Global Gaming Business, June 2017 by Global Gaming Business

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GGB Global Gaming Business Magazine

June 2017 • Vol. 16 • No. 6 • $10

CALIFORNIA’S CRAZY CARD ROOMS LESSONS FROM THE LOTTERY WHAT DO PLAYERS KNOW? NEVADA’S A.G. BURNETT

State of PLAY

The New Competition of Tournaments

Betting on Brazil

HOW SOON WILL GAMING BE LEGALIZED?

Too Little Too Late

Are social casinos on the decline?

Official Publication of the American Gaming Association Association of Gaming Equipment Manufacturers

“

More than 10 months in and still performing at

“

5X house average - Skyelar Perkins

Senior Director of Slot Operations

CHoctaw Casino Resort

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CONTENTS

Vol. 16 • No. 6

june

Global Gaming Business Magazine

COLUMNS

22 COVER STORY Tourney Time

12 AGA When Smaller is Better Geoff Freeman

Slot tournaments are a timetested casino promotional offering that is still among the most profitable. However, today’s instant tournament systems offer casinos a wealth of new options that are less labor-intensive, provide much more variety than in the old days, and are ultimately entertaining games in their own right.

14 Fantini’s Finance The Big Two Frank Fantini

48 Table Games Escaping Vigorish, Part II Roger Snow

Slots 58 Winning with Loose Slots Buddy Frank

By Frank Legato Cover photo courtesy of Everi, at one of the company’s groundbreaking “Tournevent” competitions

60 Imperfect Experiment Michael Meczka

FEATURES

64 Responsible Gaming

18 The Brazil Bet

Sheila Bangalore

Major gaming operators look on as a political battle in Brazil could determine the fate of a potentially huge new casino market. By Chris Sieroty

A New Approach

54 Managing Revenue As the amount of data available to gaming operators continues to grow, software to manage that data is becoming more important. By Dave Bontempo

DEPARTMENTS 6

The Agenda

By the Numbers

30 Card Room Showdown

10 5 Questions

A long-running dispute over card rooms using outside firms to bank games in defiance of tribal gaming exclusivity could lead to a legal showdown with California Indian tribes.

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

By Dave Palermo

48 New Game Review

36 The

Lottery Game Lotteries in the U.S. have long been viewed by casinos as competition for gaming dollars, but the two gaming genres are converging. By Marjorie Preston

50 Frankly Speaking 52 Cutting Edge Feature

40 King Social

Global Gaming Business JUNE 2017

62 Goods & Services

Social gaming in the U.S. is still on the rise, in a market for which the future remains unwritten.

65 People

By Steve Ruddock

With A.G. Burnett, Chairman, Nevada Gaming Control Board

44 iGames News Roundup 4

46 Emerging Leaders With Osage Casinos’ Tyler Johnson, Greenberg Traurig’s Erica Okerberg, and Four Winds Casinos’ Justin Quigno

66 Casino Communications

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THE AGENDA

The Good, The Bad and the Ugly I

Roger Gros, Publisher

n this issue, we have an example of one of the gaming industry’s best regulatory organizations and one of the worst. I know people will say customers and players are the lifeblood of the gaming industry, but I have to put regulators right at the top. Because if the games aren’t “square”—they must have integrity and transparency—those customers wouldn’t feel comfortable playing the games. So, regulators are really the lynchpin of the industry. Not surprisingly, one of the best regulatory schemes in the industry is in Nevada. Our interview with Gaming Control Board Chairman A.G. Burnett clearly demonstrates that. You can read an excerpt of the interview on the Casino Communications page at the back of this month’s magazine, but you should really listen to the podcast, available at GGBMagazine.com, to really get a sense of the man and the mission. A good regulatory agency understands the symbiotic relationship between the organization and the companies and individuals it regulates. Because it was the very first regulatory scheme in the U.S., beginning in 1955 in Nevada, there were some fits and starts before it really got up to speed when the late Bob Faiss authored the modern casino regulations in the early 1970s. Faiss understood that gaming wasn’t being conducted in a vacuum, so he made the Nevada regs flexible. And that flexibility is duly noted in the Burnett interview when he explains how Nevada came to regulate iGaming and skill games. He notes that he works with the industry to give them the opportunity to succeed, while working from the regulatory baseline of integrity and transparency. And of course, the poster child for dysfunctional gaming regulation is California. While Nevada and many other progressive gaming regulatory states have two separate regulatory boards, they work in conjunction with each other and report to the same state official, a necessary function of bifurcation where the licensing and regulatory arms are separate. California, however, has two completely separate regulatory bodies which rarely talk to each other, and report to two elected public officials. The setup makes for wildly inconsistent enforcement, a complete lack of transparency and

Global Gaming Business JUNE 2017

serious ethical issues. Our writer Dave Palermo outlines some of the problems in California in his story about card rooms and tribes beginning on page 30. Now this isn’t to say that the people who run the agencies in California aren’t hard-working or don’t have good intentions; most of them do. But the problem stems from far up the ladder when state officials appoint regulators who know nothing about gaming in some sort of political payback. It happens far too frequently in all gaming jurisdictions. It’s true gaming is a somewhat narrow discipline—you can’t always get someone knowledgeable about gaming as a regulator. But you can find people in either related fields or those that have business and/or legal backgrounds who understand how systems work. That doesn’t always happen, and clearly is a problem in California. But there is a quiet revolution going on in many regulatory agencies. Nevada’s “gold standard” is being copied and adjusted in many jurisdictions. In New Jersey, David Rebuck has transformed the traditionally intransigent Division of Gaming Enforcement into an enlightened agency that does what is right for the state and the industry. The first chairman of the Massachusetts Gaming Commission, Stephen Crosby, has been doing things right from the very beginning—sometimes to the annoyance of politicians (which is a good thing!)— and the Bay State now has some of the most progressive regulations in the nation. Up north, the British Columbia regulatory scheme has paid benefits for the province and for the companies operating there. The nascent casino industry in Bermuda has benefited from the experience and integrity of Richard Schuetz, combined with the “local knowledge” of Allen Dunch. Even in Louisiana, once a backwater of regulations, Ronnie Jones has created an effective machine overseeing the wide range of gaming in that state. And there are many other citations of regulators doing the right thing for their jurisdiction and for the companies they regulate. So, there are many examples of how to do regulations right—just not enough of them. Here at GGB, we’ll continue to highlight the success stories—and shine the spotlight on the problems. By working together, we can drag the Neanderthals kicking and screaming into the 21st century.

Vol. 16 • No. 6 • JUNE 2017 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Sheila Bangalore | Frank Fantini twitter: @FantiniResearch Buddy Frank | Geoff Freeman twitter: @GeoffFreemanAGA Michael Meczka | Roger Snow Contributing Editors Dave Bontempo | Marie Casias Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Steve Ruddock twitter: @SteveRuddock Chris Sieroty | William Sokolic | Michael Vanaskie

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

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

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

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

• 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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TRANSFORMING HOSPITALITY BY BUILDING

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BY THE

NUMBERS

suppliers CiTe Huge impaCT a

report issued by the Association of Gaming Equipment Manufacturers last month demonstrated the huge economic impact that suppliers to the gaming industry have on the communities and their countries. In its annual “Industry Impact Analysis/Global Gaming Supplier” report for 2017, Las Vegas-based Applied Analysis demonstrated the power of the supply side of the gaming industry. • Economic Output: The global gaming supplier industry directly generated approximately $18 billion in economic output during 2016. When the ripple effect of those impacts is considered, total output reached nearly $48 billion, which represented a 6.2 percent increase from 2015. • Value Added: Limiting the impact to the amount of value added, the total impacts (including indirect and induced) equated to $23 billion in 2016 (+5.8 percent). • Wages and Salaries: Employers paid nearly $5 billion in direct wages to employees, which translated into over $14 billion in total earnings within the economy in 2016. • Employment: Direct jobs in the industry totaled over 55,000, and the multiplier effect resulted in more than 212,000 positions around the globe in 2016 (+5.6 percent). For a full copy of the report, visit the AGEM website at AGEM.org.

Turning Japanese

he legalization of casinos in Japan has brought a wide range of estimates about the size of the market, but few have done as thorough a research job as Global Market Advisors when it released a white paper on integrated resorts in Japan. Since there are no specifics about how many casinos will be legalized or where they will be located, GMA considered four scenarios, with revenue as low as $10 billion or as high as $25 billion. To download a full version of the report, which includes a review of the issues surrounding passage of the second bill that will establish the process, kinds and locations of the casinos, visit the GMA website at globalmarketadvisors.com. 8

Global Gaming Business JUNE 2017

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NUTSHELL

“They

5Questions

Matt Wilson

Managing Director, Aristocrat Americas att Wilson was promoted to managing director of Aristocrat Americas in March. His M promotion continues a 13-year career at the Australian slot giant that has seen him progress through the marketing and sales disciplines. He spoke with GGB Publisher Roger Gros at the Aristo-

Said It”

“Definitely within the next five years, Macau will grow back to the $45 billion gaming market. And that’s just the gaming alone, because the non-gaming part is significant.” —Lawrence Ho, chairman and CEO, Melco Resorts & Entertainment Ltd., who says he is “extremely bullish” on Macau

crat headquarters in Las Vegas in April. For a full podcast of this interview, visit GGBMagzine.com. GGB: You’re not the only new promotion at Aristocrat. You’ve got a new CEO in Trevor Coker, a new chief technology officer, and several other positions. How will you continue the momentum started with former CEO Jamie Odell? Wilson: Continuity is key for us. In a lot of ways, Trevor is an extension of Jamie. He’s been with the organization for nine years and came over with Jamie from Fosters. He’s been part of the turnaround story. We want to maintain the focus on our people and our culture, which is the reason for our success. So that’s our main focus going forward. We’ve had some changes, for sure, but our strength is still in place. Rich Schneider, who runs our product division, is still in place, as are most of our talented game designers. For me, inheriting a business that is performing incredibly well means not getting complacent, and that’s not going to happen.

1 2 3 4 5

You’ve just introduced the new RELM cabinet and reel-spinning products. How are you developing the spinning-reel genre? We want to make sure we do it right. This product came about through the capabilities we acquired with VGT. They’ve got over 20,000 spinning reels on casino floors across North America and they build the industry-leading stepper product. We’re leveraging that success and attacking it on multiple fronts. It’s working very well on the low-denom product, and now we’re moving up to the high denoms. Just after the summer we’ll be entering the high-denom, recurring-revenue stepper category. Our customers have been very supportive of this move. They’re asking for a little more competition in this category. Tell us about the new Dragon Link. That’s going to be coming out this summer also. It’s the follow-up to our tremendously successful Lightning Link. Dragon Link is already beating Lightning Link in Australia, where it’s already been launched. It’s on premium packaging and the Arc cabinet that will continue our momentum in that area. How do you work closely with VGT? We like to think it’s the most successful of that wave of Class II acquisitions that happened about three or four years ago. It’s really a marriage of capabilities and core values. Their values actually mimic our values. It’s exactly the same the way we approach our work. It was not only a great financial value, but it brought together two companies that had very complementary skill sets—a stepper, Class II company combined with a video game, Class III company.

What is Aristocrat’s strategy on skill games? Our industry needs innovative pioneers like GameCo and Gamblit. It’s often the little guys that take the initiative, and congratulations to them. We’re spending a lot of our time on incremental adjacencies like VLT, Class II video, steppers and the like. We’re spending a lot of time getting into those markets and giving our customers value. But we have a responsibility to move our industry forward, and we’re looking to get more active in that space. We have a program internally called “Think Bigger” that encourages innovation outside the traditional space. We’re watching the segment very closely and trying to find the best way to enter the space.

Global Gaming Business JUNE 2017

CALENDAR May 30-June 1: IAGA International Gaming Summit, JW Marriott Essex House, New York City. Produced by the International Association of Gaming Advisors. For more information, visit TheIAGA.org. June 6-8: North American Gaming Regulators Association (NAGRA) Annual Conference 2017, DoubleTree by Hilton, Orlando, Florida. Produced by NAGRA. For more information, visit nagra.org/page/2017_ConfHom. June 7-8: Russia Gaming Week, Moscow Exhibition and Convention Center, Pavillion No. 2, Moscow. Produced by Smile Expo. For more information, visit RGWeek.ru. June 9-11: National Council of Legislators from Gaming States (NCLGS) Summer Meeting, Westin Denver Downtown Hotel, Denver, Colorado. Produced by NCLGS. For more information, visit nclgs.org. June 19-20: Fantasy Sports Trade Association (FSTA) 2017 Summer Conference, Crown Plaza, New York City. Produced by Fantasy Sports Trade Association. For more information, visit FSTA.org. June 21-23: W Leadership Development Conference, Aliante Casino Hotel, Las Vegas. Produced by Global Gaming Women. For more information, visit ggwscholarships.fluidreview.com. June 27-28: La Fleur’s 2017 Global Lottery Forum, Dalhousie University, Halifax, Nova Scotia. Produced by LaFleurs. For more information, visit Lafleurs.com.

It’s your tourn to win. Step right up, and meet the latest addition to the TournXtreme™ brand. This all-new video slot product joins spinning reel and video poker titles along with our award-winning tournament solution to give you the most versatile and interactive tournament offering available. Now you can easily switch between any of our high-performing coin-in themes and the hottest tournament your floor has ever seen, all with the push of a button. So give your players the next generation of casino tournaments as they spin, pop, and blast their way to the top with the SpinSplosion® Tournament from IGT. Visit igt.com/SpinSplosion to learn more. ©2017 IGT. Except where ownership is otherwise identified, the trademarks used herein are owned by IGT or its affiliates, may not be used without permission, and where indicated with a ®, are registered in the U.S. Patent and Trademark Office. Artwork, descriptions, game play, photographs, videos, and other product details depicted herein are subject to change.

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AMERICAN GAMING ASSOCIATION

PUBLICATIONS

Global Gaming Business Magazine

The casino industry drives small business growth nationwide

By Geoff Freeman, President & CEO, American Gaming Association

he casino gaming industry is driving small business growth across the country, and in April, the AGA released new research that shows its impact. The report, The Gaming Industry’s Impact on Small Business Development in the United States, was commissioned by AGA and completed by Spectrum Gaming Group. It found that the industry supports 350,000 small business jobs and is responsible for $52 billion in

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When Smaller is Better

Global Gaming Business JUNE 2017

feet of space is now dedicated solely to servicing MGM National Harbor. MGM National Harbor’s partnership with Eastern Foods is one of hundreds of unique partnerships between the gaming industry and small businesses across the country. In fact, gaming’s contributions to small businesses reach far beyond creating jobs. The industry also supports $13 billion in small business employee wages, and more than half of casino industry-supported jobs are at

Gaming’s contributions to small businesses reach far beyond creating jobs. The industry also supports $13 billion in small business employee wages, and more than half of casino industry-supported jobs are at non-gaming businesses such as local restaurants and shops that see an increase in traffic from a casino property. small business revenues. To highlight the report’s findings, AGA launched a nationwide tour in April called the American Gaming Small Business Jobs Tour. The tour will scan the country to showcase gaming’s strong, positive impacts on local, small businesses that are driving Main Street’s success and American employment. AGA plans to work with a wide range of member companies to showcase their strong partnership with small businesses around the country. Eastern Food Services, Inc. in Laurel, Maryland was the first stop on AGA’s tour. Eastern Food is a Maryland-based food distributor that works directly with MGM National Harbor to provide M life water bottles and various other foods. They are a Korean-American-owned small business that specializes in providing several Asian dishes to MGM. Of the 80,000square-foot warehouse, nearly 30,000 square

non-gaming businesses such as local restaurants and shops that see an increase in traffic from a casino property. “I want to pledge my commitment to the industry and to MGM,” said Congressman Anthony Brown (D-Maryland), who participated in the first American Gaming Small Business Jobs Tour event. “I do that on behalf of the hundreds of small businesses in the Fourth Congressional District that participate in the activities and prosperity associated with gaming.” Following AGA’s Gaming Votes and Get to Know Gaming events over the past two years, the American Gaming Small Business Jobs Tour will go directly to small businesses all around the country to highlight gaming’s strong impact. I look forward to showcasing these businesses in the months to come. Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.

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FANTINI’S FINANCE

The Big Two Gaming’s two biggest personalities also run the most important companies; here’s how they stack up

here’s more than one way to get to Heaven, Warren Buffett likes to say. No one better illustrates the truth of that aphorism than Messrs. Wynn and Adelson. These visionary CEOs have taken different paths in founding and building multibillion-dollar enterprises that have enriched investors manifold. For Steve Wynn, Wynn Resorts, Wynn Macau, and earlier, Golden Nugget/Mirage Resorts, were built on meticulously designed and exquisite resorts catering to the most affluent patrons and the highest of the high rollers. Sheldon Adelson built Las Vegas Sands and Sands China on a convention-centric business model, grand scale and the development of retail malls within casinos that can be sold off to help finance the next major project. Some years ago, they playfully sparred over their different approaches, with Wynn famously saying that “bigger isn’t better. Better is better.” And Adelson responding that “bigger is better.” The latest illustration of the success of their approaches was revealed in their first-quarter earnings releases, when both companies smashed expectations. The sources of their successes were similar— rebounding Macau, ever-stronger Las Vegas and, for LVS, Singapore. The results in Macau were especially impressive as their new properties helped grow the market with minimal cannibalization. EBITDA at incumbent Wynn Macau declined just 5.3 percent to $181.1 million. The new Wynn Palace generated $111.9 million, meaning combined EBITDA grew a whopping 53.2 percent over last year. The story was similar for Las Vegas Sands. EBITDA on its much bigger base of Macau properties rose 20.5 percent to $624 million thanks to the $82 million contribution from the new Parisian. And things promise to get even better. Wynn Palace has been greatly hindered by construction disruption as work on a light-rail system nearly surrounds the property, isolating it from foot traffic. However, Steve Wynn, with his penchant for turning a phrase, said the situation will turn from “suffering… to relief” when the rail line is finished in coming months and starts delivering passengers

Global Gaming Business JUNE 2017

By Frank Fantini

to the Palace’s front door. Likewise, all their properties will soon benefit from a new ferry terminal that will deliver passengers from Hong Kong directly to the Cotai section of Macau. Then, in 2018, the bridge connecting Macau to Hong Kong and the Chinese mainland will open. Finally, both Wynn and Adelson say the Chinese and Macau governments are again supportive of Macau’s gaming industry, which, at least on paper, has barely begun to penetrate the huge Chinese market. Then there is surging Las Vegas and the chance for major new markets like Japan. If major new projects don’t happen, Wynn and Las Vegas Sands, and publicly traded subsidiaries Wynn Macau and Sands China, will have plenty of growing cash for dividends, share repurchases and debt reduction. So, the outlook appears rosy for both companies. But a good company is not necessarily a good stock. Both stocks are expensive, as the pre-first quarter ratios below suggest, so they could be range-bound for a while: Forward price-to-earnings Price-to-growth-ratio Enterprise value-to-EBITDA

WYNN 25 3 20

LVS 22 8 14

However, growth over time will bring today’s ratios down. Accelerated growth will bring them down sooner. Besides, paying a premium for quality can still make for a very rewarding investment. So, long-term investors should be rewarded. However, long-term can be an open question when the visionary CEOs are 83 (Adelson) and 75 (Wynn). That raises the question of what happens when the visionaries aren’t there. Each has a highly regarded Number Two— young Matt Maddox at Wynn and veteran Rob Goldstein at Las Vegas Sands. Yet, almost by definition, the visionary founder brings qualities that even the best executives can’t replicate.

The good news for anyone considering Wynn or Las Vegas Sands is that Steve Wynn and Sheldon Adelson appear as enthusiastic and energized as any young Turk could be.

DOUBLEDOWN AND ASIA IGT selling DoubleDown Interactive for $825 million at 10.5 times trailing EBITDA to DoubleU of South Korea gave a boost to stocks of other companies with social gaming operations. But it also highlighted the great potential for social gaming in Asia. Two statistics reported by Adam Krejcik of Eilers & Krejcik Gaming can illustrate the point: • Asia accounts for just 16.7 percent of global social gaming revenue on mobile devices, compared to 73.7 percent from North America. • Slot games generate 78 percent of all social gaming revenue. Given Asia’s much greater population and the comfort Asians have with mobile devices, the potential for social gaming is clear. Because it will have exclusive use of the vast IGT game library, South Korea-based DoubleU no doubt expects to grow far beyond last year’s $142 million of revenue. That potential is, naturally, obvious to other Asian companies. That is why Shanghai Giant Technology paid $4.4 billion to Caesars to buy Playtika, the largest of all social gamers. It is why fellow Korean company Netmarble paid $800 million for Canadian Kabam, and will amass what Krejcik says will be a $4.4 billion war chest for more acquisitions after it IPOs next month. And there are plenty of companies to acquire in a very fractured industry where five publishers, as they are called, control more than 50 percent of the market—Playtika, Scientific Games, Zynga, Aristocrat and DoubleDown. And with North America growth slowing, there could be incentive for some operators with tiny market share to sell, especially at valuations stimulated by the DoubleDown sale. 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 MAY 2017 KEY BOARD OF DIRECTORS ACTIONS

AGEM MEMBER PROFILE CDC Gaming Reports, a Las Vegas-based e-publisher, is an Associate Member of AGEM. Founded in 2002 by Jeffrey Compton, CDC Gaming Reports is the industry-leading B2B provider of gaming news and information in the United States and beyond. Featuring a wide array of news, commentaries, insight and analysis, CDC Gaming Reports aims to keep the gaming industry professional up to date and in tune with industry trends. Via its well-trafficked website (one of the highest ranked B2B gaming industry websites in the world) as well as daily e-reports including The Flash, Last Call, The Adams Daily Report and Weekend Report as well as several topical monthly and quarterly reports, over 30,000 industry insiders keep abreast with the latest news and developments in the worldwide gaming field. CDC Gaming Reports features original content from industry veterans John L. Smith, Howard Stutz, Nick Sortal, Aaron Stanley and Ken Adams and has partnerships to provide content from the Las Vegas Advisor, Raving Strategic Solutions, University of Nevada Las Vegas, and Global Gaming Business as well as publishing agreements with the Associated Press, Bloomberg, the Las Vegas Sun and the Las Vegas Review-Journal. The company also maintains the definitive Gaming Industry News Database as an open research tool to anyone wanting to learn more about a specific gaming industry issue or the casino business in general. Recent innovations and expansions have included Last Call, a late afternoon news update, as well as â&#x20AC;&#x153;From the Floor,â&#x20AC;? a special G2E daily newsletter. In the next few weeks, CDC Gaming Reports will be introducing the CDC Newswire to assist subscribers and advertisers in publicizing and distributing their current news. For more information about CDC Gaming Reports, visit CDCGamingReports.com.

