Global Gaming Business, July 2014

ggB Global Gaming Business Magazine

UnLV’s innOVatiOns MOBiLity On the CasinO FLOOr MgM Wins in Ma POKerstars sOLd FOLding in JaPan

July 2014 • $10 • Vol. 13 • No. 7

Killing With Kindness

Why free play is no bargain for casinos or players

Friends & Family

Bia’s Kevin Washburn describes Obama administration’s tribal strategies

Bright idea gLi how has become one of the most important companies in the gaming industry

LOtteries Vs. CasinOs

Who will win the race for online dominance?

Official Publication of the American Gaming Association

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CONTENTS

Vol. 13 • No. 7

july

Global Gaming Business Magazine

COLUMNS

COVER STORY Page 22

Passing the Test

14 AGA Getting to Know Us Geoff Freeman

Gaming Laboratories International reaches its 25th anniversary, having defined the business of private testing of gaming machines and systems, and both teaching and learning from the world’s regulators along the way.

16 Fantini’s Finance A Dose of Reality Frank Fantini

36 Social Gaming Making Your Social Casino Work Andy Caras-Atlas

48 Global Gaming Women

By Frank Legato

Our Daughters’ Daughters Will Adore Us Jennifer L. Carleton

FEATURES

GGB iGAMES

18 The Washburn Era Kevin Washburn reflects on the accomplishments achieved for Indian Country during his tenure as the federal Department of Interior Indian affairs secretary.

Our monthly section highlighting and analyzing the emerging internet gaming markets.

38 iGNA Outlook Border Wars Mark Balestra

Feature 40 iGaming and the Lottery

While it may be free to players, there is a steep cost to casinos for the widespread practice of using free play as the only slot-floor promotion.

By Steve Gallaway

The once-promising outlook for legalization of casinos in Japan has run out of steam.

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By Hideki Yoshii

46 Going Mobile Mobile technology is making life easier for frontline casino employees, and making operations more efficient for executives.

By Dave Bontempo

The new world of internet gaming could have its most significant player if and when state lotteries get involved.

By Marjorie Preston

44 iGames News Roundup

34 Japan in Doubt

4 The Agenda 6 Dateline 12 Nutshell

By Dave Palermo

30 The Cost of Free Play

DEPARTMENTS

50 Budding Innovation A new program at the University of Nevada, Las Vegas is providing the industry with a wealth of game innovation—all from students.

52 Emerging Leaders With TCSJohnHuxley’s Justin Findlay, Horseshoe Casino’s Marcus Glover, and Miura Holdings’ Ameesh Patel

56 New Game Review 60 Frankly Speaking 62 Cutting Edge 64 Goods & Services 69 People 70 Casino Communications With Marco Benvenuti and Patrick Bosworth, Co-Founders, Duetto Research

By Patrick Roberts JULY 2014 www.ggbmagazine.com

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THE AGENDA

Vive La Différence Roger Gros, Publisher

E

very year when I return from my annual trip to Macau for G2E Asia, I’m always struck by how different the Macau casinos are from the U.S. Now, don’t get me wrong. A casino is a casino. Even though there are far fewer slots and far more tables, the principles of casino gaming remain the same. After all, how do you account for the $40 billion in annual gross gaming win in Macau in 2013?

But there are so many differences that I’m amazed that it works as well as it does (or maybe the U.S. casinos don’t work as well as they should!).

This year, there is a massive amount of construction going on in the Cotai region of Macau.

Wynn Resorts, MGM Resorts, Melco Crown and SJM are building new projects. Las Vegas Sands is adding the Parisian hotel, while Galaxy is nearly complete on Phase II of its flagship property. And when you gaze across the narrow body of water that separates Cotai from Hengqin Island, the development on that separate territory rivals what is going up on Cotai. So it’s amazing that all that construction is under way, given the restrictions placed on hiring foreign workers by the Macau government.

I’ve always been struck by the absence of parking garages at the Macau properties. Oh, they are there, but it’s generally on a few select spots usually buried beneath these huge resorts. I was wondering if the opening of the new bridge/tunnel between Macau and Hong Kong will make more parking spaces necessary, but since few people in Hong Kong own vehicles, it’s unlikely the bridge would vastly increase the number of vehicles in Macau.

More likely, it will require larger and more elaborate transportation centers that now host shuttle buses between the various casinos and the entrances to and from Macau—the ferries and border crossings. But I suspect aggressive coach programs will be carried out between Hong Kong and Macau, bringing more of these large vehicles to the Macau casinos.

Also rising this year was the Macau light rail system that will one day link all the areas of Macau for the benefit of both residents and visitors. Let’s hope they don’t model their rail system after the Las Vegas monorail, which to this day still does not connect to the airport (and has failed to pro-

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duce significant ridership as a result).

And speaking of the airport, Macau’s quaint but efficient airport is very convenient for visitors to the casinos. A short taxi or shuttle ride delivers the visitors to the casino floor and the hotels. For those of us who fly the 16-plus hours from the U.S., arriving in Macau is preferable to schlepping our bags onto a ferry for a bumpy hour-long ride to Macau after arriving in Hong Kong (at least in my opinion).

In addition to gaming, retail is becoming another success story of the Macau integrated resorts. At G2E Asia this year, MGM China CoChairwoman Pansy Ho pointed out that Macau has more luxury retailers per capita than any other place in the world. The Venetian shopping mall, which once was eerily empty, is now bustling with shoppers most of the day.

The proliferation of the “premium” mass market is more visible than the VIP market, which has become a little less dominant than it was in the past. But that VIP segment is so shadowy that it’s very difficult to grasp how it works and who is actually playing. The crowded “mass” casino floor makes it almost incomprehensible that such a large part of the market is virtually invisible.

As a former baccarat dealer, I enjoy viewing the different versions of the game that the casinos have developed to get the most out of them, given the restrictions on the number of table games. My favorite is Fast Action Baccarat, which offers a lower limit, along with a non-commission form of the game. More than 40 people can gather around the horseshoe-shaped table. When the winner is announced (banker, player or tie), the losing bets fall through the table like a trap door that drops victims into a crocodile pit. A dealer then scoots around the table with a movable chip tray to pay the winners. Fast, efficient and profitable, I’m sure.

And the “stadium”-style electronic table games with the tiered seating areas also appeal to a little lower limit than the regular tables, and need only one dealer since all transactions are electronic.

So Macau keeps changing and keeps fascinating me. If you haven’t been there, it would be well worth your while to plan a trip, because casino gambling in Macau is like nowhere else in the world.

Vol. 13 • No. 7 • July 2014 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Mark Balestra | Andy Caras-Altas | Jennifer L. Carleton Frank Fantini | Geoff Freeman Contributing Editors Dave Bontempo | Steve Gallaway | Alexis Garber Christopher Irwin | Dave Palermo Marjorie Preston | David Rittvo | Patrick Roberts Robert Rossiello | Hideki Yoshii

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

• Mark A. Birtha, Vice President and General Manager, Fiesta Henderson Casino Hotel

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Michael Johnson, Industry Vice President, Global Gaming Expo, Reed Exhibitions

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, General Manager, ACSC Product Group Eastern Region Vice President, Bally Systems

• Steven M. Rittvo, President, The Innovation Group

• Katherine Spilde, Executive Director, Sycuan Gaming Institute, San Diego State University

• Ernie Stevens, Jr., Chairman, National Indian Gaming Association

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 921 American Pacific Dr, Suite 304, Henderson, NV 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 2014 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 921 American Pacific Dr, Suite 304, Henderson, NV 89014

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DATELINE USA july2014

No BraiNer MGM gets first Massachusetts casino license, but challenges remain

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he long road to awarding a casino license in Massachusetts is over—at least for the western region, where MGM Resorts International was the only applicant left standing.

The other two regions of the state will be much more difficult to sort out. The Boston-area license features a bitter competition between Wynn Resorts and the Mohegan Sun/Suffolk Downs partnership.

The southeastern region, which was reserved for a tribal casino, has been tied up in state and federal litigation and increased competition.

But MGM Resorts will be the first full casino license holder (Penn National Gaming got the nod for the sole slot parlor at the Plainridge Racetrack in

Saturation Victim

Plainville). The process for MGM began two years ago, and included many hearings, long deliberations and extensive investigations. The original field of five contenders was whittled down by several factors, including local referendums where the towns declined to become a host city to a casino.

“This is a great day for Springfield, the commonwealth of Massachusetts and MGM,” said Jim Murren, chairman and CEO of MGM Resorts.

“We’re proud of what our talented team and our many dedicated city and community partners have accomplished together.”

The project includes a 25-story, 250-room hotel with world-class amenities including a spa, pool and roof deck; 125,000 square feet of gaming

space with 3,000 slot machines, 75 gaming tables, a poker room and high limit VIP gambling area; about 55,000 square feet of retail and restaurant space that will accommodate 15 shops and restaurants; and a multi-level parking garage. The project is seen as a catalyst to the revitalization of Springfield that envisions a high-energy dining, retail and entertainment district with an eight-screen cinema, a bowling alley and an outdoor stage.

Springfield was the most hotly contested of all of the cities where a casino was proposed. At one time the city was targeted by Penn National Gaming and Ameristar at the same time that Hard Rock International wooed neighboring West Springfield, where voters decided against host-city status.

MGM and the other remaining applicants are concerned, however, about the possibility of the anticasino initiative qualifying for the November ballot.

It has asked the commission to consider issuing a provisional license and not requiring it to pay the $185 million license fee until after the ballot measure’s fate is decided. The commission has asked the legislature to address this issue by amending the gaming expansion law to provide for refunding applicants’ fees if the law is repealed.

Harrah’s Casino Tunica closed

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arrah’s Casino in Tunica, Mississippi closed at midnight on Sunday, June 1, putting close to 1,000 people out of work. Tunica Convention & Visitors Bureau President and Chief Executive Officer Webster Franklin said, “I’d love to be able to sit here and spin that this is something good. But this is not good.” The facility also includes a convention center and RV park.

When the property opened in June 1996 as the Grand Casino, it was the largest casino between Las Vegas and Atlantic City. It became Harrah’s Tunica in May 2008, the largest of Caesars Entertainment’s holdings in the state.

The company announced plans to close Harrah’s Tunica in March 2014 as its customer base declined by half in the last six years, from 3.4 million players in 2007 to just 1.7 million in 2013.

But the final blow most likely was Mississippi River flooding that caused the casino to close for nearly a month in May 2011.

The company had tried to sell the facility, but was unable to find a buyer in four years.

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Illinois Blowback Gambling expansion fails again he Illinois legislative session has ended without a gambling expansion bill—despite Governor Pat Quinn’s announcement that he wanted a bill and Chicago Mayor Rahm Emanuel’s lobbying for a Chicago casino to be owned by the city and operate independently of the Illinois Gaming Board.

State Rep. Robert Rita, chief sponsor of the legislation in the House, said, “I’m going to ask for meetings with the administration of Governor Quinn and the administration of Mayor Emanuel. I want to hear what they have to say about the bill and what they would like to see.”

Gambling expansion previously had passed the Senate and House twice, so hopes were high once again. But Rita held public hearings in response to both opponents and supporters of the measure who said their voices had not been heard. He did not call for a vote on the measure.

In fact, as the session was winding down, he

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Illinois state Rep. Robert Rita

added two amendments. One would create a state-owned mega-casino in Chicago. Rita said this concept answered Quinn’s concerns about a city casino being independent of the state gaming board, plus overexpansion of gambling in Illinois.

Rita’s second amendment would create a smaller state-owned casino in Chicago and four others throughout Illinois, including one in the south suburbs. Horse racetracks would get about 600 slot machines, but only half as many as in previous bills.

Neither Quinn nor Emanuel responded to Rita’s amendments, but Rita said he will reach out to them this summer. “Chicago is going to be part of the mix if we’re going to move forward,” Rita said.

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SupremeS SuStain Sovereignty Case may not have much impact on off-rez casinos, however.

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he U.S. Supreme Court last month ruled in a 5-4 decision in Michigan v. Bay Mills Indian Community that the tribe, as a domestic sovereign entity, is protected from being sued by the state of Michigan.

The tribe had briefly operated a small, offreservation casino in Vanderbilt, in upstate Michigan. The case had been closely watched by Native American tribes concerned that an adverse ruling could lead to lawsuits against off-reservation gaming operations. It was sent back to the 6th Circuit Court of Appeals for disposal.

Justice Elena Kagan, writing for the majority, said the federal Indian Gaming Regulatory Act only allows a state to bring lawsuits challenging casinos operating on Indian lands. But the Bay Mills casino was opened outside the tribe’s reservation, beyond the law’s coverage. Therefore, Kagan wrote, since the casino does not fall under

federal gaming laws, it is subject to the ordinary tribal immunity that extends to off-reservation commercial activities.

Kagan noted that Michigan officials have other options for dealing with the casino, such as bringing a lawsuit against individual tribal officials or even prosecuting tribal members under criminal laws.

Bay Mills purchased 40 acres of land in Vanderbilt, about 100 miles from its Upper Peninsula reservation, in August 2010 with interest from a trust fund established under the Michigan Indian Land Claims Settlement Act of 1997, alleging it had not been adequately compensated for land ceded under 1800s treaties. The tribe opened an 84-slot Class III gaming facility there on November 3, 2010. Tribal officials claimed any land purchased with settlement act funds are eligible for tribal gaming under the Indian Gaming Regulatory Act. The state of Michigan disagreed and filed suit in

federal court in December 2010, claiming Bay Mills did not have permission from the federal government and violated the terms of the gaming compact and IGRA. The Little Traverse Bay Bands of Odawa Indians joined the lawsuit. The district court ruled that the Vanderbilt land would “likely” not qualify as Indian lands under IGRA, and issued an injunction that forced the tribe to close the casino in March 2011. It has remained closed since then.

Bay Mills filed an appeal, asserting sovereign immunity. The U.S. Court of Appeals for the Sixth Circuit reversed the federal court’s decision, declaring that federal courts lack jurisdiction under IGRA, and barred the state’s claim by the doctrine of tribal sovereign immunity.

While Michigan may not be able to sue the tribes, the court left open the ability to sue individual tribal officials, casino executives and even the players who would frequent the casino.

The Paskenta Band of Nomlaki Indians’ Rolling Hills Casino

Power Struggle

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nternal divisions in the power structure of the Paskenta Band of Nomlaki Indians in Corning, California, have led to the temporary closing of the Rolling Hills Casino, amid accusations of embezzlement.

In April, the non-Indian casino management made accusations that some tribal members were embezzling funds from the casino. According to some members of the tribal council, the charges were orchestrated by an attorney who has been involved in the political unrest of other tribes in the state, such as the Picayune Rancheria of Chukchansi Indians.

Several members of the tribal council walked out of the annual General Council Meeting in April when the chairman, Andrew Freeman, departed from the agenda and announced that members of prominent families (the Henthorn/Pata/Lohse families) would be disenrolled from the tribe.

The chairman claimed that by leaving the meeting the council members, including vice chairman David Swearinger, had effectively resigned. After the council members left the meeting Freeman attempted to disenroll the three families and to remove the council members.

However, within two weeks, both the Bureau of Indian Affairs and the National Indian Gaming Commission sent letters to the tribe confirming that the original council (Chairman Andrew Freeman, Vice Chairman David Swearinger, Treasurer Leslie Lohse, Secretary Geraldine Freeman and Member-at-Large Allen Swearinger) was the only legal authority of the tribe.

Rockin’ Kenosha Developers release casino plans lans recently were revealed for the Menominee Tribe’s proposed $810 million off-reservation Hard Rock hotel and casino at the former Dairyland Greyhound Park site in Kenosha, Wisconsin, even though Governor Scott Walker has yet to approve it.

Jeff Hook, vice president of marketing for Seminole Gaming, owner of Hard Rock International, said phase one would include a 400,000square-foot gaming floor with 2,700 slot machines, 100 table games and 24 poker games, plus an entertainment venue and retail space. A temporary casino will be open during construction. Phase two, to be completed four years later, would feature a hotel, spa and pool. The entire project would create 1,400 construction jobs, 3,300 direct permanent jobs and 1,800 indirect jobs.

Walker received approval from the U.S. Bureau of Indian Affairs to delay making a decision on the casino until February 19. He had said he would not approve it unless the state’s 11 Indian tribes agreed. The HoChunk and Potawatomi remain strongly opposed to the Kenosha casino.

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Border Wars

Is Vietnam done as Chinese destination?

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he ugly riots that broke out in May in Vietnam after an oil rig owned by a Chinese company was moved into disputed waters in the South China Sea may be the death knell for plans to build integrated casino resorts in the country. The riots began after the Chinese state energy company deployed a $1 billion oil rig about 150 miles off the Vietnamese coast in an area both countries claim as their own.

Riots spread across Vietnam to all major cities, resulting in at least six deaths and dozens of serious

BRAND LOYALTY Hyatt signs on with Melco in Manila

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elco Crown Resorts, the Philippines-listed subsidiary of Melco Crown Entertainment, has signed up Hyatt Hotels to manage one of the three hotels set to open this fall as part of Melco’s US$1.3 billion City of Dreams Manila mega-resort.

“Given the strong Hyatt brand name and the hotel’s ideal location, we believe Hyatt City of Dreams Manila will attract both business and leisure travelers, as well as meeting and incentive groups, from across the region,” MCR Chairman and President Clarence Chung said.

The hotel will feature 365 five-star rooms in two towers. Financial terms were not disclosed.

A Hyatt hotel is also included at Melco’s COD in Macau.

City of Dreams is the second gaming resort slated to open in October at the governmentsponsored Entertainment City district on Manila Bay. City of Dreams Manila is a joint venture between Macau-based Melco and Belle Corp., a wholly owned subsidiary of Philippines retail giant SM Group.

The Hyatt hotel at City of Dreams Macau

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Global Gaming Business JULY 2014

injuries. China sent planes and ships to evacuate Chinese nationals and issued a warning to its citizens to avoid Vietnam.

Although the Vietnamese government sent police out in force to quell the riots, the damage had been done. Even Taiwanese citizens and companies were targeted by rioters.

The situation had a severe impact on tourism in Vietnam, particularly to the country’s foreignersonly casinos. Reports from the Grand Ho Tram indicate that few Chinese remained after the first day of riots and gaming revenue tumbled to virtually nothing.

Since the territorial dispute has just gotten under way and there is little indication of a swift resolution, the question has been raised about the long-term impact. An estimated 1.8 million Chi-

nese tourists visited Vietnam last year, up almost 35 percent from the previous year. In addition to Ho Tram, several developers have plans for large-scale integrated resorts in areas such as in Da Nang, Lang Song, Vung Tau and Phu Yen. Nguyen Van Tuan, Vietnam’s tourism minister, pleaded with the government to prevent “aggressive, discriminative and unfair actions from happening to Chinese tourists.”

The dispute may have an impact on the Philippines as well. Although the disputed territory does not involve the Philippines, there are other areas of the South China Sea that are claimed by both China and the Philippines. And Vietnam’s prime minister announced on Wednesday that the country is teaming up with the Philippines to oppose China’s “illegal” actions, which may turn China’s tourism ire on both countries.

Burning Issue Macau to ban smoking in casinos he government of Macau will ban smoking on the city’s public casino floors by October 6, meaning gamblers will have to retire to sequestered, airport-style smoking rooms to light up.

The change is designed to improve air quality for casino workers from the unacceptable rates achieved by a partial ban enacted in 2013 that left 50 percent of gaming areas available to smokers and moved operators to shift table games, and staff, into the smoking halves.

The ban will not apply to VIP rooms, although technically it will require half their total floor area to be non-smoking.

It will, however, affect anywhere from half to 70 percent of the tables of the major operators.

“We think a full ban will have negative impact on (gross gaming revenue) as the speed of the game could slow down,” Morgan Stanley wrote in a note to investors. The investment bank said full smoking bans in place in the United States and Australia cut initial revenues by 4 percent and 20 percent, respectively.

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In Macau the burden is likely to hit hardest among operators in older, smaller properties with limited space for building the smoking rooms.

The ban also could exacerbate tensions with the labor force, which is in seriously short supply in the market and protected from imported competition by government policy. Almost 60 percent of casino staff say they don’t want to work in the VIP rooms where smoking will be allowed, according to a recent survey conducted by the University of Macau on behalf of the Health Bureau, although a smaller number, just under 13 percent, said they would consider it in exchange for additional compensation.

Macau’s casinos generated US$45 billion in gaming revenue last year, the highest in the world by far, and most of it is contributed by gamblers from mainland China, which is home to more smokers than anywhere in the world and has one of the highest smoking prevalence rates. About one-quarter of the population smokes, compared to the global average of less than 20 percent.

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Hope in Crimea From Russia with love—

Franklin Roosevelt met early in 1945 to discuss the reorganization of Europe just and casinos a few months prior he head of the Russian government’s new to the defeat of Nazi Crimea Affairs Ministry said the territory will Germany. look to Singapore as the gaming model for reviv“We will try to put ing an ailing economy that has sunk lower since our boldest dreams into practice,” Savelyev said.

Russia seized Crimea from the Ukraine in March.

Tourism is still one of the mainstays of the econ“I blew the dust off the book Singapore: From omy of the Crimea, which National Geographic Third World to First by Lee Kuan Yew to have an- magazine named one of the world’s top travel destiother read when I became minister,” said Oleg nations last year, calling it “a diamond suspended Savelyev. “We will pursue Singapore’s model in from the south coast of Ukraine.”

Crimea; we’ll ensure a comfortable business enviThe peninsula attracted 6 million visitors last ronment there.” year, about 70 percent of whom were Ukrainian and Lee, who ruled Singapore from 1959 to 1990, 25 percent Russian. But those numbers have plumturned the former impoverished British colony meted since annexation as the government in Kiev into one of the wealthiest countries in the world. urges people to boycott the region and skirmishes The World Bank ranks Singapore No. 1 on its an- continue between Ukrainian forces and pro-Russian nual “ease of doing business” survey. Russia is separatist rebels in eastern Ukraine.

92nd, just behind Albania and Barbados.

Russia seized the territory after bloody mass “Regulatory principles in Crimea will be much demonstrations in the Ukraine in February forced better, simpler than in the rest of Russia,” said Kremlin-backed President Viktor Yanukovych to flee Savelyev. “The region will not have the stifling bu- to Russia. reaucratic system that Russia is notorious for. Our Since then, the Ukrainian government has task is not to replicate the Russian model, but to banned all lenders operating under Ukrainian law create a much better one.” from the region, and nearly every bank on the Casinos figure prominently in the plan, and peninsula has closed. All transactions currently are will likely be located in and around Yalta, the Black cash only because credit and debit cards no longer Sea resort that was a favorite vacation spot for the work. Another economic pillar, shipping, is also masses in the Communist era and is famed as the foundering. The economy now is heavily dependent place where Joseph Stalin, Winston Churchill and on subsidies from the Kremlin to survive.

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Going Underground London casino gets risqué

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ondon’s Hippodrome Casino has opened a new underground gambling venue where dancing girls perform in cages above the tables.

Lola’s Underground Casino—named for Lola McGuire, an Edwardian chorus girl famous for her illicit West End card games and drinking parties—is believed to be a first for Britain, where historically the mass marketing of casinos has been tightly restricted, a situation that did not change until the promulgation of the 2005 Gambling Act. Visitors to the casino, which opened at the storied Leicester Square venue in July 2012, have exceeded initial forecasts of about 20,000 a week and currently stand at about 32,000, owner Simon Thomas said.

“To accommodate future growth we wanted to be well-prepared and open a casino that

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London’s Hippodrome Casino

echoes what Vegas does brilliantly—putting the entertainment on the same floor as the gambling, much closer to the tables,” he said.

“Hitherto this would have been impossible for any U.K. casino, but we’re bringing to life the vision and spirit of the 2005 Gaming Act, which now allows venues like ours to offer a much more rounded entertainment experience.”

Lola’s is located below the main auditorium of the Hippodrome, which has housed a circus, music halls and a nightclub in its 100-plus years of history.

Bookies Bashed Shop closings ‘inevitable,’ says Gala Coral .K. gaming giant Gala Coral said betting shop closures are “inevitable” in the wake of tough new measures by the government to curb the proliferation of the shops in high streets nationwide along with the lucrative electronic table games they contain.

