Global Gaming Business, May 2018 by Global Gaming Business

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GGB Global Gaming Business Magazine

SPORTS BETTING TECHNOLOGY FUTURE OF THE CASINO FLOOR SLOT DESIGN SOCIAL GAMING SUIT

May 2018 • Vol. 17 • No. 5 • $10

Choctaw Challenge Economic diversity has always been a tribal hallmark in Mississippi

Atlantic City Boomed, Busted,

May Boom Again Hopeful in Japan

The long and painful process for gaming legalization may find fruition Official Publication of the American Gaming Association

Association of Gaming Equipment Manufacturers

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CONTENTS

Vol. 17 • No. 5

may

Global Gaming Business Magazine

COLUMNS

16 COVER STORY AC Gaming at 40

12 AGA Casino Collaboration

As the Atlantic City gaming industry marks its 40th anniversary, profits are back up after a painful right-sizing. But two formerly shuttered Boardwalk casinos being reborn as new properties this summer will test the market’s rebound.

Geoff Freeman

14 Fantini’s Finance Trade War Frank Fantini

56 Slot Operations That Winning Feeling Steve Walther

By Marjorie Preston

58 Table Games The Five-Minute Degree Roger Snow

60 Legal Little Fish, Big Problem?

FEATURES 22 Floor of the Future

Greg Gemignani

DEPARTMENTS

What do the top slot executives in the business think about the future of the gaming floor? The first Episode of the UNLV Gaming & Hospitality Education Series opened the door.

The Agenda

By the Numbers

10 5 Questions

By Frank Legato

28 Japan’s Long Debut The long process of creating a new market of integrated gaming resorts in Japan is finally nearing an imperfect but workable finish.

15 AGEM 48 Emerging Leaders With Gaming Capital Group’s Melissa Cox and Caesars Entertainment’s Michael Marino

By Steve Gallaway, Brendan Bussmann and Kit Szybala

50 Frankly Speaking

36 Choctaw Revival

52 New Game Review

Chief Phyliss Anderson continues to restore unity and financial stability to the Mississippi Band of Choctaw Indians, its casinos, and the vision of the late Chief Phillip Martin. By Dave Palermo

42 Ready for Sports Betting Technology suppliers are ready to empower the creation of secure sports-betting operations in a legal environment likely to be emerging soon. By Dave Bontempo 4

Global Gaming Business MAY 2018

62 Cutting Edge 64 Goods & Services

65 People 66 Casino Communications With Bob Boughner, Partner, Global Market Advisors

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THE AGENDA

The eSports Dilemma Roger Gros, Publisher

or me, video games were the things that I told my kids to stop playing and go outside to get some fresh air. For many in the casino industry, it’s the next big thing. Yes, I will probably be called an old curmudgeon, after you read this. But what is a curmudgeon anyway? Six or seven years ago, I was invited by a casino executive to visit the Cosmopolitan of Las Vegas to witness an eSports tournament. She was excited about it, so I thought I’d check it out. And she was right. I was impressed. It was a Friday afternoon and literally thousands of young people—lots of them looked too young to be in a casino—were packing the hotel’s meeting and convention space. The ballroom that hosted the actual tournament had a stage where several players were competing against each other in League of Legends (I had never heard of that game, but apparently it was pretty big). There were announcers— play-by-play and color commentators—explaining what was going on. It was all gibberish to me. But the kids seemed to be having fun and I’m guessing the casino sold some food and drink. But today, the eSports industry is massive. The involvement with the casino industry progressed from those Cosmopolitan days and now many casinos host such tournaments. I’m assuming they do well with non-gaming revenues, but I understand the impact on gaming revenues is negligible. Some casinos are installing semi-permanent facilities. It started with the Downtown Grand in Las Vegas, where an eSports lounge was placed on the casino floor and was soon moved to the adjacent hotel because the eSports players were disturbed by the sounds of the slot machines! MGM Resorts recently opened an eSports Arena in Luxor at the site of a former nightclub. The layout is well done, plenty of bars and play stations, but the food misses the mark, I expect. Lots of sushi, which I’m doubtful that the video game players care much about. This arena complements MGM Grand’s Level Up gaming area, which includes video games, skill games and electronic table games, a mish-mash of supposedly millennial-friendly attractions. Caesars built a studio on the back parking lot of Bally’s Las Vegas, and hosted a tournament there

Global Gaming Business MAY 2018

produced by Gears of War (don’t ask). Again, lots of people, lots of action, but I’m still not sure where they made any money. The food and drink was supplied by food trucks and vendors outside the building. Caesars is also the home in the same facility to H1Z1 Pro League, that will host a full season of video game competition with teams like Gankstars, SetToDestroyX and Tempo Storm. Lots of locals and regional casinos are also getting in on the game, hosting weekend tournaments or superstar appearances from the top video gamers. I guess this makes some sense. After all, these are the gamers (casino gamers) of the future. We’ll get them into the casino environment early, develop skill games that mimic video games, and eventually they’ll give us their disposable income. But wait. There are billions of dollars already being spent by dweebs playing in their bedrooms. Why should they come out to a casino to play the games they love? Casinos have to present something really different if they want to capture this audience at the time they actually have that disposable income—or any income at all, for that matter. Admittedly, I never played video games. I remember sitting at a bar in the late ’70s playing Pac Man occasionally, but that’s as far as it went. So maybe I’m missing something. I certainly hope so. OK, this is a casino, so can we bet on it. Sure, I think. But the best eSports players are teenagers. Can you bet on them? You can in the Olympics, so why not? But can they throw a game without anyone noticing? No, says my sports analytics geeks. And we’ve already seen wagering on eSports approved in specific situations by Nevada gaming regulators. Not much action, I’m afraid. So what’s the answer? Thankfully, the UNLV International Gaming Institute is hard at work on this issue. They’ve established an eSports Lab under the direction of former casino exec Robert Rippee. We should know more come October 24 when the UNLV Gaming & Hospitality Education Series presents an episode on eSports and sports betting. Check out the details on UNLVGHES.com. Until then, we’ll keep our antennae up about eSports, but I’m getting outside for some fresh air this summer.

Vol. 17 • No. 5 • MAY 2018 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Monica Cooley, Art Director | cooley7@sunflower.com John Buyachek, Director, Sales & Marketing jbchek@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com twitter: @LisaJohnsonPR Columnists Frank Fantini twitter: @FantiniResearch Geoff Freeman twitter: @GeoffFreemanAGA Greg Gemignani | Roger Snow Steve Walther Contributing Editors Dave Bontempo twitter: @bontempomedia Brendan Bussmann | Steve Gallaway Dave Palermo twitter: @DavePalermo4 | Marjorie Preston Angela Slovachek | William Sokolic | Kit Szybala

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

•

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

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

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

• Dean Macomber, President, Macomber International, Inc.

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

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, Vice President Systems Sales, Scientific Games

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

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

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

• Roy Student, President, Applied Management Strategies

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

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BY THE

NUMBERS

MILLeNNIALs AND NIGHTCLubs

I am more likely to go to a nightlub in Las Vegas than in my hometown. Very True Completely False Somewhat True Somewhat False Neither True or False

aming scholar Oliver Lovat is noted for his in-depth research, extensive surveys and astute observations. In June 2016, he published a paper for the Center for Gaming Research at the University of Nevada, Las Vegas called “Elvis Who?: Understanding, Attracting and Retaining the Next Generation of Las Vegas Customers.” In the paper, he describes how millennials visit Las Vegas casinos—how they plan their visit, what they do when they get there, how much money they spend and where they spend it. The charts here are the information they provided about their nightclub experience. To download a copy of the paper, visit Gaming.UNLV.edu.

he Association of Gaming Equipment Manufacturers released the 2017 Census of gaming equipment in use, compiled by Eilers & Krejcik Gaming. The report covers slot machines of all sorts, and includes a survey of table games in use in North America. Clearly the biggest growth segment during the last eight years has been in baccarat, which grew at an 8 percent clip. Blackjack remains the most popular game in the North American market, but poker tables have begun to comeback after several years of decline. To obtain a copy of this Census, visit AGEM.org.

North America Table Mix - CY17

40%

37%

30%

27%

20%

18% 9%

10% 0

5% None

North America Table Game Mix Growth Rates

Baccarat 8%

Blackjack 42%

Poker 24% Roulette 6% Craps 5%

Yes - Always Sometimes Never

How many clubs do you visit on the average Vegas trip (including dayclubs):

Table Tally

Specialty 15%

Do you go to nightclubs when in Vegas?

Global Gaming Business MAY 2018

2% 5

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NUTSHELL

“They

5Questions

Jerry Epstein CEO, Engaged Nation

erry Epstein is a recognized leader in marketing communications, spending three decades leading Jcommunications companies with innovative strategies for brand development, new product launches and marketing for many casino hotels and integrated resorts. Along with co-founder Bill Paulos, Epstein operates Engaged Nation, a company specializing in gamification to create attention and loyalty for any casino brand. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: When did gamification really become a thing? Epstein: The concept is quite old. You might remember—I do—S&H Green Stamps or Plaid Stamps.

1 2 3 4 5

You’d go to the market and they would gamify it by giving you Green Stamps that you’d put in a book and take to a retail redemption center. Inside and outside the casino industry, gamification has been viewed as “pay for play.” So to a certain extent, a players club program is gamification. Other applications are points for your credit card use, airline miles and the like. But the modern way that we see it is you’re paying people for their investment. You’re rewarding them and driving them to your property ultimately to generate incremental visits and revenue.

Said It”

“This is a unique opportunity to acquire an investment in a globally recognized entertainment corporation with exceptionally high-quality assets and a significant development pipeline.” —Galaxy Entertainment Group Vice Chairman Francis Lui, commenting on his company’s purchase of 8 million shares in Wynn Resorts after founder Steve Wynn, who resigned as Wynn Resorts chairman amid sexual misconduct allegations, sold his entire stake

CALENDAR May 2-3: Southern Gaming Summit, Beau Rivage Casino Resort, Biloxi, Mississippi. Produced the Mississippi Gaming & Hospitality Association and Global Gaming Business. For more information, visit SGSummit.com. May 10-11: JgC Japan Gaming Congress, Conrad Tokyo, Tokyo, Japan. Produced by Clarion Gaming. For more information, visit JapanGamingCongress.com. May 15-17: IAGA International Gaming Summit, The Venetian Macao. Produced by the International Association of Gaming Advisors. For more information, visit TheIAGA.org.

Why has this taken so long to get a foothold in the casino industry?

May 15-18: G2E Asia, the Venetian Macao. Produced by American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com.

Everyone says they want to be a leader, but they don’t want to be first. Gamification a very misunderstood and often misused term. It’s not just slapping a logo on a game; it’s offering an experience to a player to keep them coming back to the property. There are a lot of different ways you can implement these programs, and the casino industry is just starting to realize how powerful they can be.

May 17: UNLV Gaming & Hospitality Education Series, International Gaming Institute, University of Nevada, Las Vegas. “Data Analytics.” Produced by Global Gaming Business. For more information, visit UNLVGHES.com.

What’s the theory behind this game play?

We immerse them in the experience. It’s very much like what the casino industry is trying to create on the floor—have fun in an immersive experience that is rewarding and challenging. When you put it together in the right way, you’re bringing people in or online and we’re educating them about the property so they actually become brand ambassadors. And for their investment of time—they do have fun while they’re doing it—we reward them with virtual currency or instant rewards like a drawing entry that drives business. Sounds like there is real science behind this.

May 30-31: GiGSE 2018, The Biltmore, Miami, Florida. Produced by Clarion Gaming. For more information, visit GIGSE.com. May 30-31: Vienna International Gaming Expo (VIGE), Danube City Tower, Vienna, Austria. Produced by European Gaming Media and Events. For more information, visit ViennaGamingExpo.com. May 30-June 1: Juegos Miami, The Biltmore, Miami, Florida. Produced by Clarion Gaming. For more information, visit JuegosMiami.com.

For sure! Gamification is changing motivational behavior to the desired outcome of the casino. And to get this desired result, the casino needs to determine what the goal is. Is it reactivation of old customers, acquisition of new customers? It really is a science.

June 5-7, 2018: North American Gaming Regulators Association (NAGRA) Annual Conference 2018, AT&T Exec Education Conference Center, Austin, Texas. Produced by NAGRA. For more information, visit nagra.org.

So gamification allows a casino operator to touch his customer on an ongoing basis, even when they’re not at the casino?

June 7-8: Russia Gaming Week, EcoCenter Sokolinksi, Moscow, Russia. Produced by Smile Expo. For more information, visit RGWeek.ru.

Funny, but just a couple of years ago lots of casinos were saying, “My baby boomer customer doesn’t engage in technology.” Well, that’s absolute nonsense. They engage just as much as or even more than millennials. Even if they did admit that they were tech savvy, they said they didn’t want to engage them at home, they wanted them in the casino. Today, a mobile device is a portable entertainment center. Do you want them to engage with you or play games with someone else? The opportunity to keep them connected with your brand, with your messages on an ongoing basis is really the foundation of what we call continuous engagement.

Global Gaming Business MAY 2018

July 13-15: National Council of Legislators from Gaming States (NCLGS) Summer Meeting, Cleveland Marriott Downtown at Key Center, Cleveland, Ohio. Produced by NGLGS. For more information, visit NCLGS.org. August 14-16: Australasian Gaming Expo, ICC Sydney Darling Harbour NSW, Australia. Produced by the Gaming Technologies Association. For more information, visit austgamingexpo.com.

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AMERICAN GAMING ASSOCIATION

Casino

Collaboration A new approach to responsible gaming By Geoff Freeman, President & CEO, American Gaming Association

T THE

SMART BET T

We W e know k now how how to t o keep keep the t he h players p layers you you have have and a nd get ge t tthe he o ones nes you you want. wa nt . Because B e c au s e no n o one one knows k nows ccasinos a si nos like l i ke RPM. R PM. And A nd w with it h nearly nea rly 220 0 years y ea rs of of gaming ga m i ng industry i nd u s t r y experience, e x per ience, we’re we’re just ju s t getting g et t i ng started. star t ed.

Call uss ttoday C all u oday aatt 800-475-2000 800-475-20000 rrpmadv.com pmadvv.com 12

Global Gaming Business MAY 2018

here are many obstacles to gaming’s continued growth and innovation, but one of the most significant is also one of the least understood—concerns among policymakers, regulators and other stakeholders over problem gambling. At Disney World today, guests are outfitted with a MagicBand—a Fitbit-like device that lets customers do everything from unlock hotel doors to pay for food and merchandise. The MagicBand also allows Disney to personalize the vacation experience, with special offers and benefits. Princess Cruises offers the Ocean Medallion, providing many of the same conveniences that go into creating a seamless vacation. However, innovations like this are currently closed to the gaming industry. In fact, casinos are not even allowed to accept credit cards or other forms of digital payments from gaming customers—in part because of negative perceptions about the issue of responsible gaming. Every year, gaming companies invest an estimated $300 million in programs, employee training and compliance measures aimed at promoting responsible gaming, preventing problem gambling, and ensuring that people who need help get it. Yet, we get little credit. Responsible gaming advocates believe we should be doing more. Policymakers are skeptical about our commitment. And our programs are seen as ineffective. Clearly, our current approach needs to change. It’s time for our industry to take a leadership role that will change the misperceptions about our commitment to dealing with this important issue. To help accomplish this goal, the American Gaming Association recently launched the Responsible Gaming Collaborative. This Collaborative includes the entire gaming industry—AGA, the National Indian Gaming Association, the Association of Gaming Equipment Manufacturers, the North American Association of State and Provincial Lotteries, and the National Thoroughbred Racing Association. It also includes advocates from the National Council on Problem Gambling and the National Center for Responsible Gaming—along with experts from the University of Nevada, Las Vegas International Gaming Institute, Harvard University’s T.H.

