Global Gaming Business, May 2019 by Global Gaming Business

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GGB Global Gaming Business Magazine

GAMING IN THE PHILIPPINES TURNING THE TABLES ONLINE GAMING TAXES LVCVA’S STEVE HILL

May 2019 • Vol. 18 • No. 5 • $10

Fact or Fantasy

Card Room Conundrum

What analysts get wrong about Macau

Tribes ask California to enforce the law SPECIAL REPORT

Challenges & Opportunities The future of skill games on the casino floor

Association of Gaming Equipment Manufacturers

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CONTENTS

Vol. 18 • No. 5

may

Global Gaming Business Magazine

COLUMNS

20 COVER STORY SPECIAL REPORT:

AGA 10 Emotional Intelligence and Gaming

Skill Games

Allie Barth

Despite a bumpy start, skill-based gaming holds a particular allure to casino operators. The second generation of games have already made big advances.

Fantini’s Finance 12 Consolidation: Not Just for the Big Guys Anymore Frank Fantini

20 The Paradigm of Skill

24 Solving the Skill Challenge

A look at the first wave of skill-based games and the industry’s process of defining a new genre.

A study of the reasons suppliers are finding it challenging to produce a skill game that will be the “next blackjack or poker.”

By Nicole Schultz

By Jeff Hwang

Making My Point 32 Goldie Got It Right Roger Snow

DEPARTMENTS FEATURES 16 Macau’s Future When considering the future of Macau, financial analysts may not be the best source considering they don’t weigh all the factors.

Agenda

By the Numbers

5 Questions

13 AGEM 40 Emerging Leaders With the Drew Las Vegas’ Stephen Singer, HBG Design’s Emily Marshall, and Hollywood Casino Columbus’ Jason Birney

By Andrew Klebanow and Gerard Parisi

42 Table Bonus Technology has brought the ability to offer bonusing and progressives to the table-game pit.

46 Frankly Speaking

28 Card Room Reckoning

By Dave Bontempo

54 Cutting Edge

48 Philippines Rising

56 Global Gaming Women

State and federal lawsuits from gaming tribes are bringing the long-simmering dispute over California card rooms’ right to offer banked card games through TPPP firms to a head. By Dave Palermo

34 The iGaming Tax Debate Some online gaming jurisdictions are imposing onerous revenue taxes, bringing into question the potential long-term viability of U.S. iGaming.

The growing gaming industry in the Philippines has made it second only to Macau in the Asian market in terms of total gaming venues. By Michael Zhu Okada Manila

52 New Game Review

With Excalibur’s Ann Hoff

58 Goods & Services 61 People 62 Casino Communications With Stephen Hill, CEO, Las Vegas Convention and Visitors Authority

By Marjorie Preston

MAY 2019 www.ggbmagazine.com

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THE AGENDA

Rain, Rain, Go Away

Roger Gros, Publisher

Vol. 18 • No. 5 • MAY 2019 Roger Gros, Publisher | rgros@ggbmagazine.com twitter: @GlobalGamingBiz Frank Legato, Editor | flegato@ggbmagazine.com twitter: @FranklySpeakn Marjorie Preston, Managing Editor mpreston@ggbmagazine.com Monica Cooley, Art Director | mcooley@ggbmagazine.com

y friend Richard Schuetz wrote a piece for our online GGB News on April 8 titled “Rain on the Parade.” He recounts his early days of working table games for Bill Harrah in Reno and how it was the hottest place in gaming in those days (not so much now). It was a great article, and made some very cogent points. You can find the article at GGBNews.com But it brought back a lot of memories. Like Richard, I used to work the graveyard shift, just not in Reno, in Atlantic City. And while there was a certain allure about coming to work at 8 p.m. or 9 p.m. when the crowd was lively and the beautiful people were hanging out, it was a different story at 3 a.m. or 4 a.m. when the makeup had run and the opposite of the beautiful people remained on the casino floor. At that time of night, you got a large dose of derelicts, downtrodden and disturbed people. I saw lots of people digging deep into their pockets hoping to find another sawbuck but coming up with only lint. Now, this was Atlantic City in the early ’80s when gaming was still special and players in the wee hours of the morning could slide into seats that weren’t available earlier in the day, so not everyone was a degenerate. But I saw my share of people who clearly suffered from problem gambling. In his GGB News piece, Richard warns that the American gaming industry must start to address this issue because a backlash could be coming, particularly with the legalization of sports betting, which will certainly attract many players who may not have gambled before. He points to the recent restrictions of gambling advertisements in Europe and the reduction of the maximum bet on fixed-odds betting terminals (FOBTs) in the U.K. from ₤100 to ₤2, which has put a serious hurt on the betting shops and gaming companies there. In the mid-1990s, the American Gaming Association supported the establishment of the independent National Center for Responsible Gaming. It was brilliant move by then-AGA President and CEO Frank Fahrenkopf, who remarked he didn’t want to see casino executives lined up in a federal hearing feeling the wrath of congressmen like they did with the tobacco indus-

Global Gaming Business MAY 2019

try at that time. And it worked for a while. But what the NCRG has discovered over the years is that problem gambling has a comorbidity with other addictions, making it very difficult to treat any one at a time. So the “cure” for problem gambling is still very elusive. And while the AGA and other industry organizations and corporations give lots of lip service to problem gambling, there’s no plan to really help people afflicted with this problem because there really is no one answer. And compounding that issue is the widely published “fact” that 80 percent of gaming revenues come from 20 percent of the customers. A respected casino executive confided to me recently that when you get to the high end of the market, the split is more like 90-10 or 95-5. That is downright scary. Anecdotal evidence like the recent conviction of New York radio personality Craig Carton and his obvious gambling addiction keep popping up. He reportedly went through millions of dollars— most of it not his own—in a Ponzi scheme that involved many “investors.” He cited the VIP treatment he got at some very recognizable casinos on the East Coast. Carton posted a video confessing to his problems with gambling, yet no one in the casinos recognized it before then? Where were the red flags in this situation for the casinos? Could they not have done something? These kinds of situations occur much too often. Casino hosts and marketing executives must be more aware of these issues and be prepared to take action. Yes, sometimes you may be driving a valuable customer to another casino, but there has to be a point where “doing the right thing” becomes the most important thing for corporate bigwigs. For the last few years, Richard performed a great service to the industry by pointing out the lamentable lack of women in the boardrooms and C-suites of gaming corporations and regulatory bodies. That has begun to be addressed. Richard has become the conscience of the industry. And with the attention he’s now paying to problem gambling and the industry’s tepid response, I find my conscience is a little guilty. Hope that applies to others in this business too.

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 Allie Barth | Frank Fantini | Roger Snow Contributing Editors Dave Bontempo twitter: @bontempomedia Jeff Hwang twitter: @RivalSchoolX | Andrew Klebanow Dave Palermo twitter: @DavePalermo4 Gerard Parisi | Nicole Shultz | William Sokolic Michael Vanaskie | Michael Zhu __________________

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

• 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 2019 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014

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BY THE

NUMBERS

10 YearS after I

tâ&#x20AC;&#x2122;s clear that non-gaming revenues are taking a bigger slice of the Nevada revenue pie, but a recent report by the Nevada Resort Association puts it into perspective. Over the last 10 years, the percentage of gaming revenue to total revenue has slipped from 48% to 43%, while non-gaming revenues have inched up. To obtain a copy of the full report, the 2019 Nevada Gaming Fact Book, which outlines the impact of gaming and integrated resorts on Nevada, visit nevadaresorts.org.

Nevada Gaming and Non-Gaming revenue Distribution

the Big four

arket share is a crucial measurement in the slot manufacturing world. In the most recent Eilers Fantini Game Performance Report, IGT, Scientific Games, Aristocrat and Konami are the clear winners in this race. And while there has been much discussion about leased slot machines and wide-area progressives (WAP), the vast majority of slot machines are owned outright by the casinos. Thatâ&#x20AC;&#x2122;s why it becomes so crucial for casinos to make their purchasing decisions by using access to good data, as exhibited in the Game Performance Report. To obtain a copy of the report, contact Todd Eilers at teilers@ekgamingllc.com.

Supplier

Global Gaming Business MAY 2019

Own Status

CREATING WAVES AGAIN!

From the leader in portrait video slot cabinets comes the next surge in cuttingedge platforms – the TwinStar® Wave XL! With its curved, 49-inch, 4K UHD display, and some of the most recognizable player-favorite themes in the pipeline, this for-sale cabinet is sure to make waves on your casino floor!

CATCH THE WAVE! Call Your SG Sales Representative Today!

LAUNCH TITLES

Visit SGgaming.com The look and feel of the games and their individual components and displays are trade dress of Scientific Games Corp. and its Subsidiaries. TM and © 2019 Scientific Games Corp. and its Subsidiaries. All rights reserved.

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NUTSHELL

“They

5Questions

Jon Hanlin

Vice President of Commercial Strategy, Gaming Operations, Aristocrat Technologies

on Hanlin leads product and marketing strategy for the gaming operations division of Aristocrat Technologies, and he has wide operations experience with Caesars Entertainment. Hanlin explains how games were paired with the new Edge-X cabinet and why they were chosen. He spoke with GGB Publisher Roger Gros at the new Aristocrat headquarters in Las Vegas in March. To hear a full podcast of this interview, visit GGBMagazine.com. Tell us about the new Edge-X cabinet.

1 2 3 4 5

We’re excited about the Edge-X cabinet in the premium video category. There have been a lot of advances in the bigger slot machines, and we look at this cabinet as a smaller version of those “jumbos.” The key in this cabinet is providing the player with a more intimate experience than the very large machines. The Edge-X has two 43-inch curved screens in the “landscape” or horizontal position placed on top of each other. If you think back to our Arc Double cabinet, which has two screens positioned vertically on top of each other, these are horizontal. And what that provides is a very cinematic experience that extends all the way across your peripheral vision. It allows our game designers a really amazing palate. And it gives the players a little more elbow room since it’s wide instead of tall.

“My main thing is to make sure that we’re just responsible with it, and we think it through. Short-term success wouldn’t actually be the goal—we should make sure we do it well for the long term. I think one of the main things that’s being talked about is the integrity of the game.” —Mark Davis, owner of the Las Vegas-bound Oakland Raiders, commenting to Yahoo Sports that the National Football League should move cautiously on embracing legalized sports betting

CALENDAR May 7-9: Southern Gaming Summit 2019, Beau Rivage, Biloxi, Mississippi. Produced by the Mississippi Gaming & Hospitality Association. For more information, visit SGSummit.com. May 13-15: ICE North America 2019, Boston Convention Exhibition Centre, Boston, Massachusetts. Produced by Clarion Gaming. For more information, visit ICENorthAmerica.com. May 16-17: Japan Gaming Congress 2019, Conrad Tokyo, Tokyo, Japan. Produced by Clarion Gaming. For more information, visit JapanGamingCongress.com.

Yes, that’s one of the key attributes that’s going to make this cabinet popular. We’re also using our revolutionary i-Bench technology, which is a connected bench that allows couples to game together. It allows people to spread out and have a more comfortable experience while playing.

May 20-21: Cyprus Gaming Show, Hilton Cyprus, Nicosia, Cyprus. Produced by Eventus. For more information, visit CyprusGamingShow.com.

Did you want it to be grouped together in a carousel setup?

May 21-23: Global Gaming Expo Asia (G2E Asia), The Venetian, Macau. Produced by the American Gaming Association and Reed Exhibitions. For more information, visit G2EAsia.com.

Yes, it’s the legacy of our Wonder Wheel cabinet that was wall-based and meant to be grouped together. We were very keen on making the Edge-X bankable—something that would sit in the center of the casino floor and attract attention. Casinos are being more opportunistic about putting these kinds of machines where customers can see them. We built this with the expectation we could do three-pods or back-to-back. If someone wants to go bigger, we have that capacity. Player engagement is always what you’re seeking with new cabinets. How does that work with the Edge-X?

Even though it’s a large cabinet, it’s a private feeling because you feel engrossed in the game. It takes up so much of your eye-line and it has such a cinematic feel that you feel like you’re playing alone or with your partner. What games are you launching with the Edge-X?

At Aristocrat, we have some great licensed titles that are a little on the darker side—Mad Max, Walking Dead, etc. With the Edge-X, we decided to go with a little more brighter palate that has a different feel. Madonna is a great example of that cinematic feel. There’s a very acute awareness of what Madonna is, her songs, her images and her videos, which we use extensively in the game. That is key to that game. You get engrossed in her early career. The Edge-X has a very big button panel—the biggest we’ve ever made. When you try to find ways to engage players, we’ve added a karaoke screen where you can read the words and sing along with the game. It’s an example of bringing the player engagement into the panel. FarmVille is a very successful online social and slot game. It has a huge following and a collection of great characters and art. We picked these two titles because they were vibrant and cheerful. But of course, we’ll follow it up with our newest Mad Max title and get back to the darker side.

Said It”

Global Gaming Business MAY 2019

May 21: UNLV Gaming & Hospitality Education Series: Tribal Gaming Economy—Battling Competition, Morongo Casino Resort & Spa, Cabazon, California. Produced by GGB Magazine the William F. Harrah College of Hospitality at the University of Nevada, Las Vegas. For more information, visit UNLVGHES.com. May 27-31: 15th International Conference on Gambling & Risk Taking, Caesars Palace, Las Vegas. Produced by UNLV’s International Gaming Institute. For more information, visit unlv.edu/igi/ conference/15th. May 29-31: Juegos Miami 2019, Biltmore Hotel, Miami, Florida. Produced by Clarion Gaming. For more information, visit juegosmiami.com. June 4-6: International Gaming Summit, Ritz Half Moon Bay, Marin County, California. Produced by the International Association of Gaming Advisors. For more information, visit TheIAGA.org. June 10-11: 13th Annual Native American Economic Development Conference, Pechanga Resort & Casino, Temecula, California. Produced by Native Nations Events. For more information, visit NativeNationEvents.com.

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AMERICAN GAMING ASSOCIATION

Emotional Intelligence and Gaming Some dismiss emotional intelligence as a pseudoscience. But boosting your EI can help you succeed, personally and professionally

You want a better return? You want RPM. Because nobody knows the gaming business better than we do. Your games, your players, your rewards programs, we do it all. So call or email us at info@rpmadv.com.

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we speak casino

Global Gaming Business MAY 2019

By Allie Barth Vice President of Industry Relations American Gaming Association

his past year, the American Gaming Association launched AGA Elevate, an educational and interactive peer exchange of information around critical gaming and business topics through both webinars and in-person workshops. For the past couple of months, the team behind our Elevate initiative has been working with Bill Benjamin and Sara Ross at the Institute for Health and Human Potential to create content for our leadership summit series centered on emotional intelligence (EI). What’s that, you say? Training in emotional intelligence? Do we start by sharing our feelings? Will the holding of hands be after or before lunch? All joking aside, consider this: psychologist and science reporter Daniel Goleman found that EI accounts for about two-thirds of what differentiates top and average workplace performers. And Motorola saw productivity increase among 93% of its employees after workforce training to increase EI. Studies make it clear EI isn’t some touchyfeely pseudoscience, but a business imperative that drives performance and profitability. Some of these studies date back decades, but one of the best is from just two years ago. In its 2016 report, “The Future of Jobs,” the World Economic Forum ranked EI the No. 6 most critical skill for workers by 2020. And actually, a bunch more on the Top 10

list are elements of EI or closely related. We’ve put together the following opportunities: a free webinar and a full-day training workshop in Las Vegas. I’ll be there. I hope you can join us! Thursday, May 2: Workshop Perform Under Pressure: The Science of Emotional Intelligence A full-day, deep dive into putting EI to work for your organization. Las Vegas • 9 a.m. to 5 p.m. PT

Thursday, May 16: Webinar Applying Emotional Intelligence Strategies at Work (and at Home!) Extend your learning from our May 2 workshop. 10:30 – 11:30 PT • 1:30 – 2:30 p.m. ET

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FANTINI’S FINANCE

Consolidation: Not Just for the Big Guys Anymore In the model set by Boyd Gaming and Penn National, small operators are becoming major players through smart acquisitions

onsolidation has become a theme in the casino industry. In a mature industry, the avenue to growth is for companies to buy other companies, stripping out redundant costs. We’ve certainly seen our share of consolidation from the likes of Penn National, Boyd Gaming and Eldorado Resorts among casino operators, and among suppliers before that. Activist investors like Carl Icahn (Caesars) and Starboard (MGM Resorts) assure that consolidations and restructurings will continue. But, while the big companies make the headlines, there are also companies bubbling up from the bottom. We’ve seen smaller companies participate, most notably Churchill Downs and Eldorado as they’ve grown into enterprises nearing $4 billion in market value through acquisitions. Golden Entertainment has been actively growing from a slot route/tavern operator into a casino operator. Other emerging companies are Twin River and Maverick Gaming. Not long ago, Twin River was the privately held owner of a slot casino in Rhode Island and a racetrack in suburban Denver. Then, the little company bought Hard Rock Biloxi for $250 million. It acquired Rhode lsland’s second casino license and built a new Twin River on the Massachusetts border in Tiverton. Then, in a case of if you can’t beat ’em, join ’em, Twin River agreed to buy three small casinos in Black Hawk, Colorado, so it can take advantage of the Denver area’s growing gaming industry as a fellow casino operator rather than being the outside racetrack owner blocked out by the casino lobby. That purchase is expected to close early next year. Twin River’s most recent acquisition was Dover Downs casino in Delaware, a merger through which the company went public. Twin River now trades on the New York Stock Ex-

Global Gaming Business MAY 2019

By Frank Fantini

change under the symbol TRWH and has more than $600 million in revenues. It’s not so little anymore. Yet another small company participating in the consolidation is Maverick Gaming, which was formed just a year ago. The company headed by industry veterans Eric Persson and Justin Beltram is buying Red Lion Casino, Gold Country Casino and High Desert Inn in Elko, Nevada. The purchase follows Maverick’s initial acquisitions of the Wendover Nugget and Red Garter Hotels in Elko last year and the announcement in September that it will buy Nevada Gold & Casinos, which operates nine mini-casinos in Washington state. Red Lion, Gold Country and High Desert will add 435 slot machines, 11 table games and 544 hotel rooms to Maverick, whose other Elko properties have more than 600 hotel rooms and 1,200 slot machines. The latest acquisitions are expected to close in May, and will be funded by cash on hand and financing from HG Vora Capital Management. Washington regulators are expected to act on the Nevada Gold purchase in the first half of the year. Maverick intends to be “a best-in-class regional owner and operator” in North America, CEO and majority shareholder Persson says. Maverick will be announcing more strategic acquisitions over the next three months that will transform the company “into a true regional operator,” Persson says. In other words, Maverick has the motivation and resources to grow through acquisition beyond what already will be a $100 million EBITDA enterprise. So, it isn’t just big guys like Caesars, MGM, Icahn and Starboard playing the consolidation game. And with so many small casinos in the U.S., their roll-up by bigger companies will be worth watching, and perhaps participating in.