The games, known as fixed-odds betting terminals, comprise the majority of bookmakers’ revenues, but critics contend they prey on the poor and those vulnerable to gambling addiction, and the government’s crackdown includes a tax increase on FOBT win from 15 percent to 25 percent.

Coral said that despite taking steps to address concerns about problem gambling through a new industry-sponsored code of conduct, the government “has continued to react to scare-mongering and misleading information about the impact of FOBTs on problem gambling.

“As a result of the announced changes, and consistent with statements made by our competitors, the group regards shop closures, and therefore job losses, as inevitable,” the company said.

Rivals William Hill and Ladbrokes have both announced similar plans to downsize.

Gala Coral’s retail division saw EBITDA fall 19 percent to £38.1 million in the most recent quarter compared with the same period last year as a result of unfavorable football results and the phasing of machine content costs.

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Island Hopping Jamaica gaming generated $4.5 billion

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Echo already operates the Treasury Casino in Brisbane.

Queensland Quiz Echo, Crown short-listed for Brisbane casino

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he government of Queensland has named Brisbane incumbent Echo Entertainment, rival Crown Resorts and two Chinese companies to its short list for a casino license in the Australian state.

Hong Kong Far East Consortium, a joint venture that includes retail jewelry giant Chow Tai Fook, and Greenland Investment, a state-owned property development group based in Shanghai, complete the list, which was announced on the heels of the state’s conditional approval of two other Chinese investment groups—Aquis at the Great Barrier Reef and ASF—for mega-resorts totaling more than A$15 billion.

Aquis and ASF’s Broadwater Marine will be located, respectively, on the state’s far northern coast near Cairns and in the popular tourist destination of Gold Coast on the Pacific Ocean, where Sydney-based Echo has long been the sole operator. Echo also runs the only casino in Brisbane.

Four other proposals did not make the cut. They included a bid supported by Australian golfing great Greg Norman planned for Great Keppel Island near the Barrier Reef, a Brisbane bid by New Zealand-based casino operator SkyCity Entertainment and a Gold Coast bid by Australian property developer Lend Lease.

Queensland will award three licenses in all as part of the largest expansion of casino gaming in Australian history. Reeling from falling resource exports and deeply in debt, the state is banking on the Asian tourism boom to revive its fortunes, led by China’s increasingly wealthy and gambling-obsessed millions.

Plans for the $8.15 billion Aquis, the brainchild of Hong Kong financier Tony Fung, include nine hotels, a 25,000-seat stadium, a golf course and a lake and reef lagoon.

Broadwater Marine is pegged at $7.5 billion and likewise envisions an expansive mixed-use offering comprising hotels and luxury residences with the addition of a marina and a full-scale cruise ship terminal.

Like Aquis, the project must also obtain planning and environmental approvals to move forward.

The Brisbane finalists, meanwhile, have been asked to detail how they will transform an area known as Queen’s Wharf in the city’s central government and business district.

Echo, which operates the Star casino and hotel in Sydney, has offered to spend upwards of $1 billion to preserve its Brisbane monopoly in the face of an aggressive lobbying campaign by James Packer’s Crown, which has pledged a similar amount in its bid for the license. Echo wants permission to develop a new resort to replace its Treasury Casino and Hotel, which is housed in an aging building that is historically listed and cannot be expanded. The company’s Jupiters Hotel and Casino in Gold Coast is similarly in need of reinvestment and expansion.

peaking at the recent 2014 Gaming Industry Summit in Jamaica, Jamaican Ministry of Finance and Planning Horace Dalley said the island’s gaming industry has generated significant revenue in Jamaican Ministry of the past three years. The government earned $2.9 bilFinance and Planning lion in 2011-12, $3.8 billion in 2012-13 and $4.5 Horace Dalley billion in 2013-14. “This is not the kind of revenue intake in the economy that any administration can ignore,” Dalley said.

He noted despite the increasing revenues, there still is room for growth and expansion which would create jobs and enhance the economy. In that regard, phone and text betting will be introduced to expand sports betting.

Recent amendments to the Betting, Gaming and Lotteries Act are making the expansion of sports betting possible, Dalley noted. The amendments also will provide the government with more effective tools to combat illegal gaming.

Cleaning Up

MEXICO Mexico targeting casino irregularities Juan Jose Rojasexico is in the process of updating its nearly Cardona, Mexico’s 70-year-old gambling laws to clarify numerous provisions. The new laws could be finalized later so-called casino czar this year. SEGOB, the branch of Mexico’s Interior Ministry that oversees gaming issues, also is stepping up activities in regard to illegal gambling. In October, the government declared casino permit holders may not lease their concessions to other operators and also reduced the span of a casino permit from 40 years to 25 years.

In a recent crackdown, the Mexican Auditors Tax Administration shut down the Golden Island Casino and Casino Life in Merida over tax irregularities. In addition, the Circus Casino was closed for operating without a permit and failing to issue tax receipts. Another three of the city’s four remaining casinos closed voluntarily. Only Juega Juega remains open.

In addition, last month 24 betting and slots operations closed in northern Mexico, including the Playboy Club casino in Cancun. All of these facilities were operated by Entretenimiento De Mexico, or EMEX. As a result, SEGOB revoked EMEX’s permit that was issued by the government of former President Vicente Fox in 2005.

EMEX is headed by Juan Jose Rojas-Cardona, the so-called casino czar who was arrested in 1994 in New Mexico with 17 pounds of marijuana in the trunk of his rental car. Rojas-Cardona skipped bail but the charges were later dismissed, leading to some speculation that Rojas-Cardona had become a federal informant. He’s been accused of defrauding gaming device maker Aristocrat Technologies and Arizona’s Lac Vieux Desert Band of Indians. In 2007 he was the target of a failed assassination attempt that killed his driver.

M

JULY 2014 www.ggbmagazine.com

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NUTSHELL

“They Revenue from mobile gaming will reach $11.4 billion in 2014, up from $5.6 billion in 2009, according to Statista, a statistics company based in New York. The rise is tied to greater use of smart phones and other mobile devices and new companies offering new and better mobile games as technology increases. SLS Las Vegas on the Las Vegas Strip, which is set to open Labor Day, is conducting a job fair for military veterans. The resort, owned by SBE Entertainment of Los Angeles, has received more than 90,000 job applications. About 1,400 jobs have already been filled, and there are about 1,800 still available. The veterans are applying for a wide variety of positions like front desk, security and hospitality, the company said. SBE has also announced that SLS will be part of the Preferred Hotels & Resorts guest loyalty program, which includes 450 independently-owned hotels and resorts, and that it will be affiliated with a new independent hotel collection through Hilton Worldwide. The former Atlantic Club, which closed only four months ago, will reopen—but not as a casino. Florida-based TJM Properties, Inc. bought the Atlantic Club last month for an undisclosed sum, and has indicated it plans to reopen it as a non-casino hotel. TJM did the same last year with another former Boardwalk casinohotel when it purchased the Claridge from Caesars Entertainment for $12.5 million. The Claridge Hotel was reopened over Memorial Day weekend as a 500room luxury non-gaming hotel. TJM spokeswoman Sherry Amos indicated in an interview that the operator is likely to repeat the business model that brought the Claridge back to life as an independent hotel, after serving for years as an adjunct tower to neighboring Bally’s Atlantic City. Officials with the state of North Dakota recently informed the Turtle Mountain Band of Chippewa Indians that the tribe may not move forward with plans for an off-reservation casino in Grand Forks. State officials said they would not make exceptions to state law, plus the governor and the U.S. Department of Interior also would have to approve the project. Grand Forks City Administrator

Todd Feland said the city also has dropped the project for now.

Japanese pachinko hall operator Dynam Japan Holdings has applied for Macau regulatory approval to operate up to 100 pachinko-style machine games in a casino in the city. Dynam Chairman Yogi Sato said the machines are slated for a new hotel opening in September, which means it is likely the Prague Harbourview under construction by Macau Legend Development at the latter’s Fisherman’s Wharf resort complex. Dynam last month entered into a six-month extension of an agreement with Singapore-based games developer I Got Games to develop software for “next-generation pachinko machines” to be operated in Macau. Indiana lawmakers will form a study committee this summer to review and recommend action to help the state’s gaming industry, which has felt the impact of new casinos in Ohio and Illinois over the past few years— in particular, a new casino in Cincinnati that has hurt Indiana’s three casinos along the Ohio River. The industry has raised billions of dollars for the state, local schools, municipalities and capital projects since the mid-1990s. It has become the state’s third largest source of revenue, behind sales and income taxes.

Proposals to help the state’s gaming industry remain competitive include allowing casinos to move off riverboats and build on land, and permitting racinos.

The rock group KISS is planning a residency at the Joint at the Hard Rock in Las Vegas. The monochromatic quartet led by Gene Simmons will kick off their act in Vegas this fall, following other rockers including Guns N’ Roses, Def Leppard and Motley Crue.

Success Universe Group, 49 percent owner of Macau’s Ponte 16 casino resort in Macau, plans to sell its 55 percent interest in the gambling cruise ship M.V. Macau Success. The company said it is negotiating with an independent third party interested in the boat, which also contains 200 guest rooms. The Macau Success generated a 4 percent increase in turnover last year to HK$84 million and recorded a profit of approximately $500,000, the company said.

CALENDAR July 14-16: GIGSE (Global iGaming Summit & Expo) 2014, Hyatt Regency, San Francisco. Produced by Clarion Gaming. For more information, visit gigse.com.

August 11-13: OIGA Conference & Trade Show 2014, Cox Centre, Oklahoma City. Produced by the Oklahoma Indian Gaming Association. For more information, visit oiga.org.

August 12-14: Australasian Gaming Expo 2014, Sydney Exhibition Centre, Glebe Island. Produced

by Gaming Technologies Association. For more information, visit austgamingexpo.com.

September 9-12: 10th European Conference on Gambling Studies and Policy Issues, Helsinki, Finland.

Produced by the European Association for the Study of Gambling. For more information, visit easg.org.

12

Global Gaming Business JULY 2014

September 30-October 2: Global Gaming Expo 2014, Sands Expo & Convention Center, Las Vegas. Produced by Reed Exhibitions and the American Gaming Association. For more information, visit globalgamingexpo.com.

October 1-4: IMGL 2013 Autumn Conference, Grand Hotel, Oslo, Norway. Produced by the International Masters of Gaming Law. For more information, visit gaminglawmasters.com.

October 21-22: Balkan Entertainment and Gaming Expo 2014, Inter Expo Center, Sofia, Bulgaria. For more information, visit balkangamingexpo.com.

November 5-6: Arizona Indian Gaming Association Expo 2014, Fort McDowell Hotel & Casino, Scottsdale, Arizona. Produced by AIGA. For more information, visit azindiangaming.org.

Said It”

“80 is the new 60.”

—Sheldon Adelson, responding to a shareholder’s question about whether he was going to retire upon reaching the ripe old age of 80

“The only organization that has a legitimate reason to oppose legalized gambling is the mob. They stand to lose a cut of their business. As long as there are degenerate gamblers, the mob will be around to take their action. The majority of the population, however, will welcome decriminalizing the activity.”

—Marisa Lankester, a former illegal bookmaker and the author of Dangerous Odds: My Secret Life Inside a Billion Dollar Illegal Sports Betting Operation, suggesting that there is no reason to continue to criminalize sports betting

“Caesars and the citizens of the commonwealth deserve to know the truth about the conduct of the leader of the Massachusetts Gaming Commission.”

—Caesars Entertainment CEO and Chairman Gary Loveman announcing Caesars’ plans to appeal a ruling that dismissed the gaming company’s lawsuit against Massachusetts Gaming Commission Chairman Stephen Crosby

“Has it affected my personal life? Has it affected my professional life? Have I lost all my money? There’s nothing negative about what I’ve been doing lately.”

—Dana White, UFC president, on his reputation for compulsive gambling

“As I think through it, unless I’m convinced otherwise, it’s not something I would support. I’m more of a traditionalist when it comes to betting. The state has done fine on sports and horse race betting and other events.”

—Brian Sandoval, governor of Nevada, on a bill that would allow betting on the U.S. presidential election and other federal contests

“Anybody who’s played Texas hold ‘em knows that it’s a game of skill. Those that are good at it consistently win at it.”

—Helo Hancock, spokesman for the Coeur d’Alene, Idaho tribe, which is arguing in federal court that Texas hold ‘em is a game of skill, and therefore can’t be banned by the state

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AMERICAN GAMING ASSOCIATION

Getting to Know Us Campaign takes the understanding of our industry to the next level

By Geoff Freeman, President & CEO, American Gaming Association

T

he American Gaming Association recently launched the “Get to Know Gaming” campaign, which aims to promote the value of our industry, combat outdated stereotypes and pave the way for regulatory policies that encourage innovation and financial efficiencies—like never before.

Get to Know Gaming is the AGA’s most aggressive, coordinated effort to date to promote gaming across the country. It’s critical for our industry’s positive story to be heard and for policymakers to embrace a regulatory environment that encourages industry growth.

PROMOTE THE VALUE OF GAMING Gaming is an economic engine that enhances communities around the globe. Gaming spurs economic development, creates jobs and provides essential tax revenues to local communities.

According to a 2012 report conducted by the Brattle Group, the commercial casino industry generates $125 billion each year in direct and indirect spending. This spending includes purchases at businesses in the surrounding area and employees’ salaries and benefits.

Our industry creates jobs far beyond the casino floor. Gaming-related jobs span a range of areas, including those in accounting, hotel management, technology, software and retail. The Get to Know Gaming campaign will promote the multi-faceted employment opportunities our industry provides and demonstrate that casinos provide good-paying jobs and serve as a diverse employer.

COMBAT OUTDATED STEREOTYPES Communities with casinos understand that our industry is a valuable community partner. Many community leaders including mayors and police chiefs indicate that casinos have enhanced their communities. Casinos drive visitors to locally owned, small businesses including restaurants, boutiques and other shops.

Furthermore, non-gaming amenities are a critical component to the entire casino enter14

Global Gaming Business JULY 2014

tainment experience. Get to Know Gaming will affirm the positive benefits of gaming through authoritative research and broadcasting these very facts, which many already realize: casinos serve as an enhancement and partner to local communities.

Moreover, when gaming opponents misinform the public about gaming by retreading tired myths and outdated stereotypes, the AGA will assert its voice, serving as an unapologetic champion of gaming.

PAVE THE WAY FOR AN EFFICIENT, INNOVATIVE REGULATORY ENVIRONMENT Voters’ support of casinos has reached an all-time high. Recently released results from a national survey conducted by Democratic pollster Mark Mellman, CEO of the Mellman Group, and Republican pollster Glen Bolger, founder and partner of Public Opinion Strategies, show that American voters have positive views of our industry, and

ment is not afforded to our industry. Instead, many states have adopted the “tax and torture” model for casino regulation, which is unsustainable and limits our industry’s ability to innovate and to reinvest in further developing competitive entertainment product.

The Get to Know Gaming campaign will pave the way for policymakers to begin to see our industry for what it is—an economic driver and community partner. In turn, this campaign will lead the way toward a more efficient regulatory environment that will allow our industry to thrive.

GET INVOLVED IN THE CAMPAIGN Get to Know Gaming is a multi-year campaign—it took us decades to arrive to this point and it will take dedicated efforts from the more than 800,000 gaming employees across the U.S. whose jobs depend on gaming in order for us to secure a modernized regulatory environment.

“

Our industry creates jobs far beyond the casino floor. Gaming-related jobs span a range of areas, including those in accounting, hotel management, technology, software and retail. The Get to Know Gaming campaign will promote the multi-faceted employment opportunities our industry provides and demonstrate that casinos provide good-paying jobs and serve as a diverse employer.

believe casinos create jobs, strengthen communities and support local businesses. Voters have given policymakers permission to treat casinos the same as any other mainstream businesses. It’s time policies match voters’ perspectives.

Many industries receive tax subsidies and breaks from governments as business incentives to enter or remain in a community. Yet, this treat-

”

Please stay up to date with the positive messaging and research that we’ve begun to roll out, which unequivocally reveals the positive impact our industry has throughout this country. Visit www.gettoknowgaming.org. Together with unified voice to broadcast gaming’s tremendous value, we will facilitate growth and thrive.

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FANTINI’S FINANCE

A Dose of Reality The uninspired launch of iGaming in the U.S. isn’t sitting well with everyone

G

ive 888 CEO Brian Mattingley credit for candor.

While other executives have downplayed the slow start to online gaming in the U.S., Mattingley recently told Bloomberg he has been absolutely shocked.

Nor have the dismal results been improving as expected for a young industry that, all conventional thinking would have it, is bound to ramp up.

In fact, the average number of poker players online in New Jersey, Nevada and Delaware has actually declined in recent weeks.

Delaware, with an average of six poker players online at any one time, doesn’t appear to have enough to justify operating.

Last month, New Jersey online operations took in just $11.4 million, which annualizes to $140 million compared to initial estimates that ranged as high as $1.2 billion.

Explanations for the slow start are now wellknown—many banks won’t process gaming transactions, most New Jerseyans still don’t know online gaming is legal, unlicensed offshore books are poaching players, and player registration is intimidating and time-consuming.

Most of those issues will be resolved, and online gaming should grow.

But it is worth considering the possibility that online gaming will not reach the big numbers so many forecast.

Nor is iGaming assured of being profitable.

Right now, online gaming operations in the U.S. are losing money. That is in part due to start-up costs, and in part to the low levels of play.

But many investors, wide-eyed over huge revenue projections, don’t appreciate the high cost of marketing and player acquisition that cuts deeply into that, and otherwise don’t have the expenses of brick-and-mortar properties such as housekeeping, slot machines and property maintenance and refurbishment.

Just use Sweden’s Cherry as one example. The company grew online revenue 43 percent in the first quarter to 39.1 million krona as it campaigned to grow its number of registered online players by 12 percent to 404,000.

But online earnings before interest and taxes fell 16

Global Gaming Business JULY 2014

By Frank Fantini

from minus 900,000 krona ($135,000) last year to minus 5.6 million ($840,000) thanks to 20.2 million krona ($3 million) invested in marketing, most of that to acquire those players. Last year, Cherry spent only 400,000 krona in first quarter marketing.

Cherry’s conventional gaming business, meanwhile, continued to be profitable.

Another issue is whether online gaming is as appealing in the U.S. as it is in the U.K. and Europe.

American casinos are entertainment centers offering a full range of experiences that make them much more fun than their small, gambling-only European counterparts.

Sitting at home spinning a slot machine on your telephone just doesn’t have the same appeal as backslapping a friend who just hit a jackpot and then celebrating in a restaurant or nightclub.

Finally, social gaming has emerged to be a powerfully attractive form of interactive entertainment.

A social gamer can play his or her favorite slots on a cell phone and never have to worry about credit cards not being processed, geolocation glitches or registering with a state regulatory agency.

So, iGaming will have a growing future in the U.S., but it might not be a quick and easy bonanza.

Explanations for the slow are now well-known— ‘‘start many banks won’t process gaming transactions, most New Jerseyans still don’t know online gaming is legal, unlicensed offshore books are poaching players, and player registration is intimidating and time-consuming.

’’

LAND-BASED BLUES As disappointing as online gaming’s start in the U.S. has been, the existing land-based business hasn’t been lighting up the skies either.

American casinos had their best year-over-year comparison in April since the bottom fell out in December, and improvement has been steady so far

this year, despite a wicked winter that affected virtually every market.

The improvements in national gaming revenue comparisons are illustrated here: MONTH

YOY

December January February March April

-7.3 percent -3.1 -4.8 -0.7 -0.9

The improving trend has been welcomed by some as evidence that customers are returning.

But there isn’t clear good news yet.

First of all, revenues are still down, despite more casinos being in operation than a year ago. On a same-store basis, revenues fell 4.34 percent in May, an improvement over the year-to-date decline of 7.1 percent heading into April, but still a decline.

Nor was there a big bounce back from pent-up demand from those weary of the long and severe winter.

The doldrums have continued despite an economy that has improved, albeit with some bumps in the road.

Time will tell whether this is a new normal that we have to accept, or whether it will correct if the economy continues to improve.

Meanwhile, another question might soon be worth some thought and analysis. Is the proliferation of various forms of electronic entertainment taking time—and therefore money—away from traditional brick-and-mortar providers of entertainment?

That could be another aspect of the new normal independent of the economy.

Indeed, the rise of social gaming has ramifications that are surely unforeseen and unappreciated.

We may look back in several years and see an entirely different landscape for online and brick-and-mortar gaming based on how rapidly evolving social gaming turns out.

Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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Federal action

A Conversation with Interior Assistant Secretary Kevin Washburn

Tribal gambling has ‘hijacked’ federal Indian policy By dave Palermo

K

evin Washburn is quick to respond when asked what he believes to be the U.S. Department of the Interior’s most significant American Indian success story under the Obama administration.

“Certainly getting land into trust has got to be one of the biggest accomplishments,” says the Oklahoma Chickasaw, who was appointed in 2012 as Interior’s assistant secretary for Indian affairs.

Breaking a logjam of fee-to-trust applications stockpiled during the Bush administration has, indeed, been a major accomplishment of President Obama’s Interior and Bureau of Indian Affairs (BIA).

The agencies have processed some 1,700 requests since Obama took office, placing 250,000 acres of Indian land in federal trust for housing, health care, education, economic development, community infrastructure and other governmental services.

The Bush administration had acted on only 17 applications and placed a virtual moratorium on trust lands for gambling.

Restoring ancestral lands is one of a litany of Native American achievements under the tribal-friendly Obama administration.

Executive Accomplishments Obama’s White House has increased the BIA budget, settled Cobell trust litigation and a number of water rights cases, enacted the Tribal Law and Order Act, permanently authorized the Indian Health Care Improvement Act (IHCIA) and reformed reservation business leasing policies.

And for the first time in 40-plus years, Washburn is promulgating new regulations to what Indian advocates regard as a “broken” federal process for recognizing tribes as governments.

“The history of the United States and tribal nations is filled with broken promises,” Obama said in an Indian Country Today editorial. “But I believe that during my administration we’ve turned a corner together.

“We’re writing a new chapter in our history—one in which agreements are upheld, tribal sovereignty is respected, and every American Indian and Alaskan native who works hard has the chance to get ahead.”

Reclaiming Indian territory has been particularly gratifying, Washburn says, because ancestral lands go to the very heart of tribal identity, sovereignty and selfdetermination.

“It’s all about restoring homelands to tribes,” he says—millions of acres lost due to generations of failed federal Indian policies that decimated indigenous communities and tribal governments.

Gaming’s Shadow The restoration has not been easy because, in Washburn’s words, modern-day federal Indian policy “has been hijacked” by tribal government gambling.

“Gaming casts an out-sized shadow on everything we do,” says Washburn, tenured dean of the University Of New Mexico School of Law. “One of President Obama’s highest priorities is restoring tribal homelands, and we have approved nearly 1,700 applications for land into trust in the last five 18

Global Gaming Business JULY 2014

and a half years. Only a small handful of those—in the neighborhood of a dozen—have explicitly been for gaming.

“But gaming seems to be a big part of the discussion.”

Recent U.S. Supreme Court and federal court decisions stemming from casino-related litigation— particularly Carcieri v.

Salazar, Salazar v. Patchak and Big Lagoon Rancheria v.

California—have seriously Interior Department Assistant Secretary impacted Interior’s ability to for Indian Affairs Kevin Washburn place Indian land in trust.

But efforts at getting congressional remedies to the land/trust court decisions have been stymied by legislators opposed to Indian casinos, particularly Senators Dianne Feinstein of California, Jack Reed and Sheldon Whitehouse of Rhode Island, Charles Schumer of New York and Dick Durbin of Illinois.

The political and public pushback against a $28 billion Indian gambling industry with some 425 casinos in 28 states has created havoc with a number of tribal issues, including taxation and health care.

In fact, virtually all Indian matters on Capitol Hill are today viewed through the neon prism of tribal casinos, which generate nearly 30 times the BIA’s $3 billion budget.