Chan Public School of Health and Yale School of Medicine. I believe there are three main areas where the Responsible Gaming Collaborative can have an impact. First, we need to ask the right questions about the programs being funded. Rather than the exclusive focus on the prevalence of the problem, let’s also focus on effectiveness by asking things like: What responsible gaming programs are actually working? And which policies are failing to meet their goals, get help to those who need it, or deliver any consumer or public benefit? Second, we need to ensure that government and other stakeholders are supporting and promoting the best programs based on evidence, sound science and results. A few years back, one state decided ATM machines couldn’t be within a 15-foot radius of video lottery terminals. That limit was later reduced to 10 feet. Casino operators asked to cut it to 7 feet to align with standardized gaming floor plans—but were denied. Has anyone seen research suggesting why ATMs are safe within 10 feet of machines, but not 7 feet? Of course not. We need a unified understanding about what works—with clear, consistent policies driven by evidence-based research, not arbitrary judgments and misperceptions. Third, we need to demand accountability for results. Our industry generates millions of dollars for state governments to direct to responsible gaming efforts, but is all the money really being targeted toward effective programs? How much of is just winding up in a state’s general fund? It’s time we all found out. The Responsible Gaming Collaborative held its first meeting last month. We’ll be convening throughout the coming year to advance these goals and evaluate our progress. If we succeed, we’ll gain a clear understanding of what programs actually work when it comes to promoting responsible gaming. We’ll make sure that tax revenues generated by the gaming industry are truly flowing to those programs. We’ll hold government accountable for results. And we’ll make progress in transforming perceptions about our industry’s commitment to this important issue—and create a better environment for gaming’s future.

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FANTINI’S FINANCE

Trade War What will tariffs with China mean to gaming?

of the moment of this writing, President Donald Trump has announced he might triple tariffs on China by adding $100 billion in products subject to tariffs to the $50 billion he earlier announced. China is responding more assertively than it did after Trump’s initial announcement, saying it will impose its own severe tariffs and will not negotiate trade issues under current circumstances. Now, this might be posturing by both sides before they do, in fact, sit down to negotiate. However, it raises the threat that a trade war might, indeed, break out. Thus, it is worth asking what impact a trade war could have on the gaming industry. Here is speculation on some possibilities: • Fewer Chinese coming to the U.S., and to Las Vegas in particular. A trade war accompanied by what amounts to a propaganda war has the potential to reduce the number of Chinese coming to the U.S. The Chinese government could restrict travel through regulation, or many Chinese might feel uncomfortable coming to the U.S., especially the kind of high-profile wealthy Chinese who fill Las Vegas baccarat pits. Baccarat comprises 20 percent or more of Las Vegas Strip gaming revenues. Obviously, only a fraction of bac players are mainland Chinese, but it’s an indication that a significant reduction in Chinese visitors could have an impact, especially on the handful of companies with high-end baccarat play—Wynn Resorts, MGM Resorts, Las Vegas Sands and, to a lesser extent, Caesars. • Recession or slowing economy. There are increasing signs that we might be at the end of the business cycle with job growth slowing, but wage pressures rising, leading to fear of both inflation and the impact on the economy as the Federal Reserve Board raises interest rates to combat inflation. A trade war that can chip another half-percentage point or so off the economy could help add to the possibility of recession, or to the strength of a recession that might occur, anyway. Recession obviously means fewer discretionary dollars for American consumers to spend on gam-

Global Gaming Business MAY 2018

By Frank Fantini

bling and entertainment, thus possibly causing a reduction in gaming and non-gaming revenues throughout the country. Companies also cut expenses in recessions, including travel and conference budgets, another potential hit to Las Vegas. • Making examples of American companies. Much as Trump and the Chinese are selecting industries to target with tariffs, the Chinese government can single out particular companies to send a message. This is where American casino companies operating in Macau could become pawns in a U.S.China trade war. Cracking down on them would be immaterial to the Chinese economy, but they are high profile, so the message would be loud and clear. Further, the timing could be right as gaming concessions expire in 2020 and 2022. Opening concessions to a bidding process would send the message. So far, the Macau government has been making reassuring sounds about concession renewals, but Macau can be compliant if the national government decides to turn on the heat. So, now that we’ve speculated on what could happen, what’s really likely to happen? Trump has been president long enough now that we’ve seen bluster amplified to greater bluster amplified to even greater bluster yet. But despite the bluster, Trump hasn’t shown himself to make draconian decisions. If we had to bet, we would put our money on the side that Trump will raise as much noise as he can and then, at the limit, avoid a trade war, possibly in a high-level negotiation in which he can come out boasting of a win-win conclusion.

INTEREST RATES A more significant threat to gaming stocks might by the Fed raising interest rates significantly. Capital-intensive industries of all kinds have lived in a friendly world for a long time with interest rates well below historical norms. That period might be coming to an end, meaning a potential triple-whammy of higher interest expenses on their debt dampening profits, a slower economy affecting consumers, as mentioned above, and debt becoming a bigger competitor for investor dollars. In the long term, higher rates—or maybe more normal rates is the better way to say it— could be better for the economy and give the Fed some room to then lower rates if a recession comes along. But for now, the impact of higher rates deserves investor consideration.

If we had to bet, we would put our money on the side that Trump will raise as much noise as he can and then, at the limit, avoid a trade war, possibly in a highlevel negotiation in which he can come out boasting of a win-win conclusion.

Q1 COMING UP

Of more immediate concern is the first quarter earnings season which is about to begin. If just looking at gaming revenues, casino companies might report their first bumpy quarter in a while. According to Fantini’s National Revenue Report, U.S. gaming revenues through February declined 0.36 percent overall and 0.86 percent on a same-store basis. States are still releasing March revenues as of this writing, and they are somewhat encouraging with most showing gains, though severe weather will take a bite out of casinos in the Middle Atlantic, Northeast and Midwest. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. For a free 30-day trial subscription email subscriptions@fantiniresearch.com.

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AGEMupdate AGEM MEMBER PROFILE

Founded in 1934, Betson is a leader in providing profitable solutions to the VLT market, offering stylish and high-efficiency touch-screen monitors for unattended transactions. Betson also offers a comprehensive product line for the location-based entertainment industry including amusement games, vending equipment, parts and billiards. Through a nationwide network of 14 offices, Betson Enterprises presents client-specific consultative solutions for the design, installation, service and exporting of equipment. The company offers competitive interest rates for leasing and financing, as well as deferred payments through its private inhouse lending company. Betson Enterprises is a division of H. Betti Industries, Inc. and is headquartered in Carlstadt, New Jersey. Over the course of an 80-plus-year history, Betson has learned they are only as successful as their customers. Because of that, everything Betson is designed to help its valued customers run and grow a profitable business. Betson doesn’t just sell equipment. It offers design, layout and installation services to ensure optimal profitability and low-risk financing through its private lending division. Betson trains its customers on how to maintain equipment so it remains operational. The company keeps parts in stock, so customers can get parts when they need them. Betson works with customers from concept to completion to the everyday operations of their business. Betson isn’t just interested in closing deals; they are interested in starting long-term relationships. Betson believes they are only as successful as their customers. Betson is much more than distributor—a one-stop-shop to meet all the needs of its customers, from product to parts to service to financing. For more information, visit betson.com. For information on the company’s full line of parts and Goldfinger monitors, visit betsonparts.com.

APRIL 2017 KEY BOARD OF DIRECTORS ACTIONS • Reed Expositions Senior Vice President Melissa Ashley gave a short presentation to AGEM members recently regarding the forthcoming G2E Asia show. She was pleased to share positive news that pre-registration numbers are tracking 60 percent ahead of figures at this point last year, although this can change by the time the show opens. In terms of exhibitor floor space, they have sold over 15,000 square meters, a substantial increase over 2017 figures. Other new items include the launch of an expanded digital customer experience via a G2E Asia app, which attendees are encouraged to download, as it features a useful 3-D floor plan with navigation system. • AGEM recently approved funding of £3,000 for a new event being organized by Clarion Events. Brazil Legislators’ Day will take place on April 26 in Brasilia, and follows the Brazil Gaming Congress in Sao Paulo April 22-24. The event will be held at the Chamber of Deputies, and will give attendees the chance to interact with the government body at a crucial stage in Brazil gaming expansion discussions. Key industry figures have been invited to attend, and AGEM will be represented by AGEM Mexico Committee Chairman Carlos Carrion of Aristocrat, who will be on the panel. • AGEM continues to work with the Nevada Gaming Commission on the proposed updated language of Regulation 14, a follow-up to the legislative passage of the AGEM-endorsed Assembly Bill 75 that was, among other things, designed to allow slot makers to incorporate new technologies from companies not licensed in Nevada as long as they accept responsibility for the inclusion of such technology into their games and platforms. After consultation with new NGCB Chairwoman Becky Harris regarding AGEM’s concerns over the proposed language, she has decided to cancel the public meeting so the content can be reviewed again. • AGEM Director of Responsible Gaming Connie Jones and AGEM Executive Director Marcus Prater recently attended the American Gaming Association’s Responsible Gaming Collaborative meeting in Las Vegas. They were joined by 10 or so industry representatives and AGA staff to discuss the effectiveness of problem gaming and responsible gaming spending in the U.S. and to initiate effective policies and regulations for the industry. This proved to be a very positive event that will help to ensure success for responsible gaming initiatives moving forward. • April saw two new Associate members welcomed to AGEM—Deloitte LLP, a global company with offices in Las Vegas that provides audit and assurance, consulting, risk and financial advisory, risk manageP show exhibit company Plus Studios, also based in ment, tax, and related services to select clients; and trade Las Vegas, which provides design, full service production, engineering and the best project/account management personnel. • AGEM once again has a booth at G2E Asia, being held in Macau May 15-17. We look forward to welcoming new and existing members to the show. AGEM will also be hosting the President’s Reception for invited guests on Tuesday, May 15 at the new MGM Cotai.

AGEMindex The AGEM Index again experienced declines during March 2018. The composite index closed the month at 505.15 points, a drop of 8.32 points or 1.62 percent, when compared to February 2018. The AGEM Index reported a year-over-year increase for the 30th consecutive month, and has climbed 134.87 points, or 36.87 percent, since March 2017. During the latest period, seven of the 13 global gaming equipment manufacturers reported month-to-month increases in stock price. Six manufacturers reported decreases in stock price during the month, with one manufacturer posting a double-digit percentage decline.

AGEM Agilysys Ainsworth Game Technology

Exchange: Symbol (Currency)

Stock Price At Month End Mar-18 Feb-18 Mar-17

Percent Change Prior Period Prior Year

Index Contribution

Nasdaq: AGYS (US$)

11.92

11.17

9.45

6.71

0.27

ASX: AGI (AU$)

1.85

2.03

1.86

(8.87)

(0.54)

(0.66)

34.87

26.14

ASX: ALL (AU$)

24.06

24.65

17.84

(2.39)

(5.80)

Taiwan: 3064 (NT$)

18.10

12.20

19.10

48.36

(5.24)

0.32

NYSE: CR (US$)

92.74

92.31

74.18

0.47

25.03

0.37

Everi Holdings Inc.

NYSE: EVRI (US$)

6.57

7.45

4.79

(11.81)

37.16

(0.76)

Galaxy Gaming Inc.

OTCMKTS: GLXZ (US$)

1.04

1.00

0.63

4.00

65.08

0.02

Nasdaq: GPIC (US$)

9.84

9.60

10.00

2.50

(1.60)

0.03

NYSE: IGT (US$)

26.73

26.50

23.20

0.87

15.20

0.68

TYO: 9766 (¥)

5,590

5,650

4,725

(1.06)

18.31

(0.70)

Aristocrat Leisure Limited Astro Corp. Crane Co.

Gaming Partners International International Game Technology PLC Konami Corp. Scientific Games Corporation Transact Technologies PlayAGS Inc.

Nasdaq: SGMS (US$)

41.60

44.45

23.65

(6.41)

75.90

(3.43)

Nasdaq: TACT (US$)

13.05

13.85

8.10

(5.78)

61.11

(0.08)

NYSE: AGS (US$)

23.26

20.71

12.31

Change in Index Value

1.44 (8.32)

AGEM Index Value: February 2018

513.47

AGEM Index Value: March 2018

505.15

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.

MAY 2018 www.ggbmagazine.com

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Entertainer Steve Lawrence rolled the first dice at Resorts International casino on opening weekend, where lines formed for months afterwards

Years 40 in Atlantic City of Gaming

Casino gaming hasn’t solved all of Atlantic City’s problems. But it’s kept the seaside resort rolling in the dough—mostly— for four decades. By Marjorie Preston

ant the long view on Atlantic City’s casino industry? Talk to Dan Heneghan. When casinos were first floated as a way to revive the fading shore town, Heneghan was a reporter for the Press of Atlantic City. He was there 40 years ago, when Resorts Atlantic City opened. He saw the mobs who stood in line for hours to get inside the town’s first legal gaming hall. He eventually worked the newspaper’s casino beat, and he’s still around, as public information officer for the New Jersey Casino Control Commission. More than almost anyone, Heneghan knows AC. He’s seen it survive more ups and downs than the Steel Pier’s Wild Mouse roller coaster.

Global Gaming Business MAY 2018

Donald Trump at his Taj Mahal in 1990

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Lawrence recreated the dice roll at the 15th anniversary of Resorts, with then-owner Merv Griffin

THROW OUT THE LIFELINE Few remember today that New Jersey gaming was originally conceived as a statewide industry. That plan that was nixed by voters in 1974, but when the legislation confined casinos only to Atlantic City, the referendum passed. Everyone knew the city needed a break. “Atlantic City was down and out,” says Heneghan. “There was a joke at the time that if the casino referendum failed, the last one over the bridge could turn out the lights. The city was a shambles—slums with an ocean view.” Though the shore resort still sputtered to life during the summer, it emptied out after the Miss America pageant in September. “There would be virtually nothing open all winter,” says Heneghan. “The city was clinging to life, hoping against hope that something positive would happen.” That something was casinos. The Committee to Rebuild Atlantic City (known, without irony, as “CRAC”), promised an experience totally unlike Las Vegas, with “continental-style casinos patterned after those in Monte Carlo and the Caribbean,” and nary a slot machine in sight. “They created this impression of James Bond-type casinos with ladies in evening gowns and men in dinner jackets, making bets in French,” says Heneghan with a laugh. As everyone knows, what Atlantic City got was “enormous gambling halls chock-full with slots and tables, with people in T-shirts and jeans shoving each other. “There was a glamorous aspect to it,” says Heneghan, “but it was also mass pandemonium with these intense crowds. You heard more than one tale of a gentleman who refused to leave the blackjack table when nature called, because he didn’t want to lose his seat.” The casinos could not empty their slot machines fast enough, he says, and the soft count took 23 hours to tabulate. The city was almost literally rolling in dough.