JAPAN: LAND OF THE NOT-SO-RISING SUN? We have long been less enthralled with the prospects for casino resorts in Japan than many others. Japanese ambivalence about gaming, the likely insistence of Japanese ownership, or at least partial ownership, and the country’s internal political divisions have all made adoption of the so-called Singapore model seem unlikely. Now, it appears others are starting to share some of the doubts. Japan’s casino revenue may fall short of expectations due to government restrictions on the industry, high operating costs and high initial investments, said analyst Praveen Choudhary of Morgan Stanley as quoted by Inside Asian Gaming. Choudhary expects Japanese gambling revenue of $9 billion annually based on casinos in two large cities and one regional casino. However, that may be optimistic, he added. If Japan goes for smaller cities to host casinos, results could underwhelm, with $4 billion in revenue and $1.4 billion in EBITDA annually, Anil Daswani of Citigroup said. The returns would be nowhere near as attractive as those in Macau, he added. Casinos are unlikely to work with junkets to bring in VIP gaming rooms and customers due to high construction and operating costs, Choudhary added. He also pointed to requirements that casino space be limited to 3% of total floor space and that locals be charged US$50 to enter, and also have restrictions on the number of times they visit casinos. Japan will be a very worthwhile prize to the winners, but maybe not quite a Singapore-like grand slam. 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 G4, which stands for Global Gambling Guidance Group, is based in Amsterdam, the Netherlands. G4 works in a lot of different countries on different continents. G4 is a group of international experts in the field of problem gambling and responsible gamblingâ&#x20AC;&#x201D;safer gambling. G4 has staff and board members from different parts of the world. The companyâ&#x20AC;&#x2122;s members have many years of experience working with the gaming industry worldwide to encourage responsible and safer gambling and minimize the harm caused by problem gambling. The G4 accreditation program is meant for landbased, online and lottery operators, as well as software and technology providers. The G4 audit team has an elaborate experience with a number of responsible gaming frameworks. Besides the G4 standards, the team also carries out audits for the World Lottery Association and the European lotteries, as well as for the European Casino Association Responsible Gambling Framework. Ynze Remmers is the G4 lead auditor, and a certified and registered IRCA auditor. Every year the G4 standards are compared with other standards that can be found, and the G4 standards are updated when necessary. G4 wants to be recognized as a premier auditing and accreditation organization, but also on the level of the responsible gaming framework and standards. G4 Chairman Pieter Remmers frequently attends conferences and presents on the topic of G4 and responsible gaming all over the world. This year, a conference will be organized in Brussels October 23-24 related to the topics so often discussed by G4, â&#x20AC;&#x153;Responsibility in Gaming and Gambling,â&#x20AC;? with a focus on the industry and the role of the regulator. Top speakers are invited and have accepted. For more information on G4, contact info@gx4.com or visit G4â&#x20AC;&#x2122;s website at gx4.com. AGEM is an international trade association representing manufacturers of electronic gaming devices, systems, lotteries and components for the gaming industry. The association works to further the interests of gaming equipment manufacturers throughout the world. Through political action, trade show partnerships, information dissemination and good corporate citizenship, the members of AGEM work together to create benefits for every company within the organization. Together, AGEM and its member organizations have assisted regulatory commissions and participated in the legislative process to solve problems and create a positive business environment.

AGEM Board of Directors Actions â&#x20AC;&#x201C; April 2019 â&#x20AC;˘ Those in attendance at the monthly AGEM meeting acknowledged the retirement of Tom Nieman from both JCM Global and AGEM after an epic career that started when he joined Bally Manufacturing in 1972. Formerly president of AGEM in 2017 and 2018, Nieman was currently serving as AGEM treasurer. Among his many accomplishments was organizing the annual AGEMAGA Golf Classic presented by JCM Global that has raised millions of dollars for the National Center for Responsible Gaming. The 21st edition of the tournament will take place May 7 at the Cascata golf course in Boulder City, Nevada. â&#x20AC;˘ The AGEM board hosted Allie Barth, vice president of industry relations for the American Gaming Association, and Korbi Carrison, event director, Global Gaming Expo/Reed Exhibitions, who updated the group on the new â&#x20AC;&#x153;Good Neighbor Pledgeâ&#x20AC;? at both G2E and G2E Asia. Exhibitors are being asked to â&#x20AC;&#x153;agree that the industry is strongest when it works together, while simultaneously acknowledging that competition is inherent and healthy.â&#x20AC;? Barth and Carrison also previewed the G2E Asia show overall and provided an update on efforts to improve exhibitor satisfaction at the Las Vegas event. â&#x20AC;˘ The AGEM-initiated Nevada workforce development effort to lower the age of gaming supplier employment and internships from 21 to 18 continues to move forward as Assembly Bill 221, and received unanimous support from the Assembly Judiciary Committee after a hearing on March 13. â&#x20AC;˘ AGEM members heard the news that Maryland House Bill 987 that would have required casino patrons in Maryland to play machines only after scrolling through a complete list of odds for every an outcry from both suppliers and operators. winning combination failed to advance after â&#x20AC;˘ AGEM Director of Responsible Gaming Connie Jones highlighted her activities on behalf of AGEM, including participating in two sessions at the International Masters of Gaming Law Spring Conference in New Orleans and serving on the search committee that selected Stephanie Goodman as the new head of the Problem Gambling Center in Las Vegas. â&#x20AC;˘ AGEM welcomed new Bronze member Next Gaming and Associate members Entropy Cabinet Solutions, Innovum Technologies and Panasonic Corporation in April. This takes membership to an all-time high of 175 companies.

FORTHCOMING EVENTS â&#x20AC;˘ AGEM is a sponsor of the Japan Gaming Congress, set for May 16-17 in Tokyo. â&#x20AC;˘ AGEM will have a booth and be a participating partner, in conjunction with the AGA and Reed Exhibitions, at G2E Asia, set for May 21-23 at the Venetian Macao.

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The AGEM Index decreased in March 2019 by 11.27 points to a from February 2019. The AGEM Indexâ&#x20AC;&#x2122;s March 2019 decline was driven by a 24.7% decrease in the stock price of International Game Technology Plc. (IGT), which dropped from $17.25 to $12.99. The stock was responsible for 10.37 points of the Indexâ&#x20AC;&#x2122;s March Corporation a 29.73% stock price AGEM decline. Scientific Games (SGMS) experienced drop from $29.06 to $20.42, which led to a contribution of negative 8.87 points. The major stock indices out the AGEM Index as the Dow Industrial Average grew by less than 0.1%, the S&P 500 experiperformed Jones enced an increase of 1.8% and the NASDAQ grew by 2.6%.

MAY 2019 www.ggbmagazine.com

p. 16 macau:Layout 1 4/11/19 6:57 PM Page 16

Crystal Ball Gazing Why most analysts are wrong when predicting the future of Macau By Andrew Klebanow and Gerard Parisi

redicting the future of any industry has always been an inexact science. It requires an examination of historical trends, possible changes in public policy, the application of a variety of macro-economic theories, the unlikely entry of a disruption industry that could emerge as a worthy competitor, and a substantial amount of guesswork. The problem is, when it comes to Macau, more often than not the soothsayers have been unable to predict the future. When predictions are made, word spreads quickly. The number of media outlets devoted to the casino industry has increased and amplified the distribution of news. Casinos are now part of the 24-hour news cycle; the industry has its own forums, dedicated writers and avid readership. In addition to dozens of print publications, online media offer daily news briefs and commentary. This has created demand for news articles, whether they be professionally researched articles, insightful observations by industry professionals, or forecasts by gaming stock analysts. Because of this demand for articles, occasionally, a prognosticator with nothing more than an opinion falls into the mix. So, well-researched analysis often appears side-by-side with opinions that are less than valid. When it comes to predictions, Macau is particularly appealing because of its size, the volume of patrons it attracts, its outsized gaming rev-

Global Gaming Business MAY 2019

With the recent openings of (l. to r.) MGM Cotai, Wynn Palace and the LVS property Parisian, some analysts think that there are no more reasons for people to visit Macau. They are wrong.

enues and colorful cast of characters. It thus attracts the interest of a wide variety of pundits. Most truly understand the industry and provide an abundance of analysis to justify their predications. A few do not, yet they still have a voice.

A Historical Perspective From 2009, when the industry was in the grips of the worldwide recession, to 2013, as world markets recovered, Macauâ&#x20AC;&#x2122;s gross gaming revenue grew threefold from US$14.8 billion to US$44.8 billion. This unprecedented

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Phase III of Galaxy Macau will include many non-gaming amenities, including a 10,000-seat theater

The opening of the Hong Kong-Zhuhai-Macau Bridge makes it much easier for 120 million to visit the Macau casinos

The problem with predicting the future for a particular market is that once an argument is made, it becomes necessary to defend that position, even if trends illustrate otherwise. growth was fueled by dramatic increases in gaming and lodging supply, and occurred despite changes in public policy that placed restrictions on currency flows and inbound visas from mainland China. This growth came to an abrupt halt in mid-2014 when the central government cracked down on public corruption. The industry has yet to fully recover. Recently, analysts have attempted to apply macro-economic theory to explain the downturn as well as temporary slowdowns during this growth period. Some cited changes in a tightening of credit as a harbinger to periodic downturns and continue to use the same rationale to describe a possible downturn in 2019. Nevertheless, what occurred in 2014 had nothing to do with credit policy, money supply or other economic bellwethers. In June 2014, the central government implemented its campaign on public corruption, which had an immediate and deleterious effect on Macau’s gaming revenue performance. The crackdown not only affected public officials but also impacted the

spending patterns of wealthy individuals. Conspicuous consumption was no longer considered fashionable. The market bottomed out in mid-2016 and has since begun a steady rise. In 2017, the market generated US$33.0 billion, up from its nadir of US$27.7 billion in 2016. In 2018, the market generated US$37.6 billion in gross gaming revenue. Despite this increase, analysts remained very cautious, citing competitive pressures from other Asian jurisdictions, a looming U.S.-China trade war, government monetary policy and implementation of a smoking ban. While all are valid reasons, the market nonetheless grew by 14 percent in 2018. Throughout that year, analysts continued to defend their positions, and their opinions were broadcast through various media outlets. The net result was decline in stock values with some concessionaries’ shares dropping by more than 30 percent. The problem with predicting the future for a particular market is that once an argument is made, it becomes necessary to defend that position, even if trends illustrate otherwise. As recently as February 2019, one analyst who had been down on the market throughout 2018 said, “Big gaming companies ended the year in the red, hurt in large part by weaker revenue in Macau.” Unfortunately, the data did not support the assertion made. Another analyst made the argument that since the opening of Studio City,

70%

$40

43%

$30

15%

$20

-13%

$10

-40%

MAY 2019 www.ggbmagazine.com

Year-over-Year %

$50

p. 16 macau:Layout 1 4/11/19 6:57 PM Page 18

Macau’s light rail system will be up and running by 2020; it will eventually link all the casino resorts with the airport

the Parisian, Wynn Cotai and MGM Cotai, most visitors had come and seen the properties and now have no reason to return. “A few factors could be impacting Macau’s gaming industry, and none of them bode well for its long term,” the analyst said. “One is that new resort construction is nearly complete, which means that the tourists and gamblers who began visiting in 2016 to see the latest spectacles will no longer have fresh inducements to return. “There will be some minor hotel additions over the next couple of years, but Melco, MGM, Wynn and Las Vegas Sands have all opened new resorts in the last few years, and none has a major expansion on the horizon,” the analyst continued. This, of course, defies logic. Casino operators build new integrated resorts with the expectation that patrons will visit more than once while attracting new patrons from a wider catchment area. The analyst further stated, “Competition from nearby countries like the Philippines, South Korea and Singapore could be siphoning off customers, spreading gaming revenue over a broader set of casinos. Macau used to be the only major gaming hub in Asia, but now the competition is fierce.” This statement ignores the fact that Singapore has had integrated casino resorts since 2010; South Korea has offered a variety of foreigner-only casinos for decades, as has the Philippines; and Entertainment City has been largely built out since 2017. Amid all the negative reports, most observers failed to mention the factors that helped boost Macau’s GGR in 2018, including the opening of the MGM Grand Cotai, the completion of the Hong Kong-Zhuhai-Macau Bridge, and continued increases in visitation. As the positive trends played out in 2018, the pundits’ projections failed to materialize. This was not without consequence, as stock prices fell sharply yearover-year for most of the Macau operators. Nonetheless, these prognosticators continue to maintain narratives and issue seemingly endless revisions to walk back on their initial predictions.

Occasionally, a prognosticator with nothing more than an opinion falls into the mix. So, well-researched analysis often appears side-by-side with opinions that are less than valid.

By the Numbers Despite the continued words of caution issued by industry observers, the concessionaires remain very optimistic and are manifesting their optimism with significant capital investments. The most immediate addition to the Cotai resort corridor will be the US$4.6 billion Grand Lisboa Palace. Slated to begin a phased opening in the second quarter of 2019, the property will include a total of 2,000 lodging keys divided among three hotel brands including the Grand Lisboa Palace, the Palazzo Versace Macau and the Karl Lagerfeld Hotel. Also included in the facility programming is a shopping mall and multiple food and beverage outlets. The property will connect to the Lisboeta Macau, an 820-key non-gaming hotel scheduled to open in late 2020. 18

Global Gaming Business MAY 2019

By mid-2020, Galaxy will open Phase III. It will include a 10,000-seat arena, a 2,000-seat theater and an additional retail mall. Planning for Phase IV is under way, and is expected to include a variety of family-oriented attractions. Rebranding of Sands Cotai Central into the Londoner Hotel-Casino will begin in earnest by mid-2019. In addition to a wholesale renovation and retheming of the casino, public areas and façade, the 1,200-room Holiday Inn will be converted to a 600-key, all-suite hotel. The St Regis Tower, which currently offers 400 lodging keys, will see an additional 370 suites added during the same time period. Across the street, the Four Seasons will open its 290-key Four Seasons Tower Suites. The sum of all these capital improvements now approaches US$10 billion. This is not a small amount to invest in a market whose future performance is questionable. A general pessimistic outlook is understandable, given trade tensions between the United States and China and a slow start to 2019 gaming revenue performance. Nonetheless, the fact remains that Macau sits on the Pearl River Delta and is easily accessible by ferry, car or rail to 120 million people. Massive improvements to infrastructure, including the recently opened bridge to Hong Kong, the 2020 opening of the first phase of the Macau Light Rail Transit system and continued improvements to the Macau International Airport will allow visitors convenient access to an ever-growing number of attractions. Pundits can say what they want, and their opinions can be easily broadcast, but as long as the concessionaires address the concerns of central planners and continue to invest in their assets, tourism and visitor spending will grow.

Andrew Klebanow is a senior partner at Global Market Advisors; Gerard Parisi is a senior analyst at Global Market Advisors. They can be reached at info@globalmarketadvisors.com.

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skill games A New Paradigm Part one

Taking a gamble on skill slots By Nicole Schultz

or the last few years, skill-based gaming seems to have been about the only topic anyone in the gaming industry is discussing; so-called “skill” games dominate trade show exhibition halls and bustling conference rooms. They’re the talk of industry execs eager to appease a new generation of gamers and create new streams of revenue. But several years after their debut on the gaming scene, skill games remain an emerging and vastly misunderstood technology. Not only is there confusion about what it means to be skill-based, there are also unfair performance expectations placed on skill games that wouldn’t fly with innovative and experimental products in other industries. For skill games to be successful moving forward, operators, manufacturers and regulators must work together to maximize the popularity and profitability potential of this new technology.

