Global Gaming Business, May 2016 by Global Gaming Business

p. 1 cover may:_cover, inside, back.qx 4/14/16 2:22 PM Page 1

GGB Global Gaming Business Magazine

U.S. REVENUE TRENDS DFS & GAMBLING ONLINE IN INDIAN COUNTRY DATA CENTRIC

May 2016 • Vol. 15 • No. 5 • $10

The Future of

MONEY

Sightline’s Play+ bridges gap between cash and games

Tribal Casinos Grow Up Why management contracts are becoming a thing of the past

The

Other Asia Why India has enormous gaming potential

Official Publication of the American Gaming Association

Association of Gaming Equipment Manufacturers

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CONTENTS

Vol. 15 • No. 5

may

26 COVER STORY Conquering Cash As modern businesses from Starbucks to eBay continue to erode the position of cash as a preferred way to buy goods and services in the world at large, casinos will have to keep up by providing alternatives to the current cash-based gaming ecosystem. Cash+, a cashless play system developed by Vantiv Gaming Solutions in partnership with Sightline Payments and Scientific Games and tested successfully at Mohegan Sun in Sightline CEO Kirk Sanford and Mohegan Connecticut, may point to the world beyond TITO. Tribal Gaming Authority President and CEO Bobby Soper

By Roger Gros

72 Empowering the Future

With gaming markets maturing in Macau, Singapore, the Philippines and elsewhere, India could be the next major Asian gaming market.

Scientific Games’ expanded Empower conference in Las Vegas showed the supplier’s customers how to get the most of an incredible range of technology.

By Kit Szybala

By Frank Legato

32 Data Debate

84 G2E Asia for 2016

With the variety of available consumer data growing every day, casinos are learning how best to harness more of that information for marketing.

A new awards program and a conference program focused on non-gaming attractions headline this year’s edition of the G2E Asia trade show and conference.

By Marjorie Preston

By Patrick Roberts

36 Turning the Corner

By Dave Palermo

66 Kiosk Evolution The kiosks once used only for ticket redemption have become a multi-faceted tool for casinos.

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

Column 50 Dear Mister Fantasy

18 Fantini’s Finance Back In Action Frank Fantini

48 Table Games Family Feud Roger Snow

88 Global Gaming Women

DEPARTMENTS 6

The Agenda

By the Numbers

10 5 Questions 12 Gaming History 14 AGEM Page 74 Emerging Leaders With Rainmaker Group’s Eian Counts, Grand Traverse Resort’s Daniel Duffiney, and Makowsky Restaurant Group’s Seth Makowsky

By Steve Ruddock

Global Gaming Business MAY 2016

80 Frankly Speaking 82 Cutting Edge 83 Goods & Services

60 iGNA’s Big Show

Last month’s annual iGaming North Features America conference in 54 Toward Tribal iGaming Las Vegas concentratTribal gaming interests ed on eSports, DFS have been positioning and the millennials. their chess pieces to By Patrick Roberts finally enter the online gaming business, but 62 iGames News still face challenges. Roundup Andrew Tottenham

By Dave Bontempo 4

Geoff Freeman

76 New Game Review

An analysis from the Innovation Group examines whether U.S. gaming revenues have finally recovered from the Great Recession.

The growth and health of the U.S. tribal gaming market has depended on industry veterans as management partners.

16 AGA Unintended Consequences

Sheila Bangalore

22 The Other Asia

42 Tribal Partners

COLUMNS

Power of Technology

FEATURES

By Tom Zitt

PHOTO BY ANNA SAWIN

Global Gaming Business Magazine

89 People 90 Casino

Communications

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THE AGENDA

Eye on Asia

Vol. 15 • No. 5 • May 2016 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com

Roger Gros, Publisher

s I prepare for my one trip to Asia each year, I wonder how these jet-setting casino executives can take all that travel. The flight alone kicks my butt, and it takes me a couple of days to get acclimated. Yet, there are casino execs, particularly in the companies that operate in Macau, that do it multiple times each year. And some of them are my age or older! Amazing. But I do enjoy my annual trip to Macau for G2E Asia. The differences from one year to the next are always impressive, and now, when I step back to consider the changes that have occurred since I first went there for the opening of the Venetian Macao, I’m flabbergasted by what has happened in less than 10 years. If you just consider the Cotai Strip, where the Venetian is located, there probably has been more gaming money invested there than in any place in the world at anytime in history. Studio City, which I’ll see for the first time during G2E Asia, alone cost $3.2 billion. Galaxy Macau is north of $5 billion total. And the Sands China properties after the Venetian—Four Seasons, Cotai Central, Parisian and the included retail/non-gaming developments—have to be approaching $15 billion. Wynn Palace will open later this year at a cost of about $4 billion, followed by MGM Cotai; add another $3 billion. Not to mention Louis XIII (now simply “13”—a name that wouldn’t go over well in English-speaking markets) at a couple of billion. So you can understand the angst about the decline in the VIP market over the past few years. When you see a market segment where at least 70 percent of the revenues shrink so dramatically, those investment dollars look a bit like overkill. But on the reverse side of the coin, while it’s no longer a $40 billion-a-year market, it is $25 billion, far exceeding any other jurisdiction in the world. So, it’s all relative. But it’s the other Asian markets that interest me, as well. Having been to the Philippines a couple of times and witnessed the integrated resort development plans there, it’s not surprising that this has quickly become a growth market. What is surprising is that you can get players from the airport to the Entertainment City campus (only about five miles away) in less than an hour. Manila

Global Gaming Business MAY 2016

has some of the worst traffic I’ve ever seen. Singapore seems to be a mature market now. No more competition coming on, no greater government involvement in the businesses (although it was a little daunting in the beginning there). There are many jurisdictions I have yet to visit, but I’m penciling them in for a future Asia voyage. I’m somewhat surprised about the increased investment in the Northern Marianas islands. Tinian has had one casino for many years (now closed) and Saipan has struggled with the concept of casinos for just about as long. And now we’re supposed to believe that this will be the new gambling mecca? South Korea has had its fits and starts, and it still confuses me why they are taking such a hard line against citizens gambling, particularly when they have one casino in the middle of nowhere where the locals are allowed to gamble. I would think a Singapore-style daily or annual entrance fee would work well in Korea. And now that the Mohegan tribe partnership has been approved for an Incheon Airport integrated resort, it seems only a matter of time before the government sees the light on Koreans gambling. And do we need to even mention Japan again? No, we don’t. But the Southeast Asian countries of Vietnam, Cambodia and Thailand (even throw in Laos and Burma) deserve lots of attention because of action in mergers and acquisitions within the past year. Thais and Vietnamese seem to be the principal market here, so if those countries ever get their act together, it could become a very vibrant region, not only for the locals but also for Chinese. And lest we forget Australia, where there are currently several integrated resorts/casinos on the drawing board. Most of that development is being done with an eye toward the Chinese market (as is most gaming development in Asia). Someday I’ll get to see some of the fantastic casinos of Australia and New Zealand. But wait, that’s an even longer flight than my annual trip to Macau. Guess I’ll have to combine them one year.

JohnBuyachek, 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 Columnists Sheila Bangalore | Frank Fantini Geoff Freeman | Roger Snow | Andrew Tottenham Contributing Editors Stephanie Adkison | Dave Bontempo Chris Irwin | Dave Palermo | Marjorie Preston David Rittvo | Patrick Roberts Steve Ruddock | Kit Szybala | Tom Zitt

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

• Geoff Freeman, President & CEO, American Gaming Association

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Partner, Duane Morris, Baltimore

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

• Steven M. Rittvo, Chairman/CEO, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 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 2016 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

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BY THE

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A Short hiStory of GAmblinG t

he social media team at the Reno hotel casino Grand Sierra put together an infographic on the evolution of gambling, ending at that fabulous Reno property. This page is a reproduction of the development of gaming in Nevada. For the full infographic, visit GGBMagazine.com or go to grandsierraresort.com/press-room/grand-infographics/from-il-ridotto-to-reno.

Global Gaming Business MAY 2016

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NUTSHELL

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with Grant Eve

Partner, Joseph Eve and Associates

oseph Eve and Associates’ duties are often underappreciated and sometimes misunderstood. But the financial evaluations and audits conducted by the company are some of the most mission-critical to any casino, gaming group or government organization. Partner Grant Eve is responsible for most of the firm’s gaming clients, particularly in tribal government gaming, and has helped develop the clarity and integrity that has become Joseph Eve and Associates’ reputation. Give us a quick overview of your firm. Our firm consists of about 60 professionals with four offices across the Northwest, but we have clients in 30 states. We’re a niche CPA firm that focuses on gaming work, both tribal and commercial. We do lots of audits but we’re developing our technology very quickly. The technology focuses on accounting system implementation and impact. It’s been very successful so far. It’s a cloud-based accounting solution. We also have JE University, which is our Title 31 AML (anti-money laundering) training module.

1 2 3 4 5

Audits often seem dry, but they are very important. How does your firm conduct them? Once we are engaged to do an audit, we come in and do a planning meeting where we go through a risk assessment, and decide which areas need attention. Then we go on site, observe the internal controls and walk through the procedures. We do a fair amount of detailed testing. At year end, you arrive on site, and you basically count the cash and the inventory. Our CPAs love it. It’s not your typical work; you’re counting millions of dollars in most cases. Then we do some more field work; we draft reports for delivery to the tribal council or the gaming commission, or in a public company, management or the board of directors. Are you often called in before a casino opens to set up accounting systems and procedures? Definitely. We also set up Title 31 AML compliance programs. And that happens in existing casinos, as well. Sometimes they’re operating on legacy systems and need the most updated and current procedures. We walk through all the processes from the initiation of a transaction all the way until it hits the general ledger. We discover how to create more efficiency and transparency. And we use updated technology to streamline the process and save on costs. We issue reports that are easy to decipher and move forward with the implementation. Tell us about your cloud-based accounting solution. It’s all automatic; nothing’s manual. It links to your smartphones and tablets. It’s an app you access online. You can see balances, invoices and deadlines. You can approve a payment from your phone and it ties right into your audit paperwork. As an auditor, it makes your job easy. You don’t have to go through invoices or vendor files—it’s all online. It’s so much more efficient. And the return on investment is there immediately. The Title 31 AML issue is crucial these days. Have the casinos responded to this challenge? No doubt. And to back up, casinos are viewed as a financial institution, so they’re in the same segment as banks and money service businesses. A lot of people don’t realize that in 2014, FinCEN set up a standalone enforcement division. We’re really seeing the repercussions of this now. In 2015, casinos had more enforcement actions against them than any other industry. So casinos are really taking a look at their AML compliance programs. In addition, we’ve seen the IRS at casinos more in the past two years than in the five previous years combined. And since casinos are considered high-risk clients, banks are demanding that they are fully AML compliant. We’ve seen several banks walk away from casino clients in the past year because of AML issues. So this is very serious. 10

Global Gaming Business MAY 2016

Said It”

“VIP is where you make the millions.” —Mark Brown, CEO, Best Sunshine, which plans to work with junkets at its upcoming casino on Saipan

“And I’ll say to Massachusetts: Be careful what you wish for because there’s problems that come with casinos, as well as some profit.” —Dannel P. Malloy, governor of Connecticut, speaking in Massachusetts and commenting about the brewing casino “war” between the two states

CALENDAR May 17-19: G2E Asia, The Venetian Macao. Produced by the American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com. May 31-June 3: Juegos Miami, The Biltmore, Coral Gables, Miami, Florida. Produced by Urban Expositions and Clarion Events. For more information, visit JuegosMiami.com. June 7-10: iGaming Super Show 2016, RAI Amsterdam, Netherlands. Produced by Clarion Events. For more information, visit iGamingSupershow.com. June 20-22: Northwest Indian Gaming Conference & Expo 2016, Tulalip Resort Casino, Tulalip, Washington. Produced by the Washington Indian Gaming Association (WIGA). For more information, visit washingtonindiangaming.org. July 25-27: Oklahoma Indian Gaming Association 2016 Conference, Cox Business Center, Tulsa, OK. Produced by the Oklahoma Indian Gaming Association. For more information, visit okindiangaming.org. August 9-11: Australasian Gaming Expo (AGE) 2016, Sydney Exhibition Centre @ Glebe Island, Sydney, New South Wales, Australia. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com.

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GAMING HISTORY Caesars Palace today

Hail Caesars

Caesars Palace is still the capital of casinos as it celebrates the 50th anniversary of gaming’s most iconic resort By Patrick Roberts

hen Jay Sarno came up with the idea for Caesars Palace, people laughed at him. The Atlanta motel owner wanted to build a themed hotel, which had never been done in Vegas. Until Sarno came along, casino themes in Las Vegas were just extensions of the motel names that were sprouting up across the American Southwest in the early ’60s—El Rancho, the Desert Inn, the Sahara, the Dunes, the Sands… Even Bugsy Siegel’s place, the Flamingo, named after his infamous girlfriend Virginia Hill, could have been plucked from the high desert in Southern California. Since banks had never funded a casino, Sarno went to the source that had traditionally financed Las Vegas casinos, the Teamsters Union Central States Pension Fund, run by Jimmy Hoffa and organized crime. With $10.6 million—a fortune in 1965—he built on land owned by Kirk Kerkorian, later the man behind MGM. Sarno’s insistence on a heavily themed Roman experience caused costs to soar, including $1 million spent on the largest order for Ukrainian caviar ever placed by a private organization. But even before opening, it had generated $42 million in advance bookings (even at the then unheard-of rate of $14 a night). And that wasn’t even counting the gaming revenue, which has never been revealed completely (except that on opening night, Sarno had only $100,000 in the cage, potentially putting the casino at risk should a gambler get lucky). In his seminal book on Sarno, Grandissimo, UNLV professor David Schwartz explains that the famous fountains of Caesars Palace lining the entrance to the hotel were part of the drama. “The driveway was meant to do more than just guide cars from the boulevard to the front doors,” said Schwartz. “It was to transport the guest out of time, out of space, away from his workaday life and into a fantasy world—neither wholly real nor entirely imagined—that would let Jay Sarno with French singer Line Renaud at the grand opening of Caesars Palace on August 5, 1966

Caesars Palace under construction, 1965

Global Gaming Business MAY 2016

“

him be the man he’d always dreamed he should be, with gratification only a throw of the dice or the flash of a smile away.” Even though Sarno sold Caesars Palace in 1969 for $60 million, the reputation of the property continued to grow. Frank Sinatra became the main performer, followed by dozens of his superstar colleagues. The property became the preferred destination for high rollers because of its unbelievable suites (featured in many TV shows and movies, like Rain Man). Themes became popular in Las Vegas, starting with Sarno’s second property, Circus Circus, and a theme was the only way to build in the ’80s and ’90s. Several towers were added to the original 770 rooms. Today the resort features almost 4,000 rooms and suites, and boasts such groundbreaking developments as Caesars Forum Shops (which kicked off the retail binge still going today in Vegas) and the Colosseum (a 4,000-seat theater that hosts long-running performances by superstars like Celine Dion, Elton John, Rod Stewart and others). Even though Caesars Palace has been sold many times over the years, it remains today the flagship of the Caesars (formerly Harrah’s) Entertainment empire. Even with parts of the company in bankruptcy, Caesars Palace continues to wow and amaze. The Nobu Hotel opened last year as a boutique hotel within the Caesars complex. Caesars was one of the first casinos to open a nightclub, Pure, which has since been replaced by Omnia. Special events have always been a signature of the property, ever since Evel Kneivel attempted to jump the fountains in 1967. Formula One held two world championships there in the 1980s, but discontinued it because the heat was too much for the drivers. Boxing has long been the flagship entertainment event, with special bouts becoming home to such fighters as Sugar Ray Leonard, Marvin Hagler, Mike Tyson, Evander Holyfield, Roberto Duran, Riddick Bowe and many others. The Palace also hosted one of Muhammad Ali’s last fights in 1980 against Larry Holmes. But beyond the building and events, Caesars Palace was the launch pad for many top gaming executives like Steve Wynn, who purchased a plot of land adjacent to the property, selling it for twice what he paid and using the proceeds to launch his career. Terry Lanni cut his teeth at Caesars Palace before leading MGM Grand to prosperity. Billy Weinberger was the first “rainmaker” bringing in thousands of “whales” over the years, creating the mystique of gambling at the Palace. So, happy anniversary to gaming’s most important property, and may you have at least 50 more years of fun, excitement and profits.

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AGEMupdate AGEM KEY BOARD OF DIRECTORS ACTIONS

AGEM MEMBER PROFILE As the leading end-to-end gaming company, International Game Technology Plc. enables players to experience their favorite games across the entire spectrum of channels and regulated gaming segments. With more than 12,000 employees in more than 100 countries worldwide, IGT has the industryâ&#x20AC;&#x2122;s largest footprint and broadest product portfolio, which continues to transform the industry. IGT provides the industryâ&#x20AC;&#x2122;s leading R&D investment, and drives innovation to build the future of gaming together with its valued partners. For 2016, the company has introduced two new cabinets. The AXXIS 23/23 features new themes, multi-level progressives and packaged bundles with multiple themes. It features two 23inch LCD displays and intelligent attract lighting. ICE marked the debut of diversity HD content, the next-generation diversity multi-game solution for AXXIS 23/23. And the CrystalSlant, a new slant-top cabinet, borrows design elements from the CrystalDual and CrystalCore cabinets. CrystalSlant features content developed on the Ascent platform, backed by a deep content library. It is available with either a 27-inch top box or 32-inch top box. The company will expand many game themes, including Baywatch 3D, which is housed on the AXXIS 3D cabinet and features a symbol set with cast members and familiar elements from the TV series; and the Wheel of Fortune Hawaiian Getaway, housed on the CrystalWheel cabinet, which offers unique bonus awards and a â&#x20AC;&#x153;Big Kahuna Re-spinâ&#x20AC;? feature to elevate game play. IGT recently announced its enterprise-wide deployment of the Universal Game Adaptor (UGA) and systems solutions across 19 properties at Station Casinos in Las Vegas. This agreement provides the enhanced IGT Advantage casino management system, which allows â&#x20AC;&#x153;on-deviceâ&#x20AC;? marketing, bonusing and guest communication services on over 19,000 slot machines. The companyâ&#x20AC;&#x2122;s Spin Ferno tournament solution successfully launched on the S3000 cabinets at Seminole Hard Rock Hotel & Casino Tampa. This is the gaming industryâ&#x20AC;&#x2122;s first automated tournament product for a mechanical reel cabinet. For more information on all IGT activity, visit IGT.com. 14

Global Gaming Business MAY 2016

â&#x20AC;˘ The AGEM Board of Directors was told the Nevada Gaming Policy Committee is seeking input from suppliers that want to submit a â&#x20AC;&#x153;wish listâ&#x20AC;? of items for the committee and ultimately the Nevada legislature to consider. AGEM Executive Director Marcus Prater and AGEM Nevada Counsel Dan Reaser are compiling input from various suppliers that may want to propose ideas that are not currently allowed from either a regulatory or statutory standpoint. â&#x20AC;˘ The board was also informed the Nevada Gaming Control Board meeting addressing Regulation 5 that affects transactions at the machine was April 23. â&#x20AC;˘ The board approved paying students from the UNLV School of Law to research, state-by-state in the U.S., what would need to change for those particular states to approve slots with variable-payback percentages. The goal is to build momentum beyond Nevada and New Jersey for this new form of gaming. â&#x20AC;˘ Recent developments in Brazil have seen another competing bill presented for the Senate to consider. The uncertain political situation in the country is sure to have an impact on the proposed gaming bills, but nevertheless there is still positive activity. The forthcoming Brazilian Gaming Congress May 11-12, organized by Clarion, has an impressive list of speakers that should provide excellent commentary and influence as the discussion progresses. â&#x20AC;˘ Three companies were voted in as Associate members at the April meeting: Duane Morris law firm, Gaming & Entertainment Touch Technology, and the Holley, Driggs, Walch, Fine, Wray, Puzey & March 2016 Thompson law firm. In addition, existing members AGS and Merkur have moved up to Gold member status and Vantiv Entertainment Solutions has moved up to Bronze level.

UPCOMING EVENTS â&#x20AC;˘ AGEM members approved a $2,500 contribution to sponsor the forthcoming â&#x20AC;&#x153;Global Gaming Women-The Power of Technologyâ&#x20AC;? luncheon being held in Las Vegas on June 16. The event will feature an impressive lineup of speakers and sponsors. â&#x20AC;˘ The AGEM board recently agreed to contribute $25,000 as sole sponsor for the Presidentâ&#x20AC;&#x2122;s Reception. This prestigious event takes place during G2E Asia in Macau, May 17-19. O

AGEMindex

The AGEM Index posted a sharp increase in March 2016 after gaining 8.54 points in February 2016. The composite index stood at 224.35 at the close of the month, which represents an increase of 27.35 points, or 13.9 percent, when compared to February. The AGEM Index reported a year-over-year increase for the sixth consecutive month, rising 34.07 points, or 17.9 percent, when compared to March 2015. During the latest period, 10 of the 14 global gaming equipment manufacturers reported month-to-month gains in stock price, with six up by more than 10 percent. Of the two manufacturers reporting declines in stock price during the month, only one was down by more than 10 percent. The remaining two manufacturers reported flat performances month-to-month.

AGEM

Exchange: Symbol (Currency)

Stock Price At Month End Percent Change Mar-16 Feb-16 Mar-15 Prior Period Prior Year

Index Contribution

Nasdaq: AGYS (US$)

10.21

10.45

9.84

(2.30)

(0.06)

Ainsworth Game Technology

ASX: AGI (AU$)

2.33

2.19

2.89

6.39

(19.38)

0.59

Aristocrat Technologies

ASX: ALL (AU$)

10.30

10.00

8.43

3.00

22.18

3.26

Taiwan: 3064 (NT$)

54.70

41.00

28.40

33.41

92.61

0.46

NYSE: CR (US$)

53.86

49.05

62.41

9.81

(13.70)

3.25

Nasdaq: DAKT (US$)

7.90

7.07

10.81

11.74

(26.92)

0.43

NYSE: EVRI (US$)

2.29

2.94

7.62

(22.11)

(69.95)

(0.35)

OTCMKTS: GLXZ (US$)

0.22

0.30

(26.67)

Nasdaq: GPIC (US$)

9.85

9.64

10.76

2.18

(8.46)

0.02

23.48

4.82

8.99

(24.67)

0.06

48.00

9.69

0.93

Agilysys

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

NYSE: IGT (US$)

18.25

14.78

17.41

INTRALOT S.A.