“When I told the New Jersey Casino Control Commission we would exceed $200 million in the first year, they thought I was nuts. We took in $245 million.” —Steve Norton, former executive vice president, Resorts International

THE GOLD RUSH Steve Norton wasn’t surprised. An executive with Resorts International, which had developed casinos in the Bahamas and the Caribbean, Norton was shipped north to check out Atlantic City’s viability as a casino market. He found pent-up demand for gambling that convinced him the idea was a sure bet. “Adding lottery and racetracks, there was more money being wagered in New Jersey, New York and Pennsylvania than in California, Arizona and Nevada,” says Norton, who eventually became executive vice president of Resorts International in Atlantic City. “When the racetracks in New York City closed down, there were 30 buses a day running from Manhattan to Charlestown, West Virginia, taking people to the track.” At the time, Caesars and Bally’s (then MGM) were tops in Vegas, generating about $80 million each per year. “When I told the New Jersey Casino Control Commission that we would exceed $200 million in the first year, they thought I was nuts,” he says. “We took in $245 million.” The gold rush was on. “There was this incredible euphoria,” says Heneghan. “It knocked the sense out of a lot of people, who thought the streets would be paved with gold.” Within 13 months, the city’s second casino, Caesars Boardwalk Regency, had opened, followed by Bally’s Park Place. By 1981, there were nine casinos on the Boardwalk. Then the industry sputtered. “You went from a place where you couldn’t count the money fast enough to the fourth quarter of 1981, where every property lost money,” says Heneghan. “Supply had grown much faster than demand.” Bus marketing helped. Under that program, which started at Resorts, up to 1,000 buses a day packed with happy gamblers rolled in from MAY 2018 www.ggbmagazine.com

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“Atlantic City would have disappeared from a commercial point of view if not for the fact that the people of New Jersey chose to legalize gaming 40 years ago.” —Steve Perskie, former New Jersey Superior Court judge and author of the original New Jersey Casino Control Act

Philadelphia, North Jersey, New York and Baltimore. The day trippers got a free ride, a roll of quarters, and sometimes a buffet. They helped the casino industry continue to expand. In 1980, Harrah’s was the first casino to open off the Boardwalk, in the city’s Marina District. Tropicana came next. The Trump era began in 1984. Eventually, the T-word was emblazoned on three gaming resorts in town: Trump Plaza, Trump Castle (later Trump Marina), and finally, the $1 billion Trump Taj Mahal in 1990, called “the eighth wonder of the world” by the hyperbolic business mogul. When the Borgata opened in 2003, its sparkling gold tower, Dale Chihuly glass sculptures and upscale experience made the schlock-heavy Boardwalk casinos look a little tired, but those properties soon stepped up their game. For 28 straight years, from 1978 through 2006, casino revenues grew every year. It seemed the casino industry, like the housing market, just could not lose.

Caesars Atlantic City, then and now

TUMBLING DICE In 2007, four new casinos were planned for Atlantic City, representing a total investment of $9 billion. As late as November of that year, a giddy report from NBC News said, “By 2012, you might not even recognize this place.” That’s when the hammer hit. The Great Recession coupled with new Pennsylvania casinos brought the gravy train to a screeching halt. Three of the four new casinos were shelved, four of the existing casinos closed, and more than 8,000 people lost their jobs. The only casino completed at the time— the $2.6 billion Revel, which was scaled back from two towers to one—opened behind schedule, closed inside two years, stood vacant for a while, and then was bought for pennies on the dollar by a Florida developer. Glenn Straub’s wacky plans for the property, which he renamed Ten, included an recreational center with “frozen mountains, half —Dan Heneghan, Public Information Officer, New Jersey pipes and motocross tracks,” charity mud runs Casino Control Commission featuring “girls in pink tutus,” rodeos, and a cryotherapy chamber, a la Michael Jackson. At

“There was this incredible euphoria. It knocked the sense out of a lot of people, who thought the streets would be paved with gold.”

Global Gaming Business MAY 2018

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“For 30 years in Atlantic City, every year was better than the last—that’s a really long period of time to grow.” —Joe Kelly, President, Atlantic City Chamber of Commerce

ment period. We improved our product. various times, Straub announced We added to it. We’re coming back.” that Revel would become an acaThe city’s new mayor, Frank demic institution for geniuses Gilliam, agrees. “As online gaming conand a sanctuary for Syrian tinues to grow with sports betting, I see refugees. the gaming industry thrive in Atlantic Thankfully, Straub is now City as it’s done for 40 years. The new part of Atlantic City’s colorful, casinos set to open in Atlantic City can turbulent history. In January, he only continue to enhance the gaming sold Revel-slash-Ten to a Collandscape.” orado investor who plans to reFormer New Jersey Superior Court open it as the Ocean Casino Judge Steve Perskie, author and princiResort. That should coincide pal sponsor of the original New Jersey with the reopening of the former Casino Control Act, says Atlantic City’s Trump Taj Mahal as Hard Rock future “is not dependent on how many Atlantic City. The eight casinos Atlantic City’s Boardwalk remains a new casinos there are. There have to be that survived the recession are popular summer tourist spot other reasons for people to come—shops once again making money, and and restaurants and nightclubs. It’s my hope that, over the course of next 10 the state’s online gaming industry has helped fill the coffers too. years, the state makes a significant investment in terms of promoting Atlantic There are concerns the new properties will sound the death knell for City. It’s always been a spectacular site for conventions and meetings, and while weaker properties in town, but for the first time in a decade, the forecast for the facilities are first-rate, the marketing is not.” Atlantic City looks mostly sunny. According to a 2017 article in USA Norton believes the biggest key to a resilient marketplace is more and better Today, the city, “left for dead for the last 10 years, is having a revival.” commercial air service to and from key cities like Atlanta, Houston and Dallas. In that article, the late state Senator Jim Whelan, mayor of Atlantic In retrospect, with all the ups and downs, with pockets of poverty still City from 1990 to 2001, summed it up when he said, “Atlantic City is like blighting the town, and with the seesawing nature of the gaming industry, have Dracula—you can’t kill it, no matter how hard we try.” casinos proven a good bet for Atlantic City? “The answer to that—as it was in years 10, 20 and 30—is yes, without a 40 YEARS doubt,” says Perskie. “Atlantic City would be off everybody’s radar, it would AND COUNTING have disappeared from a commercial point of view, if not for the fact that the Joe Kelly, president of the Atlantic City Chamber of Commerce since people of New Jersey chose to legalize gaming 40 years ago. 1997, says the city has proven its hardiness, and also learned its lessons. “While indeed the experience of Atlantic City in the last 10 years has been “For 30 years in Atlantic City, every year was better than the last—that’s a difficult, the words of Mark Twain come to mind. Reports of Atlantic City’s really long period of time to grow,” says Kelly. “When gaming was added to death are greatly exaggerated.” other jurisdictions, the demand dropped and we went through that adjust-

Global Gaming Business MAY 2018

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Slot Floor

Futures L

The first episode of the UNLV Gaming & Hospitality Education Series focuses on new game styles, new casino game areas, and how to please the next generation of gamers By Frank Legato

ast month, a new type of gaming education session debuted at the University of Nevada, Las Vegas. The UNLV Gaming & Hospitality Education Series officially kicked off on March 22 with two sessions—one featuring some of the top gaming executives in the business and the other featuring a legendary gaming technology innovator—examining what operators need to do to sustain the gaming floor as a new generation of customers arrives. Produced by Global Gaming Business magazine along with Applied Management Strategies and the UNLV William F. Harrah College of Hospitality, the education series is designed to provide detailed examination and discussion of the top issues facing both the casino and hotel sides of the industry.

The UNLV Gaming & Hospitality Education Series 2018 Register for any of the four subsequent 2018 episodes of the UNLV Gaming & Hospitality Education Series at UNLVGHES.com or contact Roger Gros at rgros@ggbmagazine.com

Global Gaming Business MAY 2018

The first episode, titled “Casino Games: Spanning Generations,” featured a panel including Melissa Price, senior vice president of Caesars Entertainment; Steve Sirianni, vice president of slot operations and marketing for MGM Grand Las Vegas; Kevin Sweet, vice president of slot operations and marketing for the Cosmopolitan of Las Vegas; and Charlie Lombardo, the longtime slot operations vice president of Caesars’ Las Vegas Strip properties and Seminole Gaming who is now an industry consultant. The panel, moderated by GGB Editor Frank Legato, examined the progress of new operational experiments such as skill games, consolestyle video games and fresh approaches to the design of gaming floors. The discussion was followed by a presentation by gaming legend John Acres, with Q&A conducted by GGB Publisher Roger Gros, in which Acres issued a warning to operators that technology which removes human contact with their customers threatens to render the casino industry obsolete. Close to 50 attendees peppered speakers in both sessions—sponsored by Gaming Laboratories International—with questions in a display of audience participation that producers hope will be a common feature at all UNLV Gaming & Hospitality episodes, one that differentiates the series from most trade-show seminars and roundtable discus-

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Roger Gros, Frank Legato, Charlie Lombardo, Steve Sirianni, Kevin Sweet, Melissa Price

sions. While audience questions at industry roundtables are typically reserved to the end of the session after moderator questioning of panelists is complete, attendees at the first UNLV sessions engaged in discussion with panelists throughout—the audience essentially driving the progress of the sessions. The first session drilled down into how the gaming floor has changed over the past decade, reasons for the overall decline in slot revenues, and what operators will need to do to cater to the millennial generation. Panelists also gave a progress report on what they have done so far to usher in the next generation of gamers, including both the creation of new floor areas and experimentation with placement of the first games incorporating an element of skill.

Skill Games and New Spaces

Sirianni, who oversaw the creation of MGM Grand’s millennialfriendly Level Up lounge, agreed that the industry is in the very early stages of trying skill-based games. “We need the time and the volume with skilled-based games, to see if they will succeed,” he said. “It’s very early to say if they’re going to be successful. “I don’t think there’s going to be one math model that will work; I think there will be different math models, as you see in slots. I don’t think (skill games will) be a majority of your floor, but a meaningful segment, as in video poker and electronic table games.” Sirianni added that operators and suppliers are also still working at solving the puzzle of how to monetize skill games so they return at levels closer to traditional slot machines. He noted that while customers in Level Up have enjoyed the skill-based offerings such as Gamblit’s four-player competitive offering, “they’re not seeing it for that second trip. It’s not

Caesars properties were among the first to incorporate skill games from suppliers GameCo and Gamblit beginning in 2016, as well as skill-based and other non-traditional slot-floor offerings from IGT, Scientific Games and Konami. While the first skill-based games “I don’t think there’s going to be did not achieve success, Price told atone math model that will work; tendees that the incorporation of skill and variable-payback-percentage games I think there will be different math is still very much a “work in progress.” models, as you see in slots. It’s very Price offered the U.S. spread of electronic table games as analogous to early to say if they’re going to be skill games, noting that it took five successful.” years from introduction for —Steve Sirianni, Vice President ETGs to really catch on. “I of Slot Operations and Marketing, said patience, because we’re MGM Grand Las Vegas growing a customer base here,” she said. “We’re only a year and a half in, and we’ve only had a few to try. I’m disappointed with the media and headlines over skill-based games being a failure, and how they were taken out and they’re bad. I just think that’s irresponsible. “We’re trying to evolve MGM Grand’s millennialourselves. We need to be more patient. friendly Level Up lounge We need to learn.”

MAY 2018 www.ggbmagazine.com

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“We removed 160 slot machines, because no matter what we put back there, we couldn’t get the games to work. We have a leased sports book; I put 23 bar-top video poker games in, and they do 80 percent of the revenue the 160 games had been doing, which is an incredible stat.” —Kevin Sweet, Vice President of Slot Operations and Marketing, Cosmopolitan of Las Vegas

monetizing enough. The product still needs to be tweaked. There’s more evolution needed.” The games themselves are only part of the equation, panelists said. The other element important in bringing new players to the casino floor is the casino environment itself, which is moving from the old slot-warehouse look to a more spacious area with room for more interesting spaces. For instance, Sirianni keeps Level Up stocked not only with skillbased gaming machines, but video games (including a giant Pac-Man), a pool table, bubble hockey and other activities around a central sports bar. “I was in there a couple of weeks ago, and there were so many different people congesting in one space,” Sirianni said. “You had a group of guys playing NFL games on PlayStation and you had some older groups playing mini-bowling, a club crowd hanging out at the bar and some random people playing arcade games. That was cool and fun to see. That’s what we were going for, and we’re happy with the space.” The Cosmopolitan’s Sweet has been tweaking his floor with new configurations since he took over slot operations and marketing in early 2015, and he has gotten great revenue results. One of those tweaks is the area in front of the casino surrounding the property’s sports book, which has been reworked to attract younger customers. Sweet commented on the panel that he is not sold on the value of the millennial generation as gamblers, but he nevertheless sees the value of bringing them to his property. “Our sports book is truly an innovative design—it’s how I interpret what we’re going to do for millennials,” Sweet said, adding that he is “bearish” on their potential as gamers. “We removed 160 slot machines, because no matter what we put back there, we couldn’t get the games to work. We have a leased sports book; I put 23 bar-top video poker games in, and they do 80 percent of the revenue the 160 games had been doing, which is an incredible stat. “Then, we have low-limit blackjack, ETGs, and we just put the Fortune Cup horse-race game from Konami in there. We have free shuffleboard and pool tables. It’s really a place to hang out, and from my perspective, that’s not a bad thing, as we target the younger generation. That 25-35-year-old probably has student loan debt, is probably underemployed, probably makes less money than their parents did at that stage of their career. It’s not really my target (gaming) demographic... but we have a spot for them. We want them to think casinos are cool. They can go watch March Madness.” He said one recent week included two of the busiest days in the casino’s history, thanks to a ballroom viewing party for the NCAA bas24

Global Gaming Business MAY 2018

ketball playoffs, with between 1,000 and 2,000 customers in the sports book throughout. “We have 40 million visitors to Las Vegas every year,” Sweet said. “We don’t need every one of them to play slots.”

More with Less One reason casinos have the space to evolve their casino floors is that most of them have fewer slot machines than they did five or 10 years ago. “We are all operating with less machines on our floor right now, and in my personal opinion, that has created a better gaming environment for us,” said Sweet. “We’re creating pockets where people feel comfortable. To me, gaming is a social environment where I want to be around people, but I don’t want anybody right next to me.” Sweet said reconfiguring his main floor into circular and triangular banks, after a study by his staff showed end-cap games perform anywhere from 15 percent to 40 percent better than those in the middle of rows, gave an immediate boost to overall performance. It’s one way casinos are doing more with fewer slot machines. “We just don’t flat out need as many games,” Sweet said. “In today’s capital-constrained world, we can’t make mistakes with our capital, and having less games, but higher performing ones has proven to be successful.” Sirianni and Price both agreed that casinos are making nearly as much with fewer machines. “The utilization on the floor (on the Strip) is less than 30 percent,” which means the games aren’t full of players, Sirianni said— compared to regional markets where utilization can be 80 percent or more. “When you do that, it ends up looking like a warehouse, and you have rows and rows of games, which is great for those (regional) properties,” Sirianni said. “Here in Vegas, we don’t need that. We are finding other opportunities where we want to make the areas more fun and interesting to explore. I think it’s very important to maintain a good game library and have a good selection of games. If you are going to cut games, you don’t want to eliminate a lot of popular games or themes your competitors offer because you still want to provide that to your guests.” All of that, said the panelists, means they are optimistic about the future of the slot floor—even as it pertains to the millennial generation. Price said Caesars did a study that showed the 21-to-39-year-old age group has as much propensity to gamble as older customers. “That was astounding,” Price said. “You hear all of the rhetoric that they don’t game, don’t have the money and are not going to game because they grew up differently. When you get down to the core segment and spend time and research all kinds of focus groups and surveys with the play-

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2 0 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˚

We Have the Team to Meet Your Japan Integrated Resorts Needs

ers, you find out that they have a propensity to game. The key for us is figuring out what that thing is. We’re experimenting with all kinds of things from eSports to drone races to virtual reality. We are working to understand what they would like to do to game with us.” “For slots, I have a very positive outlook,” said Sirianni. “I think (the market is) healthy, and it’s growing. We haven’t quite reached the 2007 numbers yet, but we’re seeing positive growth year-over-year, and it’s been consistent.”

The Hold Issue One point of disagreement among panelists was the root of declining slot revenues. Lombardo, who witnessed the decline at the Seminole properties, said the recession was not entirely responsible for the drop in slot play, and attributed part of the reason to the rise in operator slot holds and the disappearance of comps for slot players. Twenty years ago, said Lombardo, “if you were to drive down the Strip, almost every casino would have a sign that advertised 97 percent payback. When I was at Bally’s, our house hold was 95 percent, all in. I don’t know what it is (there) today, but I guarantee that if you put one of those 97 percent signs out there today, a lot of people would come running in your door. “A 97 percent payback was not abnormal; it was normal.” As far as payback goes, Price countered that the real reason holds went up was the rise of multi-line penny games, and the reason those multiplied was simple: Players demanded them. “Players voted with their wallets,” Price said. “They couldn’t get enough of them. I will never forget the day that 50 percent of Diamond Seven Star handle pulls started happening on penny games outside of the high-limit room. What is happening is they love and enjoy the experience so much more. We went from 20 percent of the floor to almost 70 percent of the floor (in penny denomination) in a five-to-eight-year period, because players wanted that game.” Price also commented that players, in general, do not notice a difference in house hold of a few percentage points—another point disputed by Lombardo. “We’ve taken too much of the base percentage and put it into the bonus,” he said. “We’re asking the player to risk more for less reward.