Definition Inconsistency

“Interactive means the player makes choices in the game, and as a result, they take responsibility for the outcomes to a certain extent.” —Eric Meyerhofer, CEO, Gamblit Gaming

So what exactly are skill games? According to Dan Sahl of the Center for Gaming Innovation at the University of Nevada, Las Vegas, “Skill gaming refers to when a player has a certain skill or ability— whether that’s better strategy, better ability to recognize patterns, maybe faster reflexes, better hand-eye coordination—that they’re able to use in some or all of the wagers they make to improve their likelihood of winning.” And though Sahl’s is a widely used and accepted definition among the masses, many manufacturers agree that this isn’t the most accurate way to describe their games. Most games currently on the market should be correctly categorized as hybrid games—games where skill and chance blend together. Some games don’t fit into either category, instead falling under a third category known as interactive games. “Interactive means the player makes choices in the game and as a result, they take responsibility for the outcomes to a certain extent,” says Eric Meyerhofer, CEO of Gamblit Gaming. Over the years, nuances in these definitions and their albeit incorrect interchangeability have created confusion across the industry. Operators may hear the term “skill-based” and believe they can’t carry these slots because 20

Global Gaming Business MAY 2019

they don’t understand their rules and regulations; typically, however, if a casino accepts the GLI-11 standard—the regulatory standard that governs traditional slot machines—that casino also has the green light to offer skill slots. Sometimes skill slot manufacturers like Synergy Blue offer two variations of their games that comply with different regulatory standards. One of those games, Candy Cash, is a traditional match three-style game. Version A, which complies with GLI-11 standard 2.0, allows players to swap and match candies, but each row of three that is matched triggers a traditional (and completely random) slot mechanic—equivalent to pulling a slot lever or pressing the “Max Bet” button on a machine. Version B of the same game, which complies with the newer GLI-11 standard 3.0, allows players to exercise more skill in their game play. Matching three candies automatically triggers a randomly generated payout to the player, creating a hybrid skill and chance experience. These variations create flexibility, allowing more casinos across more states to carry hybrid slot products. And flexibility is crucial for innovation in the gaming industry.

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“If we make the greatest game in the world but it’s on a slot floor where no one knows it exists, I don’t think it’s necessarily realistic for that game to perform right out of the gate.” The First Generation “The industry is currently wrapping up its first generation of skill-based games,” Sahl says. Consensus among manufacturers, moving into the second generation of hybrid gaming, is about finding the right integration of gambling and skill elements without skewing the younger demographic that enjoys playing them. The first few years of this new era of gaming were about analyzing player behaviors and learning what they enjoy in their gaming experience. In 2019, manufacturers believe they have a better grasp of what new segments players are looking for. GameCo’s Blaine Graboyes has learned that creating a fun and engaging experience for players is about “combining the motivations for a (video) gamer and the motivations for a gambler.” Whereas gamers typically look for elements like theme, progression, completion, competition, story and narrative, gamblers look for real anticipation, winning and losing. As Graboyes says, “Because if you’re not losing sometimes, winning is just not that exciting.” Contrary to popular opinion, hybrid gaming isn’t necessarily about creating games where the most-skilled players win the most money. Hybrid gaming is for players who aren’t interested in simply pressing a button on a traditional slot for the chance to win big. Hybrid games add a gambling component to an entertainment experience for a demographic well-versed in the world of online and mobile games—games that require exercising some skill to achieve a desirable outcome. “Hybrid gaming is the next natural step,” says Sahl. “Looking at the last 30 years of slot design, there have been dynamic, exciting changes and developments in terms of the actual machines themselves: the screens, the use of touch screens and video screens, the additions of sounds and colors and lights. “More important, we saw great new features that transformed the purely random win/loss dynamic of the slot: bonus rounds, crazy wilds and multipliers. Slot players loved them then and love them now. We’re at a point where it’s natural to look at games like ‘Candy Crush’ and ‘Angry Birds’ and say, ‘Can we take what makes them fun, merge them with what makes our gaming fun, and create a new playing experience that appeals not just to new players but people who currently enjoy our products?’” Hybrid slot manufacturers fill a gap in the industry by creating a unique new gaming product where there was once none, but this innovation experiment will continue for years to come as new technologies emerge and more is learned about player preferences. Much like online and mobile games surge to popularity then decline among the masses, manufacturers must stay

—Blaine Graboyes, CEO, GameCo

atop current trends by updating their design and portfolio of games to remain current with the expectations and preferences of players. This year, for example, GameCo will release new products and features inspired by market testing and focus groups: bar-top hybrid games, multi-player mode, post-game leaderboards (to compare high scores with other players), and the option to purchase in-game upgrades to enhance the play experience. Features aside, however, the appeal of a particular game to players is often the game itself, and the art of choosing an online or mobile game to “gamblify” is a tricky one. “Certain games might be great entertainment products, but not good casino products,” says Meyerhofer. “For a game to be successful in this industry, we need to truly understand the gambling proposition behind it.” Though player preferences ebb and flow, a few things are certain: skill-based games are here to stay, and “if we make the games fun,” says Georg Washington, CEO of Synergy Blue, “the profitability will follow.”

Popularity, Performance and Profitability Though today’s hybrid slots have only been around since 2016, games like blackjack and video poker demonstrate that the demand for skillbased games has been around much longer. Despite their popularity, the debate between manufacturers and operators surrounding the performance and profitability of these devices continues. Over time, manufacturers have learned that hybrid games are capable of ushering in a new era of gamers who don’t typically play slots—players who prefer games where they can make a meaningful impact on the outcome. And manufacturers have the evidence to back up their claims. Slot data show that people playing skill slots often don’t use loyalty cards, suggesting they aren’t regular players of traditional slots. By offering a new gaming experience, casinos are providing variety and creating entirely new streams of players, revenue and utilization. “Ultimately, that’s what the industry needs for sustainability and growth: the revenue generation of a slot machine, but from something that attracts a different audience and creates incremental revenue without cannibalizing pre-existing slot revenue,” says Graboyes. “Profitability ultimately comes down to occupancy.”

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skill games Part one

On the flip side, operators argue that hybrid slots are a gamble for casinos—viewing the space that these experimental games occupy as space that could be better filled with well-known and well-performing games. Not only this, but since the conclusion of a wager in a hybrid game takes more time than in traditional slots, there are fewer chances for a player to reach a winning outcome in any given slot play session. The problem is that these winning outcomes are what keep games “sticky”—keep players coming back for more. Skill slots are still a new technology, and manufacturers are learning how to balance the expectations of both operators and players. In 2019, manufacturers will release new games with improved betting velocity and floor averages on win-per-unit that meet or beat those of traditional slots.

“If we make the games fun, the profitability will follow.” —Georg Washington, CEO, Synergy Blue

Looking to the Future For the next few years, the industry will remain in the experimental phases of hybrid slot design and implementation. Manufacturers stress that, though their games have been on the market for several years, innovation and the creation of a truly successful product takes time and trial and error. Aggressive innovation is a complex process, and this complexity only increases in a highly regulated industry like gaming. “It takes longer for new gaming concepts, especially radically new gaming concepts, to make it to the casino floor where operators and manufacturers can actually get real data about their popularity and their performance, because we’re a regulated industry and can’t afford to make mistakes when we put wagering products on the casino floor,” says Sahl. “It’s expected that there will be way more failures than successes. The important thing is that those failures are used to improve the chances of success when we go back to the drawing board.” The industry conversation surrounding hybrids is nowhere near over. It’s just getting started. Manufacturers will continue to seek investors for research and development to ensure true sticking power for their games. “Major slot companies spend, what, $150 million a year on research and development, and maybe only one or two out of 10 of their games are successful? How can a segment of the industry as new as ours be held to the same standard?” says Graboyes. Moreover, marketing budgets for the big gaming manufacturers often mirror their hefty research and development budgets. Often, the same budget doesn’t exist for hybrid slot manufacturers. “So if we make the greatest game in the world, but it’s on a slot floor where no one knows it exists, I don’t think it’s necessarily realistic for that 22

Global Gaming Business MAY 2019

game to perform right out of the gate,” says Graboyes. He says the job of marketing should be a 50-50 split between operators and manufacturers. “Tools like social media, live streaming platforms and cost-per-acquisition signups into loyalty programs are just some of the ways we can and should be promoting our games to new audiences,” he says.

The Importance of Working Together Now is a critical time for manufacturers big and small, operators, regulators, and even university educators to work together to create the gaming experience of the future. “It’s our belief at Gamblit that we’re not in the competition phase at this point,” says Meyerhofer. “We feel we’re better off with more product supply from more manufacturers.” As more skill slots make their way to casino floors, players and operators will become more familiar with and comfortable playing or stocking these games. As more manufacturers submit hybrid slot products for regulatory review, regulators will become more comfortable with the technology behind them, too. “We’re in that stage where cooperation is the best bet for innovation and the industry,” says Meyerhofer.

Nicole Schultz is the global gaming capital coordinator of the International Gaming Institute at the University of Nevada, Las Vegas, overseeing all communication and public relations efforts.

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skill games The Next Big Game Part tWO

Why the next blackjack and the next poker have been so hard to come by By Jeff Hwang

he flood of articles proclaiming “skill-based” games as a solution to the (non-existent) millennial problem were correct about one thing: the fundamental demand for skill games in

the casino. Though slot machines have been the dominant profit engines of the U.S. gaming industry since the 1990s, skill games have long been the lifeblood, brand drivers and key differentiators of the modern American casino. What the skill-based gaming articles get wrong is why skill games are in demand. It’s not because they require skill or physical dexterity; one key factor drives the demand for skill games, plus a spin-off: 1. Profit motive. The prospect of profitability creates an incentive for

the player to learn the complex strategies required to beat blackjack, win at poker or daily fantasy sports, beat video poker or beat the sports books. Profit motive drives the demand for strategy texts, training websites and related content. Meanwhile, the relatively low house advantage under basic strategy for traditional blackjack (compared to other casino games) and nonbeatable video poker creates (or created, as the case may be) an incentive to learn the basic strategies for such games. 2. The plausibility of profit motive. The mere possibility that sharps exist creates demand for blackjack, poker and sports betting by the ability to represent profit motive. Non-sharps want to play and be seen playing the games that sharps play, because these are the best bets in the casino—and it makes them look like sharps.

Where, then, is the next blackjack or next poker? And why are these games so hard to come by? To answer these questions, let’s break skill games down into three categories: 1. Casino skill games (house-banked): Casino games that may be mathematically beatable (i.e., the player can play with a positive expectation). This category may include more traditional forms of blackjack (not 6:5 blackjack); video poker machines that may feature 100 percent-plus payback or may be beatable factoring comps; and to an extent, sports betting (a slightly different animal that in some ways functions similarly to player vs. player games). 2. Player vs. player (PvP) games: Player vs. player (peer-to-peer) games, where players compete against each other, not the casino. These 24

Global Gaming Business MAY 2019

games may be raked (poker cash games) or fee-based games (poker tournaments). This group includes most poker but also daily fantasy sports (DFS), esports and some forms of multi-player, next-generation “skill-based” games. 3. Casino skill-based games: Casino games where the house edge varies with skill, but which are not generally mathematically beatable (i.e., the player cannot play with a meaningfully positive expectation under normal circumstances). This includes modern iterations of blackjack (6:5 blackjack and most other variations); most video poker games with less than 100 percent payback rates; most non-traditional table games such as Pai Gow, Three Card Poker, Crazy 4 Poker and Ultimate Texas Hold’em; and nextgeneration single-player “skill-based” games from companies such as Gamblit Gaming, GameCo, Synergy Blue and Next Gaming.

We’ll tackle No. 3 (casino skill-based games) another time, starting with the challenges of casino skill games then diving into the challenges associated with growing the market for PvP games.

Blackjack and the Challenge with Casino Skill Games There will never be another blackjack, because casino operators have no appetite for a game that’s mathematically beatable. We could end that discussion right there, but there are some observations worth thinking about given their broad applicability to other discussions—chiefly, the change in player skill level over time, and the impact of the (likely) self-selecting nature of 6:5 blackjack players. We talked a bit about the decline of blackjack in the March issue of GGB (“Solving the Las Vegas Strip Value Problem”). The short version is that the house advantage across the casino floor has been on the rise for more than two decades now, and table games are no exception.

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There will never be another blackjack, because casino operators have no appetite for a game that’s mathematically beatable. Casino operators first moved to make blackjack unbeatable by implementing continuous shuffling machines, before changing the payout on blackjack to 6 to 5 from 3 to 2 (adding 1.39 percent to the basic strategy house advantage), and replacing blackjack outright with higher-edge, proprietary games such as Three Card Poker. As a consequence, blackjack has become increasingly marginalized, falling to under 50 percent of table games units on the Las Vegas Strip in 2018.

Las Vegas Strip: Blackjack Table Count Year

Units

% of Units Revenue

% of Revenue

1985

1,010

77.2%

$357.2 million

50.3%

2000

1,515

59.3%

$744.7 million

33.1%

2018

1,240

49.2%

$857.8 million

28.4%

Source: UNLV Center for Gaming Research

One challenge with casino skill (and skill-based) games is the likelihood that the player pool will improve over time. In The Theory of Blackjack, Peter A. Griffin pegged the cost of player errors in blackjack at 1.41 percent (hence the common-knowledge estimate that the average player plays at about a 2 percent house advantage, given a basic strategy house advantage of about 0.5 percent). In Casino-ology 2, Bill Zender observed that the average player lost only 0.83 percent due to player error. In other words, the average blackjack player appears to have gotten better over time, which makes sense given both the widespread casino expansion across the U.S. (wider access means that the average player will be more experienced) and the increasing availability of strategy tutorials. That the player has improved is probably at least a partial catalyst for the widespread move to 6:5 blackjack, in order to recover profitability. Another aspect worth noting—the probability that 6:5 blackjack players are self-selecting. For a player to choose 6:5 blackjack tends to mean that the player doesn’t know what 6:5 blackjack is. The type of player who plays 6:5 blackjack is likely to make more mistakes, providing a juicy double whammy, which makes it harder for the casino operator to get away from offering 6:5 blackjack. Hence blackjack’s death spiral, and the increasingly utter lack of reasonable games for an increasing pool of nonidiot gamblers to play.

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skill games Part tWO

The table below, from PartyGaming’s 2005 Annual Report, shows the decline in player retention rates for new player signups from 2003 to 2005.

Source: PartyGaming Annual Report 2005

Poker: Attrition Rates and the Skill Gap Problem As the average player’s increasing skill in blackjack has posed a challenge for casino operators, the average player’s increasing skill in poker has posed a challenge for the poker economy. Back in 2012, I introduced the skill gap problem and discussed its impact on poker’s weakening economy (Google “Sorry, Mr. Online Poker”). The skill gap problem goes something like this: 1. For a professional player to continue playing in significant volume, the player must have an edge over the opposition that’s greater than the size of the rake. 2. Over time, the skill level of the regular players rises, as do the number of players with professional-level skills. 3. As fish get wiped out and exit the game, games become tougher, the threshold for a professional player rises, and the marginal pros also exit the game as they can no longer beat the rake. 4. As the games get tougher, more fish get wiped out, further raising the threshold for a professional player. 5. As players get wiped out, rake (revenue) drops and liquidity suffers, and—as we have observed—poker rooms close. When the existing player pool gets tougher, the house advantage against new or casual players increases, and new and weaker players get wiped out faster and faster. As we discussed in 2014 (Google “Online Poker’s Fundamental Problems”), PartyGaming observed the new player retention rate fall— and thus the attrition rate of new players rise—from the very beginning of the poker boom all the way to the end of its existence (PartyGaming merged with Bwin in 2011 to become bwin.party, and is now part of GVC Holdings Plc.).

Global Gaming Business MAY 2019

By 2010, the six-month attrition rate had climbed steadily to 79 percent from 67 percent in 2005; the 12-month attrition rate reached 84 percent, meaning that 84 percent of new players were wiped out from the site within a year. Note that the 2006 figures are non-U.S. due to the impact of UIGEA (the Unlawful Internet Gambling Enforcement Act of 2006), which forced PartyGaming from the U.S. market.

PartyGaming: New Player Attrition Rates (2005-2010) Year

6-Month Attrition Rate

12-Month Attrition Rate

Note

2005 2006 2007 2008 2009 2010

67% 73% 73% 76% 77% 79%

71% 76% 79% 81% 83% 84%

All Non-US Real Money Real Money Real Money Real Money

Source: PartyGaming Annual Reports 2005-2010

The skill gap problem isn’t unique to poker, and is more likely a general condition of PvP skill games, from poker to Golden Tee. The advantage that poker has had is that hold’em in particular is easy to pick up yet strategically complex. (In Mike Sexton’s voice, “It takes a minute to learn and a lifetime to master.”) Games that are harder to pick up (harder to create a market for) or less nuanced (easier to master) tend to have shorter life spans, particularly as games are solved faster than ever before. In 2015, we applied these same principles regarding the skill gap problem and attrition rates in discussing DFS (Google “DFS and Lessons from Poker: How Bright is the Future?”).

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with. As it is, online poker revenue (termed “peer-to-peer”) in New Jersey for the first two months of 2019 was down slightly over 2018; at $3.7 million, it was a fraction of the $65.3 million in total internet gaming win and insignificant compared to $31.5 million in sports betting win through February. It’s the same challenge DFS faces and other PvP online games likely face. If you’re a DFS site and you let players enter multiple contests simultaneously, the strongest players populate more of the games, making the contests tougher for everybody else and leading to increased attrition rates. The gist of it is that the incentive to cater to professionals at the expense of everybody else and the health of the game is not limited to poker.

