Global Gaming Business, March 2018 by Global Gaming Business

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GGB Global Gaming Business Magazine

SOCIAL CASINOS PURCHASING & INVENTORY SPORTS BETTING LEAVING LEGACIES BEHINd

March 2018 • Vol. 17 • No. 3 • $10

SPECIAL SECTION:

Elevating Education

SECURITY & SURVEILLANCE

Responding to October 1

How Indian Country trains and advances employees and executives

Pot Problems

Why legal marijuana and gaming might not mix

Bulls Are Running Strong AGS IPO will benefit investors, clients and players Association of Gaming Equipment Manufacturers

Official Publication of the American Gaming Association

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CONTENTS

Vol. 17 • No. 3

march

Global Gaming Business Magazine

COLUMNS

22 COVER STORY

Playing AGS

12 AGA The Problem with PASPA

The initial public offering of PlayAGS, Inc. caps an amazing four years of growth for gaming supplier AGS, from a what was a small Class II distributor into a solid competitor in the gaming industry in slot machines, table games and interactive gaming.

Geoff Freeman

By Frank Legato

FEATURES

14 Fantini’s Finance Correction Concerns Frank Fantini

On the Cover (l. to r.): Robert Perry, Senior Vice President of Sales; Drew Pawlak, VP & GM for Latin America; Sigmund Lee, Chief Technology Officer; Matt Reback, Executive Vice President; David Lopez, Chief Executive Officer; Julia Boguslawski, CMO and EVP of Investor Relations; John Hemberger, Senior Vice President of Table Products; Kimo Akiona, Chief Financial Officer; Vic Gallo, General Counsel; Andrew Burke, Senior Vice President of Slots

Securing the Industry Our annual World Game Protection expert report on security and surveillance in the gaming industry.

28 Learning from October 1 After the devastation of the October 1 Las Vegas shooting, what needs to change in casino security? By Mac Segal

32 Robbery Countermeasures As robberies of casino cages and of casino customers off-property continue to occur, security and surveillance countermeasures evolve. By Alan W. Zajic

36 Problem Gambling and Crime The tragedy of October 1 was only the latest evidence of a link between problem gambling and crime. By Willy Allison

16 Educating Tribal Gaming Education and training for the U.S. tribal gaming market is accomplished through a combination of effective tribally run programs and formal university education.

Global Gaming Business MARCH 2018

Marco Benvenuti

42 Sports Betting Four Myths Joe Bertolone and Greg Gemignani

58 Table Games Speaking of Nerves Roger Snow

DEPARTMENTS 6

The Agenda

By Dave Palermo

By the Numbers

40 Casinos and Marijuana

10 5 Questions

Casinos in states that have legalized recreational marijuana use continue to seek guidance from the federal government in developing policies.

15 AGEM Page

By Grant Eve

44 Social Gaming Wins Social gaming has provided casinos with a way to increase their landbased customers, while keeping their names in players’ minds off-property. By Marjorie Preston

52 Emerging Leaders With Affinity Gaming’s Mariah Dyer, Inspired Entertainment’s Nicholas Weil, Ainsworth’s Alex Bertone, Bellagio’s Alja Halleran, and Seneca Niagara’s Michael Mitten

56 New Game Review 60 Frankly Speaking 62 Cutting Edge

48 Purchasing Power

63 Goods & Services

Technology has made the areas of purchasing and inventory control more efficient—and bottom-linefriendly—for casinos.

65 People

By Dave Bontempo 4

38 Operations Legacy Casino Systems Impede Innovation

66 Casino Communications With Kevin Kline, Chief Operating Officer and General Manager, Resorts World Catskills

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THE AGENDA

The Way It Is

Vol. 17 • No. 3 • MARCH 2018 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

he opportunities involving sports betting in the United States are massive. If just half the states decide they want to get involved, they are going to require large amounts of technical expertise to accomplish their goals. And the fact remains that the experts in the field are the European companies that have been involved in the operations of sports books for years. Because sports betting has largely been legal in Europe for decades, these companies have evolved and transformed themselves into the experts. They’ve moved from the betting shops on High Street to the sophisticated paradigms that you find online when those online casinos offer things like in-running betting and wagering on non-sports events like awards and political contests. So when the U.S. jurisdictions go looking for expertise, they should be looking toward Europe if they want to get an edge over their competition. But then again, there’s also a barrier to that expertise, and that barrier is regulations. While sports betting in Europe is regulated, it doesn’t rise to the same level that it does in the U.S. Three U.S. states joined the iGaming community after it was opened up by the Department of Justice memo in late 2011 that said the Wire Act only applied to sports betting and not to other forms of wagering like lotteries and casinos. European companies were also the experts in that field. But only a handful of companies decided to make the U.S. plunge at that time. The biggest complaint was the onerous regulatory schemes in all three states—New Jersey, Nevada and Delaware. Now let’s remember that iGaming in Europe started with no government oversight. Online casinos opened and the governments were caught flatfooted. Eventually, they woke up to what was going on and tried to enforce a regulatory system, but didn’t do a very good job. Many countries have now come around to U.S.-style gaming regulations, but the horses are already out of the barn. Some of the small island nations/territories in Europe suddenly became “experts” at regulation— Alderney, the Isle of Man, Gibraltar and Malta were later joined by Caribbean nations supposedly regulating gaming like Antigua, Curacao, Costa Rica and others. Truth be told, they were ineffective and far from transparent. The infamous

Global Gaming Business MARCH 2018

Absolute Poker scandal was supposedly regulated by one of these countries. So European iGaming companies got used to lax regulations, and most of them wouldn’t subject themselves to U.S. oversight. Fast forward to sports betting 2018. If the companies serving the European markets think that sports betting regulation is going to be any different than iGaming regulation, think again. If there are some who believe the federal government will wave a magic wand and permit them to participate with less regulatory oversight… ain’t gonna happen. So European companies are going to have to make a choice. If the opportunities in the U.S. are lucrative enough that you are willing to endure the regulatory scrutiny, you should go for it. While licensing in the U.S. is typically complete, exhaustive and thorough, it’s also a sign that your company is recognized as one of the best suppliers in the world. To be able to pass U.S. scrutiny gives you the ability to access the markets that could mean success or failure for your company. Some of the biggest iGaming suppliers made the decision not to participate in the U.S. market. Some of those companies have either disappeared, shrunk to a smaller size or got swallowed up by a larger competitor. So why are U.S. jurisdictions so tough about licensing? Exactly because of what happened in the Absolute Poker incident. Consumer protection is paramount in the U.S., coupled with the goal of keeping organized crime out of the gaming industry. When the late Governor Brendan Byrne opened up the first casino in Atlantic City, he told organized crime to keep their filthy hands off the city. But he didn’t say filthy; it was a bit more colorful than that. There is nothing that would destroy the credibility of gaming in the U.S. more than a scandal. Good gaming regulations in the U.S. are designed to be transparent to achieve and maintain the integrity necessary to succeed. U.S. jurisdictions have spent years honing their regulatory process. Although it is onerous, the process is logical and complete. If there are no irregularities in your background (and even if there are, they can often be overcome), any company wanting to participate in U.S. sports betting should not hesitate to apply for licensure.

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 Marco Benvenuti twitter: @DuettoCloud | Joe Bertone Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Greg Gemignani | Roger Snow Contributing Editors Willy Allison twitter: @WillyJAllison Dave Bontempo twitter: @bontempomedia | Maria Casias Grant Eve | Dave Palermo twitter: @DavePalermo4 Marjorie Preston | Mac Segal | William Sokolic Cameron Steinagel | Alan W. Zajic

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

•

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

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

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

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

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

• Roy Student, President, Applied Management Strategies

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

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BY THE

NUMBERS

REPLACEMENT RESISTANCE

Total Survey Replacement Sales by quarter

he “replacement cycle” in the slot machine world is sometimes the holy grail for the sales staff. Although traditional slot replacement was an average of five to seven years, the cycle was stretched out during the recession and later. But the latest Eilers Fantini Slot Survey for the fourth quarter of 2017 shows a replacement cycle in full bloom. To obtain a copy of the survey, contact Todd Eilers at 714-619-9330.

Commercial Casinos

VLT/Route Ops

Tribal Casinos

Pennsylvania Power

n the state with the second-largest gross gaming revenues after Nevada, Pennsylvania casinos are money machines. Although a very high tax rate limits capital reinvestment in each property, the results still are impressive. The 2017 gross gaming revenues were up less than 1 percent over 2016.

2017 GROSS GAMING REVENUES, TABLES & SLOTS, PENNSYLVANIA CASINO

2017 GTR

% Change

Table Rev

% Change

Total Rev

% Change

Parx

388,220,901

-0.56%

178,297,137

10.18%

566,518,038

2.59%

Sands Bethlehem

302,568,558

-0.81%

226,879,088

5.03%

529,447,646

1.61%

Rivers

269,751,527

1.77%

71,820,108

-1.26%

341,571,635

1.12%

SugarHouse

177,837,718

-1.85%

119,816,047

2.85%

297,653,765

-0.01%

Harrah’s

198,193,939

-4.36%

65,270,571

-0.04%

263,464,510

-3.32%

Mohegan Sun

204,461,556

-5.45%

42,413,840

-6.66%

246,875,396

-5.66%

The Meadows

214,289,737

-3.31%

36,603,067

16.55%

250,892,804

-0.84%

Penn National

209,014,353

-0.41%

35,758,640

4.07%

244,772,993

0.22%

Mount Airy

147,803,674

4.12%

50,084,910

17.61%

197,888,583

7.23%

Presque Isle

111,164,968

-3.66%

14,470,504

-2.65%

125,635,473

-3.54%

Valley Forge

82,760,824

6.37%

34,419,700

-7.12%

117,180,524

2.02%

Nemacolin

30,145,146

2.79%

4,542,215

-2.42%

34,687,361

2.08%

Total

2,336,212,902

-1.05%

890,644,392

4.38%

3,226,857,294

0.39%

GTR=Gross Terminal Revenue, % Change is comparison to 2016 GGR 8

Global Gaming Business MARCH 2018

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NUTSHELL

5Questions

Lou DeGregorio Founder and President,

Shark Trap Gaming & Security Systems

more than five years working on perfecting a generation of shufflers, Lou DeGregorio arrived ATrapatftershuffler the Global Gaming Expo in October ready to give his product the official debut. The Shark improves game security, reduces card costs and increases efficiency. The shufflers also have to ability to provide casino executives with a vast array of data on players and dealers. To hear a full podcast of this interview with DeGregorio and his son Dino, visit GGBMagazine.com. GGB: You’ve got years of experience in table games. Tell us how you see that market today.

1 2 3 4 5

DeGregorio: I see table games in two ways. You have about three or four companies today that dom-

inate the market, splitting the market share. All of them are trying to come up with the next best idea. But now they’re getting distracted by how they can attract the millennials. And they’re playing tables more than slots, which is a bit surprising. Blackjack and roulette are very popular today. You would have thought the game of craps would have died out with the soldiers and sailors who made it so popular, but it’s now making a comeback. So tell us about the next generation of shufflers.

I’ve been involved with shufflers for a long time, and I have a passion for it because I understand what a big game changer it was. Three or four years ago, I decided to come up with a new shuffler that would not step on any of the patents that were already out there, which is a big issue. So we filed for some patents, but we didn’t know exactly how the mechanism was going to work. We knew what the patent said, but not how to build the actual machine. And then one day I see on television that the students at the UNLV engineering school had made a bionic hand for a little girl. I knew immediately those were the guys we needed. How does UNLV play into the Shark Trap?

We went to the head of the engineering school and explained what we wanted to do and how this would fit well with their mission, this being the gaming industry. So, we took a year and half to set up a methodology and came up with a prototype. We took that to an engineering firm and told them we needed it produced. It will be made in the U.S., developed by local guys in gaming. It’s a great, sexy story. How is your shuffler different than what’s on the market today?

We take a different approach to shuffling the cards, different than any other company. The first thing you notice is its size. It’s very small; you can actually put it in the palm of your hand. Like a normal non-shuffling shoe, dealers can actually move it to fit their comfort. There’s no need to cut into the table—it sits right on top. How does it protect game integrity?

First of all, we’ve eliminated “hold carding”—where a player may be able to get a glimpse of the down card—completely. The shuffler slides the cards right onto the table and there’s no need to pick them up. We have a system that will also eliminate edge-sorting by reporting to casino management via a readout which way the cards are facing. So you’d be able to tell if 10-value cards are facing one way and cards with values in card counting are facing another way, and take action if necessary.

Global Gaming Business MARCH 2018

“They

Said It”

“We make money, everybody else gets it but us, and we end up with a million-dollar loss. This is just not sustainable.” —Denis McGlynn, president and CEO of Dover Downs Gaming & Entertainment, appealing to the Delaware legislature to pass a bill offering tax and fee relief to the state’s struggling casinos

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AMERICAN GAMING ASSOCIATION

The Problem with PASPA

The failed law gets increased attention as states prepare for the legalization of sports betting By Geoff Freeman, President & CEO, American Gaming Association

THE

REAL DEAL D

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Global Gaming Business MARCH 2018

arlier this month, the AGA released our annual prediction of how much Americans would wager on Super Bowl 52, estimating $4.76 billion in total bets. Due to the failed Professional and Amateur Sports Protection Act (PASPA), a staggering 97 percent of total wagers, equaling more than $4.6 billion, were estimated to be bet illegally across the United States. And the numbers are in. A record total of $158.58 million was wagered legally in Nevada sports books (exceeding our own estimates by around $20 million). AGA has continued to engage stakeholders in the important debate, raise the profile of PASPA’s failings, and call for sensible change to this bad federal prohibition. While the announcement of our Super Bowl yielded a significant amount of national news coverage (ESPN, Fox, CNBC, Forbes, USA Today, AP, etc.), what strikes me is how drastically the tenor of the content has changed since we first began this effort two years ago. No longer are journalists, talking heads, legislators, regulators, leagues, owners, etc. talking about what would happen if we enabled legal sports wagering— they are either talking about when it hap-

pens, or have moved past timing entirely to discuss how this will play out. There are currently 34 active pieces of sports betting legislation in 16 states, and judging by how quickly states and tribes are getting prepared to offer sports betting should PASPA be overturned, those numbers will most certainly increase throughout current legislative sessions. For over 25 years, PASPA has empowered an illegal sports betting market full of shady offshore operators and corner bookies managing at least $150 billion annually. So the Super Bowl attracting record amounts wagered isn’t particularly surprising to anyone monitoring this issue. What isn’t told is how thin the margins are for our members who are doing this on the up and up. Even in a record year for Super Bowl bets, total gaming operator profit barely exceeded $1 million. Any negotiation about what a legal framework looks like has to take this into consideration, lest we fail at what should be our mutual, fundamental goal: driving the illegal market out of business. All eyes are on the U.S. Supreme Court, which will issue a ruling on Christie v. NCAA this spring, and we’re as optimistic as ever that it’s time for a change.

There are currently 34 active pieces of sports betting legislation in 16 states, and judging by how quickly states and tribes are getting prepared to offer sports betting should PASPA be overturned, those numbers will most certainly increase throughout current legislative sessions.

Follow Geoff Freeman on Twitter at @GeoffFreemanAGA.

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FANTINI’S FINANCE

Correction Concerns Will gaming stocks continue the bull run?

danger in writing a column well in advance of publication is that circumstances can change dramatically before it sees print. That is true in writing about the stock market at any time, but especially this year. As of this writing, the Dow Jones average has fallen more than 1,000 points in two of the past four days, and we don’t know whether we are experiencing a correction, whether that correction has run its course or has more downside to cover, or whether we are at the start of a bear market. What has been true so far is that gaming stocks, which far outperformed the market during its great bull run, continue to outperform on the way down. For example, the Dow dropped 4.6 percent on the first big day down and 4.15 percent on the second, compared to 3.25 percent and 3.74 percent drops for Fantini’s North American Gaming Index. The difference might not have been so much confidence in gamers as investors fleeing certain big-cap stocks, as the gaming declines were closer to those of the Russell 2000, whose component companies are nearer in size to the typical casino stock. And, of course, investors did react to specific company news. Penn National sold off 7.95 percent on the second big down day, helped by reporting four-quarter financial results that disappointed some analysts. Scientific Games is down 27 percent from its peak, but that is still five times higher than when its bull run began in the summer of 2016. One investor concern is potentially higher interest rates if the Federal Reserve Board thinks the economy is overheating and driving up inflation. That would be a concern for gaming companies, many of which have considerable debt, though they also have spent the past year or so refinancing down to lower interest rates, converting variable debt to fixed interest, and putting off maturity dates to buy time for the economy and their own finances to work their way out. Still, a caution to investors: look at the debt structure with a keener eye today.

Global Gaming Business MARCH 2018

By Frank Fantini

WYNN RESORTS Steve Wynn’s resignation as CEO of his eponymous company started immediate speculation that Wynn Resorts may be sold at some point, if not in the near term. A possible sale makes sense at first glance, considering the company, no matter how well managed, has lost its founding genius, which seems likely to dim some luster over time. However, MGM Resorts CEO Jim Murren was quick to throw cold water on that idea, pointing out that WYNN’s $17 billion market cap makes it a pretty big company to swallow. The days of mega-mergers are over, he said. But to Murren’s no-so-fast, we’ll add our own not-so-fast, Jim. There might be a business analogy to the old expression that you eat an elephant one bite at a time. In this case, it might be that you don’t sell the whole Wynn Resorts elephant at once, but that you sell it one piece at a time. That might not be the first choice, but could be an option if regulators decide to get tough, de-

Las Vegas Sands, or an international company wanting to get onto the Las Vegas Strip in a big way.

AGS, LET’S PLAY There’s a new kid on the block for investors in gaming technology companies: PlayAGS or, as it is better known, just plain AGS. AGS IPO’d recently at $16 a share and the stock is over $19 as of this writing, giving it a market cap around $650 million compared to billions of dollars for IGT, Aristocrat and Scientific Games, but in the same ball park as smaller competitors like Everi and Ainsworth. The story for AGS can be summed up in one word: growth. A company that had maybe 1 percent market share in slot machines not long ago is now around 6 percent ship share, and double digits in several key jurisdictions. Further, AGS is on the start of its growth in terms of entering new markets, competing in Class III slots as well as its historic Class II business, developing table games and broadening its product lines. A second very good word is profitability. AGS generated $83.4 million in EBITDA in the third quarter on $154 million in revenues, a 52 percent margin. A final very good word is leadership. AGS’ CEO is David Lopez, youngish at 43, but an industry veteran who helped build Shuffle Master into a significant company, subsequently sold to what is now Scientific Games, and who was CEO of what is now Everi. Lopez has built a management team replete with Shuffle Master colleagues, and intends to make AGS into a significant table game player. When investors on AGS’ IPO road show asked how the little company would grow in the face of competition from the big rivals, Lopez pointed to current trends and said, “We’re not planning to do it; we’re doing it.”

What has been true so “which far is that gaming stocks, far outperformed the market during its great bull run, continue to outperform on the way down.

”

pending on what they find in their investigations that initially will look at sexual misconduct allegations against Steve Wynn. For example, if Massachusetts decides Wynn Resorts should not retain its license, the company would have to sell its $2.4 billion Boston casino project. If Macau regulators come to the same conclusion, Wynn’s properties there, and the company’s gaming concession, would be attractive to any number of Asian companies. And if those dispositions happen, the Las Vegas properties would be affordable for a neighboring

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 FEBRUARY 2017 KEY BOARD OF DIRECTORS ACTIONS Finnegan, Henderson, Farabow, Garrett & Dunner, LLP is dedicated to advancing the ideas, discoveries and innovations that drive businesses around the world. Members are scientists, engineers, and intellectual property (IP) professionals practicing U.S. and European IP law. Finnegan works in every major area—patent, trademark, copyright, trade secret—and every aspect in between. Working with IP-savvy clients, the firm partners with companies to apply its technical expertise and focused legal experience to offer solutions that will serve their business now and in the long run. Finnegan has over 350 professionals focused on intellectual property, plus over 400 support staff, including legal assistants, docketing, research, litigation support, and information technology specialists. The firm’s work with gaming companies includes obtaining patent protection, asserting IP rights through litigation, protecting trademarks, developing IP portfolios, and negotiating strategic licensing deals. Law360 recently named Finnegan “IP Group of the Year,” an award that honors the law firms behind the litigation wins and major deals that resonated throughout the legal industry in the past year. Finnegan consistently ranks as one of the nation’s top law firms not only for IP law practice, but also for overall diversity by Law360, Vault Guide, The American Lawyer and Working Mother magazines, Women in Law Empowerment Forum (WILEF), and the Human Rights Campaign’s Corporate Equality Index. Finnegan’s ranking by The American Lawyer as a top-30 firm for its percentage of female equity partners as compared to all other Am Law 200 firms is a distinct achievement and reflective of the firm’s values. For more information, visit finnegan.com. AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.

