Global Gaming Business, July 2017

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GGB Global Gaming Business Magazine

MELCO’S LAWRENCE HO GOLDEN NUGGET ONLINE NON-GAMING RATINGS 7 STEPS TO GAMING’S FUTURE

July 2017 • Vol. 16 • No. 7 • $10

Official Publication of the American Gaming Association

Stalled Off-Rez Early indications aren’t good for land-into-trust issues

Decoupling Decision

Why racinos aren’t saving racing

The Harvard of Gaming How UNLV’s collection of gaming programs makes it the best in the world Association of Gaming Equipment Manufacturers


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CONTENTS

Vol. 16 • No. 7

july

Global Gaming Business Magazine

COLUMNS

Celebrating 15

12 AGA Let’s Legalize and Regulate It

It’s the landmark 15th Anniversary issue for GGB, and we’re celebrating this month with special cover image produced by Jason Martin with Bare Bones Games. And don’t miss the 15th Anniversary Gamification challenge on page 12 to see how well you know the industry’s last 15 years.

Geoff Freeman

14 Fantini’s Finance Hail Caesars Frank Fantini

20 Research Transition Begins Rummy Pandit

Cover photo courtesy of Bare Bones Games. See page 54 for more informaton.

FEATURES

18 Educating the Industry With the spread of the casino industry across the country has come a collateral growth of gaming education in higher-education institutions. By Bob Ambrose

28 Trump and Carcieri As President Donald Trump’s administration continues to take form, Indian Country watches to see if tribal-friendly land-trust policies continue. By Dave Palermo

38 Operations The Casino of the Future

34 The Racino Experiment

Blaine Graboyes

Slot machines were originally placed at racetracks to save the racing industry, but all indications are that it is not working.

46 Table Games An Authentic Friend

By Aaron Stanley

48 Rating Game As casinos have concentrated more on non-gaming revenues, system suppliers have kept pace with new technology for tracking and rating customer spend. By Dave Bontempo

60 Asia’s Expo A record-setting trade-show floor and a stellar lineup of speakers marked G2E Asia 2017. By Patrick Roberts

Roger Snow

DEPARTMENTS 6

The Agenda

8

By the Numbers

10 5 Questions 12 15th Anniversary Challenge 18 AGEM Page 52 New Game Review 54 Cutting Edge 55 Frankly Speaking

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

Feature 40 The Golden Standard Golden Nugget Atlantic City has provided the model of how to create a successful online gaming program. By Steve Ruddock

44 iGames News Roundup 4

Global Gaming Business JULY 2017

56 Emerging Leaders With Aria’s Angela Bae, Duane Morris LLP’s Adam Berger, and Gamblit Gaming’s Darion Lowenstein

58 Goods

62 GameON II Slot and table-game supplier AGS used its second annual GameON customer conference outside of Washington, D.C. to highlight industry trends and technology developments. By Frank Legato

& Services

65 People 66 Casino

Communications

With Lawrence Ho, Chairman and CEO, Melco International


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THE AGENDA

15 &

Vol. 16 • No. 7 • JULY 2017 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz

Counting

Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

F

ifteen years doesn’t seem like a lot to me. But then again, when you’ve recorded four times that total and more, it’s like a blink of an eye. But the last 15 years have been some of the most satisfying of my life. Launching Global Gaming Business in the middle of 2002, less than a year after 9/11 shook the world, was a gamble. Like most industries, gaming had yet to recover. No one knew what was coming next. But we put together a small staff and began publishing two issues a month starting in July 2002. That was our hook. We were far from the only gaming trade publication out there, so we needed to differentiate ourselves, and two magazines a month arriving on the desks of the executives should do just that. My previous magazine had been bought by the industry giant that already owned the leading trade publication and was now part of the former annual trade show, World Gaming Congress. The nascent Global Gaming Expo (G2E) was struggling to compete and needed a publication vehicle. So with the support of the American Gaming Association and Reed Exhibitions, the two partners in G2E, we set off on our adventure. It wasn’t long until the power of the AGA did away with the World Gaming Congress, so GGB became an important partner in promoting the new G2E. I’ve been a conference consultant to G2E since those early days, and I’m confident that the quality of the education sessions over the years truly set G2E apart from any competitor. But it wasn’t easy. Our small staff—an editor, a writer and an art director—was often frazzled with the two-issues-a-month task. While we didn’t have to paste up the pages on boards as I did early in my journalism career, the clunky software we used to lay out the magazines wasn’t much better. So after a year of the two-a-month, we cut back to one issue, and we relaxed a bit. We began to get recognition as the industry’s major trade publication toward the end of 2003, when we featured cover stories on such luminaries as Boyd Gaming’s Bob Boughner, Caesars’ Gary Loveman, Steve Wynn and the legendary

6

Global Gaming Business JULY 2017

Dennis Gomes. This focus on important industry leaders became a hallmark of GGB and continues to this day. In fact, it was Gomes who encouraged us to produce magazines for employees in Atlantic City and Las Vegas. Casino Connection became the voice of the employee, and discussed such important topics as customer service, upward mobility and how to manage your life in the fast casino world. I moved from Atlantic City to Las Vegas in 2005 to start the Nevada version and we set up our main office in the capital of gaming. We continued the upward move until the recession hit hard in 2007. Our partners—we call “advertisers” partners because we’re committed to helping them reach their goals across multiple media platforms—stuck with us. They may have reduced the number of pages they bought, but few abandoned us altogether. We unfortunately had to fold the two Casino Connections (the Atlantic City version remains online, however), and our staff tightened our belts to ride it out. And we did, emerging on the other side, healthier and more dedicated than ever to serve the industry. And just recently we survived the “consolidation” in which several of our largest partners gobbled up the others. Again, our dedication to spreading the word about how these even larger companies would thrive has helped us maintain their loyalty. And because our reputation has continued to grow, the newest companies to the industry understand that our relationships with our partners and our dedication to the industry will enable them to truly make an impact on gaming, so they’ve come to us in overwhelming numbers. Yes, it’s been somewhat of a roller coaster these last 15 years. But because of the tremendous friends that we’ve made, the lasting relationships that we’ve forged and the amazing staff that has helped us overcome these hurdles, GGB will be around much, much longer. So thanks to all those people and organizations for making gaming great again!

John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Blaine Graboyes | Rummy Pandit | Roger Snow Contributing Editors Bob Ambrose | Dave Bontempo Marie Casias | Dave Palermo twitter: @DavePalermo4 Patrick Roberts | Steve Ruddock twitter: @SteveRuddock Aaron Stanley | William Sokolic

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

• Mark A. Birtha, Senior Vice President & General Manager, Hard Rock International

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports twitter: @CDCNewswire

• Geoff Freeman, President & CEO, American Gaming Association twitter: @GeoffFreemanAGA

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2017 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014 Official Publication


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BY THE

NUMBERS

Free PLay Good invesTmenT?

i

n the April Market Monitor, compiled by Manfredi Consulting, an interesting chart on the impact of free play was published. In states where free play was reported (or where companies reveal in annual reports), the bottom line (ROI) is revealing. Florida, Ohio and Pennsylvania give away the most free play (although New York got more aggressive in the last two quarters). But for the most part, ROI remains steady no matter how much you give away. To download the full Market Monitor, visit manfrediconsulting.com.

The LasT six in nevada

8

T

wo good months can erase four negative months. That was the case in the last six months of Nevada gaming revenues. A double-digit increase in January was followed two months later by a boost of nearly 8 percent, pushing gaming revenues in the state up for the period by almost 2 percent. The Las Vegas Strip, which contributes almost 60 percent of state gaming revenue, also did well in slots with a much higher hold percentage. But tables were very volatile, dipping more than 10 percent in April and producing almost flat revenues for the sixmonth period. This report was compiled by the Center for Gaming Research at the University of Nevada, Las Vegas, from reports issued by the Nevada Gaming Control Board.

Nevada Gaming Statistics: The Last Six Months November 2016 to April 2017

Statewide November December Total Win Y/Y Change Slot Win Y/Y Change Slot Hold % Game Win Y/Y Change

930,425 -1.47 605,232 1.47 6.94 325,193 -6.52

956,095 -2.73 547,296 -3.37 5.83 408,800 -1.87

January

February

March

April

1,036,265 12.02 634,472 9.57 7.48 401,794 16.12

945,598 -4.48 581,681 -4.57 6.60 363,917 -4.33

991,023 7.45 655,446 6.29 6.74 335,577 9.79

886,529 1.19 598,732 5.50 6.55 287,797 -6.75

February 541,901 -4.98 249,369 -4.96 7.80 292,532 -4.99

March 526,093 8.07 277,926 10.98 7.94 248,167 4.98

Total 5,745,935 1.87% 3,622,859 2.48% 6.68% 2,123,078 0.85%

Las Vegas Strip

Global Gaming Business JULY 2017

Total Win Y/Y Change Slot Win Y/Y Change Slot Hold % Game Win Y/Y Change

November 516,992 -3.48 257,976 -2.70 8.06 259,016 -4.23

December 590,707 -1.67 259,869 2.10 7.03 330,838 -4.45

January 608,928 14.40 274,317 6.10 9.03 334,610 22.24

April 475,375 -3.25 260,212 3.74 7.99 215,163 -10.55

Total 3,259,996 1.34% 1,579,669 2.47% 7.94% 1,680,326 0.30%


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NUTSHELL

“They

5Questions

Steve Walther

Senior Director, Marketing and Product Management, Konami Gaming teve Walther recently added marketing to his product management duties at Konami Gaming. scratWalther has a 20-year history in gaming on the supplier side, working for such companies as Aristoand Aruze. At Konami, he is responsible for global product planning, life-cycle support and performance analysis, which includes gathering and prioritizing product and customer requirements, defining the product vision and roadmap, and building product launch and marketing strategies. He spoke with GGB Publisher Roger Gros at the Konami offices in Las Vegas in May. To listen to a podcast of this interview, visit GGBMagazine.com.

1 2 3 4 5

How has your role changed with the additional responsibilities you recently took on? I am now looking after the marketing group, handling marketing events, promotions and communications, as well as continuing my duties looking after the product management both on the games and systems sides.

You debuted a game at the NIGA trade show that was very impressive, Castlevania. Give us the genesis of that game and how it was developed. Castlevania is very near and dear to the Konami heart and to anyone who has been playing video games since the early 1980s on the Nintendo-style game systems. There have been almost 30 versions of it over the years, so it’s a very popular game for Konami. We felt if we were going to bring it to Konami Gaming, we had to treat it right. So we’ve created a hybrid of the different versions, from the 8-bit versions all the way to the modern 3-D style graphics. At the heart of it is a romance game, with the hero trying to rescue his princess. And having the palate of that 43-inch curved display, we can use some incredibly high-definition graphics. And you really get involved in the game. You debuted Frogger as a skill game at Level Up in MGM Las Vegas earlier this year. How’s that been doing? It’s been doing well for the location. It’s not in the most heavily trafficked area of the floor, but it’s been hitting the demographics we’ve been looking for. Frogger Get Hoppin’ is the first skill-based game that was approved in Nevada via the new Innovation Beta program. We’re very happy that Konami could participate in this groundbreaking experiment by introducing variable payback into the games. The player actually moves the frog, and it’s all about you.

Tell us about your new tournament program. Our True-Time Tournaments have been very well-received. In addition to being able to offer on-demand tournaments, where the players can enter and play the tournaments where they’ve earned entries at any time, we’ve got the ability to synchronize tournaments as well. We’re able to use our True-Time Window, a picture-in-picture on the screen that can access the tournament and play in real time. This way the operator doesn’t have to take any games out of play for the tournament.

And how about the Fortune Cup horse-racing game? There’s a huge demand for Fortune Cup. We’re in the process of making sure we’ve got all the elements right. We’re known for our quality and reliability, so when we bring out new products like Fortune Cup, like Frogger, we want to make sure we’ve got everything right and fully tested. Now, Fortune Cup has been running in Japan for 30 years or more, but we want to make sure that when we bring it to the U.S. it has the same quality and reliability that it has in the Japanese arcades. We also had a math engine we had to build. We’re pretty happy with this product, and you’ll see it soon on the casino floors.

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Global Gaming Business JULY 2017

Said It”

“If this bill passes as is, you’re going to hear crickets, because no casino is going to buy a license.” —Eric Schippers, spokesman for Penn National Gaming, on the bill passed by the Pennsylvania Senate that would impose a 54 percent tax on online casino games, now before the state House

CALENDAR July 8-11: iGaming Super Show, Hall 8, Amsterdam RAI, Netherlands. Produced by iGB Events. For more information, visit iGamingSuperShow.com. July 11-14: Amsterdam Affiliate Conference 2017, Amsterdam RAI, Netherlands. Produced by iGB Events. For more information, visit iGBAffiliates.com. July 18-19: Sports Betting West Africa, Eko Hotel & Suites, Lagos, Nigeria. Produced by Eventus International Limited. For more information, visit sportsbettingevents.com. August 15-17: Australasian Gaming Expo (AGE), ICC Sydney Darling Harbour. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com. September 4-6: Entertainment Arena Expo, Bucharest, Romania. Produced by Expo 24 Romania. For more information, visit earena.ro. September 10-12: IMGL Autumn Conference, Copenhagen, Denmark. Produced by International Masters of Gaming Law. For more information, visit IMGL.org. September 26-28: Malta iGaming Seminar (MiGS), the Hilton, Malta. Produced by the Malta Gaming Authority. For more information, visit MaltaiGamingSeminar.com. October 2-5: Global Gaming Expo, Sands Expo Center, Las Vegas. Produced by American Gaming Association and Reed Exhibitions. For more information, visit GlobalGamingExpo.com.



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What was the cover story in the premiere issue of Global Gaming Business magazine? o There wasn’t one; generic “global” photo o Caribbean casinos o New Jersey Senator Robert Torricelli

thAnniversary

15 2002 Gamification

1

I

n today’s casino world, it’s all about gamification—making a game out of promotions, events and entertainment. So the GGB staff came up with a little game to see how familiar you are with the magazine. Good luck and let us know how you did!

Who was featured on the first “25 People to Watch” cover in 2003? o George Maloof o Steve Wynn o Bob Boughner

2003

2004

2 How many times has GGB featured a U.S. president on the cover of one of its publications? o1 o2 o4

The first issue of GGB to feature a cover on Macau was: o April 2004 o August 2004 o November 2004

4

2005 2006 2007 2008 5

How many times was Asia mentioned on the covers of GGB in 2006? o3 o4 o6

Who replaced Frank Fahrenkopf as president of the AGA? o Jim Murren o Geoff Freeman o Donald Trump

3

6

9

This important group was the focus of the August 2014 cover story. o Slot players o Millennials o Baby Boomers

GGB changed its logo in this 2013 issue: o May o July o November

8

2017 2016 2015 2014 ANSWERS 1. There wasn’t one; generic photo 2. George Maloof 3. 2 (Donald Trump, March 15, 2003 and Barack Obama, Tribal Government Gaming 2016) 4. August 2004 5. 4 6. Geoff Freeman 7. His opposition to online gambling 8. November 9. Millennials 10. Scientific Games

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Global Gaming Business JULY 2017

10

The dominant supplier for table games is o Scientific Games o TSCJohnHuxley o GPI

2013

2009 2010 2011 7

Las Vegas Sands Chairman Sheldon Adelson revealed first to GGB: o LVS was entering the Macau market o His opposition to online gambling o Who he was going to support in the 2012 presidential primaries

2012


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AMERICAN GAMING ASSOCIATION

Legalize and Regulate It The federal sports betting ban has failed and it’s time to get control over the activity By Geoff Freeman, President & CEO, American Gaming Association

A

merica’s federal ban on sports betting has failed. That’s why a new, diverse coalition including law enforcement, elected officials and gaming leaders is coming together to reform the law. We want to give states the opportunity to decide whether to legalize and regulate sports betting, just as they already do with casinos, lotteries and other forms of gaming. Officially, the Professional and Amateur Sports Protection Act (PASPA) prohibits traditional sports betting outside Nevada. Unofficially, millions of Americans bet at will in a vast, unregulated illegal market that offers no oversight by law enforcement, no accountability to regulators, no protections for consumers and no concern about the integrity of games. In the two biggest sports events of the year—the Super Bowl and the NCAA men’s basketball tournament—Americans wagered nearly $15 billion. About 97 percent was bet illegally. A law mocked and ignored by 97 percent of Americans isn’t serving any public benefit. How low is public esteem for the current law? A little over a year ago, President Obama went on The Late Show with Stephen Colbert and joked about pardoning himself for betting on the Super Bowl. When a federal law becomes a punchline for the president of the United States, it’s time for a change. The newly formed American Sports Betting Coalition supports a new approach. We believe giving states the power to decide whether to allow sports betting and how best to regulate it would offer many important public benefits. First, an open, transparent, regulated betting market takes sports betting out of the shadows, making it easier for law enforcement to protect the public and choke off money flowing into criminal organizations. Second, a regulated market combined with modern data analytics technology makes it easier to track sports wagering, identify suspicious

14

Global Gaming Business JULY 2017

The newly formed American Sports Betting Coalition supports a new approach. We believe giving states the power to decide whether to allow sports betting and how best to regulate it would offer many important public benefits.

and anomalous betting patterns and strengthen the integrity of games. Third, lifting the ban would enable state policymakers to align the law with public opinion. A recent national survey by Greenberg Quinlan Rosner (GQR) found that ending the federal sports betting ban is one of the few issues that unites Democrats, Republicans and independents. According to the survey, 57 percent of independents, 58 percent of Republicans and 52 percent of Democrats want to let states make the call.

Among avid sports fans, support for ending the ban rises to 72 percent. Public attitudes toward gaming have changed dramatically since 1992 when the current prohibition was imposed. Gaming has spread to 40 states across America. More than 1,000 casinos draw millions of guests and work closely with law enforcement and regulators to combat illegal gambling. And more political leaders see firsthand the benefits gaming brings to their districts in terms of economic development, jobs and tax revenues. Actually, one casino owner first articulated the case for legalized sports betting right after PASPA was enacted. “You have to be” in favor of sports betting, he said. “It is vital to keeping your taxes low… and it’s vital to putting the bookies out of business.” That casino owner is now the president of the United States. President Trump reiterated his views in November 2015. “I’m OK with (sports betting and daily fantasy sports) because it’s happening anyway,” said Trump. “Whether you have (legalized sports betting) or you don’t have it, you have it.” Sports leagues also recognize public attitudes toward gaming have changed. Later this year, the first professional sports team in Las Vegas will suit up when the Vegas Golden Knights of the National Hockey League take the ice. Back in March, 31 out of 32 National Football League franchise owners voted to allow the Oakland Raiders to move to Las Vegas. Betting on sports has become a mainstream form of entertainment embraced by millions of Americans. Let’s help law enforcement shut down illegal gambling operations and give fans what they want by ending the federal ban on sports betting.

Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.


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FANTINI’S FINANCE

Hail Caesars Preparing for the coming-out party

C

aesars Entertainment recently held what might be called a pre-comingout party. The company hosted sell-side analysts at a day-long program in Las Vegas to give a view of what CZR will look like after it reorganizes based on the structure approved by bankruptcy court in January. Aside from the financial details, the clear message is that Caesars will, for the first time in years, be free to act like every other major casino company in growing its business and serving shareholders. The company also used the opportunity to make the point that has long been a theme of CEO Mark Frissora—that operationally, CZR has steadily been growing EBITDA through higher revenues and lower expenses during his two years at the helm. Some statistics to support Frissora’s point: • EBITDA margins have improved from 18.4 percent in 2014 to 26.4 percent. • Revenue in Las Vegas has grown 13.1 percent from 2014 to 2016, outpacing MGM Resorts, Las Vegas Sands and Wynn. • CZR exceeds fair share in every market except Atlantic City, Philadelphia and Iowa, where it is exactly at average. • The company has added $756 million in EBITDA even though constrained by the bankruptcy process. Part of that is because of greater efficiency. Marketing expenses have fallen from 27 percent to 22 percent of revenue, while revenue per full-time employee has grown from $167 to $204. So, where will CZR be upon reorganization? As has been well reported, CZR will be an operating and property-owning company, though many properties will be owned by a new, as yet-to-benamed REIT. Debt will be reduced and leverage ratio cut from 14 times in 2014 to 4.2 times, or 5.7 times counting obligations to the REIT and a $1.1 billion convertible note that matures in 2024. CZR will put a new emphasis on cash flow rather than EBITDA, and projects free cash flow to grow to $507 million next year and reach $940

16

Global Gaming Business JULY 2017

By Frank Fantini

million in 2021. While CZR is still the world’s biggest casino operator with 47 properties globally and a big regional presence in the U.S., Las Vegas will generate 66 percent of EBITDA. CZR expects to get there through a variety of ways: • Hotel room upgrades, which have already helped raise hotel revenues by 17 percent. By 2020, 88 percent of Las Vegas rooms will have been refurbished, allowing for higher room rates. Each $10 in cash average daily rate adds $70 million in EBITDA. • Other refurbishments will be elsewhere in the properties, including updating slots in casinos. • Costs. CZR has removed $800 million a year in expenses and expects further reductions with much of that thanks to new technology, such as replacing the multitude of proprietary software systems with far fewer systems provided by a handful of leading vendors. • Higher revenue opportunities in various areas. CZR expects to reverse the percentage of EBITDA growth from 70 percent coming from savings to 70 percent coming from higher revenues. Finally, CZR expects to be a full competitor to its peers, assertively seeking to grow through acquisitions, pursuing major international development opportunities, including Japan, and further developing its excess land along and near the Las Vegas Strip. Where does that leave investors? The number of shares will grow from 157.751 million now to 713.3 million upon reorganization, to 856.629 million after the note conversion. At present, and based on the recent stock price of $11.20, CZR figures it is valued at 8.7 times enterprise value to EBITDAR. With the reorganization having won court approval, CZR is now in the process of winning regulatory approvals, and expects to launch its new structure in September or October.

