Global Gaming Business, March 2017

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GGB Global Gaming Business Magazine

AML/KYC PROGRESS AFFILIATE MARKETING IN iGAMING EVOLVING BUSINESS SOFTWARE REALITY IN RESPONSIBLE GAMING

March 2017 • Vol. 16 • No. 3 • $10

Location, Location,

Location Why slot floor real estate is changing

On the Road Again How slot route operations are growing quickly

The War for Connecticut Is a clash between tribal and commercial gaming the future?

Official Publication of the American Gaming Association

Association of Gaming Equipment Manufacturers

A NEW GAMING UNIVERSE AWAITS

SEE IT AT NIGA #PlayAGS

©2017 AGS LLC.

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CONTENTS

Vol. 16 • No. 3

march

Global Gaming Business Magazine

24 COVER STORY The Evolving Floor

COLUMNS 12 AGA Making the Most

With the advent of new styles of skill-based, arcade-style slot machines, electronic table games and non-gaming activities designed to appeal to younger gamblers, major casino operators are beginning to experiment with new attractions that make the most of space once reserved for traditional slot machines.

Geoff Freeman

14 Fantini’s Finance Good For Gaming?

Frank Fantini

34 Operations Targeting Millennials Blaine Graboyes

By Frank Legato

46 Player Development Breaking It Down Mick Ingersoll

FEATURES

54 Responsible Gaming

18 The Route Game

Evolving With the Times

Distributed gaming is one of the growth areas of the casino industry, as more new states look at video lottery terminals in bars and Nevada’s slot routes remain strong.

Connie Jones

60 Table Games Ace in the Hole Roger Snow

By Chris Sieroty

DEPARTMENTS

30 The Crowded East The quest of the Mashantucket Pequot and Mohegan tribes to place a satellite casino in Connecticut has created a legal war with MGM Resorts.

By Dave Palermo

48 Software Solutions Business software is helping casinos maximize profit through pricing optimization, tablet-assisted service and other innovations.

By Dave Bontempo

6

The Agenda

8

By the Numbers

10 5 Questions 16 AGEM Page 52 Emerging Leaders

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

MGM Springfield in Massachusetts

36 The AML Score Casinos are natural targets for money laundering, but the industry has stepped up its anti-money laundering safeguards.

By Marjorie Preston

4

Global Gaming Business MARCH 2017

With SaskGaming’s Jada Yee, Forest County Potawatomi Gaming Commission’s Stephen Maldonado, and Chumash Casino Resort’s Michael Armenta

56 Frankly Speaking

40 The Affiliate Game

57 Cutting Edge

Commonplace in Europe, the use of affiliates to steer players to online gaming sites is growing in the U.S., despite limited legal iGaming.

58 New Game Review

By Steve Ruddock

62 Goods & Services 65 People 66 Casino Communications

44 iGames News Roundup

With Jonathan Jossel, CEO, Plaza Hotel & Casino

Meet the Reel Star!

J43

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To learn more, contact your Scientific Games sales representative or visit www.SGgaming.com

© 2017 Scientific Games Corporation. All rights reserved.

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THE AGENDA

Grow We Must

Vol. 16 • No. 3 • March 2017 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

or those of you who think that growth in the gaming industry is over, I suggest you simply take a look at some of the incredible opportunities opening up in places that have been underpenetrated until today.

And we’ll start where we’ve started over the last decade, Asia. The expansion in Macau is almost done, as the new Cotai properties have opened one by one over the last year, with Wynn Palace and the Parisian opening within weeks of each other. Still to go is the MGM Cotai property in August, and later on, the SJM Lisboa Palace that is slated for sometime in 2019.

And maybe that’s the date we can expect to get shovels in the ground in Japan. While gaming was legalized there late last year, there are still some legislative and business hurdles to overcome. The enabling legislation—regulatory structure, bidding process, locations—will take at least a year to complete, and then it’s uncertain how long the bidding will take. It’s almost a lock, however, that any foreign company will need to have a Japanese partner to enter that process, so it will undoubtedly be years before that is completed.

And now that Japan is gearing up, you have to question whether the Korean government will respond by allowing locals to gamble in the casinos in that country. Mohegan Sun will join with a local partner to develop a multibillion-dollar project adjacent to the Incheon Airport, and the ability of locals to gamble would certainly enhance that development.

Vietnam just stepped up to the plate in the last few months by passing legislation that allows a test period to evaluate gambling by Vietnamese citizens.

Professor Augustine Vinh explains the details on page 10, but it appears that there will be substantial growth of gaming in Vietnam, and maybe a little contraction in Cambodia, particularly along the border between the two countries.

The Philippines is just completing—against all odds—Entertainment City in Manila, where four multibillion-dollar resorts will operate side by side.

Okada is the third to open (after Solaire and City of Dreams Manila), with only a project led by Genting yet to debut. And there are discussions going on to add additional casinos outside of Manila in other beautiful areas of the country.

You might think Australia is saturated by gam-

F

6

Global Gaming Business MARCH 2017

ing, but no one told the people in Queensland, where a major resort by Star Entertainment in Brisbane, and a second on the Gold Coast by the Chinese company ASF are on the drawing boards.

And of course, Crown Resorts will build a huge VIP casino in Sydney’s Barangaroo area, along with the nation’s tallest building, a hotel expansion to Crown’s Melbourne project.

In Europe, a consortium of Hard Rock and Melco will develop a 400-room, five-star integrated resort on the island of Cyprus, putting 200 million people within an hour’s flight of this development.

And while Spain has seen lots of starts and stops for IR projects, it appears a true mixed-use development is getting traction, as proposed by the Cordish Companies, owners of Maryland Live! outside of Baltimore, and lots of urban developments across the U.S. Russian gaming is a mixed bag. While Melco’s Tigre de Cristal has been a roaring success near Vladivostok, a recent decision that quintupled gaming taxes overnight in Russia demonstrates yet again what a risk it is to operate casinos in a Communist country. The government already decided to shift one already-operating gaming zone to another region (the former Olympic region of Sochi), effectively destroying several casinos.

Another risky place to invest in casinos would be Central and South America. Unstable governments and economic chaos are constant threats, but the big prize appears to be Brazil. Even in the midst of both of those threats, gaming legislation is creeping along, and there will be major casino companies involved should it pass.

The U.S. has a few regions that are underpenetrated. One, Georgia, is actively courting casino legislation to fix an ailing educational program.

Casinos in Atlanta would be a home run, and even one by the beautiful city of Savannah would be very successful. Texas is also underserved, but Texas casinos would severely damage operations in Oklahoma and western Louisiana. And New York will soon start a process for casino bids in the metropolitan New York City area.

So fear not, those who preach doom and gloom for casino growth. There is still room to move, and then we can start on the process of refurbishing what we started 40 years ago.

John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Blaine Graboyes | Mick Ingersoll Connie Jones | Roger Snow Contributing Editors Dave Bontempo | Dave Palermo twitter: @DavePalermo4 Erika Meeske | Marjorie Preston Steve Ruddock twitter: @SteveRuddock Chris Sieroty | Angela Slovachek | William Sokolic

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

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

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

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor.

Copyright 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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p. 8 numbers mar:Layout 1 2/16/17 10:18 AM Page 8

BY THE

NUMBERS

GamblinG in Oz a

ccording to a new report issued by H2 Gambling Capital, Australians are the biggest individual losers when gambling.

Residents Down Under lost almost US$1,000 per person according the report, published in the Economist magazine.

Gambling activity is defined as non-casino gaming machines, casinos, betting (sports betting, racetracks, etc.), lottery and online wagering.

Country

Per Capita Loss

Total Loss Per Country (B$)

Australia Australia

$990

$18.3

Singapore Singapore

$675

$5.9

Ireland Ireland

$520

$2.2

Finland Finland

$480

$2.1

U.S. U.S.

$480

$116.9

Zealand $460 NewNew Zealand

$1.6

Canada Canada

$430

$12.4

Norway Norway

$380

$1.6

Italy Italy

$360

$19.0

UK U.K.

$330

$18.0

Iceland Iceland

$320

$.10

Cyprus Cyprus

$310

$.20

Sweden Sweden

$300

$2.4

Denmark Denmark

$280

$1.3

Malta Malta

$240

$0.1

$0

$250

$500

$750

While gamblers in Australia lost the most per capita, U.S. gamblers were the biggest losers overall, down almost $117 billion as a nation.

$1,000

Untitled 1

Ship Share

T

he measurement of the popularity of games from specific slot manufacturers can be found each quarter in the Eilers-Fantini Slot Survey, which compiles responses from a wide array of slot executives from around the world. This “ship share� measurement is derived from the kinds of machines these executives have purchased for their establishments every six months, and includes the slot route operations in many states and countries. For a copy of the survey, contact Fantini Research at 1-866-683-4557 or online at FantiniResearch.com.

8

Global Gaming Business MARCH 2017

Survey Ship Share - Games Sold

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NUTSHELL

“They

5Questions

Professor Augustine Vinh President and CEO, Stellar Management Corp.

ugustine Vinh has over 30 years of professional, technical and management experience in the AsianAmanagement, Pacific, European and West African regions, with a concentration in economic development strategies, regulatory and institutional reforms, bilateral, multi-lateral project finance and banking finance. For many years, Vinh has been a senior adviser in Asia for many projects of World Bank, including China, the Philippines, Vietnam, Mongolia, Laos and others. He spoke with GGB Publisher Roger Gros from Hanoi in February. For a full transcript of this interview, visit GGBMagazine.com.

1 2 3

GGB: You were the first to report some of the details of the decree on citizens entering casinos.

How long did the government take to research the facts, and how did they do it?

The country’s top leadership commissioned, in June 2013, a confidential research study to look at the possibility of allowing local Vietnamese to enter two designated integrated resorts, one on the Van Don Island, Ha Long Bay in the north, and the other on Phu Quoc Island in the south. The positive impacts of the study are the basis for the ruling Communist Party to issue, in September 2016, a decision to allow locals to enter the above two casinos on a three-year trial basis.

Did you play a role in helping the government decide about dropping the locals gambling ban?

I was actively involved in providing the various government agencies with studies, unbiased opinions, comments and inputs to the gaming draft decrees. I spearheaded the three-year trial proposal for local Vietnamese players and lobbied for its ratification.

Where once the government was requiring a $4 billion investment, that has now been adjusted to $2 billion. What is the reason for that change?

The government, in the early stage, probably wanted to replicate the experience of Singapore in attracting major investors for the large-scale gaming projects, which called for an investment of about $4 billion.

After various unsuccessful attempts and after reviews of investors’ recommendations, the government has decided to lower the initial capital investment to a more reasonable amount of $2 billion.

Each year thousands of local Vietnamese travel to neighboring countries to gamble, taking with them millions of dollars. By allowing locals to play and by lowering the initial investment amount, the government hopes to create a more attractive investment climate to bring in strategic investors and, in the same time, allow locals with gaming and entertainment activities to keep their money in the country.

The entrance fee as set by the decree, about $45 per entry and $1,100 for a monthly pass, is reasonable to a lot of local players, considering the betting amounts in local underground gambling dens.

There were two casinos that seem to be approved to accept locals, but that has changed. Some reports suggest that Grand Ho Tram may also participate. What is your impression about the casinos that will be included in the test?

4 5

The ruling party has designated the two integrated resorts mentioned previously to accept Vietnamese on a three-year trial basis. The Ministry of Finance followed suit and drafted a gaming decree, which reflected the party’s decision. The prime minister’s office, at the last minute, to avoid any impression of potential preferential treatment, has removed the names of these two sites from the final decree. The language of the decree gives, however, the ruling party the final say on either keeping these two sites or adding a new location, e.g., Ho Tram, for local Vietnamese.

Two of the casinos prominently mentioned are not even under construction yet. How does that impact the test? Does it start when the casinos open or does it start on a specific date?

The construction of the Van Don integrated resort progresses smoothly. The airport runway is being finished and the land for the casino sites is being cleared. The Phu Quoc integrated resort is being completed, and the opening date is tentatively scheduled late this summer. The three-year trial basis will kick in whenever the first integrated resort opens its door to the public. The government, at the end of the trial, will be able to collect information on the players—for example, demographic data, background, gaming patterns, propensity to play, betting amounts, etc.

10

Global Gaming Business MARCH 2017

Said It”

“What must not be overshadowed in a debate about dollars and cents is the importance of consumer protections that regulated online gaming would bring. While Pennsylvania delays action, a black market that harms and takes advantage of consumers will continue to exist.

Last October, another offshore site shut down.

Because there is no oversight in Pennsylvania, there is nothing affected players can do to hold sites accountable or get their money back.”

—John Pappas, Poker Players Alliance executive director, in an op-ed piece for Philly.com on Pennsylvania’s efforts to pass online gaming legislation

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March 21-23: ASEAN Gaming Summit, Solaire Resort & Casino, Manila, Philippines. Produced

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March 27-29: iGaming Asia Congress, Grand Hyatt, Macau. Produced by Beacon Events.

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April 3-5: Eastern Leadership Development Conference, SugarHouse Casino, Philadelphia, Pennsylvania. Produced by Global Gaming Women. For more information, visit ggwscholarships.fluidreview.com.

April 10-13: Indian Gaming 2017, San Diego Convention Center, San Diego, California.

Produced by the National Indian Gaming Association. For more information, visit IndianGaming.org.

April 26-28: GiGSE 2017, San Diego, California.

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p. 12 aga march:Layout 1 2/15/17 9:37 PM Page 12

AMERICAN GAMING ASSOCIATION

Making the Most

How states can maximize gaming’s many benefits

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Global Gaming Business MARCH 2017

By Geoff Freeman, President & CEO, American Gaming Association

arlier this year, I had the opportunity to address the Louisiana Riverboat Economic Development and Gaming Task Force. The formation of this task force is an astute acknowledgment the public policies that guided gaming’s expansion beyond Nevada and New Jersey are not necessarily the same policies that will empower the industry to succeed in today’s ultra-competitive environment, where gaming is now viewed as a mainstream industry.

My comments in Louisiana highlighted key principles that could apply to each of the 40 gaming states to allow the industry to create more jobs, generate more tax revenue and reinvest in communities where we do business. We believe three elements should define any regulatory regime.

First is to streamline the regulatory process.

Right now, the regulatory process is arduous. In Louisiana, for example, it can take almost a year for an operator to get approval for a new game.

However, the process is smoother in other states.

New Jersey has rolled out a reform called “New Jersey First.” Under this approach, the state Division of Gaming Enforcement guarantees that new gaming products submitted to New Jersey before or simultaneously with any other state will be tested and put on the gaming floor in no more than 14 days. This helps casinos adapt more rapidly to changing technology and compete more effectively against other entertainment options.

Second is to empower regulators and the industry to act. The goal here should be to establish principles, not prescriptions. Legislators should define the broad principles for gaming regulation, not heap mandates on regulators that tie their hands, ignore their expertise and act as barriers to change.

Massachusetts Gaming Commission Chairman Stephen Crosby has proposed just such an approach in his state so regulators can adapt more quickly as new types of gaming enter the market—like eSports and daily fantasy sports. Under this proposal, the legislature would outline funda-

mental values and regulatory priorities. Regulators would have wide latitude to apply these principles to new games, rather than waiting for legislators to craft entirely new bills with detailed new rules every time a different game or technology comes along.

Other states are finding that a principlesbased approach allows high regulatory standards to be achieved, while giving the industry the freedom to choose the path that’s best.

Finally, states must treat the casino gaming industry as a trusted partner, not an adversary.

Maryland regulators, for example, have established a formal annual comment process. State casino operators are invited to identify regulatory reforms or fixes that can have an immediate impact on improving the gaming environment. Regulators have told us that this process builds trust and helps regulators gain perspective on day-today challenges running casinos. Regulators don’t implement every suggestion, but they have adopted many.

It’s turned into a win-win solution that helps the industry operate more efficiently and sustains the flow of much-needed tax revenue for Maryland communities. Many of these are very focused and technical. But taken together, they create a constant drive for greater operational and business efficiency as well as more flexibility on the casino floor.

AGA and gaming states around the country share a common goal. We both want a vibrant gaming industry that can reach its full potential when it comes to generating economic growth, providing jobs and contributing tax revenue. Task forces like the one in Louisiana can be a model for the rest of the U.S. Through progressive regulations, states can position themselves to be flexible enough, nimble enough and adaptable enough to allow everyone to share in the benefits our industry provides.

Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.

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FANTINI’S FINANCE

Good For Gaming?

Donald Trump’s impact on gaming and positive signs for 2017

W

ill Donald Trump be good for gaming?

That question has been raised repeatedly in recent weeks. Usually, it has been raised by the general business press, with stories premised on the fact that Trump is a former casino owner, so gaming now has one of its own in power.

Others attempting to answer the question are equity analysts. They also have been positively biased, citing what they expect to be an investor and business-friendly administration.

Thus, it might have come as a bit of a shock when Attorney General Jeff Sessions suggested he might pull the rug out from under online gaming.

Specifically, Sessions opposed the decision by the Obama administration’s Department of Justice that the 1961 Wire Act only bans sports betting over telephone lines, and that he intends to review that decision.

It might be hard to put the online genie back in the bottle. After all, there are numerous congressional delegations representing states that now offer online gambling, including state lotteries. That is a political reality the Trump administration will have to face.

But Sessions might try to do it. And, even if he doesn’t, it shows that government risk continues for the gaming industry.

One of the fallacies underlying the general business press assumptions about Trump is that he’s a gaming guy.

Trump never really was a gaming guy, even though he owned several casinos. He was, and by temperament remains, a feisty, independent real estate developer.

Still, Trump has the support of Steve Wynn and Sheldon Adelson.

One suspects that if Trump leans towards an anti-gaming policy, he’ll get a phone call from one or both and will respect their viewpoints.

Of course, that might not help online gamers, with Adelson as the nation’s highest-profile opponent of internet gaming and Wynn biased against it. That’s where congressional delegations defending their states come in.

14

Global Gaming Business MARCH 2017

By Frank Fantini

In speculating about Trump, there is one possible concern that isn’t mentioned—Macau.

If Trump alienates the national Chinese government, the boys in Beijing might decide to send the message to the compliant government of Macau that American billionaires, especially Trump allies, shouldn’t make so much money from Chinese gamblers.

And with casino concessions expiring in 2020 and 2022, the heat could be on.

Of course, bulls might dismiss that possibility.

But, as we correctly warned in this space before, the Communist creed is anti-gambling, and Macau casino operators always are at risk. Those warnings proved true in recent years when the national government’s corruption campaign smashed the sky’s-the-limit illusions of casino investors.

For now, we don’t know how Trump will handle gaming issues, or issues that affect gaming.

We do know that the modern casino industry is influenced by the overall economy. Today, that economy is healthy. But there’s a caveat—the recovery is getting long in the tooth, and no one yet has repealed the business cycle. And that is a reality Trump will have to deal with, too.

The year 2017 looks like it is starting out positive for casino and supplier companies.

POSITIVE HINTS FOR 2017 The year 2017 looks like it is starting out positive for casino and supplier companies.

On the supplier side, the Eilers-Fantini Quarterly Slot Survey shows both North American slot sales and leases gaining ground.

On the casino side, early reporters of December results were positive.

Wynn surprised with a strong report out of Macau as the new Wynn Palace grew the market and, given the company’s long history of slow ramping-up of new properties, suggests more good news to come.

Penn National likewise reported itself bullish

about the new year, which could be a harbinger for other regional companies, such as Eldorado and Boyd.

Back to suppliers, the Eilers-Fantini survey shows that casino managers plan to replace 7.6 percent of the slot machines on their floor, in a continuation of a slight warming in the long-cold replacement cycle.

And the number of leased machines grew for the seventh straight quarter.

Both figures might be an indication that casinos are finally loosening purse strings after a long period of conservative spending coming out of the Great Recession.

Another trend worth noting is that the slot machine market continues to be more competitive, which is contrary to what many observers believed when IGT and Scientific Games completed their rounds of mergers.

In the past quarter, IGT still led, but only at 27 percent. A surging Aristocrat followed at 23 percent. Sci Games came in at 22 percent, and Konami 12 percent.

Smaller companies accounted for 16 percent of sales, including Everi, reporting a healthy 5 percent share.

Those numbers are a long way from the days when IGT had nearly 70 percent share and Bally, WMS and Aristocrat fought over the rest.

It should be noted that the Eilers-Fantini survey has a record of accuracy that is charted in the 55-page report. One reason for that accuracy is the sheer size of the participation—567 casinos globally operating more than a 506,000 machines, and casinos representing 37.5 percent of all North American slot machines.

(Note: The survey is available by contacting Robin Coventry at 302-730-2793 or at rcoventry@fantiniresearch.com.)

The bottom line is that conditions are improving for gaming equipment manufacturers, but competition is greater than ever.

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 AGEM MEMBER PROFILE

CG Technology is an innovative gaming tech-

nology solutions provider for gaming, race and sports wagering. CG Technology specializes in providing secure, scalable, mobile technology and risk management solutions to integrated resorts and gaming partners. The technology solutions are designed to meet the highest standards of regulatory compliance, transactional security and customer experience. The products include Android- and Apple-compatible applications for sports wagering and real-money mobile casino gaming, as well as CG Technology’s state-of-theart account-based sports wagering system.

New Products, Technologies or Services CG Technology has consistently been a leader in sports wagering. CGT’s In-Running product was significantly enhanced in 2016, launched at the beginning of the fall football season, and now offers lines on select games, play-by-play, to users of the CG Sports mobile apps. In-Running wagering gives sports fans the ability to place bets while the game is in progress on up to 400 games each month. Total points, point spreads, sides and money lines are just a few examples of the types of wagers which can be placed during the games, via CG Technology’s sports betting application. For sports fans, In-Running offers additional wagering options and provides for non-stop action. The sports betting app is only available within the state of Nevada; the company utilizes leading-edge geo-fencing technology to ensure that customers are located within Nevada, and that mobile wagering transactions are fast and secure.

In April 2017, CG Technology will launch the latest upgrade to the CG Sports mobile apps, for both Android and Apple platforms. The new apps are packed with new features and customer experience improvements, and the upgrades will further cement CG Technology’s position as the leader in mobile sports wagering in Nevada.