• AGEM recently approved an update to its bylaws that govern the organization. The original bylaws were established when AGEM was formed in 2000 and had been updated only once since. The latest changes bring the bylaws up to date and streamline the terminology. A motion was carried and agreed with the new bylaws coming into practice immediately. • The appointment of the new Nevada Gaming Control Board chairwoman, state Senator Becky Harris, was announced in January. Harris is the first female chair of the regulatory board, and has worked with AGEM in her previous role as treasurer for the National Council of Legislators from Gaming States. She has agreed to meet the members and present a general outline of her priorities at the March or April board meeting. • SEGOB, the Mexico Secretariat of the Interior concerned with the country’s internal affairs, including the presentation of the president’s bills to Congress, recently announced a new director, Eduardo Cayetano Cacho Silva. AGEM has enjoyed a good working relationship over the past few years with the outgoing SEGOB director, Luis Felipe Cangas Hernández, and hopes this will continue through the work of AGEM’s Mexico Committee. • AGEM members approved a host of funding to worthwhile events at the February meeting. A $6,500 sponsorship was approved for the Nevada State Conference on Problem Gambling, being held May 3-4 in Las Vegas. The conference promotes awareness and education, attracting addiction and mental health professionals and interested stakeholder groups. The International Association of Gaming Advisors’ International Gaming Summit, May14-16, Macau, was approved for sponsorship of $5,000, and East Coast Gaming Congress, June 13-14 in Atlantic City, received a $6,000 sponsorship. • Four new members were voted into AGEM recently: Bronze member, RCT Gaming, based in Mexico City, provides hardware and software for video bingo machines and slots. Associate members include E4 Gaming, based in Mexico City, which provides gaming products and services; Gaming Specialized Logistics, based in Las Vegas, which provides management of goods and materials for OEM gaming businesses; and, Millennial Esports, based in Toronto, which provides content for online and offline gaming channels. The membership total now stands at 168, an all-time high. S • In line with AGEM’s support of educational initiatives, members approved a sponsorship of $2,500 for the Gaming & Hospitality Education Series at the University of Nevada, Las Vegas. Starting in March, each of the monthly half-day episodes will cover different aspects of one topic, such as non-gaming revenue, data analytics, eSports and sports betting, and payment solutions, among others. Speakers and participants at the series will be the leading experts in their fields, providing information for all attendees, who will receive a certificate of accomplishment from UNLV upon completion of the six series sessions.

AGEMindex The AGEM Index experienced significant gains for the fifth month in a row during January 2018. The composite index closed the month at 540.24 points, a gain of 23.45 points or 4.54 percent, when compared to December 2017. The AGEM Index reported a year-over-year increase for the 28th consecutive month, and has climbed 232.1 points, or 75.32 percent, since November 2016. During the latest period, six of the 12 global gaming equipment manufacturers reported month-to-month increases in stock price. Six manufacturers reported decreases in stock price during the month, with three manufacturers posting double-digit increases or declines.

AGEM

Agilysys

Exchange: Symbol (Currency)

Stock Price At Month End Jan-18 Dec-17 Jan-17

Nasdaq: AGYS (US$)

12.00

12.28

Ainsworth Game Technology

ASX: AGI (AU$)

2.11

2.16

1.75

Aristocrat Leisure Limited

ASX: ALL (AU$)

23.90

23.70

15.03

Astro Corp. Crane Co. Everi Holdings Inc. Galaxy Gaming Inc. Gaming Partners International International Game Technology PLC Konami Corp. Scientific Games Corporation Transact Technologies

Taiwan: 3064 (NT$)

9.73

12.00

13.50

25.60

NYSE: CR (US$)

99.94

89.22

71.08

NYSE: EVRI (US$)

7.74

7.54

2.95

OTCMKTS: GLXZ (US$)

1.13

1.20

0.60

Nasdaq: GPIC (US$)

10.17

11.24

11.88

NYSE: IGT (US$)

29.07

26.51

25.64

TYO: 9766 (¥)

6,240

6,200

4,520

Nasdaq: SGMS (US$)

46.65

51.30

17.00

Nasdaq: TACT (US$)

15.00

13.25

6.90

Percent Change Index Prior Period Prior Year Contribution (2.28) 23.33 (0.09) (2.31) 20.57 0.06 0.84 59.02 6.78 (11.11) (53.13) (0.04) 40.59 9.78 12.02 2.65 162.37 0.19 88.33 (0.04) (5.83) (9.52) (14.39) (0.11) 13.37 7.80 9.66 0.65 38.05 4.11 174.41 (5.20) (9.06) 117.39 0.20 13.21 Change in Index Value

23.45

AGEM Index Value: December 2017

516.79

AGEM Index Value: January 2018

540.24

MARCH 2018 www.ggbmagazine.com

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Betting on

Education

Tribal gaming utilizes several different avenues to train and educate employees and tribal members By Dave Palermo

Mystic Lake

In addition to its GLI University, Gaming Laboratories International hosts several conferences for regulators throughout the year, including the GLI Roundtable, that attract may tribal gaming officials.

very year, students in the W.A. Franke College of Business at Northern Arizona University in Flagstaff haul out the blackjack, poker and craps tables, roulette wheels and other gambling paraphernalia and stage a casino night to raise scholarship funds. “We actually put on a working casino,” says Professor Gary Vallen, who for 25 years has been teaching Casino Gaming Management 477. “We deal the games. We have cashiers, everything. The only thing we don’t have is surveillance. “It’s a lot of work, but a lot of fun,” Vallen says, “and a great opportunity to give students real hands-on lab experience.” Along with raising more than $700,000 in scholarship money since its inception 25 years ago, the casino night and other NAU business and hotel management courses provide a service to an American Indian government gambling industry that, statewide, employs some 15,000 people. “We’ve tried to be helpful to the tribes, providing consulting services, educational programs and training,” says NAU business Professor Galen Collins. That includes seminars in customer service. The birth and growth of tribal government gambling and resort development has prompted a number of the nation’s colleges and universities to expand their hotel and hospitality curriculums to meet the growing demand for industry training and education. But gambling is not normally included in a university curriculum. And in16

Global Gaming Business MARCH 2018

stitutes of higher learning play a limited role in ensuring indigenous citizens get the training and education to pursue careers in a tribal gambling industry that consists of some 480 facilities in 29 states. That’s unfortunate. The congressional intent of the Indian Gaming Regulatory Act (IGRA) of 1988, which paved the way for what is today a $31.2 billion tribal casino industry, was to assist tribes in strengthening their governments and building diversified economies. Gambling is being looked to by some 240 tribal governments to provide jobs and, hopefully, diminish social ills associated with impoverished, depressed indigenous communities. It’s proven to be a successful tool in doing just that. Economist Alan Meister, author of the annual Indian Gaming Industry Report, puts the number of tribal casino jobs at 333,717. Meanwhile, tribal governments employ approximately 5,900 gaming regulators, according to the National Indian Gaming Association (NIGA), the industry’s trade group and lobby. Arizona, Oklahoma, Minnesota and Washington each employ 15,000 to 18,000 casino-hotel workers, according to tribal gambling associations. Roughly 30 percent of the jobs are held by indigenous employees. The percentage rises to 60 to 70 percent or higher on rural reservations. But training and educating tribal citizens to fill jobs in the tribal gov-

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We did a very good job in educating tribal members and Native Americans. Our success kind of hurt us in that all the tribes we did business with took over management of their casinos after seven years.” —Lyle Berman, former chairman of Grand Casinos, one of the first casino management firms in tribal gaming

ernment gambling industry is a complex task—more so than for commercial casino companies with a string of properties to provide the training and management expertise to create a skilled workforce. Tribes must be creative and resourceful in ensuring tribal citizens— many victims of cyclical poverty—get the opportunity to both operate and regulate their gambling enterprises. This can be challenging.

Small Casinos, Big Challenges Some 70 percent of the tribal industry’s gross revenue is generated by about 75 largely urban casinos operated by tribes with small enrollments. The bulk of the workers are non-Indians from surrounding communities. Many of the other tribal casinos are marginally successful operations on rural, often remote and economically depressed reservations where unemployment rises to 50 percent or higher. “It’s not like you’re in Vegas and you can go to a dealer’s school or UNLV,” says Sheila Morago, a member of the Gila River Indian Community of Arizona and executive director of the Oklahoma Indian Gaming Association. “Many tribes are in places where there are no schools. Of course you have to bring the training to them.” With the exception of the Sycuan Institute on Tribal Gaming at San Diego State University, which offers in-depth study in the operation and regulation of government casinos, tribal gambling is a subject not found at the nation’s colleges and universities. (See page 20.) Tribes have availed themselves of gambling law, regulatory and hotel and hospitality management courses and executive-level training programs at the University of Nevada, both the Las Vegas and Reno campuses. Roughly 20 of the 60 to 70 participants in the University of Nevada’s Executive Development Program (EDP), a 10-day series of seminars held annually in Lake Tahoe, are indigenous Americans. Ken Manuel, a citizen of the Gila River Indian Community who recently was appointed CEO of the tribe’s casino enterprise, is an alumnus of the EDP seminars. “We have a tremendous relationship with the tribes,” says Bo Bernhard, executive director of the International Gaming Institute at the University of Nevada, Las Vegas.

Regulations Take Priority To be sure, gambling is not a career that requires extensive academic credentials. It’s largely an industry in which people work their way up from the slot floor and table game pit, some to supervisory, management and CEO-level

positions. Gambling has, in fact, proven to be the ideal economic development tool for remote Indian communities lacking resources, government infrastructure and a skilled workforce. With the passage of IGRA in 1988, many tribes initially looked to casino companies and management firms to provide the employee training and expertise to run their gambling operations. Meanwhile, tribal leaders focused on setting up commissions and other government functions to ensure the operations adhered to IGRA, tribal-state regulatory compacts and other federal rules and regulations. “When tribes first started opening casinos, they outsourced casino operations to experts from other jurisdictions,” says Kate Spilde, professor of gambling studies at the Sycuan Institute. “Tribes focused on growing their governments. That’s what they needed to do. “Tribes were launching a whole new industry. They needed gaming commissioners to regulate the casinos. That’s where the priority was. The integrity of the industry was very important to tribes. They were willing to outsource the operations, but they were not going to outsource the regulations. “Slot techs are a dime a dozen,” Spilde says. “A gaming regulator is not.” IGRA limits management agreements to seven years, capping revenue to outside companies at 30 percent of the profits. Companies such as Grand Casinos, Boyd Gaming, Harrah’s (now Caesars Entertainment), Station Casinos and others were tasked with training a tribal work force and providing opportunities for indigenous citizens to move into the management ranks. “We were obligated under the contracts to give first preference in employment to tribal members and second preference to other Native Americans,” says Lyle Berman, whose Grand Casinos operated tribal facilities in Minnesota and Louisiana. “We took our obligation very seriously. “We also had training processes to bring tribal members and other Native Americans to upper management. We fulfilled that obligation very well,” Berman says. “We did a very good job in educating tribal members and Native Americans. “Our success kind of hurt us in that all the tribes we did business with took over management of their casinos after seven years.” Tribal leaders initially stressed that their citizens take positions in human resources—where Tribal Employment Rights Ordinances (TERO) gave job preference to enrolled members and other indigenous people—and marketing, promoting both the casino and the tribal government. MARCH 2018 www.ggbmagazine.com

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Training, Education Options Many tribes have since established their own internal training programs. They provide mentoring and tuition reimbursements to encourage tribal citizens to pursue supervisory, management and executive-level positions. This has become more important as tribal casinos evolved into hotelcasinos and, eventually, integrated resorts. On the government side of the business, tribes have availed themselves of regulatory training and commissioner certification programs offered by NIGA. The association also provides operations seminars at its annual and midyear conferences. “I’m seeing more detailed educational programs at the conferences,” says Andrew Hofstetter, director of the Tribal Gaming Protection Network (TGPN), which offers largely regulatory and security training to the tribes. “I’m seeing more and more knowledge and content. The people teaching the classes are of a higher quality and there are more reference materials. There are more things you can use on the job, whether you’re a commissioner or a manager on the casino operations side.” TGPN provides training in active shooter, human trafficking and gangrelated security. The National Indian Gaming Commission (NIGC), the federal oversight agency for tribal casinos, also has a catalog of training, workshops and technical assistance courses in regulatory compliance and operations. Participation in NIGC programs has grown in the past three years from 1,662 to 2,664 in fiscal 2017. Gaming Laboratories International (GLI) is the industry leader in the testing and certification of electronic gambling devices, working closely with regulators, suppliers and operators in some 475 jurisdictions throughout the world. The company—a conglomerate of mathematicians, hardware and software engineers, compliance specialists and others—has formed GLI University to provide consulting and training for the industry. Falmouth Institute in Massachusetts provides a variety of training, certification and consulting services to tribal governments and casino enterprises. The institute, established in 1985 following passage of the Indian Self-Determination and Education Assistance Act, trains roughly 5,000 to 6,000 people a year, largely in government and regulatory compliance. Falmouth designs programs to deal with new and amended Interior Department policies on government gambling and other issues. It also works with tribes on human resource issues, particularly tribal hiring preference and TERO policies. “One thing I’ve seen—especially with tribes with large resorts—is an effort to develop their own internal training,” says Marguerite Carroll, Falmouth marketing director. “They’re bringing in professionals—people who have worked in the industry—regardless of whether they’ve worked in tribal or commercial casinos. “As a result, you’re seeing more and more tribal people managing their operations.” Falmouth largely services the marginal tribes on rural reservations. “I think we do a lot for the smaller, rural casinos,” Carroll says. “They don’t have the resources to do their own training. They probably don’t have big universities nearby.” Many of the marginal casino operations turn to the NIGC for training and consulting. “I think there are a lot more resources now than there used to be,” a slot manufacturing executive says of the training and educational opportunities for tribes in the gambling business. “It’s just a matter of tribes being aware of the opportunities.”

Global Gaming Business MARCH 2018

“Now we’re looking to develop more industry and enterprises so we can attract those experienced Navajos back to the reservation. When you look at the intent of IGRA, Navajo is really kind of the model success story.” —Navajo Nation Gaming Enterprise CEO Brian Parrish

Building a Workforce The Navajo Nation, arguably the country’s largest tribe with some 340,000 members and a three-state reservation of 27,000 square miles (roughly the size of West Virginia), got into the business late, opening the first of four casinos in 2008. But the nation quickly made up for lost time. Navajo Nation Gaming Enterprise (NNGE) employs 1,200 people, 85 percent of whom are Navajo citizens. Seventy-four percent of the management jobs are held by Navajos, including 60 percent of the senior-level positions. Far more impressive is the fact NNGE has generated an additional 5,296 jobs in other tribal enterprises, such as construction, utilities, ranching, agriculture and retail development. Navajo contractors built the largely rural casinos and connected the utilities and water lines. Navajo ranches provide beef for the restaurants. Artisans supply the gift shops. Retail enterprises develop nearby roadside travel facilities and retail centers. NNGE participates in a government-wide initiative to promote education as a means of creating economic development and opportunity on the reservation. “Navajo is very pro-education,” says NNGE CEO Brian Parrish. “There are several things we’re doing that we’re very proud of. “But across Navajo, the nation is making very sure that education is prominently cited in job descriptions as part of minimum requirements. They’ve set high standards.” The nation offers employees up to $7,500 a year in tuition reimbursements. Individual development programs are crafted to all employees, and involve internal, external and online training. “When a team member first joins us, we’re looking for a certain aptitude and attitude,” Parrish says. “Then we have a very comprehensive program to make sure the success of the new team member is the responsibility of not only their immediate supervisor, but the department director and general manager. They all participate in training and giving feedback.” Five to eight upper-level executives participate in UNLV’s EDP every year, Parrish says. The goal is to create opportunity on Navajo not only with NNGE, but other enterprises. “Now we’re looking to develop more industry and enterprises so we can attract those experienced Navajos back to the reservation,” Parrish says. “When you look at the intent of IGRA, Navajo is really kind of the model success story.”

An Evolution of Tribal Talent Gary Litzau, an Ojibwe from the White Earth Band in Northern Minnesota, began his marketing career in 1992, when Grand Casino began managing hotelcasino operations for the nearby Mille Lacs Band of Ojibwe.

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Sycuan Pioneers Tribal Gambling Studies t’s appropriate that the natainment, a commercial casino tion’s first and only four-year company. degree in American Indian govOne graduate has returned to ernment casino management his own tribe, the Pueblo of Sanwould be offered at San Diego dia in New Mexico, as a gaming State University (SDSU), in a commissioner. county with more indigenous “We market ourselves as the communities (18) than anymost personalized hospitality where else in the United States. school in the U.S. because we It’s also appropriate the work with each individual stustudies would be taught by Prodent to establish the best fit for fessor Katherine Spilde, who has them so they stay in their career a Ph.D. in anthropology, an track,” Spilde says. “I really think MBA in entrepreneurial manit works. agement and a childhood spent San Diego State Professor Kate Spilde “They’re not going to be GMs on the ancestral lands of the out of college. This is an underWhite Earth Band of Ojibwe in Northern Mingraduate program. But I want them to at least be nesota. Her parents were teachers. where they think they want to be when they start Inspired by the social and economic progress out. They can always change later on.” created when White Earth opened the Shooting Star Tribal leaders have historically concentrated on Casino in the early 1990s, Spilde became an advothe governmental aspects of casino enterprises, focuscate of tribal gambling. ing on regulations, auditing, public relations, mar“Gaming on Indian lands is about tribal governketing and human resources, ensuring tribal ments,” says Spilde, associate professor in the School preference in hiring and adherence to Tribal Employof Hospitality and Tourism Management and Enment Rights Ordinances, or TERO. dowed Chair of the Sycuan Institute on Tribal Gam“That government component has always been ing. very strong,” Spilde says. “Meanwhile, the operations “There’s a lot of misunderstanding about how have always been outsourced. Running a casino can different tribal government gaming can be from the be very complex, especially an integrated resort propcommercial segment,” she says, with revenues subsierty, which many tribes built right off the bat. dizing housing, health care, education, community “The Sycuan Tribe changed the paradigm. They infrastructure and other services to tribal citizens. “It said, ‘OK, now we got our governments and gaming can be very complex.” commissions up and functioning. But they’re all deSpilde credits the Sycuan Band of the Kumeyaay pendent on this check we get every month from the Nation and former chairman Daniel Tucker with casino. We have no idea how to run the business that the vision to launch the institute, funded with a generates that check.’” $5.5 million gift and annual $474,000 payments. Despite the growth of tribal government gam“Kate Spilde’s program with the Sycuan, they’re bling to 29 states, it is not a subject most colleges really the pioneers in education,” says Andrew Hofand universities readily embrace. stetter, director of tribal affairs for BlueBird CPAs, “Usually when they do reach out, it’s to provide an auditing firm servicing Indian Country. programs in tribal administration, not casino operaThe courses in Tribal Casino Operations Mantions,” Spilde says. “Universities are more comfortagement include tribal gambling history, federal Inable with that. Gambling is still highly marginalized dian law and policy, tribal governance, marketing in society. and public relations, tribal gambling regulations, “Those in the industry convince themselves it’s and problem and compulsive gambling. mainstream. It’s not.” Graduating students are awarded a Bachelor of Fortunately for the Sycuan Band, Joyce Gatta, Science in hospitality and tourism management with SDSU’s dean of the College of Professional Studies an emphasis in tribal casino operations management. and Fine Arts, did some casino dealing in Lake Tahoe Dozens of students have secured industry emwhile obtaining her own degrees. ployment upon graduation, achieving positions with “She was open to (casino studies) whereas a lot of Sycuan, the Morongo and San Manuel Band of Misother universities are critical of gambling,” Spilde sion Indians, Pechanga.net news service, Gaming says. Laboratories International and even MGM Enter—Dave Palermo

“I attributed a lot of my success to Grand Casinos and what I learned there,” says Litzau, who later returned to the White Earth reservation. “They were very strict. Everything was uniform. You were always involved in some sort of training. You were reimbursed for college courses. “I’m very thankful for the career I’ve had,” says Litzau, who today supervises 70 to 80 employees for the White Earth government casino enterprise. Meanwhile, the Mille Lacs, with an enrollment of some 4,300, continues to own and operate two Grand Casinos and adjoining hotels employing about 2,900 employees. Tribal spokeswoman Sarah Barten says “nearly 10 percent” of the workforce of Mille Lacs Corporate Ventures is made up of tribal citizens. Another 4 percent consists of members of other tribes. MLCV includes not only the two casino-hotels but two non-gaming hotels in St. Paul, one in Oklahoma City, Oklahoma and other businesses. MLCV CEO Joseph Nayquonabe Jr. worked his way up through Grand Casinos’ marketing department, and in 2015 was named Executive of the Year by the Native American Finance Officers Association (NAFOA). “At MLCV, a majority of our senior leadership is Native American,” Barten said in an email. “We also offer dedicated programs for our tribal members to develop into these roles.” The tribe provides tuition reimbursement to full- and part-time MLCV employees with a minimum of one year’s continuous service. The tribe also has teamed up with St. Cloud State University in an Introduction to Casino Leadership program for 35 employees. There are other programs designed to encourage Mille Lacs citizens to work for the tribal government and its enterprises. “We want our people running our casinos,” says a human resources executive with a Minnesota tribe who requested anonymity. “We’re pushing education. If you really want to make a difference, we don’t want you washing dishes.”