â&#x20AC;˘ A new AGEM officer was voted in at the recent May meeting. IGT put forward Scott Gunn as an officer candidate, who was duly approved as AGEMâ&#x20AC;&#x2122;s vice president of government relations. â&#x20AC;˘ The Nevada Gaming Control Board finalized its proposed Regulation 5 and 5a language covering account wagering, among other topics. AGEM counsel Dan Reaser attended the May meeting of the GCB, where they were seeking approval for these new regulations. Separately, GCB Technology Division Chief Jim Barbee presented an update to selected AGEM members on the GCBâ&#x20AC;&#x2122;s new pre-approval inspection proposal, along with an update on its previously introduced New Innovation Beta program. â&#x20AC;˘ The recent flurry of activity in Florida, proposing for gaming regulations to be passed, subsequently saw House and Senate leaders fail to reach resolution, leaving any formal gaming expansion plans dead for the year. â&#x20AC;˘ AGEMâ&#x20AC;&#x2122;s membership of the Pennsylvania Video Gaming Association (PaVGA) was recently approved. A lengthy legislative hearing was held in Harrisburg on May 1 that included opposition to the idea of video gaming terminals from most of the stateâ&#x20AC;&#x2122;s casinos. With a large number of gaming bills pending in Pennsylvania, it is unlikely any decisions will be made until at least June. â&#x20AC;˘ AGEMâ&#x20AC;&#x2122;s commissioned Economic Impact Study, carried out by Las Vegas firm Applied Analysis, was slated to be published in May. The study highlights the collective strength of the supplier sector that had a direct output (revenue) of $17.9 billion in 2106 and directly employs more than 55,000 people making an average annual wage of $89,400. â&#x20AC;˘ The recent 19th AGEM-AGA Golf Classic presented by JCM Global was yet again a successful fundraiser for the National Center for Responsible Gaming (NCRG), seeing 144 players take part. Over the past 18 years, the event has managed to raise an astonishing $2.7 million for this very worthwhile cause. â&#x20AC;˘ AGEM welcomed two new members in May. William Hill US, based in Las Vegas, was voted in as a Silver member; and electronic table games manufacturer Spintec, based in Slovenia, was voted in as a Bronze member. In addition, existing member Quixant was elevated to Silver level due to an increase in gross annual revenue.

AGEMindex 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 month-to-month increases in stock price, with two up by more than 10 percent. Three manufacturers reported decreases in stock price during the month and one manufacturer posted a flat performance.

AGEM Agilysys Ainsworth Game Technology Aristocrat Technologies Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC

Exchange: Symbol (Currency)

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

Nasdaq: AGYS (US$)

9.90

9.45

10.68

4.76

(7.30)

0.14

ASX: AGI (AU$)

1.86

1.84

2.33

1.09

(20.17)

(0.05)

ASX: ALL (AU$)

19.64

17.97

10.00

9.29

96.40

8.85

Taiwan: 3064 (NT$)

24.20

19.10

36.50

26.70

(33.70)

0.21

NYSE: CR (US$)

79.91

74.83

55.57

6.79

43.80

4.18

NYSE: EVRI (US$)

6.35

4.79

1.68

32.57

277.98

1.77

OTCMKTS: GLXZ (US$)

0.63

0.25

153.01

Nasdaq: GPIC (US$)

9.99

10.00

8.90

(0.10)

12.25

(0.00)

(6.33)

28.03

(3.68)

1.64

21.57

0.10

(1.90)

34.93

(1.47) 0.11

NYSE: IGT (US$)

22.20

23.70

17.34

INTRALOT S.A.

1.24

1.22

1.02

Konami Corp.

TYO: 9766 (ÂĽ)

4,635

4,725

3,435

Nasdaq: SGMS (US$)

23.75

23.65

9.92

0.42

139.42

Nasdaq: TACT (US$)

8.75

8.10

8.71

8.02

0.46

Scientific Games Corporation Transact Technologies

Index Contribution

0.07

Change in Index Value

10.22

AGEM Index Value: March 2017

361.28

AGEM Index Value: April 2017

371.50

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.

Global Gaming Business JUNE 2017

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Betting on

Brazil The political battle to create a legal, regulated gaming market By Chris Sieroty The Catholic Church is the main opponent of the legalization of gaming in Brazil

he popularity of Jogo do Bicho—the animal gambling game—is proof, some analysts and gaming executives say, of how successful Brazil’s gambling industry could be. The problem is that with very few exemptions, gambling, including slot machines and Jogo do Bicho, has been illegal under federal law since the early 1940s. However, over the last two decades, lawmakers have been trying to legalize one form of gambling or another, as well as creating a regulatory framework that would lift the ban completely. Those efforts have drawn interest from some of the world’s largest gaming companies. “Brazil certainly has the potential to be a market of interest, but it is entirely dependent on the type and terms of any new legislation,” says Alan Feldman, executive vice president of MGM Resorts International. “We continue to monitor activity there as the process continues.” Las Vegas Sands Chairman Sheldon Adelson recently made a trip to Brazil to meet with President Michael Temer and several key officials to discuss building an integrated resort in Rio de Janeiro. Adelson’s visit last month has been considered a sign that a law legalizing gambling could be approved imminently. The O Globo newspaper reported that Adelson met last month with the mayor of Rio de Janeiro to discuss tourism and his proposed $8 billion casino project. Adelson has long called Brazil “a very good opportunity.”

Global Gaming Business JUNE 2017

Jogo do Bicho—an animal-themed, lottery-style game—is illegal, but officials estimate it generates almost $4 billion

MGM Resorts, Las Vegas Sands, William Hill, Ladbrokes Coral, Betsson and NetEnt have all expressed an interest in expanding into Brazil should the gaming industry be legalized. “The industry has stated that it’s comfortable with the market,” says Michael Soll, co-founder and president of The Innovation Group. “They are cautiously optimistic that Brazil could work.”

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Senator Ciro Nogueria Lima Fiho introduced a bill in 2014 that would legalize a wide range of gambling

BRAZIL

Country at a Glance Population: 207.8 million

Both Brazil’s lower House and Senate—the National Congress—have been debating separate proposals that would legalize different forms of gambling, including sports betting.

Devil’s in the Details Under SB 186/2014, authored by Senator Ciro Nogueria Lima Fiho in 2014, both land-based and online casinos would be legalized. Other forms of gambling including slot parlors, bingo halls, sports betting and Jogo do Bicho would be legal. An amended version of the bill was debated last year and even approved by the Special Committee for National Development, but was sent back to the Senate’s Constitution, Justice and Citizenship Committee in December for further debate. The bill would have authorized land-based casinos, sports betting, bingo halls and internet gambling, completely overhauling Brazil’s gambling market. The game of Jogo do Bicho would also emerge from the underground and gain legal status. Those legislative developments got analysts believing lawmakers would have the bill on the full Senate floor by the end of 2016 for a final vote. However, a final vote didn’t occur, which means the bill remains in the Senate. It’s not just one bill that Brazilian lawmakers are considering. In the House, also known as the Chamber of Deputies, lawmakers have been discussing their own proposal to legalize gambling, but analysts say there is little chance of approving a bill with a larger role for the government to oversee the market. The bill includes proposals to force foreign companies to take on local partners and restrictions on how many casinos one company can own. Both bills aim to modernize the industry by authorizing up to 35 land-based casinos. Even online betting has been discussed. But online wagering may remain illegal out of concern for fueling gambling addiction in Brazil, according to an analyst. Despite their caution of online gaming, Alberto Peredne, executive vice president of Abrabinces in Sao Paulo, says online gaming and sports betting are on the legislative agenda. “We believe that casinos have more appeal to the government and congressmen due to the amount of money to be invested and the number of jobs created by the casino industry, which is far more attractive than a virtual company,” Peredne says. But it is still under discussion, he says, with “some heavy players visiting Brasilia these days.” Peredne said even the Ministry of Finance has been working on privatiz-

GDP: $1.8 trillion GDP growth: 3.6 percent Inflation: 8.7 percent

Source: The World Bank

ing the state-owned instant-win games, LOTEX, as part of the government’s efforts to privatize state-owned assets. He expected up to 51 percent of LOTEX to be sold off by the end of 2017. Brazil’s Ministry of Finance is also preparing to present the National Congress with a sports betting bill, but few details have been released. “I have heard that they expect to pass gambling legislation in June, but I don’t know how much I believe that,” says Steve Gallaway, managing partner with Global Market Advisors. Gallaway says any guess as to when Brazil would legalize integrated resorts would be just that—a guess. “I wouldn’t be surprised if it happens in two months or if it happens in five years or 10 years,” Gallaway says. Soll agrees, saying, there is not a “predictable timeframe for passage of a gambling bill.” Although the bill has support in both houses of the National Congress, it has been met with opposition from Brazil’s influential Catholic clergy and lawmakers who fear the legalization of gambling, including integrated resorts or sports betting, could worsen the country’s current economic situation. Gambling, even bingo, has been compared to drugs in terms of harmfulness to Brazilian society. The Catholic Church in Brazil has lobbied lawmakers to reject gambling’s legalization to prevent moral and family damage in the country. But that strong opposition may be overcome by a need to create jobs and tax revenue as the government considers alternatives to plug a budget deficit that is expected to be 10 percent of gross domestic product.

Economic Realities Brazil has been going through a deep recession. The country’s growth rate has decelerated steadily since the beginning of this decade, from an average annual growth of 4.5 percent between 2006 and 2010 to 2.1 percent between 2011 and 2014, according to the World Bank. Brazil’s GDP in 2015 was minus 3.8 percent, followed by minus 3.6 percent last year. It’s gotten worse. GDP started the year at 0.5 percent. The International JUNE 2017 www.ggbmagazine.com

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Monetary Fund (IMF) believes the economy will grow by 1.7 percent this year. So, legalizing gambling has been considered a way to boost Brazil’s struggling economy. The population of Brazilians unemployed is now equal to London and Rio de Janeiro combined, at more than 14 million, the Brazilian Institute for Geography and Statistics reported. Gambling was outlawed in 1941 as part of Brazil’s Criminal Contravention Act. Five years later, then-President Eurico Dutra issued a decree closing all existing casinos. In the 1990s, bingo was reintroduced under the so-called “Pele Law” to fund sports activities, but was outlawed by the Supreme Court in 2007 over reports of money laundering. Supporters believe legalization of gambling in Brazil, including local markets, would be enticing to international companies to invest in the country and generate badly needed tax revenue. Peredne says it would be improbable that everything would be approved at once. “If this happens, we will be grateful,” Peredne says. “Which business will be the first to start operations is the question. It is evident that where large casinos are established, bingo and other small gaming places aren’t welcome.” Fiho’s bill would establish a regulatory framework for the operation and taxation of casinos. Soll says there are also anti-money laundering measures being built into the legislation. “There is still a lot of support for the bill even with the political distractions,” Soll says. “The whole government has been focused on cleaning up the political problems.” Brazil continues to emerge slowly from its devastating recession, but recent nationwide strikes in opposition to reforms have made the issue of legalizing gambling a difficult one for Social Democratic Party President Michael Temer. Temer has said the country will move forward with the reforms his administration started, the Rio Times reported. In Congress, lawmakers are expected to approve easier labor rules and stricter limits to pension spending commitments. Temer has argued the reforms will benefit workers and will have a positive impact on attracting business to Brazil. Peredne understands, with Brazil’s current tough economic climate, the government’s attraction to the gaming industry and the investments, jobs and tax revenue it could generate. He says that legalizing gaming would “reduce crime (and) create new forms of leisure and entertainment.” “The whole package is very attractive, and what really matters to the government is revenue,” he says. Illegal gambling in Brazil is already a big thing. According to the Brazilian Legal Gaming Institute (the Instituto de Jogo Legal, or IJL), some Real $20 billion (US$6.4 billion) is generated from illegal gambling annually. The Jogo do Bicho market, where players pick numbers by choosing coinciding animals, was estimated to be worth US$3.8 billion (R$12 billion). Brazil’s legal gaming market includes state-run lotteries, poker and betting on horse racing.

Uruguay Casinos But without brick-and-motor casinos in Brazil, analysts estimate that around 200,000 residents travel to neighboring Uruguay to gamble at local casinos. “It is probably the best-known casino market,” Soll says. “It is driven by high-end business. It is a very popular destination that will survive Brazil legalizing gambling.” Conrad Punta del Este Resort and Casino earns 70 percent of its revenues from Brazilian tourists. 20

Global Gaming Business JUNE 2017

The administration of President Michael Temer has supported the legalization of gaming

“Uruguay remains as one of the preferred routes for Brazilian gamblers for reasons like low accommodation prices, not far from Brazil… and language,” Peredne says. The IJL estimates Brazil loses about US$2 billion (R$6 billion) annually in gambling taxes to illegal gaming and to residents travelling to Uruguay. Betting in Uruguay state-owned casinos grew by 6.5 percent last year, according to Javier Cha, head of the Uruguayan Casino Control Board. Cha says around UYU$212 million (US$5.9 billion) was gambled in state casinos, but that figure does not include the larger casinos in Uruguay such as the Conrad in Punta del Este, the Casino Parque Hotel nor the Hotel Casino Carrasco, which are both located in Montevideo. Cha says the fact that the casinos had reported growth close to the level of inflation was an achievement due to the slowing down of the local economy.

Brazil: The New Frontier With a population of 207.8 million, according to the World Bank, Brazil could be the world’s largest regulated gambling market. “We like to call Brazil ‘the last frontier’ to the gaming industry because the country has the opportunity of facing this business based on a leisure and entertainment point of view (like) what has never been seen before,” Peredne says. Peredne says this is why this country is so attractive to the gaming industry. If Congress can agree on legislation this year, it would need to be signed by Temer. But not every Brazilian will be able to afford to gamble at a casino. That’s why analysts argue that an illegal market for online gaming and sports betting will remain even in a regulated market. Soll explains that should Brazil legalize casinos, you can “look to take out 50 percent of the population” who can’t afford to gamble from that potential market. Soll argues that even with just 5 percent of the wealthiest Brazilians visiting casinos, that “is still millions of people.” Both Soll and Gallaway believe a legal gambling market will benefit from domestic tourism. “Realistically, developers will likely design the casinos for the domestic market,” Gallaway says. “At the end of the day, while tourism will generate levels of win, the majority of the win will come from the domestic market.” Temer’s government, however, has made a big push to promote international tourism. But to attract gamblers from China, the United States or even the European Union they’ll have to loosen restrictions on obtaining a visa. “Even as an American, we need to get a visa,” Gallaway says. “For integrated resorts to impact tourism, the government needs to ease its tourist visa policies.”

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Playing to Win How slot tournaments have evolved with technology—and how they’ve stayed the same By Frank Legato

nyone who has worked in the gaming industry for a decade or more has an ingrained vision of the slot tournament as it was, unchanged for years.

A couple of dozen roped-off slot machines, usually old. (The primal three-reel video slot comes to mind.) Direct-mail invitations. Long lines for registration (sometimes the wait was eased by cocktail servers with free drinks). A theme—Christmas, Halloween, whatever. A few free casino days in which to spend one or more 10-minute sessions pounding on the “spin” button of a slot machine (or earlier, wearing out elbow joints pulling a handle). From the start, casino marketers have seen tournaments as perfect for generating play in slow periods, and perfect as rewards for their best players. They generally were seen as low-cost, high-yield events. Most of the cost was related to labor and equipment needed to devote a portion of the slot floor—the heart of the property’s income during the 1990s—to a promotional event. Mostly, there was the matter of the machines to be used for tournaments. Some casinos kept tournament machines in storage; others bought high-paying tournaKonami’s True-Time Tournament Director Application will manage all aspects of True-Time Tournaments

Global Gaming Business JUNE 2017

ment chips and would convert existing banks of games for the tournament, returning the original game chips to the machines after the event. Eventually, technology brought down the cost and increased the value of tournaments. These days, through on-floor controllers, cloudbased systems and modules to casino management systems, slot officials are able to run tournaments on anything from a single machine to a bank of games to every device in the entire enterprise. The designated games are interchangeable between tournament and revenue mode, or normal slot machines serve as tournament hosts on some systems. High-tech tournaments are giving slot directors unprecedented flexibility in offering promotional tournaments of all stripes. Totally new styles of tournaments have joined the still-popular classic slot player’s club tournament events. Veteran slot executive Frank Neborsky still uses both tournament methods. In fact, Neborsky, vice president of slots for the new del Lago Resort & Casino in upstate New York, has done just about every type of slot tournament imaginable since he opened Atlantic City’s Trump Plaza in 1989 as chief slot technician. He would become director of slot operations there until 1994, when he spent a year as casino manager of New Orleans’ Grand Palais Riverboat before spending 18 years as vice president of slot operations for Connecticut’s Mohegan Sun. Neborsky says he still ropes off banks of machines for the oldschool style of slot tournament. “In April, we roped off a section of the floor because we wanted to create a special and exclusive feel for the people who were playing,” he says. “When it’s small like that, you’re doing a focused event with focused participants, so roping off an area is great. But then, having the ability to do floor-wide stuff—turn the bonus on and off—is equally powerful, because now you can get everyone involved and drive play, and drive seat time, based on how you manage and create the campaign or tournament.” Neborsky was in charge of slots at Mohegan Sun when its Bally system enabled the casino to score Guinness World Records for “Most Slot Machines Running the Same Game Simultaneously” and “World’s Largest Slot Tournament” for an event in 2013—the latter record of 3,001 participants to be broken three years later at Washington’s Muck-

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Contests have created a surge for TournEvent, which has gone from 200 machines at 10 sites in 2010 to more than 5,000 at around 350 sites today—not only in the U.S., but in Peru and Canada. leshoot Casinos, when 3,173 participants competed in a contest on the TournEvent tournament system from Everi. Today, Neborsky uses both of those products. The del Lago has the Bally Systems Elite Bonusing Suite (EBS) with modules enabling instant tournaments of all types on all slot machines using the iVIEW Display Manager system (and enterprise-wide Virtual Races); and Neborsky has a dedicated area with Everi’s TournEvent system. Those systems are two among several that have recharged the concept of a slot tournament. Among other leaders are IGT’s Spin Ferno tournament system, which enables instant contests on designated banks of S3000 reel-spinning slots; and True-Time Tournaments from Konami Gaming, part of that company’s popular Synkros casino management system. For the past several years, the vendors have been improving these tournament systems, adding features and creating new ways to run promotional contests. Arguably, the latest high-tech arms race in the business of tournament systems started in 2011, with a system by the Austin-based slot-maker known then as Multimedia Games—TournEvent.