For more information, visit cgtglobal.com.

FEBRUARY 2017 KEY BOARD OF DIRECTORS ACTIONS • The AGEM Board of Directors approved a proposal from respected Las Vegas firm Applied Analysis to conduct a complete economic impact study of the global supplier sector. AGEM last released an economic impact study in 2014 from 2013 data, in conjunction with the American Gaming Association’s “State of the States” report. This update will analyze the impact of all of the consolidation in the supplier sector over the past three years, and will be released as a stand-alone report by the end of April.

The report will also include a subset focused on the impact of the supplier sector on Nevada’s overall economy.

• AGEM has been approached by the Las Vegas Metro Chamber of Commerce about collaborating on issues that may be raised during the current Nevada legislative session, and possibly federal issues in Washington as well. The discussed plan involves the chamber hosting representatives from the gaming technology sector to identify common goals and discuss ways to collaborate in an organized fashion going forward.

• AGEM Mexico Committee Chairman Carlos Carrion of Aristocrat recently had a one-on-one meeting with Luis Felipe Cangas, the head of Mexico’s regulatory body, SEGOB, that has led to discussions about a larger meeting with the entire supplier group in Mexico City and the potential for updated machine certification requirements that AGEM has been seeking for years.

• AGEM continues to give back to the industry with the following contributions to the following events: G2E Asia President’s Reception, May 16-18, Macau, $25,000; International Association of

Gaming Advisors (IAGA) International Gaming Summit, May 30-June 1, New York City, Sponsor ship, $5,000; Western Indian Gaming Conference Sponsorship, Morongo Casino, February 7-9, $5,000; Go Red For Woman Lunch Sponsorship, Aria Las Vegas, March 2, $5,000; Midwest ConferAssociation of Gaming Equipment Manufacturers January 2017 ence on Problem Gambling and Substance Abuse Sponsorship, June 21-23, Kansas City, $5,000; he AGEM Index began 2017 on a positive note, Selected positive contributors to the January 2017 AGEM continuingU.K. the momentum from 2016. The Index included the following: Annual GamCare Contribution, £5,000.

composite index stood at 330.14 points at the

close of the first month of 2017, which UPCOMING EVENTS represents an increase of 8.87 points, or 2.8 percent,

Scientific Games Corporation (SGMS) contributed

4.09 points due to a 21.43 percent increase in stock

price to $17.00. compared to December 2016.

•when Nevada Legislative Reception, AprilThe5, AGEM CarsonIndex City reported a year-over-year increase for the 16th

International month,Tradeshow rising 141.7& points, or 75.2 percent, •consecutive Indian Gaming Convention (NIGA), April 10-13, San Gaming Diego

Technology (IGT) reported a 3.49 percent increase in stock price, rising to $26.41 and contributing 2.37 points.

when compared to January 2016.

AGEMindex

During the latest period, seven of the 13 global gaming

Everi Holdings (EVRI) contributed 0.90 points due to equipment manufacturers reported month-to-month a 35.94 percent increase in stock price to $2.95. increases in stock price, with two up by more than 10 The AGEM began 2017 on adecreases positive note, continuing the momentum from 2016. The composite percent.

Six Index manufacturers reported in stock Selected negative contributors the following: price during month with one at experiencing double digitmonth index stoodthe at 330.14 points the close of the first of 2017, which representsincluded an increase of 8.87 losses. points, or 2.8 percent, when compared to December 2016.

The AGEM a year-over-year in With a stockIndex price reported of AU$1.81 (-14.22 percent), Ainsworth Game Technology (ASX: AGI) contributed crease for thestock 16thmarkets consecutive month, 141.7inpoints, or 75.2 percent, when compared to January The broader continued to rising gain value negative 0.57 points. early 2017. The S&P 500 reported a month-to-month

2016. During the latest period, seven of the 13 global gaming equipment manufacturers reported monthincrease of 1.8 percent, rising to 2,278.87. Additionally,

Konami GroupSix(TYO: 9766) contributed to-month increases in stock price, with two0.5uppercent by more than 10 percent. manufacturers reportednegative dethe Dow Jones Industrial Average increased 0.53 points to the index due to a 3.73 percent to 19,864.09, theduring NASDAQ 4.3 one percent creases in stockwhile price theincreased month with experiencing double-digit losses.

The broader stock decline in stock price to ¥4,520. during the period to 5,614.79. markets continued to gain value in early 2017. The S&P 500 reported a month-to-month increase of 1.8

With a stock price of $9.73 0.5 (-6.08 percent) percent, rising to 2,278.87. Additionally, the Dow Jones Industrial Average increased percent to Agilysys (AGYS) contributed negative 0.18 points.

19,864.09, while the NASDAQ increased 4.3 percent during the period to 5,614.79.

Exchange: Symbol (Currency)

Percent Change Prior Period Prior Year

Index Contribution

Nasdaq: AGYS (US$)

9.73

10.36

9.90

(6.08)

(1.72)

(0.18)

Ainsworth Game Technology

ASX: AGI (AU$)

1.81

2.11

2.22

(14.22)

(18.47)

(0.57)

Aristocrat Technologies

ASX: ALL (AU$)

15.14

15.50

10.25

(2.32)

47.71

2.62

Taiwan: 3064 (NT$)

25.60

27.20

19.60

(5.88)

30.61

(0.02)

Agilysys

Astro Corp.

NYSE: CR (US$)

72.04

72.12

47.76

(0.11)

50.84

(0.06)

NYSE: EVRI (US$)

2.95

2.17

2.81

35.94

4.98

0.90

OTCMKTS: GLXZ (US$)

0.60

0.58

0.13

3.45

361.54

0.01

Nasdaq: GPIC (US$)

11.88

11.82

9.20

0.51

29.13

0.01

NYSE: IGT (US$)

26.41

25.52

14.47

3.49

82.52

2.37

1.01

1.19

6.93

2,766

(3.73)

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

Stock Price At Month End Jan-17 Dec-16 Jan-16

%

B

% E &B &

Konami Corp.

Scientific Games Corporation Transact Technologies

B %

@

E>

% E

5&6

TYO: 9766 ( )

4,520

4,695

Nasdaq: SGMS (US$)

17.00

14.00

5.92

21.43

Nasdaq: TACT (US$)

6.90

6.60

7.73

4.55

0.19

63.41

(0.53)

187.16

4.09

0.03

(9.24)

(10.74)

Change in Index Value

8.87

AGEM Index Value: December 2016

321.28

AGEM Index Value: January 2017

330.14

ww.AGEM.or AGEM is an international trade association representing manufacturers of electronic gamThe AGEM Index is published monthly ing

by Association of Gaminglotteries Equipment Manufacturers (AGEM) andgaming Applied Analysis © 2017 devices, systems, and components for the industry.| Copyright The association

works to further the interests of gaming equipment manufacturers throughout the world.

Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization.

Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.

16

Global Gaming Business MARCH 2017

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p. 18 slot routes:Layout 1 2/15/17 9:39 PM Page 18

e t u o R e h t g n i d i R

Distributed gaming—the next big trend

By Chris Sieroty Golden’s newest PT’s Pub on Lake Mead Drive in Las Vegas features a total of 16 machines, the maximum allowed at that location

A

Democratic state representative from one of the oldest towns in the United States says he’s putting together a bill to license some 38,000 additional gaming machines that could generate hundreds of millions in additional tax revenues.

Bars and restaurants like the Horse Inn or J.B. Dawson’s in Lancaster, Pennsylvania, incorporated in 1742, could offer slot machines—three of them, ready to play between sips of craft beer or bites of a gourmet hamburger.

Pennsylvania has about a $3 billion budget deficit that lawmakers are looking to close by the end of June with the help of several wide-ranging gambling bills.

Rep. Mike Sturla, from Lancaster, believes video gaming terminals (VGTs), a profitable form of gambling, could help close that budget gap by licensing bars and other establishments to allow slot machine-style gambling.

Sturla’s proposal would permit up to three slot-like video gaming terminals in each of some 12,000 Pennsylvania establishments that hold liquor licenses.

“Currently, there are some 40,000 illegal machines in operation in Pennsylvania,” Sturla says. “This has been a practice that has been going on for 40 years or more. It’s time to legalize these machines so the state and 18

Global Gaming Business MARCH 2017

local communities can benefit from them.”

Sturla says there would be strict penalties to dissuade anyone from operating an illegal terminal. He’s proposing a $10,000 fine and the loss of a liquor license for any establishment conducting illegal gambling.

“It’s not illegal to have a machine in your bar, but it is illegal to get a payout,” he says. “At this point in time, I’m going to make sure that all VGTs that are plugged in are legal.”

Slot Revenue Flat According to the Pennsylvania Gaming Control Board, slot machine revenue in 2016 was $2.36 billion, about $5 million less than the year before. Table game revenue increased $41 million year-over-year to $853.2 million.

Taxed revenue for 2016 was $1.4 billion, gaming regulators say.

Sturla expects to introduce his bill soon. He admits it wouldn’t completely solve the budget shortfall, but it could go a long way to helping lawmakers reach a deal.

But, VGTs do have the power to generate millions of dollars in revenue.

Pennsylvania’s casino industry has fought all proposals to expand slotstyle gaming into bars and restaurants.

The state passed a casino law in 2004, and the first casino opened in 2006. Today, six land-based casinos and six racinos operate in the state, ac-

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Rep. Mike Sturla has introduced a bill in the Pennsylvania legislature to install 38,000 slot machines at bars and restaurants across the state

Golden Opportunity cording to state gaming records.

Eric Schippers, vice president of public affairs, says Penn National Gaming looks at the budget situation in terms of “defending our existing investment and the 2,300 jobs that we have at our Hollywood casino, as well as look at it opportunistically to see whether we can get gaming out of this. Frankly, there has been a lot of discussion around VGTs, so we’ve been working potential models that would work for us—protect our investment and allow some upside.”

Sturla expects opposition from the state’s casino operators, who have compared VGTs to a convenience-gaming market that would erode their business and the tax revenues they pay.

“We are limiting it to establishments with alcohol,” Sturla says. “There are still dry counties with no liquor or gambling in Pennsylvania. Nobody can complain that I’m cannibalizing their business.”

Frank Fantini, CEO of Fantini Research, disagrees slightly.

“Cannibalization would have to be a concern if there are 30,000 to 40,000 machines,” Fantini says. “However, in many cases the VGTs would be replacing gray machines, so the case for cannibalization would not be as clear.

“In addition, casinos offer a whole different experience and attraction than a social club, veterans hall or neighborhood bar,” Fantini says.

Sturla says the exact provisions are still being worked out, but he expects an initial fee to obtain a license and a division of the tax revenue among the state, municipality, hosting venue and the VGT or distributed gaming company.

As Sturla completes the bill, he remembers his defeat in last year’s legislature.

“The proposal last year would have passed if not for one thing—local municipalities didn’t get a cut of it,” Sturla says. “Local municipalities will get a cut of the revenue in our bill.

“My motivation to write this bill is it’s an additional source of revenue.”

Sturla is considering sending 33 percent of the annual win to the state and between 5 percent and 10 percent to local municipalities.

“That’s the part we are still working on,” Sturla says.

If VGTs were legalized, tax revenues are estimated at $300 million.

“Pennsylvania isn’t so much unique as it is big,” Fantini says. “The estimate is that adopting slot routes similar to Illinois could result in a market of 30,000 to 40,000 slot machines. That’s like adding 15 to 20 new major casinos.

“Obviously, it opens a big new market for gaming equipment companies.”

One of those companies is Las Vegas-based Golden Entertainment Inc. An executive with Nevada’s largest distributed gaming machine operator says he sees opportunities in Pennsylvania as well as other markets.

“It’s a very attractive market,” says Blake Sartini II, senior vice president of distributed gaming for Golden Entertainment. “We will keep ourselves updated with what’s going on. When the time is right, we’ll be ready to jump into that market.”

Under Sturla’s VGT plan, each licensed liquor establishment could apply to install up to three machines per license. He expects an expansion of about 1,000 machines per year, with a total reaching more than 38,000.

“Three machines is a good place to start,” Sturla says.

Besides Pennsylvania, Indiana is considering legislation to legalize video slot machines, as bars, local taverns and veterans groups look for new sources of revenue.

The Video Gaming Coalition argues VGTs would generate $165 million annually in new tax revenue, with revenue going to the state and local governments.

The coalition includes the Indiana Amusement and Music Operators Association, Indiana Licensed Beverage Association, and Indiana Bowling Centers Association.

In Indiana, the games would be limited to $2 wagers at most, with a maximum payout of $599. According to the Video Gaming Coalition, the money raised by VGTs would help pay for infrastructure improvements.

Sturla says Illinois has demonstrated the potential of legalizing VGTs. “Illinois is our model,” he says. “We want to learn from their experience so when we project a number it’s accurate.”

Saturated Market Illinois first legalized VGTs in 2009, permitting licensed establishments to have up to five terminals if they also have a liquor license.

But VGTs were not appearing in bars and taverns until 2012, due to the Illinois Gaming Board taking three years to evaluate applications and select a computer system to monitor all of the state’s terminals.

Illinois terminals came online in September 2012, and now there are 24,841. In 2016, they generated $332.4 million in taxes, with the money going to both the state and local governments.

That’s without terminals being legal in Chicago, but they’re available at 5,727 locations.

The first revenue report issued for September 2012 showed 61 machines in 13 outlets with $1.07 million played, and the net amount kept by

MARCH 2017 www.ggbmagazine.com

19

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Dotty’s, which has 175 operations in Nevada, Oregon and Montana, has planned 150 locations in Illinois

“Everywhere you go, the fundamentals of the market are good. We just need to find the right opportunity.”

—Blake Sartini II, senior vice president of distributed gaming for Golden Entertainment, on the potential for the Illinois market

bars and taverns at $90,030. Total taxes for the first month were $27,016, according to data compiled by the state gaming board.

Illinois gaming regulators reported VGTs did $1.1 billion in total revenue last year, topping the $1 billion mark for the first time.

“Illinois is the densest population, which makes it an attractive VGT market,” says Sartini.

Sartini admits there were some obstacles to being successful in Illinois, including betting limits and win limits.

“It’s attractive,” Sartini says. “Everywhere you go, the fundamentals of the market are good. We just need to find the right opportunity.”

Asked if Illinois was a market that lent itself to organic growth or an acquisition, Sartini says Golden Entertainment would look for an acquisition.

“We are interested,” he says.

VGTs are also more prevalent these days than slot machines in Illinois, with the state’s 10 casinos hosting 10,905 machines.

Casino operators believe the market is saturated as a result of VGTs. “Casinos in Illinois have made the claim that their low rate of growth is at least partly attributable to the proliferation of VGTs,” Fantini says.

When asked how casinos can stem the loss of revenues from VGT expansion, Illinois Gaming Association President Tom Swoik says that was a tough question to answer.

“I believe it is in our best interests to continue promoting our casinos as entertainment venues, not just a place to gamble,” Swoik says. “We have four- and five-star restaurants, hotels, bands, concerts and staff trained to make your casino experience wonderful.”

The Illinois Casino Gaming Association represents eight of the 10 casino operators in Illinois.

“An additional concern again this year is legislation that had been introduced to add six new casinos and allow slots at four racetracks to an already saturated market,” Swoik says.

A recent report by the Illinois Commission on Government Forecasting and Accountability supported the casinos’ position, noting that adjusted gross revenue receipts—what was taken in, minus what was paid out—of 20

Global Gaming Business MARCH 2017

the five casinos surrounding the Chicago metro area had fallen by a combined 9.3 percent between 2012 and 2016.

Video gambling has “no doubt has been a significant contributor” to the decrease, according to the report. The state’s indoor smoking ban and the recession were also factors in the decline, the report says.

Illinois continues to operate without a state budget. One of the budget proposals being offered would add six new casinos to the 10 already operating in the state, including one casino in Chicago.

The availability of VGTs in the suburbs “has diminished the revenue potential” a Chicago-based casino once had prior to the rollout of VGTs, the report found.

Machines in Illinois can be found in bars, restaurants, taverns, gas stations, truck stops and so-called casino cafes.

VGT operators, such as Dotty’s or Pocket Aces Gaming, were originally prohibited from having a substantial interest in more than 5 percent of the machines licensed by the Illinois gaming regulators.

However, that restriction was overturned in 2010.

That decision opened the market to Dotty’s and other distributed gaming or slot route companies to expand.

Big Business The lucrative business also attracted even larger gaming companies to Illinois.

Two years ago, Penn National became the first publicly traded gaming company to acquire a slot route operator in Illinois. Penn also owns the Hollywood casinos in Aurora and Joliet.

Penn acquired Prairie State Gaming, an operator of 1,100 terminals across a network of 270 different bars and retail outlets statewide.

In its 2016 earnings report, Penn National noted that it did a couple of tuck-in acquisitions with its video gaming terminal business.

Penn National has not disclosed the terms of the acquisitions.

“The multiple is something that we have not provided in the past,” says Jay Snowden, Penn National’s chief operating officer. “I think it’s fair to say

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p. 18 slot routes:Layout 1 2/15/17 9:39 PM Page 22

Golden Entertainment’s Montana route features mini slot casinos

that they were accretive transactions. The size was approximately $1.5 million of EBITDA.” Meanwhile, Delaware North, owner of Jumer’s Casino in Rock Island, in May 2016 bought GEM (Gaming & Entertainment Management) and its 1,800 VGTs at 438 sites in Illinois. Terms of that deal were not disclosed publicly either.

Penn and Delaware North now control more than 13 percent of the VGT sites statewide.

The popular form of distributed gaming began in Nevada in the 1990s, when businesses with names like PT’s Pub, The Loose Caboose and Jackson’s Bar & Grill offered gambling in a non-casino environment.

But its expansion into Illinois and possibly Pennsylvania has been driven by the economic crisis of 2008, after which states looked at widening their gaming offerings as a way to maintain or even increase their tax revenues.

VGTs have also garnered interest from the casino industry’s largest lobbying group.

“We are studying this issue with our members to determine the best regulatory structure that would complement existing gaming facilities and ensure responsible gaming measures are in place and enforced,” says Sara Rayme, senior vice president of public affairs at the American Gaming Association.

The Nevada Gaming Control Board defines distributed gaming as a “restricted” market where VGTs, video poker or slot machines are placed in non-casino businesses.

Those businesses also include supermarkets and gas stations.

But with the recession now a fading memory for many Nevada residents, is the distributed gaming market healthy?

“Health is relative,” Sartini says. “In the Southern Nevada market, there has been some consolidation. Up north is where the bulk of the growth has taken place.”

Sartini says there are lots of opportunities in Northern Nevada, especially in Reno.

22

Global Gaming Business MARCH 2017

“They have Tesla fever,” Sartini says of the area, which is now home to a battery factory for the innovative automaker. “The Reno area is growing; employment and wages are also growing.”

Other Jurisdictions Active Besides Nevada and Illinois, VGTs can be found in Oregon, South Dakota and Montana.

Golden Entertainment has spent $45 million to enter the Montana gaming market, and has become the state’s second-largest provider of gaming machines.

The company purchased Amusement Services for $25 million and the assets of C. Lohman Games Inc., Rocket Mountain Gaming Inc., and Brandy’s Shoreliner Restaurant in western Montana for $20 million.

Total VGTs in Nevada are about 18,500, with Golden having 41 percent market share, or 7,600 games in 680 locations. Montana: total statewide devices 16,100-plus—Golden has 18 percent market share— with almost 2,900 games in almost 300 locations.

“With their stable economies, we are very bullish on the central and west regions of Montana,” Sartini says. “We are starting to see a little recovery in eastern Montana, which has been sluggish over the last year with the slump in oil prices in the Bakken oil field in North Dakota.”

Sartini attributes the company’s success in Montana to just being a distributed gaming operator, and not a tavern owner.

“I know we just want to be a route operator in Montana,” he says.

“We are the outsider up there.”

Montana has a 15 percent tax on video gaming, applied to the money paid into machines minus the payouts. The money collected goes into the general fund.

Sartini expects a lot more states to begin talking about legalizing distributed gaming over the next five to 10 years, as lawmakers look to raise extra revenues.

Overall, Sartini says opportunities in Illinois are “still to be determined,” while if the opportunity presented itself in Pennsylvania, “we would take a look at it.”

Project1:Layout 1 2/15/17 9:47 PM Page 1

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p. 24 slot floor cover:Layout 1 2/15/17 10:19 PM Page 24

Not Your Father’s Slot Floor

{ T

Casinos are devoting space once reserved for rows of slot machines to new types of game spaces, designed to appeal to the millennials—— and more

By Frank Legato

hey call it Level Up. It looks like an amalgamation of a sports bar, pool hall, amusement arcade, video game room and college frat house. There are hip murals on the wall, an array of video monitors; there are pool tables. There’s beer pong. There’s bubble hockey.

There’s a giant Pac-Man video game.

Oh, and there is gaming, too. It is, after all, in a major Las Vegas Strip casino.

Level Up is the MGM Grand’s answer to the new and persistent call for something different on the gaming floors of commercial casinos. In other words, it’s meant to cater to a massive group of players who might not be enamored with the traditional slot machine. That includes not only the millennials—itself a larger group than the baby boomers, who currently wager the most in casinos—but Gen X and Gen Y. And yes, baby boomers who just want to see something different on the floor.

“We built Level Up at MGM Grand with the intent of not only attracting a millennial customer, but a customer that has a millennial mindset—an individual who considers themselves to be an early adopter,” explains Tom Mikuluch, senior vice president of business development for MGM Resorts International.

“The premise behind the project was to build a space that looks different from what guests are accustomed to with an ‘everyday casino.’

“Yes, Level Up has the common gaming elements, but, through our partnership with Hakassan Group, we also integrated features that we know this specific customer segment appreciates. We wanted to develop an environment that naturally attracts these guests, and has a gaming element naturally mixed into the venue.”

The gaming elements at Level Up are definitely not the traditional casino24

Global Gaming Business MARCH 2017

}

floor fare. There is a version of the Pulse Arena from Interblock which features a group of electronic table games in an ultra-lounge-style setting. Pulse Arena is a multi-game product with live DJs, dealers, and both hybrid and automatic ETGs presented in branded or non-branded “environments,” which can easily adjust to various demographics.