1.13

1.50

Konami Corp.

TYO: 9766 (ÂĽ)

3,330.00

2,739.00

2,250.00

21.58

Nasdaq: SGMS (US$)

9.43

8.51

10.47

10.81

Nasdaq: TACT (US$)

8.14

7.24

5.91

12.43

Scientific Games Corporation Transact Technologies

3.76

(9.93) 37.73

Change in Index Value

0.08 27.35

AGEM Index Value: February 2016

197.00

AGEM Index Value: March 2016

224.35

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.

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AMERICAN GAMING ASSOCIATION

Unintended Consequences AGA urges policymakers to ‘Get to Know Gaming’

B WE’RE

ALL IN

By Geoff Freeman, President & CEO, American Gaming Association

ackwards proposals to tax the promomaries, AGA joined the team at Rivers Casino in tional credits, or free play, that serve as Pittsburgh to host our latest Gaming Votes event, a vital marketing tool for casinos across which highlighted the many benefits gaming prothe country are uniting our industry and offering vides as a strong community partner. an example of why the AGA’s Get to Know For Carol Philp, a small business owner who creGaming campaign is an important effort for the ates designs for blankets and throw pillows, her partindustry. nership with Rivers has helped her business thrive. Educating elected officials and other stake“I started in my basement and have been in holders about today’s gaming industry is as imbusiness for 20 years,” she said. “Working with portant as ever after Pennsylvania Governor Tom Rivers is where magic comes from for small busiWolf proposed levying an 8 percent tax on free play. Policymakers too often rely on antiquated AGA promptly replied with notions and stereotypes of what casino a letter to the governor, saygaming is all about. This is why AGA is ing that “taxing promotional credits would likely lead to a traversing the country to tout the value of decrease in tax revenue from gaming and give voice to the broad range casinos—the exact opposite of individuals who benefit from it. of the intended result.” Further, AGA explained that “taxing Pennsylvania casinos’ promotional nesses. Rivers helped us grow and create new partcredit programs will be an economic deterrent to nerships and American-made products.” casinos offering such incentives, and conseAlso benefiting is the Bidwell Training Center. quently, result in a decrease in patron play and Of the partnership, Valerie Njie said, “Our students lower tax revenues generated for state and local know they will get a great income and lifelong governments.” learning at Rivers.” Despite the harm it would cause casinos and “Jobs are the foundation of what we are,” comthe state, local media report that the governor is mented Rivers Casino General Manager Craig standing by the proposal. Clark. “Diversity and inclusion are part of what The Keystone State isn’t the first state to conRivers is all about.” sider this tax proposal—just last year, lawmakers These are just two examples of the many hunin Ohio attempted to do the same. dreds of ways gaming touches a community and These proposals speak to a larger issue that those who live there. Next month, we’ll visit gaming faces. Policymakers too often rely on antiDetroit, where taxes from gaming have been a key quated notions and stereotypes of what casino revenue source for the city. gaming is all about. This is why AGA is traversing Our industry has a tremendous, compelling the country to tout the value of gaming and give story to tell in 40 states across the country, but we voice to the broad range of individuals who beneneed your voice to help broadcast the many benefits fit from it. Our industry—and our allies—will of gaming and urge our lawmakers to get to know stand together to promote smart, growth-oriented the true story of gaming. policies. In the wake of Pennsylvania’s tax proposal Follow Geoff Freeman on Twitter: and three weeks before the state’s presidential pri@GeoffFreemanAGA.

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Global Gaming Business MAY 2016

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FANTINI’S FINANCE

Back In Action After several years of uncertainty and doubt, gaming investors are back in force, and for good reason

By Frank Fantini

t’s taken a long time, but stock investor sentiment on almost all the gaming industry now appears sanguine. First, the Las Vegas rebound found adherents. More recently, regional casino operators have imbued investors with confidence. Now, investors are starting to see light at the end of Macau’s tunnel. Analyst Kai Tan of Macquarie was among the first to turn around, raising the Macau market as a whole to neutral and upping his target prices on all six casino concession holders. On specific companies, Tan upgraded Sands China to outperform and Melco Crown to neutral. He forecasts citywide gaming revenues to fall just 2 percent this year, be flat next year then finally rise again in 2018, though at a snail’s pace of 3 percent rather than the 40 percent rocket rides in the halcyon days of not so long ago. Then, Steve Wynn gave a big boost to Macau stocks when Wynn Resorts sounded a bullish call in its first-ever analyst day presentation, and his stock took off. David Katz of Telsey Advisory followed by raising his rating on Wynn to outperform following its analyst day presentation in which WYNN outlined growth prospects in Macau, Las Vegas and Boston. Investors can doubt WYNN’s bullish outlook, but management has a record of executing and accelerating earnings to support higher valuations, Katz said, adding that he has chosen to get ahead of the curve. Katz put a $112 target on WYNN, which is 18 times his 2017 earnings estimate of $6.29 a share. He also raised his EBITDA estimates to $1.083 billion this year and $1.602 billion next year. In addition to WYNN’s projection of greater profitability in Macau when Wynn Palace opens later this year, the company anticipates: • Paradise Park, a new development at Wynn Las Vegas, to generate $300 million to $400 million in EBITDA a year versus the $5 million at the golf course it will replace. The post-2019 development would include 1,000 hotel rooms, a small casino and a 38-acre lagoon. 18

Global Gaming Business MAY 2016

• Boston Harbor to generate $300 million to $400 million a year in EBITDA after it opens in 2019. Further, WYNN thinks it can cut its debt-toEBITDA ratio to four times next year and then three times after peaking at 6.9 times this year. Thomas Allen of Morgan Stanley said that if WYNN achieves its estimates, the stock is worth $175 vs. his current target of $120. The bottom line is that WYNN stock, which dipped nearly to $50 in October, briefly went past $100 on the day after the presentation. Next up for a sentiment turnaround are suppliers, and that might not be too long in coming.

‘There is a mixture of sentiment: growing confidence in regional casinos and in Las Vegas, early and tentative hope that Macau has found bottom, but still concern about market conditions for suppliers.’ The industry’s two biggest players, IGT and Scientific Games, recently announced stronger-than-expected financial results, debt is coming down, and those now-prosperous U.S. casinos appear to finally have started planning to freshen their floors with new slot machines. Other companies, such as Aristocrat and Ainsworth, already had shown the way to sunnier times, but IGT and Scientific Games are the giants that can set the tone for Wall Street. How much casinos might loosen purse strings is subject to considerable debate. Todd Eilers of Eilers & Krejcik Gaming has quantified the trends in his quarterly industry outlook. In the fourth quarter, North American slot machine sales rose 15.6 percent over the previous year

to 19,200 units, reversing the full year’s 8.4 percent down trend, according to Eilers. Sales were driven by 4,000 units shipped in new and expanded casinos, including Scarlet Pearl, which opened in D’Iberville, Mississippi, and 1,200 more VGT placements in Illinois compared to 600 units in the previous year. But what many observers look at as a key for slot machine companies is the replacement market. With approximately 1 million slot machines in North America, replacing them at the rate of just one every 10 years—which would be a historically low number—would amount to 100,000 replacement sales. However, replacement sales have been below 60,000 in recent years. Much of the blame went to the Great Recession forcing casinos to cut back purchases. But the recession is long since over, as noted above. Another problem is that casinos simply offer fewer slot machines today. Eilers reported mixed results on replacement sales. Replacement sales inched up 0.8 percent to 15,200 units thanks to continuing replacement cycles in Oregon and Canada VLTs. However, factor out Oregon and Canada and sales slipped 0.9 percent, hardly a bullish sign. Another way to look at sales is what casino and slot managers say they intend to do. In the fourth-quarter Eilers-Fantini Quarterly Slot Survey, those executives said they intend to replace 7.2 percent of their machines this year. Put all together, it would appear that the supplier sector still needs accelerated growth, as well as continued improvement by the industry leaders, for their stocks to meaningfully recover. So, there is a mixture of sentiment: growing confidence in regional casinos and in Las Vegas, early and tentative hope that Macau has found bottom, but still concern about market conditions for suppliers. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

More than a transaction. A connection. The real moment of truth on the casino floor is when a player gives you her money. Only she doesn’t actually hand it to you. She hands it to us. From the moment that currency touches our bill validator, we are responsible for providing an effortless, accurate transfer of cash into play. We accept your customer’s wager with reliable grace and efficiency, just the way you would personally. We are your representative on your casino floor. This philosophy has earned JCM its position as the industry leader, with more bill validators and printers in play than all other brands combined. And now we will show you how a simple buy-in can lead to a level of player engagement that goes beyond the transaction. We’ll help you make connections.

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Why India promises to become the next major gaming market in the region By Kit Szybala Mandovi riverfront in Goa

Asia’s Sleeping Tiger

ince the emergence of Macau and Singapore as two of the world’s largest gaming markets, casino developers have looked at other jurisdictions within Asia for the next great opportunity. Japan, South Korea, Vietnam, the Primorye region of Eastern Russia, the Philippines and Cambodia have all generated varying amounts of interest from international casino developers. Japan, with its large and prosperous population, now appears to be out of play, at least for the foreseeable future. The remaining countries’ nascent casino industries are all highly dependent on gamers from China and, as has been clearly demonstrated over the past two years, gaming revenue from Chinese. As such, the next great Asian casino development opportunity remains elusive. One market that has been largely ignored, both from a development opportunity and as a target market for casinos in nearby jurisdictions, is India. There is much to like about India. India offers a stable democratic society, the world’s second-largest population, an enormous and growing middle class, a burgeoning capitalist-driven economy, and a population that has long embraced and enjoyed various forms of wagering. Global Market Advisors, in its white paper from which this article was derived, examined the Indian casino market, both as an opportunity for casino-resort development within India’s borders and casino development in neighboring jurisdictions that target Indian gamers.

The Indian Market India’s 1.25 billion residents and $2.18 trillion economy present an opportunity to casino developers and to India’s state governments interested in stim22

Global Gaming Business MAY 2016

ulating economic development. In 2011, the National Council of Applied Economic Research (NCAER) estimated that India’s middle-class population would reach 267 million this year, making it the second-largest in the world, next to China. By 2025, NCAER expects this number to double to nearly 547 million. Much of the middle-class population resides in urban areas, where they can be more easily marketed to. India’s eight largest metropolitan areas all have populations above 5 million, with three metropolitan areas having populations above 14 million. In 2015, India had a labor force of 502.1 million, making it the secondlargest in the world behind China. The IMF estimated that India’s GDP grew from $1.8 trillion in 2012 to nearly $2.2 trillion in 2015, which was higher than GDP levels achieved in Russia, Australia and Korea. India’s chief economic adviser, Arvind Subramanian, recently stated that India’s economy should achieve a growth rate between 8 percent and 10 percent in the next two to five years. With these strong trends and a positive economic outlook, the country is positioning itself to become increasingly more attractive to the gaming industry.

The Indian Gamer Wagering has long been a part of Indian culture. Gambling halls were in fact legal for centuries and were only banned by British colonial authorities in 1867. The Public Gaming Act banned all forms of gambling with exceptions for horse racing, lotteries and certain card games. India’s post-colonial constitution gave individual states the right to author-

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“ The Deltin Royale; Casino Mahjong in Sikkim

The Union Territory of Daman and Diu also permits casino gaming; however, its first casino is still awaiting the approval of its gaming license. As Goa and Sikkim cater to the Indian gamer, live and electronic table games dominate the casino floor and private poker and flush rooms are also prevalent. Indian casinos usually feature a small number of slot machines, but they are mainly ornamental, as they are often very old, non-functional and underplayed. Both Indian casino markets are located in very attractive tourist destinations. Goa, located on the western coast of India, features beautiful beaches and relics from its Portuguese past. Sikkim, located in northwestern India, is nestled in the Himalayas and offers tourists scenic vistas and religious experiences at its various monasteries. Both states have utilized casino gaming as a way to capture additional revenue from their tourist bases.

Gaming in Goa

ize and regulate various forms of gambling. Of the 29 states in India, 13 states offer a lottery, six allow horse racing, and two states currently allow and offer casinos. Sports wagering, although technically illegal, occurs throughout Indian society, with verve and passion. The card game rummy is considered a game of skill and is also very popular in households, clubs and illegal gambling halls alike. Indian gaming patrons are made up of a variety of different economic and demographic backgrounds including young entrepreneurs, middle-class residents, factory owners, wealthy housewives and successful businessmen. These gamers frequent legal and illegal gaming venues domestically and seek out gaming opportunities abroad. The G3-247 Report titled “Searching for Symmetry” estimates that annual Indian casino gaming spend (both legal and underground) accounts for approximately $30 billion. However, these figures do not include the amount of cash wagering that regularly occurs at card games in private clubs and in homes during religious festivals like Diwali. The report also estimates that Indians spend a combined $60 billion annually on online wagering, horse track wagering, sports betting and casino gaming. Indian gamers have strong gaming preferences and exhibit unique gaming habits. They overwhelmingly prefer table games and particularly enjoy globally recognized games like roulette, blackjack and baccarat, but also prefer traditional games like Indian Flush (Teen Patti), Mini-Flush and Andar Bahar. Although the Indian gamer’s preferences for table games are similar to those of the Chinese gamer, their gaming mindset is wholeheartedly different. Indian gamers do not necessarily only gamble to win, they gamble to enjoy the thrill of the gaming experience. Indians tend to display more calculated and reserved gambling behavior. For example, many Indian patrons often do not keep large stacks of chips on the table. Instead, they repeatedly reach into their pockets to replenish their stacks. Many Indian gaming patrons bet at a slower pace, often take breaks, and switch games regularly.

The Indian Casino Although Indians demonstrate a serious propensity for casino gaming, casinos are not readily available in India today. At the time of this writing, only two Indian states, Goa and Sikkim, offer some form of legalized casino gaming.

Goa and Sikkim are not easily accessible or proximate to large metropolitan areas. To reach the casinos in Goa, most patrons fly. Once patrons arrive in Goa, they can avail themselves of approximately 15 casinos, with a total of 350 live and electronic tables and 160 slot machines. Despite its modest supply of gaming positions, Goa is the largest gaming destination in India. The G3-247 report estimates that Goa accounts for nearly 95 percent of India’s casino gaming revenue. BBC News noted that Goa’s casinos receive approximately 15,000 visitors a day, with visitation increasing by 30 percent annually. A vast majority of visitors arrive from Indian states outside of Goa. Currently, Goa is dominated by two gaming operators, Delta Corp. Ltd. and Pride Group, which own eight of the market’s 15 casinos. Four offshore casinos, housed in riverboats, also serve the market. A fifth casino is expected to reopen soon. These casinos feature a total of 250 live and electronic tables and a much smaller number of slot machines. Although these casinos feature the largest array of gaming amenities in India, they do not offer a gaming environment or non-gaming amenities that would attract many casual gamers. The gambling boats float in the Mandovi River, but there have been efforts to move them out to the Indian Ocean, which is unsuitable for riverboats such as these. Therefore, a scheduled move has been postponed indefinitely. The market’s remaining electronic gaming tables and machines are located in casinos situated in suspiciously rated five-star hotels. These eleven casinos are spread along the state’s coastline. Patrons pay lower entry fees for these casinos, ranging from US$11 to US$23, and receive the same range of items in return. Electronic gaming tables dominate the casino floor, as they are limited to them by law. Even so, many of these games are manned by live dealers and offer an experience similar to that of a live table game. These casinos have extremely limited non-gaming amenities and, as such, typically attract only serious gamers. At most, these casinos offer a small buffet, bar and live entertainment.

Gaming in Sikkim Some gamers venture to the two casinos in Gangtok, Sikkim. However, to do so is a daunting task. To reach Sikkim, patrons must fly into Siliguri then drive three to five hours along a poorly paved, narrow mountain highway with limited (and often non-existent) guardrails and burdensome traffic. With these obstacles, it is understandable why Sikkim’s gaming market generates far less gaming revenue than Goa. Patrons can gamble at Casino Sikkim and Casino Mahjong. Casino Sikkim is located in central Gangtok within the basement of the Royal Plaza Hotel. It features a small variety of table games, a flush room, and very dilapiMAY 2016 www.ggbmagazine.com

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The Indian Gamer Abroad dated slot product. Casino Mahjong is located just outside of central Gangtok in the Mayfair Spa Resort. This casino features a more diverse set of amenities in a more attractive gaming setting, including a main casino floor, poker room, flush room, buffet/dining area and small entertainment stage. To enter either casino, patrons must pay entrance fees ranging from US$15 to US$53 and receive in return the same items as in Goa. The market only offers around 30 table games and 30 slot machines. With such a small offering of gaming and non-gaming amenities, the market’s casino product does not make the trip’s required hurdles worthwhile. With a few exceptions, the gaming facilities in Goa and Sikkim offer a largely underwhelming gaming experience. Despite the unappealing offering, Indian patronage of these facilities continues to increase.

India’s Gaming Market Potential The Indian gaming market is immature and underserved today. India’s 1.25 billion citizens are only proximately served by 730 table games, yielding a ratio of nearly 1.71 million people per available table game. As such, Indian gaming operators like Delta Corp. and Pride Group and non-Indian gaming operators like Silver Heritage (see right) are attempting to position themselves to capitalize on the underserved market’s potential promise. In the short to medium term, other operators of casinos in existing markets, such as Singapore and Macau, should recognize the value of the Indian gamer. In the long term, Indian states and the federal government must consider and recognize the significant economic contributions that integrated casino resort developments can bring to their communities in the form of job growth, tax revenue and tourism. If the right number and mix of attractive integrated casino resorts were strategically positioned throughout India’s major cities and along its borders, the tiger that is the Indian gaming market could wake up and generate upwards of $10 billion, taking its place as a dominant force in Asian gaming. Kit Szybala is director of research and analysis at Global Market Advisors. He can be reached at kszybala@globalmarketadvisors.com. A white paper presenting a more detailed examination of India, the Indian gaming market, and its potential can be found at globalmarketadvisors.com. 24

Global Gaming Business MAY 2016

Limited gaming inside India has made gaming in surrounding countries a growth industry ith such a limited selection of proximate gaming venues in India, many Indian gamers venture abroad to gamble, frequenting casinos in neighboring countries like Nepal and Sri Lanka that cater specifically to them. Nepal’s capital city, Kathmandu, offers four casinos, the Millionaire’s Club and Casino, Casino Mahjong, Casino Royale and Casino Pride, located in four-star or above hotels. The existing casinos in Nepal offer a similar array of gaming and non-gaming amenities to the casinos in India. In total, these facilities feature approximately 100 table games and more than 100 slot machines. One international operator has taken a keen interest in the market: Silver Heritage Limited. With its existing operation at the Millionaire’s Club and Casino and previous experience in the market area, Silver Heritage is planning to open another casino, the Tiger Palace Resort, on the Nepal/India border. But the opening of the Kathmandu casino was a rough one, and involved helping to re-start a dormant industry after it had been shut down by the Nepal government in 2014. And then a 7.8-magnitude earthquake hit the capital of Kathmandu, killing nearly 10,000 people. “We won the license in February 2015 and the earthquake hit at the end of April,” says Mike Bolsover, the COO of Silver Heritage. “We had about 400 employees just finishing training. Although it was a horrible event, we were lucky in that none of our employees suffered directly. There was very little damage to the property, which is in the five-star Shangri-La Hotel. We were able to deliver aid immediately and did our part as good corporate citizens. We’re now part of the rebuilding process.” Part of that process is the hotel-casino on the border. “It’s a five-star hotel,” says Bolsover. “Our plan is to build about three facilities like this so we’ll employ multiple thousands of Nepalese over the course of the next two or three years.” Bolsover says the Indian market is “fantastic.” “In addition to Indians traveling to Nepal, there’s a lot of Indian expats living and working in Nepal,” he says. “Since the Nepalese are not allowed to gamble, this is also a big market for us.” It’s not the only market that Silver Heritage is approaching, however. “We had an event last month with 400 people in our 22-table casino,” says Bolsover, “and over 80 of those people were ethnic Chinese. It’s more than we’d hoped for in the beginning, but with four

Silver Heritage’s planned Tiger Palace Resort on the India/Nepal border

The Millionaire’s Club in Kathmandu, Nepal, operated by Silver Heritage

flights from different cities in China, it’s a market we can develop. But our business model is based on the Indian market, which is thus far underserved.” Bolsover says the Goa and Sikkim markets inside India aren’t really that popular. “The Indian customer we see,” he explains, “isn’t overly enamored with those markets. And Macau is built solely for mainland Chinese. And these two cultures have different expectations about what they would like to see in a casino environment.” Sri Lanka, an island located off the southeastern coast of India, also features several casino gaming facilities that attract Indian gamblers. All of the gaming facilities are located in or near the nation’s capital of Colombo. These casinos generally offer a similar gaming product to those in Nepal and India, but also attempt to cater to a variety of other demand segments. Specifically, Sri Lanka’s casinos target India’s southern metropolitan areas, like Chennai, Cochin, Bengaluru and Madurai, as many of them are closer to Sri Lanka’s casinos than Goa’s. Sri Lanka’s casinos offer a total of approximately 250 table games as well as slot machines and live sports betting. Plans for Crown Resorts to build an integrated resort in Colombo were scuttled when a new prime minister was elected, who nixed any gambling expansion. Outside of these neighboring gaming markets, Indian casino visitation is limited. In 2015, only 167,578 Indians visited Macau, the 10th largest visitor source market to Macau in that year. Indian visitors also fell within the top 10 countries that produce visitors to Las Vegas in 2015, but the number of total visitors is also minimal.