Martha Sabol and Koji Ishikawa lead a multidisciplinary team of Greenberg Traurig attorneys who are able to assist gaming companies seeking to enter the Japanese gaming market. Our Tokyo office is comprised of an award-winning team of attorneys and professionals, who provide multinational and Japanese clients with innovative, strategic advice and legal services in a market known as a gateway to international business opportunities.

• Martha, Global Gaming Practice Co-chair, focuses her practice on gaming regulatory and business law, representing national and international casino operators and suppliers in the areas of regulatory compliance, acquisition, licensure, internal investigation matters and corporate counseling. • Koji, Tokyo Managing Shareholder, focuses his practice on corporate finance and capital market matters. He is experienced in handling cross-border transactions and advising clients in the technology sector. Greenberg Traurig is focused on the impending Japanese Integrated Resorts market.

Martha A. Sabol

Koji Ishikawa

+1 312.476.5114 sabolm@gtlaw.com

+81 (0)3 4510 2208 ishikawak@gtlaw.com

G R E E N B E R G T R A U R I G , L L P | W W W. G T L AW. C O M The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2018 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Attorney Advertising. Contact: Martha A. Sabol in Chicago at 312.456.8400. °These numbers are subject to fluctuation. 30470

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“Most people lose. What makes me go back? If it’s supported by a warm, embracing experience—someone asking about your welfare—it becomes a different kind of game.” —John Acres, CEO, Acres 4.0

If you tell me the player won’t notice the difference, in the short term that may be true, but in the longer term, it is not. They have less time on device, they earn fewer points, and get fewer comps.” When it comes to comps, Lombardo lamented the replacement of hosts bearing giveaways with self-service rewards—namely, free play. “Nothing drives me more nuts, personally, than all the self service we do out there today,” Lombardo said. “There’s nothing better for a customer than to see an employee with a smile on their face, and there are not a lot of them out there today... When I hear the business is down and we’re not making as much money as we used to, those are the things I think about. We don’t pay out, we don’t have the same number of employees.”

Self-Serve Casinos Some panelists commented that one reason comps are down—and why players are generally left to retrieve their own rewards—has been the replacement of the old comp system with free-play awards. Sweet noted that while operators like free play as a lower-cost way to compensate players, free play awards inflate the operator hold percentage disproportioinately. “I would love to have a looser floor,” said Sweet, “if we got rid of free play. It’s a race to the bottom—tighten the floor, get more free play... If I tell a customer this game will give you 98 percent but you’re not going to get any free play, they’ll say, ‘Next door they give me $2,000 in free play.’ That game holds 12 percent, but they don’t care.” Lombardo said the replacement of comps with self-serve free play was an overall negative for customer service. “We found reasons to give comps, especially rooms or meals,” he said of his earlier days in the industry. “We felt it didn’t cost us much, so give it away; give away as much as you wanted. In today’s world, everything is based off points, but it’s twice as hard to get a point, and the point is worth half as much as it used to be. You take that into consideration, it’s really 25 percent of the value those points used to be.” One reason this happened, Lombardo said, was the consolidation of the industry, and the resulting easing of competition. “Back then, we were all independent casinos. Now, for instance, MGM owns more than half the Strip, so they are their own competition. “We had to find ways to be better than the guy next door. We had to do things that were different. So, from that aspect, the whole way we operated and performed, we found reasons to hire people, to give better service. Today, we seem to find reasons to get rid of people, and do more 26

with self service. So, when I hear the slot business is going down, I say we find as many reasons to chase people away as we do to bring them in.”

Hero’s Journey Lombardo found agreement in this respect from the second session of the UNLV seminar, in which John Acres, CEO of Acres 4.0 and the man who invented player tracking systems, bonusing and more, blasted current operators for replacing human contact with self-service cash back, payment kiosks, automated drink service and other technology. Acres went right at the practices of the executives on the first panel in the area of customer service. “Candidly, there’s no better example of how not to please a customer than how MGM and Caesars handle their slot departments,” Acres said. “It’s not that we’ve gone through a change; it’s that the rest of the world has changed and we have not.” Acres compared today’s casino operations to businesses like Blockbuster Video in the 1990s, calling them “obsolete.” “There was a time this worked. But they got lost in the process by which they manage things.” Noting that Blockbuster decided to make its money from late fees for videos—annoying customers and hastening their exodus to Netflix— Acres said, “Late fees on a video cassette are like resort fees and parking fees are now in hotels—something you do for revenue, but is not necessarily pleasing to the customers... If you forget the customer, you’re doomed.” Acres said casinos need to be “fanatical” about customers. “I don’t think casinos are being fanatical about customers if they say, ‘I don’t know you, but if you put enough money in this machine, I’ll give you a coupon for a drink. I think that’s a lousy way to create a relationship. I think it’s doomed. It makes spreadsheet sense, but it doesn’t make emotional sense. And gambling is an emotional business. If we forget that, we’ll be just like Blockbuster.” Acres said exorbitant fees will lead to customers abandoning casinos, particularly as online gaming grows—they can play casino games online with no fees. More importantly, he said, casinos have abandoned the main advantage they had over iGaming—personal service. “Our surveys show that human contact—which has greatly diminished since we took the change person off the floor—is very important,” Acres said. He pointed to Barona casino near San Diego, which has removed kiosks from the floor and employed staffed redemption booths and more hand pays. “They’ve put more people on the floor, created more human contact, and they’re doing quite well,” he said. “Most peo-

Global Gaming Business MAY 2018

GlobalGa

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ple lose. What makes me go back? If it’s supported by a warm, embracing experience—someone asking about your welfare—it becomes a different kind of game.” Acres plugged what he calls the “Hero’s Journey”—the creation of human interaction to make customers feel like heroes, even if they have lost money. Acres 4.0 developed a system in which hosts are alerted on their mobile devices when good players come in, customers’ names, their favorite drink, etc. He said just greeting players by name has increased revenue by 7 percent where it’s been tested. “Human contact, human engagement—It starts with the casinos becoming fanatical about the players. “We’ve become a business of equipment and processes and services instead of experiences. That’s how we’ve missed the boat.” The next episode of the UNLV Gaming & Hospitality Education Series, titled “Non-Gaming

“There’s nothing better for a customer than to see an employee with a smile on their face, and there are not a lot of them out there today... When I hear the business is down and we’re not making as much money as we used to, those are the things I think about. We don’t pay out, we don’t have the same number of employees.” —Charlie Lombardo, former slot operations vice president, Caesars’ Las Vegas Strip properties and Seminole Gaming

Revenue: The ROI Details,” was slated for April 24. Moderator Stowe Shoemaker, dean of UNLV’s William F. Harrah College of Hospitality, moderated a panel including Doni Taube, vice president of international marketing or Resorts World Las Vegas; Tom Soukup, senior vice president and chief systems officer for Konami Gaming; Elena Shampaner, vice president of strategic initiatives for Pinnacle Entertainment; and Oliver Lovat, founder and managing director of Denstone Group. The April 24 episode kicked off with a session featuring Bob Boughner, principal of Global Market Advisors and a board member for Boyd Gaming—and former president of the Borgata in Atlantic City—who addressed the diverse elements of non-gaming attractions in the casino market. To register for any of the four subsequent 2018 episodes of the UNLV Gaming & Hospitality Education Series, visit UNLVGHES.com or contact Gros at rgros@ggbmagazine.com.

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Nearing the imperfect but acceptable finish line Prime Minister Shinzo Abe has been committed to bring integrated resorts to Japan since the beginning of his term, but now a scandal threatens to end not only the gaming effort, but also his career

By Steve Gallaway, Brendan Bussmann and Kit Szybala

Home Stretch in Japan

or nearly 20 years, Japan has gone through several false starts and iterations in its attempt to legalize integrated resorts. In December 2016, Japan took its first official first step toward legalization with the passing of the IR Promotion Bill. Later this spring, Japan is poised to take the final step in this process with the introduction of two bills that will help solidify the initial act: the IR Implementation Bill and the Basics Bill on Gambling Addiction Countermeasures. The government of Japan has been contemplating what items to include within these bills in its quest to create an environment that maximizes the potential benefit realized by the country in terms of investment and tourism as well as to attract quality operators to the market. The decisions made within this process are vital to creating a healthy regulatory environment that both attracts operators and ensures a positive impact to the nation. However, certain aspects of regulation can prevent the ideal marketplace from coming to fruition. As the Japanese Diet enters the tail end of its 2018 ordinary session, the Liberal Democratic Party (LDP) and the Komeito will continue to negotiate the terms and outline of both bills. As the end of the session draws nearer, stakeholders will have a clearer picture of how this new, valuable market’s regulatory model will take shape. However, as the current session is set to end on June 20, it does not provide ample time for the creation and passage of the bill, particularly when the Japanese Diet would like to pass the Basics Bill on Gambling Addiction Countermeasures before the IR Implementation Bill. As the process continues to unfold, several key aspects of the bills have been revealed. At the beginning of April, after two months of deliberations, the LDP and the Komeito came to terms on key points that are expected to be in28

Global Gaming Business MAY 2018

cluded within the framework of the IR Implementation Bill. These key points include a tax on gross gaming revenue, entrance levy, visitation restrictions, and gaming floor space limitations. When regulatory limitations such as entrance levies, gaming tax rates and floor size are imposed, the bidders must reevaluate how the legal and regulatory environment would impact the feasibility of their proposed projects and reshape what they can offer to the government and people of Japan.

Number of Locations The number of locations allowed within the bill was one of the last items to be agreed upon between the LDP and the Komeito. Initially, the Komeito Party desired only two to three locations. However, the LDP sought as many as six locations. As outlined in Global Market Advisors’ (GMA) white paper “Japan: Integrated Resorts” from May 2017, the Japanese market can easily support anywhere from four to six locations. However, it was stressed at that time that the government of Japan should consider allowing multiple licenses at specific locations to meet its tourism goals. Specifically, this process could be employed in Osaka, creating the Osaka Strip. In Osaka, the size and scope of the site require significant infrastructure improvements as well as encompassing more land than the resorts on Cotai. By allowing two or three operators to participate in the market, the operators could accommodate these necessary development costs while creating a premiere tourist destination. After much debate, the ruling coalition decided upon three host locations. The current leading contenders vying for these locations include (in no particular order) Osaka (Osaka Prefecture), Yokohama (Kanagawa Prefec-

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ture), Sasebo (Nagasaki Prefecture) and Tomakomai (Hokkaido Prefecture). However, over 25 prefectural governments have expressed interest in participating in this process.

Tax Rate Throughout the debate, it has been clear that the Japanese Diet is relying on the Singapore framework as a model for regulation. Given the success that Singapore has realized from IR development, this is a sound approach. As such, it appeared that Japan was going to pass a rational tax rate of 15 percent on gaming. Recently, it became clear that discussions had changed and the LDP is leaning towards implementing a 30 percent tax rate, which is higher than tax rates in most leading jurisdictions. While IR development would still be feasible at this tax rate, operators are likely evaluating previously proposed levels of investment. Specifically, an increased tax rate impacts an operator’s ability to develop a product that is highly attractive to tourists. As the expected level of profit is lowered, operators must adjust development costs to meet return thresholds. The first components of development that are reduced include the size and scope of non-gaming amenities (e.g., hotel rooms, food and beverage outlets, retail space, etc.), including the quality level, and aspects of the design and architecture. These items have a direct impact on potential gaming revenue, especially the ability to attract international operators. With the reduction of these components, it will be harder for the government to meet its tourism goals and we’ll see an overall reduced economic impact from IR development.

Entry Levy, Visitation Restrictions Singapore was one of the first jurisdictions to introduce a casino levy for locals. Regulators in Singapore set a fee of SGD100 (equivalent to US$76 or JPY¥8,000). Recent announcements indicate that the LDP will likely use this aspect of the Singapore model as well. This issue was heavily debated between the LDP and Komeito, with the LDP pushing for a JPY¥2,000 levy and the Komeito lobbying for a levy closer to the Singaporean level. After negotiation, the parties agreed to a compromise and proposed an entry levy of JPY¥6,000 (USD $56), which is higher as a percentage of GDP than the levy imposed in Singapore. Additionally, the Japanese entry levy, as with the Singapore levy, is only applicable to local market patrons, thus allowing foreigner access to the gaming area free of the tax. Alongside this provision, visitation restrictions will be put into place that limit the amount of times that a local market patron can visit a casino within a given time period. Specifically, the proposed restrictions would prohibit local patrons from visiting a casino more than three times a week with a maximum of 10 visits per month. This will be tracked through an ID card system, or the “my number” card as it is known in Japan. These visitation restrictions also do not apply to foreigners. While the actual regulations governing these measures still need to be written, the entrance to gaming floors in Japan will likely resemble those at Marina

Bay Sands and Resorts World Sentosa in Singapore. However, it may be difficult to use the “my number” system, as most Japanese do not carry this new ID. This entry levy is expected to impact gaming revenue to a large degree, as the percentage of the population that would have the means to frequent the casino would shrink considerably. While some suggest that entry levies help curb problem gaming, there has been no conclusive research conducted to support that hypothesis. Simply put, the entry levy is nothing more than an additional tax that encourages lower-value patrons to gamble in unregulated markets like pachinko parlors. The entry levy, which is suggested to help curb problem gaming, would instead make it more difficult to prevent problem gaming. The IRs will have internationally accepted problem gaming programs in place that have been proven to address incidence of problem gaming among a population. The entry levy will likely result in fewer problem gamblers being identified by the operators, and could result in gamers spending more than they can afford to gamble in an attempt to gain back their sunken dollars spent on entering the facilities. From a revenue standpoint, the tripling of the proposed entry levy from JPY¥2,000 to JPY¥6,000 will reduce the percentage of the local population that has the means to gamble by about 27.5 percent in the wealthier regions, to nearly 40 percent in less affluent regions, such as Hokkaido. This reduction is a result of an entry fee simply too high in relationship to the amount of money a given gamer may be willing to risk in a given day. Given the JPY¥6,000 entry levy, GMA estimates that 32 percent of adults would not be impacted by the existence of an entry levy in deciding whether or not to visit the casino, 39 percent would be influenced by the levy, and the remaining 29 percent would likely be unwilling to pay the levy as they simply cannot afford it. Those who are influenced negatively by the levy but still choose to gamble will likely visit the local pachinko parlors.

Casino Sizing Limitations The government of Japan wishes to limit the size of the casino gaming floor. This provision was also borrowed from Singapore, as the facilities in that market have regulatory guidelines that limit them to 15,000 square meters MAY 2018 www.ggbmagazine.com

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Osaka’s Yumeshima Island could be home to a “strip” of integrated resorts

of gaming space. In Japan, the ruling coalition has decided that the casino gaming floor cannot exceed 3 percent of the total facility size. As the casino gaming floor is the engine that supports nongaming amenities within an IR and allows operators to develop facilities with iconic design, this limitation could certainly impact the bids received by certain host markets. For example, given the comparatively low incomes in Hokkaido, some developers may find that there is not enough profit to build out the remaining 97 percent of the development, and will choose to not submit a proposal if a formal RFP is issued.