According to Mikuluch, the ETGs in the Pulse Arena at Level Up are currently available with completely automated games as the casino goes through the approval process for live games in an arena-style setting.

Other games slated for the area include the newest skill-based offerings, first from Gamblit Gaming, which specializes in the kinds of games people may play on their mobile phones. Mikuluch says Level Up will soon feature Gamblit Model G units—four-player tables built for community play. Players join or compete in puzzle-based and other mobile-style games, or can select head-to-head poker matchups, tactile fruit-slashing games, proprietary Gamblit card games and other offerings.

“We are excited to see this unique product introduced in Level Up,” Mikuluch says, “as these games received a lot of attention at G2E. We’re interested to see how our guests react upon installation.”

On the other side of the country, the Tropicana in Atlantic City recently joined the Caesars Entertainment properties as the first casinos in the East to offer newly approved skill-based offerings from New York-based startup GameCo. “Danger Arena” is an arcade-style first-person shooter video game, in which players wager to use an attached video game controller to find and shoot robots, or “bots,” in one of 10,000 different video-game sequences.

Steve Callender, general manager of the Tropicana Atlantic City, reports that Danger Arena is drawing more than just the millennials. “It’s a little bit older of a crowd than I thought,” he says. “I was expecting just the twen-

p. 24 slot floor cover:Layout 1 2/15/17 10:19 PM Page 25

“The premise behind the project was to build a space that looks different from what guests are accustomed to with an ‘everyday casino.’ ” —Tom Mikuluch, senior vice president of business development, MGM Resorts International tysomethings to be playing, but the average age on the machines is in the 30s, and I have some people in their 50s on them as well.” He says one recent visit to the floor showed players at three units were 10 years apart in age.

These casinos are not alone in diversifying space which once would have been the exclusive domain of traditional gaming machines. Resorts in Atlantic City, managed by the Mohegan Gaming Authority, has devoted large parts of its casino floor to non-gaming attractions from a food court to various bars and lounges carrying the Jimmy Buffet Margaritaville theme. O’Sheas in Las Vegas has beer pong tournaments; the Downtown Grand has eSports events.

Ten years ago, it would have been unthinkable for casinos to devote big chunks of casino floor space to attractions like these. Before the Great Recession, casinos typically stuffed as many slot machines as possible into an available space—rows and rows of penny multi-line games returning holds of 10 percent, 12 percent or more.

But the perfect storm of recession, high holds and a rising younger demographic dealt operators in many major markets a hard truth: Fewer people were playing the slots. Though the economy recovered, many casinos still have not reached pre-recession slot revenues.

Interblock Global CEO John Connelly, who was a longtime vice president for Bally Technologies prior to moving to the electronic tablegame leader, stresses that not all markets saw this downturn, but for some, the recession hit hard. “What we saw was there obviously was an increased level of saturation in some markets,” he says. “When the

economy was going well, it was, ‘You build it, they will come.’ In many cases, the more slots you put on the floor, the more incremental revenue.

“You can’t generalize when you talk about the casino sector, because there are still markets where that is the case, and they haven’t even come close to a saturation point. But other casino operators, both domestically and internationally, are oversaturated on their floor. Some operators are moving slot machines from one casino into new casinos they are opening.”

Connelly says the five-year replacement cycle for a typical slot machine is a thing of the past. “Most would agree we’re never going back to the replacement cycle we had in the mid-2000s,” he says. However, what the recession did do, he says, was open up the market to new types of games, and new uses for floor space. He says that is not only fueling the propensity for new types of skill games, but is causing the rapid growth of electronic table games— which have grown from a previous 0.5 percent average of North American floors to more than 5 percent in some of Interblock’s partner casinos—and a growing appetite for new styles of presentation such as the Pulse Arena.

“I wouldn’t say the demand for (traditional) slots has decreased,” Connelly says. “I think there is still a high propensity for certain demographics to

“Danger Arena” (right, at Harrah’s Resort) is an arcade-style first-person shooter video game, in which players wager to use an attached video game controller to find and shoot robots, or “bots,” in one of 10,000 different video-game sequences.

MARCH 2017 www.ggbmagazine.com

25

p. 24 slot floor cover:Layout 1 2/15/17 10:19 PM Page 26

Interblock’s award-winning Pulse Arena at Perla Casino and Hotel in Nova Gorica, Slovenia, one of the largest entertainment providers in Europe

play slots. Would I say that the younger demographic is less prone to play slots than the older demographic? Yes. Is there data to substantiate that? Absolutely. When you look at online wagering and look at the demographic play of slots vs. table games, it’s staggering. You’ll find the older demographic primarily plays slots and the younger demographic primarily plays table games.

“When you look on a casino floor, you’re not seeing as many younger demographics enter a casino to wager. You’re seeing them enter a casino to go to shows, bars, nightclubs, restaurants, shopping, but never stepping on a casino floor. I don’t want to say there isn’t a demand for slots, because there is—it’s still a very profitable part of our business. But I think you’d be misguided to say you shouldn’t be looking at alternatives for the future.”

“Clearly, the Great Recession tripped into motion this drop-down in earnings rates on slot machines, and overall market earnings for EGMs,” says Eric Meyerhofer, CEO and co-founder of Gamblit Gaming. “That grabbed everyone’s attention, and in the recovery years, we haven’t seen the bounceback for the EGM, and perhaps the broader casino business overall. It has now been a full eight years since (the recession’s worst year). People are eight years younger, and technology has become eight years more pervasive.”

Meanwhile, the time is drawing closer to when the massive millennial generation will have the kind of discretionary income that makes for good, loyal casino patrons. With study after study showing they are not likely to spend that money on traditional slot machines, casinos have been looking for ways to offer what they do like.

Regulators in Nevada and New Jersey were among the first to respond to the new slot-floor reality in 2014, with laws and regulations inviting new game styles for the slot floors, including skill-based video games and other innovations. Casinos like MGM, Tropicana and the Caesars Entertainment Atlantic City properties are experimenting in just how these new games will be monetized, where they will be offered, and what kinds of attractions and gaming can convert former slot-machine square footage into space that brings in

new gamblers.

“We realized that our consumers’ tendencies are changing,” says Mikuluch.

“We believe that our guests between the ages of 21 and 35 have an appetite to gamble—there is evidence that supports this—but ultimately it is a matter of identifying the channel in which they want to game.

“Slot machines are not leaving the casino floor anytime soon. However, the younger demographic is not as interested in playing them as in years past. Our challenge is to identify what will truly engage this segment of our business.”

Augment, Not Replace Buddy Frank, the longtime slot operations vice president of California’s Pechanga Resort and Casino, witnessed the evolution of the slot floor from when he joined that casino in 2007 through his retirement in late 2015. Frank, now a consultant, stresses that the need for new types of games on the slot floor doesn’t mean traditional slots are in a cycle of decline.

“I’m a big contrarian when it comes to saying the slot machines’ time is over,” Frank says. “In fact, if you look nationally overall, slot revenues are higher than they’ve ever been. But at individual properties, they’re down.”

Frank notes that even where they are down, operators have reconfigured floors to achieve maximum profit. “You want to create an image of a full and exciting floor,” he says. “A lot of operators will take their large slot areas and reduce the space so it feels more exciting. There’s nothing wrong with that—it’s the exact right thing to do. You base it on supply and demand.”

Many casinos have the merchandising of a smaller floor down to an art.

The Stratosphere in Las Vegas went from 1,200 machines a decade ago to its current total of 700 machines—and overall slot revenue has climbed. In a recent interview with the Las Vegas Review-Journal, Stratosphere Slot Operations VP Bill Boswell credited wider aisles creating a comfortable play atmosphere, as well as careful placement of profitable games in end caps, where they have proven to earn more.

“I don’t think the slot machine’s dead yet. On the other hand, you’d be a fool to stick your head in the sand and not try to look at what’s happening with the upcoming millennials, and with the entertainment industry as a whole.”

—Buddy Frank, gaming consultant and former slot operations vice president at California’s Pechanga Resort and Casino

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ANNIVERSARY

Frank adds that even success in a traditional slot floor doesn’t change the need for casinos to prepare for the future. “I don’t think the slot machine’s dead yet,” he says. “On the other hand, you’d be a fool to stick your head in the sand and not try to look at what’s happening with the upcoming millennials, and with the entertainment industry as a whole.”

MGM’s Mikuluch agrees. “As operators, we have to take responsibility and do our part to help move the industry forward,” he says. “We work directly with the manufacturers, as they are always creating innovative products for our eventual display and customer use when visiting our resorts.”

The Level Up attraction is a microcosm of that effort—not only in its millennial-friendly non-gaming attractions, but in the gaming. The Gamblit games and the Interblock ETG attraction were to be joined in mid-February by Konami’s skill-based version of Frogger, which features a bonus indistinguishable from the arcade game in which recreational players—from younger boomers to Gen-X and beyond—have used their coordination and dexterity in arcades and pizza shops to get a digital frog across a busy video street.

“Our MGM Resorts team is always looking to expand gaming where we can, whether it be in lounges, skill-based games, or eSports venues,” Mikuluch says. Frogger, he says, is “one of the examples that give us the chance to push the status quo a bit to learn more about how the guest and overall industry will react.”

Of course, Frogger is one of many games from major manufacturers that test skill limits within a traditional slot-machine format. Scientific Games will soon release the skill version of Space Invaders, which features the same shooter game that stormed the arcades in the 1980s and never slowed down. International Game Technology will launch Lucky’s Quest, a game that is practically indistinguishable from the mobilephone puzzle-style games that have gained widespread popularity. Everi has both partial and full-skill versions of Fruit Ninja, the mobile game testing skill at swiping a screen to slice up digital fruit.

Floor of the Future?

All eyes, though, are on the experimentation with areas that use skill-based and other new types of games within tailored environments. The casinos with the most floor space—MGM, Harrah’s, the

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Gamblit Model G units are fourplayer tables built for community play. Players join or compete in puzzle-based and other mobilestyle games, or can select head-to-head poker matchups, tactile fruit-slashing games, proprietary Gamblit card games and other offerings.

Tropicana—are now giant testing grounds for these new slot-floor offerings.

Despite what many think, the new spaces generally are not replacing under-performing traditional slot machines. Frank comments that while the number of slots on the floor at Pechanga did go down in the thick of the recession, the numbers at that and other California casinos went back up with the recovery.

Callender says the same thing regarding the Tropicana. “Our number of games did go down in 2010 or 2011, but we’ve been adding back since then,” he says. “We do continue to reconfigure our floor, make it more beautiful and change the traffic patterns to make it easier to navigate, because it’s such a big place.”

The Tropicana includes nearly 133,000 square feet of casino floor space, not to mention another 200,000 square feet in The Quarter, the Old Havana-themed retail, dining and entertainment complex—where slot machines already have appeared in the courtyard running through the two-floor attraction.

Callender says space in The Quarter now accommodates the GameCo Danger Arena first-person shooter games, and other space within the dining and retail center soon will be devoted to millennial-friendly attractions.

“When we put gaming in The Quarter space,” he recalls, “it was because there were a lot of baby boomers waiting in line at Carmine’s and The Palm (restaurants). We wanted to give them a chance to sit down and play. But when we actually put them in a (separate) room over there, we targeted the millennials—because a lot of millennials come over to spend money in The Quarter, but they don’t necessarily come over to the casino side.

“Now, we put the electronic roulette in there, and we have some of the

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GameCo games in there, and people are playing.”

He stresses that none of this has reduced the inventory of traditional slots at the property. “Though we’ve started to add the non-traditional games, we really haven’t had to take our traditional slot machines off,” Callender says. “But we have invaded that space. We think it’s important to have everything in the right place, and we take advantage of our traffic patterns, and where people are going to more easily find these new games.”

Blaine Graboyes, CEO of GameCo, says the Tropicana is the company’s best site so far, and early results confirm the games are appealing to all age groups— with a lot of customers new to the casino floor. “Our most critical goal is driving incremental revenue and bringing new customers to the casinos,” he says. “We’ve seen that 60 percent of our players are under 40, so it’s likely to say that those are people that aren’t typically playing slot machines.

“We do exit interviews at the casinos in New Jersey, and we found that 50 percent of the people playing our games do not regularly go to the casino or play slot machines. That means half of our customers are net new customers for the casino.”

Callender says the casino is planning a new area on the other side of The Quarter that will specifically be designed to cater to millennials, and the Tropicana also is exploring eSports events. “We want to target some of the younger crowd,” he says, “and give them a chance to have a place they can call their own.”

Casino operators are only beginning to scratch the surface of how they are going to attract and retain younger customers in the coming years. Luckily, they have years in which to experiment, with new areas, new styles of games, new amenities. “I think you have to be flexible, and try to keep track of the analytics to figure out what’s working and what’s not,” says Callender. “We have some pretty smart folks in this industry, and they’ll figure out how many of each game you should need, and other details.”

“We think it’s “We believe there is an appetite for the important to have everything next generation to game, and it’s all about the vehicle that is used to present it,” Mikuluch in the right adds. “The next generation is competitive and place, and we take advantage loves to share their achievements with the world. Yes, I understand the cliché that ‘all of our traffic millennials received trophies playing soccer patterns, and whether first or last place to boost self-esteem,’ where people but most millennials that I know still want are going to their trophy to be bigger than their peers’. more easily “As a result, new forms of gaming find these may be developed that embrace community new games.” and competition. But the idea and entertain—Steve Callender, ment value associated with gaming always will general manager, be a staple of Las Vegas.”

Tropicana Atlantic City

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One thing on which Frank, Callender, Mikuluch and other operators agree is that the new games and venues should ultimately add customers rather than cannibalizing the traditional slots. “I don’t think the traditional games are going to go away very quickly,” Callender says. “On a recent Saturday, every slot machine in this place was taken. (That’s around 2,600 machines.) And I think that there are still a lot of people who are just looking for a luck factor. Not everybody wants to have a game of skill.

“The slot machine itself has been changing and upgrading, and the content is so important to these slot companies—they spend so much money on research and development to give the slot player what they want. I don’t think they’re going anywhere, even according to some of the millennials I’ve talked to. They’ll play a game if it’s got a wheel on it, and they can find a big payoff.”

“Classic games like blackjack, baccarat, craps, roulette— and slots, too—will never go out of style,” says Mikuluch. “Everything evolves over time, and gaming may be in the midst of its transitional phase.”

This phase will see an evolution not only in games offered, but in how casinos measure the results from those new games. “When it comes to skillbased gaming, I’m cautiously optimistic there is a place for that product within a casino,” says Interblock’s Connelly. “However, it will solely depend on a casino’s appetite to measure those games in a completely different fashion. If we’re going to measure skill-based gaming using the same metrics we use to measure slot machines, skill-based gaming is going to continue to be at the shows, and continue to not be on the casino floors.

“It’s going to be up to the operators—Are they OK with the fact that bonus rounds can take well over a minute up to three minutes? That means

that on a Friday night, you’re not potentially generating as much handle or net win. By definition in skill-based games, if you’re going to allow the player to have that entertainment factor, it’s going to be challenging to generate the same net win as a typical slot machine on the floor.

“Will the operators carve out a section of the floor for skill-based gaming that allows for that? I think you’re going to find the larger operators with that square footage that’s under-utilized, or who have the capacity to try things within their environment, are already trying to create areas that are geared more toward a younger demographic.”

Connelly adds that the same principles apply to ETGs. “If you measure the ETG against a slot, why would you put it on the floor when a typical table game, a blackjack, can hold less than 2 percent? These are low-holding games. So, if you’re going to measure them against a slot machine that could be holding 10 percent and use the typical discussion point of house average, it becomes challenging.

“However, if you really start to dive into the types of players who are playing the products, is it truly incremental revenue? As you remove the bottom 5 percent of a slot floor and replace it with an automated table game or a skill-based game, are you bringing in incremental revenue with the remainder of the handle on the floor remaining the same?”

Those metrics are being studied and examined as large casinos like MGM, Tropicana and others experiment with new ways to present slot-machine gaming.

“Over the years, we have learned that more slot machines does not equal more revenue,” Mikuluch says. “Creating an inviting or intriguing slot floor is a better approach versus the classic warehouse style that many slot floors adopted in the past. Our focus has shifted from ‘packing it all in’ to getting the most out of the slot inventory that our guests have a desire to play.”

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Border War Tribes, MGM locked in legal dispute in Connecticut

By Dave Palermo

Level Playing Field

A

legal skirmish involving the commercial and American Indian segments of the nation’s gambling industry was perhaps inevitable, particularly with the spread of casinos to 38 of the 50 states.

And it comes as little surprise the first major confrontation between commercial and tribal government casinos would take place in Connecticut, situated as it is in the midst of an exploding, highly competitive casino market in the Northeast United States.

The Mohegan and Mashantucket Pequot tribes—operators of the Nutmeg State’s two casinos—are embroiled in a legal dispute with one of the country’s largest gambling companies over legislation giving the tribes exclusive rights to jointly operate a third casino near Hartford.

The tribes believe at least one “satellite” facility is needed to help prevent the loss of jobs and revenue as a result of emerging competition in nearby states, particularly a $1 billion hotel-casino being built by MGM Resorts International in Springfield, Massachusetts, on Connecticut’s northern border.

“The Massachusetts casino when it opens its doors will strike a devastating blow to our state” resulting in a loss of some 9,000 jobs, Pequot Chairman Rodney Butler told a March session of the state Commerce Committee.

MGM has sued Connecticut Governor Daniel Malloy, claiming a 2015 bill giving the tribes the exclusive right to form a corporation (MMCT Venture) and seek casino sites outside their reservations violates the equal protection and commerce clauses of the U.S. Constitution.

MMCT Venture has narrowed its search to East Windsor and Windsor Locks, both about 15 miles south of Springfield near U.S. 91, ideal spots to head off gamblers who otherwise would visit MGM’s resort. A final proposal must go to the legislature for approval.

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MGM believes a third Connecticut casino on non-Indian lands should be subject to a bidding process open to both gambling companies and tribes.

The company suggests the state would be better served with a more upscale gambling resort in the populous southwest part of the state.

“This is all about open and fair competition,” MGM Vice President for Global Affairs Alan Feldman says. “It’s not about whether an entity is or is not a tribal government.”

The Las Vegas-based casino company is appealing a June U.S. District Court ruling dismissing MGM’s lawsuit on the grounds the company’s claim of injury is “too speculative to confer standing.”

State law prohibits commercial casinos. But Mohegan and Pequot officials contend there is nothing in Malloy’s Tribal Casino Act to prevent MGM from creating a business entity, making a proposal and seeking a change in

Rodney Butler, chairman of the Mashantucket Pequots, and Kevin Brown, chairman of the Mohegan tribe, have created an entity that will allow both tribes to own and operate a third casino near Hartford

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From MGMSpringfield.com: “Our multi-use plan envisions an exciting and lively residential, retail, dining and entertainment district that preserves much of downtown’s most iconic architecture while rebuilding the city’s hardest-hit downtown neighborhood.”

the law.

“Other companies are allowed to come in and offer what they want to build,” Mohegan CEO Chuck Bunnell says. “We’re going to present an alternative to Connecticut losing jobs. If MGM has a different alternative, they should come forward and present it.

“They’re acting like they don’t have that opportunity. This is America.

Anybody can come forth and give a proposal.”

Feldman says his company approached the secretary of state for a license to do business and was rebuffed because of language in the legislation.

MGM, he says, is prepared to build a Connecticut resort if given the chance.

“The secretary of state was very clear,” Feldman says. “We could not have a business license.”

State Attorney General George Jepsen, in a review of the legislation, notes possible problems with the constitutionality of the act and a legislative process that he says could conflict with federal Indian law and Department of the Interior gambling policy.

“The proposed legislation poses several legal issues that cannot be resolved with a high degree of certainty,” Jepsen said in a letter to lawmakers.

“We are unable to predict with any certainty how a court would resolve such issues.”

Meanwhile, about 1,000 commercial and tribal government casinos nationwide are elbowing each other for room in what is becoming a crowded U.S. gambling market.

Although the MGM/tribal war is particularly volatile, lines of demarcation separating commercial and tribal government gambling throughout the country are becoming increasingly blurred, and potentially problematic.

“The secretary of state was very clear.

We could not have a business license.”

—MGM Vice President for Global Affairs Alan Feldman

“Commercial and tribal gambling are subject to public policy objectives,” Feldman says, and operate under different legal and regulatory paradigms. “How can those policy objectives be met when both the tribal gaming and commercial gaming footprints continue to grow? That is the principal issue here.”

Making the Distinction Commercial casinos are business ventures taxed and regulated by states. Most tribal casinos operate as tax-exempt, government enterprises under the Indian Gaming Regulatory Act (IGRA) of 1988. Casino revenues largely subsidize services to tribal citizens.

IGRA provisions, however, apply only to casinos on Indian lands held in trust by the federal government. Tribes operating casinos off Indian lands are subject to the same taxes and regulations as commercial casino companies.

IGRA permits tribes to operate Class II bingo-style gambling without interference from the state. But it requires tribes with Class III, Nevada-style casinos to enter into tribal-state compacts giving states limited regulatory oversight of the operations.

In several states, including Connecticut, tribes under compacts (the Pequot Tribe technically operates under Interior Department secretarial procedures) pay the state a share of gambling revenues in exchange for a benefit, most often regional or statewide exclusivity to operate casinos.

The Mohegan and Pequot tribes each pay Connecticut 25 percent of their gross gaming revenues—roughly $260 million last year—in exchange for the exclusivity to operate Class III casinos.

Connecticut’s decision to let the Mohegan and Pequot tribes jointly operate a commercial, off-reservation casino is born of a desire to prevent further erosion of the state’s share of tribal gambling revenues in the face of increasing competition from surrounding states.

The tribes agreed to continue paying the state 25 percent of gross game revenues. Allowing MGM or another commercial casino company to operate in Connecticut would violate exclusivity clauses in the tribal-state agreements and result in loss of the revenue share.