OH, BOY. BOYD IS BACK Boyd Gaming has been making steady progress for several years, and the company looks like it could

break out in 2017. The results were clear in the first quarter as earnings per share jumped 45 percent to a consensus-beating 22 cents, and adjusted EBITDA jumped 13.15 percent to $155.8 million. Those strong results and Boyd’s confident outlook caused the company to restore a quarterly dividend, starting with a 5-cent-a-share payout in July. Boyd also reiterated its previous outlook that it will generate $585 million to $605 million in EBITDA this year. One reason for Boyd’s strength is its decision to buy three more casinos in the Las Vegas locals market. In the first quarter, BYD reported a big jump in EBITDA thanks to those casinos—Aliante and Cannery in North Las Vegas and the East Side Cannery on the Boulder Strip. EBITDA jumped 49.59 percent to $66.23 million. The locals market comprised 38.07 percent of BYD’s property-level EBITDA. Further, Boyd appears to be getting a bigger boost as those submarkets grow, at least if April is an indication. North Las Vegas revenues leaped 18.02 percent to $23.572 million and Boulder Highway jumped 19.03 percent to $63.875 million. North Las Vegas and Boulder Highway far outpaced the overall locals market, which rose 8.97 percent. In addition, revenue in April for Downtown Las Vegas jumped 21.89 percent to $52.295 million. Given that Boyd has nearly 40 percent of Downtown revenue, that nearly 22 percent gain is a boost to BYD, assuming it maintained market share. Downtown provided BYD with 7.84 percent of its property-level EBITDA in the first quarter. So, draw a few inferences from April’s submarket revenue growth and extrapolate based on first-quarter results, and Boyd might be getting a bigger boost in Las Vegas than many had expected. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.fantiniresearch.com.


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AGEMupdate JUNE 2017 KEY BOARD OF DIRECTORS ACTIONS

AGEM MEMBER PROFILE Gamblit Gaming,

based in Glendale, California, is the leading publisher of real-money and skill gaming in video games, enabling a wide range of game genres to accommodate gambling experiences at land-based casinos worldwide. Gamblit’s platform provides all essential regulated technology, customer operations and licenses, freeing up game developers, publishers and casino operators to focus on making the best possible game experience for their players. Founded with the goal of bridging the gap between video games and casinos, Gamblit’s executive team has deep roots in both industries. Gamblit’s Model G interactive game tables launched in March 2017 in Las Vegas, and were the first multi-player skill games on the casino floor. Locations with Gamblit hardware and games include Planet Hollywood Resort & Casino, the Hakkasan Group-managed Level Up gaming lounge at the MGM Grand Hotel & Casino, Caesars Palace Hotel & Casino, the LINQ Hotel & Casino, Paris Las Vegas Hotel & Casino, Red Rock Resort & Casino and the Venetian Hotel & Casino, with many more properties to be added soon. Gamblit’s skill games and tables are also live at Harrah’s Resort Southern California, the first location in the state to offer skill games, as well as Harrah’s Lake Tahoe Hotel & Casino and three Carnival cruise ships. The company will also be rolling out its TriStation hardware, which delivers an innovative singleplayer experience with six compelling new games, starting this summer at Las Vegas casinos. Additionally, the company’s Gamblit Poker Live! hardware, which are new physical felt tables offering a highly engaging interactive take on the digital game, are scheduled to debut in casinos this summer. For more information, visit gamblitgaming.com.

• Regulations 5 and 5A have finally been adopted by the Nevada Gaming Control Board and Commission. AGEM has been working with the board on updating the regulations in a process which has lasted almost two years. This has been a great example of the positive working relationship the NGCB has with suppliers, and their readiness for open dialogue. • In more NGCB news, Nevada Assembly 75 has recently been approved. This regulation was initiated last November by the Gaming Control Board, which sought AGEM’s input, to take out a layer of regulation the manufactures had to deal with when partnering with non-licensed third parties. Now, each individual licensed partner assumes responsibility for who they do business with and for the content in products, which speeds up the approval process. There is scope to advance this legislation into other markets by introducing it to other regulatory bodies. • AGEM approved a contribution of $30,000 for the forthcoming G2E Chairman’s Reception. This prestigious event is held in conjunction with the AGA’s Gaming Hall of Fame, which sees the winners honored at the reception. • The recent Japan Gaming Congress, held by Clarion prior to G2E Asia, was very successful and well-attended by politicians, media, operators and regulators. AGEM board members that attended were able to initiate relationships with key individuals who will be involved in the process as the gaming bill moves forward. • AGEM President Tom Nieman and Executive Director Marcus Prater recently attended the YES Program event (Young Executive Scholars) at the University of Nevada, Las Vegas. This worthwhile initiative is supported by AGEM and aimed at junior high and high school students to give them an introduction to the hospitality and gaming industry. Also at the event were students from the Gaming Innovation Group. The group is focused on producing new innovations that cover all aspects of gaming, and is currently preparing products to display at G2E in October. • AGEM welcomed two new Associate members in June—Southco, based in Pennsylvania, which special izes in engineered access hardware; and Skilled Game Development, a software development specialist. This brings the total number of members to 151.

UPCOMING EVENTS • Nominations for the Jens Halle and Peter Mead Memorial Awards are open. Nominees should have a the qualities that both men displayed. All nomiminimum of 10 years working in the industry and possess nations must be received by July 15, and the winners will be announced during G2E Las Vegas in October. Please visit AGEM.org for more information.

AGEMindex

18

Global Gaming Business JULY 2017

Stock Price At Month End Percent Change May-17 Apr-17 May-16 Prior Period Prior Year

Index Contribution

Nasdaq: AGYS (US$)

9.91

9.90

11.73

0.10

(15.52)

ASX: AGI (AU$)

2.21

1.86

2.40

18.82

(7.92)

1.25

Aristocrat Technologies

ASX: ALL (AU$)

21.80

19.64

12.86

11.00

69.52

13.49

Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC >

Exchange: Symbol (Currency)

Ainsworth Game Technology

Agilysys

AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.

The AGEM Index reached another record high in April, continuing the momentum from previous months. The composite index stood at 371.5 points at the close of April 2017, which represents an increase of 10.22 points, or 2.8 percent, when compared to March 2017. The AGEM Index reported a year-over-year increase for the 19th consecutive month, rising 144.99 points, or 64 percent, when compared to April 2016. During the latest period, nine of the 13 global gaming equipment manufacturers reported monthto-month increases in stock price, with two up by more than 10 percent. Three manufacturers reported de creases in stock price during the month and one manufacturer posted a flat performance. The broader stock markets produced mixed results in March. The S&P 500 reported a slight month-to-month increase, rising 0.09 percent to 2,384.20. Additionally, the Dow Jones Industrial Average increased 1.3 percent to 20,940.51, while the NASDAQ increased 2.3 percent during the period to 6,047.61.

*

B

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Konami Corp. Scientific Games Corporation Transact Technologies

0.00

Taiwan: 3064 (NT$)

19.20

24.20

39.30

(20.66)

(51.15)

(0.12)

NYSE: CR (US$)

77.58

79.91

57.40

(2.92)

35.16

(1.73)

NYSE: EVRI (US$)

6.69

6.35

1.43

5.35

367.83

0.30

OTCMKTS: GLXZ (US$)

0.73

0.63

0.26

15.87

180.77

0.06

Nasdaq: GPIC (US$)

10.35

9.99

9.01

3.60

14.87

0.04

NYSE: IGT (US$)

17.75

22.20

18.96

(20.05)

(6.38)

(9.26)

(12.90)

0.93

17.37

29.52

B *

1.24

1.07

TYO: 9766 ( )

@

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5,440

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4,635

4,200

Nasdaq: SGMS (US$)

23.20

23.75

9.79

(2.32)

136.98

Nasdaq: TACT (US$)

8.55

8.75

7.44

(2.29)

14.92

Change in Index Value

(0.24) 15.53 (0.61) (0.02) 18.68

AGEM Index Value: April 2017

371.50

AGEM Index Value: May 2017

390.18


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RESEARCH

Transition Begins Non-gaming revenue in Atlantic City is beginning to expand

F

or the first time in 10 years, Atlantic City casinos have seen a year-over-year increase in total gaming win. This break in the city’s decade-long losing streak, attributed to the rapidly growing internet gaming market, is encouraging, but not necessarily the answer to the city’s long-term success. From 1978 through the early 1990s, New Jersey had a virtual monopoly on East Coast casino gaming. However, as the casino gaming market expanded (Connecticut and Delaware in 1992, New York in 2004, Pennsylvania in 2006, Maryland and Rhode Island in 2010), and competition increased, Atlantic City found itself sharing more and more of the East Coast gaming market. As a result, gaming revenue has been reduced to less than half of what it was at its height in 2006 ($5.2 billion), reaching its lowest point in 2015 ($2.5 billion). Figure 1 graphically depicts the infusion of casinos into the Northeast since 1995 and the impact on total gaming win for Atlantic City casinos. Annual double-digit percentage gains in internet gaming win seem to have slowed the decline in gambling revenue and contributed significantly to the modest year-over-year increase in total gaming win (1.55 percent ) in 2016. However, just as Atlantic City’s monopoly on East Coast casino gaming came to an end, so too its monopoly on internet gaming is coming to a close. At present only Delaware, Nevada and New Jersey have legalized internet gaming. However, California, New York, Pennsylvania and an increasing number of other states are all poised to enter that market. The impact of new competition may not be felt immediately, as internet gaming continues to experience its initial growth, but as the industry matures, Atlantic City may again be sharing only a piece of the market. In this environment, the role of non-gaming revenue in Atlantic City has become increasingly important. Changes in revenue share between gaming and non-gaming revenue signal a shift in focus for Atlantic City casinos. In 1989, non-gaming revenue represented 21 percent of total casino revenue. As of 2015, it represents 29 percent. For Las Vegas, the shift is even more distinct, from a

20

Global Gaming Business JULY 2017

By Rummy Pandit

60/40 split gaming vs. non-gaming in 1989 to a 35/65 split in 2015. Figure 2 depicts the shifting relationship between gaming and non-gaming revenues for both Atlantic City and Las Vegas. Figure 1

Figure 2

The shift in focus toward non-gaming revenue has manifested in a number of ways, among them investments in convention venues and nightclubs to serve both the expanding meetings and conventions business and the growing audience of millennial consumers.


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ANNIVERSARY A NNIV E R SAR RY

Recent investments in the conventions business— Borgata ($11 million), Harrah’s (Waterfront Conference Center, $125.8 million) and Resorts ($9.4 million)—have already seen a return on investment. According to the Atlantic City Tourism Sales Barometer, prepared by Atlantic City Convention and Visitors Authority, hotels (including casinoowned properties) saw a 23.2 percent increase in the number of conventions, trade shows and meetings held at their venues in 2016. The total number of shows offered in the city increased by 10.1 percent in 2016, drawing 9 percent more meeting attendees/delegates who used 21.5 percent more rooms. In addition to these gains in the meeting and convention business, casino properties have pursued opportunities for growth in attractions targeting millennial consumers. Investments in renovations to The Pool at Harrah’s ($3 million), the Premier Nightclub at the Borgata ($14 million) and Ivan Kane’s Kiss Kiss Nightclub at the Tropicana (part of a $40 million renovation) are all examples of this. Interestingly, as Atlantic City celebrates a streak of good news including the announcement of Hard Rock International’s plan to reopen the shuttered Taj Mahal as a casino hotel, most discussion has focused on what the reopening will mean in non-gaming rather than in gaming revenue terms. Likewise, conversations regarding the possible reopening of the Atlantic Club focus on what such a project could bring to Atlantic City in terms of nongaming amenities, rather than gaming space. With both projects the number of rooms, meeting and parking space, as well as the number of local jobs they are likely to create, are all major topics of interest. Whereas the new casino’s impact on the gaming market has received comparatively little attention. In fact, Colin Mansfield, director of U.S. corporates at Fitch Ratings, told the Press of Atlantic City that he didn’t expect the opening of the Hard Rock Casino to have any significant impact on gaming. “With or without it, Atlantic City is still a $2.4 billion market.” The way forward for Atlantic City will likely come through embracing what the city has to offer in terms of non-gaming amenities. The gaming market may be fixed (for now) at $2.4 billion, but growth in nongaming revenue is potentially limitless.

Rummy Pandit, L.P.D., MBA, CHA, is executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism at Stockton University in Atlantic City, New Jersey.

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The Halls of

GAMING Academia

Some educational institutions are doubling down on curriculum BY BOB AMBROSE

L

earning about the operational side of the casino industry today goes beyond how to deal cards or having an understanding of how slot game math works. Gaming—and the hospitality infrastructure that frames it—is big business, and more institutions of higher learning are recognizing this. The gaming industry, like all service/entertainment models, is about people. It is an industry layered in principles rooted deeply not only in liberal arts studies but also business formulas of operational balance, fundamental business applications, law, human resources and strategic marketing initiatives. The framework of today’s hospitality industry consists of a variety of independent business segments that include dining, entertainment, retail, lodging and gaming. Separately, they each offer an experience and a unique set of operational challenges. Collectively, these segments bring the property brand together in a single identity within the total property experience for the customer. In hospitality education, the model is presented under much of the same identifiable headings, except it is housed in a program consisting of a unique set of learning objectives that define the various disciplines within the educational framework of research and presentation. And it might include a casino course or two. Located in various hospitality and business curriculums at county colleges and some universities, casino courses are being offered in both undergrad and graduate programs. The course selection is in place to support jurisdictional casino operations in the local area, or they are being offered to expand an already related academic program such as hospitality or business. Whenever casino operational courses reside in a curriculum, it is a sign of acceptance into the mainstream of education. It is where students of the discipline or those desiring a broader base of knowledge can learn the fundamentals of business models, operational management tools and marketing strategies.

22

Global Gaming Business JULY 2017


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A Center for Gaming Study The University of Nevada, Las Vegas (UNLV) is the “Harvard” of gaming education. The William F. Harrah College of Hotel Administration, named for the pioneering original “outside-the-box thinker” Bill Harrah, celebrates its 50th birthday this year. From the very beginning, gaming education was a central component of what was recently ranked the No. 1 hospitality program in the world. The International Gaming Institute (IGI) presents the related disciplines of hospitality that include gaming in very specific operational hands-on concepts of learning. This mother ship of learning has partnered and supported the gaming and hospitality industry with research, programs and on-site learning curriculums covering all of its aspects for decades. They have also stayed ahead of the curve, not only supporting and teaching the various innovations but also being part of the platform themselves. Their research model has fostered studies in all areas of industry collaboration. “We aim to foster a team full of multi-disciplinary expertise,” says Brett Abarbanel, UNLV director of research. “We work on research, innovation and education on all topics that fall under the broad umbrella of gambling.” “At UNLV, we take pride in having a long-standing dedication to gaming and hospitality education,” adds Bo Bernhard, executive director of the IGI. GGB: Give us an overview of the program and the experiential philosophy of learning at IGI. How has the gaming industry supported this process? Bo Bernhard: We have a rigorous curriculum that includes gaming management (among the many other fields, including F&B, convention management and hotel management, necessary to operate an integrated resort). Meanwhile, the International Gaming InBo Bernhard, stitute is the university’s outward-facing acaexecutive director, demic institute—focusing on educating and UNLV’s International researching the world’s industry and governGaming Institute ment approaches to gaming—and the largest academic institute in the world dedicated to the study of the global gaming industry. In Governor Brian Sandoval’s 2013 State of the State Address, he asked UNLV to work with his office to “build a global intellectual capital” of gaming—and that is precisely what we have done, often in collaboration with the Governor’s Office of Economic Development (GOED), which, through its Knowledge Fund, has inspired some of our most ambitious projects yet—including our innovation centers, which have 44 different gaming innovations at various stages of the

patent process. We currently have two dozen people working at the IGI—in fields as diverse as law, sociology, business, regulation and innovation. They include some of the brightest minds in industry and academe—and all are deeply experienced in real-world applications. How is UNLV specifically using its academic model to stay engaged with the industry? Mark Yoseloff’s Center for Gaming Innovation and Robert Rippee’s Hospitality Lab are outstanding illustrations of industry expertise combined with academic resources. Both are longtime respected industry leaders. The inventions that they are putting out there are really amazing. Of course, our Executive Development Program is the world’s most prestigious and beloved executive development program. It was developed by the best academic in this field—our mentor, Dr. Bill Eadington. Our status as a go-to resource has been reflected, of late, by organizations like the Oakland Raiders coming to us to provide answers to all of the gaming-related questions that the NFL had about their move to the city. The resulting project laid the groundwork for one of the most important developments in this city. Similarly, the government of Japan has visited the IGI on several occasions over the past four years, as that government seeks answers to the gaming-related questions.

The Industry of Change Today’s instructors in gaming are following a moving target of innovation and change. What we have seen in the past decade is unprecedented in terms of technological innovation. The hospitality industry is rapidly adapting to the next generation of customers through innovative gaming applications as well as enhanced digital technology. Mark L. Yoseloff is the executive director, Center for Gaming Innovation. This arena is a platform where both academia and the gaming industry can have opportunities to collaborate. Under his direction, actual issues are presented to the students, and the students work on solutions. Yoseloff says in some cases other UNLV disciplines have become involved to produce a working prototype based on the innovation labs solution. “This is an outstanding example of cross-disciplinary relations,” he says. In fall of 2016, the eSports Lab was added at IGI, addressing a need for commitment to eSports education, since it has established its global presence in gaming.

JULY 2017 www.ggbmagazine.com

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Demand Drives the Market Regional casino relationships in community college education

I

n past years, local community colleges have offered some standard casino training classes such as dealer training and slot repair. In recent years, based on regional growth of casino and integrated resorts, demand has risen for expanded educational initiatives in operational programs. The regional community colleges have taken steps to expand their footprint by offering more specific casino-related courses that previously may have only been seen at four-year institutions. Recognizing this new sense of purpose, regional casino operators have also stepped up an alliance to support the college initiatives. There has been an increase in partnerships with two-year educational institutions, either through a direct relationship during a new casino property development or to fill a more permanent niche market. In Massachusetts, three major casino resorts are scheduled to open in the next couple of years. In anticipation, community colleges in the state have developed alliances with various casino industry partners to bring casino education to the residents of the state. General casino-related courses are being established to develop a foundation of learning in both management development and certification for dealer training. The collaboration includes the Massachusetts Casino Careers Training Institute, a consortium of 15 community colleges and some fouryear schools in the state. The mission statement for the organization is concise: “The MCCTI was formed as a collaborating workforce development organization by the state’s 15 community colleges. The MCCTI has developed a memorandum of understanding with the Massachusetts Gaming Commission to work collaboratively regarding workforce certification, training, licensure and other requirements.” The institute will be collaborating with local community organizations, state employment boards, unions and casino developers for training and job placement. This is a plan for the future that recognizes what is needed in a collaborative effort for both the gaming/hospitality in-

The casino program at the Schenectady County Community College in New York provides students with the requisite knowledge and skills for professional opportunities in the gaming industry

24

Global Gaming Business JULY 2017

The Casino Career Institute at Atlantic Cape Community College has been training and educating casino employees for almost 40 years

dustry and regional educational institutions. Similar support initiatives have taken place at Arundel Community College in Maryland and Northampton Community College in Pennsylvania, as well as the Atlantic Cape Community College through its Casino Career Institute (CCI) in Atlantic City. CCI has had a long history working closely not just with industry partners to fill a need but also developing and marketing programs with other educational institutions in jurisdictions where gaming is being developed. The casino program at the Schenectady County Community College in New York is particularly impressive. Stepping up to recent casino initiatives in the state, the college offers a Casino and Gaming Hospitality A.A.S. 60-credit program with six casino managementspecific courses. Within the School of Hotel, Culinary Arts and Tourism, the two-year program offers courses such as Intro to Gaming Operations, Casino Security/Surveillance, Law & Regulations and Marketing, and ties the integrated resort experience in with a Non-Casino Gaming Operations course. The program has partnered with the major casinos in the area for field trips and speaker engagements. “The program is designed to provide students with a strong foundation in hospitality, allowing for many potential opportunities within the integrated resort setting, and in casinos proper,” says Assistant Professor Kimberly Otis. “The casino-specific classes lend themselves to both in-depth study and the cooperative and interrelated nature of the industry perfectly.” Otis has also achieved high praise for the development and implementation of a Responsible Gaming Ambassador certification program in cooperation with the New York Council on Problem Gambling. —Bob Ambrose


p. 22 education:Layout 1 6/15/17 2:03 PM Page 25

“Constant immersion in fully functional hospitality and gaming settings is necessary to ensure that those designing the courses remain in tune with the reality of conditions on the ground.”

