the manufacturers’ intricate specifications. Wells-Gardner’s vast experience enables the company to develop proprietary electronics boards and individual components to create a monitor that will look and perform just like the Wells-Gardner game-maker customers want. Wells-Gardner’s experienced sales and engineering teams are dedicated to offering exceptionable customer support with all of the company’s products, creating a Wells-Gardner experience that separates the company from others. Contact Wells-Gardner at 1-800-336-6630 or visit the website at wellsgardner.com.

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. 16

Global Gaming Business DECEMBER 2018

• AGEM’s Compliance Committee met with Nevada Gaming Control Board Chairwoman Becky Harris on October 23 to discuss the “assume responsibility” portion of Regulation 14. During the positive working session, AGEM made the case its members, specifically the slot machine companies, have always assumed responsibility for all aspects of their equipment and that extra wording within the regulation was not necessary. Chairwoman Harris said she would consult with her staff on next steps and reply to AGEM in due course. • AGEM has recently commenced an initiative in Nevada for a proposed workforce development bill to be introduced in the upcoming legislative session that would allow suppliers to provide employment or paid internships to those under 21 years of age. Nevada has invested heavily in technical high schools, and there should be a pipeline for these students that may not wish to go on to college. The gaming supplier sector is a fast-growing, multibillion-dollar industry providing innovative development opportunities for this emerging workforce. • The NIGA Indian Gaming Tradeshow & Convention will take place April 1-4, 2019 in San Diego. AGEM members approved funding of $50,000 for Platinum Sponsorship of the event and will now refine the details of what the contribution will be used for. In the past, this has consisted of a show floor reception on the first day, among other things. • AGEM’s support of the Driving Arkansas Forward campaign had a positive outcome in the recent U.S. elections, with four new Class III casinos confirmed. The first casino opening is likely to be in 2020 and, with each casino having approximately 2,000-2,500 machines, this is a welcome market expansion for all of the industry. • AGEM welcomed five new members in November. New Bronze member Synergy Blue is based in Palm Desert, California, and is a leading provider of entertainment gaming solutions, bringing arcadestyle, skill-based games, platforms and applications to the casino market. Other new Associate members include Aon, with an office in Las Vegas, a global professional services firm providing a broad range of risk, retirement and health solutions; Gaming Publishing, based in Manchester, U.K., publisher of G3 Magazine and G3 Newswire, a global news portal for the gaming industry; Leadman Electronics USA, based in Santa Clara, California, a provider of data center server solutions, manufacturing services and design services; and TACK Electronics, based in Grand Rapids, Michigan, which provides custom wire harnesses and assemblies for a wide variety of electronic applications to the gaming industry among othP ers, for over 20 years.

Forthcoming Events • The 6th Gaming Innovation Showcase will take place on December 12, 5 p.m.-8 p.m. at the International Gaming Institute at the University of Nevada, Las Vegas. This important showcase presents new talent and ideas from students at the institute to the industry.

AGEMindex The AGEM Index decreased in October 2018. The composite index finished the month at 452.16 points, a decline of 40.87 points or 8.29 percent, compared to September 2018. The AGEM Index reported a year-over-year decrease for the first time after 36 consecutive months of year-over-year increases. The AGEM Index decreased by 23.18 points, or 4.88 percent, on a year-over-year basis. During the latest period, two of the 13 global gaming equipment manufacturers reported month-tomonth increases in stock price. Eleven manufacturers reported decreases in stock price during the month.

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Fixing GGB’s the Future

10 Trends for 2019 1010 Trends Trends

t’s a dangerous sport, predicting the future. But it’s also fun to speculate, and that’s exactly what our authors are doing in GGB’s Annual 10 Trends for 2019.

While you can’t predict the future without remembering the past, you also can’t plan for the future without understanding the present. In this feature, the expert authors gathered by GGB editors explain how different topics will impact the gaming industry in the next year and beyond. Technology plays a role in several of the stories in this feature. When you think about how advances in technology have changed all our lives in the past 10 years, it’s amazing to consider where it will go. And of course, it’s accelerating quickly.

Some of the trends we see in this feature are predictable: sports betting’s growing engine, in-play wagering; non-gaming amenities and where they’re going; and gambling expansion in Asia, but specifically in Japan; the pressures facing the gaming capital of Las Vegas. Others are more subtle than surprising: succession plans in gaming companies and increasing regulatory challenges. And still others are ongoing trends like the increasing visibility and importance of women in gaming and the crossover between tribal and commercial gaming. So the last year of the second decade of the 21st century will hold some surprises, opportunities and challenges for the gaming industry. Hold on— it’s going to be a wild ride.

{1}

Ready for 2020? Las Vegas and gaming will be transformed

he name Las Vegas will probably always conjure up images of neon signs, casinos on the Strip and Elvis for most people around the world. But for the gaming companies living through the city’s rapid evolution, Vegas already encompasses more than its past. Its future will be a dramatically different business environment in only a few short years. Casinos are already preparing for Las Vegas 2020, when the city will have to retain its roots and reputation as a gaming and entertainment destination as it remakes itself as a true sports town—welcoming not just the National Football League, but also the exploding popularity of esports. Once it lost its monopoly in the United States on gaming, Las Vegas began the first of several reinventions. It faces another inflection point

Global Gaming Business DECEMBER 2018

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right now. Casino licenses are spreading The next team to come to Las Vegas to regional markets and tribal lands all will be the Raiders, who will kick off the over the country, forcing mainstays in 2020 NFL season in a brand new, $1.9 Las Vegas to stand out from options billion stadium. In addition to eight much closer to home for potential visihome games per year for the Raiders, the tors. new stadium is almost guaranteed to be a For the first time, the Las Vegas Convention Center will have More importantly, the gaming future host site for the Super Bowl or an entrance on the Strip sometime in 2020 spend from guests who do come to college championships in football or basVegas isn’t growing as fast as it used to. ketball. In fact, it’s lagging the growth in revVegas could also be the epicenter of enue coming from amenities outside the gaming floor, like F&B, spas, enthe “sport” growing faster than anything else: video games. According to marketing firm Newzoo, the esports industry is expected to cross $1 billion tertainment venues and nightclubs. in revenue in 2019. By 2020, this trend of non-gaming revenue’s emergence will join anHow can that much money be made from tournaments and leagues deother major challenge for casino operators: a huge influx of new supply. voted to watching people play video games? There are hundreds of millions Three new mega-resorts on the Strip have backing from Resorts World, of dollars at stake for sponsorships, advertising, media rights, fees to video Wynn Resorts and Marriott International. The 9,000 new hotel rooms game publishers and—most important to Vegas—merchandise and tickets they’re adding to the supply will be the biggest expansion of inventory on to events. the Strip in decades. Casinos in Las Vegas are betting on esports in a big way by competing Convention Wisdom to host these competitions. MGM opened the Strip’s first esports arena at Las Vegas is home to some of the world’s biggest trade shows, such as the the Luxor in 2018, and that’s probably a sign of things to come. Consumer Electronics Show (CES). But many, many smaller conventions and meetings make up the approximately 22,000 events that are hosted in Revenue Strategies for the Next Las Vegas the city each year, according to the Las Vegas Convention and Visitors AuSo, Las Vegas is undeniably getting tons of new supply in hotel and conventhority. tion space, and it’s banking on new demand for a new Vegas experience However, in the first half of 2018, convention attendance decreased from sports fans and business travelers. Gaming isn’t going anywhere, but slightly more than 3 percent, the LVCVA reported. That was a more signifiit’s also not going to be the engine for growth that it used to be. How are cant dropoff than the 0.4 percent decline in non-convention visitor volume. casino resorts going to keep making money in this changing environment? Convention attendance has not fallen year-over-year since 2010, when I The answer to this question has implications for how much casino-howas a revenue management executive on the Strip. Trying to open the Entels can charge for a room, as well as whom they comp. Rapidly growing core Las Vegas that year was incredibly difficult. supply often hurts properties’ pricing power, but if Las Vegas achieves its By 2020, Las Vegas will have millions more square feet of meeting and hoped-for boom in demand and compression dates, casinos will still have convention space, including the ongoing major expansion of the Las Vegas the opportunity to command better cash rates. Convention Center. That facility’s complete expansion and remodel is supIf demand is slow to materialize, then the revenue management chalposed to wrap up by 2023, which would ultimately accommodate 600,000 lenge becomes outperforming the casino’s competitive set and taking marnew visitors per year. ket share in RevPAR Index. But that’s not all. Caesars Entertainment plans to open Caesars Forum Integrated resorts must determine how to price their inventory by room by 2020 on the Strip, and a new entertainment venue developed by Maditype and customer segment for their cash rates, and then they need to acson Square Garden and Las Vegas Sands will open right behind the Sands count for changing consumer preferences in their reinvestment strategies. Expo & Convention Center. As the city evolves over the next few years, casinos’ success in Las Vegas will depend in large part on their revenue strategy. This requires a mindset A Different Kind of Gaming shift toward greater collaboration between the hotel and casino teams, Las Vegas has relied on its convention business for decades to create demand where a shared set of data helps both groups work toward the same goal: for midweek stays and fill the city’s hotels with visitors who still spend siggreater total-resort profitability. nificantly on property, even if they don’t gamble. Retaining flexibility will be crucial if demand swings as much as exMore recently, with non-gaming revenue continuing to outpace the pected in Las Vegas in the near future. growth in gaming revenue, Las Vegas has begun to embrace a different kind —Marco Benvenuti, chief strategy officer and co-founder, Duetto of attraction: sports. While it’s hard to account for every incremental dollar produced by sports fans in Las Vegas, we could agree that welcoming profesThis article is adapted from “Vegas 2020: A Vision for the Future of Gaming,” a sional teams like the Vegas Golden Knights in the National Hockey League new industry report from Duetto. To learn more and to download the full reand the Las Vegas Aces in the WNBA have been a huge net positive. port, visit duettocloud.com/content-vegas-2020-report-2018. DECEMBER 2018 www.ggbmagazine.com

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10 Trends for 2019

{2}

“Your free play at the casino is expiring today!”

Machine Learning A technology that is gaining traction in gaming

next week. • Learn that a slot does t’s one of technology’s sexiest topics— $300 theo per day, and flag machine learning—conjuring up images of the $2,000 theo it did in the Watson playing Jeopardy!, self-driving cars, last 90 minutes, despite losing and “I’m sorry Dave, I can’t do that.” money, so that a tech can inBut these examples feel—even to this auvestigate and find that we erthor—a bit futuristic and inaccessible. What roneously reset the can machine learning do for me now? mini-progressive too high. Actually, most people interact with ma• Predict that a patron chine learning every day. Netflix recomwon’t play for the next three mended I watch Sherlock. Amazon months, allowing marketers to recommended a Michigan Snuggie. confidently send a more agA friend wrote an email about a restaurant, gressive offer. and Gmail offered some pre-populated Meanwhile, a clustering alone-click responses: gorithm might… • Identify a set of 15 AristoInteresting. Thanks for the tip! Cool, thanks! crat games, located all across the gaming floor, that tend to These are all examples of machine learning in be played by the same set of people (diapers–beer action. “Alexa, what’s machine learning?” Indeed— example above). This may encourage us to bank Alexa, Siri, and Cortana all use machine learning to those games together. mimic human conversation. Voice-to-text? Ma• Tell us that a player really likes five of those chines use large training sets to learn how people games but hasn’t yet played the other 10. We can speak. The text they produce is a prediction of what include recommendations and images of those we’re saying. machines in her next email correspondence. At its core, machine learning is processing data, Especially in marketing and on slot floors, “learning” from the data, and making predictions where there’s an abundance of data and where the based on the data. Netflix, Amazon, Gmail and revenue and cost numbers are large, many compaAlexa use data to predict what I want to watch, buy, nies have begun developing internal teams or type and hear. But we have slot machines. Dice. working with vendors to turn their data into intelCards. How can we use machine learning? ligence, optimizing both their top and bottom To answer this, it helps to understand the types lines. Machine learning algorithms can even help of problems machine learning solves: classification analyze guest satisfaction surveys. This is what maand clustering. A classifier might aim to predict chine learning is doing for the industry now. whether a picture is of a cat or a camel, or whether But, machine learning is an evolving tool in an email is spam or “ham”—yes, that’s really what this process, and there’s a lot farther to go to leverwe call non-spam emails. The classifier might learn age this technology to its fullest. It is not easy— that misspellings, words like “buy,” and certain competition from the tech industry makes it pharmaceuticals are good predictors of spam. A clusdifficult to find talent, and market rates for the tering algorithm might learn that I probably want to skill set are high. However, since machine learning watch the latest season of Sherlock, or that people is all about prediction, I will offer one of my own: who buy diapers at the grocery store also buy beer— machine learning will be transformational in gamsomething to which this new dad can attest! ing. And while we aren’t to the level of true 1-to-1 In the gaming world, a classifier might… marketing and in-session bonusing yet (we are • Figure out that certain advantage players often close), there are many routine areas of operations have PO boxes or out-of-state addresses, a large where machine learning can make an immediate theo-to-actual disparity, and play certain game types. EBITDA impact. • Predict that a slot’s bill validator will break —Brian Wyman, The Innovation Group

Global Gaming Business DECEMBER 2018

{3} ROI From IRs Non-gaming amenities are becoming an increasingly important part of casino resorts in the face of fierce competition

ith competition increasing in casino markets across the world, many of the more astute casino operators are expanding and/or repositioning their facilities to differentiate themselves from their competition to better meet the needs of their customers. These operators have realized that they must create compelling environments and engaging experiences to fully penetrate their marketplaces and improve property performance. Globally, casino operators have utilized the phrase “integrated resort” as a catalyst to redefine the casino experience. This strategy is not new, as it has been employed in markets like Las Vegas, Singapore and Macau. However, recent developments in these markets have truly reimagined the concept. At Wynn Palace Cotai, those that dine within SW Steakhouse’s elegant dining room are provided with a unique theatrical performance every 30 minutes. Combined, Macau features 18 Michelin star restaurants (most of which are found within Macau’s casinos). In Singapore, Marina Bay Sands utilizes iconic architectural design to bring the property to the forefront of the world’s tourism stage. MGM Cotai’s slogan, “Where Great Moments are Made,” fully encapsulates the vision behind this broader trend. Some operators have even developed unique amenities and services to target groups of patrons within their markets. These operators have focused on tailoring their food & beverage programs, architecture, design, floor layout, game types, and even in-room amenities (e.g., providing bigger safes, dental care products, and robes/slippers in rooms) to attract certain market segments. In Macau, operators have become increasingly sophisticated at creating products that are specifically curated for their market. Successful facilities in Macau have been designed and built in a way that adheres to the principles of feng shui and other relevant design philosophies. Colors like red and gold are utilized, as they represent good fortune and joy, while the numbers 6, 8, and 9 are often found in

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Macau’s Wynn Palace dazzles visitors at the Wing Lei Palace restaurant with a view of the fountains

2 0 0 0 AT T O R N E Y S | 3 8 L O C AT I O N S W O R L D W I D E˚

Focusing on Your Global BSA/AML Needs

casinos as they are viewed to be auspicious. Multilingual dealers are recruited and trained to cater to a variety of market segments and allow customers to feel more comfortable on the casino floor. These strategies are not unique to Macau. Globally, operators have noticed how important these strategies are in attracting new segments within their markets. Just outside of Vancouver, River Rock Casino Resort worked to bring Sea Harbour Seafood Restaurant to their property (an authentic, awardwinning Cantonese restaurant developed by chefs from Zhongshan in Guangdong Province). In Northern California, Cache Creek Casino Resort has long targeted unique Asian demand segments in the Bay Area with a well-positioned food & beverage program, television channels that provide programming in Cantonese, Mandarin and Vietnamese, and even a website in multiple languages. In Cambodia, NagaWorld offers an incredibly diverse mix of dining options that appeals to visitors from across Asia. They even maintain an academy that teaches foreign languages to the Cambodian employees. At Wynn Las Vegas, the Red 8 Restaurant features a menu in which nearly every item’s price ends in 88 cents. These strategies are not always successful, as several operators have attempted to penetrate their marketplaces by developing faux environments and experiences. Developments such as the Lucky Dragon in Las Vegas missed the mark in their attempt to attract the Chinese-American and Chinese visitor segments. In other instances, developers have over- or under-built their facilities in an attempt to create unique and attractive experiences. Despite these attempts, operators will continue to innovate and reimagine their offerings to provide patrons with unique experiences and crafted environments in 2019. —Kit L. Szybala is a partner and the executive director of operations at Global Market Advisors.

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.

Mark A. Clayton

Carl A. Fornaris

702.599.8006 claytonm@gtlaw.com

305.579.0626 fornarisc@gtlaw.com

G R E E N B E R G T R A U R I G , L L P | W W W. G T L AW. C O M The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2018 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Attorney Advertising. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 31613

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10 Trends for 2019

{4} Play On In-game wagering is in its early stages in the U.S., and will grow to dominate

ith the recent repeal of the Professional and Amateur Sports Protection Act in the United States, sports betting has become one of the most talked-about topics in the industry. In the coming year, as states and U.S. territories examine how to address PASPA’s repeal, operators will be faced with a significant challenge: creating a suite of products that can effectively compete with the illegal market in a variety of regulatory environments. To accomplish this task, operators will attempt to do several things, including but not limited to securing access to data, developing in-play/in-game wagering products, and identifying other unique products that can help them enhance fan engagement and viewership, and subsequently help them satisfy all stakeholders. A handful of sports betting operators have already begun to establish partnerships with professional sports leagues and data providers. These moves were made to ensure that operators have the best possible access to data feeds as well as advertising and sponsorship opportunities. Sports betting data feeds are a critical piece of the puzzle, as they allow bookmakers to enhance the accuracy of the odds they set and expand the amount and type of products they can offer. These feeds must come from trusted sources that can deliver information in an immediate manner. In 2018, MGM entered into agreements with the National Hockey League, National Basketball Association and Women’s National Basketball Association to gain access to each league’s proprietary data. These strategic moves are expected to continue to ramp up as more markets come on line in the next year. By obtaining access to these data feeds, the legal sports wagering industry will be able to enhance its products by offering sophisticated in-game/in-play wagering products. Ingame wagering is offered in countries throughout Europe, and represents a sizeable portion of total wagering in those markets. Despite this fact, most operators in the United States have failed to provide an in-game wagering product that is as functional and/or as sophisticated as those products offered in mature international markets. Today, most illegal bookmakers in the United States are unable to offer in-game/inplay products that offer an enticing experience to customers. By offering these products, legal operators will be able to lure patrons away from illegal wagering outlets. As operators continue to fine-tune their product offerings and secure access to data feeds, more refined in-game/in-play wagering products are expected to enter markets in 2019. In-game and in-play will be critical to not only attract serious sports bettors but also casual fans who want to participate, and feel like they can compete and have a chance to win. To demonstrate the value of sports betting to sports leagues, teams and other stakeholders, legal operators will find ways to demonstrate the positive impact sports betting can have on viewership and fan engagement. Effective in-game products will not only help drive additional fan engagement and viewership, but increase the value and role that media plays in sports. This will be accomplished by continuing to innovate products that offer unique game-play options that differentiate the legal market from the illegal market. Additionally, operators may look to partner with and/or acquire established companies that have developed products that would bring value to their offerings. These include social apps as well as wagering apps that are able to engage more fans. —Kit L. Szybala is a partner and the executive director of operations at Global Market Advisors. 22

Global Gaming Business DECEMBER 2018

{5} Changing of the Guard With notable departures in leadership, gaming is transforming its succession plans

he year 2018 has been memorable for Las Vegas, not for the arrivals, but for the departures. At year’s end, three of the defining characters in modern casino management, Steve Wynn, Bobby Baldwin and Felix Rappaport, have left the building, the latter, sadly, for the last time. A trio that inspired and mentored dozens of today’s industry leaders, schooling them in a distinct culture of customer-centric hospitality, development and management, have exited. Their legacy is secure in today’s C-suites across the gaming and hospitality industry, but their particular approach may soon be to change. One of the defining trends of recent decades has been the influx of MBA graduates coming from outside of gaming and hospitality to management roles in large gaming companies. It started with Harrah’s and Gary Loveman’s MBA hiring program, which was replicated throughout the industry. It is a far cry from the scene in Paul Verhoeven’s Showgirls, when dancer Nomi Malone questioned the meaning of her superior’s MBA designation. This approach has reaped success and is set to endure, as fresh investment is made to the industry, corporate consolidation continues and the need increases to hire people who have the skills to progress large and complex organizations. Moreover, we are now at the time when retirement calls for many of those that built Las Vegas and Atlantic City over the past decades. Qualifications are as important as experience in 2019. Hiring MBA graduates and from outside the industry throughout the 2000s has undoubtedly brought benefits in terms of fresh and innovative thinking as well as best practice, as seen in other industries. The capture, collection and analysis of customer data in a centralized manner has been the most noticeable outcome of this strategy, as has the structured and collegiate approach to decision-making, where once the decisions were the preserve of the founder or owner of the enterprise.