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Plastic Fantastic King Cash is dying, but how will gaming respond? By Roger Gros

PHOTO BY ANNA SAWIN

Kirk Sanford, Sightline founder and CEO, and Bobby Soper, Mohegan Tribal Gaming Authority president and CEO 26

Global Gaming Business MAY 2016

onsumers today prefer to pay with credit, debit or online transactions. Whether it’s the local convenience store, where plastic buys a cup of coffee, or online where you pay for your eBay purchase with PayPal, cash is fading away more rapidly than we can imagine. Some studies (reported by credit agencies, granted) say consumers prefer by more than 80 percent to pay for purchases with some alternative payment method. So, where does that leave casinos, which are hobbled by requirements that players use cash to play slot machines or buy in at table games, even if they are granted credit by the casino? The answer could be a system that has recently concluded a successful beta test at Mohegan Sun casino in Connecticut and is now in full operation across the slot floor. Sightline Payments has designed the Play+ platform to allow players to deposit money into an account and play that money from their casino player’s club card. Money can either be transferred from a credit or debit card, ACH from their checking account or deposited at the casino cage. Sightline created a unique partnership with Vantiv Gaming Solutions, Scientific Games and Mohegan Sun to roll out Play+. Mohegan Tribal Gaming Authority President and CEO Bobby Soper says Play+ has been well-received. “It’s a technology that allows us to provide a service to our guests, especially those guests that like to play high-denomination games, and don’t want to keep putting in $20 and $100 bills,” says Soper. “They can preload their card, don’t have to withdraw cash, and don’t have to deal with tickets. It’s cleaner. It’s certainly quicker and more efficient. And based on the beta test, they do like it.” Kirk Sanford, the founder and CEO of Sightline, explains the genesis behind Play+: “Various forms of account-based wagering have been talked about or attempted for a number of years,” he says, “without much success, for a number of reasons, whether that was regulatory or technology limitations, poor product design, or responsible gaming issues. And the gaming indus-

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“We’re all about what’s best for the guest, what’s most important for the guest, what creates a fun, convenient experience for the guest. And this is it.” —Mohegan Sun General Manager Ray Pineault on Play+

try is one of the last remaining industries to still have an inefficient and expensive cash-based ecosystem. “Today, there is literally more than a trillion dollars of green paper activity across the worldwide gaming industry. And it’s become our mission here at Sightline to convert that green paper into electrons. If you take a look at the broader retail economy, today, less than 14 percent of all purchases are made with cash. Conversely, by sad comparison, in the gaming industry, 95 percent of gaming activity is done with cash.” Sanford says Sightline started from scratch more than three years ago, assembling a team of payment specialists, banks and technology experts to create a solution to a complex problem, given the technology and regulatory constraints. But in the end, the system is rather simple, which, for user acceptance and casino deployment, is critical. The player signs up for the casino’s loyalty club or adds some information if they are already signed up. This takes place online, on a mobile app, or in person at the casino. It’s a process that takes less than a minute and links the Play+ account to the existing casino loyalty card account. The second step is to load money into the Play+ account, either from a cash deposit at the cage or through a mobile phone or PC transfer of money from a credit or debit card or bank ACH. Step three begins when the player sits down at a machine and inserts the loyalty card as usual. A message pops up asking them if they want to access their Play+ account. They can then move funds in and out of a game in an instant. But there’s one more step that is a final benefit for the player, says Sanford. “So the customer doesn’t feel that the money is stranded only for gaming purposes, the customer will receive a casino-branded Discover card in the mail seven to 10 days later, which will allow the consumer to access the

Play+ account at millions of merchants and ATMs worldwide,” he says. “Account-based wagering has failed in all its previous iterations because it blocked consumers from using their own funds as and when they choose. This is the fundamental problem which has now been solved. Consumer freedom and flexibility to their own monies outside of the casino was the critical missing link.” In addition, he says, patron funds are always held at an FDICinsured bank, providing safety and comfort. Sightline clients get information about those purchases, giving them valuable data on the behavior of their customers. Clients also get a financial benefit from those transactions. Mohegan Sun General Manager Ray Pineault says it wasn’t a hard sell for Sightline. “After we met with the Play+ guys and really talked about what this technology was going to provide us, just the ease and convenience for the guest, we were sold,” he says. “Guests don’t have to carry money around with them, and worry about losing money, and how they account for their money. They are able to sit at a machine and bring in their budgeted amount, download it right at the machine, not have to worry about going to ATMs, not have to worry about keeping receipts. And then they can backload it back onto their card and then go spend it wherever they want—anywhere that Discover card is accepted. The convenience and creating that experience for the guest, we thought, was a fantastic opportunity.” For financial services, Sightline has set up a partnership with Vantiv. Joe Pappano, senior vice president and general manager of Vantiv Gaming Solutions, says his company plays an important role in Play+. “Vantiv includes the value-add service that provides financial services in a seamless, safe environment to the customers,” he says. “When someone wants to move money in and out of the Mohegan Play+ account to conduct a cashless transaction, we are the engine that allows the utilization of a debit and/or credit card. We allow the funding to occur.”

Gaming Breakthrough Geoff Freeman, the president and CEO of the American Gaming Association, believes the Sightline system has tremendous implications for the gaming industry. “This kind of technology will allow us to tap into what the next generation of consumers is looking for, and that is alternative forms of payments and conducting business,” he says. “It’s critical for our industry as we aspire to bring in new customers and keep existing customers. What I’m excited about is that Sightline and other players active in this space are giving customers the ability to enjoy our product in the way that they want to enjoy it.” Freeman says the industry has to look ahead if it wants to grow. “The gaming industry today is swimming against the current,” he admits. “That can’t possibly be good for traffic, new customers and maintaining the customers we already have.” Some believe this new system is the most significant change in payment processing since the introduction of ticket-in, ticket-out (TITO) technology in the late 1990s. But where TITO took several years to truly take hold, Sanford believes Play+ will catch on more quickly. “I think you have to ask yourself this question,” he says. “If you fundamentally believe that less cash and utility of mobile phones will be a continuing trend with consumers, then I think you have to believe Play+ is going to play a significant role in shaping the future of cashless gaming. We think it’s not ‘if’ but a ‘when’ we’ll gain the success like TITO did. It took TITO five to seven years from its initial inception to become the industry standard. Much like TITO, which had initial failed iterations, so did cashless, and Play+ changes that paradigm.” MAY 2016 www.ggbmagazine.com

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“Everybody’s used to debit cards and using ATM machines and engaging in transactions without paper checks and currency—I think it’s going to be easily adaptable.” —Mohegan Tribal Gaming Authority President and CEO Bobby Soper on the Play+ system

He believes, however, that Play+ won’t necessarily replace TITO. “I think it is also important to understand that in some ways, we are complementary with TITO,” he explains. “Patrons may still choose to use TITO when moving from machine to machine, but for beginning their play and ending their play, which is where most utility for Play+ will be driven, those are the points where cash has historically played its role. Early indications make me optimistic that we can follow a similar trajectory as TITO, but time will tell.” Soper says the acceptance rate initially is encouraging. “Certainly there’s always an education process, like there is with any type of new currency methodology,” he says. “But based on the early feedback we received just in our rollout, it seems to be easily understood. It doesn’t require a lot of education. And from our perspective, because everybody’s used to debit cards and using ATM machines and engaging in transactions without paper checks and currency, I think it’s going to be easily adaptable.” Derik Mooberry is CEO of Scientific Games’ gaming division, which partnered with Sightline to develop Play+ and integrate it with the Bally systems. He believes Play+ is complementary to TITO. “We don’t anticipate cashless replacing TITO for years to come,” he says. “It’s similar to the Starbucks payment model. Some patrons will still want to use cash, others will embrace this program. It’s important to give your patrons every option available, and this is just one. “I view Play+ as evolutionary, rather than revolutionary. It will take some time to gain acceptance among players and operators.”

Technology Challenges To match up with Play+, a casino must have an updated casino management system (CMS) that can send messages to the service modules on the face of the slot machines. Sightline initially partnered with Scientific Games, which uses its Bally CMS to communicate with slot machines of all brands. Sightline is now working with slot manufacturers who run different systems to integrate Play+ with those systems. If the operator is running some of the more current systems, Sanford says the cost for Play+ is generally rather nominal. “In the case where a casino does not have the systems version required, it will result in additional cost to upgrade, which can vary significantly,” he says. “And that is usually, to us, the single biggest resistance factor from operators. But, at the end of the day, we think it’s a game-changing product. It resonates well with forward-thinking operators like Mohegan Sun and others, who see where the consumer trends are going, and have chosen to lead instead of follow. And as we build more compelling results, the ROI we think will clearly justify the expense.” Mooberry says the technical challenges were overcome by a good working relationship between the two companies. “There was some software development required so that Play+ integrates with our casino management system,” he says. The advantages of Play+ to the casino are many fold, Mooberry says. 28

Global Gaming Business MAY 2016

More than 5,000 slot machines at Mohegan Sun are outfitted with Sightline’s Play+ feature

“First, it will reduce costs, allowing the casino to spend less time and money deploying, collecting, reconciling and transporting cash,” he explains. “And by storing and reading data from a loyalty card, casinos can reduce the cost of printers, consumables and labor. “It also makes it easier to bring money to the player by enabling electronic funding from anywhere: online, mobile phones or at the game. “Play+ also allows casinos to collect more data to see how your customers spend on and off property, and provides a single view of the player. It tracks both gaming and non-gaming activity, enabling casinos to better understand customer spending, measure engagement, pinpoint markets, tailor coupons, incentivize behavior, reward loyalty and strengthen retention.” Pineault says there was one overriding factor for Mohegan Sun. “No. 1 from us was as a guest service driver,” he says. “We’re all about what’s best for the guest, what’s most important for the guest, what creates a fun, convenient experience for the guest. And this is it. Obviously, no more filling out papers, no more carrying stock. Hopefully you get to that point where it gets adopted by all your guests and you have to carry less paper. “Yes, there’s savings for us, but most important is the guest experience, and how we create that. Interaction with our team members is much simpler now, because rather than having to get these paper tickets, now they can have it downloaded right onto their card, and accounting for it at the end of the year, when they want to do their tax returns, is going to be much easier because it’s accounted for just like any other card.” Pappano says technical hurdles were only part of the complexity of the process. “With Vantiv being a financial services company and Sightline being a gaming company, you had two highly complex, highly regulated industries coming together,” he explains. “So educating the gaming regulators, the various legislators, the credit card networks and everyone in this ecosystem was a key part of this process. Getting everyone to understand the MCC designa-

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“If you fundamentally believe that less cash and utility of mobile phones will be a continuing trend with consumers, then I think you have to believe Play+ is going to play a significant role in shaping the future of cashless gaming.” —Sightline founder and CEO Kirk Sanford

tion, the flow of funds, what compliance is required, what customer protection is necessary… This was crucial. But we were able to create the education and the awareness that drove the change to gaming regulations that was necessary in this environment.” Sightline will soon roll out a Play+ table-game application that allows a player to use a tablet-like device to access their account. The dealer then issues chips from the rack. At the conclusion of play, the player will “cash out” right at the table, loading the value of his remaining chips back into his account via the tablet. This move should also save the casino time and money as chip fills at the table will become less frequent as more players use Play+.

Responsible Operations Most jurisdictions will not allow credit or debit cards to be used in slot machines or gaming tables because the threat to a problem gambler would be too great. Freeman believes, however, that the industry needs to keep pace with payment solutions while at the same time protecting the vulnerable. “We can’t do a ‘one size fits all’ kind of solution,” he insists. “Remember the vast majority of people can enjoy our products in a responsible manner. For those who are able to do that, it seems unlikely that a speedier transaction would cause them to become problem gamblers. “But for those who are vulnerable or have addiction disorders, you can understand how this might become another component of that problem. Perhaps the model today is something akin to what you see at the airport at the security checkpoints. Those who fly frequently are ushered through much more quickly than infrequent travelers. So maybe we allow those who do not have gambling disorders to access their payments more quickly.” From systemically imposed funding limits, to maximum account balances, and most importantly, automated funding delays, an electronic payment ecosystem like Play+ allows for great flexibility around responsibility. Sightline worked and continues to work with national and regional responsible gaming groups as well as gaming regulatory bodies to make sure the integrity of the player and the gaming operator is protected. Pappano says his company has many reasons to ensure that Play+ is used responsibly. “At Vantiv, we have always been focused on ensuring the integrity of the transaction,” he says. “We process over 23 billion transactions each year and have a responsibility to make certain that every transaction complies with state and federal regulations as well as card network mandates. With gaming transactions, this means we work closely with clients to secure the very best technologies available for identity management including know your customer, geolocation and age verification as well as anti-money laundering.” 30

Global Gaming Business MAY 2016

For a variety of reasons, Sanford says the use of credit cards at slot machines or gaming tables is unlikely to occur. That’s why he’s so confident that Play+ will become a universal solution, with the right education of the players and casino employees. “One of the great benefits of having Mohegan as a partner is they’re an extremely disciplined organization, and focused on making sure that their customers are having a great experience,” he says. “So training employees across the enterprise was critical, and something that our team at Sightline worked very closely with the Mohegan team to accomplish, over a number of months.” The results of the Mohegan launch of Play+ have been encouraging, says Sanford. “Play+ is proving to be a product that casino customers want, so casinos that have it are at a distinct competitive advantage over casinos that don’t,” he says. “It also allows them to really engage with their customers through their mobile phone, which is something that consumers already do for many things in their daily life. For example, at Mohegan, 84 percent of the funding is being done through the patron’s mobile phone.” Pineault believes that the partnership has been fruitful. “We’ve worked very closely with the Sightline team for a significant period of time,” he says. “They’ve been very patient with us from regulatory issues, from the consumer protection issues, from the guest interactions, from a team member understanding to make sure we rolled it out right. We didn’t want to roll out something that was going to inconvenience, confuse or upset the guest. So they wanted to make sure that we rolled it out in a manner that was easy and comfortable for everybody. They did some programming to make sure that it works properly, that we weren’t having issues. So, as a team, it’s been a great partnership.” For Soper, it’s the data that Play+ will gather that is so enticing. “One of the benefits of this technology is that it’s not only on-site, where we’re able to track and manage data relative to the behaviors of our guests, but off-site as well,” he says. “We’ll learn a lot from their behavior off-site, and we benefit in that we receive monetary remuneration from transactions that occur on that debit card off-site, not only on-site. So, there’s both a direct monetary benefit, and perhaps even more importantly, a benefit in obtaining data that we’re going to be able to use to serve our guests even better. “If we’re effective in managing and using that data, then certainly there’s an opportunity to tailor offers, provide services and benefits to those players, based on their behaviors. And that’s certainly our goal, when leveraging this technology.”

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Data

Is Driving You Crazy? It sounds like like a marketer’s dream: instant information about consumers that allows a property to reach and incentivize them in real time. But easy access brings its own problems. By Marjorie Preston

asino rewards programs have come a long way. In decades past, rewards for loyalty club card holders might include a two-for-one buffet, comped drinks or accommodations, or an occasional pair of show tickets. Today’s successful loyalty programs don’t stop there. Along with room upgrades, presale event tickets, and limos to and from the airport, MGM Resorts’ Mlife program offers once-in-a-lifetime “experiences” for top-tier patrons: think cooking classes with a celebrity chef, a private bump-and-grind by the Thunder from Down Under male review, or swimming with the dolphins at Seigfried and Roy’s Secret Garden. It can also mean jumping the line at the hotel check-in—which is sometimes the sweetest reward of all. American Airlines introduced the first customer loyalty program in 1981; within weeks of launch, its AAdvantage frequent flier plan spawned copycats, and the concept of customer rewards leapfrogged to other industries, from banking to retail and beyond. The casino industry wrote at least part of the playbook. But some marketing experts suggest the industry that helped start it all has fallen behind the curve—chiefly because it hasn’t kept pace with the digital data explosion. “The sweet spot for gamers is still really 50-plus, and the argument was that they hadn’t adopted technology as quickly as the younger cohort, the 32

Global Gaming Business MAY 2016

millennials,” says Rich Sullivan, CEO of Red Square Gaming in Atlanta. “Properties didn’t put a lot of effort into innovation—they thought they didn’t have to. But a 50-plus-year-old person in 2016 has a smartphone, is probably on Facebook, and is more conversant with digital platforms than advertisers care to think. And the target demographic is going to be fully digitally native in a decade. “That’s the invisible hand that’s going to force change, the macroeconomic picture we’re looking at right now. The question is, what do we do about it?”

Fast Forward As recently as 2009, Caesars Entertainment (then Harrah’s) was still not mobile with its highly successful Total Rewards program. Arguably, it didn’t need to be; Total Rewards, which still leaned heavily on direct mail (and increasingly on email), produced a response rate in the high single digits, and generated $6.4 billion per year, or 80 percent of the company’s gaming revenue, according to Ad Age. “We know if you like golf, chardonnay, down pillows, if you like your room close to the elevator, which properties you visit, what games you play, and which offers you redeemed,” then-Chief Marketing Officer David Norton told the magazine. “We not only use these things on the front end of marketing, but for the service experience.”

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“

It’s not simply a matter of gathering data, but analyzing and using it to develop a marketing strategy that

A lot has changed in seven years. With the proliferation of mobile technologies, there is a greater volume of data available than ever before—a virtual landslide of detail on customer behaviors, preferences, average spend, responsiveness to special offers, and other minutiae. “What everyone is behind on is the digital application of all that data,” says Sullivan. “On the advertiser’s side, it can be daunting to figure out how finitely you want to slice all the information you’re getting from players; it can be kind of paralyzing.” “The casino club systems are still the primary source of data,” says Tara Ezzell, director of casino database marketing with the Red Circle Agency in Minneapolis. “Digital marketing allows you to follow patrons through their play cycle and habits and marry up some of that data to your player’s club data—it’s a big job. Every potential source of info has to be clean, and has to somehow match up to the other data you have in a way that’s meaningful.”

But the technology landscape has changed so much in the last five years, there’s been some slower adoption—casinos have been slower to come to the mobile app space, for example, and we’re just starting to see them take advantage of that opportunity.” According to a 2014 study by the Pew Research Center, almost three-quarters of adults born between 1950 and 1964 have become regular, if not daily users of mobile technology. And these so-called “digital immigrants”—people who were not born with smartphones and iPads in their hands—are still the casinos’ bread-andbutter demographic. They not only have the discretionary income for entertainment (controlling 70 percent of disposable income in the United States), but they still enjoy traditional gaming, far more than their children and especially their grandchildren, the millennial generation. And needless to say at this point, they are connected through technology, with 71 percent of boomers using social media every day. “When we look at the analytics, whatever their age, more than half the traffic at most websites now is mobile; people are not going there from their desktops anymore, but from their phones,” observes Ezzell.

defends a property’s market position, builds customer loyalty and drives revenue.

‘Immigrants’ Assimilate One data management system available to casino operators promises to search public records for information about asset ownership, personal and professional affiliations and education level to deduce the potential value of a given customer. (The same system also filters out the deceased, the imprisoned and people facing bankruptcy, so operators do not spend money on low-value prospects.) Obviously, it’s not simply a matter of gathering data, but analyzing and using it to develop a marketing strategy that defends a property’s market position, builds customer loyalty and drives revenue. Like Sullivan, Ezzell, whose firm works mostly with smaller, regional Native American casinos, believes casinos became comfortable and maybe even complacent with the information gathered by loyalty programs based on carded activity. “They came to the database marketing space earlier—they’ve been doing true segmentation and database marketing for a long time now.

Spamalot The challenge is crafting custom pitches based on consumer data that engage customers without annoying them. A 2015 survey by Experian Marketing Services found that only 5.2 percent percent of boomers are interested in getting ads on mobile devices. “We want to make sure we communicate with people on the most personal level possible,” says Michael Gambino of Boston-based RoamingAround, which offers location-based mobile software that help marketers personalize mobile communications. “When two people walk into Caesars Palace, maybe one would like a spa offer where the other might prefer something related to poker. Without knowing who’s walking through the door, any marketing message could be more like spam.”

“Newspapers are not a very effective way to reach me any longer; I don’t listen to radio, I listen to Spotify; I watch Netflix (more than TV), though I grudgingly will watch an ad or two on Hulu. I don’t pay attention to ads online or on websites, because a lot of them are so noisy. It’s hard to reach me at this point, because I’ve paid some premium to control the way I get my content.” —Rich Sullivan, CEO, Red Square Gaming MAY 2016 www.ggbmagazine.com

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Some location-based technologies like Wi-Fi antennas help casinos identify traffic patterns, dwell times and the like, but don’t drill down to personalized customer info. Bluetooth beacons, which are typically accessed through mobile applications on a device, “give insight on who that customer is, where they’re going, and give you the opportunity to engage with that customer almost on a one-to-one level,” says Gambino. “You could potentially identify that one person as Mrs. Smith who’s in Pit 5 and has been playing blackjack for an hour.” The company’s preference manager component “is really the core for all the intelligence we have on users, customers or guests. Everything you purchase is a preference, so depending on the information available, we could say Michael Gambino likes pinot and cabernet from California and Italy, between these years and of this region. You could build a sophisticated profile that’s virtually infinite and put all that at the fingertips of the marketing department.” By defining the customer with more accuracy, he says, the take rate of a mobile offer via SMS may rise from 20-30 percent to as high as 70-90 percent. Sifting the wheat from the chaff—therein lies the challenge, says Izzell. “The more variables you continue to add, sometimes the harder it is to make a decision about what’s valuable and actionable,” she says. “There’s an overwhelming amount of data. Refining it down a point where it’s digestible is super important.”

Anybody Out There?

—Tara Ezzell, Director of Casino Database Marketing, Red Circle Agency

With the proliferation of mobile technologies, there is a greater volume of data available than ever before—a virtual landslide of detail on customer behaviors, preferences, average spend, responsiveness to special offers, and other minutiae.