Tools for Learning David G. Schwartz is the director of the Center for Gaming Research at UNLV, as well as an instructor. Schwartz is very well known for his definitive books on gaming subjects, including one all-encompassing volume, Roll the Bones: The History of Gambling. Schwartz is a noted speaker, and his passion and respect for the gaming industry is equal to his knowledge on the topic.

—David G. Schwartz, Director, Center for Gaming Research, UNLV

GGB: In this age of multiple information resources, are traditional textbooks still a valid learning tool? Schwartz: I think that textbooks are a necessary foundation for gaming education. They are a way of making sure that all students have the basic knowledge they need to properly assess, understand and apply the course material. Once that base is established, it is important for teachers and students to test their knowledge and challenge their assumptions in the field. How can the general academic model stay engaged going forward with the gaming industry? I think it is important for academics to constantly challenge and revise their curricula. The gaming industry changes, generally speaking,

more rapidly than others. So constant immersion in fully functional hospitality and gaming settings is necessary to ensure that those designing the courses remain in tune with the reality of conditions on the ground. Would you agree that educating students in gaming is similar to building a real working operational team on a property? I think that the same mechanics are at play. It is most important to establish two things at the outset in both the classroom and on the property: trust and respect. Both of those, optimally, are earned over time, but both leaders and teachers need to work quickly to establish them to ensure that those who depend on them can get the most out of their leadership. Leaders in both the classroom and the casino can inspire those they work with to push their limits and achieve beyond their wildest expectations.

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Operational Standards Mark Birtha is president of Hard Rock Rocksino, Northfield Park, Ohio, and a graduate of the hospitality school at Cornell University. He is a highly regarded gaming and hospitality executive with over 20 years of experience. The “Rocksino” opened in late 2013. It has a strong presence in the Ohio locals/regional market. GGB: Are colleges and universities responding to the need for educated casino executives? Birtha: We need high-quality candidates to fill operations positions in our properties, and what better formula is there than to have qualified individuals who have started their careers with a hospitality academic foundation? Today’s universities that offer hospitality-based programming are identifying the needs of our industry and providing a unique laboratory for future leaders to get applicable knowledge on multiple levels. This is an absolutely essential incubator that will allow our industry to cultivate new talent and continue to successfully grow for generations to come. Are the academic models across the country in gaming and related disciplines keeping up with the industry? There has been a great evolution in academia with regard to the hospitality industry. As our businesses have evolved, so have the training programs to support them on a national and global level. Whether it is looking at our industry from an operations perspective, or through a real estate, development or financing lens, programs have continued to embrace the gaming space as a growing and relevant niche within all of hospitality. Many educational venues offer all of the various disciplines required to operate a significant property, from hotel to gaming to F&B and revenue management, entertainment, IT, spas, meetings and more. What is truly unique about our industry above and beyond these basic elements is the size of our operations and their related logistical challenges as well as the regulatory and financing hurdles. The integrated resort is the evolution of our industry, and academic programs are building and adapting their training programs to prepare future graduates to be ready to enter our field and be successful. How can regional county colleges and universities assist new gaming and hospitality properties as they develop in a new area? I remember when I was one of the first people from the Western companies on the ground in Macau in early 2002, and we were working with the local schools there like Macau Polytechnic Institute to build programs to train dealers and other positions needed to staff Sands Macao. The students were energized, the teachers were passionate, and we took pupils who had never dealt and turned them into the next generation of service providers in this unique marketplace. This formula has been played out time and again, and is an effective combination of business leaders partnering with academics to serve the greater needs of the marketplace to the benefit of all. In my current property, we host hospitality students from Kent State and provide them with an intimate, interactive and live understanding of our op-

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Global Gaming Business JULY 2017

“Today’s universities that offer hospitality-based programming are identifying the needs of our industry and providing a unique laboratory for future leaders to get applicable knowledge on multiple levels. This is an absolutely essential incubator that will allow our industry to cultivate new talent and continue to successfully grow for generations to come.” —Mark Birtha, President, Hard Rock Rocksino

erations. I go back to Cornell and teach a class in the gaming program, and can see the energy and interest of the students. This is the essence of what is needed to bring our industry closer to the academic institutions, and at the same time seed fertile ground for future leaders to emerge. Any operator or developer in any part of the world should have this simple strategy in mind when they are engaging their local community to better serve the needs, wants and expectations of those in their markets.

Industry Regulations Employees in casino/hospitality operations face new challenges daily. As part of a very organized infrastructure, the employees in gaming rely on several departments to perform their duties. The casino employees also work within the parameters of government regulations, company internal controls and customer situations that can strain and test the skill sets of the best-educated employee. That is another reason for colleges that are teaching courses in gaming not to pigeonhole their thinking and curriculum. They need to keep in mind that they are teaching students about the gaming industry, not how to gamble. “The goal is to keep the students informed on legal and regulatory issues, and to understand the concepts of gaming, whether they are going to practice law in the area or not,” says Jennifer Roberts, associate director at UNLV International Center for Gaming Regulation and adjunct professor of gaming law at William S. Boyd School of Law. “We bring the gaming industry and regulatory environment to life,” she says. The program provides opportunities for students to attend gaming board and commission hearings, and also experience industry guest lecturers as they speak about their careers and the impact of various regulations on the industry.

Industry and Education Initiatives Collaboration between academic institutions and higher education must be ongoing nationwide. Valuable joint studies have been produced, as in the publication of “The Millennial Entertainment Preference Study, 2016.”


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The study was a collaboration of Stockton University’s Lloyd D. Levenson Institute of Gaming, Hospitality & Tourism (LIGHT) in New Jersey and members of the Atlantic City gaming community. Jane F. Bokunewicz, assistant professor of hospitality at Stockton, authored the study. “The millennial study was a win-win for the casino industry and Stockton University” says Bokunewicz. Several casinos supported the study financially and provided marketing executives to offer input on the design of the survey instrument. Stockton provided firsthand experience in working with this elusive age group, as well as access for focus group participants and survey distribution. The results were informative to all parties. “The millennial study was an impactful research project because of the collaboration with the casino industry,” Bokunewicz says. And of course, co-op, or “externships,” as Jennifer Roberts from UNLV calls them, are programs where students of gaming or related interests can spend a semester working at a specific job on a casino resort property. It is a great way to test the student’s interest. Still, some educational institutions, whether through outdated ideological views of gaming or a lack of understanding of the industry, still maintain very

little interest in expanding their programs. However, those that have embraced gaming offer their students a broader learning experience. And the gaming industry has been very supportive in terms of funding and scholarships. A great employee of casino/hospitality operations is always a “student” of the industry. Remember, simply training students will provide skill sets to accomplish short-term goals. The extended learning philosophy for gaming and related hospitality programs comes into play through formal education initiatives where students receive a learning experience for their long-term employee development. Presented within these learning objectives, students see the big picture and better understand the impact of their role and how it contributes to the company bottom line. Today’s students, employees, and yes, customers, are in a mine field of competitive options. Each individual segment of the integrated hospitality experience comes together to present the brand. Competent, trained and educated employees must be at the core of any operation. Thanks to the collaboration of the academic institutions and the gaming industry, a core model of research and learning is not only producing the next generation of employees, but also providing the current tools needed for the entire hospitality industry. And yes, it might just include some casino gaming.


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TRUMP Troubles? A

merican Indian efforts to reacquire and place in federal trust their ancestral lands—particularly acreage earmarked for new government casinos—will slow dramatically under the administration of President Donald Trump, Capitol Hill

sources say. Trump appointees with the Department of the Interior and Bureau of Indian Affairs (BIA) are rescinding tribal-friendly land-trust policies under Democratic President Barack Obama intended to help indigenous communities strengthen their governments and grow economies. An April memo from newly appointed Interior Secretary Ryan Zinke ordered that all off-reservation land-trust applications be routed to Washington, D.C. headquarters for scrutiny by acting Deputy Secretary James Cason. Cason, who served under former President George W. Bush, was the architect of stringent land-trust policies that caused a logjam of applications, particularly those for casinos on newly acquired lands. Republican House and Senate leaders are also weighing in on what they call a need to make more strict Interior policy and regulations on placing land in federal trust for tribes. Rep. Raul Labrador (R-Idaho), chairman of the House Subcommittee on Oversight and Investigations, accuses Interior of violating a 2009 Supreme Court decision in Carcieri v. Salazar. The ruling limits Interior’s authority to place land in trust for tribes not “under federal jurisdiction”

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Global Gaming Business JULY 2017

BY DAVE PALERMO Off-reservation land for casinos will slow under the new president

with passage of the Indian Reorganization Act (IRA) of 1934. Meanwhile, Rep. Rob Bishop (R-Utah), chairman of the House Resources Committee, in a February 17 letter to Cason demanded a freeze to “troubling determinations” by Interior on off-reservation casinos during the Obama-Trump transition. “While the last-minute nature of these actions does not necessarily imply wrongdoing, it begs scrutiny,” Bishop said of land-trust decisions made in the last days of the Obama administration and soon after Trump’s election. Interior approvals of trust land for casinos in the waning days of the Obama administration came with “little or no transparency” or notification of committee members who, Bishop said, “are on record expressing concerns with off-reservation gambling.”

Major Shift In Federal Indian Policy Many Indian advocates fear Trump’s Interior—combined with congressional pushback to Obama land-trust policies—signals a major shift in tribal-federal relations that may diminish the sovereignty of indigenous governments. They were particularly alarmed when Zinke, speaking at a May energy summit, called for an “off ramp” for natural resource tribes seeking to transition from governments under federal trusteeships to corporations. “If tribes would have a choice of leaving Indian trust lands and becom-


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The ilani casino in Washington state is the most recent land-into-trust casino that opened after years of opposition from the state and federal governments, as well as neighboring tribes

Interior Secretary Ryan Zinke will review all applications for land-into-trust

ing a corporation, tribes would take it,” Zinke said, noting that some 220 Alaska Native villages are organized as corporations. Zinke’s remark harkens to past federal policies of terminating tribes and allotting land to individual Indians. More than 90 million acres of Indian land was lost in the allotment era that began in 1887 and ended with enactment of IRA in 1934. “The confluence now—with Trump’s Interior and others in Congress wanting to make changes in the laws—is going to spell real trouble for us,” says attorney Bryan Newland, a former Interior counsel under Obama.

Tribal-Friendly Land-Trust Policies Are Ending Some 630,000 acres were taken into federal trust for Indian governments and individuals during the Obama administration, according to Interior officials, bringing the nationwide total to 56.2 million acres. There also was a spike in the approval of land-trust applications for casinos. With Trump taking office, tribal-friendly policies on land-trust decisions are ending. “Taking off-reservation land into trust is going to be more scrutinized by the current administration, for gaming or any other purpose,” attorney and former Interior official George Skibine says. “I think they’re just going to take a more cautious approach,” a Capitol Hill insider says of Interior officials. “They’re going to be careful. I don’t think they necessarily agree with Obama’s approach.” Meanwhile, continued failure to get a legislative remedy to the controversial 2009 Supreme Court ruling in Carcieri v. Salazar makes the land-trust process more difficult. “There is no movement on the legislation and we don’t expect it to happen anytime soon,” says Teresa Davis, communications director for Rep. Tom Cole (R-Oklahoma), who is leading the effort to get a congressional “fix” to the high court ruling.

Tribal Support For Change The additional scrutiny of casino-related trust applications is embraced not only by state, county and municipal officials, but several tribes concerned with competition created by a mature and increasingly crowded Indian casino market. “Are they going to be taking a closer look at some of these land-trust applications, particularly for off-reservation gaming? I think they are,” Larry Rosenthal, partner in Spirit Rock Consulting, says of Interior and BIA officials. “I don’t think off-reservation applications for non-gaming will be that much harder. But clearly, when it comes to gaming there will be more scrutiny. And for many tribes that will be a welcome relief.” Tribal government gambling, a $30 billion industry, remains a catalyst for economic growth in Indian Country. But trust land for non-gambling purposes is also crucial to tribal self-governance. And many tribal lawyers and lobbyists loathe the end to Obama policies. “I’m pessimistic,” says tribal attorney Michael McBride, “and the first point of pessimism is Michael Black,” the interim assistant secretary for Indian affairs who drafted the Zinke memo. Black announced in April that off-reservation land-trust applications— for casinos or otherwise—would be routed through Interior’s Washington headquarters rather than processed in BIA regional offices. Only fee-to-trust applications for lands within reservation borders will be processed by regional offices. “That’s a huge funnel that’s going to restrict the flow of those applications,” McBride says. “There have been so many resignations—and I don’t know about firings—that the office is not adequately staffed to handle the

Tribal governmenT gambling, a $30 billion indusTry, remains a caTalysT for economic growTh in indian counTry. buT TrusT land for non-gambling purposes is also crucial To Tribal self-governance. and many Tribal lawyers and lobbyisTs loaThe The end To obama policies. JULY 2017 www.ggbmagazine.com

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Deputy Secretary of the Interior James Cason created a logjam for land-into-trust applications when he worked for President George W. Bush

backlog of pending applications, much less the new ones.” “I’m hopeful the administration continues the (fee-to-trust) process,” says an outgoing Interior official who requested anonymity. “I know there’s a lot of concern. The regional BIA offices were processing the vast majority of applications without much controversy. A lot of the non-gaming applications we didn’t get sued on.” Newland says policies and regulations being discussed would essentially freeze Indian trust lands at their current levels. That would create hardships, particularly for tribes with limited land for housing, governmental infrastructure and economic development. “They’re looking to remake the trust responsibility for tribes,” Newland says of Interior officials and members of Congress critical of Obama policies. “The pressure is building to swing the pendulum back the other way. They’re looking to change things when it comes to Indian lands in a way that will hurt us.” The fears expressed by Newland and others were heightened when Trump proposed draconian 10 percent budget cuts to BIA, Indian Health Service and housing programs for Indian communities, many crippled by cyclical poverty. Education programs are also slashed. “President Obama may have spurred a backlash” against tribes, Kevin Washburn, assistant secretary of Indian affairs under Obama, says of Trump budget cuts and land-trust policies. “Though tribes and the BIA now have a more than a half-million acres of new lands to manage, Trump seeks to slash $15 million from the real estate staff managing such lands,” Washburn says. “This will frustrate economic development by slowing approvals for leases and rights-of-ways. Trump would also slice $23 million from human services programs, including Indian child welfare.” Skibine is less skeptical. “There will be different priorities,” he says. “But the role of the Interior Department as trustee for the tribes will continue. The programs the new administration will generate as policy are going to generally try to help tribes achieve greater self-sufficiency.”

Land/Trust Progress Despite Carcieri Washburn and his predecessor Larry Echo Hawk were applauded by Indian leaders for crafting an expedited land-trust process aimed at breaking a logjam created under the administration of President Bush. Bush was faulted for stonewalling decisions. Washburn and Echo Hawk devised procedures to circumvent the 2009 U.S. Supreme Court ruling in Carcieri v. Salazar. Justices in Carcieri ruled that Interior could not place land in trust for tribes not “under federal jurisdiction” with passage of IRA in 1934. Justices did not define “under federal jurisdiction.” The ruling impacted dozens of tribes granted federal recognition after IRA. Carcieri also prompted litigation tying up a number of landtrust applications. Washburn delegated non-gambling land-trust decisions to BIA regional offices, which conducted legal determinations to meet Carcieri guidelines. Land-trust applications for casinos were routed directly to headquarters in Washington, D.C. for a ruling by Interior’s Office of the Solicitor. Former Interior Solicitor Hilary Tompkins—one of several Native Americans serving in key positions with Obama’s administration— helped the process along by issuing a two-part review process for tribes granted federal recognition after 1934. As a result, 630,000 acres was placed in federal trust for Indian governments and individuals. The total includes fee-to-trust lands within reservation borders, off-reservation land acquisitions and transfers of Bureau of Land Management (BLM) property to tribal authority. House and Senate leaders are now seeking to trash Tompkins’ guidelines and replace them with regulations more in line with the Carcieri ruling. Labrador says Obama land-trust policies violated the congressional intent of IRA as interpreted in Carcieri. “For too long, federal agencies have been permitted to disregard congressional intent and implement the laws Congress passes sometimes ignoring the law’s original purpose,” he says. “We must curb abuse by the executive branch and reassert power over the unelected bureaucracy.” House Resources is also ending a $1.9 billion Interior land buy-back program aimed at consolidating and purchasing for tribal governments fractionized interest in reservation parcels. Obama and Trump officials dispute the effectiveness of the program.

Tribal Casino Growth Under Obama Of the more than 2,400 land-trust applications processed under Obama, only about two dozen involved casinos. The Indian Gaming Regulatory Act (IGRA) largely limits casinos to

TwenTy-Three land-TrusT applicaTions for gambling were pending wiTh inTerior as of march. Ten fiT The caTegory of off-reservaTion gambling. There were four applicaTions for casinos on land conTiguous To exisTing reservaTions, four for acreage acquired Through federal land seTTlemenTs and Three from newly resTored Tribes. 30

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Oklahoma Congressman Tom Cole is trying to create a “fix” for the Carcieri decision in Congress

lands held in federal trust when the act was passed in 1988. There are some 480 Indian casinos nationwide. There are, however, exceptions in Section 20 of IGRA to the 1988 limitations. A “two-part determination” process allows tribes to open casinos on off-reservation trust lands with the approval of state governors. Tribes must prove offreservation casinos benefit the tribe and are not detrimental to surrounding Indian and non-indigenous communities. There also are “equal footing” exemptions in IGRA for newly recognized and restored tribes, land adjacent to existing reservations and property acquired through federal land settlements.

A Slow, Arduous Process Getting trust land for casinos through any of the IGRA exemptions is an often difficult and expensive endeavor fraught with politics.

“While some tribes have been able to open new gaming facilities on land taken into trust, it can be a lengthy, costly and contentious process, with no guarantee of success,” says economist Alan Meister, author of the annual Indian Gaming Industry Report. Since IGRA was enacted nearly 30 years ago, the BIA has processed 75 applications for new trust lands for casinos under Section 20 exemptions, according to Meister’s report. Twenty-seven of the applications were approved during the Obama administration, Meister’s report says, including nine in 2015. Some decisions in California, Washington state, Arizona and elsewhere were opposed by non-Indian and tribal governments. “Under the Obama administration, there was a higher rate of approvals of land-trust applications for gaming than in previous administrations,” Meister says. “That coincides with the anecdotal evidence that the administration was friendlier toward tribes. “With the Trump administration there is no clear picture of how things are going to go. I think there is some uncertainty.” Meister notes, however, that gambling land-trust applications are notoriously difficult regardless of presidential politics. This is particularly true with offreservation, two-part determinations, which are more political. “Almost 50 percent (of land-trust applications for gambling) fall into the category of off-reservation casinos, which are generally contested and harder to get approved,” Meister says. “They are going to have a difficult path, regardless of what the administration policy is.” Twenty-three land-trust applications for gambling were pending with Interior as of March. Ten fit the category of off-reservation gambling. There were


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New Mexico Democrat Senator Tom Udall calls all Indian polices of the Trump administration “troubling”

four applications for casinos on land contiguous to existing reservations, four for acreage acquired through federal land settlements and three from newly restored tribes.

An Ominous Policy It’s not clear if Zinke’s memo foreshadows future Interior policy or whether it serves as a “placeholder” strategy pending the appointment of an assistant secretary and other high-ranking positions. “There’s no political leadership there right now,” a lobbyist says. “They’re treading water. Nobody is ready to make policy decisions.” “Zinke needs to have his full team there,” says the outgoing Interior official. “Once he has a full team we’ll see where they go with policies.” Placing additional scrutiny on land-trust decisions should not be construed as being anti-Indian, sources say, particularly in light of the opposition from tribes to additional Indian casinos. “I don’t think there is going to be a knee-jerk, anti-Indian posture from this administration,” Rosenthal says. “There are obviously going to be some different policy views with this administration. But Interior is not going to turn off the spigot on land-trust applications. “The Obama administration made some decisions that were controversial. There was a call from Indian Country to bring more scrutiny to these trust applications. “Most of the scrutiny will be toward off-reservation gaming,” Rosenthal says. “There are applications all over the country. Look at Michigan, California, Oklahoma, Arizona and New Mexico. This is clearly an issue that is not going away.” Skibine also believes it is hasty to characterize the Zinke Interior as antiIndian because of its heightened scrutiny of land-trust applications. “I wouldn’t call it a political decision. I would call it policy decision,” he says. “When a new assistant secretary for Indian affairs comes on board, that person will set the tone.”