Turn of Events That year, Multimedia first used its TournEvent dedicated instant tournament system—launched a year earlier—for a multi-property contest styled along the lines of the World Series of Poker. TournEvent was developed as an instant tournament for dedicated banks of slots, in a system with cameras in each machine that provides an overhead video display of a tournament in progress. Faces of the changing leaders in the contest are displayed on the screen as a master of ceremonies—it can be a human host or a video one—calls the slot tournament. A central feature has been a pop-up icon, originally a balloon, which boosts the score when touched. Another special feature, “Jump to First,” is a random occurrence that boosts a losing player into first place. In 2011, Multimedia held multi-property TournEvent contests among players at California casinos equipped with the system. Satellite events across the state led to the selection of one finalist from each participating property, and Multimedia took 13 finalists on a five-night vacation aboard Celebrity Cruises’ Millennium Wine Tour Cruise from San Diego to Vancouver, including associated accommodations, round-trip airfare and a $200 on-ship casino credit for themselves and one guest. The winner got $20,000. After a second statewide event in Washington in 2013, Multimedia went national in 2014 with the TournEvent of Champions, an event that has grown every year as new properties have installed the system and improvements have been made to the platform—refinements that continued through the merger of Multimedia and Global Cash Access, which formed the current Everi Holdings. Last year, winners of preliminary contests at casinos around the country got all-expense-paid trips for two to Las Vegas to a final tournament held at Wynn Las Vegas’ XS lounge, with a top prize of $1 million. No finalist wins less than $500. According to John Carpenter, product manager for Everi, the contests

have created a surge for TournEvent, which has gone from 200 machines at 10 sites in 2010 to more than 5,000 at around 350 sites today—not only in the U.S., but in Peru and Canada. “TournEvent is continuously growing,” Carpenter says. “We keep on putting more and more games out, and it hasn’t seemed to slow down.” The company has consistently added new features to the system. Among the most recent additions is an automated wild-card drawing offering losing participants a second shot at the prize. After the first round of a tournament, each subsequent round automatically picks a losing player from the previous round to advance to subsequent rounds. And last year, Everi added skill to the TournEvent phenomenon, with the debut at the annual TournEvent for Charity event (celebrities and media participants choose a charity for which to play) of Fruit Ninja as the tournament game. Fruit Ninja is one of the most popular skill-based internet and mobile video games—players swipe the screen to slice up pieces of fruit bombarding the screen. Each slice scores points. Everi has put out a standard video slot, with a partial skill bonus, using the game. But on TournEvent, it’s all skill. “Fruit Ninja is one of the most downloaded apps in the world,” comments Michael Conway, Everi’s creative director. “You’ve got built-in players. The players are pre-trained, they are out there, and the age ranges from from entry 21-year-olds to... Well, my mother plays Fruit Ninja. It is a huge, vast range of trained players to whom you can run promotions.” He adds that the tournament format is the one place game designers do not worry about a fair balance between chance and skill—the best players win. “There is a lot of advertising you can do to find new players to bring in to your casino, and you can start really rewarding players for being good at something,” Conway says. “You can really reward players for skill.” Neborsky, who installed the latest TournEvent 4.0 version for the opening of del Lago in February, says one of the things he likes about the system is that it keeps players on their toes—instead of pushing a button repeatedly, they have to react quickly to pop the balloons that appear to boost their scores. JUNE 2017 www.ggbmagazine.com

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TournEvent 5.0, just certified in April by Gaming Laboratories International, doubles down on that feature with a new base game called Electric Diamond. “We have made our standard game into one of the most challenging yet—almost a skillbased version,” says Carpenter. “Electric Diamond has really quick response. While it’s still a balloonpopping game, we’re pushing the envelope so you have to be more on your toes—almost like a whacka-mole game.” “The balloons come in really fast and furious,” says Conway. “It is one of the most exciting games we’ve ever made.” Carpenter says Electric Diamond also employs a new technology the company calls “reflexive math,” which increases the competitiveness by adjusting the pay table for players who may be doing poorly—it will, he says, “juice their payout if they’re in last place, and on the other side of the coin, if you’re in first place, it will lower the payout opportunity.” He says this encourages more intense competition, and more changes on the leaderboard. At press time, Everi already had close to 100 casinos participating in the 2017 TournEvent of Champions, with 160 finalists decided so far. As always, Everi sends teams of marketers and company hosts out to satellite tournaments on huge TournEvent buses—each with its own hosting “Money Man” mascot—to rev up the crowd. “We have two buses in the United States, and then one bus dedicated to Canada,” says Linda Trinh, Everi vice president of marketing and promotions. Trinh, who originally developed the TournEvent of Champions, travels to scores of locations with the bus every year. At press time, she was touring Canadian casinos, on the dedicated bus bearing the maple-leaf flag. “I just got back from Montreal two weeks ago, and will be heading to Alberta in the next couple of weeks,” she says. “TournEvent has changed the way promotions have been done across the country,” comments Conway.

Flexibility, Timeliness So have iView, iVIEW Display Manager (DM) and Elite Bonusing Suite (EBS). Scientific Games’ iVIEW DM and EBS have given slot marketers a wealth of options for individual bonusing rewards and enterprise-wide contests such as Virtual Racing—a “tournament” of sorts that involves choosing horses or NASCAR stars for a video race. But for the classic promotional slot tournament, nothing is more flexible that the Bally Systems DM Tournaments application. Using the iVIEW displays that are active on machines of any manufacturer using the iVIEW DM system—on video, a portion of the screen or the entire monitor transforms for bonuses and contests; on reel-spinners, a separate screen on the console is used—operators can instantly transform any or all slot machines on the floor into tournament machines. “Our initial goal for DM Tournaments was to help operators automate and reduce the labor related to those traditional roped-off tournaments,” explains Ted Keenan, senior director of product management at Scientific Games. “Tournaments continue to be a great promotional event, even when they’re used in that older roped-off format.” With EBS, though, tournaments have expanded from the roped-off classic to contests of all types and sizes, which operators can tap in an instant. “The No. 1 advantage of DM Tournaments is automation,” says Keenan. “Automated session management and automated scoring make it really efficient for the casino operator, but what really differentiates our product is that any slot machine equipped with iVIEW DM can be switched into tournament mode. 24

Global Gaming Business JUNE 2017

“What really differentiates our product is that any slot machine equipped with iVIEW Display Manager can be switched into tournament mode.” —Ted Keenan, Senior Director of Product Management, Scientific Games

“All the manufacturers’ slot machines can be tournament-enabled with DM Tournaments, because we’re integrated with the player tracking system. That means we can also automate the enrollment, and the prize award. We know who that player is—from the moment they insert the player card, we know if that player is eligible for the tournament, and if he or she wins the tournament, we know exactly which account into which to place the prize.” Keenan adds that EBS, which pioneered the capability of doing an enterprise-wide contest, allows customization in scoring and prizes. “We’ve had customers that set up tournaments with what we call topsy-turvy scoring— for example, positions one, 11, 21 and 31 get prizes. We’ve seen customers set up ladder tournaments, where you win the level-one tournament, then you progress to level two, and so forth. We’ve seen, multiple-entry tournaments, where customers participate on Saturday and again on Sunday, the two scores added together.” These variations—which are some of the newest additions to DM Tournaments—are meant to enhance the customization available to operators through the system. Earning entries, tournament scheduling and other aspects are decided by the operator. The casino can choose set times on a given bank, plan an elaborate rope-off event, or even employ “player start” tournaments, in which customers can play their sessions at any point within a set period of time by inserting the player card and pressing a button. Scientific Games is constantly improving both software and hardware elements of DM Tournaments and the EBS platform in general. The iVIEW 4 display system, recently launched, uses a better processor with more memory. “It can run graphics more smoothly, so it allows us to create games that have a much higher production value,” Keenan says. “It was a challenge for us to create games that had the kind of production quality that a full slot machine has, and the iVIEW 4 brings that capacity.” Scientific Games also is bringing skill-based games into the tournament and EBS equation. “When you talk about tournaments and other bonusing

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IGT’s Spin Ferno (left) and latest product for the TournXTreme platform, “Spin-Splosion!”

games, we have a lot more leeway with skill,” says Keenan. “It’s certainly quicker to deploy those games because there are less jurisdictional restrictions.” Among the first Bally Systems bonusing offerings to use skill are Dice Frenzy and Bubble Burst. “We’ve got other skill-based games coming that will be tournament-enabled, or otherwise available on the bonusing platform,” Keenan says. The next big move for DM Tournaments will be multi-channel events, he says—contests running on multiple devices simultaneously. “That’s where we see most of the innovation happening,” says Keenan. “How do we include other channels, whether they be other gaming devices at the casino, mobile devices at home or Facebook games?”

Utilizing the Best The transformation of the tournament with innovative new technologies has not, of course, been lost on executives of IGT, which happens to spend more on research and development than any other supplier. For years, IGT offered an instant tournament attached to its IGT Advantage casino management system called TournXTreme. However, two years ago, the company’s officials launched a concerted effort to develop a new tournament solution that would rival or surpass the innovations coming from Everi, Scientific Games and other competitors. The result, launched at Global Gaming Expo 2015, was Spin Ferno. This system is designed not for specialized tournament games, but for the games that have been IGT’s bread and butter for decades—stepper games. Spin Ferno uses the Tournament Manager 5.0 system to enable instant tournaments on dedicated steppers in the S3000 series that are also top-earning stand-alone games. The timing was perfect—Spin Ferno was released just as casinos around the industry were replacing their former workhorse S2000 steppers with the new S3000 platform and related IGT system products like “SyncSation,” which enables a synchronized sound and light show applied to a bank of games. In tournament mode, those games pulse in unison with light and sound. “Regardless of how many machines you enroll into the tournament, the lighting across all of the S3000 cabinets is synchronized,” explains Sina Miri, IGT’s vice president of casino systems. “A familiar cabinet becomes a complete experience, where all the players and the rest of the people in the casino see the sheer volume of the light and sound show that is going across all of these machines that are part of the tournament.” He adds that recent add-ons can play different types of music with the light show to reflect Halloween, Christmas or other seasonal environments, as well as video animation via IGT’s Service Window. But the real value of Spin Ferno, Miri says, starts with the S3000 games themselves. 26

Global Gaming Business JUNE 2017

“Like any recipe, you want to start with good ingredients,” he says. “We started with a high-performing game. We looked for the math model that was really performing. Then, we combined it with the platform. This really is the secret sauce here. We have a game that performs in cash mode, by itself. Then we said, ‘What do we do to make it a tournament experience that is delightful for the player, but also a good experience for the operator?’” Miri says starting with a top game makes it easier to put a tournament together, to advertise it to players and to track the results. Marrying it to the Tournament Manager 5.0 module, he adds, enables functions such as enrolling players with a mobile device, or using player’s club cards to stage on-demand tournaments. “On every slot machine, you can advertise a tournament to the player, and invite them to enroll into the tournament right now,” he says. Miri says the performance of Spin Ferno so far has been “phenomenal,” with interest in many markets. He says customers are marrying the Spin Ferno function to S3000 banks of a variety of different sizes, all games that perform very well in revenue mode. With the Tournament Manager system, the machines can be converted instantly between tournament and revenue mode, which gives the operator the flexibility of staging any type of tournament, at any time of day. “As soon as the tournament’s over, the machines go back into cash mode, and they continue to perform,” Miri says, “and it’s likely that people who played the tournament will continue to play that game, because it is on a really entertaining game.” At last year’s Global Gaming Expo, IGT demonstrated functions of Spin Ferno and Tournament Manager that allow operators to customize all aspects of the contests—from play required to earn entries to session times to prizes. Additionally, use of mobile technology was demonstrated, with scenarios such as inviting players to a tournament on their mobile device after they have achieved a certain player status. “What we are really trying to do with the Tournament Manager platform is to make sure we eliminate all these unnecessary activities that don’t make money for the operator,” Miri says. “The more we eliminate friction and make it that you can just go play and be entertained, the more we are likely to improve the bottom line of the operator.” In addition to Spin Ferno, IGT this year introduced its first multi-site tournament capabilities, and a tournament mode for IGT’s virtual-reality game, Siege VR. “Using the tournament platform in combination with a virtual reality

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“There is a definite competitive advantage for casino properties when they can deploy tournaments on any windowing-enabled slot machine, in either player on-demand or synchronized start formats.” —Steve Walther, Senior Director of Marketing and Product Management, Konami Gaming

game offers a new way for casinos to monetize VR technology,” says Miri. Finally, Miri notes that Tournament Manager and Spin Ferno are platformagnostic. The solution can be used by casinos regardless of the casino management system deployed. “Actually, half of the installations are on non-IGT casino management systems,” he says. Tournament Manager and Spin Ferno join enterprise-wide contests possible through the IGT Service Window. “Again, it’s that same slot machine that is performing well in a cash mode,” Miri says. “It becomes a vehicle for an enterprise-wide tournament through that window, which can take over the full screen. And then, of course, go right back to high-earning revenue mode.” IGT’s latest tournament product, for the TournXTreme product family, is called “Spin-Splosion!” It is a video tournament system packed with engaging features like “blast symbols” that award pachinko balls for a “Blast Launch” feature to boost scores; a charismatic cartoon host that calls the tournament, gameshow style; and custom leaderboard graphics in the top-box video monitor.

True-Time Tools Another of the top slot manufacturers that has maintained its competitive tool kit in the tournament area is Konami Gaming. In fact, Konami’s tournament is part of an arsenal for operators known as the True-Time Bonusing Tool Kit. As part of Konami’s popular Synkros casino management system, this tool kit includes on-demand bonusing events such as Super Series Community Bonusing, a collection of racing, lottery-style and video adventure games that can be customized to occur at any time, on any number of Synkros-connected devices, and with any triggering play or point threshold the casino desires. Draw Poker Bonusing, Advanced Incentive Bonusing, Contest Draw Manager and the Random Giveaway module also are part of the Synkros suite. Then there is the True-Time Tournaments module. Using Synkros and the True-Time Windowing machine display feature, True-Time Tournaments can be configured for any number of machines, up to the entire enterprise, and a format called SYNKstart allows the operator to run synchronized tournaments at a single or multiple slot banks without taking the machines out of service. “True-Time Tournaments was originally developed based on feedback from our customers,” says Steve Walther, Konami’s senior director of marketing and product management. “There is a definite competitive advantage for casino properties when they can deploy tournaments on any windowing-enabled slot machine, in either player on-demand or synchronized start formats. “From an on-site marketing perspective, True-Time Tournaments supports customized leaderboard displays, so operators have the flexibility to feature their own unique branding and further optimize their promotional tournament messaging. Leaderboards help reinforce participation by highlighting top participants, while encouraging other players to join.” 28

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Konami offers customers a broad library of games to go with True-Time Tournaments, and operators can switch them out, change times, manage and monitor the contests through the Tournament Director interface. “Our customers are able to define start times, end times, game lengths, invitation cut-off periods, player qualifying criteria, and more,” Walther says. “From the Tournament Director interface, they can view current scores, rankings, active players, and the number of missing entries. They have the flexibility to put machines into standby mode, start rounds, and advance rounds or heats.” True-Time Tournaments allow players to earn tournament entries from any machine and play tournaments on any equipped machine. Depending on the property’s particular needs for a promotion, they have the flexibility to deliver synchronized tournament games and on-demand tournament games to reward carded players. According to Walther, True-Time Tournaments is the only system-delivered tournament product on the market with player multi-game capabilities. “When redeeming an on-demand tournament entry at any enabled video slot machine, carded players can have the option to choose from an array of game themes, to help keep tournament promotions fresh and unique,” he says. “Players are given a menu of game theme options when claiming their tournament entries, empowering them with an additional element of control and excitement when they achieve targeted sales and marketing rewards at the property.” (He says operators have the option to enable or disable this function.) Slot tournaments may have come a long way since the days when tournament machines were routinely hauled to roped-off areas for labor-intensive events. However, as Neborsky notes, their value to the operator has not diminished. “The value continues to be present,” he says. “As with any type of promotion, it’s how you execute it, and being able to target it to the right players. Having the flexibility of doing either roped-off tournaments that create a specialized area or doing more of a global, across-the-floor event gives us the flexibility of entertaining guests in a different way, and being able to provide a different level of entertainment.” Neborsky says that once the del Lago property adds a hotel, he will look at doing some of the types of events he used decades ago to pamper his Atlantic City guests. “We used to do weekend-long tournaments in Atlantic City,” he recalls. “Players would come in on a Friday, they play Friday, all day Saturday and Sunday morning. We would have a great awards banquet ball. I haven’t seen any of those for years.” Those elaborate events were great for brining in top players and keeping them playing in the casino for days. In fact, those events are still great. And with today’s technology, the logistics are a breeze. Tournament time is no doubt here to stay.

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Gaming

the System Tribes, card rooms near showdown in games dispute By Dave Palermo

five-year dispute between California’s American Indian tribes and the state’s card rooms is moving toward potential litigation that could force major reforms of what many believe to be the worst-regulated segment of the legal gambling industry. Failed efforts by the state Gambling Control Commission (GCC) and Bureau of Gambling Control (BGC) to regulate and police the state’s 74 licensed card rooms may result in litigation over constitutional provisions giving tribes exclusivity to operate casino gambling, sources say. A court-mandated settlement of the conflict may not bode well for the card rooms, which tribal lawyers contend have been circumventing provisions of the state constitution and penal and business codes prohibiting house-banked games such as blackjack, pai gow poker and baccarat. A strict interpretation of state gambling laws limiting the ability of card rooms to bank high-stakes table games could cripple an $850 million industry responsible for some 22,000 jobs and millions of dollars in state and municipal taxes. Proposition 1A in 2000—approved by 63 percent of the voters— amended the state constitution to give tribes statewide exclusivity to operate casinos. “Tribes aren’t interested in putting the card rooms out of business. That’s not the point here,” says Steve Stallings, chairman of the California Nations Indian Gaming Association, a group of 32 casino and non-gaming tribes. “But, clearly, when the type of games and practices regarding banked games infringe on tribal exclusivity, card rooms are crossing the line.”

Global Gaming Business JUNE 2017

Bad to Worse Relations between tribes and card rooms, says lobbyist David Quintana, “are the worst they’ve ever been.” Chairmen Bo Mazzetti of the Rincon Band of Luiseño Indians and Kevin Day of the Tuolumne Band of Me-Wuk met with Attorney General Xavier Becerra in April to voice their opposition to card room practices. Seven other tribes were also seeking to meet with Becerra. “When we hear back from the AG, I think the tribes and CNIGA will take some direction,” Stallings says. “I think it’s folly to believe this issue will not be ultimately solved by litigation,” tribal attorney Scott Crowell says. Card rooms say they operate in compliance with BGC game rules and GCC regulations governing licensed third-party proposition player (TPPP) banking firms. “The tribal community has very strong feelings about the issues,” says Kyle Kirkland, president of the California Gaming Association, a card room lobby and trade group. “The card rooms feel very strongly about our position. We feel like we operate lawfully.” But tribes believe GCC regulations and BGC game rules violate state law and constitutional provisions giving them exclusivity to operate casinos. “The card rooms’ strongest defense is that there are regulations in place that essentially make no sense that are sanctioning illegal activity,” Crowell says. “It’s not Law School 101, but Social Studies 101 that statutes trump regulations, and constitutional provisions trump statutes. “House-banked games not on Indian lands violate constitutional provisions, and regulations cannot sanction unconstitutional behavior, period.”

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While there are fewer card rooms today than there were in the 1990s, the number of tables has not declined, leading to large casino-style card rooms like the Bicycle Club and the Commerce Casino

Political Overtones Tribes are angry that card rooms are able to offer high-stakes, house-banked games by failing to rotate the player/dealer position and abusing the use of TPPP firms. Leland Kinter, chairman of the Yocha Dehe Wintun Nation, tossed down the gauntlet at a recent state Assembly hearing. “The California penal code expressly bars the playing of blackjack as a prohibited game,” Kinter said. “Yet you can drive down streets and highways in our state and see billboards on which card rooms boldly advertise that they play Las Vegas-style blackjack. “In addition, the card rooms are effectively playing house-banked games. Card rooms no longer rotate the bank in the playing of their games and allow so-called third-party proposition players, essentially a partner of the card rooms, to maintain that bank. “This practice directly violates the California Constitution and penal code and the tribal exclusivity granted to tribes by California voters.” Tribes and card rooms wield considerable clout, accounting for 80,000 jobs and millions of dollars in taxes and revenue to state and local governments. The industries are also a lucrative source of campaign contributions. The political implications are not lost on the GCC, the regulatory and adjudication arm of the gambling control apparatus whose commissioners are appointed by Governor Jerry Brown. The same is true of the BGC, the enforcement agency in AG Becerra’s Department of Justice. BGC officials declined interviews, asking that questions be emailed through Becerra’s press office. The governor’s office also refused to discuss the dispute.

“I don’t expect we’ll be commenting,” Brown spokeswoman Deborah Hoffman says.

Card Room Industry Evolution

Card rooms have undergone an evolution from strictly poker with the house getting a fee, or “rake,” from each hand, to Asian and “California games,” versions of blackjack, pai gow poker and baccarat. The games have promulgated widespread use of TPPP firms to bank the games. The high-stakes Asian/California games and TPPPs have helped card rooms compete with tribal government casinos which, since the passage of Proposition 1A, have grown into an $8 billion industry with 63 state-licensed operations. The card room industry has dwindled from 232 clubs in the late 1990s to about 75 today, according to state officials. But the inventory of gambling tables has dropped only slightly, from 1,945 in 1997 to the current 1,879. State and municipal regulations and internal operating controls have not kept up with the industry’s evolution. A number of card room managers have been slow to develop internal operating controls and federally mandated anti-money laundering and suspicious cash transaction procedures not necessary with poker. “There needs to be more transparency,” says Saverio Scheri, president of White Sand Gaming, which has consulted with card rooms and municipal officials. “There needs to be more attention to not only the regulations but accounting practices.” “When you switch over to the type of games in California now— non-poker games that by law are supposed to be player-banked, but most of the time it’s a third-party banker—it certainly makes the situation far more complicated,” gaming attorney and author Tony Cabot says. “You need different internal controls than with poker. You also have the contractual arrangement between the banker and the house.” Card room attorney Keith Sharp says regulatory compliance problems are not systemic throughout the —Steve Stallings, Chairman, California Nations industry. Indian Gaming Association “The regulations are in good shape,” he says. “But regulators and industry folks recognize that some regu-

“When the type of games and practices regarding banked games infringe on tribal exclusivity, card rooms are crossing the line.”