The PLO Revolution: How Skill Games Succeed Online Poker and DFS: The Problem with Multi-Tabling As any poker player can tell you, online poker games as a rule tend to be far tougher than live poker games. Let’s say you have an online poker room with 10 tables running; Phil Ivey can play on all 10 at once, whereas in a live poker room, he can only exist on one. Without knowing anything about poker except that Phil Ivey is good at it, you know online games are tougher than live games. This disparity is exacerbated when you consider that online games are more often played six-handed or less while live games are more often played nine- or 10handed. In online games, the best players take up proportionately more real estate, and in a format (short-handed games) where raw poker skills are emphasized over patience and basic hand valuation skills (which are easier to acquire and more valuable in nine- and 10-handed full-ring games, and especially in softer live games where multi-way pots are more frequent). It’s clearly better for the long-term health of a game—to keep a game running—to have a softer game where the casual players (“rec” or recreational players) don’t get wiped out as fast, which goes right back to the topic of the problem of increasing attrition rates. Why is it so hard, then, for online poker sites to restrict multi-tabling to improve the quality and life of the game? It’s a chicken-and-egg problem. There are few barriers to entry in online poker and a lot of competition, at least until smaller competitors in a given market get wiped out. The only safety is in size—the largest poker rooms benefit from network effects. Liquidity breeds liquidity; larger sites draw more action, allowing for more game types, enhancing the product offering and drawing more action over the competition. Further, more games running equal more revenue, at least in the short run. If you’re an online poker room and don’t allow multi-tabling but other sites do (which is generally the case), the others are going to appear larger and draw more action. This isn’t optimal for the health of the game, because the size game is the one that online poker sites have to win in order to survive. For better or for worse, online poker sites tend to cater to multi-tabling professionals and their ability to create a market (and thus liquidity) on their sites, at the expense of recreational players and the life of the game. PvP contests aren’t terribly profitable for most operators to begin

When I wrote “Pot-Limit Omaha Poker: The Big Play Strategy” in 200607, PLO was played online and in Europe, but in the U.S. was largely only played for mid-to-high stakes in the riverboat states of the Midwest and South, and in Las Vegas during the World Series of Poker. My goal was to change that by setting up sustainable smaller-stakes games and educating players on how to play the game, in order to: 1. Drive down the stakes and widen the player pool in order to grow the game; and, 2. Slow the rate of attrition to make the games sustainable.

PLO is basically no-limit hold’em on steroids; it’s hold’em except every player is dealt four hole cards and the player’s hand at showdown is the best five-card hand the player can make using exactly two of his/her hole cards and three of the community cards, while utilizing a pot-limit betting structure (the player can only bet up to the size of the pot at any given time) rather than a no-limit betting structure. Because the player has four hole cards, the drawing hands run far bigger than in hold’em, where the biggest straight draw in most forms of poker is an eight-out straight draw. The player can have as much as a 20card straight draw in Omaha (for example, J-10-7-6 on a 9-8-2 flop yields 20 straight outs, as any queen, jack, 10, 7, 6, or 5 will make a straight). When combined with flush draws, the player can have absolutely monster draws that can be a favorite over even a set, thus blurring the line between made hand and draw. Despite the pot-limit betting restrictions, pots get big in a hurry, because more hands can reasonably lay claim to the pot. Consequently, PLO breeds action, and is often the highest-stakes game in card rooms in which the game is spread. This is a game everybody would play if: (a) they knew how, and (b) it could be played at reasonable stakes, such that the player can blow multiple buy-ins without going broke. That’s the rub. For starters, $2/$5 PLO tends to play bigger than $5/$10 NLHE. The first live PLO game I ever played was the uncapped (no max buy-in) $5/$5 PLO game at Ameristar St. Charles in St. Louis; there would be $40,000 on the table with at least one or two $10,000 stacks. The $10 straddle (in effect, a blind raise) would always be out, and it would often be a blind raise to $40 and $200 to see the flop. You realize that you have no control over the size of the game—in NLHE, the action is relatively stunted somewhat pre-flop because you can take AA and simply shove with it. In PLO, you can’t do that (because of MAY 2019 www.ggbmagazine.com

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skill games It’s clearly better for the long-term health of a game—to keep a game running—to have a softer game where the casual players don’t get wiped out as fast.

the pot-limit betting restrictions), and nobody cares anyway because AA is easy to outrun with four cards. Plus, it’s not practical to structure a live PLO game aimed at $1/$2 NLHE players using chips and cards. As such, the goal was to structure games aimed at $500-max buyin $2/$5 NLHE players. Straight $1/$2 PLO doesn’t work for many reasons beyond the scope of this text, but I’ll explain it anyway. For starters, the game needs to be played with red ($5) chips after the flop, the alternative being having the dealers and players track $1 chips for betting purposes, which is impractical. Secondly, under a straight pot-limit structure, the opening pot-sized raise is to $8–which is painfully small, considering that is not uncommon to see players open to $12 or $15 even in $1/$2 NLHE. The fix is often to implement a separate bring-in amount (correct) or use a straddle (incorrect); the problem with the straddle is that you’ve changed the size of the game. Where it may be somewhat typical for NLHE games to have 100bb (100 times the big blind) max buy-ins (e.g. $500 max for a $2/$5 NLHE game), you really need 150bb stacks to really play PLO, given that pot-sized bets and multi-way pots are standard; this means that if you allow a $5 straddle, you’re going to want to raise the buy-in amounts to higher than $500, which defeats the purpose of trying to shrink the size of the game. Thus, the straddle—which is $10 in the $1/$2 with $5 bring-in structure—should not be allowed in the $500-max buy-in game, as your $500 buy-in is now only 50bbs, and a $200 min buy-in is now a 20bb shortstacker, which is bad for the game. Over the course of 2007, we started a weekly small-stakes PLO game at Ameristar St. Charles (to go along with the twice-weekly monster $5/$5 and eventually $5/$10 PLO game) utilizing a number of betting structures with a $200-min/$500-max buy-in, including a straight $2/$3 blind structure and a $1/$2 blind with $5 bring-in structure I had come across while playing in Tulsa. By the end of 2007, my friends and I had started the first daily PLO game in the country: a $1/$2 blind with $5 bring-in ($200-min/$500-max buy-in) game in the new WSOP poker room at what was then Harrah’s Maryland Heights (now the Hollywood Casino St. Louis). When I moved to Las Vegas in the summer of 2008 after the WSOP, there were no regular PLO games in Las Vegas, as few poker rooms in town even cared to try—for many poker rooms, poker was still all hold’em, all the time. We first tried to get a regular $2/$5 PLO game going at the Wynn in August 2008, but the stakes were too high for the existing player pool at the time, and it didn’t take with any regularity. But then at the end of October, I got a call from Lou White, then vice chairman, co-founder and former CEO of PokerTek, the company behind the PokerPro electronic poker tables. Lou asked if I would host a regular smallstakes PLO game in the new all-electronic poker room at Excalibur. In November, we launched a weekly $0.50/$1 ($100-min/$200-max) PLO game on 28

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Part tWO

the electronic tables, which ran every Thursday up until the WSOP in June 2009, after which the electronic tables were removed. That July, I walked into the poker room at the Venetian one evening and spoke to the shift manager, Tracy Mendiola. I said I had a game and a structure in mind, and that if they would agree to stick to the structure, we’d play the game there. The next day, we launched the first daily PLO game in Las Vegas, a $1/$2 blind with $5 bring-in PLO game ($200-min/$500-max buyin) with no straddle allowed. The game ran every Thursday-Friday-Saturday right from the start, and within a couple of months was running every day. In May 2011, my buddy Steven “TT” McLoughlin and I went over to Aria and proposed starting a second daily PLO game to Adam Altweis, the poker room manager. Adam agreed to restructure their PLO game lineup immediately; the small-stakes structure I had in mind was a straight $1/$3 blind structure (no separate bring-in amount), again with no straddle, which would play smaller than the $1/$2 with $5 bring-in structure, and thus have both a wider player pool and more staying power. Before we had even announced the game publicly, the game was already running, and has run daily right from the start; the Aria poker room has dominated the Las Vegas PLO market since. The game has grown spectacularly, such that regular PLO games can now be found in most every state where poker is played. Many of these games are based on the $1/$2 with $5 bring-in structure employed here. The small-stakes Las Vegas PLO games have changed a bit since; Aria has since switched to the $1/$2 with $5 bring-in structure and allows the $10 straddle, while the Venetian moved to allow the straddle (and initially raised the max buy-in to $1,000 to compensate) after we started the Aria game, and the regular daily game has since migrated over to the relatively new poker room at Encore. That said, if the poker economy wasn’t shrinking, there might be room for a third, smaller game using the $1/$3 blind structure without the straddle; the smaller game would again have a wider player pool and more staying power, which is precisely how Aria took over from Day One.

The Challenge at Hand This is the challenge that the first multi-player skill-based games are facing and must overcome. As I’ve written before, because the game speed is slow, the stakes are high and the rake is high. Because the stakes are high, the cost of the learning curve is high. And because the rake is high and there is no pre-existing market for these games, there is no profit motive to create a set of winning players to make the market for these games, as we had for PLO.

Jeff Hwang is a game developer and president of High Variance Games LLC and the best-selling author of Pot-Limit Omaha Poker: The Big Play Strategy, the three-volume Advanced PLO series, and The Modern Baseball Card Investor. Follow Hwang on Twitter @RivalSchoolX.

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California

Countdown By Dave Palermo

A longstanding battle about the right to offer banked card games could be about to boil over. Who will prevail—the tribes or their rivals, the card rooms?

rdath Hyer and her husband moved to Redding, California 16 years ago, hoping to buy a house, which they could not afford when they lived in Santa Cruz. “It was our dream,” she said at an October workshop held by the California Department of Justice, Bureau of Gambling Control (BGC). “When I moved here and started a job at the Casino Poker Club, it enabled me to buy a home. It also enabled me to gain guardianship of my four nieces and nephews, raise them and give them a life here.” If California regulators require rotation of the player-dealer position for versions of blackjack and other banked card games—which the BGC is contemplating—Hyer said she and thousands of card room employees would lose their jobs. “I believe that this will hurt all small card rooms,” she said of the proposed regulation. “It’s such a large part of our income.”

California Sweep Card room industry officials say “California games”—including versions of blackjack banked by third-party proposition player firms, or TPPPs—account for at least 70% of industry revenues. Many suspect the figure is much higher. They say tightened game rules could cripple an industry that employs more than 20,000 workers and generates in excess of $2 billion in annual revenues and more than $300 million in federal, state and local taxes. It also could have a major impact on municipalities that depend on tax revenues from the clubs to fund city services. But state regulators—comprised of a California Gambling Commission (CGC) under Governor Gavin Newsom and a BGC under Attorney General Xavier Becerra—are threatening to make drastic revisions in regulations and game rules for the state’s licensed card rooms. The move is in response to pressure from American Indian casino operators who contend card rooms violate state law and the tribes’ constitutionally guaranteed exclusivity to not only slot machines but banked and percentage table games. 30

Global Gaming Business MAY 2019

Proposition 1A, approved by 63% of California voters in 2000, launched what is today an $8.9 billion Indian casino industry comprised of 63 licensed casinos.

Taking It to Court Tribes are bringing the issue to a head, filing state and federal lawsuits against the state and card rooms. “The tribes are very committed to seeing this through, to point out the card rooms are operating illegally and causing financial damage to our properties,” says Steve Stallings, chairman of the California Nations Indian Gaming Association and a council member for the Rincon Band of Luiseño Indians. “The state has been derelict in its duties to regulate the industry.” In an effort to resolve the dispute, BGC Director Stephanie Shimazu is rescinding rules for card room games similar to blackjack prohibited by state law. Shimazu and the BGC also are promulgating regulations that will likely require rotation of the player-dealer position, limiting the ability of card rooms to offer the lucrative California games bankrolled by TPPP firms. “I understand people feel very strongly about this issue,” Shimazu told attendees at the hearing in Redding. “We are in the informal stages of the regulatory process, and we will continue with the informal stage until such time we are comfortable we have received, reviewed and analyzed all

“The card rooms are operating illegally and causing financial damage to our properties.” —Steve Stallings, Chairman, California Nations Indian Gaming Association

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“The state created the monster. Now they don’t know how to get the monster back in the cage.” —Bo Mazzetti, Chairman, Rincon Band of Luiseño Indians

your input and concerns. “The regulatory process can be lengthy,” she said. For eight years, tribes have been bickering with the commission and bureau in an effort to get gambling regulations and game rules in compliance with state penal codes and the Proposition 1A constitutional amendment limiting banked games to tribal casinos. The issue came to a head in November, when the Rincon and Santa Ynez Band of Chumash Indians sued nine card rooms and several unnamed TPPP firms in San Diego County Superior Court. The two tribes contend illegal card room games deprived them of $18 million a year in table game revenue from 2013 to 2018. Three other tribes—the Yocha Dehe Wintun Nation and the Sycuan and Viejas bands of Kumeyaay Indians—filed suit in the Ninth Circuit U.S. District Court against the state, claiming it had breached tribal-state compacts and violated their exclusive rights. “I would like to make it clear, we are not challenging the right of a business to operate, but rather the non-compliance with California law,” Rincon Chairman Bo Mazzetti says. If the CGC and BGC “enforced the current laws that exist,” Mazzetti says, “we would not have taken this action. Unfortunately, this lack of enforcement gives us no other option but to pursue legal remedies. We are simply asking that card rooms comply with the law.”

Political Roadblocks “We felt it was time to put this issue front of a judge to make a decision independent from the state,” says Chumash Chairman Kenneth Kahn. “We feel like we have a pretty solid case.” Politics have gotten in the way. California has the country’s only politically bifurcated regulatory system, divided between two elected officials, the governor and the attorney general. The system is responsible for directly regulating the card clubs while providing oversight for tribes, which under federal law have primacy for regulating their casinos. Tribes have contributed millions of dollars in regulating their operations, which have been relatively free of scandal. The card clubs, on the contrary, have been hit with some $10 million in federal money-laundering violations in the last decade—more than the nearly 1,000 U.S. commercial and tribal government casinos combined. Veteran casino executive and former California Gambling Control Commissioner Richard Schuetz calls card rooms the “worst-regulated segment” of the legal gambling industry. His opinion is echoed by others who contend card rooms lack sufficient internal operating controls, prompting a rash of raids by the federal Financial Crimes Enforcement Network (FinCEN). State attorneys general have not shown a willingness to crack down on the industry, a malaise blamed on the industry’s political clout generated by

jobs and municipal tax revenues. The tribes’ Ninth Circuit lawsuit alleges that state regulators have been “complicit, at times even encouraging” unlawful conduct by card rooms running banked games such as blackjack. The games, approved by the bifurcated regulatory agency, have enabled the card rooms to evolve beyond offering strictly poker with the club getting a fee or “rake” per hand. The most egregious misstep was a December 2007 opinion by former bureau chief Robert Lytle that the player-dealer position in California games need not be “continuously and systematically” rotated as required by state law, but merely offered to participants in the game. Lytle issued the opinion—later rescinded by the agency but still followed by most card rooms—just days before leaving the bureau to work as a card room consultant and owner. His licenses to work in the industry were later revoked by former Attorney General Kamala Harris. “It’s not breaking news these days that many California card rooms located in urban areas have been allowing blackjack and banking their own games in violation of state law,” wrote John L. Smith in CDC Gaming Reports. “There’s a good possibility California regulators will look very bad before this mess is over.” Mazzetti says the growth of the card room industry is largely due to the permissive attitude of regulators toward card room game rules and other regulations. “Both the employees and the taxes were generated by illegal income, and the state allowed that,” Mazzetti says. “They created the monster. Now they don’t know how to get the monster back in the cage.”

‘A Different Interpretation’ Card rooms used BGC workshops to rally workers, city officials and others to generate positive press coverage. It worked. Mainstream newspapers focused on the impact tightened game regulations could have on jobs and tax revenues. Little attention was paid to the legal issues. “As the leader of my community, I am most disappointed in the harsh, unwarranted treatment of the driving economic force in our community,” Hawaiian Gardens Mayor Myra Maravilla said of the Hawaiian Gardens Casino, which generates 76% of the city’s tax revenue. “What did we do to deserve you picking on low-income immigrant communities that primarily rely on our casino revenue? This is a direct assault on our working families, our seniors and our youths.” “For you to unilaterally change this game so it becomes less desirable endangers employment for our residents, needlessly endangers the budget for the city of Inglewood and seems to be a solution in search of a problem,” Inglewood Mayor James Butts told regulators. “The impacts to our city are significant,” City of Commerce Major Hugo Argumendo said of the proposed regulations. “Our city would have no choice but to begin to lay off many of our employees. The casino itself MAY 2019 www.ggbmagazine.com

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“As the leader of my community, I am most disappointed in the harsh, unwarranted treatment of the driving economic force in our community. What did we do to deserve you picking on lowincome immigrant communities that primarily rely on our casino revenue? This is a direct assault on our working families, our seniors and our youths.” — Hawaiian Gardens Mayor Myra Maravilla on the Hawaiian Gardens Casino, which generates 76% of the city’s tax revenue

would also have to reduce its employment.” Ryan Stone, owner of three card rooms in California, told the San Diego Union Tribune that the tribes “continually make false statements about the legality of our business in an effort to shut down the card room industry, which supports our cities and provides living-wage jobs to thousands of people in California.” He called the lawsuit by the Rincon and Chumash “the latest attempt to interfere with a legal industry that has existed in California for over 150 years.” “We understand the need for compliance and rule-making,” Kyle Kirkland, president of the California Gaming Association and general manager of the Club One Casino and Poker Room in Fresno, told the Redding workshop. “What we would ask is that we carefully balance the legal needs and social impacts. We’ve talked of course about the jobs and the investment we have with the communities. “Our games are very different from tribal games,” Kirkland says. “The fact that we offer the player-dealer position is substantially different.” While state law and Penal Code 330.11 allow games to be dealt by TPPPs, it requires the player-dealer position to be “continuously and systematically” rotated. It does not require every player to accept the offer of the deal. “We have a different interpretation of ‘continuous’ and ‘systematic,’” Kirkland said. “That’s not defined. We have a different interpretation of the Lytle letter and how it was put together and put forth. “Both player-dealer games and blackjack-style games have been approved by the California Department of Justice and played at California card rooms without harm to or complaint from the public for decades.” Kirkland told KUSI News in San Diego, “Some of the tribal casinos have been complaining about what some of the card rooms are doing, basically saying, ‘Hey, well, wait a minute. We think we’re the only ones that do gaming in the state.’ And that’s not true. The tribes have monopoly exclusivity on slot machines, but they don’t on table games.” That’s misleading. The California Constitution in Section 19(f) states that only tribes can operate slot machines. But it also gives tribes exclusivity to operate “banking and percentage card games.”