Global Gaming Business MARCH 2018

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Full Speed Ahead A successful IPO caps four years of meteoric growth for AGS

Mystic Lake

By Frank Legato

aming supplier AGS is in the midst of a renaissance. It’s not the first time. Founded in 2005, the company—then called American Gaming Systems—spent its first years as a small Class II supplier with strong markets in Oklahoma and elsewhere. The company first made a play at Class III markets early this decade, after former Bally chief Bob Miodunski came out of retirement to guide the company to its first Class III licenses as CEO. But the company’s first real renaissance would come with its late 2013 acquisition by private equity firm Apollo Global Management. Apollo’s first move was to place gaming supply veteran David Lopez at the helm as CEO, charged with transforming the company from a Class II supplier into a full-service gaming supplier. Lopez—who formerly was CEO of Global Cash Access and COO of Shuffle Master, where he spent 14 years—would spend the subsequent four years crafting that transformation. In a whirlwind of acquisitions, key hirings and implementation of a development plan, Lopez and his newly assembled team grew AGS into a major supplier of Class II and Class III slots, created a table-game division from scratch that has fast-growing sales in side bets and proprietary games, and most recently, launched an interactive division that offers a white-label B2B social casino and a B2C social app. This year, AGS is being reborn once again, as public company PlayAGS, Inc. On January 26, the AGS senior team rang the bell of the New York Stock Exchange to commence trading of shares under the ticker AGS. The company then completed a successful initial public offering of 10.25 million common shares with an opening price of $16 per share. The price went up quickly, reaching $18 early in trading. Shares were $19.55 at press time. The company had announced that it hoped to raise $160 million with the IPO. After the initial success, that prediction was raised to $174 million. According to Lopez, the proceeds will be used to deleverage the company, freeing up cash to continue its growth plan as a publicly traded company. Less than two weeks after the IPO was launched, the company announced the repricing of its existing term loans in a move that will save around $6.4 million in annual interest payments. “After executing our initial public offering, we immediately started work on repricing our term loans to reduce our annual interest expense and provide us with more cash to grow and operate the business,” says Lopez. “We’re also sponsored by Apollo, which is a private equity firm. And right now, it’s a good market. At some point, they had to pick an entry point for liquidity. We issued enough stock to cover our PIK notes. It’s a good time in the market, and it’s a nice time to establish that liquidity platform.” Lopez credits the leaders of Apollo not only for providing the financial

Global Gaming Business MARCH 2018

“We determined success was going to require making some acquisitions and doing other things organically, but we would have to start with people. We’d have to start with hiring and establishing a great management team to lead us forward.” —David Lopez, CEO, AGS muscle to reinvent AGS as a supplier, but for what will be the equity firm’s continuing support as the largest shareholder of the public company PlayAGS, Inc. (Apollo was expected to control 69 percent of AGS following the IPO.) It was Apollo that afforded Lopez and the management team the ability to craft AGS into what it is today. “Before I was even hired, we talked about what AGS needed to become,” Lopez recalls of his initial contact with Apollo. “AGS was primarily a Class II distributor. We wanted to become more of a Class II and Class III diversified global gaming supplier. What would it take to get there?” The answer was a combination of acquisitions and organic growth, with the financial backing to accomplish it. The first two acquisitions would set the tone for the company’s slot division. The acquisition of large-format slot supplier Colossal Gaming would give the company its first big hit in Class III markets, Colossal Diamonds on the Big Red cabinet. Next, the AGS acquisition of Georgia-based supplier Cadillac Jack combined two very similar companies—both traditional Class II suppliers beginning to move into Class III. With little overlap in the markets of the

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Criss Cross Poker

legacy companies, the AGS Class II footprint essentially doubled, and the former Cadillac’s Atlanta-based technology team provided AGS the basis for what would become its core video slot platform, ICON—soon to be followed by Orion, the company’s first premium slot platform. “We doubled everything—employees, revenue, EBITDA,” Lopez says of the Cadillac acquisition. That acquisition has one thing in common with subsequent moves that have led to the emergence of AGS as a top competitor in slots, table games and interactive products—it brought in quality executives that strengthened a management team that is the envy of the industry.

People Power Lopez also credits Apollo with helping him build his team. “From the perspective of Apollo—the sponsor—and myself, we determined success was going to require making some acquisitions and doing other things organically, but we would have to start with people,” he says. “We’d have to start with hiring and establishing a great management team to lead us forward.” One of the most important additions came midway through Lopez’s first year at the helm, when he brought in former Shuffle Master colleague John Hemberger as senior vice president of table games, charged with creating the new table division. Hemberger, who had run the proprietary table game division for Shuffle Master, acquired products such as the Buster Blackjack side bet, Casino War, Criss Cross Poker and others, in addition to adding new proprietary games such as Chase the Flush. Within three years, the table-game division completed more than 2,350 installations worldwide. The Cadillac Jack acquisition also would strengthen the management team, with Sigmund Lee filling the role of AGS chief technology officer, the position he had held with Cadillac for nine years. Lee also had been vice president of engineering for Bally Technologies. It was Lee’s team that developed the former Cadillac operating system into ICON, getting the slot division moving in Class III in concert with Andrew Burke, the senior vice president of slot products who had been with AGS since 2008. In 2015, Lopez brought in Julia Boguslawski, formerly a longtime investor relations and marketing executive for Shuffle Master, Scientific Games and

Bally Technologies, as executive vice president of investor relations and chief marketing officer; and longtime Aristocrat sales executive Robert Perry as senior vice president of sales. The team would further be augmented with the addition of Matt Reback as executive vice president. Reback was a longtime marketing executive with Konami in addition to a history on the operations side with Station Casinos and Caesars Entertainment. “We thought about it from the very start,” Lopez says. “This was how we were going to build the company and build the product lines. We kept some folks on board from the previous team, and our goal was to hire All Stars who understood the culture, who could adapt to the culture, in a very unique environment where people speak very openly in front of one another but there’s no hard feelings.” The culture that the executive team created for AGS is one in which operations are efficient but relaxed, and everyone gets a say—at least in the board room (“or the Death Star, as we call it,” laughs Lopez). “This room is where all disagreements are handled, and when we’re done in here, it’s done, because we’re not going to win by being political,” Lopez says. “We’re going to win as a team of 550 employees, as the late (Shuffle Master CEO) Tim Parrott said, all pulling oars in the same direction.” “The pace is great,” adds Boguslawski. “David has created a culture where we get issues out there on the table, and we move quickly on decisions. It’s even part of our mission statement, which essentially says, ‘The bigger that we get, the smaller we need to act.’” Lopez says it is different than the traditional corporate environment in which there are layers of management to go through before actions are taken—the culture makes for a nimble company. “That’s part of our culture, and also part of the Apollo culture—there is no tomorrow,” Lopez says. “Why not today? There’s no need to wait. We’ve had executives who join the company and say, ‘We’ll talk about a problem, we’ll talk through a solution,’ and then, ‘What do we need to do to get this done and move it forward?’ And I say, ‘Well, we just did it.’ “They’re surprised to see how quick and nimble we can be. We don’t have to send it up to Galactic Headquarters for an approval. We’re the approval, right here, sitting around the table.” “It’s something that all employees know,” says Boguslawski. “We never MARCH 2018 www.ggbmagazine.com

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The Class II segment of the slot division is stronger than ever, Business as Usual thanks in part to the The emergence of AGS as a publicly traded company will not change the company’s culture or product plan acquisition in December moving forward. “(The change) should be transparent of the installed Class II to the customers and the players,” Lopez says. “We base of Rocket Gaming don’t want customers to feel any bumps in the road, or Systems, a transaction any changes.” The transition is easy for AGS, whose operation has that instantly added mirrored companies, at least from a financial 1,600 recurring-revenue perspective.public “Kimo (Akiona, CFO) has already been games to the doing all the quarterly reporting, the Qs and Ks, as if company’s footprint. we were a public company,” Lopez says. “However, it’s

lose sight of those things we do that got us to the position where we are, where we’re able to grow and grow quickly.” It’s a culture Lopez says he built from his experience with executives who have been role models in the past—from Parrott to prior Shuffle Master legends including Mark Yoseloff and Joseph Lahti, to Apollo Managing Director David Sambur. “You take a guy like me who grew up in Troy, New York, and didn’t get very good grades in high school or UNLV, and ask, ‘How the heck did I get anything accomplished in life?’ And the answer is Joe Lahti, Mark Yoseloff, Tim Parrott, David Sambur— folks like that,” Lopez says. “If you were willing to listen and willing to learn, each and every one of those guys brought something to the table. “Clearly, Mark Yoseloff had the most years with me, and I think that there was a lot that he shared with me. Joe Lahti, in my early years, really taught me a lot about being a CEO, although I was just an analyst at the time. And Tim Parrott was a huge influence. I think we carry a torch of customer service and community service culture that Tim instilled in us. And then, of course, David Sambur is one of the smartest people I’ve ever worked for, and has been tremendous in tutoring me along the way as well.” 24

Global Gaming Business MARCH 2018

not like we’re going to sprint to the end of every quarter. We’ll probably settle on annual guidance, because we know what we’re going to do over the course of the year. Quarter to quarter, things may change. We don’t want to change the way we behave, transitioning from private to public.” Boguslawski adds that the investors the company’s executives dealt with leading to the IPO include a lot of “long-only institutions” that AGS will continue to target. “That’s always been our priority—we want investors who are committed to the story for the long term, who believe in the team, believe in the fundamentals, and who are looking out two years, three years,” Boguslawski says.

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“We never lose sight of those things we do that got us to the position where we are, where we’re able to grow and grow quickly.” —Julia Boguslawski, Executive Vice President and Chief Marketing Officer, AGS

For this reason, Lopez says he expects the product roadmap to continue to grow at the pace it has established during the company’s phenomenal recent past. In the second quarter, the company’s slot segment will release the Orion Slant. “We’re developing content for that,” he says, “and I don’t think you’ll see us veer stylistically from what we’re doing right now. We’re developing games for core gamblers.” Other additions on the slot side will include another new cabinet, a new style of linked progressive, and game programs designed for the medium- to high-volatility space. The Class II segment of the slot division is stronger than ever, thanks in part to the acquisition in December of the installed Class II base of Rocket Gaming Systems, a transaction that instantly added 1,600 recurring-revenue games to the company’s footprint. “That puts us over 23,000 units on recurring revenue,” Lopez comments. “We like the opportunity to take that footprint, tack it on to what we have, manage it, optimize it, and make the most of it.”

Lopez says around 83 percent of the company’s revenues come from recurring sources, not only in Class II but in Class III standouts such as Colossal Diamonds. “As we expand internationally, that could grow,” he says. “We will continue to grow that base—it gives us great stability. It will allow us to plan accordingly for the future, and look out two to three years and have a lot of confidence in what we’re doing.” “Equally important,” adds Boguslawski, “we believe that there’s great opportunity to optimize some of the existing base”—not only with the Rocket units, but with about 4,700 units she says are “great candidates to upgrade with some of our new high-performing content. We have a whole team of analysts that work on that, and look all the time at what makes sense in different properties. That’s a a strategy we believe will grow the recurring revenue dollars moving forward.” That recurring revenue base also contributes to the company’s ability to experiment with new product styles. “It allows us to take some chances that maybe you wouldn’t take if 93 percent or 95 percent of your revenue came from sales instead of recurring sources,” Lopez says. “It gives you the ability to plan, look for-

BIGGER THAN BIG We already told you bigger was better. But what we didn’t ƚĞůů ǇŽƵ ŝƐ ƚŚĞ ŐĂŵĞ ďĞŚŝŶĚ ƚŚĞ ďŝŐ ŝƐ ĞǀĞŶ ďĞƩĞƌ͘ tŝƚŚ ŝŶŝƟĂů ƉĞƌĨŽƌŵĂŶĐĞ ĚĂƚĂ ĂǀĞƌĂŐŝŶŐ ŽǀĞƌ ϯy ŚŽƵƐĞ͕ /ŶĮŶŝƚǇΠ sϱϱΡ ŝƐ ƉƌŽǀŝŶŐ ƚŚĂƚ ŝƚ͛Ɛ ŶŽƚ ŽŶůǇ ƐŝǌĞ ƚŚĂƚ ŵĂƩĞƌƐ͘ >ĂƵŶĐŚĞĚ ǁŝƚŚ ĞǆĐůƵƐŝǀĞ ƟƚůĞƐ ĚĞƐŝŐŶĞĚ ĨŽƌ ŵĂǆŝŵƵŵ ƉůĂǇĞƌ ŝŶƚĞƌĂĐƟŽŶ͕ ƚŚĞ /ŶĮŶŝƚǇ sϱϱ ŝƐ ŶŽƚ ŽŶůǇ Ă ǀŝƐƵĂůůǇ ƐƚƌŝŬŝŶŐ ĂĚĚŝƟŽŶ ƚŽ ƚŚĞ ŇŽŽƌ Ͳ ŝƚ͛Ɛ Ă ƉƌĞŵŝƵŵ ƉŽǁĞƌŚŽƵƐĞ ĂǀĂŝůĂďůĞ ĨŽƌͲƐĂůĞ ŝŶ ƚŚĞ ĐŽƌĞ ƐĞŐŵĞŶƚ͕ ũƵƐƚ ǁŚĂƚ ƚŚĞ ŝŶĚƵƐƚƌǇ ŚĂƐ ďĞĞŶ ĂƐŬŝŶŐ ĨŽƌ͘ ŽŶƚĂĐƚ ǇŽƵƌ /ŶĐƌĞĚŝďůĞ ĐĐŽƵŶƚ DĂŶĂŐĞƌ ƚŽ ƉůĂĐĞ /ŶĮŶŝƚǇ sϱϱ ŽŶ ǇŽƵƌ ŇŽŽƌ ƚŽĚĂǇ͘

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The AGS product lineup will be augmented with changes to the industry, from expansion of online gaming to the search for games that appeal to the emerging millennial generation.

ward, and understand what your needs are from a capital point of view.” On the table side, the company will continue to expand the division with new products. “At G2E 2017, I looked over into the table games section of our booth, and I was able to sit there and say, ‘This is coming together beautifully.’ We have an absolutely phenomenal product portfolio,” Lopez says. “I think any customer that came to see us was impressed with the diversity of the portfolio. “Going forward, we will continue to take a look at expanding that portfolio, but that said, we’ve been able to do it because we hired the right people. We got John and his team in here; he has experience, he understands the pieces and parts, and how to put together a portfolio like that. “So, nothing’s done—either on the slot side, the table side, or on the interactive side. We’ll always be active trying to improve those divisions.” Some of the biggest successes on the table side so far have been the Buster Blackjack side bet and the Bonus Spin wheel for table games. “Buster Blackjack is just a great testament to what we can do when we acquire a game that might have limited installs, but under our umbrella of sales channels and licenses, we’re able to then quadruple the install,” Boguslawski says. “And Bonus Spin has been great. We are excited with that rollout. It’s in Caesars, Las Vegas Sands, MGM, Golden Nugget, Graton and Foxwoods. That’s been a tremendous product, as well as the launch of the shuffler, which will be this year. We’re very excited about that, based on operator feedback.” And how does AGS compete in these areas with a well-entrenched competitor such as Shuffle Master (now part of Scientific Games)—a.k.a. the “800-pound gorilla” of the segment? “We worked for the 800-pound gorilla,” answers Lopez. “Each and every one of us has worked for the 800-pound gorilla. I was there for 14 and a half years, and I understand the ins and outs of the business. John Hemberger was there for a number of years; he ran the table game division. “There was once a time in the slot division where we all asked the same question, because somebody had 75 percent to 80 percent ship share. Things have changed quite dramatically there, and there’s no reason that the same thing can’t happen in the table game space.” He expresses similar confidence in the prospects of the new interactive division, another 26

Global Gaming Business MARCH 2018

area where there is entrenched competition. “We’ve been primarily a B2C supplier of social gaming, but we now provide a white-label B2B product,” says Lopez. “In 2017, in the second half, we won about six deals. This year, we’ve already won two more deals, in the first month. Each one of those deals exceeds the combined total of all the deals we did in 2017, so we’re starting to scale up a little bit. We didn’t want to jump out there too fast, so we started with smaller customers, and now we’re stepping up to larger customers and still winning deals, so that’s exciting.” The AGS product lineup will be augmented with changes to the industry, from expansion of online gaming to the search for games that appeal to the emerging millennial generation. Lopez says the company already provides skill games and other games that permit the kind of socializing younger players seek— they’re called table games. “A lot of companies are focused on skill games because this millennial generation spends a lot of time in the nightclub, and they spend a lot of time in experiential stuff,” Lopez says, “but just as with Generation X, it starts with the table games. They’ll migrate to those table games, and are already starting to migrate. Table games are social. You can sit down, you can have your drinks, you can hang out, talk to your friends. At the end of the day, that’s a social, skilled game that we believe millennials will play.”

Expanding Markets

Bonus Spin

With licenses secured across the U.S. Class III market, AGS plans to expand elsewhere in North America— the former Cadillac Jack already was one of the top suppliers in Mexico, and the company is now looking toward Canada as well. “We think there’s a huge opportunity in Canada for us,” Lopez says. “Our early returns on installs tell us our games are performing very well. We’ve hired a salesperson for Canada. Mexico’s been growing two years in a row, after multiple years of contraction.” AGS also is looking to new markets in South America and Asian markets, beginning with the Philippines. “We have our first installations in the Philippines in Q1, and of course, we’re prepared for Brazil, should the gaming law pass,” says Lopez. “The great news with going into the Philippines,” says Boguslawski, “is that this will help us grow our recurring revenue base—that market is a participation market, same as Brazil. We’re very selective with the markets we go into, and those two markets make great sense for us.” With the company’s balance sheet improving and the continued support of Apollo, there will be sufficient cash moving forward to fund additional growth opportunities. “Since we have so much great white space ahead of us, espe-

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cially in the Class III market, we want to be able to capitalize on those opportunities,” Boguslawski says, “to make sure that we can get all those units in the field, and definitely prioritize use of the cash to go to that, and also to R&D, which is our lifeblood.” And to continue that culture—AGS was recently named one of the “Best and Brightest Companies to Work For” by the National Association for Business Resources. “David is so focused on his people,” says Boguslawski. “Everyone really enjoys working with one another, and this is a culture where people are very empowered, able to speak their minds without repercussion, and there’s this tone of playfulness with all of it. So, no matter how busy we are and how fast we’re moving, we can’t forget to have fun. “That all comes from David. People meet him, they say how accessible he is, that he’s kind of a no-BS guy. Investors certainly felt the same thing. Everything stems from the top, and it’s trickled down in the organization.” That extends to the “GameON” conference, an intimate gathering of AGS team members and around 100 key customers, during which operators get to know the company, its products and its product roadmap going forward. The event will be held this year at California’s Pechanga casino. “We’re keeping GameON about the same size every year, based on demand, because it allows everyone to feel that over the course of three days, you can mingle with everyone and it still feels intimate,” Boguslawski says. There may be more M&A activity for AGS in the future, but for now, the company will focus on maximizing the product pipeline for its growing base of customers. “We’ve done over 20 acquisitions since Apollo acquired the company,” Lopez says. “Clearly, we’ve raised the bar. We don’t need to be as risky as we once were. That said, we’re still out there; we’re always looking at M&A.” And of course, any future acquisition will bring more strength to the team. “When you talk about our culture, each person has had to fill a role,” says Lopez. “I’m not a fan of the New England Patriots or (coach) Bill Belichick, but his slogan is that we need all of our people to understand what their job is, and then we need them to do their job.” That’s Lopez’s mantra at AGS, with one additional football slogan: “We’ll do anything it takes to win.”

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Global Gaming Practice Regulatory | Operations | AML | IP | Labor | Litigation | Privacy | Real Estate Acquisitions | Financing Learn more at gtlaw.com/gaming GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2018 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 30374

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Security& Surveillance

LESSONS FROM

OCTOBER 1

Mystic Lake

What needs to change? BY MAC SEGAL

lmost six months have passed since the tragic events of October 1 in Las Vegas, and the questions I am being constantly asked are, “What has changed in hotel security? What needs to change? Are we more secure than we were before?” In short, the answers are: not much; the unwillingness to do what is needed; and, no, I do not believe we are safer than before October 1. Allow me to begin with a question: Do we need security? Do we face probable and critical threats to our safety and security that need to be addressed? If the answer is no, then we should pack up our things, send the security personnel home and call it a day. If, however, we do need security, then the time has come to start doing it right. We need to keep people safe as opposed to just making them feel safe—no more “security theater,” but rather, the enactment of the long-overdue shift in the security paradigm that will effectively reduce risk and make people safer.

Real, Not Show Security, real security, does not come from cameras, metal detectors, radar firearm detection systems or file rooms full of unrealistic procedures. The leading principles are, as always, stop the threat as early and far away as possible; prevention is better than intervention; and, stop the attack before it gets going. However, this is not always possible. Washing machines come with guarantees but not security. We must acknowledge that security measures, no matter how good, may at some point be penetrated. Just recently, a woman bypassed all TSA and other airport security at Chicago O’Hare airport and succeeded in boarding a flight to London without a passport, ticket or boarding pass. People have broken into the White House and succeeded at penetrating a myriad of other “secure locations” without being stopped. This is in no way a critique of existing preventative security measures. However, it goes to show that hostile events may occur despite your best efforts to prevent them, and recent events have shown us that we are ill-prepared to deal with them when they do. At a recent conference for the security of sporting events, a security manager was explaining how well trained their employees were to check delivery ve28

Global Gaming Business MARCH 2018

hicles at the access control points. He provided an in-depth description of the procedures and attention to detail when searching vehicles. However, when I asked if their team is as well trained to respond to a threat as they are to detect one, the answer was, and I quote, “Absolutely not! We have the police for that!” It goes without saying that the chances the police are standing next to the staff member as they check every vehicle is close to zero, hence they had no effective ability to respond to a threat once discovered. Herein lies the issue. Detection without the ability to respond is far from good enough. It comes back to our original question. Do we need security? If we do, then we need to consider that the worst may happen, and if we are not prepared, the results will not be good. So, how do we approach today’s security threats in an effective manner? Time after time we bear witness to attacks on hotels, casinos and events that attain an unacceptable rate of success. The security apparatus in most facilities today is not equipped to effectively prevent or deal with a hostile incident on the scale we have witnessed in recent years, and unless there is a fundamental conceptual change in the hotel security paradigm, when the next terror attack occurs, it too will succeed.

Feeling Safe is Not the Same as Being Safe If there is one thing we know to be true, it is that higher-resolution cameras, more robust vehicle barriers or the addition of more inadequately trained security personnel is not the answer. Physical and technological security measures without properly trained manpower and proper procedures in place create an illusion of security that is both ineffectual and dangerous. The perception of security does not necessarily mean security. So, how do we protect ourselves from becoming the next victim of a hostile attack? We propose a four-fold solution that starts with understanding the risks, threats and vulnerabilities a hotel, casino or event faces, then moves to the implementation of effective proactive and reactive measures to ensure the safety of both guests and staff.