“There is a definite backlash in Congress and on the local level,” tribal lobbyist and Oklahoma Cherokee Jana McKeag told attendees at last year’s Global Gaming Expo.

During a decade-long push to get congressional authorization of the IHCIA—an effort achieved with passage in 2010 of the Affordable Care Act— Paiute-Shoshone Rachel Joseph was confronted by legislators asking why Indians couldn’t fund health care with casino money.

“You hear the remark, ‘Hey, there are all these tribes making all this money… they can pay for it themselves,’” Joseph said in 2007. “You definitely have congressional representatives using that argument in opposition to Native

“A world in which only some tribes are allowed to have land in trust is unfair. We feel urgency because we are troubled by the existing inequities.”

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American health-care programs.”

Indigenous groups working through BIA’s Office of Federal Acknowledgement (OFA) have long regarded the process as being unfair, with millions of dollars in legal fees and research and decades of bureaucratic delays often leading to unjust determinations.

Yet Washburn’s efforts to streamline the process have, predictably, been rebuffed by politicians and anti-gambling groups fearing additional casinos.

“We have recognized only 17 groups as tribes through this process since 1978,” Washburn says, while Congress has recognized roughly twice that number since 1934, when the Indian Reorganization Act ended a period of federal termination of Indian tribes.

“But the first question anyone asks seems to be, ‘Does this mean that we are going to have gaming in our backyard?’

“It’s not uncommon for it to take over a decade for a newly recognized tribe to develop a gaming opportunity, if it ever happens at all,” Washburn says.

Native Participation Much tribal progress can be credited to Obama’s American Indian appointees, which include Navajo Hilary Tompkins as Interior solicitor. Tompkins has worked with Washburn and deputy assistant secretary Larry Roberts, a Wisconsin Oneida, in developing an administrative system to work within the legal constraints of the Carcieri decision.

Navajo Charles Galbraith was named associate director of the White House Office of Intergovernmental Affairs and Cherokee Kimberly Teehee was made senior adviser on domestic policy. Teehee was succeeded by Jodi Gillette, a citizen of the Standing Rock Sioux Tribe.

Those and other appointments mean Indian issues are no longer the sole province of the BIA. “There was a day when the assistant secretary led Washington on all Indian policy, across the government,” Washburn says. “Now we have people in the White House, and it really, really makes a difference.”

Many Interior reforms began with Secretary Ken Salazar and Washburn’s predecessor, Pawnee John Echo Hawk, who resigned in 2012 to become general authority of the Church of Jesus Christ of Latter-day Saints.

But Washburn, a scholar in Indian law, tribal government gambling and law enforcement, is generating a great deal of kudos from Indian Country.

“I think he has been a fairly courageous assistant secretary, particularly considering the administrative restraints he operates in,” says Lumbee Arlinda Locklear, a pioneer attorney in Indian law.

“The assistant secretary, with his knowledge and his background, is certainly better equipped to handle the job than many of his predecessors,” says another tribal attorney who requested anonymity.

The myriad needs of the nation’s indigenous peoples—be it health care, housing, education, law enforcement or government contracts—pose quite a challenge for a poorly funded, heavily bureaucratic Interior and BIA. “It’s a thankless, crappy job,” a tribal attorney says. “You don’t have the resources. You don’t have the manpower. And everybody’s mad at you all the time.”

“I give Washburn’s administration good marks,” says tribal attorney Michael McBride. “I think they’re doing the best they can under the circumstances.”

Carcieri And The Land/Trust Quandry No federal law was more devastating to American Indians than the Dawes General Allotment Act of 1887, which distributed reservation land to individual tribesmen with the misguided intent of making them farmers. Non-allotted land was sold to non-Indians, robbing tribes of two-thirds of the 138 million acres held in federal trust when the act was passed.

The federal effort to terminate tribes ended with the Indian Reorganization Act of 1934, which empowered indigenous governments and returned some 2 million acres to tribal control.

But a modern era of anti-Indian sentiment on the once-tribal-friendly U.S. Supreme Court began with chief justices William Rehnquist (1986-2005) and successor John Roberts. Court opinions have gradually eroded the legal doctrine of tribal sovereignty.

“A majority of the Supreme Court, given their opinions, is conducting their own tribal termination project,” Blackfeet lobbyist Tom Rodgers says.

Political partisanship has rendered Congress powerless, says Matthew Fletcher, a member of the Grand Traverse Band of Ottawa and Chippewa Indians and director of the Indigenous Law & Policy Center at Michigan State University, leaving Indian policy to the courts.

Particularly disturbing to Indian advocates was the high court’s 2009 decision in Carcieri v. Salazar in which justices ruled that Interior could not place land in trust for tribes not “under federal jurisdiction” in 1934.

The 6-3 opinion was a victory for then-Rhode Island Governor Donald Carcieri, who feared the Narragansett tribe was attempting to place 31 acres into trust for a casino. The tribe said the land was intended for housing. That ruling was followed in 2012 by Salazar v. Patchak, which extended for several years the period a lawsuit could be filed over a land/trust decision. That case was fueled by a Michigan man’s opposition to a Potawatomi Indian casino.

Washburn and solicitor Tompkins developed an administrative strategy—internally referred to as the “M opinion”—for dealing with land/trust applications in the wake of Carcieri. It requires a tribe to prove it was “under federal jurisdiction” with passage of IRA in 1934.

The criterion can include enrollment in tribal boarding schools or being a signatory to federal contracts.

While Interior’s Washington office reviews all gambling fee-to-trust applications, non-gambling land/trust decisions are made by the agency’s regional offices.

“We must follow Carcieri as long as it is the law, but we certainly aren’t going to interpret it any more broadly than we need to,” Washburn says. “We disagreed with it when it was being litigated and we don’t think it’s a very good interpretation of what the law ought to be.

“The good news is once we decide a tribe does not have a Carcieri problem, future acquisitions by that tribe are probably OK as well.”

The bad news is the 50-plus tribes recognized since 1934 by Interior’s OFA or through an act of Congress remain vulnerable to the Carcieri ruling. Some don’t pass the “M opinion” test, creating what tribal advocates decry as a two-class system of tribes.

“A world in which only some tribes are allowed to have land in trust is unfair,” Washburn says. “We feel urgency because we are troubled by the existing inequities.”

The myriad needs of the nation’s indigenous peoples—be it health care, housing, education, law enforcement or government contracts—pose quite a challenge for a poorly funded, heavily bureaucratic Interior and BIA. JULY 2014 www.ggbmagazine.com

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The Aboriginal Lands Coalition claims federal law and Interior regulations are being used and abused by indigenous communities and big-moneyed developers who, in some cases, are encroaching on the ancestral lands of other tribes. The lack of unity in Indian Country hinders efforts to get a Carcieri fix out of Capitol Hill.

“All I can say is there cannot be two classes of citizenry in Indian Country,” says New York Oneida Brian Patterson, president of the United South and Eastern Tribes (USET), which has been leading the lobby effort for a congressional “fix” to the Carcieri ruling.

Washburn has also implemented a “Patchak patch,” doing away with a 30-day waiting period on Interior land decisions, speeding up the process to discourage litigation.

“The Patchak ruling, by exposing land-into-trust decisions to litigation after the acquisition, undermines economic development in Indian Country,” Washburn says.

No Remedy In Sight With strong opposition from Senate leaders, there appears to be no easy solution to the land/trust issue. The politics of a congressional solution to Carcieri and Patchak are complicated by the fact some tribes are also disturbed at the spread of tribal gambling.

While tribes are philosophically united on the need for a legislative “fix” to the high court rulings, some Indian leaders believe political realities require that a remedy be linked to Indian Gaming Regulatory Act provisions dealing with casinos on newly acquired lands.

The Aboriginal Lands Coalition—a loosely organized group of tribes that include the San Manuel and Pechanga Indian bands in California, Forest County Potawatomi in Wisconsin and Gila and Salt River Pima-Maricopa Indians of Arizona, among others—claim federal law and Interior regulations are being used and abused by indigenous communities and big-moneyed developers who, in some cases, are encroaching on the ancestral lands of other tribes.

The lack of unity in Indian Country hinders efforts to get a Carcieri fix out of Capitol Hill.

“I know that there are a number of my colleagues who have an interest in this legislation and would like to see changes to this bill,” Montana Democratic Senator Jon Tester warned in introducing the latest legislative effort to “fix” the Carcieri ruling.

“Even Indian Country is divided on the issue.”

“Virtually every significant tribal organization has enacted a resolution urging Congress to fix Carcieri,” Washburn says. “No one agrees on everything in Indian Country, but the idea that there is a broad division is unfounded.”

Washburn does realize, however, that the politics of gambling make a “clean fix” problematic, at best.

“The difficult political compromises that might need to be made… I just don’t know,” he says. “I honestly don’t know.”

Current regulations require Interior to conduct a lengthy U.S. Environmental Protection Agency review (NEPA) of the impact casino development will have on local communities. The process takes years, often generating criticism of the agency from tribal applicants.

“Interior and the BIA is understaffed, so you’re forced to pick a few issues you can concentrate on and can make a difference and let other things slide,” one tribal lawyer says. “I think the agency may at times use (NEPA) as an excuse to delay.”

20

Global Gaming Business JULY 2014

Washburn contends Congress needs to be educated that federal land/trust regulations include safeguards for local communities.

Although land/trust rulings for casinos off existing reservations are few, Interior has come under fire for approving casino applications on newly acquired lands for the North Fork and Enterprise rancherias in California and the Menominee Indian tribe in Wisconsin.

Specific Compacts Meanwhile, Washburn has stood firm on tribal-state regulatory agreements, or compacts, which under IGRA are required for tribes to operate Las Vegas-style gambling on Indian lands, rejecting proposals that demand unreasonable shares of tribal casino revenues.

“Gaming compacts are to address gaming matters only,” he says. “Tribal hunting rights, fishing rights, water rights and other matters pertaining to the sovereign rights of tribes are generally not subject to negotiation in the gaming context.”

Washburn did, however, applaud a settlement the New York Oneida Nation reached with state and local officials that included agreement on a longdisputed land claim in exchange for a share of tribal revenues, contending it was not an amended compact subject to his review.

The assistant secretary has been characterized by some as being politically pragmatic. A “veto clause” in proposed federal acknowledgement reforms is regarded as a bow to Connecticut opposition.

Political leaders in that state are opposed to allowing three tribes denied recognition to re-petition Interior under the new rules and eventually develop casinos.

Washburn says the draft regulations embrace a wide spectrum of views on the issue that are not yet finalized.

“We adopted something moderate, in the middle,” Washburn says of the draft. “Under some circumstances people can re-petition.

“I did not get political pressure from my boss (Interior Secretary Sally Jewell) or the White House.”

“It’s a good-faith effort,” attorney Judy Shapiro says. “But I don’t think the Connecticut clause is fair.”

“It does seem to be fundamentally unfair to deny those tribes a new opportunity just because the state has been opposed to them all along,” Locklear says.

Diplomacy can be difficult in leading a poorly funded, understaffed agency.

Washburn’s scholarly expertise in gambling and law enforcement was expected to assist him in dealing with department matters. That has not necessarily been the case.

“It wasn’t as helpful as I hoped it would be,” he says. “The BIA is responsible for everything under the sun in Indian Country, everything but health care.

Around here gaming is about 5 percent of what we do.

“On any given day people expect me to be an expert on everything from dams to law enforcement, to irrigation, to water rights, to roads, to education, to social services, to child welfare.

“To do this job right I need an MBA and Ph.D. in several subjects.”

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The Industry Standard Gaming Laboratories International celebrates 25 years of setting the standard for integrity in gaming

by Frank Legato

A

t the time, it was a radical idea: a private company performing duties that governments customarily performed around the world—testing gaming devices to ensure integrity.

It was even more radical because the time was the late 1980s, and the place was the United States, where slot machines and other gaming devices and systems were legally operated in precisely two states, Nevada and New Jersey. But with a vision of a much larger gaming industry, James Maida and Paul Magno would develop the concept into the first private laboratory dedicated to testing gaming devices and systems.

Today, as the company started by Maida and Magno celebrates its 25th anniversary, certification of slots and systems by Gaming Laboratories International is recognized as the industry standard, replacing the need for state-run labs in nearly all of the 28 U.S. jurisdictions hosting Indian casinos, as well as numerous other casino and lottery jurisdictions both in the U.S. and around the world.

In all, 45 U.S. states and 455 jurisdictions worldwide accept GLI test results. Government officials in new and planned casino jurisdictions seek the counsel of GLI in setting up their gaming regulations. GLI serves as a clearinghouse for regulators around the world, providing a forum for discussion of new rules, new technologies and new ways to test to ensure the integrity of gaming.

In short, GLI is an integral player in the worldwide gaming industry.

Jersey Strong Not surprisingly, the company known as the foremost authority on regulation of the gaming industry had its beginnings in a state that has, over the years, been a model for effective gaming regulation, New Jersey. Maida and Magno, both enthusiasts of competitive sailing, met as youths at the Lavallette (New Jersey) Yacht Club.

In addition to sailing, the two men shared aptitude for mathematics and engineering. Upon graduation from Lehigh University with a computer engineering degree, Maida was snatched up by the New Jersey Division of Gaming 22

Global Gaming Business JULY 2014

Enforcement as a test engineer. Soon, he would tell his friend of an opening for a computer specialist at DGE. Magno, working at the time as a computer programmer for a New York banking systems firm, took the job.

It was 1987, and the expansion of the casino industry was about to begin—a fact both Maida and Magno realized. Meanwhile, New Jersey was gaining an unwanted reputation for its backlog of new slots in the approval pipeline at DGE. “As a group, engineers, myself and some of the technicians used to talk about how the expansion of gaming was coming about, and that we should consider going out on our own and doing it without government involvement,” Magno, now GLI executive vice president, recalls. “There was a lot of red tape and political reasons why the testing took as long as it did. We all thought if we could do it on our own, we could probably develop a model similar to what New Jersey used, and we could be more efficient and get devices tested much more quickly, and probably better.”

Maida, who is GLI president and CEO, says the first chance to test that theory would arise that year, 1987. “Back then, New Jersey and Nevada were the only two places in the U.S. that you could place a legal bet,” he recalls.

“Montana was just starting their lab, so we helped Montana get up and running.” With Montana set up as the third U.S. jurisdiction to allow casino-style betting with its video poker program, South Dakota was next, legalizing casinos in the city of Deadwood and VLTs in bars and taverns.

By the time South Dakota was setting up its testing lab in 1989, it was clear to Maida that casino gaming was ready for an explosive expansion. Passage of the Indian Gaming Regulatory Act the previous year was about to spawn the first casinos in what would ultimately become the $28 billion tribal gaming industry, and lawmakers in Midwestern states were beginning to discuss gaming on riverboats.

Maida says he realized at that time that several states would soon have casinos and the need to test and approve gaming equipment, so he was particularly receptive when the head of the South Dakota Lottery approached him and sug-

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GLI co-founders Paul Magno, executive VP and James Maida, president and CEO

He adds that working for the state of New Jersey in the mid 1980s showed him how relying on state approvals can put casinos behind the curve on new technologies. “The ability to upgrade (engineering) talent in a state working environment is very difficult,” he says. “Technology moves, frankly, quicker than government. We’re in a very highly competitive technical environment, with new games coming out all the time. And we just have a commitment here, that we’re going to get all the work done within 25 or 30 days. And, sometimes we get it done more quickly.”

From the early days, GLI was dedicated to quick turnaround in the approval of new technology. “Slot machine game production is like a movie,” says Maida.

“When the movie comes out, you want to see it right away. And the slot manufacturers want to do national roll-outs. So, proper staffing is something that we saw the need for very early on, and we’ve adjusted our staff levels over the years—we’re more than 800 people now—to make sure that those turnaround times do not get too far out in the future, and that we can service each initiative appropriately.”

Building the Business gested that rather than helping the lottery set up its own testing lab, he set up a private testing lab.

“The idea was really conceived by the head of the lottery, Susan Walker, and a few others around me,” Maida recalls. “They said, ‘We don’t really want to test our own games here in South Dakota. We’re a small state. Why can’t we just contract with you, James?’”

Maida, who was in law school at the time in addition to his DGE job, accepted, and founded Gaming Laboratories International in June 1989—along with Magno, whom he lured from DGE. The founding of GLI was visionary, to say the least. Maida says he knew how chaotic it would be if each new gaming state had its own testing procedure.

“Every state should not duplicate testing,” Maida says. “I thought, why don’t we have a clearinghouse to do all of the testing, much like Underwriters Laboratories does in electrical engineering?

“Today in the United States, there are more than 300 gaming jurisdictions, when you count all the tribes and all the states and all the lotteries and parimutuels. Having to submit the same game to all of them would have been very duplicative, and very slow.”

“Proper staffing” for GLI, of course, would change as gaming machine technology changed. Starting out when most testing was done on simple, three-reel machines, the tasks could be handled by a very small staff.

“Paul and I did all the jobs early on,” recalls Maida. “We tested the machines, did the accounting, all of it. We hired our first employee in 1990.”

“To be honest, as technology has advanced, a lot of the information is above my head!” laughs Magno. “The mathematics are much more complicated than just testing a three-reel slot machine. We used to be able to do the math easily on three reels, even five reels. But when you get into bonus rounds and the rest, we leave it up to our mathematicians and the guys with the Ph.Ds to do the calculations.”

Advancing technology was not the only reason GLI grew quickly during the 1990s. Maida’s original vision proved true as gaming expanded rapidly, and Maida and Magno made sure they were on top of every new jurisdiction opening up. “We would just read USA Today, which had little blurbs about when gambling was starting,” Maida recalls. “If we saw something happening in the state of Iowa, for instance, we got on a plane and went to Des Moines to meet with the gaming commission.

“Any time a new state was getting gaming, or a new Indian gaming compact was being signed, we would show up. We would work with the tribe, we would

45 U.S. states and 455 jurisdictions worldwide accept GLI test results.

Government officials in new and planned casino jurisdictions seek the counsel of GLI in setting up their gaming regulations. GLI serves as a clearinghouse for regulators around the world, providing a forum for discussion of new rules, new technologies and new ways to test to ensure the integrity of gaming.

JULY 2014 www.ggbmagazine.com

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“

We invest heavily in technology here. We probably spend $2.5 million a year just on new technology, to make sure that our tests are better. We spend a tremendous amount of money on making sure our tests are standardized, and then we do a lot of training with our employees.

”

—James Maida, President and CEO, GLI

work with the state, we would work with the lotteries. We went in and introduced ourselves to the legislature.”

Before long, riverboat casinos in the Midwest were joined by Indian casinos in states like Minnesota, Wisconsin, Iowa and South Dakota, and the modern casino industry in the U.S. began to take shape. GLI’s business model, says Maida, was always to work with the regulators in new jurisdictions. “We bid contracts through RFP processes, and we win the vast majority of those,” he says. “Our client is still the regulator; it’s always been the regulator, whether it’s a tribal regulatory agency—228 of them—state regulators, a state lottery, a parimutuel or horse-racing commission.

“While we might be paid by the suppliers, all of our work is audited by regulators. The reports are addressed to regulators, and while we have to balance the line between regulatory needs—which is very important, and is our bread and butter—we also work with suppliers so they can conform to those regulations.”

“The manufacturers were quite helpful in introducing us to the regulators,” adds Magno. “Manufacturers gave us information on who was introducing bills to legalize some form of gaming, whether it be a lottery or actual casino jurisdiction. We would meet with these regulators, show them how we did testing, and put them in touch with current jurisdictions we were working with or had worked with, as a reference.”

Technological Expertise Along the way, the company snatched up engineering talent to meet the challenges brought by the changing technology of the gaming industry—and built a training regimen into the culture of the company that has ensured that the company’s technical expertise is second to none.

“Our biggest challenges come when new devices are made that go away from standard EPROMs or standard memory packages—being able to verify all the technology, being able to test all the technology, coming up with test equipment and the right people to do the tests,” Maida says. “So, we invest heavily in technology here. We probably spend $2.5 million a year just on new technology, to make sure that our tests are better. We spend a tremendous amount of money on making sure our tests are standardized, and then we do a lot of training with our employees.”

Training is a constant for GLI employees, says John Grau, GLI’s vice president of engineering. “All of our test engineers go through unbelievable amounts of training, and they’re constantly being retrained as the technology 24

Global Gaming Business JULY 2014

moves,” he says. “Training and keeping our people up to date is something that as a private company we can do. States find it, obviously, very difficult to do that, but it’s really our cornerstone.”

It is how GLI has maintained its status as the leading test lab through generational changes in technology. “Any time a new technology comes up we’re doing security audits and network risk assessments,” Grau says. “Our clients said, ‘GLI, you need to be so much more than just slot machine testing and systems testing, or lottery testing.’ Clients are now asking, ‘Can you assess our network floor? Can we make sure that we’re secure? How secure are we at the cages? Can people hack in? Is our Wi-Fi secure?’ There’s so much more that we do than just slot machine testing and systems testing.”

Since 2000, the testing challenges have multiplied as ticketing, cashless play and server-based gaming were implemented in the U.S. and around the world.

With the worldwide spread of online gaming, GLI added yet another testing skill set by acquiring Canada’s Technical Systems Testing in 2010.

TST, long a leader in interactive gaming testing, systems testing, and wagering system certification for regulators around the world, became what is now known as GLI Interactive B.V. It was another instance of GLI being ahead of the curve. Magno says the company was not involved in iGaming that took place internationally, but anticipated legalization in the U.S. and a further spread of interactive gaming. “We saw the opportunity that if we purchased TST, they’ve already been involved in a bunch of jurisdictions that have allowed (iGaming),” he says. “We thought that brought instant expertise in that area, and allowed us to share personnel by moving some people from the States up to Canada to be more involved in it, and vice versa, to have people from Canada come to our U.S. offices and train people in testing to be prepared when it came to the States.”

For internet gaming testing, GLI deals directly with operators and content providers, as well as the regulators, Magno says.

The challenges of new technologies never ends, says Maida. Manufacturers are now pushing the envelope of skill-based gaming, with games straddling the line of awarding knowledge and physical dexterity while remaining fair to players who are less skilled.

One way GLI stays at the head of the technological parade is through a proactive approach using what Maida calls “technologists.”

“We have a group of people, technologists, who travel the world and meet with suppliers to identify the next-generation game that’s coming two years and three years and four years in the future,” Maida says, “and we start thinking

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Seated: Christie Eickelman, VP of Marketing; Tim Reigel, Chief Technology Officer; Christine Gallo, Vice President of Compliance and Quality Assurance Standing: Bruce Hecht, CFO; John Grau, VP of Engineering; Ian Hughes, VP of Global Services and Managing Director of GLI Australia and GLI Asia; Martin Britton, GLI Europe Managing Director; Salim Adatia, CEO GLI Test Labs Canada; Kevin Mullally, VP of Government Affairs and General Counsel

about what that technology looks like. We actually start coming up with test plans ahead of when that’s going to be introduced, so we’re not scrambling when it arrives.”

Tribal Partnerships Fairly early on, GLI’s proactive approach branched out from the testing of slot games to systems, from casino management systems to lottery networks. According to Magno, the genesis of the company’s system work can be traced to the strong partnerships it forged from the start with Native American gaming tribes.

“A lot of the compacts stated that there would be a central monitoring system,” Magno says. “The Indian gaming compacts really established a monitoring system not only for accounting purposes but as a security system—a slot door open, alarms for various events—which they did in larger casinos, but had not been a requirement. We were able to work with the Native Americans on what they wanted as security features on the systems.”

GLI also built its systems expertise on video lottery systems, which, like Class II Native American gaming, typically required monitoring and control of each machine from a central system. “Those were the first systems, even before the Native American systems,” says Magno.

The testing work for the tribes, though, began a longstanding partnership between GLI and Native American gaming, a relationship in which slots and systems for tribal casinos are certified once by GLI and instantly authorized for Indian casinos in several states. “A lot of our business, and a lot of our testing models, came from working with the tribes,” Magno says, “because we helped open many casinos in Wisconsin, Minnesota and elsewhere, testing not only the machine software, but system functions on the floor, before they even opened.”