Stepping Up to the Plate Tribal silence on the issue ended March 5 with the fifth BGC workshop in Riverside, when six tribal chairs, nine county and city officials, about 200 employees and representatives of 16 community groups packed the Cesar Chavez Community Center to make their case. “We respect the process that you have undertaken, which is why we have chosen not to turn the prior workshops into political rallies,” said

Global Gaming Business MAY 2019

Lynn Valbuena, chairwoman of both the San Manuel Band of Mission Indians and Tribal Alliance of Sovereign Indian Nations. “We hope that our respect for, and deference to, this process is not misinterpreted as indifference, because it is not. In fact, the record reflects that for almost a decade, tribal governments throughout the state have been pleading with the bureau to investigate what we consider unlawful Nevada-style games at urban card rooms.” Unlike commercial casinos, tribal gambling operations generate revenue for government services to tribal citizens. That includes table game revenue, which on the average generates from 10 percent to 20 percent of a tribal casino’s win. But roughly 80 percent of the 63,000 tribal casino jobs are held by non-Indians, according to CNIGA. Tribal casinos also generate more than 22,000 non-gambling jobs, according to a Beacon Economics study funded by CNIGA tribes. Tribal casinos in 2014 generated $392.4 million in state and local tax revenues, according to Beacon Economics. Tribes contract with non-Indian counties and municipalities for other services. Tribal fire departments respond to off-reservation emergencies and have mutual aid agreements with the Forest Service and other fire departments. Tribal governments under the Indian Gaming Regulatory Act (IGRA) are required to contribute part of their gambling revenue to local charities. California tribes donate about $102 million a year to state and local charities, according to Beacon Economics.

“We’re not here asking for a vote. That vote actually occurred: twice, in fact. We’re not here asking for a new law. That law already exists. We’re not here asking to shut anybody out. We’re simply asking you to enforce the law.” —Mark Macarro, Chairman, Pechanga Band of Luiseño Indians

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“We understand the need for compliance and rule-making. What we would ask is that we carefully balance the legal needs and social impacts. We’ve talked of course about the jobs and the investment we have with the communities.” — Kyle Kirkland, President of the California Gaming Association and General Manager, Club One Casino and Poker Room

Letter of the Law Engaging in dueling statistics is not likely to solve the dispute. “Public perception is certainly an important component when it comes to big issues,” Chumash Chairman Kahn says. “But we felt by taking the matter to a court of law, we can take the politics out of it. Our concern is the state’s lack of action in enforcing the law.” While the tribes and other interested observers are impressed with Shimazu’s resolve in reaching a regulatory fix, they are not optimistic. “I always thought what the bureau was doing was just a delay, an effort to kick the can down the road,” Schuetz says. “Political pressure is on the bureau to do something about the card rooms,” adds a club executive who requested anonymity. “But if they do anything—do something about rotation or even get rid of blackjack—people will be out of work and these communities will take a beating. And that will politically backfire on the state.” Some believe the tribes and card rooms will attempt to negotiate a fix, particularly if judges in the two lawsuits reject efforts to dismiss the litigation. “I don’t think tribes have any interest in having the card rooms close down. It’s not our interest at all,” Stallings says. “Their businesses will be affected. But the gloom and doom they’re talking about is just not true.” “If judges reject motions to dismiss, the card rooms will be running to meet with the tribes,” says a lawyer familiar with the issue who requested anonymity. “Tribes have the law on their side.” Tribal officials are concerned that allowing card rooms with upscale hotels and restaurants to offer banked games and sports betting will transform their facilities into virtual urban casinos capable of competing with the more rural tribal operations. Mark Macarro, chairman of the Pechanga Band of Luiseño Indians, reminded BGC officials that voters who in two ballot initiatives upheld the right of tribes to operate casinos on Indian lands also rejected expanded gambling in the state. “We’re not here asking for a vote,” Macarro testified. “That vote actually occurred—twice, in fact. We’re not here asking for a new law. That law already exists. We’re not here asking to shut anybody out. “We’re simply asking you to enforce the law. “For eight years we’ve been patiently waiting for the bureau to enforce the law and our constitutional rights,” Macarro said. “Respect the constitution, the will of the voters, and enforce the law.”

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Higher & Higher Will high-tax states unwittingly put a lid on their online industries? By Marjorie Preston

ack in 2017, Rep. Scott Petri, then chairman of the Pennsylvania House Gaming Oversight Committee, advanced a novel argument for hefty iGaming taxes. Petri said to tax online games at a lesser rate than land-based operations would be, well, kind of mean to the casinos. “If a casino has employees and spends $700 million to operate, I don’t believe online can’t be successful at those rates,” Petri said. “They may not want to pay it; it may be more appetizing to place their capital in other states. But lowering the rate for online effectively will be penalizing casinos for having accepted the previous rate.” He failed to mention that existing casinos would be running some of those online operations, along with their interactive partners. For example, Harrah’s Philadelphia will launch its online arm with 888/Scientific Games. Hollywood Casino at Penn National Race Course will partner with IGT for iGaming and William Hill for mobile sports betting. And so on. The projected tax rates for iGaming in the Keystone State are up there, at 54% for slots and 36% for sports wagers. Some operators seem to be buying in less to turn a meaningful profit than to avoid being left on the sidelines or depriving customers of an expected amenity. In March, Penn National CEO Tim Wilmott, outgoing chairman and CEO of the American Gaming Association, said the company will “leverage this strategic opportunity long-term,” with “the hope that we can work to bring the tax rate in line.”

“The biggest thing to ask with any tax rate is, are we competitive with the black market, which includes illegal bookmakers and offshore companies?” —Vic Salerno, bookmaker and CEO of USFantasy Sports

Global Gaming Business MAY 2019

The Great Divide Steep tax rates on gaming have long divided policymakers and gaming operators. Operators say they should be able to keep more of the profits they generate so they can reinvest in their products and stay ahead of the competition, which is proliferating like kudzu. Tax-happy lawmakers say despite the high cost of entry and the state’s big cut, the casinos are also raking it in, so everybody wins. If the setup is perceived by some as unfairly pinching operators, it’s been a bonanza for governments so far. Pennsylvania has proven “the most successful in delivering dollars to the state,” according to Petri, who has since gone on to greater things at the Philadelphia Parking Authority. That argument holds some weight, says gaming analyst and consultant Steve Ruddock. “When Pennsylvania legalized casino gambling, it imposed a 54% tax on slot machine revenue and everyone said it wouldn’t work: RTPs would be too low, and casinos would churn players too fast or lose them to nearby states with better payouts. “All Pennsylvania has done is become the second largest casino market in the nation, trailing only Nevada.” The expectation that states with high tax rates would price operators out of their respective markets “doesn’t ring true, at least for now,” Ruddock says. “West Virginia, which was led to believe a low tax would maximize revenue for the state, starts to second-guess its decision when it sees Pennsylvania and Rhode Island receiving more tax revenue.” Capital investment and tax rates are said to be inversely related; as tax rates rise, capital investment falls, and vice versa. While online operations don’t have to reinvest in buildings or pay hundreds of onsite employees, are the levels of required capital investment comparable? “Absolutely,” Ruddock says. “Online operators don’t have to renovate, expand their bricks-and-mortar facilities or purchase new gambling equipment, but they do need to invest and reinvest in their products and internal systems. Capital investment in the online gambling space has to do with innovation and technology. If money that would normally go towards marketing and product development is headed to the state in the form of taxes, that will stifle innovation. New products and the ability to properly market them will be eroded. “The question is, at what point does the tax rate become burdensome enough that it causes operators to reduce the amount they spend on marketing and product development? Is it 15%, 20%, 36%? And conversely, at what point is the tax rate too operator-friendly—is it 6%, 10%, 12%?” In U.S. iGaming markets, he says, this is “the great unknown.”

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Squeeze Play

“If the participation grows because of iGaming, it’s hard to argue against that. But if the taxes and costs exceed the operators’ return in the land-based casino, that’s a major concern.”

At the conference of the National Council of Legislators from Gaming States in January, Florida gaming attorney Marc Dunbar took on the Pennsylvania model for sports wagering, which is taxed at 36%, the highest rate in the nation. He said policymakers should “create an environment to allow these technology businesses to thrive and to reinvest in more technology,” without “regulatory or tax handcuffs.” —Phil Juliano, Senior Vice President What’s true of land-based operations is true online, says Dunbar, and Chief Marketing Officer, Twin of the Tallahassee law firm Dean Mead. He refutes the contention that River Management online ops don’t need as much money because they’re—well, virtual, out there in the ether, with little overhead and no buildings, parking lots, slot machines or people to manage them. state’s model. “It’s a lot easier to scale an online or mobile product, so you hear the ar“The player, regardless of what type of gambling they like, has no congument that you can tax them at a higher rate because of the limited capital cern about the tax rate,” he said. “The tax rate affects other things, but it infrastructure. But you have to appreciate that what drives success in mobile doesn’t effect a patron’s decision on where to gamble or what type of acis the continued innovation,” he says. tivity they want to gamble on.” For example, look at Epic Games’ epic success with the video game But it’s the tax rate that causes apoplectic reactions in some operators. Fortnite. The wildly popular series, launched in 2017, propelled the North Eric Schippers, senior vice president of government affairs for Penn NaCarolina company’s valuation into the $15 billion range by 2018. tional Gaming, has been among the outspoken, saying Pennsylvania may “They attribute it completely to the ability to continue to evolve the end up “strangling the golden goose” if it doesn’t let its operators make product, because they have the money,” says Dunbar. “If you tax mobile more money. betting at a high rate, you’re going to create for the most part a static prod“It’s hard to explain the logic of policymakers,” Dunbar says. “Someuct that doesn’t innovate and doesn’t evolve.” times they run with emotion and without regard to logic. They frankly At the January conference, Kevin O’Toole, executive director of the don’t want to educate themselves because it will force them to disprove Pennsylvania Gaming Control Board, continued to bang the drum for that their own biases.”

FRESH FORTUNES HAVE ARRIVED ^ŬǇ ƌĂŐŽŶƐΡ ĂŶĚ &ŝƌĞǁŽƌŬƐ &ĞƐƟ ǀĂůΡ͕ /d͛Ɛ ŶĞǁĞƐƚ /ŶĮ ŶŝƚǇΠ sϱϱΡ Ɵ ƚůĞƐ͕ ĂƌĞ ĂŶ ƵŶĚĞŶŝĂďůĞ ĂƐƚĞƌŶ ĂƩ ƌĂĐƟ ŽŶ ŽŶ ƐůŽƚ Ň ŽŽƌƐ ǁŝƚŚ ŝŶŝƟ Ăů ƉĞƌĨŽƌŵĂŶĐĞ ŝŶĚĞǆĞƐ ĂǀĞƌĂŐŝŶŐ ǁĞůů ŽǀĞƌ Ϯy ŶĂƟ ŽŶǁŝĚĞ͊ ƌĞĂƚĞ Ă ƐƚĂŶĚŽƵƚ ĨĞĂƚƵƌĞ ďĂŶŬ͕ ĐŽŵďŝŶŝŶŐ ƉŽƉƵůĂƌ ƐŝĂŶͲƚŚĞŵĞĚ ŐĂŵĞƐ ĂŶĚ ĐƵƐƚŽŵ ϰ< ĚŐĞ ǀŝĚĞŽ ŐƌĂƉŚŝĐƐ ʹ Ă ƉĞƌĨĞĐƚ ĂĚĚŝƟ ŽŶ ƚŽ ĂŶǇ ŐĂŵŝŶŐ Ň ŽŽƌ͊ CONTACT YOUR ACCOUNT MANAGER TO PLACE THESE INCREDIBLE TITLES ON YOUR FLOOR TODAY

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volume for margin,” says Juliano. “We would have to grow 3 million to 4 million more visits to just stay even.” John E. Taylor, Jr., Twin River’s chairman of the board, hopes the iGaming player is an add-on, not a defector from the casino sports book. “The early information out of New Jersey is that the majority of online players are not traditional casino players. If introducing your interactive extension introduces your brand to a new and different player, that would be a good thing.”

Get in Line The states are not the only ones getting a piece of the action. The federal tax—(.25% of handle) is also “baked into the cake,” says Ruddock. “As One of the most persuasive arguments for legal, regulated online and molegal sports betting continues to expand in the bile gaming is that it brings existU.S., it will be interesting to see if the governing activity above ground and ment provides some transparency when it quashes offshore and illegal oper“If you tax mobile betting at a comes to where the federal sports betting tax ations. Do higher tax rates have high rate, you’re going to create goes. Right now, no one knows.” any impact on that? for the most part a static And while a .25% tax rate doesn’t seem Vic Salerno says a resoundlike much, it is, because it’s a tax on the hanproduct that doesn’t innovate ing maybe. According to the dle—the total money bet—rather than gross legendary Nevada bookmaker, and doesn’t evolve.” gaming revenue. In Nevada, where casinos CEO of USFantasy Sports, —Marc Dunbar, gaming attorney pay a 6.75% tax rate on GGR, the addi“The biggest thing to ask with tional federal handle tax means an effective any tax rate is, are we competi12% tax on sports betting GGR, almost tive with the black market, doubling the state tax rate. which includes illegal bookmakers and offshore companies? If we’re not Sports leagues are also at the feedbag, demanding so-called “integrity competitive, our revenues are going to go down. When you get to states like fees” as compensation for the legalization of sports betting, which they Pennsylvania or Rhode Island with higher taxes, the customers sooner fought for many years. The American Gaming Association isn’t buying it, rather than later are going to figure out they’re not getting back as much as and neither is most of the American public. they should. Then they’ll go back to wagering with their offshore or illegal According to the AGA, a recent poll found that only 23% of Ameribookmakers.” cans believe the leagues should collect a fee from the amount wagered on After Rhode Island legalized sports betting in November, March Madsports, while 55% are opposed. ness more than lived up to its name at the state’s Twin River and Tiverton “The results of this research are overwhelmingly clear,” said Sara Slane, casinos. the AGA’s senior vice president. “Consumers want legal sports betting, “We had a mob in there,” says Phil Juliano, chief marketing officer and they believe it should be regulated by state and tribal governments, and senior vice president of Twin River Management. “There was spillover to they don’t think the leagues should get a cut.” the table games and food and beverage.” Ruddock agrees. “Whatever the preferred nomenclature of the day— After mobile sports betting launches, “that crowd is outta here,” he integrity fees, royalty fees, data fees—league demands for a cut of sports says. With no crowd, there’s reduced need for staff. Juliano calls it “a potenbetting money is a demand for something for nothing. tial tragedy.” “Sports betting wasn’t created out of whole cloth on May 14, 2018,” Mobile wagers are a sure thing now: the bill is on Governor Gina Raihe says. “The insinuation by the leagues that they suddenly have integrity mondo’s desk, and the projected revenues are part of her budget. The tax concerns because sports betting is being moved from illegal to legal maron sports bets is a whopping 51% with 32% for the vendor and just 17% kets doesn’t stand up to the smell test. for the casinos. The industry in the state is overseen by the Rhode Island “Either the leagues are looking for a handout, or they’ve been grossly Lottery. negligent about integrity up until now.” Juliano hopes his concerns are unfounded. “If the participation grows Salerno, too, bristles at the leagues’ demands. because of the phenomenon of iGaming, it’s hard to argue against that. But “Who’s been protecting the integrity of sports for the past 50 years? if the taxes and costs exceed the operators’ return in the land-based casino, The bookmakers. In the NBA finals last year, LeBron James had a broken that’s a major concern.” hand, the NBA knew about it and they didn’t tell us. Where’s the inRight now, the numbers don’t seem to add up. Casinos in Rhode Istegrity in something like that? Call it what it is—a royalty fee.” land retain just under 28% of gross gaming revenues. “If we lost a million If the leagues prosper from sports betting, will customers have cause to visits out of the land-based casino to iGaming at an end game for us of question the game outcomes? 10%, we would have lost 18% and the only thing that would outgrow that The repercussions of high taxes on online and mobile bets can only be would be a participation rate that’s radically different, so we would trade calculated over time. It may not be a close game.