Larry Roberts, Interior’s acting assistant secretary for Indian affairs, in nearly identical April 2016 letters, said draft amendments to the Connecticut tribal-state agreements “reflect the unique circumstances” in allowing the

MARCH 2017 www.ggbmagazine.com

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Connecticut Attorney General George Jepsen has questioned the constitutionality of the law that allows the state’s two tribes to open a third casino.

The Choctaw—whose upstate Philadelphia resort-casino was initially financed and managed by Boyd Gaming in Las Vegas—eventually backed away from the Ocean Springs proposal.

Mutual Understanding and Cooperation tribes to jointly operate a commercial casino.

“Our view is that the tribes’ existing exclusivity agreement would not be affected by a new state-authorized casino that is jointly and exclusively owned” by the two tribes, Roberts said.

A Growing Trend There are 486 tribal government casinos and 460 commercial facilities in the United States, according to the American Gaming Association, each segment generating more than $30 billion a year. There are also 56 racetrack gambling operations.

As the U.S. gambling market has matured, so too has competition between commercial and tribal government casinos. Some of the competition has gotten a bit nasty.

“We’re going to see this more and more as regional markets get saturated across the United States,” Clyde Barrow, an economist and manager/partner of Pyramid Associates, a Massachusetts gaming policy firm, says of Connecticut.

“It’s the level of the competition and the viciousness of the competition. It seems to escalate.”

Tribes and commercial companies operating both stand-alone casinos and racinos (slots and table games at parimutuel racetracks) share markets in a handful of states, notably Michigan, Mississippi, Florida, New Mexico and New York.

A few tribal operations are managed by commercial gambling companies, notably the Harrah’s subsidiary of Caesars Entertainment and Station Casinos.

Penn National recently launched a joint venture with the Jamul Tribe near San Diego.

Meanwhile, several tribes—Mohegan, Pequot, Poarch Band of Creek Indians in Alabama, Cherokee Nation of Oklahoma and others—own commercial casinos and racetracks and are exploring additional gambling ventures off their reservations.

Both the Mohegan and Pequot tribes failed in bids to build casinos in Massachusetts, although not in Springfield. The Mohegan Tribe owns the Mohegan Sun Pocono in Pennsylvania and has a management interest in Resorts Casino Hotel in Atlantic City.

MGM, ironically, once had a licensing agreement with the Pequot Tribe allowing Foxwoods use of the company name and trademark lion’s head logo on a resort hotel. The agreement was signed in 2006 and terminated eight years later.

Commercial and tribal operations have, for the most part, peacefully coexisted.

But the dialogue got a bit heated about 15 years ago when the Mississippi Band of Choctaw Indians explored building a casino on trust land near Ocean Springs in Jackson County, near a cluster of coastal casinos in Biloxi and Gulfport in adjacent Harrison County.

Commercial operators claimed the Choctaw tax exemption would have given the tribe an unfair competitive edge, cannibalizing the regional gambling market and drawing jobs and revenue from Harrison County.

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It would be a stretch to suggest Indian Country is keeping a close eye on the border war between MGM and the Connecticut tribes.

“I don’t think most tribes are even paying attention,” says a prominent Capitol Hill lobbyist who requested anonymity.

And it would be wrong to infer there is simmering hatred between tribal and commercial casino operators.

The AGA and National Indian Gaming Association, the lobby and trade group for Indian casinos, have, in fact, recently agreed to join forces on issues of mutual interest, particularly sports wagering and daily fantasy sports (DFS).

A few of the more lucrative tribal casino operators—including Mohegan, Foxwoods, Florida Seminole and Oklahoma Cherokee—serve on the AGA board of directors.

The border war between Connecticut tribes and MGM will not likely impact AGA/NIGA cooperation.

“I don’t believe so,” says Whitaker Askew, AGA vice president of government relations. “AGA and NIGA have a long list of issues we are working on that impact the gaming industry at the national level.

“Sport betting is probably at the top of that list. Working together will improve our chances, as an industry, for success.

“Issues specific to states—commercial or tribal—are matters gaming associations can address separate from NIGA and AGA, and our attempts to work together on issues that unite the industry.”

Tribal lobbyists concede AGA is better equipped and has more resources to confront gambling-related issues.

“AGA is doing some smart things. They are doing things NIGA is not,” a Washington-based tribal advocate says. “They are paying serious attention to sports book, DFS, non-core tribal gaming stuff.

“AGA is getting real experts and working on policy and strategy. NIGA is doing panels at the trade shows.”

Tribes View MGM As ‘Anti-Indian’ NIGA did step up to the plate last summer when Nevada Senators Dean Heller and Harry Reid attempted to amend a defense authorization bill that would have not only blocked the MMCT casino, but limit the ability of tribes nationwide to seek off-reservation business investments.

NIGA blamed MGM for what it called an “unprecedented attack on Indian tribes and their ability to pursue economic development opportunities.” The Connecticut congressional delegation helped kill the amendment.

MGM also angered indigenous Americans when it opposed federal recognition last year of the Pamunkey Tribe of Virginia, a move some believe was inspired by fears the tribe would develop a casino and compete with the MGM National Harbor resort in Maryland.

Feldman distanced the company from the defense authorization amendment, contending it is not MGM’s position to limit the ability of tribes to engage in commercial activity off Indian lands.

MGM opposed Pamunkey’s federal recognition, Feldman says, on behalf of the Congressional Black Caucus (CBC), which was disturbed by a Pamunkey

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“Our view is that the tribe’s existing exclusivity agreement would not be affected by a new state-authorized casino that is jointly and exclusively owned by the two tribes.”

—Larry Roberts, Acting Assistant Secretary for Indian Affairs, Department of the Interior

policy prohibiting interracial marriages. The policy was repealed in 2012.

“We have a lot of friends with the CBC,” Feldman says. “We raised concerns about some of the practices the tribe was taking. The tribe has since changed those practices. That was the one issue we raised. They made the change. We didn’t have anything further to say about it.”

Compared to other commercial casino operators, MGM has had few business dealings with tribes other than the hotel licensing agreement with Foxwoods. Its lobby efforts in connection with the Connecticut litigation and Pamunkey recognition annoyed indigenous advocates.

“People have made some pretty strong comments about MGM’s attacks on the first Americans,” Mohegan’s Bunnell says.

“Other commercial companies have had relationships—respectful relationships—with tribes. In many cases they’ve helped tribes build and manage facilities. They have experience in the market and they’ve created mutually beneficial relationships with the first Americans.

“Certainly that has not been our experience with MGM. They’ve used any means possible to squash competition, whether it was moral or not.”

“Tribes aren’t really happy with MGM,” says Kiowa-Comanche John Tahsuda, a principal with Navigators Global, a government relations firm.

“They’re not making friends. But the company doesn’t have that big a presence to make the radar.”

Feldman rejects the characterization MGM is opposed to economic progress in Indian Country. But he warns of the “Pandora’s box” created by off-reservation casino controversies and the danger in prompting congressional involvement in federal Indian policy.

The spread of Indian casinos on newly acquired trust lands has generated Senate and House criticism of federal laws and Interior policies on tribal land/trust issues. Casinos are blamed for the failure to get a congressional fix to a Supreme Court ruling making it difficult for Interior to place land in trust for indigenous communities.

And competition between tribal casinos in California, Arizona, Wisconsin and elsewhere has prompted suggestions by indigenous leaders for amendments to IGRA provisions dealing with gambling on newly acquired lands.

“The tribes in Connecticut—whether or not they choose to acknowledge it—have opened this issue to debate,” Feldman says. “We aren’t the ones trying to get a piece of legislation passed that would provide exclusivity for offreservation gambling.

“There are plenty of senators who have nothing to do with MGM who have different views than MGM about tribal gaming. We don’t control them.”

A Casino ‘Arms Race’ Connecticut officials along with Mohegan and Pequot officials see new casinos as the only alternative to competition from gambling expansion in several Northeast states.

MGM’s Springfield casino is the most immediate threat to the state’s share of casino revenues from the tribes, which over the last two decades has amounted to more than $7 billion.

“Simply, this is about siphoning revenues from Connecticut to benefit a Las Vegas company while at the same time moving thousands of existing jobs from Connecticut to Massachusetts,” Pequot Chairman Butler and Mohegan Chairman Kevin Brown said in a joint statement.

“That’s why the tribes, the legislature and the governor have committed to developing a solution that protects Connecticut.”

The protection, however, is likely to be both limited and temporary.

The initial strategy was to build three satellite casinos, including a resort in the upscale, densely populated southwest region. But New Haven, Bridgeport, Stamford and suburban communities are generally opposed to casino gambling.

“Politically, casinos are not going to be able to go there,” Barrow says.

“That will never happen.”

There also was brief consideration to placing slots at Bradley International Airport in Windsor Locks.

A planned $300 million investment in a largely slot machine facility on U.S. 91 near Hartford will likely prevent the loss of up to 60 percent of the jobs and revenue decline anticipated from the Springfield casino and other regional projects, according to economists.

A second satellite facility in Danbury in West Connecticut could up the retention of jobs and revenue to more than 80 percent.

But additional gambling resorts are in the planning stages for New York, Massachusetts and elsewhere, and Connecticut’s share of tribal gambling revenues will likely continue to decline.

“I call it a casino arms race,” Barrow says. “The economic and market geographies don’t correspond to state boundaries. They cross state boundaries.

And states are competing with each other within those market areas.”

MGM Chairman and CEO Jim Murren is critical of Connecticut’s strategy of investing in gambling facilities that fall short of casino resorts in an effort to prevent diminishing jobs and revenue, calling the operations “boxes of slots.”

“Connecticut has had a duopoly for decades, and instead of attempting to improve the quality of entertainment, there seems to be a desire to sprinkle slots around the state,” Murren told the Associated Press. “It might raise some revenue, but it doesn’t create many jobs.”

Tribal officials are offended at the “boxes of slots” analogy, contending one or more satellite casinos will put in the state in a strong position to compete in the regional market.

Meanwhile, MGM is pledging to press on, both in Springfield and in the courts.

“We’re not going to go peacefully,” MGM president William Hornbuckle told Bloomberg News.

MARCH 2017 www.ggbmagazine.com

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OPERATIONS

Targeting Millennials When casinos should be focusing on gamers

F

or some time now, the casino industry has been abuzz with discussions on the best ways to target millennials and drive new revenue opportunities. Much focus and public discussion have been placed on this topic, white papers have been written, and strategies have been taking shape that millennials have seemingly become the savior to overcome stagnant revenue.

But there’s another perspective the industry needs to consider—perhaps the casino industry should be focusing on “gamers” (video-game enthusiasts) in addition to, or more directly, instead of millennials. Skill-based games and video game gambling are often touted as a premier attraction for millennials, but it’s worth considering the significantly larger market of video-game enthusiasts.

Primarily because of outdated stereotypes and perceptions, gamers are a massive and underserved market. Mention “gamers” and many people conjure the image of a teenager playing video games in their parents’ basement. Nothing could be further from the truth.

Gamers represent a very large and lucrative market opportunity for casino operators. A simple four-part test can be applied to reaffirm the market opportunity. Gamers who are over 21 represent the top percentile of household income, play video games, and are already visiting casinos. This group represents 9 million millennials, 8 million Gen-Xers, and another 6 million boomers.

(Source: Narus Advisors.)

The market size is even larger when you consider the remainder of household incomes, and those who are not currently frequenting casinos because there are few offerings that appeal to their interests.

The demographics that make gamers such an attractive target market for casino operators are undeniable. According to ESA’s 2016 “Essential Facts,” today’s average gamer is 35 years old. In fact, there are significantly more adult female gamers (31 percent) than male teenage gamers (17 percent), with female gamers comprising 41 percent of the market. The majority of U.S. households (65 percent) own a device to play video games.

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Global Gaming Business MARCH 2017

By Blaine Graboyes

Gamers are also very social, as proven time and again by the sellout crowds at eSports events around the globe. And 54 percent of gamers play with others, including with their friends, family members, parents, and spouse or partner.

Total U.S. consumer spend on video games in 2015 exceeded $23 billion, with the majority ($16.5 billion) allocated to content (games), and the balance going towards hardware and accessories. Gamers have considerable disposable income, but most of their spending is solely focused on video games. If casinos do not have a “gamer offering,” there’s little opportunity to capture any of this meaningful disposable income.

It’s true, gamers love to play video games.

The most frequent multi-player and online gamers spend approximately 6.5 hours per week playing with others online and approximately 4.6 hours per week playing with others in person. For many gamers, playing video games is not just a hobby but a strong self-identifier. eSports have become a significant piece of the video game industry, with half of all frequent gamers increasingly familiar and active in eSports, propelling today’s audience for eSports viewers to over 335 million gamers worldwide.

One of things gamers are lacking—and seeking—is a place to meet with other gamers—outings that can offer the “VIP, sexy, cool” experience and atmosphere which casinos have successfully created and become known for in the nightclub space. Playing on a friend’s couch, at an arcade, or even attending an eSports event does not afford the level of excitement and service provided at casinos across North America and around the world.

Imagine a casino experience that finally allows a gamer to feel like the cool kid they have become with the treatment generally reserved for high rollers and nightclub patrons. From their first discovery of the gaming experience to their interaction on social media to travel and check-in to gaming on the floor, dining, betting on eSports, and winning prizes—these types of experiences would be highly appealing to gamers hungry to be treated in an authentic manner that

validates their enthusiasm for video games.

Gamers also have a high propensity for betting. This is evidenced by the huge (often unregulated and even invisible) eSports gambling markets of “skins” betting, eSports books, fantasy sports and other forms of wagering. In 2017, the “visible” market for eSports gambling is projected to be $3 billion and the “invisible” market is estimated to be 10 times that. (Source: ESIC.) This is a significant revenue stream that casino operators should look to bring into their regulated industry by increasing their outreach and initiatives geared towards attracting gamers.

So what can casinos do today, and in the near future, to attract, retain and monetize this stillgrowing market of gamers? Much of the current focus has been on casinos acting as venue rentals for professional eSports leagues and tournaments.

But this represents a very small piece of the potential, and is focused only on the “top of the pyramid” while ignoring the majority of the wider audience of gamers. Casinos need to prioritize the development and implementation of comprehensive “gamer strategies.” These strategies should include a wide variety of activities, events, content production, brand integration, influencers and celebrities, targeted incentives and other initiatives.

Casinos can generate valuable new revenue, and attract an entirely new audience, by building dedicated, multi-purpose spaces to conduct 24/7/365 programs targeted specifically to gamers. While a few casinos are currently demonstrating their understanding of the gamer demographic and revenue opportunity and have become first-movers in implementing strategies to capture this market, there is still a lot of work to be done across the wider industry. This is likely due to the current disconnect between the discussion of millennials and the opportunity to appeal to the huge demand from gamers. The gamer market opportunity is real and actionable today.

The first gamer to earn a significant gaming win, bottle service or other meaningful prize will be the casino industry’s best ambassador ever.

Blaine Graboyes is CEO of GameCo, Inc.

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Casinos & Money Laundering:

An Industry Scorecard An estimated $300 billion in illicit funds is laundered through financial systems in the U.S. each year. Casinos are always a tempting target for criminals. Are their AML efforts good enough?

By Marjorie Preston

I

n the fight against money laundering, the U.S. casino industry just got a passing grade.

In its December report, the global Financial Action Task Force applauded the stateside industry for its “increased focus on raising awareness and improving compliance” and for “mitigating measures above the requirements” of the 2007 Bank Secrecy Act. But money laundering is still big business, here and abroad. The 2016 Basel AML Index, which ranks countries for their money laundering risk, put Iran at No. 1, at greatest risk among 149 countries. Finland came in last—or best—with the least risk. The U.S. ranked 97th, leaving room for improvement.

China came in 39th and the United Kingdom 121st. And the Philippines—at the center of a multimillion-dollar international money laundering scandal last year—ranked 55th. Only now are lawmakers considering making casinos subject to the Philippines’ anti-money laundering (AML) laws.

According to the index, more countries have worked to improve their rankings, “but the effectiveness in fighting money laundering remains weak.” And though a majority of countries legally comply with international standards, they “fall short in the implementation and enforcement of their laws,” the agency said.

Despite increasing oversight by bodies like the U.S. Financial Crimes Enforcement Network, the flourishing underground will probably never be eliminated because criminals—like other entrepreneurs—are adaptable and highly motivated. Lock the front door, and they’ll come in through the window. In the internet age, the threat is likely to increase.

Cashing Out As 24/7, cash-intensive operations, casinos are natural targets for money launderers. The goal is to ensure they’re not easy targets.

Like banks, U.S. gaming operations are required to file Currency Transaction Reports whenever patrons pass more than $10,000 over 24 hours, and Suspicious Activity Reports when the property “knows, suspects or has reason to suspect” that a transaction aggregating at least $5,000 involves 36

Global Gaming Business MARCH 2017

funds derived from illegal activity. (By contrast, in Macau the reporting threshold is MOP500,000, or $62,570.)

Arguably, the rules can be boiled down to an axiom that’s already wellknown in the casino business.

“Know your customer—that’s the byword,” says former casino executive Jeff Silver, a onetime chairman of the Nevada Gaming Control Board and now a gaming attorney at the Las Vegas-based firm Dickinson Wright. “In the early days of the gaming industry, money could come into the casino with burn marks, like someone had just blown up a safe in the bank, and nobody would ask questions. Today, when a patron requests a lot of credit or transacts large sums of cash, he’ll face a background check to see if the money he earns can support the kind of play he’s engaging in.”

Front-line employees can be the eyes and ears of the property, says Hal Crawford, managing director of regulatory compliance at K2 Intelligence, a compliance and cybersecurity firm in New York. “So many SARs come from employees just seeing something. It’s your people on the floor—the dealers and cage operators and ticket writers—who may first notice shady dealings and send out the alert.

“SAR doesn’t stand for Suspicious Activity Report,” says Crawford. “It stands for, ‘Something ain’t right.’”

When it comes to maintaining a paper trail—or the electronic equivalent—the industry is on its toes. Between 2011 and 2014, the number of

“SAR doesn’t stand for Suspicious Activity Report. It stands for ‘Something ain’t right.’”

—Hal Crawford, managing director of regulatory compliance, K2 Intelligence

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“In the early days, money could come into the casino with burn marks, like someone had just blown up a safe in the bank, and nobody would ask questions.”

—Jeff Silver, gaming attorney, former member of the Nevada Gaming Control Board

SARs filed with the federal government increased 164 percent.

The reports are “investigated in a real-time, online basis,” says Silver.

“When you file a report, within 24 hours, someone in the IRS has their hands on it, is looking at it, and decides if they want to send an agent over to the property to do more work.”

Other seemingly simple money-changing measures have made an impact— such as the choice by operators including MGM Resorts International to banish cash at the poker table. Among the most effective deterrents may be the increasing use of player cards, not just for VIPs but for patrons at all levels.

don’t have a compliance department to look into the background of your customers.” He cites one major U.S. property that spends $20 million a year on compliance. “With the risk of fines or loss of license, this is part of an organization that’s well worth it.”

For proof, look no further than Tinian Dynasty, a casino resort that once operated in the Northern Marianas Islands, a U.S.-controlled commonwealth.

In June 2015, FinCEN levied a $75 million fine against the property—a new record—for “willful and egregious violations” of AML laws. By September of the same year, the place was forced to close, leaving hundreds of people out of work and decimating the island economy.

Full Disclosure

Structuring, Smurfing and “Player card data is critical to effective surveillance,” says Crawford. “If the inOther Dirty Tricks dustry as a whole gets the information up front, there will be less putting out Criminals continue to fly under the radar, scrubbing an estimated $300 billion fires. Casinos will be able to profile their customers and answer a fundamental per year in the U.S. alone in an enterprise that can be used to fund terrorism. Is question: Is a customer’s play consistent with the capacity of the individual? In the gaming industry doing a good enough job of curtailing money laundering? the near future, my guess is if you want to play, you’re going to have to have a “That’s like asking if there’s an acceptable level of loss,” says Crawford. player card.”

“The answer is no. There’s a much higher level of awareness and wanting to im“It’s like applying for a car loan,” says former FBI forensic accountant plement AML programs, but I think the gaming industry needs to spend more Kerry Myers, who now teaches graduate classes on white-collar crime, fraud time and effort building out the right technologies.” and money laundering at the University of South Florida. “You put in an appliAsked to grade the gaming industry as a whole on its AML compliance, cation. They run a credit report, verify your address and verify that you’re emMyers says, “There was a six-month period between April and October 2016 in ployed. Then they know who you are. The advantage of player cards for the which FinCEN levied fines of about $16 million against three casinos for failure casino is it’s more efficient, it’s cheaper and they can control it. And that, in to comply with money-laundering requirements. In my opinion, that says and of itself, really cuts down on money laundering.” there’s still work to do.”

Perhaps surprisingly, Crawford has found some reDespite greater attention to the problem, bad sistance to the idea of universal player cards. “What I’m guys can still sidestep the rules. hearing in the industry is, ‘If I ask for all that informa“Casinos must report any transaction involvtion, they’ll go across the street and not come back—I’ll ing $10,000 or more, but how many casinos are lose that player.’ But look at the level of capital reinveston the Las Vegas Strip?” asks Myers. “If I want to ment they put in on a regular basis for hotel rooms and launder money, I just go from one casino to anso forth. I think the government, regulators and law enother,” exchanging lesser amounts for chips and forcement expect the same thinking in the capital reincashing out.

“If I do that five days in a row, I can vestment space of AML surveillance.” turn a lot of money.”

This investment is not without return, he says. “If That form of minimal gambling comprises companies demonstrate that they’re willing to reinvest about 14 percent of SARs, according to the U.S. in their technology, their training, their effective data“Ultimately the industry is Treasury’s 2015 Money Laundering Risk Assessgathering and reporting, they’re going to keep the risk serving the government with ment.

An additional 28 percent of reports are filed of money laundering down. The regulators, the IRS and for suspected structuring, where players deliberinformation that will protect FinCEN are going to acknowledge their level of effort. ately stay under the $10,000 reportable threshold.