This included the largest Indian casinos, Foxwoods and Mohegan Sun, the testing for which gave GLI a model it would use for years to come. “That got us proficient in helping to do audits at casinos, and software testing for openings, which we did in Mississippi, Illinois riverboats and a lot of other jurisdictions,” says Magno.

“Indian gaming has been very important to our company, and we try to give back as much as we can,” adds Maida. “We work for every tribe in the United States that has Class III or Class II gaming, and we’re real proud of that. We have more than 10 people on our development team who travel each week to 26

Global Gaming Business JULY 2014

tribal locations and talk to tribes about special requests.

“As you know, compacts are a treaty between the tribe and the state. The tribes have sovereignty, and the states have sovereignty, and they’re equal partners in a compact. And so, states have concerns, and tribes have concerns. We really want the tribes and the states to meet privately and work out their concerns, but where technology is involved and they need a little assistance, we’re happy to help when we’re called upon by either or both.”

Global Reach Not long after the company established itself, GLI’s work with both tribal and commercial casinos in the U.S. would evolve into a worldwide business. The company currently tests games, systems and interactive gaming in more than 200 jurisdictions outside of North America, based on standards applying to more than 35 categories—including GLI 11, the recognized international standard for gaming devices, GLI 13 for online monitoring and control systems, GLI 23 for video lottery systems, GLI 26 for wireless gaming systems and more.

The task of managing this array of services for jurisdictions around the world falls to Ian Hughes, GLI’s vice president of global services. Hughes is also managing director of GLI Australia and GLI Asia; he built his understanding of worldwide markets when he first worked for GLI in Australia 20 years ago.

Six years ago, Hughes moved to the U.S. to handle global services for GLI, and began applying his expertise to other markets around the world.

“I set the overall strategic direction of what we do,” he explains. “I have some very long-term relationships with various government regulators and governments in the (Australia and Asia) region, which ties very closely into what I do as VP of global services. Essentially, it’s fairly simple: I try to understand what the regulator is trying to achieve, and understand what is achievable currently, and put that into place. We try to deliver services around that.”

With boots on the ground in various markets in Europe, Asia, Australia, the Americas and Africa, Hughes works with local operations teams to understand the dynamics of each market and deliver testing services effectively. “You need to know the inner workings of what’s happening in each market,” he explains.

“What are their views, their policy concerns? Compulsive gaming could be a big issue for them, money laundering could be a big issue for them, underage play— whatever their policy concerns are at that time is what we’re focusing on.

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“

The challenge that always exists is working with new technology. You never know what it will be, but you have to monitor high-tech sites— gaming and non-gaming—to see what technology is used in other fields, and ask how it can relate to gaming. We then will determine what training we need to get our people up to speed, and then work with regulators on potential technology that could be used in the gaming industry.

”

—Paul Magno, Co-founder and Executive VP, GLI

“And that changes. Different jurisdictions have different views at different times, and even the same jurisdiction’s views change over time. So you need to have a very solid understanding of that.”

Hughes’ responsibility also reaches from current to future jurisdictions. “Some, such as Japan, are looking to introduce gaming, and they are around four or five years away from where Macau is today,” he says. “So, there are jurisdictions that are highly mature, that have been there for 25 years, and there are a lot of jurisdictions that will introduce gaming within the next five years. So, my responsibility sort of spans a 30-year continuum.”

Small World With 21 current global offices, the world is becoming smaller for GLI. “We have some very good relationships with regulators and operators,” says Hughes.

“We’re also quite privy to some of the issues and concerns that they might have, particularly in introduction of new technology.” He says GLI focuses on bringing regulators and operators together to resolve technology concerns—“for example, if they bring in a new system, or new technology that has wallet or internet-enabled devices, how that affects their internal controls, and how that affects their risk.”

GLI has developed some ingenious ways of managing these worldwide duties, and making the world a smaller place for testing. One is a technology invented by Hughes and a team of engineers called GLI Link. “It came to me five years ago when I was in our Macau office, working with a systems vendor,” he recalls. “We were having troubles with systems interoperability in Macau, with a lot of new devices going in. There were manufacturers based in Korea, and we were asking them to ship machines to Las Vegas to do interoperability testing for Macau. I said, there’s got to be a better way to do this.”

GLI Link is that better way, allowing interoperability testing over the internet.

With GLI Link, suppliers can ship devices to their local GLI lab, and GLI engineers can do remote testing for interoperability against every supplier’s system. “It really reduced suppliers’ costs, and enabled a gaming machine manufacturer anywhere in the world to go to one of our offices and do interoperability testing,” Hughes says.

“We just hook it up through GLI Link and it operates across a very fast wide-area network.”

Of course, advanced technology is one thing, but there’s nothing that makes the world a smaller place better than face-to-face contact.

That’s where GLI University comes in.

GLI University is a program developed to keep regulators around the world up to date on new technologies and developing issues. “The GLI University was an idea that we came up with to provide really top-notch training,” says Maida.

28

Global Gaming Business JULY 2014

The centerpiece of GLI University is the Regulator’s Roundtable. The company invites regulators from throughout a region to a location for workshops, discussions, networking and training sessions. GLI now holds roundtables all around the world.

As Maida notes, the program also now offers a diverse range of training outside of the roundtables. “We now have a list of courses with which tribal gaming commissioners can come and learn about everything from Slots 101 to Systems 101, all the way through to complex issues dealing with bonusing and system configurations,” he says.

“We recently signed an agreement with the National Indian Gaming Association, where we’ll be providing with them Level 3 certification. GLI will be providing part of that training, along with working with the National Indian Gaming Association. We also do training with the National Indian Gaming Commission and with other partners. So really, our goal is a really well-trained client, a really well-educated client, in all the technology that’s coming.”

That training will become more important in the near future, with the emergence of iGaming, mobile gaming and social gaming. “Devices are becoming more and more mobile,” says Grau. “From a technology point of view, we’re seeing more of people using their own devices (for gaming), so that brings a number of new security challenges.

“Another challenge is more use of electronic payment methods. We keep a very active file of digital currencies, but ultimately, the regulators make the final decisions.”

“The challenge that always exists is working with new technology,” says Magno. “You never know what it will be, but you have to monitor high-tech sites—gaming and non-gaming—to see what technology is used in other fields, and ask how it can relate to gaming. We then will determine what training we need to get our people up to speed, and then work with regulators on potential technology that could be used in the gaming industry.”

“The world around us is changing,” says Maida. “What will be the acceptance of iGaming? Will it be replaced with social gaming? Will social gaming envelop all of iGaming? What’s going to happen with mobile gaming, and what special concerns are there with mobile platforms? We’re testing those now.

“We see technology becoming more connected, the software in more places than a single box. All that will require more tools, more ways of validating everything for the regulator.

“It’s all about quality, control, tools, and testing to make sure that the public at large is consistently being safeguarded.”

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KillinG the GaminG experience Why free

play isn’t free for either the casino or the player

r

By Steve Gallaway

egional U.S. gaming markets continue to see month-over-month declines in gaming revenues. Analysts tend to blame the weather, the economy, market saturation, increased competition in neighboring states, and of course, Obama for this decline.

What has yet to be cited is that the gaming entertainment experience has fundamentally changed over the past few years, and many casinos no longer deliver the experiences that players have been used to historically.

Historically, consumer confidence has tracked closely with regional gaming revenues. When people perceive that the economy is strong, they spend more on entertainment activities such as gaming. When they are concerned about their economic future, they reduce their discretionary spending.

The U.S. economy is strengthening and people are feeling better about it.

However, in looking at regional gaming trends, the economy is still in the doldrums. The question that must be asked: Is there something that the gaming industry is doing to cause this trend? Why is gaming revenue not growing in lockstep with consumer confidence?

To better understand what is happening, we conducted a number of analyses and identified two likely causes: machine hold percentage and the ever-increasing use of “free play.”

Reason No. 1: High-Hold Machines Over the past decade, the largest growth in slot machine gaming has occurred on multi-line, video reel penny games. Penny games allow players an interactive gaming experience that provides more frequent payouts than more volatile, higher-denomination machines.

However, due to the game algorithms of penny games, their payouts are often lower than the gaming patron’s bet. Even though the machine makes exciting sounds and flashing lights, the customer never really wins anything in many casinos. This charade continues when the player has the opportunity to play a few exciting bonus rounds, often with little in return other than an entertaining experience and a few extra credits. Eventually, the player’s money runs out.

On the surface, this appears to be a win-win; players get their time on device and the casinos get their money. However, with many of these higher-hold machines, players have come to realize that too often they are going home as losers. Gone are the days when the patron went home a winner 15 percent to 25 percent of the time. With the high-hold penny games, the fundamental 30

Global Gaming Business JULY 2014

sense of winning has begun to fade away.

With a typical penny game holding 12 percent to 16 percent, these games offer the worst odds on the casino floor. When one considers how much the top jackpot impacts this hold percentage, the effective hold percentage for the vast majority of players is even higher than 16 percent.

As if 16 percent isn’t high enough, casino operators in certain jurisdictions are requesting that legal caps on slot hold be raised in order to allow them to put even higher-hold machines on the floor. When hold percentages approach these levels, the fundamental gaming experience is being destroyed.

Table 1 illustrates how slot hold percentages in a sample of states have been steadily increasing over the past decade. Illinois casinos increased their

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TABLE 1

overall hold by over 36 percent; Missouri increased by more than 40 percent.

The one exception to this trend was Florida, where the hold percentage at racinos has been steadily decreasing. Not surprisingly, Florida is one of the few jurisdictions that have been experiencing an increase in gaming revenue, even when looking at the sum of only the three original racinos (Isle Pompano, Mardi Gras and Gulfstream).

So how did these high-hold games evolve? Studies by both manufacturers and operators were conducted to test whether players can tell a higher-hold machine from a looser machine. In one study, a six-person group was selected and each individual was given $100 to play on a number of slot machines, all with the same game title. The research team set various hold percentages on those machines. After playing out their gaming budgets players were queried, and none could identify which machines were tighter.

The problem with this research is that it did not account for how the real world works. In the real world, players notice over time that their money simply is not lasting as long as it used to. They also have other empirical ways to measure their gaming experiences. Most gamers keep seven years’ win/loss statements in their tax records. They also keep track of their points earned and have come to realize that they simply earn fewer points than they used to.

New players that are necessary for the casino industry to grow are often attracted to the penny games. Unfortunately, too often they seem to visit only a few times, lose their money too quickly and choose not to return. Many casinos further fail to induce incremental visits since the offers sent to those new players are based on theoretical win and not actual win, resulting in players receiving offers that do not reflect their true worth as they were not able to generate enough coin handle to qualify for a quality offer. It is not surprising that they do not return.

Reason No. 2: Free Play Over the past few years our industry has seen casinos issuing ever-increasing amounts of free play. Free play can be a great incentive to induce visits, particularly for those players who live a fair distance from a casino. However, too much free play can result in lower profits and fewer players. Unfortunately, in the world of high-tax jurisdictions, often the only marketing tool that casinos can use is free play.

For example, in Pennsylvania, where the effective tax rate on slots is 54 percent, casinos simply cannot afford to give players comp meals and free hotel stays.

If a Pennsylvania casino issues a $100 player $20 in free play, that money is not taxed and costs the casino only a nominal amount of labor and supplies to produce. However, if that same casino gives a player a $20 food voucher, the redemption of that comp costs the casino closer to $17, given food and labor costs.

When considering the tax rate, that player would have to lose $31.50 ($17/54 percent tax rate) for the casino to break even on that comp. As such, it makes financial sense for these casinos to issue free play over other types of comps.

To better understand the amount of free play being issued, let’s continue with Pennsylvania. For FY 2014 YTD, 20.2 percent of every dollar wagered on 32

Global Gaming Business JULY 2014

slot machines in Pennsylvania was through free play. That is equal to 25.3 percent of every dollar actually lost.

At Sands Bethlehem, which issued the largest percentage of free play, 33.8 percent of every dollar cycled through their machines was free play. That means that free play was equal to 51.1 percent of actual net revenue. Hold percentages were also very high at 9.9 percent for the state and 10.2 percent for Sands.

The problem is that many casinos are not directing this overabundance of free play to the right customers. It is a reality of gaming that some players are lucky and some players are not. Statistically, it makes sense that over time a group of players win and larger group of players lose. Some players will lose a little and some players will lose a lot.

Unfortunately, the majority of casinos have a habit of basing direct mail offers on theoretical win and not actual loss. As such, it is very common for players with lower actual losses to receive higher-value offers than those who lost more cash to the casino. What inevitably happens in many casinos is that the player comes in a couple of times, puts his card in the machine, loses his $100 in 30 minutes and has only generated $20 in theo. He then receives an offer in the mail for $5 in free play, which is insulting to a $100 player. As such, he does not return.

For the new player who is not yet in the database, the experience becomes even more exacerbating. The new player, who benefits from only a minimal amount of free play for joining the club, is now faced with a floor that is holding 10-plus percent on average. If it is an inexperienced player who doesn’t know that $1 steppers have the lowest hold, then he or she will likely be lured in by a high-hold penny game.

Many new players think the penny games will be the best bet for their money to last. After all, how much money can you really lose on a penny wager? They soon find out that when you hit max-coin, the cost of each spin becomes $3.50 or more. Before the player knows it, he has lost $100 in 30 minutes. As they didn’t have the extra play time allotted to them by the 50 percent bump in funds from free play, their play time is minimal and experience lacking.

Let’s Go Back to the Basics There is a belief that casinos need to attract younger players to replace the older generation of gamers. That is a false premise. Casinos’ core players always have been and always will be 50-plus empty nesters. Every year this market segment from a net perspective grows as people age.

They want the same casino experiences that they have always wanted—a clean environment, recognition, reasonable rewards, a game where their money will last and the real chance to win occasionally.

Let’s stop trying to underestimate the player and simply give them what they want, a quality experience. Slot hold percentages in some jurisdictions have hit a tipping point and gamers no longer find entertainment value in the gaming experience. Casinos can change, collectively or individually, and reverse declines in revenues, or they can accept that their best days are behind them.

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p. 34 japan:Layout 1 6/22/14 10:07 AM Page 34

in Japan h t Dea J

A promising outlook for a bill that would legalize casinos in Japan runs out of gas By Hideki Yoshii

apan’s Prime Minister Shinzo Abe Diet (74 percent), but a much slimmer majority in added casino site tours to his Singapore the upper house of the Diet (52 percent).” itinerary last month, while plans were The LDP is promoting destination-scale casinos unraveling back home to secure passage as a tourism-boosting tonic for Japan’s sluggish econof a much-anticipated bill he supports to legalize omy and a complement to the 2020 Summer the industry.

Olympics Games in Tokyo. Some estimates project Abe visited Resorts World Sentosa and Mathat a 12-casino market could be worth as much as rina Bay Sands while in the city-state to deliver a US$40 billion in gaming revenue a year over the next keynote address at the Asia Security Summit. The decade, a prospect that has attracted an A-list of prime minister was reported to be interested in global operators touting plans to spend billions to be learning more about Singapore’s stringent appart of it. proach to regulation and the mitigation of probAt the same time, casinos remain a sensitive issue lem gambling. among the population as a whole, and lawmakers Japanese Prime Minister Shinzo Abe toured the His visit also included a “scripted plea” from have been reluctant to spend too much political capiSingapore casinos last month and pronounced Marina Bay Sands owner Las Vegas Sands to pres- himself a fan of integrated resorts. But it didn’t tal on them, especially with bills addressing bigger issure the Diet to act on the troubled bill, or so the help move the bill in his country. sues such as defense, the new constitution and company’s billionaire Chairman Sheldon Adelson nuclear power elbowing it out as national priorities. told Bloomberg.

But the window for making that happen closed rapidly as the last day availIf It Happens able to a committee of the Diet slipped away to review the casino legalization The process of establishing the industry is likely to be a complicated one as bill Abe’s governing Liberal Democratic Party introduced in the lower house of well, and will require at least two pieces of legislation, according to insiders: the Japanese parliament back in December with a view to securing passage bethe current bill, which would end a longstanding legal ban on casinos; and fore the legislature’s current session ended on June 22. one detailing a framework for regulating them and apportioning the liThe committee claimed it didn’t have time to address the bill because it had censes. to handle another measure regarding the country’s Atomic Energy Commission.

Industry hopes have centered on openings in Tokyo and Osaka in time As a result, lobbyists and lawmakers are saying now that it will be nearly imposfor the Olympics, which means 2014 for legalization and 2015 for the sible for the bill to pass in 2014. structural bill. The way things are going, however, makes it increasingly unProspects for introduction during the short fall session of the Diet seem to likely that will happen. be scuttled too, as a bill must at least be introduced during the spring session to “Time is of the essence,” MGM Resorts Chairman James Murren has even be considered later in the year. Because the gaming bill was not even consaid. “There seems to be a very strong political will to move this forward, sidered in the spring, it’s unlikely a hearing in the fall would take place. and who knows what the environment will be a year or two from now?”

Both MGM and Wynn say they’ll launch initial public offerings in Political Turmoil Japan for their ventures, and MGM has already shown Osaka officials plans And in another grim twist for casino proponents, the right-wing Japan Restorafor a resort with two hotel towers totaling 5,000 rooms, a 20,000-seat ention Party, one of the LDP’s coalition partners and a big booster of legalization, tertainment arena and a circular waterway inspired by the moat surroundis reported to be embroiled in a leadership split over a new national constitution ing Osaka Castle. The Las Vegas-based casino giant also has been sounding to replace the current post-World War II constitution. The issue is a sensitive out companies of the stature of Panasonic and Sony about partnering on and controversial one for Japan domestically, and vis a vis relations with China the project. and South Korea especially, and with its principal ally, the United States. If Wynn also is “actively looking” for equity partners, President Matt there’s collateral political damage, depending on how things unfold, casinos Maddox said, and Chairman Steve Wynn said recently that he has had talks could wind up part of that. with several Japanese companies about possible tie-ups.

“While we do not believe that the fracture of the JRP had any material imGenting subsidiary Genting Singapore, the developer and owner of pact on the current behind-the-scenes horse trading going on in relation to Singapore’s Resorts World Sentosa, is reported to have set up eight subbringing the gaming bill up for debate, we do believe it could have an impact on sidiaries in Japan, each of them “principally engaged in investment holding, future support for gaming,” investment brokers Union Gaming Research Macau leisure and related businesses,” the company said in a stock exchange filing. said in a client note last month. “The JRP, along with the LDP and Life parties, Japan-based slot manufacturer Konami Corp. also wants in, and has had pledged 100 percent member support for the gaming bill. On a combined created a new investment subsidiary, Konami Gaming Japan Corp., to purbasis, these parties hold a very comfortable majority in the lower house of the sue a foothold.

34

Global Gaming Business JULY 2014

This kind of muscle won’t protect you anymore.

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SOCIAL GAMING

Making Your Social Casino Work

Does digital gaming make sense for a land-based casino?

By Andy Caras-Altas

T

he challenges facing operators in the U.S. market are always changing.

From the promotional price wars of the 1990s and 2000s to the emergence of digital gaming, the ground seems to be always moving under the industry’s feet.

Digital products are gaining acceptance with casinos, and some are even attempting to operate for-wager businesses in New Jersey, Nevada and Delaware. For the vast majority of casinos, forwager online gaming is not going to happen anytime soon. So then, what are the opportunities for making a profit from the numerous digital casino platforms (social gaming) that are being offered?

There are some chances to make money directly from digital games. Some platforms allow players to purchase coins to play the games either on the site, or in Facebook. To make this anything more than a trivial contribution, a casino needs to have scale. “Freemium” casino businesses are a volume game, and casinos should not expect to make any kind of meaningful revenue without having at least hundreds of thousands of players per month.

Silos don’t work: Integrate your digital casino as closely as possible with your land-based systems.

Players see value in a digital casino if they can earn loyalty points/comps for your property.

Deliver value to the players: In addition to earning loyalty points, turn your digital casino into a player info venue. Show loyalty points, number needed to upgrade to next tier, promotions, events, new in-property games and tournaments, travel info, accommodation booking, etc.

Leverage the strengths of digital: Players want a marketing message that is relevant to them— showing the same promotion to everyone means that it will be attractive to no one.

casino ‘“Freemium” businesses are a volume game, and

casinos should not expect to make any kind of meaningful revenue without having at least hundreds of thousands of players per month.

’

An alternative approach is to develop an entirely free-play site. For these to have a purpose, a very clear set of objectives needs to be set by the operator, as revenue cannot be generated directly from within them. Platform providers are typically touting these systems as being either “get ready now by building a database for when for-wager regulations appear in your state,” or, “drive new 36

footfall to your property by acquiring players online and then marketing your property to them.”

Neither of these is a good enough reason in and of itself to invest in a new digital casino addition to your property.

The reality is that for the majority of casinos, the truth is somewhere between the two. Digital games have a very real opportunity to engage players and drive greater loyalty and theo in your property. How? Here are some ways the market leaders are making digital really work for them:

Global Gaming Business JULY 2014

Integrate your marketing: A digital casino can be seen to be an extension of the marketing function, especially in a free-to-play environment. Digital casinos provide a channel for highly targeted marketing message delivery that can change in real time based upon how the player behaves.

VIP no matter where they are: Operators need to have a single view of their most valuable players regardless of whether they are playing in your property or on your digital casino. Players that play both digital and land-based typically have higher lifetime values. Recognizing a player’s level in the loyalty program when they are in the digital casino shows that the casino cares about their experience.

Nicky Senyard, CEO of affiliate specialist Income Access, recommends that brick-and-mortar casinos take a step-by-step approach.

“Land-based operations can use digital platforms in three phases,” she says. “The first is to build engagement with their current databases, and create a clearer picture of who those customers are. The second is as an acquisition strategy to create an extended reach of the land-based brand to customers outside of the current property database.

The third is to use the digital platform to continuously engage with customers and create transparency on what digital activities attract the most volume and value.”

While all this might sound great, you may be asking yourself, “How do I do this with my existing team? We’ve never done digital gaming or even extensive online marketing.”

Choose your platform provider correctly and they will make a range of third-party marketing tools available that will enable you to automate a lot of the heavy lifting of turning a stand-alone digital casino into a revenue-generator for your property. There is no need to invest in an expensive team, especially when you are taking your first steps into digital.

Jon Friedberg, CEO of Overlay Gaming, another affiliate provider, believes that the casinos already have powerful brands. Just take the next step.

“Operators need to focus on utilizing digital casino experiences to extend their brands and player relationships beyond the traditional ‘nightout’ entertainment mindset, into their regular daily lives at home and or the go,” he says.

At the end of the day, your first step into digital gaming can seem confusing, especially if you have not set down what your specific objectives are.

However, if you fully understand what the purpose of your digital product is, you choose your platform and marketing systems providers carefully, and focus on the value to the player, you have every chance of delivering real value to your business in the short term.

Andy Caras-Altas is an experienced gaming executive and founder and CEO of TraffGen, a company set up in 2011 to provide the tools and services required to help land-based clients drive revenue from digital convergence.

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iGAMING NORTH AMERICA

Border Wars An international iGaming industry may be the only option

by Mark Balestra

I

t has been suggested that the sputtering young U.S. iGaming industry will not reach its potential until an interstate model is in place, but a 2005 ruling from the World Trade Organization’s Appellate Body could signal that merely opening up state borders won’t be enough.

Could it be that participating in the global market is, rather than a distant reality, necessary for the survival of the domestic industry?

Political maneuvering has yielded some interesting alliances throughout the 19-year history of internet gambling, and in that vein, it’s conceivable that the WTO’s position on U.S. iGaming policy could provide hefty new support to opponents of the industry. That is, if the lingering WTO dispute between the United States and Antigua and Barbuda rears its head again, the recording, television, software and motion picture industries might have a significantly heightened interest in the future of iGaming.

The WTO dispute dates back to 2003, when Antigua asked the organization to rule on whether the United States’ restrictive treatment of internet gambling was inconsistent with commitments made pursuant to the WTO General Agreement on Trade in Services (GATS). Antigua’s oncethriving iGaming industry had been devastated by U.S. efforts to sever foreign iGaming operators’ access to the U.S. market, and the island nation essentially wanted the WTO to pressure the United States to open its borders.