All Ashore

Global Gaming Business MAY 2019

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MAKING MY POINT

Goldie Got It Right A lesson in seizing the moment, courtesy of Marty McFly and Mayor Goldie Wilson

arty McFly couldn’t stop himself. That DeLorean-driving, purple-underpants wearing, rock-‘n’-roll-inventing time traveler sat there, his eyes bugged and his mouth agape, while the busboy from Mr. Carruthers’ coffee shop ripped his father a new—well, whatever they said back in 1955—for backing down against some bullies. “Stand tall, boy,” the busboy told teenage George McFly. “Don’t you know if you let people walk over you now, they’ll be walking over you the rest of your life? Look at me. I’m going to make something of myself. I’m going to night school, and one day I’m going to be somebody.” And that’s when Marty, who could see the future because he was from the future, couldn’t hold back. He’d held out as long as humanly possible, stopping himself from spilling the beans on what lay ahead for the busboy. Then, in an instant, he hit the point of no return and had to let it fly. “That’s right!” Marty said, his voice rising in excitement. “He’s going to be mayor!” The busboy, a wide-smiled, gold-toothed young man named, aptly enough, Goldie, did a double-take. He paused for a second and raised his index finger into the air. “Mayyyyor!” Goldie Wilson said, exaggerating the “ay” like Arthur Fonzarelli would do after elbowing a jukebox. “Now that’s a good idea. I could run for mayor.” Which he did. And won. At least once, because, according to the movie, he was up for reelection in 1985. And what does this have to do with business? Turns out quite a bit. Next time you’re in a discussion with someone at work, or with a lot of someones at work, perhaps at one of those fancy-pants offsite corporate strategy sessions, there’s one word you need to keep in the front of your mind and on the tip of your tongue. Synergy? Ideation? Deliverable? Paradigm? No, no, no, and hell no! It’s mayyyyor. The real value in these mass mind melds— and there is indeed value—is to create as many of these “mayor moments” as possible. Forget the pa-

Global Gaming Business MAY 2019

By Roger Snow

rade of PowerPoints that leave you glassy-eyed like Michael Spinks when he got knocked out by Mike Tyson or Mike Tyson when he got knocked out by Buster Douglas or Buster Douglas when he got knocked out, well, by just about everybody. Suffer through those team-building exercises. And hold your nose and avert your eyes as you are bewitched, bothered and bewildered by the mountains of endless pie charts, pivot tables and that other thingy—you know, the one with the Olympic rings that partially overlap each other. Pish-posh on all that. Instead, focus on the dialogue. The questions and answers. The smarmy remarks and the witty retorts. The off-the-cuff comments and the sidebar convos. The unscripted commentary. The jokes. The verbal volleys in an argument. The things that give you an idea to do something different, an idea you wouldn’t have had unless someone else put it into your head. “That’s right! He’s going to be mayor!” Here are two more examples, these from the real world rather than the big screen.

We Salute You In the summer of 1998, a few months before Bellagio was set to open on the Las Vegas Strip, two mid-level administrators were given the seemingly simple assignment of naming the newsletter for the table games department. Seemingly simple. The men struggled—oh, how they struggled— to come up with anything that didn’t sound totally unimaginative (Table Games Quarterly), didn’t sound like a snack pie (Table Talk), didn’t sound pompous and douchey (The Bellagio Times), and didn’t sound gratuitously alliterative (Bellagio Bugle). But then, one day as summer turned to fall, the two men were driving to the property and one of them sneezed. “Salute,” said the other man. “What does that mean?” the sneezer asked. “It means ‘God bless you’ in Italian.” Mayyyyor! For five-plus years and 20-plus issues, the table games newsletter at Bellagio was called “Salute.” The name expired only when the newsletter itself did. Like the word resort, it’s half-Italian and half-

American. Wishing your employees good health and, if you take the English spelling (no accent mark) and pronunciation, it’s also a physical gesture of respect. Lucky this wasn’t a German-themed resort, or the newsletter would have been called “Gesundheit.”

Turn that Faucet Two men—no, not the same bozos that got bailed out by an allergy attack—were stuck behind each other in the buffet queue at a Shuffle Master executive offsite meeting in the late 2000s. The company, which historically only leased its table games, had recently sold off a lot of them to casinos, leaving a hole in its recurring revenue base. A hole big enough to ride an elephant through. While the men picked through the food choices, one said to the other, “We need to come up with something to turn the faucet back on. I go into casinos now and all I see are games that don’t generate revenue for us.” “Do you mean something we add on to the games?” the other man said. “Something to increase the hold and the win?” “Exactly.” “What, like progressive jackpots?” Mayyyyor! Between the lunch line that day and the deadline for this column, Shuffle Master (now Scientific Games), which didn’t even possess a progressive system at the time, now has 5,000 of them in casinos around the world. Throw in felt upgrades like 3 Card Bonus for Let it Ride, 6 Card Bonus for Three Card Poker and Bad Beat Bonus for Ultimate Texas Hold’em—another offshoot of the faucet comment—and you’re talking 7,000 placements. All from a 20-second exchange between the rice pilaf and the mystery meat. That’s how mayor moments work. You never see them coming, but when they do, they turn on that little lightbulb over your head. Right, Goldie? 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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2019

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EMERGING LEADERS Bullish on the Future Stephen Singer Chief Strategy Officer, The Drew Las Vegas tephen Singer joined the gaming and hospitality industry at a challenging time. The Great Recession was on. Jobs in Las Vegas were few, but on graduating from the University of Nevada, Las Vegas, Singer landed an internship at the Cosmopolitan. As a member of the strategic planning team, he knew his colleagues wouldn’t be slowed down by a recent grad with little experience. With hard work and an entrepreneurial spirit, he got “Risking it all for a new through the ramp-up period and ascended opportunity was the only way to where he is today—chief strategy officer at the Drew Las Vegas. to get to where I am today.” If you aren’t working on making things better, Singer says, someone else probably is. “The hope is that when opportunity presents itself, you’ve put in enough work to be considered and ultimately succeed,” he says. “The entrepreneurial spirit has driven me to continuously seek new opportunities, both in traditional and untraditional work environments, working for others and for myself.” In 2014, he left a stable job and pursued an idea that was under development. That startup turned into a partnership with John Unwin, and ultimately, led him to the Drew Las Vegas. “Risking it all for a new opportunity was the only way to get to where I am today,” Singer says. He spent more than two years with Unwin refining the business model. At the Drew, Singer has established a cognitively diverse team of talented professionals who seek to challenge, disrupt and invent. His believes the best way to learn is by doing, so everyone tries their hand at solving different business problems and onboarding new responsibilities. “Being open to exploring different options unlocks new opportunities, increases the size of your network, and broadens your experience, fostering further growth,” he says. The Drew culture embraces ideas, diversity of thought and collaboration. Singer and his team have the opportunity to create an entirely different way of working in Las Vegas and intend to be thoughtful with how they realize that opportunity. Singer believes technology and data will be the great growth areas in hospitality. With the sheer number of systems used in the industry, the complexity of those systems and the levels of integration achieved, this area is in need of smart people who think about business differently. He believes marketing is another key trend area, particularly with the proliferation in data and the need to intelligently attract and target customers. A long-term bull on the Las Vegas market, Singer hopes the city remains true to the customer through these times of growth. “Las Vegas is a globally recognized brand with a powerful heritage,” he says. “Remembering what the customer experience is founded on will only support our growth story.” — Michael Zhu, The Innovation Group

Global Gaming Business MAY 2019

All in the Design Emily Marshall, IIDA Interior Design Discipline Leader, HBG Design asinos and integrated resort developments are among of the most iconic architectural buildings in the world. It’s easy to recognize this looking at the Las Vegas skyline or the seminal steel structure of Marina Bay Sands. While the exteriors sometimes create iconic attractions, what lies inside is critical to creating memorable guest experiences. Emily Marshall appreciates this notion. As leader of the Interior Design Group at HBG Design, she’s an expert on the design nuances necessary to create environments that leave a lasting impression. “Interior design for the hospitality and gaming industry is all about creating vibrant experiences for guests,” Marshall explains. “This has always intrigued me—the drama and excitement that physical spaces can impart, the thoughtfulness that’s put into how guests use and experience a space.” The nuances of both the business goals and guest desires in gaming and hospitality originally attracted Marshall, and keeps her pushing forward. “There’s a psychological element to it, paired with the fantasy of escapism. That’s kept me challenged and passionate about my career.” While Marshall could be a considered a design veteran with 14 years of experience, her interest in and experience with art and design began well before her professional ca-

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Hollywood Star Jason Birney

The challenges we “ face when designing very complex experiences have existed before, so it’s important to see how other designers dealt with them.

”

reer. The daughter of a prominent Memphis architect, she developed an eye for design at an early age. Professionally, she points to her first mentor as having the most impact on her career trajectory. “The influence of my dad notwithstanding, my first mentor, Jacques Coetzee, taught me how to truly be a designer,” Marshall says. “He helped me understand the importance collaboration plays in the role of an interior designer, while also teaching me how to push the boundaries of design and to be bold in my expression of interior spaces.” For young design professionals, Marshall has advice on ways to grow both professionally and personally. “Broaden your perspective. Travel! Go see as much of the world as you can. The challenges we face when designing very complex experiences have existed before, so it’s important to see how other designers dealt with them. “Every project has issues, some more visible than others, so seeing details in real time is important,” she adds. “I believe in complete immersion into places whose cultures and traditions affect their visual connection to the built environment.” For someone whose livelihood revolves around creating memorable experiences for others, Marshall says the projects have had just as much of an experiential impact on her. “Seeing these gaming and resort projects come to life has given me indescribable and unforgettable experiences of my own.” This year, she looks forward to seeing three major projects come to fruition and open. “These large-scale projects have been years in the making,” she says. Be on the lookout for Marshall’s latest imprints on the gaming and hospitality industries. — Michael Vanaskie, The Innovation Group

General Manager, Hollywood Casino Columbus ason Birney grew up just outside Philadelphia. He reveled in the local sports scene. But he also knew that choosing the gaming industry meant eventually moving from the city he loved. “My family understands and has been incredibly supportive, not to mention my wife, Kimberlee, who started this journey moving around with me when she was just my girlfriend,” he says. The journey began after graduation from Florida Southern College when he returned to the Philadelphia area. The owner of a flower shop where he worked to put food on the table asked Birney if he ever considered Atlantic City. Bingo. “Not long after that, I started my career as advertising production planner at Showboat” in 2002, he says. Birney also worked in a similar capacity for Harrah’s and at Harrah’s Philadelphia as advertising and public relations manager from 2006 to 2009. Atlantic City introduced Birney to casino gaming and marketing. “I was exposed to multiple properties and leadership teams at a young age,” he says. “I was able to compare how different operators handled their business challenges, and that gave me insight into how I may want to handle my own operations in the future.” Birney worked directly for the regional vice president of marketing in developing and deploying key strategic initiatives for what was then four Caesars Entertainment properties in Atlantic City, including the opening of the House of Blues at Showboat, the World Series of Poker circuit events, the opening of The Pier at Caesars and several expansion projects. While Birney felt Atlantic City was just like being home, he never moved out of Pennsylvania during his tenure in the resort. “In retrospect, I wish I took the opportunity to live at the beach in my young 20s,” he says now. The big move came with Penn National Gaming, beginning in 2009 with a stint as director of marketing at Hollywood Casino Hotel & Raceway in Bangor, Maine. Birney left in mid-2011 for Hollywood Toledo as vice president of marketing, moved to Hollywood Columbus in the same role, where the company promoted him to assistant general manager, then upped him to general

manager at Hollywood Gaming at Dayton Raceway before assuming the same title at Columbus. Birney owes his success in part to a host of mentors, in marketing and finance. “I’ve had a few that I can directly point to that helped me understand the importance of casino marketing and our responsibility to drive profitable revenue to the organization,” he says. “In recent years, I’ve benefited from my colleagues that are more experienced in finance. The two specialties give me a well-rounded understanding of how to drive revenue while managing strong margins.” Birney sees digital gaming as a growing aspect of the casino universe, as evident in the increasing footprint of electronic table games. “Companies continue to listen to player feedback, and that shows when they release new product,” he says. “I’ve also seen concepts at the gaming show that include digital felts on traditional table games. As an operator, it’s exciting to think that you could change your spread of table product multiple times a day to handle the fluctuations in player demographics.” In Birney’s experience, few people come out of college thinking gaming as a career choice. To introduce the notion, he and colleagues in Ohio open up the possibility to hospitality students. “If younger people enter their career with a desire to learn and can be movable for development opportunities, companies like Penn National Gaming are perfect to jump-start a career in gaming,” says Birney, the father of a toddler, who enjoys golf and still roots for Philadelphia teams. —William Sokolic

MAY 2019 www.ggbmagazine.com

Turning

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e h t

Tables

Innovations in table-games tech mean a win-win for operators and players By Dave Bontempo

able games mimic the epic phrase pitched by late actor Telly Savalas for Player’s Club International ads back in the 1980s: “It’s bonus time, baby.” And, in this era, it’s bonus time like never before. Table games ride the technology vaulting them into a new wild-card world. Whether it’s the menu of e-tables, the linked functionality with slots or the innovation of lucky chips and lucky seats for patrons, there’s new prominence for gaming’s classic wagering sector. The area once overtaken by slots enjoys a rise led by younger players and an expanded gambling pool sparked by the mobile age. Companies steer new products to this lucrative new trend built atop an age-old foundation. Side bets, after all, were practically stitched into the gaming fabric. Wild-card wagers marked the kitchen-game card era of oneeyed jacks, split-whiskered kings, “baseball” and acey-deucy. They extended to the casino craps realm of horn, high yos, hard ways and any sevens. The newly upgraded legalized sports-betting world offers in-game betting and parlays, boosting gambling options to the point of near-absolute indulgence. It’s bonus time indeed, but not just for the patrons.

The Thrive at Five Gimme five. It’s been a celebratory high-five slap for Scientific Games over its five-year run in this area. The industry giant gained instant table-games prominence in 2014 42

Global Gaming Business MAY 2019

with the acquisition of Bally Technologies. One year earlier, Bally had obtained Shuffle Master, the worldwide leader in card shufflers and proprietary table games. Scientific Games became an instant table-games force, the Monopoly equivalent of spending one’s first dollar building Park Place and Boardwalk hotels. The company has parlayed its position by wielding innovative product offerings. Roger Snow, senior vice president of table products, has amassed several decorations, creating or co-creating more than 25 games and side bets covering thousands of tables in 50 countries. The lineup includes Ultimate Texas Hold’em, Four-Card Poker, Dragon Bonus Baccarat and DJ Wild Stud Poker. One of Snow’s boldest efforts is Blazing 7s Roulette, which he launched with Scientific Games employee Michael Vizzo. It lets a player win up to 500-to-1 on a single roulette spin. Snow believes the product could have another three years of upside potential, and he likes the market position table games have rallied to gain. “It’s stronger than ever,” he says. “Not that long ago, it looked like table games were headed for extinction. Casinos were ripping out pits in favor of slot machines. Games like blackjack and craps were on the wane. And save for some specialty titles like Three Card Poker and Ultimate Texas Hold’em, there wasn’t a whole lot to get excited about. “It’s completely different now. Table games are enjoying a renaissance, and it seems to be something fueled by young people. Just walk through

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“Table games are enjoying a renaissance, and it seems to be something fueled by young people. Just walk through any casino. It’s obvious that table games players, and even more so electronic table games players, are some of the youngest people in the casino.” —Roger Snow, Senior Vice President of Table Products, Scientific Games

any casino. It’s obvious that table games players, and even more so electronic table games players, are some of the youngest people in the casino.” Snow considers progressives the hottest products in the sector. “You have them on the specialty games,” he says. “You have them on blackjack. You have them, albeit to a smaller extent, on baccarat. And you will soon have them on roulette and craps. This is the big wave in our industry, and it’s only going to grow.” Snow believes poker-based content will continue driving the success for table games. Besides Three Card Poker and Mississippi Stud, Snow says there are some terrific new games like High Card Flush, Criss Cross Poker and DJ Wild. These games may not reach the prominence of Caribbean Stud or Ultimate Texas Hold’em—the market is too fragmented nowadays—but they will all gain a significant niche, Snow says. The company’s hottest game is Face Up Pai Gow Poker. This is a commission-free pai gow game it picked up from outside inventor Johnny Lee. With respect reserved for a fellow inventor, Snow highly endorses it. “If you’re a game inventor, this is one of those games you smack yourself in the head because you didn’t think of it—it’s absolutely brilliant,” he says. “The dealer shows his hand and arranges it in front of the players. Because of this, players are always able to optimize the way they arrange their hands. Plus—and this is the best part—if players can’t beat or at least tie, they muck their hand. Because of this, and the fact there is no 5% commission on winning hands, casinos are reporting up to a 25% increase in hands per hour. So, not only is this a great game, but it’s a great utility device for speeding up play.”

Blending the Best IGT, the global gaming-machine, lottery and research and development powerhouse, embraces its own version of the tables-slots marriage. “There’s a huge demand within the table games market to be able to deliver ‘slot-style’ bonusing promotions to table game players,” says Eric Lancaster, senior director of systems product management for IGT. “Pit bosses and table game marketers have seen the success that bonusing drives within the slot business and are eager to mimic this in the tables business.” Bonusing shows the versatility of Table Manager, the automated system that maximizes rating accuracy and delivers compelling promotions to table players. This mature product has long been hailed for rating and comping table games players, capturing true game handle and revealing betting patterns. It also incorporates table promotions. Table Manager offers Lucky Seat and Lucky Chip bonusing that mimic the popular IGT Advantage

casino management system’s Carded Lucky Time and Carded Lucky Coin bonusing products. “Table Manager provides a friendly user experience and a differentiator, because the product quickly and efficiently provides users with actionable and relevant information,” he says. “The two bonusing products within it enable management and marketers to extend ‘slot’ bonusing applications to table game players. “Table Manager is fully integrated into the IGT Advantage system, and pulls data from the patron management and cage modules to allow the tracking of players while on the table—average bet, time played, buy in, credit, comps, etc. In situations where Table Manager is installed as a stand-alone product, it can connect to other host systems to extract the same data.” Lucky Seat enables casino marketers to create and schedule promotional drawings for their table game players, he says. It allows operators to configure a promotional prize for those customers. Once started, a promotion runs for a set period. At the end of that period, one or more winners are randomly selected from currently eligible players. A Matching Bet coupon award, for example, can start at a property on Friday at 5 p.m. Every hour for five hours, a drawing is run and a winner is selected. This includes rated and name-refused players at all blackjack tables in every pit. Lucky Chip creates progressive jackpot promotions specifically for the table game. The Lucky Chip bonus selects a random player rating based on qualifying criteria operators set during a scheduled period. Awards can be either a fixed or pooled amount. The bonus integrates with digital signage to drive play and create an event when the bonus is won. No additional bet is required to be eligible. Table Hot Seat is a time-based mystery jackpot that can only hit within a specific time frame chosen. Operators can drive play during slow periods or match awards to periodic activities. Carded and uncarded versions give operators the flexibility to choose which players qualify for the bonus. Features include the ability to produce 16 different bonus periods, each focusing on specific time frames. It can run on a single table, a pit or across the entire floor. Bonus jackpots can be funded as play occurs or as a fixed amount. The product helps operators link to video monitors, meters and audio systems to increase excitement. It’s based on the highly successful Lucky Time slot bonus.