This generation of management has now been in place for over a decade, and there is recognition that unlike previous gaming executives that were pigeonholed in this industry, their skill set is highly transferable and desirable, yet many of the executives have no desire to leave. Rather, there is a growing desire for these hires, now in their second decade in the industry, to further transition to senior management and assume key leadership roles with greater responsibility, either within the existing market players, the corporate parents, or indeed to take roles within competitors in the online or land-based spaces. Within Las Vegas, we have already seen key hires made from the MGM and Caesars talent pool, with Station onboarding Thomas Mikulich and Josh Swissman from MGM and Mike Salzman leaving the Caesars development team to build the Las Vegas-to-Los Angeles train for Brightline. Elsewhere, MGM corporate executives like David Tsai and Chris Gumiela have moved to property level, as Las Vegas-based companies needed qualified boots on the ground to manage their expanding regional footprint and implement more focused strategies that were once the responsibilities of traditional hospitality professionals. It may be that as the corporate center streamlines at a senior level, this movement of people outward for new challenges will continue. The question arises in how this affects tribal holdings or companies where the founder or dominant executive still has an operational presence. Tribal operations are similar in many ways to family offices, and many of those that have worked for Wynn, Boyd and Las Vegas Sands have likened the experience to working in a family business. On Rappaport’s passing, MGM CEO Jim Murren remarked on his two decades as part of the MGM family, a telling legacy to the culture that the former generation of leadership had created, where longevity and cultural acquiescence were valued above educational attainment. Indeed, there is much that these companies can gain from the successful transition from family businesses to family offices, where external professionals, again from the private financial sector, have come in to assist in planning and analysis, not to mention strategic leadership. As the Seminole ex900 perience shows us, tribal casinos can evolve from single assets to global brands and multifaceted enterprises. Bernhard, Green and Lucas’ insightful University of Nevada, Las Vegas paper, From Maverick to Mafia to MBA, charted Las Vegas’ leadership evolution. It may be that 2019 will be the year when this transition completes, not just in Las Vegas but throughout the industry. For tomorrow’s

executives, Excel formulas and pivot tables have a greater importance than the culture forged in the lights of 1980s Fremont Street and the Atlantic City Boardwalk. — Oliver Lovat is a founder and current managing director of Denstone REA. Lovat is visiting faculty and lecturer on strategic marketing at Cass Business School, City University of London, and The PLuS+ Centre for Executive Education at the University of Nevada, Las Vegas.

We congratulate our Emerging Gaming Leader

C.J. Fisher C.J. Fisher We congratulate our Emerging Gaming Leader

attorneys | 27 offices nationwide

foxrothschild.com 1301 Atlantic Avenue Midtown Building, Suite 400 Atlantic City, NJ 08401 DECEMBER 2018 www.ggbmagazine.com

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10 Trends for 2019

“Companies must specifically target where they want to be, measure how they’re succeeding against those targets, and build in processes to make sure their recruitment practices are giving them the most diverse pool.” —Jan Jones, Executive Vice President of Public Policy and Corporate Responsibility, Caesars Entertainment

Women Ascending Will #metoo affect the balance of power in gaming?

he fight for gender equality took center stage in 2018 with #metoo, which led to the downfall of powerful men including Harvey Weinstein, Matt Lauer, Al Franken and of course, Steve Wynn. Last February, Wynn stepped down from the empire he founded amid allegations of chronic sexual misconduct. In his wake, the company added three female board members (for a total of four) in what CEO Matt Maddox called “a new era” of representation for women. The news is encouraging: MGM Resorts now has four women board members. In October, Caesars appointed its first. And when Geoff Freeman departed as head of the American Gaming Association last summer, he was replaced by interim CEO Stacy Papadopoulos, AGA general counsel and senior vice president of industry services. And Sara Slane, the AGA’s senior vice president of public affairs, has led the organization’s sports betting legalization drive, among other female senior staffers at the AGA. But there’s a long road ahead to correct gender-based inequality, says Jan Jones, Caesars executive vice president of public policy and corporate responsibility—and the first female mayor of Las Vegas. “I’ve been giving the same speech (on equal pay and representation) for 25 years, and quite frankly, the numbers haven’t changed,” says Jones. “Companies love to say, ‘Fifty percent of our workforce is women,’” but in the top ranks, the distaff side is still scarce, accounting for about 14 percent of senior vice presidents and 4 percent to 5 percent of CEOs. In one oddball statistic, “there are more CEOs named David” in Fortune 500 companies than the total number of women CEOs, says Jones. According to the 2018 Women in the Workplace Study, co-sponsored by McKinsey & Co. and LeanIn.org, women still earn appreciably less than men: “78 percent and 82 percent on the dollar for women; 68 percent for black women; and 58 percent for Latina women,” she adds. “Those numbers aren’t moving,” despite highly publicized promotions of women. In the quest for gender parity, says Jones, “companies must specifically target where they want to be, measure how they’re succeeding against those targets, and build in processes to make sure their recruitment practices are giving them the most diverse pool. Then, sponsorship and mentorship practices must move those (recruits) through the system, and performance evaluations must include diversity and inclusiveness criteria. What isn’t measured doesn’t count.” Caesars’ 50/50 by 2025 campaign, for example, “measures against all levels of the organization, both horizontally and vertically,” Jones stresses. “It’s not just 50 percent of women in the company. We want 50 percent of women at the highest levels.” Phyllis A. James, executive vice president and chief diversity and corporate responsibility officer for MGM Resorts International, says inclusion isn’t just a social justice imperative—it’s good business. In 2017, when

Global Gaming Business DECEMBER 2018

{6}

“There’s a myth that all white men have been given everything on a silver platter. That is not true for all white men, and we shouldn’t stereotype white men any more than women.”

MGM was named a top U.S. company for diversity by DiversityInc, James said, “A business becomes stronger and more competitive when it leverages the talents of all of its employees— and their different backgrounds, — Phyllis A. James, Executive Vice cultures, ideas and viewpoints— President and Chief Diversity and to create better, innovative strate- Corporate Responsibility Officer, gies and methods for exceptional MGM Resorts International products and guest services.” Methods will change before minds do, she adds. “This is a broad-based social, political and economic movement. There are ebbs and flows, big leaps and incremental steps. I like to think we got a big leap from #metoo, but it’s going to take several generations to change ingrained cultural and social attitudes. Companies must go beyond bare legal minimum and truly embrace diversity.” To women seeking professional advancement, she says, “Be the best you can be. If you’re not naturally assertive, practice. Speak up. Don’t recede into the background and don’t wait to be called on. Take stretch assignments. And don’t give up. If you hit a roadblock, figure out why it happened and get some advice about it. Usually there’s more than one road to where you want to get to.” She adds, “There’s a myth that all white men have been given everything on a silver platter. That is not true for all white men, and we shouldn’t stereotype white men any more than women.” Jones cites the famous “blind orchestra” auditions of the 1970s and 1980s that helped change the gender makeup of symphonies. “For years, about 10 percent of orchestra members were women. Then they started doing blind auditions, where applicants auditioned behind a curtain. Now almost 50 percent are women. “I call it unintentional chauvinism or misogyny. People—men and women alike—don’t recognize their own unconscious biases. If you don’t change the mindsets and then give an organization the tools to actually move and enact change, (workplace equality) will remain a conversation. “This is not an evolution,” Jones says. “If it was an evolution it would have happened on its own. I call it a managed revolution, where companies look at themselves and grade themselves on where they are. And the workforce can grade them too.” —Marjorie Preston

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Tribes Go Commercial Confidence and capital make tribes a major player in the commercial casino market

{7}

Alabama’s Poarch Band of Creek Indians recently purchased Sands Bethlehem, one of the leaders in the Pennsylvania casino market

merican Indian tribes are increasingly looking to commercial casino opportunities in North America and overseas in their effort to grow a tribal government gambling industry that consists of some 500 facilities in 29 states. Hard Rock International, a multibillion-dollar enterprise of the Seminole Tribe of Florida, is taking a leadership role, pursuing projects in Japan, Costa Rica and Spain. Its worldwide ventures include the former Trump Taj Mahal in Atlantic City. Mohegan Gaming & Entertainment, an enterprise of the Mohegan Tribe of Connecticut, hopes to add a South Korea gambling resort to the list of casinos and racetracks it owns or manages in Atlantic City, Pennsylvania, Connecticut, Louisiana and Washington. And Wind Creek Hospitality, a division of the Poarch Band of Creek Indians of Alabama, is putting together a $1.3 billion deal to acquire the Sands Resort and Casino in Pennsylvania. The tribe operates several gambling and hotel facilities in the Southeast and the Caribbean. The commercial ventures are a natural extension of a tribal gambling industry that exploded with passage in 1988 of the Indian Gaming Regulatory Act (IGRA), which dovetailed a U.S. Supreme Court ruling recognizing the sovereign right of tribes to operate gambling on Indian lands. “Tribes have been in gaming long enough, they know the business,” says economist Alan Meister, author of the annual Indian Gaming Industry Report. “They have the confidence and many have the capital.” “Tribes are good operators. They’ve developed top-notch, high-quality management teams,” says Matt Sodl, co-founder and managing director of Innovation Capital. The American Indian casino market dominates gambling in North America, growing at a faster rate than the commercial casino and racetrack, or “racino,” segments of the legal gambling industry, according to Meister’s report. Gaming revenue in the 17 states with commercial casinos rose 1 percent in 2016 to $30 billion, Meister says. Meanwhile, racinos in 15 states grew 2 percent to $8.7 billion. Unlike commercial casinos, slots and table games at dog and horse tracks are largely a method used by the parimutuel industry to generate increased purses. Tribal government gambling revenue for 2016 rose 3.9 percent to $31.5 billion, Meister says. “The last couple of years, Indian gaming has been growing at a faster pace than commercial casinos and racinos,” Meister says. “Indian gaming has become the largest segment of the legal gaming industry. “Indian gaming will remain the largest segment for some time. It’s growing at a healthy rate.” The National Indian Gaming Commission (NIGC) says tribal gambling revenues grew another 3.9 percent in 2017 and now total $32.4 billion. “The consistent growth of the Indian gaming industry year after year shows how well tribes run and regulate complicated operations,” the NIGC said in a press release. With the maturity and growing saturation of the largely rural Indian gambling market, it comes as no surprise tribes would utilize their expertise in acquiring and/or managing commercial and tribal casinos off their reservations. For some tribes, the goal is to achieve regional diversification of their gambling and hospitality enterprises while discouraging increasing competition from commercial casino companies. “That’s appealing because tribes typically operate on their own land and in many circumstances the land is rural,” Meister says. “It’s not the ideal location.

Connecticut’s Mohegan tribe has plans to build a massive $4 billion resort next to Korea’s busy Incheon airport

“Having a facility in a metropolitan area puts you in a bigger, nicer market. That’s the positive.” Getting state and local approvals for commercial casinos is often quicker than the lengthy, risky and politically onerous process under IGRA, particularly when a project involves placing newly acquired land in federal trust. The downside of off-reservation commercial investments is the relinquishing of tax and regulatory benefits associated with operating as a government business enterprise. In addition, tribes moving off Indian lands are often confronted with increased competition. “That’s the potential negative,” Meister says. “Going off the reservation means you lose the rights tribes have as sovereign nations, including tax exemptions and regulatory issues. “And it’s often a more competitive situation.” Eleven of the more lucrative tribes with casinos have joined the American Gaming Association, the commercial industry’s trade association and lobby. Some joined the group to monitor issues such as sports wagering, others to seek out commercial casino ventures. “Gaming is still a very significant, important part of tribal economies,” says Kristi Jackson, chairwoman of TFA Capital Partners. “Looking forward, though, the conversation we have with just about all our tribal clients is how they can grow beyond gaming. “There is a need in most cases to look beyond the boundaries of the reservation and do things that will diversify the economy. “An absolute trend is the diversification away from home-based gaming. Some tribes are looking at geographical diversification. They are looking to do gaming outside of the reservation boundaries to mitigate economic or competitive issues.” —Dave Palermo DECEMBER 2018 www.ggbmagazine.com

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10 Trends for 2019

{8} Rating the Rising Sun

Think Big

Will Japan’s gaming industry be a boom or a bust?

Large-format slots once were a novelty. No more.

apan may look like it will be a sleeping giant in 2019, but the upcoming year may prove to be the most critical year in Japan’s march toward integrated resort development. Japan took a major step forward this year with the passage of the IR Implementation Bill and the Basic Bill on Gambling Addictions Countermeasures. Next year will be one of the more critical years in the process as Japan contemplates the largest land-based gaming opportunity since Singapore in the mid-2000s. While outside observers may not see significant progress, a regulatory framework will be established in 2019 that will likely include more than 300 regulations. These regulations will determine the true market potential and scope of Japan’s three integrated resorts. While some groups initially put forth obscure estimates that the market would be as large as US$40 billion, the opportunity continues to be further refined with the passage of the IR Implementation Bill, which imposed the following key regulatory items: • A 30 percent tax rate that is split between the national government and the host prefecture/city. • A ¥6,000 (US$52.75) entrance fee for locals that is also split between the national government and the host prefecture/city. • A 3 percent cap on casino floor space within the IR. • A limit on the number of visits patrons may make to an IR: three visits on a weekly basis with a maximum of 10 within a month. This regulation also requires that local Japanese use their “My Number” card for entry into the casino. As Japan’s Casino Control Commission contemplates the items included within the 300-plus regulations, over 20 operators will continue to show interest in the opportunity and over half of Japan’s prefectures will continue to position themselves as the best host markets. As more potential regulation is uncovered, the market’s true potential will be further understood. Responsible operators will need to pay close attention throughout the year to understand the details and legislative intent behind the IR Implementation Bill and lobby to help formulate any regulations that are made in the coming year. Interested parties will begin handicapping the potential location of each IR opportunity and either fine-tune, reposition or implement a ground game to position themselves for each opportunity. While many companies have opened offices in Tokyo, Osaka, Sasebo, Tomakomai and other locations, this coming year will be instrumental as operators begin to develop and formalize partnerships and relationships at the local level while formulating their IR teams. Many of the larger operators will continue to enhance the teams they already have in place, but those operators that are just entering the market’s ground game phase will need to make up for lost time. Responsible gaming measures will also be a key consideration in 2019. As these plans are still being developed by the government, stakeholders will work to ensure that any responsible gaming programs in Japan are evidence-based and should focus on all (IR-based and non-IR-based) forms of gambling including pachinko and pachislot. This process will also require the training of professionals to address the small percentage of the population that may develop a problem with gambling to make sure a safety net is available. While the first integrated resort in Japan will not likely open until at least 2025, 2018 will prove to be a defining year in determining the future of the market. The partnership between the Japanese government and potential operators will be key in determining the future success of what will likely be Asia’s second biggest gaming market. All of this will be a catalyst in establishing an extremely competitive RFP process into 2020. Let the race begin. —Brendan D. Bussmann is a partner and director of government affairs with Global Market Advisors.

{9}

Global Gaming Business DECEMBER 2018

en years ago, walking an average casino floor might reveal one slot machine that would draw curious onlookers—the giant machine. Large-format slot machines were traditionally designed to draw a crowd of customers who, presumably, would gaze in wonder at reels that were as large as car tires spinning under a billboard-sized paytable. They may try their luck and pull a handle that looked like something out of Charlie Chaplain’s Modern Times, before moving on to pump serious money into their favorite normal-sized slot machine. In short, large-format slots used to be placed purely for their novelty value, to populate an otherwise sparsely populated area of a slot floor. That has changed. Over the past few years, giantsized slot machines have become common, and not only in rarely visited corners of the floor. What’s more, these large-format games are no longer simply freakishly large versions of traditional slot machines, designed for photo ops and a few novelty spins. They are designed to be played. Examples abound in the game libraries of most of the top slot manufacturers. AGS jump-started its Class III business a few years ago—and arguably, kicked off the latest big-game trend—with Colossal Diamonds, a giant reel-spinner on its “Big Red” cabinet. Players love the game, thanks to program math that is so effective that the supplier is now using the same math on standard-sized slots. Scientific Games’ latest oversized hit is Monopoly Hot Shot, the first game on its V75 cabinet. Physically, it is designed for two to play in comfort, with a cushy bench seat and dual spin buttons in front of the big 75-inch monitor. But the game itself is designed for extended play, combining two of the very best legacy games from the company’s predecessors—Monopoly from WMS and Hot Shot from Bally. For IGT, it’s the S3000 XL reel-spinner, launched last year with Wheel of Fortune Megatower, offering players all the familiar features of its top brand, from the multiplying wild symbols to the famous wheel bonus, on a giant format that plays the same as the

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classic IGT favorite. This year, a v2 version of the cabinet will host another IGT favorite, Triple Gold, a three-reel, five-line stepper with a wide-area progressive jackpot starting at $200,000. Aristocrat offers the Edge XL, a new video format featuring dual 48-inch landscape monitors. Launched last year with a new version of the Madonna

game, the cabinet moves on this year with Mad Max Fury Road. For Konami, it’s the Concerto Opus, with an imposing 65-inch video display being launched with new versions of the company’s popular Triple Sparkle series. For Everi, it’s the Renegade 3600, a display of three 43-inch curved monitors that provides bonus games for base slots on the Core HDX video cabinet. We can go on from there with the other slot-makers, from Novomatic’s luxurious V.I.P. Lounge to Incredible Technologies’ Infinity V55 to Aruze’s Cube-X Vertical 80, to more that we don’t have the space to note here. It all leads to one giant-sized conclusion: Large-format games are no longer just for show. They are for serious play. —Frank Legato

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10 Trends for 2019

{10} Too Much Too Soon Regulators are coping with historic changes and complex technology

n 1973, I was dealing a blackjack game at Harrah’s Casino in Reno, Nevada, and two gentlemen came into the pit and took the cards off of an adjoining table game, placed them in a plastic bag, filled out some paperwork, and left. These gentlemen were field agents for the Nevada Gaming Control Board, and this was a terribly exciting and interesting event. This was my introduction to gaming regulation, and at the time, Nevada was the only state in the nation that had legal casino gaming. In the 1970s, I embarked on an analysis of the Nevada Gaming Control Board as a dissertation project for a Ph.D. program in economics, concentrating on the years 1945-1966. I believe these to be some of the most critical years in the evolution of the Nevada, and therefore, the U.S. gaming regulatory model. While gaming became legal in Nevada in 1931, it never attracted much regulatory attention until 1945, and that was primarily centered on an effort to tax the industry to generate revenues for the state. The board itself was founded in 1955, and in 1959, 11 pages of regulations guided it. I moved into the casino industry in operations and was regulated for over 30 years, including a stint on a board of directors that caused me to file gaming applications in over 100 jurisdictions. Then, apparently being totally confused as to the direction one was to go through the revolving door, I became a regulator, first as a commissioner in the largest gambling state in the nation and later as an executive director in a foreign jurisdiction. The point is, gaming regulation has been a significant part of my adult life, and I have technically been an adult for a very long time. I have also never been more pessimistic as to the future of gaming regulation. I am a critic of much of what passes for gaming regulation, a fact that I kept somewhat to myself as an operator, and became more vocal about as a regulator. It was my sense that my criticisms would have greater credibility if I could use the pronoun “we,” but mainly what I have managed to do is annoy regulators with my comments. I am OK with that, but that is not my intent. Before one can begin to talk about trends in regulation, I believe it is important to understand the reality of the gaming regulatory entities within the states of the United States. First of all, the state agencies are monopolies, and I believe some often behave like monopolies, offering slowness to innovate, low service levels and high prices. Moreover, they are bureaucracies, and this is not a structure that is known to facilitate innovation and speed to market. In addition, many of these bureaucracies have policies that are shaped by government unions and civil service protections, and while these are great, they make for management challenges that one does not typically find in the private sector. Finally, they are dependent upon legislatures for funding, and legislatures do not like spending more money in this area, for they cannot collect nice campaign contributions by pushing for better regulation. I also believe that the regulation of gaming on a state-by-state basis is an antique vestige of a bygone era that has become technologically obsolete and

Global Gaming Business DECEMBER 2018

economically inefficient. I also believe that the federal government, regardless of the party in power, cannot be trusted to offer viable gaming regulation. These are structural, institutional and historical challenges that one finds in gaming regulation today. In and around the industry side, things have never been moving so fast. Technologies involving gaming and near gaming products, and the entities that surround them, are exploding across the landscape at a pace that no one can completely understand. The complexity of the industry and its regulatory challenges has never been greater, and this explosion has recently found a new source of fuel provided by the legal changes involving sports wagering, definitions of what is gambling, and a technological world that is changing at an incredibly rapid rate. What I am suggesting is that presently the gaming industry finds itself at a Malthusian dilemma where the industry is moving along at an exponential growth rate, driven by legal changes and technological innovation, and the regulatory agencies are moving along at an arithmetic rate. This is the most significant source of tension that exists in gaming today, and how this tension is resolved will shape the majority of trends for the future. What needs to happen, I would suggest, is a cultural revolution within the agencies, a structural revolution in how the industry is regulated, and enlightened politicians who are more interested in doing the right thing than padding their campaign war chests. None of this, I unfortunately believe, will happen. So what we find is a world of increased mergers and acquisitions (often involving foreign entities), new financial structures like REITs, new gaming verticals, gamblification, social gaming, skill-based gaming, mobile gaming, AML, payment innovations, esports, huge challenges in game integrity, massive data protection issues, the launching of sports wagering, geolocation, cryptocurrencies, new threats of problem gambling, and on and on the list grows—all within a regulatory environment that cannot expand its employee base and secure the other resources they need to do an adequate job. And how are the politicians responding? Not by strengthening the process but by pressuring the agencies to move forward in a mad grab for more government revenues, or to appease some lobbying group that could care less about the state or issues of integrity. “We need to start up sports wagering before the football season” is but one emblematic cry of politicians who absolutely do not have a hint as to the risks they are introducing into their jurisdictions. I learned the gambling business in the old days from men and women who continually made the point that it was a privileged industry. I still believe that, but I seem to be in a minority. We need to slow the explosion of gambling in our society down, for there are huge issues before us including problem gambling, integrity, public policy and the like, the impact of which we do not understand. Without slowing things down, we run the risk of the worst type of regulation, that being regulation by prayer, and I sincerely believe that regulation by prayer will be the biggest trend in 2019. In short, the trend is we are beyond the tipping point in trying to do too much too soon, and our regulatory agencies are overwhelmed. —Richard Schuetz started dealing blackjack for Bill Harrah 47 years ago, and has traveled the world as a casino executive, educator and regulator. He is sincerely appreciative of the help he received from his friends and colleagues throughout the gaming world in developing this article, understanding that any and all errors are his own.