JUNE 2017 www.ggbmagazine.com

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“The guys I represent in the card room industry welcome fair and efficient regulations.” —Keith Sharp, attorney for the card rooms

The M8Trix Casino in San Jose is only one of nearly a dozen California card rooms that have been the targets of federal money laundering, skimming and loan sharking investigations

lations work well and others don’t work as well, or work at all. Regulations can be changed. That’s what we’re going through now with third-party regulations. “The guys I represent in the card room industry welcome fair and efficient regulations.” Kirkland made similar remarks to the San Diego Union-Tribune, acknowledging that the industry’s evolution has outpaced regulations. “The industry, I think, is realizing we have to become more sophisticated,” he told the newspaper. Others are harsher in their appraisals. Table games expert Vic Taucer, president of Casino Creations, said card room internal operating controls “are virtually nonexistent.” Gambling industry consultant George Joseph refers to card rooms as “the Wild, Wild West.” Richard Schuetz, who retired in 2015 from the GCC, says card rooms are the “worst-regulated segment” of legal gambling, an opinion echoed by others knowledgeable of the industry. “It’s the Galapagos Islands,” he quips.

Regulators Struggle With Industry Compliance The profitable use of TPPPs by card rooms conflicts with Business and Professions Code Section 19984, which states, “In no event shall a gambling enterprise or the house have any interest, whether direct or indirect, in funds wagered, lost or won.” Meanwhile, game rules adopted by the BGC appear to violate the intent of California Penal Code 330.11, which states, “The player-dealer position must be continuously and systematically rotated” among players. The code does not mandate acceptance of the deal by every player. Business and professions codes allow card rooms to contract with banking services, which profit from a statistical advantage in the pay of the games. Twenty TPPP firms are listed as licensees on the GCC website. But the codes do not define how contracts are to be structured and what services can be provided by the TPPPs—advertising, supplies, etc.—without violating state law prohibiting card rooms from having a “direct or indirect” benefit from the outcome of wagers. Nefarious business arrangements between TPPPs and card rooms have been blamed for at least a few of several recent federal money laundering, skimming and loan-sharking investigations. Beginning with Artichoke Joe’s and the Oaks Card Club in suburban San Francisco in 2011, there have been more federal and state anti-money 32

Global Gaming Business JUNE 2017

laundering and skimming raids, investigations and shutdowns of card rooms than the nearly 1,000 commercial and tribal casinos nationwide. The list includes Hawaiian Gardens, Bicycle Club and Normandie Club in suburban Los Angeles, M8trix Casino in San Jose and the Palomar and Seven Mile card rooms near San Diego. Lucrative TPPP partnerships enable card room operators to stop taking collection fees on the wagers, which is allowed under the penal code. Dropping the fees enables clubs to lure high rollers from tribal casinos. Tables account for up to 25 percent of a tribal casino’s revenues. The United Auburn Indian Community, owner of the Thunder Valley Resort in the Sacramento suburb of Lincoln, flew into a rage when a valued gambler was spotted three years ago at nearby Casino Royale buying $20,000 in chips. The club has since closed. The GCC two years ago shelved draft regulations aimed at reforms and transparency in TPPP-card room contractual arrangements. Commissioners pledged to take up the challenge again this summer. Some card room operators complain that the draft proposals are confusing and onerous. They blame tribes for fueling the fires of regulatory reform in an effort to put card rooms out of business. Some tribal officials suggest forcing card rooms to take collection fees from gamblers would go a long way to resolving the dispute. “If card rooms agree to adopt a collection fee policy, they may never hear another peep out of us,” a tribal regulator says. Not all tribes agree with that assessment. “The problem with that solution is you’re sanctioning an illegal result,” a tribal attorney says. Mitchell Goldstein, president of Gold Gaming Consultants, a TPPP firm, warned BGC officials at a 2015 hearing that by forcing card rooms to take collection fees “you’ve destroyed a huge industry and all of the families that support it.” Tribal officials believe the ability of card rooms to avoid imposing a collection fee is evidence operators are at least indirectly profiting from the outcome of the games, violating state law. “How is it these (club-TPPP) contracts can enable a card room to avoid a collection fee, to waive it altogether, and still be able to operate?” Tuari Bigknife, attorney general for the Viejas Band of Kumeyaay Indians, asked commissioners at a hearing on the issue. “What percentage of the total expenses generated by a card room is paid by a TPPP under contract? “It is banked gaming, in our viewpoint. It looks like it. It sounds like it. It operates like it. And the folks that go in and play at these facilities think it is.”

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“It’s the Galapagos Islands.” —Richard Schuetz, former member of the California Gambling Control Commission, calling California card rooms the “worst-regulated sector” of the gaming industry

Bureau Game Rules Are Ambiguous While the GCC grapples with TPPP regulations, the BGC has struggled to adopt game rules that comply with state law while continuing to enable card rooms to offer high-stakes, player-banked games. The effort has been mired in controversy and criticism. Former enforcement chief Rob Lytle issued a December 2007 opinion letter that stated the deal need not be “continuously and systematically” rotated as stated in Penal Code 330.11, but merely offered to the various players at the table. Lytle distributed the opinion—worth millions of dollars to the card rooms—about 10 days before resigning his position to become an industry consultant and club owner. Lytle was later slapped with a formal conflict-of-interest accusation in 2014 by then-AG Kamala Harris and stripped of his consulting and ownership licenses. The attorney general issued a memo in March 2008 apparently repudiating the Lytle opinion, citing the penal code and referencing the need to “continuously and systematically” rotate the player/dealer position. But a June 2016 effort by BGC chief Wayne Quint to again resolve the rotation issue generated criticism from both tribes and the card rooms. Claiming in a letter that the “relevant portion” of 330.11 was that the deal need not be accepted by every player, Quint’s ruling was that the deal be rotated every hour, at which time the game would be “closed” for two minutes. Card rooms complained the rule would be difficult to enforce and cause them financial hardship. Tribes said it ignored longstanding BGC policy that the deal is to be rotated every two hands, allowing some 40 to 50 hands to be dealt without any rotation. Tribes claimed the relevant portion of 330.11, as noted in the 1998 decision in Oliver v. Los Angeles County, was the need to “continuously” rotate the deal, which was not mentioned in Quint’s letter. “The notification doesn’t change the state of the law in California at all,” Bigknife says of Quint’s decision. “We’re extremely disappointed and a little bewildered by these guidelines,” says Ray Patterson, executive director of the tribal gambling agency for the Yocha Dehe Wintun Nation. “To anybody with any regulatory or operational experience, it makes zero sense what they did.”

Regulatory System Issues Card rooms were largely unregulated prior to the Gambling Control Act of 1997, which designated the GCC and BGC as primary regulators of the industry with limited oversight of tribal gambling. Federal law gives tribal governments primacy in regulating their casinos. The Paskenta Band of Nomlaki Indians and Picayune Rancheria of 34

Global Gaming Business JUNE 2017

Chukchansi Indians in recent years underwent political upheavals that disrupted gambling operations. But tribal casinos have operated virtually free of scandal. The same is not true of California’s card room industry. “I think it is very poorly regulated,” Scheri says. “More attention needs to be paid to these operations. There are some bad actors out there that are really causing problems.” In stepping away from the CGC in 2015, Schuetz and commission Chairman Richard Lopes urged reform of the politically bifurcated regulatory system, the only one in the country under two constitutionally elected officials. Their opinions are shared by many industry authorities. “California is one of the world’s largest gaming markets, with diverse constituents, including tribes, racetracks and card rooms,” says Nevada state Senator Mark Lipparelli, a veteran industry regulator and consultant. “That it does not have a consolidated gaming regulatory body presents tough challenges and complexities.” Lopes and Schuetz noted that the commission is largely comprised of political appointees lacking knowledge of the gambling industry. They also warned of a lack of experience and resources with the BGC, staffed not with career regulators but law enforcement officers unschooled in auditing and gambling compliance. “The culture has to change,” Lopes said of the BGC, a process that will be difficult with a bureau subject to Civil Service and union rules. Dave Vialpando, a former BGC agent who now acts as gaming commissioner for the Iipay Nation of Santa Ysabel, says the BGC has “some very wellqualified and dedicated agents. “But if you ask me if the bureau is adequately prepared to regulate the industry, I’d say absolutely not,” Vialpando says, largely because the agency is overworked and understaffed. “I see a huge void when it comes to regulatory oversight over gaming in the state of California,” says a high-ranking official of a municipality that generates millions of dollars in tax revenue from card rooms. “(GCC and BGC) don’t have the expertise. They don’t have the manpower. Nor do they have the political willpower to do anything.” The California regulatory system has numerous problems, says Schuetz, who left the GCC to become the executive director for the new Bermuda Gaming Commission. “To begin with, bifurcation of the system with two constitutionally elected officers is a critical problem,” Schuetz says. “It’s like having two CEOs for a major corporation. There are two different leaderships. It’s stupid. “Two, they need training with the bureau and experience on the commission. You don’t have anybody there who understands the industry. They have all these union and Civil Service employees who don’t know what they’re doing. “Finally, they need more bodies.”

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Can Casinos Learn from the Lottery? In a grab for the gambling dollar, scratch-ticket peddlers may have an edge on casinos By Marjorie Preston

ach time the nationwide lottery jackpot starts to climb, Nevadans flock to the border states of Arizona and California for a chance to win big. For them, it’s worth the trip (and hours of standing in line); in February, the Golden State’s best-selling lottery retailer, Primm Valley Lotto on the Nevada-California border, sold a winning $191 million Mega Millions ticket. Which begs the question: Why does Nevada, the gamblingest state in the union, continue to ban in-state lottery sales? In the past 30 years, lawmakers and lobbyists have tried dozens of times to amend the state constitution and establish a lottery. In 2016, when the latest bill failed, its sponsor, Assemblyman Harvey J. Munford, bemoaned the potential millions in revenues that could be “helping the education of our younger constituents… without increasing taxes.” “In Nevada, it’s not a concern about gambling from a moral standpoint, which is why Mississippi and Alabama don’t have lotteries yet; it’s not opposition to gaming in general, which is which is why Hawaii and Alaska have neither lotteries nor casinos,” says Victor A. Matheson, gaming expert and economist at Holy Cross College in Worcester, Massachusetts. “Obviously, Nevada’s casino owners don’t want the competition.” Seriously? Throwing a buck in the office lotto pool or buying a ticket at the 7Eleven is far different from gambling at a casino, but the industries often act like squabbling siblings. And surprisingly, in important ways, lotteries may have a leg up on casinos.

The Halo Effect First, there’s the convenience factor. Lottery tickets are sold at more than 200,000 retail locations nationwide, according to the National Association of State and Provincial Lotteries. Second, there’s the potential windfall. The lottery offers a chance at a life-changing bonanza, like the $1.6 billion Powerball jackpot split by players in California, Tennessee and Florida in January 2016. “Even the biggest casinos aren’t capitalized well enough to take a billion-dollar loss,” says Matheson. “The lottery does it by spreading it across hundreds of millions of ticket buyers.” Then there’s the perception of the lottery as a benevolent organization, almost a charity. The Pennsylvania Lottery, for example, funds senior

Global Gaming Business JUNE 2017

services. In Colorado, it’s the environment. In the Hallmark verse of WyoLotto.com, the website of the Wyoming Lottery, the state’s cut is earmarked for “our cities, towns, and counties, to build a brighter future for the places we call home.” Minnesota spends it on school aid and crime control. Delaware, Iowa and other states toss their share in a general fund. While lottery critics complain that the money does not constitute a net gain—the amount is simply subtracted from what would have been allotted for education, for example—the image pushed by marketers is still beatific. “The Brits call it ‘good works,’ so you as the gambler have some sense of where your money’s going if you lose,” says Matheson. “In a casino, all you know is it’s going into Sheldon Adelson’s or Steve Wynn’s pocket.” Lotteries and casinos may be fighting over the same gambling dollar, but they share important challenges. The current generation of players is aging out, and new ones haven’t readily stepped up to replace them. All but a few states have resisted online sales, leaving out the digital natives who might grow into that next pool of customers.

Parallel Lines “Both casinos and lotteries are trying to overcome player stereotypes in the design of our product and the delivery channels, especially for millennials who see these games as part of the parental generation,” says Rose Hudson, presi-

“Even the biggest casinos aren’t capitalized well enough to take a billiondollar loss. The lottery does it by spreading it across hundreds of millions of ticket buyers.” —Victor Matheson, economist and gaming expert, Holy Cross College

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“We have these businesses that rely on integrity and public trust. I would look for opportunities for us to share or collaborate on technology, fraud protection and prevention, and how to be good corporate citizens.” —Rose Hudson, President and CEO, Louisiana Lottery; President, National Association of State and Provincial Lotteries dent and CEO of the Louisiana Lottery and also president of NASPL. “Casinos are trying to get folks into their bricks-and-mortar buildings. We’re challenged to get those same young players to spend their entertainment dollar on our product. We’re both trying to figure out a path forward.” “We’re in the same situation as the casinos,” agrees Laura Solano, director of the Colorado Lottery. To win that emerging player, “we’ve taken things that are experiential, like virtual-reality scavenger hunts and digital games that are fun and free to play but not connected to a sale. We’ve developed Colorado-themed tickets with second-chance appeal. For instance, Colorado’s natural amphitheater at Red Rocks celebrated its 50th anniversary last year. We developed a partnership with them, a second-chance draw giving away multiple concert packages throughout the run of the ticket.” Similarly, when Denver International Airport marked its 25th anniversary, “we sent that younger millennial generation of frequent flyers a chance to purchase a ticket and then enter into a second-chance draw,” says Solano. “We have so many fun special events—arts festivals, baseball games, state fairs—where the second-chance giveaway is a park pass for the next full year. Those initiatives really reach out to that generation as we attempt to make new friends and develop new lottery players.” By the way, Solano adds, “We have a very good working relationship with our casinos in Colorado. A handful are actually lottery retailers, where we’ve placed scratch-ticket vending machines. We don’t have an adversarial relationship.”

“We’ve taken things that are experiential, like virtual-reality scavenger hunts and digital games that are fun and free to play but not connected to a sale, to make new friends and develop new lottery players.”

That’s the Ticket Even some on the lottery side aren’t eager to see more games migrate online, fearing it would take a chunk out of retail sales. It’s a hot topic among NASPL members, says Hudson, and plans there are afloat that could help the channels work together: offering online coupons that can only be redeemed in stores, for instance, and making sure retailers continue to cash out winning tickets. “There are ways you can highlight these stores via geomapping for your customer and still give your online customers what they want,” says Hudson. “That’s the discussion, but we haven’t been able to bridge the gap because some members are so strongly opposed”—not to mention most of the states. It seems inevitable that lottery games will one day be played online, but it may be a long time before state governments drop their resistance. They’re concerned the state-blessed, often state-run games may “cause more problems in society than they’re worth in terms of revenue,” says Matheson—aka problem gambling, increased gambling among the poor, etc. Meanwhile, in many ways, the lottery and casino industries have merged. Major casino gaming manufacturers including IGT and Scientific Games are also the leading suppliers of lottery games, and in some cases, subsidiaries of such companies are actually running the lotteries, as in the case of Northstar, a third-party provider that fell short of revenue projections in Illi-

—Laura Solano, Director, Colorado Lottery

nois and was ultimately “fired” from its 10-year contract. “There is a lot of overlap between the lottery and casino segments,” says Matteo Monteverdi, IGT’s senior vice president of global product marketing, interactive. “In mature jurisdictions like Canada or many European states and countries, the lottery operators are running the lottery and casino businesses. That, I think, is a natural evolution, a convergence of the two sides coming together.” He notes that the Georgia Lottery offers many iconic titles that are familiar to slot players, including “Ghostbusters” and “Cleopatra.” “They are the same games you will find on the casino floor. So there are a lot of best practices you can take from one industry to another. They are very much interchangeable, and we see a tremendous opportunity to work together to generate incremental value for our customers.”

Sporting Chance That goes for sports betting, too. In Italy, Monteverdi points out, Lottomatica is “one of the largest sports betting operators, competing against JUNE 2017 www.ggbmagazine.com

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‘The Same DNA’: Bet 365, Paddy Power and all the traditional betting operators. The two worlds are competing one with each other but at the same time working together to regulate the industry and eventually grow the market.” The market is a big one. In terms of revenues, U.S. casinos and state lotteries are neckand-neck. In 2016, lotteries brought in $80.5 billion across 44 states and the District of Columbia, and U.S. casinos hauled in about $80 billion (counting commercial and tribal gaming halls). If legal sports betting becomes widespread in the United States, will it split the gaming pie even more? Hudson contends lottery operators should get a piece of that action. “It is just more of what we do, and lottery could be positioned” to perform as an operator in that case, she says. “There are states that are moving into the legalization of sports bets to bring that significant money into the sunlight. For us, it would be another piece of a gaming portfolio.” Monteverdi agrees. “Sooner rather than later, everybody is anxious to see it regulated, not only because it will provide a lot of jobs and generate a lot of revenue for the states but also because it will protect players who are completely unprotected now. If casinos and lotteries come together and push in that direction, obviously they can only benefit.” As for the future online, Hudson says, “The business model is ready. The blueprint is ready. It’s ripe for us to do that. But our state is not prepared to swiftly move in that direction, so we’re kind of sitting on our hands, and other states can be in the same situation.” “From an industry perspective in Colorado, we’re taking baby steps, expanding into a digital environment but not necessarily selling online,” adds Solano. “We have to understand the changing demographic and make sure we make new friends. We need new core players, but we also need to keep our current core players. I’m an old Girl Scout. It’s the Girl Scout adage of, ‘Make new friends and keep the old.’” The million-dollar question remains: Are casinos and lotteries natural rivals? Hudson doesn’t think so, and if they are, they shouldn’t be. “We have these businesses that rely on integrity and public trust, so I would look for opportunities for us to share or collaborate on technology, fraud protection and prevention, and how to be good corporate citizens around the whole issue of responsible gaming. We should be learning from each other.” 38

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Lotteries, Casinos and the Future of Gaming Matteo Monteverdi, Senior Vice President, Global Product Marketing, Interactive, IGT GGB: How similar are online lottery games to online casino games? How do they differ? Monteverdi: Online lottery games and online casino games share much of the same DNA. In many cases, the visual output and delivery mechanism may differ between the two, but both products share the same key objective—entertain the player.

The online space is where the boundaries start to blur, increasingly on mobile. Every gaming experience is competing for the player’s attention, but on a level playing field, an online casino app may not have the stickiness of a physical casino, whereas a lottery app would not have the overheads of physical space that prevent it having an extensive range of content. Ultimately, regulations will drive what lotteries and casinos do.

Online lottery ticket sales legally spurred online gaming. Who is best positioned to run wagering online, the casinos or the lottery organizations? IGT’s position is that as long as jurisdictions retain their rights to legally regulate gaming within their borders, all qualified operators (either lotteries or casinos) should have an equal opportunity to run interactive wagering.

What can casinos learn from the lotteries, and vice versa? There are two areas where casinos and online casino operators have learned from lotteries’ experience. One is the appeal of a progressive jackpot, and the second is the benefit of providing more immersive digital games. For many years now, the casino industry has offered players life-changing progressive jackpots, similar in scale to lottery jackpots. Players can win multimillion-dollar payouts with a small wager on a slot machine. And to make the progressive jackpots larger, casinos share the link across the floor and across properties, similar to lotteries where multiple retailers in multiple jurisdictions sell tickets for the same progressive, increasing the size of the jackpots. IGT recently introduced MegaJackpots online, and it is doing very well. Like casinos, the online progressive promises life-changing jackpots and the players have four different titles that they can play to win. Progressive jackpots are becoming more and more common online. Secondly, lotteries created a new format of games when they made the common scratch ticket digital. The resulting games were more immersive bonus-like games that gave players a more entertaining experience. These games have quickly grown in popularity. The games are like slot bonuses from a casino floor, and use the same math as a lottery scratch ticket. The result is a new format and experience and new price points that work for an online lottery, and have captured the attention of online casinos as they look to expand their virtual game mix. In terms of what lotteries could glean from casinos, casinos arguably have had more sophisticated player loyalty/reward solutions, and lotteries can perhaps benefit from those features/experiences as they relate to lottery player engagement.

Will lotteries and casinos unite when it comes to expanded betting in the future, like legal sports betting? I think we will see similarities between lotteries and casinos in terms of the offerings they present to players, especially as betting markets mature. In Italy and Denmark, for example, lotteries compete head-tohead with commercial players in the sports betting market. Lotteries have worked hard to establish their brand values and are identified with solidity and integrity. This can be a real asset in areas such as sports betting, where trust is a key attribute and one that casinos may need to build further. In the land-based or retail space, there are fewer similarities: lotteries sell tickets at retail stores and become part of a player’s weekly grocery shopping. But casinos are a dedicated leisure destination. Where stand-alone betting shops exist, they sit between these two; they are located on a main or “high” street, and are easily accessible, but are more of a conscious destination than the lottery seller, who becomes embedded in a player’s weekly routine. These differences naturally lead to different products. The lottery model of buying a ticket, going away, and returning at some future time to collect winnings could be suited to longer-term pre-match betting—for example, a complex system to bet on this weekend’s football games—whereas the continuous player presence in a casino or betting shop would lend itself to live, quick-win styles of betting.

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Social Gaming:

The Thrill is Gone? Is it too late for land-based casinos to capitalize on the social casino phenomenon?