Then they’re going to attract a more sophisticated level the integrity of the wider Then there’s a common practice known as of financial institutions to provide the capital investU.S. financial system.” “smurfing,” in which groups of people go into ment they want. It’s money well-spent.” casinos or other businesses to exchange illicit “The price of compliance is eternal vigilance,” Silver —Elizabeth Cronan, senior director of funds in small amounts for legitimate, liquid agrees. “It used to be that not everyone had a compligaming policy, American Gaming Association currencies. ance officer. Now it’s considered a dereliction if you MARCH 2017 www.ggbmagazine.com

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The Building Blocks of an Effective

AML Compliance Program GGB: What are the basics of an effective AML compliance program?

Fornaris: It consists of four key “pillars:” internal controls, such as policies and procedures; a compliance officer; employee training; and an annual independent audit that tests the effectiveness of the Mark Clayton and Carl A. Fornaris, gaming AML compliance attorneys, Greenberg Traurig LLP program. At the heart of the compliance program is the ability to monitor for suspicious transactions and, as appropriate, to report suspicious transactions to regulatory authorities.

Enforcement actions against casinos typically result because of the existence of systemic breakdowns in one or more of these pillars.

Clayton: It’s a comprehensive program that is risk-based, meaning the requirements of the program are designed to reasonably detect potential money laundering based on the risk the particular casino could be used for money laundering. A small regional casino with slot machines and a few low-dollar table games is much different than a high-end casino on Las Vegas Boulevard. The two programs would be vastly different, as the risks of money laundering are vastly different.

Further, the program should be able to collect all information regarding a patron, regardless of the source, within the casino, to provide a comprehensive collection of data/transactions that can be used for currency transaction reporting and suspicious activity reporting purposes.

Front-line employees may be as important as or even more important than the bosses to the successful detection of money laundering. How vital is it to have a formal training program for the rank and file?

Clayton: FinCEN has made it clear that training from the top down is important. Everyone in a casino must be educated on anti-money laundering requirements, tailored to the person’s job functions. Of course, any employee who interacts with a customer or has information on a patron, regardless of how, is vitally important to the casino’s AML efforts.

Do you ever encounter resistance from gaming organizations on investing in a strong prevention effort? And what do you say to them?

Clayton: One simply has to look at the amount of the recent fines and penalties for Bank Secrecy Act and anti-money laundering violations to demonstrate the importance of compliance. Given the amount of fines and potential reputational damage, it’s more prudent and cost-effective to spend the money up front on compliance efforts rather than on the back end after violations of the program have occurred.

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Global Gaming Business MARCH 2017

“In fairness to the gaming industry, money launderers are drawn to any business that’s heavily involved in cash. It could be a restaurant, a taxi cab company—any industry out there that has a lot of cash moving. But frankly, the biggest cash-based business is casino gaming.”

—Kerry Myers, former FBI forensic accountant To detect possible money laundering, Crawford advises that casinos look at players and patterns of activity over the long haul. “The industry should look not only at a 24-hour window but over a multiple-day period, and at the end of 30 days do a full analysis to see if suspicious people are coming in and out.”

‘Where the Money Is’ To keep ahead of money launderers, the American Gaming Association just released its updated list of best practices for AML compliance, says Elizabeth Cronan, the AGA’s senior director of gaming policy. Among its most important tenets: “to ensure that internally there’s a culture of compliance, without silos, so that critical information is being shared across departments.”

“It’s a huge priority for the AGA when you look at the wider implications,” says Cronan. “Ultimately, our industry is serving the government with information that’s going to protect the integrity of the wider U.S. financial system. It’s of critical importance in the age of terror threats, and something we take very seriously.”

No matter how tight the controls, criminal syndicates, cartels and garden-variety crooks will always be working on new ways to clean dirty money from drug trafficking, human trafficking, Medicare fraud, ID theft, mortgage fraud or other nefarious activities—including illegal gambling. Once the origins are obscured, the tainted profits re-enter the economy, and money launderers make out like the bandits they are.

“A new slot machine can’t come out without finding its way into the garage of some criminal who tries to reverse-engineer it so it can be cheated,” says Silver. “Of course with the internet, there are more sophisticated ways of laundering money. Every time you plug a hole, the ingenuity among the criminals also occurs.”

“The ways to launder money are limited only by the imagination of the person doing it,” says Myers. “In fairness to the gaming industry, money launderers are drawn to any business that’s heavily involved in cash. It could be a restaurant, a taxi cab company—any industry out there that has a lot of cash moving. But frankly, the biggest cash-based business is casino gaming.”

He recalls the words of legendary bank robber Willie Sutton, who stole a reported $2 million during his career in the 1930s. Asked why he robbed banks, Sutton famously replied, “Because that’s where the money is.”

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Affiliates

With Benefits

Unlike affiliates in Europe, U.S.-facing affiliates are learning to work with regulators and relatively small markets | By Steve Ruddock

W

hen it comes to customer acquisition, affiliates are an extremely important cog in the online gaming machine. In smaller, ring-fenced markets like New Jersey, they play an even more vital role, which is why it’s not surprising to find online operators increasingly turning to affiliate marketing in lieu of traditional advertising channels.

But this wasn’t always the case.

In the lead-up to New Jersey’s synchronized launch in November 2013, most of the online gaming sites decided to mimic the successful European approach to their marketing initiatives. Yes, they teamed up with affiliates, but they also spent countless dollars plastering their wares on billboards and sporting events, and filled the radio and TV airwaves with commercials.

One would think that reaching every potential customer in such a small market would be an easy task, but online gaming operators learned a hard truth during this period. Customer awareness was incredibly low, and in order to reach all 9 million people in New Jersey, they would have to advertise in the ultra-expensive New York and Philadelphia markets.

It wasn’t long before operators tightened their purse strings and reassessed their marketing spends.

What ended up happening in New Jersey was the early blitz of marketing by operators was followed by smaller, less visible campaigns. And with that, the focus shifted to affiliates.

Affiliate Marketing in New Jersey Affiliates offer online gaming sites a way to market without the upfront cost, creating a relationship not unlike “friends with benefits.”

As Mattias Stetz, COO of Rush Street Interactive, which operates the PlaySugarHouse.com online casino in New Jersey, says, “As the affiliate business is a pure performance-based business model, there are few drawbacks for us doing marketing through affiliates.”

In addition to the no-strings relationship, “affiliates are usually very good at SEO (search engine optimization),” Stetz notes. “So, this forces us to continuously improve our SEO efforts to stay ahead and secure top ranking for our own brand.

“It’s a very important aspect of online gaming, and how to attract new players to your site. The affiliate channel is a great way for us to educate our players about all of our games, promotions and loyalty rewards.”

Thomas Winter, vice president of online gaming at Golden 40

Global Gaming Business MARCH 2017

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Many affiliates came to the realization that the immediate money was in marketing the offshore sites that continued to serve most of the United States. After all, it’s much easier for an affiliate to market a while failing to differentiate between black-marblack-market site that is ket sites and the licensed and regulated industry.

The reason so many affiliates continue to aimed at 365 million U.S. advertise offshore sites is simple. residents instead of a completely legal and Regulations Lead regulated site limited to to a Tough Decision New Jersey’s 9 million for Affiliates For the first time, New Jersey required U.S. afresidents.

Nugget Atlantic City, also is positive about the affiliate situation in New Jersey, but indicates it still has room to grow, provided the situation on the ground improves—i.e., more states legalize online gaming.

Even though affiliates are a decent part of Golden Nugget’s acquisition numbers, Winter says, “the number of top affiliates remains low when compared to other, more mature markets.”

Winter goes on to say that the lack of topend affiliates—according to Winter, there are only a handful of significant online casino affiliates in New Jersey—“explains why affiliates probably weight three times less in that state than they typically do in more mature markets.”

There are a number of reasons for this discrepancy, and for affiliates eschewing New Jersey, including but not limited to the multi-year absence of online gambling sites and the coexistence of licensed and unlicensed sites, and regulatory burdens placed on affiliates that didn’t previously exist.

All of these things created a difficult situation for affiliates, operators and regulators.

Is This Legal?

In New Jersey, differentiating between licensed and unlicensed online gaming websites has been difficult for the average person, particularly when you consider the multi-year absence of online poker and gaming advertisements across mainstream channels, along with the fact that online gambling remains illegal in other states.

A big reason for this confusion and lack of awareness was the marketing efforts by the newly licensed sites. The ads looked familiar to the old marketing campaigns of Full Tilt Poker and PokerStars from a few years back, and despite the money spent, the understanding among the populace—largely due to the April 15, 2011 crackdown by the Department of Justice—was online gambling was illegal, and legality wasn’t a big enough focus early on.

As PocketFives.com co-founder Adam Small says, “I think the education campaign hasn’t yet been as effective as it needs to be. There are still way too many people in New Jersey who think this is an illegal industry.”

Furthermore, black-market sites still operating in the New Jersey market, along with affiliates advertising these sites, were happy to further muddy the waters. To this day, affiliate websites representing unlicensed operators like to tout the legalization of online gaming in New Jersey,

filiates to abide by strict regulations. To continue to operate as they were accustomed to, affiliates would have to apply for a license.

In New Jersey, affiliates were required to apply for an ACSIE license, or they could choose to fill out some basic paperwork, but would be limited to working on a CPA basis rather than the more lucrative revenue-share model—the licensing process for affiliates is less restrictive in Nevada, but the small size of the Nevada’s poker-only market is what keeps most affiliates from devoting resources to it.

Furthermore, the New Jersey Division of Gaming Enforcement required affiliates working with licensed online gaming sites in New Jersey to stop advertising offshore sites, even if they only advertised these sites outside of New Jersey, in other states. The decision affiliates had to make was a difficult one that required weighing current earnings against future potential.

Many affiliates came to the realization that the immediate money was in marketing the offshore sites that continued to serve most of the United States. After all, it’s much easier for an affiliate to market a black-market site that is aimed at 365 million U.S. residents instead of a completely legal and regulated site limited to New Jersey’s 9 million residents.

This all came to a head in July 2015, when the DGE forced affiliates to make a choice—drop all offshore online gaming websites or forego New Jersey (and ostensibly be prohibited from working in a state that legalizes online gaming down the road) in perpetuity.

Most chose the immediate returns of the black market over the uncertain future of legal online gaming in the United States.

For some affiliates, this was a decision that was already made for them. As was the case with the operators, many affiliates found the size of the market too restrictive, and the pay cut they would have to take, including potentially operating in the red until other states legalized online gaming, wasn’t an option.

As Income Access CEO Nicky Senyard said at the time, “Affiliates MARCH 2017 www.ggbmagazine.com

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The affiliates that made the difficult choice to stick it out in the legal, regulated U.S. markets are banking on being rewarded when more states legalize online gaming.

“We do have several

have to decide what business they’re in. You need to decide what the end goal of your business is. Is your end goal to make a nice living for the rest of your life? Is your end goal to sell this asset? And I think that’s the conversation affiliates are pragmatically having with themselves.”

It’s impossible to talk affiliates without mentioning Income Access, and like many New Jersey online gaming sites—Betfair US, Caesars Casino, Harrah’s Casino, Tropicana, and Virgin US—Golden Nugget’s and SugarHouse’s online affiliate programs are set up on the Income Access platform.

Income Access, now a subsidiary of PaySafe, is one of the leastknown but most integral parts of the online gaming industry. The company offers affiliate management programs linking operators and affiliates, and providing a streamlined and proven management system.

As Stetz notes, “All of our ad-serving and tracking is provided by Income Access.”

Regulations Serve Their Purpose Winter makes it clear: The size of the New Jersey market is the biggest blocker to affiliates.

“Affiliates need to work harder to make sure they don’t waste their energy or money in non-regulated states,” Winter explains.

But in the grand scheme of things, the regulatory burdens have their merits, and the benefits outweigh the burdens.

“Regulations are balanced, in our opinion,” Winter says. “Licensing conditions may be seen as too heavy for affiliates looking for a revenueshare model, but I am not sure it’s been that big a blocker so far.”

Small, a licensed affiliate in New Jersey, agrees.

“My experience is very positive,” he says. “Things happen slowly sometimes—I had to wait two months on one occasion to get approval for a basic affiliate deal—but there are wonderful, highly experienced and well-prepared people working there.

“That makes it a pleasure, and I love being a positive part of a state that’s doing things the right way, bringing this industry where it needs to be in the U.S.”

The Recipe for a Successful Relationship Doing things the right way is a two-way street, and requires long-term commitment from operators and the affiliates they’re working with.

“The affiliates that we currently have on board are seeing incredible success thus far with us in large part due to not only being new to the market, but also due to the fact that we are a top-converting brand,” Stetz says.

Stetz goes on to lay out the perfect operator/affiliate relationship: “Offering a unique brand that players love is first and foremost. We need to do the heavy lifting and make sure we offer a product that players love, which from what our players have been telling us, is certainly 42

Global Gaming Business MARCH 2017

the case at PlaySugaraffiliates that engage in House.com. offline affiliate promotions, “Next, we need to including one who has his track all referred players, own storefront in Atlantic no matter what channel affiliates have utilized to City. We are always refer them, and pay out looking to welcome or generously and on time. reach out to any affiliate “Lastly, it’s important that either has online traffic to be in continuous communication with affiliates or can get the word out so they are aware of our offline, as we also have promotions, are up to bonus code tracking date on what we have to capabilities for offline offer our players and make sure that any affilicampaigns.” ate’s player queries are —Mattias Stetz, COO of Rush answered in a timely Street Interactive, which operates manner.”

PlaySugarHouse.com Stetz notes that PlaySugarHouse.com has started thinking outside the box when it comes to affiliate marketing, going so far as to partner with offline affiliates to promote the company’s online gaming brand.

“We do have several affiliates that engage in offline affiliate promotions, including one who has his own storefront in Atlantic City,” Stetz explains. “We are always looking to welcome or reach out to any affiliate that either has online traffic or can get the word out offline, as we also have bonus code tracking capabilities for offline campaigns.”

The Future of Affiliates in the U.S. The affiliates that made the difficult choice to stick it out in the legal, regulated U.S. markets are banking on being rewarded when more states legalize online gaming.

“For poker at least, it’s important to see more states and/or countries share the player pool,” Small indicates. “Otherwise, it will never grow beyond what it is today.”

Asked how important it was for his business to see further legalization in the U.S., Small doesn’t mince words: “On a scale of 1-10, it’s a 12.”

Stetz also points out how the early bonds formed in New Jersey will pay off for affiliates down the road. “We offer affiliates the chance to grow their business in the United States,” he says. “It might just be New Jersey today, but because our company owns casinos in several large-population states (Pennsylvania, New York and Illinois), in addition to owning our own proven iGaming platform, affiliates will have the opportunity to grow with us as more states legalize online gaming.”

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U.S. AG Warns, States Eye iGaming

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Costa, but many details of the plans he confirmation hearings for remain to be debated and possibly President Donald Trump’s reconciled. One main issue of connominee for attorney general, Jeff tention is likely to be tax rates on Sessions, jarred the iGaming indusiGaming. Last year’s House bill contry in December. Under questiontemplated a 14 percent tax on online ing by Senator Lindsay Graham gaming, plus 2 percent for local com(R-South Carolina), an advocate munities to be distributed via an ecofor Sheldon Adelson’s RAWA (Renomic development grant program. store American’s Wire Act), SesCosta’s proposal contemplates a 25 sions said he would “review” the U.S. Attorney General percent tax rate on online gambling.

Department of Justice’s 2011 Jeff Sessions Few feel the Senate tax rate will be acmemo that found only sports betceptable to operators, who already pay revenue ting was prohibited by the 1962 Wire Act, allowtaxes among the highest in the industry—55 pering online gambling and lottery to expand. cent on slot revenues and 16 percent on table While it’s unclear what would happen to the games. three states that have already legalized iGaming, Costa’s iGaming fee structures also are much it’s not stopping other states from continuing to higher than the House plan. The Senate document explore the new industry. In fact, it may have incontemplates a $10 million operator licensing fee, creased momentum. plus $5 million from suppliers, such as content Two members of the Pennsylvania House of providers. The House version contemplates $8 milRepresentatives have filed a co-sponsorship memolion operator license fees spread out over five years, randum outlining upcoming legislation to expand with a $2 million supplier fee, also over five years. gaming in the state, including the legalization and (Costa did not indicate the term length of the liregulation of online gaming and daily fantasy cense fees.) sports, as well as new regulations to make it easier In New York, lawmakers will get their second to get new styles of slot machines into casinos. crack in as many years at legalizing online poker The memorandum also includes a plan floated following the reintroduction by state Sen. John last year to permit slot gaming on tablets at state Bonacic of a bill that would grant up to 11 licenses airports. to host the games with licenses designated to state The co-sponsorship memorandum, filed by casinos and racetracks. state Reps. George Dunbar and Rosita YoungIn 2016, Bonacic, who chairs the Senate’s Racblood, states an intention to introduce “omnibus ing, Gaming and Wagering Committee, was able to gaming legislation that will protect consumers, steer the same bill easily through the upper chammaintain and improve the competitiveness of ber, which passed it 53-5, only to see it fail to reach Pennsylvania’s casino industry and generate a vote in the Assembly, where opposition to interneeded revenues for the commonwealth.” net gambling is considerably stronger.

Eleven key features of the memorandum The fate of the 2017 version (S 3898) is uncerwould create state regulations concerning entry tain as well, though proponents take heart in the fees, skill gaming progressive jackpots, vendor regfact that the legislature has given its support to istration, the use of licensed testing labs and more. daily fantasy sports, classifying it last year as a skillFor iGaming, it would regulate and tax online based activity, and because Assembly Gaming wagers, including a full slate of online casino Committee Chairman Gary Pretlow, who opposed games and online poker, with land-based casinos the 2016 bill, now says legalization is “doable.” operating the sites along the New Jersey model, In Massachusetts, state Senator Bruce Tarr has and impose consumer protections on and tax onintroduced a bill that would allow state casinos to line fantasy sports operators. offer online games.

The memorandum joins a similar one filed The bill is a “shell” bill, which means that the last month in the state Senate by Senator Jay 44

Global Gaming Business MARCH 2017

details need to be filled out. The bill would allow casinos to apply for licenses to “conduct gaming operations via the internet, provided that such operations do not include or reflect gaming mechanisms operated by the state lottery program or those simulating or resembling slot machines.” This would imply that the internet games could be games such as poker, craps and roulette.

Last year the legislature created an ad hoc “Special Commission on Online Gaming, Fantasy Sports Gaming and Daily Fantasy Sports” whose task is to study all online gaming except for the lottery and recommend an omnibus bill to the lawmakers this summer. Tarr’s bill is jumping the gun a little on that.

Massachusetts Gaming Commission Chairman Stephen Crosby is on that commission. He has been calling for an omnibus bill that would include fantasy sports and online poker for some time now.

Three members of the New Hampshire House have introduced a bill to allow online gaming in the state. The bill, titled “Allowing Online Gambling,” has been referred to the Ways and Means Committee.

The bill so far lacks specifics in that it does not create a regulatory framework for licensing or require that online gaming be operated by companies based in the Granite State. It simply decriminalizes the practice and allows New Hampshire residents to play on existing online sites. It would, therefore, not create any new revenues for the state from licensing fees.

And finally, an online poker bill has been introduced to the Hawaii legislature seeking to allow online poker and casino games.

The bill—introduced by state Senator Will Espero—would create the “Hawaii Internet Lottery and Gaming Corporation.” Tax revenue would be used to benefit public schools and the University of Hawaii system. The bill allows online poker and casino games and has provisions for player sharing agreements with other states.

The bill also calls for online gaming to help boost tourism to Hawaii through “land-based gaming entertainment events,” even though Hawaii currently has no land-based casinos.

Past efforts to bring online gambling to Hawaii have gained little traction, and the state is one of only two in the U.S. with no form of legalized gambling or casinos. Still, Espero said that “tens of thousands” of Hawaiians are sending “tens of millions” of dollars out of the state by gambling online illegally via unregulated offshore sites.

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Study: New Jersey Online Gambling Expected to Grow at 17 Percent for 2017

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nline gaming revenue rose by 32 percent in New Jersey in 2016, and that growth is likely to continue at a slower rate of 17 percent, according to a study by industry research firm Eilers & Krejcik.

The slowdown will come largely because the state’s pool of online poker players has leveled off, the study said, which predicts online poker revenue will fall 6 percent.

“There are not really enough players in New Jersey alone to support an online poker market,” said co-author Chris Grove, a senior consultant at Eilers & Krejcik.

The study also looked at the impact of PokerStars launching a site in the state.

“Poker revenue appears to have hit a wall despite the much-anticipated launch of PokerStars,” the study said. “Ultimately the lion’s share of PokerStars’ growth came at the direct expense of Borgata/Party and WSOP/888.

With roughly one full year in the books, we believe it’s safe to now conclude what we originally assumed would be the case: PokerStars has had a meaningful, but not transformative, impact on the New Jersey online poker market, which rose 11 percent year-over-year.”

State gaming regulators reported that online gaming revenue for the state was $196.7 million in 2016, up 32.1 percent from 2015.

The New Jersey market, however, is largely driven by online slots and casinos games. The report predicts play on slots and casino games will increase about 20 percent in 2017.

All in all, the study predicts New Jersey will get about $40.2 million in taxes from online gambling in 2017.

DFS Site Fantasy Aces Declares Bankruptcy

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deal that would have had small DFS site Fantasy Aces be acquired by the DFS site Fantasy Draft fell through and Fantasy Aces has filed for bankruptcy. Customers of the site were advised their accounts are temporarily on hold.

The collapse of Fantasy Aces, one of the smaller DFS sites behind giants FanDuel and DraftKings, further thins competition for the larger sites.

Fantasy Aces, based in Orange County, California, filed for Chapter 7 bankruptcy in the Central District of California. The move came about a week after the site had announced it was being acquired by another small DFS player FantasyDraft. That deal, however, fell apart due to “issues identified during our due diligence,” the company said.

Fantasy Aces later sent an email to players saying the site was “temporarily shuttered” and that “all accounts are on hold.”

FantasyDraft later announced it would pay up to $1.3 million to make the players of Fantasy Aces whole again. Player account information will be turned over the FantasyDraft to complete the payouts.