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g n i n r the Tables u T Electronic table games gain momentum in the U.S. as operators tap what has become a game genre in itself By Frank Legato

he evolution of the modern casino industry has largely been the story of shifting appeal for two styles of games. The classic view of Las Vegas for decades centered around the table games loved by the World War II generation, but the last two decades of the 20th century saw tables declining in favor of slot machines that were newly computerized, carrying popular entertainment themes and advertising huge jackpots. Table games have staged something of a comeback over the past decade or so, aided not only by a younger clientele that prefers social interaction over slot-machine isolation, but by progressive jackpots and a variety of side bets that draw from the appeal of slot machines while boosting the house’s hold on games which, in their original state, did not approach the house advantage on slot machines. Over the past few years, the best of both the slot and table-game genres have merged on U.S. slot floors in a third genre of game that is borrowing floor space from both original styles of casino game—the electronic table game, or ETG. ETGs themselves are not new. Interblock founder Joc Pe če čnik invented what many recognize as the first automated electro-mechanical roulette game in his garage in the early 1990s, and other companies in Interblock’s home country of Slovenia, as well as Austrian gaming supply giant Novomatic, subsequently spread the auto-roulette genre through European casinos, allowing small casinos to offer the popular game despite a lack of space for the live version. Space also was a factor in the rise of ETGs in Asian markets like Macau, where limits on the number of table games left a ton of unmet demand from players. The solution there has been the stadium-style ETG, which sets up cameras on any number of different live tables and beams the video to slotstyle terminals often numbering in the hundreds. In North America, ETGs began to appear after gaming expanded beyond

Global Gaming Business DECEMBER 2018

IGT’s Dynasty Roulette

Nevada and Atlantic City in the 1990s, mainly as a way to offer the traditional table games to players in jurisdictions where live tables were forbidden by law. The former Shuffle Master (now part of Scientific Games) was happy to oblige in these markets with the Table Master series (now Table Master Fusion), which features video dealers on screens in front of slot-like betting terminals. However, in the U.S. casino market at large—in places where live table games are, in fact, permitted—there traditionally was no real market for ETGs. Over the past few years, there has been a palpable change. A perfect storm of declining slot-machine play (and the floor space that trend opened up), advancing technology and a recognition of the success of the Asian model has made the electronic table game a growing choice for casinos across the U.S., and a viable offering to bring in incremental revenue. As with traditional live tables, side bets have helped fuel the ETG surge, bringing house hold up and injecting slot-style excitement into the age-old games. Many casinos are creating special sections for ETGs— some, as with Interblock’s Pulse Arena product, complete with DJs, disco lights and bottle service in an arrangement designed to draw younger pa-

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Scientific Games blackjack stadium gaming at Sands Casino Resort in Bethlehem

Interblock Pulse Arena

trons who otherwise would not play a table game or a slot machine. The stadium style of ETG also is popping up across the U.S. industry, especially in casinos that have a large Asian clientele like Sands Casino Resort in Bethlehem, Pennsylvania, which two years ago installed an IGT Dynasty ETG stadium with 150 play stations—the largest ETG installation in the U.S. to date. The Sands has since added a Scientific Games blackjack ETG stadium next to the Steelworks Buffet & Grill. Meanwhile, ETGs continue to shine in markets where tables are not yet authorized, as evidenced by Empire City Casino in Yonkers, New York. While the average ETG footprint in the U.S. hovers around 1 percent, Empire City has an ETG presence that’s more akin to Macau. “Empire City Casino has the sixth largest gaming floor in the country, and ETGs currently make up 10 percent of our floor,” says Ryan Munroe, head of VGM operations at Empire City. “That percentage has grown substantially in the past three years, as we have nearly doubled the floor share for our ETGs with the addition of new games such as blackjack, Three Card Poker, Ultimate Texas Hold Em and the Big 6 Wheel, which have helped to revitalize interest and substantial growth in this segment. “When New York state regulations first allowed for the addition of electronic table games to our floor, Empire City integrated approximately 180 positions into ETGs including roulette, craps, sic bo and baccarat. The games were sought after by patrons, which led to the casino quickly increasing the number of positions to nearly 350 in 2015. Currently, the casino has more than 520 ETG positions on the floor to meet customer demand.” Particularly since no live table games are in the market, he adds, the ETGs are providing revenue that is incremental to the slots. “We were originally a facility with no live or electronic table games,” says Munroe, “so when New York state regulations allowed for electronic table games, Empire City was able to attract new players to our property who were interested in playing the electronic table games, but were not historically slot players.” Aside from markets where live tables are not authorized, the regional markets such as Pennsylvania are the drivers of growth in ETGs. “ETGs are slowly gaining adoption in the U.S., and are particularly stronger in regions where table games are absent or at a premium due to capacity constraints,” comments Rick Hutchins, senior vice president of slot strategy for MGM Resorts International. “ETG growth over the past few years has been steady.” Michael Dejong, who is senior vice president of DECEMBER 2018 www.ggbmagazine.com

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“Players can learn at their own pace without fear of making an error. That appeals to a lot of people. It’s why I don’t play live table games. This I would easily play. Slot players who have wanted to try tables can now learn in a more private, comfortable environment.” Novomatic ETG

Global Gaming Business DECEMBER 2018

New Revenue

Horn comments that the ETGs are settling into a niche of their own, and are generating incremental revenue for the casino. “There are operators who are afraid to put ETGs close to the table games, but I’ve never been an opponent of that, because there’s a natural intimidation with a social game—particularly roulette and craps. Craps is obviously more intimidating than roulette is, but for the gamer who wants to learn, it’s an intimidating process.” ETGs fill the need of many new table game players to learn the games without being intimidated by trying to learn amid seasoned players, he says, but also serves the purpose of offering a lower minimum than the live games. There also are many players—both young and old—who simply enjoy the machine experience and the ability to play several games at once in the stadium setups. “Younger players have grown up in the tablet and smartphone era; they are used to playing all forms of games on those devices,” comments Chris Wester, product manager for electronic table systems at Scientific Games. “As such, I think that the younger demographic is more likely to dive in and play blackjack or Three Card Poker in an electronic environment.” “One of the catalysts is that is appeals to more mid-budget players who may be intimidated to play at a live table,” adds Kathleen McLaughlin, vice president of product management and marketing for Novomatic Americas. “Players can learn at their own pace without fear of making an error. That appeals to a lot of people. It’s why I don’t play live table games. This I would easily play. Slot players who have wanted to try tables can now learn in a more private, comfortable environment.” The result is that ETGs are, for the most part, representing incremental revenue to the casino. “I believe it’s new revenue, based on the high level of unrated play,” comments Dejong. “The blackjack and baccarat games we had before weren’t producing the win-per-unit numbers we wanted, but they were 80-plus percent unrated play.” Dejong adds that ETGs do not affect the take of the live table games. “Even if we did install dealer-assisted ETGs in Las Vegas, our table games people are not looking to decrease games. We believe it can completely coexist without cannibalizing from either side. “Part of the appeal for that unrated guy who sits down is a low point of entry. It’s less intimidating, and again, that’s play I don’t think we would otherwise get.” As the ETG has evolved, the genre has gone through something of an iden-

—Kathleen McLaughlin, Vice President of Product Management and Marketing, Novomatic Americas

slot operations and marketing for Wynn Las Vegas—and has been helping in the ramp-up for the operator’s new Encore Boston Harbor— agrees that the ETG phenomenon is starting out as a regional happening in the U.S. “On the Las Vegas Strip, it doesn’t seem to have taken hold like it’s taken hold in other areas,” Dejong says. “The stadium style seems to be the most popular back East. I know in touring there and talking with our team building the (Encore) property back there, we’re going to have an implementation of a small stadium in the beginning with potential to grow in the future. “Especially if there are restrictions on live table games, it seems like ETGs are really a home run. But it’s outside of Las Vegas, and specifically the Strip, where it seems to have taken hold first and at its largest.” Wynn Las Vegas and a few other Strip casinos have been testing the ETG waters for several years. Bellagio offers small groups of dealer-assisted ETGs offering roulette and baccarat, while the Venetian has been the most ambitious on the Strip, with a 44-seat IGT Dynasty ETG stadium in the Palazzo and individual mullti-player ETG units such as Aruze’s popular Shoot to Win Craps. Dejong says Wynn is currently examining possible expansion of its ETG footprint on the Strip as well. He says the operator has been testing the waters with automated roulette from Interblock and the Fusion series from Scientific Games, and is in discussions with Aruze as well. “We’ve engaged Aruze to build a machine to our specs,” he says. “We have very demanding design specs and colors they have to commit to before we’ll take their product. It’s in motion, and I’d expect next year we’ll be installing the Aruze (Shoot to Win Craps) dice game. And I think it will do well.” Las Vegas locals casino giant Station Casinos also has been testing the ETG waters, according to David Horn, corporate vice president of table games (he also is assistant general manager of Palace Station). “We have stadium ETG setups in three Station casinos now,” he says. ETG stadium installations using the LT Baccarat system are currently

feeding live table games to 30 play stations in a setup at Palace Station, with upwards of 20 seats at the Palms. An 18-game setup using Scientific Games’ Fusion Hybrid system recently debuted at Red Rock. Station also employs individual multiplayer ETGs at several of its properties. “The craps and roulette ETGs are at nearly every property we have,” Horn says. “The blackjack game seems to struggle from within our market, being mostly local, but the craps and roulette have stayed constant with us as a success.”

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Aruze’s Shoot to Win Craps

tity crisis in the U.S., particularly when it comes to the various regulatory regimes. Are they slot machines or table games? That depends on the jurisdiction, but even where they are considered slot machines for regulatory purposes, the operators—some are slot operations officials; others are on the table-game side—find ways to measure their performance that does not involve comparing them to the house average take for slot machines. For instance, in Nevada, where ETGs are considered slot machines by regulation, Horn at Station is on the table side, while MGM’s Hutchins and Wynn’s Dejong are both on the slot side. Horn notes that while the revenue reports to the state list the ETGs with slots, management does not gauge their performance the way slots are evaluated. “We just have to do our own bookkeeping on the back end, to make sure it pencils out right,” Horn says. “We slice it up in a pretty detailed manner, so we know what kind of contribution we’re getting, and what the numbers are from an expectation standpoint... We had to rewrite the internal controls at Red Rock, just because we had never had that system in the past.” What brings the ETG numbers up closer to the slot numbers, all agree, is the collection of side bets employed by the various manufacturers. Horn says side bets appeal to the slot mentality, creating a hybrid experience that brings in new revenue. “There’s a lower entry point for the side bets, just like there’s a lower entry point for the game itself,” he says. “I think it has more of a slot mentality, because basically you’re looking to hit a jackpot, as well as playing a true version of a live game, only automated.” All agree, however, that the biggest advantage of a complete lineup of side bets is that the slot-style excitement is accompanied by a slot-style house hold on those wagers, which brings the overall house advantage up closer to what the slot department has enjoyed for decades. The major manufacturers of ETGs understand this as well.

ETG Innovation “Side bets of any kind are where the operator really recognizes their ETG revenue,” comments Scientific Games’ Wester. “The ability of ETGs to offer multiple concurrent side wagers, while not needing any additional time to reconcile those wagers, makes this an ideal growth area of the market.” IGT has realized the same, launching a new effort to grow its ETG library this year after bringing in Paul Baskerville, formerly with London-based tablegame giant TCSJohnHuxley, as director of ETG product management. In addition to the auto-roulette and the Dynasty brand of live blackjack, baccarat and sic bo, the supplier has introduced LiveConnect, which enables any live baccarat or roulette game on a casino floor to be beamed to ETG setups. IGT innovations being launched this year also include Triple Zero Roulette and a new baccarat ETG that includes no less than 28 betting options with all 34

Global Gaming Business DECEMBER 2018

the side bets. “At IGT, we see a lot of potential in side bets for a variety of reasons,” says Baskerville. “We’re building up our side bet content library, and also developing new games like our baccarat, with 28 betting options. That’s just new; it’s exciting. It adds more dynamics to the game.” “In live table games, we have seen side bets and progressives make a major impact already,” adds Brandon Knowles, Aruze’s executive director of table games. “ETGs can provide further growth in this area due to the increased flexibility and ease by which an electronic, software-based game can manage transactions.” Aruze is another supplier that has redoubled its ETG effort, last year bringing in Knowles, who previously managed ETGs for both Shuffle Master and IGT. At G2E, Aruze introduced the follow-up to its popular Shoot to Win Craps, a hybrid table set up to resemble a live game. Called Roll to Win Craps, the table features real dice with separate play stations for electronic wagers. The table itself uses projection animation to display anything from roll history to outside advertising, and the game progresses like a normal craps game, with only one dealer required. Projection imaging is also used to enhance Super Big Wheel, an ETG version of Big 6; and Lucky Roulette, a new automated roulette game. And of course, the old hands in the ETG genre are still pumping out new products, with both Novomatic and Interblock riding the new wave of ETG popularity in the U.S. “When we first entered the North American market, electronic table games were not a focus in our growth plan,” comments McLaughlin. “It was not an obvious product to add to our product plan. ETGs’ popularity has grown domestically and internationally for the past several years, so we began to have requests based on the success of our products in Europe.” “As a Europe-based supplier that excels in electronic table game technology, we have had incredible expertise and a large installation base from which to learn,” adds Rick Meitzler, president and CEO of Novomatic Americas. “We have different solutions available for live games such as roulette, blackjack, baccarat and sic bo.”

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WHAT’S THE Interblock, meanwhile, continues to progress with stadium setups, led by its Pulse Arena, which has been installed in casinos from Greektown in Detroit to Seneca Niagara in New York. “Interblock, being in Macau for decades, was aware of that (stadium) product, but no one had ever really tried it in the U.S.,” says Interblock CEO John Connelly. “I think there was a perception that was very demographically conducive to an Asian player, but we decided to try and really introduce that in a more aggressive fashion... And it seemed to be working quite successfully, which gave us some confidence that if we were to really create a product and take it global, it could work. “We started creating these areas of force in stadiums, creating an environment around them, with both live dealers and automated. Fast-forward to today, we’re signing up one stadium on average every 10 to 12 days, in North America.” Macau, of course, is the gold standard for the ETG genre, with typically more than 10 percent of entire casino floors filled with the game style. In the U.S., it’s more like 1 percent to 2 percent currently, but those numbers are rising, and will likely continue to rise as manufacturers introduce more innovations. “In five years, I can see us getting to 10, 15 percent of a casino floor in North America and South America, and globally,” says Interblock’s Connelly. “In fact, outside of North America, and parts of Latin America, the industry is already there.” Wynn’s Dejong says a 10 percent floor share in North America may be overly optimistic, but he does not discount that possibility. “In five years, I think that might be optimistic, but there is growth,” he says. “The genre seems to be growing more outside Las Vegas than in Las Vegas, and I don’t know why that wouldn’t continue. I think it’s going to be a gradual growth. Ten percent of a floor seems optimistic, but it remains to be seen.” Adds MGM’s Hutchins, “As manufacturers continue to innovate with new offerings such as carnival-style games or more interactive experiences, operators will continue to incorporate ETGs into the casino environment.” “North America has shown itself to be the global leader in new ETG placements, far outpacing growth in Europe and the Australasia markets,” says Scientific Games’ Wester. “We feel there is a lot of opportunity in this market in terms of growth in the next five to 10 years as we look to expand the player segments we appeal to and help the operator find ways to provide new entertainment options that offer the best possible player appeal and ROI.”

REAL COST

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You Broke It, You Bought It California gambling regulations a system in serious need of repair By Dave Palermo

promised crackdown on illegal games in California card rooms and a state-mandated audit of spending by the Gambling Control Commission (GCC) and Bureau of Gambling Control (BGC) foreshadow long-awaited scrutiny of the state’s politicized regulatory system. BGC Director Stephanie Shimazu, in a September memo, said she “plans to rescind game rules” for blackjack and other banked table games prohibited by state law, pledging to resolve a six-year dispute between American Indian tribes and the card rooms. Meanwhile, the Joint Legislative Audit Committee is seeking a financial review of spending by the GCC and BGC to determine whether funds are being used for “improper purposes.” The audit will target a backlog of some 1,700 applicants for gambling licenses and work permits. The California Nations Indian Gaming Association (CNIGA), a group of 38 gaming and non-gaming tribes, is also seeking a legislative audit of a Special Distribution Fund used to mitigate impacts of tribal government casinos, including problem gambling and regulatory costs. “We want transparency,” says CNIGA attorney Stephen Hart. “We want to know that the monies are being well spent to regulate gaming and not for other purposes.” Two lawsuits by the tribes may also prove to be a condemnation of the state’s regulatory system. The first is a pending lawsuit against the card rooms for allegedly operating illegal games, despite BGC oversight. The second is threatened tribal litigation against the state for violating exclusivity provisions in the tribal-state regulatory agreements, or compacts. “That could be dangerous for all parties,” warns a tribal attorney who requested anonymity. “You don’t want to put gaming policy decisions in the hands of a judge.” The crackdown on illegal games, audits and litigation may lift the veil off

In California’s bifurcated regulatory system, one agency—the Bureau of Gambling Control—reports to Attorney General Xavier Becerra (l.) and the other—the Gambling Control Commission—reports to Governor Jerry Brown

what many industry experts believe to be a dysfunctional regulatory system responsible for adjudicating and policing the bulk of the nation’s largest and most diversified statewide gambling industry.

Big Gaming Business Tribal casinos, card rooms, a lottery and parimutuel racing in the Golden State generate roughly $13 billion annually in gross gaming revenues. Nevada casinos won $11.2 billion in 2016, according to the American Gaming Association. Many states have bifurcated gambling regulatory systems. But California has the only politically bifurcated gambling regulatory structure in the country with adjudicatory and enforcement agencies under the authority of two constitutionally elected officials. Policy, licensing and regulations are functions of the GCC, an agency under the authority of outgoing Governor Jerry Brown. Investigations, compliance, game rules and enforcement are assigned to the BGC, a bureau of the Department of Justice under Attorney General

Tribal casinos, card rooms, a lottery and parimutuel racing in the Golden State generate roughly $13 billion annually in gross gaming revenues. Nevada casinos won $11.2 billion in 2016, according to the American Gaming Association. 36

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David Vialpando, chairman of the Santa Ysabel Tribal Gaming Commission, believes the decision to allow card rooms to flaunt the rules comes at a higher level than any regulator

Xavier Becerra. The two agencies, established with passage of the Gambling Control Act of 1997, are directly responsible for regulating 74 card rooms while providing limited oversight of 63 licensed tribal casinos. Federal law gives tribal governments primacy over the regulation of their casinos. Racetracks and the lottery are regulated separately. The GCC/BGC system has been criticized for subjecting regulatory issues to political pressure. “The mistake was made to create a bifurcated regulatory structure,” says a former high-ranking state official who helped draft the Gambling Control Act. “Where you have two constitutional officers—one the governor and one the attorney general—who use their offices for political purposes, the regulatory environment becomes too politicized,” says the onetime state official, who requested anonymity. “I think it’s time to unwind things and redo it.” Former GCC Chairman Richard Lopes, upon his retirement in 2015, also voiced criticism of the bifurcated system. “If you get an attorney general and governor with different views on how gambling should be regulated, it does make things somewhat difficult,” Lopes told delegates at an International Masters of Gaming Law (IMGL) conference in San Diego. “Having the two structures is somewhat awkward,” Lopes said, with investigatory information between the two agencies often filtered through attorneys and mid-level bureaucrats. “I think it’s difficult to meander through this and come up with good decisions,” he said. The GCC and BGC have come under criticism for failing to adequately regulate and police the card rooms, which since 2011 have been the target of at least eight federal raids for money-laundering, loan-sharking and other violations of the Bank Secrecy Act. “It’s the worst regulated segment of the legal gambling industry,” says former GCC commissioner Richard Schuetz, noting that the state’s card clubs have been the subject of more federal raids than the nearly 1,000 American Indian and commercial casinos nationwide. Industry consultant George Joseph refers to the card rooms as “the Wild, Wild West.”