Responsible Gaming Considerations Meanwhile, the Japanese Diet is still contemplating the Basics Bill on Gambling Addiction Countermeasures and what responsible gaming measures it will set into place. This bill will allow for the creation of a non-government organization similar in nature to the National Council on Problem Gambling in Singapore. This council addresses all forms of gaming in Singapore, including Toto, 4D and Sweep as well as casino gaming. Today, gaming already exists within Japan in the form of pachinko and other forms of gambling. So far, Japan has modeled its system off the same social safeguards that Singapore implemented. However, it will be important that the employed regulatory items address all forms of gaming, including pachinko. Strong operators have already drafted effective responsible gaming programs and have started to educate and implement resources in Japan to assist the small percentage of the population that may develop a problem with gaming. The Japanese Diet should look at the scientific research model, as well as the models employed by qualified operators and regulators globally, to develop the ideal framework for addressing responsible gaming.

Looking Forward The current political climate in Japan has made the timeline of IR implementation uncertain, as the Prime Minister’s office combats several issues regarding public opinion and the Japanese Diet deals with the PM office’s heavy legislative agenda. The political situation for Prime Minister Shinzo Abe is one that has been very tremulous over the last several months. The overall approval of Abe and the cabinet has dipped considerably since the start of 2018, with ratings dropping to levels in the low 30 percent range in March and rebounding to the low 40 percent range in April. These fluctuations are likely tied to the several scandals that continue to surround Abe and his cabinet. One major scandal involves the state’s approval of land sales for a school operated by Morimoto Gakuen in Osaka. Other notable scandals include the approval of a veterinary school, which showed the potential for favoritism toward Kake Gakuen, which is chaired by Kotaro Kake, one of Abe’s closest friends; and the controversy regarding the ministry’s civilian control over the Self Defense Force (SDF). Abe has several items on the agenda that he would like to address before the June 20 end of the ordinary session. The controversy surrounding the gaming measures may force the IR issue to take a back seat during the ordinary session. Instead, the bills could be addressed in an extra ordinary session later this summer/fall or further into 2019. Additionally, the PM’s office will face a party election in the fall that could play a role in the timeline of IR-related events. 30

Global Gaming Business MAY 2018

Assuming that no major roadblocks occur due to shifting political dynamics, the timeline of IR development in Japan is largely contingent upon the passage of the IR Implementation Bill and Basics Bill on Gambling Addiction Countermeasures. Once those two bills have been passed through the Diet, the timeline becomes much more prescribed in nature. Following each bill’s passage, several items will begin to unfold: a casino control commission will be formed, additional regulations will be set, an RFP process will be outlined for operators and prefectures, an NGO will be created to handle responsible gaming issues, operators will be selected, design and construction of IRs will begin, and the first IR will open its doors. Japan offers the opportunity to create the world’s next destination for premiere integrated resorts. The opportunity still exits for Japan to set a reasonable standard that balances its desire to expand its tourist base to reach the goal of 60 million visitors, up 20 million visitors from its 2020 goal spurred in part by hosting the Summer Olympics. However, the market needs to be framed appropriately in two ways—the first allowing the partnership to occur between the government and the groups formed between operators and the consortium. It must also balance the size difference between urban facilities and more remote, regional facilities. A one-sizefits-all approach does not work because of the difference in GDP within regions as well as what each market can support. There is still a significant path to overcome with the passage of two significant pieces of legislation and the regulatory framework that must follow. However, Japan has the opportunity at hand to address concerns across all forms of gaming while investing in additional tourism to the country. If crafted appropriately, the race for integrated resorts in Japan will allow operators to invest billions of dollars to create iconic venues that will be models for locals and visitors to appreciate.

In Japan, the ruling coalition has decided that the casino gaming floor cannot exceed 3 percent of the total facility size. As the casino gaming floor is the engine that supports non-gaming amenities within an IR and allows operators to develop facilities with iconic design, this limitation could certainly impact the bids received by certain host markets.

Steve Gallaway, Brendan Bussmann and Kit Szybala are partners with Global Market Advisors. GMA is the leading provider of consulting services to the gaming and hospitality industries.

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The Quiet Casino Boomtown By Andrew Klebanow

s the gaming industry’s collective attention is focused on what casino development might look like in Japan, a small seaside resort town on the coast of Cambodia is quietly emerging as the world’s fastest-growing gaming jurisdiction. The town is called Sihanoukville. Sihanoukville is a port city and down-market vacation destination on the Gulf of Thailand in southwest Cambodia. It has long appealed to backpackers for its pristine beaches and low-priced accommodations. It also has served as a gambling and vacation destination for Thais and Chinese. There are approximately 17 casinos currently in operation in Sihanoukville’s tourism corridor on or near Victory Beach, Independence Beach and Ocheteaul Beach, with a total of 27 casino licenses issued as of December 2017. In 2015, the market had nine licenses. Since Cambodians are prohibited from gambling in the nation’s casinos, these properties rely solely on foreigners. The casinos that are open today are generally small and range in quality from halfstar to three and a half stars. Some of the more recently issued licenses appear to be devoted to live-dealer online casinos. Live-dealer online (LDO) gaming is a hybrid form of wagering that can be found in casinos in Cambodia as well as the Philippines. Within a casino is a separate table game pit that is reserved for patrons who wish to gamble from remote locations, ostensibly in other countries. These tables are equipped with special lighting and high-resolution cameras. A visitor to a casino’s LDO website can look at the faces of all the dealers in real time and select a table to play at. These online bettors can also observe casino customers walking in the background, further assuring them that they are playing a live game. Once a table is selected and a bet is made online, the dealer commences the game. Customers observe the outcome of those games on their computers or mobile devices. While the wager is made online, LDO allows customers to play against a person, not a computer, and witness in real time the outcome of each game. Despite the recent proliferation of LDO in the town’s existing casinos and purpose-built casino studios, Sihanoukville’s future is in brick-and-mortar properties, and this is where the growth is most dramatic. Rising along the beaches are no less than six high-rise mixed-use condominium/hotel/casino projects with at least another half dozen more in various stages of development. The scale of these properties is dramatically dif-

Global Gaming Business MAY 2018

The XiHu International Hotel with almost 600 rooms and the Blue Bay (right), with 1,400 condominium units, are just two of a dozen projects under way in Sihanoukville

ferent from current commercial structures, which are mainly low-rise buildings abutting rutted roads. These new projects are massive, high-density/highrise developments, up to 47 stories tall. The projects are comprised of hotels, condominiums, retail and gaming. Some of the largest include the XiHu International Hotel with 508 lodging keys, the Blue Bay with 1,400 condominium units, the Royal Bay View with 1,344 condominium units and Sunshine Bay with 900 units. Within each of these projects will be a casino, although none involve major casino operators. The hotel and condominium projects that are rising today appear to be designed as investment vehicles for second-home owners, primarily from China. Cambodia’s light gaming regulatory oversight has historically been a deterrent to international casino operators, who desire a strict regulatory regime. That may change soon. The Cambodian government has come to recognize that casino development targeting foreigners can play a very important role in the country’s economic growth. One need only look at NagaWorld in Phnom Penh and the impact that one integrated resort has had on the nation’s economy. In 2016, NagaWorld contributed 1.2 percent to the nation’s overall GDP and made up 22.7 percent of the country’s tourism sector GDP. It also employs 8,600 people, the vast majority of whom are Cambodian. Based on NagaWorld’s success, the central government has come to recognize that casino development can play a critical role in nation building. In an effort to further develop the casino industry, the government is developing more robust regulatory oversight and tax policy. These new regulations are expected to emerge later this year. A gambling law drafted by the Cambodian Finance and Interior ministries has been submitted for ap-

proval by the prime minister’s cabinet. The proposed law would authorize the government to set up a body to review the internal financial controls of Cambodian casinos, promote the prevention of money laundering, and prevent other criminal activity. The law would also include a modest tax on gaming revenue that would further encourage growth of the industry. Sihanoukville has numerous challenges that may preclude it from evolving into a regional gaming destination. It is not a particularly easy place to get to. Road infrastructure is in need of improvement. The town is serviced by a small airport, capable of accommodating A-320/737 aircraft on its single runway. The absence of a parallel taxiway requires that planes turn around after landing in order to approach the terminal. This limits the number of flights that can land at any given time of day. While the air terminal can accommodate international arrivals, its capacity is limited. The terminal is currently undergoing a modest expansion, which should alleviate current congestion. It remains to be seen if there is sufficient demand for lodging and second home ownership for all of the supply that is currently under development, and what impact it will have on gaming revenue potential. Airlift into the local airport is limited to commuter flights from Phnom Penh and Siem Reap as well as a limited number of flights from other international cities. Regardless, Sihanoukville is a market that is worthy of the gaming industry’s attention. Andrew Klebanow is a senior partner at Global Market Advisors. He has worked in the hospitality and gaming industries since 1975 and in the fields of casino marketing and business planning since 1991.

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Mississippi Momentum

A Shared Legacy of Choctaw Self-Determination By Dave Palermo

n American Indian tribe that 40 years ago began a nationally acclaimed rise from poverty to become a thriving, diversified economy in Mississippi’s Bible Belt is regaining its status as a leader in Indian self-determination under the guidance of its first woman chief. Phyliss Anderson—in her second term as chief of the Mississippi Band of Choctaw Indians—is restoring unity and financial stability to the tribe, which under the late Chief Phillip Martin established a national reputation for economic progress and self-governance. Anderson’s administration has reduced a crippling multimillion-dollar debt load created by overly ambitious tribal gambling projects while improving health care, education and job opportunities for nearly 11,000 citizens of the Choctaw Nation. She also is gaining nationwide prominence as an indigenous leader, building relations with other tribes and federal, state and local governments. Anderson’s predecessor, Beasley Denson, antagonized state and local officials with his pursuit of gambling projects beyond the Choctaw headquarters near Philadelphia in Neshoba County, where the tribe operates the Silver Star and Golden Moon casino hotels. Anderson is a protégé of Martin, who served as chief for 32 years before being ousted by Denson in the 2007 election. She defeated Denson in 2011 and 2015 and began building a legacy of her own based on fiscal management, education and the creation of a skilled workforce. Anderson was chosen to introduce President Barack Obama at the annual White House Tribal Nations Conference in 2011. She has testified on Indian issues before Congress and is active in the United South and East-

Global Gaming Business MAY 2018

ern Tribes (USET), an organization of 23 tribes founded in 1968 by Martin and three other indigenous leaders. Anderson also serves on the National Advisory Council on Indian Education, an appointment that resulted from a visit to the Choctaw Reservation by former Interior Secretary Sally Jewell.

Choctaw Organization The Choctaw operate the largest consolidated school district in Indian Country, consisting of a high school, middle school and six elementary schools. The tribe operates other educational and job training programs for adolescents and adults. “My administration is interested in creating opportunity and a better quality of life for our people and the next generation of Choctaws,” Anderson says. “First and foremost is through education. “We are focused on cultural preservation in the classroom,” she says, which includes a Choctaw language immersion program. “We also are equipping our students with important skills and knowledge that will translate into today’s workforce. We have a comprehensive and aggressive workforce development program that provides skill training, certification and job placement opportunities for adult learners.” A skilled workforce is essential as the tribe recruits more high-tech businesses to the reservation. “I believe Choctaw self-determination is moving forward and it is ongoing,” AnderPhyliss Anderson, Chief, Mississippi Band of Choctaw Indians

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Philip Martin served as chief of the Mississippi Band of Choctaws for 32 years, engineering a diverse economy that still exists to this day.

son says. The Choctaw inhabit a checkerboard, 35,000acre reservation stretching over 10 counties and headquartered near Philadelphia, 80 miles east of Jackson. It is Mississippi’s only federally recognized Indian tribe. As is the case with 366 other tribes in the lower 48 states, the Choctaw is a sovereign government operating largely independent of state, county and municipal authorities. The Choctaw operates schools, courts, health care facilities and police and fire departments. The tribe also is a major contributor to the state economy, its 17 businesses employing 5,750 people, roughly half of them non-Indians. Choctaw ranks among the state’s top 10 employers. “Phyliss Anderson has done a great job in filling the role of leader of the Choctaw people,” says Ernie Stevens, a Wisconsin Oneida and chairman of the National Indian Gaming Association. “She’s a strong leader and a role model for economic development.” “Phillip Martin established a benchmark not only for Mississippi Choctaw, but all Indian Country,” says Brian Patterson, a New York Oneida and former executive director of USET. “Chief Anderson’s leadership embodies Chief Martin’s legacy. She models her leadership by his example. She is following Phillip’s path, but with her own moccasins. “She has won the hearts of the Choctaw people.”

Escaping Poverty Martin returned to Choctaw around 1955 after a decade in the peacetime U.S. Air Force. He trained as an electrician under the G.I. Bill and met and married Bonnie Bell, a Choctaw. He joined the tribal council and was first elected chief in 1979. There were fewer than 2,000 Choctaw on the reservation when Martin returned from the military, most of them living in poverty. Some worked as sharecroppers. A Harvard University study put unemployment at about 75 percent. Martin’s strategy was to strengthen the Choctaw government—crafting business codes, strengthening tribal courts and creating a fair system of dispute resolution—building a foundation to lure business partners in the creation of low-skilled, low-wage manufacturing jobs. The tribe in 1969 lobbied for a federal grant to build an 80-acre industry park. Building on a federal Indian policy of tribal self-determination initiated under President Richard Nixon, the Choctaw started Chahta Enterprises, a company that built tribal housing and produced wiring and speaker systems for the auto industry. Chahta later lured American Greetings Card Company and a satellite-imaging firm. The Choctaw by 1998 would operate six factories with some 2,000

workers. Meanwhile, the tribe launched other businesses, including a shopping center, an office supply firm, a forestry enterprise and a post office. Long before the Indian Gaming Regulatory Act (IGRA) of 1988 launched an era of social and economic progress on tribal reservations, the Choctaw had already grown a large and diverse economy out of Mississippi’s sparsely populated red clay soil. “The original economic development strategy was based around creating job opportunity,” says John Hendrix, director of Choctaw Economic Development. “There were a lot of low-skilled, lowpaying, low-margin businesses. The tribe was financially successful and viable. It worked. We made it work.” The tribal population ballooned to 9,000 members, unemployment fell to 4 percent. The average life expectancy grew by 20 years. It was testament to Martin, strong tribal governance and Choctaw selfdetermination. “A lot of tribal leaders talk about diversifying their economies. He actually did it,” says Tadd Johnson, professor of American Indian Studies at the University of Minnesota at Duluth. “For him, gaming was secondary. For a lot of tribes it has become the only thing. “That reservation was a model for economic diversification,” says Johnson, a citizen of the Bois Forte Band of Chippewa Indians in Minnesota. “He demonstrated how economic power can become political power. He was the man everybody looked to for an education on how things should be done. “What we’re always trying to teach and what he demonstrated is the need to develop a government first.” “It’s hard to overstate Chief Martin and the Choctaw influence,” says Joseph Kalt, professor emeritus of political economy and director of the Harvard University Project on American Indian Economic Development. “Choctaw was the first of the tribes to figure out how to use self-determination to achieve not only economic development but, more broadly, community progress. “He figured out if your government isn’t in order, everything else was going to fall apart. Economic development is not about resources. It’s not about capital. It’s about getting your governmental house in order. Until and unless you do that, you’re not going to go anywhere.”