Taking On Carcieri Congressman Cole, who is leading the fight to get a congressional “fix” to Carcieri, faces opposition from House and Senate leaders opposed to Indian casinos and others pressing for more local government involvement in the fee-to-trust process. One of two Cole-sponsored bills would have merely affirmed the status of land recently taken into federal trust, preventing court challenges. Cole also sponsored legislation that would give Interior authority to place land in trust for tribes. Both bills generated strong opposition. The federal courts in recent cases involving the Mashpee Wampanoag Indians of Massachusetts and the Cowlitz Tribe of Washington state issued contradictory decisions as to whether Interior has the authority to place land in trust for tribes recognized after IRA. Cowlitz was recognized in 2002 and Mashpee in 2007. Both tribes contend they were “under federal jurisdiction” before 1934. 32

Global Gaming Business JULY 2017

“I’m concerned that it would violate the federal government’s trust and treaty obligations to provide even basic health, education, public safety and other core services” to indigenous Americans. Skibine says the lack of a legislative “fix” to Carcieri creates “haves and have-nots” among the 567 federally recognized tribes and Alaska Native villages in Indian Country. But Dean Katherine Rand, of the University of North Dakota Law School, says the decision is embraced by congressional leaders opposed to Indian casinos. “Folks put forward a fix, but it never gained traction in Congress, mainly because of the brakes this decision put on Indian gaming,” Rand told the Concord Journal. “I’d suggest the reasons are as political as they are legal. In today’s environment, any tribe looking to get land taken into trust is probably looking for a casino.”

Federal Indian Policy Going Forward Indigenous leaders and lobbyists had expressed hope tribal economic progress would continue to grow under Zinke. Those hopes were dashed with Trump’s proposed 2018 Interior budget, which slashes 10 percent—roughly $300 million—from Indian programs. “President Trump’s budget proposal for programs affecting Indian Country is extremely troubling because of its disregard for the federal government’s responsibilities and its troubling lack of understanding of the challenges facing tribal communities,” Senator Tom Udall (D-New Mexico) said in a press release. “I’m concerned that it would violate the federal government’s trust and treaty obligations to provide even basic health, education, public safety and other core services” to indigenous Americans, Udall said. But a number of natural resource and energy tribes support Zinke policies. Interior officials point out that Zinke has more knowledge of indigenous governments than outgoing Interior Secretary Sally Jewell. Skibine says Trump’s Interior has made rulings helpful to tribal governments, noting that Cason recently drafted a letter supporting efforts by the Mohegan and Mashantucket Pequot tribes to build a commercial casino in Connecticut. “I think except for the off-reservation land acquisitions, where things may slow down, I’m not sure in any other areas there will be an anti-Indian approach,” Skibine says. “The Pequot-Mohegan letter would indicate that.” Indian policy theorists note that it is the goal of Indian self-determination that tribes eventually free themselves of the paternalistic trust policies of Interior and the BIA. And Indian advocates find solace that federal policy encouraging tribal self-determination has remained steadfast under several Republication administrations dating back to the late President Richard Nixon, who served from 1969 to 1974. “Historically it’s been the Republican philosophy that the government closest to the people is the most efficient,” says a Washington lobbyist who requested anonymity. “That’s been a strong aspect of the Republican approach to tribal self-governance. “Certainly in Congress there has been a strong level of support for that concept.”


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Rating

Mountaineer racetrack in West Virginia is the premier track in the state, but its costs are still a drag on the state’s most successful casino

Racinos

Is horse racing being impacted at all by slots and other gaming located at racetracks? By Aaron Stanley

I

f a random first-time visitor had made the trek to Hamilton Downs, 90 miles east of Tallahassee, in the summer of 2014 to see one of its “flag drop” races, he would have been in for a bizarre experience: an open field track, no grandstand, a small shed for placing bets and a race consisting of a group of horses sleepily trotting from Point A to Point B. “Tired, reluctant, skittish or disinterested horses moving at a slow pace down a dust-choked path,” described an administrative law judge in a ruling after the state’s parimutuel regulators complained that the races lacked “speed” and therefore did not count as real races under their license agreement. “The overall quality of the videotaped races was about what one would expect of an entry-level campers’ horse show held at the conclusion of a two-week YMCA summer camp,” the judge wrote, though he ultimately ruled that Hamilton Downs had satisfied the legal definition of a “race” and therefore could not be sanctioned by the state. Stories of such “sham” races in Florida have cropped up frequently in recent years, with racetracks like Hialeah Park, Oxford Downs and Gretna—the flashpoint in a recent Florida Supreme Court case ruling against placing slot machines in racetracks outside Miami-Dade and Broward counties—holding events more designed to check a box than to attract patrons and show off the sport in all of its splendor. The rationale for Hamilton Downs and the others to hold such farcical 34

Global Gaming Business JULY 2017

races is simple. If they want to offer other, more attractive and profitable forms of gambling, then pursuant to Florida law, they must hold a certain number of races each year. But because customer interest is dwindling and the operators lose money on each race, they have an incentive to run them on a shoestring budget to whatever extent they can get away with. “What you have in Florida is a lot of lawyers who have made quite a living taking advantage of loopholes in the law, and that’s what’s created a lot of this confusion,” says Dan Adkins, president of Mardi Gras Casino in Hollywood, north of Miami. “If you think this is a dysfunctional industry to start with, you’ve seen nothing like Florida.” Indeed, the very existence of such races highlights several of the bizarre and convoluted aspects of the environment in which racinos currently operate. They sit at the precipice of an existential crisis—one driven by declining interest among bettors and the general public, increasing competition from other forms of gambling and entertainment, outdated public policy that hasn’t allowed the activity to evolve and intra-industry discord that has prevented it from advancing its agenda when it has needed to. “These scams of flag-drop racing and barrel racing just to allow yourself to have a poker room under Florida law, that’s been the result of this dysfunctionality within the industry and not being able to work together to get anything accomplished in Tallahassee,” says Adkins.


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Greyhound racing is facing an even more precipitous fall than all kinds of horse racing, yet states are reluctant to “decouple” the popular gaming from the racing

Bettors can wager on barrel racing at a Florida “entertainment center” that also offers poker

Downward Spiral Racing nowadays is by and large a moneylosing proposition for all but the largest and highest-profile operators because of its high overhead costs and the minimal enthusiasm it generates among the betting public. “There is dwindling interest in parimutuel wagering in every jurisdiction in the country. It doesn’t exist anymore, and without other products the brick-and-mortar facilities can’t survive,” says Adkins. Jeffrey Gural, owner of the Meadowlands Racetrack and a leading proponent of a casino in North Jersey, reckons that if more dollars and creativity had been invested on the marketing front 10-15 years ago, the situation today would be quite different. “We have an interesting product. Look at NASCAR and some of these other things where they put TVs in the guy’s helmet and you see a crash in real time. We could have done some of those things and exposed our product to the public,” he says. “I would venture to guess that few people even know harness racing exists.” A failure to attract and retain the interest of young people, who have a multitude of other entertainment options to choose from, seems to indicate that a miracle turnaround is not on the horizon. “Unfortunately, horse racing throughout the whole country is on a downward spiral. It doesn’t click with millennials at all,” says Ed Sutor, president of Dover Downs in Delaware. “The only people in the grandstands are people who are much older who know how to handicap. We just can’t seem to attract younger folks.” Gural concurs: “I think it’s no different than ‘Why don’t they go sit in front of a slot machine?’ They just don’t. It doesn’t appeal to them, and it’s not likely to appeal to them anytime soon.”

Subsidy Lifeline Despite these problematic trends, laws remain on the books in many states requiring that racinos hold a certain number of races per year, and that those races be subsidized by a racetrack’s other gambling operations to the tune of $400 million a year nationally, according to the Thoroughbred Racing Association. The existence of these requirements and subsidies are the source of major questions regarding the future of the racino industry. Horsemen’s groups and breeders say that the subsidies are the lifeblood

of their business, but many operators say that as wagering interest continues to decline and gaming markets become more competitive and saturated, being forced to race horses or dogs and subsidize an antiquated product that customers don’t want makes little sense. “It’s like if Ford Motor Company had the same kind of regulatory body, and they said to them, ‘Look, you can build all the popular F-150s you want, but you’d better keep building that Model T; otherwise you’re out of business.’ It’s the same thing going on here,” says Adkins. “When a product doesn’t move off the shelf anymore, you put a different product on the shelf. And that’s what needs to happen. It can’t survive in today’s world.” Gural suggests that while the racino industry is doing OK in and of itself, the racing side of it is beleaguered and won’t be able to justify receiving the subsidies much longer. “The horse-racing component is in trouble because there’s been no evidence whatsoever that the increase in purses (from the subsidies) has caused an increase in customers coming to the racetracks and betting on the product,” he says. “If you look at the numbers, for the most part there’s been no growth in the handle whatsoever. That’s disappointing.” Total combined on- and off-track handle on horse racing in the U.S. peaked at $15.2 billion in 2003 before falling to $10.9 billion in 2012— where it has roughly hovered ever since, according to data compiled by the Jockey Club.

Slots Not the Savior The process of pairing racing with casino games first began in the 1990s, when racetracks around the country coped with declines in wagering by looking to slot machines as a silver bullet. The thought was that slots could provide a profitable new revenue stream, bring in new customers and subsidize the high operating costs of running races. State legislators in numerous states eager to preserve the racing industry and its associated tax revenues were keen to the idea. JULY 2017 www.ggbmagazine.com

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“The whole idea was, ‘We’re going bring it to a horse a 4,400-seat grandstand, and I’m lucky if I have 40 racetrack because there’s already gambling going on there, people out there, and most of them are the dog and it’s not really an expansion of gambling if we’re owners and kennel owners themselves. bringing more gambling to a place where there’s already “And it’s not marketing, because every greygambling,’” says Ray Paulick, publisher of the hound track in the country is failing,” he continPaulick Report, an industry newsletter. ues, adding that the situation isn’t much different For many, the transition from racetrack to racino at his property in Charleston, West Virginia. “We was a lucrative one. are still forced under law to run dogs. There is no Sutor says that introducing slots in the midinterest there beyond the people in that industry to 1990s and eventually table games saved Dover wager on dogs.” Downs. The decline of greyhound racing has also been In the pre-slots era, the property’s overall annual propelled by fierce opposition from animal welfare purse payout—the amount paid out to horse owngroups, a dynamic that is less present in horse ers—averaged $600,000. “You’re talking peanuts. It racing. was nothing.” “It’s fascinating that the horse racing industry is Within a couple years, Sutor had grown his annot undergoing a decline that is as severe as what nual purse size to $28 million and Dover Downs bethe greyhound industry is seeing,” says Carey Theil, came one of the highest-performing racetracks in the executive director of Grey2K USA. “One of the —Ed Sutor, president, Dover Downs, reasons is that horse racing has been willing to adcountry in terms of wagering handle. “We went on how “decoupling” his casino from dress some of these welfare issues and challenges. from last in the U.S. out of the 38 tracks up to No. 2 the harness racing required at the behind the Meadowlands,” he says. “We had some of The greyhound industry has been completely resisttrack would aid his business the best horse racing on the entire East Coast.” ant to any change whatsoever.” The boost from adding casino games and the subsidies helped to offset the diminishing racing perDecouple Your Way Out? formance, but it never proved to be an elixir that could fully compensate Many operators argue that the only way forward to ensuring the long-term for lower racing handle. health of racinos is to get them out of the racing business altogether. One “To a degree it kept the industry alive, but it did nothing to further inway to achieve this end is to allow them to “decouple,” or separate their slot terest in that activity,” says Adkins. “It’s not a matter of marketing, belicense from their parimutuel license and thus allow a casino to be operated cause everybody has tried to market and remarket and remake parimutuel without a racetrack. wagering—it doesn’t work.” States like Iowa, Rhode Island and West Virginia have either passed or In Sutor’s case, the uplift from slots and table games proved to be a on are on the brink of passing decoupling legislation. But the epicenter of windfall until neighboring states unleashed an onslaught of competition in the decoupling debate now is Florida, where all of the state’s dog and horse the mid-2000s, leaving Dover Downs teetering on the brink. tracks—with the exception of Gulfstream Park—are in favor of decoupling. “When Maryland Live! opened, they creamed us. We had a 25 percent “Gulfstream Park wants to continue thoroughbred racing, but that’s bereduction in our revenues,” he says. cause they’re owned by a family that wants to continue thoroughbred racing. All of the other racinos in Florida are in favor of decoupling because they What About Greyhounds? make so much money on their slots and they don’t make money with live Despite horse racing’s decline, it still retains enough cultural cachet to reracing,” says Paulick. main relevant to the public, even if it’s just for one month of the year durProponents of decoupling say they have secured the necessary votes in ing Triple Crown season. the Florida legislature. “I don’t see horse racing going away in my lifetime or ever,” says “We have the votes in the House and Senate for decoupling; we have had Sutor. “I see the big races still being around, but the smaller racetracks less it for years,” says Theil. “The challenge is that there is a desire on behalf of so.” the legislature’s leadership in Florida to not address this issue by itself but adGreyhound racing, which exists in Florida and a handful of smaller dress gambling issues as comprehensive piece of legislation.” states, possesses even less cultural appeal and has experienced a far more A comprehensive gambling bill hit an impasse earlier this year, but there precipitous decline. According to Grey2K USA, a group pushing for the are indications that there will be momentum for passage in 2018. discontinuation of greyhound racing, total handle from the activity in Many horsemen’s groups understandably view the potential passage of 2014 was $580 million—down from $3.5 billion in 1991. decoupling in Florida as a grave threat to their industry nationwide, but “There’s no interest in greyhound racing. None,” says Adkins. “I have Paulick reckons that the bigger threat is one of politicians simply diverting

“To assume that money would go to the casino is not a good assumption, but if we can stop losing money running these 10-12 races a night, that helps us.”

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“It doesn’t appeal to them, and it’s not likely to appeal to them anytime soon.” —Jeff Gural, owner of New Jersey’s Meadowlands, on the failure of horse racing to attract millennials

the racing subsidies toward other uses. “What’s more likely taking place in other states is that the politicians are looking at the amount of money that’s going from slot machines to support the racing industry and saying, ‘Gee, we can’t pay our teachers enough money and we don’t have money to build hospitals, but we’re giving all this money to the racing industry. Let’s take some of this money away from the racing industry and use it for things we think are more important,’” he says. “That’s starting to happen in some of these states a little bit at a time, and it’s probably going to happen more and more.” Even for proponents, the option to decouple is more of a necessary evil than a comprehensive solution, as it would allow for a gradual rationalization of the industry that would be much less painful than an outright implosion.

Sutor says having the option to decouple would help to ease Dover Downs’ current woes, though he believes it’s unlikely much of the subsidy money would ultimately end up back in his hands. “To assume that money would go to the casino is not a good assumption, but if we can stop losing money running these 10-12 races a night, that helps us.” “Decoupling is something that’s going to be an absolute necessity, and it’s going to happen whether people like it or not. If it just collapses then you have a catastrophic problem,” says Adkins, emphasizing that the alternative to decoupling will be more bizarre instances of operators gaming the system. “You have archaic laws that say, ‘OK, you have nobody in your grandstand, but you still have to run dogs.’ What do you have happen then? Then you end up looking at the loopholes like barrel racing, and then I take three Chihuahuas and I run them a 40-foot sprint down the track and say that’s a race.”


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OPERATIONS

The Casino of the Future

Seven considerations for the evolution of gaming

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ately, every conference includes a panel on the “casino of the future.” Perhaps this has been a theme for decades, but it does seem that our industry is on the cusp of another meaningful evolution. Today’s younger generations are the first to have grown up fully immersed in technology such as video games, social media and smartphones. It’s reasonable to assume that these demographics will not “age into” past gaming products such as slot machines, and that they will expect a new paradigm at casinos. From 1931 to 1975, gambling in the U.S. was the sole (legal) domain of Nevada and established the historical cool factor of the tuxedo-clad “Rat Pack.” In 1976, legalized gaming expanded to New Jersey, and the next two decades brought rapid expansion across the country along with an evolution of the casino “brand” towards a more familyfriendly destination. The end of the 20th century brought the crossover point for the “X-Chart” in Las Vegas, whereby non-gaming revenue overtook gaming revenue, and that trend has continued. How will casinos look over the next five, 10 or 20 years? Let’s propose seven considerations for the evolution of the gaming industry and tomorrow’s casino. Consideration 1: Seamlessness Today, most casinos are highly structured, with clear division between the gaming floor, entertainment offerings, food and beverage, retail and other components. The future will likely bring an experience and philosophy that is more seamless and integrated, with a free flow of design and construction that mixes these and other casino elements. Imagine a casino floor with a well-connected blend of gaming, entertainment, shopping, restaurants, bars and more. Patrons will have quick, simple access to the products and services they desire in a seamless environment. Consideration 2: Technology The pace of technology innovation and acceptance continues to quicken, and casino operators are well poised to benefit from the rapid integration and deployment of new technologies. This includes everything from back-end systems such as powerful

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By Blaine Graboyes

customer-tracking databases and cloud computing platforms to consumer-facing measures including virtual, augmented and mixed realty, to a greater connection with patrons’ smartphones and social media. While previous adoption cycles for new gaming technologies such as TITO, video slots and electronic table games often took five to 10 years, today’s digital evolution is expected to take place more rapidly. Consideration 3: Video Games Video games have increasingly grown from a niche pastime to mainstream entertainment. Since 2007, first-week sales revenues of video games have exceeded those of blockbuster Hollywood movies. Consumers who grew up playing interactive, immersive video games are also looking for a greater degree of engagement, socializing and competition than what is offered by many current casino games. More recently, eSports have become a growing entertainment trend, further leading casinos to integrate video games in the form of skill-based games, video game gambling, eSports book betting, virtual reality experiences and other related products. Consideration 4: Weight Casino architecture has historically trended towards a rather “heavy” design and construction with dark colors, rich fabrics and masculine cues. Modern retail stores and restaurants have embraced a “lighter” palette of materials, colors and textures. Examples such as the Apple Store or contemporary quick-service restaurants come to mind. These same building styles will likely serve as reference points for the casinos of the future looking to attract and retain a younger, more diverse clientele. Consideration 5: Experiences The growth of non-gaming “experiences” at casinos will almost certainly continue. To date, this has often meant nightclubs, day clubs, pool and outdoor events, and celebrity chef-driven restaurants. This will allow casinos to host everything from ARGs (alternate reality games) to virtual-reality amusements to pop-up retail stores. Consumers are always on the hunt for the latest, unique experiences, and casinos are well-positioned to host, pro-

mote and deliver an ongoing evolution. The billions of dollars invested in casino operations provide the perfect destination for implementation of new experiences. Consideration 6: Brands Despite the challenges facing the American mall, brands continue to want to expand and grow their connection with consumers. Today’s consumers feel a connection with brands that provide products and services while still aligning with principles that are critical to each shopper or patron. Casinos have already embraced brands with themed slots, retail, entertainment and food-and-beverage offerings. The integration of brands will continue to expand into every area and aspect of the casino, including hotel rooms, new gaming products and public areas. Consideration 7: Hospitality Casinos are experts at offering the highest levels of hospitality. But the definition of what constitutes world-class service for today’s customers is changing and evolving, creating new opportunities. From the check-in process (concierges with tablets) to the guest rooms themselves (more sparsely designed with high-speed Wi-Fi over larger spaces with adorned fixtures), the casino of the future will need to incorporate a more streamlined look and feel with a greater focus on experience over facade. The casino patron of tomorrow is looking for the next generation of VIP hospitality defined by an era of ubiquitous technology and ease of use. These seven considerations, each in isolation, all offer unique opportunities and appeal to the new audience of younger gamers, and when combined in some synergy, they produce a gamechanging experience for the future of casinos. But what does it really mean to deliver VIP hospitality to the next generation of casino patrons? Our next article will explore four potential “pillars” for understanding how to make a customer feel like a very important person—your brand, the environment, their experience, and how these elements combine to define a culture. Blaine Graboyes is CEO of GameCo, Inc.


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How David Slew Goliath Golden Nugget’s ascent to the top of New Jersey online gambling By Steve Ruddock

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he evidence is now indisputable: Online gambling has buoyed the Atlantic City casino industry. The year 2016 saw casino revenue rise for the first time since 2006, thanks in part to the nearly $200 million generated by the state’s online gaming operators. Even the mainstream Associated Press is convinced. “There’s no longer much of a debate about it: Internet gambling is helping to save Atlantic City’s casinos,” AP writer Wayne Parry wrote in April. The benefits of online gambling can be seen industry-wide, as online casinos contributed 8 percent of all gaming revenue generated by Atlantic City casinos in 2016. Some casinos have been able to leverage online gaming more than others, but no casino has been strengthened by the addition of online gambling more than Golden Nugget Atlantic City. And because the Landry’s-owned property is one of the city’s smallest casinos, online gaming also constitutes a larger percentage of its revenue. In 2016, online gaming accounted for nearly 17 percent of Golden Nugget’s total gaming revenue—more than double the industry average. By way of comparison, online gaming was just 6 percent of Borgata’s total casino revenue in 2016.