Antigua got the answer it wanted in 2005, when the WTO Appellate Body ruled that the United State indeed violated its GATS commitment and that it must open up its borders to Antigua-licensed iGaming operators.

The United States responded to the WTO ruling by withdrawing from its specific commitment to market access to foreign gambling services, and Antigua sought alternative measures for dealing with what amounts to U.S. noncompliance.

To recoup damages, Antigua requested from a WTO arbitrator authorization to suspend obligations to the United States under GATS and the Agreement on Trade Related Aspects of Intellec38

Global Gaming Business JULY 2014

tual Property Rights (TRIPS). A resolution finally came in December 2007 with a WTO arbitrator authorizing Antigua to suspend its TRIPS commitment, essentially allowing Antigua to sell U.S.-copyrighted material with no compensation to the owners of the rights.

To date, the threat that authorized piracy poses to their businesses has been relatively insignificant because Antigua’s annual restitution is limited to $21 million from sales of pirated material.

The arbitrator’s decision in principle spelled victory for Antigua, but the devil is always in the details. Antigua asked the arbitrator to authorize suspensions of commitments to the extent of recouping $3.4 billion annually, a figure drawn from research and projections made by industry analyst Global Betting and Gaming Consultants (GBGC) and based on the assumption that the WTO’s 2005 ruling covers all types of cross-border gambling.

At the time of the Appellate Body’s ruling, however, horse racing was the only type of gambling allowed over the internet in the United States. The United States thus argued that the 2005 ruling covers only access to the horse-racing market. With that, the United States turned to GATS Article XXIV, which allows WTO members to make general exceptions to their GATS commitments for a variety of reasons.

The arbitrator agreed with the United States, finding that the United States should be compelled to open its borders to foreign gambling operators, but only in the horse-racing sector.

All of these factors combined brought the arbitrator to the amount of $21 million—not a major bother for U.S. copyright holders.

Nearly seven years later, the “solid ground” could be crumbling. Antigua is looking at legislation that will clear the way for launching a website where visitors can purchase pirated U.S.copyrighted material, and if the WTO were to revisit the matter, the annual restitution figure could blow up way beyond $21 million.

With New Jersey, Nevada and Delaware authorizing regulated internet gambling—and

more jurisdictions certain to join the club—it’s safe to say that the line can no longer be drawn at horse racing. Further, the DOJ’s 2011 opinion letter stating that Wire Act (of which the 2006 Unlawful Internet Gambling Enforcement Act is an extension) prohibits only sports betting lends additional support to the argument that the exceptions to the United States GATS commitments are no longer limited to horse racing.

Add to all this the prospect of additional iGaming jurisdictions taking similar WTO measures, and large, influential corporations dealing in copyrighted material might see the need to be more involved in the political process.

If the “Pirates of the Caribbean” open their doors to business, the United States could be expected to counter the WTO compliance measures by providing market access conditioned on satisfying unattainable regulatory standards or perhaps by taking measures to block the movement of money between pirate sites and U.S. consumers (taking a page out of the iGaming enforcement book).

But, even if these tactics are successful, one can only assume that the headache of enforcing the payment-blocking measures and the prospect of Antigua selling U.S.-registered intellectual property to the rest of the world would hardly be palatable for the Sonys and Microsofts of the world.

Add the haunting prospect of a successful challenge to the Professional and Amateur Sports Protection Act (PASPA)—and the subsequent possibility of legalized online sports betting in the United States—and the $21 million figure becomes a tiny fraction of the total entitlements to foreign online gambling jurisdictions.

All this supports the notion that the WTO wrinkle could hurt momentum toward regulating the U.S. iGaming industry, but a wider view of the matter might suggest that it will simply alter the course of progress. That is, the WTO thorn could ultimately accelerate the end game of U.S. participation in an international model.

Mark Balestra is head of Bola Verde Media and a partner in iGaming North America, the most popular U.S. gathering for iGaming.

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p. 40, 41, 42 lotteries:Layout 1 6/19/14 2:14 PM Page 40

Who will be the primary provider of iGaming in the United States— casinos or state lotteries? There’s a case for both sides.

By Marjorie Preston

W

hen the Minnesota Lottery launched online instant-play scratch-off games last winter, it wasn’t long before the critics started howling.

Republican lawmakers led the chorus. GOP Rep. Greg Davids said lottery officials pulled a fast one by going online without legislative consent. “This is the lottery gone wild!” he said. Jake Grassel, of Citizens Against Gambling Expansion, claimed that online lottery games would mean “a gambling facility in every home, library and Starbucks in the state.” Autumn Leva of the Minnesota Family Council weighed in, saying, “Our state should not be involved in predatory gambling.”

In response to the uproar, the House and Senate drafted a bipartisan bill that would ban both online lottery sales and ticket sales at gas stations and ATMs. On May 30—after weeks of turmoil, teeth-gnashing and legislative sanctimony—Governor Mark Dayton vetoed the measure. As he did so, he hinted the real opposition to online lottery games came from a completely different corner: tribal casinos worried that instant-play lottery games could siphon off some of their patronage and their revenues.

“I am concerned that the real impetus behind this bill was not to protect the citizens of Minnesota, but to protect the interests that now benefit from the status quo,” Dayton said in his veto letter. By going online, he added, the state lottery was not attempting to compete with tribal casinos. Like every other business, it was simply using technology to reach more people and make more money.

Do the Indians and other casino operators have cause for concern? As iGaming becomes more widespread in the United States, could state lotteries end up usurping bricks-and-mortar casinos as the primary providers? Three states currently offer legal iGaming. Two of the three, Nevada and New Jersey, licensed the state’s casino industry to run the show. The third state, Delaware, put iGaming under the control of the Delaware Lottery, which also oversees the state’s three racinos. What happens in states with both a strong casino presence and an established lottery?

40

Global Gaming Business JULY 2014

The Battleground State Minnesota has 18 tribal casinos run by 11 tribes employing more than 20,000 people. According to the website of the Shakopee Dakota tribe, Indian gaming and other enterprises in the North Star State pay out $1.35 billion in wages and benefits each year, as well as millions in state income taxes.

Not surprisingly, the tribes wield plenty of political influence; in 2012, the Minnesota Star Tribune reported that the top five tribal PACs actually outspent Education Minnesota, the state’s powerful teachers union, and had allies on both sides of the political aisle. If the tribes perceive online lottery games as a threat, they certainly have the means to fight it.

In 2010, the Minnesota Lottery launched online subscription games with little outcry. Critics compare instant-play games to online casino games, in which players play for real cash in real time. But Ed Van Petten, executive director of the Minnesota Lottery, says online scratch-off games will never rival casino games, played online or on-site. For one thing, he says, they’re just not that exciting. And a $50-per-week cap on online play makes it unlikely gamblers would become addicted.

“To quote the National Council on Problem Gambling, online gambling is gambling without everything that makes it fun—the social experience, the interaction,” says Van Petten. “To me, the sale of lottery tickets online is simply a marketing tool and a convenience for those who are unable to get out into the retail environment.” The lottery’s decision to introduce online sales was prompted by flatlining revenues, and the recognition that this is how business is done today; Van Petten noted that 74 percent of people are online daily.

“The opposition came from tribal casinos lobbying legislators in the belief we will somehow become competition to them,” says Van Petten.

“They’ve been quoted on a number of occasions that they’re not worried about what we’re doing, but what we may do later. Well, we can’t do casinostyle gaming by statute, so I really don’t know what they’re talking about.”

p. 40, 41, 42 lotteries:Layout 1 6/19/14 2:14 PM Page 41

Up for Grabs Charlie McIntyre doesn’t see it that way. As executive director of the New Hampshire Lottery, McIntyre says he would be remiss in his duties if he did not pursue the opportunity to offer iGaming.

“When and if I allow the internet to be taken over for gambling, I believe this agency would be less productive and less successful,” says McIntyre, who is also chairman of the Government Relations Committee of the North American Association of State and Provincial Lotteries. “We are one of the state’s biggest funding sources for education. Every buck we don’t make would be a buck that doesn’t go to educate kids.”

The New Hampshire Lottery, which currently offers online subscription games only, broke alltime sales records in 2013, surpassing $278.7 million in total sales, a 10 percent year-over-year increase. “That’s not by accident,” says McIntyre.

“We’ve been in gaming for a half-century (New Hampshire’s lottery was launched in 1964). We know what we’re doing and do it pretty well.” He says lotteries are just as qualified to offer iGaming as casinos, maybe more.

“It’s not as if they have this sort of secret sauce; we all use basically the same vendors and the same backup systems to manage wagering, transactions and customer management systems.”

Gaming law expert I. Nelson Rose, professor at Whittier Law School in Costa Mesa, California, points out that online gaming actually originated because two state lotteries—Illinois and New York—wanted to use out-of-state payment processors. That led to the 2011 reinterpretation of the federal Wire Act, which in turn opened the doors to online gaming.

“They got more than they asked for,” says Rose. “They got the right to everything but sports betting.

“The state lotteries have been the first to react to the liberalization of the gambling laws,” says Rose. “Illinois became the first to sell tickets using the lottery, and they were tremendously successful—so much so that the computer crashed.”

In January, the Illinois Lottery introduced yet another way to buy lottery tickets: through a smart-phone app. Not surprisingly, this innovation too was viewed by some as the next sign of the apocalypse.

“Gambling can really ruin people’s lives,” Anita Bedell, of Illinois Church Action on Alcohol and Addiction Problems, told the Chicago Tribune.

“And now by having an app, it can ruin lives 24/7.” Convenience store owners cried foul, saying it would inhibit in-store sales.

Two Can Play ThaT Game Casinos and state lotteries offer vastly different online products.

But the technology is virtually the same.

C

harlie McIntyre, head of the New Hampshire Lottery, says lottery games are an age-old American tradition, older by far than traditional casinos. Dartmouth College, he says, was founded by a lottery in 1769 “before there was even a country.”

That history may not give lotteries a head start on iGaming in the U.S. But it does speak to the durability and popularity of the games, now available in 44 states (Wyoming is the latest, and will launch its WyoLotto games this year).

Of the six states without lotteries, Utah, Mississippi and Alabama cite religious concerns.

Alaska and Hawaii also have no lotteries. And last year, when a $636 million Powerball jackpot gripped the nation in lotto-mania, ABC News reported that Nevada, the nation’s gaming hub, has shut out every effort to introduce a state lottery.

Even charitable drawings held by schools, Elks Clubs and Boy Scout raffles must be approved by the Gaming Control Board.

“It’s the gaming industry that doesn’t want to have a lottery,” said Gaming Control Board Chairman A.G. Burnett. “That’s pretty much the prevailing view even today.”

“The casinos don’t want competition from a state-run lottery,” economics professor and gaming expert Victor Matheson told CNN at the time.

“Since they have so much power, they have successfully blocked a lottery.”

Lotteries that eventually want to offer iGaming might be fully equipped to do so, at least from a technological perspective. The architecture of all iGaming solutions is pretty much the same for online casino games and online lottery games, says Matteo Monteverdi, head of iGaming for GTECH. “You typically have two components: the back office-slash-CRM platform, where the players register, provide their information, deposit funds, and withdraw funds” through an “electronic wallet.”

“The other component is the content. Casinos typically offer advanced or hard-core games like slots, roulette, blackjack and bingo. Lottery offers games like Powerball or Mega Millions and electronic scratch cards. From a technical perspective, there is no difference between the two segments.” Gaming providers outside the U.S. who offer all lottery, casino games, sports betting, the works, do so using the same system.

From the players’ point of view, the experience is markedly different. “There is a big distinction between synchronous and asynchronous games; synchronous games are a much more immersive player experience,” with the chance to

win on the spot, says Monteverdi. With asynchronous draw games like Powerball or Mega Millions you take your chance today with the chance of winning a day or two down the road. Today, more lotteries are offering “e-instant” electronic tickets; those are the ones raising the hackles of other iGaming purveyors, like bricks-and-mortar casino operators.

RTP, return to player or simply the payout, is also significantly different between online casino games and online lottery games.

“If you take a lottery, out of 100 percent of what they collect, approximately 65 percent is returned to the players,” says Monteverdi. “In the casino space, the RTP on certain games like slots is close to 95 percent.” The player experience on a 95 percent payout is much more immersive, interactive and enduring; an online casino game may take 15 minutes to play, whereas an online scratch card is over and done within seconds.

“The value proposition attracts two different demographics, so there is not an immediate overlap between the offerings,” says Monteverdi. “The two potentially could coexist with limited cannibalization, because they are talking to different segments and they provide a very different player experience.”

Not surprisingly, the lottery tends to attract an older demographic, and interactive casino games draw younger players. The social gaming segment, people who play on websites like Zynga or GSN, are “much more overlapped” with online casino games than lottery games, says Monteverdi.

Expanding the reach of the lottery arguably will help state governments in the U.S. top off their funding for health care, education and the environment (most states direct their lottery revenues to such benign efforts; the Pennsylvania Lottery, for example, explicitly funds care for senior citizens).

With many markets at saturation level, iGaming looks like the next frontier, including the lottery to some extent. But the resistance is likely to last for years.

“In the U.S. we have taken a little more conservative view towards gaming expansion and policy, and we are also coming off a decade and a half of pretty serious casino expansion in the U.S., land-based, boats, tribal,” says Scott Gunn, head of government relations for GTECH. “States are now looking at their entire gaming portfolio, and asking, am I fully exploiting that portfolio for the maximum benefit of my state?”

JULY 2014 www.ggbmagazine.com

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The lure for all the states, casinos and state lotteries is the pot of gold at the end of the rainbow. Internationally, iGaming is a $35 billion business—that’s about half the value of the gaming industry in the U.S., which generated some $66.3 billion last year.

Who’s On First?

What’s Next?

Half a dozen state lotteries now offer some form of online ticket sales, says Rose.

“And in some cases, they have statutes that permit them to have gambling online, where every other form, like casinos, would take an act of the legislature.

So the lottery in many cases can be first.”

For political reasons, he adds, state lotteries in the U.S. “probably will not do what a provincial lottery in Canada did, and open up true video poker and video internet casinos. But in many cases, they certainly are going to be the first movers here. And then the casinos will have to play catch-up.”

Jonathan Griffin, policy analyst with the National Conference of State Legislatures, points to Delaware as an example of how the scenario likely will play out state by state.

“It really is who is already running it in the state. Nevada and New Jersey had a private-operator model, so when they transitioned to online gaming, they stayed with that model. In Delaware they use loose language in the statute to categorize all table games as lottery games, so the Delaware Lottery controls casino gaming and runs the casinos too.”

Rose says the conversation about lotteries as providers of iGaming is just getting started.

“I went to G2E Asia in Macau and they had a whole day devoted to iGaming, but none of the panelists talked about the lottery. I brought it up, because the lotteries are clearly going to be some of the first to offer internet games for money to Americans. There hasn’t been that much recognition of how much the lotteries can do. That’s because the gambling industry is so fractured: the lotteries don’t talk to the casinos, and neither one talks to the racetracks.”

“There isn’t a model yet,” says Frank Fantini, of Fantini Gaming Research in Delaware. “First of all, you’re not allowed to gamble online in almost every state.

The states online with lotteries—Maryland, Illinois, Minnesota—so far have limited themselves to lottery games. There is no case I can see where lotteries are getting into casino gambling, but lottery directors are continually looking to see what they can offer. They want the opportunity to expand.”

Fantini recounts a letter sent by state lottery agents to New York Senator Charles Schumer saying, in essence, “Hey, don’t go passing a federal law that outlaws online gaming.” “They want to make sure they’re not preempted,” Fantini says.

“I think it will grow like any other system,” says McIntyre. “The first casino in Nevada opened in the ’40s, and it took three decades before New Jersey opened up. It shouldn’t be a rush to adopt a platform and say let’s go right now.

I’m not selling internet scratch tickets online anytime soon. So it’s not as if I’m protecting sales I’ll make next month.”

Rocky Road No one would dispute it’s been a tough first year for legal iGaming in the United States. The three states that approved the games banked on millions in revenue that have yet to materialize.

And the road to that revenue is still full of speed bumps. A number of U.S. banks still decline to process online gaming payments. Some mobile devices reportedly cannot take the bets. In the early rollout of online gaming, geolocation technologies kicked some gamblers off the sites.

Reports have surfaced that players in New Jersey have been less than dazzled by their online experience, and in April, just six months after launch, online gaming in the Garden State saw its first decline. That takes care of Governor Chris Christie’s optimistic prediction that online games would reap $180 million for the state in the first year (in the most populous state with iGaming, projections have been drastically scaled back to about $12 million).

Nevada saw just $8.52 million in revenues during the first 10 months.

Delaware’s results have been spotty so far, but the numbers are improving: Dover Downs, Delaware Park and Harrington Raceway generated just over $240,000 in April, up from $207,000 the previous month.

And while it’s hard to imagine that Congress would try to put the genie back in the bottle, Sheldon Adelson and Steve Wynn both back legislation that would restore the Wire Act and ban virtually all forms of online gambling.

The lure for all the states, casinos and state lotteries is the pot of gold at the end of the rainbow. Internationally, iGaming is a $35 billion business—that’s about half the value of the gaming industry in the U.S., which generated some $66.3 billion last year.

And Morgan Stanley predicts that by 2020, legal online gambling in the U.S. will generate $8 billion a year. That’s something for all the contenders to shoot for.

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Global Gaming Business JULY 2014

Strictly Business Scott Gunn, senior vice president of Global Government Relations and U.S. Business Development at lottery and gaming giant GTECH, says it’s not a case of casinos versus lotteries, but of policymakers deciding which entity was first in line, and which will bring in the most revenues. In other words, it’s strictly business.

“The policymakers and regulators are deciding what the biggest economic impact is for them. But we also see a sensitivity to whatever the primary gaming voice is in the jurisdiction. So when you look out across the landscape at who’s doing iGaming and who’s contemplating it, it’s not surprising that in Nevada and New Jersey it was the commercial casinos.

“It’s not surprising in Ontario, where the Ontario Lottery and Gaming Corp. runs everything, that in addition to casinos and lottery they are now running iGaming. In Illinois it was the lottery. In Delaware it was that mix of the Delaware lottery as the technology backbone for the racinos that got the licenses.

In California the tribal governments that lead gaming are trying to come to consensus as to the model.

“As we look at it,” says Gunn, “it’s really not who can do it better, casinos or lotteries.” Any tension between the industries “comes from companies doing what companies do, which is attempt to to protect their business interests within the sphere of the political legislative process.”

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PokerStars: Sold!

Amaya buys online poker giant; licensing possible

Mark and Isai Scheinberg

T

he biggest transaction in the history of iGaming was concluded last month when Canada’s Amaya Gaming Group bought the Rational Group, the parent company of the industry’s leading iPoker site, PokerStars, for $4.9 billion.

The deal gives Amaya the world’s most successful online poker site, in addition to the intellectual property and software that has made PokerStars such a success. The deal also includes Full Tilt Poker, which Rational bought after the company was forced to close down following the “Black Friday” indictments April 15, 2011 by the U.S. Department of Justice.

As a result of the deal, former Rational Group Chairman Isai Scheinberg, who was indicted on federal crimes related to racketeering and money laundering, and his son, current Chairman Mark Scheinberg, will both step away from PokerStars.

This action removes the impediment to PokerStars being licensed in legal U.S. jurisdictions.

While the company will continue to be barred from Nevada because of the “bad actor” clause in its legislation, New Jersey may reconsider licensing the company. The PokerStars application had been suspended by the state’s Division of Gaming Enforcement, which had called for divestiture by Mark Scheinberg and “certain PokerStars executives.”

David Baazov, CEO of Amaya, has been quietly building an industry powerhouse over the past several years, but this acquisition vaults the company to the top shelf of gaming suppliers.

“This is a transformative acquisition for Amaya, strengthening our core B2B operations with a consumer online powerhouse that creates a scalable global platform for growth,” said Baazov.

Sheinberg announced in a private email to company employees that he would be stepping down and his father would be separating himself for all Rational responsibilities.

“I am incredibly proud of the business Isai and 44

Global Gaming Business JULY 2014

I have built over the last 14 years, creating the world’s biggest poker company and a leader in the iGaming space,” Sheinberg said. “Our achievements and this transaction are an affirmation of the hard work, expertise and dedication of our staff, which I am confident will continue to drive the company’s success.”

Amaya already has some software that is currently being used in the legal online gaming jurisdiction of New Jersey. Therefore, the company is licensed there, and officials say the process of introducing PokerStars to the market should be seamless.

The purchase of PokerStars is a big reach for the much-smaller Amaya. The company is being extended a $2.1 billion credit line, as well as a senior secured second-lien term loan fully underwritten by Amaya advisers Deutsche Bank, Barclays and Macquarie Capital. Although the deal saddles Amaya with a substantial debt load, company officials aren’t worried about repayment.

“The combined company’s significant cash flow should allow for rapid debt repayment and provide Amaya with sufficient liquidity and flexibility to support ongoing growth prospects,” Amaya’s press release said.

The deal includes several live poker tours operated by Rational, including the European Poker Tour, PokerStars Caribbean Adventure, Latin American Poker Tour and the Asia Pacific Poker Tour, along with branded poker rooms at casinos such as the Hippodrome in London and Casino Barcelona in Spain.

California Tribes Go All In ‘Bad actor’ clause included in bill

O

nly one of the large California gaming tribes, the Morongo tribe, has not signed onto a proposed online poker bill that is before the legislature.

In a letter to key lawmakers, including Senator Lou Correa and Assemblyman Reginald JonesSawyer, 13 gaming tribes indicated their support for a bill that would allow the Golden State to tap into online gaming profits in the largest market in

the U.S. “As you know, this journey has been long and difficult, but the challenges posed by the internet demand that we harness rather than cede the technology of the future for California and for our tribal communities,” said the letter. “In achieving consensus for internet poker, we reaffirm our commitment to the longstanding principle of limited gaming that has guided California’s public policy toward gaming.”

Tribes signing the letter include the Agua Caliente Band of Cahuilla Indians, Barona Band of Mission Indians, Cachil Dehe Band of Wintun Indians, Lytton Band of Pomo Indians, Pala Band of Mission Indians, Paskenta Band of Nomlaki Indians, Pechanga Band of Luiseño Indians, Rincon Band of Luiseño Indians, San Manuel Band of Mission Indians, Sycuan Band of Kumeyaay Indians, United Auburn Indian Community, Viejas Band of Kumeyaay Indians and Yocha Dehe Wintun Nation.

Morongo opposes the bill because it includes a “bad actor” provision that would effectively bar its partner, PokerStars, the largest online poker company in the world, from participating. The Justice Department alleged that PokerStars violated federal law when it continued to offer online poker to U.S. residents after Congress passed the Unlawful Inernet Gaming Enforcement Act. PokerStars settled with the Justice Department without admitting guilt. And the recent sale of PokerStars to Amaya may also have an impact on this bad actor clause.

Web Poker Bill Draft Makes Rounds in Washington Caesars backs bill; Adelson is still opposed

A

lobbyist’s draft of a bill to legalize online Nevada Senator poker in the U.S. is being Dean Heller circulated in Washington.

Nevada Senator Dean Heller told the Las Vegas Review Journal that he has been briefed on the bill by Caesars Entertainment Corp. lobbyist Haley Barbour, former governor of Mississippi and head of the Republican Party.

Caesars, which operates three WSOP.com online poker sites in Nevada and New Jersey, reportedly wrote the draft bill. The bill would only allow poker and ban other types of casino games, the newspaper reports.

Heller, however, told the paper that the issue is still taking shape in Congress and there is no rush

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to embrace a specific bill.

“There’s something floating around,” Heller told the Review Journal. “I don’t have it, I’m not carrying it, and I don’t think Senator Harry Reid’s office is carrying it either.”

Heller and Reid are working as a team on online gambling, which has set off a contentious debate in the casino industry. For example, the American Gaming Association, the industry’s lobbying group, recently announced it was withdrawing from the debate.

“We will treat it like any other proposal,” Heller told the paper. “We’ll take a look at it, we’ll read it and determine whether or not it is something we can support. I’d like to get all these ideas on the table at one time and move in the appropriate direction.”