Ruling: Gibraltar and U.K. Single Market in E.U. Court Challenge

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he European Union’s advocate general has issued an opinion that Gibraltar and the U.K. are one single market, rejecting a challenge by Gibraltar of new U.K. taxes on online gambling. The U.K. protectorate also faces implications from the opinion as it tries to deal with the Brexit vote. The E.U. Court does not have to follow the opinion of the advocate general, but rarely goes against the office.

Britain and Gibraltar are part of the same market, according to an opinion from the European Union’s Advocate general, a ruling that hurts Gibraltar’s challenge of U.K. online gaming taxes and could affect the protectorate after the Brexit vote.

The ruling came after Gibraltar’s challenge of new U.K. online gambling taxes or point of consumption taxes imposed in 2014. Gibraltar’s online gaming industry challenged that the U.K. was taxing the free movement of services within the E.U. Advocate General to the European Court of Justice Maciej Szpunar issued an opinion in the case saying his office “takes the view that, for the purposes of the freedom to provide services, Gibraltar and the U.K. are to be treated as one entity,” the court said in a released statement.

Szpunar said the U.K. tax is a domestic tax not covered by E.U. law as it does not affect another E.U. state.

The court is not obligated to affirm the advocate general’s rulings in a final decision, but generally supports such rulings. Britain’s High Court had asked the E.U. Court for a ruling on whether Gibraltar was considered a separate territory than the U.K. The ruling could have implications for the small protectorate and its large online gaming industry as the U.K. goes through with its exit from the European Union.

Gibraltar is part of the E.U. due to its status as a British overseas territory. Its residents voted overwhelmingly against the U.K. leaving the E.U. Gibraltar officials have said they hope to negotiate a different associate relationship with the E.U. as Britain withdraws.

MARCH 2017 www.ggbmagazine.com

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PLAYER DEVELOPMENT

Breaking It Down Hyper-segmentation for player development

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atabase marketing is a monster. With a myriad of intricacies, the strategies within can be overwhelming to those outside of the gaming world. They can even be overwhelming to those inside the gaming world who don’t have experience in that department. It’s an ever-evolving science that provides a tremendous value to any casino. It’s a practice that generates millions in annual revenue. It rewards loyalty and drives trip frequency. It’s brilliant.

Why then, do we not apply the experience we’ve gleaned from our successes in database marketing to player development and hyper-segment each host book?

It’s imperative that the host team and the database teams work in tandem, as each player book is essentially a micro-casino. If an ADT threshold is set at $500 to be eligible for coding, we acknowledge that there are many players who are at that minimum; however, there are also a number of players who have a substantially higher daily worth, and a bulk of the hosted group is somewhere in the middle. Hyper-segmentation is the key to adequately serving these segments.

Database incorporates battle-zone marketing to aggressively increase market share from competitors on a grand scale. From the player development perspective, the same practices can be directly applied to a highly targeted player segment. Hosts can continue to segment this player group to identify opportunities within a coded group of players.

Think of a unique game that your property has for which your VIP players have a preference.

In some markets, this could even be as simple as having table games as an option. How far away is the next property that offers that same game?

Which players are equidistant between your property and them? The host team has a need to pay special attention to this band of players and entice them to the property.

At this point, from the player’s perspective, it comes down to the guest experience they have at your property. Same travel time. Same game experience. Different host relationship.

Segmenting by geography is nothing new.

Sadly, not many hosts are using it as leverage to

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Global Gaming Business MARCH 2017

By Mick Ingersoll

maximize performance each quarter. The player development team can easily strategize by focusing on business that needs more lead time for a visit or invitation and zero in on those with easier access near the end of a quarter where guests may need as short as a day’s notice to respond with a visit.

This geographic low-hanging fruit can be the difference between a made goal and a missed goal at quarter’s end.

Common wisdom says it takes approximately 21 days for something to become a habit. If a player who typically visits five times per week is gone for 21 days, it’s highly likely that they have created a new habit elsewhere.

Comp redemption is a delicate dance between host and player. Hosts want to reward VIPs for their loyalty. Players want to get as much as they can, to the point of a negative reinvestment if they can take it that far. They’re not to be blamed. Essentially, hosts must find that sweet spot where the casino can make a profit and its VIPs can have a great time and feel appreciated.

Hosts can analyze comp redemption to identify behaviors commonly associated with a player’s life cycle. By segmenting a group of players who have a recent spike in redemption, they may be able to identify someone who has started to feel like they need more for their play.

Maybe there has been a correlating spike in actual win on his or her recent trips. Theoretical win helps the casino internally, but the player doesn’t have a theoretical wallet. Players feel actual loss and want to be rewarded when they leave money in a machine or on a table. We can speculate that someone who is redeeming comps at a higher rate with no associated increase in play is someone who may be near the busting point.

As an industry, there has to be an ethical

awareness on all levels, including redemption of comps and incentives.

Another major benefit of database marketing is the ability to identify incliners and decliners—both critical segments to a host team. Even more attention should be directed toward a decliner or inactive, because fewer visits by these high-worth players have a greater impact.

The inactive players also happen to be the segment your competitors are most eager to entice away from your property. To prevent this, hosts must be deeply familiar with their players’ regular patterns and behaviors. Not knowing about a change in visit frequency until 90 days or even 18 months has passed is a huge missed opportunity.

Redirecting negative growth as it arises will always be a more viable option than trying to reactivate an account.

Common wisdom says it takes approximately 21 days for something to become a habit. If a player who typically visits five times per week is gone for 21 days, it’s highly likely that they have created a new habit elsewhere. There’s an opportunity to break that new habit if it’s caught early, but virtually no chance if the guest is classified as inactive (and the host only notified) at the 90-day mark. Most players taper off slowly; good hosts who notice the pattern before it becomes a habit have the best chance to implement a recovery effort to regain that player’s loyalty.

There are countless ways to segment groups of players and target them with personalized offers, but it requires host teams to be empowered with the right tools and technology. You wouldn’t go to a surgeon whose hospital didn’t provide a scalpel.

Don’t send your hosts out without the tools needed to own their business and increase your market share. Give them the data and the knowledge to create an unparalleled guest experience.

VizExplorer Industry Specialist Mick Ingersoll is a 13-year player development and VIP marketing veteran, including nearly a decade at Penn National Gaming. At VizExplorer, he is responsible for developing and managing best practices training for the company’s player development and CRM solution, hostViz.

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Hard Results

with Great Software Why the

By Dave Bontempo

development of new gaming programs has driven profits for the gaming industry

InfoGenesis Flex tablet has performed well for Agilysys clients.

In eight- or 10-inch models, the device helps hosts place high-scale attention upon guests, bringing mobile capability to the next level of customer engagement

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ollars and data. Bonuses and bottom lines. Gaming resorts and hotels.

Revenue tools connect them all via new, cutting-edge software. Evolving business software aids savvy gaming and hotel operators, whose interests converge more than ever. Tablets enhance property-wide customer-service efforts. Information programs illuminate guest spending and room rates, hitting the sweet spot between under- and overcharging. Product upgrades enable multiple tournament floor promotions.

Operators blending hotel and gaming interests consider software enhancements invaluable. The products help them evaluate and apply critical information. The decisions must often be made quickly, for “real time” affects real money.

Pooling Resources Agilysys, the Alpharetta, Georgia-based hospitality company, has vastly extended its gaming reach. The company’s major 2016 innovations included the tablet-driven mobility of InfoGenesis Flex and the business insights of rGuest Analyze.

Jan Larsen, the company’s senior director of product management and strategy, says the InfoGenesis Flex tablet has performed well for clients. In eight- or 10-inch models, the device helps hosts place high-scale attention upon guests, bringing mobile capability to the next level of customer engagement.

Larsen says InfoGenesis Flex recently enabled properties to service 30-50 percent more customers, obtain about 60 percent more spend because of customer convenience and generate a whopping 75 percent poolside uptick based on reduced order cycle time and increased interaction.

This underscores the concept that if it’s easy for customers to order pool48

Global Gaming Business MARCH 2017

side food and beverage, they will.

“We’re bringing service to the guest wherever that guest might be,” Larsen indicates. “This creates new revenue opportunities from little more than meeting existing, unmet demand.

“Take poolside, for example. Servers take and enter food and beverage orders while they continue to engage the guest in conversation. Implemented well, the order can arrive before the conversation is over. The outcome is more orders, happier guests and a cost-effective operation.”

While the tablet runs on Agilysys software, Larsen also touts its hardware.

He says it’s a military-spec tablet certified for gaming use. The units are splashand shock-resistant, meeting specifications for drop resistance.

The Flex tablets are available in different footprints to accommodate various environments. They provide a longer battery life and broader temperature tolerances to withstand challenging environmental conditions, Larsen says.

They also remain flexible enough to accommodate the changing guest-activity flow. Whether guests are on the casino floor, poolside, at the convention center or using retail or food and beverage carts, they are served quickly and seamlessly, he asserts. Indeed, the outdoor use of InfoGenesis Flex brings the hardware-software world together.

Agilysys rGuest Analyze is a business intelligence solution helping operators discover and share significant insights. It uses the data that already exists in their fixed and mobile POS systems. There is little to no infrastructure required outside of a web browser and an internet connection.

The solution also is ideal for creating business dashboards, Larsen says. It is used to support loss prevention in quickly identifying fraudulent activity. Capabilities include staff performance metrics, to identify team champions and opportunities for training; and for on-demand data to assess guest traffic, table turns, tips and tender types.

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Up-And-Comers Epic Results TransAct Technologies thrives in software-driven technology and printing solutions for high-growth markets including casino and gaming, lottery, food safety, banking and hospitality. It has offices in Hamden, Connecticut and in Las Vegas.

Under the Epic brand, it has prospered since 2013 with Epicentral. This is the gaming industry’s only enterprise-level promotion and bonusing software suite allowing casino operators to deliver realtime promotions at slot machines and electronic table games, according to Tracy Chernay, senior vice president of global casino, gaming and lottery.

Two new Epicentral system versions, the v3.8 and SE, have enhanced the capabilities of the solution. They were announced at G2E 2016 and were recently showcased at ICE Totally Gaming.

“With new innovative capabilities, Epicentral v3.8 allows operators to run multiple promotions at the same time, create games within games, offer multi-user/multi-site promotions, run different promotions on different slot game banks, segment players by tier and promote to different levels of uncarded players,” Chernay says. “There’s nothing like it in the industry.”

Chernay considers Epicentral SE a unique upgrade for TransAct’s promotion and bonusing system.

“It will allow operators to use the existing bonusing capabilities found in their slot management systems to offer bonuses to players as a printed coupon by leveraging the Print Manager and Design Center modules of Epicentral,” Chernay says. “Epicentral SE also provides for an upgrade path to a full Epicentral implementation should an operator seek to expand the promotion and bonusing options beyond what the existing slot management system offers. Casino operators running Epicentral SE will be able to fully track and report on all promotions from their CMS, giving

Several new entries into the gaming industry have brought disrupting technology that creates profits

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hile some heavyhitting companies bring software to gaming, the sector also welcomes up-and-comers.

One of them is SpendSight Technologies, a four-person Vancouver outfit bringing its product by the same name to the market. SpendSight has one major deployment each in the United States and Canada, according to founder Kahlil Ashanti. The product has a unique aim.

“We target non-gaming spending, which is quite significant,” he says. “We help you track what I’d call the invisible whales. You may have players club members who come to your property, have dinner and drinks, use the spa and perhaps spend $5,000-$6,000 a month, and you may have no idea where and how they spend their money.

“We have a proprietary algorithm that allows this software not only to predict the behavior of the players club members but to learn their trends over time. It’s also easy to use (cloud-based, accessible via computer, tablet, etc.). You can log in and instantly get a picture of 40,000-50,000 players.

We also customize it for you. Who are your weekend warriors, who are your most valuable, who isn’t as valuable to you as you may have thought?”

Ashanti says SpendSght will continue testing its new product generation, completed last August, throughout the next several months. After that, perhaps more casino whales will become visible.

Sen-Sen-Sible

SenSen is one of the leading suppliers of Smart City solutions. The products impact retail, parking and transportation realms, helping cities upgrade their operations.

The Australia-based company helps its customers improve decision-making speed and accuracy, and to automate business processes. The company’s groundbreaking software combines enterprise video and sensor data acquisition, data fusion and big data analytics into a highly scalable and configurable platform, officials say. Gaming fits perfectly into its lineup.

All solutions are configurations of the SenDISA platform (SenSen Distributed Sensor Analytics), with the Smarter Gaming version tailored for the casino market.

“We target non-gaming spending, which is quite significant. We help you track what I’d call the invisible whales.”

—Kahlil Ashanti, founder, SpendSight

Via SenDISA, businesses can capture video and sensor data from many sensing devices including CCTV cameras, time-of-flight cameras, GPS, radar, heat sensors, motion detectors, etc. An operator can track people, vehicles and objects in real time.

From a gaming perspective, the solution can track bet size and chip counts, money flow, player statistics, gaming department performance, dealer metrics, theoretical edge monitoring and a unique item—staff fatigue. Besides having a marketing and player-development purpose, the solution helps with security.

Meet the New Host

GGH, a partnership of Morowitz Gaming Advisors and Global Gaming & Hospitality, continues its new joint venture with Magnifact, a leading technology industry solutions provider, to distribute Casino Host Manager (CHM). The new product, announced late in 2016, is a proprietary data analytics innovation designed to manage casino VIP or hosted play.

CHM is a daily operating dashboard that will help casino owners, operators and senior management monitor performance in real time, make more informed, data-driven decisions about the profitability of individual VIP players, and quickly evaluate the effectiveness of their hosts and casino marketing programs. CHM will enable management to more effectively target and control promotional allowance spending, deploy marketing spend more efficiently, and assist in identifying opportunities to reduce overall spending, company officials contend.

GGH is a private global merchant advisory and investing boutique with offices in Las Vegas, New York and Atlantic City. It is led by partners Cory Morowitz, Carlton Greer and Michael Kim. Magnifact is a leading technology industry solutions provider and developer of software-asa-service (SaaS) programs.

—Dave Bontempo

MARCH 2017 www.ggbmagazine.com

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Rainmaker’s grouprev is a pricing optimization tool that analyzes each group lead 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. marketing teams and slot floor managers a true all-in-one view of the player environment.”

Casinos using Epicentral attain consistent floor-performance strength, Chernay says. That includes reporting a 60 percent increase in new player club registrations, an 87 percent bounce-back redemption rate, a 14 percent increase on time-on-device, a 100 percent increase in lower-tier average daily theoretical (ADT), a 46 percent increase in slot handle and a 37 percent increase in weekday afternoon play, according to her figures.

One major TransAct Epicentral customer is Foxwoods Resort Casino, the largest resort casino in North America.

“Foxwoods opted for a system that would provide them with the flexibility to connect directly and immediately with their players while they are playing at the slot machine,” Chernay says. “Hence, the creation of FoxPerx powered by Epicentral.”

The program was rolled out on 1,900 electronic gaming machines in two of Foxwood’s casinos last spring. Working with TransAct, the loyalty marketing team designed a promotion to randomly award slot players using their Foxwoods Rewards cards with a bonus ticket redeemable for cash payouts up to $500. Patrons could also receive gift cards for many of the over 30 Foxwoods dining outlets.

An Assessment Repertoire The Rainmaker Group, also based in Alpharetta, Georgia (north of Atlanta), is a world leader in automated forecasting and profit optimization software and services for the gaming and hospitality industry.

Software prominence has never been more important to its customer base.

“We’ve seen a mix across the board depending on who the customer is, but in general, casinos typically track their gaming revenues most closely, leaving a sizable gap where they are not always analyzing the other segments of the property or business,” says Angie Dobney, vice president of pricing and revenue management strategies for Rainmaker. “Each revenue stream has different profits, and each one is important for overall success. We have the ability to take in any ancillary revenue a casino can track to help them understand the total customer spend across their business. This is an area where our casino customers can benefit from the data and info our solutions provide them.”

In that realm, Dobney says group business remains hot. Rainmaker will make a new product announcement in March, maintaining its development of new strategies. This continues the trend that produced previous rollouts like guestrev, grouprev, revcaster and revintel.

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. That gives 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 that analyzes each group lead 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.

Revcaster and revintel have brought out another side of analysis.

“Revcaster has had a lot of success with rate shopping, and we are seeing 50

Global Gaming Business MARCH 2017

more adopters of revcaster using it to help them improve and optimize their rate strategies,” Dobney indicates. “Due to this, we are also gearing up to layer some revenue management decision tools onto the revcaster platform—primarily for limited-service hotels.”

Dobney says revintel has been endorsed in the gaming world because it can tie in property management data with the revenue management and rate shopping data information.

“What revenue managers and casino operators love about this is the one-truth analytics it provides for them,” Dobney contends. “They receive important, consistent data across all segments of the business and identify trends in business, and make better, fast decisions that improve performance.”

Dobney believes that the more effectively hotels can predict their business— from all segments, not just one group—the more proactive they can be in managing future demand.

“We have seen a real appetite from our clients to expand from revenue management into demand generation—so much so, in fact, that last year, we launched demand generation services,” she indicates. “Hoteliers are looking more and more for new ways to drive direct bookings, increase their online presence and get a clear view of exactly where they are spending their money. Our demand generation can do all of this and more for them, and I’ve seen more casinos and hotels come on board and use this service to improve and strengthen their business through website and global search engine optimization, paid search, digital display and social media advertising, re-targeting and revenue data analysis.”

The Financial ScoreBoard Duetto serves the gaming and hotel industries from its respective headquarters in Las Vegas and San Francisco. Two of its headlined performers are GameChanger in the price-optimization realm and ScoreBoard in the revenue intel category.

“There are a few topics that the industry has been talking about for a long time that continue to dominate the conversation—namely, tracking total guest spend and personalizing guest offers,” says Marco Benvenuti, a company co-founder.

“Unfortunately, everyone is talking about them but no one has been able to implement them well. Fortunately, over the past year, the technologies that power the casino industry have made major steps toward making these things happen.

Specifically, cloud computing—moving all of our data, operations and integrations into the cloud—will pave the way for total resort spend and guest personalization.

“This might be slightly controversial, but the casino industry and the technology industries are not often on the same page,” Benvenuti adds. “The casino industry is a smaller vertical that asks for and needs dedicated products and services. But to provide that, the technology industry needs dedication from casinos that they can adequately fund and continually operate tools built specifically for them.”

Toward that end, Benvenuti says casinos need to break down departmental silos and install a revenue management structure that works with all other depart-

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ScoreBoard allows casinos to compile and analyze reports that can be shared instantly with stakeholders throughout a single casino or across an entire organization that owns and operates several properties.

ments, including operations, sales and, most importantly, marketing.

Benvenuti believes two new Duetto products will help the gaming industry.

Personalized Loyalty Price (in the GameChanger realm) “was a major accomplishment in 2016,” he says, because it allows casino hosts to offer a personalized room rate to individual loyalty members based on their worth to the property.

“We also released ScoreBoard, what we’re calling a revenue intelligence tool aimed at replacing Excel as a reporting tool,” Benvenuti asserts. “ScoreBoard allows casinos to compile and analyze reports that can be shared instantly with stakeholders throughout a single casino or across an entire organization that owns and operates several properties.

“In real time, casinos can frame the big picture of non-gaming revenue for

the property and can drill down on how different customer segments are contributing to profitability. 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.”

Benvenuti says a number of customers prospered with sophisticated implementation of his company’s products. He says usage at Affinity Gaming, across all 11 of its properties, ramped up throughout 2016.

“By looking at our internal data, we can see the most popular pages within the app and how much time Affinity users were spending in the app,” he indicates. “In January, Affinity employees spent 25 hours on the Managed Rates page, the page where rates are recommended and then locked in and sent to the PMS. In December, Affinity users spent 446 collective hours on the Managed Rates page.”

From whatever angle vendors approach gaming and hospitality, they must manage the term “more.” What they offer can’t simply be reams of information. It must be drilled down into a money-making tool.

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EMERGING LEADERS Born and Raised Michael Armenta

Stephen Maldonado

Senior Marketing Manager, Chumash Casino Resort and Hotel Corque

ITR Manager, Forest County Potawatomi Gaming Commission

ichael Armenta had two choices when he graduated high school: college, or the casino on the Chumash Reservation two blocks from where he grew up.

He chose both.

Armenta began as a blackjack dealer, moving up to his current position as senior marketing manager.

“This was the industry for me, and I went into a two“It was a combination of the year management training program,” he says. “Over the experience and the next six years I worked full-time and was enrolled in online customer interaction as a school with the University of Phoenix.” dealer that molded my The training program taught Armenta all aspects of outlook and thought the casino and resort business. process as a casino “It was a combination of the experience and the cusmarketer in the Native tomer interaction as a dealer that molded my outlook and American gaming world.” thought process as a casino marketer in the Native American gaming world,” he says.

Armed with an MBA, Armenta could have gone anywhere in the country, but elected to stay put.

And for good reason. His father, Vincent, served as chairman of the Chumash Tribe, recently stepping down after 17 years.

“I had the opportunity to be exposed to tribal government,” he says. “Exposure to the gaming and hospitality business was a just the tip of the iceberg. Economic diversification, compact negotiations and working with other tribes were all part of this experience.”

The married father of one admits his current role is all over the place. “Digital marketing is a large focus of what I do, trying to find ways to connect to the customers, both new and existing. The most interesting aspect to me is closing the loop on a customer’s interaction with the brand, whether through website, Facebook or the casino floor, to deliver the best experience possible.”

In addition to the casino resort, Armenta’s job description includes marketing the Hotel Corque, Root 246 and Hadsten House. He also has responsibility for budgeting, strategic planning, new player acquisition, sponsorships, busing and event sales through their own ticketing.

Armenta calls his wife, Tawnee, his “biggest supporter and best critic.”

But Vincent Armenta is certainly a mentor. “He truly believes that if there is a will, there is a way. He is the person that can accomplish anything.”

He also credits General Manager Bill Peters.

“He has a great approach to any situation.”