Despite the wellspring of grab-and-go customer intel, the most useful information may be increasingly out of reach, as consumers take control of their media consumption. Though Sullivan is in advertising, for example, he says he shuns most advertising, at least as it has been traditionally delivered for decades. He has also put the brakes on the barrage of mobile messages that don’t serve him. “Newspapers are not a very effective way to reach me any longer; I don’t listen to radio, I listen to Spotify; I watch Netflix (more than TV), though I grudgingly will watch an ad or two on Hulu. I don’t pay attention to ads online or on websites, because a lot of them are so noisy. It’s hard to reach me at this point, because I’ve paid some premium to control the way I get my content.” That doesn’t mean he’s immune to the well-positioned, well-timed and personalized offer, but it must be targeted, precise and most importantly, spam-free. “I select the messages I want to receive based on brands I interact with— retailers I buy clothes from, casinos where I like to play—and if they can give me useful information, either a deal or time-sensitive offer or a sneak peek at a new product, then that’s something I value and will seek out,” he explains. 34

“Digital marketing allows you to follow patrons through their play cycle and habits and marry up some of that data to your player’s club data— it’s a big job. Every potential source of info has to be clean, and has to somehow match up to the other data you have in a way that’s meaningful.”

Global Gaming Business MAY 2016

“But you have to figure out what is important, relevant and useful.” For example, “You go to casino, and it knows you like to play Wheel of Fortune. Unfortunately, that game is full, and every seat is taken. So the casino lets you know when you walk in, ‘Hey, your game isn’t open, but here’s another one you might like, and we’ll ping you when we have an open slot. Oh yeah, and meanwhile, here’s $2 off at the bar.’ It knows you’re in the casino. It knows what you like. With that kind of data and that kind of intelleigence, it doesn’t feel like advertsing, it feels like a service.”

The Open Market What tracking systems we have today, we will hate tomorrow. —Patrice Gianni, president (now CEO), Marketing Results Inc., at the 1999 Casino Ops conference in Las Vegas That statement, which drew laughs at the end of the last millennium, may be even truer in the new one. Consumers are surrendering more data than ever, but they also enjoy a more collaborative role in the marketing they receive, react to, or send to the spam folder. That dynamic interaction will force marketers to be more nimble and more creative, and use all that customer data to provide exemplary service. “Everyone is walking around with these mobile devices that control the world,” says Sullivan. “The difference between needing something and having that need fulfilled is just so small now. If I’m used to pressing a button, walking to Starbucks five minutes later and having my coffee waiting for me, that starts to influence what I expect everywhere else. “It’s a challenging time, but the opportunity is just tremendous.”

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Look Up or Look Out? Have U.S. gaming revenues turned the corner? By Tom Zitt

s the discussion over lingering post-recession sluggishness in gaming performance—particularly slot performance—enters yet another year, it is worth taking stock and examining what the year-end 2015 numbers show. Did we round the corner in 2015? Or should we continue to look toward the horizon with low expectations? The following analysis examines gaming revenue trends nationally, in four broad regions with overlapping markets, and in three states with isolated commercial markets. Data from all commercial casinos and Connecticut slot revenues are included in the analysis. After years of head-scratching results—if the economy is improving, why haven’t gaming revenues?—we can be cautiously optimistic that 2015 represents a turnaround year. A number of jurisdictions and overlapping regional markets saw results improve in 2015, and the impacts of new jurisdictions— with a couple of exceptions—are finally being absorbed by neighboring jurisdictions. On the economic front, employment and wage growth accelerated starting mid-to-late 2014, helping to break the stretch of sluggish casino performance post-recession.

The National Picture Nationally, gaming revenue bounced back in 2015 after a small decline in 2014. Table revenue declined slightly in 2015 after having posted strong growth in 2012 and 2013, which largely resulted from new table jurisdictions opening in Maine, Maryland, Ohio and Rhode Island.

Global Gaming Business MAY 2016

Slot revenue rebounded in 2015 after a slight decline in 2014. The strong growth in 2012 was attributable primarily to the addition of the new jurisdiction of Ohio, the first full year of Resorts World New York, and the opening of Maryland Live! It is worth highlighting that a number of mature markets experienced growth, although the good news in 2015 was largely due to the first full year of two new slot facilities in Ohio, the first full year of Horseshoe Baltimore, and expansions in Arkansas. States where slot revenue declined all faced increasing competition from neighboring jurisdictions, or in the case of Illinois, internal competition from video machines in licensed liquor establishments.

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Regions of Overlapping Markets

“

Given the extensive market overlaps in the East, Midwest and South, it is useful to examine trends on a regional basis, since new developments in one state can cause declines in a neighboring state. We have identified the following regions for analysis: • Atlantic Coast: the contiguous gaming markets starting with Plainridge in the north and ending in the Chesapeake region, including Rhode Island, Connecticut, the two New York City-area racinos, Atlantic City, Eastern Pennsylvania, Maryland, and Charles Town, West Virginia. • Ohio Valley: western Pennsylvania, Ohio, western West Virginia, Detroit, and central and southern Indiana. • Midwest: western Indiana, Illinois, Iowa and Missouri (including Kansas City, Kansas). • Mississippi River Delta: Arkansas, Louisiana and Mississippi.

The Atlantic Coast region saw a small acceleration in growth in 2015, as gains in eastern Pennsylvania, Maryland and the New York City area outweighed declines in Connecticut and New Jersey. Delaware posted its first gain since 2006 and Charles Town, West Virginia, also grew following a string of losses, despite 2015 being the first full year of Horseshoe Baltimore. Connecticut’s 2.2 percent loss was nevertheless well below its annual average loss of 7.4 percent during the previous three years, and Rhode Island managed to grow despite facing new competition at nearby Plainridge Casino. Ohio had three VLT racinos open in mid- to late 2014, making 2015 the first full year of operation for all 11 of the state’s available licenses (four standalone casinos in Cincinnati, Cleveland and Columbus and seven VLT racinos). The final two to open, in Dayton and Youngstown, were in greenfield markets, which tend to foster a higher ratio of market growth to cannibalization, as evidenced by the 12.8 percent growth in 2015. The impact of Ohio continues to be felt in southern Indiana and western West Virginia, although this would be expected to taper off now that Ohio is fully built out. Detroit and western Pennsylvania appear to have already turned the corner, posting gains in 2015 after having suffered declines through 2014. Revenue has generally stabilized in the Midwest, although Illinois continues to be impacted by the spread of VGT facilities throughout the state. Iowa benefited by a new casino in Jefferson and a new license holder in Sioux City, with a Hard Rock land-based operation replacing an old riverboat casino in mid-2014. Encouragingly, Missouri, a highly mature market, posted a 2.5 percent gain in 2015 after numerous years of decline.

MAY 2016 www.ggbmagazine.com

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Insulated State Markets Similar to trends in overlapping market areas, insulated state markets are also experiencing an uptick in 2015 revenues over previous years. Colorado, which has been minimally impacted by expanded gaming markets either internally or externally, was slow to recover from the Great Recession, and showed a slight decline through 2014. Florida was a slightly different story, as a new facility opened in each year following 2011. On the whole, revenues for the state of Nevada have been relatively stable over the past five years. The remainder of the state has fared better than the Strip, which has declined year-overyear since 2012. As a destination market, the Las Vegas Strip has been more sensitive to external events such as the slowdown in the Chinese market.

Economic And Demographic Trends Economic factors go a long way to explain recent gaming revenue trends. As the following chart shows, employment has been rising steadily since bottoming out in February 2010 at 129.7 million. However, it wasnâ&#x20AC;&#x2122;t until mid-2014 that employment had recovered to its pre-recession level. Employment growth accelerated beginning in mid-2014 and now stands at 3.4 percent above its pre-recession peak. But the number of jobs is only part of the storyâ&#x20AC;&#x201D;how much those jobs are paying and what household income looks like help to complete the picture. During the past 15 years, household income has lagged far behind gains in productivity. The widening gap in the following chart illustrates that American households effectively have not been earning enough to purchase all the goods and services the economy has been producing. Consumer expenditures on gaming and other leisure activities remained strong into 2007 largely on the basis of rising home values; however, gaming revenues started a steady and pronounced

decline once the housing bubble burst and the financial sector collapsed. Although 2013 saw a slight uptick in real income (0.35 percent), the first since 2007, income trended down again in 2014. In fact, national median household income remains only marginally higher than it was 25 years ago (in constant 2014 dollars). Even before the recession hit in 2008, real median income was lower than it had been in 1999 and 2000, as incomes declined from 2001 through 2004. Real median income data is not yet available for 2015. However, early indications are that wage and salary trends finally started to rise late in 2014 after being flat for most of the post-recession period. Regional variations in employment shed some light, although they are not uniformly consistent with gaming trends. Florida and Nevada were affected the most by the recession, and correspondingly have seen the sharpest increase since 2010, although Nevada remains 3.1 percent below its pre-recession peak. Also of note is Colorado, where employment is 8 percent higher than pre-recession levels. Despite the generally improved employment picture from the recession in 2008, in most regions, working-age population growth has exceeded that of employment. As a result, employment participation rates (employment divided by the working-age population) have yet to reach their prerecession levels. The exceptions are the Atlantic Coast and Ohio Valley, although the latter case is a result of minimal population growth rather than robust employment growth. The largest gaps are in Nevada and Florida, both of which have had continued robust population growth despite the economic challenges.

Global Gaming Business MAY 2016

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The Great Hold Percentage Debate

Luck or Positive Outlook?

There has been a lot of discussion in the gaming press recently regarding the theory that increases in slot hold have turned off players and contributed to the sluggish trends in slot revenue. A look at the data suggests two problems with this theory. First of all, the claim of runaway hold increases is overstated. As illustrated in the following table, in a number of states, hold percentages have been relatively stable, and in two states—Delaware and New York—have even decreased since 2004. Connecticut and West Virginia have had no change in slot hold, while New Jersey and Nevada have increased by less than one percentage point.

In a study published in Psychological Science, researchers found that being in a good mood from sunny weather or watching your favorite sports team makes people feel lucky and more likely to gamble. In the language of the academy, “unexpected but incidental positive outcomes influence risk-taking.” Although it will be some time before 2015 data from tribal casinos is available, it appears that a ray of sunshine in the form of an improved employment and earnings picture may finally be settling on the gaming industry.

Secondly, if you take a closer look at the states where there has been an increase, you will find that most of the increase occurred before the recession took hold, during a period when slot revenues were skyrocketing. The three states with the highest hold increases from 2000 to 2008—Iowa, Indiana and Missouri—also had the highest revenue increases. Illinois was hit by the smoking ban implemented in January 2008; revenue was up by 30 percent through 2007.

With the exception of Illinois, increases in hold percentages since the recession have been miniscule. Further, they have been driven largely by free play, which implies that the majority of slot players have not seen their playing-time value decrease during the post-recession era. In summary, the explanatory power of hold increases pales in comparison to economic trends in assessing the causes behind sluggish casino trends in the post-recession era.

Global Gaming Business MAY 2016

Tom Zitt is a partner in the Innovation Group. Since joining the Innovation Group in 1997, Zitt has excelled at market analytics and high-level strategic planning, earning with his reports a reputation for accuracy and reliability unsurpassed in the gaming industry. He has assessed the economic, social and fiscal impacts of gaming in numerous developing jurisdictions, including Massachusetts, New York and Ohio. Zitt has also conducted regional analyses for investment firms like CIBC World Markets, Deutsche Bank and Bear Stearns, looking to understand the impacts of new gaming development.

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Management contracts a key to tribal casino industry growth by Dave Palermo

Walking

Before Running

ashpee Wampanoag Indians who welcomed the Pilgrims in 1607—only to wait 400 years for federal recognition— recently contracted with the Genting Group of Malaysia to finance and manage their $1 billion First Light Resort & Casino going up near Taunton, Massachusetts. A similar management/finance partnership between the Jamul Indian Village in California and Penn National Gaming of Pennsylvania is developing the 12-story, $390 million Hollywood Jamul Casino on Interstate 8, 20 miles east of San Diego. And Station Casinos of Las Vegas tipped the Indian gaming industry scales quite a bit in 2010 with its finance and management deal with the Federated Indians of Graton Rancheria, owners of the upscale, $800 million Graton Resort & Casino in Rohnert Park, California, near San Francisco, and the smaller casino owned by the Gun Lake tribe in Michigan. The explosive growth of American Indian casinos that began with the Indian Gaming Regulatory Act (IGRA) of 1988 and continues today—albeit at a much slower pace—has been greatly aided by the financial assistance and expertise of U.S. and foreign gambling companies. Many of the 243 tribes now operating casinos were victims of cyclical poverty and high unemployment, and lacked business experience and financial acumen. As a result, it was common in the late 1980s and early ’90s for tribes in potentially lucrative markets to partner with deep-pocketed gambling companies in Nevada and elsewhere for the funds and operational expertise needed to launch casinos. Other tribes were assisted by “newbie” casino investment and management teams. These tribal-private partnerships would help ignite a gambling industry 42

Global Gaming Business MAY 2016

that in 2014 generated $28.9 billion from 489 facilities in 28 states, according to Casino City’s Indian Gaming Industry Report by economist Alan Meister of Nathan Associates.

Mature Market The double-digit growth plateaued with the 2008 recession and maturation of the Native American gambling market. But tribal-casino company partnerships occasionally surface with greenfield projects such as the Wampanoag, Jamul and Graton casinos. These partnerships were anticipated by Congress in its grand plan to create a legislative response to the 1987 U.S. Supreme Court ruling that recognized the right of indigenous Americans to operate casinos on tribal trust lands. Aware many tribes lacked the skills and finances needed to get into the casino business, framers of IGRA included in the act a version of Title 25 U.S. Code Section 81, the federal law which gives Interior and the Bureau of Indian Affairs (BIA), as trustee for Indian tribes, authority to approve private-sector contracts with indigenous governments. “That law came about after a lot of unscrupulous traders and crooked Indian agents and superintendents ripped tribes off,” says Phil Hogen, former chairman of the National Indian Gaming Commission (NIGC), which oversees the regulation of tribal casinos. IGRA guidelines restrict casino management agreements to seven years and caps revenue sharing at 30 percent of pre-tax profits. The limits are intended to ensure that tribes—and not finance and management companies—maintain proprietary interest in the casinos, which by law are intended to fund health care, education and other government services for tribal citizens.

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The rules discouraged many name “companies from getting involved. I recall casino owner Steve Wynn saying, ‘Why in the world would I ever do something like that? Why would I give the tribes all my expertise and then have to go away in seven years?’” —Lyle Berman, who was a pioneer in tribal gaming management with Grand Casinos

The North Carolina Cherokees have partnered with Harrah’s for years, starting with Harrah’s Cherokee in the Smokey Mountains, and most recently opened a second Harrah’s casino in the state.

The legendary Choctaw chief, the late Philip Martin, remained close friends with Boyd Gaming Chairman Bill Boyd, crediting him with helping to launch the tribe’s Silver Star casino in Mississippi.

“When I came on the scene in ’92 or so, there were a lot of shady consulting agreements,” Hogen says of the early days of Indian casinos. “The contractual arrangements weren’t being reviewed or approved because they weren’t called management agreements. “The concept has since become somewhat obsolete, as tribes have become considerably more sophisticated than they were at the time IGRA was written, some extremely so. “But there are still tribes that haven’t really put it together yet in terms of doing business in the white man’s world. A few of them are in my part of the country,” says Hogen, an Oglala Lakota from the Pine Ridge, South Dakota Indian reservation. The NIGC website lists 64 federally approved tribal casino management agreements. The list does not include the Jamul/Penn and Wampanoag/ Genting partnerships, which are awaiting federal scrutiny. Nor does it include agreements approved by BIA prior to passage of IGRA in 1988 and establishment of the NIGC five years later. Many of the listed agreements have expired, and some management companies have filed for bankruptcy. The last agreements were approved in 2010.

Partners and Teachers Most tribal gambling authorities believe IGRA’s casino management provisions met the needs of both tribes and their business partners and investors. “Overall, Indian Country was well-served by having the proposition that the federal trustee is going to look carefully at the agreement between the gaming tribe and the folks who are going to finance and manage the gaming for them,” Hogen says. “There were some bad deals. But I think in most cases where tribes began

with management companies and later took control of the operation, they were well-served by that arrangement.” Lyle Berman, founder of Lakes Entertainment of Minnetonka, Minnesota, and a pioneer in the management of tribal casinos, also believes the regulations worked. Lakes (formerly Grand Casinos) opened and managed six tribal casinos in Minnesota, Louisiana and Oklahoma. Lakes Entertainment recently merged with Golden Gaming to become Golden Entertainment. Berman does, however, believe IGRA restrictions—particularly the sevenyear limitation—discouraged many premier casino companies from partnering with tribes. “When you think about it, it’s one of the most unfair contractual arrangements you could envision,” Berman says. “We put up all the money, took all the risks and had all the expertise. Yet we only got 30 percent for seven years. “The rules discouraged many name companies from getting involved. I recall casino owner Steve Wynn saying, ‘Why in the world would I ever do something like that? Why would I give the tribes all my expertise and then have to go away in seven years?’” Prior to IGRA, some California Indian bands along with the Seminole Tribe of Florida, Poarch Band of Creek Indians of Alabama and others operated high-stakes bingo or casinos with “gray area” slot machines not found in regulated casinos in Nevada and Atlantic City. Upon passage of IGRA, many of these tribes had the finances and operation skills to “morph” into more elaborate, well-regulated casinos. “They basically were able to make the transition on their own,” Berman recalls. “But other tribes didn’t have the money or the management expertise. The majority of them initially did need some kind of help in financing and managing their operations. MAY 2016 www.ggbmagazine.com

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“We got in early and we made good deals,” Berman says of Grand Casinos, which opened two Grand Casino resorts in Mille Lacs and Hinckley, Minnesota, for the Mille Lacs Band of Ojibwe Indians, as well as the Coushatta and Paragon casino resorts in Kinder and Marksville, Louisiana. Park Place Entertainment (later Caesars Entertainment) bought Grand Casinos in 1998, but after the tribal compacts had ended. “Both our company and the tribes were happy with each other,” Berman says. “We made a fair amount of money.”

Tribal leaders have to trust that we’re going to both run the government casino responsibly and achieve their goals, which are a better economic outcome for the tribe, job creation and reinvesting in things like education and health facilities.” —Former Harrah’s Chairman Phil Satre

Satre and Harrah’s executives Janet Beronio and James Baum, who recently resigned as vice president of development for Penn National, also believed in tribal self-governance. A few large, branded companies such as Harrah’s (now Caesars Entertainment), “Satre was very respectful,” Jones says. “He stressed these were not our Boyd Gaming and Station Casinos, and a handful of newcomers such as Lakes, casinos. They were the tribes’ casinos. We had expertise and we had capital led the way in partnering with a number of Indian tribes in gambling and hotel to help them open. Then we learned along with them.” ventures. “That kind of respect is incredibly important,” says Satre, who today “Back in the old days, we had a lot of sleazy types trying to manage smaller serves as board chairman for International Game Technology. “Harrah’s had casinos,” former NIGC Commissioner Jana McKeag, an Oklahoma Cherokee, that empathy. It’s important because the tribe has to trust the company with told GamblingCompliance.com. “They figured you throw some slot machines what is probably the tribe’s most important economic asset. in a double-wide, you have a casino. “Tribal leaders have to trust that we’re going to both run the government “Then there were (Boyd Gaming CEO) Bill Boyd, Lakes Entertainment and casino responsibly and achieve their goals, which are a better economic outHarrah’s, who saw the potential. It was helpful for tribes to have people and come for the tribe, job creation and reinvesting in things like education and companies of that stature involved in Indian gaming.” health facilities.” Harrah’s under CEO Phil Satre from 1994 to 2003 reached out to tribal Penn National will make the Jamul Indian Village casino its first tribal governments while most Nevada companies lobbied to block the fledgling inmanagement operation. dustry, particularly ballot Proposition 1A, which led to compacted Indian casi“It is important to understand Jamul Indian Village is a sovereign nation,” nos in California. California is the most successful Indian casino state with 63 says Eric Schippers, Penn National director of public affairs. “We are managtribes generating $7.3 billion in 2014, according to Meister’s report. ing the operation. But this is about helping the tribe find a sustainable “All the casino companies put up money to defeat tribal gaming in Califorsource of income to stand on its own and have financial independence. This nia except Harrah’s,” says Jan Jones, vice president of government affairs for is very important to the tribe in terms of developing a health clinic, providCaesars Entertainment. “Phil Satre didn’t think that was right. He believed in ing education and other benefits to tribal members.” competition. He thought we should support the expansion of gaming in the The appreciation Harrah’s had for tribal sovereignty is not lost on its country.” tribal partners, the Cherokee Nation of North Carolina, Ak-Chin Indian Satre also believed partnering with tribes and riverboat casinos would grow Community of Maricopa, Arizona, and Rincon Band of Luiseño Indians in his company, which had a business strategy of developing small-market casinos Valley Center, California. in numerous jurisdictions. “One thing I’ve always recognized with the company is an expression of respect for tribes and tribal governments, the fact tribes have a unique set of opportunities and constraints,” says Steve Stallings, a Rincon tribal council member. The late Phillip Martin, chief of the Mississippi Band of Choctaw Indians, spoke glowingly of his partnership with Boyd Gaming and company CEO Bill Boyd, who financed and —Rincon tribal council member Steve Stallings on why managed the tribe’s Silver Star Resort & Casino in Philadelphia, Mississippi. his tribe has renewed management contracts with Although the Choctaw bought out Boyd Caesars after the initial seven-year period Gaming after three years, Martin and Boyd re-

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The concept has since become somewhat obsolete as tribes have become considerably more sophisticated than they were at the time IGRA was written, some extremely so.”