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Is it going to make our guests feel safe, or actually be safe? 1: Updated Risk, Threat and Vulnerability Analyses (RTVA) There is no “one-size-fits-all” solution to security, especially not in hotels, casinos and events. A good RTVA shows this immediately. Each location must be considered in terms of its environment, clientele, geographical location and many other factors. Back in the days when the main concern for security was petty theft and drunks in the bar, the concept had different connotations. In the reality of today’s world, without an in-depth analysis of the probable and critical threats and risks a facility faces—and where its vulnerabilities lie—it is not possible to build an effective security apparatus. In order to improve security, it is imperative to have a clear understanding of the specific risks and threats facing the hotel and its guests, as well as the vulnerabilities that might allow these risks and threats to breach the existing security apparatus. Only after qualified professionals have properly conducted an RTVA is it possible to establish a security plan that objectively addresses risks, threats and vulnerabilities—and then reliably reduces the risks to acceptable levels. We can compare risk mitigation to a vaccination. If one is traveling to a country where yellow fever is a high risk, getting a flu shot is not going to help. That’s not to say a flu shot isn’t a good thing to have. It simply means that for that particular country, additional and specific protection is needed to optimally reduce risk. Today, many facilities have their security “flu shots:” a range of generic prophylactic measures they hope will insulate them from day-to-day lowlevel threats, but nothing based on a rigorous RTVA or a current understanding of the actual threat scenarios. This mindset needs to change. Hostile events are on the rise, and hotels, casinos and events are highly attractive, and for the most part highly vulnerable soft targets.

2: Physical and Technological Barriers • Physical barriers: Gates, lights, locking mechanisms, windows, fences, walls, barriers, bollards, security booths, etc. • Technological barriers: CCTV cameras, alarms, biometric readers for employees, key cards, smart elevators, automatic fire doors, etc. All of the above are essential for any facility security system, and should keep guests and visitors safe. Correct? Yes, but not on their own! Physical and technological barriers that protect a fixed-site perimeter and shell should be part of every security plan. But it is important to realize that while they are necessary components, they are not sufficient to establish real security.

In fact, they can sometimes provide a false sense of security. Even though the attacks of the last several years have shown that these measures alone do not mitigate, control or contain threats, numerous articles still call for hotels to install better-quality incident-response and high-resolution cameras, sophisticated alarm systems and more secure locking mechanisms on doors. The fact is, however, that no camera has ever stopped a gunman from entering a hotel lobby, any more than an alarm prevents them from accessing the premises. Every fixed-site security apparatus requires all four cornerstones to be truly effective, but many today place disproportionate emphasis on the physical and technological aspects of security, and far less on an RTVA, manpower/training and procedures. The questions that need to be asked before installing or upgrading physical and technological security measures are: • Why do we need this? • What threats are we addressing or mitigating? • What is our purpose? • Is it going to make our guests feel safe, or actually be safe? We do not suggest throwing away cameras or leaving rooms unlocked. We do want to emphasize that CCTV cameras do not prevent attacks. Cameras have a function and a place in the security paradigm, but they are not a preventative measure. This is a prime example of feeling safe as opposed to being safe.

3: Manpower and Training Having the “right person for the right job” may sound cliché, but that doesn’t make it any less true. From the selection of the security manager to access control guards, choosing the correct people is of paramount importance to the security of any facility. Specific qualifications for all security positions need to be established, and only qualified candidates must fill them. Proper vetting and screening of all potential employees, not only for security-related positions, is equally important. (In the Mumbai attacks, for example, employees who had been planted there by the terrorist organizations supplied much of the useful intelligence about the interior of Taj Mahal Hotel.) Once the security team has been selected, appropriate and comprehensive training by well-qualified instructors is essential.

HAVING THE “RIGHT PERSON FOR THE RIGHT JOB” MAY SOUND CLICHÉ, BUT THAT DOESN’T MAKE IT ANY LESS TRUE. FROM THE SELECTION OF THE SECURITY MANAGER TO ACCESS CONTROL GUARDS, CHOOSING THE CORRECT PEOPLE IS OF PARAMOUNT IMPORTANCE TO THE SECURITY OF ANY FACILITY. MARCH 2018 www.ggbmagazine.com

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It is critical that your personnel, all personnel, undergo some degree of security-related training so that if a crisis hits, they will know how to respond correctly to minimize casualties and save lives. In an emergency, the more people who know how to respond, the higher the chances of a positive outcome and limiting damage.

Training should not only teach the skills necessary to carry out day-to-day responsibilities in an effective and thorough manner. It should also enable staff to be a proactive security force. This means that training courses should include lessons on hostile surveillance indicators, suspicious behavior identification, imminent-attack indicators, proper monitoring of CCTV, case studies of actual attacks and more. The mantra must be: We are all responsible for our security and safety. A further aspect of training that is mostly neglected is response training: what to do when a threat is detected, or a hostile incident occurs. When security personnel hear shots fired or a receptionist hears an explosion in the parking lot, what do they do? How do they respond? It is not reasonable to expect the average person to respond effectively to extreme circumstances, especially life-threatening ones, without proper training. It is critical that your personnel, all personnel, undergo some degree of security-related training so that if a crisis hits, they will know how to respond correctly to minimize casualties and save lives. In an emergency, the more people who know how to respond, the higher the chances of a positive outcome and limiting damage.

paper; they must be field-tested and properly imparted to the employees, both security and general staff. Ongoing drills must be done and procedures reassessed on a regular basis to ensure they are still relevant and effective. Procedures must be clearly written and accessible so people can refer to them when necessary. They must be simple and unambiguous, and they should provide clear instructions for how to act during routine and emergency situations. We are aware that operators have emergency procedures in place for fires, earthquakes and various other natural disasters, as well as contingency plans in the event of war or other extreme circumstances. We are also aware that one cannot know if these plans will effectively save lives until they have been field-tested in an actual crisis. That is why it is critical these procedures be prepared with the help of experienced professionals who have a deep understanding of real-world threats and firsthand knowledge of what will actually work and save lives. The combination of properly written procedures and training equips employees with not only the “what” and “how” to do things, but also “why” these things need to be done. This facilitates proper and effective function in the field.

4: Procedures

It’s All About The Guest Experience

The fourth cornerstone, procedures, is vitally important and yet the most neglected. Procedures are the manner in which staff should respond and act when faced with a particular set of circumstances. But while there are rooms filled with generic security procedures, and these may have been enough in the past, they no longer provide adequate answers to the emerging threats fixed sites face today. Security procedures need to be location-specific, and they need to address a wide variety of risks and threats at various levels. The concept of one procedures manual being applicable to all hotels in a chain or region is no more logical than suggesting that one guidebook could be relevant for every country in the world. Security procedures relate directly to the RTVA (risk, threat, vulnerability analysis) for a specific location. They need to consider variables such as geographical locations, environment, clientele, facilities, budgets, manpower and many other issues. They provide structure and methodology for carrying out security-related tasks, not just for security personnel, but for all employees. Procedures, both routine and emergency, must be simple, effective and implementable. It is not good enough that they look good on

Global Gaming Business MARCH 2018

Turning fixed sites into fortresses is not the answer. Guests and visitors must feel welcome, safe and happy, and they should be able to enjoy a positive experience in keeping with the operator’s culture. Effective security will not come from radar weapons detection systems, barbed wire fences or more inadequately trained guards with more guns. It will come from accepting the new reality: The world has changed and is no longer what it once was. We need to have properly trained people supported by technology, and not to be reliant upon technology supported by people. Hotels, casinos and events are considered legitimate targets by those who wish us harm, and only an intelligent shift in the hotel security paradigm that will provide actual, not perceived, security is going to prevent the next attack from claiming innocent lives. Mac Segal is director of Hotel & Fixed Site Security Consulting. He has over 25 years of operational, training and consulting experience in the security industry, specializing in mitigating and responding to terror and criminal threats.

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Security& Surveillance

PROTECTING THE CAGE

Mystic Lake

Trends and Countermeasures for Casino Robberies BY ALAN W. ZAJIC

lthough there is not a specific study that identifies casino-related robberies throughout North America or within the U.S., news reports indicate that incidents involving some form of robbery on a gaming property are becoming more frequent, or are being reported at a higher frequency in the news. The U.S. Department of Justice does not specifically track casino-related robberies, but the Uniform Crime Reports (UCR), produced annually, track all types of robberies. UCR reporting demonstrates that robberies overall have been on an uptick over the last several years in the U.S. Measured in metrics of per 100,000 residents, the robbery rate went up slightly on average—1.6 per 100,000 residents in the three years between 2014 and 2016. This equates to 4,000-5,000 more robberies annually in the U.S. in the last three years. Overall, robbery has decreased from its peak in the 1990s and appears on an incremental trending increase over the last few years, yet still has significantly decreased overall in the since the 1990s, when it was more than double the current levels based on population.

Casino Robbery There are two basic types of robbery that can occur on a gaming property. The first is the robbery of the casino itself, which involves a cashier’s cage, a satellite cashier, venue cashier, and occasionally the employee that carries a cash wallet for jackpot payouts. At the time of this writing, Las Vegas Metropolitan Police are investigating four separate robberies of casinos occurring within a week, and another robbery that had occurred two months prior. This local trending is of concern, and is the focus of local police to conduct simultaneous investigations that do not appear to be related. One of those instances involved three patrons who simultaneously grabbed

chips from a table game much in the fashion of “flash robberies” that occurred some years ago when multiple people would enter a convenience or other retail store and conduct mass theft in a swarming method, making it impossible for employees to prevent. This is something that should be managed quickly to assure dealers and pit supervision are well trained in protecting table game bankrolls, monitoring customers on games, identifying potential perpetrators, contacting surveillance and security, and managing the employee and customer behavior in their workspaces. Security and surveillance can work together to monitor the peripheral areas around table games pits, identify patrons who closely watch or “hawk” players, and take appropriate action to “back them off” or request identification. Periodic scans of the people and faces of people not gambling but near table games also become beneficial. And yet another Las Vegas robbery involved the jumping over the counter of another Strip casino, grabbing cash, and fleeing out the casino doors. This is another example of when designers move away from cage bars and barriers that prevent these types of robberies, which most casinos implemented and still use that were installed after several high-profile similar events back in the 1990s. Aesthetics changes and decreases in formidable barriers are noticed by criminals as an opportunity for robbery.

Follow-Home Robberies The second type involves a robbery committed upon a patron or visitor by an unknown third party. These typically occur in locations such as parking lots, garages, restrooms or remote-area ATMs. There is some trending in what have been coined by the media as “follow-home robberies” where a patron is marked or selected by a criminal while gambling, usually winning, and is discreetly followed away from the casino and subsequently robbed of any winnings at their home.

CASINOS SHOULD CONSIDER HAVING A WELL-DESIGNED PLAN THAT INVOLVES DETERRENCE, DOCUMENTATION, CUSTOMER WARNING PROCESSES FOR CARRYING LARGE AMOUNTS OF CASH, CASH PAYOUT PROTOCOLS, AND TRAINING OF EMPLOYEES WHO DISTRIBUTE CASH. SPECIFIC TRAINING OF SECURITY PERSONNEL AND SURVEILLANCE AGENTS ON PROACTIVE PRACTICES ALSO WOULD BE BENEFICIAL. 32

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The best opportunity for a casino is to provide as many capable guardians as possible both in the traditional sense through uniformed security personnel, and other employees who regularly work in the environment.

Regardless of operational executivesâ&#x20AC;&#x2122; opinions concerning a customer who has been robbed after they have traveled a distance from the casino, the negative publicity and potential litigation exposure can have lasting impact. Depending on the state and jurisdiction, these have some potential for liability based on individual state case laws regarding responsibility for criminal events off the premises. The negative press can create customer concerns for their safety. It would appear that these have somewhat decreased over the last few years, with the occasional high-profile robbery such as the recent one in Rhode Island where the perpetrator watched a woman gamble and win, followed the victim 43 miles to her home and then committed the robbery. Casinos should consider having a well-designed plan that involves deterrence, documentation, customer warning processes for carrying large amounts of cash, cash payout protocols, and training of employees who distribute cash. Specific training of security personnel and surveillance agents on proactive practices also would be beneficial.

Motivated Offenders Many criminologists are of the belief that a motivated offender is not deterred from committing violent crimes by traditional crime prevention strategies. In casino environments, these strategies would include uniformed security presence, CCTV surveillance, and environmental conditions designed to make it harder to commit a robbery. Recent history appears to support this, in that even with an abundance of surveillance cameras and uniformed security, incidents of robbery are occurring in larger Las Vegas properties on the Strip during busy periods. In previous studies involving interviews of incarcerated offenders convicted of robbery, Athena Research concluded that these robbers often did not consider those basic crime prevention strategies a deterrent to committing a robbery. This becomes a challenge to casinos in attempting to prevent robberies from occurring. If a criminal is not deterred by traditional security measures, robberies will continue to occur. Studies by criminologists also demonstrate that criminals evaluate their target to include potential yield or how much they could obtain, and what risks are present that would liken them to being caught, jailed, convicted and sentenced to a prison term. Robbery is one of the most difficult violent crimes to deter or eliminate in any environment, including casinos. The banking industry painfully realized that they could not prevent bank robberies from occurring regardless of the precautions taken over the last several decades. Even wide posting of screen

captures from surveillance cameras in the press has not reduced robberies from occurring in banks, where a more controlled environment is present. There are more casino areas that are susceptible to robbery based on the publicâ&#x20AC;&#x2122;s desire and demand for convenience when it comes to cash transactions. This consumer demand gives more opportunities to the criminal intent on committing a robbery. Additional points of sale or cash transaction locations have increased the exposure. Regardless, the gaming industry should be vigilant in providing as much crime prevention strategy as possible to chip away at the problem of robbery, and attempt to deter and reduce violent crime by proven strategies incrementally.

Presence The visibility of obvious security personnel has decreased over time in many casino environments. The desire by management to put security in soft uniforms such as blazers as opposed to traditional distinct hard uniforms with badges, patches and exposed equipment should be given a new look by management. The main objective of the soft uniform was to make security personnel less intimidating to the legitimate customers and promote a friendlier environment for a positive customer experience. The decrease in obvious security presence visually may contribute for increases in robbery events at certain properties. In my experience, the more times an obvious security officer is observed in a particular area, the less likely a violent criminal event will occur at that location. This also aligns with contemporary criminology theories. Patrol tactics should include increases in patrol of cash-handling areas, and not decreases. As an example, in previous decades, the presence of uniformed security officers in booths or podiums in close proximity to cashier cages was fairly consistent. In recent years, this position has been removed and absorbed by other security officers. Careful evaluation should be made regarding either posting a security officer in cash-handling areas, or in the alternative, increase the frequency of patrols of those areas dramatically to create a higher perception of security to the customer, employees and the bad guys. Properties in jurisdictions where liquor liability laws (dram shop) are in place should post security personnel at all ingress/egress points to assist in compliance. The benefits of this security measure also significantly reduce robbery and other violent crime. Jurisdictions such as Nevada do not deploy security in this manner, and Nevada does not have liquor liability laws. Nevada casinos may benefit from posting obvious, uniformed security personnel, highly visible to all who enter and exit a casino. Properties that do

MARCH 2018 www.ggbmagazine.com

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Additional camera scans of parking areas and selective following of customers leaving the casino and walking to their cars may prove beneficial in detecting perpetrators before they commit a robbery.

deploy these measures by increasing the security footprint typically experience fewer incidents, including robbery events inside the casinos. According to most experts in criminology, an important element for a crime to occur is a lack of capable guardians. The other elements are a motivated offender and a suitable victim. The best opportunity for a casino is to provide as many capable guardians as possible both in the traditional sense through uniformed security personnel, and other employees who regularly work in the environment. Slot and other departments will tend to mimic security practices as they relate to observations and practices which can extend that important security footprint or perception of security by the legitimate users, employees and most importantly, by the potential perpetrators of violent crime.

Employee Training What is obvious is that employees will typically do what is appropriate when a robbery does occur. The age-old training—that includes not to resist an armed robber and give them what they ask for—has saved many lives in casino robberies. In those instances where the employee may resist, it increases the risk of injury, as well as injury or death to bystanders. Thankfully, injury or death in casino robberies are very rare as a result. A higher frequency of overall training of cash-handling employees can be considered. This training should include specific training in response to an armed robbery, training in observation of the perpetrator, alarm activation, and crime scene protection should a robbery occur. Surveillance personnel can be instructed to conduct more camera scans of the areas surrounding cashier cages to identify persons who may be collecting intelligence for a future robbery. Once a person is identified as unusual or suspicious, notify uniformed security, who can respond and identify the person who may be observed. Additional camera scans of parking areas and selective following of customers leaving the casino and walking to their cars may prove beneficial in detecting perpetrators before they commit a robbery. Security personnel can be specifically trained in robbery response and prevention to increase awareness of the risk of robbery occurring and those prevention strategies desired by management. In some environments, a specific time period of captured video can be reviewed forensically to determine how much security officer presence is observed, at what frequency, and if security personnel are actually practicing positive patrol tactics and techniques. These practices can include acknowledgment of the legitimate users in the gaming areas, identifying those without a business purpose, assuring contact is made, and ejection of those who cannot produce identification or for undesirable activity. Surveillance can capture the time period, and provide it to security

Global Gaming Business MARCH 2018

management, who can then conduct a review for compliance. Surveillance can, and should, conduct audits of high-risk areas, and report the findings up the management chain. There should be some crossover between physical security and surveillance as it relates to crime prevention in the areas of violent crime. Traditionally, surveillance personnel see themselves as protectors of the bankroll (follow the money) and security personnel see themselves as the responders to incidents or calls for service. A review of these two departments with a focus on prevention of violent crime may prove beneficial and provide increased protective measures. The more instances of a “stop and talk” with people who appear suspicious for the location, the faster word will get out in that criminal community of the positive security footprint. Incarcerated inmates trade information on criminal activity, including how they got caught and when they were successful and avoided getting caught and arrested.

Cash Inventory It may be productive to evaluate accessible cash inventory or decrease the impress cash bank. The retail convenience store industry successfully keeps low balances to reduce the amount of cash on hand at any given time. Although this may increase frequencies of cash fills, those fills would be made by security personnel, or involve a security escort, and again, increase the visibility of security at the location. Surveillance can also observe the cash-handling areas and pull video for selected times to evaluate cashier practices regarding visible cash, excessive cash practices, or other conditions that create an increased opportunity for robberies.

A Fresh Look Is Needed Trends in marketing and customer service standards have had a cumulative impact on security performance and deterrence in casinos. The move toward being warm and fuzzy towards customers is moving away from traditional, time-proven crime prevention strategies. Casino executives should review their overall property crime prevention strategies and balance them to the risks of violent crime occurring at their facilities. Evaluating the long-term impacts of major decisions on security uniforms, staffing levels, deployment strategies and teaming efforts between security and surveillance should be completed for an effective strategy to reasonably attempt to deter and reduce as much violent crime as possible.

Alan W. Zajic, CPP, CSP, ICPS, is an independent security consultant specializing in gaming and nightclub environments. He can be reached at alanwzajic@aol.com.

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Security& Surveillance Another Problem With Problem Gambling Disordered Gamblers Can Kill People BY WILLY ALLISON

n 2017, in three separate incidents around the world, “problem gamblers” killed and injured hundreds of innocent people. These horrific events exposed the casino industry for what a lot of us in the industry have known most of our career: Gamblers can be jerks. What we underestimated, however, is how the side effects of their addiction can turn them into mass killers. To recap, in June an armed problem gambler went into Resorts Word Casino in Manila and wreaked havoc, shooting and lighting fires. When the night was over, 37 people were dead and 70 people were injured. In July, an armed problem gambler was playing roulette in Monticello Casino in Chile when he stood up and shot and killed two dealers and injured six others. In October, a problem gambler armed with 23 guns built a fortress in his hotel suite at Mandalay Bay in Las Vegas, broke the window and for 10 minutes rained down bullets on 22,000 music lovers at an openair concert. At the end of the night, 58 people were dead and 546 were injured. What did the three killers have in common? Well... They gambled a lot. They were men. They were armed with guns. They killed innocent people. They were losers. They are dead now. These guys obviously had screws loose, and as an industry, we shouldn’t ignore that they were our customers. They were casino gamblers, and they gambled a lot.

The Problem With Some Gamblers We know gambling can be addictive. So are alcohol, drugs, smoking, coffee, energy drinks, chewing tobacco, smartphones, video games, porn, watching TV, pizza and Vegemite. Most of us have, or know someone who has, a gambling problem or some type of addiction. 36

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Credible research and studies over the years have concluded gamblers are more prone to violent behavior than non-gamblers. As casino operators, if we didn’t already know gamblers can “lose it,” the fatal attacks of last year reminded us and amplified the threat, which I believe is increasing due to today’s proliferation of and ease of access to gambling, guns and drugs. These factors should be considered by casino managers when they deal with gamblers. The safety of all our customers and employees should be our priority. I am not a psychiatrist and don’t claim to be an expert on problem gambling. I got my education on problem gambling from, well… problem gamblers. I have found gamblers are often difficult to deal with. A lot of them have an us-against-them mentality and are hell-bent on proving to the world that they are smart—dare I say it—like geniuses. Casino workers often have to put up with their antics. They cringe when gamblers become obnoxious and their bosses don’t have their back. It’s a business decision. Casino employees take it on the chin, go home to their families, open a beer and wonder what it would be like to have a job where abuse is not tolerated by management. Even though the casino floor is full of stringent rules and procedures designed to protect the casino, staff and players, staff know these rules will be bent the moment a good customer rides his horse into town. As an industry, we make a half-hearted attempt to deal with gambling addiction by promoting selfbarring programs. These programs essentially say if you think you have a gambling problem, come see us and we’ll let you bar yourself... Dilly, dilly. Sounds good on paper but in practice it’s impractical. Placing the onus on casino staff to recognize thousands of people that they have never seen or met before is a Band-Aid solution with a small chance of being fully effective, especially in the larger properties that oper-

ate 24 hours a day. To their defense, casinos face numerous challenges when it comes to their moral and regulatory obligations of policing problem gambling. When does a gambler have a problem? What is a problem? Is it up to us to identify problem gamblers? How do we do that? What should I do if we identify a problem gambler? The problem is, a player who gambles a lot is what casinos call a “good player.” The more money they gamble, the more they are encouraged to play. The more they are showered with freebies and perks. The more they are induced to return. If a gambler’s theoretical value is high, managers often give them a long bad-behavior leash and a license to break the rules. Pandering to good players is not a new thing. In recent years because of the over-saturated market and the competiveness of capturing good players, casinos have been increasingly upping the ante on spending money to induce gamblers to stay and play. In 2016, Vegas casinos spent over $2 billion on incentives for gamblers. Frankly, I don’t think there are any other industries that would dream of putting the brakes on a customer who spends lots of time and thousands of dollars with them each month. How are we supposed to know what their personal financial and family situation is? I don’t expect casinos to pry into customers’ lives. I’m sure customers don’t want that either.