By Steve Ruddock

ocial gaming is arguably the most significant development in the casino industry of the past decade. From billion-dollar destination resorts to regional racinos, casinos across the country have embraced social gaming. The casinos that have resisted social are now giving it a second look, but many are finding that as the social industry grows and matures, the opportunities are shrinking. Or are they? When social casino products first appeared on the horizon, the prevailing view in the land-based casino industry was caution and skepticism. What exactly is this new product? How can a casino integrate social into its current catalogue of products? And most importantly, how can a casino monetize a “free-to-play” product? Most casinos took a wait-and-see approach, while a few forwardlooking companies, that harbored no such concerns, jumped into social gaming headfirst. Several years later, these early risk-takers have been rewarded handsomely. In 2011, Caesars purchased a social startup called Playtika for a reported $85 million. Within five years, Playtika was the No. 1 social casino operator in the world, and one of Caesars’ best assets. Mired in debt and facing bankruptcy restructuring, Caesars offloaded Playtika for the princely sum of $4.4 billion in 2016. Piggybacking on the Playtika sale, another early entrant in the social space, IGT, sold its social arm, Double Down Interactive, for $825 million earlier this year. IGT purchased Double Down in 2012 for a reported $450 million.

Remaining Opportunities The two high-profile sales have led to the usual chatter that IGT and 40

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Caesars cashed in when the market was at its peak, but few on the front lines share this opinion. Casinos shouldn’t mistake these sales as an indication the social sector has peaked, or that opportunities are disappearing. The social casino industry generated $3.4 billion worldwide in 2016, with revenue expected to top $4 billion in 2017, according to Eilers & Krejcik Gaming. “My read is that both parties built a high-demand product and seized the opportunity to benefit from its sale and perhaps pay down debt,” says Gabriel Cianchetto, Greentube’s president of North American marketing development. “These two sales—while high-profile—were made for different reasons, neither of which can be seen as a referendum on the industry.” Bryan Bennett, senior vice president of AGS Interactive, is of the same mind. “The Playtika price certainly got a lot of attention, but Caesars had some other things going on financially that made it the right move for them to offload that piece for a significant return,” Bennett says. The truth is, the early opportunities Caesars and IGT jumped at had already vanished long before the Playtika sale. The Double Down and Playtika sales are simply indicative of ongoing changes in the social casino market—a market where the rich get richer. At the supplier level, the social casino industry has been consolidated around a small group of major players who have maintained their stranglehold thanks to an aggressive M&A strategy and marketing budgets that small or even medium-sized startups cannot rival, some spending as much as $5 million a month, according to Bennett. “The space has become increasingly difficult for smaller providers,” Bennett says. “The cost of acquisition on the marketing side has just gotten insane.” According to Bennett, even before the sales, it would be difficult for anyone to create another Playtika or Double Down from scratch.

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“

Here is the truth of the matter when it comes to B2B social casino gaming: No one is late because the party has not really started yet.

“

—Gabriel Cianchetto, President, North American Marketing Development, Greentube

IGT recently sold its DoubleDown Casino brand for $825 million

Seth Young, director of online gaming at Foxwoods Resort Casino—one of Greentube’s casino partners—agrees, noting, “Across the board, data suggests that social gaming is of great benefit to casino operators.” The key for any casino is to understand where the opportunities are, and how social can work for their business.

“It’s going to be harder and harder for new entrants—social gaming-only company—to get into the space,” Bennett says, adding that he believes it’s highly unlikely another social gaming giant will come out of nowhere. “The ones at the top are going to stay at the top,” says Bennett. “They’ve distanced Slotomania was just one of the games offered by Playtika, which Caesars Entertainment sold last themselves from anyone else, allowing them year for $4.4 billion Opportunity for Every Casino to outspend everyone else when it comes to Social’s best use, particularly this late in the user acquisition.” game, is as a marketing and customer analytics tool. But both Bennett and Cianchetto believe there’s Bennett calls this aspect of social casinos “super-serving your existing auample opportunity for casinos to get in and be successful—depending on their dience.” definition of success. Listening to Cianchetto and Bennett, you come away With so many casinos offering social products, trying to go beyond with the feeling that there’s never been a better time to get into the social your borders and turn your product into a national brand is difficult, casino business… provided a casino understands what it can expect to get out which is why Bennett believes leveraging your brand and your existing of it. database is critical to social success. “It really depends on what your definition of success is,” Bennett says. “The big thing casinos have going for them is their brand and their customer database,” says Bennett. “My recommendation when I’m talkDefining Social Success ing to casino customers thinking about jumping into the social space is New entries into the social casino space have to realize they’re not going to leverage both of those at all costs.” turn their social casino into a billion-dollar asset the way Caesars or IGT did, This is sound advice. Offering a social product not only keeps a but just because you can’t afford your dream vacation doesn’t mean you can’t casino’s brand front and center at all times, it allows a casino to track custake a vacation. tomer habits when they’re off-property and leverage the direct relationIn the same way the industry fretted about monetization and questioned ships they have with their customers through on-property opportunities the benefits of social casino in the early days, it would be a compounding misand email and web marketing. take to see the consolidation of B2C social around a handful of major suppliers Bennett offers up AGS’ first B2B client, a small casino in Seattle as a reason to remain resistant to social. called BJ’s Bingo & Gaming, as an example of how land-based and social Casinos that can set their sights lower will still be able to benefit, and gaming can play off of one another. should reject the notion that the social opportunities have passed them by— “Whenever there’s a break in a bingo game, we have tent cards all particularly on the B2B front. over the bingo tables directing them to the BJ’s social app. It’s a great “Here is the truth of the matter when it comes to B2B social casino gamtime-waster while they’re waiting for the next real-money bingo game to ing: No one is late because the party has not really started yet,” says start,” Bennett explains. Cianchetto. “B2B social is just entering its growth phase, and the opportunity For BJ’s, this raises awareness of its social casino product, making it for white label/B2B growth remains strong.” JUNE 2017 www.ggbmagazine.com

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The big thing casinos have going for them is their brand and their customer database. My recommendation is leverage both of those at all costs.

“

—Bryan Bennett, Senior Vice President, AGS Interactive

more likely its land-based patrons will choose BJ’s—a brand they are familiar with—when they’re playing social games at home. “When players leave the casino floor, many are playing social casino games at home,” Bennett says. “They should be playing your social game.” This is where the true value of a social casino product resides. “Most casinos have a strong base of loyal guests—some larger than others—but all casinos stand to benefit from learning more about their audience and from having a gaming platform that can also act as a conduit for data capture and new revenue generation,” says Young. “Some casino operators are likely to have more financial success than others, but the benefit that can be driven from a marketing perspective cannot be ignored for any group. “For over three years, Foxwoods has had an opportunity to provide exciting entertainment options to guests on and off-property. “We have succeeded in finding new ways to provide the kinds of experiences that our guests have grown to love, and through continued engagement on FoxwoodsONLINE we have been able to drive increased loyalty and interest in visitation to our beautiful resort. “Beyond this, we have had the benefit of learning more about the games that our guests enjoy, and we anticipate continued success as our program grows.”

The White-Label Solution Casinos of any size can jump into the social market by partnering with a white-label B2B provider. This can be done with minimal investment, and more importantly, social starts paying dividends on the marketing front almost immediately. Bennett explains AGS’ new social strategy (which was first launched in October 2016) as taking proven direct-to-consumer content and turning it into a white-label solution that focuses on the casino’s brand and its relationship with its existing players. “By choosing a white-label solution, casinos can make sure their 42

Global Gaming Business JUNE 2017

brand is front and center,” he says, adding that the goal is to “make the customer feel like they’re still on the casino’s property when they’re playing the social app.” But content is only one piece of the puzzle, and that’s where B2B companies like Greentube and AGS come in. As Bennett puts it, “Content is important, but you need a lot of the meta-game stuff within the app itself to drive better retention and monetization. Not only can we bring them content that’s already doing well in their casino, but we can also bring all the things that support a social game to keep their players engaged and interested. “The revenue they’ll make from those players on-property is going to exceed any direct revenue they might be able to generate.”

Has the Direct Monetization Ship Sailed? But what about opportunities beyond marketing? A casino can choose to focus solely on the marketing value of social (the low-hanging fruit), but the ability to generate direct revenue, or monetize social, isn’t dead and buried, particularly as the industry continues to evolve. Whether it’s integrated into another product offering like real-money online gaming, the introduction of new products such as virtual sports, or some yet-to-be-seen innovation, forward-thinking companies will undoubtedly find a way to generate revenue through their social casino. “I think it is inevitable that most organizations will try to find a way to leverage online gaming as time goes on,” Young says. As Cianchetto notes, “These days, we promote social casinos as marketing marvels, but the revenue possibilities are equally enticing. With a simple shift, a social platform can pursue new revenue streams through virtual currency, game-play enhancements and more.” Young agrees, and sees social as a multi-layered opportunity that allows casinos to fine-tune to their specific needs and capabilities. There is no onesize-fits-all solution, and a social gaming program is what you make of it, but the opportunities for growth in revenue, customer acquisition and customer retention are theoretically limitless. “At some point in the future, the U.S. B2B market may become saturated,” Young says. “If that time approaches, I foresee operators possibly setting their sights on foreign markets. With a little adaptation, social casinos can adhere to a new market’s structure and reap similar benefits.” Make no mistake about it, the future of social gaming is still unwritten. Casino operators are just beginning to scratch under the surface and understand the various ways a social casino can be leveraged as a moneymaker, and as a supplemental product that bolsters their existing products and offerings.

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MGM Goes Online in Jersey

GM resorts announced plans to launch a playMGM online casino brand in New Jersey through its Borgata casino in Atlantic City. The site would be the first under the MGM brand, and is scheduled for launch later this year. Borgata already offers BorgataCasino.com and BorgataPoker.com and is partnered with NJ.partypoker.com. New Jersey requires online sites to be partnered with Atlantic City casinos. The new platform will offer more than 300 casino games playable on mobile and desktop, as well as a variety of poker tournaments, the company said in a press release. “This is a historic moment for MGM Resorts to be launching real-money online casino and poker under the MGM brand for the first time,” said Corey Sanders, chief operating officer of MGM Resorts. MGM said they hope the move will help reestablish Borgata’s online brands in the market. The Borgata sites initially dominated in New Jersey, but have fallen back since the launch of PokerStars NJ in online poker. Golden Nugget’s casino game sites have also passed Borgata’s to lead the market. The Borgata license also hosts PartyPokerNJ.com, the iPoker website of GVC, as well as palacasino.com, the website of the interactive division of California’s Pala tribe. The move comes as New Jersey has been experiencing steady growth in its online market, which generated $21.7 million in March. The launch of the brand, however, also sets up MGM for expansion into other potential U.S. markets. “GVC has been a first-rate partner for us, and we are excited about the possibilities of extending that partnership as regulated markets open up in the U.S.,” Sanders said. GVC (its predecessor PartyGaming) has provided software and technical support services to the Borgata sites since online gaming went live in the state in 2014. There were some reports last year that Borgata would switch to the Pala platform, but those appear to be unfounded.

Global Gaming Business JUNE 2017

IGT to Sell Double Down

nternational Game Technology Plc. announced that it has signed a definitive agreement to sell its successful social gaming subsidiary, Double Down Interactive LLC, to South Korean company DoubleU Games Co., a leading global social casino operator headquartered in Seoul. IGT is not leaving the social space, though. The transaction establishes a new multi-year strategic partnership between IGT and DoubleU Games to provide player experiences in the social casino market worldwide. The deal represents a big win for IGT, which was subject to criticism in 2012 when it bought the social gaming company, which had 70 employees at the time, for what many thought was a vastly overinflated price of $450 million. But Double Down Interactive and its DoubleDown Facebook casino proved to be a cash cow for the company, and was largely responsible for the meteoric rise of social casinos in the U.S., which have flourished in the absence, in all but three states, of legalized for-money online gaming. DoubleU Games will pay $825 million for Double Down. Analysts are lauding the timing of the sale, which comes after the pioneering company’s initial surge has faded, and competition in the nowcrowded social space has led to flat results. The sale will remove what is becoming a drag on IGT’s balance sheet.

New Proposals Muddy PA Gaming Debate

everal new proposals in the state Senate are complicating debate in the Pennsylvania legislature to draft an omnibus gaming bill that would

legalize online gaming and implement gaming expansion measures including slots at airports and other new gaming. A new push to include slot machines at bars and taverns in the package is further muddying the waters in the State Rep. Scott Petri gaming debate. wants parity between the tax rate for Operators and gamland-based and ing proponents in the online gaming state House have already lambasted a proposal in the Senate to tax online gaming revenues at the same rate as land-based gaming. Adding to the criticism is a new proposal from state Senator Joe Scarnati, president pro tempore of the Senate, to place operation of online gaming under the purview of the Pennsylvania Lottery, rather than the successful New Jersey model of having land-based casinos operate iGaming sites. Critics of Scarnati’s proposal point out that placing iGaming in the lottery’s jurisdiction would create new competition for land-based casinos, while New Jersey has proven that linking online gaming to land-based casinos helps both—driving fans of the land-based casinos to the iGaming sites, keeping land-based customers engaged with the brand off-site and bringing new customers to the land-based casinos. Penn National Gaming, which operates Hollywood Casino at Penn National Race Course near Harrisburg, is one of the operators that has come out against the state Senate proposals. In an interview with CDC Gaming Reports, Eric Schippers, senior vice president of public affairs for Penn National, said the result of taxing iGaming at the same rate as land-based gaming would be that no casino would apply for an iGaming license. “The key question around iGaming right now is focusing on the tax rate that would be applied,” Schippers said. “We are trying to knock down some sort of silly notion that you could have tax parity between iGaming and the slot machines and that it could be a successful industry. We’re trying to convince them that if they do this, no one will sign up for it. We’re spending a lot of time trying to educate legislators on that business.” State Rep. Scott Petri, chairman of the House Gaming Oversight Committee, is one of several members of that chamber also said to be pushing the tax-parity argument in the gaming debate. Land-based casinos in Pennsylvania pay a rate of 54 percent for slot machines and 16 percent for

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table games. The House bill passed last year set the iGaming tax rate at 14 percent. Under the latest proposal in the state Senate, separate licenses would be required for online poker and online casino games, along with separate license fees—$5 million each. Online poker would be taxed at 16 percent, but online casino games would be taxed at 54 percent, the land-based rate for slot machine revenues.

IGT Signs Content Deal with PokerStars

nternational Game Technology Plc. announced that it has signed a content distribution agreement with IGT’s Cleopatra will now Rational Group, the appear on the PokerStars Amaya subsidiary that casino sites is owner and operator of leading online gaming site PokerStars. Under the agreement, PokerStars Casino now offers its players in many jurisdictions game content and features from IGT’s Remote Game Server (RGS). IGT’s RGS is a server-based content library that contains a portfolio of more than 100 game themes, including some of the gaming industry’s most celebrated titles such as Cleopatra, Golden Goddess and Wheel of Fortune.

Norway Blocks Online Gambling Site Payments

orway’s gaming authority, the Lotteri-og Stiftelsestilsynet, has ordered banks to stop processing transactions by payment providers with online gambling sites that are not licensed in the country. The order was issued in late March and ordered banks to stop the transactions by April 24, according to Norway’s Klassekampen media. Some payment providers affected include Trustly, Entercash, Earth Port, Worldplay, Inpay and some local operators. The authority says about $2.56 million moved through the payment providers in 2016, with as much as a half billion Norwegian Krone already moving through the sites in the first two months of 2017. The authority’s director told local media that the authority is dedicated to stopping the transactions and will issue new orders to stop transactions should other payment providers be found to be working with unlicensed sites. JUNE 2017 www.ggbmagazine.com

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EMERGING LEADERS Turning Challenges into Chances Tyler Johnson Director of Slot Operations, Osage Casinos lthough Tyler Johnson’s career actually began in the information technology (IT) field, he was soon introduced to the casino gaming industry, and his interests grew exponentially. Enthralled with the inner workings of slot machines and how gaming enterprise systems worked, Johnson spent every free moment learning about the industry, about the successful business processes that others had applied, and about building relationships so if questions came his way, he’d have an answer every time. Johnson’s initial need to understand the business led to a passion that continues to grow today. Instead of limiting himself to the IT segment, he learned every piece from marketing, operations, the cage and casino auditing to emerging trends in the industry. When the opportunity arose for him to transition into operations, it proved to be a perfect fit. In April 2015, Johnson joined Osage Casinos, a company comprised of seven casinos ranging from 200 to 1,000 slot machines. Overseeing slot operations from a technical standpoint, his IT background played a very useful part in managing the machines and their performance. Osage is currently building a new casino in Tulsa slated to open in the fall of 2018, which will feature a significantly higher number of games as well as multiple restaurants, conference space and a hotel. One of Johnson’s first operations challenges was figuring out how to appease high-end players who thrived on finding things to complain about. But with his love of customer service and the energy he gains from guest interaction, Johnson made it his goal to win these players over until they only had positive things to say about the facility. This head-on approach and the ability to turn challenges into strengths continue to be among his favorite aspects of the job. As for the rapidly changing gaming industry, Johnson sees opportunity. “We have an incredible opportunity to reach out to millennials as well as subsequent generations, and learn how to connect them to the casino industry,” he observes, his belief being that, as with all new generations, millennials have different values and ways of thinking than their predecessors. Johnson sees young gaming professionals as having an edge on how to create promotions that will attract millennials, as demonstrated from his team’s current focus on interactive, social, non-gaming products for mobile and online platforms, as well as for brick-and-mortar ones. An exciting time at present, the gaming industry stands to benefit from emerging leaders and young professionals looking to contribute to the future. Johnson perceives the millennial challenge to be the largest opportunity to date on growing brick-and-mortar brands. The industry has transformed greatly over time, and a property built in the future will look very different than it does today. Says Johnson about these changes, “I am excited to be a part of the next generation of leaders that will capitalize on our new strengths to host and entertain future generations.” In June, Johnson will receive his MBA at Southern Nazarene University in Bethany, Oklahoma. —Marie Casias, The Innovation Group

“We have an incredible opportunity to reach out to millennials as well as subsequent generations, and learn how to connect them to the casino industry.”

Global Gaming Business JUNE 2017

Hitting the Ground Running Erica Okerberg Associate, Greenberg Traurig, LLP n virtually every industry, it often takes young professionals several years to establish themselves before making meaningful impacts. This was not the case for Erica Okerberg, an associate at Greenberg Traurig, LLP. Okerberg graduated magna cum laude from the University of Nevada, Las Vegas William S. Boyd School of Law in 2013, and has quickly established herself as a thought leader within gaming law. As one colleague notes, “Although an associate, she is already an influencer in the industry not only because of the success she has helped her clients achieve, but because of her commitment to advising clients.” Okerberg was drawn to gaming by two seemingly paradoxical characteristics of the industry—innovation and tradition. “I was attracted to the gaming industry because it is a unique balance of innovation and tradition,” she explains. “Certain elements have been carried over for many years, but they are blended with cutting-edge technology.” Okerberg’s interest in the industry influenced her to study law at the epicenter of the domestic gaming industry, Las Vegas, after graduating from the University of Minnesota in 2010. Okerberg’s interest in the evolution of the gaming industry is apparent in her work. As a colleague explains, “Okerberg is a forward thinker who will continue to contribute to the gaming industry for years to come.” Having counseled clients regarding both social gaming and skill games, Okerberg is truly at the forefront of the industry. From her own perspective, the most interesting and challenging aspects of the industry are one and the same. “The most enjoyable and challenging part of gaming law is the fact that gaming is regulated by each jurisdiction with varying rules

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Team Leader Justin Quigno Director of Slot Services, Pokagon Four Winds Casinos he Pokagon Band of Potawatomi Indians opened the Four Winds Casinos as its flagship property in New Buffalo, Michigan in 2007. Justin Quigno saw opportunity. A 20-year-old college student, Quigno got in on the ground floor, dealing craps, blackjack and Three Card Poker. A decade—and two degrees—later, Quigno now serves as director of slot services for not only the property at New Buffalo, but for the other two Michigan Four Winds casinos, in Dowagiac and his hometown of Hartford. The tribe will add a casino in South Bend, Indiana in early 2018. Those degrees? A bachelor’s in business administration in 2010 at Western Michigan University, and a master’s in hospitality business management from Michigan State in 2015. “To me, college is an investment into the future,” Quigno says. “The pursuit of higher education is a commitment to success. And while college may not directly teach someone how to become a slot director, college does teach people how to learn.” Between degrees, Quigno worked in a variety of roles: slot supervisor, slot manager, property manager, director of beverage operations and director of hotel operations. “Such exposure provided me with a comprehensive view of the casino operation as a whole. This experience, in combination with my education, has equipped me with the tools needed for my current role,” he says. In his current position, Quigno oversees the performance and operation of more than 3,500 slot machines and 200 employees among three properties, with another 1,800 games set for South Bend. “I have direct oversight of not only our slot team, but also our players club and promotions teams as well. And I established and I’m in charge of our Play4Fun online gaming platform,” says Quigno. A typical day includes meeting with management staff to go over administrative actions for the day. “I work closely with our executive team to go over game selection and production placement, while constantly keeping a close eye on game performance,” he says.