Breaking Rules Meanwhile, GCC and BGC officials have tactically allowed card rooms competing with the well-regulated and lucrative tribal casinos to evolve from strict poker to player-banked versions of blackjack, pai gow poker and

California Bureau of Gambling Control Director Stephanie Shimazu has issued plans to rescind game rules for blackjack and other banked table games in state card rooms

other card games normally found in Las Vegas casinos. What are referred to as “California/Asian” games appear to violate criminal and business codes and a provision in the state constitution giving tribes exclusivity to offer banked and percentage games. But the BGC for the last six years has failed to bring game regulations in compliance with state law and tribal exclusivity. California Penal Code 330 prohibits banked and percentage games, yet card rooms openly advertise blackjack and other games banked by thirdparty proposition player firms, or TPPPs. California Penal Code 330.11 states, “The player-dealer position must be continuously and systematically rotated” among players. The deal is seldom rotated in California/Asian games. The GCC has struggled with regulating TPPPs, contracted by clubs to bankroll and deal the games. The profitable use of TPPPs by card rooms conflicts with Business and Professions Code Section 19984, which states, “In no event shall a gambling enterprise or the house have any interest, whether direct or indirect, in funds wagered, lost, or won.” Card room operators contend strict interpretation of laws and regulations dealing with table games could cripple their business. They argue policy. They don’t argue the law. The clubs are politically allied with the municipalities, many of which rely on card rooms for 60 percent or more of their tax revenue. The governor and attorney general are aware of the clout wielded by the prosperous tribal casinos and the struggling card room industry, which since 1997 has shrunk from 233 to 74 licensees. The number of tables has remained stable at about 1,800, partly due to a statewide moratorium. Tribes generate $8.9 billion a year in gross revenues and employ more than 50,000 workers, according to various sources. Card rooms win about $1.2 billion a year, employ more than 23,000 workers and generate up to $300 million annually in federal, state and local taxes. David Vialpando, chairman of the Santa Ysabel Tribal Gaming Commission and a former BGC supervisory agent, says enforcement agents generally refrain from letting politics interfere with their duties. But political issues flare up at the top of the regulatory food chain. “Certainly at a higher level and certainly at the GCC those types of things are considered,” Vialpando says. “Basically, how can we allow the card room industry to prosper within the regulatory framework that the state has provided?” Governor Jerry Brown, Attorney General Becerra and their top aides, including GCC Chairman Jim Evans and BGC Director Shimazu, refused requests for interviews. DECEMBER 2018 www.ggbmagazine.com

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Steve Stallings, chairman of California Nations Indian Gaming Association, says the directive to change the rules of the games is too little, too late. He wants a total regulatory overhaul.

Card room operators contend strict interpretation of laws and regulations dealing with table games could cripple their business. They argue policy. They don’t argue the law.The clubs are politically allied with the municipalities, many of which rely on card rooms for 60 percent or more of their tax revenue. Mainstream newspapers have ignored the issue, despite the fact the California gambling industry—including the lottery and racing—employs more than 100,000 people.

A Litany Of Problems Regulatory system bias flared up in 2013, when it was disclosed former bureau Chief Rob Lytle issued an opinion that card rooms need not rotate the deal in banked games, an apparent violation of state law. Lytle issued the opinion less than a week before leaving the agency to work as a consultant for the card room industry. The directive—which generated millions of dollars in card room revenue—was later rescinded. The GCC and BGC stripped Lytle of his licenses to own card rooms and work in the industry. Brown appointees to the GCC commission have been criticized by gambling industry experts for being inexperienced in regulatory issues. “The commission is totally made up of political appointees,” says Steve Stallings, chairman of California Nations Indian Gaming Association. “There are no professional regulators there.” And the BGC, staffed largely by law enforcement officers, has, according to many observers, been hindered by union and civil service rules from accumulating persons experienced in regulatory compliance. Others say the rules are not an impediment. Lopes, a former BGC supervisor, says agents with a law enforcement background needed training in gambling industry compliance. “The culture has to change,” he says. Academics, consultants and others familiar with gambling regulations agree, although some say the situation has improved. The GCC commission and its staff have become more professional under Chairman Jim Evans and director Stacey Luna Baxter, observers say. And BGC agents have gained experience in regulatory compliance. “We had issues. We all knew we had issues,” BGC special agent Tyler Burtis told a meeting of tribal gambling regulators earlier this year. “There was always talk that we were knuckle-dragging narcotics agents that don’t know about gambling. We’ve had a solid crew of people for several years 38

Global Gaming Business DECEMBER 2018

now. They’ve all gone through training. We’ve come a long way.” But the agencies continue to suffer from a lack of policy coordination and inadequate financial resources, staff and training. They also are subject to the political whims of the governor and attorney general. “The regulators get pissed off. And it’s not their fault, by and large,” Schuetz says. “It’s the system. It’s badly led.” “The regulatory system is not professional,” says an industry authority who requested anonymity. “It’s way too political. And there’s a real lack of clarity in what they’re trying to achieve. “The lack of real regulatory controls over the card rooms has gone on for 20 years. It’s just a highly politicized process. There needs to be greater insulation from political pressure. “The legislature should step in and clarify things. It’s a public policy issue.” “The decision-making is being influenced by politics and municipalities dependent on the tax revenues,” says a tribal regulator who also requested anonymity. “There are people high up in state government who believe tribes make enough and the card rooms should be able to coexist.”

Crackdown on Banked Games BGC Director Shimazu, in a September 25 memo, said her office “plans to rescind game rules approvals for games too similar to 21/blackjack that are prohibited by state law. “We will notify card rooms and defer enforcement for a specified period of time to enable card rooms to prepare for this action,” she said. Shimazu also pledged to promulgate regulations requiring rotation of the player-dealer position. But tribes remain dissatisfied with Shimazu’s promises and were expected in November to take legal action against both the card rooms and the state. “It’s a delaying tactic,” Stallings told CDC Reports. “At this point, we’re suing.” Two Southern California tribes plan to sue nearby card rooms over the banked games, claiming they cost the tribal casinos roughly $200 million a year in lost revenue. Two other tribes have implemented a 45-day “meet and confer” arbitration

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Two members of the Assembly, (including Rob Bonta), are seeking separate audits of the regulatory agencies because they claim there is evidence of misuse of regulatory funds

in the DOJ’s Indian Gaming Law Section (IGLS), says in a letter to the audit committee. “There are serious allegations being made, so I think it warrants the state auditor as independent reviewer to review what is going on,” committee Chairman Al Muratsuchi says, particularly since there has been no audit of the system in the 20-year history of the Gambling Control Act. “It could be beneficial to the general public as well as the legislature to have a review of the commission and the bureau.” —Assembly member Al Muratsuchi State Auditor Elaine Howle said the audit would (D-Torrance) represents California’s take six months to complete. She did not respond to a Tribes and state Assembly members Rob Bonta 66th Assembly District request for an interview relayed through spokeswoman and David Chiu are separately seeking audits of Margarita Fernandez. the GCC and BGC, claiming there is evidence of “While we dispute the need for an audit, obviously misuse of regulatory funds. if an audit is approved we will cooperate fully with the The regulatory system is largely funded auditor’s office to make sure her staff has everything it needs to complete the through the Gambling Control Fund (GCF) and the tribal Special Distriaudit,” Shimazu told the committee. bution Fund (SDF). Tribes fund the bulk of the regulatory system. “I’m not going to comment on the audit beyond saying that unfortunately The BGC is budgeted at approximately $32 million a year and the there were several misrepresentations presented to the legislative audit commitGCC at roughly $8 million. tee that we’re confident the auditor will examine and dismiss,” Evans said in “Neither the commission nor the bureau or the Gambling Control an email. “Where the auditor finds legitimate areas where we can improve, we Fund (GCF) has been independently reviewed to ensure the regulatory syswelcome the input and examination.” tem is meeting its statutorily mandated goals,” Bonta told an August 8 Meanwhile, the tribes are seeking a Legislative Analyst Office (LAO) audit meeting of the Joint Legislative Audit Committee. of the SDF, which in the 2016-17 fiscal year appropriated $31.5 million to “An audit is needed to help determine whether or not fees are being state agencies, including $20.5 million to the DOJ (primarily the BGC and used appropriately and whether or not they need to be adjusted.” IGLS) and $2.8 million to the GCC. Another $3.2 million was directed to Of particular concern to Bonta was a BGA backlog of 1,700 applicants problem gambling. for licensing, a process that by state law is to be completed in 180 days. The Tribes are concerned at what they believe is a lack of accounting of the exGCF nevertheless has a $59 million surplus. BGC says it has reduced the penditures. They are also concerned with the fact tribes contribute more to backlog from a high of 3,300 applicants. problem gambling than other segments of the state’s legal gambling. Tribes Bonta, who heads the state’s Asian Pacific Islanders caucus, says he also also finance state litigation with nearly $2 million going to the IGLS in 2016has gotten complaints from his constituents that the GCC and BGC en17. gaged in prejudicial behavior. “There is a far-ranging set of issues here,” Stallings says. Commission and bureau officials deny the accusations. “I would applaud an effort to do a systematic evaluation—with expert tesWhile there is a $59 million budget surplus in the GCF, Department of timony—to develop a model for improving the dismal performance record of Justice (DOJ) officials say the BGC is only allowed to spend what is alloCalifornia regulators,” Schuetz says. “I would have a number of recommendacated by the state legislature. tions, everything from getting away from the bifurcated regulatory system to “The bureau is currently reviewing its allocations from both the GCF increased training and funding. and the Special Distribution Fund to determine if the allocations for the “I could think of at least a hundred things.” current workload are adequate,” Shimazu and Sara Drake, attorney general provision in the tribal-state compact, notification that they intend to file a lawsuit in federal court charging the state with violating the agreement. The card rooms also lashed out at the BGC. “The bureau’s announcement to revoke game approvals for various versions of blackjack on a statewide basis is unprecedented,” Austin Lee, executive director of Communities for California Cardrooms, told CDC Reports. “It would require card rooms to significantly adjust operations.”

“There are serious allegations being made so I think it warrants the state auditor as independent reviewer to review what is going on.”

Opening the Books

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MAKING MY POINT

Beware the Birds Why predicting the future is easier than you think

n attractive woman, cross-armed and anxious, sits alone on the bench outside a schoolhouse. She’s far enough away so the children can’t smell her cigarette smoke, yet close enough so she can hear them singing in their classroom. Behind her is a playground. She can’t see—but you can, thanks to director Alfred Hitchcock—the large, black crow perched on the playground’s jungle gym. Then, a few seconds later, there are three more. Or, as the old joke goes, an attempted murder. A few more drags, a few more birds. A few more glances toward the school, a few more verses of the same sing-song. Until, high in the air, a single crow catches her eye. She follows it, fixed and unblinking, as it slows and descends, gliding to a silent, graceful stop atop the jungle gym. Which is teeming with crows. Dozens, maybe hundreds of them. Which she now realizes are going to attack the school children the instant they step outside. Which they are about to do. And… cut! Truth be told, The Birds can’t teach you much in the way of ornithology. Uh, ravens run amok? Sparrows and seagulls with a taste for human blood? Kamikaze crows? Come on, Hitch. But the film in general and this sequence in particular can teach you about something much more important. Predicting the future. Think about it. When you saw this film for the first time, at what point did you realize those poor kids were going to get their eyes pecked out? After the first crow? After the fourth? The fifth? The seventh? After the last one, when it was too late to do anything about it? Turns out what’s good for birds is also good for business. Our business. The casino business. Be honest: Did you know right away that progressive jackpots would work as well on tables as they did on slots? That Macau would dwarf the Las Vegas Strip in revenue? That tournament poker would boom and bust and boom again? That electronic table games would be an actual thing and that skill-based gaming—at least in its current form— probably won’t be? Exactly how far ahead can you see?

By Roger Snow

Because that’s what makes a visionary a visionary. It’s not an exercise of wild-eyed speculation and conjecture, the realms of Nostradamus or Rasputin. Or the Psychic Friends Network. Instead, it’s a system of disciplining your mind to identify trends before your competitors do. To strengthen your soothsaying powers, keep these three things in mind:

The Player Always Wins As you nibble at the buffet of new products and services being offered at G2E, try to tune out the glitz. The girls dealing the games. The celebrities signing photographs. The little robot guy zipping around and handing out free candy. After you get your Snickers bar, of course. Focus instead on one question: If you were a casino customer—and most of us in this industry either were or still are—is this something you would like? Is it fun? Would it make you want to stay and play longer? Would it make you want to come back? From shufflers to TITO to multi-hand video poker to electronic table games, there is no innovation that transformed a casino floor that wasn’t pulled in by players. If you can find something that answers “yes” to all those questions, go ahead and jump on it.

The Obvious Often Isn’t One of the safest predictions 10 years ago was that millennials, when they came of age to gamble in casinos, would strike the death blow to anything analog. This made perfect sense in that it’s hard, nay impossible, to find anyone between the ages of 18 and 30 that isn’t essentially a conjoined twin with his or her smartphone. So you weren’t exactly going out on the a skinny limb of a tree when making this assumption. Except that it was wrong. Research shows young players gravitate toward old-fashioned table games more so than their parents do. Of course, from here until eternity, most casino floors will remain dominated by slot machines and slot players, but craps, roulette and poker—games that not long ago had one foot in the grave and the other on a banana peel—are staging a comeback, a comeback fueled by, ironi-

cally enough, these digi-kids. History is full of counter-intuition. Don’t guess.

Clues, Clues, Everywhere Clues Because of its regulated nature and lengthy product development cycles, the gaming industry tends to follow, rather than lead, the cultural zeitgeist. So, to catch a whiff of what’s coming next to casinos, it helps to look first at other forms of entertainment. And when you look, what do you see? Well, today, it’s all about immersion and socialization. Entertainment is a form of escapism, has been since the days of the Greek theater and gladiator fights. And people tend to escape in the opposite corner of their daily lives. Before cellphones existed and people had to actually, you know, interact with each other, they escaped by playing video games by themselves, by listening to music with headphones on, by staring into the screen of a slot machine. Now it’s gone topsy-turvy. Navigating through daily life is all about your wireless device and online shopping and the self-checkout register at the supermarket. Things that separate you from people. The escape from that reality is, for many people, hanging out with tens of thousands of strangers at a music festival. Or with a handful of close friends at a local pub to drink and play—brace yourself— “Cranium” and “Cards Against Humanity” at the weekly board game night. Wait. What the %$#@ is going on? These trends, especially when you consider they are led by young people, are heading to a casino resort near you. To an extent they already have, what with the proliferation of nightclubs and day clubs, of non-gaming attractions like zip lines and Top Golf, of themed gaming environments designed to transform ordinary casino space into an environment of excitement and energy and fun. Yup. Ready or not, something new, something different, something wicked awesome this way comes. Just keep your eyes—and your mind—open and you’ll catch on before anyone else does. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates.

DECEMBER 2018 www.ggbmagazine.com

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PROTECTING THE ASSETS Security and surveillance in today’s world

By Willy Allison

hen I recently traveled to Manila, I had the opportunity to catch up with friends who had taken management opportunities in the newly opened integrated casino resorts at Entertainment City, a gaming and entertainment complex under development at Bay City in Metro Manila. It was my first time in the Philippines and I was looking forward to taking in some of the local culture and famous hospitality. I was also there to learn more about the security and surveillance practices from the new kids on the Asian casino scene. My first impression of Manila was that it is a city full of friendly, smiling people and jeepneys. Uniquely Filipino, the flamboyantly decorated jeepneys (similar to a minibus) were originally made from leftover World War II U.S. military jeeps. I saw plenty of jeepneys and friendly faces up close while stuck in traffic on the way to my hotel from the airport. I also had a lot of time to Google, and it came as no surprise to learn that Manila is one of the world’s most densely populated cities with over 46,000 people per square mile (nearly twice that of New York City), 12.8 million people living in the metro area. My hotel was located in upscale Makati. Upon arrival, my wife and I were greeted by helpful concierge staff who took our bags and told us they would follow us inside as they pointed us to a security screening checkpoint to the left side of the hotel’s main doors. The screening process was seamless and the staff respectful and courteous. Sure, I was a little surprised being asked to go through a weapons detection system in a hotel, but as a casino protection professional and traveler, I appreciated the security and so did my wife. This “security service” would become a theme throughout my visit to Manila, as I learned that customer safety is of paramount importance to organizations running hotels, casinos, shopping malls and large public venues.

Entertainment City The next morning, I jumped in a taxi and asked the driver to take me to Okada Manila at Entertainment City. Entertainment City is built on re42

Global Gaming Business DECEMBER 2018

claimed land adjacent to Manila Bay. Since the development was greenlighted, three integrated casino resorts have opened. Solaire Resort & Casino (2013), City of Dreams (2014) and Okada Manila (2016) were each constructed at a cost of over US$1 billion. A fourth property, Westside City Resorts World, is currently under construction and is slated to open in 2019. Discussions are also under way to add a fifth casino. Okada Manila stands out. The gold-mirrored windows of the hotel shine brightly from a distance, and its sleek, futuristic design draws your eye’s attention. The taxi driver pulled into the main entrance and drove slowly up to a security checkpoint where we were greeted by friendly security officers and bomb-sniffing dogs. They asked us to drive slowly over the under-vehicle inspection system (UVIS) before proceeding to the main entrance. UVIS checkpoints are located at all vehicle entrances on the property including guest entrances, valet and self-parking garages and the staff parking area. When I got out of the taxi, I was greeted by one of the many security officers at the entrance. He was professional and polite and could have passed for a New York City concierge. He pointed me over to the security checkpoint at the main doors to the casino lobby, which at this stage of my visit was becoming more of an expectation than an inconvenience. I learned later that all the entrances into Okada Manila have weapons detection systems consisting of a combination of X-ray machines, metal detectors, dogs and physical searches. All guests are screened through the metal detectors. All baggage is run through an X-ray machine. All entrances and other sensitive areas are manned by armed security and general security teams. “Weapons Are Forbidden” signs are displayed at all entrances. Guests in possession of a firearm are escorted to a Weapon Deposit Room by one of their armed security officers. The rooms have reinforced ballistic wall areas and discharge areas. Weapons are checked in, and if required, unloaded under a CCTV camera. Guests register their weapons and ammunition before depositing them in specifically designed high-security lockers.

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I was informed that Okada Manila has almost 90 dogs on property—primarily trained to detect explosives, while some are trained to detect drugs. The dogs are housed on-site in veterinarian-designed kennels. Professional caregivers are responsible for making sure the dogs are well looked after and receive regular check-ups. The reason they keep so many dogs is simply to ensure they are not overworked. The property is large, and to keep from overworking them they limit each dog’s work day to four hours. Dog handlers are assigned to their own permanent small group of dogs. When the handler has a day off, then his/her dogs also have the day off.

Department Head After entering the casino lobby, I was met by my friend Mike Waite, the vice president of security and surveillance. Mike had agreed to let me go behind the scenes and spend a day with him to observe his security operation. Mike is a 30-year casino security and surveillance veteran who has the unique distinction of having opened 13 casinos around the world. I would describe him as being a kind of casino journeyman who likes a challenge. I used to work with Mike a long time ago. I always remember the time I got a catch-up email from him and he casually mentioned he was bunkered down in his office in a casino in the Middle East dodging missiles, bombs and sniper fire. Mike joined the Okada Manila opening team in late 2013 (originally Tiger Resorts). It was good to see him again and that he was happy to be in the Philippines, the home of his wife and his adopted home outside Australia. Mike oversees the security and surveillance departments. He has a person in charge of each department that reports directly to him. Both departments are divided into two divisions—security operations and security services, and surveillance operations and surveillance services. I would come to learn during the day that his leadership and oversight of both areas translates to good communication and cooperation between both of these essential casino support services. Mike kicked off my visit with a guided tour of the property, starting off with the main floor of the casino. The casino has almost 500 gaming tables and 3,000 electronic games. It was elegant, open and full of bold colors, still with that new car smell. He showed me some of the private gaming rooms. They were lavishly decorated and fully equipped for the needs of high rollers. We then headed out of the casino to see the other impressive amenities on the property. The property is massive, and lives up to its marketing claims of offering five-star luxury amenities. After the front-of-house tour, I was escorted back of house to the security and surveillance offices. It was a hive of activity. Mike introduced me to his management team, an international all-star group with multi-jurisdictional

All the entrances into Okada Manila have weapons detection systems consisting of a combination of X-ray machines, metal detectors, dogs and physical searches. All guests are screened through the metal detectors. All baggage is run through an X-ray machine. All entrances and other sensitive areas are manned by armed security and general security teams.

experience who brought with them best practices from around the world. Highly motivated and energetic, I sensed that these guys would go the extra mile to make sure customers and employees were safe in their house. The first stop on my behindthe-scenes tour was the surveillance training room. A new group of about 10 surveillance trainees were undergoing training, so I got the opportunity to sit and chat with them for a while. Mike told me surveillance staff train every day. The next stop was the surveillance monitor room. The large room is configured stadium style with the shift manager positioned on the top level with a view of all the consoles in the room. The room was equipped with all the latest technology, and like most large casinos in the Asian Pacific region, the surveillance department employed monitor room operators, special project teams, investigators and analysts. Mike then took me to see his security control rooms. The security command center (SCC) is tasked with general control room-related tasks. The fire control center (FCC) is primarily tasked with managing emergency situations, particularly fire. It is located in an area of the property to allow the fire brigade or others quick access from outside the building. The control rooms are located a fair distance from each other and operate on separate power grids. Each is capable of handling the other room’s functions entirely. The reason for several control rooms is that in the event that one is rendered “out of action” for any reason, the other control room will still remain fully operational. In addition, because of the sheer size of the property, the work load can be shared between the control rooms. Mike went on to tell me that the property has its own paramedics, ambulances, two clinics, two first aid rooms and a fire engine.