A Wake-Up Call or Just an Unfortunate Incident? So, was the Las Vegas massacre an outlier situation? Just a crazy event that was a statistical abnormality and in no way possibly predictable? Was it foreseeable? I believe it was—not the specific scenario that took place on October 1, but

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the threat of a horrific mass shooting taking place in Las Vegas. I believe that the casino attacks perpetrated by problem gamblers in Manila and Chile, three and four months prior to October 1, warranted the attention of all casino executives around the world. They stood as a warning sign that casinos need to invest, upgrade, develop and adapt security strategies for active shooting situations. It was the thing we’ve feared since 9/11 would happen in Vegas. It was just a matter of when and where. Since 9/11, security directors of casinos all over the world have been made aware of and informed of the threat of terrorism. They’ve been warned by federal and local law enforcement officials on a regular basis. They’ve attended free seminars (free lunch included) and received updates on foreign and domestic terrorism. They have access to plenty of specialist training organizations and associations out there that were and are willing to provide the expertise and training to deal with the threat of a mass shooting. Did casino executives pay attention to what was going on in the industry and in the world? Did they take action to preempt horrific acts of violence? Did they understand the businesses they operated have been steadily evolving into more than just gambling dens but huge fun palaces catering to large amounts of people primarily there to take their minds off the world and simply be entertained? More than any time before, entertainment brings in large amounts of customers and lots of money. Entertainment has become an increasingly important business driver for the casino industry. It also brings in a higher threat of mass shootings and acts of violence. You don’t have to be a security expert to understand large groups of people congregating in a relatively confined area for the purpose of letting their hair down and having fun are a target for sick, demented individuals with a point to make. In the last few years, the U.S. has seen an increase in mass shootings and attacks. The numbers have been well documented and discussed. The most disturbing thing is that each one seems to top the last one in terms of people killed. There are too many to list here, but if you are a music concert fan like myself, you wonder if Vegas casino executives paid attention to the Paris and Orlando nightclub attacks, and even more recently, the Ariana Grande concert attack in Manchester last May.

large mass shooting. Did they make it a priority to prepare for a mass shooting similar to ones perpetrated at various entertainment venues in the previous 12 months? Did they provide their staff with training? Did they spend money on security technologies that could have prevented it? Did they prepare? Did they care? I would like to think and expect that every casino does have a plan for active shooters. But plans are just plans. The ability to execute an effective plan requires resources, knowledge sharing, constant review of global best practices, specialized training and the support of strong leaders within the organization. Organizations need to conduct regular emergency response drills, and they need everyone to know what to do. They need to be proactive, not reactive. It’s not just about reacting to an incident like the one on October 1. It’s about considering how the next one could happen. A failure to predict is a failure to protect. This has to be a priority for Las Vegas casinos in 2018. Five months after October 1, there is still a lot to learn about the worst mass shooting in U.S. history. The silence of the FBI, Las Vegas police and MGM Resorts is deafening. As a local Vegas guy, it tears me up. Conspiracy theories are running rampant, and there seems to be

an attempt by a lot of people connected to the casino industry to want to make it go away. I can’t. I won’t. I’m disgusted by what happened in Vegas. Yes, I know there are lots of crazies out there and yes, it could have happened (and does) somewhere else. The difference is, unlike schools and churches, our casinos have lots of money, thousands of security cameras, thousands of security guards, a big-budget police force, security vendors that are lining up to provide technology to them, and hundreds of people who call themselves security experts. Regardless of what comes out of the FBI report on the Las Vegas massacre, it is time for casinos to lift their game. We cannot let this happen again. It’s not about blame. It’s about action. It’s about leadership demanding higher security standards. It’s about stamping out complacency, arrogance and a reactive culture. It’s about learning from this and moving forward. I know we can be better. Willy Allison is a game protection consultant/trainer and founder of the annual World Game Protection Conference. Allison’s website is willyallison.com, and the conference website is worldgameprotection.com. The opinions expressed in this column are those of the author and do not necessarily reflect the opinion of GGB Magazine or any of its advertisers or related organizations.

What Happens in Vegas… Happens Elsewhere Too A big question remains in my mind on whether Las Vegas casino executives were prepared for a MARCH 2018 www.ggbmagazine.com

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OPERATIONS

Legacy Casino Systems Impede Innovation Hurdles to even simple e-commerce strategies illustrate the need for better casino data and personalization | By Marco Benvenuti

et’s face it: Casinos are stuck in a pigeonhole of legacy technology that doesn’t address the evolving gaming landscape. Back-of-house technology built decades ago with limited and costly connectivity holds properties back from the most basic e-commerce capabilities, particularly personalization. How did this happen? Outside of the large international companies that are developing and building their own technology, the casino industry hasn’t experienced the kind of back-of-house innovation it desperately needs. Smaller, independent casinos are hamstrung by budgets, putting them behind the 8-ball when it comes to adopting automated and analytics-driven technology. Consequently, tech developers are often wary of operating in a space where shallow pockets could mean less adoption. The casino industry was groundbreaking in its approach to building guest profiles and then developing a relationship with those guests through marketing. Early on, the model was much easier to implement at casinos than at hotels because of the high amount of return visits. Casino data management that was revolutionary 20 years ago has changed very little since. At the center of the issue is the patron management system, often built by vendors rooted in slot machine development. While these are incredibly innovative companies, most of their focus is on improving the gaming experience and tracking machine revenue and less often on improving casino-wide data management. In addition, much of this legacy technology comes with massive integration costs, hindering a casino’s ability to deploy a more agile strategy. And when on-property technology and databases are siloed, most likely operations are as well.

Improve the Online Experience With a Holistic Approach To take the next step, basic casino marketing concepts should remain in place, but cloud tech38

Global Gaming Business MARCH 2018

nology, centralized data and automation have paved the way for quicker and more profitable e-commerce strategies that provide better value to the guest. Start by understanding that along with technology upgrades should come operational culture changes. Breaking down the barriers between branches, particularly hotel and casino sales and marketing departments, is a must. Take a close look at whether your employees at the corporate and property level are set up in the best possible situations to succeed. Opening up communication across departments and sharing data will allow everyone to act in alignment, which will ultimately pave the way for a seamless customer experience. Once the casino’s departments are collaborating, they can begin to properly value their guests, which is the crucial first step to bringing real personalization to the casino industry. Instead of valuing guests based solely on gaming spend, casinos need to quickly adopt a total-profitability perspective. Valuing guests based on their total spend—including gaming, hotel, restaurant, spa, etc.—provides a much better understanding of who to comp, who to discount and who to charge the rack rate. The process can be extended to groups, and now casinos can better determine the profitability of taking a group that may or may not gamble versus a full house of comped gamers. The marketing team should be meeting much more frequently than monthly, as they typically do to pull all the player values and then send pieces of mail. Casinos should also cultivate an understanding that players can call anytime and get a quote.

Proper Values Lead to Better Personalization Properly valuing your guests gives casinos a better ability to customize merchandising along the booking path, such as offering the most appealing room type or packaged upgrades in the right sort order. Rewarding guests at different points of the customer journey with rates or of-

fers that reflect their value to the property will help grow your casino’s base of repeat guests. Showing your players they can get a personalized rate whenever they want helps your operation in multiple ways: • It smooths out your booking window so your call center is not overwhelmed for a few days every month. • It paves the way for guests to earn value at one property and redeem rewards at another. • It entices higher levels of play due to a real-time reward system. • It opens up new ways for cross-property marketing that contribute significantly to growth. Once the culture and strategy are in place, pressure your technology partners to bring this process out of the call center and online. This will require more collaboration and integration among your various tech partners, bringing guest data out of a closed warehouse and into a centralized platform where it can be accessed in real time and used to make data-driven marketing and e-commerce decisions. With as few clicks as possible on a casino’s website, loyalty members should be able to sign in, and a personalized room rate should be served up immediately. Speeding up the time it takes for your loyal guests to get their comp or special casino rate likely means more of them will book with your property, and at prices that will increase the casino’s profitability. There is more customer data available than ever, meaning casinos are better equipped to offer personalized room rates and tailored packages or upgrades. Individualized rates help casinos appeal to gamers and non-gamers alike, ultimately driving conversion into profitable bookings. Marco Benvenuti, a co-founder of Duetto Consulting, has extensive experience in revenue management, business analytics and IT. Benvenuti has patented two unique inventions: the pricing engine for one-to-one dynamic pricing (sole inventor) and the enterprise value algorithm for calculating the value of every customer (co-inventor).

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How casinos can deal with the legalization of marijuana in their jurisdictions By Grant Eve

GOING to T

he legalization of medical and recreational marijuana in several states where gaming is also legal has posed a particular problem to casinos in those states. Not only has the gaming industry been waiting for the new administration to issue guidance on the legality of the marijuana industry; the entire country has been waiting, for a wide array of reasons. Marijuana is classified as a Schedule 1 substance and is illegal under federal law to manufacture, distribute or dispense; yet, it is common knowledge that many states conflict with the federal law. Recreational marijuana use is legal the District of Columbia and eight states including Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon and Washington. Medical marijuana use is legal in 29 states. The legality of marijuana use and distribution, whether recreational or medical, varies from state to state.

Prior Administration Former Deputy Attorney General James Cole issued a memorandum (the “Cole Memo”) in August 2013 to all United States attorneys that provided guidance regarding marijuana enforcement, with an additional memo regarding the same topic in February 2014. With several conflicting state and federal laws, many expected the federal government to make a decision on the legality of marijuana. While this still hasn’t happened, the Cole Memo has served as guidance to not only U.S. attorneys, but to financial institutions, casinos and many others on where the federal government will dedicate its resources. In the Cole Memo, there are eight priorities that are important to the federal government. Outside those priorities, the federal government relies heavily on state and local laws on the enforcement of marijuana usage. Those priorities are: • Preventing the distribution of marijuana to minors; • Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; • Preventing the diversion of marijuana from states where it is legal under state law in some forms to other states; • Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or illegal activity; • Preventing violence and the use of firearms in the cultivation and 40

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POT

distribution of marijuana; • Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; • Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and, • Preventing marijuana possession or use on federal property. On the same day the Cole Memo was issued, the Financial Crimes Enforcement Network (FinCEN) issued guidance on BSA expectations regarding marijuana-related businesses. At a high level, the guidance left each financial institution the freedom to make its own choices regarding marijuana-related business. (It’s important to note that FinCEN and the Treasury Department treat casinos as financial institutions if they have gross gaming revenue over $1 million in each calendar year.) More importantly, the guidance provided information for how financial institutions should file a suspicious activity report (SAR) when deciding to provide services to a marijuana-related business. The direction from FinCEN on marijuana SAR filings were as follows: “Marijuana Limited” SAR Filings—the financial institution provides financial services to a marijuana-related business and believes the customer does not implicate one of the Cole Memo priorities. “Marijuana Priority” SAR Filings—the financial institution provides financial services to a marijuana-related business and believes the customer has implicated one of the Cole Memo priorities. “Marijuana Termination” SAR Filings—the financial institution deems it necessary to terminate a relationship with a marijuana-related business to maintain an effective AML compliance program. What is the issue with this guidance? How can a casino or a BSA compliance officer know if a principal or someone involved in a marijuana-related business is violating one of the Cole Memo priorities? For example, if a casino has a high-limit player who owns a marijuana dispensary, it would be almost impossible for the casino to know if that player’s marijuana dispensary is violating one of the Cole Memo priorities through conduct of due diligence procedures. How would the casino know if the dispensary was growing marijuana

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The state of California expects to collect between $750 million and $1 billion in tax revenue off the sales of marijuana. There is no doubt that the current White House administration has had friction with the state of California, but it was still a surprise when the announcement of a new memo with marijuana enforcement came in early January.

on public lands or selling marijuana to minors (two priorities from the Cole Memo)? Thus, filing an SAR “Marijuana Limited” or SAR “Marijuana Priority” would likely be very difficult or almost impossible. The casino, with much more certainty, would file a normal SAR, or an SAR “Marijuana Termination,” if they decided to terminate the relationship with the customer. There is no doubt this guidance was written for banks, which can perform their due diligence procedures before deciding to engage in business with a customer, rather than casinos or other businesses that are considered “financial institutions” which, due to the nature of their businesses, often have to perform due diligence procedures after the business is conducted.

Nevada and California Nevada is the largest gaming state in the U.S., and was the fifth state to legalize recreational marijuana on July 1, 2017. Not only is Las Vegas the gaming mecca of the U.S., but it is also one of the top tourist destinations in the country, which makes it a very lucrative market. The Nevada Gaming Control Board has been very clear on marijuana in the gaming industry, and it is not accepted. The board has banned the use of marijuana by casino patrons. Casinos are not allowed to have relationships with marijuana-related businesses, and those licensed by casinos cannot be involved in the business in any way. The Nevada Gaming Policy Committee continues to monitor marijuana-related issues on a consistent basis. Reuters states that if California were its own country, it would be the sixthlargest economy in the world, with gross state product of $2.46 trillion. On January 1, California went live with legalized recreational marijuana (Proposition 64), which passed the state legislature in 2016 with an approximate margin of 56 percent to 44 percent. This is expected to be the largest legalized marijuana market in the United States, worth approximately $6 billion to $7 billion in annual revenue. The state of California expects to collect between $750 million and $1 billion in tax revenue off the sales of marijuana. There is no doubt that the current White House administration has had friction with the state of California, but it was still a surprise when the announcement of a new memo with marijuana enforcement came in early January.

Current Administration On January 4, Attorney General Jeff Sessions distributed a new memo (the “Sessions Memo”) to all U.S. attorneys regarding marijuana enforcement. This was a one-page memo that rescinded the Cole Memo, along with several other pieces of federal guidance related to marijuana enforcement. The Sessions Memo specifically stated, “Given the department’s well-established general principles, previous nationwide guidance specific to marijuana enforcement is unnecessary and is rescinded, effective immediately.” The memorandum does not state how the Department of Justice plans to enforce these laws or direct prosecution for current U.S. attorneys. With the release of this memo, there is no doubt the current administration is taking a different tone on marijuana activity and plans to crack down on the industry. Not only does this create confusion for states that already have legalized recreational and medical marijuana, but it creates confusion for the gaming industry as well. With the taxes generated and the budget deficits in most states (almost all

states that have legalized recreational marijuana are in a serious budget deficit situation), the states will have some difficult decisions to make if changes at the federal level aren’t made. With almost all marijuana prosecutions, other crimes such as money laundering and the Bank Secrecy Act are affiliated. This raises the question of at what point is a casino considered a co-conspirator. This leaves casinos in a compromising position, as they will need to make decisions about doing business with customers who are involved in marijuana-related businesses. This may need to be documented in their Title 31/AML compliance programs, training will need to occur, and many parties will need to be involved in decision-making processes.

Unchartered Waters Moving forward, several actions could occur that would provide the public, marijuana businesses, financial institutions and casinos more guidance on what they are supposed to do after this memo was issued with no warning. Congress could (and should) act in a couple different capacities. They could bar the DOJ from spending funds to prosecute state recreational marijuana businesses, similar to what they do with medical marijuana states. Additionally, Congress could pass legislation to reclassify marijuana from a Schedule 1 substance or pass legislation to leave marijuana law to the state level, similar to what they do with alcohol or gambling. FinCEN could issue guidance for financial institutions including casinos, similar to the 2014 provisions (FIN-2014-G001). This guidance should focus on other businesses and not just banking institutions. FinCEN recently appointed Kenneth Blanco as its director, replacing former Acting Director Jamal El-Hindi from the previous administration. It’s too early to tell what direction Blanco will take in leading FinCEN. Prior to FinCEN, he was the acting assistant attorney general of the Criminal Division at the United States Department of Justice. He is quoted as saying he has 28 years of prosecutorial experience. Another key position to monitor is the Treasury Department’s under secretary for terrorism and financial intelligence, which approves all regulations developed by FinCEN. This position was confirmed in June 2017 by Sigal Mandelker, who previously served in senior law enforcement and national security positions for Homeland Security. If there is one thing for certain from the recent Sessions Memo to all U.S. attorneys, it is that the gaming industry, along with several other industries, needs more guidance on this important issue. This guidance would be welcomed from Congress, FinCEN or the Attorney General’s Office, but there is no doubt more federal guidance is warranted. Grant Eve is a partner in Wipfli LLP/Joseph Eve specializing in tribal and commercial gaming. He has several years of experience working with tribal gaming organizations and commercial casinos in Nevada. A recognized leader in the tribal gaming industry, Eve has authored numerous articles and has been interviewed in industry publications. In addition, he has testified before the United States Senate’s Committee on Indian Affairs about the future of internet gaming and its impact on the industry. Eve is a sought-after presenter and frequently presents seminars and training related to the gaming industry. MARCH 2018 www.ggbmagazine.com

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SPORTS BETTING

Four Myths There is no mystery about the sports wagering business, but there are some misconceptions

s this article is being written, the U.S. Supreme Court is weighing the constitutionality of the Professional and Amateur Sports Protection Act (PASPA) based on a challenge brought by the state of New Jersey. This has created a flurry of activity among states, sports leagues, professional players’ associations, and service providers that see legal and regulated sports wagering as a gold mine. Regulating sports wagering is good policy which can provide consumer protections, inherent systematic integrity and tax revenue, while depriving scofflaws a source of revenue. The current debates are being clouded, however, by many misunderstandings and myths that could result in misguided policies. Myth 1: Sports Wagering, Yes or No The first and most significant misunderstanding is a belief the debate is over whether to have sports wagering or not. The myth is that government or leagues can determine whether or not sports wagering occurs. The issue isn’t “sports wagering, yes or no;” it is “sports wagering, regulated and operated with integrity, or sports wagering illegal and operated by scofflaws.” Nevada only accounts for between 1 percent and 5 percent of all sports wagering in the U.S., meaning the vast majority of sports wagering occurs despite current state and federal legal prohibitions. This myth is dangerous, because if policymakers begin with the wrong premise, the policies that result may have unintended consequences. Policymakers must recognize the nature of the current illegal market and understand the pressures it creates in order to craft policies that support a viable legal, safe and regulated industry. Myth 2: Sports Wagering is a Gold Mine Sports wagering is unlike table games, slot machines, lotteries, bingo or parimutuel horse race wagering, in that there is no mathematical probability of profit. The house losing on slots, lotteries, table games, bingo and parimutuel sports is a near mathematical impossibility over time. Unlike other games, sports wagering is gambling in its

Global Gaming Business MARCH 2018

By Joe Bertolone and Greg Gemignani

truest form. It is bookie against bettor, and the house can lose—and often does. It requires skillful risk management and experience to be in a position to earn a profit. In 2017, Nevada book operators had a house win of about 4.86 percent on standard bets. The federal government imposes an excise tax of .025 percent of all amounts wagered, or “handle,” regardless of win and loss, which can be devastating in a low-profit or loss reporting period. In Nevada, the wagering excise tax cost book operators about 5 percent of last year’s robust win. Additionally, Nevada taxes gaming revenue at 6.75 percent of win, and the net result is an after-tax hold of only about 3.28 percent on standard wagers for Nevada books. It will be difficult for any operator without a long history of operations and honed sports wagering risk-management skills to exceed the profitability realized by experienced Nevada books. Many recent presentations and publications ignore the slim margins in sports wagering, which may lead to unrealistic expectations. Sports wagering is not a gold mine: It is a difficult, riskfilled way to earn revenue. Myth 3: Legal Sports Wagering Jeopardizes the Integrity of Sports All forms of wagering are subject to efforts by the unscrupulous to cheat. This is true for casino games and lotteries just as it is true for sports. Risks to the integrity of sporting events from wagering exists now. Today, that risk is heightened, because most sports wagering is currently conducted illegally. In a regulated market such as Nevada, the regulatory framework is designed to address the potential of cheating by the bettor or the house. Essentially, regulated markets are efficient: the house is not incentivized to offer a wager where there is the slightest chance of match fixing. The reality is that the bulk of regulated U.S. wagers are placed on sports with reliable governing bodies. Experienced regulated books are able to pick up on anomalous betting patterns that indicate nefarious activity. Because regulated sports book

operators base their risk-management strategies on an assumption of integrity, and marketplacebased pricing, they have a vested financial interest in rooting out corruption and legal and regulatory obligations to report such issues. When betting is conducted illegally, such anomalous betting information goes undetected and unreported. The net result is that illegal sports wagering presents a risk to the integrity of sporting events, where regulated sports wagering presents a countervailing mitigation of such risk. Myth 4: Running Your Own Sports Book is Just Another Casino Amenity Sports books require dedicated space, constantly updated technology and unique, scarce and licensable human capital to manage wagering risk. Additionally, regulatory requirements and federal issues that face books are unlike other forms of gaming. Finally, a very close examination of an organization’s risk tolerance should be undertaken and tested before entering into this potentially rewarding but risk-inherent business. If not done right, a sports book can drain an organization’s finances and require inordinate resources to manage. As the legalization and regulation of sports wagering is being addressed by governments, service providers and stakeholders, it is important to have a realistic understanding of the sports wagering business. Without such an understanding, there is a risk that policies based on misinformed or misunderstood information will be counter-productive to the goals of policymakers. Joe Bertolone is the owner of GameOn Consulting Services, LLC. He formerly was the chief of the Technology Division of the Nevada Gaming Control Board, the chief technology officer of William Hill US, and the CEO of DEQ Systems. Greg Gemignani is an attorney with the law firm of Dickinson Wright, PLLC in Las Vegas. In addition, he has been an adjunct professor of law at the Boyd School of Law at the University of Nevada, Las Vegas more than 10 years, and has been representing clients in the regulated sports wagering industry for more than a decade.