Pennsylvania Eyes Online Gambling

pact on the state’s budget.

Ryan said Pennsylvania would need time to implement online gambling and warned against rushing the process, saying it could take a full year.

Several legislators pointed out that such a timetable means online gaming can’t help this year’s state budget.

Casino operators in the state also warned against Pennsylvania setting too high a tax rate on online revenue and a desire to be the only operators eligible for online gaming licenses in the state.

But not all casino operators are in favor of online gambling—at least not right away.

Wendy Hamilton, general manager of Philadelphia’s SugarHouse Casino, said the state should “proceed with caution” when considering online gaming, and suggested the state should wait a year to see how online gaming evolves in the three states that currently allow it—New Jersey, Nevada and Delaware.

State senator says he plans to introduce a bill

THEY WILL

Raider Wins Bwin.party settles with Ader after board shakeup

E

ven though plans are in the works to introduce bills to legalize intrastate online gambling in Pennsylvania, a recent hearing on the issue showed widely divided opinions in the state, including substantial opposition.

Legislators in both the Pennsylvania House and the Senate have said they plan on introducing a bill that would legalize online poker in the state in the coming weeks. But judging from the back-andforth testimony at a hearing on online gambling before the Senate Community, Economic and Recreational Development Committee, that legislation passing quickly hardly seems like a sure thing.

William Ryan, chairman of the Pennsylvania Gaming Control Board, injected a note of caution into the debate by saying that legislators should be wary of large revenue projections for online gambling.

Econsult Solutions—which conducted a state study on the Pennsylvania gambling industry—estimates online gambling would bring in $68 million in tax revenue for the state in the first year and $110 million in subsequent years.

But Ryan cited the example of neighboring New Jersey, which began online gambling in November. Revenue from New Jersey’s online sites has been well below projections made before gambling went live in the state, and taxes collected by New Jersey are only a slight fraction of initial projections.

“It would seem to me, from what we are observing, that intrastate iGaming will never be big,” Ryan said. “The way it looks now, it doesn’t look like it’s going to approach the bricks-and-mortar casinos. It’s just not there.”

Several state legislators also questioned whether online gaming would truly have a significant im-

IF WE BRAND IT,

A

fter a contentious week that saw three members of bwin.party’s board step down after an independent evaluation ordered by new chairman Philip Yea, the company reached an agreement with activist investor Jason Ader to reshape the board.

One of those who stepped down was Manfred Bodner, a co-founder of the company.

Ader’s hedge fund, SpringOwl Asset Management, has acquired about 5 percent of the company and has been urging stockholders to approve a major revamp of the company’s board, saying the company is not providing the return it should. He had proposed remaking the board with four of his nominees, but the final agreement has placed SpringOwl President Daniel Silvers on the board, and the company said it would consider placing Ader nominee Michael B. Fertik, chief executive and founder of Reputation.com, on the board as a replacement for one of the three departed members.

“I am pleased to be able to demonstrate common ground with SpringOwl and welcome its support,” said Yea. Bodner, a co-founder of the bwin half of bwin.party, will remain as a paid consultant and Deputy Chairman Rod Perry will leave once a successor can be found. Audit & Risk Committee Chairman Helmut Kem will step down after the 2015 annual general meeting.

Ader conducted a similar activist campaign against slot manufacturer IGT and won a similar settlement, also landing Silvers on that board.

Bwin co-founder Manfred Bodner

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JULY 2014 www.ggbmagazine.com

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ON THE

MOVE Take ‘n Play by Bally Technologies allows slot players to gamble from a remote location inside the casino.

Preparing for mobile technology and the impact on your casino

By Dave Bontempo obile devices continue displaying their worth. They enhance casino-floor management by minimizing disruptions, upgrading a property’s customer-cultivation arm and increasing the versatility of games.

They also expand the means by which properties lure customers to the floor.

That’s increasingly significant as casinos and gamblers strengthen the link between brick-and-mortar and remote-location interactions.

Software funneled through iPads, tablets and androids mirrors the portable tendencies of customers. Patrons want access to reward points, specials, shows and restaurants, from the convenience of a coffee shop, home or office located off property. Industry projections of 1 billion smart phones shipped this year perpetuate that trend.

Players inside the property want quick attention to sudden problems, as do operators.

This combination propels a creative menu from casino vendors. Special text offers greet players who have just landed at an airport. An inoperable machine suddenly sports a technician, summoned via the world of software. And players can literally move off the slot floor to continue gambling on the same game.

Technology has struck again.

Mobile product manufacturers endorse their ability to cut labor costs. Some bemoan that, because it means a loss of jobs. On the flip side, these innovations allow employees to quickly address customer problems, greet players by name, and gain a friend. Or a tip.

Consider the advantage technology gives a motivated employee. A customer on a downed game is helped faster than the usual response time. The employee has a jump on the problem, the potential to solve it more quickly and the chance to enhance customer satisfaction. The casino has reduced time-on-device disruption and most likely will keep the player from seeking out the competition.

M

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Mobile technology is changing how casino floors operate.

David Wolmetz of Motorola Solutions displays the MC40, a compact but powerful mobile computer with built-in data capture for real-time table tracking, secure payment processing and other player engagement use by casino staff.

Customer Service Bally Technologies respects the mobile revolution enough to re-brand a proven product.

The worldwide gaming titan is already renown. It is a leader in gaming machines, table game products, casino-management systems, interactive applications, and networked and server-based systems for the global gaming industry. And the company won’t rest on its laurels.

Servizio is the new name for Service Tracking Manager, which is a rule-driven automated dispatch and alert system. It creates and assigns tasks to eligible casino personnel by intercepting messages from Bally’s suite of systems products. The reactive computing solution uses system and customer data to enhance services for players by immediately making the tasks available to appropriate personnel.

Now it will do more.

“Service Tracking Manager is performing more tasks than that of a dispatch system,” says Tom Doyle, vice president of product management for Bally Technologies. “It is now doing jackpots, establishing a database for machine maintenance, looking up players and even registering them on the floor.

“If you have identified a hot player via Live Floor View (a new application developed to provide our customers with graphical and detailed information on current activity happening on the slot floor), you can go up that person, introduce yourself as a player’s club rep, take the person’s ID, scan it on a mobile device, and now you have a customer you can track and market to.

“Service Tracking Manager has grown from dispatching employees to slot machines or table games, and addressing issues or incidents that need to be resolved, into a full-fledged maintenance, jackpot and mobile-registration tool,” says Doyle.

“We have expanded the product dramatically.”

Another mobile breakthrough unfolds via Take ‘n Play, which allows slot players to gamble from a remote location inside the casino. A player may wish to be in a VIP lounge, for example, socializing while engaged in slots. Smokers in

casinos where smoking is banned typically interrupt their slot sessions to go to a smoking area.

Take ‘n Play allows them to sign out a tablet from a casino representative and continue the game somewhere else while the game streams directly from the slot machine to the tablet. When the player is done, he can sign the tablet back in. Doyle expects the product to be released internationally this month and domestically before the end of the year.

Take ‘n Play is one of the industry’s first technologies that allows the same slot machine game to be played in more than one location. The game still takes place on the slot machine, with the tablet replicating the game screen.

Take ‘n Play empowers operators to utilize the machines on their slot floor to generate additional revenue and improve the gaming experience for players who have the freedom to take their game to another part of the property.

The product is easy to use and works on any tablet, including Androids and iPads. Any casino with a Wi-Fi network can utilize Take ‘n Play.

Mobile Credits is another breakthrough product. It allows someone to download an app to a smart phone, insert the player card information and use a prepaid card routed through the casino systems to put money onto the game.

Doyle says product rollouts like this have benefited casino properties.

“It helps them out in three different areas,” he says. “One, it is economical; it allows them to cut 10 percent to 20 percent of staff in certain places.

The second area is time on device. It is important for your players not to be waiting eight-10 minutes on a down machine when the machine can be repaired in three minutes because someone was dispatched to it more quickly.

“A third benefit happens because we have a maintenance app. We are able to determine that this bill validator has had 25 jams in the last month.

Let’s pull it out, repair or replace it and put another one on the game. We are watching when they are having problems. This improves the slot floor.”

Some of Bally Technologies’ products are targeted for employees. Bally Mobile provides a broad range of tools covering an umbrella of scenarios.

Bally Mobile has external-facing apps for patrons, and internal-facing apps for employees.

The apps for patrons give operators the chance to attract new players, enhance their visit, and sell more to them via their phones or mobile tablets.

The app can include popular casino games, show previews, room and restaurant bookings, feedback surveys, menus, interactive maps and offers.

The apps for employees enable the staff to access critical information and functionality directly from their mobile devices.

JULY 2014 www.ggbmagazine.com

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Goodbye radio. Kai helps casino operators connect employees to customers who need help, quickly. It automatically tells them which customers need service, who they are, where they are and what help they need. Data transmitted via Wi-Fi can show up on an iPad mini device and quickly be converted into a dispatch.

“It’s a mobile internet in a way,” says Aron Ezra, vice president of mobile products for Bally Technologies. “This can enable employees to access their schedules, ask a question of their supervisor, check their health benefits, etc.”

Using Bally’s patent-pending mobile technology platform, casinos can create and manage their entire portfolio of mobile websites and native apps for iPhone, iPad, Android phones and tablets, BlackBerry, and other devices from a single content management system.

Further demonstrating its commitment to this area, Bally Technologies recently announced its acquisition of Dragonplay Ltd., a developer and a publisher of social games for smart phones. The deal is expected to close in July.

Say Hi to Kai Glance at your wrist and solve a crisis. It’s Kai, on Wi-Fi. Kai, a mobile solution that can work in several ways, including by means of an iPad mini attached to the wrist, brings speed and efficiency to the troubleshooting department. It is being rolled out by Acres 4.0, the Las Vegas-based solutions company touted for its electronic pulltab gaming system and other player-centric products.

Goodbye radio. Kai helps casino operators connect employees to customers who need help, quickly. It automatically tells them which customers need service, who they are, where they are and what help they need.

Data transmitted via Wi-Fi can show up on an iPad mini device and quickly be converted into a dispatch.

“As a property manager, I determine how I want my floor to run, and with Kai every call is handled the same way,” says Roy Corby, COO of Acres 4.0 “It gives a consistency of service critical in our business.

“Let’s say, as a player, you have a problem on your slot machine. You are normally waiting for someone to notice, and that could take 20 or 30 minutes if you are not lucky and somebody happens to be walking by.

“Every machine in the country transmits a signal to the slot system when there is a problem. We take the signals and automatically tie it into the personnel database. We get the most qualified person available to fix the problem, and we also know who is closest to the machine.

“With Kai, nobody waits and we always know what the problem is. If your player’s club card is in, we will also know who the player is having the problem and we can say “Dave, we’re sorry you’re having the problem, and someone is going to be right there.’”

Corby says operators can save significant labor hours and improve customer service with this product. It is operational in several states, including Arizona, California, Washington, Iowa, Michigan, Minnesota and Oklahoma. In markets yet to be reached, like New Jersey and Connecticut, the savings could multiply.

“Take any Atlantic City casino, and say you have 2,000 machines,” he says.

“Every machine in the industry, on average, has one type of problem per day, 48

Global Gaming Business JULY 2014

whether that’s a jam, reel tilt, running out of paper, etc. Even if we saved you just one minute a day on each machine, that’s more than 30 hours in one day, or perhaps six people. But we could save you up to 15 or 20 minutes on one problem. Even if you figured the time saving to be in the midrange between one minute and 15 minutes, this is saving you quite a bit of time and improving your customer service.”

Corby says the technology also exists in food and beverage and promotional areas, and will probably be utilized there in the future. Housekeeping is likely to join this lineup too. A room attendant can notice a faulty toilet, punch in the information and automatically dispatch a repair tech rather than start the more-lengthy calling process.

Kai had a game-changing effect for Corby’s career, first as an operator for Casino del Sol in Arizona. He came up with Kai’s concept and asked John Acres to build it for him. Corby not only endorsed it, but came to Acres 4.0 in 2012 to propel it.

Finding Customer Choice Joingo, a mobile engagement platform company based in San Jose, California, helps the casino industry embrace the future. It allows brands to create and deploy a revenue-generating mobile loyalty strategy with no coding required, giving them the latest technology to connect with customers.

Joingo’s Mobile Loyalty Program gains increased market share in Alabama, Pennsylvania and Nevada, among other locations. It can help players easily select a drink, be apprised of their reward points or indicate their preference to view certain entertainment.

“We put the patron in control,” says Steve Boyle, the founder and CEO of Joingo. “What we find is that everyone has a different view of what they want.

Some like events. Some like tournaments. Some like golf. Some like spas.

When a patron wants to be apprised of their preference class and can say to an operator, ‘I want these five things,’ the rewards can be focused on those needs and the marketing can be much more successful.

“What mobile marketing can do in Joingo is help an operator create a one-to-one relationship with a player,” says Boyle. “That’s hard to do today, unless it’s hand-in-hand with a live host. You can do all of this on a phone now.”

And as Boyle sees it, what better device could there be?

“The phones are going to be the center of the internet revolution,” he says.

“It’s going to be a huge wave. People will eventually gain the majority of their internet access by phone.”

The ramifications may grow to include what physical properties look like, he says.

“Operators will one day move more of their labor force out on the floor and close the back offices,” Boyle asserts. “There will be no need for a VIP

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host station, front desk or servers to take orders. No more waiting lines at the buffet. All of these services will be provided on mobile host devices. The Apple Store is a great example.

“Marketers will be able to construct an incredibly precise view of their patron database on an individual basis, and be able to use that information to precisely target the patron with messaging and offers that are 100 percent relevant to the individual and their current context (time and space). Patrons will be in the driver seat, having access to a full set of services from the palm of their hand. The patron can guide the operator toward the offers and relationship they prefer.”

Joining the Gaming Party Next-generation technology for the casino floor may come from new companies entering the market.

One such company, Motorola Solutions, sees key opportunities for adapting its mobility solutions already used in retail, health care, hospitality and government for the gaming sector. The company did $8.7 billion in revenues in 2013 and has a vision for how its extensive research and development of technology

may be used within casino operations.

“We are talking with several gaming industry companies already about nextgeneration gaming operations and how they can leverage our technology employed by other verticals to enhance player engagement and the overall player experience,” says David Wolmetz, senior manager for OEM gaming at Motorola.

“We are looking to bring new levels of engagement and tracking to slot machines and table games using our data capture hardware and software, including bar code, RFID and MPact Bluetooth beaconing. Along with our OEM partners, we envision a more ideal solution for casinos to deliver personalized incentives for players to drive incremental spending, while also enabling casino operational efficiency.

“Our embedded enterprise-class mobile and fixed platforms, working with low-energy beaconing and Wi-Fi, offer opportunities to the to the casino operator they may not have considered before.

“It is new territory at this point—it’s a matter of who wants to drive a better customer experience, and in turn, positively impact revenue.”

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innovation for

EXCELLENCE New programs promote UNLV’s William F. Harrah College of Hotel Administration and further technology and information

By Patrick Roberts

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hen Nevada Governor Brian Sandoval announced last year that he wanted to ensure that his state would remain the innovation capital of the gaming industry, former Shuffle Master CEO Mark Yoseloff was listening. Yoseloff, who retired from Shuffle Master (later SHFL entertainment) in 2006, had an idea that would help to reach that goal.

“As the CEO of Shuffle Master,” Yoseloff, who himself holds more than 100 patents on gaming products, said, “I met a lot of people who had ideas— many were not even part of the gaming industry—and didn’t know what to do with them. We couple that with the fact that the industry doesn’t know how to attract younger gamblers, 21-35 years old. There’s not enough product in the casinos that appeals to them.”

As a trustee of the University of Nevada, Las Vegas Foundation, Yoseloff envisioned a project that could potentially solve that problem, as well as benefit the university.

“I had this notion that there were many students who had ideas but didn’t know what to do with them,” he says. “So I proposed to the university that we offer a course for gaming innovators. You can’t train someone to be inventive but we can take inventive people and train them in what they need to do to go from an idea to a product in a casino. That was the course we offered last fall.”

Yoseloff’s Family Charitable Foundation donated $250,000 to launch the class, and also got initial funding from a program set up by Sandoval’s administration called the Knowledge Fund, created by the Nevada legislature in 2011 and funded in 2013.

With that money, Yoseloff has set up the Center for Gaming Innovation, which will reach far beyond the walls of UNLV into the community.

“The purpose of grants from the Knowledge Fund is to create educational opportunities that will add to the state’s economic growth by adding jobs or bringing revenue into the state,” says Yoseloff. “I think we were the first recipient of one of these grants. This allows us to go from a single course to actually setting up the center, where not only students, but people from the community will be eligible to come in and get help with their gaming ideas. We even have a 50

Global Gaming Business JULY 2014

few people who are willing UNLV Hotel College professor Dr. Mark to commute from out of Yoseloff, UNLV Hotel College student Hien state to take this course Nguyen and Thomas Jingoli, senior vice when it’s offered in the fall.” president and chief compliance officer of Konami Gaming, Inc. Nguyen created a The course includes video wagering game called Domino Dragon. how to do research for similar products, novelty searches, how to file patents, expert math advice, mentoring and more. In exchange, the students have to commit 20 percent of the future earnings of the product to the university.

The first course attracted 17 students, and everyone had a few ideas.

“Amazingly, we are in the process of filing 12 patents based on the work of these students,” says Yoseloff. “And one of these is already sold.”

Hien Nguyen developed a game called Domino Dragon, a Chinese domino video wagering game that includes a new method for determining slot machine winning outcomes using elements of pai gow tiles. She won the first prize of $3,500 and sold her product to slot manufacturer Konami Gaming.

“The sale of Hien’s game concept is testament to the quality of ideas being produced by our students,” says Yoseloff. “That this sale took place less than nine months from the commencement of the Gaming Innovation Program is truly gratifying.”

An undergraduate, Nguyen will return to school next semester and plans to build on her success by inventing more successful games.

“I am so excited to be able to sell my invention and can’t wait until others are playing my game,” Nguyen says. “I never thought this would be a possibility for me and I’m so thankful for the support of Dr. Yoseloff and UNLV.” Other student inventions included: • 888 Baccarat: Invented by UNLV Hotel College graduate He Lin, who won second place and $2,000 in the gaming innovation competition. The game is a new, non-commission baccarat taking into account elements of Chi-

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UNLV professor Arte Nation interviews Las Vegas Sands President and COO Michael Leven for the first installment of the “Conversations on Leadership” series, which will be a hallmark of the new center for executive entrepreneurship at the William F. Harrah College of Hotel Administration

nese culture.

• Delayed Wager Increase in Video Gaming: Created by UNLV employee Gael Hancock and David Downes, a UNLV graduate of the master in hospitality administration program. This is a feature applicable to any reel slot machine, which permits the player to change his or her wager after two or more of the reels have stopped spinning.

• Color War: Created by UNLV Hotel College student Young Gi Lee, this is a new, easy-to-play specialty table game based on the color (red or black) of the cards dealt to the player.

• Flip Card Blackjack: Created by UNLV Hotel College student Aron Kock, this is a game in which a card is dealt face down under the side the wager when the player receives a blackjack. The winning odds for the side bet are determined by the value of that card.

The Konami Corporation has been a longtime supporter of UNLV, providing philanthropic donations and employee participation. But Tom Jingoli, Konami’s chief compliance officer and senior vice president, says the purchase of Nguyen’s game was simply a commercial venture.

“It is exciting to witness the university encouraging its students to hone their talents and market their ideas to the gaming industry,” says Jingoli. “In this case, Konami’s interests were purely commercial, and we are optimistic about the financial partnership we have forged around this innovative gaming concept.”

The Gaming Innovation course will be offered again at UNLV next fall, says Yoseloff, and this time it’s open to members of the community, and not just

to UNLV students.

“We expect the program this year to be very much in demand,” he says, given the success of the first class.

The UNLV William F. Harrah College of Hotel Administration is getting increased accolades from the community and the industry as it expands its reach. Just a few months ago, it was announced that Konami had donated $2 million for the construction of Hospitality Hall, an academic building for the college.

Las Vegas Sands recently added a $7 million bequest to get that building much closer to its $20 million goal in private funding (in addition to $30 million in public funding). In 2010, the Caesars Foundation provided $2.5 million to drive the project’s initial planning, with the state providing additional funds during the last legislative session.

UNLV expects to present a public funding request during the 2015 legislative session, which could lead to project completion in late 2017.

“We are setting the global standard in hospitality and gaming education and development of the industry’s future leaders and scholars,” says Stowe Shoemaker, dean of the Hotel College. “These endeavors are vital for continuing UNLV’s leadership and building an environment that enhances the learning styles of tomorrow’s students, creating a truly global classroom.”

Another innovative program produced by the Hotel College is the “Conversations on Leadership” series, which will be a hallmark of the new center for executive entrepreneurship at the William F. Harrah College of Hotel Administration. The proposed center is being funded through a multimillion-dollar gift from Las Vegas Sands Corp.

The first guests were LV Sands Chairman and CEO Sheldon Adelson, along with company President and COO Michael Leven. UNLV professor and gaming industry human resources legend Arte Nathan interviewed the two leaders.

JULY 2014 www.ggbmagazine.com

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EMERGING LEADERS

Building a Career Marcus Glover Senior Vice President and General Manager, Horseshoe Casino Cleveland and ThistleDown Racino or Marcus Glover, the road less traveled ended up being the avenue to early success.

Upon graduating from Atlanta’s Morehouse College, Glover began a career in management consulting, working for Accenture and Deloitte before leaving after five years to pursue his MBA at Duke University’s Fuqua School of Business.

While in business school, Glover had the opportunity to join Caesars Entertainment (formerly Harrah’s Entertainment) as a President’s Associate intern, with options for locations including renowned gaming markets such as Las Vegas and Atlantic City or New Orleans, which was known more as a destination city with an evolving but dynamic gaming market. He chose the challenging Gulf Coast over the glitz and glamour of more established gaming markets.

“In New Orleans, I got to be a big fish in a small pond as the only intern on property,” says Glover, now the senior vice president and general manager of Horseshoe Casino Cleveland and ThistleDown Racino, both Caesars/Rock Gaming properties in the new Ohio gaming market.

Glover was able to get more involved in major projects than he might have in the larger gaming markets, such as the acquisition of Caesars Entertainment and the rebuild of its casinos on the Gulf Coast following Hurricane Katrina. This was a shift from what he had experienced during his stint in management consulting, where many project engagements never involved seeing the solution delivered to the customer.

New Orleans was also a market with the ability to nurture future leaders.

“I was able to work with a lot of people who showed care and concern as well as devoted attention to my career,” Glover said. Among them was John Payne, president of Central Markets and Partnership Development, who took an interest in Glover’s career and provided business counsel and support. Other mentors included Dan Nita, regional president and general manager of Horseshoe Casino, and at the time, Division President Anthony Sanfilippo, who is currently the CEO of Pinnacle Entertainment.

Such guidance and a wealth of experience gained in a short time propelled Glover to vice president of operations for Grand Casino Biloxi (now Harrah’s Gulf Coast) in 2006. By 2008, he was promoted to assistant general manager and vice president of operations at Harrah’s St. Louis

F

Follow the Money

“The company has been undergoing major changes in the senior management team, as well as our product offering.

These are exciting times for our business, and the industry in general.”

Justin Findlay Chief Financial Officer, TCSJohnHuxley ustin Findlay grew up in mid-Michigan, where he graduated from Saginaw Valley State University with a degree in accounting. After graduation, he worked in public accounting, where he earned his CPA license. Findlay focused primarily on auditing small businesses and not-for-profits.

To Findlay, accounting is the backbone of every business, and provided him the opportunity to really understand the details of a company, specifically his current company TCSJohnHuxley (TCS).

After joining TCS in the fall of 2009 as an assistant controller working under the CFO, Findlay encountered some challenges early on in his career. Respect and confidence were most notable due to the age discrepancy between him and many others in the industry. The only way to overcome this, he says, “was to set yourself apart from the pack, to put in the effort and truly commit to your organization—leaving after you’ve worked eight hours isn’t enough.”