—Former NIGC Chairman Phil Hogen on the decline of tribal gaming management contracts, which were once quite sketchy

mained fast friends until the chief’s death in 2010. When visiting Las Vegas, Martin was a fixture in the coffee shop of Boyd’s Stardust Casino on the Strip long after the partnership ended.

More Opportunity Boyd is reportedly in a partnership with the Wilton Rancheria of Miwok Indians, which is pursuing a casino in rural Galt, California. Cannery Resorts of Las Vegas has been in talks with the recently restored Tejon Indian Tribe near Bakersfield. The Mohegan Tribe of Connecticut has arranged a partnership with the Cowlitz Indians of Washington state. A major factor in Harrah’s success in Indian Country was its willingness to loan money at terms below most banks and lending institutions, Satre says. In addition, tribes applaud Caesars Entertainment’s management training program, which has enabled tribal citizens to assume control of casino and hotel operations. Virtually all management agreements end at seven years, if not sooner. Self-management not only is more profitable, but an expression of tribal sovereignty. “Tribes opt for a management agreement when they need money to get started,” says Norm DesRosiers, a consultant and former NIGC commissioner. “Once a casino is up and running and the debt is paid, I don’t think many tribes would maintain a management agreement.” But Caesars has renewed—with revenue modifications—its Cherokee, Ak-Chin and Rincon deals, largely because of the value of the Caesars/Harrah’s brand. The company’s Total Rewards customer loyalty program has a database of 30 million people, 10 million in California. Renewed agreements do not include a percentage of profits, but pay an often-lucrative flat management fee similar to what is found in the chain hotel industry. “Of all the gaming companies, we have the longest history of maintaining these contracts,” Jones says. “We have a very competitive environment,” says Stallings, noting that San Diego County has 18 tribes, more than any other U.S. county. “We compete more on brand than anything. Total Rewards is just a great base to draw upon. It works for us.” 46

Global Gaming Business MAY 2016

End Of An Era Management contracts have diminished with the maturation/saturation of the Indian gambling market. Of the 366 federally recognized tribes in the lower 48 states, 243 operate casinos and another 50 or 60 share in the revenues. Many of the remaining tribes do not have a land base. The time, expense and political hurdles in achieving federal recognition, acquiring and placing in federal trust ancestral lands and negotiating a tribal-state compact discourage indigenous groups and potential investors with aspirations of getting into the casino business. “Whether it’s getting recognition or land in trust, things are not happening with the rapidity they were in the late ’80s, ’90s and early 2000s,” Jones says. “Tribal groups need to be federally recognized. They need land in trust for gaming. And they need a tribal-state regulatory compact,” Berman says. “Virtually every tribe in the country which meets those criteria is already operating a casino.” Meister’s study lists 26 land/trust applications for gambling on file with Interior, four of them dating back nine years or more and others falling into the politically volatile category of gambling on newly acquired lands. Berman doesn’t advise entering into a partnership with indigenous groups seeking casinos. “The deals out there today are—quite frankly—very, very risky,” Berman says. “You have to invest a lot of time and money and there’s no certainty you’ll ever open a casino. “Let’s put it this way. If some people came to me and said, ‘We want to go into the Indian gaming management business,’ I’ll tell them, ‘Forget it.’ There simply isn’t much there.”

Exceptions To The Rule Miwok and Pomo Indians of Graton Rancheria were restored for two years when Chairman Greg Sarris met with Station Casinos in 2002 to discuss a casino—a potentially lucrative proposition in that Graton’s trust lands are a 40-minute drive from the Golden Gate Bridge. “There were a lot of Las Vegas casino companies that contacted me after we were restored,” Sarris says. “But Station gave me what I wanted.” Station once managed the profitable Thunder Valley Casino Resort near Sacramento, and operates through a 50 percent share of MPM Enterprises the Gun Lake Casino owned by the Pottawatomi Indians of Wayland, Michigan. Company officials declined to be interviewed. Sarris, whose connections include Governor Jerry Brown, drove a hard bargain, demanding a non-refundable $200 million to purchase property and control of development decisions. “There would be no cheap tent,” Sarris says. “We would open with a nice, big facility.” The biggest concession was Sarris’ demand that the property embrace UNITE HERE, the hotel workers union. Station has been at war with the union in Nevada for a number of years. “The sticking point was the labor thing. They did not want union. They were adamant about that,” Sarris says. “But I said, ‘OK. Goodbye. We are going to build this and run with this union.’ “I am a firm believer in dignity in the workplace. We made an agree-

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1 9 0 0 AT T O R N E Y S | 3 8 L O C AT I O N S W O R L D W I D E˚

Fresh perspectives. Penn National has partnered with the Jamul Indian Village in California to develop a Hollywood Casino near San Diego

ment with UNITE HERE, up front. I was not going to yield. This was the way it was going to be.” Sarris says labor support was crucial in getting legislative approval of the tribal-state compact. “They have proven to be excellent managers,” Sarris says of Station Casinos. “They are very good local operators.” Sarris hopes to buy down the debt in about five years and is not sure the partnership will last beyond seven years. “Who knows what will happen?” Sarris says. “If we kept them, the terms would definitely be different; that’s all I can say.”

Martha Sabol, Co-Chair of Greenberg Traurig’s Global Gaming Practice, is President of the International Association of Gaming Advisors (IAGA), which is co-hosting the 2016 International Gaming Summit in Malta on May 31st – June 2nd with its conference partners Gaming Regulators European Forum (“GREF”). To see more about the conference, please visit the IAGA website at www.theiaga.org. “It has been a pleasure working with GREF and our other conference partners, sponsors and our committed members in planning the 2016 Summit. Momentum has been a key focus for IAGA as we continue to build upon our strengths and the extensive experience of our members, which have made IAGA the leading advisor and provider of relevant educational content in the ever-changing and complex world of gaming. I look forward to seeing you in Malta.” − Martha A. Sabol | IAGA President

Penn’s Plan Penn National runs Casino Rama, Ontario’s only First Nations commercial casino, but Jamul is the company’s first U.S. tribal venture. “I wouldn’t say the company had a strategic objective to enter into the tribal gaming space other than when this opportunity presented itself,” Schippers says. “We explore any and all opportunities—commercial, tribal and even online.” Lakes partnered with Jamul for several years before selling out to Penn. The project faces a lawsuit from a group of residents. Baum and Penn COO Jay Snowden, also a Harrah’s alumnus, helped the company navigate the federal, state and local legal, political and bureaucratic landscape of Indian gambling. “Obviously, there’s a complex map that must be navigated when taking on this kind of development,” Schippers says. He’s not certain the agreement will last beyond seven years. “We’re hopeful we can be able to extend it,” Schippers says. “But that, of course, is an issue left to the tribe.”

Global Gaming Practice Acquisitions | Financing | IP | Labor | Litigation | Operations | Real Estate | Regulatory 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. ©2016 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. 27296

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TABLE GAMES

Family Feud The biggest changes to table games in the last 20 years

ne hundred casino gamblers surveyed. Top five answers on the board. What’s the biggest change to table games over the past 20 years? Survey says . . .

ELECTRONIC TABLES [30] If you’re truly plugged into the table games industry today, you’re no doubt aware how many table games in the industry today are truly plugged in. Like with a cord. Electronic tables, de rigueur for decades in Asia, Europe and Australia, have finally—after a few fits and starts, sputters and sparks—become fashionable in this part of the world. And it’s a fashion bordering on passion. Electronic table games, or e-tables as the cool kids call them, are now offered in every major market in North America. The common-sense definition, if perhaps not the legal definition, of an e-table is a device that mates table content and electronic wagering. The craps game with the tumbling dice so big they should be hanging off the rearview mirror of an 18-wheeler? That’s an e-table. The roulette game with ticket-in and ticket-out? That’s an e-table. The mashup of baccarat, roulette and sic bo that’s flanked by three dealers, video cameras and a Jumbotron? Yup, that’s an e-table, too. What started as a niche is now perhaps the fastest-growing segment in casinos. And of even more weighty importance, many operators believe e-tables are the best bait for luring and retaining the millennial generation. To wit: several resorts in Las Vegas have recently created special zones for these games and these players, while others in places like Quebec dedicate entire rooms—vast, intricate build-outs—in the hopes of wooing this younger crowd.

CARD SHUFFLERS [25] Earthquakes. Famine. Rivers turning to blood. And of course, the most harrowing 48

Global Gaming Business MAY 2016

By Roger Snow

apocalyptic precursor of them all: card shufflers on every table. We’re not there yet, but we’re not that far off either. If you walked into a casino in the mid 1990s, you were less likely to find a shuffler than you were a tattoo parlor catering to hemophiliacs or a three-legged cocktail waitress. Shufflers were an oddity, a curiosity, and to some, a monstrosity. Now they are a necessity. Or pert-near. Sixty percent of all house-banked card games utilize a mechanical device for mixing cards. Et tu, poker? Yes, Caesar. Seventy percent of the Texas Hold’em, Omaha and Seven Card Stud games around the world have shufflers on them. And speaking of Caesars—plural—its annual World Series of Poker (aka, the greatest show on felt) uses them as well.

NEW GAMES [20] Remember the scene in Vegas Vacation, right after Chevy Chase lost all his money to that dealer—you know, the little guy, old and bald with a squirrel face, the one in The Princess Bride who kept yelling, “Inconceivable!” over and over—he tried to get it back at games like Coin Toss, War and Rock, Paper, Scissors? Yeah, that was pretty funny, but here’s the thing: two of those games actually exist. For realsies. War (technically Casino War), where you play mano-e-mano, card-vs.-card against the dealer, is offered in casinos around the world, while Two Up is a coin-toss game played on Anzac Day in Australia. It seems art imitates life once—make that twice—again.

NO SMOKING [15] Whether it’s via house policy or government statute, smoking in casinos is going bye-bye. Or as they say when you’re getting off an airplane, buh-bye. At this pace, smoking will soon be regarded as an anachronism, an antiquity, a practice as passé as having boxmen on a craps game or laddermen on a baccarat game, or a blackjack game that gave you a fair gamble. Speaking of which . . .

BAD BLACKJACK

[10]

Once upon a time, a time before eight-deck shoes, a time before hitting soft 17, a time before 6 to 5 only referred to how early the milkman woke up, was a time when blackjack had the best odds of any game you could name. Sorry, time’s up. Just how good were the good old days? Read ‘em and weep, lo these tales of yore: 1) The Holiday Inn Boardwalk on the Las Vegas Strip would, albeit intermittently and briefly, allow “early surrender,” where players could forfeit half their bet before the dealer checked for blackjack; 2) The Stratosphere once dealt a single-deck game all the way to the bottom; and, 3) Las Vegas Club for years advertised the “World’s Most Liberal Blackjack Game,” and mathematically speaking, it was closer to reality than it was to hyperbole. Those days and those games—not to mention two of those casinos—are gone, baby, gone. Blackjack has sold out and cashed in, like Jefferson Starship in the ’80s, Aerosmith in the ’90s or Phil Collins in every decade. But hey, that’s showbiz. And that’s casinobiz too: first and foremost, it’s a business. Sure, a 0.25 percent house advantage sounds appealing, but it doesn’t exactly pay the rent. Or the neon bill, for that matter. Besides, all these changes to blackjack—side bets, derivatives, progressives, rule variations, etc.—have proliferated because players like them. Simple as that. And to all you purists out there aghast at such advancements, Frankie says relax. Blackjack isn’t all that goofy and gaffed up. It’s not like something you’d find along a carnival midway, where if you beat the dealer three times in a row, he pays you off with a funnel cake or a giant Minions doll. Well, at least not yet. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed 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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INTERACTIVE

Dear Mister Fantasy Why DFS will lose the skill-vs.-chance argument and should stop trying

nless you have been living at the bottom of a well, you will have heard about the troubles facing America’s fantasy sports industry. Fantasy sports, specifically daily fantasy sports (DFS), has been caught in an argument as to whether it is skill or gambling, and the consequences of it being one or the other are potentially enormous. Clearly, it has elements of both. There is a big overlap in the spectrum that encompasses skill games and gambling games. For example, the only real card game that is purely skill is Snap! The outcome in a game of Snap will always be determined by a person’s level of skill, in this case recognition and reaction time. But whether or not a game is classified as gambling and thus illegal in the U.S., therefore requiring legislation and/or regulation, is up to each state to determine. The fantasy sports industry has made much of it being a game of skill, and so not gambling, and enjoying the carve-out in the Unlawful Internet Gambling Enforcement Act (UIGEA). However, whether it has elements of skill and enjoys the carve-out in UIGEA is really missing the point. More about the UIGEA and the carve-outs later. To determine if a gambling activity is illegal under federal law, the federal government relies on predefined activities or activities that are illegal under state law; the Federal Wire Act (bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest), the Illegal Gambling Business Act (“illegal gambling business” means a gambling business which… .is a violation of the law of a state or political subdivision in which it is conducted), and the Professional and Amateur Sports Protection Act, or PASPA (It shall be unlawful… to sponsor, operate, advertise, promote, license, or authorize by law or compact… a lottery, sweepstakes, or other betting, gambling, or wagering scheme based, directly or indirectly (through the use of geographical references or otherwise), on one or more competitive games in which amateur or professional athletes participate, or are intended to

Global Gaming Business MAY 2016

By Andrew Tottenham

participate, or on one or more performances of such athletes in such games) and the carve-outs in the UIGEA. States use different tests to determine if an activity is “gambling” according to the law. Games can have elements of skill but still be classified as gambling. The tests used by the states are the “predominant factor test,” the

“

Whether a game is classified as gambling and thus illegal in the U.S., therefore requiring legislation and/or regulation, is up to each state to determine.

”

“material element test” and the “any chance test.” Suffice to say apart from the use of “predominant” in the language of the UIGEA, there are no tests for activities at a federal level. The predominant factor test looks at whether the outcome is predominately based on a random element irrespective of the fact that the use of skill can improve the chance of winning. Games in which the outcome is always determined by superior skill is not a game of chance. This is a high hurdle, and this test uses the extent to which superior skill overcomes the random element. Some DFS games/bets may pass this test. The material element test looks at whether the outcome depends on chance to a material degree. A player’s proficiency at poker, for example, may influence the outcome of each hand, but skill alone cannot influence every hand—it depends on the cards that you and your opponent are dealt. This hurdle is even

higher, and it is doubtful that most DFS games/bets would get over it. If the any chance test is used, the result of a game would have to be devoid of any chance element for it to be classified as a game of skill. Most games and certainly fantasy sports would fail this test. If there are any elements of chance that can affect the outcome, regardless of the level of skill involved, it is gambling. Ouch! As you can see, from a legal perspective, it is not as simple as stating that something is a game of skill and therefore not gambling. It is whether the activity is likely to pass the specific test that the state in question uses. Now on to UIGEA and the carve-out— what does it mean? Not much, in my estimation. The Department of Justice had decided that the Wire Act did not apply to online casino gambling, only sports betting. With the inability to stop online gambling from offshore sites, UIGEA was passed to starve online casino operators of funds. It made it illegal to process funds for any online gambling activity that a state determined was illegal. It is a federal law, and only concerned with providing services to gambling that is unlawful. If it is deemed to be illegal gambling under state law or a federal law (Wire Act, PASPA, etc.), then it is illegal under UIGEA, unless it is an activity that has been specifically carved out in UIGEA. But just because it enjoys a carve-out at the federal level does not mean it is legal at the state level. It is up to each state to decide using the one of the tests described above. It is true that fantasy sports has a carve-out in UIGEA that would make the activity lawful, but only from a federal law perspective. The carve-out is very specific, and for the fantasy sports activity to be deemed legal under UIGEA, and only under UIGEA and not state law, it has to meet all of these conditions: 1. The amount of the prize must be known in advance; 2. The amount of the prize is not influenced by the number of players; 3. Winning is based predominantly on skill;

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“

The fantasy sports industry did not learn the lessons of the online casino and online poker industries. These industries took a great deal of pain in the early part of the century, with some of their executives spending time in jail, and, in the end, they stopped their U.S.-facing activity and are now lobbying for legislation and regulation.

”

4. Winning or losing is not based on a single performance of an individual athlete in a single sporting event; and, 5. Winning or losing may not be based on the score, point spread or performance of any single team. Looking at the fantasy sports operators’ websites, many of the fantasy sports bets offered today fall foul of the first two conditions. But even if they do not meet all of the conditions, UIGEA does not afford much protection if a state determines the activity is illegal gambling. You might not get prosecuted by the feds, but the state could still come after you. Back in October, I was in New York watching a football game on U.S. network television. Every five minutes, the show was interrupted with promotions and advertisements about fantasy sports. Not content with advertising fantasy sports, there were panel discussions showing how to pick your team and “enter the competition.” I couldn’t help but think that they were poking a giant in the eye with a sharp stick. When you do that, at some point the giant gets mad—and it did. A number of state attorneys general have either made statements declaring fantasy sports to be illegal—most notably Eric Schneiderman of New York, who has issued a cease-and-desist order—or started to investigate whether it is lawful. Remember, attorneys general are elected officials, and high-profile cases are good for election results. The inevitable has happened. Banks and payment processors have run for the hills, and lawyers are filing class-action lawsuits on behalf of poor innocent citizens who were duped to become involved in an illegal gambling activity. This is all too familiar. The fantasy sports 52

Global Gaming Business MAY 2016

industry did not learn the lessons of the online casino and online poker industries. These industries took a great deal of pain in the early part of the century, with some of their executives spending time in jail, and, in the end, they stopped their U.S.-facing activity and are now lobbying for legislation and regulation. Perhaps the fantasy sports industry thinks it can use the “Uber” approach—use the vast cash resources coughed up by their investors to mount legal challenges in each state, meanwhile building up a large database of customers, hoping, in the meantime, that they will win the challenges or that it will be declared legal. Or, will it become “a death by a thousand cuts,” where legalization on a state-by-state basis is slow so revenues are low, and they are tied up with class-action lawsuits forevermore? I remember in the early 2000s talking to someone involved in a U.S.-facing online poker site. They were arguing that the Federal Wire Act did not apply and they were acting legally. I asked what the Department of Justice and the states’ attorneys general thought. He replied that they thought it illegal. Hmmm, perhaps there is a hint there. You might not agree with him, but it is rarely a good strategy to argue with an angry gorilla! Andrew Tottenham is managing director of Tottenham & Co., a business consulting firm specializing in strategic planning, market assessments, feasibility studies and project development for the international gaming industry. For five years he was managing director, development, Europe for Caesars Entertainment, and is currently an independent board member of Groupe Joa, a French casino operator.

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Desert Rose Bingo was a short-lived attempt by California’s Santa Ysabel tribe to claim that tribal sovereignty permitted them to offer Class II online gaming. It didn’t fly with either the state or the federal government.

Checkmate? Tribes cautiously position pieces on the iGaming chess board By Steve Ruddock

California’s Pala Band operates an online casino in New Jersey under the license held by the Borgata casino in Atlantic City, while the Mohegan tribe of Connecticut operates MoheganSunCasino.com under the Resorts license, a property which the tribe also manages.

Global Gaming Business MAY 2016

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he story of real-money tribal online gambling in the United States is still being written, but it got off to an inauspicious start in the summer of 2014, when a small California tribe managed to grab the attention of the entire online gaming world. In an unprecedented announcement, the tribe detailed its plans to launch a real-money online poker site in the coming months, whether California passed an online poker law or not. The tribe was essentially challenging the status-quo interpretation of online poker’s legality with respect to tribes, and playing a dangerous game of chicken with the state and federal governments in the process. The tribe, the Iipay Nation of Santa Ysabel, never launched its muchhyped online poker site, but they did still make good on their challenge, launching a real-money online bingo site in November 2014. The site was promptly shut down by California Attorney General Kamala Harris, despite the protestations of tribal leaders, who claimed their tribal sovereignty allowed them to offer Class II gaming, bingo and poker, online. Even though Santa Ysabel was an unlikely vehicle to advance tribal online gaming in the U.S.—the tribe’s brick-and-mortar casino had closed just a few months before, leaving the tribe with a reported $50 million of debt—their brief foray into the world of real-money online gambling has earned the tribe, and DesertRoseBingo.com, a footnote in gaming history. The legal cases between Santa Ysabel and the state of California and Santa Ysabel and the U.S. government have yet to be decided. Santa Ysabel certainly wasn’t the first, or the last, tribe to look into online gambling, but it has been by far the most aggressive. California tribes have been pursuing online poker legalization dating back as far 2008, and tribes across the country have launched social casinos to tap into the changing demographics and pursuits of their customers. Since Santa Ysabel’s failed back-door attempt to get into online gaming, more steady and cautious progress has been made on this front by other tribes. Two tribes have launched real-money online gaming platforms in New Jersey (through the front door), and several others are making their own preparations in other potential markets.

Canaries in the New Jersey Coal Mine The honorific of the first state-licensed tribal online gaming site goes to the Pala Band of Mission Indians. With online poker legalization in its home state at an impasse, the California tribe decided to launch a real-money online casino platform in New Jersey, some 4,000 miles away from their tribal lands. Partnering with and operating under the license of the Borgata casino, PalaCasino.com launched in September 2014. In March 2016, Pala added a real-money online bingo site in New Jersey. But Pala isn’t the only tribe with a stake in the New Jersey online gaming market. On July 20, 2015, the Connecticut-based Mohegan Tribe launched MoheganSunCasino.com in the Garden State. Like Pala, Mohegan used the license of one of the state’s brick-and-mortar casinos (a prerequisite for operating an online gaming site in the state), the Resorts Casino. Unlike the relationship between Pala and Borgata, Mohegan already had a relationship with Resorts, as the Mohegan Tribal Gaming Authority is responsible for the day-to-day operations of Resorts Casino.