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Social Casinos:

How the House Wins Players can’t cash in at social casinos. But gaming operators can and do. By Marjorie Preston

n 2012, when New Jersey lawmakers OK’d real-money internet gaming, many thought it was the first ripple in a wave that would sweep the nation and kick off a giant interstate industry. Some operators launched free-play internet platforms while they waited for the real thing. They’re still waiting. In 2018, only three states—Jersey, Delaware and Nevada—offer real-money online games. But social casinos continue to grow. The digital platforms do triple duty: as branded entertainment hubs, marketing channels, and data-capture tools. Ideally, they lure more players on property. And sometimes, they even make a little money. Adam Krejcik, principal of Eilers & Krejcik Gaming, says many thought the social casino phenomenon “would not survive as a genre” when real-money gaming stalled. “They thought, who in his right mind would spend real money for virtual coins that can’t be withdrawn? Well, the numbers and the growth of the industry have disproven that thesis.” While social platforms associated with land-based operations occupy a tiny corner of the $4.5 billion worldwide social games market, there really is a payoff—for casinos and for players. “Such a solution is not necessarily driven by P&L,” says Krejcik. “It’s more focused on helping to drive land-based play. That’s harder to quantify in terms of impact, but the evidence and research we’ve collected points to it being a complementary service and solution that makes a lot of sense for casinos.” It’s been a big win for Foxwoods Resort Casino, according to Seth Young, director of online gaming for the tribal enterprise. Young gives FoxwoodsOnline “an A-plus ranking.” “Roughly 92 percent of new FoxwoodsOnline players aren’t known to

Global Gaming Business MARCH 2018

the Foxwoods Rewards Program,” which suggests that the social casino is tapping into a whole new customer base, Young says. Allowing online players to earn on-site rewards has led to a “quantifiable increase in both frequency of visitation and spend at the physical property” among those guests. It’s also “a great asset for new-customer prospecting.”

Facetime = Foot Traffic When the value of social casinos was in question, gaming manufacturers recognized the opportunity, says Dana Takrudtong, executive in charge of digital transformation at GAN. “They watched the rapid development of social casinos on Facebook and mobile apps, and the meteoric rise of revenues.

“Players can be home watching Netflix and shopping on Amazon while playing a social game.” —Dana Takrudtong, Digital Transformation, New Market Development, Analytics, GAN

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“A good metagame cannot make up for bad content. And a bad metagame will not monetize the good content.” —Bryan Bennet, Senior Vice President, AGS Interactive

“The vendors who produced content said, ‘We have these historic libraries and these incredibly valuable games. Why don’t we bring take this IP to our casino partners so they can participate in the marketplace as well?’” She calls social casino “a phenomenal tool” that extends the house to the digital space, 24/7/365. “Players can be home watching Netflix and shopping on Amazon while playing a social game, and the casino still has the player’s share of wallet, share of mind and share of time.” “This goes beyond simply providing casino-style games in mobile apps,” says Luisa Woods, vice president of marketing, gaming and entertainment at Delaware North, who previously led the online divisions of Tropicana Atlantic City and Caesars Interactive. “These games are integrated into a deeper relationship with the customer. Casinos can provide features, services and benefits in new ways and get more face time with their customers.” Ideally, “that open communication channel” will tempt online patrons to become on-site players. “Casinos have hotel rooms to fill, slot machines to be occupied, restaurants they want people to frequent,” say Woods, whose company acquired social casino developer Ruby Seven Studios in 2016. Social casinos, as much as direct mail and other types of outreach, can help make that happen. So, just who is the typical social casino customer? “We’re stretching into younger generations,” says Woods, “but it’s not squarely centered around millennials at all.” The demographic is “probably 55-60 percent female, and skews a little older, north of 35,” says Bryan Bennet, senior vice president of AGS Interactive. “It’s the typical slots player you’ll see on the casino floor. It’s a real win for the casino when it gets that player back to the floor—that’s where you monetize the endeavor in gaming as well as food, hotel, wherever you want them to go.”

to come back and keep playing.” Players in a social casino environment “are driven by level and overall status,” he adds. “They want to be the most decorated player in that room. We do a lot of live events where people can earn charms or trophies that go on their profile screen. Those things uniquely drive a social casino player as opposed to a normal casino player.” He stresses that content is king. “We don’t build our own slots anymore, because the games from the AGS land-based team are just killing it,” says Bennett. “We take them and pour them over, one for one, to play as close to the land-based games as possible. That’s what players want, that authenticity. They want the same math, the same volatility, the same journey. “A good metagame cannot make up for bad content,” Bennet says. “And a bad metagame will not monetize the good content.” How many social casino players go beyond free play to monetize—i.e., after using up all their free play, purchasing additional tokens or virtual currency to keep the game going?

What Players Want So what do players get out of these games? Apparently, it’s the same thing that drives other social-media engagement platforms: visibility, validation, and perceived status when they win. That helps bait the hook and keeps them coming back. “It’s all about developing ways to engage the player,” says Bennett, who came from social game developer RocketPlay when it was acquired by AGS in 2015. “That’s achieved with tournaments, missions, challenges— something every day that gives them a reason MARCH 2018 www.ggbmagazine.com

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“People thought, who in his right mind would spend real money for virtual coins that can’t be withdrawn?” —Adam Krejcik, Eilers & Krejcik Gaming

Social Casino Makes the Grade Bob Hayes, Vice President, Global, Commercial, Interactive, Scientific Games

“It’s a small fraction, typically under 2 percent of the total player base,” according to Woods. “The social casino model is largely built on the concept of scale. If you have a large enough audience, that 2 percent becomes meaningful in terms of a revenue stream.” (Some experts say the number of conversions can be as high as 10 percent.) Other ways to monetize include advertising, Woods adds. “We can very narrowly target appropriate ads and messages for appropriate audiences, so the likelihood of them benefiting from the message can be much higher. For people who aren’t interested in reaching into their own pockets, casinos can essentially negotiate an exchange of their time and attention for additional coin-back.” She says gaming companies are “getting better at administering that implied contract, giving consumers more control over when and what types of ads they want to see in exchange for currency and time on device.” “You can make some money in the space, but it’s not like you’re going to take on the Playtikas and Double Downs of the world,” says Bennet. “It will pale in comparison to what you make on the casino floor. But people are more profitable on-property than off. Social casino is a fantastic contextual marketing channel to reach them and get them back on site.” Free-play sites will break even “in most cases after a year or two, and in fact even can be slightly positive,” Krejcik says. “Financially it’s not a major windfall, but from a strategic and marketing standpoint, it makes a lot of sense.”

The Future of Social Casinos If and when real-money iGaming becomes widespread in the United States, will it coexist with social sites? Will the customer groups overlap? The answer to both questions, Woods says, is yes. “People have different appetites at different times—there are days they wake up feeling lucky and want to wager real money. Some days they just want to be entertained. The day after payday feels very different than the day before payday.” “It remains to be seen, but we’re of the mindset that social casino is going to coexist with real-money gaming, even if it becomes readily and widely available across the U.S.,” says Krejcik. “Certainly there will be some users and players who switch, because the social game designs are much more casual, social-based, pick-up-and-play. They don’t have any of the pressure or anxiety of winning or losing a bunch of money.” Not all casino operators have jumped into the social, and that can be to their detriment as players give their loyalty to other brands. But it’s not too late, and according to Takrudtong, it’s not really too expensive. “It’s unwise to sit out the space when the barriers to entering social, after five years of development by the major suppliers, are incredibly low. The price of entry is effectively three slot machines, and I don’t believe there’s a casino with over 1,200 units on their floor that can’t carve out a budget for three slot machines. In return, they’re putting their games in the hands of players on their own devices.” 46

Global Gaming Business MARCH 2018

How successful are social casinos in bringing people to land-based properties? Based on anecdotal evidence and research, social casinos have served as a driver for increased visitation and spend on the casino floor. Richard Schwartz, president of Rush Street Interactive, said they saw their social casino site increase land-based visits by over 20 percent each year and a half, post-launch. In a 2017 Global Gaming Business article, Penn National Gaming, now using the SG Universe product suite, recognized early returns from Hollywoodcasino.com, seeing significant overlap in land-based and active social casino participants. A study by Game Account Network over nearly eight years across six major U.S. casinos showed an average 28 percent uplift in on-property theoretical win from increased visitors who also engaged with the social gaming platform. The moral of the story: a social casino doesn’t cannibalize brick-andmortar, it complements it. How do social casinos support a marketing strategy? Brick-and-mortar casinos can market to an engaged social casino audience via highly targeted and highly trackable digital tactics—everything from push messaging and geo-fencing to in-app messaging and email campaigns. These tactics can be easily segmented, A/B tested, and optimized on an ongoing basis to provide the best possible results, even as an audience base evolves. As part of the SG Universe product suite, customers can utilize Core Systems Integration technology to tie into their land-based systems, which provides a true 360-degree view of the player. Strategic use of this view can empower casinos to serve up communications that answer to the marketing trifecta: right audience, right place, right time. Nothing trumps the importance of relevance. What demographic is reeled in via social casinos? It tends to skew female at 79 percent with an average age of 39. Research shows that 82 percent of social casino gamers visited a land-based casino within the past year, and 60 percent have visited a land-based casino in the past six months. These results reinforce that there is a continued and undeniable convergence of land-based and online play. Today’s patron is more multi-channel than ever before. What trends should we be watching for in 2018? Different in-game features and functionalities will pop up that make for a more interesting and compelling player journey. In particular, look for evolution around features that connect people and create communities, as well as those that tie back into the property with offers, tournament qualifiers and more.

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Buying Smart Suppliers are providing efficient purchasing and inventory control systems that save casinos money By Dave Bontempo

urchasing systems and inventory control. They are two magic terms in the casino world, two major factors in property-wide finance and operations assessment. Their best use signifies two likely means to a lucrative end. Casinos weigh the options of in-house or outsourced cost monitoring, even a hybrid of their methods. Traditional practice features an army of specialists in one property. Yet a significant partner outside the casino can remove the layered, department-by-department approach to internal purchasing. That wellconnected ally may be especially valuable for multiple properties. The relevance has never been higher. Even moderate streamlining moves the needle for many properties in this $250 billion industry. Observe the seismic shift. Food and beverage revenue alone hover near $15 million annually in many moderate-sized markets. Non-gaming revenues flirt with a two-thirds to one-third majority on the Las Vegas Strip.

While the automation and outsourcing realm unfolds, the personal touch remains important. What is a patronâ&#x20AC;&#x2122;s favorite dish? Customize the information, have it instantly available, regardless of when that person next dines. Favorite beverage? Get it on file. Popular recipes should be preserved, their ingredients monitored and re-stocked. A glimpse of these trends reveals tips on how much product to carry, who consumes what and which vendors have the best deals.

Soup to Nuts Carl Long, senior vice president of Dallas-based Purchasing Management International, has a clear view of where his company fits into this discussion. â&#x20AC;&#x153;We are the purchasing system,â&#x20AC;? he laughs. Long says that since its founding in 1995, PMI has globally sourced, purchased and installed over $2 billion in hotel, resort and casino furnishings, operating equipment, systems and construction materials worldwide. It is the leading procurement agent in the gaming industry, he adds. PMI can outfit a casino with the whole package. The company must be a master of minutia, handling everything from carpet and pad to wall covering,

Founded in 1970, Sysco grew to become the global leader in selling, marketing and distributing food products to restaurants, health care and educational facilities, lodging establishments and casinos.

Putting North American gambling, gaming and betting under the microscope

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Purchasing systems demand control and execution. We provide the execution, knowledge of the vendor, knowledge of the product—and we can connect the ownership stakeholders, contractors, designers and vendors.”

“

—Carl Long, Senior Vice President, Purchasing Management International

specialty lighting, beds and frames, bedspreads, fabrics, drapery, case goods and upholstered furniture. Did we mention chandeliers, artwork and frames, ironwork, mirrors, banquet and meeting room seating, office furniture, custom furniture and other furnishings normally used in a hospitality application? Operating supplies and equipment items including china, glass, silver, linen, pots and pans, mini-bars and guest-room amenities? The scope of work entails conceptual budgeting, global sourcing, vendor negotiations, and warehouse and installation coordination. PMI services many casinos, including an ongoing expansion with Maryland Live. Long pitches PMI as a one-stop shop. “The owner can easily get out of control when you are talking about thousands and thousands of individual line items,” Long says. “We know project purchasing. People don’t really see this, but it is cheaper to outsource purchasing than to maintain that expertise in house, because the expertise is expensive. “Purchasing systems demand control and execution. We provide the execution, knowledge of the vendor, knowledge of the product—and we can connect the ownership stakeholders, contractors, designers and vendors.” PMI utilizes the buying power of a vast vendor network, Long says. It can purchase in volume and leverage longstanding relationships. The company also connects dots faster than an internal operation, he says. “Our buying power is more than just dollars,” Long asserts. “It is dollar volume, project volume, vendor knowledge and project management expertise. A lot of casino and hotel companies don’t have the luxury of meeting hundreds of vendors. They work on their own project, but they can’t evaluate thousands of different product options. We can. We will help an operator budget correctly, plan correctly, make sure the project is scoped well and convey who is responsible for what.” Long observes both short- and long-term market trends. In the near run, a bullish economic sentiment will produce a secondary market this year. “There’s going to be a large push on updating lagging projects or a lagging product,” he predicts. “The dog that hasn’t been fed in a while, the casino that looks tired and worn down. I think there’s going to be a push in getting that up to date while the whole market is growing.” Long eyes the potential ripple effect of Revel coming back online in Atlantic City, and whether that coaxes competitors like Borgata to re-invest in the market. On a larger scale, he views flexibility as a paramount customer concern. “We’re seeing more of a desire for properties to have convertible spaces,” he says. “If you are talking food and beverage venues, if they are not booked for a fight or a concert, they still keep the juice going by shrinking the spaces so they don’t have vast empty caverns. Architects and designers are creative in the way they use the walls, seating arrangements, multiple partitions and other methods allowing for the sense of an activated space.” Long says the industry addresses social media in terms of design. Millenials have become perennials, blooming with a different new focus each year. They remain prominent in casino design and purchasing. “You’ve got this idea of an Instagram moment that when a guest comes, somebody is there, they have this spot (a lounge perhaps), and in the room you are seeing a less traditional lineup,” he says. “Now, instead of a desk chair and 50

Global Gaming Business MARCH 2018

desk, you might have a chaise lounge and and ottoman that rolls, so that you can work on your tablet. “I was in a model unit of a property, and in that room I counted 16 different places you could plug a device in. You think of the phone, computer, maybe a tablet, Bluetooth charger, possibly two people using the room (not to mention hair dryers and electric shaver outlets), and there you have a large number of outlets.” PMI’s value may intensify when large corporations use their buying leverage to obtain discounts across several properties.

Food for Thought A global reach with local connections. That’s the gaming profile for Houston-based Sysco Corporation, a longtime food-product powerhouse and increasingly prominent casino partner. Sysco’s participation in the Global Gaming Expo and emerging leadership role at industry conferences underscore its rising symmetry with resorts, casinos and the restaurants they unveil to the public. Founded in 1970, Sysco grew to become the global leader in selling, marketing and distributing food products to restaurants, health care and educational facilities, lodging establishments and casinos. Sysco operates approximately 300 distribution facilities worldwide. It serves more than 500,000 customers in several countries, including the U.S., Canada, Mexico, France and the U.K. For fiscal 2017, the company generated sales of more than $55 billion. That gives casinos a strong purchasing ally. Company officials say Sysco offers a worldwide reach to leverage its buying power, access to vendors and the ability to tailor products for individual properties. Its options provide a holistic offering through broadline distribution companies, specialty produce, hotel guest-room amenities programs, equipment and supplies, custom-cut meat operations, specialty imported products and customer-facing technology solutions. Sysco cites restaurants as key drivers in the gaming space. Because many of its associates have backgrounds in restaurants and other food-service settings, Sysco officials say they understand the challenge of managing a kitchen, retaining staff and handling the books. This helps casinos, which compete with local restaurants in the bid to draw new revenue. A recent product rollout reflects Sysco’s ongoing gaming focus. Cutting Edge Solutions, derived from leading suppliers, provide unique experiences to the gaming customer, officials say. The development process involved distinct, relative concepts, from plant-based and sustainably raised proteins to natural ingredients in everyday favorites, free from artificial additives. It resulted in a late-2017 fleet of new products. They include Sysco Imperial Fruit & Vegetable Juice Concentrates, Imperial Clean Cheesecakes, Fire River Farms Grass Fed Beef Patties, Beyond Meat and Beyond Burger, Coleman Organic Chicken, Ecolab, Duraloc and Premier Gold Natural Wild Caught Gulf Shrimp. A customer-centric approach ensures the development of programs tailored to the gaming industry, Sysco maintains. Either by vendor consolidation, venue standardization or SKU consolidation, significant savings in time and money can be realized. Sysco also boasts a strong community aspect. Officials say it introduced a new giving strategy to direct 75 percent of community donations and volunteerism toward hunger relief initiatives. In the gaming community, Sysco’s leadership supports both local and national charities, along with organizations like the Epicurean Charitable Foundation, Global Gaming Women, AGA, NIGA, the Las Vegas Business Academy, the Nevada Hotel & Lodging Association and the Nevada Restaurant Association.

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A Nice Fit Innovation reigns at Agilysys, a leading global provider of next-generation hospitality software solutions and services. The proliferation of non-gaming spend has vaulted the Alpharetta, Georgia-based company into a prominent casino-world position. Its hotel property and point-of-sale systems, along with software used in gaming-resort spas, golf courses, retail and food-service realms, have grown substantially. The company continually spreads wings across the gaming industry. And now, it’s on to the small, important details. The company’s inventory management solutions are tailored to decrease food and labor costs while boosting efficiency. The targeted result is freeing up working capital, improving management and guest satisfaction, along with improved delivery times. Eatec and Stratton Warren Systems are two of its recent catalysts. Eatec is a single-solution, advanced food management system that controls the quality and consistency of the operation. It integrates with many of the markets’ ancillary technologies. It can be used as a back-of-the-house system to streamline food and beverage ordering. The product can also manage multiple restaurant and food-service functions. One of its major areas is the optimization of inventory. Eatec stores information by time, date, outlet, location and shelf. It can track spoilage and loss, leverage hand-held inventory terminals and print bar-code labels. An operator can quickly compare food costs to menu prices, gain insight on the cross-utilization of ingredients and compare theoretical and actual usages. It can also prioritize vendors.

Agilysys officials say it is used in universities, restaurants, hotels, resorts, stadiums, theme parks, supermarkets and, of course, casinos. The Stratton Warren System sports its own brand of innovation. Agilysys recently unveiled upgrades to it. The SWS v9.2 includes key enhancements like one-click capability to receive all purchase orders that arrive fully complete, the ability to attach and retrieve supporting bid documentation and enhanced compliance capabilities. Optional modules for SWS include bar-coding, menu and recipe analysis, retail and SWS Direct, a convenient and intuitive shopping cart experience. SWS can be deployed as either an on-premise or Software-as-a-Service (SaaS) solution. Agilysys officials say that 25 global gaming organizations utilize SWS to streamline menu item purchasing and inventory. Although the product is a fullfeatured, made-for-hospitality inventory and procurement solution, it enhances the gaming footprint for Agilysys. The Casino Pauma in California signed on to it last year. Casino Pauma, which boasts more than 35,000 square feet of gaming space, is open 24 hours a day and hosts thousands of guests each month. The property’s management team wanted a comprehensive inventory and procurement solution that would automate processes, reduce costs and boost efficiency. They also sought a subscription service model that would provide predictable IT costs, an accelerated return on investment and the latest software updates. From varied angles, PMI, Sysco and Agilysys fit an industry niche. Providing buying leverage or enhanced internal assessment, they let operators decide how best to be lean and mean.