David vs. Goliath Like Master Yoda’s control over The Force, Golden Nugget is proving that when it comes to online gambling, “size matters not.” Golden Nugget has a small footprint compared to some of its high-profile neighbors like Borgata or Harrah’s. GNAC boasts less than 75,000 square feet of gaming space, and just over 700 hotel rooms. Right next door, Borgata’s casino floor is over 160,000 square feet and the property has more than 2,000 hotel rooms. Not surprisingly, Golden Nugget’s land-based gaming market share was 8.2 percent in 2016, while Borgata’s market share was 33.1 percent. But these size deficits don’t matter in the virtual world of online gambling. Golden Nugget’s 2016 online gaming market share was 21.5 percent, good enough for second place behind Borgata. More recently, Golden Nugget has been getting the better of Borgata. In seven of the last eight months, Golden Nugget posted higher monthly iGaming revenue numbers than Borgata. Since the beginning of 2017, Golden Nugget has left Borgata in the rearview mirror, and is now the clear market leader in New Jersey. Whereas most online operators in New Jersey are ecstatic when their monthly revenue tops $4 million, Golden Nugget has reached the $5 million mark in each of JULY 2017 www.ggbmagazine.com

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Joining the Fun

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n a somewhat unorthodox move, Rush Street Gaming, which operates SugarHouse Casino in Philadelphia, entered the New Jersey real-money iGaming market earlier this year. Rush Street Interactive President Richard Schwartz explains why the company decided to enter the market and how the decision to invest in developing a proprietary platform has paid off. To hear a full version of this podcast, visit GGBMagazine.com.

GGB: Why did Rush Street Gaming form an interactive division? Schwartz: We saw other types of commerce across all industries have migrated online—how we shop, how we bank, how we listen to music, watch movies and play video games have all gone online. We saw what happened with Blockbuster and we didn’t want that to happen to us. We don’t want to be Blockbuster. We’d rather be Netflix. Why did Rush Street decide to enter the New Jersey iGaming market? New Jersey was the first legal iGaming market in the United States for casino games with a meaningful population. We thought it was a natural market for us, given that our SugarHouse property is on the Delaware River bordering New Jersey, and has a significant player base from New Jersey. Our player base from New Jersey is closer to SugarHouse than it is to Atlantic City. And entering the market early allowed us to develop our product and prepare for future markets. Golden Nugget has been very successful in the last couple of years. What role does PlaySugarHouse.com and the other partner, Betfair, play in the success of the Golden Nugget? When it’s reported how successful the Golden Nugget license is, it’s rarely noted that there are three brands contributing to the revenues associated with that license. We each have separate brands, marketing budgets and operations. We’ve all been growing very fast, so we think of it as a team effort. We’ve been very happy so far with the results. Golden Nugget has been very innovative in online gaming, which certainly contributes to their success. What has Rush Street done that is equally innovative? We’ve brought a wide range of “firsts” to the New Jersey market. Everyone has similar games, so our focus was how to differentiate the user experience, or the journey, as we call it. We want to create experiences not available anywhere else. One of the things we focus on has been a completely new way of casino bonusing. Based on market research, players didn’t have much understanding of how you get bonuses, how you redeem them and how you track them. So transparency was really missing. We’ve added that to PlaySugarHouse.com. We also have an intense loyalty system that is gamified with lots of wheel spins along the way. We want to elevate our players to the next level as soon as possible.

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the last three months (GNAC is the only online operator that has eclipsed the $5 million mark), including $6 million in March. As impressive as its current numbers are, the road Golden Nugget traveled to get to the top of the New Jersey online gambling market is nothing short of remarkable.

A Blessing in Disguise Golden Nugget got off to a rocky start in New Jersey. On November 21, 2013, Borgata, Tropicana, Trump Taj Mahal, Trump Plaza, Caesars and Golden Nugget were all part of New Jersey’s synchronized online gambling launch. During this “soft launch,” all of the operators were being put through a five-day field test by the New Jersey Division of Gaming Enforcement. Golden Nugget was the only operator that didn’t pass the test. Golden Nugget’s online casino software, powered at the time by Bally Systems, wasn’t ready for prime time. Technical difficulties led to the site being pulled almost as soon as it launched. So, while its competitors were busy gobbling up market share, Golden Nugget had to sit on the sidelines for several weeks, as it worked out the software kinks. In the end, Golden Nugget’s late entry turned out to be a bit of a lucky break. Not only did Golden Nugget avoid association with the worst of the early geolocation and payment processing issues that plagued the industry; when it did launch in December, it walked into a marketing vacuum. Golden Nugget Vice President of Online Gaming Thomas Winter explained how this dynamic benefited GNAC in a 2015 interview with iGaming Business. “As our competitors all launched marketing campaigns at the same time, they really struggled to acquire customers cost-effectively,” Winter said. “And in most cases, the operators had pulled back from their marketing spend already. “That gave us the opportunity to achieve a disproportionately high share of voice and acceptable CPAs (cost per acquisition).” To use a sports analogy, Golden Nugget was the short-yardage running back who came in for one play and scored the game-winning touchdown after the offense marched 80 yards down the field to the 1-yard line.

The Secret to Golden Nugget’s Success Golden Nugget may have caught a lucky break, but luck isn’t why Golden Nugget finds itself at the top of the New Jersey online gaming hierarchy. Golden Nugget’s success is a testament to the company’s vision and determination to be the best, and it’s thrived under the stewardship of Winter and his team. “We are 100 percent focused on New Jersey,” Winter says. “Since day one, we’ve been consistent in investing in this market, be that on marketing, product or user experience. We strive to be the No. 1 choice for the most demanding New Jersey casino players. “Generally speaking, I think the user experience lives up to the brand promise—that is, to offer the best and most authentic online product and service to traditional casino players.” In order to live up to its own lofty expectations, and create the best user experience, Golden Nugget takes a multi-faceted approach. As Winter puts it, “That superior user experience comes in many different ways, from an ergonomic and slick user interface to exclusive games, fast withdrawals, 24/7 customer service and dedicated VIP management. “We also have a very personal relationship with our patrons, with over 40 staff working in Atlantic City across customer service and our live dealer studio. New Jersey players value this proximity.”


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Of all the online operators in New Jersey, Golden Nugget has been the most forward-thinking, and taken the most risks. No Reward Without Risk Golden Nugget also has benefited from a number of bold moves. Of all the online operators in New Jersey, Golden Nugget has been the most forward-thinking, and taken the most risks. Golden Nugget has made moves other operators, still entrenched in the conservative land-based casino mindset, have been loath to make. “The online gaming industry as a whole, not only in the U.S., is very fastchanging, and requires operators to quickly adapt to stay relevant,” Winter says. “Besides, you don’t only compete with other online real-money gaming operators, but with lots of alterative entertainment options, such as daily fantasy leagues, social gaming, Netflix… You need to always give more fun and entertainment, in a more convenient fashion, to deserve players’ share of wallet. “New Jersey is also a very competitive market, with no less than 14 online casinos. It is true that some of them are perhaps focusing less on this particular market because they operate much larger businesses outside New Jersey, but others are very active. To differentiate our brand, we need product innovations as well as regular enhancements across the board.”

Choosing Partners Wisely Golden Nugget caught another lucky break when it decided to offer a home to Betfair’s online casino. In 2014, following the closure of Trump Plaza, Betfair’s New Jersey online casino found itself without a casino partner. Caesars took in Betfair on a temporary basis, but in the end it was Golden Nugget that offered Betfair a permanent home. Even though it meant bringing a direct competitor into the fold, Golden Nugget saw value in adding the wayward Betfair Casino, and the move paid dividends almost immediately, practically doubling Golden Nugget’s monthly online gaming revenue. But it wasn’t without some risk, as the relationship between Betfair and Golden Nugget was the first instance in New Jersey where the land-based casino’s online brand was powered by different software than the sub-brand. Caesars approached this problem conservatively; Golden Nugget didn’t. And Golden Nugget reaped the rewards. The Betfair experiment worked so well GNAC went back to the same well a couple years later. In 2016, Golden Nugget reached an agreement with Rush Street Gaming, where the latter would launch a New Jersey online gaming site for its Philadelphia-based SugarHouse Casino under GNAC’s online gaming license. This agreement will likely pay off down the road, as it’s widely believed the deal will be reciprocated by Rush Street when Pennsylvania legalizes online gaming.

Product Enhancements Golden Nugget also has made a number of shrewd in-house business decisions that ultimately improved its product. There was a platform switch, from Bally to NYX in 2015 following tthe sale of Bally Technologies to Scientific Games. “On our end, we wanted a fully committed partner to keep improving their platform and our players’ experience,” says Winter. “So we both figured out it was best to change.” It was also risky, as no other New Jersey operator had switched online platforms prior to GNAC’s move to NYX. With NYX, Golden Nugget possesses a catalog of games that now numbers over 400, it’s experimented with a loss-back rewards program, and GNAC is expected to roll out virtual sports in the very near future.

But all of this pales in comparison to the most important product innovation Golden Nugget has brought to the New Jersey online gaming market: the launch of live-dealer games. Unsurprisingly, this was also one of the biggest risks Golden Nugget has taken.

The Live-Dealer Advantage Live-dealer games have been a runaway success for Golden Nugget. Since their debut in the fall of 2016, Golden Nugget went from $3.5 million a month to $5 million and even $6 million. It should be noted that PlaySugarHouse.com launched two months after live-dealer games, and likely has something to do with the uptick in revenue. “For the first time, an online brand is embodied with real dealers and real player interactions,” Winter says. “We believe this has attracted patrons who would not have played online otherwise, for it was perceived somewhat cold and too far from the social experience a brick-and-mortar casino typically offers.” According to Winter, the company’s internal surveys indicate one of the main reasons brick-and-mortar customers were reticent to register for online accounts was because of a lack of trust. He says live-dealer games help remedy this concern. “It helps building further trust in online gaming in a U.S. market where online gambling was still illegal three years ago,” Winter says. “Live-dealer is the best possible answer to their concerns.” And as was the case with the SugarHouse deal— which opens up the possibility of Golden Nugget launching a Pennsylvania online casino—live-dealer games are creating new opportunities for Golden Nugget. “We are also opening up our live-dealer studio to new brands,” Winter says, “which will help us further improve our offerings— adding tables, increasing opening hours and launching new games.”

The Future in New Jersey and Beyond Online gambling has been good to Golden Nugget. But Winter believes it can be better. A lot better. “In New Jersey, we see still a high potential for growth, with the market probably topping $400 million within four years,” Winter states. “We have a solid road map of product enhancements coming up, which should help us capture our fair share of this growth despite more brands going live in the market. For 2017 alone, we are targeting 50 percent revenue growth for our brand and are ahead of our projection after five months.” Golden Nugget also is exploring its opportunities outside the borders of the Garden State. “Outside New Jersey, we are closely monitoring other states’ regulatory progress,” Winter says, “especially in Pennsylvania, Michigan, Illinois or New York.” Winter also mentions Nevada, Louisiana and Mississippi, three states where Golden Nugget (Landry’s) owns casinos, and states where he indicates the company would like to offer online casino games, if it’s authorized. “There are also interesting opportunities outside online real-money casinos, such as social gaming and DFS,” Winter adds. “With a brand that is recognized and trusted nationwide and more than 500 U.S. locations owned by our parent company Landry’s, we have great assets to leverage.” If Golden Nugget’s success in New Jersey is any indication, it will indeed leverage those assets. JULY 2017 www.ggbmagazine.com

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Pennsylvania Governor Tom Wolf has not indicated whether he will sign an iGaming bill or not

States Consider iGaming Bills

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everal states have taken serious strides toward the legalization of online gaming. But the devil is in the details, and there is no guarantee that any of the states will pass laws that will legalize iGaming, and if they do, that the stipulations of the law will be acceptable to companies interested in conducting iGaming.

Illinois The Illinois Senate has approved a bill to allow online gaming and daily fantasy sports in the state. Though the bill has yet to be considered in the state’s Assembly—which was out of session until June 8—the 42-to-10 vote came as a surprise to analysts, as Illinois has not voted on an online gaming bill before. The bill was initially proposed for DFS sites, but according to a report in the Chicago Tribune, online gaming was added to gain support Illinois casinos like Elgin’s Grand Victoria, and state racetracks, will be eligible to apply for iGaming licenses

from the state’s land-based casino operators. According to the report, casino operators in the state see DFS sites as competition. The bill, titled the Internet Gaming Act, would create a Division of Internet Gaming within the Illinois Gaming Board. The bill allows for both online poker and casino games. According to a report at CalvinAyre.com, online licenses would be available only to the state’s licensed casino and horse-racing operators. Successful applicants would pay $10 million as a deposit against future tax obligations. The tax on gross gaming revenue would be set at 15 percent, but operators would only be taxed at 44

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10 percent on their first $100 million of annual revenue, and 15 percent on revenue above $100 million for the first five years the law is in place. The bill also creates the Fantasy Sports Contest Act. DFS operators would pay 5 percent on the first $1 million of revenue, 7.5 percent on revenue between $1 million and $3 million, 10 percent on revenue between $3 million and $8 million and 15 percent of revenue over $8 million, the report said. DFS license application fees would be based on revenue with operators earning over $10 million per year paying $25,000.

Pennsylvania The Pennsylvania Senate passed a gaming expansion package that includes legalization of online gaming and daily fantasy sports. Senators easily passed HB 271, a measure originally formulated by the state House that senators had been using as a shell bill for gaming expansion. In addition to legalizing and regulating iGaming and DFS, the bill would authorize gaming on iGaming kiosks and tablets at the state’s airports, and would authorize sales of state lottery tickets over the internet. Additionally, the bill would replace the local-community host fee struck down last fall by the state Supreme Court. Like past measures passed by the state House, the Senate bill would restrict online gaming licenses to the current 12 operators of land-based casinos and racinos—a relief to many who had heard state senators push for online gaming run by the state lottery. However, the tax rates in the Senate measure bear no resemblance to either of the iGaming bills passed by the state House. In fact, many observers say the taxes and fees in the Senate measure would doom any online gaming program before it began. The bill, which now goes to the House, sets a 54 percent tax rate on revenues from online slot and table games, while taxing internet poker at 16 percent. Current operators have said they would not seek licenses to run online casinos at the 54 percent tax rate, which is the same revenue tax operators pay on land-based slot machines.

Both bills passed in the House set the online gaming revenue tax at 14 percent, regardless of the game. The Senate bill also sets higher fees than the House measures. Operators seeking a full iGaming license would pay $10 million in fees—$5 million each for online poker and online casino games. A license to operate daily fantasy sports would cost the lesser of $50,000 or 7.5 percent of the applicant’s gross revenue, with a 12 percent revenue tax thereafter. Under the measure, existing casinos would have 90 days after enactment to buy an iGaming license. After that, other companies would be allowed to purchase the licenses, for the same $5 million fee for each type. After licensing, renewal would cost $250,000 annually. Airport gaming at kiosks and tablets would be licensed at fees from $250,000 to $5 million, depending on the size of the city or county in which the airport is located.

Massachusetts Now late in the legislative calendar, it is unlikely the Massachusetts legislature will take up legalizing online gaming in 2017, Stan Rosenberg, president of the Senate, said last month. Although an online lottery was on a separate track, it too will probably have to wait for next year. Rosenberg said lawmakers are approaching both issues carefully in order to not harm the brickand-mortar casinos the legislature has already authorized, and not to harm the existing lottery. Massachusetts already has one casino that has been operating for nearly two years, Plainridge Park

Stan Rosenberg, president of the Massachusetts Senate, says it is unlikely that online gaming legislation will pass this year


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in Plainville. Two more, the Wynn Boston Harbor and the MGM Springfield, are under construction, with opening dates planned for 2019 and 2018, respectively. Rosenberg said he and his colleagues were uncertain how to allow for online gaming without hurting the infant casino industry in the Bay State. He predicted some action on a bill next year. At the same time, however, the special commission appointed last year by the Massachusetts legislature to study the issue of online gaming such as eSports—excepting the lottery—is leaning towards an omnibus approach, according to reports. The Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports has a July 31 deadline to submit its recommendations to lawmakers. In June, it met to informally poll the nine members on where they are leaning. Rep. Joseph Wagner, one of the commission’s co-chairmen, said at that meeting, “There are three options I think that we will look at... There’s the gaming option, a type of structure where we have a separate law that would govern this; the omnibus approach, which is where we would give some authority to oversee all of this; or to just simply let it play out for some time going forward.” Massachusetts Gaming Commission Chairman Stephen Crosby, who also serves on the ad-hoc commission, said, “Our view is that the legislature’s job is to determine whether or not we want gambling online to be legal, and if the answer to that is yes, which it sort of presumptively appears to be, then come up with a regulatory environment that can deal with all of these things as they come down the pike and not have to try to be in a reactive model.” He said he supports an approach “broad brushed, very clear in terms of values and parameters and regulatory criteria.” He said it makes sense for the Gaming Commission to be tasked with this oversight. “Though if it goes to somebody else, it’s totally fine with us. We’re not invested in it one way or another,” he said.

New York The drive to legalize online poker in New York has taken a dramatic turn with the inclusion of language that could block industry giant PokerStars from operating in the state. John Bonacic, legalization’s longtime champion in the Senate, gave no reason for the sudden addition of the so-called “bad actor” provision to his bill on the eve of an expected floor vote in the upper house in which the bill should pass easily, as it did last year. Some observers point to continued opposition in the Assembly where J. Gary Pretlow’s compan-

ion bill died last year without coming to a vote and it could be Bonacic inserted the tougher language in hopes of swaying undecided lawmakers there. Then there is Governor Andrew Cuomo, who hasn’t taken a public position on legalization, but whose political machine has some questionable history with PokerStars, which is fueling speculation that keeping the company out of New York might be a requirement to secure the governor’s support. “Bad actor” clauses are fairly common in online gaming bills put forward in other states. In essence, they’re designed to deny licensing to operators who marketed to American players after the 2006 passage of the federal Unlawful Internet Gambling Enforcement Act. Prior to UIGEA, most offshore operators were inclined to treat the U.S. as a gray market where they were free to offer their services absent positive legislation prohibiting them. UIGEA changed that—not by prohibiting Amaya’s former CEO and founder David Baazov is entangled in a campaign finance scandal related to Governor Andrew Cuomo’s 2014 re-election

online gambling per se, but by making it illegal under federal law to accept or process financial transactions over the internet for gambling activities. PokerStars was one of several offshore operators that continued to take bets in the country after UIGEA. That is, until April 15, 2011, “Black Friday” as it’s known in web gambling circles, when PokerStars and its ownership were indicted by the U.S. Justice Department, along with two other major operators, on a raft of criminal charges including illegal gambling, fraud, money laundering and conspiracy. Its U.S. operation was shut down and the company pleaded guilty and accepted a steep fine. The Cuomo connection came later. In 2014, PokerStars was sold to Canadian web gaming operator Amaya. New ownership normally might have served to eliminate any “bad actor” taint. But this, too, has become a problem, because last month a federal complaint was issued alleging that in 2014 a New York Democratic Party operative helped then-Amaya CEO David Baazov disguise a $25,000 contribution to Cuomo’s re-election campaign. According to the complaint, the money was made to appear as if it came from a third party, a Florida attorney, who later would be hired by Amaya.

PAGCOR Caps Online Licenses at 50

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n official with the Philippine Amusement and Gaming Corp. says the state-run gaming regulator will limit offshore licenses to 50 until it is certain that “the increase in players is not overtaking the demand,” reported the Philippine Star. “We need to evaluate first if the industry is already oversaturated,” said Jose Tria Jr., assistant vice president of PAGCOR’s Offshore Gaming Licensing Department. He added that the cap could be adjusted at any time. “It depends on the evaluation. The saturation of the market can be seen in the audit system. If the income of each operator goes down from the previously reported, this means there are too many operators,” Tria said. “They are just dividing between themselves instead of increasing it. That means it’s already saturated.” Philippine Offshore Gaming Operators, known as POGOs, will offer online games and sports betting to overseas players. So far, the Star reported, 42 licenses have been issued. Applicants must pay $50,000 for online casino operations and $40,000 for sports betting operations. Once a license is granted, the operator must fork over an additional $200,000 for an online casino license and $150,000 for a sports betting license. PAGCOR predicts the industry will generate around P6 billion (US$121 million) in online gaming taxes.