“If there is going to be progress on the legislative front, then an internet poker bill is going to have to have a focus that deals with questions like whether the number of operator licenses should be capped, whether licenses should be tied to existing brick-and-mortar casinos and cardrooms across the state, or just to tribal operators.” —Chris Stearns, Chairman, Washington State Gambling Commission Barring future expansion in states with tribal gaming operators, which has ground to a halt following the early flurry in 2013, this online gamingby-proxy approach may be the foot in the iGaming door other tribes choose to adopt. “In general, I think New Jersey has done an outstanding job on internet gaming,” says Chris Stearns, chairman of the Washington State Gambling Commission. “Within that existing structure, there are opportunities for Indian tribes to get involved in internet gaming in other states like Pala has done. I don’t see any trouble for a tribe that chooses to go through the hoops to become an operator in New Jersey, or another well-regulated jurisdiction.” Those opportunities exist not only for potential financial gain, but also for testing purposes. “The business—Pala Interactive—was founded in 2013, initially on the basis of being a poker operator in the state of California,” explains Jim Ryan, CEO of Pala Interactive. “In 2014, we concluded that it was going to be difficult to predict when the California market was going to open. “We took the view that it made good business sense to launch in New Jersey, because it would allow us to build and perfect our product in the open market as opposed to the lab, and would allow us to build out the necessary infrastructure to operate in a regulated online gaming market—thereby preparing us of the opening of California or other U.S. state-regulated markets.”

California Gold Rush As Ryan notes, Pala sees New Jersey as a proving ground of sorts for its online gaming platforms. The real prize for Pala, and more than a dozen other tribes, has always been California, and its 39 million residents—more than MAY 2016 www.ggbmagazine.com

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“In our view it is clear that consumers will continue to increase the use of internet and mobile-based gaming irrespective of the availability of a regulated online poker market in (California).” –Jim Ryan, CEO, Pala Interactive

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four times the population of New Jersey. When California will actually open up for online poker is anyone’s guess. The state has been trying to pass an online poker bill for nearly a decade, and even though progress has been made, it always feels like the state’s two steps forward are followed by one step back. From licensing and taxation rates to regulatory structure, to the role of the horse-racing industry, to bad-actor clauses, there is never a lack of conflict for the state’s tribal and commercial stakeholders to choose from. Yet the stakeholders advocating for online poker, and the potential opportunities it can bring, continue to press the issue, and feel good about a new effort that finally offers a solution to the most pressing concern, the horse-racing industry. “We are optimistic about the prospects for AB 2863,” says Ryan. “The bill is being driven by Adam Gray and other legislative leaders, and in our view has addressed the issues that have divided California’s online gaming stakeholders.” Ryan is alluding to the bill’s proposed yearly payment of up to $60 million that would go to the horse-racing industry. But even if the horse-racing issue is solved, the recent legal entanglements of Amaya CEO David Baazov (Baazov has been charged in Canada with facilitating insider trading, and has taken a voluntary leave of absence) may reignite calls for bad-actor clauses to be included in any legislation legalizing online poker. When it comes to online poker, progress in California is fleeting. Fortunately, tribal gaming interests in other locales are also exploring online gaming expansion.

Washington State Surprise?

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One such state where tribes could play a role in online gaming legislation lies two states the north of California, in Washington state. Washington shares many similarities with California, as the state has tribal casinos and commercial card rooms, as well as the need for online gaming expansion to pass both houses with a two-thirds majority, a hurdle that makes consensus a necessity in both locales. 56

Global Gaming Business MAY 2016

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Washington state would seem to be a difficult nut to crack for online gaming expansion, as the state has the strictest anti-online gambling laws in the country—a 2006 law makes the mere act of gambling online a felony— but there are also reasons to keep a watchful eye on developments there. “The reality is that any expansion of gambling would necessarily require all of the interested parties, and that includes the tribes, to sit down and plan together,” Stearns states. “My sense is that the tribes would have to play a central role for the legislature to authorize internet poker, other internet card games, or even internet casino gambling. “I should add that unlike many other states, Washington does not have a revenue-sharing arrangement with the tribes in exchange for exclusivity. We have found that in terms of existing casino operations, that’s a system that has worked out well for everyone. “So, if there was a bill to allow internet gambling, the question of whether that opportunity would only be for tribes, or only for existing tribal casinos and non-Indian card rooms, or for other operators, would have to be carefully and thoughtfully worked out in advance.” Stearns says the recent legislative efforts that were by and large the results of grassroots advocacy (last year’s HB 1114) lacked this type of across-theboard input. “I believe it would have more or less allowed any business the opportunity to get a license to operate an internet poker network, provided they met the qualifications,” he says. “If there is going to be progress on the legislative front, then an internet poker bill is going to have to have a focus that deals with questions like whether the number of operator licenses should be capped, whether licenses should be tied to existing brick-and-mortar casinos and card rooms across the state, or just to tribal operators.”

More Ambitious Efforts While most tribal efforts are focused on opportunities in their own states, the Iowa Tribe in Oklahoma is taking a bigger-picture approach. The tribe has

When California will actually open up for online poker is anyone’s guess. The state has

been trying to pass an online poker bill for nearly a decade, and even though progress has been made, it always feels like the state’s two steps forward are followed by one step back.

MAY 2016 www.ggbmagazine.com

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“From what I understand, the biggest issue is the economic impact on their brick-and-mortar casinos. Right now, the general gaming

market seems strong in Washington, but the tribes are concerned that the introduction of internet gaming, fantasy sports or new casinos could upset the market.” —Chris Stearns, Chairman, Washington State Gambling Commission

successfully (so far) petitioned for the right to host an online poker site not for Oklahomans, but for players overseas, as well as in the three legal U.S. jurisdictions, Nevada, Delaware, and New Jersey—a clever way of leveraging their tribal sovereignty without dealing with state prohibitions of online gaming. Even though an arbitrator said the tribe’s plans wouldn’t violate federal law—nor was it in violation of the tribe’s compact with the state—the tribe still requires a circuit judge to sign off on the ruling, and there will likely be legal challenges if and when the site, pokertribe.com, comes to fruition. That being said, if the venture is successful, it could flip the entire U.S. online gaming industry on its head and propel tribes to the forefront, affording them a cross-border opportunity commercial and state-run gaming interests simply don’t have without in-state legalization.

Skepticism Or Opportunities Despite these potential opportunities, there is still a strong protectionist el-

Global Gaming Business MAY 2016

ement harbored by the leadership of many tribes when it comes to online gaming, as tribes fear losing what they have spent so much time and energy building. “From what I understand, the biggest issue is the economic impact on their brick-and-mortar casinos,” Stearns says. “Right now, the general gaming market seems strong in Washington, but the tribes are concerned that the introduction of internet gaming, fantasy sports or new casinos could upset the market. “The WSGC is in the process of awarding a contract to an economic research firm to conduct a year-long study of the gaming market in Washington,” says Stearns. “We think that when the study is complete, the tribes will definitely benefit from that information as they make decisions about if, when and how they might want to enter the online gaming market.” The problem is, every day of delay leaves the door open for other entities to walk through. Where there is a will there is often a way, and the industry could leave tribes in its wake as it continues to evolve. “In our view, it is clear that consumers will continue to increase the use

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Even though an arbitrator said the tribe’s plans wouldn’t violate federal law—nor was it in violation of the tribe’s compact with the state—the tribe still requires a circuit judge to sign off on the ruling, and there will likely be legal challenges if and when the site, pokertribe.com, comes to fruition.

of internet and mobile-based gaming irrespective of the availability of a regulated online poker market in the state,” Pala’s Ryan explains, adding that they’d like to see their brand compete in this space. Ryan also voices concerns over potentially longer delays, saying, “Should a poker bill remain stalled for the next number of years, other operators will provide online-based games that will address the consumer demand. These games will take on a different form than poker, as we have seen with the evolution of the daily fantasy sports, and as we expect to occur in the eSports gaming vertical. “Pala simply does not want to be left behind, and this is the downside we see for all tribes should they not be able to collectively advance a realmoney online gaming strategy in the state of California.” Stearns outlines the case for tribal caution, citing Washington state’s law that forbids online gaming, coupled with non-tribal casino gaming being limited to table games, which gives the tribal casinos a leg up, much like in California.

Because of this advantage, the tribal gaming interests in Washington state may be content with the status quo. That said, Stearns understands this point of view, but also warns of the potential downside to continued inaction. “I’d look at it from a different side,” Stearns says, “which is that tribes might be able to expand their customer base and entertainment value by eventually choosing to work with the legislature to allow online gaming in Washington.” With the situation surrounding online gaming so fluid, Stearns is of the same mindset as Ryan, as he sees the potential for competitors beyond the state’s borders. “The major competition might come from British Columbia, or simply from competition from other states that allow online gaming and draw customers away from Washington over the long haul,” the WSGC chairman indicates. Tribal gaming interests across the U.S. have been doing a terrific job positioning their chess pieces in a strong defensive position, willing to play the waiting game until the conditions are perfect. The question is: Will this conservative approach be the winning strategy for tribes?

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iGAMING NORTH AMERICA

It’s All About eSports at iGNA 2016 The premier U.S. iGaming conference draws hundreds to Las Vegas By Patrick Roberts

iGNA organizer Sue Schneider hosted the opening keynote with Michael Cohen (middle), chief legal counsel for Caesars Interactive, and Eric Hollreiser, the VP of communications for Amaya/PokerStars

f last month’s iGaming North America conference in Las Vegas had any message to the gaming industry, it would be, “Get ready for eSports.” The rise of the new video game competition was contrasted by the downfall of daily fantasy sports in such a way that it could only give casino executives hope for the next generation. With the same three states offering iGaming as for the past two editions of the iGaming North America conference, and few legitimate prospects, the focus of this year’s conference became the one remaining interactive gaming opportunity left: eSports. Some of the statistics about eSports are astounding. Chris Grove of LegalSportsReport.com and Narus Consulting said eSports is a $5.1 billion industry. At its height, daily fantasy sports was around $2.5 billion, so is eSports the most important secret in gaming? According to Seth Schorr, the chairman of Fifth Street Gaming, which operates the Downtown Grand in Las Vegas, it is. Schorr has been producing small eSports tournaments at the property that have been remarkably successful. “Vegas has a unique opportunity to position itself as the destination for eSports,” he said. He points out that MGM is using it as a spectator sport, scheduling a massive eSports League of Legends tournament in late April. But the potential for eSports is as a betting vehicle, which it is not at the time. Grove says the worldwide wa-

Global Gaming Business MAY 2016

Clockwise: Howard Stutz, Greenberg Traurig; Chris Grove, Narus Consulting; Louis Castle, Castle Gaming; Seth Schorr, Downtown Grand

gering numbers for eSports are now on a par with rugby and Formula One racing, so it’s an untapped reservoir. Grove anticipated eSports leagues—and there are more than a dozen professional leagues, with over 150 teams—getting licensed by Nevada gaming regulators. Integrity isn’t an issue, he said, for two reasons. First, the leagues have much at stake and wouldn’t risk their status. Second, the same data that prevents match-fixing in other sports

would also be applied to eSports. “It’s always possible,” said Grove, “but like with other sports, the lower you go on the professional ladder, the more problems you are likely to have.” The eSports debate went hand-in-hand with the ongoing discussions about millennials. In a panel moderated by GGB Publisher Roger Gros, MGM Executive Director of Interactive Gaming Development Lovell Walker said the “millennial” is more of a lifestyle than a simple age definition. He cautioned, however, not to lump millennials into one basket. “I look at it like high school, where there were many different cliques,” he said. “Remember the nerds, the jocks, the popular people… That’s what we have to consider when marketing to millennials.” Roberto Coppolla, the research director for YWS Architects, pointed out that millennials also differ between cultures. The Chinese millennials are totally different from American millennials. There is little interest in partying and drinking with young Chinese. They are more interested in community and family. There was lots of criticism of DFS and how the industry has conducted itself during the legal challenges. The argument that DFS is not gambling has been lost, said Seth Young of Flower City Gaming. “OK, it’s gambling, so now what?” he said. “We’re seeing different states dealing with it in different ways.” Joe Asher, the head of William Hill US, says his sports betting company has no plans to introduce any fantasy sports games. He said no one is making any money from DFS except for the networks that cleaned up with advertising. And then he questioned how to keep players coming back without advertising. Grove said whether DFS survives will be one of the elements that determines whether sports betting will be legalized in the U.S. The legislation regulating DFS and the application of the Professional and Amateur Sports Protection Act (PASPA) to DFS will be important, as will the attitude of the sports leagues toward potential sports betting legalization.

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Online ‘Free Bet’ Offers Could Face U.K. Tax

Amaya, Baazov Rocked; PokerStars Soars in New Jersey

two-year investigation into Amaya Inc.’s $4.9 million acquisition of PokerStars has resulted in 23 total charges of insider trading against three companies and three individuals by Quebec regulators—including five charges against CEO David Baazov. The charges stem from a surge in Amaya’s share price ahead of the acquisition. The charges are “very serious,” Sylvain Théberge, spokesman for the Amaya CEO Quebec regulator the Autorité des David Baazov Marchés Financiers, told CBC news. If found guilty, the Amaya officials could face fines of up to $5 million and five years in prison. Baazov quickly released a statement denying the charges and saying he will “vigorously contest them,” and a few days later took a leave of absence. The AMF also announced it had executed search warrants and obtained freeze and cease-trade orders in regards to 13 other individuals tied to mergers and acquisitions involving Amaya. Théberge said the investigation began in June 2014, after Amaya acquired the privately held Rational Group—or Oldford Group—the parent company of online poker websites PokerStars and Full Tilt Poker. The acquisition made Amaya the largest online gambling company in the world. A raid of Amaya’s offices in Pointe-Claire was conducted in December 2014. Baazov’s charges include aiding with trades while in possession of privileged information, influencing or attempting to influence Amaya’s market price and communicating privileged information. Amaya also released a statement saying the charges are without merit and saying they involve allegations relating to a former financial adviser to the company and an employee. Meanwhile, just one week into its online poker operations in New Jersey, PokerStars already appears to be dominating the market and attracting more players than any other site in the state. According to PokerScout, PokerStars NJ averaged 170 cash game players in its first week with a 24-hour peak of 441 players. Meanwhile, WSOP/888 had 140 and 341, respectively. Party 62

Global Gaming Business MAY 2016

Borgata NJ is in third with a 95-player average over the week and a peak of 252. Play is restricted to players physically located in the state and pales in comparison to the global PokerStars platform, which averages 17,000 cash game players. Still, the New Jersey market has shown signs of growth, though most of its revenue comes from online casino games. The state’s online gaming win was a record $14.7 million in February, compared to $10.4 million in February 2015, reflecting an increase of 41.8 percent. Online poker, however, brought in just under $2 million, down 2.5 percent from 2015. PokerStars NJ, however, also offers slots and casino games.

Germany Plans to Increase Sports Betting Licenses

ermany is considering issuing more sports betting licenses in the face of European Union pressure, but has balked at legalizing online poker. Germany’s 16 state ministers agreed that the number of available sports betting licenses in the country should be doubled to 40, but a rewrite of its interstate gambling treaty was rejected. Leaders of Germany’s 16 states assembled in Berlin to discuss the gambling legislation. The country is under pressure from the EU after its top court declared Germany’s current betting system illegal. The EU may be preparing infringement proceedings against the country, the website reported. Twenty sports betting licenses were awarded by Germany in September 2014, but due to legal challenges by failed applicants, none of these licenses have been activated. Local media reports said the ministers had agreed that the number of available licenses would be doubled to 40, which would automatically approve licenses to all 35 original applicants who managed to make it to the second stage of the licensing process. Proposals to extend licensing to include online poker and casino games were reportedly rejected by ministers. An amended treaty is expected to be approved by June.

uring British Chancellor George Osborne’s budget speech, it was announced that online gambling operators licensed in the U.K. will be taxed on “free bet” offers starting in 2017. If approved, the 15 percent tax would go into effect in August 2017. Free bets were not included in the country’s recently revamped online tax laws, and the move would affect operators who use free spins and British Chancellor bonus credits to attract George Osborne customers. Osborne, however, did not address fixedodds betting terminals, which have drawn controversy in the U.K. Osborne did not mention any newly proposed regulations on the terminals. Also in the budget, gross gaming yield bands for gaming duty for U.K. casino operators are set to be increased for accounting periods starting on or after April 1. Specific increases weren’t named, but will be included in the Finance Bill 2016 and will be in line with the retail price index for accounting periods starting on or after April 1, officials said.

New York Cozies Up to Online Poker

egal online poker might become a reality soon in New York, and state lawmakers have included it in revenue projections. The state’s lawmakers are looking for ways to cover a projected $150 billion state budget, and online poker could become legal in a matter of months. New York Assemblyman Gary Pretlow, who chairs the Assembly Racing and Wagering Committee, says the committee likely would move an online poker bill that involves the state’s brick-and-mortar casinos in the online New York Assemblyman poker games. Gary Pretlow Gaming analysts estimate online poker could generate more than $120 million in the state during its first year, and could generate about five times the $2 million in

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eSports Emerging in France, Las Vegas monthly revenues generated in neighboring New Jersey. A bill that would make online poker legal in New York shows promise, and state lawmakers are moving fast on enabling legislation that would legalize and regulate daily fantasy sports in time for the fall football season. Any movement on daily fantasy sports could lead to a similar push to get online poker up and running in New York. The Senate Racing, Gaming and Wagering Committee recently passed S 5302B, which would legalize online poker in New York. No prior online poker bill made it out of committee. The measure awaits scrutiny before the Senate Finance Committee, but stands a good chance of seeing a full floor debate and possible passage, along with daily fantasy sports regulation.

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layStudios has partnered with Konami Gaming to develop and operate myKONAMI Slots, a new mobile app featuring top Konami slot machine titles.

proposed Digital Republic Bill would enable the growth of eSports gambling events in France, and many in Las Vegas eye eSports as a potential windfall. France currently bans eSports, which it associates with unregulated gambling. But the proposed bill would separate eSports from gambling, and enable competitions to be held there. Currently, eSports operators have to apply for gaming licenses to hold events in France. Such events typically include teams of participants from around the world competing online in video gaming. The measure in France would enable the government to develop partnerships capable of regulating eSports and helping the fledgling industry to gain a foothold in France. French lawmakers also hope the enabling bill would spur additional investment in the nation’s economy by eSports operators looking to establish themselves in Europe. Studies show eSports are very popular among members of the millennial generation, who grew up playing video and online games. Audience participation is growing globally by double digits each year, and the online format helps eliminate national borders and other traditional boundaries to holding online events. That’s why gaming operators in Las Vegas view eSports as a potential windfall for Sin City, as casino operators look for ways to bring in more millennial

GLI Releases iGaming Security White Paper The product recently shipped with Lotus Land, Spellbound Princess, Lion Festival, China Mystery and Masked Ball Nights. Future updates will include China Shores, Mayan Chief and More Gold More Silver, with additional titles added each month. PlayStudios’ flagship franchise, myVEGAS Slots, was the first to feature a limited selection of Konami titles. Now with a new app dedicated exclusively to Konami, the company expects to grow its library of licensed casino content. “We have seen the incredible popularity of mobile content based on actual casino games,” said Paul Mathews, president of PlayStudios. “Konami has a wonderful collection of products with beautiful graphics and great game features. It was a perfect fit for our studio, and we’re delighted that Konami Gaming has entrusted us with their valuable brands.” 64

Global Gaming Business MAY 2016

eading gaming testing company Gaming Laboratories International has announced the release of its newest white paper, “iGaming Information Security Management: Is Your Business Adequately Protected?” According to the company, the white paper highlights GLI’s ability to: “1. Discuss your concerns about network infrastructure security; GLI VP of iGaming 2. Advise about data loss Salim Adatia from players or your company; 3. Assist you to ensure security when working with third parties; 4. Provide effective personalized planning to maximize system uptime; and, 5. Work closely with you for continued compliance and ongoing risk mitigation.”

bettors. Unlike their older counterparts, millennials greatly prefer interactive gaming experiences such as eSports, rather than the traditional slot machines that previously drove most of Las Vegas’ gaming revenues. Nevada gaming regulators are working to make daily fantasy sports legal in time for the fall football season, and eSports regulations might follow soon after, which would allow individuals and teams to compete for money and prizes. The Downtown Grand casino hosts a professional e-gaming team from Australia, and constructed a special viewing area for casino visitors to watch the team practice and play between events. And the Mandalay Bay Events Center hosted the North American League of Legends season championship April 16-17. The actions in France and activities in Las Vegas are sure signs that eSports is a winner that is just awaiting regulatory approval.

“The growing expansion of iGaming has created an increasing depth of internal knowledge,” said Martin Britton, managing director of GLI Europe and Africa. “We can use this knowledge bank to assist suppliers and operators and discuss and advise about security measures to ensure systems and information are protected not just for today but for tomorrow. “The first step is (to understand) the security risks, determine the requirements, discuss system architecture and build a plan specifically around these. This can be a combination of audits, assessments and consultancy. We want our clients to be confident that security breaches can be minimized by having effective and logical controls in place. This is why the GLI iGaming team, headed by our VP of iGaming Salim Adatia, has spearheaded this important white paper.” In addition to the white paper, GLI has also launched an iGaming webpage with additional information about the company’s unique iGaming services. It can be found at gaminglabs.com/services/igaming.

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At Your

Service

Innovative kiosks can multiply good customer service By Dave Bontempo

iosks gain significant new relevance. One of gaming’s most flexible vehicles becomes an important security source this year. New fraud-prevention equipment is the latest upgrade for a device that provides an array of customer services at the touch of a screen. Customers rely on kiosks for expedited casino checkouts, reservations, maps, loyalty-point assessments, promo offers and standard ATM cash-dispense. Yes, the fabled machines that also disperse funds, break bills, provide electronic check cashing and redeem tickets will serve more than customers in 2016. They will shield operators in the shifting world of theft protection. A nationwide fraud liability movement, launched last October, changed accountability from financial institutions to merchants who don’t use a chip card. It will extend to ATMs, thus kiosks and the casino floor, in October 2016. A casino operator without a chip reader will become responsible for fraud under the new setup. The deadline sent panic throughout the industry. Casinos already battle in the trenches of fraud, from counterfeit bills to palmed chips and cut cards. They

already need an eye in the sky and multiple eyeballs on the gaming floor to prevent theft. Operators can’t also be on the hook for expensive credit-card abuse. Vendors acknowledge the paranoia, knowing the price of keeping casino business is to extinguish this looming fire. Their efforts aim to ensure EMV (Europe Pay, Master Card and Visa) compliance before the October deadline. While companies always highlight the speed of products, the new age also requires protection. Reliance meets compliance.