MARCH 2018 www.ggbmagazine.com

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EMERGING LEADERS Affinity for Employees Mariah Dyer Vice President of Human Resources, Primm Properties, Affinity Gaming hildren often like to emulate their fathers. Mariah Dyer is no different. She emulated a father who worked as an executive chef. But Dyer saw the other side of the hospitality equation as her pathway: human resources, where she can shape employees, especially in the gaming industry. “I wanted to create workplaces where employees understand why they are doing what they are doing, how their position lends itself to the guest experience,” she says. Dyer’s career trajectory took the 2005 University of Nevada, Las Vegas graduate to the Tropicana and Hooters Casino Hotel before she moved on to Affinity Gaming, where she served as director of human resources at Silver Sevens Hotel & Casino. In the wake of her selection for Global Gaming Business magazine’s “40 under 40,” Affinity promoted Dyer to vice president of human resources at the three Primm properties—Primm Valley, Whiskey Pete’s and Buffalo Bill’s. Because of its history, starting at the Tropicana proved invaluable, Dyer says. “The collective experience I have from working at the Tropicana, Hooters and other properties is something you can’t put a price on. Each property had unique ‘best practices’ that I still implement today.” Dyer also had the good fortune of associating with people who cheered her on. Phil Fortino, now senior vice president of human resources at Eldorado Resorts, has been a huge supporter throughout the years. “He presented a new perspective on the field and reinforced that accountability, forward thinking and knowledge of operations are key elements to success,” she says. Michael Silberling, Affinity CEO, told Dyer employee engagement is paramount to success as a champion of human resources initiatives. “Having your (non-revenue-generating) function be so supported from the highest level is fantastic,” Dyer says. “I also worked for great general managers, like Dan Uonites at Silver Sevens, and Stuart Richey at Primm. They both allowed me the freedom and creativity to throw out old, stale processes and really re-energize the way we do things.” As a human resource leader, Dyer wears many hats. “Some days my focus is partnering with operational departments to look for labor efficiencies or to think through employee training programs. Other days we review guest satisfaction surveys to turn feedback into action plans. I think how we can thoughtfully maximize our resources to become better at what we do in all areas.” The future of gaming—and by extension, industry employment—is rosy, according to Dyer. “As we look at the shift in the industry to provide skill-based gaming and significant investments into nightclubs, pools and entertainment, we similarly need to pivot our thoughts on HR, recruitment, talent development and the overall employee experience,” she says. For prospective employees, Dyer recommends learning everything from everyone you can. “Ask questions, be a keen observer, and don’t be afraid to recommend improvements.” —William Sokolic

Global Gaming Business MARCH 2018

A Numbers Game Nicholas Weil Head of Business Development for U.S. Lotteries, Inspired Entertainment hen you work for a company unknown to American audiences like Inspired Entertainment, Inc., and pitch an unknown product like virtual sports, it could pose a challenge. Not to Nicholas Weil. “Virtual sports is such an exciting product, and is so perfect for the U.S. lottery industry, that people are pretty excited to learn more, which usually makes these discussions pretty fun,” Weil says. Inspired is the latest gaming company for Weil. He’s been around the industry for much of his life, thanks to his father, Lorne, who worked in racing, lotteries and commercial gaming. “People used to ask me if I liked following my dad into this field, and I always said it was a heck of a lot more interesting than if my dad made vacuum cleaners,” he says. Lorne is also Weil’s mentor. “I consider myself incredibly fortunate to have worked with and learned from someone as knowledgeable, intelligent, experienced and accomplished, who also happens to be hilarious. The best thing I ever learned was to shut up and listen to him as much as possible.” Positions at Autotote and Scientific Games laid the groundwork for Weil’s career path. “It was when I worked at Scientific Games that I got my first taste of what I really love. It was absolutely thrilling watching how a company of that size steers its long-term goals.” When he joined GameCo, Weil went from a huge corporation to a startup business with just six employees. That experience was exciting and scary, he says. “GameCo also taught me about business development, which is the other part of the industry I really enjoy.” At Inspired, Weil educates potential customers in the U.S. and Canada on their products and their benefits, convincing clients that the lottery industry needs “new”—new games, new players, new thinking. “I believe that virtual sports offers all of that,” he says. “It is everything everyone in gaming always says they are after: technology-driven, millennialfocused, dynamic and sports. It targets a younger, more enthusiastic customer for incremental revenue, and it does it more often in more ways and places.” Most co-workers are in the U.K. and five hours ahead, so Weil gets to chat by phone or answer emails until the close of business on that side of the pond. “I usually spend the afternoon reaching out to customers,” he says. Gaming is a very tight-knit business, where people stay in the industry for much of their careers, Weil says. If you want to join that community, he has some advice: “As I said before, shut up and listen! There are a lot of people in this business who have a lot to teach you.” Despite a schedule that includes a lot of travel, Weil makes the most of his time when home. He has three young daughters. “I have breakfast with them every morning, then take the oldest one to school,” says Weil, who is also learning the piano. “By the time I’m too old to be eligible for this list, I should be able to play chopsticks.” —William Sokolic

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Class of Class II Alex Bertone Project Manager, Ainsworth Game Technology lex Bertone learned the most valuable lesson of her budding career at Rocket Gaming Systems: be genuine. “I cannot stress that enough. If you want to succeed in tribal gaming, you have to be a genuine human being. You have to care about your customers and their needs,” says one of GGB’s latest “40 Under 40” selections. Bertone started at Rocket as an entry-level compliance administrator, sending project notifications to gaming commissions and Class II casino operators. In less than two years, she went from being an employee with no industry knowledge to an account executive who intricately knew bingo systems and games. “Rocket brought me to the dance, and I will always be grateful,” she says. Her next stop at Gaming Laboratories International taught Bertone to step out of her comfort zone. “GLI allowed me to dive into the regulation side of the business. I was able to network with regulators from across the country and assist in protecting their tribal assets.” Bertone parlayed these two positions into her current job as a project manager at Ainsworth Game Technology. In her role, Bertone creates game configuration mixes and develops the progressive implementation strategy for the company’s server-based gaming installations, expansions and conversions.

“I ensure undertakings are completed seamlessly. I also analyze game performance data to ensure customer and player satisfaction,” she says. A graduate of Pittsburg State University in Kansas with a degree in marketing, Bertone credits not only her knowledge of North American tribal gaming but tenacity for her success. “I am self-motivated and coachable. And I am not afraid to roll up my sleeves during an installation.” For all her can-do spirit, Bertone owes much to a pair of key mentors. Jodi Morgan, now with Eclipse Gaming, convinced her to add the sales side to her resume. “She took me under her wing and introduced me to every casino and operator she could get me in front of. She gave me the tools and confidence. I will forever be in her debt,” she says. She met the other mentor, Russell Witt, at GLI and now reports to him at Ainsworth, where he is a director of operations and business development. “Russ is the definition of team leader. He taught me to always look at the bigger picture and hold true to what is right for tribal gaming,” says Bertone, who also runs her own woodworking shop called Knotty Bark Designs, which specializes in wood burning. For Bertone, her future likely includes more analytics. “I’m a nerd when it comes to numbers. Data doesn’t lie, and I like the challenge of trying to perfect the footprint I have to work with at each property.” As for tribal gaming’s future, Bertone sees skill-based gaming as an opportunity. “But I truly believe that Class II will surge again, sooner, rather than later. The technology is here,” she says. Bertone has promising words to industry newcomers. “Be coachable. Take advice and learn from it. And network, network, network.” —William Sokolic

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Open Minds Open Doors

Never Let Them See You Sweat

Alja Halleran

Michael Mitten

Director of Human Resources, Bellagio

Vice President of Table Games, Seneca Niagara Casino & Resort

o say Alja Halleran comes from a unique background is a colossal understatement. Born in the Netherlands, she has lived in six different countries: Holland, England, Luxembourg, Greece, Italy and the United States. In looking at her current position alone, one would likely not guess that her background actually began in European Studies at the University of Amsterdam, where she acquired both a bachelor’s degree and a master of arts. It would also not automatically be deduced that her college-era employment ranged from shoe sales to executive assistant work and environmental consultancy. Flash-forward to present day and she’s director of human resources at Bellagio. Halleran’s career journey began after graduating from college, first as transportation office manager for NBC Olympics, Inc. in Athens, Greece, then as booking coordinator for the Torino Olympic Broadcasting Organization in Turin, Italy. She then made the gutsy decision to change industries entirely, determined to get a job in gaming even if it meant starting at a line-level position and working her way up. After moving to Las Vegas in 2006, she applied for job after job in the gaming industry, but received no response or interest, given that employers were skeptical as to how her education or prior work experience could lend itself to the positions she applied for. After many closed doors, Halleran’s big break finally arrived when the Signature at MGM Grand hired her on as a front desk agent in 2007. Halleran’s enthusiasm and drive served her most as she quickly determined how to amass more responsibilities that would broaden her skill set. Volunteering for special projects, and joining councils, committees and strategic planning teams, she worked day in and day out by one motto: “How you show up is everything.” With a propensity for showing up focused, present and willing, she was promoted to front desk supervisor at the Signature at MGM Grand in just six months, and later was promoted to training manager in the Signature’s human resources department. In hindsight, Halleran is grateful to have started from the ground up, as it offered her a different perspective once she reached a leadership role. She also credits mentors like Laura Lee (regional senior vice president, human resources, MGM Resorts International) and Mary Choi Kelly (senior vice president, talent and organization effectiveness, MGM Resorts International) for her current success, still calling them for occasional career advice. Also strongly supported by the senior leadership at Bellagio, she appreciates how much MGM values its employees and their feedback, committed to giving them every opportunity to succeed. Halleran obtained her certified professional in learning and performance (CPLP) certification in 2011, a long-pursued goal that boosted her credibility even more. After having mentored a number of junior managers, she strives to be one of the internal coaches for the young professionals at MGM Resorts International, and to help them achieve their own career goals as they become more effective leaders. When asked today what her biggest piece of advice is, she offers, “Willingness to learn is key. Hard work is the reality, and success looks different for everyone. It’s not always about moving up. It’s about your level of fulfillment in what you’re doing.” —Maria Casias, The Innovation Group

Global Gaming Business MARCH 2018

ichael Mitten has established himself as a young, up-and-coming executive in the casino industry by living under one simple mantra: “Question everything and everyone.” This idea was established early in his career through his various interactions with his previous boss and mentor, former Seneca Gaming Senior Vice President (and current Genting New York President) Mike Speller. Mitten jokes that Speller was the hardest person to converse with because he always asked questions and bantered about, keeping everyone on their toes. Mitten’s career began in 1996 with the opening of the Casino Rama in Ontario, Canada. Part of that opening team, he was brought in as a table games dealer. The fast-paced action of table games, coupled with the rush and stress of opening a new property, quickly became an atmosphere that Mitten excelled at and enjoyed. As he sought out career growth opportunities and continued to hone his skills, he found himself attracted to the long nights and hard work associated with the opening of a new property. This desire drove him to a series of table games positions in the Northeast, as a dual-rate dealer for the grand opening of the Greektown Casino in Detroit in 2001, and as a table games supervisor in Niagara Falls, New York, in 2003, for the opening of the Seneca Niagara Casino & Hotel. This high-intensity, hard-working ethic instilled in him from his early years has proved to be a key ingredient to his success. Even in his current position as vice president of table games at Seneca Niagara Casino & Resort, he found himself engrained in a grand opening, of sorts. Described by Mitten as one of the proudest moments of his career, Seneca Gaming Corporation opened the Buffalo Creek casino facility in nearby Buffalo, New York. The corporation allowed team members to transfer to Buffalo Creek from the Niagara Falls facility. As such, the Niagara table games department that Mitten leads experienced an exodus of roughly 40 percent of his staff. The staff left for Buffalo for convenience or promotion, leaving a gaping hole in Mitten’s department. Mitten was then in a mode of hiring, training and monitoring performances, tasks very similar to those required during a grand opening. His ability to deal with this fast-paced and stressful situation was illustrated during this period, and helped contribute to the success of both facilities in the long term. Mitten says he considers it a privilege to have been afforded the opportunity to be a part of the transition team, and is grateful for the faith and trust that the company puts in him in crucial transitional times. Mitten prides himself on his ability to not only succeed, but to thrive in difficult situations. Of course, he attributes it to his mentors and advisers throughout his career, but he also attributes it to various characteristics that he has developed along the way. Mitten notes his natural problem-solving ability coupled with his calm demeanor and high composure as key ingredients to his success. He says that these characteristics have allowed him to adapt and to successfully manage the rapid growth within the Seneca Gaming Corporation. When stressful situations arise, Mitten reminds himself of the time-tested table games mantra to “never let them see you sweat.” —Cameron Steinagel, The Innovation Group

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GAMING & HOSPITALITY

EDUCATION • SERIES • 2018 Presented by

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The first episode, Casino Games: Spanning Generations, held on March 22 at UNLV’s Stan Fulton Building, will examine how casinos have transitioned from one generation to the next. Moderated by Frank Legato, speakers include Melissa Price, senior vice president of enterprise gaming for Caesars Entertainment; Charlie Lombardo, former slots vice president for Seminole Gaming and Caesars Palace; Steve Sirianni, vice president of slot operations and marketing, MGM Grand Hotel & Casino and Kevin Sweet, vice president of slot operations and marketing, The Cosmopolitan of Las Vegas. In the second session, gaming legend and AGA Hall of Fame member John Acres will examine the current issues, such as free play, cash back, slot promotions, win-percentage strategies and unique customer service.

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A M S APPLIED MANAGEMENT STRATEGIES

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NEW GAME REVIEW by Frank Legato

Buffy the Vampire Slayer Everi

his game, based on the WB series starring Sarah Michelle Gellar as one of a line of young women known as “Slayers” who fight vampires and other assorted demons, is featured on Everi’s new Empire MPX cabinet, with its 55-inch vertical flat-screen HD monitor. The base game is a five-reel, 1,024-ways-towin video slot, with no paylines and winning combinations resulting from adjacent symbols. Randomly during either base-game or free spins, the reel array will expand from four to eight rows of symbols. The game features a six-level progressive jackpot, won through a wheel bonus. It is available in both local-area and wide-area progressive versions. The top progressive in the LAP version resets at $20,000; in the WAP version, $100,000. There are four main bonus events. The Buffy Pick Feature is a picking bonus in which the awards are upgraded with each pick revealing a credit award. Picks can also reveal multipliers and one of the six progressive awards. The Helmouth Free Spins award five to 30

free games, with frequent retriggers and frequent expanding reels. The Buffy & Angel free spins award extra spins for Buffy and Angel symbols, as well as multipliers as high as 6X. The Primeval Progressive Wheel returns higher awards with higher bets. At max bet, awards land on two wheel slices, including the chance of winning two progressives with one spin. Manufacturer: Everi Holdings Platform: Empire MPX Format: Five-reel, 1,024-ways-to-win video slot Denomination: .01 Max Bet: 300 Top Award: WAP—$100,000 reset LAP—$20,000 reset Hit Frequency: WAP— 30.27%-33.55% LAP—33.74%-34.9% Theoretical Hold: WAP—5.73%-14.33% LAP—2.06%-14.76%

Viking & Dragon Novomatic

his new video slot presents a cinematic experience on Novomatic’s V.I.P. Lounge cabinet, which features dual horizontal oversized LCD monitors, a movable leather easy chair and a table-like button panel for maximum comfort. The base game is a five-reel, 25-line video slot with wild symbols augmented by the Viking and Dragon characters, which award random extra wilds. Three, four or five treasure chest symbols award eight, 12 or 20 free games, respectively. During the free games, all visible chest symbols except for the rightmost scatter can randomly award additional free games. The rightmost chest symbol can reveal a random multiplier of up to 200X for freegame wins. With every free-game spin, three to 15 additional wild coin symbols can appear randomly on the reels.

Global Gaming Business MARCH 2018

Manufacturer: Novomatic AG Platform: V.I.P. Lounge Format: Five-reel, 25-line video slot Denomination: .01 Max Bet: 250 Top Award: 750 times total bet Hit Frequency: 32% Theoretical Hold: 5%-14%

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Seinfeld

Scientific Games

his much-anticipated new video slot mines the nine seasons of the landmark 1990s Seinfeld TV series, transforming the four main characters and all the most celebrated episodes into a pack of bonus events, presented with a cinematic flair thanks to the WMS “GameScape” cabinet. The immersive curved lower screen, upper monitor and wheel contribute to a variety of bonus styles befitting the variety of classic Seinfeld moments, from the Soup Nazi to the “Contest.” The base game is a five-reel, 36-line video slot available in penny and nickel denominations. There is a wide-area progressive, available on two separate links. The Reel Adventures link resets the top prize, won with five jackpot symbols on payline 28, at $200,000 ($201,000 in Nevada). The Cash Connection link resets the top jackpot at 40 million credits times the denomination—$400,000 in pennies or $2 million in nickels. All the bonus events reflect classic moments from the show. The “Seinfeld Feature” can randomly occur during the base game, triggering one of four “mini-games,” including the “Elaine Giant Reel Sets,” with an additional three rows on the main reel array; “Kramer Wild Reels,” with up to five reels randomly covered with Kramer Wild symbols; the “George Multiplier” with up to a 7X multiplier on all paylines; and “Jerry Added Wilds” with wild symbols placed on from three to five symbols.

Scattered bonus symbols trigger one of four main bonus events, and multipliers of 2X, 5X or 10X. The main bonus events are “No Soup for You,” in which players pick a soup for one spin of a “character wheel,” a random credit prize or “Today’s Soup” credit value; “Free Spins,” in which the player picks one of the four main characters for a themed reel array and five free games; “Festivus,” with one spin of the “Festivus Wheel;” or “Episode Games,” which unlocks one of six episode-specific bonuses—“The Hamptons,” “The Marine Biologist,” “The Marble Rye,” “The Bottle Deposit,” “The Butter Shave” or “The Contest.” All are picking games, with the player choosing from icons of the particular episode—lobsters, golf balls, loaves of marble rye, bottle tops, sticks of butter, or pillows. Manufacturer: Scientific Games Platform: CPU-4.1.1X Format: Five-reel, 36-line video slot Denomination: .01, .05 Max Bet: 540 Top Award: Progressive; $200,000 or $2 million reset Hit Frequency: 33.17% Theoretical Hold: 9.96%-12.47%

Dreams of Egypt

International Game Technology

his new video slot takes full advantage of IGT’s new CrystalCurve cabinet, which features a curved 43-inch 4K display. The game features novel uses of all that expanded real estate, both in the primary game and in bonuses that include a progressive bonus resulting in one of three progressive jackpots. The base game is a six-reel, 40-line video slot (80-credit cost to cover), but the reel array is configured in a unique way. The reels are sectioned off in twos—reels one and two, three and four, and five and six are connected and spin together, affording the visual of three large reels with large symbols that span up to four symbol spaces, and allowing for large stacked-symbol wins. Randomly in the base game, the “Shifting Sands” feature will trigger to expand the reels upward on the big vertical screen, transforming from four rows of symbols to eight rows. The middle reel of the expanded array is always wild, which guarantees a win on any Shifting Sands spin. The expanded array offers 100 paylines. Three bonus symbols trigger eight free games, with the Shifting Sands fea-

ture active on every spin—guaranteeing that every free spin is a winner. Free games can be retriggered. Finally, three jackpot symbols trigger the progressive feature. Players select icons corresponding to each of the three jackpots until matching three for a guaranteed progressive win. Progressive resets are $25, $75, and a top progressive of 75,000 credits times the denomination ($750 in the penny version). Manufacturer: International Game Technology Platform: CrystalCurve Format: Six-reel, 40-line video slot (expanding to 100 lines) Denomination: .01-500.00 Max Bet: 1,600 Top Award: Progressive; resets at 75,000 times denomination Hit Frequency: 32% Theoretical Hold: 4%-15%

MARCH 2018 www.ggbmagazine.com

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TABLE GAMES

Speaking of Nerves Public speaking is often one of our greatest fears— but it doesn’t have to be By Roger Snow

“Speaking in front of a crowd is the No. 1 fear of the average person. No. 2 is death. This means to the average person, if you have to be at a funeral, you would rather be in the casket than delivering the eulogy.” —Jerry Seinfeld

f you’re reading this, you’ve likely ascended to a position that requires you occasionally stand up in front of a bunch of people—friends, Romans, countrymen, and the like—and say something intelligent or persuasive. Could be a sales pitch. Could be a presentation. Could be a panel discussion at G2E. Could be an impromptu adieu at someone’s retirement party. Could be, well jeez, it could be anything that requires: A) You opening your mouth; and B) Others opening their ears. And it could be, as Seinfeld says, the most terrifying thing you’ll ever do. But it doesn’t have to be. Speaking in public, like changing a flat tire or solving a Rubik’s Cube or baking a cake, is all about the process. The steps. The recipe. The tricks of the trade that, when followed, stifle anxiety in a way a dozen Valium never could. You want to turn yourself into a lean, mean talking machine? It’s as easy as 1-2-3. Or more aptly, 50%, 30%, 20%.

50 Percent Is Non-Verbal Half of your effectiveness as a speaker, believe it or not, has got zip-a-dee-doo-dah to do-dah with your speaking. Instead, it has to do with your poise, posture, and attitude (aka, stage presence). You’ve got to own the room, and to do that, don’t do this: Don’t shuffle your feet. Don’t blink excessively. Don’t hunch over or lean against the podium. Don’t turn your back. Don’t fold your arms. Don’t look at your shoes. Don’t look at the ceiling. Don’t clasp your hands in front of your crotch like you’re David Beckman in the soccer wall, or put them on your hips like you’re Yul Brynner in The King and I.

Et cetera. Et cetera. Et cetera. If you’ve got to move around, do so with purpose. 58

Global Gaming Business MARCH 2018

Search an old Chris Rock or an older Richard Pryor performance on YouTube. Those guys didn’t aimlessly ambulate. They prowled around the stage to get close to the audience, making sure everyone was alert and attentive.

30 Percent Is Your Voice You don’t need to sound like Morgan Freeman or Liev Schrieber or Don LaFontaine (the “in a world” guy from the movie trailers), but vocal quality is the second-most important element in public speaking. Your voice is an instrument, and to capture and enrapture the audience, you must give a virtuoso performance. Want to keep the crowd on the tip of your tongue? Try these: First, speak up. Do a perimeter check. Make sure those in the back row and far aisles can hear without straining. This may sound obvious, but many a presentation has been doomed from the start by a deficit of decibels. Second, stick a fork in those pesky “ums” and “ahs.” Next time you give a presentation, have someone in the audience count the number of times you lean against these oral crutches. Either that or have him zap you with a cattle prod. Third, mix it up. Good speakers steer clear of the monotone zone by shuffling their pitch and volume and cadence. Sometimes. They. Talk. Slow. Ly. And other times theytalkfast. High and low. Soft and loud. They use different voices when telling a story. They pause to let the audience digest what was just said, or to create—wait for it—anticipation of what is coming next.