Staxed AGS touts Stax, the newest addition to its table-game progressive offerings. The product brings unprecedented player excitement to nearly any MAY 2019 www.ggbmagazine.com

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Aristocrat’s TrackIt

AGS Stax

table game, officials say, with dynamic links to multi-level and must-hit-by jackpots. This unique multi-level progressive system enables operators to offer up to five different prize pools. With configurable settings and engaging displays, Stax offers these and other features for seamless integration into the table game pit. Product features include light-up bet sensors, dynamic double-sided display, customizable reserves for each prize pool and automated prize-pool contribution adjustments along with web-based reporting and configuration, plus an optional must-hit-by prize pool and tablet-style dealer interface. AGS is firmly planted in the Class II Native American gaming market, but has branched out to become an all-inclusive commercial gaming supplier.

Good Timing Aristocrat Technologies, a subsidiary of Aristocrat Leisure Ltd., finds a new way to double down. This year, the company expects to double its installs of TrackIt, which links the functions of slots and table games. The timing is sound. While bonusing innovations abound, advancements like this one improve the infrastructure surrounding table games. With the proliferation of wild-card wagers, TrackIt can get players to a seat at the table more quickly. The newest version of TrackIt was unveiled last fall at the Global Gaming Expo, and also implemented at Maryland’s Live! casino for tables with vouchers and RFID. The implementation is the first in North America. TrackIt has been Aristocrat’s table game management solution for about four years. The rollout, coupled with the hiring of Gavin McPhail as

Global Gaming Business MAY 2019

the unit’s director of systems product management last November, indicates the company’s increased interest in table games. “The company has been investing heavily in this sector,” McPhail says. “Table game management systems have been evolving for the last 25 years, and the expectation nowadays is to be able to deliver a system that can streamline the table operations, making it more accurate and closer to what an operator expects on a slot floor. “We really want to grow this area. We want to drive it, grab it and get people involved in everything from the entry level to the Rolls-Royce of what we offer. We see this as a growing part of the ATI business.” TrackIt, part of Aristocrat’s Oasis 360 table management solution, allows players to take vouchers printed at the slot machine and redeem them at the table for chips. It also enables operators to issue vouchers at the end of the table-game play session that can be redeemed at any redemption kiosk or the casino cage. The product also reduces cage lines for players and table fills for operators. Dealers and/or supervisors can scan vouchers using bar-code scanner equipment at the table, increasing table game utilization. TrackIt’s RFID chip count sensor detects the value of chips returned before the dealer/supervisor can issue a walked-with value. If the chips detected by the RFID chip count sensor do not match the value input for the voucher, the system automatically generates an error message that notifies the user of the incorrect values. McPhail touts TrackIt on a multi-benefit scale. “This is a modular solution,” he says. “The software allows us to scale from entry level to very sophisticated operators and/or markets. We can go from simple pit solutions to our full automated RFID table that even includes ticket vouchering and mobile customer logins. The full RFID solution tracks all

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GFL Bonusing

wagering at the table in real time as well as all cash movements with our VIVO solution.” The hardware gets retrofitted to the table, equipped with sensors and RFID. It works with the table-enterprise software that is part of the Oasis system. McPhail considers RFID, sensors, bonusing and vouchering at the table main ingredients for operator demand. “Any type of application that can provide the operator some kind of ROI whether it be operation efficiencies or increment patron spend, is important,” he says. “Casinos want ease of use, accurate ratings and additional data.”

Customizing the Tables For London-based table-game supply giant TCSJohnHuxley, the bonusing function is wrapped into the Gaming Floor Live solution, a technological ecosystem designed to give casinos real-time visibility and total control over their gaming floor through seven unique modules. One of those modules provides the kind of bonusing that is currently bringing new players to the pit. GFL Bonusing gives casinos the tools to customize their games, the goal to keep players at the table and achieve the best hold possi-

ble. With this module, operators can create multiple bespoke progressives and side bets for any table game, monitor the success of them in real time and, if necessary, modify the game configurations instantly (subject to local regulations). GFL Bonusing allows for the setup of playerfunded jackpot pools, where after the initial jackpot put-in (the seed), casinos allocate side-bet funds into jackpot pools. These pools can be set to fund the winnings of jackpots but also replenish and fill up higher-yielding jackpots, keeping excitement on tables to its fullest. Progressive jackpots increment when a bet is placed and “reset” once won. However, if one jackpot is won, the others remain in play until they are also won. GFL Bonusing can be tailored to the demands of any unique player demographic. Not only does this help generate truly meaningful jackpots for players, but it also helps to increases table revenues. All this new technology is bringing new players to the pit the same way slot technology has maintained its own loyal legion of players—bonuses, progressives and new elements of the game. In short, it’s bonus time in the pit.

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MAY 2019 www.ggbmagazine.com

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FRANKLY SPEAKING by Frank Legato

Moët and Silk Jammies

Global Gaming Business MAY 2019

says the casino’s website, “to serve you a glass of champagne from a red, crystalencrusted magnum bottle of Moët.” I don’t know about you, but if a butler tries to pour me champagne from a bottle that isn’t encrusted with crystal, I’m out of there. (I also demand that my Iron City Beer be poured from an authentic Ming Dynasty vase.) “After a diamond massage,” the website continues, “slip into a pair of monogrammed red silk pajamas and enjoy an in-room, four-course dinner,” topped off with “gold-dusted chicken n’ waffles and a red velvet cake milkshake adorned with a 5.5carat diamond bracelet.” What, no buffet? Can you at least add bread pudding? If I’m in my silk PJs, I’ve got to have bread pudding. Not to be a Debbie Downer, but I don’t really want to be massaged with diamonds. It just doesn’t sound comfortable. And I definitely don’t want anybody sprinkling gold dust on my chicken n’ waffles. Come to think of it, I don’t want chicken “n’” my waffles at all. Whatever happened to maple syrup? Want The World is an even bigger bargain than Kaos Theory: four nights, not three, for a mere $450,000. And they fly and drive you there. Heck, the Palms expects me to find my own transportation, like some loser. In other news this month, it was announced that Donnie and Marie Osmond will end their 11-year run at the Flamingo Las Vegas in November. How sad. They’re my favorite group, next to Iron Maiden. (I also like the Statler Brothers, and Municipal Waste.) In case anyone from Genting, the operator that ultimately bought the Westward Ho land from Boyd Gaming, is reading this... I still want that damn leather jacket. I hit the progressive royal in 2005! Pay up! VIC TOR RINAL DO

n our cover story back in March, author Jeff Hwang made the case that the Las Vegas Strip has a value problem—that high rates and fees are squeezing the mid-range gambler out of the Strip properties. For the record, I’m one of those mid-range gamblers. I remember when properties like the Riviera and the Westward Ho would compete for guys like me with free rooms, full-pay video poker, liberal table odds, cheap prime rib and free buffets that actually had fairly good food. Man, I loved the Westward Ho. I hit a progressive royal flush there once, and I was supposed to get a Westward Ho leather jacket in their royal flush promotion. Sadly, they had run out of jackets. Before they could get more, they ran out of Westward Ho. The place closed a couple of weeks later. I really loved those old Strip properties. I even used to gamble at the Landmark, before it was destroyed by a space laser in Mars Attacks! (Coolest-ever use of footage from a casino implosion.) I’d like to think some casino operator will eventually pick up the value ball on the Strip. The convention authority has put up a big chunk of the former Riviera land for sale. Maybe I’ll buy it and bring back the Riv just like it was. I’ll even put in musty carpets for authenticity. Hey, maybe the place wasn’t real swanky near the end, but they still had the best coffee shop in town, hands down. Some of these new places don’t even have a coffee shop, which, to my mind, disqualifies a place from being a real casino. Sadly, it looks like things are going the other direction on and around the Strip. Last month, both the Palms and the Venetian announced outrageous suite packages tailored for guests of substantial means (a.k.a., “not me”). The Palms created a suite package to celebrate the opening of its posh Kaos nightclub/day club. It’s three nights in an Empathy Suite, complete with butlers in white gloves pouring “rare format” bottles of Dom Perignon and Ace of Spades champagne from a private “champagne vault.” (I have one of those. It’s out in back of my tool shed.) Or if you prefer, you can just spend all day and night at the Kaos club, which features a 60-foot bronze sculpture of a demon in the center of a lounge that is larger than the entire Westward Ho was. The Palms “Kaos Theory” package costs $1 million. But that’s for all three nights, so it’s quite the bargain. As is the Venetian’s “Want The World” package. That’s a four-night stay in a suite with a lot more living space than my house. (And my yard, sidewalk and half the street.) They’ll fly you in via private jet, pick you up in a Mercedes Maybach and whisk you to the resort. A private butler will meet you at the suite,

UNLV_MorongoAd_2019-Final.qxp_Layout 1 4/10/19 8:15 PM Page 1

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MAY 21, 2019

Tribal Gaming Economy: Battling Competition At this full-day episode presented at the Morongo Casino Resort in California, the UNLV Gaming & Hospitality Education Series goes on the road for the first time. Tribal gaming executives will get to hear about such important topics as the latest trends in slot machines, how non-gaming amenities can set you apart from your competitors, how finance and cash transactions are getting increasing attention from state and federal governments, how investment in new technology will provide a dramatic return, and much more. Plus, a panel of the leaders of Southern California casinos and tribes.

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Philippine

Dream

Okada Manila interior

In Asia, the Philippines are second only to Macau for total gaming venues. The signs point to continuing growth, if the market remains stable.

By Michael Zhu

and-based casino gaming in the Philippines was legalized in 1976 by then President Ferdinand Marcos with the creation of the Philippine Amusement and Gaming Corporation (PAGCOR), a government-owned and controlled entity and the de facto gaming regulator in the country. The regulatory agency was formed to intervene in the proliferation of unlicensed casinos and underground bookmaking operations that conducted games of chance in a rampant manner. Since the establishment of PAGCOR, the industry has grown steadily, and has successfully secured its position among the top three gaming markets in Asia.

Overview of the Market There are four jurisdictions in the Philippines: 1. PAGCOR for land-based casino gaming and its relatively new Philippine Offshore Gaming Operator (POGO, established in late 2016) for online gaming; 2. the Philippine Charity Sweepstakes Office (PCSO) primarily administering lotteries; 3. the Cagayan Special Economic Zone (CEZA) that regulates gaming in the Cagayan Valley region; and, 4. the Aurora Special Economic Zone and Freeport Authority (APECO) for gaming activities in its region. 48

Global Gaming Business MAY 2019

Except PCSO, all jurisdictions are authorized to regulate and operate casino gaming, as well as grant licenses to other entities. So far, PAGCOR has been the most prolific, with a large number of casinos of its own and the responsibility for regulating other properties it granted licenses to—for example, the large-scale integrated resorts (IRs) within Entertainment City in Metro Manila. In land-based casino gaming, PAGCOR’s contribution to the overall casino count in the Philippines makes the country second only to Macau for the total number of gaming venues in Asia. Its properties are also known by the commercial brand name Casino Filipino. Casino Filipino operates gaming venues in six locations across the Philippines and has another 33 so-called “satellite” sites across the country. As of the end of 2018, the Casino Filipino chain offered a total of 472 live gaming tables and nearly 9,600 electronic gaming machines. The Entertainment City district in Parañaque, National Capital Region or Metro Manila, is truly remarkable—the pride and joy of the country in terms of gaming and leisure activities. In 2008, PAGCOR awarded four provisional licenses for IR developments on a 100-hectare (247-acre) plot on Manila Bay, now known as Entertainment City. Opened in 2013, Bloomberry Resorts Corp.’s Solaire Resort & Casino was the first IR in the zone. The property was designed by Las Vegas-based Steelman Partners to host world-class entertainment and leisure amenities. It was followed by City of Dreams Manila in late 2014,

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City of Dreams Manila was developed by Melco Philippines and SM Group’s Belle Corp.

Okada Manila was the most recent addition to Entertainment City, opening in 2016

“Cluster Effect” another prominent set of lodging, gaming and leisure products. In late 2016, Okada Manila opened its large-scale gaming and leisure complex with a wide range of facilities. The fourth licensee, Resorts World Westside City (formerly known as Resorts World Bayshore), now under development, will bring one more set of renowned brands to the zone in the near future. This latest Resorts World property will follow in the footsteps of Resorts World Manila next to the Ninoy Aquino International Airport, arguably the Philippines’ first integrated casino resort, introduced in 2009. There are other notable areas in the scope of casino gaming. The Clark Freeport Zone, a redevelopment of the former U.S. air base about 40 miles north of Metro Manila, is home to multiple casinos, including Royce Casino, Midori Casino, and Widus Hotel & Casino. Thunderbird Resorts & Casinos operates both Thunderbird Poro Point, the only five-star hotel resort in Northern Luzon, and Thunderbird Rizal, located east of Metro Manila and near Laguna Lake.

Growth Momentum and Main Drivers

Entertainment City, along with Las Vegas and Macau, arguably represent the world’s top casino clusters. While these destinations have varying degrees of dependency on gambling—with Las Vegas perhaps representing the most diversified—the presence of casinos has undoubtedly shaped all three into top tourist destinations. In most industries, demand is the driver of supply. In the case of destination tourism markets, however, the lack of critical mass can often hinder growth and limit demand. Given this critical mass concept, The Innovation Group has found that the addition of gaming supply in destinationtype markets results in a “cluster effect,” more formally known as agglomeration. As casino developments “cluster” in these destination markets, a corresponding increase in gaming and tourism demand occurs. Entertainment City gained cluster status with the introduction of Resorts World Manila and Solaire, which helped to increase both gaming revenue and tourism considerably. The opening of Resorts World Manila in 2010 attracted new international customers to the region. This resulted in the Philippine gaming revenue growth significantly outpacing position count growth. For example, between 2009 and 2010, gaming revenue increased 30% while total gaming positions increased by only 10%. This trend is reflected in historical growths as well, and continued with the introduction of Solaire in 2013. Since 2004, the total position count has grown by just 7.1% per year, while revenue has seen growth rates surpassing 17.2% per year and tourism growth of roughly 8.3% annually.

According to the latest data published by PAGCOR, the Philippines’ landbased casino gaming market finished 2018 with an impressive growth rate from the prior year. The total gross gaming revenue generated by the landbased casinos in 2018 was PHP187.54 billion (approximately US$3.57 billion), representing a 22.9% year-over-year Philippines GGR, Positions and Tourism Arrivals increase and a compound annual growth rate north of 20% for the period of 2015-2018. Whereas GGR of the PAGCOR-operated casinos had a fairly modest growth rate of 4.4% to reach $683.7 million in 2018, the casino resorts in Entertainment City largely drove this growth—Solaire Resort & Casino, City of Dreams Manila, Okada Manila and Resorts World Manila aggregately accomplished a total GGR of more than $2.69 billion, an increase of 29.3% over the prior year. In addition, the properties in the Clark Freeport and Special Economic Zone also experienced a 22.4% growth to reach an aggregate GGR of $164.2 million, leading the growth momentum outside Manila. What is fueling the rapid growth?

MAY 2019 www.ggbmagazine.com

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Gaming Tax Rates in Major Asian Gaming Markets

Supply of New IRs The robust growth of gaming in Entertainment City, as well as in the Philippines in general, has been consistently fueled by sustainable supply of new IRs. Okada Manila opened its initial phase in late 2016 with the casino launching operations in early 2017. Despite some noise at the corporate level, the property seems to have been ramping up well, reaching an annual GGR of $522 million in 2018. More recent results from January and February this year suggest that new records continue to be made and that performance is certainly heading in the right direction. The company has announced a new alliance with a major Chinese travel agency to draw more mainland Chinese visitors, boding well for further development of visitation to the property and driving a sustainable trajectory of growth. Although Resorts World Westside City is taking a little longer than planned to open, the building work is expected to begin during the first half of 2019 with completion sometime in 2020, according to the developer. The property will be part of a “leisure and entertainment township” within Entertainment City, including housing units, an up-market shopping mall and a grand opera house among other facilities, to ensure adequate supply of premium offerings for the rapidly growing market. Farther down the development pipeline, there are more prospective IRs coming to the Philippine market. Construction work for the second Bloomberry Resorts property, named Solaire Resort & Casino Quezon, is expected to start this year. The site is located in the Quezon City Central Business District in the Vertis North area of Quezon City. The development will carry the same Solaire branding, but is strategically positioned to serve the mass gaming market in the north of Metro Manila. In February 2019, two of Bloomberry Resorts Corp.’s subsidiaries signed an agreement for a 10-year loan worth $762 million to partially finance the design, construction and development of this IR. Another Philippine Stock Exchange-listed firm, PH Resorts Group Holdings, formerly known as Philippine H2O Ventures Corp, is also in a proactive development process for two IRs—the Emerald Resort on Mactan Island in the central Philippine province of Cebu and the Clark Resort at Clark Global City in the Clark Freeport Zone in Pampanga. The estimated completion date for these development schemes is reportedly circa 2022. 50

Global Gaming Business MAY 2019

The Philippine Market’s Competitive Advantages 1. Gaming Tax Regime

Gaming tax rates and structure can have a significant impact on the potential success of an IR development and the acceptable return on private investment. Implementing a tax structure that attracts optimal capital investment while still deriving adequate revenue through taxes and providing ample funding for tourism promotion, regulatory oversight and other associated social needs is critical. The chart above illustrates the effective gaming tax rates of major gaming markets in the Asia Pacific region. As illustrated in the chart above, the Philippines’ gaming tax regime remains commercially competitive in the Asia Pacific region, which represents a solid competitive advantage of the market, as operators can allocate more financial resources toward customer acquisition and/or capital improvements that result in greater prospective revenues. 2. Workforce and Labor Costs

The Philippines possesses a competitive workforce for the gaming industry. The local workforce tends to be comprised of fast learners who have the passion to work in most entertainment and hospitality settings. Additionally, English is one of the official languages, and is used as the primary medium of instruction in the country’s education system, making training and development sessions more effective.