And his own boss, Executive Director of Marketing Wayne Hurte, “a numbers-driven decision maker who has shown me that taking calculated risks is much better than staying stagnant.”

A lot of what goes on each day involves program design, implementation and review, Armenta says.

The one constant is meetings. On days an entertainment event is booked, Armenta works late.

“I review the process our employees go through to sell and distribute tickets as well as interact with the customers.”

The key to the evolution of the industry is delivering what customers want, Armenta says. “Online gaming is huge, but there will always be the desire for people to enjoy a traditional brick-and-mortar casino.”

For those who might want a career in the industry, Armenta has some advice. “Don’t be afraid to evolve with the market. The ever-changing gaming industry is a fast-paced, fun environment to be a part of. But never forget that the customers and employees are the ones who keep the businesses thriving.”

—William Sokolic

hen Stephen Maldonado first started in the gaming industry 10 years ago, his perception of what he was getting involved with was severely skewed. He recalls thinking to himself, “OK, Stephen, is this the path that you want to continue on given your technological experience and expectations?” It turns out that the answer was an overwhelming yes.

Maldonado joined the gaming industry working as a compliance engineer and field lab inspector for Gaming Laboratories International in New Jersey. After seven years in the New Jersey office, he learned about a new position opening in GLI’s Las Vegas office. And while he wasn’t sure what exactly to expect professionally, he was confident that the relocation was the right choice.

“Relocating to Las Vegas opened up doors that I didn’t even know existed, because now I was in the epicenter of gaming,” says Maldonado. “The move allowed easier access to suppliers, casino properties and other like-minded individuals that definitely helped shape my career.”

Most recently, Maldonado made the move to the regulatory side of the business, working with the Forest County Potawatomi Gaming Commission as an information technology and risk manager. This position requires full alignment with various casino networks, ensuring that the tribe’s gaming enterprises are in compliance with tribal, federal, state, county and municipal regulatory requirements through researching appropriate resources, and developing and recommending regulatory instruments.

The switch to the regulatory side of gaming gives Maldonado a unique perspective from both sides of the industry and a distinctive insight into best practices.

“It is always rewarding when you have the ability to educate other professionals and share ideas that would greatly impact day-to-day business, especially on a gaming floor,” he says. “I have been able to utilize my education and experience to form professional relationships with the ITL (independent test lab), regulators and suppliers, so they know I am always available to

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Multiple Skills

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Never Stop Learning Jada Yee Food and Beverage Manager, SaskGaming Corporation s a member of the Wood Mountain Lakota First Nation and direct descendent of Chief Sitting Bull, Jada Yee closely follows his ancestral teachings, believing that, “The circle of life is all about having a reciprocal relationship. You take, you give back.” Yee was taught that when it comes to learning, you learn as much as possible from everyone, no matter what religion and color they are, and in return, you share your teachings to them.

The Earth, he says, “is just one big classroom, and we are all here to learn and share experiences to make a better world for future generations.”

This philosophy of interconnectedness speaks volumes to Yee’s personal experience in the gaming industry, to his commitment to the community and to his loyalty to his longtime employer, SaskGaming.

Regarding his first visit to a casino on a family trip to Reno, Yee recalls, “The crowds of people, the noise of the slot jackpots going off and the exciting atmosphere—I just knew one day I wanted to work at a casino.”

It wasn’t long after that moment that Yee began his career at the early age of 19 for the newly opened Casino Regina in Saskatchewan Province. Starting out as a security officer, Yee took advantage of the many opportunities offered through his company, including the tuition reimbursement program which enabled him to attain his bachelor’s degree in business administration while working full time at the casino. However, Yee’s education didn’t stop there.

Throughout the years, he continued to work his way up the ranks through numerous departments, leading to his current role as food and beverage manager. Yee was fortunate to learn from many great managers along the way, gaining valuable knowledge that allowed him to become a strong and diverse leader.

Yee credits two men in particular for shaping his leadership abilities.

The first was his former CEO Marty

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“We need to find new and efficient ways to bring eSports and skill-based gaming to the casino gaming industry to appeal to millennials, as we start to see rising numbers in the younger player base.”

provide insight to the best of my ability.”

Looking forward, Maldonado’s advice to emerging leaders and young professionals who are looking to establish themselves is to focus on the emerging skill-based games.

“The emergence of skill-based gaming and eSports should be at the forefront of any gaming organization that wants to stay on the cutting edge and provide new experiences for their player base,” he suggests. “We need to find new and efficient ways to bring eSports and skillbased gaming to the casino gaming industry to appeal to millennials, as we start to see rising numbers in the younger player base.”

Maldonado hopes to grab the reins in this part of the industry and become a leader that other regulatory bodies can follow.

— Erika Meeske, The Innovation Group

Klyne, who taught him the importance of a leader’s employee engagement. Yee recalls how Klyne “would walk through the gaming floor remembering each staff member’s name and the names of their kids. He would do this almost every day, and you could really see the difference it made to the staff.”

As a leader, Yee strives daily to ensure that his staff is fully engaged. To attain that, he believes that a leader must “communicate, inspire, recognize and share in their success.” Overall, Yee describes it as challenging work, but with a reward well worth the effort.

Yee’s current mentor, Bob Crowe, the director of food and beverage at Casino Regina, taught him, among many things, to “always be willing to take risks and encourage innovation.”

Yee believes that a true leader never stops learning. He advises young professionals to always be willing to research new trends in the local, national and global gaming industry, and to find ways to make the casino a better place for staff and guests.

It’s no accident that Yee is devoted to SaskGaming. On the company’s obvious devotion to the community, he says, “SaskGaming understands that to be a leader, you need to make your community stronger.”

Throughout the years, Yee has helped his organization raise money for the Canadian Cancer Society, local food bank and women’s shelters.

Yee brings his education and experience full circle, by participating on committees and boards, speaking to youth regarding leadership and, most recently, by teaching gaming and hospitality courses at the university.

A dedicated family man, Yee somehow finds the time to return to the university for his master’s degree. “Early on in my education, I was able to talk with some First Nation elders, and they told me to always keep learning in life,” he says.

He has always kept those words in mind, happily admitting that after 17 years at Casino Regina, he still looks forward to every shift.

—Angela Slovachek, The Innovation Group

MARCH 2017 www.ggbmagazine.com

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RESPONSIBLE GAMING

Evolving With the Times

Why responsible gaming programs must adapt as more data becomes known

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hese past 15 years, I have had the good fortune to be engaged in responsible gaming (RG) on the supplier side of the gaming industry.

As director of RG for the Association of Gaming Equipment Manufacturers (AGEM), with more than 150 member companies from 23 countries, my role in RG is global in nature, thereby providing me the opportunity to contrast and compare RG efforts around the world.

This is an aspect of consumer protections that reflects the remarkable differences in cultures and their governments. Working with problem gambling interests (advocacy groups, treatment professionals, researchers and academics) has afforded a unique opportunity to view RG through a broad lens. Here is some of what I’ve learned and what I believe the future holds:

Player Protection Features via the Games Although problem gambling prevalence rates remain relatively stable, more or less around 2 percent, regardless of the jurisdiction or type of gambling, responsible gaming measures are changing. It only follows that since I work on the supplier side of the gambling business, my primary focus has been the modification of the technology in an effort to create a “safer” gaming device.

These modifications include but are not limited to clocks on every gaming machine (don’t people wear watches?), pop-up reminders asking people if they wish to cash out, reduced max bet/prize and, more recently, the pre-commitment measures in Australia that allow players to place limits on time and money. Not only have these restrictions proven largely ineffective in reducing problem gambling, they have diminished player enjoyment for the approximately 98 percent of players who don’t have a gambling problem— until now.

For the first time in the U.S., the state of Massachusetts recently unveiled “PlayMyWay” as a component of its new RG framework under the recent gaming expansion. PlayMyWay is available through a loyalty card, and is not intended for problem gamblers but rather for recreational players.

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By Connie Jones

The features allow players to manage their gaming experience by providing a type of budgeting tool. Some have referred to it as a type of “seat belt.” While it’s too early to determine how effective the technology will be in reducing problem gambling, regulators are encouraged by the number of players who are choosing to utilize the tools.

Internet Gaming Concerns Despite admonishments by some that slot machines are designed to addict, slot play is down in many locales, including the gaming mecca, Las Vegas. It seems the new “millennial” generation loves anything interactive.

From an RG perspective, internet gaming provides a perfect platform to deliver the type of player protections that are difficult to incorporate into the games in a bricks-and-mortar establishment. After the introduction of internet gaming in the U.K., problem gambling prevalence has not increased.

RG features are readily available on the game sites that allow players to manage their play experience, view RG guidelines, self-exclude and receive information for help with a gambling problem.

Other countries have been even quicker to embrace this change, according to some industry research. Consumer Reports magazine states that in Belgium, France, Canada and Sweden, cashless payments now comprise 89-93 percent of consumer spending.

Problem gambling interests have expressed concerns about how this could impact vulnerable players if adopted at gambling venues. These concerns might be addressed by incorporating RG measures, such as those used for online play, into the non-currency payment forms. These may include age verification, loss and time limits set by the player, self-exclusion and, most importantly, information on where to go for help if players think they might have a gambling problem.

Added RG Engagement for Game Providers Another aspect of RG that is undergoing a change is the role of the game provider in protecting players. Gaming technology companies that have been strictly business-to-business companies in the past are now finding themselves moving into the business-to-consumer space with the advent of online gambling. The primary difference of RG for operators such as Caesars, Wynn or Las Vegas Sands as opposed to the RG program of a game provider is direct interface with the player.

RG for a technology company centers around product safety, regulations that ensure fairness of the games, advertising guidelines, assisting in the creation of public policy that addresses RG, employee awareness and working with the problem gambling communities toward common strategies to reduce harm. In today’s online gaming environment, a game provider might get a call from a player who has a gambling problem and needs to know how to better manage play, self-exclude or seek advice on where to get help. Or they may have a loved one who has lost thousands of dollars playing one of those so-called “addictive” games and wants to know what the game provider can do to rectify the situation.

From an RG perspective, “internet gaming provides a perfect platform to deliver the type of player protections that are difficult to incorporate into the games in a bricks-and-mortar establishment.

”

Convenience Payments According to a survey by Bankrate.com, almost half of Americans walk around with less than $20 in cash. Convenience payments through use of a debit/credit card, mobile wallet, store-branded apps and a variety of other non-cash payment methods are quickly becoming a way of life.

Global Gaming Business MARCH 2017

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Calls of this nature may fall to a customer-relations employee who hopefully has some in-depth training in this extremely sensitive area. Casino companies have been interfacing directly with players far longer than technology providers, and typically have detailed training programs for employees who are designated “gaming ambassadors,� and can assist players with a gambling problem.

Data, Data, Data‌ The clamor for player data by researchers to help minimize gambling-related harms has been a subject of interest at virtually every problem gamblingrelated conference I have attended this year—and I take part in most, if not all, of those events.

In one discussion, it was pointed out that the casinos and online operators definitely know who their compulsive players are through all the player data that is collected for marketing purposes and player loyalty schemes. Although this data might indicate frequency of play, preferred games and spend amounts, it may be difficult to extrapolate information identifying a compulsive player from such a broad data field.

Privacy issues are also a concern. It is one thing to utilize data for marketing purposes and quite another to diagnose a mental health condition. A related topic has been the use of so-called

“algorithms� that claim to detect problem gamblers based on their play behavior. While certain play patterns might indicate a gambling disorder, the concept of an algorithm that positively identifies a compulsive player remains controversial.

Future Considerations Looking into my crystal ball for what the future holds for RG, I see the supplier side of the gaming industry taking a more active role. The mix of exhibitors and participants at the big Global Gaming Expo this year at the Sands Expo in Las Vegas is an indicator of the major transformation taking place in the gaming industry.

Another event that is evidence of the evolving gaming landscape was the Iberoamerican Gaming Summit held in Mexico City last May. AGEM collaborated with SEGOB and others to make the event possible. Top-level decision-makers from South and Central America gathered to discuss critical issues around internet gaming, regulation and illegal gambling. The program included a roundtable discussion dedicated exclusively to RG. I was privileged to take part in this exchange of ideas. In the very recent past, RG was not a primary consideration or even included at industry conferences.

There are many new business interests that

have not previously been in the legalized gambling arena and are unaware of sensitivities related to consumer protections and their relationship to problem gambling. Gambling is a unique commodity, and is held to a different standard than others in the entertainment business. It is vital that those new to gambling become aware of this distinction and engage with problem gambling interests.

The public backlash surrounding video lottery terminals in Canada, fixed-odds betting terminals in the U.K. and the pokies in Australia might have been avoided if stakeholders had been more proactive in providing strong RG measures. A famous quote reminds us that “those who fail to learn from the past are doomed to repeat it.� It is not surprising that public perception shapes gaming policy.

AGEM Executive Director Marcus Prater recently commented, “We are living in a remarkable and unprecedented period in the gaming industry.

AGEM, with its diverse membership, provides the perfect vehicle to help expand awareness of RG and its importance in sustaining our business for the future.�

Connie Jones is director of responsible gaming for the Association of Gaming Equipment Manufacturers.

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FRANKLY SPEAKING

by Frank Legato

Michigan Madness

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RINALDO

Evidently, no one told Bernie that doctorpatient confidentiality doesn’t really work when the session is broadcast on national TV. By the way, I’m not sure of the legalities involved since it was a Native American casino, but I was surprised that trashing a hotel room is a federal case, prosecuted under indictment by the U.S. District Court. Good thing The Who never played at an Indian casino.

Anyway, Bernie wasn’t the only gambler in Michigan to go berserk last month. Over in Petoskey, a man was arrested for punching a tribal policeman repeatedly in the groin, and then stabbing him in the face and chest with a pen.

The officer, from the Little Traverse Band of Odawa Indians, was called after the man—let’s call him Larry—was kicked out of the Odawa Casino Resort with his wife, and the two kept trying to get back in. They had been cut off from alcohol at the craps table, mainly because the wife had been urinating on the floor.

You know, like you do.

The guy had driven to a different entrance of the casino before trying to get back in, and when the cop asked for identification, he ignored the officer and tried to leave. When the policeman told him he couldn’t get behind the wheel of his car because he was drunk, Larry went bonkers, punching and kicking and stabbing the guy with his pen.

Wow. I do drink in casinos sometimes, but I’m pretty sure I’d never do that. For one thing, I can never seem to find a pen when I need one.

According to an article in the Grand Rapids Press, the officer tried to defend himself with his baton, but Larry’s wife was in the way, perhaps getting rid of whatever liquid she didn’t shed at the craps table.

The article quotes an FBI agent. Yes, since it was a tribal officer, they called in the FBI, to handle a crazy, drunken couple.

They should have just called Dr. Phil.

VICT OR

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here were a few bizarre stories coming out of the industry this month, but none more so than a couple of tales from the Indian casinos of Michigan, where it seems a few gamblers must be drinking the lake water again.

I’ll give you the one that has Dr. Phil in it first, since, you know, it has Dr. Phil in it.

It all started with a gambler running around in his underwear at the Four Winds Casino Resort in New Buffalo, Michigan last summer. No, it wasn’t Dr. Phil, although I’m sure people would have paid to see that. We’ll call this guy Bernie, since he goes on trial this month, and, here at Global Gaming Business, people are innocent until proven guilty in a court of law.

On August 5, Pokagon Band tribal police were called with a report of a man walking outside the Four Winds in his tighty whities. It was our pal Bernie, who told the tribal cop that he was on his way to Los Angeles to appear on the Dr. Phil show.

According to a report in the Detroit Free Press, the tribal police drove Bernie to Michigan City, Indiana, where he was picked up by an Uber driver and taken to the airport for his flight to Los Angeles.

The story doesn’t say whether they made him put his clothes on first, but I’m guessing the Uber driver wouldn’t have picked up a naked man.

But there’s more. Walking around in his underwear was apparently only the coda of Bernie’s little summer symphony. There had been complaints that he had made “inappropriate comments” to young girls near the casino pool, and he also did a Keith Moon on his hotel room—smashing mirrors, breaking the flat-screen TV, tearing up carpet, punching holes in the wall, and generally trashing the place. Then, he went outside in his underwear.

You know, like you do.

It turns out Bernie was telling the truth about the Dr. Phil show. About a month after his Michigan meltdown, there he was on the couch with Dr. Phil, in an episode titled “A House On Fire, A Dog in Flames: Our Brother is Out of Control.”

Somewhere amid telling Dr. Phil his story, which may or may not have involved setting his dog on fire (I’m going to look for it on demand as soon as I’m done here), he told Dr. Phil all about how he trashed his hotel room at Four Winds. Federal prosecutors plan to enter a recording of the segment as evidence at his trial this month.

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CUTTING EDGE

by Frank Legato

Picture Perfect Product: Portrait Mode Gaming Manufacturer: SG Interactive

G Interactive, a division of Scientific Games, is the first game creator to make full use of screen space on mobile devices with Portrait Mode Gaming. Portraitmode technology expands and enhances a player’s gaming experience by utilizing the full vertical screen space, creating better gaming immersion through advanced game displays on a mobile device that perfectly match the land-based game executions and player experiences.

Portrait mode makes a significant impact by offering mobile players seamless transitions between landscape and vertical screen orientations. With a quick tilt of the player’s mobile device, the screen adapts to fit the orientation, even in the middle of a spin. A gesture as basic as rotating a phone 90 degrees changes the game so it captures the energy of a towering slot machine, and the transition is incredibly smooth.

The vertical screen orientation allows for more engaging game art that interacts with key game mechanics and immerses the player in the title’s world. This effect is especially evident in themes like Dragon Spin, where

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dragons capture the essence of large-screen slot play and trigger wild symbols to appear on the reel set.

The power of portrait mode is an innovation that brings more opportunities to the surface than one might imagine. The real estate provided by a rotated device allows for truly captivating games that can be played with one hand and just a tap of the screen. The technology replicates the powerful presence of a slot machine, while also making online gaming as easy as checking Facebook or Twitter.

SG Interactive’s portrait-mode library highlights the advantages of the dynamic technology—Hercules High & Mighty, Lucky Tree and other titles all make full use of portrait gaming technology with enchanting artwork, fantastic bonus games and other features.

These titles are available on many online casinos in regulated jurisdictions.

For more information, visit sginteractive.com.

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NEW GAME REVIEW

by Frank Legato

Heat ‘Em Up

Incredible Technologies

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eat ‘Em Up, on Incredible Technologies’ new Infinity Skybox extra-tall cabinet, utilizes the top 52-inch LCD monitor for IT’s unique “Sky Reels” feature, which extends the play area and paylines.

The base game is a 30-line video slot with max-bet options ranging from 60 to 300. The reel array features classic bars, 7s, cherries and bells in a traditional three-by-five format. The “Heat ‘Em Up” logo is a jackpot symbol for eight levels of progressive jackpot. Five or more scattered logo symbols at max bet wins a progressive, with reset levels ranging from $15 for five symbols to the top $10,000 for 12 or more.

There also are arrow symbols in the main reel array. Two or more arrow symbols on the main reels activate the Sky Reels on the top monitor. Each arrow displays a number (4, 5, or 6), indicating how high the arrow will fly to activate positions on the corresponding Sky Reel. Once the Sky Reels are activated by the arrows, the spin is evaluated—providing a chance for a big win, a bonus trigger or even one of the eight progressives.

The Sky Reels activate up to 60 additional paylines, and

the top and bottom reel arrays combine for assembling logo symbols toward one of the progressives.

Four bonus scatter symbols trigger the “Power Up Bonus,” which displays a tower of four colorful wheels on the top Skybox screen. Players are invited to spin the first wheel, each slice of the wheel showcasing instant credit awards, with the hopes to land on a Power Up slice to move up to the next wheel—credit awards increasing as the tower is climbed.

Manufacturer: Incredible Technologies Platform: Infinity Skybox Format: Five-reel, 30-line video slot Denomination: Multi-denominational Max Bet: 60, 120, 180, 240, 300 Top Award: Progressive; $10,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.96%-14.84%

Phoenix 888 Dragon AGS

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his Chinese-themed game on the AGS Icon cabinet combines two popular AGS game-play features, PowerXStream and Streaming Stacks. PowerXStream is the AGS ways-to-win configuration. There are no paylines; wins are registered through adjacent symbols. In this case, the three-by-five reel array (three symbols on each of five reels) results in 243 possible ways to win on each spin.

Streaming Stacks is a random feature in which one symbol occupies an entire reel. Prior to each spin, a random symbol is selected to appear in a stack each time it lands on a reel. This applies to wild symbols as well as game symbols.

The game and its features are themed around the number “8,” lucky in Chinese culture, with a dragon and a phoenix as the main reel-symbol characters. The main bonus is a free-spin event, triggered by any combination of bonus and wild symbols on the three middle reels.

This triggers a one-time bonus award of 88 credits times the bet, and awards eight free spins.

Bonus symbols do not appear in the free-spin event, but wild symbols on the middle three reels trigger an additional eight free games.

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Global Gaming Business MARCH 2017

The free-spin event also features a multi-tiered bonus feature in which a number of Streaming Stacks is guaranteed.

The player begins with a Streaming Stack on one reel, but the number of guaranteed Streaming Stacks on subsequent spins increases with each tier of the bonus event. This allows for potentially large wins from multiple winning combinations on each free spin.

Finally, the game features two “Must Hit By” mystery progressive jackpots. The secondary jackpot resets at $200 and is guaranteed to hit by $500. The top progressive resets at $4,000 and must hit by $5,000. Both “must-hit-by” levels are stated on the display, which injects the possibility of a sort of jackpot fever as the meters approach the top levels.

Manufacturer: AGS Platform: PowerXStream Format: Five-reel, 243-ways-to-win video slot Denomination: .01 Max Bet: 880 Top Award: 500,000 Hit Frequency: 26% Theoretical Hold: 5%-14%

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Rumble Rumble Bison Ainsworth Game Technology

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his game on Ainsworth’s new A640 cabinet features a main screen topped by two curved reels that come into play in two separate bonus features.

The base game is a five-reel video slot with a double mystery progressive, available in 30-line, 40-line or 50-line configuration. The Minor jackpot resets at $250; the Major resets at $4,500. During base-game play, when “Spin” appears anywhere on the fifth reel, it triggers the “Single Curved Reel Feature” for a bonus spin.