Gambling and the Pearl River Resort The tribe in the early 1990s was reinvesting most manufacturing revenues to create more jobs and businesses. There was little discretionary income. That changed with IGRA and tribal government gambling. Martin in 1993 negotiated a tribal-state compact with Governor Kirk Fordice. The agreement had no termination date or provision for sharing MAY 2018 www.ggbmagazine.com

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The Mississippi Band of Choctaw Indians operates three casinos, including the Golden Moon Casino Resort in Philadelphia, Mississippi, and the slot-centric Bok Homa Casino in Jones County

casino revenue with the state, which became common in later agreements. Choctaw then partnered with Boyd Gaming to help finance and operate the Silver Star hotel-casino, which opened in 1994. The tribe bought out Boyd’s partnership three years later. A sister property, the adjacent Golden Moon hotel-casino, opened in 2001 and the smaller Bok Homa Casino in Jones County debuted in 2010. The casinos, a limited-service hotel, two golf courses and a man-made lake and water park combine to make up Pearl River Resorts. Tribal revenues soared with the casino, hotel and tourism ventures, exceeding $400 million in 2001. Tribal finances are kept confidential. So are per-capita payments to individual tribal citizens. But figures provided by Mississippi State University in 2001 show the tribe was employing 8,686 workers with an annual payroll of $236.7 million, generating $19.7 million in taxes. Government gambling revenues fund a myriad of tribal services, including schools, childhood and elderly care centers, scholarships, medical facilities, public safety and other community infrastructure. “When gambling, tourism and hospitality became legal there was a boost in revenues,” Hendrix says. “It was a higher-profit margin business. It also provided good jobs and the opportunity for a diverse career. You could get into marketing, culinary arts, accounting and finance. “Gambling also solved a lot of infrastructure problems. It built housing for the newly emerging middle class tribal members. It built new elementary schools. It supplemented the tribal health care system so tribal citizens could get the care they needed. “There was a vast improvement in the quality of service provided by the tribe as a government.” With the growth in gambling and tourism, Choctaw factories went into decline. Two were exported to Mexico, where they were operated by the tribe for about a decade and later sold. Employment fell. With the demise of manufacturing and overseas exportation of factory jobs, the tribal workforce began transitioning to service and high-tech industries. The tribe in 2005 created Choctaw TechParc, a 150-acre business park, and began recruiting tech companies to the reservation. The tribe then formed Choctaw-Ikhana Laboratory Services to provide calibration and metrology services to various government and private-sector clients. Ikhana has operations in Mississippi and Texas. With much of the tribe employed in government and resort-related enterprises, Anderson’s administration is focused on ensuring Choctaw citizens have the tools needed to respond to the growth of high-skilled and high-tech industries. 38

Global Gaming Business MAY 2018

“When you look at what Chief Martin was faced with and now with Chief Anderson, circumstances and opportunities are much different,” Hendrix says. “There are very few low-skilled manufacturing jobs to be had anymore. So we’re seeing to it that our tribal people are upgrading their skills. “Of the jobs being created on the reservation today, the goal is to have tribal members trained and able to fill them.” “Phyliss is doing much the same as Phillip, but with a changing industry,” Patterson says. “She is pursuing opportunity for her people. “You see Choctaw people in leadership positions, whether it’s as manager of a restaurant or a shopping center.”

A Transition in Leadership Some 20 years ago, over lunch at Phillip M’s restaurant at the Silver Star, Martin mentioned that his tribal council was more politically involved than when he returned to the reservation, largely because of improved employment and educational opportunities. “Pretty soon they’ll be after my job,” he quipped. Martin’s esteem as an indigenous leader grew with Choctaw social and economic progress in the era of tribal self-determination. Martin was impressed with Europe’s World War II recovery, bolstered along with U.S. aid under a program known as the Marshall Plan, after then-Secretary of State General George Marshall. “They did it brick-by-brick,” Martin recalled. Tribes throughout the country would later refer to Choctaw’s recovery as “the Martin Plan.” The Choctaw economic blueprint was emulated by other tribal governments. Elected leaders frequently toured the reservation. Martin’s philosophy of strong tribal governance was viewed as gospel. Martin became a political force at both the state and federal levels, on occasion stepping in to resolve a tribal crisis on Capitol Hill. “Politically, he was our nuclear weapon,” Johnson recalls. Martin for decades was beloved, admired and respected throughout Indian Country. But his support among the Choctaw began to fracture leading to the 2007 election. Martin was viewed by many tribal citizens as wielding too much authority. He was accused of not hiring Choctaws for key government jobs. Tribal members complained of long waits for housing and inadequate schools and health facilities. Tribal finances grew unsteady. The Golden Moon proved an unwise investment, pitching the tribe into a debt load that would reach $75 million.

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Anderson and her 17-member tribal council has been credited with refinancing much of the tribe’s debt, saving millions of dollars in potential interest payments. In addition, her administration last year announced it had taken only 23 months to pay off a 10-year, $10 million loan to help finance the Choctaw Health Center, an acute and primary care facility.

Martin’s reputation also was tarnished when it was disclosed he had paid disgraced Washington lobbyist Jack Abramoff some $15 million to lobby against efforts by Indians in surrounding states to launch gambling ventures that would compete with Choctaw. The scandal became personal when Abramoff wrote in an email reference to Choctaw, “We need to get some money from those monkeys!!” Martin lost the 2007 election to Denson by 200 votes. One of Denson’s first acts was to strip Phillip M’s as the name of the Silver Star steakhouse, replacing it with “Miko,” Choctaw for chief. Denson preferred the title miko as opposed to chief. Martin died of a stroke three years later. He was 83.

Changing Leadership Denson was credited by some with upgrading educational facilities, improving the health care system and reducing a backlog of applications for tribal housing. He engineered the opening in 2010 of a third casino, a largely slot ma-

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chine facility in the tribal community of Bok Homa near Sandersville. The operation was opposed by state officials, but supported by most local residents. Although Bok Homa proved a success, tribal finances remained in apparent disarray. The Golden Moon continued to struggle and its hours were significantly cut back in 2009. The facility was closed the following year. With the financial picture remaining unsteady, Anderson defeated Denson in a 2011 run-off election, 1,971 to 1,618. Anderson became the fourth chief since Choctaw recognition in 1945 and the tribe’s first woman leader. She defeated Denson again in a 2015 run-off election, 1,907 votes to 1,745. Although both elections were narrow and disputed, Anderson in her inaugural speeches and a recent interview expressed the need for unity among tribal citizens. “It has always been my hope and continues to be my hope that we unite as a people,” she says.

Improving The Financial Picture Anderson’s administration has had both successes and failures, the most recent being a referendum last year rejecting development of a fourth casino in the

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Red Water community near Carthage, Anderson’s hometown. Anderson supported the project, contending the $25 million casino would create 250 jobs and generate $50 million a year to fund government services. The project would not have required a loan, she said, but would be built with cash flow from Pearl River operations. The tribe voted down the issue 1,506 to 710, apparently fearing the casino would cannibalize Silver Star and Golden Moon. On the plus side, her administration in 2014 engineered the refinancing a $70 million debt and negotiated a companion $75 million loan that allowed for the reopening of Golden Moon as a full resort and arena along with renovations to Silver Star. “This deal is something every tribal member should have pride in because it is the best rates banks have ever given our tribe,” Anderson said in signing the document as chairman of the Choctaw Resort Development Enterprise. “This deal clearly demonstrates banks and lenders have confidence in the work we are doing here at Pearl River Resort and on the Choctaw Indian Reservation.” Anderson and her 17-member tribal council have been credited with refinancing much of the tribe’s debt, saving millions of dollars in potential interest payments. In addition, her administration last year announced it had taken only 23 months to pay off a 10-year, $10 million loan to help finance the Choctaw

Health Center, an acute and primary care facility. “When Chief Anderson came into office the EBITDA (earnings before interest, taxes and depreciation) was not in a good place,” says a tribal official noting the confidentiality of tribal financial information. “She was able to provide better management of the tribe’s resources. We’ve been able to grow our cash reserves. We’ve significantly grown our EBITDA from the time the chief walked into office to where we are now.” Raised without electricity or plumbing and having worked as a child in a cotton field, the mother of three children and four stepchildren has been asked to voice her views on Indian issues. “I believe it’s very important that I’m available to members of Congress,” she says. “I believe it’s very important that we work together, as Native American Indians. We have different names, cultures, languages. Not every reservation has casinos. Not every reservation has schools. “But we do embrace that we are one people. We are all Native American Indians. It’s important that we continue to support each other in Indian Country.” One of her first acts as chief in 2011 was to restore Phillip M’s as the name of the Silver Star steakhouse. “Under the visionary leadership of our late Chief Phillip Martin, our tribe realized great progress,” Anderson said in a ceremony announcing the renaming. “I am proud to honor his legacy.”

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SAFE AND SECURE How sports betting technology can deliver integrity and profits to operators By Dave Bontempo

hey stir at the starting gate, thoroughbreds ready to sprint. Their imminent race concerns the projected windfall of expanded legalized sports betting. These “horses” could be state regulators, gaming-service companies or operators. The jockeys could be lawyers trying to overturn the onerous Professional and Amateur Sports Protection Act (PASPA) in the United States Supreme Court. This would open the gates for casinos, online suppliers, lotteries and at least 20 American states to embrace a new, multibillion-dollar market. The gaming industry considers this day overdue. PASPA, enacted in 1992 to let sports leagues block most sports-betting wagers, has all the popularity of prohibition a century ago—and about the same enforcement aptitude. Billions of dollars are bet illegally in the United Stats every year, close to $5 billion alone for the Super Bowl, while cash-starved state governments bemoan the lack of tax money and casinos chafe over a suppressed revenue stream. Operators expect the demise of PASPA, now that sports leagues revealed their hypocritical hand. The leagues, which decried illegal gambling, will soon have both pro hockey and football franchises in Las Vegas. Their push for “integrity” now appears as a crippling tax on legal wagers, not the sanctity of their games once professed. And the NFL’s opposition to fantasy football stopped once it began pocketing revenue. Given these factors, New Jersey was listed as a 2-1 favorite to overturn PASPA last December. How fitting for a sports-betting legal case to have odds. With the Supreme Court decision expected for the second quarter of this year, operators monitor it daily. And they get ready, either for the overturn, the court kicking it to Congress, or the chance to defy the ban by placing sports betting inside of some state regulations and making others block them. While the Supreme Court case impacts states’ rights in the long term, gaming interests look to win now. Monmouth Park racetrack in New Jersey, for instance, was ready to offer March Madness betting had the rule been lifted. The gaming players wait impatiently, ready to roll. Once the race begins, the first steps are important.

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PlaySpot. The London and Las Vegas-based company appears poised to embrace the sports-betting bonanza with PlaySpot, a turnkey mobile sports wagering solution that can be deployed by a casino of any size. If an operator has an existing mobile convenience app, the sports betting functionality can be incorporated into that app, or IGT will collaborate with the customer to create an independent portal. If a mobile wagering solution is not ideal for an operator, IGT can work with the customer to create a sports betting solution that better suits its players. Charles Cohen, IGT’s vice president for mobile, PlaySpot and North American sports betting, forecasts a prosperous era. “I often liken the state of sports betting to a dormant volcano,” he says. “At the surface, it appears perhaps that not a lot is going on, but below the surface there is a storm of activity. The addressable market for a sports betting solution in the U.S. is vast. IGT’s PlaySpot represents a proven, mobile wagering solution that we believe can meet the needs of a broad range of casino operators and wide demographic of players.” Cohen says any casino interested in extending play from its gaming floor to include areas such as pools, restaurants and beyond can benefit from PlaySpot technology. For example, PlaySpot users in Nevada can place mobile sports bets from any location within Nevada’s state lines via MGM Resort International’s PlayMGM application. If PASPA is repealed, casino operators in all parts of the country could potentially offer their players similar mobile wagering opportunities, he asserts. Cohen sees a double dynamic for PlaySpot. “For the player, it is the mobile user experience,” Cohen says. “PlaySpot has in-app features such as the ‘trend cloud’ which reveals the most popular bets of the moment. The option for ingame betting, search capability and the ease with which players can create parlay cards are among the most embraced features within the app. “For the operator, the in-depth, real-time player insights that PlaySpot can generate is a key factor. Through PlaySpot, sports

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book operators can gain a holistic view of their players, including their betting patterns and preferences. These robust player insights enable casinos to create deeper, more personalized casino-patron relationships, and ultimately differentiate their offering.” Cohen says that in developing PlaySpot, IGT drew upon decades of experience in building gambling apps for the European gaming market. The U.S.-centric product that is currently live with MGM Resorts International went through approximately one year of Nevada field trials prior to its official approval, which was granted in April 2017. “What PlaySpot customers are buying into is not one particular type of gaming—like sports betting or live table betting—or even one version of an app and user experience,” Cohen says. “Customers are taking on a new way of doing business, and PlaySpot is a platform for that. Every casino that deploys PlaySpot is getting a service and technology which will evolve over time to offer new player experiences, new ways to play, and new opportunities to tie the land-based casino experience into the digital world of the consumer.”

THE DIGITAL AGE Las Vegas powerhouse Scientific Games had a glimpse of the future when it made two major moves early this year. It established SG Digital and lined itself up as a prime industry force by obtaining a major solution, OpenBet, via the acquisition of NYX Gaming. Scientific Games completed its acquisition of NYX in January, adding a major global sports betting platform to its portfolio. In February, it announced SG Digital. Assembling established brands in iGaming, sports betting and iLottery, SG Digital is an integrated industry leader boasting products from the company’s nine in-house game development studios—including Bally, Barcrest, NextGen and WMS Gaming. The division will also leverage the company’s offerings, including SG Universe, an online solution for land-based casinos, and OpenBet, a leading sports betting solution. OpenBet Sportsbook, in particular, positions SG Digital to capitalize on future regulatory developments in real-money wagering and sports betting. This digital Sportsbook can be seamlessly delivered throughout Scientific Games’ global gaming and lottery networks in existing and future-regulated U.S. and global markets. “If PASPA is repealed, the rapidity with which the states are legalizing sports betting will be unprecedented,” says Quinton Singleton, the com-

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Sportradar, based in Switzerland, has been a force wherever betting is legal, from the established markets in Europe to the emerging continent of Africa. The company provides everything from simple scores updates to full turnkey sports books, complete with sophisticated trading and risk management services

pany’s vice president of corporate strategy and government affairs. “Certain states are targeting immediate go-live following a favorable SCOTUS decision and others are looking to go live shortly afterward in the second half of 2018. We are actively engaging with gaming regulators and preparing for the market opening. “The repeal of PASPA would be an industry-changing event like we have never seen. The United States is a massive market with millions of potential players who have unique interests and needs from a sports-betting perspective. Casinos and gaming operators would immediately enter the fray, but we also expect to see different industries take an interest in the space. Legalization would entice companies across various entertainment industries to take notice and, more importantly, take advantage of the opportunity.” The growth opportunity is tremendous, he says. By certain estimates, the U.S. sport betting market, if legalized, would be around $150 billion. And there’s only room to grow from there. Singleton is confident that OpenBet will become a force for SG Digital. It has been a pioneer of online sports betting since the market’s inception, driving the sector forward though innovative developments across retail, web and mobile. OpenBet powered the first online sports book back in 1998, ahead of the World Cup in France. The product has become a juggernaut in the sports-betting arena. OpenBet can process tens of millions of bets in a single day. The scale of the product’s performance is remarkable, he says. In 2017, Amazon processed nearly 9 million transactions on “Amazon Prime Day.” During the 2018 Cheltenham Festival, a tent pole horse racing event in the U.K., OpenBet processed more than 10 million transactions in a 24-hour window. “OpenBet’s sheer power and performance is unprecedented,” says Matt Davey, group chief executive at SG Digital. “It’s a product that revolutionizes its space by carving out new opportunities for customers and players while driving our growth. It is nearly impossible to overstate the opportunity that the potential PASPA repeal presents. This one event would create ripples throughout the industry and open new doors for providers everywhere. Looking to the future has never been more important than it is now, because the future we’ve envisioned has never been closer to becoming reality.” And what a time to buy in. The company looks poised for the online/brick-and-mortar phenomenon, spread across computers, mobile devices, kiosks and perhaps avenues yet to be determine. The new market could show up in lotteries, casinos, tracks or tribal entitles. At the moment, all eyes are on Pennsylvania, New Jersey, Mississippi, New York and West Virginia for the next potential legalized betting influx, according to Singleton. That list is expected to grow, making it imperative to hit the ground running. 44

Global Gaming Business MAY 2018

ON THE RADAR For Sportradar, a prominent supplier of data, technology and services to the sports betting market, the floodgates could open once PASPA, and its affiliated shackles on sports betting, becomes passé. They may even open without the extinction of PASPA. “This is not true just with the casinos,” says Neale Deeley, the company’s vice president of sales and gaming. “The general sense in the market is that it’s no longer a question of if, it’s a question of when, even if PASPA isn’t overturned. While nobody knows exactly the answer to that question, casinos are making educated guesses and are putting in place plans to be ready.” Sportradar, based in Switzerland, has been a force wherever betting is legal, from the established markets in Europe to the emerging continent of Africa. The company provides everything from simple scores updates to full turnkey sports books, complete with sophisticated trading and risk management services. It also supplies live odds to several Nevada casinos and suppliers, including CG Technology and Station Casinos, according to Deeley. “Experience in other countries and product verticals shows just how important it is to be ready for when the market opens,” he says. “While there is no guarantee that those who are live on the opening day will be the market leaders of the future, it does significantly improve the prospects. While we can’t control the world, we can control our own actions, and we are ready for legal sports betting across the U.S.” For Sportradar, in-game wagering has proliferated. Being efficient up to the minute is an accomplishment, yet being efficient up to the millisecond is a “cha-ching” fest. That’s the reality of in-game wagering, perhaps sports betting’s ultimate indulgence. Shifting odds, wagers and sentiments must be accomplished faster than the blink of an eye. Deeley believes the sports-betting industry eyes a surge. “This presents the U.S. gaming sector with the biggest opportunity in years,” Deeley says. “Globally, sports betting is around 15 percent of all revenues from gambling activities across land-based, online and mobile. Underneath that headline figure are some very interesting and hugely important trends. “In the online space, betting is firmly established as the largest driver of activity, with approximately half of all revenue coming from betting and in the fastest growing of all channels—mobile betting accounts for three out of every four dollars with the majority of that coming from inplay wagering.”