Drilling Down As the tour of the control rooms wound down, Mike received a phone call from one of his team leaders informing him that the first emergency response drill of the day was about to commence. We immediately returned to the surveillance monitor room. I watched on the monitors and listened to radio traffic as both surveillance and security departments conDECEMBER 2018 www.ggbmagazine.com

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The active shooter drill would be the first of four drills I witnessed that day. It was great to watch and see the sense of urgency and communication between the teams. It was like being on a movie set with the staff doing a great job of acting out the scenario while the managers coordinated the response like seasoned Hollywood directors.

ducted a coordinated active shooter drill. Mike’s emergency response teams conduct drills every day. He has a well-armed, well-trained tactical response team, a fire and emergency team and a medical response team. The active shooter drill would be the first of four drills I witnessed that day. It was great to watch and see the sense of urgency and communication between the teams. It was like being on a movie set with the staff doing a great job of acting out the scenario while the managers coordinated the response like seasoned Hollywood directors. The security team use their discretion on deciding what scenario will be scheduled each day. Common scenarios include fire, active shooter, earthquake, armed robbery, bomb, suspicious package and hostage situations. They video-record each drill for review and analysis. They also conduct daily safety briefings and training courses with other departments in the organization. In total, they probably spent two to three hours conducting four emergency response drills that day. After the drills, the entire security management team got together in a “situation room” to critique their handling of each drill and then come up with ways they could improve efficiency and effectiveness. I sat in on the briefing for about 20 minutes and was impressed by the way the team broke down every detail and offered up spirited suggestions on how it could have been done better. It became obvious to me that the security team is passionate about safety. They work well together and are motivated to improve on a daily basis. They have created a security culture that continually searches for excellence. At the end of the day I sat down with Mike and talked about the role of security and surveillance in his organization. He spoke with pride about what his team had built and was complimentary about the passion and drive they have for keeping people safe. I told him I was very impressed with his operation, especially the people, the attention to details and their continuous training program.

Model Operation I have heard so many casino security and surveillance directors cry poor when it comes to improving technology and providing training. Writing this article, I could see how other casino security professionals may be envious (even a little skeptical?) of the support Mike receives from his organization and the lengths he goes to make his property safe and secure. So, I wrote Mike an email asking him to give me his views on leading a security surveillance operation. This was his reply, and I feel it sums up best the extraordinary operation I encountered at Okada Manila. His reason for why we strive for better safety and security (no matter what size the property may be) is a priority that can’t be ignored. “Many properties in our industry make large revenues. Reinvestment goes into finding ways to make even more revenues, enhancing guest experiences, and paying dividends to shareholders. It is time for our industry as 44

Global Gaming Business DECEMBER 2018

a whole to take a more responsible approach to safety and security. Increasing investment and resource allocation in safety and security should be a responsibility that company directors and shareholders embrace as part of the ethical obligation and financial cost of operating a resort or casino (or both). “Companies should not just view enhanced safety and security as a necessary cost. They should also view safety and security as an ethical decision, a corporate social responsibility, a best practice, an investment in the future of their organizations, and also as a value proposition. Yes, safety can also be a marketing tool. The world has changed very much in the last 20 years. People, in general, now appreciate much more the need for security and safety. Many guests take comfort in knowing that they are in a safe environment. This very fact can contribute to the overall guest experience. More importantly, it saves lives. “Nobody can claim that their security is ‘perfect’ or that their property is ‘100 percent safe,’ but we can all aim for this. Security and safety experts should continuously re-evaluate and maintain the never-ending process of improving safety and security. Even the highest levels of security do not guarantee 100 percent that a tragedy won’t happen. But at least, we can all do our very best to prevent such tragedies from happening. Design, systems and processes are highly important. However, training, more training, then, even more training is the key. “We planned our high-security-and-safety property long before the recent tragedies in several casinos even happened. Many factors led us to aim for the highest levels of safety and security that we can. A key element of our planning was that we tried to think of as many ‘what if’ security scenarios as we could. Unfortunately, the recent tragedies have proved some of these ‘what if’s’ to be valid concerns. The security and safety planning process is continuous and ongoing. “Key people in our senior security management team have worked all over the world and have opened many casino resorts in both highly regulated and high-risk environments. Our collective goal to create the most safe and secure property that we can is fueled by a passion for safety and security, a drive to achieve the best results we can, and a shared belief that safety of people comes before any other consideration, without exception. Fortunately, we were able to assemble a team of highly experienced experts in security design, systems, safety, training and operations to work towards our goal. We are also very fortunate and grateful to receive the full support of our company leaders who have shown a strong willingness to invest heavily in security and safety and entrust us with this very serious responsibility. “The most important factor that drives us to make our property as safe and secure as we can is people. There is nothing more important than doing everything we possibly can to keep people safe.”

Willy Allison is a game protection consultant/trainer and founder of the annual World Game Protection Conference. Allison’s website is willyallison.com, and the conference website is worldgameprotection.com. World Game Protection Conference 2019 is being held at the Tropicana in Las Vegas March 3-6.

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GLOBAL GAMING WOMEN

Perfect Storm Are you paying attention to an obvious solution for recruitment and retention?

ith the unemployment rate nationally at 3.8 percent, the lowest it’s been since March 2001, many companies are being forced to find new ways to attract quality candidates and retain them. The Simmons Group has been advising clients since 2015 that employers are heading toward the perfect storm: fewer candidates due to lower birth rate, low unemployment and more jobs available than candidates. We believe one solution to the recruitment and retention challenge is attracting more women and under-represented individuals in the workforce. Although it’s not a novel concept, in the sense that you are recruiting talent and through this process you happen to hire women and diverse candidates, what may be novel are the approaches to recruiting and retaining individuals in the workplace that actively prioritize women and diverse candidates. Focusing more efforts on recruiting diversity may deepen what we call the labor “puddle,” as labor pools are simply too shallow to call pools anymore. Retaining diversity in the workplace will help your organization as well. Specifically, having women in the workplace results in multiple benefits: lower sexual harassment claims, diversity of thought, and organizations that can count on women in management and board positions to drive stock market prices. As you navigate your recruitment and retention strategy, we believe it’s important to consider the following: Conduct a compensation analysis to ensure men and women (especially women of color) in like roles are being paid equitably. Women are at the cusp of making up the majority of the workforce, and yet they are still making 80 cents to a man’s dollar. Additionally, women’s median annual earnings are $10,086 less than men’s median annual earnings. Historically, one cause of this was putting women in traditional roles rather than in leadership positions or male-centric jobs such as construction or software development. We encourage you to break down each role in your organization, see

By Ann Nicholson

getting pregnant or having a family because they where there are gaps in earnings, and close the gap. feel like they have to trade off work for family and In addition to the pay gaps, does your organivice versa. By allowing them financial stability on zation allow for the best candidate to advance in top of job security, they are more likely to remain the organization? Under-represented employees invested to your organization because of your inhave expectations of advancement and career vestment in them. growth, so don’t let your biases predetermine how • Do you offer child-care assistance—a monthly your employees will develop their careers. Giving stipend or on-site care? Assisting with paying for all employees equal opportunity to advance within child care reduces an additional stressor, making the organization may also lead to the closure of the employees more productive in the workplace. leadership gap. • Do you have an intentional digital presence If you don’t have a mentorship program estabregarding the diversity in your workplace? Look at lished, it’s time to start thinking about one. In your representation on general, your mentees are more digital/social platforms, likely to develop leadership skills, “If you don’t have a evaluate and ensure images get promoted and report greater mentorship program on your digital/social platjob satisfaction and organizational established, it’s time forms are reflective of your loyalty. Mentors will also benefit from these relationships. They are to start thinking about workforce. you looked at likely to report greater job satisfacone. Your mentees are what• Have your reputation says tion and organizational loyalty and more likely to about you? If you’re hiring get the opportunity to practice develop leadership people to build an inclutheir leadership skills. Mentoring all employees in your workplace is skills, get promoted sive culture, you’re on the right track. Truly valuing likely going to benefit your organiand report greater the input from your dization. job satisfaction and verse team members in As the attraction-selectionorganizational loyalty.” equal weight utilizes all attrition (ASA) model implies, team members’ skill sets organizations are made up of thier and improves your organization. It is more likely employees, and the organization’s culture is estabyou will be viewed as an organization women and lished by these employees, attracting other similar diverse candidates would want to work for. individuals to the organization. Thus, having feIf you haven’t questioned or evaluated any of male and diverse representation in your workplace these practices, it’s time to do so. Being an attractive is likely to attract more female and diverse talent employer to as many candidates as possible is the to your organization. Equality and diversity are starting point. Congratulations on considering posalso attractive to workers of younger generations, a sibilities to improve your business by improving separate discussion topic altogether. your workforce through conscious efforts towards What benefits are you offering to target diversity. women and diverse candidates in the workplace? • As previously mentioned, what are your Ann Simmons Nicholson is the CEO of Simmons mentoring, promotion and pay equity practices? Group, simmons-group.com. An expert in HR and • What “flexibility” do you offer your employOD with over 30 years of experience in all aspects of ees to meet the needs of their jobs and the needs talent and people management, she is also an officer of life? Allowing individuals to work remotely and board member for Global Gaming Women (globgives them the flexibility to meet their work dealgamingwomen.org), whose mission statement is to mands and the demands of their family. support, inspire and influence the development of • Do you offer paid maternity leave in conwomen in the gaming industry. junction with your FMLA? Often, women avoid DECEMBER 2018 www.ggbmagazine.com

yo are to d ersh pro rep job an tio

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NEW GAME REVIEW by Frank Legato

Bonanza Blast AGS

his new game on the AGS XStream Jackpots progressive link is a 243-ways-to-win game that expands into a 16,807-ways-to-win game in the bonus. The base game in the Power XStream ways-to-win series uses the large flat monitor of the Orion premium cabinet to display a mining scene, with the three-by-five reel array on the bottom topped by four two-by-four boards with dynamite on each end, depicting a shut mine. When bonus symbols trigger a free-spin feature, the dynamite explodes to reveal an expanded reel array. The exploding dynamite reveals up to four additional symbol rows on the reels. At the maximum expanded array of seven rows, there are 16,807 possible ways to win on each spin for the free-spin round. The XStream Jackpots progressive picking bonus is triggered randomly when at least one wild symbol lands on the reels. The screen will switch to display 12 gold coin icons. The player picks to reveal icons for the Mini, Minor, Major and Grand jackpots, continuing until matching three icons to win the corresponding prize. The jackpots reset at $10, $25, $800, and $10,000 for the top Grand Jackpot. The jackpot is linked among all XStream Jackpots games on a floor.

Manufacturer: AGS Platform: Orion Format: Five-reel, waysto-win video slot Denomination: .01 Max Bet: 880 Top Award: Progressive; $10,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 2.26%-11.12%

Dazzling Thunder: Deep Violet Aruze Gaming America

This new game on Aruze’s Cube X Innovator Deluxe cabinet uses all the real estate of the cabinet’s tall cabinet for a variety of bonuses, including a top wheel, a multiplier wheel and special reels for the free-game bonus, all on the vertical video monitor above the five spinning reels of the base stepper game. The base game is a five-reel, 30-line stepper featuring four progressive jackpot levels. The base mechanical reels include “Spin” and “Bonus” symbols in addition to the standard reel symbols. Spin symbols on the first, third and fifth reels award one spin on the Dazzling Thunder Wheel, which contains nine credit amounts ranging from 200 to 3,000, which are multiplied by the line bet, and four progressives—a Mini resetting at $20, a Minor resetting at $50, a Major resetting at $500, and the Grand, for which the operator chooses a reset amount of $2,500, $5,000 or $10,000. If the wheel lands on one of the jackpot amounts, it re-spins once to award an additional credit amount. Scattered Bonus symbols on the three middle reels trigger the Violet Free Games feature. The player is awarded 12 free games on a special set of video reels. Any time one or more diamond symbols land on a free spin, it activates the multiplier wheel displayed on the top monitor. That wheel spins to a multiplier of 2X, 3X, 5X, 8X or 10X. That multiplier remains in effect for the rest of the free spins, or until one or more dia-

Global Gaming Business DECEMBER 2018

monds land again, which spins the multiplier wheel a second time. The multiplier also applies to any spin of the Dazzling Thunder Wheel triggered on a free spin. When that happens, the credit amounts on the wheel slices change to indicate the multiplied amounts before the wheel spin occurs. (Multipliers do not apply to jackpots.) Three Bonus symbols on a free spin trigger eight additional free games once, plus a bonus of 500 credits times the line bet. Manufacturer: Aruze Gaming America Platform: Cube X Innovator Deluxe Format: Five-reel, 30-line stepper slot Denomination: .01 Max Bet: 50, 100, 150, 200, 250, 300, 400, 500, 750, 1,000 Top Award: Progressive; $2,500, $5,000 or $10,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.41%-16.41%

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Diamond Blaze Everi Holdings

his game features a classic theme under the Hot Stuff brand, presented in two different formats—Diamond Blaze, a five-reel, 40-line version; and Diamond Blaze 9 Reel, a nine-reel version presented in a three-bythree reel array. Each is available on the new Renegade 3600 sign package, which features the huge “Hot Stuff Bonus Reels,” a giant overhead three-reel game that can lead to one of five progressive jackpots. The Renegade 3600 consists of three 43-inch, convex curved monitors linked to the base game’s computer to deliver a bonus event wrapped around a celebratory light show with booming sound. The base games are traditional slot games with multiplying wild symbols. Reel symbols are various 7 symbols, bars and special bonus and diamond symbols. Winning combinations can occur with 2X, 3X or 5X wild symbols. The multiplier amounts on different wild symbols in a winning combinations multiply together to increase jackpots.

The overhead progressive bonus carries the theme and images of Warren Kremer’s Hot Stuff the Little Devil comic book character. When linked to the Renegade 3600 package, bonus symbols are scattered on three reels of the base game. Landing scattered bonus symbols on three reels awards seven free spins on the giant top reels. On the 9 Reel version of the game, progressives are awarded for five mixed wild symbols, or five same-colored wild symbols. There are three different colors, with five red 2X wilds returning a progressive resetting at $1,000. The top progressive, for five Hot Stuff symbols, resets at $100,000 or $200,000. Manufacturer: Everi Holdings Platform: Core HDX Format: Five-reel, 40-line or nine-reel, 40-line video slot Denomination: .01, .02, .03, .05, .10, .25, .50, 1.00 Max Bet: 300 Top Award: Progressive; $100,00 or $200,000 reset Hit Frequency: 38.41% Theoretical Hold: 2%-15%

Casino Royale Scientific Games

his latest game in Scientific Games’ franchise of slots themed on the James Bond films features the 2006 film Casino Royale on the supplier’s immersive Gamefield 2.0 cabinet. The 2006 film, the first to feature Daniel Craig as Agent 007, is presented in various clips built around both mystery base game bonuses and second-screen events. The base game is a five-reel, 25-line video slot with one credit per line plus a five-credit bonus bet to activate all the features. The base reel array is five by five—five spots on each reel. The base game includes a mystery “Cloning Feature” in which two or more columns of symbols may switch to an alternate set of reels before the spin, with all symbols on the selected reels stopping on the same symbol. The main bonus feature is centered around the high-stakes poker game depicted in the film, and can lead to one of two progressive jackpots. The game is available both with stand-alone progressives and in wide-area versions on one of two Scientific Games links, Cash Connection (jackpot resetting at $400,000) and Reel Adventures ($200,000 reset). Six or more scattered chip symbols on the reels trigger the Chip Feature. Each chip symbol will hold in place for the duration of the feature. Players are awarded “Chip Respins” in which the unlocked positions re-spin, potentially landing more chip symbols. After all re-spins and upgrades, the chip symbols award prizes according to their color, white, red, black or gold. White chips award 25-50 credits; red, 100-200. Black chips spin a “mini-reel” to award 500-1,000 credits. The gold chip triggers the 007 Bonus, which can lead to one of three progressives. Each chip awards a deal of cards that can award up to 10,000 credits,

a “Casino Bonus” of poker hands, or the Minor or Major progressives. Scattered bonus symbols on two or more reels expand and fill each reel with “BONUS.” A “Bonus Respin” feature then occurs on reels that contain only bonus symbols and blanks. Bonus symbols lead to the Casino Bonus, which features three to five hands of poker. Manufacturer: Scientific Games Platform: CPU-NXT, Gamefield 2.0 Format: Five-reel, 25-line video slot Denomination: .01, .02, .05, .10 Max Bet: 540 Top Award: WAP—$200,000, $400,000 resets Stand-Alone—$10,000 reset Hit Frequency: 26.06% Theoretical Hold: WAP—10.99%, 13.43% Stand-Alone—5.26%-13.43%

DECEMBER 2018 www.ggbmagazine.com

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NEW YORK State of Mind F

What happened to the state’s casinos?

or decades, casino operators viewed the potential for casinos in the Catskills region of New York as the mother lode of gaming development. The region’s proximity to the New York City By andreW KleBanoW metropolitan area and its history as a vacation desEmpire Resorts’ tination made it a near ideal location for casino Resorts World Subsequent to passage of the act, the board development. State legislators also saw casinos in upstate New York, a region Catskills exterior and issued a “Request for Application” and in turn rethat has had difficulty recovering from the loss of a host of manufacturing inthe Empire Lounge ceived 17 applications. The board selected the dedustries, not only as a tool for economic development, but tax revenue. velopers of Del Lago Casino Resort for the In 2013, the New York state legislature passed the Upstate New York EcoCentral-Southern Tier region, the developers of the Rivers Casino in nomic Development Act, which provided the legal framework for commercial Schenectady for the Capital District-Saratoga region, and Empire Resorts, casinos in the state. The act went into effect on January 1, 2014. When signowner of Monticello Raceway, to build what was to become Resorts World ing the bill, Governor Andrew Cuomo stated, “This new law will bring the Catskills for the Hudson Valley-Catskills region. state one step closer to establishing world-class destination gaming resorts that The State Siting Board took great care in selecting sites that would be will attract tourists to upstate New York and support thousands of good-paybest suited to fulfill the governor’s mandate, protect racetracks and New ing jobs as well as new revenue for local businesses. For too many years, gamYork Indian casinos from undue cannibalization, and prevent oversaturation. ing revenue has left New York for our neighboring states.” The board further made a decision to limit the Hudson Valley-Catskills reThe act authorized the issuance of up to four casino licenses. Destination gion to one license, despite the region’s proximity to the New York City gaming resorts were authorized in three regions of the state: the Hudson Valmetropolitan area. State legislators subsequently awarded that license to anley-Catskill region, the Capital District-Saratoga region, and the Centralother candidate in the Central-Southern Tier region. Southern Tier region. The act further specified that one region could have up In 2017, the first commercial casinos opened. Today, there are four casito two casinos, if determined by the State Siting Board. nos in operation and all are performing well below their anticipated levels. It was initially believed that the Hudson Valley-Catskills region, given its So, what happened? proximity to the New York City metropolitan area, could support two casino The easy answer is oversaturation. Casinos in Pennsylvania, Massachuresorts. The act further precluded the development of destination gaming resetts, Atlantic City and Connecticut are all proving to be far more formidasorts in Westchester, Rockland and Putnam counties, New York City or Long ble competitors than originally anticipated, as are the Indian casinos in Island, and included a seven-year exclusivity period during which time no furupstate New York. In addition, as far back as 2012, there was already a suffither destination gaming resorts would be licensed by the state. 48

Global Gaming Business DECEMBER 2018

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Del Lago Casino Hotel

cient supply of electronic gaming devices at the state’s racetracks to satisfy existing demand for slot machine gambling in the state. Yet, these were known factors in 2014. Why were these particular sites selected when others offered greater chances for success? Were expectations realistic? Did New York state regulations conspire to limit casinos’ success? The answer is that other factors may have played a role. An explanation for what happened is far more nuanced.