One Step Ahead

DiTronics DFS 500

“When the liability shift occurred, there was a big freakout in the casinos, as in, ‘Who is going to be responsible for this stuff?’” says Jim Kirner, senior vice president of sales and marketing for Las Vegas-based DiTronics, which processes nearly $3 billion each year through its cash access systems and has doubled revenues since August 2013. “That’s understandable, but in the end, it will be a whole bunch to do about nothing for them, because we will have this covered,” he adds. “Our kiosk has ATM ability, cash advance, ticket redemption, bill break, etc. It is fully loaded. And before October, the kiosks will be EMV-ready. We have been field-testing it.”

A nationwide fraud liability movement, launched last October, changed accountability from financial institutions to merchants who don’t use a chip card. It will extend to ATMs, thus kiosks and the casino floor, in October 2016. A casino operator without a chip reader will become responsible for fraud under the new setup. 66

Global Gaming Business MAY 2016

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“ ploying Transaction Rewards at Southland Park in Arkansas, check cashing in Unlike magnetic-stripe cards, which store unchanging data in their Treasure Island, Minnesota and Jackpot Pay in Oklahoma. It also earned the stripes, EMV-chip cards generate a new code for every transaction. Cardright to install the DFS 500 at the Peppermill properties in Nevada. It handled holders also have to verify their EMV card purchases with either a signature ticket redemptions several seconds faster than top competitors, he asserts. A few or by entering a PIN. seconds, multiplied by myriad transactions, could make a property wary of cusThe fraud liability conversion marks the changing dynamics between tomers being distracted and possibly leaving. business owners and banks. If an ATM fraud via magnetic stripe occurs The DFS 500’s existing software will help operators accommodate these cusnow, card-issuing banks are on the hook. Once that burden changes, casitomers. The next software product will serve the operators themselves. nos must have products in place. This is the second phase of a movement that began last year for many businesses. As they became responsible for fraud, smaller, non-gaming properties had to decide whether or not to become gamblers. They can either make a costly conversion via chip readers or “wager,” by doing nothing, that occasional fraud costs less than the new system. Smaller businesses may reason that criminals with stolen cards would likely visit high-end establishments like jewelry stores to obtain luxury items rather than a family grocery store. Gaming establishments, facing cutthroat competition, have no choice regarding conversion. They need to be in the game, providing funds access, without being accountable for theft. Companies that serve the operators want to satisfy both ends of the casino industry equaextraordinary tion. Before field-testing EMV compliance, DiTronics rolled out the DFS 500 5-N-1 ticket redemption solution, which increased the speed, durability and functionality of casino kiosks. Security aside, operators need kiosks to prove bottom-line worth. “Operators are looking at their entire casino floor and asking what other values can a product provide for me,” Kirner says. “Regarding a kiosk, you look at the space it sits in as opposed to machines on the floor. People are moving machine counts down to optimize floor space already. They want to know what provides the best bang for my buck. What else can you do for me on that valuable real estate?” DiTronics uses the ultra-reliable Glory platform for its hardware, and provides systematic software add-ons. They include Transaction ReGasser chairs are proven p performers, p rformers,, to say the least. For wards, which integrates funds access with a 70 years they have maintainedd a sensible symmetry between casino’s player database to provide customized style, comfort and dependability bility that has never ceased to amaze. At Gasser Gasser,, we don’t merely perform, we dazzle. fee structures; Smart Dispense, which reduces wear and tear on the kiosk; and Jackpot Pay, Visit Gasser at Southern Gaming Summit, Booth #627 which eliminates the need for jackpot dispense units. Kirner says a casino can save approxigasserchair.com gasser chair.com | 800.323.2 800.323.2234 .2234 mately $55,000 in costs for a kiosk and the Featured Chair: Prelude labor drain of servicing jackpots by selecting a DiTronics software component. Kirner says DiTronics recently began deMAY 2016 www.ggbmagazine.com

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The Vantiv Advantage Cincinnati-based Vantiv, which services retail giants like Wal-Mart and CVS, brought a high-profile reputation into the gaming world. It handles 23 billion transactions and more than $842 billion every year in an enterprise that spans more than 800,000 merchant locations. Vantiv provides the connectivity for anyone using a card to fund gaming purchases. The lucrative casino world enticed the company to launch Vantiv Gaming Solutions about three years ago. The outfit later became Vantiv Entertainment Solutions, reflecting an intent to help casinos, iGaming, lottery and social gaming operators build strategic pay programs. To enhance its gaming footprint, Vantiv must educate regulators and properties about increased security of credit-card transactions. “One of the positive things is we have the three financial institutions participating in gaming merchant category codes (MCCs) and we are incredibly pleased with that progress,” says Joe Pappano, senior vice president and managing director for Vantiv Entertainment Solutions. “Today, gaming and entertainment experiences are less fragmented, the three largest card issuers are now accepting payments with more ease and the consumer is being protected like never before.” One might call gaming’s approach a chip off the new block, as chip cards become more prevalent and provide a glimpse into the next realm of industry security. “It’s new; there are a lot of moving pieces to it, but operators understand it,” Pappano indicates. “They are rolling it out and it has been successful.

The challenge is that EMV is not a one-and-done situation. There will be ongoing complexities as it pertains to gaming. As there are continued changes with frameworks and networks, there are going to be constant updates as it relates to EMV acceptance. But thus far it’s been doing what they said it would do—a liability shift from financial institutions to merchants. It’s causing operators to move quickly to limit fraud exposure. “As for why this is good for the industry, sure, initially EMV is costly to roll out. But in the long run, it is significantly impacting fraud and chargeback losses. Losses for operators in the long run will be cut, and that money can go towards developing new innovations.” Pappano welcomes the new codes set for ATMs. He says that when EMV is attached to a PIN, fraud becomes virtually non-existent. It has become so effective, he predicts fraudsters will move their operations to a softer target. “You need a belt-and-suspender game plan in today’s world, meaning tokenization, end-to-end encryption and embedding EMV,” he says. “Everyone thinks, ‘Oh, one should just replace the other.’ That is not the case. My fear, because of the EMV rollout—and this is starting to become well-documented—is that the fraudsters are always going to find a way, so you’re going to see them shift to online. “The card-present fraud will dissipate, based on the security measures that have been enacted. What’s going to happen is that online fraud will increase dramatically. As a result of that, appropriate security tools that protect businesses online are vital. Card-not-present security is vital, and that’s an area we’re focused on.”

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Glory Global Solutions SK 500

While security and data increase their prominence, kiosks remain a cornerstone in Vantiv’s overall agenda. “The movement of funds goes back to our core principle of simplifying payment innovation,” Pappano indicates. “That’s why we continue to be engaged on the kiosk front. It should be secure, seamless and a value-added service—embedding that type of innovation within the kiosk truly benefits everyone involved.” On the lottery side, Pappano says the company sees the proliferation of embedding payments and making the kiosk more dynamic. “We’re seeing games on top of games,” he says. “Interactive systems that let you do more things with the kiosk itself, while enabling multiple payments, including near-field communication (NFC). A lot of kiosks we are working on, you can walk up to with your phone and make a transaction.” Although schooled in the cat-and-mouse security game, Vantiv also presents value-added products like its iQ software. It is a simple solution that provides, among other things, credit-card processing reports and snapshots of payment activity. The solution lets operators see both the big picture and important details of their customers’ buying patterns through its SMB merchant payment data and transaction systems. Big Data is alive and well. “Data science is a direct result of Vantiv iQ,” Pappano says. “I’m confident

with the conversations we’ve had with the different market segments in gaming, that data science will be the heartbeat of how the industry electronifies and grows.”

A Balanced Portfolio Glory Global Solutions, headquartered in Japan, is a pioneer in the development and manufacture of money-handling machines and systems. It serves the financial, retail, vending machine, amusement and gaming industries in more than 100 countries. The company stands at an interesting intersection of hardware and software enhancements. It unveiled the SK 500 in January, increasing its product to two bill validators, a card-reader for EMV compliance and increased capacity for kiosk cash-holding. Many software companies consider Glory the hardware king, the gold standard of kiosk durability, and a good match for its products. Operators depend upon it. “What strikes me about the casinos is how the kiosk is mission-criti-

MAY 2016 www.ggbmagazine.com

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Kiosk Potpourri cal,” says Peter Wolf, senior vice president of retail marketing for Glory Global Solutions North America. “If a kiosk goes down, it is a big deal. If a customer has to go farther to get cash, instead of going back to the gaming floor, they may leave a property. We have more reliability, I believe, because of our service network. We don’t use third parties. Glory only uses Glory technicians.” Another area has become mission-critical, he notes. Operators view the new October regulations with dread. “There has been an incredible amount of angst, confusion, frustration and anger, not only from the casinos, but from the providers,” Wolf says. “What we hear is a cry for help. Standards have changed, explanations have changed. It has not been a smooth transition to EMV. Casinos are looking not only to us, but to software providers to a assure them that they will be EMV-compliant, and then that the regulators will certify all of it.” While kiosks are at the forefront of that concern, Glory features a new innovation for the back of the house. That’s where its CI-300, part of the Cash Infinity System, is utilized. The CI-300 cash recycling system consists of a banknote recycler and a coin recycle, offering improved security and reduced cash-handling time in retail applications, during day-open, shift change and day-close operations. CI-300 offers the cashier a quick and easy solution for handling cash in the back office of a retail environment, allowing managers more time to focus on their core business. The cash recycler can both receive and dispense cash.

Lest anyone forget the speed angle, Michigan-based Atrient offers custom-developed software solutions and a suite of applications exclusively for gaming operators. Its PowerKiosk is an extensible workflow engine designed to provide operators with the ability to reward players in new ways. Besides offering promotions, it can be a self-service tool for account management, allowing guests to spend less time in the player’s club line. PowerKiosk integrates with patron management systems developed by Aristocrat, Scientific Games, IGT and Konami. The PowerKiosk solution also has several modules that are managed through its control panel. The modules include promotional games, virtual drawings, account lookup, comp redemption, casino maps, slot machine concierge and idle-screen digital signage. The solution is placed in several prominent locations, including the MGM Grand in Detroit, Turning Stone Casino in New York, Casino Del Sol in Arizona and Prairie Band Casino Resort in Kansas. The company also touts an enrollment and card-printing kiosk. It enables guests to create a loyalty club account or reprint a card in less than a minute. Enrollment is quick. Done in under 30 seconds, the guest simply inserts their driver’s license and the kiosk scans the ID, captures relevant data, checks for existing accounts, and provides the guest with a new card. Card reprints are equally easy and fast, company officials say. It’s only the latest advancement of technology making the kiosk a secure and essential element of casino operations—offering functionality that only stands to grow more important going forward.

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Empowering Innovation Scientific Games shows its worldwide customers the next generation of casino technology BY FRANK LEGATO

martphones instead of player’s cards—or cash. Revolutionary new game styles that don’t involve spinning reels. Electronic wallets, club points, slot and table games, promotions, comps and room offers across all channels. These are only a few examples of the next-generation technology on display at Scientific Games’ “Empower” conference, held at the end of March at Planet Hollywood in Las Vegas. The diversified manufacturer stages this event for its customers from casinos around the world. For 11 years, the company held the conference at various casinos around the U.S. It was originally called the Bally Systems User Conference, because it focused on helping casinos get the most out of the former Bally Technologies’ industry-leading system solutions. Last month’s event was the first such conference staged to help customers get the most of the remarkable variety of technology the company has offered since the merger of Scientific Games and Bally.

Global Gaming Business MAY 2016

“Previously, it was the Bally Systems user group, and we’ve expanded it to show innovation across the board,” Scientific Games Chairman and CEO Gavin Isaacs told GGB. “We don’t have all our games here, but we have new games. We have skill-based games. We have new functionality in the systems, and in the lottery area. It’s really important, because our customers are becoming one. For instance, when you deal with VLTs, you’re dealing with lotteries. We thought that given our focus as a company, it made so much sense to bring everything together, and it’s working.” Speaking of technology, one of the event’s highlights was a keynote presentation with Apple Computer co-founder Steve Wozniak, who fielded questions from Scientific Games Enterprise CTO Steve Beason and from the crowd of attendees. But as intriguing as Wozniak’s session was, the real draw of the conference was instruction from Scientific Games professionals on the best use of all of the company’s slots, table games, systems and lottery products, and the always-popular sneak peek at future technologies being developed by the company’s Innovation Lab, headed by Senior VP-Technology Bryan Kelly. New technology was the main draw of the former Bally systems conference as well, so expanding it to encompass all areas of the casino and lottery industries made this year’s event particularly popular. Empower 2016 drew more than 700 attendees, representing 150 casinos around the world—customers included executives from South Africa, Australia, Peru, Argentina and several European jurisdictions, among others—plus several major worldwide lottery organizations. Isaacs commented that the conference allows Scientific Games and its customers to focus on the company’s products and new technologies, without the din of presentations from multiple manufacturers found at a trade show. “I think it’s really important we get to focus on explaining to our customers—without distractions—what our philosophy, what our message, what our innovation focus is all about,” Isaacs said. “It’s really important they understand what benefits (the legacy companies of) the combined entity can provide to each other, and how synergies come across from the dif-

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Top: Customers are shown Scientific Games system technology Middle: Company CEO Gavin Isaacs; CTO Steve Beason interviews Apple co-founder Steve Wozniak Bottom: Operators get hands-on demonstrations of new Bally products

ferent groups. I’ve had multiple people come up and say to me this is way more valuable than G2E.” He added that the benefits of Empower go both ways— the company’s executives and its customers learn from each other. “Some of these products are in the embryonic stage, and the customers have the opportunity to say, ‘We think this is great, but if you did it this way, I think it would be better.’ We’re empowering them, and part of that empowerment is them giving their feedback. The focus is on the customer, which is what we’re all about.” Empower provided a sneak peek at Scientific Games’ product plan with 50 exhibits, more than 40 learning sessions and 20 special “how-to” sessions involving the entire Scientific Games product portfolio. Attendees were shown how all of the company’s products fit together across multiple online and land-based channels. The one device tying everything together will be the smartphone. For instance, one innovation shown in a private room at last fall’s Global Gaming Expo that will be making its way to casinos within the next year is “Rapid Play,” a cashless wagering system centered around the mobile phone. Under this system, a player goes to a kiosk to deposit funds, and the kiosk creates a barcode that can either be texted to the player’s smartphone or printed on a ticket. The player then takes the phone to a gaming device and scans the barcode to a reader (supplied by Zebra) on the game, and starts playing. The amount on the code is automatically updated for another scan at cash-out, after which the phone or ticket is taken back to the kiosk to collect cash or a TITO ticket. The company also displayed a new “Lounge Table” (a working title) that works seamlessly within this system. It is a table with a touch-screen surface designed for four players in a community setting, on which there is no bill acceptor. The table will be available as a stand-up device or as a lower version for more intimate play between friends in a lounge setting. It’s designed to bring players of all ages together. One of the first games is a groundbreaking offering called “Dice Dice Frenzy,” a competitive game for four players. Players touch the screen to roll their dice, and trigger a progressive prize if matching five, seven or all 10 on the first roll. After that, it’s a race to achieve matching results on all 10 dice. Eighty percent of the total of all four wagers goes to the winner, with a 10 percent rake for the house and the other 10 percent to the progressive. According to Kelly, the dice rolls are “true rolls,” accomplished through “virtual gravity.” There is no random number generator. A similar product to be launched by the end of the year, called the Prizm table, consists of four games on a 65-inch, high-definition touch table surface, with a community bonus in the middle of the table. Other highlights of the conference included the “SG Universe,” a package of solutions designed to connect the player to the casino regardless of the channel being used. The SG Universe is offered as an omni-channel gaming experience, centered on players’ mobile devices. A key feature of this system is that it offers games wherever the player is—at home through SG’s “Play4Fun” social casino, or for money where

legal—and in casinos, all on mobile devices if the player chooses. Marketing also follows the player, who can earn loyalty points playing social games at home and redeem them at the casino. “Omni-channel means we are offering the same content wherever the player is,” Jeff Allen, senior director of product management for SG Interactive, said at a breakout session, “but with a common wallet, common marketing and a unified suite of content.” Empower drew 200 more attendees than the last Bally system user conference, but Isaacs says he expects next year’s conference to be larger still. “I think a lot of people were waiting to see how good this was, so next year, we’ll be expecting a lot more,” he said. “I think this gets stronger and stronger as the trade shows get weaker.” MAY 2016 www.ggbmagazine.com

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EMERGING LEADERS Making It Rain Eian Counts Vice President of Product Strategy, Rainmaker Group lthough Eian Counts joined the gaming industry a decade into his career, he has since taken the world of gaming technology by storm. For the past five years, Counts has worked for the Rainmaker Group, a company that specializes in price and profit optimization in the gaming, hospitality and realty industries. While he started with the company as director of architecture and development in 2011, Counts was recently promoted to vice president of product strategy. Equipped with a decade of experience from various software companies, including Microsoft, Counts found that the most challenging part about switching to the gaming industry was the difference in the industries themselves. “The expectations are different,” he says. “You must fully understand the industry and its challenges to make sure you are properly addressing them as a vendor.” Despite these challenges, Counts drew from his personal skill set to put himself on the road to success. He works well with the fact that this industry requires a lot of broad thinking. “You have to think of how each piece fits into the whole,” he says. A large part of Counts’ success has come from his ability to make longstanding connections in the “relationship-heavy” gaming industry, as he knew from the beginning that he would have to immerse himself into building relationships with other industry professionals in order to be successful. Although his personal qualities have contributed to his success, Counts also credits his professional teams. He has been fortunate to genuinely enjoy the company of his colleagues, describing his work environment as “being surrounded by smart, hard-working people that want to be working together.” Counts’ testament to the importance of positive work relationships highlights how crucial they are to enhancing not only one’s professional development, but also one’s personal development. If you are happy in the workplace, you are more likely to be successful, and Counts is an excellent example of this philosophy. Counts says the technological side of the gaming industry is an excellent way for upand-coming millennials to get involved in the industry, as they have been exposed to technology from an early age. “Technology breeds innovative ideas,” he says. “There is an inherent value in this familiarity with technology.” As the younger generations enter the professional workforce, careers involving technology are becoming more popular. This trend is beneficial to the gaming industry, where iGaming is simultaneously growing in popularity. Over the next 12 to 18 months, Counts is most looking forward to continuing his professional growth. He frequently self-evaluates his career path to ensure that he is on the right track to happiness and success. “I have ideas, hopes and aspirations; where does it all lead?” When asked what advice he would offer to millennials looking to start a career in the gaming industry, Counts recommends focusing on being self-aware. “Overextending yourself without being aware of it can have a negative impact,” he says. Counts believes it is very important to self-identify your strengths and figure out how to capitalize on them. “Only you know your strengths and weaknesses.” —Stephanie Adkison, The Innovation Group

Global Gaming Business MAY 2016

I Spy Daniel Duffiney Surveillance Manager, Grand Traverse Resort and Casino aniel Duffiney is the surveillance manager at the Grand Traverse Resort and Casino in Northern Michigan, where he has been working since turning 18. Needless to say, he has lots of experience in the gaming industry, having started as a dealer and eventually moving to surveillance, where he has quickly moved up the ranks to the position he currently holds. Though he has worked at the Grand Traverse for basically his entire professional career, Duffiney credits his time with organizations, even some outside of gaming, for having made him a better employee and boss. He serves as vice chairman of the Michigan Indian Gaming Communication Network (MIGCN), is on the board of a local nonprofit called Northport Promise that provides college scholarships to local students, and was elected to the local school board, where he is the treasurer. Duffiney recognizes these ventures as giving him the experience and knowledge to grow as an individual, which in turn has made him a more valuable employee. Duffiney acknowledges that he has always been a very logical person, with a knack for organization. He is able to see a problem, search out a solution and implement it successfully. Much as he did when he went to get his system technician certification, he was able to take a confident logical lead when converting their current system from analog to digital. By taking the initiative, he was able to help the overall success of the organization. Duffiney points out that having endeavors outside the workplace is always important. Obviously, he understands that always being present and making a noticeable effort to contribute is always important in the workplace; however, there are some things that cannot be learned at work. He recommends finding a place in your community that interests you, and volunteering your time to help them improve. Not only are you helping to create something better for a community that you belong to, but you are gaining valuable experience, contacts, confidence and humility. All of which go a long way in the workplace. —Chris Irwin, The Innovation Group

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Food for Thought Seth Makowsky Founder, Makowsky Restaurant Group hether it is working for a mentor or eventually becoming a business partner, Seth Makowsky, founder of Makowsky Restaurant Group (MRG), has proven that he can make restaurants and food and beverage concepts successful. Makowsky started MRG after working for some of the top companies in food and beverage, including Coca-Cola, Food Systems Unlimited and Earl of Sandwich. MRG is a boutique food-and-beverage advisory and management group specializing in improving workforce capability, process management and leadership. MRG’s gaming clients include the Hakkasan Group, Hollywood Park Casino and Delaware North Companies. Outside of the gaming industry, MRG’s hospitality clients include Hilton Worldwide, Panda Express, Wolfgang Puck and Gate Gourmet. The breadth and success of MRG are directly related to Makowsky’s formidable business acumen and previous work experience. Makowsky began his career at Coca-Cola straight out of business school at Emory University. After four years at Coke, Makowsky left to join one of his clients, Food Systems Unlimited, where he worked in both operations and corporate restructuring. During his tenure with the company, Food Systems grew four-fold. In 2007, Makowsky was appointed CEO of Earl Of Sandwich, a burgeoning sandwich chain started by Robert Earl. During his tenure, he was instrumental in growing the brand with placements in Disney (on both coasts), major airports, casinos, malls and travel plazas. Throughout his career, Makowsky has always sought out new challenges. “A willingness to venture into the unknown and start the next chapter has led to my biggest breakthroughs,” Makowsky says of his career path. “Fulfillment and growth are really what drives me.” This edict led him to branch out on his own to start a restaurant consulting practice. Since starting his restaurant consulting

“We embrace principles like reciprocation, civility, collaboration and incentives. We strive to be the best partner to one another and our clients.”

group, Makowsky has continued to grow a strong portfolio of clients and projects. While the top-line success has been great for MRG, Makowsky has learned that “culture is everything.” “We embrace principles like reciprocation, civility, collaboration and incentives,” he says. “We strive to be the best partner to one another and our clients.” By developing this culture, Makowsky hopes to continue to bolster the success of MRG. Concurrent with the strong corporate culture of the company, Makowsky is grateful for the relationships he has with his partners, co-workers and clients. “I am most proud of how my teammates and partners have grown over the years. It’s very fulfilling and inspiring to see people develop, flourish and accomplish wonderful achievements.” —David Rittvo, The Innovation Group

MAY 2016 www.ggbmagazine.com

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NEW GAME REVIEW by Frank Legato

Gold On Gold Aruze Gaming

his is a classic three-reel stepper base game on Aruze’s slick new Cube-X Innovator cabinet, which is a hybrid format that combines mechanical spinning reels with bonus features in a top-box video monitor. The base game is a three-reel, five-line game in the penny denomination, but unlike your traditional threereeler, which would never be placed in a penny denominations, available programs for this include top wagers of $2.50, $5, $7.50 or $10, with plenty of incentives inside the game for players to aim for that max bet. The main reason to wager up is the Gold Bonus, which adds a unique twist to the standard free-spin event. The Gold Bonus symbol on the third reel serves as a wild symbol in addition to triggering the free-game bonus. Before the free spins begin, a “Coin Award” is randomly selected from eight possible awards. For the lowest “any bar” combination, those awards range from 50 credits to 500 credits; for the top three red 7s, they range from 2,000 credits to 20,000 credits.