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Speed is the execution of that blueprint. Snap the fingers and wager again. “Ultimately, all sports betting is reliant on fast and accurate data,” Deeley indicates. “Without it, bookmakers wouldn’t be able to price events or settle bets. As technology has advanced, so has the sophistication of the data provision to the point we are at today, where it takes less than a second from an event happening on a sports field somewhere in the world to the bookmaker updating the odds. This has greatly enhanced the betting experience for gamblers, as can be seen by the explosive growth in mobile and in-play wagering.” Deeley asserts that Sportradar is the official and exclusive data partner of the major leagues in the United States, including the NFL, NBA, NHL and NASCAR, but it also has integrity partnerships with NBA, NHL, MLS, etc., in the U.S. “Worldwide, we have more than 100 official data relationships with

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leagues and sports organizations,” Deeley says. “We have direct relationships and advise all our partners on the developments in the U.S., but also share global experiences and knowledge on good and bad practices.” According to company officials, that has been a boon to the sports leagues. The Sportradar bet monitoring, intelligence and investigation, education and prevention, regulatory and consultancy solutions are used by over 70 sports federations around the world, company officials say. The swirl of activities continues. Collectively, government and gaming root for the demise of PASPA. Then they must become responsible partners. Sports-betting revenue must be taxed sensibly, probably at less than 10 percent, to be viable. The states that eye this money can’t be greedy. The entities working side-by-side today must be unselfish tomorrow. Otherwise, the race won’t produce a winner.

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Catching the Crooks

ported to partners over 3,500 sporting fixtures as likely manipulated and the company’s findings have initiated or supported over 240 sporting and criminal sanctions worldwide.” Sportradar has supported more than 30 law enforcement agencies and assisted government bodies, along with national betting regulators. The company’s presence in more than 30 international locations also gives it a unique background to help the leagues. Its partners include the NBA, NHL, International Ice Hockey Federation, International Cricket Council, World Rugby and the major soccer (or football) -related likes of MLS, FIFA, UEFA and CONMEBOL. Since 2015 alone, Sportradar has educated more than 10,000 sporting participants on the key messages around betting and matchfixing, according to Mintas. The technology to both enable and monitor sports betting must be sophisticated. Sportradar provides data for services like in-game betting, with second-by-second changes in betting odds. An operator using the company has more at stake than ever before and league integrity must be a given for patrons who may bet on, yet not know, the intricacies of these sports. “In terms of bet monitoring, Sportradar analyzes betting data through use of its bespoke, technologically advanced and award-winning monitoring platform—the —Sportradar Deputy President Laila Mintas Fraud Detection System (FDS),” Mintas says. “Betting data is fed into the FDS allowing over 200,000 sporting events per year to be monitored in real tipped the ball in with his hand, but the goal was allowed while Engtime. The FDS tracks betting patterns at over 550 global bookmakers land, and bettors, fumed. Maradona acknowledged his game winner as and operates a sophisticated two-tier alerting system to identify any “the hand of God.” unusual betting patterns. Once an alert is generated, Sportradar’s InScrutiny at least makes perpetrators think twice. Switzerland-based tegrity Analyst team provides an expert qualitative interpretation of Sportradar is a global leader for providing integrity-related services to the betting data and we then report incidents deemed as suspicious to sports governing bodies, leagues, betting regulators, law enforcement our sporting, regulatory and law enforcement partners.” agencies and government authorities to help thwart corruption. It wants If sports betting grows, as expected, Sportradar’s combination of to be at the epicenter of American sports-betting expansion. instant data and the infrastructure to protect fraud may arm operators “Sportradar’s capabilities have proven effective in assisting our partboth with revenue capability and peace of mind. ners to prevent, detect and investigate match fixing,” says Dr. Laila —Dave Bontempo Mintas, U.S. deputy president for Sportradar. “We have detected and re-

hat is the new era of sports-betting oversight? The classic platform is a sports book or betting service alerting authorities about irregular betting patterns. That helps unearth official misconduct, like the multi-year investigation revealing NBA referee Tim Donaghy betting on games he officiated. Some of his calls likely influenced playoff contests. Donaghy spent some time in jail and permanently fouled out of his career. Yet what about other contests, with origins outside the United States but soon to be in play if sports betting legalization grows? At the Singapore Grand Prix 10 years ago, Nelson Piquet Jr. deliberately crashed to allow a victory for Renault teammate Fernando Alonso. Besides the safety concerns of officials and spectators, what if you’d made a prop or team bet on that contest, only to suffer from the cheating later dubbed Crashgate? Or be stymied when Diego Maradona scored an illegal goal in the 1986 World Cup to give Argentina a victory over England? Maradona

“We have detected and reported to partners over 3,500 sporting fixtures as likely manipulated and the company’s findings have initiated or supported over 240 sporting and criminal sanctions worldwide.”

Global Gaming Business MAY 2018

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EMERGING LEADERS Driving Decisions

The Best Version Melissa Cox

Michael Marino

Vice President of Marketing and Customer Relations, Gaming Capital Group

Senior Vice President, Chief Experience Officer, Caesars Entertainment

t’s not every day someone gets the opportunity to recruit herself for a job. But Melissa Cox did just that. “Essentially I recruited myself into my first role at Gaming Capital Group LLC as their sales and marketing manager,” says Cox, whose initial position after graduating from the University of Nebraska in Omaha was a job recruiter specializing in finance and accounting. She was a newcomer to the gaming industry, but tenacious—and a woman. “I was told a big reason I was hired was because I was a woman. The gaming industry is still today very male-dominated.” What Cox joined in 2006 was the beginning of a one-stop shop for the gaming industry. Since then, Gaming Capital Group has provided nearly $900 million for equipment financing, including casino and hotel projects. Along the way, Cox has donned many hats. Now vice president of customer relations and marketing, she oversees the marketing and promotions department as well as customer, vendor and employee relations. Gaming Capital Group is also one of the largest customers of gaming manufacturers, having purchased over 15,000 slots, which are leased on a revenue-sharing basis. “We are laser-focused on growing our customers’ revenues by providing superior service and maintenance on our ever-growing footprint of electronic gaming devices,” says Cox, who grew up in Lincoln, Nebraska. The company, headquartered in Newcastle, Oklahoma, also has warehouses in Durant and Tulsa to better accommodate its growing operations throughout the northern and eastern regions of Oklahoma. They now operate within 12 gaming jurisdictions and 72 casinos. Cox credits a number of the company executives for her success, including Rolen Miller, Ward Chilton, Matt Weber, Sherri Lance and Rob Miller. “They are such a big part of who I am today both personally and professionally. I learned different things from each, but all have pushed me to be my best. However, my parents, Nick and Sally Dean, are my biggest mentors. They continue to teach me what it means to love, be loved, to be

ichael Marino, senior vice president and chief experience officer at Caesars Entertainment, describes himself an avid sports fan and overall “experience seeker,” having traveled to more than 100 stadiums and arenas throughout his life. He got an early start learning about customer behavior in entertainment—his father owned thoroughbred race horses as he was growing up in upstate New York, and he spent a lot of time at racetracks—but his first career moves were elsewhere. Only in hindsight is it easy to see how this former software engineer ended up in a senior leadership role at one of the largest entertainment companies in the world. After graduating from the University of Virginia with a degree in computer science, Marino realized that his real passion was business. He spent the early part of his career at Capital One, where he built up his analytical skills and developed a keen interest in the relationship between consumer data and behavior. Not only did that lead to him earning an MBA, but also his eventual transition into gaming. “When I was in business school, one-third of case studies in marketing were on Capital One and Caesars (formerly Harrah’s),” he says. “I already worked for Capital One, so I figured the next best place for me was Caesars.” Gaming was also a natural fit since it was one of the first industries to collect customer data on a large scale and to develop marketing objectives based on customer preferences. At Capital One, his sales objective consisted of “getting the right product in front of the right customer, at the right time.” He accomplished that by using customer data to drive decisions. Now, he says, “I do the same thing; I just have more fun things to give a customer.” With other consumer industries following suit in their pursuit of customers and their data, making your marketing voice heard and influencing customer behavior has become increasingly difficult. The challenge for marketing departments is learning to differentiate your product—not only from other casinos but from other entertainment choices as well.

Global Gaming Business MAY 2018

“As our industry grows, we will grow with it. It is vital that our vendor partners develop the best gaming content and utilize the latest technology so we can keep our customers’ casino floors fresh.” kind, and always be true to myself.” The company has an even brighter future, Cox says. “As our industry grows, we will grow with it. It is vital that our vendor partners develop the best gaming content and utilize the latest technology so we can keep our customers’ casino floors fresh.” Cox says she’s fortunate to work not only in the gaming industry, but for Gaming Capital Group. “I cannot imagine doing anything else. I hope in five years my path continues to take me to a place where I can learn, grow, and show those around me that I can do anything you put in front of me,” says Cox, who relaxes by playing golf and taking walks with her husband, Todd, their baby and puppies. The future is also well-positioned to bring newcomers into the industry. “My advice, learn from everyone around you, lead when you know it’s right, and always be the best version of yourself.” —William Sokolic

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“It’s a great brand, great culture, and all decisions are grounded in data.” Marino is proud that Caesars has always been a leader incorporating customer data into marketing efforts. “It’s a great brand, great culture, and all decisions are grounded in data.” Marino links much of his success in gaming back to his early mentor, Rich Fairbank, cofounder and CEO of Capital One. Marino credits Fairbank for his ability of “seeing beyond the product he was selling” and “taking the core competencies that the company had developed for use in other areas” as he expanded the company from financing into banking. In a similar vein, his advice for young professionals is to focus on developing transferable skills rather than deep product knowledge. He sees the industry expanding opportunities to newcomers and encourages his employees to perform outside of their traditional roles. As he describes it, “If you only do ‘your job,’ you’ll never go beyond it.” —Angela Slovachek, The Innovation Group

MAY 2018 www.ggbmagazine.com

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FRANKLY SPEAKING by Frank Legato

Virtual Virtues

Global Gaming Business MAY 2018

So, let me get this straight. The virtual reality games are there to draw in millennials who don’t like slot machines, so the top virtual-archer prize is a bunch of Slot Dollars that can only be redeemed by playing them through a slot machine. Is is just me, or does that seem to be a conundrum? In any event, I’m certain there are hundreds of thousands of millennials out there who are skilled archers, but this is going to be one of the VR experiences on which I’m going to pass. As hard as this might be to believe, I have never manipulated a bow and arrow, and knowing me, I’d probably injure my hands even trying to shoot a virtual arrow. Finally, the new VR attraction at the Venetian and Palazzo charges $32.95 a person to roam a galaxy far, far away alongside the characters from the Star Wars movies. This is another one on which I’m going to pass. I’m not a Star Wars guy. When people were lining up at theaters for that original series of films, I was in college, and I was much more interested in playing in rock bands (typically for little or no money, or, of course, for beer) than in crowding into a theater with a bunch of whiney children to watch a movie about intergalactic wars. I was, however, always a Star Trek guy. Cook up a VR gizmo that puts me on the bridge with Kirk and Spock—or better yet, out on the holodeck with Piccard—and you’ll definitely get my attention. In the end, I’m an old-school casino patron. I actually go to casinos to gamble. Maybe someone will come up with a virtual craps game that simulates me actually winning. Virtual dice that make every point, virtual players cheering me on... I might go for that. Hey, throw in a few zombies, and I’m there. VIC TOR RINAL DO

n case you haven’t heard, virtual reality has finally reached casinos. The Orleans in Las Vegas has joined the MGM Grand in making the once-unheard-of move of clearing out hundreds of slot machines to make room for virtual-reality attractions. And over at the Venetian and Palazzo, they’ve evidently drained part of their virtual Venice canal space for a Star Wars virtual reality thingamabob. These attractions are the latest attempts by our industry to bring younger players to the casinos. Right, the “M” word again. As has been repeated ad nauseam by industry pundits left and right (yes, me too), millennials don’t like slot machines, so we need something to bring them into casinos. The idea is to get them into casinos with the VR stuff, and while they’re hanging out with their friends, going to ultra-lounges and battling virtual monsters, knights and such, we’ll figure out new ways for them to gamble, so by the time these kids have serious gambling budgets, we’ll know how to separate them from their money. So, let the virtual games begin. At MGM’s Level Up lounge, players can pony up $50 apiece to form teams to roam through a digital universe. There are four games. Team members can fight the undead in a zombie apocalypse, fight different zombies amid a virus outbreak, battle rogue robots and killer drones in a military space station, or “solve physics-based problems” in “a fantastical world with flying whales, giant parrots and colorful creatures.” Hey, who wouldn’t love solving physics-based problems for big money? I’m still waiting for the calculus tables to open up at the South Point. They say these are skill-based games, so the skill here obviously is trying to concentrate on physics with big whales and giant parrots flying around your head. But even better than whales and parrots, you’ve got zombies—in not one, but two digital universes. Just in case you’re all zombie-apocalypsed out from binge-watching The Walking Dead, you can shoot those pesky zombies in the head during a virus outbreak, because, as you know, the most scary prospect of a viral pandemic is the thought that after the sick people die, they’ll all come back as zombies. It’s one of the things that keeps me up at night. Meanwhile, the Orleans has set up a virtual archery attraction, in which players have to use digital bows and arrows to defend a castle under siege. Yes, it’s another skill-based game, allowing all the millennials to show off their archery skills, at $10 a pop. For $30, the kids can form a team and compete on the IGT SiegeVR apparatus. The Orleans awards the top daily archer with $125 worth of Slot Dollars and the top SiegeVR team $300.