“The most enjoyable and challenging part of gaming law is the fact that gaming is regulated by each jurisdiction with varying rules that evolve with the industry.” that evolve with the industry,” she says. Reflecting on her career thus far, Okerberg feels fortunate to be a part of and learn from the Greenberg Traurig staff. “Greenberg Traurig embraces associates and encourages them to grow,” she explains. “There are many internal and development resources. Management is very supportive of each associate’s goals and offers as much assistance as possible.” When asked if there was a specific mentor who has had an important impact on her gaming career thus far, Okerberg was quick to call out Mark Clayton. “He has been a wonderful mentor, guiding me in all facets of gaming law,” she exclaims. Recognizing that Okerberg has found success early on in her gaming career, young professionals in the industry would be wise to learn from her experience. As for her advice to gaming’s emerging leaders, Okerberg encourages them to “learn everything they can about the industry. Consider how gaming has evolved. Find a mentor and ask for advice.” — Michael Vanaskie, The Innovation Group

Quigno credits his parents for piquing his interest in gaming. “My parents would occasionally take vacations to Las Vegas,” he explains. “They would always come back and share interesting stories about their experience. Often, those stories involved an entertaining dealer. I guess the profession just seemed fitting to my personality,” says the father of one with another on the way. He cites Joe and Leane Quigno as a big influence in his life. “My mother and father were always open to being challenged in new ways,” he says. “Their strong work ethic and belief that we never stop learning and that we never stop growing is instilled in me.” While internet-driven platforms and the push for millennials through skill-based gaming will be an increasing part of the gambling landscape, Quigno believes that the future will “look a lot like it does today. A casino’s brickand-mortar facility will ultimately be the backbone to its success.” Quigno has advice for up-and-coming casino people. “Surround yourself with good people. Seek leaders in positions that interest you and ask them to be your mentor.” —William Sokolic

JUNE 2017 www.ggbmagazine.com

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NEW GAME REVIEW by Frank Legato

Money Roll Jackpot Incredible Technologies

his is a new version of IT’s popular Money Roll game, with images of currency presented as reel symbols in a rolling printing press of cash. This one is in the Infinity Skybox cabinet, with an oversized vertical top monitor displaying a huge bonus wheel in an arcade-style, pachinko-like form. The base game is in the Scatter Ways format, with wins for five or more like symbols anywhere on the screen. The game also includes the popular base-game mystery Fast Line Multiplier feature, which can trigger on any spin with a scatter in the middle reel. All symbols in that row are added together and the player chooses from three money bags to reveal a multiplier which can award up to four times the win. Five or more key symbols trigger the Sky Ball Bonus on the top screen. Three rotating wheels with balls located within each wheel are displayed on the vertical Skybox monitor. As the Sky Ball Bonus begins, balls drop into three prize buckets, each representing a different bonus feature—Cash-In Roll, Fast Line Roll and Bonus Money. The first prize bucket to fill with three balls is awarded. Cash-In Roll and Fast Line Roll both initiate eight free spins, each offering a unique twist on the classic feature. During both events, the Mega Cash Reels unlock to reveal an additional four-by-five area on the top box, making an eight-by-five active reel set throughout for an increased opportunity for big wins. Additionally, the Fast Line Multiplier feature is active during

the Fast Line Roll spins and the Cash-In Roll spins award instant credits when any special scatter symbol lands on the reels. When the Bonus Money bucket fills, it triggers a secondary Sky Ball Bonus. All of the balls now display credit amounts and drop into the three buckets, each representing the three progressive levels (Mega, Major and Mini). The corresponding progressive is awarded to the first bucket that fills with three balls, as well as the additional credit amounts shown on those balls. Manufacturer: Incredible Technologies Platform: Infinity Skybox Format: Five-reel, ways-to-win video slot Denomination: Multi-denomination Max Bet: 60, 120, 180, 240, 300 Top Award: Progressive; $1,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.77%-13.83%

Zuma 3D

International Game Technology

his latest fruit of IGT’s licensing agreement with PopCap Games is based on the hit arcade and home video game centered on a frog idol that spits balls along various paths to earn points. It uses IGT’s True 3D glasses-free 3-D technology on the AXXIS 3D cabinet. Building on the success of IGT’s original Zuma slot, the new 3-D game offers a seven-level, must-hit-by progressive and a dynamic attract feature for an immersive gaming experience. The base game is a five-reel, 30-line video slot featuring a frog wild symbol that engages “track balls” that rotate around the perimeter of the reels. With each base game wager, the wild frog symbol can trigger incremental “Mojo Pot” wins, “Ghost Boss” multipliers, and “Power Balls” that can result in extra wilds and re-spins. There are four unique bonus experiences, including the “Jaguar Bonus,” “Sephalo Ka Boss Battle,” “Kolo Kamari Boss Battle” and “Szhaka Mu Boss Battle.” The bonuses follow the game-play sequences

Global Gaming Business JUNE 2017

familiar to players of the mobile version of Zuma, with balls shot from the mechanical frog character in the game, the object being to match the colors. The progressives are won by accumulating colored Mojo Pot symbols to fill up the meter under any of the seven jackpots displayed on the tall vertical screen of the AXXIS 3D cabinet. And, of course, the frog idol, Mojo Balls and other objects jut out at the player during game play in the True 3D format. Manufacturer: International Game Technology Platform: True 3D Format: Five-reel, 30-line video slot Denomination: .01 Max Bet: 400 Top Award: 1,000 credits times multiplier Hit Frequency: 31.95%-32.44% Theoretical Hold: 3.98%-13.98%

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Tim McGraw

Aristocrat Technologies

his game celebrating the music and performances of country music star Tim McGraw is presented on the imposing Arc Double cabinet, which allows for enhanced video footage and state-of-the-art audio of the performer’s greatest hits, including “Don’t Take the Girl,” “Down on the Farm,” “Refried Dreams” and his biggest hit, “I Like It, I Love It.” The base game is in the “Reel Power” format, with no paylines, and wins registered through adjacent symbols. Tim McGraw features a dual game set—two reel arrays stacked on top of each other on the giant Arc Double format. According to the company, the choice of the two game styles is designed to appeal to both entertainment and moderate-gambler-style players. Game 1 uses a three-by-five reel array offering 243 possible ways to win on each spin. Game 2 utilizes a four-by-five array, which is the “Xtra Reel Power” format featuring 1,024 ways to win and a more volatile experience.

Wacky Races Scientific Games

cientific Games uses its Alpha Pro Theatre cinematic two-machine format to present this game based on the popular late 1960s cartoon series. Wacky Races, based on the 1965 film The Great Race, had 11 cars racing through North America chasing the title “World’s Wackiest Racer.” The game on the Pro Theatre features two Alpha 2 Pro Wave gaming cabinets under a 55-inch shared video monitor, which is used for bonuses and houses the meters for five progressive jackpots, the top resetting at $10,000 on the penny version. The base five-reel, 40-line game features two primary-game mystery bonus features—a Random Wild feature that turns from three to 10 symbols on the screen wild on any spin; and a Wild Reels feature that replaces one or more entire reels with wild symbols. The central bonus feature is the Racing Bonus, which can lead to any of five other events. Triggered by Wacky Races or Wacky Races Wild symbols scattered on the first, third and fifth reels, the monitor displays five cars, out of which one is randomly assigned a special “bonus enhancement” before start of the race. At the end of the race, a random car wins the race and the feature associated with that car is awarded. If the special bonus enhancement car wins the race, additional enhancements are awarded, such as extra free games, extra picks, extra lives or extra multipliers, depending on the bonus won. Among the bonuses available through the race: The “Professor Pat Pending Wheel Bonus” spins a bonus wheel for credit amounts ranging from 1,000 to 5,000 times the line bet, or, at the

The game has an all-new mechanic called “Picture Pays” that is inspired by Lightning Link, the popular Aristocrat progressive link featuring a multiple progressive jackpot triggered an average of every 100 spins, with the top Grand Jackpot hitting every 25 days on average. Tim McGraw features a three-level progressive, with the top prize a multi-site progressive resetting at $500,000. The game adds a twist to the progressive setup, with “Hold & Spin” symbols offering extra chances to win one of the progressives. Bonus features include a main Tim McGraw Wheel Feature and “Growin’ Up Country” free spins. A random “Reel Growth” feature expands the reel array to cover both screens with seven rows and up to 100,000 possible ways to win on each spin. Manufacturer: Aristocrat Technologies Platform: Arc Double Format: Five-reel, ways-to-win video slot Denomination: Multi-denomination Max Bet: 500 Top Award: Progressive; $500,000 reset Hit Frequency: Approximately 60% Theoretical Hold: 10%-12%

max bet, one of the five progressives. “Penelope Pitstop Free Games” awards 12 free spins. If triggered the by the “enhancement” car, heart symbols can be collected—if three are collected, the fifth reel becomes wild for subsequent spins. Collect six, and the fourth reel is added as a wild reel; for nine, reel 3 becomes wild; 12, reel 2—four of five reels wild for remaining spins. “Creepy Coupe Free Games” awards 10 free spins, with the Random Wild and Wild Reels features active, and a re-trigger of the bonus with Creepy Coupe or Creepy Coupe Wild symbols. “Peter Perfect Trophy Bonus” is a picking bonus, the player selecting from five icons for a credit award up to 2,000 times the line bet. “Mutley Scrap Yard Bonus” is another picking event, with a bomb symbol advancing through potentially five levels of advancing win multipliers. Manufacturer: Scientific Games Platform: Alpha 2 Pro Theatre Format: Five-reel, 40-line video slot Denomination: .01-1,000 Max Bet: 300 Top Award: Progressive; reset at 1 million times denomination Hit Frequency: 28.14%, 29.15% Theoretical Hold: 5.96%-14.6% JUNE 2017 www.ggbmagazine.com

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FRANKLY SPEAKING by Frank Legato

Magic Kingdoms

Global Gaming Business JUNE 2017

might as well put a casino under the sea. (OK, I’ll stop.) Incidentally, my daughter took a picture of my son and I, soaring under the sea on the new Little Mermaid ride, watching hockey on my cellphone. Hey, it’s the playoffs. Speaking of amusement rides, they broke ground in Downtown Las Vegas last month on a new attraction based on the Fear the Walking Dead zombie television show. It’s being created by Canada’s Triotech, which has built attractions including the XD Dark Ride at GameWorks in Town Square Las Vegas and the Ninjago ride at Legoland California. Details were still being worked out at press time, including how many employees will be needed to run the attraction, and how customers will be able to tell the attraction’s zombies from the usual characters on Fremont Street. Next, less than two years after it opened in the Palms Casino Resort in Las Vegas, the world’s largest Hooters is closing. Fox News cited “stiff competition” (honest) from other restaurants with buxom waitresses. Oh, well. At least you can still go to the Hooters Casino. (“Where A Pair Always Beats a Full House.”) Finally, it says here that North Korea is calling on foreign businesses to invest in an international casino cruise ship to raise money for the cashstrapped regime, and to “boost tourism.” As I understand it, the first progressive jackpot on the converted Soviet-era ship will consist of a single potato at the Kim Jong Un Buffet. Entertainment will consist of the stage play Our Beloved Leader. Dealers will all have bad hair, and will be dressed in drab military uniforms. Talk about virtual reality. VIC TOR RINAL DO

went on vacation with my family last month at Walt Disney World (“Home of the $20 Hamburger”). We stayed at a nice resort, stood in stifling lines, walked around virtual worlds including a hilarious 1966 “Tomorrowland” with creaky animatronics, and had meet-and-greets with a giant rodent that doesn’t actually exist. No, it was fun, really. I went on some of the rides, spent time with the family, and ate snails in a French restaurant where the waiters spoke French to each other, and were fabulously rude. (Kidding.) However, as is usual for me while on vacation, I kept looking for the casino. Of course, as we all know, there are no casinos at Walt Disney World. The Walt Disney Company, in fact, is spending a lot of money to make sure the closest casino to the Magic Kingdom remains 66 miles away at Seminole Hard Rock Tampa. In April, the company contributed $250,000 to “Voters in Charge,” a group pushing a Florida constitutional amendment that would require any new casino to submit to a vote of the state’s citizens. I believe the majority of that money came from my pocket last month, by the way. Happy to help. The petition drive for a constitutional amendment is in response to efforts by Florida lawmakers to expand dog and horse tracks across the state and create Las Vegas-style casinos in South Florida. They need 100,000 signatures to get the anti-casino measure on the 2018 ballot, and as I understand, language in the ballot measure will allow signatures from animated mice, dogs, mermaids (only little ones), lion kings, living toys, and whatever the heck Lilo and Stitch are. The Disney people, of course, oppose casinos in Florida because they think gambling halls would be detrimental to the family image of the state, where Philadelphia crime boss Skinny Joey Merlino still runs a restaurant. Seriously. He opened it in Boca Raton after he got out of the joint in 2011, presumably so he could be closer to the ghosts of Santo Trafficante and Al Capone. Personally, I think there should be a casino at Walt Disney World. It could become part of the culture. How about a virtual-reality ride on a giant craps table through the skies over the Las Vegas Strip? Or one that makes you a reel symbol on a giant slot machine? There could be Bugsy Siegel and Skinny Joey mascots mingling with Mickey and Donald at the restaurants. Mostly, though, a casino would give back-challenged guests like myself something to do while our families are enjoying rides that would turn me into a twisted freak. Hey, at least I’d be dumping all that cash with a chance of winning some of it back. They could put the casino right between the Little Mermaid ride and the snack stand that charges $10 for a pretzel. (Really.) I guess anyone expecting Disney to soften on gambling is just wishing upon a star. And it makes no difference who you are. You

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CUTTING EDGE by Frank Legato

Table Cash Product: PlayOn Manufacturer: Automated Cashless Systems, Inc.

hen players sit down at their favorite slot machine or table game, one of the last things they want is disruption. ACS is introducing a product designed to minimize unnecessary gaps in play through a seamless solution. To jointly address players’ desire to play their favorite games uninterrupted as well as casinos/operators’ focus to keep players actively engaged, ACS has developed its patented PlayOn solution. PlayOn technology allows patrons to access their own money utilizing their own debit card, without ever having to leave a table or slot machine. At the gaming position, a patron will swipe their debit card at the PlayOn terminal, request an amount, enter their corresponding PIN, and upon approval a voucher is produced and converted to chips at the table or re-inserted at the slot machine. For operators, the hardware may be installed in a matter of minutes; the system adheres to all PCI/DSS standards and its proprietary system provides for uniform report auditing, reconciliation and verification. “ACS PlayOn has quickly become an invaluable asset to Thunder Valley’s AAA Four Diamond resort experience,” said Dawn Clayton, general manager of Thunder Valley Casino Resort. “Our guests appreciate the convenience of safe and secure transactions without having to step away

from their favorite games. We look forward to working with ACS to implement PlayOn solutions on 90 additional tables at Thunder Valley.” Also at the core of PlayOn’s unified experience is its strategic processing partnership with Vantiv Entertainment Solutions (VES). Processing more than 23 billion transactions annually with a volume of $842 billion-plus, VES is the payments and transactional engine behind the product. ACS’ patented PlayOn technology has been granted GLI approval and complies with regulations for table games in California, Connecticut, New Jersey and New Mexico. In 2016, the Reno-based company submitted its application for approval in Nevada; the PlayOn slot machine solution is being finalized for testing and certification. For more information, visit ACSplayon.com.

Fraud Solution Product: Kount Manufacturer: Kount, Inc.

daho-based Kount, Inc. offers the Kount fraud solution, designed to stop fraud and maximize revenue opportunities. Putting hurdles in the way of fraudsters during account creation, login, payout and special offers can keep them from creating problems within gaming networks. Operators that can tell the difference between a “whale” and a “shark” are better equipped to provide an optimal playing experience for their customers.

Operators that deploy Kount see: • Dramatically cut chargebacks and refunds • Reduced or eliminated need for manual review of player accounts • Increased player account opening acceptance • Protected current player accounts • Expansion into new geographies • Decreases in fraudulent bonus payouts Kount is a turn-key fraud solution that is easy to implement and use. Kount’s proprietary technology has reviewed billions of transactions, and

Global Gaming Business JUNE 2017

provides maximum protection for some of the world’s best-known brands. Kount increases player acceptance, optimizes player experience, protects player accounts and decreases the fallout caused by fraud. For more information, visit kount.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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Revenue Results Knowing your players’ preferences makes all the difference By Dave Bontempo

now thy customer. It is a near-biblical gaming mantra, conceived at the base of casino operations. Properties must know their players’ drink preference, commuting distance, frequency of occupancy and the incentives realm keeping them engaged. It’s a slippery, multibillion-dollar slope. Too many comps shrivel margins, while too few enhance one’s competitors. Stakes are magnified by the powerful new presence of merged resorts. Revenue management systems have thus become more valuable, even priceless. Their targeted information helps hotels and casinos merge functions under the large corporate umbrella. Hotels can still segment customers as regular or business travelers, and, with the help of data, match discounts with certain nights of the week. Casinos can still delineate high-end players, low-stakes patrons, slots players and table-game players, to find a promotional sweet spot. When their efforts come together, the property casts a wider financial net. Revenue management systems illuminate the path. Their input helps operators streamline the comp-business structure while allowing, even enhancing, age-old eyeball intuition. A manager or host can tell a customer the system recommends “x,” but then provide a higher comp. It’s a personal decision, set up by data and executed by an individual’s instinct. The combination is rooted in casino history. Dennis Gomes, the late gaming legend, taught his employees what he termed the “soft hustle,” blending people skills with the tools of comps and rewards. Revenue management systems give enterprising hosts more sales ammunition. As casinos and hotels increasingly merge interests, the tools of their trade matter more.

Living the Merged Dream Las Vegas-based Duetto helped pioneer the casino-hotel synergy. Though it works with hoteliers and casino properties, the company began forming its revenue management ideas in the gaming industry. Two of its co-founders, CEO Patrick Bosworth and Chief Product Offi-

Global Gaming Business JUNE 2017

cer Marco Benvenuti, first worked together at Wynn and Encore in Las Vegas. That’s where Benvenuti created the Enterprise Strategy Group that brought together revenue management, data analytics and digital marketing. They saw the need for all casino departments to work together as an integrated resort rather than wage turf wars over hotel rooms or operating budgets. The strategies Bosworth and Benvenuti developed for Wynn, like the practice of open pricing for dynamically setting room rates, still impact how Duetto helps casinos maximize revenue. “There is a lot of actionable data available to casinos, about consumer demand as well as guests’ gambling and on-property spending, which helps calculate a more robust customer worth when you’re making reinvestment decisions,” Bosworth says. “That information needs to be centralized so that all the casino’s key people can use it—and in a very coordinated way, not just in their silos with their own strategies to hit their own compensation targets.” Several casinos in Las Vegas and across the United States formulate revenue strategy using Duetto’s GameChanger, a cloud-based application that integrates with property management and CRM systems. A casino’s revenue manager using the app can yield cash rates for hotel rooms based on demand for any booking date, customer segment or distribution channel. Then, when the player development and marketing teams want to reward high-value big spenders, they use the app to apply dynamic rates of reinvestment across all the segments in the loyalty club database. The casino can thus offer an unlimited number of discounted casino rates—based on a guest’s activity and value—rather than the typical choice of transient rate, casino rate or comp. Without relying on room blocks, casinos can fill the house profitably while still reserving inventory for the highest-value guests. This boosts the property’s top and bottom lines, the company says. And while intuition has value, why depend entirely upon it for major decisions? “We think the ability to get the casino, hotel and marketing teams working in lockstep toward a loyalty program built on data, not the man-

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“

It used to be that casino resorts were rolling the dice in their efforts to meet guest room demand. Today, revenue management is the priority of an entire team, and it’s a central part of operations that drive many decisions and actions in adjoining departments.

”

—Luke Pfeifer, Director of Product Management, Agilysys ager or front desk’s ‘gut feeling,’ is what will set our partners up to win today and in the future,” says Rory Fagan, Duetto’s vice president of casinos. “That’s been our goal from the start, and it’s in keeping with this wider trend toward greater personalization in the hospitality industry.” The company continues to innovate in this area. Last year, it released ScoreBoard, a revenue intelligence tool aimed at replacing Excel as a reporting tool, according to Benvenuti. It allows casinos to compile and analyze reports to share instantly with stakeholders throughout a single casino or across an entire organization that owns several properties. In real time, casinos can frame the big picture of non-gaming revenue for the property and drill down on the performance of different customer segments. Management can then make better, data-driven decisions on the optimal mix between comp segments and its cash business, and it can quickly coordinate efforts between the revenue management and marketing departments to tailor better direct-mail offers. Another recent development was a technology integration and global reseller agreement with Agilysys. By integrating its cloud-based application with Agilysys’ Lodging Management System and Visual One PMS, Duetto can offer casinos real-time lookup of personalized loyalty rates or a mix of comp and cash rates by room type, all from the offers screen of LMS, the company says. The two companies combined to host a webinar, “Transform Your Casino Revenue Management to Maximize Profits.”