The Coin Award is then multiplied by the per-line bet. In the top game program, that means the $200 Coin Award becomes a $40,000 award at max bet. Once the Coin Award is selected, five free spins take place. Any time the “$” symbol lands on a reel spot during a free spin, the player wins the Coin Award. The bonus symbol also can land during free spins, triggering an additional five free games, with the same potential Coin Award. Manufacturer: Aruze Gaming Platform: Cube-X Innovator Format: Three-reel, five-line stepper slot Denomination: .01 Max Bet: 250, 500, 750, 1,000 Top Award: 2,000 times line bet, plus Coin Award Hit Frequency: Approximately 15% Theoretical Hold: 4.04%-12.9%

Great Gorilla AGS

his dual-progressive video slot is on the new AGS core cabinet called Icon, which features a thin profile, fun light effects and a highquality sound system. The base game is a five-reel, 50-line video slot on a four-by-five reel setup, with a minimum bet of 50 credits. Game play is centered around a feature AGS calls Dynamic Streaming Stacks. In this format, multiple large stacks of symbols are randomly inserted from spin to spin, increasing the frequency of five-ofa-kind and other big wins. The feature is particularly valuable in the free-spin bonus round. Three or more bonus symbols in any position on the reels triggers anywhere from five to 20 free games, with more free spins by

Global Gaming Business MAY 2016

retriggering the feature on a free spin. The two progressive jackpots are mystery events—they will hit randomly on an active spin, regardless of the resulting reel combination. They are both “Must Hit By” jackpots—each meter displays the level at which the jackpot is guaranteed to hit, adding to player anticipation and potentially resulting in doses of jackpot fever as it approaches the must-hit level. The secondary progressive resets at $200 and must hit before or when it reaches $500. The top progressive resets at $4,000 and must hit by $5,000. Manufacturer: AGS Platform: Icon Format: Five-reel, 50-line video slot Denomination: .01 Max Bet: 250 Top Award: $5,000 Hit Frequency: Approximately 50% Theoretical Hold: 4.9%-13.83%

GAMING EMPLOYEES: MAKE YOUR VOICES HEARD IN THE PRESIDENTIAL RACE Inform candidates that gaming is a valued community partner in 40 states delivering benefits that include:

1.7 MILLION JOBS

$240 BILLION IN ECONOMIC IMPACT

$38 BILLION IN TAX REVENUES

A PATH TO THE MIDDLE CLASS FOR WORKERS OF ALL BACKGROUNDS & EXPERIENCES

GET INVOLVED Join the American Gaming Association as we hold on-the-ground events in key states. Tell candidates to meet you and your co-workers and learn more about the industry. Visit gamingvotes.org and register to vote. Use #GamingVotes to get candidates’ attention on social media and let them know you’re paying attention to them.

WITH YOUR ENGAGEMENT, CANDIDATES WILL GET TO KNOW GAMING IN 2016. Learn more at www.gamingvotes.org and www.americangaming.org

facebook.com/americangaming @AmerGamingAssn

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Jackpot Inferno Everi

his new multiple-progressive video slot, on the oversized marquee-style Core HDX cabinet, employs a unique feature that instantly bumps a player up to a higher level of progressive through a unique picking bonus. The base game is a five-reel, 50-line game on a four-by-five reel setup. Progressives are won by landing from five to 12 Jackpot Inferno symbols scattered on the 20-symbol field. Five symbols return a jackpot resetting at $10, and the jackpots rise incrementally higher, with the top three resetting at $800 for 10 symbols, $2,000 for 11 symbols and $5,000 for 12 symbols. The unique part is called the “Jackpot Jump.” When at least five Jackpot Inferno symbols land on the screen, the display shows 20 game-themed symbols. The player is given three picks to reveal credit prizes ranging from 10 times the total bet to 200 times the total bet, two additional picks, or a Jackpot Inferno symbol. This causes the progressive award to jump one tier higher. There also is a free-spin bonus, triggered when three,

four or five bonus symbols land scattered on the reels. Each triggering combination awards free spins plus an initial bonus award: Three bonus symbols award two times the total bet and six free spins. Four symbols award five times the bet and 10 free spins; five bonus symbols return 10 times the bet and 20 free spins. Manufacturer: Everi Holdings Platform: Core HDX Format: Five-reel, 50-line video slot Denomination: .01, .02, .05 Max Bet: 250 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 2%-15%

Sugar Hit Jackpots Aristocrat Technologies

ristocrat takes a page from the mobile video game craze with the candy theme of this new series of multiprogressive video slots, called the Sugar Hit Jackpots Series. Initially launching with three separate base-game titles, the series fits into what the manufacturer calls the “J*Series” of games offering progressive jackpots. The initial titles—Reel Sweet Stacks, Rich Rich Chocolate Respins and Cool I Scooped It Again—are all available with colorful carousel artwork making them perfect to be banked together. The games are each available in two of Aristocrat’s popular new cabinets—the Arc Single (pictured), which features a 42-inch highresolution LCD screen in a concave curved shape; and the Helix, featuring two floating 1080p-resolution LED display monitors, immersive rear-surface ambient lighting and a quad sound package. The Sugar Fairy is a player’s muse through each of the three titles. Each title employs a 40-line base game on a five-by-four reel layout, and each includes a four-level progressive jackpot with a trigger based on Aristocrat’s popular stacking mechanic, along with frequent mini features. Plus, all mini features and free games improve the chance of winning jackpots. Adding to the fantasy are player-selectable 3D 78

Global Gaming Business MAY 2016

reels and oversized scatter symbols. Reel Sweet Stacks includes a Wild Reel feature that awards players more stacks and a greater chance of winning the jackpots. Rich Rich Chocolate Respins has a re-spin feature that provides more chances to win a jackpot. Cool I Scooped It Again gives players a chance to win up to five of the same jackpots in a single spin. The four progressives apply to all games, with resets of $2,500 for the Grand, $300 for the Major, $60 for the Minor and $10 for the Mini. Each jackpot is identified with a reel symbol, and is won when the symbol lands stacked on three reels. All titles have a 60-credit minimum bet and high volatility. Manufacturer: Aristocrat Technologies Platform: Arc Single or Helix Format: Five-reel, 40-line video slot Denomination: .01 Max Bet: 600 Top Award: Progressive; $2,500 reset Hit Frequency: Approximately 50% Theoretical Hold: 4%-14.5%

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FRANKLY SPEAKING by Frank Legato

Mountains, Mud and Revel

Global Gaming Business MAY 2016

RINALDO

tracks,” Straub told Forbes. “We’ll also have mud runs where we’ll raise $1 million a day for cancer charities. Girls will get dressed in pink tutus and run around on our race track in the mud.” Wow. Pink-tutu babes covered in mud, running around. Maybe not the kind of family entertainment envisioned by some for Atlantic City, but hey, I’m there. He also plans a “life-extension facility” for Revel. “They’ll replace any organ in your body that’s not doing well,” Straub said in the interview. “Your hips, your lungs, your heart.” Wow again. Do you think they’ll offer organs as player-club giveaways? “It’s Transplant Tuesday at Revel! Every 10,000 points earns a lung! Kidneys and spleens are 5,000 points each!” No, Straub takes this stuff seriously. He says he personally plans to live to 105. “After that you shrivel up too much,” he told Forbes. That’s what I always say: Once you reach 105, it’s all downhill from there. Unless they invent cyborg bodies. Then, Straub would have to transform his life-extension facilities into showrooms for the cyborg bodies, just like that one episode of The Twilight Zone. And if Straub can bring Atlantic City out of its own Twilight Zone with his grand plans for Revel, more power to him. He says that he and his other billionaire pal, Carl Icahn, are going to make Atlantic City “10 times what it’s now worth.” Personally, I’m all for it. Just don’t forget the tutu-girl mud race. If that doesn’t bring in the high rollers, nothing will.

VICT OR

y now, we all know the story of the Revel in Atlantic City. It was built for $2.4 billion, touted as the smoke-free, high-end Borgata of the Boardwalk—a place to which young people from all over the Northeast would flock to gladly pony up $250 for a weeknight room so they could sit in a club with a DJ and drink vodka for $400 a bottle. Subsequently, in recession-ravaged New Jersey, the glitz and glamor of Vegas-style partying appealed to about six people, and what was arguably the most beautiful hotel ever built in Atlantic City’s modern era closed in just two years. But the more intriguing story may lie in the man who eventually bought the shuttered property, Florida developer Glenn Straub. He snatched up the Revel for a bargain-basement $82 million. The last time we visited Straub in this space, he was busy patching up holes in Revel caused by kamikaze seagulls, and doing everything he could to keep the place from looking like an abandoned rust-belt factory. But he’s planning on opening Revel back up on June 15, so evidently, he has figured out a way to keep the winged vagabonds from crashing into the guest rooms. He’s actually figuring out much more than that, according to the man himself, who was the subject of a profile and interview last month in Forbes. He says he is sinking $500 million into Revel to create a year-round attraction that will offer just about every amusement you can think of. Straub, 69, is a fascinating fellow. He spends a lot of time and money on self-preservation—as in preserving his own body from the ravages of time. I fancy myself a fairly clever writer, but I admit that after reading the Forbes piece, I had to look up “cryotherapy.” Remarkably, it has nothing to do with crying. It means using cold to preserve your body, as in packing yourself in ice periodically. (The advantage, of course, is that in case you do croak, your carcass won’t spoil.) Straub practices cryotherapy, and also gets regular vitamin transfusions. “Once a week you can sit there and get a transfusion with the nutrients you need,” he told Forbes. “That’s what allows me to go out and play polo like I’m 20 years old.” Man, if I could play polo like I did when I was 20… I still couldn’t play polo, because I never played polo. But I digress. I must admit, Straub does look pretty good for a 69-year-old. Well, except that he wears his tie like his buddy Donald Trump, which is to say it’s so long it must drag on the ground like an ape’s knuckles. But again, I digress. What really intrigues me about Straub is his ambition for the Revel. He plans year-round recreation facilities including a water park, horse jumping (like in polo, as opposed to the old diving horse), an art fair, rope courses, and even a friggin’ ski jump on a fake mountain, for crying out loud! “We’ll have frozen mountains with ski runs and half pipes and moto cross

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or the last 14 years, GGB magazine has published an annual supplement, Casino Design magazine, highlighting architecture, design and construction of casino resorts. With dozens of casino resorts being built every year, Casino Design showcased the renovations and re-designs of existing properties and highlighted the importance of non-gaming amenities. Because we believe that design is at the heart of every casino experience, we have expanded our focus of non-gaming amenities. Casino Design magazine will now become Casino Style magazine. We will still cover the design and construction of casino resorts, but our coverage will encompass every aspect of the guest experience:

• Food & Beverage • Hotel Operations • Nightlife & Entertainment

• Meetings & Conventions • Pools & Spas • Other Non-Gaming Amenities

Casino Style will delve into the non-gaming customer; what attracts them to your property, what marketing seems to work best, and how analytics are changing the way casino resorts operate. Casino Style will be published to coincide with the dates of Global Gaming Expo (G2E) and its co-located trade show and conference, the Integrated Resort Experience. Casino Style will be the go-to guide for trends that shape the future of the casino resort experience. We’re sure you will be as excited as we are when you get your hands on the first copy of Casino Style magazine.

Roger Gros, Publisher rgros@ggbmagazine.com

For information & sponsorship opportunities contact: JOHN BUYACHEK Sales Director 702.248.1565 ext. 227 jbchek@ggbmagazine.com

FLOYD SEMBLER Business Development Manager 480-231-8433 fsembler@ggbmagazine.com

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CUTTING EDGE by Frank Legato

Data Power Product: CasinoEdge Powered by Intacct Manufacturer: Joseph Eve CPAs

asinos sometimes waste resources in the most unlikely of places. Process and workflow inefficiencies are two examples. They don’t appear on financial reports, and are often overlooked in budget meetings; however, inefficiencies from antiquated IT solutions can be a constant drain on a casino’s budget. Joseph Eve CPAs’ advanced CasinoEdge powered by Intacct enables modernized accounting, reporting procedures and strong controls which create a lean workforce, visibility and insight, empowering operators to make better decisions. CasinoEdge combines the power of Intacct cloud enterprise resource planning (ERP) with Joseph Eve’s decades of casino expertise. While most legacy casino systems were designed before modern technologies (like the internet, smartphones and tablets), CasinoEdge was created in the age of the cloud. It is built to allow financial and operational metrics to be sliced in any number of relevant ways. Stakeholders throughout the organization can then better understand their programs and areas of responsibility, helping them to make improved strategic decisions. CasinoEdge is the first and only cloud-based ERP tailored specifically for the gaming environment. It helps casinos increase efficiencies, reduce costs, empower better decision-making and reduce errors. CasinoEdge modernizes the back office and enables daily flash reporting from any de-

vice, streamlined revenue audit posting, automated processes, and management of multiple properties. All financial processes are mobile-enabled, meaning purchases, bill payments, check requests and employee expenses can be approved from anywhere, anytime. Additionally, casinos can easily scale their ERP with ease as they add facilities without adding head count. Specifically, the software enables: • Electronic purchasing and purchase approvals from any device (computer, tablet, smartphone); • Better decision-making utilizing user-friendly on-demand reports and dashboards that pair operational data with financial data for any defined time period; and, • Increased accuracy through a revenue audit and posting process that is simple, more automated, less error-prone, and consistent across all three properties. Casinos using the CasinoEdge solution have reported ROIs as great as 222 percent, along with costs of ownership that are as much as 63 percent less than the solution being replaced. For more information about the CasinoEdge solution, visit josepheve.com.

Real-Time Service Product: Mobile Assistant Manufacturer: MicroFirst Gaming Inc.

icroFirst Gaming is in its 30th year of delivering innovative gaming products, but one of the company’s most recent successes both in the United States and overseas is Mobile Assistant, one of MicroFirst Gaming’s “Power Packed Application” products. Mobile Assistant provides real-time automated event notification to a casino’s staff on a mobile device, delivering an enhanced player experience by reducing the amount of time the player has to wait to be serviced. While this improves response time, it also reduces the staff required to service a casino floor. Most recently added to Mobile Assistant is the ability to now notify a host when a VIP inserts a player’s card at a slot machine. Mobile Assistant offers additional tracking features and user-friendly configuration capabilities. After comparing the data from varying installations, the average response

Global Gaming Business MAY 2016

time dropped by over 70 percent when using Mobile Assistant. This significant improvement delivers a superior customer service experience and provides a more efficient use of the available staffing resources. One of the unique features of doing business with MicroFirst Gaming is the “Make It Yours” (MIY) professional services offering. This offering—available with most of MicroFirst Gaming’s Power Packed Applications, including Mobile Assistant—allows the operator to modify and customize the application to fit its unique wants and needs. MicroFirst Gaming’s suite of Power Packed Applications offers the casino operator many solutions that otherwise would not be available. These solutions keep players at the slot machines and promote the use of mobile devices, allowing the casino operator the flexibility to implement processes that are best fit for their property. Coming soon will be an enhanced Power Packed Application: MicroFirst Gaming is now accepting pre-ordering with special discounts for Speedy Serve Mobile, a complete mobile beverage solution. For more information, visit microfirst.com.

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New Awards Program Front and Center at G2E Asia The first Asia Gaming Awards will honor operators, suppliers, online and land-based gaming The organizers of the Asia By Patrick Roberts

he inaugural edition of the Asia Gaming Awards to honor the gaming industry will be held on May 17 concurrently with G2E Asia, at the Venetian Macao. The awards will be produced by Asia Gaming Brief, in association with G2E Asia and the Innovation Group. The AGAwards will be an annual event to reward excellence and innovation in the gaming industry, with a clear focus on quality. Companies will be judged in 11 categories spanning the land-based and online spheres, with an additional category recognizing the achievements of up-and-coming leaders in the Asian gaming industry. The categories are: • Best Casino Operator • Best Integrated Resort • Best Casino Design • Best Table Games Manufacturer • Best Electronic Game Machine Manufacturer • Best Industry Supplier • Best Online Operator • Best Online Supplier • Best Mobile Solution • Outstanding Contribution in the Field of “Innovation” • Special Recognition of Young Industry Leaders under 40

The organizing committee comprises senior industry figures who have been selected for their reputation and experience in the Asian gaming industry: David Green, principal, NewPage Consulting; David Rittvo, executive VP international, the Innovation Group; Manuel Neves, former head of the Gaming Inspection Coordination Bureau (DICJ); Peter Cohen, director, regulatory affairs, the Agenda Group; and Tim Craighead, director of Asian research and senior gaming analyst, Bloomberg Intelligence. David Green, the chairman of the organizing committee and judging panel, said, “These awards are the result of a rigorous process, intended to identify and recognize the very best players in the gaming industry in Asia. It is not a beauty contest—the criteria used in judging achievement

Global Gaming Business MAY 2016

Gaming Awards include David Green, chairman of the AGAwards, and principal with NewPage Consulting; Luis Pereira, managing director of AGBrief; and Josephine Lee, vice president of Reed Exhibitions

are both comprehensive and objective. “The judging panel has a deep understanding of gaming in general, and gaming in Asia in particular. We look forward to the awards becoming an established annual highlight of G2E Asia, and expect that they will be much sought-after by the industry. It is important that industry successes are celebrated by the gaming industry, and where better than at G2E Asia?” Luis Pereira, Asian Gaming Brief managing director, added, “AGB believes in developing the Asia Gaming Awards as a fair, independent platform to

recognize and celebrate the achievements of the industry.” Rosalind Wade, AGB managing director, said, “We are proud to be spearheading this exciting event with the team at G2E Asia and with the Innovation Group. It will no doubt become a high point in the Asian gaming events calendar.” The AGAwards Gala Dinner and Award Ceremony will be held at 7 p.m. on May 17 at the Venetian Macao. The winners of the 11 award categories will be announced and congratulated before the entire industry.

G2E ASIA CONFERENCE PROGRAM FOCUSES ON NON-GAMING

ith a stepped-up focus on non-gaming attractions in Macau, G2E Asia has enlisted some expert speakers and detailed conference sessions explaining how and why these can be produced in the SAR. On Wednesday, May 18, MGM China partner Pansy Ho will deliver a keynote speech and then moderate a session, “Hand in Hand: Gaming & Retail Working Together.” Ho has been instrumental in Pansy Ho will present her vision attracting many of the world’s most important retailers and brands to for retail in Macau at the G2E Macau, catering to mainland Chinese who rate shopping at the top Asia Conference of their “to-do list” when they visit the SAR. Following Ho’s session, GGB Publisher Roger Gros will moderate a panel, “Beyond Gaming: Tracking the Value of the Non-Gaming Customer,” featuring speakers Jim Dennedy, the CEO of Agilysys; and Sam Sheng, vice president of Integrated Resorts International Ltd. Later in the day, Bloomberg Intelligence will feature a market session, “Chinese Millennial Travelers Shaping the Future of Macau Tourism.” Andrew Zarnett, managing director of Deutsche Bank, will moderate a session “Transformation in Changing Conditions: What Does the New IR Look Like?” and Global Market Advisors Principal Andrew Klebanow will moderate “Growth & Stability: How to Maximize Current Customers and Optimize Total Revenue” featuring speakers Jim Walker, senior vice president of Agilysys; and Rory Fagan, vice president of gaming for Duetto Research. Paulo Martins Chan, the new director of the Gaming Inspection and Coordination Bureau, will explain his views as he takes over as Macau’s chief regulator, in his first appearance at a gaming conference. And on Thursday, the G2E Asia conference concludes with a full day of interactive gaming, the iGaming Summit.

THE INDUSTRY EVENT FOR

FORWARD-LOOKING CASINO OPERATORS AND SUPPLIERS IN ASIA

NETWORKING, EDUCATION AND BUSINESS INSIGHT. may 17-19, 2016 the venetian macao

come experience g2e asia and get the insight you need to win in the market.

A G2E EVENT

ORGANIZED BY

PRESENTED BY