The Hudson Valley-Catskills Region The Hudson Valley-Catskills region, referred to in the act as Region 2, attracted the most applications. Beginning approximately 30 miles north of the west side of the Mario Cuomo Bridge, the region serves as a primary transportation corridor to Albany via the New York State Thruway and west to Scranton via I-84. It is also the closest region to the burgeoning and wealthy populations in northern New Jersey and the Hudson Valley. Empire Resorts was awarded the license for the Hudson Valley-Catskills region at what was to be called the Montreign Resort Casino. A subsequent licensing agreement brought the Resorts World brand to the property. Empire Resorts had a long history in the region, having owned and operated Monticello Raceway, and had the rights to redevelop Grossinger’s Hotel, which was once considered the finest resort in the Catskills. Other applicants with sites closer to both major population centers and the interstate highways were rejected. While projected gaming revenues would probably have been higher at locations closer to the New York State Thruway, those locations were not as isolated and had not suffered the same long-term economic decline as the area around Monticello. In addition, in an effort to assure the success of this site, the Site Selection Committee prudently decided that the market could only support one casino. That decision proved brilliant in hindsight. Unfortunately, neither the Site Selection Committee nor the developer foresaw how difficult it would be to attract gamers that had developed relationships with other casinos in the region. Mohegan Sun and Foxwoods, two of the largest casino resorts in the United States, had spent nearly two decades developing their properties into fully integrated casino resorts. Mohegan Sun boasts over 5,000 slot machines, over 300 table games, 45 food and beverage outlets, 1,600 hotel keys, 100,000 square feet of meeting space, a 12,000-seat arena and a shopping mall. Foxwoods has 4,800 slot machines, over 340 tables, 42 food and beverage outlets, 2,220 hotel keys, and a premium outlet mall. Both of these integrated casino resorts are essentially “category killers” in that they offer a wealth of amenities that no new competitor could match without putting at

risk billions of dollars in capital. Atlantic City, with nine properties, continues to offer a wealth of gaming and recreational options that make it difficult for Resorts World to pull loyal customers north to the Catskills. It too is a category killer among regional casino markets. Even Sands Bethlehem, with its expansive casino, hotel and shopping mall, has also proven to be a very formidable competitor, owing in part to its location closest to New York City, its wealth of amenities, and generous marketing programs. What the Site Selection Committee may have underestimated was the power that these mega-properties had, not only in their product offerings but in customer loyalty. Customers loyal to a particular casino, who have demonstrated their gaming worth, are the recipients of countless marketing offers. Suites, show tickets, fine dining, invitations to special events, free slot play, access to personal hosts, are all part of the benefits they currently receive, and moving their loyalty to another property puts those benefits at risk. Getting customers to switch to a casino that offers fewer amenities than what their current casino provides is difficult. This is not to say that Resorts World Catskills is not beautiful. It certainly is. It just does not offer players enough amenities and benefits to switch loyalties. Casinos often entice players to return to their properties with the offer of free slot play. Free slot play is game credits that players receive as members of a casino’s rewards program. As customers wager those game credits, they may win more game credits that can be redeemed for cash, or lose those game credits. At that point, the customer will put his own money at risk. In some states, casinos are allowed to deduct free slot play from gross slot revenue to determine net slot revenue that is taxable. Some states cap that amount while others simply do not allow the deduction. New York caps the amount of free slot play that a casino can deduct from gross slot revenue at 19 percent. New York racetracks are capped at 15 percent. Casinos in Pennsylvania have no such cap and are free to give out as much free slot play as they feel is warranted. That means Resorts World cannot afford free slot play offers that are more generous than what Pennsylvania casinos offer. That may not have been considered when original projections were made back in 2014. Another issue is that of cigarette smoking. All commercial casinos and racinos in New York state prohibit indoor smoking. Approximately 16 percent of adults in the United States smoke. Assuming that casino customers are representative of the U.S. population, then 16 percent of the gaming public would not patronize a non-smoking casino if an alternative was available. Now assume that an additional 10 percent of the gaming population are spouses or gaming partners of smoking patrons, and they too would not go to a non-smoking casino because of their friends that smoke. Atlantic City, Sands Bethlehem and the casinos in Connecticut all offer smoking sections in their casinos. So, that one codicil of the act effectively reduced the potential market of gaming customers by over 25 percent. Another issue is perception. Residents of New York City have long perDECEMBER 2018 www.ggbmagazine.com

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ceived the Catskills to be “in the country.” Of course, this perception dates back to a time when millions of New Yorkers ventured into the Catskills for summer vacations or ski holidays and drove along two-lane highways to get to their favorite resort or bungalow colony. Highways have improved since then. Unfortunately, the perception of the Catskills as “the country” remains. Would another location adjacent to the New York State Thruway have overcome that perception? Perhaps, but the fact remains that going to Resorts World Catskills feels like a drive to the country.

The Central-Southern Tier Site Del Lago Casino Resort near the village of Tyre was selected as the licensee in the Central-Southern Tier, referred to as Region 4. It is a very attractive property with 1,980 slot machines, 100 table games, eight restaurants, a spa, and 205 hotel keys. The resort is located along Interstate 90 in a rural area between Rochester and Syracuse. Once again, this is a region that was already well served by two regional casino resorts that also could be considered category killers, as well as a number of racinos. Turning Stone, 66 miles east of Del Lago, offers 2,000 slot machines, 100 table games, four hotels with a total of 567 keys, three golf courses, 100,000 square feet of meeting space, and 14 food and beverage outlets. Seneca Niagara, 128 miles to the west, contains 4,500 slot machines, 100 table games, and more than 600 lodging keys. Also, both properties offer smoking sections within their casinos. In fact, in 2013, the total gaming supply along the Interstate 90 corridor from Verona, New York to Hamburg, New York was comprised of seven casinos with over 10,000 electronic gaming devices and 200 table games, enough to meet demand.

new york State CommerCial GaminG taxeS

The Capital District-Saratoga Region The Rivers Casino in Schenectady opened in February 2017. In its first year, it generated approximately $116 million compared to an original forecast of $181 million to $222 million. Built for a cost of $330 million, it is a thoughtfully designed, attractive casino with an entertaining mix of dining along with an attractive hotel. Its nearest competitor, Saratoga Raceway, is at a competitive disadvantage in that it does not offer the wealth of amenities that the Rivers offers. It is also the most perplexing one to figure out what went wrong. Part of the problem might be attributed to its location in a former industrial zone that has not yet reached a point of gentrification or urban renewal. Part of it may be that smokers are venturing 100 miles to Turning Stone to play. Regardless, it is also the casino with the highest tax rate at 45 percent for slot machine revenue.

What’s Next? All four casinos now face their unique challenges to meet their financial projections. An underestimation of the power of the competition, the difficulty in changing player behavior, the inability to offer smoking areas within their casinos and limits on how much casinos can spend on free play all played a role in the industry’s disappointing first-year results. These casinos did succeed in other ways. They have collectively created thousands of jobs in regions that were economically depressed. They brought needed investment capital. They created compelling entertainment destinations in areas of the state that were devoid of things to do. They just did not do enough in terms of generating gaming revenue. What has yet to be discussed are the high tax rates that these properties are obligated to pay.

GaminG Supply alonG i-90 Corridor 2013 (exlcudes Poker)

Facility

% of Slot Revenue

% of Table Revenue

Tioga Downs Del Lago Rivers Casino RW Catskills

37% 37% 45% 39%

10% 10% 10% 10%

Source: New York State Gaming Commission, GMA

Again, the challenges of moving market share from well-established competitors remain for the operators of Del Lago. Customers are loyal to their properties, not only because of their past experiences, but the benefits that they stand to lose if they start devoting their gaming play to a new resort, albeit a beautiful one, that offers fewer amenities or is farther than their favored casino. They can smoke at the Indian casinos to the east and west. Also, there is the issue of the cap on free slot play that precludes Del Lago from buying market share. The fourth casino license, originally not awarded by the Site Selection Committee, was eventually assigned to Tioga Downs, a racino west of Binghamton, New York. To meet the requirements for the license, the property was expanded with a hotel component, meeting space, an additional dining outlet and a parking garage. It is certainly an improved property, but it is not nearly as attractive as Del Lago to the north, Mohegan Sun Pocono to the south, or Seneca Allegheny to the west. It remains a rural casino with a limited catchment area and a small population from which to draw.

Global Gaming Business DECEMBER 2018

Property

Slots/VLTs

Table Games

Seneca Buffalo Creek Seneca Niagara Batavia Downs Finger Lakes Gaming Hamburg Gaming Turning Stone Vernon Downs

808 4,000 647 1,500 940 2,162 700

18 100

Total

10,757

201

Excludes casinos in Niagara Falls, Canada Taxes on slot revenue vary by region, from 37 percent to 45 percent. These taxes are paid from net slot revenues, before any operating expenses are paid including wages, salaries, utilities and other costs of doing business. At some point New York state legislators will have to consider some reduction of these rates in order to keep these facilities viable so they can compete with more superior, integrated casino resorts in the surrounding region. Too much has been invested in these projects and the communities that they reside in to allow them to fail because of high tax rates and onerous regulations that limit their ability to compete.

Andrew Klebanow is a senior partner at Global Market Advisors, a leading hospitality, gaming and tourism consulting firm.

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FRANKLY SPEAKING by Frank Legato

Mayhem in Middle Earth dogs next summer as he is now, so why wait? Meanwhile, in New Jersey, a new university program means many of the next generation of casino professionals to graduate from Stockton University outside of Atlantic City can now do so with a minor in Cannabis Studies. Wow, what a coincidence. That was my minor as well. Of course, Duquesne University didn’t know it at the time. Anyway, according to the Stockton website, the interdisciplinary minor in Cannabis Studies “offers students a foundation for understanding the burgeoning cannabis industry” in anticipation of New Jersey possibly becoming the 10th state to legalize recreational use of marijuana. It is now one of 29 states with legal medical marijuana. Among the prerequisites listed for the minor is successful completion of “Introduction to Medical Marijuana” (Course No. GEN 2347), “Cannabis Law” (GSS 2198), and “Rolling On A Gatefold LP Sleeve” (GEN 420). OK, I made the last one up, but there also is an Internship Preparation (GEN 3XXX). The course manual doesn’t say what kind of internship is involved. It instructs the student to contact the coordinator of the program for more details, and to “bring a bong.” (Yes, made that up too.) Finally, to those of you who were concerned, that was not a UFO beaming lights that formed a perfect circle hovering in the Minnesota sky above the Shakopee Walmart. It was the light from the illuminated tepee of the Mystic Lake Resort and Casino nearby. Casino officials confirmed this, although they were unable to explain the giant steel exoskeleton that emerged from the ring to encircle the Shakopee Walmart. I love Shakopee on a Saturday night. Almost as much as Omaha. VIC TOR RINAL DO

n pursuing material for this monthly moment of mayhem—usually at least a milligram of mayhem, matey—memes about the mob are most meritorious. Alliteration also is useful in this monthly amalgam of magnificent mirth. OK, I’ll stop. Recently, I came across a rather bizarre story involving some veteran casino executives—Full House Resorts CEO and former Pinnacle chief Daniel Lee, MGM Resorts CEO Jim Murren, and Glenn Schaeffer, who was president of Circus Circus Enterprises and Mandalay Resort Group, now part of MGM. Murren was to testify last month in New Zealand in a lawsuit he and Lee filed against his former friend Schaeffer, over a seven-figure investment Murren and Lee reportedly made in Schaeffer’s winery in New Zealand. They claim their investment of millions disappeared with no compensation. So, at press time, Murren was headed down to Middle Earth to testify in the lawsuit. But here’s where it gets weird. According to a report in the New Zealand Herald, Schaeffer claimed that in a mediation meeting Lee said “he knew where I lived, knew where my family lived and knew where my dogs lived. He said if I did not give him back his money that he would bury me in the desert like in the old days, he would destroy my children’s lives, and bankrupt my ex-wife, and travel to Omaha to kill my three show dogs. He ended his threats with the words ‘give me my f**** money!’” Lee denied he threatened Schaeffer’s family or dogs, saying he was simply referring to what might have happened to Schaeffer in the “old days” had he tried to swindle casino bosses. The court didn’t rule on whether or not Lee had, in fact, gone all DeNiro on Schaeffer. But this case is puzzling to me in one other very important aspect: If Schaeffer’s in New Zealand, who’s taking care of his dogs in Omaha? And, why did he leave his dogs in Nebraska to begin with? It’s a wonder they haven’t committed suicide. (I’m kidding. Love Nebraska. Johnny Carson was from there.) Also, is there even a desert near Schaeffer in New Zealand? I’d hate to think that Lee would need to ship him back to Nevada, just to bury him near Tony the Ant. In the end, Justice Peter Churchman denied Schaeffer’s motion to have the case dismissed because of the alleged threat. “It would clearly cause significant inconvenience for the plaintiffs if the trial were to be adjourned, particularly as another hearing date is unlikely to be available until mid-2019 at the earliest,” the judge wrote. “Furthermore, if Mr. Schaeffer and some of his witnesses are feeling intimidated by Mr. Lee, it is likely they will continue to feel intimidated at the time of any hearing of the trial, even one that is adjourned to next year.” In other words, hey, Glenn, this guy’s as likely to kill you and your

DECEMBER 2018 www.ggbmagazine.com

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EMERGING LEADERS Found His Niche

Native Talent

CJ Fisher Associate, Fox Rothschild

Dustin Thomas

or CJ Fisher, there was no question he was going to be a lawyer, and then once he was a lawyer, he had an idea of where he wanted to go. “When I started, I was interested broadly in the gaming and hospitality space,” he says. “The skill set I had developed over the years—litigation and a finance background—seemed to fit. I like that regulatory component of the gaming practice most of all. When I got a chance to get involved, I jumped at the chance.” Joining Fox Rothschild’s Atlantic City office was another stroke of luck. Fisher credits Nick Casiello, the head of the firm’s gaming practice, and longtime attorney Marie Jones for helping him get up to speed. Since he’s been with the firm he’s represented clients like MGM Resorts, Amaya, Empire Resorts, GTECH and others. “As a group, and personally, we’ve had the opportunity to work with many internationally known clients,” he says. “Whether it’s sports betting or ramping up a casino from the ground up, it’s always interesting to me.” His interest level ramped up last year when the Supreme Court issued a decision that legalized sports betting and made regulatory attorneys a hot commodity. “Recently, with sports betting, I’ve been fascinated by what’s happened in such a short time. And I really like to be able to help clients who are getting involved in this field. I’ve always had an interest in sports, so to be able to advise companies and individuals on how to get involved in the U.S. has been gratifying.” The message he had to deliver to potential clients about U.S. regulations overseeing sports betting wasn’t a pleasant one. “I tell them they’re in for a rude awakening with the licensing and ongoing compliance requirements they may not have had to face in other jurisdictions,” he explains. “When we go through the process with them, they’re honestly stunned. But so far, most of them are on board and ready to go. It’s just necessary to get over the initial shock.” Fisher has been around long enough to remember when the New Jersey regulatory system was a black hole for any company expecting a quick license or product approval. But with the appointment of Division of Gaming Enforcement Director David Rebuck in 2012, there has been vast improvement, says Fisher. “Working with the (Casino Control) Commission and the Division has been great. They want to be partners with our clients rather than adversaries. They want our clients to be successful in accordance with the Casino Control Act, so they walk them through the process. And that helps the existing licensees to be successful.” As for Fisher, the advice he got early in his career stuck with him. “As an attorney,” he says, “they always tell you to find your niche, and it doesn’t get any more niche than gaming and the regulatory field. It’s such an interesting field that I learn something new every day.” But it wouldn’t have happened without learning from those who went before him. Fisher recommends that new entries into gaming pay attention to experience. “Listen and learn from your mentors,” he says. “Whether you’re in marketing or sales or the legal side, there are so many people who have been in this business a lot longer than you. Find your mentor, listen and learn.” —Patrick Roberts

f you ask Dustin Thomas how he arrived at being one of the youngest executives at the National Indian Gaming Commission, he will tell you it was with a lot of patience and a lot of persistence. “I owe everything to my parents,” Thomas says. “We didn’t have a lot growing up—at one point, we didn’t even have running water—but we always made the best of what we had, and this recognition is a testament to the principles of perseverance and work ethic my parents instilled in me.” After receiving a bachelor of science in criminal justice and law from California University of Pennsylvania and an MBA from the University of Wisconsin-Milwaukee, Thomas began his gaming career in 2005 in operations as a security officer for the Seneca Gaming Corporation. Eventually, he became the lead gaming inspector for the Seneca Gaming Authority, overseeing regulatory compliance for the Seneca Gaming Corporation and Seneca Gaming and Entertainment. “Every day I came to work I learned something, not only about my current position but other positions, too,” he states. “I would study operational procedures, gaming compacts and other regulations, and was always asking questions, always preparing for the next career opportunity.” Early on in his career as he was trying to gain supervisory experience, Thomas took a supervisor position that included a significant pay cut. He said the move was questioned by his friends and family, but the value for him was to get the supervisor experience to prepare himself for management positions. And he says the gamble paid off in the long run. Thomas says he had the opportunity to work for and with many great leaders and learned a lot by observing how they conducted themselves, what strategies they used, and how they communicated with others. In his current role as director of compliance, Thomas credits Tom Cunningham, NIGC assistant director, with being a tremendous resource. “He’s a

“Recently, with sports betting, I’ve been fascinated by what’s happened in such a short time. And I really like to be able to help clients who are getting involved in this field.”

Global Gaming Business DECEMBER 2018

Director of Compliance, National Indian Gaming Commission

Avai

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“Every day I came to work I learned something, not only about my current position but other positions, too. I would study operational procedures, gaming compacts and other regulations, and was always asking questions, always preparing for the next career opportunity.”

longtime federal employee with a ton of expertise, and that has been enormously helpful to me as a new employee of the federal government and being a federal regulator.” Another person who had great impact on Thomas’ career early on was Klint Nephew from the Seneca Nation. As Thomas was starting out and navigating the professional world, he reflects on how Nephew took the time to coach him and help him get on the right track. Thomas also credits many great people from the Seneca Nation, Forest County Potawatomi and the Potawatomi Hotel Casino for giving him opportunities to grow and emerge, and is grateful for the opportunity to learn from NIGC Chairman Jonodev Chaudhuri, who he calls a “great leader.”

As one of the youngest professionals at NIGC, Thomas makes it a general rule to make himself available to other emerging leaders in the organization, taking the time to learn about their career goals and encourage professional development opportunities. “The gaming industry as a whole and particularly tribal gaming is growing year after year,” Thomas says. “Every year there are regulatory, technology or market changes that are shaping the industry, and with that there are increasing opportunities for emerging leaders.” His advice to future emerging leaders: “Be a student of your profession. Set your sights on where you want to be and then formulate a plan on how to get there.” —Allison McCoy, The Innovation Group

Join the Conversation!

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POWER Platforms

By Dave Bontempo

How iGaming and sports betting systems bend to every different situation

he “I’s” have it. And they have begun to run with it. The “it” is business momentum, sweeping the ascendant iGaming world in the wake of a landmark judicial victory seven months ago. When the United States Supreme Court struck down PASPA (Professional and Amateur Sports Protection Act) in May, legalizing sports betting in the world’s biggest market, ripple effects ensued. Operators see a vast, untapped niche; vendors view a bevy of new customers; regulators eye new tax revenue; and gamblers seek brick-and-mortar convenience at home. They can even have a new acronym for PASPA, like Play Any Sport, Practically Always. Poker, football, baseball, and classic gambling action now unfold, at the touch of a finger in the United States. So do teases and parlays. Online gaming today reaches far beyond its original hubs of Gibraltar, Malta and the U.K. This is a prosperous time for iGaming power brokers. They race to provide product for a market ready to burst at the seams during the next wave of online gaming approvals. State by state, the barriers seem ready to fall like dominoes. The Roaring Twenties, in this century, may come early. In the long term, the industry views mobile as its catalyst and may see blockchain technology (which allows digital information to be distributed, not copied) as an important security infrastructure. Yet right now, the atmosphere is giddy. This was the year the shackles came off and iGaming soared to life. Bring on the next vendor. Bring on the next bettor. The I’s have it.