This paid off as he was promoted to CFO after approximately a year and a half. Of the two accomplishments Findlay noted, being hired as the CFO at TCS at the age of 26 was one of them. The other was graduating from law school in the spring of 2014 after four years of night school.

J

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Findlay’s decision to go to law school rather than study for an MBA or other business-related degree allows him to broaden his options as his career progresses. The degree enables Findlay to bring much more to the table and potentially move into other C-level positions where he can utilize his finance background and apply additional skills on the operations or executive side of a business in the future.

When asked about the gaming industry, Findlay references the popular book (and film) Moneyball. He noted that saber-metrics changed the way baseball is analyzed; 10 years ago it was all about the experience of a scout, where now they need data to back it up. To him, certain areas of the gaming industry are still stuck in that “10 years ago period,” but with an eye toward more reliance on data. Overall, he notes that a shift from experiencebased decisions to data-driven operations has led to better business decisions and overall business operations.

For now, Findlay is more than happy in his CFO role at TCS. “The company has been undergoing major changes in the senior management team, as well as our product offering,” he says.

“These are exciting times for our business, and the industry in general.”

—Christopher Irwin, The Innovation Group

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Fire in the Eyes Ameesh Patel Managing Director, Miura Holdings ut of the frying pan and into the fire! This is the motto of Ameesh Patel, and the way he likes to live his business life. Patel is the managing director of Miura Holdings, a multi-purpose investment vehicle focused on gaming, hotel and food & beverage activities. His desire to carve his own path, the executives that have shaped him and the lessons that he has learned along the way have positioned him as an emerging leader in the gaming industry.

Patel’s career in international development has taken him across the world with long-term stretches in Las Vegas, the United Kingdom, Singapore and Hong Kong. He has been involved in a diverse scale of projects ranging from small-scale casinos in Europe to large integrated resorts in Asia.

Along the way, he gained the sponsorship of senior leadership. Patel explains, “I was fortunate in that I had a tremendous amount of responsibilities at an early stage in my career and was able to see projects from inception through to opening.”

Having these opportunities and responsibilities proved to be the catalyst, and later, the driving force for Patel. In addition to working in interesting locations, he has also worked for some of the best operators in the industry, including Las Vegas Sands and Melco Crown Entertainment. Patel believes that to become an emerging leader in the industry, it is important to spend significant time exposing yourself to all facets of the gaming sector.

“The types of companies and their respective integrated projects can help expand your core competencies,” he explains. The integrated resort model creates many diverse streams of cash flow, and through the planning of such large-scale projects, Patel was able to expose himself to VIP marketing, retail, food & beverage, entertainment, hotel and casino operations.

Prior to starting Miura Holdings with original partner John Lin, Patel spent a large portion of his time in Asia. He co-founded SilkStar Global Marketing Limited, a junket operator focused on high-value players that generated over US$1.3 billion in rolling chip volume in 2011-12. Patel also served as vice president of development for Melco Crown Entertainment. In this position, he was part of the development team that created the City of Dreams in Macau, a $2.4 billion integrated resort.

Prior to Melco Crown Entertainment, he served as director of development for Las Vegas Sands. Patel stated that for any young person in

O

“Each person is unique, and I try to look at their current circumstance and give them advice tailored to their unique situation.”

Casino and Hotel. In 2010, Glover jumped at the chance to open Ohio’s first casino, Horseshoe Cleveland, pioneering a new casino gaming market.

Today, Glover oversees nearly 2,300 employees at Horseshoe Cleveland and ThistleDown and is in charge of maximizing Horseshoe Cleveland’s connectivity and economic impact in Cleveland.

Glover also mentors quite a few young professionals and emerging leaders. He meets with what he calls his high-potential talent quite often to discuss matters such as their progression and to give advice. Glover tells his mentees how important it is to keep up with the latest trends and to be commercially aware of what is happening not only in their industry, but in other related industries as well.

“Each person is unique, and I try to look at their current circumstance and give them advice tailored to their unique situation,” he says.

For Glover, “success is a journey, not a destination,” and his advice to young aspiring professionals is to “be intolerable of unacceptable outcomes, gain accomplishments, and continue in personal and professional development that fosters both continuity and sustainability on your journey to success.”

—Alexis Garber, The Innovation Group

“I was fortunate to have the sponsorship of senior leadership at Melco Crown Entertainment and Las Vegas Sands and to have worked sideby-side with some immensely talented executives. These individuals played a valuable role in my own personal development.” the industry, it is not only critical to seek out leadership roles, but also to seek out mentors and guidance from people around you.

“I was fortunate to have the sponsorship of senior leadership at Melco Crown Entertainment and Las Vegas Sands and to have worked side-by-side with some immensely talented executives,” says Patel. “These individuals played a valuable role in my own personal development.”

Moving forward, Patel is very much interested in furthering his development through Miura Holdings. By way of example, Miura has co-invested in over 20 food and beverage outlets with the Lev Restaurant Group. Lev owns and operates numerous outlets across the Las Vegas Strip including innovative concepts such as Lobster ME and I Love Burgers.

Patel also serves as an adviser to Joey Lim, chief executive officer of Donaco International Limited, a public company listed on the Australian Securities Exchange. He works closely with Lim in seeking out and exploring casino expansion opportunities for Donaco. Donaco recently opened the Aristo International on Vietnam’s northern border with China.

—David Rittvo, The Innovation Group JULY 2014 www.ggbmagazine.com

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GLOBAL GAMING WOMEN

Our Daughters’ Daughters Will Adore Us The role of children in a career

F

or those of you who don’t have the entire Mary Poppins lyrical catalogue memorized, this is from Mrs. Banks’ song about her work with the women’s suffrage movement: “Our daughters’ daughters will adore us, and sing out in grateful chorus, Well done!, Sister Suffragette!”

When I was a kid, this song was my least favorite part of the movie. The mom was so earnest and annoying, so incredibly disengaged from Jane and Michael, whom she referred to as “the children.”

I rethought this part of Mary Poppins as an adult and working mother after reading I Don’t Know How She Does It, the all-too-close-to-home tale of a London investment banker with two children under the age of 7. In the book, the main character is watching Mary Poppins with her daughter, who asks “what’s a suffer jet?” The mom explains about women’s right to vote and says, “Because back then, in the olden days, women and men were—well, girls stayed at home and it was thought that they were less important than boys.”

Mary Poppins came out in 1964. When I was a kid, they would show this movie on TV once a year and occasionally at the drive-in theater. By the time I had my daughter, we could buy a DVD and watch it at home anytime. I suppose if my 15year-old wanted to watch it tonight, we would download it from Netflix. When I got home from work. Later.

Will our daughters’ daughters sing out in grateful chorus to us? I doubt it. I think women in their 20s and early 30s are incredibly grateful for all of the sacrifices that have been made by women to get to where we are, but I don’t think it occurs to them that they are standing on our shoulders.

In the same way that a 7-year-old girl watching Mary Poppins can’t conceive of a time when women couldn’t vote (or that she couldn’t watch the movie whenever she wanted—without commercials!), a working mother today can’t conceive of a time when she could lose her job just because she had children.

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by Jennifer L. Carleton, Partner, Brownstein Hyatt Farber Schreck

There is a lot of space between having a job and having a career. I have two children and work fulltime in a law firm. I know that my job is not in jeopardy because I am a mother (thank you, Family Medical Leave Act), but is my status as full-time mom a factor in my career? Reasonable minds can, and certainly do, differ.

“Availability,” “commitment,” “dedication” and “responsiveness” are subjective criteria by which we are all judged. If my clients think that my priorities are at home, I could lose work. Since I’m

“

While not all employers perceive that women with children are less available or committed to their jobs than men with children, it is true that women with children are not compensated in the same way as men with children.

”

an incredibly proud and committed mom, my priorities are at home (or at school, or on the soccer field). All priorities are my first priority—long live Supermom!

While not all employers perceive that women with children are less available or committed to their jobs than men with children, it is true that women with children are not compensated in the same way as men with children.

A study last month from the City University of New York reported that men with children outearned men and women without kids, as well as working moms in New York City (the study was based on U.S. Census Bureau data between 1990 and 2010). Women with children earned an aver-

age of 41 percent less than men with children within all levels of education and in all five categories of employment—management/professionals, service, sales, construction/natural resources, and production/transportation.

There are real-world consequences associated with our priorities, and with our perceptions of other people’s priorities.

We are drowning in opinions on working mothers, compensation disparity, defining success, work-life balance and “leaning in.” I have the privilege to know and work with women that I would define as incredibly successful, and I am convinced that they would not define themselves that way. I recently asked one of my partners how she was doing and she started to answer and then burst into tears. She missed her baby and wanted to be at home. It was just that simple, on that day.

For me, every day is that day. I haven’t made it to every Mother’s Day tea or school play, nor have I been on every client call. I try to give myself permission to do the best I can every day, both professionally and personally. I try and make the best choices I can each day based on what is going on right now. I hope that I’m successful at it.

Our daughters’ daughters may not sing out in grateful chorus, but mine did write me a poem when I told her I was working on this column: “Atticus Finch inspired a nation A lawyer’s career its dear aspiration Of the bright young law students, with lofty education Few high courtroom dreams would reach realization Yet there was a chance of lucrative consolation By joining the ranks of the gaming conglomeration.”

Jennifer Carleton is a partner in the gaming group of Brownstein Hyatt Farber Schreck. She counsels gaming companies on corporate and regulatory matters, focusing on the licensing aspects of deal structures and transactions, mergers and acquisitions, reorganizations, and public finance. She has spent the last 17 years of her career in gaming.

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NEW GAME REVIEW

by Frank Legato

Are You Smarter Than A 5th Grader?

American Gaming Systems

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his is the latest game in the AGS “It Pays To Know” series, which, as the name says, gives players the chance to use general trivia knowledge to achieve higher bonuses—in this case, gradeschool stuff that everyone should know, but which many don’t, in the theme of the popular TV game show Are You Smarter Than A 5th Grader?

The base game is a five-reel scatter-pay video slot on a four-by-five field, yielding 1,024 possible winning combinations on every spin.

As with many of the premium games in the AGS lineup, this one is packed with bonus events—freespin events, picking bonuses, mystery awards—but the central focus is the trivia quiz from the popular Fox TV series, the U.S. version of which stars comedian Jeff Foxworthy (Foxworthy did not participate in the slot theme), which made TV Guide’s list of history’s 60 greatest game shows.

The “It Pays to Know” trivia bonus is based on actual questions from the television show.

Players are prompted to choose one of four “helpers”—fall-backs like eliminating one of the four possible multiple-choice answers, or stats on how an audience answered the question. The player is then given a first-grade

question, and three tries to answer it correctly—the earlier the correct answer is picked, the higher the award.

Answering the question correctly within three tries advances the grade level, and the game goes on. Completing all five grade levels earns the “Gold Star Bonus,” in which the player picks from a field of five stars to reveal an advanced award.

In addition to the “helper” picked at the beginning, the player can earn any of three “cheats” by landing symbols in the primary game—“Peek” lets you look at the answer of a “classmate,” which on the TV show is a fifth grader who has been given a study guide on the show’s questions. You can then choose to “Copy” the answer for the slot game. (The classmate doesn’t always get it right.) The other cheat is “Save,” which automatically corrects your wrong answer if the classmate has the correct one.

The other bonuses are “Field Trip,” in which picks are made to reveal multipliers for a free-spin round; and two primary-game events—a mystery jackpot and “Mega Block Spins,” which expands the reel field to 10 rows of symbols with three wild reels, for one super-spin.

Manufacturer: American Gaming Systems Platform: Roadrunner Format: Five-reel scatter-pay slot Denomination: .01, .02, .05 Max Bet: 250, 400 Top Award: $5,180.25, $8,288.40 Hit Frequency: Approximately 50% Theoretical Hold: 5.91%-14.9%

Little Green Men: Cosmic Blasters International Game Technology

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his sequel to IGT’s popular 2000s alien invader “Little Green Men” theme takes the concept to its ultimate conclusion: an arcade-style bonus, a-la “Space Invaders.”

The Cosmic Blasters version of Little Green Men includes all the classic alien characters from the original in a game on IGT’s “Center Stage Duo” format, which places two individual games in front of one giant video monitor that is used for a community-style bonus round. This version also takes the base game into a three-reel, higher-denomination format.

The base game features stacked wild symbols and two separate mystery features. Multipliers are added to winning combinations on random spins to increase the jackpot, and a virtual wheel appears randomly to spin for bonus credits.

But the main attraction of this game is the arcade-style bonus, available with any bet level. Called the “Cosmic Blasters Bonus,” it uses the joysticks mounted in front of each player.

Just like the old arcade games, players use the joysticks to target alien invaders and far-off planets to win credit awards.

This is not billed as a skill-based bonus as in IGT’s Reel Edge series, but it is still a very effective simulation of a classic arcade experience.

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The game is in IGT’s MegaJackpots series, which means a multi-site progressive jackpot will be featured in many jurisdictions. The top base-game jackpot is 500,000 credits.

Manufacturer: International Game Technology Platform: AVP Format: Three-reel, 27-line video slot Denomination: .25, 1.00 Max Bet: 81 Top Award: 500,000 (progressive where available) Hit Frequency: 14% Theoretical Hold: 2%-15%

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Sphinx 3D GTECH

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his game features what is arguably the best 3D imagery ever used for a slot machine. Called “True3D,” it is billed as the best 3D available “without glasses.” It may be even better than 3D glasses.

Sphinx 3D also constitutes the launch of GTECH’s nextgeneration cabinet, but the hallmark of the game is what’s inside that cabinet—3D artwork depicting the areas surrounding the Sphinx, and the interior of the Sphinx itself. The 3D effect enables the player to go on a journey toward, and then inside, the Sphinx.

Even the primary-game reel-spinning is in 3D, with the Sphinx and other symbols popping out at the player with an authenticity that invites them to be grabbed out of the air. Mystery wilds are accomplished by a box that flies out of the screen and then back to the reels to change symbols to wild.

Even the “Easter eggs”—butterflies that fly out when the screen is touched—are in 3D. There are five total bonus rounds—only one with the minimum wager; the others are unlocked as the wager goes up, with all five available at max-bet. It is one of several incentives to bet up that are built into the game.

The bonus rounds are masterful. The player is lost in a journey through an Egyptian town, or market, or neighborhood

Titanic

Bally Technologies

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his slot recreates, in elaborate detail, the sights, sounds and music of James Cameron’s Academy Award-winning 1997 film Titanic.

Bally threw all of its substantial technological muscle into the creation of this game, starting with its format, which uses an extra-tall, 42-inch main video monitor and the slot-maker’s immersive “Pro Sound Chair” to place the player back in the theater.

The Sound Chair makes for a faithful recreation of the film’s award-winning music. The visuals of the game match the audio, in an extensive collection of events, each evoking a different part of the film, and each accompanied by high-definition video from the movie on the slot’s oversized LCD screen.

During the base game, there are four mystery bonus events. “Jack’s Drawing Bonus” concentrates on the nude sketches Jack (Leonardo DiCaprio) makes of Rose (Kate Winslett) during their secret meetings in the film. Randomly, the main game screen will display 10 tiles; the player picks until three match the same artwork. Each sketch pays a different credit award.

Other random base-game events are a Mystery Jackpot in which the player picks one of three tiles for a bonus award; a re-spin with Mystery Double Wilds that double any jackpot; and Mystery Wild Reels ap-

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scene, to arrive at the Sphinx and go inside. In a nod to the original Sphinx—the 1990s game by Atronic, one of GTECH’s predecessor companies, which pioneered 3D slot video—there are several bonus levels, with picks along the way that increase credits and unlock new chambers within the Sphinx.

When three Sphinx symbols land in the base game, the main Sphinx Bonus is triggered. The player “travels” through ancient Egypt to the Sphinx pyramid, and then inside, going through chambers to select the bonus award in 3D. There also is an “Ancient Wheel Bonus,” the “Ramosis Free Game Bonus,” and the “Stars Progressive Bonus,” which moves the action to the upper screen to select one of five progressive jackpots. At least one jackpot is guaranteed. In the “Diamond Chamber Bonus,” players pick from a selection of diamonds to reveal credits and multipliers. In the “Wild Scarab Bonus,” a set of bonus reels is activated.

Manufacturer: GTECH Platform: prodiGi Vu Format: Five-reel, 30-line video slot Denomination: .01—100.00 Max Bet: 400 Top Award: 5,000 times line bet Hit Frequency: Approximately 50% Theoretical Hold: 8%-14%

plied to two of the reels for a re-evaluation of wins.

There are four main bonus events, each triggered through the “U-Spin Wheel Feature.” RMS Titanic symbols on the first, third and fifth reels prompt a wheel to appear (it looks like the ship’s steering wheel) on the top screen. The player, using Bally’s signature “U-Spin” feature, touches the screen to physically spin the wheel.

The wheel contains credit awards and four bonuses—two picking events and two free-spin events. If it lands on the “Pick Up Feature,” the player picks to collect credit awards until revealing a multiplier, which is multiplied by the accumulated credits. In the “Safe Feature,” the player selects one of 10 safes to reveal a credit amount, and them picks one of five items in a room to reveal a multiplier.

In “Heart or the Ocean Free Games,” players are instantly awarded a prize of 100 times the bet per line, and then picks one of four free-spin rounds, each with a different volatility—six, 10, 15 or 30 free games with wins multiplied at 5X, 3X, 2X or 1X, respectively. In “Make It Count Free Games,” 10 free games are awarded with each reel showcasing a different random bonus award.

Clock symbols appearing on a reel award the corresponding bonus prize, including credits, locking wilds, or an additional free game.

Manufacturer: Bally Technologies Platform: Alpha 2 Format: Five-reel, 25-line video slot Denomination: .01 Max Bet: 400 Top Award: Progressive; $400,000 reset Hit Frequency: 43.69% Theoretical Hold: 11.54%-14.91%

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p. 60 frank:Layout 1 6/19/14 2:41 PM Page 60

FRANKLY SPEAKING

by Frank Legato

World Cup Madness

C

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to defend against a free kick, there was a giant mess on the field.

No word on whether it discouraged betting on the World Cup. Personally, I had Elephant No. 3 at 10-to-1.

By the way, at press time, the Australian football team, the Socceroos, had just lost to Chile, 3-1, and was preparing to play the Dutch team, which was fresh off a victory over the defending world champion, Spain.

I think they need a Lazarus balloon. As I write this, I’m a little nervous, because I have all my colons on the Socceroos to upset the Netherlands team.

Oh, well. At least they weren’t inflatable colons.

VIC TOR RINAL DO

overing land-based casinos and online gaming in the U.S. is one thing. Covering gaming in the rest of the world is another experience altogether.

Incidentally, what’s with this “land-based casino” term? Don’t iGaming servers sit on land? I like the term “terrestrial casinos” even more. After all, we need to distinguish traditional gaming halls from the integrated resorts on Pluto’s moons.

But as usual, I digress.

Covering gaming in Europe, Asia and Australia inevitably means covering sports betting. (We do have a few U.S. states with sports betting, but Roger Goodell won’t let us have any more. Or is it Adam Silver?) And sports betting outside of North America means the FIFA World Cup—you know, that game we call soccer, but the rest of the world calls football.

(We’d call it football too, but Roger Goodell won’t let us.)

The sports fans of the world get really pumped about the World Cup, and they bet millions of dollars, and pounds, and euros, and pesos, and colons on it.

What, you never heard of El Salvador’s monetary units? They’re called colons. (The lower part of a Salvadoran’s intestinal tract is called a “dollar.”)

Because sports books around the world take in so many millions of colons’ worth of wagers on the World Cup, the tournament provides a huge payday for bookmakers. Making the wagering even more intense is the fact that it’s only a quadrennial tournament. (What’s more, it only happens every four years.) Some bookmakers get the wagering going by running expensive advertising campaigns.

Others just get a Jesus balloon.

Just before the World Cup got under way last month, people in Melbourne, Australia looked up in the skies and saw not a bird, not a plane, but the Savior Himself, in the form of a 46-meter, one-ton balloon replica of Rio’s Christ the Redeemer statue, wearing the Australian football team’s jersey and displaying the slogan “#Keep the Faith.”

The Twitter hashtag was there to invite comments on the social network, and, evidently, to show that Jesus has kept up with the times. But anyway, the immaculate conception of this stunt was pulled off by the gambling website Sportsbet, whose logo was also on the Savior’s football jersey.

According to a spokesman for Sportsbet, the “Keep the Faith” slogan was meant to convey, in a humorous, edgy kind of way, that Australia needed “some divine intervention to progress in the World Cup.” “We wanted to make it loud and clear that we are backing the boys in Brazil,” the spokesman said, “and what better way to do so than with Australia’s largest-ever balloon floating above the Melbourne skyline?”

Remarkably, Christian church leaders in Australia were not amused by Inflatable Jesus. One minister condemned Sportsbet, saying, “Is nothing sacred?” Dealing the next morality card in the deck, the minister, Rev. Tim Costello, said, “If they knew anything about Jesus they’d know he’d be overturning tables in the gaming halls, because they’re highly addictive and destroy lives.”

Now, wait a minute. That’s going a bit far. For most of the world, gaming halls provide jobs, tax money for governments, and entertainment for patrons. Tell him, Inflatable Jesus.

Dr. Philip Freier, Anglican archbishop of Melbourne, also criticized the campaign, saying, “The campaign is hypocritical because the Jesus who overturned the money-changers’ tables in the Jerusalem Temple would not encourage betting. And it is incoherent, in claiming the (Australia) Socceroos are so inadequate that they need a miracle, but patrons should nevertheless bet on them.”

Come on, Bishop, didn’t you ever hear of a longshot?

In another pre-World Cup stunt, there was an “Elephant World Cup” put on by the government of Thailand, to discourage betting on the real tournament.

Real elephants were painted in the football colors of various nations and put in front of giant soccer balls.

They didn’t know what to do. One elephant picked up the ball with his trunk, and after seven elephants tried

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CUTTING EDGE

by Frank Legato

Big Data

Product: Duetto GameChanger (Revenue Strategy Cloud Application) Manufacturer: Duetto Research

ith the launch of “GameChanger,” Duetto aims to help hotel casinos take back revenue lost to third-party booking intermediaries.

Dissatisfied with the tools at his disposal, Duetto co-founder Marco Benvenuti— formerly with Wynn Resorts, where he led revenue management, data analytics, direct marketing and online channels—joined forces with fellow Wynn executive Patrick Bosworth and the former chief technology officer of Salesforce.com, Craig Weissman, to build a cutting-edge cloud application capable of delivering the functionalities he always wanted.

“Casino hotels have been stuck with 20-year-old technologies that cannot keep pace with today’s distribution demands,” says Benvenuti. “Revenue is up but commissions paid intermediaries are growing twice as fast. An information disadvantage has allowed for arbitrage, and it is time to level the playing field.”

According to Benvenuti, casino hotels miss many opportunities to maximize revenue because traditional systems lack the flexibility needed to fine-tune pricing strategies. For example, why not offer valued guests a discounted room vs. nothing at all if they do not meet a comp threshold? Duetto GameChanger allows its users to dynamically price by each independent customer segment, room type, offer or discount.

W

Another advancement—looking to big-data technology, Duetto is improving forecast accuracy by incorporating new insights from demand indicators, such as web shopping behavior, airline traffic, customer review and weather data, among others.

According to Duetto, some of the more powerful and immediate insights about prospective customers are easily obtained by tracking regrets and denials from website booking inquiries.

Early customers are seeing strong results, in some instances doubling revenue.

For more information, visit duettocasino.com.

Text Your Luck Product: TYL Manufacturer: Acres 4.0

ambling is emotion, and the art of gambling management is allowing players to feel good, even when they aren’t winning. That’s why Acres 4.0 designed Text Your Luck (TYL) to replace traditional card-swipe drawings, and increase player gratification, all while lowering overall costs.

TYL begins with a virtual host, a cyber-personality that interacts with players via standard text messaging. Acres officials say they chose text because it is personal, always available and low in cost.

TYL reaches players of all ages, wherever they are and whenever they want. Over 2.2

G

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trillion texts were exchanged last year in the United States, and the fastest growing segment is age 50 and over.