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NEW GAME REVIEW by Frank Legato

Heat ‘Em Up Power Wheel

Incredible Technologies

his new release on Incredible Technologies’ huge marquee-style Infinity V55 flat-screen cabinet, like a lot of hit IT games, calls on the features of a current hit, the player-favorite Heat ‘Em Up. The five-reel, 30-line base game, like the original, offers opportunities for big credit wins with “Instant Stacks” any time three Heat ‘Em Up symbols land in stacks on the second and fourth reels. The new game, though, uses the 55-inch vertical full-touch-screen LCD to display a gigantic Power Wheel, which spins constantly as the game’s reels spin in the three-by-five array. Three Power Wheel scatter symbols in the base game trigger one spin on the wheel for credit awards, one of six progressive jackpots, or entry into the Super

Power Up Bonus Game. Players landing on credits wedges will have the chance to increase their winnings with a secondary wheel of multiplier wedges—up to 4X—and a re-spin wedge, giving players another chance at a jackpot or bonus feature. If the pointer stops on the “Bonus” wedge, a second wheel appears to determine how tall the bonus Super Power Up tower will be—up to seven wheels are available. Each wheel throughout the bonus is spun individually as players work their way up from level 1 by landing on “power up” wedges to move to the next wheel with increased credit awards. Even players making it to the final wheel have the chance to land on a re-spin wedge, creating huge wins. Manufacturer: Incredible Technologies Platform: V55 Format: Five-reel, 30-line video slot Denomination: .01 Max Bet: 320 Top Award: Progressive; $5,000 reset Hit Frequency: Approximately 50% Theoretical Hold: 5.92%-14.86%

Monopoly Millionaire Scientific Games

he latest game in Scientific Games’ prolific Monopoly series represents one of the best combinations of technology and brands from legacy companies Bally and WMS. The longtime WMS title here resides on the Bally Alpha Pro Wave 360 cabinet, which employs a 360-degree top display for a central bonus event. As in all games in this series, bonuses are based on the legendary Monopoly board game. The Big Wheel Bonus on the circular top display activates any of five different specific bonus events, one of which can result in the top progressive prize, which is available in a local or wide-area version. The local version resets at 10,000; the wide-area version resets at $400,000. This bonus lineup is added to mystery events in the five-reel, 40-line base game—featured on a five-by-five array (five rows of symbols). Randomly triggered events include the Community Chest bonus, in which a three Community Chest Bonus Cards appear and the player picks one for a prize ranging from two to 10 times the total bet; mystery symbol positions that are randomly replaced with one of several high-paying symbols; and a Chance symbol, which covers any random position and replaces it with a wild or one of the higher symbols. Big Wheel Bonus symbols on the corner and center reel spots trigger the main event and activate the 360-degree Monopoly Wheel, which spins to either “Avenue” credit prizes up to 4,000 times the bet or one of four separate events: In Free Parking, the player selects five red cars from a field of 23 for award credits ranging from 75X to 300X bet per line or a Jackpot Diamond symbol. Revealing five Jackpot Diamond symbols at max bet awards the top progressive, marked as the Free Parking Jackpot.

Global Gaming Business MAY 2018

Landing on the Railroad Bonus awards 10 Railroad Bonus Free Games. During each free spin, a railroad track displayed on the top display will spin in sync with the reels to award a credit prize up to five times the total bet or a multiplier up to 10X. The Electric Company Bonus awards 10 free spins with extra features on one reel awarding extra spins, credit prizes and multipliers. Finally, in the Go to Jail Bonus, players roll dice in jail, and if doubles are achieved, a credit prize is awarded. Three tries are granted. The first try awards 75 times the total bet. The second try awards 30 times total bet; the third, 15 times. If no doubles are rolled in three tries, a “Sure Win” prize of five times the bet is awarded. Manufacturer: Scientific Games Platform: Alpha Pro Wave Format: Five-reel, 40-line video slot Denomination: .01 Max Bet: 400 Top Award: Progressive; Wide-Area—$400,000 reset Local-Area—$10,000 reset Hit Frequency: 50.96% Theoretical Hold: Wide-Area—10%-14.6% Local-Area—3.96%-14.61%

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Wheel of Fortune Triple Double Diamond International Game Technology

GT flexes its muscle in the traditional reel-spinning genre with this classic, housed in the Megatower cabinet—the new S3000XL largeformat cabinet, which comes complete with a two-player bench seat. The Megatower places the Wheel of Fortune bonus wheel and widearea progressive resetting at $1 million (dollar version) on top of one of the tried and true hits of IGT’s library, Triple Double Diamond. A longtime player favorite, the dominant feature is the combination of 2X and 3X wild symbols, which multiply the jackpot in a winning combination by two or three, with four to nine times the payoff for two of either symbol in a win. In a win with one of each symbol, the jackpot is multiplied by five. The famous wheel bonus features additional jackpot chances for higher bets. A five-credit bet buys jackpot eligibility on a single payline. A 10-credit bet makes the jackpot eligible on two lines, and doubles the other wheel bonus awards. A 15-credit max bet makes the jackpot available on three lines and triples the other awards.

Manufacturer: International Game Technology Platform: Megatower Format: Three-reel, five-line stepper slot Denomination: .25, 1.00, 5.00 Max Bet: 5, 10, 15 Top Award: Progressive; $1 million reset (dollar version; resets may vary by jurisdiction) Hit Frequency: 28% Theoretical Hold: 4%-14.1%

Xtreme Progressive Series Aruze Gaming

his new progressive series highlights the capabilities of Aruze’s tall Cube-X Vertical cabinet and its 42-inch monitor. Initial games Xtreme Dragon’s Fortune (pictured) and Xtreme Panda each feature 30-line base games that can randomly expand for a single spin. From one to five extra rows are added to the array in the mystery feature, with the top nine-row array yielding 120 paylines. When the feature—called Expander Reels—randomly triggers, the bonus spin is subject to a number of wild and multiplier features, such as two or more wild symbols being added, or an “Expand Wild” feature that turns an entire reel wild. The Xtreme Panda game also includes a “Block Wild” feature that randomly turns a block of symbols wild on the expanded reel array. Both games feature highly animated and engaging characters perched atop the reels. When the reels are expanded, the Dragon or Panda character add the wilds and multipliers. The game also features a bonus wheel that can result in credit awards, 20 free games, or one of four progressives, with reset values available ranging from $5,000 to $25,000.

Global Gaming Business MAY 2018

Manufacturer: Aruze Gaming Platform: Cube-X Vertical Format: Five-reel, 30-line video slot (expands to 120 lines) Denomination: .01 Max Bet: 900 Top Award: Progressive; available resets $5,000, $7,500, $10,000, $15,000, $20,000, $25,000 Hit Frequency: Approximately 50% Theoretical Hold: 2.27%-12.78%

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SLOT OPERATIONS

That Winning Feeling The evolution of communicating player value through slot development and design

ince the first slot machines, there’s been a need to effectively communicate the value of the gaming experience while creating compelling content that resonates with the players. At the simplest level, the challenge to game designers revolves around how to show players—who are making the commercial purchase decision for entertainment—that spending more may provide greater win and entertainment opportunities. Slot designers want to help players identify those opportunities where increasing their investment rewards them with more for their play and more from the machine. Three main areas where slot games communicate value to players are the button panel, the game screen and the reels. In earlier games, and even in some games today, player value was communicated through line betting which surrounds the screen and structures the pay table. The more lines bet, the greater value per wager. It’s a mechanism that has reached a high level of awareness and understanding among players and remains an important aspect of slot games to this day. Another early example of communicating value was the “buy-a-pay” mechanic. This was common for mechanical reel stepper games, and this offers players one set of payouts for betting one coin, but for an additional two or more coins it allows players to open up a whole new set of features—for example, 7s would become wild or payouts would increase dramatically. This example can also be extended to progressives that are only eligible for award at higher or max bets. In each of these cases, the primary goal incentivizes players to increase their bet level and enjoy all the bonus features associated with it. Long before we had low-denomination and penny slots, these were some of the ways we communicated value—bet max, bet more, and unlock additional benefits in the game. More modern evolutions in the industry have included custom button panel labels indicating “good,” “better” and “best” bet levels for special features and increased odds. These button labels help signal to players that the game is designed to deliver a spectrum of value opportunity as players

Global Gaming Business MAY 2018

By Steve Walther

move further up the button panel. It supports the idea that different bet levels provide a different type of experience. Konami’s Xtra Reward is another key example where games had a basic pay table but for an additional bet, players would open up new bonus features, multipliers, or mystery event odds. It Celestial Moon Riches highlights in blue the default Strike Zone, which developed a huge following players can expand to a majority of the reel frame at a higher extra bet and drove players to realize jority of the frame with wild multipliers and jackthat by betting a little bit extra, they get more for pot wheel spins. This feature is communicated to their money. Xtra Reward successfully demonplayers through on-screen messaging and cusstrated the extra value players receive for their bet, tomized button panel graphics, and reinforced and proved to our industry the importance of this through graphic animations on the reels that extra value to players. demonstrate where and how the Strike Zone is proNot only is effective communication imporviding additional symbol-driven bonus opportunitant, it’s equally critical that the game play reinties in every spin. forces delivery of the added value. It has to be evident, and supported by how players tangibly experience the game. If they’ve experienced the Mid-range Strike Zone activation of three reels in Star Watch Magma instantly awards nudging game at both the lower level and higher level of infull-reel prize symbols within the highlighted vestment and seen that there’s something different Strike Zone area between the two, they will recognize the value. If they’ve played both but don’t see any benefit towards the higher value, they’re not going to continue to engage with it, regardless of the messaging. The game needs to tangibly demonstrate to players that by betting higher amounts, they can receive a better value. Konami has several recent game developments aimed at just this. First introduced to market last fall, Konami’s Strike Zone mechanic has proven successful both in communicating player value and tangibly delivering through game play. Premiering in Celestial Sun Riches and Celestial Moon Riches, the Strike Zone mechanic is a specially highlighted reel area that activates special bonus opportunities and invites players to flexibly control its range by increasing their bet amount. In the case of this series, players automatically receive a Strike Zone area of two center symbol positions, which can be expanded to activate a ma-

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Non-Gaming A Non-Gaming Amenities menities FFor or IIntegrated ntegrated R esorts Resorts

Strike Zone’s Star Watch Fire and Star Watch Magma games invite players to activate entire reel strips from left to right, up to the entire frame, by increasing their extra bet amount. Any star prize symbol that lands in the Strike Zone awards an instant credit prize or a wheel-spin bonus with guaranteed jackpot. The feature is described in multiple locations on-screen, and with each spin players see instant outcomes of the Strike Zone area they’ve activated. The bigger the Strike Zone, the greater the investment, but players see more value in selecting the higher bet. Multi-denomination jackpot and progressive options have been a relatively recent development in the industry, and the communication to the player on the value of changing denominations has become critical to the success of the product. Some of the industry’s most popular progressive games include the option to change denomination and demonstrate to the player that the change in denomination comes with additional value. One of Konami’s newest linked progressive games also leverages special visual cues around variable progressive contributions to communicate added value at higher bets. Power Boost Inferno invites players to increase their odds for the Supreme jackpot and receive additional pointers around a wheel bonus as they increase their extra credit bet contribution. We will continue to see new game titles, from across the industry, in which communicating value is central to player experience and operator profit. And when the communicated value is effectively delivered, it facilities better entertainment experiences for players, higher average bet and play session duration for the machine, and greater revenues for casino operators. The allure of slot games will always have a bit of mystery behind the mechanics, but it is important that the games are transparent enough to deliver on the promise of the players’ financial purchase decision. In the midst of the gaming entertainment experience, players want the assurance that they are getting the most entertainment for their investment, and that’s where slot designers can help inform and reinforce at the machine. As senior director of marketing and product management at Konami Gaming, Inc., Steve Walther is responsible for global product planning, life-cycle support, and performance analysis, which includes gathering and prioritizing product and customer requirements, defining the product vision and roadmap, and building product launch and marketing strategies. His gaming industry experience spans more than 20 years.

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TABLE GAMES

The Five-Minute Degree How to get ahead in the gaming industry

By Roger Snow

ack in the late 1970s—around the last days of “Disco Duck” and the first days of “Ayatollah Assahola”—there was a college that, believe it or not, let you earn a degree in less time than it took to pick out books at a traditional school. And for less money than it took to pay for them. “The Five Minute University,” it was called. Or at least it was when Father Guido Sarducci was on stage. Sarducci, the bespectacled, mustachioed, nom de guerre of Italian-American comic Don Novella, would—adorned in priestly vestments that looked like they were shoplifted from a Vatican City souvenir kiosk—explain his concept of meteoric matriculation in a manner as concise as the curriculum itself. “The idea is that in a-five minutes,” Sarducci would say softly, his accent as thick as it was faux, “you a-learn what the average college graduate remembers a-five years after he or she is out of aschool. And it would cost a-like $20.” As the audience broke out in laughter, smoke from Sarducci’s ever-dangling, ever-lit cigarette would waft from his fingers to the ceiling. “That may sound like a lot of money,” he said. “Twenty dollars for five minutes. But that’s for tuition, cap and gown rental, graduation picture, snacks. Everything is included.” Here’s a crash course in his crash course: Economics? “Supply and demand.” Business? “Buy something and sell it for more.” Theology? “God is everywhere.” Foreign language? “Como esta usted? Muy bien.” “And believe me,” Sarducci said. “If you took two years of college Spanish, five years after you’re out of school, ‘Como esta usted? Muy bien’ is about all you’re going to remember.” He, of course, was joking. It’s ridiculous, outrageous, and perhaps a bit slanderous to say you can boil down four years of academic toil to five measly minutes.

Global Gaming Business MAY 2018

From personal experience, it shouldn’t take longer than three, three-and-a-half minutes, tops. Just kidding. But this is serious: As goes school, so goes business. It doesn’t take long to learn what really matters. In fact, when you get right down to it, there are three skills that come into play. Master one of them, and getting hired will be easy. Master two, and promotions and pre-eminence are in your future. Master all three, and you will never have to look for work, because work will always be looking for you. Say, you got another five minutes?

Create Something Gaming, especially on the supplier side, is all about products and services. Slot machines are created. So are chip sorters for roulette. So are back-house systems. So are lottery tickets. So are table games, from the intellectual property underneath them to the furniture around them. Ernie Moody made a large fortune off one idea, Triple Play Video Poker, and then made a few smaller fortunes off other ideas like Ultimate X Poker. John Breeding changed the casino industry by coming up with the concept—and ultimately the design—of the first successful card shuffler. Dozens of table-game inventors, from Geoff Hall to Ron LaDuca to Mark Jones, have ratcheted themselves up a couple of tax brackets by conjuring something the gambling public fell in love with. The good news is there will always be a new new thing. Gaming is changing, changing rapidly and changing permanently. While this may slam some doors shut, it will pry others open. Skillbased slots, cashless transactions, the automation of anything and everything manual, social games, experiential casino environments will—along with more entrenched product categories—be the canvases of the future for the creative and the artistic.

Sell Something You’ll never see a good salesperson go hungry. Or broke. Or unemployed. The ability to close, to convince someone that what you’re offering is

more valuable than what it costs, is the simple objective of a complex endeavor. Day to day, salespeople must deal with an array of different personalities—sometimes from the same customer—with different agendas and different goals. They have to coax and prod and seduce and counsel. They have to develop trust and rapport. They have to take victory with humility and rejection with aplomb. And most important of all, they have to build—sale by sale, interaction by interaction— a reputation. And then guard it like their lives depend on it. Because their professional life, aka their livelihood, indeed does.

Run Something Of Don Shula, who coached the Miami Dolphins for, like, forever, it was said that he could take his team and beat your team, or he could take your team and beat his team. That’s how good he was. That’s how organized he was. That’s how smart he was. He couldn’t throw a pass or kick a point-after touchdown, but he knew better than just about anyone else how to run a football team. It’s the same in business. Whether you oversee research and development, product management, compliance, accounting, finance, legal, if you can get the right people on your particular team (and the wrong people off it), and motivate them to act towards a clearly defined goal, then you can be the Shula—or the Auerbach or the Stengel or the Tikhonov—of your organization. The great thing about management and leadership is that they are both transferable. And scalable. You can go from running a small group inside the company to running larger and larger groups, and maybe one day running the company itself. Roger Snow is a senior vice president with Scientific Games. The views and opinions expressed in this article are those of the author and do not necessarily reflect the views and opinions of Scientific Games Corporation or its affiliates.

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