Pala Interactive Joins New Jersey Online Poker Market

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ew Jersey’s online poker market has a new player as Pala Interactive has launched a poker site to complement its online casino games site. Pala first launched in New Jersey in 2014, and added a bingo site last year. The poker site is offered through its partnership with Atlantic City’s Borgata casino. All online sites in New Jersey must be partnered with an Atlantic City casino. The site is currently in beta testing. However, Pala will not be sharing players with Borgatapoker.com or the casino’s other partner, PartyPoker. The company had originally planned to launch a poker site in 2015, but instead waited, and now says it has spent three years “building a new poker platform.” JULY 2017 www.ggbmagazine.com

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TABLE GAMES

An Authentic Friend Dan Lubin touched many people in the industry By Roger Snow

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n May. In Las Vegas. In the living room of a dear friend’s home. In the company of acquaintances and associates— and in some cases, of adversaries—they sat there and they stood there, and they one-by-one exchanged their favorite memories of Dan Lubin, the table-game inventor and author who was found alone and unresponsive in the bedroom of his apartment less than a week earlier. It was an impromptu affair. C’est la vie when la vie itself is extinguished so quickly, without warning or graduation. This wasn’t a slow descent into the afterlife; rather, it was a sudden and shocking plunge. Lubin was only 56 years old, for crying out loud! True, he had a history of cardiac issues. True, he had been hospitalized a few days before. And true, he had joked more than once that doctors should sew him up with a zipper instead of sutures, so when he goes in for his next bypass surgery, it will be easier for them to enter and exit his chest cavity. Fine, whatever. But there’s a big difference between being unsurprised when something happens and actually expecting it to happen. And among the industry people Dan touched over the years, the ones gathered together that day and those who couldn’t make it, absolutely nobody saw this coming. Or fully grasped that it had come. Case in point: On more than one occasion, amid recounting some wild, colorful anecdote about Dan, the storyteller referred to him in the present tense. No one offered a correction. Perhaps it was out of politeness or perhaps it was out of wishful thinking. Perhaps both. For some reason (and maybe where Dan is now, he’s been enlightened with the answer to this celestial secret), the world of table-game inventors is populated exclusively by characters. Like with a capital C. We’re talking a mashup

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of The Big Bang Theory, House of Cards, and yes, even Looney Tunes. And there was no bigger character than Dan Lubin. From his volcanic energy to his wax-on-waxoff hand gestures to his batteringram tilt of the head when making a point, Dan was, in the literal sense of the word, unique. In the parlance of poker, what he was, was the worst possible hand you could get. In life, however, what he was, was the best possible thing you could be. He was one of a kind. And boy did his mannerisms, his voice, his persona make him ripe for imitation. He was the Elvis Presley of table games: Everyone did an impression of him. You could even hear it from the storytellers in the living room: whenever they had to recount something he had said, they did so in his professorial, passionate, almost singsong tone. All that was missing were the eyeglasses and the muff of silver hair. The one atop his head and the one peeking out from his white dress shirt that always had one less button buttoned than it should have. Yup. That was Dan. He was as authentic, as original as they come. But, ironically enough, for someone so easy to mimic, he will prove impossible to replicate. This you can say with a mortal certainty: there will never be another Dan Lubin. Who else would spend months writing a pai gow poker manifesto with zero interest in financial gain? Who else would turn down a better deal with Shuffle Master in the late 2000s because of his loyalty to DEQ? “Sometimes you’ve got to dance with the one who brung ya’,” he said back then, shutting down the protracted negotiations with the finality of an elephant gun. Who else would devote the time—days, not hours—to educate a fledgling inventor on the launch of his first game at Green Valley Ranch in Henderson, Nevada? Who else would lose his job at one of the largest table-game suppliers in the

world because he refused to stop posting on an internet forum that catered to aspiring developers? No one. No one else. No one ever again. But there was more to Dan than his endearing quirkiness. He was a good friend. He was a loyal business partner. He was a kind man and a loving husband. Consider that of all his accomplishments inside gaming, nothing gave him more pride than something he did outside gaming, opening a Thai massage spa on Tropicana Avenue in Las Vegas last year with his wife. He was also one hell of a game maker. EZ Pai Gow Poker, his firstborn, resides in the upper echelon of historically successful games. There are more than 100 tables in North America, a number that nudges upwards every year. Beyond that, his latest—sorry, last—game, Tiger Split (which he co-developed with Michael Shackelford, who hosted the living-room memorial for Dan), will debut at G2E Las Vegas this year. Lubin also, much like a record producer would, flushed out concepts and improved ideas that were brought to him during his employment at DEQ, Galaxy Gaming, and his own company. He also wrote a book on the subject of proprietary table games. Wait. Check that. He wrote the book on the subject of proprietary table games. The Essentials of Casino Game Design is considered the most comprehensive howto guide for people looking to turn their idea into a bona fide casino product. It was a massive undertaking, and when you read it, you realize he was someone who treated this industry with love and almost a spiritual reverence. Dan may be gone, but his influence on our industry isn’t. That will live on for decades. Perhaps forever, as those he inspired and influenced go on to influence and inspire others, and they in turn do the same. How we wish, how we wish you were here. Rest in peace, Dan. Roger Snow is a senior vice president with Scientific Games.



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How do you evaluate the non-gaming spend of your customers?

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Total Guest Rating By Dave Bontempo

aming and nongaming realms reflect the urge to merge. Their shared world stimulates earnings, enhances the operator’s menu and may, collectively, enlarge the mega-resort revenue pie. The tandem thrives by revealing multi-faceted, reward-worthy customers, like conventioneers who gamble or players whose betting history warrants hotel-tier, restaurant and entertainment discounts. Some companies approach operators with products addressing one side of the equation. Some target both. Their overall efforts reflect a reality operators increasingly grasp. The big picture should not highlight gaming versus non-gaming spend. It ought to blend both.

In Synk Konami Gaming, the Las Vegas subsidiary of Japan-based Konami Holdings Corp., has been in the casino systems business since 2001, and its core technology supports nearly 400 venues. The company has thrived with Synkros, one of the industry’s leading casino management systems. Synkros supports a spectrum of large destination properties, cruise ships, local casino stops and entire multi-property portfolios. “Synkros’ ability to deliver comprehensive enterprise-wide data analytics is what benefits our casino customers the most,” says Steve Walther, senior director of marketing and product management for Konami Gaming. “It pushes the industry forward by capturing and compiling data from across all connected areas of the property to create more meaningful cus48

Global Gaming Business JULY 2017

tomer relationships and experiences. It enables the industry operators to reach diverse player demographics with relevant communications and offers to drive targeted actions.” Konami impacts gaming and non-gaming sectors. The company enjoyed a prosperous spring. In late May, it announced the launch of Synkros at Emerald Island Casino in Henderson, Nevada. Featuring more than 400 slot machines, Emerald Island is a high-traffic locals casino in the heart of downtown. In April, Konami reported that Synkros had been selected by Tahoe Biltmore Lodge & Casino, a Northern Nevada resort property in Crystal Bay. With more than 200 casino slots and table games, Tahoe Biltmore is the first property on Lake Tahoe to introduce Konami’s leading systems advancements. Synkros marketing solutions are powered by its Advanced Incentives Bonusing Engine. This rules-based system allows operators to automatically reward players based on a multitude of criteria. That includes patron loyalty tier, geography/demographic, events, historical wager, birthdays and anniversaries, with defined award types and amounts, through several communication touchpoints. Yet developments like this only cover part of the patron spending dynamic. Walther considers the industry more conscious than ever about combining gaming and non-gaming efforts. The two sectors carry a significant benefit to revenue potential, property efficiency, data analytics, marketing effectiveness and player loyalty. “Not all casino management systems are equipped to measure and


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Konami’s Synkros marketing solutions are powered by its Advanced Incentives Bonusing Engine. This rules-based system allows operators to automatically reward players based on a multitude of criteria.

analyze gaming and non-gaming spend in a single ecosystem, which prevents many operators from observing and implementing a cohesive total property marketing strategy,” he asserts. “But through technology such as Synkros, it’s available in real time so that operators have the most accurate and up-to-date information to identify and capitalize on opportunities.” Walther says one of Synkros’ big values for casinos is its arsenal of tools that include floor-wide bonusing, targeted offers/incentives, kiosking functions, drawing tickets and integrated mobile touch points. The operator can watch these activities work together, and then leverage Synkros’ powerful business intelligence engine to optimize future marketing and operational activities. The role of Synkros becomes more prominent in the integrated-resort era. “By tracking a customer’s spending behavior via loyalty program-enabled devices at all customer touch points—restaurants, spas, golf, retail, entertainment, etc.—that information can be combined with the customer’s gaming activity to provide powerful insights that span all areas of operation,” Walther says. “If, for example, one guest is strong on concert attendance and another is a core slot player, Synkros allows different carded player demographics to receive promotions and offers that are customized for their respective areas of spend. Various player segments can receive targeted offers which appeal directly to their purchasing behavior.”

Revving the Economic Engine The Rainmaker Group, a leader in profit optimization and intelligence solutions for the gaming and hospitality markets, rides an optimistic streak. In late May, the Alpharetta, Georgia company received an endorsement from the Westgate Las Vegas Resort and Casino regarding the suite of revenue management and business intelligence solutions it deployed there late last year. Rainmaker officials say their innovations produced a significant increase in year-on-year revenue at Westgate, a popular casino resort featuring suites, on-site amenities and a prime location adjacent to the Las Vegas Convention Center. The sentiment was expressed roughly six months after Westgate

bought Rainmaker’s guestrev, grouprev and revcaster solutions to optimize property pricing and revenues. Grouprev aided the team in managing its 200,000 square feet of meeting space. “We have a multi-faceted business that requires a keen and detailed understanding of every area at every level,” says Geno Iafrate, president and general manager of Westgate. “This is of utmost importance in our revenue management practices, as it helps us to both forecast accurately and to turn the data that the system provides into actionable strategies. “To get the granular-level view of the integrated data we need, a seamless and solid integration between our PMS, our revenue management system and all other systems relevant to the process is a critical factor. This ability to integrate with existing disparate systems is something that Rainmaker does exceptionally well.” The unique math and science-based algorithms of Rainmaker’s revenue optimization and intelligence platform exponentially boost profits while providing revenue managers with an understanding of overall demand by value-based customer segments, Rainmaker officials say. With the guestrev solution, Westgate can optimize room pricing based not only on room revenue, but on the total value of the guest, processing data from multiple sources to forecast demand and set room rates. The grouprev solution provides the tools to maximize revenues from group business, helping revenue managers navigate the complex and intricate data. The revcaster rate shopping solution provides deep insight into varying rates, shopping multiple channels to see what’s happening locally so hoteliers can monitor parity and maximize ADR. In early May, Rainmaker announced record-setting growth during the first quarter of 2017, welcoming more than 200 additional properties to its rapidly expanding global client base. In addition to growing the number of users for its comprehensive platform of pricing optimization and intelligence solutions, many existing Rainmaker clients also expanded their agreements during this time period, with several hotel groups taking their current solutions portfolio-wide or implementing additional solutions from the Rainmaker platform to augment those alJULY 2017 www.ggbmagazine.com

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“Properties that keep an eye on the popular social review sites for feedback will have an advantage in delivering quality GEM. These sites are a gold mine of guest stories that operators may not otherwise hear.” —Darren Student, Director of Gaming Sales, Agilysys

ready in use at their properties, company officials say. “We are true believers in the positive results that our solutions bring to each hotelier and casino operator who entrusts us with their business,” says Tammy Farley, president of Rainmaker. “Our growth trajectory is a testament to our unwavering commitment to growing our platform.”

A Gem of an Idea Alpharetta, Georgia-based Agilysys, a stalwart in the hospitality industry, has placed increasing emphasis on gaming in recent years. The era of integrated resorts plays into its original hospitality strength. “The non-gaming guest plays a critical role for resort operators large and small,” says Darren Student, director of gaming sales for Agilysys. “Nongaming is more relevant than it has ever been, driving occupancy at hotels and spending at food and beverage outlets, spas, retail outlets, entertainment, etc. Operators must not underestimate the importance non-gaming guests have on gaming revenue, not to mention overall brand loyalty.” Student says the industry has reached a pivotal time when businesses must shift their approach to revenue growth. Transforming the guest experience is the new path to maximizing revenue, he asserts. “Sometimes referred to as GEM (guest experience management), this transformation is essentially about creating a uniquely memorable time while on property,” Student says. “Positive experiences from available activities such as golf, spa, entertainment or dining will translate to improved brand loyalty, repeat business and increased wallet share. That’s the end game. To do this, we must see beyond the single transaction and instead have a 360-degree view of guest interactions at every single touch point throughout the property.” How properties approach GEM is significant. For some large resort operators, non-gaming spend contributes more than 25 percent of the resort’s net revenue, Student says. And the integration into gaming becomes seamless when a hotel stay or coffee-shop purchase using a rewards card, for example, earns guest points that can be applied to casino credits, retail entertainment and other amenities. Student believes operators should consider digital programs that offer the added advantage of electronically capturing guest preferences and spending habits. Speed, in a that-was-so-five-minutes-ago world, is a goal operators pursue to please patrons. It also has the flip-side benefit of quick feedback. “Guests are always connected,” Student says. “Whether just arriving, at the restaurant, poolside or even after departure, they’re eager to be social 50

Global Gaming Business JULY 2017

about their whereabouts, their meals and their experiences. Properties that keep an eye on the popular social review sites for feedback will have an advantage in delivering quality GEM. These sites are a gold mine of guest stories that operators may not otherwise hear. Stories about what people like most, what they like least and occasionally, surprising feedback that requires the simplest operational change to correct.” Student offers some tips for setting up the service. To utilize the innovation, properties must do some homework. “Prior to implementing technology that supports GEM, consider the data that is readily available about existing guests,” he says. “Review this information and assess how well it informs the business about guest preferences and habits. Identify the top three to five initiatives that will allow the business to create an ideal experience. What else may be needed to be able to deliver on these initiatives? This doesn’t mean a unique guest experience is necessary for every single guest profile, but being prepared to select the most appropriate experience for the given profiles you’ve identified is key.” The technology used on property must take into consideration the end-to-end guest experience, from recruitment to post-departure, Student asserts. There are certain technology solutions that will enable guest satisfaction and business objectives, but more than thinking about technology, operators should think about the experience they want to create for the different guest profiles. Once that’s established, he says, look at the technologies that will support those service levels and help meet business objectives better, faster and maybe even at a lower cost.

SpendSight Insight The non-player ratings world is extremely timely for Kahlil Ashanti, the founder of Vancouver-based SpendSight Technologies. Ashanti was tapped to host a panel on player development in the digital realm for the Canadian Gaming Summit in Vancouver June 19-21. It focused on tools, trends and information to better understand our players in a digital world without losing the personal touch, Ashanti says. “Panelists invited core discussion about the challenges we’re facing, given the increase in non-gaming spend, and we responded to them in a responsible, innovative manner,” he says. “The discussion included case studies, customer feedback and anecdotes from similar conversations from which we can learn.” Ashanti was joined by fellow innovator Omer Sattar of Sightline Payments.

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“Casinos are going to thrive in an ecosystem in which the software is agile and connects to other systems.” —Kahlil Ashanti, founder, SpendSight Technologies

Like Sattar, who forged a niche in the loyalty-card market and then annexed the muscle of major companies like Vantiv, Ashanti espouses the responsiveness of smaller companies. “One of the biggest complaints we hear from operators is that they go to some bigger companies, pay well into five figures to get something installed, and they get a ridiculous level of support, like what you and I get from a cable company,” Ashanti says. “Casinos are going to thrive in an ecosystem in which the software is agile and connects to other systems.” Spendsight’s primary target is non-gaming spending, an appropriate focus in the ascension of that industry area.

“We help you track what I’d call the invisible whales,” he says. “You may have players club members who come to your property, have dinner and drinks, use the spa and perhaps spend $5,000-$6,000 a month, and you may have no idea where and how they spend their money. “We have a proprietary algorithm that allows this software not only to predict the behavior of the players club members but to learn their trends over time. It’s also easy to use (cloud-based, accessible via computer, tablet, etc.). You can log in and instantly get a picture of 40,00050,000 players. We also customize it for you. Who are your weekend warriors, who are your most valuable, who isn’t as valuable to you as you may have thought?” Non-gaming’s emergence continues piquing the interests of casino suppliers. Large companies champion their array of tools. Small outfits pitch the absence of layered encumbrance and faster operations. However they approach the industry, companies understand that the wall between gaming and non-gaming concerns has come tumbling down.

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NEW GAME REVIEW by Frank Legato

Casablanca Everi

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ith this game, Everi takes on a slot theme reflecting one of the most iconic films of all time, 1942’s Casablanca starring Humphrey Bogart and Ingrid Bergman, heading up a cast of unforgettable actors like Paul Henreid, Claude Rains, Sydney Greenstreet and Peter Lorre. Everi has wrapped footage and sound of all the memorable scenes in the tale of patriots in Vichy France during World War II into a progressive video slot with a variety of bonuses, on the premium Empire MPX cabinet. The base game is a five-reel, 30-line penny slot with a fivelevel progressive jackpot—each of the bottom four levels linked to a character from the film. The top progressive, resetting at $3,500, is hit by filling the entire three-by-five screen with either the “Grand” or “Wild” symbol. The lower-tier progressives are won through the Knock On Wood Bonus, which spins a bonus wheel that includes all five progressives, including the top Grand prize. The progressives are available at all bet levels. The base game also includes a “Mystery Pick Bonus,” a picking event in which the player gets three picks from 12 symbols for credit awards or an “Exit Visa,” which triggers a new

bonus. A second mystery event is the “Chance Multiplier,” which adds a multiplier of 2X, 3X or 5X to a winning spin. Triggered by “Bonus” and “Wheel Spin” symbols, the Knock On Wood event awards five spins on a wheel that includes credit amounts and the progressives. All the prizes are added together, which means that multiple progressives can theoretically be won in one event. There also is a free-spin event, featuring eight to 10 free spins with a “nudge” feature and “sticky wilds”—wild symbols that remain in place for the remainder of the free spins. Manufacturer: Everi Platform: Empire MPX Format: Five-reel, 30-line video slot Denomination: .01 Max Bet: 300 Top Award: 2,642,776 credits Hit Frequency: Approximately 50% Theoretical Hold: 2%-15%

Castlevania Konami Gaming

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his game on Konami’s curved Concerto Crescent cabinet makes full use of the format’s 43inch curved video monitor in an expanding-reel feature, in a video slot for which the manufacturer once again taps into the legendary amusement-game library of its parent company, Konomi Holdings. Castlevania is based on Konami’s video game series first popularized in the 1980s, in which the player takes on monsters and the undead to achieve points and higher levels. The base game is a five-reel “Xtra Reward” ways-to-win video slot, with a four-level progressive jackpot. There is a random Mystery Wild Feature in the base game that transforms an entire reel into wild symbols. When that occurs, the event sometimes triggers a picking sequence called the Castlevania Gameplay Feature. Players choose a heart from several displayed to reveal a number of moves to advance on a maze-like top-screen display toward Dracula’s Castle. Classic 8-bit music from the original video game plays as the player moves up the pathway toward Dracula’s Castle, collecting treasure bags and defeating threats along the way. As the player moves, he may encounter bats, which they will automatically defeat for a chance at either an additional heart or a treasure bag. The bag randomly awards a bonus prize from

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50 to 1,200 credits. Players who select extra-credit bet levels during primary play can increase their odds of reaching the castle by activating special portals that advance the hero closer toward the front of the castle. If the hero reaches the castle, it triggers the Jackpot Feature, in which the player will fight against a series of monsters. The more monsters you kill, the higher the progressive prize that will be awarded. There also is a free-spin bonus. Three, four or five scattered Castlevania gem symbols trigger eight, 12 or 25 free games, respectively. For the free spins, the reel array expands to nine rows on the vertical curved monitor. In the free spins, full-reel wilds lead to potentially huge wins. Manufacturer: Konami Gaming, Inc. Platform: KP3+ Format: Five-reel, ways-to-win video slot Denomination: .01-5.00 Max Bet: 3,000 Top Award: 122,000 Hit Frequency: Approximately 29% Theoretical Hold: 5.91% - 14.82%


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Fu Nan Fu Nu AGS

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his is one of the featured games on the new AGS Orion cabinet, with its unique large flat monitor framed by marquee-style lighting. Fu Nan Fu Nu is a traditional Chinese themed game that features “Fu Nan” (Lucky Boy) and “Fu Nu” (Lucky Girl). Pays are from left to right and use the “PowerXStream” evaluation method. PowerXStream is a ways-to-win game, with no paylines and wins registered by adjacent symbols. In the three-by-five configuration (five reels, three symbols each), the base game returns 243 possible ways to win on each spin. There is a four-tier progressive jackpot, triggered through one of the two main bonus events. The Jackpot Pick Bonus is a picking event triggered at random when a wild symbol lands on the reels. Each time a wild symbol lands, sparks fly up to the top screen on the flat vertical monitor to fire up a random number of firecrackers displayed in a dual string. This string will continue to light until only the top two are unlit. Those two fireworks at the top will remain unlit until the jackpot pick triggers, regardless of how many wild symbols land on subsequent spins. When the jackpot round is triggered, all the fireworks explode to reveal a picking screen. The player picks icons—each corresponding to one of the progressives—until matching three to award the prize. The top progressive

resets at $10,000. There also is a unique free-spin event that allows the player to choose the volatility of the free games by expanding the reel array. When the free-spin round is triggered, the player chooses either 15 free spins with the normal three-by-five configuration (243 ways to win per spin), 10 free spins on a four-by-five array (1,024 ways to win) or five free spins on a five-by-five array (3,125 ways to win). In an intriguing twist, 50 percent of the time either a “Big Win” or a free-spin trigger is going to land, an animation will play that shows a message to the player telling them that “luck has arrived,” and then shows either Fu Nan or Fu Nu riding the dragon across the screen, accompanied by a sound effect. This “pre-tell” happens right after the reels start spinning and ends before any reels come to a stop. Manufacturer: AGS Platform: Orion Format: Five-reel, ways-to-win video slot Denomination: .01 Max Bet: 888 Top Award: Progressive; $10,000 reset Hit Frequency: Approximately 30% Theoretical Hold: 5%-14%