20 Percent Is What You Say While public speaking is indeed more about the medium than the message, what you say still matters. Just not as much as you think. One hour, one day, one week after you’ve spoken, people tend to

forget pretty much all but a few details. Case in point: Did you see the latest Dave Chappelle special on Netflix? Wasn’t it hilarious? Yes. Wasn’t it awesome? Absolutely. What did he say? Uh, gee, um, er . . . Yeah, exactly. No one remembers. The best way to start your presentation is with a story that’s relevant to the topic. Talking about innovation? Tell the story of how Pfizer created Viagra by accident. Talking about perseverance? Tell the story of how Michael Jordan was cut from his high school basketball team. Talking about talking? Tell the story of how England’s King George VI overcame paralyzing stage fright—and an even more paralyzing stammer—in his worldwide radio address that declared war on Nazi Germany in 1939. And the best way to keep your presentation moving is to remain slideless. Or as slideless as you can. PowerPoint, like cinnamon, is used best when used sparingly. The text, the charts, the graphs are more hindrance than help. On the few slides you use, use as few words as possible. The last thing your audience wants to do is read your presentation, and the second last thing it wants to do is listen to you read your presentation. As for the end, there is no set way to wrap things up. You can thank the audience and solicit questions. You can circle back to a reference made earlier in the talk, especially if it’s something poignant. You can even drop the mic and walk offstage. But whatever you do, don’t wait all day to do it. You must be careful not to overstay your welcome. Shakespeare said it’s better to be three hours too soon than a minute too late. True that. And likewise, in the world of public speaking, it’s better to be three minutes too short than a second too long. 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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FRANKLY SPEAKING by Frank Legato

Playing Young

Global Gaming Business MARCH 2018

to see one that can rake in the kind of money slot machines are capable of earning. That’s why the casinos still love me. I’m still a fan of the games that we know can make money for the casino. I’m the guy looking for that old reel-spinning slot machine, preferably with wobbly reels and malfunctioning lights that blink on and off. I’m good at those games. Of course, so is a chimpanzee. And chimp-friendly games aren’t drawing many young players. What is drawing young players, as noted by AGS chief David Lopez in our cover story, are the table games. It’s because tables provide a social experience, players must actually use their brains to plan their next move, and there is active interaction with the game. I prefer to play craps, and I like it the same way my father would have played it onboard a ship during World War II. When I’m on the slot floor, I normally play video poker, or one of those clunky old three-reel dollar games. And the only interaction with the game I have is feeding in cash, or maybe putting my fist through the screen. That said, I realize that casinos have to plan for when players like me are confined to bingo at the rest home, if not that big coin-operated slot floor in the sky. That’s why we’re doing the UNLV sessions. Just so you know, I try to bring Looney Tunes into serious trade journalism whenever possible. Hey, it was a great cartoon, remember? The brain surgeons were there to carve up Bugs’ brain, but he thought they were an audience, so he started to sing and dance, and he... Oh, never mind. That’s all, folks. VIC TOR RINAL DO

happen to be hosting the first in our series of educational sessions at the University of Nevada, Las Vegas on the 23rd of this month (tickets still available—see me at the door), and coincidentally, this ends up being the month Roger Snow writes about being afraid of public speaking. Personally, I’m terrified of it. Luckily, when I do it, it’s normally in a roundtable format (although the table, to be honest, is usually rectangular), and I typically have great panelists, so it becomes easy to moderate a really interesting discussion. But going out there by yourself? With nothing but a microphone? And talking? To people? In business suits? While I certainly can do it—hey, I’m a pro, OK?—there will always be that petrifying moment where I have to mentally ward off, oh, let’s call it Ralph-Kramdenitis: “Humma-humma-humma...” That cartoon where Bugs Bunny tries to do a vaudeville routine for an audience of brain surgeons also comes to mind. There will be no such shenanigans on the 23rd, I assure you. I’ve got a distinguished panel of slot operations pros talking about what kinds of games are going to take the slot floor, and the rest of the casino, into the future. I’m sure that at some point, somebody’s going to sling the Mbomb. You know, millennials? When the issue of how to please this new generation first came up, my first thought was that we still had plenty of time to figure this out. Now, suddenly, the oldest millennials are in their mid-to-late 30s. Yikes! They probably have money now, too! How do we get some of it? Some of the ideas so far are things like eSports matches, shooter games, mobile-style games, virtual reality and a few other cool, if mystifying activities. (In a space once crammed with slot machines, Bally’s Wild Wild West in Atlantic City now has beer pong.) But so far, everyone’s still trying to figure out how to monetize activities to which these young, slot-machine-hating whippersnappers will flock, their pockets full from their first real-estate flip. I only know that I’m not winning money from these games. I’ve tried the video skill games at the past couple of G2E shows, and on each and every one of them, I pretty much suck. I had some very good hand-eye coordination back in my pinball days, and I can still manage to play bass, guitar and mandolin (although not at the same time), but I get on one of these first-person shooter games, and it’s like someone cut off my fingers and replaced them with toes. I’m just as toe-fingered on the mobile-style games, like that one where you have to slash fruit on the screen to earn points. I’m one of those people who can actually lose to a watermelon. But these games are still in the experimental stage, and we have yet

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CUTTING EDGE by Frank Legato

Stick Shift or Automatic? Product: Reflexive Rewards Manufacturer: Table Trac

eflexive Rewards, part of Table Trac’s CasinoTrac system, offers casino marketing flexibility with a high degree of automation and manual control. Deployed exclusively in CasinoTrac systems, recent approvals in the states of Maryland and Nevada have made this operations automation tool available to hundreds of new locations. Based on casino-configurable parameters, player analysis and rating decisions are made hourly using weighted ADT and separate weighted total theoretical averages over multiple distinct measurement periods. These feed the Reflexive Rewards auto-tiering algorithm. The unique formula logic does not overlook the value of frequent, seemingly unremarkable players while almost instantly recognizing and rewarding the early visits of high-potential-value new arrivals. In automatic, the combination called Reflexive Rewards takes it further by giving definition to enforcement of eligibility rules in cascading priority, automatically selecting appropriate offers for each guest based on ADT, segmented total theo wins, total visits, visit frequency and geo distances traveled. Reinvestment rules are enforced while the system internally performs all the calcu-

lations making cycle times for offer re-evaluation hourly, 24/7. In manual, the casino can export player rating data in familiar formats to apply their externally based analysis and produce offer lists in the traditional manner. List imports load the offers to player accounts and promote the offers through email, text, on kiosks and at player screens on machines. Offers are still protected with the system’s internal verification of offer eligibility before ultimately deposited into guest accounts for redemption. Using a combination of the Reflexive Rewards modes is highly effective and totally supported by the system. For more information, visit tabletrac.com.

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p. 63 goods:Layout 1 2/14/18 1:06 PM Page 63

GOODS&SERVICES ICE SUCCESSFUL BUT CONTROVERSIAL

CE London concluded last month by smashing previous records, but also coming up against controversy. It started at the ICE Vox conference the day before the show opened when UK Gambling Commission Chairwoman Sarah Harrison said she was appalled at the treatment of women on the exhibit floor, and in the industry overall. She complained about the lack of diversity in the industry, highlighted by the many scantily clad women on the show floor. “I felt that I had missed an opportunity at last year’s ICE,” said Harrison in a keynote address, “an opportunity to highlight and challenge what is a significant stain on this industry’s reputation. This is an industry where we have a number of talented, powerful and successful women. Indeed, a woman from the gambling industry is Britain’s highest-paid boss—not UK Gambling Commission highest paid female Chairwoman Sarah Harrison CEO but highest paid CEO. Yet from walking around the exhibition, you wouldn’t know this. Instead, you saw men representing their companies wearing expensive tailored suits while their female colleagues were expected to wear nothing more than swimsuits. I say, bring this to an end now! It is far from reflective of the modern society and economy of which this industry is a part. And to go further, any future participation by the Gambling Commission in events like this will depend on there being change.” Kate Chambers, managing director of Clarion Gaming, said ICE London would attempt to raise standards on the show floor, specifically with regards to the representation of women in line with its commitment to diversity. “Our campaign to encourage respectful representation of women began over a year ago, prior to the 2017 edition of ICE,” she said. “The majority of the senior team at Clarion Gaming is female, and our strategy has been to drive a cultural change, which hopefully has a degree of permanency rather than a proscriptive change. “While I think we have achieved some success adopting this strategy, moving forward we will be taking a greater degree of control over this

important issue and updating our position in partnership with our stakeholders.” Otherwise, Chambers cited the record-breaking 2018 edition of ICE, which occupied 36 of the 44 halls at the ExCeL Centre. “The show floor provided a global representation of the industry, with 589 exhibitors from 65 countries producing games for every jurisdiction and every gaming vertical. In terms of the attendance figures, our registration company undertakes a robust interrogation of the data prior to submitting the number of unique visitors for independent audit. In the week prior to ICE London, the pre-registration figures were 4 percent up and our initial attendance figures are showing a similar uplift, which would be the seventh consecutive year of growth.”

The former NYX Gaming will combine its bestof-breed OpenBet platform with a newly launched Managed Trading Service (MTS), offering full liability management with over 40 sports and 350,000 events covered annually. OpenBet has partnered with market-leading trading and data service suppliers in the industry to power the service, which will allow operators flexibility to select a product tailored for their players.

ARISTOCRAT CLEARED IN SLOT LAWSUIT

SCIENTIFIC GAMES LAUNCHES SG DIGITAL

SG Digital CEO Matt Davey

cientific Games Corporation last month announced the launch of SG Digital, the new interactive division incorporating the product portfolio of the former SG Interactive (which the new division replaces) and the B2B products and services of NYX Gaming Group, the recently acquired sports-betting platform supplier. The new division brings together some of the most established and successful brands in iGaming, sports betting and iLottery. SG Digital is described as “an integrated industry leader” that will boast products from the company’s nine in-house game development studios including Bally, Barcrest, NextGen and WMS Gaming. The division will also leverage the combined company’s product offerings, including SG Universe, an online solution for land-based casinos, and OpenBet, a leading sports betting solution. The SG Digital workforce will be over 1,500 strong, spread across 34 offices, and will serve over 200 customers with over 2,000 games and 40 licenses worldwide. Scientific Games also announced that SG Digital will be led by former NYX Gaming Group CEO Matt Davey, who assumes the role of group chief executive, digital. Jason Walbridge will become SG Digital chief operating officer. “The creation of SG Digital marks the beginning of an exciting and defining new era for Scientific Games, and underlines the company’s continued ambition and dedication to provide the industry with the very best content, technology and digital products,” said Scientific Games CEO Kevin Sheehan. “Our vision is to be the world’s leading supplier of digital gaming, sports and iLottery solutions.” SG Digital’s portfolio of products and services includes digital real-money gaming content and platforms, a sports book and SG Universe social casino.

judge in the Federal Court of the Australian state of Victoria has dismissed a lawsuit brought by a former gambling addict against the Crown Melbourne Casino and a subsidiary of slot supplier Aristocrat Leisure Limited that had claimed the design of popular Aristocrat machines misled players to keep them gambling. The lawsuit, filed in 2016 by former gambling addict Shonica Guy, alleged that Aristocrat games were “deceptively designed to mislead players” through near-misses that gave players false hope to keep them playing. It also claimed that the paybackpercentage statistics were misleading because they applied to all players as opposed to any one given player. Federal Court Judge Debbie Mortimer ruled that any notions concerning the “total theoretical return to player” were “dispelled as soon as she or he actually starts gambling and the randomness of the operation of the machine and the returns become apparent. “The impression is fleeting and may cause confusion, but it is not misleading or deceptive as the law defines those concepts,” the judge wrote. “I did not find anything in the conduct of Crown or Aristocrat that could be found as unconscionable. There are no allegations that either respondent has failed to comply with its obligations under the regulatory framework. To the contrary, the evidence positively demonstrates compliance.” Aristocrat lauded the ruling in a filing with the Australian Securities Exchange, writing, “Aristocrat is a high-integrity business that takes our regulatory obligations extremely seriously. We strive to scrupulously uphold our obligations with respect to EGM compliance. We will continue to support balanced and factbased harm minimization initiatives and do more where we can, recognizing that these issues are complex and require collaboration across the industry, regulators and the community.”

MARCH 2018 www.ggbmagazine.com

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PEOPLE AINSWORTH’S DREITZER RESIGNS

ustralian slot manufacturer Ainsworth Game Technology, which recently became majority-owned by Mike Dreitzer Austria’s Novomatic AG, announced that Mike Dreitzer, president of Ainsworth Game North America, has resigned. Danny Gladstone, the parent company’s chief executive, said in a filing with the U.S. Securities and Exchange Commission that Ainsworth’s North American headquarters in Las Vegas will be run by its “highly capable local management team” while “a suitable replacement is secured.” Novomatic finalized the purchase of the 52 percent stake in Ainsworth of company founder Len Ainsworth on January 5. In a press release, Novomatic said the company’s plan was to use the acquisition “to increase market share in the United States to about 10 percent over the next five years.”

MELCO RESTRUCTURES LEADERSHIP

n a move to “optimize operating excellence,” Melco Resorts & Entertainment has replaced City of Dreams Property President Gabe Hunterton Gabe Hunterton with current Studio City Property President David Sisk. In the corporate shuffle, City of Dreams Manila President Geoff Andres will relocate to Macau to take over at Studio City. And Kevin Benning, former vice president of gaming operations at City of Dreams Manila, has been promoted to senior vice president and chief operating officer at City of Dreams Manila. Melco Resorts Chairman and CEO Lawrence Ho called the shakeup a “redeployment.” “We are leveraging on key individuals who all have demonstrated their expertise in managing and delivering strong growth,” Ho said in a statement. “They have proven their innovative spirit in various geographical locations across the Melco group. We are confident that the cross-fertilization of new ideas and management initiatives will ensure that all our integrated resorts will continue to benefit from performance improvements.”

TEUFELBERGER TO LEAVE GVC

HARD ROCK INTERNATIONAL APPOINTS HOOK

orbert Teufelberger is stepping down from his Norbert role as a non-executive direcTeufelberger tor of GVC Holdings. He was expected to leave on February 2 after having served an agreed twoyear term with the firm. He was the chairman of PartyGaming before the merger with GVC. “I would like to thank Norbert for his contribution to the board over the last two years,” Lee Feldman, chairman of GVC, said in a press release. “He provided valuable insight into the bwin.party business, following the takeover of that group, and the gaming industry. We wish him well with his other ventures.”

NEW GM FOR ARIZONA CHARLIE’S

olden Entertainment has named Mark Seligman, a veteran of the Las Vegas locals gaming market, as general manager of the company’s newly acquired Arizona Charlie’s Mark Seligman casinos in Las Vegas. Seligman will oversee all aspects of Arizona Charlie’s Decatur and Arizona Charlie’s Boulder, both of which are slated for renovations and programming changes in the aftermath of Golden’s purchase of American Casino & Entertainment Properties in October. The two properties feature a combined 560 hotel rooms, more than 1,870 machine games, 750 bingo seats, race and sports books and 10 restaurants.

NEW CEO AT DESERT DIAMOND CASINOS

fter a nationwide search by the Tohono O’odham Gaming Enterprise (TOGE), longtime gaming veteran Rudy Prieto has been named chief executive officer of Desert Diamond Casinos in Arizona. He will report directly to the TOGE board. He took charge January 8. With more than 30 years in the gaming industry, Prieto most recently was general manager of Pechanga Resort & Casino in Southern California. A dual citizen of Mexico and the United States, he has been involved in both domestic and international hospitality and gaming enterprises.

ard Rock International Chairman Jim Allen recently announced Jeffrey Hook has been named executive vice president of development and marketing at Hard Rock International. Jeffrey Hook Most recently, Hook served as senior vice president of business development and marketing for the company. In his new position, Hook will be responsible for the global development of Hard Rock casinos, except on the Asian continent, where Hard Rock International’s chief executive officer for Asia, Ed Tracy, will oversee casino development. Hook joined Seminole Gaming in 2008 as senior vice president of marketing, with overall marketing responsibility for the Seminole Hard Rock Hotels & Casinos in Hollywood and Tampa, as well as other Seminole casinos in Florida. With 23 years of experience in the gaming industry, Hook also held leadership positions at MGM, Boyd Gaming and Harrah’s Entertainment.

GGB

March 2018 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 Agilysys . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 AGS . . . . . . . . . . . . . . . . . .Cover Gatefold, 3 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . .35 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Casino Style . . . . . . . . . . . . . . . . . . . . . . . .43 Dickinson Wright . . . . . . . . . . . . . . . . . . . .31 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 FABICash . . . . . . . . . . . . . . . . . . . . . . . . . .45 Fantini Report . . . . . . . . . . . . . . . . . . . . . .37 Fox Rothschild . . . . . . . . . . . . . . . . . . . . . .51 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 GGB News . . . . . . . . . . . . . . . . . . . . . . . . .62 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Greenberg Traurig . . . . . . . . . . . . . . . . . . .27 GiGSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Incredible Technologies . . . . . . . . . . . . . . .25 JCM Global . . . . . . . . . . . . . . . . . . . . . . . .13 Konami Gaming, Inc. . . . . . . . . . . . . . . . . .68 NIGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 RPM Advertising . . . . . . . . . . . . . . . . . . . .12 Scientific Games . . . . . . . . . . . . . . . . . . . . . .9 Southern Gaming Summit . . . . . . . . . . . . .64 UNLV Seminar . . . . . . . . . . . . . . . . . . . . . .55 VizExplorer . . . . . . . . . . . . . . . . . . . . . . . . .39 WIPFLi/Joseph Eve . . . . . . . . . . . . . . . . . . .53

MARCH 2018 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Kevin Kline Chief Operating Officer and General Manager, Resorts World Catskills

The fourth of the four casinos approved for the “northern tier” of New York state opened in February. Kevin Kline, the COO and GM of Resorts World Catskills, explains why the best was saved for last as it’s closer to New York City and has a powerful relationship with the Resorts World family of brands. Kline has had a long history with Harrah’s/Caesars Entertainment and came to Resorts World Catskills from a previous position with an Ohio casino. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: This has been a really long time coming for the Catskills region. They’ve been talking about casinos in the Catskills for decades. What’s the general mood in the company approaching the opening?

Kevin Kline: There are a lot of folks who have been really focused on this opportunity for a very long time. Many of our executives at Empire Resorts have been part of this journey, dating back quite a while. I will tell you that, as someone who’s just joined Empire Resorts and is embedded now here at Resorts World Catskills, there is a tremendous anticipation, as you would expect—just an amazing energy throughout the property. And there is a genuine pride to see this magnificently designed and programmed property come to life. What’s the reaction in the community so far to the debut here?

There are many stakeholders who have been very engaged at the government and community levels, making the case that this was the right location for one of the upstate licenses. So there’s a high degree of anticipation to see this finally come to reality, and similarly, there’s a lot of pride up here for what the Catskills was, and for what we have the opportunity to re-create in this new form. 66

Global Gaming Business MARCH 2018

How many employees have you hired, and are they mostly from the surrounding areas?

(As of) right now, we’ve hired close to 1,300. We’ll continue to ramp as the rest of the property scales to about 1,700 team members. As somebody who gets around to all of our team member orientations, one of the things that I like to do is to ask folks to raise their hands and ask how many people are from Sullivan, Orange and Ulster counties. We have done an amazing job of activating the local community, and finding some amazing team members as part of our Resorts World Catskills team. There’s so much enthusiasm and so much pride from the team that we’ve hired to be part of this opening, and to really be part of that revitalization of this region. It’s been a great story from a local employment perspective. How far is Resorts World Catskills from Manhattan?

We’re 90 miles from New York City. It’s a pretty straight shot. And obviously, that’s to Manhattan; the surrounding New York metro is much larger, and so we have a great opportunity within that captive market to get our fair share and more of that business. We expect to have a major presence in this Northeast market. This is the fourth casino approved several years ago by the state of New York in the Northern Tier region. The others ones haven’t performed that very well. Why will Resorts World Catskills be different?

We’re very different. We are not a regional casino. I mean, being 90 miles away from New York City, we’ve created an integrated destination resort, and that experience is meant to complement our location here in the Catskills. The hotel product is 332 all-suite rooms, penthouses and villas, along with 100,000

square feet of gaming. In addition to competing for the premium mass market, we’re also focusing on VIP premium gaming, and we think we can be very competitive. Our property’s been designed to accommodate the premium Asian customer. We’ve built a very authentic Asian gaming and food offering, that provides both traditional and modern cultural influences. We have a world-class upscale full-service spa and fitness, and a multi-purpose entertainment venue, with 27,000 square feet for entertainment, conventions and meetings. We are redesigning and bringing back the iconic Monster Golf Course in 2019. Part of our campus is going to include the Kartrite, a luxury lodge and indoor water park, that will open up early part of next year, with another 350 rooms. We’re looking to build a service environment and a guest experience that will reach five-star, five-diamond standards. So, everything has been added within our footprint to be a true integrated destination resort that becomes a major draw. Genting runs the most lucrative casino in the country, in Resorts World New York City. Do you have access to the list that they’ve built up down there?

One of the benefits of being a Resorts World brand are those cross-market opportunities. We’ve coordinated some efforts to come out of the gate and ramp up our property. We’ve been able to leverage the Resorts World database to get folks in here and get them excited about Resorts World Catskills as a premium experience to keep tourism and gaming revenues in the state of New York. It’s a nice way to start, knowing that we can go out there and contact those who are familiar with the brand, and begin to introduce them to a new and unforgettable experience of Las Vegas-style gaming in the Catskills.

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