Duetto’s ScoreBoard allows casinos to compile and analyze reports to share instantly with stakeholders throughout a single casino or across an entire organization that owns several properties

Agile Agilysys The Duetto partnership is an excellent move for Agilysys, the Alpharetta, Georgia-based hospitality company that steadily grows its gaming presence. The increasingly shared functions of gaming and resorts help it give operators useful tools. “For any hospitality business to be successful, it’s critical to have a way to predict and manage guest demand and spending patterns,” says Luke Pfeifer, director of product management for Agilysys. “Revenue management is more than just room revenue; it encompasses the full spend of the guest in all revenue centers including room revenue, dining, retail and gaming spend. Knowing the potential demand for a given sales period is determined by factors including historical trends, current events and the current pace of bookings. Equally important, operators need to anticipate how their guests will spend their money while on property. Combining all this data to drive rates and personalized offers enables hospitality operators to yield the highest return based on the full spend of guests.” Product solutions can originate from anywhere, even the clouds. Or maybe that’s cloud. “Casino resorts are switching to a real-time, data-driven revenue strategy, thanks to new cloud-based technology solutions,” Pfeifer says. “Properties with this ability can yield by market segment, distribution channel and room type. They’re moving away from one-size-fits-all discounts off a fixed best available rate and instead generating personalized guest offers to reward loyal members and to spur direct bookings. They’re also using web shopping regrets and denials to gauge the property’s true unconstrained demand.” According to Pfeifer, the latest revenue management technologies allow casinos to attract the right guests via optimized forecasting, pricing and even reinvestment. With industry-leading partners, casino resort operators can align their strategies to make more profitable decisions. Recent technologies also help operators present personalized offers aimed at the guest’s overall spend. This is made possible by systems that share real-time data like prior guest spending habits, area demand, competitor rate shopping, review scores and web shopping activity. He notes that it wasn’t always that way. “It used to be that casino resorts were rolling the dice in their efforts to meet guest room demand,” Pfeifer indicates. “Revenue management years ago only focused on one area of demand and guest spend: room revenue. The role of a revenue strategist has evolved greatly over the last 30 years. Today, revenue management is the priority of an entire team, and it’s a central part of operations that drive many decisions and actions in adjoining departments. “As guests are looking to their hotels and resorts to offer more and more services, the traditional PMS is becoming increasingly limited. It’s fo-

JUNE 2017 www.ggbmagazine.com

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cused on only the details associated with the guest’s hotel stay—and that’s about where it stops,” he says. “For years, this was all that was needed. It was ‘good enough’ and aligned well with where revenue management was focused: room revenue. But what about guests who don’t charge to their room, don’t partake of amenities and don’t dine on property? There’s a lot of missing detail, essential data that a traditional PMS simply doesn’t capture.” Pfeifer says properties have a single contract and agreement for Agilysys products combined with revenue management solutions. (Agilysys offers a comprehensive software solution used to coordinate operational functions of the front office, planning and reporting, etc., in the property management realm.) These services are combined and then delivered from a single vendor. It’s a close collaboration with Agilysys and its partners to provide the tools to get properties up and running with their new capabilities, Pfeifer asserts. Partnering with industry leaders in revenue management and optimization enables operators to work with a single vendor to achieve a holistic hospitality management system, Pfeifer adds. The combination of this technology allows operators to take the data shared between the two systems to the next level. With this new, unique set of revenue management data, businesses can offer personalized guest services.

Let Information Reign Rainmaker, also based in Alpharetta, Georgia, aggressively updates its tools of the analytical trade. In April, it launched the next generation of revcaster, touted as an affordable, flexible solution geared to limited-service and mid-market hotels. It brings actionable insights on market, demand and property dynamics to the surface, company officials say. This data transparency provides hoteliers with the relevant information to identify opportunities and make revenue-driving pricing decisions. “Due to a lack of time, budget or resources, many hotels don’t have the ability to make dynamic pricing decisions,” says Vicki Gideon, managing director of Bridgetown Revenue Management Solutions. “If they make them at all, they are often based on data that has been gathered and analyzed from a variety of disconnected spreadsheets, reports and systems. This time-consuming and inefficient process makes it difficult to stay on top of key market metrics and ultimately results in pricing outcomes that are less than desirable for the property.” Rainmaker says its new revcaster platform simplifies existing processes in an intelligent and results-driven manner to provide a cost-effective alternative for hotel operators. The additions and enhancements to the revcaster rate-shopping solution are the first to be released following its acquisition by Rainmaker in 2015. “Best Western selected revcaster as our rate-shopping provider five years ago, recognizing them at the time as a highly innovative startup with excellent customer service,” says Monte Gardiner, managing director of revenue management for Best Western Hotels and Resorts. “Their unique, extensive revenue management experience in the mid-market

Global Gaming Business JUNE 2017

Rainmaker’s grouprev is a pricing optimization tool for each group led by micro-segmenting the business, so sales managers can truly understand what the value of the group is and how it fits within the overall property strategy.

segment has continued to help us improve performance for members ever since.” Key features of this product include the ability to integrate and analyze data from varying sources, such as rate-shopping, PMS, weather, events and benchmarking data (STR). It also allows operators to collaborate, manage and share data across different groups, teams and organizations. The platform features user-friendly dashboards and the ability to quickly surface key, actionable insights from all property data with a powerful, flexible rules and alerts engine, officials say. The next-generation revcaster platform includes enhanced rate-shopping tools, which provide competitive intelligence functionalities and analytics. The product joins an analytical tools lineup that includes guestrev and grouprev. Guestrev focuses on the transient and/or gaming customer. Casinos can use the platform to capture, in real time, what the player and customer value would be, giving them a tailored price based on this customer’s willingness to pay and value to the business, while also providing data based on market conditions and the overall forecast of that value. Grouprev is a pricing optimization tool for each group led by microsegmenting the business, so sales managers can truly understand what the value of the group is and how it fits within the overall property strategy. All over the world, the gaming industry is ripe for the influx of solutions. Revenue management carries an increasingly large banner. Its information helps pinpoint rate strategy while allowing personnel to make some decisions on a human level. The operators best poised to utilize the revenue-management realm will be those which can mostly remove the wall between hotels and casinos.

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TABLE GAMES

Escaping Vigorish, Part II Speeding up the games by eliminating commission structure

ast month we began a quest—a quest to identify which table games charge commission on winning bets, a quest to understand the mathematical and historical rationales behind it, a quest to balance the pluses and minuses of its practice, and, ultimately, a quest to determine—if that’s what you want—the best way to 86 this 5 percent once and for all. Stuff that up your windmill and spin it, Don Quixote. Having already waxed on (and on and on and on) about baccarat and pai gow poker, let’s now train our focus to pai gow tiles, Three Card Baccarat and Fan Tan.

PAI GOW TILES Unlike the mass-market juggernaut pai gow poker, the tile version is more of a cult hit. Not as in the Manson Family; more like as in The Addams Family. True, this ancient game is played in most major casino markets, but there are only about 250 tables around the world. Pai gow poker, a relatively recent derivative, has muscled up to 1,500 placements. Here’s a crash course: You get four tiles (aka, dominoes) and arrange them into a high hand and a low hand of two tiles each. To win, your high hand must beat the dealer’s high hand and your low hand must beat the dealer’s low hand. To lose, just do the opposite of that. Winning bets are paid 1 to 1, but the house will claw back 5 percent. This, along with taking “copies” (exact hands) is how the house maintains its advantage. How can you kill commission? Let us count the ways: 1) Players push if the dealer’s high hand is 5 points or lower; 2) they push if the dealer’s low hand is 2 points or lower; or 3) they automatically lose if their highest tile is 6 or lower. See? Easy as pai.

THREE CARD BACCARAT Now we’re delving into the deep tracks. Unless you’ve been to the top of Resorts World in Malaysia or the back of Greek mythology in Macau, or—a little closer to home for most of

By Roger Snow

us—Ameristar Casino in East Chicago, Indiana, you’ve probably never heard of Three Card Baccarat. Traditional baccarat and this game share a surname and are sort of similar, like Pamela Anderson and Loni Anderson. Baccarat is a common-outcome game, where more than one player can have the same cards, while Three Card Baccarat, which sometimes goes by the alias “Three Kings,” in reference to the highest hand you can get, is more like blackjack. Players get their own hands and compete individually against the dealer. The game uses the same scoring system as baccarat, with 9 being the highest result and 0 being the lowest, but it incorporates a tie-breaking system based on the number of face cards in your hand, and collects 5 percent on every winning hand. Hmmm. Maybe it’s more like Pamela Anderson and Louie Anderson. As with the other games we’ve discussed, methods abound to resign this one from its commission. You can take a specific winning outcome and make it a push. Or you could borrow the dealer qualifying rule from poker-style carnival games: If the dealer has less than 3 points, players automatically win 1 to 2.

FAN TAN You have to see Fan Tan to appreciate it. Or believe it actually exists. There’s truly nothing else like it, a game and a setting so surreal that you wonder if you’re in a legitimate casino or the back room of a Chinese laundromat. In China. In the ’80s. The 1880s.

Most table games are played with cards, dice or a ball of some sort. But not Fan Tan. It uses buttons. Yes, buttons. Small, white ones, ones you might find on an Oxford shirt. Or beans. Yes, beans. Small, white ones, ones you might find at a Trader Joe’s. And then, for some nonobvious reason, the dealer starts the proceedings by ringing a bell—one like they have at the front desk of a hotel—before the start of each round. Then it really gets weird. The dealer takes a bowl and covers a random portion of buttons, 50 or so, from the pile of a few hundred on the table. Players then bet on how many buttons will remain after the dealer removes them in groups of four. The dealer doesn’t touch the buttons by hand because that would be, uh, ridiculous; instead, he uses a metal wand and separates them out of the pile four at a time, like a pharmacist filling a prescription of Zoloft. Fan Tan is all about the remainder. After the dealer removes the buttons four at a time, there will be zero, one, two or three remaining. That’s what you bet on. Guess correctly and you win 3 to 1, minus a 5 percent commission. Fittingly, Fan Tan, the oddball, the misfit, the Rudolph the Red-Nosed Reindeer of table games, is also the one member of the commission club that will never get out. How would you do it? How can you infrequently punish the player in order to eliminate the 5 percent vig? Best we can come up with is this: Drop the standard payouts to 2 to 1, which will make the house edge 25 percent. Then, randomly—once everyone has bet, of course—trigger some electronic gizmo that may randomly increase the payouts; for example, winners this round pay 5 to 1, 10 to 1, whatever to 1. You’d just have to calibrate the frequency and the amount so you land on the appropriate mathematical edge. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates. JUNE 2017 www.ggbmagazine.com

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Loose or Tight? I

n the April issue of GGB, “That Winning Feeling” by Dr. Katherine Spilde and Dr. Anthony Lucas was published, and immediately the editors got deluged with responses. That Winning Feeling presented research that showed slot players could not tell the difference between loose and tight slots in several controlled experiments. The article and the responses simply deepened the ongoing debate that often pits operators versus manufacturers. Operators say they must keep their slots rather tight because of the costs of the slot games (buying, leasing or participation), and manufacturers urge looser slots so players can enjoy the bonuses that result from longer game play. The following responses from two of the most experienced slot experts in the business—Buddy Frank, a longtime slot director for several casinos, including California’s Pechanga Resort & Casino; and Michael Meczka, a former casino marketing executive and longtime marketing consultant—are a good example of the feedback GGB received about the Spilde/Lucas article.

Winning With Loose Slots By Buddy Frank

he debate about slot odds between “stat nerds” and the “on-the-floor” slot operators has been raging for almost a decade. A good example was in the recent GGB article by Dr. Katherine Spilde and Dr. Anthony

Lucas. Sadly, their argument to tighten slots has been winning across the country, and especially in Las Vegas. I think this is a huge error. The irony for me is that while I’m a 30-year “on-the-floor” guy, I’m also a nerd devotee of good statistics. I just don’t think on this topic we’ve found the right stats to use. Therefore, I’m forced to cite experientials and “grandmother” research to argue my points. Let’s consider the two individual slot machines described in the Spilde/Lucas article: one at 8.01 percent hold and one at 5.91 percent hold. I’ve learned over the years that performance measurements are seldom pure, in that each factor (actual win, theo win, coin-in and handle pulls) can dramatically affect the other. Imagine you started playing either machine with $100 and lost it straight away with no wins whatsoever (aka the “Buddy Frank Experience”). The house’s coin-in would be $100; the theo win would be either $5.91 or $8.01. The actual win would be $100. If I were playing a two-coin $1 game, the handle-pull number would be 50. The very next player arriving with $100, but with normal luck, could enjoy hours of play before losing their initial bankroll and have stats that are wildly different, except for the actual win ($100 in both cases). Coin-in could range from $100 to six figures. And theo win would simply be the PAR times the CI. Handle pulls would also skyrocket. A third player may actually leave ahead. “….if players cannot detect differences in hold percentages, then casino operators may be able to improve game performance by increasing the theoretical hold.” —Spilde & Lucas, April 2017

Global Gaming Business JUNE 2017

Those facts bolster the authors’ suggestion that players could have a good or bad experience with either hold setting, and they probably couldn’t tell a tight machine from a loose one in a limited number of trials. So why not try an extreme? If no one will notice going to 8.01 percent; why not jump it from 5.91 percent up to the Nevada legal limit of 25 percent? And, if it weren’t for regulations, why not try 98 percent or 99 percent? Given current machines’ greater volatilities and hit frequencies (despite tighter slots), I really don’t think you’d notice any difference (except higher profitability) for a certain amount of time if you went to a 1 percent player payback. You know from player data that some folks win, but most loose. As I mentioned above, maybe one player might still win. So 99 percent wouldn’t be that noticeable in a limited number of trials for most folks. Right? I’m hopeful that most of you said “no,” and instinctively realize that you’d be closed before the end of the year. So if you agree, then you’re with me that players can feel a change in odds. But only if it’s big enough and not if it’s small? Or maybe only with time? Those of us in operations who have tightened machines in our careers have noticed that profits do increase right away. But it doesn’t last. There are some good reasons for this. Citing casino lore: all players have either a “monetary” or a “time” budget, and you can’t change either one. The increase in profits from tighter hold is not because those players on monetary budgets dig deeper. They don’t. They just leave sooner than before. But those on time budgets stay the same amount of time as before, but end up spending more. In my experience, this “increased profitability” lasts about 180 to 270 days, and then there’s a tailspin. Despite what some analysts believe, our guests aren’t stupid. It takes some time, but players do realize that

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their money doesn’t last as long or that they are paying a lot more for the same entertainment experience. I’ve never seen a casino survey that doesn’t rank “I feel lucky” as one of the most important attributes for guest satisfaction. Why would you risk that? “A dollar won is twice as sweet as a dollar earned.” —Paul Newman Think you could recover quickly once you started to see the numbers decline? You can’t! At least not without a lot of pain and incremental expense. Loosening your tight machines takes even longer to make an impact, and requires massive marketing efforts. In the interim, you’ll get a double whammy of looser slots, but fewer customers as you work to rebuild your former base. Simply put, any decision to tighten machines should be done very, very cautiously. The way back is extremely difficult and expensive. Again, I acknowledge that the short-term math models are against my simple arguments, but consider some real-world examples. In New York, at the Resort World’s Aqueduct property, the nature of their unique VGM machines gives them one of the loosest hold percentages in the country (4.95 percent in 2015-16). But, I can assure you that anyone, anywhere would kill to have their current revenues. Last year, they did almost $200 million more in slot revenue than all 45 casinos in Reno, Nevada combined. Resorts World racino at Aqueduct tops in nation in slot machine revenue generating $57.5 million during May —New York Daily News, June 2016 Speaking of Reno, two casinos there have consistently featured some of the country’s loosest odds. Today, the Atlantis and Peppermill properties are booming, while many others in the area (including some large corporate properties) have struggled. It is not a coincidence that most of them have

tighter slots. The Peppermill’s numbers are private, but Atlantis trades as Monarch Casinos (MCRI) on NASDAQ. Take a look at their five- and 10year growth rates in a much tougher market than Las Vegas. My last example comes from Oklahoma, where VGT’s Class II machines are wildly popular. Everywhere else, these games seldom perform as well as Class III games (where both are allowed). Many say this is because Oklahoma only allowed Class II for years, and so their players developed an affinity for VGT games. While there’s some truth to this, I think an even more important factor is that early VGT machines only offered loose odds. Until somewhat recently, this manufacturer didn’t even make a machine with a hold over 5 percent, even in pennies. Today, many of these loose VGT games outperformed the much tighter Class III games with PARs of 8 percent to 14 percent in pennies. Finally, in discussions with CEOs of the top slot manufacturers, all expressed private concerns about the trend to tighter slots. Think about that. Their job is to make their casino clients more money, and thereby sell them more machines. If they thought producing games with higher hold percentages was the way to achieve this, they’d be leading the charge. Admittedly, most have succumbed to the demands from many of the larger corporate customers to produce tighter and tighter hold options. But in private, they shake their heads and worry this trend is going to kill the “Golden Goose” of long-term slot profitability. “….the gambling equipment industry’s largest trade association found slot machine hold percentages have increased a combined 14.5 percent across the nation over the last 10 years while the revenue from the games has grown just 1.1 percent.” —Las Vegas Review Journal, August 2015 So, just because we in the slot world have the ability to temporarily hide our pricing changes from the public doesn’t mean it’s the right thing to do. Even “loose” slots have a strong profit margin compared to almost any other form of retail. And now is an especially critical time to be careful when our guest’s expendable time and dollar budgets are already being attacked by Netflix, streaming music, online games, resort fees, paid parking and grandchildren (that last one may just be me). You can fool some of the people all of the time, and all of the people some of the time, but you can’t fool all the people all the time. —Abraham Lincoln, 1856 Republican Convention

Resorts World racino at Aqueduct

Buddy Frank is a retired slot operations executive and current consultant with BF Slot Strategies. He can be reached at buddy.frank@yahoo.com.

JUNE 2017 www.ggbmagazine.com

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Imperfect Experiment It’s wrong to say slot players don’t notice hold differences. By Michael Meczka

he article by Dr. Katherine Spilde and Dr. Anthony Lucas in the April issue of GGB makes the claim that slot players cannot tell the difference between varying slot holds. This is misleading. To project the findings of four or fewer test games to a casino’s universe of 1,500-plus games is questionable. Then to imply patrons, across all venues, are insensitive to varying hold rates raises even more serious questions. Granted, infrequent patrons in non-competitive markets may be willing to play high-hold games, as there is no alternative. But frequent patrons in competitive markets are not willing to do so. While slot pay tables may not be readily visible, the frequent players know from experience which games provide better price/value, allowing longer play time in the casino on their fixed budget. These players are accustomed to, and accepting of, giving the casino their entire budget on the condition the casino reciprocates by allowing them to play longer. As you know, we are a research group. We are familiar with similar studies. One was a 12-game evaluation with six games set at 9 percent and six games set at 7 percent. All else was equal, including themes, cabinets, location in the casino and pay tables. The result after 120 days was the 7 percent hold games averaged a minimum of 40 percent more coin-in than the 9 percent hold games. When the frequent patrons in this study were queried why they selected a specific game in the array, the majority simply replied, “I can play longer,” or “It lets me play longer.” Consider two patrons, each with a $1,000 gaming budget, each playing max coin of $5 per spin at the same game in the same environment. One game has a theoretical of 8 percent and the other a theoretical of 6 percent. Each game was played until the budget was exhausted with no money remaining to cover a $5 wager. After 2,489 spins, on average, the 8 percent game has exhausted the budget, compared to the 3,321 spins on average required before the 6 percent game exhausts the playing budget. Assuming a spin every 3 seconds, play time would be 2:04 hours for the 8 percent hold game compared to the 3:18 hours for the 6 percent hold game.

HOLD COMPARISON Budget=$1,000; $5 per Spin; 20 Spins per Minute 6% Hold

8% Hold

Total Spins

3,321

2,489

Time on Device

3:18

2:04

The Pareto Principle, which states that 80 percent of revenue will be generated by 20 percent of customers, well applies to frequent patrons in competitive gaming markets. There is no doubt these more valuable patrons can certainly tell the difference between two and three hours of average play. In qualitative sessions that we have conducted, these same valuable patrons lament not being able to stay in play for what they consider to be a reasonable time proportionate to their budget. This Global Gaming Business article would be a great disservice if casino operators adopt a strategy of higher-holding slots based on a fourgame study. The article states, “Further research is necessary and the results cannot be generalized beyond the parameters of this study.” Casino operators are well-advised not to increase hold until further conclusive research, including in-depth probing with avid slot players, is completed. Michael Meczka is president of Meczka Marketing Research Consulting, and can be reached at 310-383-5947.

We are familiar with similar studies. One was a 12-game evaluation with six games set at 9 percent and six games set at 7 percent. All else was equal, including themes, cabinets, location in the casino and pay tables. The result after 120 days was the 7 percent hold games averaged a minimum of 40 percent more coin-in than the 9 percent hold games. When the frequent patrons in this study were queried why they selected a specific game in the array, the majority simply replied, “I can play longer,” or “It lets me play longer.” 60

Global Gaming Business JUNE 2017

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p. 62 goods:Layout 1 5/16/17 2:29 PM Page 62

GOODS&SERVICES AGA President and CEO Geoff Freeman

AGA GETS SERIOUS ABOUT SPORTS BETTING

he American Gaming Association’s Board of Directors last month ratified a new set of policy principles outlining the industry’s approach to legalized sports betting. The principles are intended to create clear guideposts as discussions with key policymakers, allies and interested parties become more granular. AGA’s stated goal is the repeal of the Professional and Amateur Sports Protection Act (PASPA), which the industry strongly believes would increase fan engagement and entertainment, empower law enforcement and enhance the protections surrounding the integrity of all professional sporting events nationwide. “The stars are aligning to finally repeal this failing law—the Professional and Amateur Sports Protection Act (PASPA). At a time when Washington remains deeply divided, sports betting has the support of Americans of all political stripes,” said Geoff Freeman, president and CEO of the AGA. “Legal, regulated sports betting will enhance fan engagement and entertainment, empower law enforcement and strengthen the integrity of every game. Everyone wins.” AGA’s board of directors adopted the following public policy principles: • Defer to states regarding the desirability of regulating sports betting as all forms of casino wagering; • Ensure the integrity of sports betting and sports through state licensing and regulation; • Make all sports betting businesses transparent to law enforcement; and, • Ensure a tax regime does not undermine regulated sports betting operations’ ability to compete against illegal offshore operators. This action comes on the heels of a recent AGA-commissioned national survey by Greenberg Quinlan Rosner (GQR), which shows that today’s sports consumer wants more engagement with the sports they follow. One area where fans have shown a desire to engage more with sports is through le62

Global Gaming Business JUNE 2017

galized sports betting. Specifically, GQR found: • Nearly six in 10 Americans are in favor of ending the federal sports betting ban to allow states to decide whether to offer sports betting; • 72 percent of avid sports fans are in favor of ending the federal ban; • More than six in 10 18- to 36-year-olds are in favor of legal sports betting; • Nearly two in three Americans believe legalized sports betting would allow local communities to benefit from additional tax revenues and job creation; and, • Were it legal to bet on sports, roughly 28 million Americans—the size of Texas’ population—would be more likely to wager on sports. These results show that Americans are much more likely to watch, engage with, and talk about sports when they bet on games. Further, the research concluded that a majority of Americans, regardless of education, income level, political party affiliation or geographical region, want to end the federal ban on sports betting.