Rumble Rumble Bear Ainsworth Game Technology

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his new video slot on Ainsworth’s premium A640 cabinet features a curved-reel display above the main reel array that can transform from one to all basegame symbols into wild symbols. The base five-reel game is available in configurations of 30, 40 or 50 paylines. There is an optional two-level mystery progressive jackpot, both “must-win-by” prizes that display the level at which they are guaranteed to hit. Rumble Rumble Bear is in what Ainsworth calls its “Curved Reel Series.” Above the five-reel, three-row array is a row of five reels on a curved arc, with one spot each in the base game and two in the free-spin bonus. In the primary game, when “Spin” appears anywhere on the fifth reel, it triggers the Single Curved Reel

Feature. The top reel spins, and any spot landing the “Wild Bear” symbol transforms a random number of spots on the corresponding reel in the main array into either a “Wild Bison” or “Wild Coin” symbol. Three or more scattered coin symbols in the primary game trigger eight free spins. During free games, a special symbol on reel five triggers the Double Curved Reel Spin. The curved reel above the array splits in two, for two separate spins and double the chance of transforming maingame symbols wild for a reassessment, resulting in the potential for an entire screen of wild symbols. Manufacturer: Ainsworth Game Technology Platform: A640 Format: Five-reel, 30-, 40- or 50-line video slot Denomination: .01-10.00 Max Bet: 150, 200, 250, 240, 300, 400, 500, 600, 1,000 Top Award: Progressive: $4,500 reset Non-progressive: 60,000-400,000 Hit Frequency: Approximately 50% Theoretical Hold: Progressive: 8%-19% Non-progressive: 4%-15%

JULY 2017 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Power Behind the Slots Product: QXi-400 Platform Manufacturer: Quixant

uixant, a leading manufacturer of PC-based hardware platforms for the global gaming market, has historically seen product evolution as the main focus of its ongoing development. A good example is the QXi-400 platform, which combines unprecedented levels of graphical power for two-screen machines with cost-effectiveness, and a variety of features to meet the requirements and regulations of machines supplied to global gaming markets. The QXi-400 platform also provides full compatibility with both Windows 7 and Windows 10 operating systems, in recognition of the fact that while making technological strides is paramount, it is also important to support the range of existing software platforms. Quixant’s ever-expanding Gaming Ecosystem is an integral component of its gaming platform offering. With a wealth of hardware and software elements, such as out-of-the-box SAS 6.02 support, game developers can considerably reduce time to market and development cost, enabling them to focus their efforts on creating the most captivating games.

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A relatively recent addition to the Quixant product portfolio is the addition of a varied range of gaming monitors and button decks. These highly optimized solutions are developed in-house according to established design principles and feature the same quality and reliability as its gaming platforms. Quixant can offer both industry-standard models and fully bespoke solutions. Over the next six to 12 months, the gaming monitor range is set to expand further with designs currently in development. For more information, visit quixant.com.

Thank you to Bare Bones Games for designing the cover image for our 15th Anniversary issue.

www.BareBonesGames.com

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FRANKLY SPEAKING by Frank Legato

Texas Teas cording to the search warrant.” Because, you know, how can you run a respectable gambling establishment without meth? According to the newspaper, Hirani posted $5,000 bail in the first case and was awaiting trial on those charges last month when he was nabbed for allegedly resuming his prior operation. He is out on bail again, this time for only $2,500. (I guess he gets the two-strike discount.) Way to get back on the horse, Ameer! A true American entrepreneur won’t let a little thing like the law keep him down. Next time I’m down in Texas, I’ll stop by Rocky’s for a refreshing beverage and some amusement-only entertainment. In other news, Rob Tercek, founder and president of General Creativity Consulting, warned at a conference last month that casino operators are in danger of becoming “vaporized” as an industry. It’s a term he coined for his book, Vaporized: Solid Strategies for Success in a Dematerialized World. He said social gaming, an outdated slot-machine model and a failure to have stuff that millennials like will lead to the same “vaporization” that claimed Blockbuster, telephone directories, record stores and That 80s Show. So, we’re going to be vaporized unless we change our ways. But for the sake of argument, don’t we have a couple more decades of baby boomers dumping money at casinos before the kids take over? Relax. I believe the industry is attacking the millennial question in the correct manner—in a deliberate, methodical way; experimenting, seeing what works and what doesn’t, with large companies like MGM leading the way in trying out new game styles. Don’t worry. We’ll figure out how to separate millennials from their money before they actually have any. Vaporized. Egad. I tell you, they wouldn’t stand for that kind of talk in Texas. VIC TOR RINAL DO

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s they say, you can’t keep a good man down. Or, if at first you don’t succeed, try try again. A rolling stone gathers no moss? Sorry, I was sidetracked by wise old sayings. The first one, though, applies to our casino industry tale this month, coming to us from the great state of Texas. As you may know, there’s not a lot of casino-style gambling in Texas. There’s the one Indian casino, the Kickapoo Lucky Eagle on the Rio Grande at Eagle Pass. But that’s Class II and pull-tab games stuffed with poker and live bingo into a 15,000-square-foot space— a comparative broom closet next to your average Nevada casino. Other than the casino, gambling in Texas means the lottery, charitable stuff, or parimutuel horse and dog racing. None of the tracks have slot machines, and, as noted in Aaron Stanley’s racino article on page 34, if you look at the grandstands of traditional racetracks these days, you’re likely to find the pigeons outnumber the octogenarians. I can’t believe anybody still runs dog tracks. Do they still have the electric rabbit that the dogs chase, like the one Bugs Bunny fell in love with in that one cartoon? I’m sorry. My main frames of reference in life usually circle back either to Looney Tunes or the Three Stooges. Anyway, Texas also allows “game rooms” with slot-like “eightliners,” but they are restricted to non-cash prizes valued at less than $5. Remarkably, some nefarious operators have tried to skirt the law by doing cash payments on the side. (“I am shocked—shocked—to find that gambling is going on in here!”) Which brings us, via an exhaustively circuitous route, back to the original subject of the column—Rocky’s Drive Thru in Fort Worth, Texas. The owner of Rocky’s, whose name is, predictably, Ameer Hirani, was arrested and charged with engaging in organized crime and keeping a gambling place. At the time, he was out on bail for his arrest a year ago, for the same alleged crime. The tale began back at Rocky’s Drive Thru in spring of 2016. Two undercover Fort Worth police officers walked into Rocky’s and observed 13 electronic gambling devices. According to the Fort Worth Star-Telegram: “One officer placed a $20 bet into one of the gambling devices, receiving 2,000 credits. The officer played until the credits were exhausted. While the officer played, a woman in the store yelled out she had won $20 on a gambling device. Hirani walked out from behind a register, verified the winning, reset the machine and later walked back to the register. Hirani took money out of the register and gave the woman some money, police said in the search warrant. “Police returned to the business a few days later and seized 22 motherboards from gambling devices, almost $5,000, keys to the gaming machines and just over a gram of methamphetamine, ac-

JULY 2017 www.ggbmagazine.com

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EMERGING LEADERS Doctor in the House Angela Bae Slot Marketing Manager, Aria Hotel & Casino alk about a career change. Angela Bae graduated in 2013 with a degree in neuroscience and psychology from the University of Pennsylvania hoping to pursue a medical profession. Now she serves as slot marketing manager at Aria Hotel & Casino. “A marketing class in my senior year caught my interest, and I made the decision to switch career paths,” Bae says. After Penn, she landed a job in the Management Associate Program for Slot Operations at Aria and never looked back. Bae served as assistant manager for slots and manager of slot marketing at MGM Grand Las Vegas. She transitioned to corpo“We have technology rate enterprise reporting and last year, returned to Aria in her on our side to improve current position. “These jobs gave me a great overarching view of how slot the gaming experience machines, customer service, guest loyalty and gaming promoand engage the tions all work together to provide the best guest experience and high profitability for the department,” she says. younger generations Bae’s duties include overseeing Aria’s M life Rewards back to slots.Though it Desk staff, conducting slot tournaments in conjunction with will never take over the special events team and running slot-related direct mail and email campaigns with the help of the direct marketing the entire casino, team. In a typical day, she works with staff to ensure all guest in- skill-based gaming will quiries are resolved, collaborates with other departments to provide a niche market plan upcoming slot events, reviews future direct mail and for those who enjoy email marketing campaigns, works with slot hosts for guest requests and analyzes data. a less traditional Bae credits part of her success to a series of mentors, inexperience.” cluding Mike Gatten, VP of slots during the MAP program. “He continues to meet with me to discuss future endeavors and ways to improve myself in my current role. Joanne Kraly, my current VP of slots at Aria, shows me how women can grow in a male-dominated industry and be seen as leaders and mentors for other women in slots.” Taylor Gwiazdon, an adviser during the MAP program, has also been instrumental. “He never fails to give me advice on how to grow as a leader of people,” says Bae, who enjoys golf, concerts and exploring new restaurants. Slots continue to evolve with interactive and skill-based gaming, and Bae feels those changes will win the hearts and minds of millennials, social creatures who enjoy sharing their fun experiences with others. “Skill-based games are fun to watch and fun to play,” she says. “We have technology on our side to improve the gaming experience and engage the younger generations back to slots. Though it will never take over the entire casino, skill-based gaming will provide a niche market for those who enjoy a less traditional experience.” As for the next generation of workers, Bae urges patience. “As millennials, we are hard-wired to believe we need to be promoted every year or we are not successful,” she says. “Learn as much as you can in each role so that when the next opportunity comes around, you are fully prepared to take on new challenges. You will earn the respect of your employees, your coworkers and your bosses. Don’t make a move for a better paycheck. The money will come.” — William Sokolic

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The Art of Watching, Listening and Learning Adam Berger Associate, Duane Morris LLP s a gaming lawyer practicing in several of the largest gaming markets in the country, Adam Berger learned early on that success comes from both finding the right mentors and constantly seeking to expand one’s knowledge base. After graduating from the George Washington University in 2007 and from Villanova University’s School of Law in 2010—both with honors—Berger worked at Fox Rothschild LLP before taking an associate position with Duane Morris LLP. Having begun practicing just four years after the birth of the gaming industry in Pennsylvania, Berger has worked on competitive bidding processes in the state. He also has worked on successful casino bids in Massachusetts and New York, vastly expanding his knowledge base in the process. This level of exposure is true to form at Duane Morris, where young attorneys are encouraged to learn the industry. The experience Berger has gained from working there has proven invaluable. The firm spurred him to make a name for himself by attending notable conferences, by speaking on panels and by publishing articles, all tasks traditionally assigned to more senior attorneys. As for recent industry trends, Berger has noticed a change in how casinos market to millennials. Operators have started to dedicate floor space to skill-based games, and some companies are already combining video gaming with slot machines. Berger also sees sports betting as another

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Early Start Darion Lowenstein phenomenon that poses expansion opportunities across the country, as the gaming industry continues to await judicial or legislative action. Says Berger about these developments, “These trends are exciting because I can relate to them. My generation grew up playing video games, so if casinos can combine video gaming with gambling, it will be a home run if done right. The challenge is finding games that are both profitable for casinos and enjoyable for patrons.” Berger’s current role involves advising clients on emerging legislation and developments affecting the brick-and-mortar and internet gaming industries. His situation is unique in that although he is surrounded by casinos in the Philadelphia suburbs, gaming professionals in the area are few and far between. His firms both past and present have given him outstanding opportunities, and he now pays it forward by mentoring law students and young gaming professionals. Regularly involved in Villanova University’s sports law program at the Jeffrey S. Moorad Center for the Study of Sports Law, Berger speaks with participating students, having been recruited as a panelist for their fantasy sports symposium last year. “It has meant a lot to me to mentor law students and young lawyers interested in the gaming industry,” Berger says. He tells them how he opened doors for himself, and what a terrific market and close-knit community the gaming law bar has become. He has also broadened his education by reading publications, attending the right networking events, and catching innovative webinars like those offered by Emerging Leaders of Gaming. As the current chair of the of the New Jersey State Bar Association’s Casino Law Section, Berger facilitates the push to get new lawyers involved in gaming law. To aspiring gaming lawyers, Berger recommends learning the craft and the industry. He has gained his success through reading the daily publications, learning the trends, and predicting which direction the industry is taking. “Immerse yourself in it,” he advises. “Network at conferences and learn from those above you. I have learned from watching our senior attorneys who have represented the same clients for decades, and they have a mutual trust that allows their careers the kind of longevity that I hope to accomplish.” — Marie Casias, The Innovation Group

Chief Marketing Officer, Gamblit Gaming t 14, Darion Lowenstein landed a job in the video game industry. That simple fact said two things about him. His upbringing was anything but normal. And his initial employment laid the groundwork for his current position as chief marketing officer for Gamblit Gaming, one of the companies developing skill-based games for the casino industry. “I grew up being home-schooled and graduated high school at 14,” Lowenstein says. Over a 20-year period, the Oregon native worked his way up from reviewer, to tester, producer, director, vice president and now CMO. During that time, Lowenstein helped develop 10 No. 1 mobile games and 14 top-five console hits. “I’ve worked on big name titles ranging from ‘The Simpsons’ to ‘Transformers,’ at companies like Electronic Arts, Rockstar Games and Activision. All that experience gave me a strong understanding of not only how to make a hit entertainment experience, but how to sell it—and make sure people hear about it,” he says. At Gamblit, Lowenstein handles marketing, public relations, publishing and games business development and licensing. “While it’s a lot to juggle, I have an incredibly talented, hard-working group of people on my team that make everything happen. I’m a firm believer that you are only as strong as your team.” Because the company has partners all over the world developing games, there’s always something for him to do, from tackling emails to conference calls and more than six hours of meetings. Lowenstein credits his own experience with shaping the importance of skill-based games. He and friends and co-workers would visit Las Vegas several times a year. “Almost none of us gambled, and the few that did played table games.” But they often went to Dave & Busters and other local bars to play games. His generation needed a challenge beyond pressing a button to see what rolls up on the screen. “Now that we are live on the floor, we see consumers becoming our own ambassadors, bringing their friends in and explaining these new types of innovative games,” says Lowenstein, who immerses himself in television, movies, music and, yes, video games in his down time. Executives depend on mentors they meet along the way.

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“Treat everyone with respect and kindness. The person who is testing games today could be a hiring manager at a company where you want to work for in a few years.” “I met Neil Haldar when I was 16 at my second job testing games at Dynamix,” says Lowenstein. “He’s been incredibly insightful into how the industry works and where to take my career. In the casino industry, my biggest mentor has been my boss, Eric Meyerhofer, who has taught me a lot about the ins and outs of this world.” Lowenstein has words of advice for those thinking about entering this segment of the gaming industry. “Treat everyone with respect and kindness. The person who is testing games today could be a hiring manager at a company where you want to work for in a few years. And keep up with the industry to stay informed—subscribe to all the magazines and newsletters, watch trends, see which resorts/markets/manufacturers are doing well, and why. “And don’t forget you work in entertainment at the end of the day. Have fun with it.“ —William Sokolic

JULY 2017 www.ggbmagazine.com

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GOODS&SERVICES Nothin’ But Net has been installed at Foxwoods Casino Resort in Connecticut

OUT AT CAESARS, IN AT FOXWOODS

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ast November, many in the industry lauded the placement of the industry’s first skill-based slot offerings when GameCo, Inc. introduced its video game gambling machines, or VGMs, at the Atlantic City properties of Caesars Entertainment. Caesars recently removed the machines, citing low earnings. However, according to GameCo founder and CEO Blaine Graboyes, it’s all part of the learning curve on how and where skill-based games will return profit for the casinos. “We can do all the prototyping, focus groups, and game nights we want, but there is nothing like a live environment to learn from,” Graboyes told the NorthJersey.com news site. According to Graboyes, the decision of Caesars to remove the first two GameCo VGMs—a shooter game called Danger Arena and a mobile-style video game called Pharaoh’s Secret Temple—was a “collective decision” by the supplier and the operator, and that the machines will be redeployed at Foxwoods Resort in Connecticut. The Tropicana is still offering its GameCo VGMs, and the Borgata is planning on adding some of the video game-style machines. Graboyes said the company is working with operators to find the best location and game mix to draw millennials and other video game enthusiasts, to whom the games are targeted. Caesars Senior Vice President Melissa Price said that she remains committed to the concept of skillbased gaming, and that the operator will experiment with the next generation of GameCo games, as well as adding skill games from Gamblit Gaming, GameCo’s skill-based rival, as soon as they are approved by New Jersey regulators. The Foxwoods placement marks GameCo’s move into its second gaming jurisdiction in the U.S., as well as the company’s introduction to 58

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tribal gaming of its skill-based gaming offerings. The VGMs installed at Foxwoods also feature GameCo’s Nothin’ but Net, on two triple-unit VGM carousels in high-traffic, prominent locations in the Fox Tower casino. Nothin’ but Net lets players hit the basketball courts with 16 shots to win cash. Players’ skill in making virtual layups, jump shots, free throws and half-court bombs is challenged in the fast-paced game, which also includes bonus money balls. “Skill-based slot machine technology is the next generation of gaming, and we welcome this addition to our already industry-leading resort casino experience,” said Felix Rappaport, Foxwoods Resort Casino president and CEO. “This partnership with GameCo is just another example of our commitment to provide our loyal guests new and exciting reasons to visit Foxwoods.”

AGA JOBS TOUR HONORS MISSOURI BUSINESS

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s part of its “Get to Know Gaming” American Gaming Small Business Jobs Tour, the American Gaming Association honored Regents Maintenance Supply in St. Louis, Missouri. The company provides janitorial supplies and equipment for regional casinos, which have an economic impact of $3.3 billion annually and provide 4,500 jobs.

Founded 18 years ago, Regents has grown due to working with area casinos, in particular River City Casino and Hollywood Casino, according to owner Lamonte Sowell. “Over the years, we have built relationships with several casinos in Missouri that have allowed us to grow our business. Regents has the capacity and professionalism to provide quality service, and we look forward to many more years partnering with the casino gaming industry,” Sowell said. River City Casino Vice President and General Manager Chris Plant stated, “River City works hard to identify and utilize locally owned small businesses for the procurement of its goods and services. One such company is Regents Maintenance Supply. We have been working directly with Lamonte Sowell for over six years.” AGA President and Chief Executive Officer

Geoff Freeman said the $240 billion casino industry supports 1.7 million jobs nationwide. In Missouri, gaming provides more than 20,000 jobs, supports $836 million in wages and has a $3.3 billion economic impact. In addition, in 2016, Missouri casinos gave approximately $324.1 million to the state’s Gaming Proceeds for Education Fund. Also in 2016, approximately $77.7 million in gaming tax and admissions fee revenue was returned to local host communities.

SCIENTIFIC GAMES LAUNCHES SPACE INVADERS

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cientific Games Corporation announced the launch of its first slot machine to feature a skill-based bonus, a slot on the Blade s32 cabinet based on the arcade classic Space Invaders. Based on the game originally released in 1978, Space Invaders is a six-reel, 60-line slot game that features a number of bonuses including free games and the Space Invaders Bonus. Channeling the original alien shooter game, the Space Invaders Bonus allows the player to control a laser cannon, moving it horizontally across the bottom of the screen while trying to shoot down rows of descending aliens, collecting credits, advancing levels and vying for one of the multi-level Jackpot Pools. Players also have the option to bypass the base slot game and “Buy a Bonus” on demand, taking them directly to the Space Invaders Bonus, where they play with higher credit win levels than the normal base game. The game is currently available in New Jersey, and will soon be available in various jurisdictions throughout North America.

IGT COMPLETES DOUBLE DOWN SALE

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nternational Game Technology, Plc. announced that it has completed its sale of Double Down Interactive LLC, the social casino subsidiary operating the DoubleDown social Facebook casino, to an affiliate of DoubleU Games Co., Ltd., for a cash purchase price of


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$825 million. IGT expects to use the proceeds from the transaction primarily to reduce debt. “Today, we are also entering into a long-term game development and distribution agreement with DoubleU Games for social casino content,” said Marco Sala, CEO of IGT. “This is an important development in supporting our strategy of leveraging our substantial content catalogue across multiple distribution platforms. Through this partnership with DoubleU, we will continue participating in the social casino market, as we will be collecting ongoing royalties on our casino game content.”