Players text with the casino’s “Virt” exactly like they text with friends. The casino’s Virt becomes their friend. The Virt can also host a Facebook page or run a Twitter feed to further strengthen emotional bonds.

The casino determines the prize structure: cash, free play, merchandise or other awards. “Just remember, a great promotion is not about making winners feel good, as that happens automatically,” says Will Adamson, Acres product manager. “A great promotion is about making losers feel important and engaged. With TYL, players feel respected and important, even when losing.”

TYL is fun for guests and great for the bottom line. When compared to traditional card-swipe drawings, TYL engages more players, more often and drives more play—while lowering reinvestment costs by 30 percent or more.

“Happier players, lower costs and increased play are exactly what your casino needs in these challenging times,” says Adamson, “and TYL delivers.”

For more information, email Will.Adamson@acres4.com.

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p. 64, 66, 67 GOODS:Layout 1 6/19/14 2:43 PM Page 64

GOODS&SERVICES

MGM China Co-Chair Pansy Ho and Hong Kong impresario Alan Zeman; AGA President and CEO Geoff Freeman; MGM China President Grant Bowie

ASIAN INFLUENCE G2E Asia sets attendance, exhibitor records ansy Ho framed her keynote address at last Pcasinos month’s G2E Asia around a call for Macau’s to continue to invest in making the city a more diversified and all-around resort destination.

“There’s no alternative sector to replace the success of the casinos in Macau,” said the billionaire Hong Kong businesswoman, a daughter of legendary Macau casino tycoon Stanley Ho and co-chair of MGM China Holdings. “We should invest also in MICE, entertainment, retail, clubs and art to diversify our offer.”

Noting that gaming accounts for 25 percent of the labor force and 80 percent of government revenues, Ho warned that Macau’s economy is vulnerable if it continues to depend on a single industry.

“The casino success was not in vain, of course, but we need to diversify and address our economic and social issues,” she said.

Her sentiments were echoed by American Gaming Association President and CEO Geoff Freeman, who spoke at a media briefing session on the first day of the show, saying that based on the Las Vegas experience the factor that leads to success in diversifying the local economy is the development of the meeting, incentives, conference and exhibition industry.

“As you bring in the meetings and the customers, their interests vary,” he said. “Some are interested in gaming; some are interested in using the spa services; some will play golf; some are in the restaurants. So I think that the MICE market and all aspects of it are critical to driving a successful non-gaming business.”

The AGA is co-producer with Reed Exhibitions of G2E Asia, the largest gaming industry trade show and conference in the region. The event covered 9,000 square meters this year at its annual home at the Venetian Macao Convention 64

Global Gaming Business JULY 2014

While VIP has entered a period of “consolidation,” Aziz said, he reiterated the widespread belief that the city’s future lies with the high-margin mass market, which does not depend on junkets and is growing at triple-digit rates, accounting now for 70 percent of the casinos’ profits.

“Any destination in the world would like to have what Macau has in terms of access to so many billions of people,” said Freeman. “That’s where this opportunity is so extraordinary.”

For G2E Asia, it was the most successful show ever. The show floor grew by over 20 percent from last year, and a robust conference program wrapped up on Thursday with an iGaming Summit focused on the Asian market.

This year, more than other previous shows, exhibitors demonstrated that their focus at G2E Asia was squarely on the Asian customers. Slot manufacturers displayed a wide range of Asian-themed games. Electronic table games were front-and-center with a selection of “stadium”-style games that appeal to jurisdictions like Macau where either the number of tables is capped or lower limits allow for wider appeal. Productivity solutions were apparent across the floor, as were service companies that did everything from slot testing to consulting.

AGA LAUNCHES G2KG new survey released by the American Gaming A Association confirms that Americans are solidly behind casino gaming and recognize the benefits

and Exhibition Center, and featured 160 exhibitors. The 2014 version, expanded for the first time to three days, attracted more than 6,500 visitors and attendees (unofficially; audited attendance data will be released soon).

Freeman said the local officials he met are confident about the continued success of Macau, which has been rocked in recent weeks by reports of crackdowns on illicit cash flows into the territory and visa permit abuses, and by ongoing investigations into money laundering that have cast a harsh light on the junkets that control the market’s massive high-roller trade.

“It seems that everyone’s always looking for reasons to prove that Macau is not the success it is,” MGM China CEO Grant Bowie said at the show’s opening session. Investors “need to understand Macau,” he said, and that’s “impossible” to do from New York or London.

“We should focus on Macau’s success story; these are minor events that will not affect the long term,” added Wynn Macau President Gamal Aziz. “Macau is a unique success in the industry.”

the industry brings to communities. The survey is the launch of a new campaign called “Get to Know Gaming” (G2KG), which is designed to proactively boast of the benefits of casino gaming in the U.S. “There has never been a better time to go on the offensive,” American Gaming Association President Geoff Freeman told the Las Vegas Review Journal. “There is no need to be defensive. The public has seen the value of having casinos, and we need to promote the hell out of the industry.”

Conducted by the politically diverse polling groups the Mellman Group and Public Opinion Strategies, the poll showed strong support for casino gaming:

• Fifty-seven percent support casino gaming and an all-time high of 87 percent agree that gaming is an acceptable activity.

• More than 70 percent of respondents agree that casinos create jobs.

• Nearly two-thirds of casino customers say they spend money in the adjacent casino communities.

*Approved in New Jersey for interactive gaming.

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The survey showed that casino customers are a cross-section of America: • Sixty-three percent of casino customers are homeowners and 70 percent are middle class or upper middle class.

• Almost half of casino customers are college graduates, a full 16 points higher than the national average.

• More than one-third attend religious services each week with a quarter of them described as evangelicals.

• Fifty-six percent of visitors are between 21 and 49 years of age.

• There is no dominant political view of casino customers with Democrats, Republicans and independents split relatively evenly.

• Twenty-three percent earn between $60,000 and $99,000 a year.

• When visiting a casino, customers set a gambling budget of less than $200.

• The reasons for going to a casino are the same for nearly two-thirds of the respondents: to “have fun and socialize with family and friends.”

• More than half of the respondents agree that casinos should be treated like any other business.

• Respondents agree that casinos are part of the communities where they are located, and almost half of them would like to see more casinos.

And nearly 60 percent agree that casinos improve their local communities and their economies.

GTECH BIDDING FOR IGT GTECH, IGT confirm acquisition talks nternational casino and lottery Iconfirmed supplier and operator GTECH last month that it is in negotiations to buy slot machine manufacturing giant International Game Technology.

GTECH S.p.A., the Italy-based conglomerate formed through the combination of Italian lottery operator Lottomatica, slot maker Spielo International and Rhode Island-based lottery supplier GTECH Corporation, issued a statement confirming that it has hired advisers to help negotiate a deal to buy IGT, the world’s largest slot manufacturer.

“This transaction could potentially involve the use of a mix of cash and equity as consideration,” the GTECH statement said.

IGT issued its own statement last month, confirming for the first time that the company is for sale.

“IGT regularly considers, and on occasion explores, a broad range of strategic alternatives,” the statement said, “including but not limited to business combinations, changes to our capital structure and adjustments to our portfolio of businesses, with the goal of maximizing shareholder value.

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Global Gaming Business JULY 2014

“The IGT Board of Directors and senior management are currently engaged in such an exploration, but no decisions have been made by the board regarding any particular alternative available to the company and there can be no assurances that any transaction or other strategic change will be entered into as a result of the current exploration of alternatives.

“IGT does not intend to discuss or disclose developments with respect to this general subject unless and until the board has approved a definitive course of action.”

Reuters, which originally reported that IGT was for sale in a story citing unnamed sources, reported subsequently that GTECH’s bid will not be alone.

Billionaire Ron Perelman’s McAndrews & Forbes Holdings, a holding company with interests in a diverse range of companies including Scientific Games and Revlon, is bidding to buy IGT, according to the report.

Private equity firm Apollo Global Management, co-owner of Caesars entertainment, and buyout firm Carlyle Group LP are also reportedly planning to bid on the company. A source told Reuters that bids are expected on the slot-maker during the next few weeks.

IGT has reportedly hired Morgan Stanley to explore a sale. None of the parties identified as potential buyers of the slot-maker would comment for the Reuters report.

IGT controls around 47 percent of the worldwide slot machine market, and most recently branched out into the social gaming area with its purchase of Double Down Interactive, which owns the popular DoubleDown Casino on Facebook.

IGT carries around $2.2 billion in debt.

GTECH is the world’s largest operator of lotteries, its subsidiary Lottomatica running the Italian lottery and several U.S. state lotteries. Its slot manufacturing arm, the former Spielo International, is a successful supplier of games in the Canadian market and in U.S. commercial casinos. That company previously bought the former Austrian slot-maker Atonic Group. Its market capitalization is around $4.6 billion.

The news of the buyout negotiations sent shares in IGT up nearly 11 percent the day of the announcement, giving it a market value of close to $4 billion. Shares in GTECH were down 0.6 percent.

BALLY TO ACQUIRE DRAGONPLAY lot, table and system supplier Bally Technologies Sagreement announced that it has entered into a definitive to acquire Dragonplay Ltd., a leading online social casino company headquartered in Tel Aviv, Israel, with top-grossing applications for Android, as well as a significant presence on Facebook and Apple iOS.

Launched in 2010, Dragonplay ranks among the 10 top-grossing game developers in the social casino genre with approximately 700,000 daily active users (DAU) and nearly 3 million monthly users across all platforms. In the “Card” category on Google Play, Dragonplay’s poker game Live Hold’em Pro is ranked No. 1 in the top-grossing category. In the “Casino” category on Google Play, Dragonplay Slots is a top 10 performer in terms of active users “With over three years of topping various performance charts on Google Play, Dragonplay has successfully and consistently demonstrated its ability to acquire, monetize and retain social gamers by creating compelling games with staying power in the social casino space,” said Bally Chief Executive Officer Richard Haddrill. “We expect this strategic acquisition to help position Bally at the forefront of social casino gaming by leveraging our world-class content, including proprietary table games and award-winning video slots, on Dragonplay’s increasingly popular social casino.”

Total consideration includes approximately $51 million in up-front cash, plus the amount of net working capital, payable to Dragonplay’s shareholders in exchange for all of the issued and outstanding equity, and approximately $49 million in additional earn-out consideration and employee retention payments over the next 18 months subject to Dragonplay meeting certain financial performance targets.

NOVOMATIC LICENSED IN ILLINOIS he Illinois Gaming Board has approved NovoTbothmatic Americas as a licensed supplier of games for the state’s riverboat casino market and its VGT video lottery bar market.

“The approval of Novomatic Americas by the Illinois Gaming Board is both very welcome and, following our recently held focus group and product presentation events, particularly timely,” said Rick Meitzler, vice president of sales-North America for Novomatic Americas. “It has already been made very clear to us that the Illinois gaming operators are ready and willing to welcome Novomatic and that they are keen to evaluate our product offering for themselves at the earliest possible opportunity.”

The license approvals were lauded by the supplier as a major forward step for Novomatic’s entry into key U.S. markets through its Florida-based partner, Reel Games, Inc.

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Novomatic Americas was established in 2012 as a strategic step for Austria’s Novomatic Group on the American continent with an emphasis on tribal government gaming.

KONAMI SUCCESSFUL AT CASINO BAD HOMBURG RGT, the European distributor for slot-maker D Konami Gaming, reported that its launch of games in the prestigious Casino Bad Homburg in Germany was a big success.

The initial trial of four single-game machines has been deemed successful by the casino and by DRGT, which identified the games as African Diamond, China Shores, Full Moon Diamond and Egyptian Eyes.

The German casino market is rather traditional and focuses mainly on the biggest brands, making it a difficult market to crack, according to Lutz Schenkel, managing director of Casino Bad Homburg.

“It could be said that it was a risk to even try Konami,” Schenkel said. “Usually, a newcomer’s slot machine is popular in the first few weeks then interest tails off. That is why most casino managers here choose what they know based on past experience.

The results of the Konami slots have been continually positive. They are sought-after by our customers, so we made the natural choice to keep Konami on our floor. Konami quickly became popular and has remained so with our customers.”

Regulator Resources for You and Your Agency

Offering educational webinars for the gaming regulation and enforcement professional.

GAMING MARKET ADVISORS ACQUIRES GALAVIZ & COMPANY, CREATES NEW COMPANY aming Market Advisors G (GMA), a leading provider of economic feasibility reports and marketing strategies to the casino gamJonathan Galaviz ing industry, announced the acquisition of Galaviz & Company last month at G2E Asia. The acquisition positions GMA with a stronger foothold to support clients in Asia and to increase its consulting presence to associated tourism industries such as airlines and hospitality.

GMA also announced that its name will change to Global Market Advisors, reflecting a broader service-offering portfolio. The Gaming Market Advisors brand, focused exclusively on serving the global casino gaming industry, will become a wholly owned division of Global Market Advisors, LLC. The team at Galaviz & Company will be fully integrated into GMA operations and client engagements. Financial terms of the Galaviz & Company acquisition were not disclosed. The Galaviz & Company brand will be fully absorbed into GMA. JULY 2014 www.ggbmagazine.com

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G&TAwardsad.2014

6/3/14

10:54 AM

Page 1

13 Annual

Awards CALL FOR ENTRIES The gaming industry’s most prestigious technology awards program is coming again and soliciting nominations. The winners of the Global Gaming Business Gaming & Technology Awards 2015 will be announced at a ceremony on the show floor at Global Gaming Expo in October. Don’t miss this chance to showcase your company’s latest innovation. Nominations are due August 22, 2014.

CALL FOR ENTRIES

THE CATEGORIES ARE: BEST CONSUMER-SERVICE TECHNOLOGY This category concerns technology that directly touches the customers. Whether it is an enhanced kiosk, a new player tracking system, reservations system, parking management system or any other customer-friendly device, this technology directly impacts the experience of the customer. Why is this a step up from previous technologies?

BEST PRODUCTIVITY-ENHANCEMENT TECHNOLOGY This category describes a technology that makes a job or task easier and more efficient. Examples could be an online accounting system, better technology for printing tickets on cashless slots, or an employee communications device that allows a property to better explain its programs to its workers. How does this technology improve on the way the task or job had been previously performed?

BEST SLOT PRODUCT Very simply, this product is the judges’ favorite new slot product. It can be a brand new game or a traditional game that has been updated within the past 12 months. What makes this machine or game a step forward technologically?

BEST TABLE-GAME PRODUCT OR INNOVATION The growth of table games continues to occur around the world and makes it important to recognize innovative developments in this area. In this category, nominations can be made for table games or any product related to table games.

For more information, criteria and nomination forms, contact Global Gaming Business Sales Director David Coheen at dcoheen@ggbmagazine.com or call 702-248-1565 X227.

To place an online nomination go to

www.ggbmagazine.com

Global Gaming Business

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PEOPLE GAMING LAW LEGEND BOB FAISS DIES

B

ob Faiss, the legendary attorney known as the “Father of Gaming Law,” died last month at 79.

Faiss was responsible for crafting gaming regulations in Nevada that eventually drove organized crime out of the Bob Faiss state’s casino industry and ushered in an era of growth and stability. His accomplishments included opening up the industry to corporations, the spread of corporate gaming ownership, the approval of private gaming salons in Nevada, the introduction of online and mobile gaming in the state and much more.

Before he was a lawyer, he was a journalist. He became the youngest city editor for the Las Vegas Sun at the time in the early 1960s, and eventually worked for the Lyndon Johnson administration.

After serving as an aide to Nevada Governor Grant Sawyer for two terms, he attended law school in Washington, D.C., with the promise that he could practice law in Sawyer’s firm.

But nothing had prepared him for the battle with the mob.

Though Nevada gaming had been infiltrated for years by organized crime, efforts were made in the 1950s and ’60s to eliminate any influences of the undesirables. Progress was limited, until Faiss (backed by his mentor, Sawyer) began to re-shape Nevada gaming regulations.

“You have to remember that after the legalization of gaming in 1931, the state played no role in gaming,” he told Global Gaming Business in 2009.

“It wasn’t until 1945 that there was a state tax, and the Gaming Control Board was not even set up until 10 years after that. So people had been in business for a long time and had been doing things the way they thought best, and suddenly this system started to be foisted upon them. So there was resistance.”

The Gaming Control Act passed by Sawyer gave the board and the Gaming Commission great discretion. Both the courts and public opinion supported this approach. Further tweaks to the system allowed gaming to operate successfully as long as the integrity of the operation and the games was assured. Faiss, who was a longtime partner in Lionel Sawyer & Collins, was involved with creating many of the regulations and guidelines.

Tributes poured in upon learning of his death.

“Nevada is a much better place because of the

Faiss family,” said U.S. Senator Harry Reid. “I’m terribly saddened at the loss of my friend Bob. He has accomplished much for our community, and his commitment to a better Nevada has always been at the forefront of his endeavors.”

“Nevada and the global casino resort industry have lost a leading light in the passing of Bob Faiss,” said Jim Murren, chairman and CEO of MGM Resorts International. “Bob’s professionalism, intellect and respect for the rule of law led to the creation of the fundamental regulations that helped to create a stable and well-regulated industry here in Nevada, as well as in jurisdictions across the country and around the world.”

AURIEMMA JOINS MGM COMPLIANCE COMMITTEE

M

GM Resorts International has appointed former New Jersey Division of Gaming Enforcement Director Thomas N. Auriemma to its compliance committee. According to a release from the Thomas N. Auriemma company, the independent committee is “charged with the responsibility of reviewing matters of significance and providing guidance and counsel to management and the board of directors.”

Auriemma was a gaming regulator in New Jersey for more than 28 years. He served for more than a decade as deputy director for the Division of Gaming Enforcement, and in 2002 was appointed as the director of the agency, a position he held until 2007. In these roles, he also served as an assistant attorney general for the state. He has also served as chief compliance officer for Penn National Gaming.

WOLF RESIGNS FROM ODAWA CASINO

D

avid Wolf recently resigned as general manager at Odawa Casino in Petoskey, Michigan, operated by the Little Traverse Bay Bands of Odawa Indians. A spokesperson for the casino said Wolf will join Jumers, an Illinois gaming operation across the river from Davenport, Iowa.

Meanwhile, Roger Borton, Odawa’s director of finance since 2010, has been named interim general manager until a new GM is hired.

Wolf joined Odawa as general manager in 2010. In the past four years, he managed numerous upgrades at the hotel, including a two-year

renovation and switching to solar energy. In addition, he directed improvements at the property’s restaurants and parking facilities, plus a website redesign. In addition, during Wolf’s tenure the casino refinanced its long-term debt and the Odawa tribal government was able to expand programs and services as a result of casino revenues.

GLI NAMES EUROPEAN DEVELOPMENT MANAGER

L

eading gaming testing company Gaming Laboratories International has named Cora Neels as European development manager, based in GLI’s European headquarters in Hillegom, The Netherlands.

Neels is a customer service and sales expert.

Most recently, she held a customer development position at GTECH SpA London, where she helped foster increased performance and developed new processes that increased efficiency.

As development manager, Neels will manage GLI Europe accounts of both existing and prospective clients.

GGB

July 2014

Index of Advertisers

Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 American Gaming Systems . . . . . . . . . . . . . . .25 Bally Technologies . . . . . . . . . . . . . . . . . . . . . .2 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . .31 Cintas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .67 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59, 63 Gaming & Technology Awards . . . . . . . . . . . .68 GCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 GTECH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Innovation Group . . . . . . . . . . . . . . . . . . . . . .57 Joingo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Konami Gaming . . . . . . . . . . . . . . . .Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 Macquarie . . . . . . . . . . . . . . . .Inside Back Cover MGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Multimedia Games . . . . . . . . . . . . . . . . . . . . .29 NAGRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Ortiz Gaming . . . . . . . . . . . . . . . . . . . . . . . . .13 Red Square Gaming . . . . . . . . . . . . . . . . . . . . .9 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .45 Spin Games . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Talking Stick Casino . . . . . . . . . . . . . . . . . . . .55 US Virgin Islands . . . . . . . . . . . . . . . . . . . . . . .43 Vantiv . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35

JULY 2014 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Q

&A

Marco Benvenuti & Patrick Bosworth

Co-Founders, Duetto Research

T

he role of revenue management is becoming more important in today’s competitive casino environment.

Patrick Bosworth and Marco Benvenuti have been working at improving this function for many years with companies such as Caesars Entertainment and Wynn Resorts. Several years ago, they started Duetto Consulting, a company built to help smaller casinos perform this task, but now have launched Duetto Research complete with an innovative software platform. They spoke with GGB Publisher Roger Gros at the Duetto offices in Las Vegas in June. To hear a full podcast of this interview, including how they work with clients and what the results have been, visit ggbmagazine.com.

GGB: You were working for the one of the largest and best gaming companies in the world, but you decided to leave and start your own business.

What was the reasoning behind that decision?

Patrick Bosworth: It was twofold. One is we knew that we were doing very interesting work at the Wynn organization, but we knew that there were also opportunities to go have a broader impact on the entire industry rather than a single company. Duetto Research has evolved from Duetto Consulting and the focus is on this new technology business, where we took some of the concepts we were working on at Wynn and the concepts we developed further at the consulting company, and built them into this new technology business.

Marco Benvenuti: It’s interesting when you are on the other side, and you’re working for a big gaming company, for big hotels, big resorts. You buy technology and you use technology, and you really see a niche. And that is the niche that we are in—revenue management, revenue strategy, distribution—where none of the existing technology was really overwhelming us. That’s when you understand that there is an opportunity to do something.

70

Global Gaming Business JULY 2014

How did Duetto Research get started?

Benvenuti: Our customer success team became

the natural transition of Duetto Consulting and everything we learned from that. And AJ Jenveja, who was working with us in Duetto Consulting, now is in charge of the customer success team here, so there is a nice continuation there because we do have still to provide professional services to our current customers with the software.

But the goal is to help the industry. At the beginning we were trying to see if we could be of help to some of the existing technology companies to move to the next level, and when we found that was not possible, we started developing our own tools that were Excel-based for the various casinos that we had as clients. We realized that we potentially had a product in our hand, if only we found, of course, a technical cofounder at that point that could translate what I wrote in Excel into a real, modern, multi-tenant cloud, web-based application. That’s when we met Craig Weissman, and that’s how things started becoming real software.

Craig is your chief technology officer. What did he bring to the table?

Bosworth: I think what we’ve seen with the reincarnation of Duetto as a technology business is that we’re bringing the best of the Silicon Valley technology industry with hopefully leading-edge thinking from the hotel and the gaming industry as well, and Craig in his former role as chief technology officer of salesforce.com really led the globe in cloud computing. They were the first cloud company, they were the first software-as-aservice business to hit scale, and they really trailblazed what is now a very large and growing part of the software industry, globally. And so, it was a bit of a coup for us to get him interested. He had spent his career in horizontal platforms, where you build a piece of software that serves telecom, banking, retail, everything. And he was looking to go into a particular vertical platform

of what he refers to as meat-and-potatoes industry, that has antiquated technology, and help change the game in a large vertical. Well, when you look at the global hospitality industry, that’s a very, very large vertical.

Have you been focusing on hospitality for the last few years because it is easier to do that without the complexities of the casino being added in?

Bosworth: That’s right. We’ve had a couple of casinos already using the product even before we launched our casino focus product, which is called GameChanger. You definitely want to build the early versions of it to serve a simpler type of hotel, but we always had in mind that we would serve the gaming industry; that’s where Marco and I spent a lot of our career, particularly Marco.

Benevenuti: The product from the very beginning was designed with the full-fledged integrated resort in mind, which is the most complex asset that you can revenue-manage, and so everything from our optimization to our forecasting was already done at the profit level. We built the pipes to incorporate other revenue streams besides just the room rate, but of course you start from the more simple asset where the only thing you have to optimize is the room rate, and then you start building functionalities in the front end, more user-based, where you can actually get all the way to the point of GameChanger, where you can basically decide who to comp, who not to comp, how much discount to give by segment, by room type, with the total flexibility that we built in the backbone.

That’s why if you compare us with other technology in the space, you don’t get the breadth of functionalities that we have in a two-year time frame without that type of design, and the development team that we talked about, which works really fast.

Providing customized advice and financing solutions to the Gaming industry

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