The Science of Digital A prime industry stalwart is SG Digital, a division of Scientific Games. It was formed in January 2018 through the combination of NYX Gaming Group and SG Interactive, offering expertise in SG online gaming, sports and iLottery. SG Digital provides an unparalleled suite of engaging game content and product solutions, according to Dylan Slaney, the company’s senior vice president of gaming. What better time to be relevant? “The iGaming market is flourishing right now, bolstered by the everyday player’s thirst for new and interesting entertainment 54

Global Gaming Business DECEMBER 2018

methods,” he says. “We’ve seen huge changes in regulations and a real focus on responsible gaming, which gives players a higher degree of trust in the operators, platforms and content they are using. “Our global presence sets us up for success in any regulated market,” he adds, “and our Open Gaming System content aggregation platform gives choice for our customers with more than 2,000 premium titles available on our platform. The true scale of this platform is one of our unsung strengths, as we have over 130 customers accessing games from over 40 content partners worldwide. We process over 1.5 billion game rounds per month.” Slaney says the looming American market expansion requires more supply, and lets SG Digital showcase its content library. Product depth, and timing, will be critical to serving the enhanced iGaming arena. “We are competing for the leisure time of players with the likes of streaming services such as Netflix, gaming consoles and social games,” Slaney asserts. “Players want the best, most thrilling and entertaining content, and our new product library provides that by adding a refreshing twist on typical iGaming titles with various mechanics like crosswords, word searches and hidden tile puzzles. An industry that fascinates me at the moment is esports, with viewership in excess of 40 million to 50 million people watching these events. The growth has been astounding.” Slaney says iGaming mirrors the lifestyle of many of his company’s patrons. The ability to play in the comfort of one’s own home and switch to mobile instantly is a major focus. He predicts an exciting product rollout for ICE 2019.

Right On (Line) Point For IGT, meanwhile, the beat goes on. Or maybe that’s online. The company is already renowned for enabling players to experience their favorite games across all channels and regulated segments, from gaming machines and lotteries to digital and social gaming. It has both a strong local presence and relationships with governments and regulators in more than 100 countries. In the fourth quarter of 2018, IGT secured two major deals. The company signed a five-year agreement with Penn Online Entertainment, LLC, a subsidiary of Penn National Gaming’s Penn Interactive Ventures (PIV), for its PlayDigital division to provide a full suite of digital gaming products, including the platform and services for the newly regulated Pennsylvania on-

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line gaming market. IGT’s digital gaming platform, PlayCommand, will enable online gaming for Penn National’s Pennsylvania-based customers via its online gaming portal, HollywoodCasino.com. Penn National will also leverage IGT’s PlayCasino to offer an expansive library of player-favorite slot games like Wheel of Fortune, Elephant King, Ocean Magic and Cleopatra. Penn National also agreed to deploy IGT’s PlayBingo and PlayPoker online solutions. “We’re excited to leverage IGT’s platform and content for our online gaming launch in Pennsylvania,” says Chris Sheffield, the managing director of PIV and senior vice president of Penn National Gaming. “The flexibility and reliability of the PlayCommand platform, coupled with the proven game library within IGT’s PlayCasino, give us confidence HollywoodCasino.com will deliver the same caliber of world-class gaming entertainment that our players have come to love in our land-based casinos.” “IGT PlayDigital’s vast portfolio of proven digital solutions enables us to quickly address our customers’ needs across online gaming, sports betting and on-premise mobile gaming,” adds Enrico Drago, IGT’s senior vice president of PlayDigital. “The newly regulated Pennsylvania online gaming market presents an exciting opportunity for IGT to extend the success of our PlayCommand platform and PlayCasino to Penn National as it expands the scope of its entertainment offering.” IGT’s PlayDigital solutions for Penn National in Pennsylvania are targeted for deployment in the first quarter of 2019. And, late in 2018, the company has launched the first cross-platform online wide area progressive in the United States. Multiple online casinos in New Jersey now offer IGT’s MegaJackpots WAP games. Players in New Jersey can now vie for progressive jackpots playing IGT’s MegaJackpots games on the several gaming websites. They include CaesarsCasino.com, HardRockCasino.com, MoheganSunCasino.com and ResortsCasino.com. IGT PlayDigital introduced the MegaJackpots Slots family in New Jersey with two games, MegaJackpots Cleopatra and MegaJackpots Siberian Storm. More games will follow. The jackpot pool starts at a base amount of $500,000 that is seeded by IGT, and increases in value as players wager on the games.

Positioned to Prosper The growth of iGaming features a strong heartbeat, according to Henrik Fagerlund, the chief product officer of NetEnt and managing director for NetEnt Malta, Ltd. “This is a thriving and exciting sector,” he says. “It is in the forefront of tech, innovation and a big part of the online entertainment industry. iGaming is very much a global industry, with a regulated market worth tens of billions of dollars. Due to

revenues growing and a steady flow of new markets opening, we expect this to continue to increase at a strong rate. The digitalization and the demands from people to consume their entertainment online put us in a great position.” In the American market, NetEnt waited for a ship that came in. The company was founded almost a quarter of a century ago when online casinos weren’t even around, he notes. Fagerlund considers NetEnt a prominent pioneer and contributor to this industry sector. NetEnt has a worldwide footprint involving more than 200 customers serviced by more than 1,000 employees across offices in Sweden, Malta, Ukraine, Gibraltar, the U.S. and Poland. The company’s gaming systems alone handled over 41.2 billion gaming transactions in 2017, he says. And the hits, particularly in the market-rich United States, keep coming. “We are particularly excited about our progress in the U.S. and across the Americas, where we have signed numerous partnerships and are now regularly launching our games, which are proven to be the most popular on the market,” he indicates. “This includes a leading range of branded titles that will soon feature a couple of huge new names—Vikings and Narcos, two of the world’s most popular TV series.” Fagerlund says that after years of promise and expectation, progress finally unfolds at a faster rate in the United States for online sports betting and gaming. He refers to the last G2E as an accurate market barometer. “There was a tangible sense of heightened momentum and confidence for iGaming at this year’s conference,” he says. “A lot of that can be accounted to the decision to repeal PASPA earlier in the year. “Certainly, the initial opportunities are going to be bigger when it comes to sports betting, but we already have games live in New Jersey with all seven licensed operators across 19 brands... The U.S.—and the wider Americas region—is a high priority for NetEnt.” Fagerlund cautions against unrealistic expectations, citing high tax rates in jurisdictions like Pennsylvania. Yet long term, he foresees a windfall. The company also adjusts to different work climates between Europe and the United States. “A key difference between Europe and the United States is the way in which the games and operators are branded and marketed in order to meet local expectations,” he says. “It is vital to ensure this happens in a culturally sensitive manner, with sponsorship and advertising leveraging appropriate assets.” Fagerlund says NetEnt is about to take efforts up a notch with the launch of Vikings, a video game based on the acclaimed TV series, featurDECEMBER 2018 www.ggbmagazine.com

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Big Picture, Small World

How boxing may be revived with special streaming service here is a parallel universe for iGaming, which illustrates a broad movement in customer preference. A revolution has occurred in the boxing world, citing tablets, smartphones and computers as catalysts. Canelo Alvarez against Sugar In October, Canelo Alvarez, one of the sport’s Shane Mosley in 2012 all-time revenue generators, signed a five-year, 11fight deal worth a minimum of $365 million with streaming service DAZN, which had launched in the United States in September. It already had been in Canada, Germany, Austria and Japan. The United States deployment, ironically announced the same month of the PASPA repeal that opened the iGaming floodgates in May, proved to be seismic. The game-changing Alvarez deal shortly followed. The Alvarez contract emerges against the backdrop of a whopping $1 billion deal over eight years reached between Eddie Hearn, the promoter of heavyweight superstar Anthony Joshua, and DAZN, a British-based streaming service known as the Netflix of boxing. Customers can sign up for roughly $11 a month and gain an avalanche of major boxing and MMA content on the device of their choice. They will receive at least 32 major events for that price, many involving the world’s top athletes. Skyrocketing pay-per-view prices of $100 figure to become extinct. DAZN is the platform service owned by British sports media company Perform Group. Mirroring a successful gaming vendor, Perform has spread worldwide tentacles and intends to apply the streaming vehicle to many sports. This formula, a small price tag aimed at scores of customers, delivered a shocking hit on HBO, boxing’s signature network for much of the last 45 years. In the fourth quarter of 2018, HBO announced its intention to withdraw from the sport, signaling a monumental departure and a vivid sign that devices outpace television in the world of demographics. In retrospect, the Alvarez deal and HBO bow-out will likely be considered the 1-2 punch that ushered in boxing’s digital age. The parallels between boxing and gaming are striking. Customers will spend hours playing on their device, even more than they previously watched on television. This has formed the basis both for gaming and sports-related choices. And boxing is not alone. UFC landed a major media partner in a new multi-year deal with ESPN, which will showcase the sport on its new direct-to-consumer subscription service starting next month. Under this deal, 15 live UFC events will stream exclusively on ESPN+, the new streaming service. Streaming rights are increasingly being valued by sports leagues and networks as key complements to broadcast deals. The arrangement, a first between the UFC and ESPN, is a substantial new asset for the $5-a-month subscription service, which features a selection of Major League Baseball and National Hockey League games, plus a grab bag of other sports. The companies’ announcement also promises the action will appear on “a variety of ESPN’s television, social and digital platforms,” in English and Spanish. Each event will deliver a full card of 12 UFC bouts. Again, streaming is not limited by network programming commitments. Fight cards can go on, seemingly endlessly. —Dave Bontempo

ing immersive footage and imagery inspired by the historical drama. The 2019 forecast includes the addition of the hotly anticipated Narcos video slot. Narcos is one of the world’s most in-demand digital series, available to watch in more than 130 countries.

Powerball to the People Slick, sophisticated and accessible. Click on a tab and seek a $71 million prize on a $2 ticket. Register, download the app, qualify for a bonus. Sound like a cutting-edge private company? How about a state-run program? The Michigan Lottery sports a highly effective online presence, and continues to fund education programs throughout its state by offering selections gaming companies would envy. “Our focus from day one has been to provide players an excellent online experience with engaging and entertaining games and a system that’s easy for them to use,” says Jaime Guerra, the affiliated program marketing manager for the Michigan Lottery. “Since the online games launched in 2014, we’ve used a datadriven approach to adjust and refine it and add new games to attract new players and encourage return visits and repeat play from existing players.” Reported numbers are impressive. The Michigan iLotto has signed up more than 800,000 accounts. Instant win revenue alone has climbed from $18.5 million in 2015 to a staggering $77.9 million last year, according to published figures. Guerra says that while the Michigan Lottery can acquire a large volume of new players with traditional draw-based game favorites like Powerball and Mega Millions, its online instant win and keno games are where it discovers player loyalty. The Michigan iLotto runs various promotions. Guerra says it has strong player retention plan and ongoing promotions to keep players engaged using various offers. Email and SMS communications are broadly used, as well as more personalized and targeted campaigns. It also found that the Welcome Offer promotion is effective at acquiring new players. The lottery offers up to a $100 bonus credit on a player’s first purchase. Throughout the industry, iGaming optimism is unprecedented. The blueprint could be: pause, take a breath and sprint toward the next opportunity. For many people in the business, this could be the boom of a lifetime.

Global Gaming Business DECEMBER 2018

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SPORTS BETTING

Not Your Father’s Casino Game

Why sports betting is something completely different

fter the Supreme Court repealed the Professional and Amateur Sports Protection Act (PASPA) in May, the gaming industry had a wake-up call that could lead the industry to new opportunities. Several states immediately jumped in and started offering sports wagering and many others are planning to join the bandwagon in the near future. The question now is how the casino industry will deal with the expanded bookmaking business, which has its own unique challenges. Now that the gaming industry outside of Nevada is embarking on offering a product that is very different from anything they have ever offered in the past to their patrons, there are new questions as to how the bookmaking business will evolve, which state will dominant the business, whether there will be a tribal network and whether Congress or the government gets involved to impose federal regulation. Sports wagering is effectively a futures contract that is closer to the options and derivatives offered by the Chicago Mercantile Exchange than those offered by a casino. Event wagering is a financial contract between a bookmaker and a bettor speculating on a future event or a series of events that has uncertain outcomes, and odds are essentially prices offered for correctly predicting the results of an event. The main difference between sports wagering and other games offered by a casino operator is that all the elements incorporated into a traditional casino game such as blackjack or slot machines are under the control of the operator. In contrast, the content for sports wagering belongs to a totally different industry. And although in some ways, wagering on sports are similar to wagering on races, they are fundamentally different products: one is offered with risk and has fixed odds and the other is offered with zero risk and is parimutuel. In horse racing, casinos primarily act as a conduit between a bettor and the racetrack. And in exchange for their services, casi-

By Bruce Merati

nos receive a handling fee without taking any risks or offering any odds. The key stakeholders in sports wagering are leagues, media, regulators, law enforcement agencies and bookmakers, and at the core of the business are the fans. In case of a match fixing or a money laundering scandal, all stakeholders will get adversely affected. Therefore, it is essential that all parties work together to ensure the integrity of the business. The main threat to sports integrity comes from fraudsters looking to make quick money by fixing the results of a match or laundering cash by betting on both sides of an event with two different operators, thus guaranteeing getting paid by one of them, washing 95 percent of their illicit monies. To protect themselves and the industry from bad actors, over the years Nevada operators learned how to deal with integrity issues by keeping a close personal working relationship with each other as well as with Nevada regulators and law enforcement agencies. However, now that the industry is spreading across the country, there needs to be common regulations between participating states combined with a digital system and a process that would deter bad actors and uncover unlawful activities. Another challenge the industry is facing is competing with illegal bookmakers who can afford offering better odds since they have low overheads and pay no taxes. To be successful, the legal markets need to be efficient, create large pools and offer competitive odds. State-ringed sports wagering, specially for smaller states, produces small betting pools with uncompetitive prices that professionals, often called the wise guys, can exploit at the expense of the average fans. Without fans there will not be any sports wagering. With all the historical data that is readily available, sports analysts who crunch the data can get an edge over fans who casually bet on their teams. Since statistically one only needs to have a hit rate of 53 percent to make a profit, the professionals more likely will go after the uncompetitive markets and will profit handsomely at the expense of the average player who will eventually lose interest after a series of losing streaks.

Overall, the professionals have a higher chance of profiting from a smaller market. Having an aggregated market makes the job of arbitragers and wise guys more difficult. Through interstate compacts, larger pools are created, aggregating multiple markets that will generate more liquidity, more competitive odds and lower risks for participating bookmakers. A recent book titled Sports Wagering in America, authored by Tony Cabot and Keith Miller, analyzes the pros and cons of different scenarios from policy, economics and regulation points of view. However, from a technology point of view there seems to be only two broad possibilities. One is to keep the business local—within the casino’s own resort or within the borders of the state in which the operator has the license. This approach will cause operators to avoid large wagers and offer odds with bigger spreads than other markets. A market that is not robust will not be exciting. We saw this with poker, which showed having a small pool—low liquidity—is a major disadvantage to the business. The other possibility is a cooperative agreement between various states to create a network that shares a common hub, i.e., an odds exchange with a centralized risk management system. Under this scenario, there will be several B2B licensed odds providers acting as intermediaries between the centralized risk management operator and licensed operators. The best solution to combat match fixing and money laundering is having one or two centralized hubs that follow a common protocol. And the ideal technology is use of a private blockchain network with a secure database structure that assures privacy and records a wager as a smart contract between the bettor and the book, with built-in logics to detect and report suspicious wagers to regulators, law enforcement agencies and the leagues. With today’s technologies, these goals are achievable. Bruce Merati is cofounder of BC Technologies, a sports book system provider, and CEO of Uplay1, a gaming IP company.

DECEMBER 2018 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Data Analytics Reimagined Product: GamingAnalytics.ai Manufacturer: Gaming Analytics, Inc.

s any casino operator knows, there are dozens of analytic software solutions on the market today. But despite enormous efforts, many casinos still struggle with how best to use these solutions. That’s the dilemma that puzzled Kiran Brahmandam, founder of Gaming Analytics, for years. As a casino systems executive, he often wondered why the gaming industry hadn’t figured out how to make analytics more accessible. “At home, if you want to know the weather next week, you just open a search engine and type the question. You get an instant answer, along with relevant secondary information about the city. But asking a similarly simple question about your casino operations is nearly impossible. “Imagine asking which brand of machines are expected to perform the best next week. There just wasn’t a good tool out there, so we built one.” Gaming Analytics uses sophisticated technology to crunch large data sets and look for patterns among ever-changing player behavior, to analyze what has happened and to extrapolate likely future scenarios. Brahmandam claims that his software has been predicting slot floor performance with 99 percent accuracy at multiple casinos.

But that’s not the big differentiator here. Instead of cranking out over-complicated reports or requiring the casino to hire expensive data scientists to interpret the data, Gaming Analytics focuses on ease of use. “With our tool, executives just type a question into the search bar, and our natural language processing and our algorithms give you a clear answer,” said Brahmandam. “We put the solution right next to the problem—wherever you are, you can pull out your phone and ask ‘which game should I move/buy/retire today?’ or ‘what actions do I need to take to reduce churn among young players?’ Our AI platform learns the unique quirks of your individual floor, allowing us to deliver immediate predictions and steps to optimize performance.” For more information, visit gaminganalytics.ai.

Next-Generation 3D Product: 3D Bare Eye Manufacturer: EFCOtec

magine you are sitting at an electronic slot machine. As you win, the coins appear to be falling out and right into your lap. For the first time, casinos will be able to offer an eyecatching 3D experience to players without the need for special glasses. The technology that makes this possible can be used to create new games and richer digital signage experiences. EFCOtec has introduced the industry’s first full development kit and signage solution for creating the latest 3D content. Called 3D Bare Eye, the solution provides both a development system and monitor as well as a broadcast kit. The development kit is based on the Unity software environment—the de facto standard development tool set among game developers, making it easy for developers to adopt. The broadcast kit includes a game-changing 3D display. While most 3D content today is delivered on a 2D display, the 3D Bare Eye solution uses true 3D technology made of up three screen layers. Different content can be placed on each of these three regions allowing for more complex graphics, and opening up more opportunities for developing new games that allow the player to interact in new ways. In addition to providing software development tools, the 3D Bare Eye de-

Global Gaming Business DECEMBER 2018

velopment and broadcast kits are based on the Intel Core i5-6500 and come with with a ready-to-use 55-inch or 65-inch 3D digital signage 4K display. A 3D film on the monitor provides the third dimension to viewers. Features of the kit include 4C/4T with boost to 3.6GHz, L2=6GB. For more information, visit efcotec.com/product/33419 or email sales-us@efcotec.com.

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GOODS&SERVICES SAUCIER RESIGNS FROM GALAXY; COMPANY HIRES INVESTMENT HOUSE

GAMING STANDARDS ASSOCIATION ANNOUNCES AGREEMENT WITH BLOCKRE

able game supplier Galaxy Gaming, Inc. announced that its founder and largest shareholder, Robert Saucier, has resigned from the board of directors effective immediately, and has stepped down as Robert Saucier executive vice president of business development for the company, effective December 31. In addition, the company announced that it has retained Macquarie Capital (USA) Inc. to assist it in evaluating strategic alternatives, including the potential sale of the shares of the company’s common stock held by Triangulum Partners LLC, an entity controlled by Saucier. Last year, Saucier resigned his roles as CEO and board chairman after Nevada gaming regulators threatened to reject the company’s license application because of issues in Saucier’s past. Longtime gaming equipment executive Todd Cravens was named CEO and former Gaming Control Board Chairman Mark Lipparelli became board chairman. Triangulum owns 23.3 million shares— roughly 60 percent of the company. Galaxy Gaming Chief Financial Officer Harry Hagerty said the shares could be purchased by one buyer or divided among several buyers. Shares of Galaxy are traded on the Over the Counter Market. In July 2017, Galaxy’s gaming license application in Nevada was referred back to staff for additional work after the Gaming Control Board spent two days grilling the company and Saucier over past business practices in Washington, Oregon and California. The company was licensed as a manufacturer and distributor two months later after Saucier was removed from the key positions. Saucier founded Galaxy 18 years ago. The company provides casinos with non-traditional table games and table game bonus features, such as side wagers on blackjack.

he Gaming Standards Association (GSA) announced an agreement with BlockRe, an international risk assessment firm with offices in London, San Francisco and New York, to explore leveraging their blockchain technology risk assessment framework in the gaming industry. BlockRe’s risk assessment framework is designed to allow for a thorough review of blockchain-based solutions. The result of the assessment details any potential risks that may need to be evaluated by those looking to install blockchain-based applications and the appropriate authorities. BlockRe has significant success using its framework in the finance industry working with some of the largest insurance underwriters globally. Blockchain-enabled applications are starting to proliferate, with more and more use cases being identified and companies announcing solutions for the gaming industry. GSA is evaluating whether the use of this risk assessment framework will provide the additional insight for its members that are seeking to deploy or utilize blockchain-based solutions. Additionally, GSA believes the framework may be beneficial for regulatory agencies seeking an independent review of solutions positioned to be used in their jurisdictions. GSA President Peter DeRaedt said, “We are interested in understanding how the use of BlockRe’s framework that lays out technical guidance, risk mitigation strategies, and compliance with relevant regulatory regimes could be of value to gaming companies, operators and regulators.” BlockRe President Raymond Zenkich added, “BlockRe is excited to be working together with GSA and its members to explore the intersection of blockchain technology, risk management, and regulatory frameworks.”

IGT RIDING HIGH

ontinued lottery products sales growth and a rise in slot machine shipments and installations were cited by supplier International Game Technology, Plc. as reasons it posted a third-quarter profit, reversing a quarterly loss a year earlier.