GLADSTONE: MERGER WILL NOT AFFECT AINSWORTH, NOVOMATIC BRANDS

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he brands of slot manufacturers Ainsworth Game Technology and Novomatic Group will remain the same after Novomatic completes its acquisiAinsworth CEO tion of Ainsworth, acDanny Gladstone cording to Ainsworth CEO Danny Gladstone. The pending sale, approved by shareholders of both companies, is currently in the process of gaining regulatory approval in the jurisdictions where the companies operate. In an interview with GGRAsia at the recent G2E Asia trade show, Gladstone said customers and players will notice no immediate differences in products of the two businesses post-sale. “Regarding the integration, I think what a lot of people don’t really understand is that it is business as usual for Ainsworth, even though Novomatic will become our major shareholder,” he said. “We will have opportunities to do things together. There are a lot of markets where we don’t even cross each other, so it’s not actually integration, it’s more cooperation… We are supplying them with product and games and vice versa. They (Novomatic) have no presence in Australia, and not much in the U.S. We have a larger footprint in the U.S., so we are looking at working together to put products there. “The brand across North America will be an Ainsworth brand. We will work on doing things together. Obviously, in Australia the brand will stay Ainsworth.” JULY 2017 www.ggbmagazine.com

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G2E Asia Smashes Records Premier Asian conference and trade show sets records, breaks news BY PATRICK ROBERTS

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Macau dignitaries, casino executives and show officials cut the ribbon to officially open G2E Asia

2E Asia traditionally has powerful keynote speakers. Now in it’s 11th year, G2E Asia has presented speakers like Stanley Ho, the founder of SJM; KT Lim, chairman of Genting; Sheldon Adelson of Las Vegas Sands; Jim Murren of MGM Resorts; Len Ainsworth, the founder of Aristocrat Technologies and Ainsworth Technologies, and many others. This year was no different. Francis Lui, the vice chairman of Galaxy Entertainment, was first up to discuss the state of the gaming industry in Macau. Addressing almost 500 attendees at G2E, Lui made a case for creating events in Macau that will make it a regional destination for non-gaming activities. But in a dramatic graph, he said Macau has only 33,000 hotel rooms, compared to 78,000 in nearby Hong King and 155,000 in Las Vegas. He said more hotels will support major events and conventions, diversifying the Macau economy. He also pointed out that analysts who were fearful of more effective regulations on the Macau gaming industry were missing the point. He says anyone operating in Macau should welcome this higher level of regulation. “If you don’t really embrace the change, you shouldn’t be in Macau,” he said. “It is very clear what the Chinese central government wants and the Macau government wants is to have more regulation, more transparency in the industry.” At a later panel, Sands China President and COO Wilfred Wong said he doesn’t think the planned introduction of new customer verification technology at automated teller machines in Macau will have a negative impact on his firm’s casino business. “We have always supported the government initiative to improve the

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Galaxy Vice Chairman Francis Lui delivered the keynote address

city’s business environment,” Wong said at G2E Asia. “This initiative helps prevent some illicit ways used by some people to obtain cash via the use of several credit cards and lend it to others; this is something that we also don’t like to see.” Lui also made a plea for lower taxes in Macau, pointing out that many new jurisdictions have a lower rate than Macau’s 39 percent. “There needs to be an open discussion of how Macau can ensure its long-term competitiveness,” he said. Following Lui was Paulo Martins Chan, the director of Macau’s Gaming Inspection and Coordination Bureau (DICJ). Chan discussed the current licensing regime for junket operators, which has been significantly tightened since he took office a little more than a year ago. “We are approving licenses on a case-by-case basis,” he told reporters following his keynote address. “Of course, we want to keep junkets that are financially healthy and capable.” As for a decrease in taxes, Chan wouldn’t rule it out. “As of now we don’t have any plan to revise the taxation regime, but of course everything will have to be considered,” he said. “At this stage we are trying to collect more opinions from different sectors so that in the future we can make a better decision.” In another keynote panel, operators Wong and John Shigley, chief operating officer, gaming, MGM China Holdings, were joined by Derik Mooberry, group chief executive of gaming, Scientific Games; Mitchell Bowen, managing director, Australia, New Zealand and international, Aristocrat Technologies; and Walter Bugno, chief executive officer, IGT International. Moderated by GGB Publisher Roger Gros, sports betting was a topic at the session. While sports betting in Macau is a monopoly held by Macau Slots, Wong was hopeful that the casinos could work with this company to introduce it in the properties. “What we may do is to try to see how we can cooperate with this operator, because we agree that sports betting is prevalent everywhere and we would like to be able to provide this offering to our customers,” he said. Shigley agreed that it would benefit the casinos. “It’s going on, it’s happening. Even in Nevada where it’s legal, the amount of legal betting is dwarfed by the amount that’s off the books,” he said. “There’s a wide desire to bet on sports in Asia, and it’s already huge business. We would love to have a piece of it and pay whatever tax rate is most relevant to develop reinvestment and pay the best salary for our employees.” As for the trade show at G2E Asia, it set a record for square meters, completely occupying the ground floor of the Expo Center at the Venetian. Growth was strong in the iGaming segment, as well as the lottery since the Asian Lottery Forum was co-located with G2E this year. A record number of delegates attended G2E Asia, as well.


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

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More than 100 AGS customers attended GameON

CEO David Lopez welcomed attendees to MGM National Harbor

MGM National Harbor VP of Slot Operations Alex Alvarado explained how he used a “slot draft” to determine where each machine would be placed prior to opening

Rising Star AGS stages its second annual GameON Customer Summit at MGM National Harbor By Frank Legato

lot and table-game supplier AGS last month held its second annual GameON Customer Summit, designed to educate select customers on new technologies being developed by the company, the processes and culture of the company, and gaming issues in general. The conference was held at Maryland’s MGM National Harbor, the new resort just outside Washington, D.C. The intimate conference, attended by 100 of the supplier’s top customers, also is designed to maintain a personal relationship with customers, particularly to get their feedback on what the company is doing right, improvements that may be needed, and what direction the operators would like to see the company’s R&D activities take in the future. CEO David Lopez served as master of ceremonies, displaying his relaxed style in guiding attendees through informative yet informal sessions covering the company and the trends of the industry. He noted that this year’s attendees, in addition to slot directors from markets across the country, included 12 C-suite level executives and 27 vice presidents, executive vice presidents and senior VPs. The sessions covered the company’s main three product areas—slot machines, table games and the new interactive division. “In December of 2013, we made a commitment to become a diversified supplier,” Lopez said, noting that the progress to this point includes acquisition of 243 licenses, slot

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Robin Zetts, director of casino operations at Harrah’s Southern California, talked about skill games on her casino floor

placements that have swelled from 9,000 to 21,000, and the creation of a table-game division from the ground up that now has 1,500 market installs. This year, the company has ramped up an interactive division with social apps and a white-label social platform. He also spoke of the company’s culture, and the commitment of its executives to remain “accessible, nimble and focused” in their relationship with customers. Andrew Burke, AGS vice president of slots, spoke of the evolution of the company’s slot product from the time he joined the company in 2006 to the present day, and in particular, the “revolution” the slot division has experienced since the arrival of Lopez as CEO in late 2013 and the company’s acquisition in 2014 by Apollo Global Management. Burke described how the slot division grew from what was essentially a Class 2 distributed gaming operation focused on Oklahoma to a full-service slot manufacturer, with the acquisitions of Las Vegas-based Colossal Gaming and Atlanta supplier Cadillac Jack. The former provided the supplier’s first mega-hit, the super-sized Colossal Diamonds; and the latter provided a highly regarded R&D team in Atlanta led by Sigmund Lee, who is now the company’s chief technology officer. The presentation described how the launch of the Icon cabinet and slot platform in 2016 and this year’s launch of the Orion premium cabinet have


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AGA President and CEO Geoff Freeman discussed sports betting and how the time is right for its legalization

Seth Schorr, president of 5th Street Gaming, described the activity surrounding the eSports lounge at his Las Vegas casino, the Downtown Grand

VizExplorer’s Andrew Cardno exploded some slot myths

Lovell Walker, executive director of iGaming development for MGM Resorts, explained how social casinos work for a large casino company

transformed the company’s slot business. He also described the newest product group on the slot side, a variety of signage packages designed for banks of AGS slots, noting that studies have shown a 15 percent to 30 percent jump in revenues when a sign package is used on a slot bank. Burke also said the company is responding to customer requests to use the math model of the hit dollar giant-format game Colossal Diamonds in new standard-sized dollar games. On the table side, John Hemberger, senior vice president of table products, conducted several sessions and panels examining the introduction of side bets and progressives such as the hot AGS product Bonus Spin, which adds a customizable prize wheel to any table game; maximizing profits on low-limit table games; and larger industry issues such as the emergence of electronic table games. Other highlights of the conference program included a panel discussion by slot executives on “gamblifying the gamer,” which examined ways casinos can capture the business of the large market of video-game enthusiasts; the use of social casino apps, and how to maximize player use of them; the math behind game design; and the use of progressives to raise the hold on table games. The conference also featured presentations by American Gaming Association President and CEO Geoff Freeman and journalist Mike Allen, co-founder

and executive editor of the Axios news service and former chief political reporter for Politico. Freeman gave an update on the industry issues being addressed by the AGA, and the evolution of attitudes toward the gaming industry in the U.S. He said the AGA and its members have come together as an industry in recent years, meeting challenges such as the IRS proposal to lower the slot win reporting requirement and the call from the federal Financial Crimes Enforcement Network for the industry to tighten up anti-money laundering procedures. In both instances, he said, the industry came together, “shifting to offense” to work with the federal government to achieve solutions to issues. He went on to outline the AGA’s leadership in the effort to repeal the 25year-old federal ban on sports betting, which he predicted will be achieved within the next two to three years. Allen gave a lively, humorous and nonpartisan assessment of President Donald Trump, covering what the president has done right and what he has done wrong during the first days of his administration. The conference also was highlighted by special events including an opening-day golf tournament at Renditions, a course that replicates famous golf holes; dinner at Washington’s historic Old Ebbitt Grill; and a moonlight bus tour of the capital’s iconic monuments. JULY 2017 www.ggbmagazine.com

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17th Annual

Nominations are open for the gaming industry’s most prestigious awards. The GGB Gaming & Technology Awards are the casino industry’s most prestigious awards for technology, products and services. The honors are designed to recognize and encourage innovation and technology in the rapidly changing casino industry. Winners will be announced in the November 2017 issue of Global Gaming Business magazine and awards will be presented at Global Gaming Expo (G2E), October 3-5, 2017 in Las Vegas. DEADLINE: August 18, 2017

• Best Consumer-Service Technology • Best Productivity-Enhancement Technology • Best Slot Product • Best Table-Game Product or Innovation

Nominations are now open in the following 4 categories:

All Non-Slot Product nominations will also automatically be nominated for the “Progressive Products” feature in GGB’s 2017 G2E Preview magazine. Slot products will be featured in the October issue of GGB, distributed at G2E.

www.ggbmagazine.com

For details and to enter online visit:

John Buyachek • Sales Director jbchek@ggbmagazine.com 702-248-1565 ext. 227


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PEOPLE NEW CEO FOR SENECA CASINOS

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Empire is building Resorts World Catskills at the site of the former Concord Hotel in Sullivan County, not far from the company’s harness track, Monticello Raceway, and about 90 miles north of New York City. Empire is majority-held by global resort conglomerate Genting, whose Resorts World brand is affixed to a portfolio of casinos stretching from Kuala Lumpur to Birmingham, England. The company’s holdings include the largest racino in the United States, Resorts World New York City, at Aqueduct racetrack in Queens, and land on the Las Vegas Strip the company is developing as an Asianthemed mega-resort. Empire Executive Chairman Emanuel Pearlman said D’Amato will remain as a consultant in the runup to Resorts World Catskills’ planned opening next March.

ew York’s Seneca Gaming Corp. has named industry veteran Holly Gagnon as president and Holly Gagnon CEO of the company’s resort operations in Buffalo, Niagara Falls and Salamanca. Seneca Gaming is owned by the state’s powerful Seneca Indian Nation, whose gaming portfolio includes Seneca Niagara Resort and Casino in Niagara Falls, Seneca Allegany Resort and Casino in Salamanca, Seneca Buffalo Creek Casino in downtown Buffalo and an employee base of some 4,000 people. Gagnon, who was hired after a national search, is the third executive to lead the Seneca casinos in little more than two years. She was slated to begin in late June. Barry E. Snyder, Sr., chairman of Seneca Gaming’s board of directors, said the board was “thoroughly impressed with Holly and her record throughout the search process. We look forward to working with her.” Gagnon most recently served as CEO of Chumash Enterprises in Santa Barbara, California, where she oversaw the operations of the Santa Ynez Band of Chumash Indians’ Chumash River Resort. She is a former president and CEO of the Pearl River Resort in Mississippi, owned by the Mississippi Band of Choctaw Indians. She is a founding board member and Mentorship Committee chair of Global Gaming Women, an organization dedicated to helping women in the gaming industry around the world develop professionally.

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EMPIRE RESORTS NAMES NEW CEO

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he company developing the last of New York’s four new commercial casinos, and the largest of the group, has named a new CEO. Nasdaq-listed Empire Ryan Eller Resorts has appointed current President and Chief Operating Officer Ryan Eller to the top job, replacing Joseph D’Amato, who has retired from the company and its board of directors.

RED ROCK NAMES NEW CFO tephen Cootey, a former Wynn Resorts chief financial officer, has taken over the position at Red Rock Resorts, replacing Marc Falcone, who resigned effective May 31. Cootey, a one-time Wall Street analyst, joined Red Rock subsidiary Station Casinos in March as executive vice president and chief administrative officer. He’d been Wynn’s CFO since May 2014 and treasurer and senior vice president before that. Prior to joining Wynn, he worked at Las Vegas Sands as senior vice president of corporate finance from March 2012 to December 2013 and as vice president of corporate finance from October 2009 to March 2012. Falcone will provide consulting services to Station over the next 12 months at his base salary of $50,000 a month plus benefits, the company said.

EASTERN CHEROKEES IMPEACH LAMBERT or only the second time since the early 1800s, the Eastern Band of Cherokee Indians Tribal Council voted to remove its chief. The council recently voted 9-3 to approve the articles of impeachment removing Principal Chief Patrick Lambert Patrick Lambert, finding him guilty of eight out of 12 articles including allegations he used his office for personal gain. Vice Chief Richard Sneed replaced Lambert as principal chief. An attorney who served as executive director of

the Tribal Gaming Commission for 22 years, Lambert was accused of signing a contract with Harrah’s Cherokee Casino in Cherokee, North Carolina to have the casino rent rooms in a hotel he owned. He also was accused of signing contracts without approval of the tribal council, and improper hiring practices, including hiring an attorney for his personal benefit. Lambert was elected principal chief in 2015 with more than 70 percent of the vote. He had called the impeachment drive a “witch hunt” and stated, “What we just saw today was nine people. How many people in this crowd support me? I think those nine overruled 71 percent of this tribe.” However, Lambert said he accepted the decision. “I’m not angry about the impeachment. We need to stop fighting,” he said. More than a dozen Lambert supporters marched in protest outside the tribal chambers after the impeachment vote.

JACK LAM DISCONNECTS FROM JIMEI

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he legendary Jack Lam, at one time one of the major junket operators in Macau, stepped down from Jimei International EnterJack Lam tainment, the company he founded to operate his VIP business. Lam—who remains a fugitive from the Philippines, where he is accused of making bribes and illegally hiring Chinese workers at his Fontana Resort near the Clark International Airport—sold his stake in Jimei in April. Lam reportedly received $57 million for his 65 percent stake in the company.

GGB

July 2017 Index of Advertisers

133 Scentertainment . . . . . . . . . . . . . . . . . . . . . . . . .51 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 DiTronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Gamblit Gaming . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 GGB Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . .61 G&T Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . . . . . . .21 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5,19 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 JCM Golf Tournamnt . . . . . . . . . . . . . . . . . . . . . . . . .67 Konami . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Quixant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Rymax Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Scientific Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 SG Interactive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 SuzoHapp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31

JULY 2017 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Q

&A

Lawrence Ho Chairman and CEO, Melco International

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awrence Ho has been a major player in Macau and other Asian gaming markets since before the handover of Macau to China in 2002. He formed Melco International to forge his own casino company in partnership with Crown Resorts. The recent departure of Crown from the joint venture means a new era for Ho and Melco. He spoke with GGB Publisher Roger Gros from his offices in Hong Kong in May. To hear a full podcast of this interview, where Ho comments on the Russian and Philippine markets and more, visit GGBMagazine.com.

But Studio City’s main investment thesis was always based on the coming of Lotus Bridge, which is the second border gate between China and Macau. But today you see the footbridge that the Macau government is currently building is not completed. And between us and the immigration building, the government is also building a massive light rail station. And so, the Lotus Bridge, which was supposed to be the most popular route to Studio City, is still blocked, and it has been blocked since its opening. Hopefully, sometime in the second half of this year it will be completed.

that’s very significant. And I don’t see that trend going away. Deep down, when you look at Melco Resorts, it really is a company that is focusing on the growing middle class. We think of ourselves as pioneers, focusing on the growing middle class of the world. That’s really what this company is about. And we’ve had this feeling over the last 10, 12 years, which is, China is going to be the biggest contributor to that growing middle class, and we should take advantage of that.

GGB: Tell us about the recent departure of Crown as co-owners of your company.

The new tower at City of Dreams also looks pretty spectacular. What’s the opening date on that tower?

A few years ago, Macau CEOs kept telling us that Macau has only penetrated 1 percent or 2 percent of the Chinese market. Is that still the case, or has that percentage gone up a bit now?

Lawrence Ho: We think it is the conclusion of the most successful gaming partnership ever, because in the gaming space, there aren’t many partnerships that last very long. And most of the time, when they end, they end in very bitter disputes and major lawsuits. James (Packer, Crown executive chairman) and I are still great friends. We’re both young. We’re both optimistic about the future, and we still might do something down the road together. So, who knows? But at the same time, for Melco and myself, it’s extremely exciting. Because I really see the market turning around, not just in Macau, but literally, in all markets driven by Chinese economies and China’s export of tourism. We just got a chance to see Studio City for the first time and it’s a pretty spectacular property. How is that performing now?

Studio City is doing much better. Studio City opened in October 2015 at a time where Macau was going through a much tougher time. And so if you look at Studio City, and the company that opened before, the Galaxy Phase 2, both of those properties really opened during some kind of tough times in Macau. Studio City is doing better.

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Global Gaming Business JULY 2017

Morpheus Tower, which is the last phase of City of Dreams, is due to open before next April. We’re less than a year away, and we really look at the opening as CoD 2.0. When City of Dreams opened in 2009, it was a very different market, and a different property, but over the last few years, we’ve solidified our position as the top premium mass and premium direct property. And with the unveiling of Morpheus, it really completes the retail loop, and we’ve done a lot of work on upgrading and improving the retail proposition. And so, it’s a significant moment for City of Dreams. We’re very proud that this was one of the last properties designed by the late Zaha Hadid. She was amazing. But at the same time, what she designed was very difficult to build, and that’s why it’s taken as long as we have, and really taken a lot of resources, capital and expertise. You mentioned the rebound of the gaming revenues in Macau. What do you think is driving this?

First of all, mass-market, for the last 12 months, has already taken over. Mass has taken over. It’s over 50 percent of the revenue. Since mass is four times as profitable as VIP, for operators,

It’s gone up a bit, but again, if you look at Macau, it’s really been mainly about Guangdong. Guangdong is really just about the business of Macau. So it’s not just like 1 percent or 2 percent of China anymore, because Macau has broadened and reached through more parts of China, but it’s still a very low penetration base, compared to most mature gaming jurisdictions. Tell us about your interest in Japan and how you would feel about being a minority partner in a Japanese casino, as the government seems to be favoring.

I look at Japan as the future of growth of the north Asia market, or north China market. We’ve always wanted to be a very open and transparent company. So being a minority partner would be a tough one. But Melco has already been very open-minded and innovative, and our single goal is to be part of that market. So, I wouldn’t say it would be a flat “no,” but we would really want to understand how many licenses and work out the possibilities first, before we would even consider signing up for a deal like that.


THANK YOU FOR MEETING US 19 AT THE

In this golf tournament, a high score is a good thing. And thanks to the generous support of our players and sponsors in the 19th annual AGEM/AGA Golf Classic Presented by JCM Global, we scored big, raising a record $155,000. That’s a lot of “greens” for the NCRG. Since the Golf Classic began, we’ve chipped away at problem gambling by raising more than $1.7 million in support of the NCRG’s important research. Join the fight against problem gambling anytime by visiting NCRG.org.

Sponsors

Global Gaming Business

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