Each of the five symbol positions on the lower curved reel at the top of the screen corresponds to each of the five reels positioned directly below on the main screen. After the lower curved reel has spun, if “Wild Bison” appears on the curved reel, “Coin” and/or all other symbols on the corresponding main game reel below are transformed to “Wild Coin” and/or “Wild Bison” respectively.

Three or more scattered Coin symbols trigger eight free games. During the Free Games Feature, when “Spin” appears anywhere on the fifth reel, the “Double Curved Reels Feature” is triggered with a bonus spin of the lower curved reel.

Each of the five symbol positions on the lower curved reel corresponds to each of the five reels of the main game positioned directly below each. If “Wild Bison” appears on the lower curved reel, all symbols on the corresponding main game reels are transformed to “Wild Bison.” If one or more “Spin” appears anywhere on the lower curved reel, the upper curved reels are triggered with an Extra Bonus Spin.

Manufacturer: Ainsworth Game Technology Platform: A640 Format: Five-reel, 30-, 40or 50-line video slot Denomination: .01-10.00 Max Bet: 150, 200, 240, 250, 300, 400, 500, 600, 1,000 Top Award: 15,000100,000 Hit Frequency: Approximately 50% Theoretical Hold: 8%-19%

Submarine Victory Konami Gaming

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his new game on Konami’s Concerto cabinet is the latest in the “Xtra Reward” series, which features a variety of mystery and free-spin bonus features. In this instance, those features and the theme center around a golden submarine that serves as the wild symbol.

The submarine symbol appears on all reels during the base 40-line game. (It is also available to casinos in 10-line, 15-line, 20-line or 30-line configuration.) It substitutes for all but the anchor symbol, which is the bonus trigger symbol.

When the wild submarine lands on the fifth reel, a mystery wild feature may add wild symbols to several other positions on the screen. Some of the extra wild symbols contain an anchor, and thus substitute for the bonus trigger symbol. This feature is more frequent during the free-spin bonus round.

The game also features Konami’s “Action Stacked Symbols.”

Randomly, a symbol will multiply into a stack of symbols—that includes wild symbols and bonus triggers.

Three, four or five anchor symbols trigger eight, 12 or 20 free games, respectively. If the Wild Feature is triggered by a submarine on the fifth reel during free spins, another mystery feature may be triggered—a submarine will cross the screen and arrange all added wild symbols into a straight line on one payline, usually for an

easy winning combination.

The Wild Feature can occur throughout the free games, and additional free games can be awarded.

Submarine Victory is a KP3+ platform game available exclusively on Konami’s Concerto cabinet lineup, including Concerto upright, Concerto Slant and Concerto SeleXion multi-game.

Manufacturer: Konami Gaming Platform: KP3+ Format: Five-reel, 40-line video slot Denomination: .01-5.00 Max Bet: 200 Top Award: 6,000 times line bet Hit Frequency: 39% Theoretical Hold: 4%-18%

MARCH 2017 www.ggbmagazine.com

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TABLE GAMES

Ace in the Hole Doing the numbers on a blackjack controversy

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pend enough time overseas, and you soon realize one-third of the world drives on the wrong side of the road.

Strangely enough, however, if you come across any Australians or Malaysians or Trinidadians and Tobagans in your travels, they will tell you it’s actually much higher.

Like two-thirds.

See? It’s all about perspective.

Reasonable minds would reasonably assume that after 5,000 years of human civilization— notwithstanding a few centuries worth of inhumane incivility along the way—we wouldn’t harbor such a polar approach to something that shouldn’t be so polarizing. Left, right, whatever.

Pick a lane and drive it. Is this really that hard?

Apparently so. And it’s not just about cars, as similarly vexing inconsistences abound around the globe: from the configuration of prongs in electrical sockets to the spacing between railroad tracks, to what goes into a McDonald’s Happy Meal (in Paris, it’s a Croque McDo), to the appreciation of David Hasselhof as an actor, to which direction water spirals down the toilet when you flush it.

To hole cards in blackjack.

If you’ve only played the game in Asia, Australia or Europe, you’ve never seen dealers start with both an upcard and a down card. And if you’ve only played in the United States, Canada or the Caribbean, you’ve never seen them not start that way.

What the… ? Didn’t we settle all this in the Treaty of Versailles?

As with most points of diametric contradiction, you can blame it on a little tradition and a lot of stubbornness. Sometime, somewhere, someone decided to either add the hole card or remove it, while sometime else, somewhere else, someone else decided not to.

Hence the schism.

Blackjack’s origins trace back to 17th century Europe—a current no-hole-zone—so it’s likely the game originated that way, with the dealer taking his second card only after all players have acted on their hand. And by the way, there is a potential bottom-line benefit to this approach: If players

60

Global Gaming Business MARCH 2017

By Roger Snow

lose split and double-down bets when it turns out the dealer has blackjack, it’s a bona fide bonanza for the house.

“You get a much higher house edge, even with the player’s adjustments to basic strategy,” says Elliot Frome, a table game designer and mathematician at Scientific Games. “There’s the potential to lose a bet you wouldn’t have made in a hole-card game. That’s a big deal.”

But if casinos don’t take those bets, Frome says, going without a hole card is a giant waste of time.

Like, literally.

“Now you’re talking about a situation where a few times per hour, the house is spending time on a hand that is essentially over,” Frome says. “The casino is just costing itself money.”

How much money? Let’s run some numbers and find out: • 20: Average number of hours per day a fulltime blackjack table is open.

• 60: Average number of rounds per hour.

• 3: Average number of players per round.

• $15: Average wager.

• 2.25 percent: Average house advantage (assumes imperfect strategy as well as side-bet play).

Simple ciphering shows this blackjack game will win about $1,200 per day. Interpolate further, and it breaks down to the house winning $61 per hour.

Considering the dealer—same as any player— gets blackjack once every 21 rounds, and each round lasts about a minute, and each round is worth $1, casinos that don’t use a hole card are costing themselves $3 per hour.

Every hour. Every day. Every week. Every month. Every quarter. Every year. Every table.

Then why do it? Or in this case, why not do it?

Why not take a hole card? Tradition and stubbornness may be powerful forces in business, but how can they withstand the howling winds of the profit motive?

“Game protection,” says George Joseph, an author and longtime consultant to the casino industry. If players catch the dealer’s hole card, they can exact a huge mathematical advantage over the casino. Remember the movie Casino? That’s what

the long-haired dude was up to, taking advantage of a weak dealer who lifted his hole card too high when checking for blackjack.

“Years ago, it was an easy way to get an edge, especially in the newer markets,” Joseph says.

“Sometimes the dealer would be sloppy and sometimes he might be colluding with a player.”

Either way, he says, the use of a hole card could put a hole in a casino’s bottom line.

But this problem—like most others—was best solved by advancing, not retreating. Holecard readers, small devices implanted in the table, debuted in 1990, obviating the need for the dealer to peek. Las Vegas-based Tech Art, which uses a mirrored device, created this space and is still its leader, while casino owner Don Laughlin has a similar gizmo that lights up green when the dealer has blackjack and red when he doesn’t.

Talk about an “Easy Button.”

In table games, things stay the same forever, right up until the moment they don’t. For decades, all blackjack tables on the Las Vegas Strip used to stand on any 17 (hard or soft). Baccarat used to always charge commission on winning banker bets. Pai gow poker used to rely on dealers to memorize myriad house-way rules. Caribbean Stud Poker used to be the top specialty game in the world. Ditto Three Card Poker.

Here’s betting that casinos from Monaco to Macau, from Auckland to Adelaide, from Singapore to Saipan (or Singapore to Widnes, as the Elvis Costello song goes, and which does have a casino, by the way) will in the next few years start adding hole cards to their blackjack tables. Table games matured and evolved in part by eradicating all the obvious operational inefficiencies; it’s just a matter of time before this one bites the dust.

Then we can start negotiating the peace accord between single-zero and double-zero roulette.

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.

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GOODS&SERVICES SCIENTIFIC GAMES COMPLETES OFFERING

S

cientific Games Corporation announced that its wholly owned subsidiary, Scientific Games International, Inc., intends, subject to market and other conditions, to commence an add-on offering of US$1.15 billion of 7 percent senior secured notes due 2022 in a private offering.

The new notes will be issued under the same indenture pursuant to which SGI previously issued $950 million of its 7 percent senior secured notes due 2022.

The new and existing notes will be treated as a single series of debt securities for all purposes

TALARIUS PICKS JCM under the indenture, including, without limitation, waivers, amendments, redemptions and offers to purchase, will have terms identical to the existing notes, other than issue date and offering price.

Scientific Games intends to use the net proceeds of the new notes offering to prepay a portion of its term loans under its credit agreement, redeem or repurchase all of its outstanding senior subordinated notes due 2018 and pay accrued and unpaid interest thereon plus any related premiums, fees and costs, repay a portion of its revolving credit facility, pay related fees and expenses of the new notes offering and for general corporate purposes.

J

CM Global has signed a contract to supply its leading Ticket2Go ticket-in/ticket-out retrofit solution to more than 150 Talarius sites in the U.K. Talarius, which was recently acquired by Novomatic, is one of the largest amusement and gaming center operators in the U.K. JCM’s Ticket2Go is a retrofit ticketing solution for gaming and AWP devices that do not support standard ticketing protocols. Ticket2Go is designed and developed for small to mediumsized gaming venues, and it can be installed across multiple sites, enabling operators to replace coin payout technology with a simple ticket-based solution.

“We are excited to deploy our Ticket2Go solution to Talarius sites,” said JCM EMEA General Manager Payam Zadeh. “TITO provides a

CLARION: ICE BIGGER THAN G2E

T

he head of the gaming division for Clarion Events, which produces the ICE Totally Gaming trade show, said that the London event, which was held last month, has surpassed the Global Gaming Expo as the world’s largest gaming industry trade show.

Kate Chambers, managing director of Clarion’s gaming division, said attendance and booth figures validate the claim of ICE to the world’slargest title, with 529 exhibitors from 62 nations and 28,500 attendees at the 2016 edition compared to 450 exhibitors and 27,000 attendees reported by the American Gaming Association at G2E 2016.

ICE took up an additional hall at the ExCeL London center this year to accommodate an influx of first-time exhibitors. “We know from our research that one of the most popular features of ICE is the opportunity the show delivers for visitors to meet new, fledgling suppliers with fresh and invigorating ideas,” Chambers said. “The additional space we have invested in means that all first-time and returning exhibitors can be hosted in what we are describing as an ‘innovation quarter,’ enabling them to demonstrate their products/services and represent their brand personality in what is gaming’s most popular and prominent shop window.”

There are differences between ICE and G2E, however. ICE’s tagline—Totally Gaming—is appropriate, since it attracts exhibitors only in the gaming arena—more than half of them from the

62

Global Gaming Business MARCH 2017

A panel sponsored by Global Gaming Women featured (l. to r.) Jennifer Bowman, director of product marketing and sales enablement, IGT; Diane Mullenex, head of gaming and gambling practice, Pinsent Mason LLP; moderator Patty Becker; and Katie Lever, general counsel and executive vice president, Baha Mar

online gaming sector, including sports betting.

G2E doesn’t attract much of an online component because iGaming is only legal in three U.S. states and several Canadian provinces, with sports betting only legal in Nevada. But G2E does attract a large proportion of exhibitors dedicated to nongaming amenities in integrated resorts, which it gathers into its Integrated Resort Experience.

G2E will be held this year October 2-5 at the Sands Expo Center in Las Vegas.

Sarah Harrison, the head of the U.K. Gambling Commission, addresses the IAGA World Regulatory Briefing conference

AGA’s Geoff Freeman explained the U.S. political landscape to the International Casino Conference, sponsored by the European Casino Association

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streamlined collection process which totally eradicates the need to float and dump hoppers, vastly improving the on-floor collection times. It also reduces service costs and machine downtime by reducing the coin-handling issues associated with gaming machines.”

KONAMI LAUNCHES CONCERTO SLANT

K

onami Gaming announced the launch of Concerto Slant, a new slant-top version of its Concerto cabinet designed to optimize the relaxed-angle posture with dual 27-inch HD cinematic displays and a comprehensive library of available games.

The cabinet features content from the KP3+ platform, as well as proven KP3 platform titles such as Dragon’s Law, Lotus Land, China Shores and many more.

“We were among the first to introduce Concerto Slant to market, and the response from our players has been overwhelmingly positive,” said Joe Whitman, director of slots at Soboba Casino.

“The momentum we saw from the original Concerto cabinet is extending even further as players get to enjoy top themes on the slant format, with even greater performance than we saw with the debut machine.”

With a focus on player comfort and convenience, Concerto Slant’s relaxed angle design includes an easy-reach center spin button combined with Konami’s new TouchDash touch-screen button panel. According to the company, it is engineered to give players a rich, cinematic gaming experience with a feeling of relaxed control.

INTERGAMES NAMED MERKUR DISTRIBUTOR

M

erkur Gaming has appointed Intergames as its distributor for Slovenia and San Marino, as well as for the Italian and Maltese casino markets.

Over the past months, Merkur has optimized its strengths and qualities within the company and has established a focus to fulfill customer expectations. As a result, the subsidiary of the German-based Gauselmann Group has set up new sales opportunities and sales partners.

MARCH 2017 www.ggbmagazine.com

63

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PEOPLE SCIENTIFIC GAMES NAMES COO

S

cientific Games last month named KarinJoyce (“KJ”) Tjon as chief operating officer and president. Her responsibilities will include oversight of the gaming and lottery opKJ Tjon erations and driving the company’s organizational strategy, business development and fiscal discipline.

Tjon will report directly to Scientific Games’ Chief Executive Officer Kevin Sheehan, who said, “We have tremendous confidence in KJ’s ability to lead our long-term growth strategy and execution, and continue the strong growth across all of our businesses. Her deep experience in international finance, performance accountability, and culture transformation will further enhance our ability to deliver for our customers, employees and our shareholders.”

She joins Scientific Games after serving two years as chief financial officer and executive vice president of Epiq Systems, a provider of integrated technology and services for the legal profession, where she oversaw legal, corporate governance, risk compliance, and all aspects of international corporate finance.

WYNN TO HEAD RNC FINANCE

W

ynn Resorts Chairman Steve Wynn will be the new Republican National Committee finance chairman. Wynn accepted the job after being asked directly by President Donald Trump, Steve Wynn Fox News reported. Wynn will become the top fundraiser for Washington Republicans ahead of the 2018 elections. He was the finance vice chairman of Trump’s inaugural committee that reportedly raised roughly $90 million.

The alliance is one that would have been unheard of 20 years ago, when Wynn and Trump were rival casino operators who typically insulted each other publicly. Wynn famously demanded that his name be removed from the AGA’s Gaming Industry Hall of Fame because Trump was named to the list. Wynn was later reinstated, and the two became friends in the 2000s, thanks

mainly to their shared conservative Republican politics.

Not coincidentally, one day after Wynn was appointed finance chair, Wynn Resorts announced that the RNC’s political director will be the company’s newest senior vice president. Christopher Carr will become a senior vice president, managing the company’s government relations, charitable giving, community development initiatives and the expansion of the Wynn Employee Foundation.

Carr has an extensive history in politics, both nationally and in Nevada. His most recent job was national political director for the RNC during the 2016 presidential election.

KREEGER STARTS AT GALAXY

F

ormer SLS Las Vegas President and Chief Operating Officer Scott Kreeger has moved to Galaxy Entertainment Group (GEG) in Macau to manage the development of the resort’s Phase 4 expanScott Kreeger sion.

Kreeger, who formally left SLS Las Vegas on December 31 after more than two years at the resort, will join a host of other former executives from the North American gaming city, including GEG’s Chief Operating Officer Kevin Kelley and its president, Michael Mecca.

Terry Downey and Robert Schaffhauser, former executives of the Aliante casino in North Las Vegas, have taken over leadership at SLS. Downey is president and COO, while Schaffhauser is CFO. Kreeger spent more than 20 years in Las Vegas with MGM Resorts International and Station Casinos, as well as running Revel in Atlantic City for a year.

HARD ROCK HOLLYWOOD NAMES CIPOLLINI

A

uggie Cipollini recently was named president of the Seminole Hard Rock Hotel & Casino in Hollywood, Florida, South Florida’s largest gaming and entertainment complex, where he will be responsible for all operations and management.

Prior to joining Seminole Hard Rock, Cipollini was senior vice president of operations at Borgata Hotel Auggie Cipollini Casino & Spa in Atlantic

City, where he was responsible for all non-gaming operations—hospitality, food and beverage, retail, reservations, hotel sales, revenue management, project design and development, facilities and property maintenance, security and surveillance.

ORTIZ GAMING NAMES REYES SENIOR VP

O

rtiz Gaming announced the promotion of Robert J. Reyes to senior vice president of Robert J. Reyes sales. Reyes will lead Ortiz Interactive, developed in 2015, a portfolio of custom products in multiple languages for social, online, real-money gaming and play-for-fun, created by Ortiz, a multinational manufacturer, gaming developer and leader in video bingo content for land-based, social and online gaming.

Along with overseeing all global interactive business initiatives, sales and development for Ortiz Interactive, Reyes also will oversee all sales, business development and client account management for commercial and tribal casinos in North America.

GGB

March 2017 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Casino Style . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64 Cintas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . . .63 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 G2E Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 GGB News . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . . . .27 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Incredible Technologies . . . . . . . . . . . . . . . . . . . .55 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Konami . . . . . . . . . . . . . . . . . . . . . . . . .Back Cover Merkur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Red Square Gaming . . . . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . . . . . . .5 SenSen Networks . . . . . . . . . . . . . . . . . . . . . . . . .51 TransAct Technologies . . . . . . . . . . . . . . . . . . . . .29

MARCH 2017 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Q

&AJonathan Jossel CEO, Plaza Hotel & Casino

D

owntown Las Vegas has established a remarkable rebound over the past few years, mostly due to an infusion of $500 million in new capital in the area. One of the hotels investing millions has been the Plaza, at the foot of Fremont Street. British-born Jonathan Jossel has been running the property for almost three years now, and explains what has made the needle move, and why the future couldn’t look any brighter for the Plaza. Jossel spoke with GGB Publisher Roger Gros at his offices at the Plaza in February. To hear a full podcast of this interview, visit GGBMagazine.com.

The Plaza is one of the most historic hotels in Downtown Las Vegas. At one point, the legendary Jackie Gaughan owned it. What is the ownership structure of the hotel today?

In 2004, Tamares, which is a privately owned real-estate development company, purchased it from Jackie Gaughan and his partners at the time, and have owned it since then. Tamares owns the real estate. Today, I am the CEO and licensee of the operating company, which is called PlayLV. So, Tamares owns the physical property, and I own the business of the Plaza.

Give us a timeline of what happened during the renovation process, and where we are today.

As you mentioned, Jackie Gaughan was a very well-known individual Downtown, a pioneer of Downtown, and did amazing things here, not just in terms of physical development, but in terms of how he made people feel, how he made the employees and team members feel.

We have a lot of team members that have been here 25, 30, 40 years—longer than I’ve been alive. And they have very fond memories of those days, and obviously the evolution of the Plaza.

From about 2004, 2005 onwards, the Downtown properties obviously were older, 66

Global Gaming Business MARCH 2017

and they had had a lot of wear and tear. They needed a little bit of new life added into them, and that took place at the Plaza in 2010 and 2011, when we closed down for a full remodel.

During that time, I was invited by our architect to go see all the furniture at the Fontainebleau, which was sitting in the basement. And I called the owner and told him about the opportunity to buy this furniture, and fortunately for us, he gave us the go-ahead to buy it on the spot. And so, that was the beginning of the remodel of the Plaza.

No one knew at the time that it was going to become such a big project, because it was, at the time, just a room refresh, which morphed into more restaurants, more casino remodels, and everything else that we ended up doing.

Since I got licensed two years ago, the main physical improvements have been to the pool deck. We did a $4 million remodel of our 60,000-square-foot pool. It has way exceeded our expectations of what a pool remodel could possibly do for this property, in terms of driving occupancy to the building, revenues at the pool, and just general awareness of the property. It sits in between the two towers, with a magnificent view of Downtown. We have 16 pickleball courts, which is the fastest-growing sport in America. We do music events up there. We have a great bar now. So, it’s really turned into an amenity.

We have live music, seven nights a week in the casino. We added a party pit in the front of the building. We’ve added about 150 new slot machines to the floor. We’ve really focused on the guest experience, and creating a bit more energy in the casino, because that’s what people want when they come Downtown. We added a new show, with the Scintas, which has been a big hit. We’ve added more bingo games, because we’re the only property Downtown to offer bingo.

But, I would say that the biggest change hasn’t been physical. It’s been more about the expe-

rience of our guests, really focusing on what people feel when they come to the Plaza. And that comes from changing the morale of the team to one dedicated to the customer.

What do you consider your target market?

Tourists? A mix of tourists and locals?

There are two separate answers to that. I don’t think that anyone has a true target market in the hotel. You can’t control who’s going on Expedia, searching by location, price, whatever it is. So in the hotel, I think our target market is somewhat of a moving target. We’re seeing great growth in occupancy, and I think that’s driven by all the changes we’ve made in terms of the property and the advertising. In terms of the casino, it’s a little bit more strategic. We know who our target market is. We’ve seen a lot of great growth in terms of our Hawaiian market, our Midwest market, and the people that come here to play bingo. But I’d say for the casino, it’s a lot of Midwest, and probably skews a little older, 45plus, for the casino.

How about your gaming philosophy in terms of the rules of the tables, the paybacks of the slot machines?

I think there are facts to prove that we have the best video poker pay tables in all of Downtown.

We have very favorable rules in the table games.

All of our blackjacks pay 3-2, not 6-5 like the Strip properties. We have crapless craps and 10 times odds. We have a good variation of games.

We’ve looked at single-zero roulette, but we haven’t quite migrated over to that yet. But coming from England, single-zero roulette’s all we know. So, I think we have very favorable gaming conditions, and our players club is extremely rewarding as well.

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