SCIENTIFIC GAMES LAUNCHES DRAGON SPIN IN LATIN AMERICA

the game,” said Golden Palace Slot Manager Luis Jave Arias. “Once we got the chance to test it, we discovered a comprehensive product that covers entertainment and player engagement, together with state-of-the-art design and technology.” Arias said the game has been well-received among the Golden Palace Casino community, and is set to become a player favorite in the Peruvian market.

REPORT: AGS PREPARING FOR IPO

lot and table-game supplier AGS has confidentially filed a draft registration statement on Form S-1 to the United States Securities and Exchange Commission, relating to a potential initial public offering of its common stock, according to a report last month. The number of shares to be offered and the price range for the offering have not been determined. The initial public offering is expected to commence sometime after the SEC completes

he Golden Palace Casino in Lima, Peru, owned and operated by Grupo Sam, is the first Latin American property to launch Scientific Games’ eye-catching Dragon Spin video slot, featured on the award-winning Pro Wave 360 cabinet. The Asian-themed game includes a pick-’em feature with five progressive jackpots and three free-game features. The Pro Wave 360 redefines community-style gaming with its circular display featuring five Pro Wave cabinets and five 40-inch video toppers forming a 360-degree video display for a towering 10-foot-tall centerpiece. The configuration synchronizes audio and visual events for a community gaming experience in which players share the joys of winning and bonuses together, while their play and coin-in stay separate. “When we saw Dragon Spin at G2E 2016, we were dazzled by the social/interactive aspect offered by

its review process, subject to market and other conditions. AGS intends to list its common stock under the ticker symbol “AGS.” A registration statement on Form S-1 relating to the proposed offering has been filed with the SEC but has not yet become effective. AGS, formerly American Gaming Systems, entered the market several years ago as a niche slot manufacturer. Since the arrival of CEO David Lopez, the company has expanded its slot line with the acquisition of Georgia-based Cadillac Jack, and has created a new tablegame division that has rapidly grown through the acquisition and organic development of several hit proprietary table games and side bets.

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GAMBLIT LAUNCHES SKILL GAMES IN CALIFORNIA

arrah’s Resort Southern California announced it will be the first casino in California to offer skill games and gaming tables from Gamblit Gaming, a leading producer of real-money and skillbased games for land-based casinos. Harrah’s has launched its first two Gamblit games, Gamblit Poker and Cannonbeard’s Treasure, and the operator says it will add more Gamblit Games as they are approved. “Gamblit’s games and tables are evolutionary steps in the right direction for the modern gaming industry, and we are honored to be the first casino in California to offer the experience,” said Harrah’s Resort Southern California Senior Vice President and General Manager Darrell Pilant. Gamblit Poker is an electronic table game set up for four players to play heads-up hold-‘em poker. Players build hands by grabbing cards from the center of the table, and can up the ante by stealing cards from opponents in order to prevent them from completing their hands. Cannonbeard’s Treasure is a modern take on blackjack, pitting players and their pirate ships against one another. The game is focused on the community cards in the center of the table which allow players to build their hands and reach their objectives, with the first player to reach the goal winning the pot of gold.

MERKUR LAUNCHES AVANTGARDE IN URUGUAY

erkur Gaming, the casino subsidiary of Germany’s Gauselmann Group, announced that the installation of slots in its Avantgarde series at the Enjoy Punta del Este casino in Uruguay has been a success. Merkur installed a bank of its Avantgarde slant-top units on the main casino floor at Punta del Este, and the company reports the games have been a “major highlight” among the more than 550 machines on the main casino floor and the adjacent Club Fortuna VIP slot area. “Punta del Este is a major

attraction for visitors from Argentina,” said Alejandro Saraintaris, Merkur Gaming Argentina’s general manager, “and one of the major attractions of this beautiful seaside resort is the Enjoy Punta del Este Casino. The property is luxurious, stylish and exceptionally well-run, so I am delighted that our Avantgarde machines are performing so well and being a very real attraction for the players.” Enjoy Punta del Este Casino Director Diego Berna added, “The addition of Merkur Gaming’s Avantgarde machines has already proved highly successful. Our guests are sophisticated, knowledgeable players, and they enjoy the excellent games that Merkur Gaming has provided. As our brand name states, we strive for gaming entertainment that our guests will ‘Enjoy.’ with the Merkur Gaming Avantgarde and the great games it provides, we have certainly achieved that.”

GAMECO SIGNS STAR TREK LICENSING DEAL

Jerry Lewis and Charo appeared at the 2015 Casino Entertainment Awards

Call For Nominations Open for 2017 Casino Entertainment Awards

ominations are now being accepted for the 2017 Casino Entertainment Awards, the only awards honoring outstanding artists, executives and venues in the casino entertainment industry. Sponsored by the Global Gaming Expo (G2E), the Casino Entertainment Awards will be held on Wednesday, October 4, at Vinyl, the award-winning nightclub at the Hard Rock Hotel & Casino Las Vegas. Categories for award nominations include: • Independent Casino Talent Buyer of the Year • Casino Booking Agent of the Year • Casino Showroom/Theater of the Year • Casino Arena/Amphitheater of the Year • Casino Entertainment Executive of the Year • Casino Comedian of the Year • Casino Musical Artist of the Year • Casino Entertainer of the Year Nominations will be accepted until June 30, online at https://fs16.formsite.com/CEA17/Nom/index.html. Finalists will be announced in July.

ameCo, Inc., the startup supplier that introduced skill gaming to the industry in New Jersey last fall with its Video Game Gambling Machines (VGMs), has signed a licensing deal with CBS Consumer Products under which the company will produce games for the VGM based on the iconic Star Trek television series. The deal gives GameCo access to the entire Star Trek television series including the original and all the sequels—The Next Generation, Voyager, Enterprise, Discovery and Deep Space Nine. The latter will be the first to be released in fall of this year, when the company releases the Star Trek Deep Space Nine Adventure on the VGM. According to the company, the game will enable players to “take lead of the USS Defiant and battle their way to victory in immersive ship-to-ship combat.” The game will feature highly polished 3-D models of the iconic spacecraft that will attract fans of both Star Trek and the space combat genre alike. The deal was brokered by Richmond Management Group. In addition to the six TV series, the Star Trek franchise extends to 13 movies with three separate casts, and more than 700 hours of content available across several media and online platforms.

ARISTOCRAT TO INVEST IN TECH STARTUPS IN INDIA

ustralian slot supply giant Aristocrat Leisure Limited is planning to invest in tech startups in India, in areas outside its core gaming business, specifically those seeking Series B, C and D funding, the company’s chief financial officer told the Deccan Herald newspaper. Fusion Labs’ Tania Darvell, who is helping Aristocrat operationalize its strategy, told the newspaper the company will partner with key players in the Indian startup ecosystem. “The Indian ecosystem is full of opportunity, with deep technology capabilities, combined with startup founders who are well-educated and passionate to succeed.” Aristocrat CFO Toni Korsanos added, “Aristocrat is a proudly innovative company, and this new innovation function will be focused exclusively on technologies that sit outside Aristocrat’s core gaming business while utilizing their existing local tech talent.”

JUNE 2017 www.ggbmagazine.com

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RESPONSIBLE GAMING

A New Approach The faith-based community and problem gambling in Bermuda

ermuda, with its pink sands and turquoise waters, has often been hailed as “another world.” This 21-square-mile island paradise is knit together with an interesting mix of British, American and Caribbean influences, resulting in a cultural, political and spiritual landscape that’s all its own. It is with this unique nation in mind that Bermuda Casino Gaming Commission Executive Director Richard Schuetz opted to host a cuttingedge event on problem gambling. More than 50 local stakeholders gathered for the “Awareness of Gambling Addiction in the Faith Community” presentation on Monday, March 27. Led by Dr. Deborah Haskins, president of the Maryland Council on Problem Gambling, and Keith Whyte, executive director of the U.S. National Council on Problem Gambling, the event was successful in educating and training members of the faith-based community on best ways to address and tackle gambling addiction. According to Schuetz, the event was “groundbreaking” in its efforts to prevent and minimize some of the negative effects potentially caused by the gaming industry. “Rather than just responding to the problems as they arise, we are being proactive in addressing the risks of problem gambling in Bermuda, well before the first casino even opens its doors on the island in the early part of 2018,” Schuetz said. U.S.-based expert Dr. Deborah Haskins has specialized in counseling cultural communities since the 1990s. Due to their history of oppression, disenfranchisement and other social issues, she said the African-descent population on the island could be at greater risk for challenges associated with gambling. Some might use gambling as a financial strategy to ensure ends meet; some others might be in desperate need to get funds due to unemployment or under-employment—in such cases gambling would cause them to feel more trapped rather than liberated. The March presentation and training was a “powerful” example of how a cross-section of a population, from mental health care professionals

Global Gaming Business JUNE 2017

By Nadia Laws

and addiction counselors to church leaders, lay people and clergy, could come together to address a concern, said Haskins. “The fact remains that treatment practitioners can’t be solely responsible for addressing problem gambling and increasing public awareness,” she said. “Although not everyone will exhibit risky behaviors when it comes to gambling, there is a segment of the population that will—and it’s up to all of us as a community to be partners in spreading awareness on the problem and possible solutions.” Raising up the faith community as first responders is something revolutionary for the gambling industry, according to Haskins, who said the psychology field typically distanced itself from religion and spirituality. “Faith leaders and the spiritual communities are important resources for providing support, especially to the African-descent community, whose members are more likely to talk to a friend, spouse or pastor than seek help from a counselor,” she said. “By providing tools so these church leaders and lay persons better understand what causes problem gambling, who is most at risk and what resources are available, this allows those in the faith community to respond empathetically so they can co-journey with the person or their family. It allows them to provide greater support, helping the individual navigate and work through the challenges.” It’s important for the person in crisis to feel supported rather than judged, she said. That’s why statements like “gambling is a sin,” “you just need to pray more,” or “you must not be strong enough in your faith if you are not able to stop,” while intended as spiritual encouragers, can be experienced as shame and actually pose as a deterrent to people getting help. “The important thing is to stay in a relationship with the individual and their family, so you can be their problem-solver,” she stated. “The person struggling with the gambling addiction may reach out for support when they get in trouble, but depending on how the support responds

can mean the difference between that person getting help or sinking deeper into debt and despair. If agents are responding in a way that feels judgmental, the individual may become defensive. “As treatment providers we want to keep the door open and dialogue going so we can continue to provide support,” Haskins continued. “Faith leaders and spiritual communities are outstanding in doing that, and have been doing it for centuries—now we just want to increase their understanding of what can happen with problem gambling so they can provide resources to those in need.” Creating a Bermuda model for gambling— and taking into account the cultural, social, economic, political and religious landscape of the country—has been vital to the integration of resort casinos on the island. International experts associated with the Bermuda Casino Gaming Commission maintain that a one-size-fits-all approach wouldn’t work in Bermuda’s case. “Bermuda’s model needs to be reflective of the population, which happens to be 60 percent African decent and also very religious. Without taking those characteristics into consideration, it’s not going to work,” Haskins said. “Unfortunately, in most places, they try to integrate culture into an already-existing model, but it’s more helpful to incorporate the cultural world view into the process from the outset. The wonderful thing about the Bermuda opportunity is the recognition and realization that we need to start with the assets in the community, which is the faith community, and include them in the process.” Nadia Laws is a former journalist and the owner of Communications Consulting Firm, the Media Maven, on the island of Bermuda. After finishing her training with the Press Association in the U.K., Laws was appointed senior reporter in 2010 at the island’s premier media provider, The Royal Gazette, reporting on a variety of political and social news and human-interest topics.

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PEOPLE PINNACLE BOARD ELECTS SANFILIPPO CHAIRMAN

he board of directors at Pinnacle Entertainment recently elected Anthony Sanfilippo as chairman, succeeding James L. Martineau in this role. He will continue in his position as chief executive officer. Martineau Anthony Sanfilippo will continue to be a board member. In addition, Charles Atwood was appointed to the newly created position of lead independent director and Ron Huberman was elected to the board, which includes six independent members. Sanfilippo joined the company in 2010 and has been involved in several strategic transactions, including the acquisition of Ameristar Casinos in 2013, the sale of the company’s real estate assets in 2016 and most recently the acquisition of the Meadows Racetrack and Casino. Atwood also was appointed chairman of the corporate governance and nominating committee. Huberman brings extensive experience to the board in the public and private sectors and expertise in technology, management, operations and government relations, Sanfilippo said.

MIKULICH JOINS STATION CASINOS

homas Mikulich has been named senior vice president of innovation for Station Casinos. He was previously senior vice president of business development for MGM Resorts, Thomas Mikulich where he oversaw innovative gaming technologies introduced by the casino operator, including onproperty mobile gaming, as well as legal iGaming in New Jersey. Prior to joining MGM, Mikulich was senior vice president of MegaJackpots at International Game Technology, and before that he was president and chief operating officer of Treasure Island Hotel & Casino when it was owned by MGM.

CROWN’S MAN IN CHINA IS OUT

rown Resorts marketing executive Michael Chen, who reportedly was on “permanent

leave” following the detention last year of 18 Crown employees in mainland China, is no longer with the company. According to the Australian Financial Review, Chen was “the architect of Michael Chen Crown Resorts’ push into China,” a strategy that allegedly went afoul of Chinese law by trying to lure high-rolling gamblers to casinos Down Under. AFR reported that Chen left the casino group in a “cleanout of top management.” Of the 18 Crown employees originally detained, 15 remain behind bars in a Shanghai detention center. They have been charged with “gambling-related crimes.”

CELADON TO HEAD GAMING FOR IGT

nternational Game Technology has appointed Fabio Celadon to the position of senior vice president, gaming portfolio. Fabio Celadon The 15-year industry veteran will be responsible for five areas within the slot giant’s Gaming Division: technological advancements and market and competitive trends; global research, development and delivery consolidation and related allocation of budgets and resources; content portfolio evolution; hardware and content road maps consolidation and execution; and product performance and results. “His operational experience, coupled with his global perspective and in-depth knowledge of the gaming industry, makes him ideally suited to lead the Gaming Portfolio group,” said CEO Marco Sala. Celadon most recently served as managing director, IGT Greater China, and senior vice president, IGT International.

ELDORADO PROMOTES CARANO, APPOINTS QUATTMAN

eno-based Eldorado Resorts recently named Anthony L. Carano as chief operating officer and executive vice president, and Anthony L. Carano Edmund L. Quattman as chief legal officer. Quattman held the same position at Isle of Capri since 2008.

Eldorado Chairman and Chief Executive Officer Gary Carano said, “We are delighted to announce Anthony’s promotion and Ed’s appointment to the Eldorado team following our acquisition of Isle of Capri and the addition of its 12 casino resorts to the company’s property portfolio. As we have meaningfully increased the scale of our regional gaming platform, Anthony’s detailed knowledge of our operations, and our operating disciplines that focus on margin enhancement and customer service, will be invaluable in managing the operations of our properties and the successful integration of the acquired Isle of Capri properties.”

NEW BOSS AT THE PALMS

tation Casinos has named Anthony Faranca vice president and general manager of its recently acquired Palms Casino Resort in Las Vegas. Faranca, who also heads the Executive Committee Anthony Faranca of the 1,200-room off-Strip casino, will be responsible for all day-to-day operations, including gaming, marketing, hotel and resort operations, food and beverage and finance. He joined the company in January from Parx Casino in Bensalem, Pennsylvania, where he served as general manager. Prior to that, he spent nine years with Parx parent Greenwood Racing.

GGB

June 2017 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35,51 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Casino Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Crane Payment Innovations . . . . . . . . . . . . . . . . . . . .21 Duetto . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 G&T Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 GGB Subscription . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . . . . . . .27 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Konami Gaming . . . . . . . . . . . . . . . . . . . . . .Back Cover Merkur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Rainmaker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Scientific Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 VizExplorer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

JUNE 2017 www.ggbmagazine.com

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CASINO COMMUNICATIONS

A.G. Burnett Chairman, Nevada Gaming Control Board

s a longtime employee and later a member of the Nevada Gaming Control Board, A.G. Burnett was appointed chairman by Governor Brian Sandoval in 2012. An attorney, with expertise in corporate securities, Burnett has been instrumental in some of the recent developments in the Nevada regulatory landscape including skill games, eSports and the expansion of sports betting. He spoke with GGB Publisher Roger Gros at the GCB offices in Las Vegas in May. To hear a full podcast of this interview, visit GGBMagazine.com.

time that it might be a game-changer for the state of Nevada. My greatest fear was twofold. One, that it would flop immediately, and not get off the ground. You would have a green light, launch, and things would shut down. And two, that some patron would be ripped off, both of which would be embarrassing events for the state of Nevada. We don’t want anyone to be harmed when they play a game or a slot machine; that’s why we regulate in the way we do. It went off well. There weren’t any of those types of scandals or events or hitches. Things went up, and they were off and running.

ability to do that, I would imagine it would look a lot like the other gaming laws that are promulgated by Congress, which would be to ban it, but say that if a state wishes to do it, it can enter into that activity, as long as it’s legal within the state. So, if that were to occur, I would imagine other states would ask us questions as to how we regulate sports betting. Our licensees will be in those states. It’s going to be the Nevada licensees exporting their knowledge and expertise into that, which I think is incredibly important with sports betting, because it is so nuanced, and so highly specialized.

GGB: You were appointed chairman just in time for the introduction of iGaming, the initial wagering on eSports, the definition and introduction of skill games, the expansion of sports betting, and dozens of other issues. Does it seem like it’s always just been one thing after another?

More than a year ago, Governor Sandoval signed a bill, reaching an agreement with Delaware to share poker liquidity. What’s happened with that agreement, and is it working?

Let’s talk about skill games. Why was Nevada so quick to figure out how this was going to work?

A.G. Burnett: I’ve been here for 19 years, and as luck would have it, or chance would have it, or skill—one of those—I would not have been here this long, had it not been for the great people here. We’ve got 400 people on staff. It’s just been an incredible working environment, to work with some of the greatest people I’ve ever been able to work with. But yeah, you’re absolutely right; it’s been one thing after another, continuously, but that’s gaming. When you took over, there had already been extensive hearings on iGaming. What were some of your first concerns in Nevada, when iPoker was launched?

When iPoker was first being launched, I was on the Gaming Control Board, and I knew that it was going to be a big event. I knew that it was going to be something that we had to look at strongly as regulators, and I think we all collectively had a feeling at the 66

Global Gaming Business JUNE 2017

It’s the Multi-State Internet Gaming Agreement. It’s working well. Our colleagues in Delaware have been great to work with. It is something that is not on my list of problems, day to day. Staff at the Gaming Control Board has meetings, periodically, with Delaware, and the numbers aren’t big enough, or the number of licensees aren’t large enough to require much more than that at this point. But I think that it has been a success from our perspective. Sports betting revenue in Nevada has grown pretty substantially over the past five or six years, mainly because of in-running betting, as well as mobile betting. What kind of role will Nevada play if and when sports betting is legalized on a national basis?

That’s a really good question. And I don’t have an answer, because I think it depends on what a federal law does. If (the Professional and Amateur Sports Protection Act) is just repealed, without any further guidance from Congress, that’s one thing. If there is a law passed in its place regarding sports betting, and the states’

There was a body created to study the impact of technology on gaming. I was part of that, along with Chairman Pete Bernhard of the state Gaming Commission, and that committee’s duty was to study what’s next, and try to determine what Nevada should do. The result of that, obviously, Nevada needs to continue to be at the forefront. What does that mean? For me as a regulator, it meant that we regulate to the statutes. Eventually we called it a hybrid game, and I consulted with my technology division staff, and they agreed. And so, that’s what ended up being SB9—this concept of the gaming device, the traditional slot-machine gaming device, and then there’s a hybrid game. The mandate that I gave my staff was this: Right now in Nevada, there’s an end zone. The very first statute says, gaming has to be regulated strictly, it has to be competitive, and these are the things that we have to do to protect the state, and the industry, the state’s population, and all 40 million visitors that come here every year. I said let’s move the goal post. Once we do, it’s going to be up to the industry to fill that space.

M I NG

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