Global Gaming Business DECEMBER 2018

In a statement, IGT reported net income was $22.3 million, or 11 cents per share, for the three months ended September 30, reversing a loss of $803.6 million, $3.95 a share, a year earlier. Earnings adjusted for nonrecurring costs were 31 cents per share, topping the 28 centsper-share forecast of seven analysts polled by Zacks Investment Research. IGT has topped Wall Street forecasts three times in the past six quarters, Zacks noted. “Solid performance and important, longterm contracts drove very good third quarter and year-to-date results,” IGT CEO Marco Sala said in the earnings statement. “Global lottery same-store revenues for instants and draw games rose mid-single digits. The installed base of gaming machines was up, and unit shipments of gaming machines increased 10 percent.”

ARUZE NAMES GERMAN DISTRIBUTOR

lot manufacturer Aruze Gaming announced that the company has entered into a partnership with Spirit Gaming, an independent gaming distribution company based in Germany. Spirit Gaming will be the exclusive distribution partner for Aruze in Germany, Austria, Switzerland and Liechtenstein. In these countries, Spirit Gaming is now distributing all land-based products for Aruze, including the new award-winning Muso Triple27 cabinet. “Aruze Gaming is a strong name in the international gaming industry, especially in the Asian and American markets,” said Frank Ziegler, founder and managing director of Spirit Gaming. “Naturally, the focus is now on Europe. We see great opportunities for success in the German-speaking markets, and this partnership will ensure that casino operators here have a local contact they know and trust, with the support to match.” “We have been reviewing how to best service the German, Austrian and Swiss gaming markets for some time,” said David Meacher, Aruze’s director of business development in Europe, “and after extensive research we concluded that Frank and his team from Spirit Gaming are the right partners for both Aruze and casino operators in these important European markets. Frank and his team have an extremely good reputation and professional approach to business.”

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SYNERGY BLUE ANNOUNCES DISTRIBUTION FOR CRUISE SHIPS

kill-based gaming developer Synergy Blue announced a sales and distribution agreement with a Florida-based casino vendor that will land the company’s games on cruise ship casinos based of out of Miami, Fort Lauderdale and the Bahamas. The deal between Southern California-based Synergy Blue and Reel Games—which was reached at the Global Gaming Expo 2018 in Las Vegas— opens the manufacturer to a new market for its games that are already in use in six countries. Synergy Blue CEO Georg Washington said the opportunity to expand into Florida and the Caribbean was part of the company’s growth initiative. “This announcement marks another step towards the adoption and proliferation of skill-based games in all casino markets,” Washington said. “Though our agreement with Reel Games, Synergy Blue will be able to tap into new markets, fulfilling the pent-up demand for skillbased games.” At G2E, Synergy Blue unveiled 15 skill-based, arcade-style gambling titles, including driving games and skill-based versions of mahjong and poker. Synergy Reel Games Blue’s games are available on CEO Sean Smith multiple platforms, including multiplayer, touch screen, joystick, trackball, gun and driving-style. Several of the titles are on a bar top multi-game product. Under the agreement, Reel Games will provide sales, distribution and support to place Synergy Blue’s games onto cruise ships. “Synergy Blue’s robust game library provides every demographic with new skill- or chance-based fun,” said Sean Smith, CEO of Reel Games. “Reel Games strives to provide our customers with the broadest and most cutting-edge entertainment available, and Synergy Blue’s innovative games help us do just that.”

KAMBI CEO BULLISH ON U.S. MARKET

ristian Nylén, CEO of Swedenh-based online and land-based sports book supplier Kambi, expressed optimism for the company’s entry into the U.S. market in last month’s report for Q3 2018. The report shows revenue ahead by nearly 40 percent year-on-year and turnover up more than 3 percent in a third quarter described as “historic” by Nylén. “In August, Kambi made its U.S. debut, and in

doing so created history when becoming the first company to process a legal online bet in the country outside of Nevada, followKristian Nylén, ing the launch of New JerCEO of Kambi sey’s regulated market,” wrote Nylén. “We are already live with three brands in New Jersey—DraftKings, SugarHouse (Rush Street Interactive) and 888sport—which is not only a great achievement in itself but, according to the regulator’s recently released September figures, equates to Kambi-powered operators having a circa 70 percent share of the online market. “It’s been a fantastic start in the U.S. for Kambi, which I believe reflects an enthusiasm for the highquality sports book experiences we offer, which we hope to bring to players in additional states shortly.

I’ve recently returned from a major gaming exhibition in the U.S. where, following our early success in New Jersey, the interest in Kambi was at an unprecedented level. It is for this reason we plan to continue to invest in areas such as talent, technology and licensing so we can maximize the opportunity presented by the gradual state-by-state rollout of regulated sports betting across the country.” The report also confirmed that Kambi plans to enter further U.S. states where there is the demand and when local regulations allow. “In our Q2 report, we referenced five potential states—New Jersey, West Virginia, Pennsylvania, Mississippi and New York,” the report said. “In addition to our transactional waiver in New Jersey, where we have subsequently launched, Kambi recently obtained a permit for West Virginia and is also in advanced stages of the licensing process with regulators in Pennsylvania and Mississippi, states where regulation has already been passed.”

TRADE SHOWS & CONFERENCES NUMBERS BOOM AT GLOBAL GAMING EXPO 2018

lobal Gaming Expo (G2E) saw more than 27,000 gaming professionals visit Las Vegas October 8-11 for the world’s premier international gaming trade show and education presented by the American Gaming Association and organized by Reed Exhibitions. Figures from key buyers, engagement in the educational programing and overall attendance significantly increased for G2E 2018. “We are thrilled to see this year’s numbers corroborate the overwhelming productivity that exhibitors and attendees experienced at G2E,” said Allie Barth, vice president of industry services for the American Gaming Association. “Our goal was to create a show that was relevant to today’s gaming professionals and facilitate ways to advance opportunities for industry growth. I believe we’ve taken a great step this year, which will be utilized to further our successes in the years to come.”

Key Figures for G2E 2018 • G2E 2018 experienced a 16 percent growth in key buyer attendance on the show floor. • Of the key buyers who attended G2E 2018, 27 percent of these key buyers were new to the show, demonstrating an expanding marketplace for the gaming industry. • Overall attendance for G2E 2018 increased more than 6 percent. This year’s show saw a 30 percent increase in turnout at G2E 2018’s education programs. G2E Event Director Korbi Carrison said, “The gaming industry is at an exciting moment where evolving technology and aspiring entrepreneurs are creating new ways to innovate. The excitement from the G2E show floor was palpable, and will shape how casino-resorts operate for years to come.” Next year’s Global Gaming Expo will be held October 14-17, 2019 (Education: October 14-17, Expo Hall: October 15-17) in Las Vegas at the Sands Expo.

DECEMBER 2018 www.ggbmagazine.com

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TRADE SHOWS & CONFERENCES GSA Technology Summit: Focus on Blockchain

put these new plans into place.” “Conferences are abuzz with new ideas. Our smaller format is like none other in the casino industry,” said Barker. “It is meant to capture the energy and ideas created at the larger conferences and turn them into tactics and actionable plans. With less than 30 chosen participants, we will build a cohort to last beyond the meeting.” More information on Casino Marketing Bootcamp can be found at casinomarketingbootcamp.com.

GSA STAGES TECHNOLOGY SUMMIT: FOCUS ON BLOCKCHAIN

aming Standards Association (GSA) held its first-ever conference event: GSA Technology Summit: Focus on Blockchain, November 8 and 9 at the Nevada Museum of Art in Reno. Blockchain technology—the second phase of the internet—will have a dramatic impact on our lives and businesses. It is poised to revolutionize data sharing, security and the ability to provide regulatory authorities with previously unobtainable levels of transparency. Those looking at how this technology will impact the gaming industry were able to listen to companies that are using the technology today and regulators as they debated the benefits blockchain provides them. GSA President Peter DeRaedt said, “We were excited to see a lot of interest in the event. For this unique summit we’ve used our extensive contacts within and outside the gaming industry to bring together speakers and participants who have the experience and know-how to offer attendees a more grounded foundation and education about this technology.” Blockchain Committee Chair Earle G. Hall, who moderated a panel discussing how blockchain will impact gaming, said, “Blockchain is the answer to so many of our inefficiencies. It is inherently designed for transparent, secure and distributed information flow. Blockchain will exponentially increase the potential for collaboration, efficiency and connectivity.” While blockchain has many answers for gaming issues, it also has some challenges, such as the speed of uploading, acceptance by regulators, and possible susceptibility to hacking, all of which were noted by speakers at the event. 62

CARCAMO, RMS TO STAGE ‘MARKETING BOOTCAMP’

EXECUTIVE DEVELOPMENT PROGRAM WELCOMES LARGE AUDIENCE

ulia Carcamo, president of J Carcamo & Associates, a New Orleans-based marketing agency, has partnered with Nicole Barker, president of Relationship Marketing Solutions, to create a unique casino marketing workshop that will be held March 10-12, 2019 in Winter Park, Colorado. The Casino Marketing Bootcamp is designed to inspire casino marketers, helping them to turn big ideas into strategic plans that will enhance their customers’ experience and drive revenue. Attendees will learn from new speakers they haven’t previously had access to, connect with colleagues who face similar challenges, and return home with tactics they can immediately implement.

ne of the longest produced conferences in the gaming industry, the UNLV-UNR Executive Development Program, was held November 9-15 at Harvey’s in Lake Tahoe. The program is produced by the University of Nevada, Las Vegas and the University of Nevada, Reno. Moderator and International Gaming Institute Executive Director Bo Bernhard said it was the largest group of attendees since 2013.

Marketing expert Julia Carcamo

“As a former casino marketing executive, I know all too well that teams come up with a lot of great ideas, but day-to-day operations often get in the way, making them too busy to follow through on developing them into concrete plans. Often, it’s just easiest to keep returning to tried and true promotions or events,” said Carcamo. “We want marketers at the Bootcamp to take a couple of days to really think through their ideas strategically, collaborate with others, and go back to their home properties excited to

Global Gaming Business DECEMBER 2018

Virginia McDowell, former CEO of Isle of Capri Casinos, speaks to the 2018 Class of the UNLV-UNR Executive Development Program

Founded by the late William Eadington, the EDP has developed leaders in the gaming industry for the last 28 years. Many of those attendees are

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Moderator and International Gaming Institute Executive Director Bo Bernhard addresses the largest group of attendees since 2013

now CEOs, presidents and chairmen of gaming companies and some of those return year after year to impart knowledge to the next generation of gaming leaders. This year’s speakers included Alan Feldman, executive vice president, global government and industry affairs, MGM Resorts; David Forst, general manager, Oakland A’s; Seth Schorr, CEO, Downtown Grand Casino; Paul Steelman, president, Steelman Partners, Las Vegas; Richard Haddrill, vice chairman of the board, Scientific Games; Jan Jones Blackhurst, vice president, government relations, Caesars Entertainment; Virginia McDowell, former CEO, Isle of Capri Casinos, and vice chair, Global Gaming Women; and many others. Each year, attendees are split into teams and assemble a case study of a gaming issue. Last year, teams developed faux RFPs for integrated resorts in Japan. This year, the teams were tasked with developing a mixed-use gaming project at the former Ellinikon International Airport in Athens, Greece. For more information on this year’s EDP and how to register for the 2019 edition, visit gaming.unr.edu/edp.

For more information or to subscribe to the database or monthly report contact Ashley Diem at ADiem@FantiniResearch.com or call +1-302-730-3793 - www.FantiniResearch.com DECEMBER 2018 www.ggbmagazine.com

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DON’T MISS AN ISSUE OF GAMING’S MOST IMPORTANT TRADE PUBLICATION!

Subscribe to Global Gaming Business, the official magazine of G2E and AGEM.

Subscribe at http://ggb.magserv.com/cgi-bin/subscribe Sign up for our digital edition at https://ggbmagazine.com/register/

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PEOPLE RODIO NAMED CEO OF AFFINITY GAMING

ffinity Gaming, the Las Vegas-based owner of 11 casinos, announced that Tony Rodio, former chief of Tropicana Atlantic City, has Tony Rodio been named Affinity chief executive officer, effective immediately. Rodio, who guided the Tropicana to the No. 2 spot in the Atlantic City market after its prior owner lost its gaming license, has more than three decades of experience in the gaming industry and a strong track record of transformative growth. Since 2011, Rodio has served as president, CEO and a member of the board of directors of Tropicana Entertainment, Inc. During his time at Tropicana, he led the unprecedented growth of the company, improving Tropicana’s overall financial results with net revenue increasing more than 50 percent through both operational improvements and further expansion into regional markets. Additionally, Rodio oversaw major capital projects including the $200 million renovation of Tropicana Atlantic City. Prior to taking the helm at Tropicana, Rodio served in a variety of roles at Hollywood Casino and Harrah’s.

HARD ROCK APPOINTS JAPAN PREZ

n October 22, Edward Tracy, CEO of Hard Rock Asia, announced the appointment of Ado Machida as the new president of Hard Rock Japan. According to a stateAdo Machida ment from the company, Machida joins Hard Rock Japan from Navigators Global LLC, a management consulting organization specializing in strategic government relations, crisis management and business development. In that role, he advised Japanese and U.S. manufacturers, financial services, and hightech firms looking to expand across the Pacific. Prior to that, Machida was director of policy implementation on the Trump transition team, served as chief domestic policy officer for former Vice President Dick Cheney, worked on the presidential campaign of Senator Bob Dole, and held positions with Goldman Sachs in New York and Tokyo.

CAESARS NAMES FIRST WOMAN TO BOARD

he board of directors of Caesars Entertainment has appointed its first female member, former Estée Lauder executive Denise Clark. Clark takes her seat as the board’s 11th director at a time when the gaming industry faces increasing scrutiny over its dearth of women in top-level positions. A 2017 study found that out of 21 gaming companies headquarDenise Clark tered in Las Vegas, none had a female CEO, chairwoman or president. At only three corporations did women hold one-third or more executive board seats. There are notable exceptions: MGM Resorts International has four women on its 12-member board, including former U.S. Secretary of Labor Alexis Herman. Wynn Resorts now has four as well, after appointing three women earlier this year in a dramatic reshuffling of its board following the departure of founder Steve Wynn, who resigned as chairman and CEO after he was accused of multiple instances of sexual harassment involving female employees. Clark, who retired from Estée Lauder after five years as chief information officer for the cosmetics giant, brings to Caesars more than two decades of corporate experience, including similar positions with Hasbro, Mattel and Apple Computer, and 13 years with the U.S. Navy. She also serves on the board of United Natural Foods.

AGS APPOINTS GEOFF FREEMAN TO BOARD

GS announced that Geoff Freeman has been appointed to its board of directors. Freeman, who stepped Geoff Freeman down from his role as president and chief executive officer of the American Gaming Association in August, is now the president and chief executive officer of the Grocery Manufacturers Association, the leading representative of the $2.1 trillion food, beverage and consumer products industry. AGS President and Chief Executive Officer David Lopez said, “We are excited to welcome Geoff as a new independent director to the AGS board. Not only does he have a proven track record

of effecting significant positive change in our industry, he is a recognized and respected business leader who brings deep strategic, operational and market development experiences that span across multiple industries.”

PEQUOT CHAIRMAN BUTLER RE-ELECTED TO FOURTH TERM

odney Butler has been re-elected to a fourth three-year term as chairman of the Mashantucket Pequot Tribal Council. His tribe owns and operates Foxwoods Rodney Butler Resort Casino in Connecticut, which is one of two large Indian casinos in the state. Butler defeated two challengers from the council for the position of chairman. The tribal council of seven members runs the tribe and manages its business enterprises, including the casino, where Butler is serving as interim CEO following the untimely death of former CEO Felix Rappaport last summer.

GGB

December 2018 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Americans for Nonsmokers Rights . . . . . . .35 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fantini Report . . . . . . . . . . . . . . . . . . . . . .63 Fox Rothschild . . . . . . . . . . . . . . . . . . . . . .23 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Greenberg Traurig . . . . . . . . . . . . . . . . . . .21 ICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 IGT #2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . .67 Konami Gaming . . . . . . . . . . . . . .Back Cover RPM Advertising . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . .5 Tribal Government Gaming . . . . . . . . . . . .59 UNLV GHES . . . . . . . . . . . . . . . . . . . . . . . .57 World Game Protection Conference . . . . .17

DECEMBER 2018 www.ggbmagazine.com

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CASINO COMMUNICATIONS

&A Brian Decorah CEO, Snoqualmie Casino

n enrolled member of the HoChunk Nation, Brian Decorah started his gaming career in his tribe’s casinos. He later went on to become a general manager at two of their mid-sized casinos, and later became general manager at Firekeepers Casino Hotel in Michigan, leading an expansion, including adding a hotel. He joined Snoqualmie Casino at the beginning of 2018. He spoke with GGB Publisher Roger Gros at G2E in October. A full podcast of this interview, with information about the size of the market, community impact of tribal gaming, and non-gaming amenities, can be accessed via GGBMagazine.com. GGB: You did a great job running the FireKeepers casino in Michigan. What’s the difference between Firekeepers and the Snoqualmie Casino?

Brian Decorah: Just like at FireKeepers, I’ve got a great team here. But Seattle’s just a different market—when you go there, just the natural beauty of where you are, and the market that we’re in. We’re the closest casino to Seattle, 27 miles out. So, we’ve got some of the most affluent neighborhoods surrounding us. We’re right off Interstate 90. We say we’re minutes away, but a world apart. We have these sweeping views of the Cascade Mountains. We have elk and blackberry all around the property. It’s just a stunning location, but very affluent. And what’s a little bit different, compared to that FireKeepers market, it’s a little bit smaller property, but the win per player is substantially higher. Our market has many players employed by Google and Microsoft and other tech companies. But we also have a very high percentage of Asian play. We estimate it’s around 50 percent, but it’s not Chinese. It’s Vietnamese and other Asian segments, and we’ve got the full offerings to target that demographic.

Global Gaming Business DECEMBER 2018

Does the tribe have a lot of land up there? Is there land to expand?

It’s actually a pretty small footprint—around 60 acres. And it’s built on the side of a mountain, so it gives you great views, but it’s really difficult to build on. So, we’re actually in the process of taking a look at what can we do to expand right now, and the topography is certainly one of the things you have to think about a lot. Tell us about your competition up there. Are there other casinos close by?

Yes, there are close to 30 casinos in Washington. We’ve also got a lot of card rooms around Washington. But the closest casino to us is Muckleshoot. They’re about 30 miles south of us, but it takes about an hour to get there, with the traffic. And Tulalip, they do a great job, on the north side of Seattle. But we almost don’t compete in some respects, because of the traffic barrier—it can be 20 miles, but it’s an hour and 45 minutes in rush-hour traffic. We’ve also got Emerald Queen over on the other side of Seattle, closer to Tacoma, and they’re in the process of building a big Vegas-style casino property there. But, you know, one thing that’s really different is that it’s a friendly competition and serious collaboration in Seattle. Everyone works together, and they’re willing to share things. And it’s taking some getting used to, compared to where I come from, but they welcome me with open arms, and that’s not something you always experience when you go to a new market. There were a lot of different things to learn, because it’s a pull-tab-based slot product there. And there’s a lot of learning the nuances of a regulatory environment. So it’s different, but I had help. Tell us about the card rooms, or what they sometimes call mini casinos.

It’s really the same things that you see across other card rooms—they aren’t as heavily regulated as our casinos are. There have been accusa-

tions of loan sharking, money laundering and even murder. Some of our higher-limit baccarat players would go to those card rooms, so we’ve converted a former deli into a high-limit private gaming salon for those high-limit bacc players. And that’s because we do have a lot of those players who do like that private experience in those little card rooms. We want to be able to replicate that, but with a tighter game, more regulations, more consumer protections. So are those pull tab machines Class II gaming?

It’s still Class III gaming, but it’s based off a pull-tab system. Essentially, if you go up to a Wheel of Fortune game, and make a bet, the 50-cent bet and the dollar bet come from different buckets of pull tabs. And once it gets down to, I think, 10 percent of what the total pull-tab base is, it dumps more pull tabs in, so it’s not quite the same as traditional slots. Our slot director is great, a former IGT executive. And he was telling me, if you go play video poker at a bar, it’s a certain experience you get here in Las Vegas, and if you’re a skill-based player, you can do pretty well. But in Washington, if you get dealt the full house or a royal flush on the first hand, you can throw all those cards away, and you’re still going to get the same result, because there’s no skill involved. It’s all based on pull tabs. Can you use Class II games?

Yes, those aren’t regulated by the state compact, so that’s more advantageous for us. They also have other restrictions, as far as types of games, and we really do need more Class II premium product, with those affluent markets that are so close to us, in Bellevue and Seattle, and Seattle proper, so we have an opportunity with a more upscale customer, just to have a higher-limit bet on each of the games. So, that’s really important to us, but we need premium content for it. Not all games are created equal, as we know.

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