Resorts World Manila is a joint venture of Alliance Global Group and Genting Hong Kong

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The Philippines’gaming tax regime remains commercially competitive in the Asia Pacific region, which represents a solid competitive advantage of the market.

Meanwhile, labor costs in the Philippines remain among the most competitive in the ASEAN countries. According to Willis Towers Watson’s Global 50 Remuneration Planning Report, the Philippine labor cost is very competitive compared to its neighbors, which works to its advantage in terms of attracting foreign investments and setting up new operations in the country. Even for professionals and those at middle management levels, the average base salaries in Vietnam and the Philippines are among the lowest across the ASEAN region, contributing to competitive operating margins and investment returns. 3. Improving Infrastructure

Given the massive domestic market, attractive investment factors, and the tourism-driving beauty of its natural environment, the country has the potential to be even more prosperous with improved infrastructure. It is timely and appropriate that President Duterte established “Ambisyon Natin 2040” and embarked on a “Build, Build, Build” program to improve infrastructure in the Philippines. With the aid of Official Development Assistance (ODA) offered by countries such as Japan, Korea and China, the Philippines is now opening the “Golden Age of Infrastructure” by planning 75 flagship projects with $160 billion in investments. It aims to complete 32 of them by 2022, effectively empowering further growth of many industries, including gaming. For example, the 106-kilometer Manila-Clark Railway Project, which aims to cut travel time between the two cities from more than two hours to just 50 minutes, is anticipated to be a strong catalyst in boosting tourism growth in the Clark Zone and benefiting the Clark-based casino properties. The project is expected to be completed by 2021.

the key feeder markets and the associated geopolitics. Geopolitical instability will affect global business with decidedly negative implications for performance. For example, the Chinese authority’s ban on tour groups to South Korea, in response to South Korea’s installation of a missile system, cost the country an estimated $5.2 billion in tourism-related revenues, including casino gaming revenue. Although casinos in South Korea shifted their focus to attract visitors from other countries in the surrounding area to mitigate the impact, they have struggled with the recovery of gaming revenues. Additionally, international tourism can be subjective to macroeconomic conditions and political climate in feeder nations that the IR host country may not be able to affect or improve.

Sustainable Growth in the Future The Philippine gaming market’s major business drivers and the competitive advantages will continue to have profound influences on its long-term outcome, which will empower the industry to keep growing in a sustainable manner, capitalizing on the booming and increasingly wealthy middle class in the region, and better stimulating tourism and related economic impacts that benefit the country. We believe these impacts and implications will continue to strengthen the industry in the Philippines, in the Asia Pacific region, and on a global basis.

Michael Zhu is senior vice president, international operations planning and analysis for The Innovation Group.

Potential Concerns Concerns regarding the growth and stability of the Philippine gaming market are based on political risks and the geopolitics between key feeder markets/countries. It is important to note that for the IR industry, the political risks imply 1) political viability to pass legislation of casino gaming, and 2) political volatility where the political winds may change dramatically and thus impact the IR’s ability to do business. Taiwan and most states in India are illustrative examples of low political viability for gaming development. Some smaller jurisdictions in the region, such as Laos, Myanmar and even Vietnam to some degree, represent the case of high political volatility that could jeopardize the IR market and suffocate potential growth. In the case of the Philippines, the stranded IR development plan in Boracay, proposed by Macau’s Galaxy Entertainment Group in partnership with local firm Leisure and Resorts World Corp., represents another example of political volatility. For today’s large-scale international IRs, another factor that has become increasingly important when evaluating a prospective jurisdiction is MAY 2019 www.ggbmagazine.com

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NEW GAME REVIEW by Frank Legato

Vegas Rise Konami Gaming

his new game is on Konami’s recently introduced KX 43 flatscreen cabinet. The KX 43 features a 43-inch 4K Ultra HD display, a relaxed slant top, standard base width, dual cup holders, dual spin buttons, USB charger, and multi-color attract lighting that stretches the entire length of the cabinet—from the bottom of the base to the top of the topper. Vegas Rise offers a base 50-line video slot on a five-reel, three-row layout, with a minimum 50-credit bet. Reels 3, 4 and 5 can randomly expand to three, four or six rows of symbols, respectively, adding more paylines. For a top bet of 150 credits per spin, a seventh row of symbols is activated, after which on any spin, the player can match up five jackpot symbols corresponding to three progressive jackpots, the top Supreme prize a linked jackpot resetting at $10,000. The top symbol line also includes various bonus credit prizes. The Maxi Jackpot resets at $3,000, the Mega at $1,000. These stand-alone progressives also are available in the fifth and sixth rows of the expanded reel array. Any three, four or five gem symbols trigger 10, 15 or 20 free games, respectively. During the free games, the screen expands to a four-by-five reel array.

Manufacturer: Konami Gaming Platform: KX 43 Format: Five-reel, 50-line video slot Denomination: Multi-denomination; .01, .02, .05 Max Bet: 150 Top Award: Progressive; $10,000 reset Hit Frequency: 25% Theoretical Hold: 4%-18%

Cash Machine Everi Holdings

his is a novel new game idea on Everi’s Player Classic 26 three-reel mechanical cabinet. The base game is a classic buy-a-pay setup, with awards rising with the credits bet, the maximum jackpot of 10,500 credits available with the 10-credit maximum bet. What is novel about the game is the lineup of reel symbols—they are all numbers, zero through 10, with one doublezero. In a system the manufacturer is calling “Win What You See,” that is exactly what occurs. The player wins the amount shown on the reels. The top award is for lining up 10, 5 and 00. To this is added two random “Respin” features. A zero on the middle reel flanked by two diamonds triggers “Zero Respins,” in which any losing spin that displays a zero will respin all active blank reels for a second chance at winning. The other random bonus is “Red Respins,” in which a winning reel result will re-spin to award a larger prize. The new Player Classic 26 cabinet features a 26-inch top LCD monitor over the stepper reels, with ergonomically designed player controls, LED front and back lighting and a pre-

Global Gaming Business MAY 2019

mium three-way sound system. Cash Machine is a multi-denomination game; denominations range from quarter to $100. Manufacturer: Everi Holdings Platform: Player Classic 26 Format: Three-reel, single-line stepper slot Denomination: Multi-denomination; .25, .50, 1.00, 5.00, 10.00, 25.00, 50.00, 100.00 Max Bet: 10 Top Award: $10,500 Hit Frequency: 44.25% Theoretical Hold: 2%-12%

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The Wizard of Oz: Munchkinland Scientific Games

his latest in Scientific Games’ popular series of slot games based on 1939’s The Wizard of Oz uses the unique format offered by the Gamefield 2.0 cabinet, which combines a horizontal, curved LCD monitor—configured like a pinball cabinet—and a horizontally situated top portrait monitor that faces the player. Animation runs from the main game screen to the top monitor in a seamless display. Munchkinland is the first game in the Oz series to feature the magical land where the Munchkins live in the film, including one element that was not even in the film—the character of the Wicked Witch of the East, appearing in the film only as feet under the house Dorothy dropped on her, the feet withering from the famed ruby slippers. The base game is a five-reel, 50-line video slot with a three-level progressive jackpot. The top prize is a wide-area progressive resetting at $400,000 or $200,000. The secondary “Dorothy Jackpot” is a near-area progressive resetting at 200,000 credits times the denomination; the third-level “Scarecrow Jackpot” resets at 25,000 times the denomination. There are two main bonus features. The “Witch Feature” is a mystery event that expands the reels up to 10 rows. On any random base game spin, all reels will expand, and one to five reels will be randomly replaced with a Wild Wicked Witch Of The East symbol and/or a Wild Tornado symbol. The average number of reels replaced with Wild Wicked Witch Of The East symbols increases when the Witch Bet is active. Each reel that is replaced with a Wild Tornado symbol will be filled with a Blue Wild and/or Rainbow Lollipop symbol. Each Blue Wild Lollipop symbol that lands on screen will award 20–80 credits if the regular bet is active, or 25– 100 credits if the Witch Bet is active. Each Rainbow Lollipop symbol that lands on the screen will display a pair of credits and/or Dorothy, Scarecrow, Tin Man or Lion symbols. The following potential prizes may be awarded: 150–15,000 credits if a regular bet is active; 200–20,000 credits if a Witch Bet is active. Three or more Bonus Yellow Brick Road symbols during any base-game spin triggers the Munchkin Parade Bonus, an award of 10 to 50 times the total bet, and one spin of a bonus wheel.

During the wheel spin, if the pointer lands on a Dorothy, Scarecrow, Tin Man or Lion wedge, the value shown in the corresponding progressive meter and one additional wheel spin is awarded. If the pointer lands on the Spins wedge, seven–20 free spins are awarded. At the start of each free spin, all wild symbols will enter the “Active Features” box in the leftmost position and all features already in the Active Features box will move one position to the right. During the bonus, two Munchkin symbols are selected to appear on the reels. If the Munchkin Wild symbol is active, all Munchkin symbols substitute for the Rainbow Lollipop symbol. For each Wild Lollipop symbol that lands in the feature active, the upgraded symbol displayed in that feature will land full on reel 5 and display a pair of credits and/or Dorothy, Scarecrow, Tin Man or Lion symbols. Bonus prizes are 50– 3,000 credits if a regular bet is active; 75–5,000 credits if the Witch Bet is active. Manufacturer: Scientific Games Platform: CPU 4.1.2X Format: Five-reel, 50-line video slot Denomination: .01, .02, .05, .10 Max Bet: 600 Top Award: Progressive; $400,000 reset Hit Frequency: 38.32% Theoretical Hold: 10.95%-13.69%

Prized Panda Novomatic Americas

his is the latest game in Novomatic’s Pay Day Progressive series. This series of games features a top-box progressive ladder, and a simple progressive method that pays prizes that rise with the number of Pay Day symbols landing scattered on the screen. Three or four of the scattered symbols return fixed jackpots, but five through 10 of the symbols return progressives with resets ranging from $25 for six symbols to $12,000 for 10 at maximum bet. The jackpots are available at any bet; the reset amounts rise as the bet rises—the top jackpot with a 30-credit minimum bet is $1,200 rather than $12,000 with the 300-credit maximum bet. The base game is a five-reel, 30-line video slot. Three, four or five “Scatter” symbols trigger 10, 15 or 20 free spins, respectively, with all jackpots tripled. The free games can be retriggered within the bonus spins.

Manufacturer: Novomatic Americas Platform: Pay Day Progressive Format: Five-reel, 30-line video slot Denomination: .01, .02, .05, .10 Max Bet: 300 Top Award: Progressive; $12,000 reset Hit Frequency: 20% Theoretical Hold: 5%-15% MAY 2019 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Rating Guest Value Product: Guest Valuation Manufacturer: The Rainmaker Group

uest valuation is a critical aspect of revenue management for any property, especially casinos. With constant pressure from a growing competitive landscape in gaming, it’s as important as ever for revenue managers to identify those guests who have the biggest impact on the casino’s bottom line. Casino hotels make a multitude of decisions based on their best estimates of player value—reinvestment levels, discretionary comps, hotel room access, slot free play offers and more. The ability to predict a customer’s value accurately flows directly to the bottom line. Consider the implications of overvaluing an overnight guest. That guest could gain access to scarce room inventory, displacing another guest of higher value. The difference in value between these two customers directly translates into lost revenue. Rainmaker’s longstanding history of working with gaming properties has led to the development of a new methodology that redefines and improves the accuracy of estimated guest value. Rainmaker’s scientific approach to guest valuation maximizes profits by utilizing a machine learning technique that continually reoptimizes its own algorithm to maximize accuracy. This methodology also captures key factors like actual win and profitability that are typically overlooked by traditional valuation approaches. The re-

sulting values impact optimal rates for rooms at a granular, segment level, ensuring that a hotel’s most profitable customers have access to valuable room inventory at any given time and receive customized marketing pieces that are relevant. Accurately value your guests: Rainmaker’s guest valuation analysis ensures guests are not over- or under-valued and captures significant trends and changes in gaming behavior among guests. Improve valuation beyond traditional methods: Achieve better accuracy and value a greater number of players compared to legacy ADT-based approaches. Guest value based on player behavior: Capture differences across game types and customer groups to better understand overall spending patterns. For more information, visit letitrain.com.

Giving While Getting Product: Everi Cares Giving Module Manufacturer: Everi Holdings

ocially conscious ticket redemption. It’s the Everi Cares Giving Module in a nutshell. As the only offering of its kind available in the gaming space, the feature provides casino patrons with a platform to easily donate change from redeemed vouchers, and operators with a new avenue to promote corporate social responsibility and support their communities while lessening ticket abandonment and coins dispensed. The Giving Module is a true pioneer in charitable giving through gaming voucher redemption, allowing patrons the option of donating the change from their voucher funds to pre-selected charities through the usual redemption process on an Everi full-service kiosk. Charities can be national or regional, giving casinos an opportunity to generate monies for their local communities and create goodwill. This simple interface prompts patrons to donate to one or more charities after a voucher is inserted, accepted and fully redeemed through the kiosk. Displayed charities are chosen from a list of fully vetted charities that have been qualified as legitimate, good-standing organizations as recognized by the IRS to participate in and accept donations through the module. Recently, Everi was recognized by the National Indian Gaming Associ-

Global Gaming Business MAY 2019

ation during the Indian Gaming Tradeshow and Convention as Associate Member of the Year for the Everi Cares Giving Module, for the donation-driven change it has helped to foster for the Chickasaw Nation. The Chickasaw Nation has deployed the Giving Module at 19 of its properties to date. On a national scale, more than 3 million donations have been made via the Giving Module, collecting more than $500,000 annually for local and national charities. More than 200 Everi kiosks throughout the U.S. are currently equipped with the module. For more information, visit everi.com.

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GLOBAL GAMING WOMEN

Slow Down and Smell the Roses

Ann Hoff offers advice based on her experience and background in the gaming industry

xcalibur Hotel & Casino President and COO Ann Hoff’s career has taken her from the ports of Louisiana to the deserts of Nevada and the pinnacle of her profession. A graduate of the hotel and restaurant management program at the University of Nevada, Las Vegas, Hoff has risen through the ranks to become president and chief operating officer at the Excalibur Hotel & Casino. With almost three decades in the hospitality and gaming industry, Hoff shared her reflections and hopes for the future with Global Gaming Business. GGB: How is the industry different today than when you first started? Hoff: I’m a native New Orleanian, so naturally, tourism and hospitality were very interesting to me. In 1987, I transferred to UNLV, and upon my graduation in 1989, the Mirage was opening. I was fortunate to join the Management Associate Program during an extraordinary time of growth in Las Vegas with properties like Excalibur and MGM opening shortly after. The industry has evolved with technology and societal trends, but the core of what we do— hospitality and creating “wow” experiences for guests—has not changed. There are more opportunities for women in gaming now than 20 years ago. What have you learned that you can share with women starting out? A crucial moment was when I transitioned from sales and marketing to hotel operations. My intention was to become a general manager. I made a strategic pivot to ensure I was developing the necessary skills and leadership competencies. I ensured my mentors and sponsors were clear about my career intentions, so they could advocate on my behalf when opportunities surfaced.

Global Gaming Business MAY 2019

It’s important to have a personal strategic plan: understand where you want to go, what you want to achieve and how you intend to do it. Set short-term and long-term objectives. Share your intentions with people who can offer advice, guidance and coaching. But the most important lesson from my journey is to always be willing to take risks, to raise my hand for the tough projects and opportunities that stretched me out of my comfort zone. In doing so, I gained confidence, experience and exposure, which is so important for women with high ambition. I truly believe leaders are not able to realize or clearly understand their full potential until they’re willing to be vulnerable and prepared to risk failure.

“It’s important to have a personal strategic plan: understand where you want to go, what you want to achieve and how you intend to do it. Set short-term and longterm objectives.”

Operations jobs are notorious for the hours spent on-property. Many women have avoided leadership roles in operations because they’re perceived as familyunfriendly. What’s your response? The lines are very blurry, but no recipe fits everyone. No one can expect working mothers—or anyone—to be 100% all the time. I’ve been happily married for 26 years and raised two children who were supportive and proud of my accomplishments. We all understood the tradeoffs, but I was very organized, tightly scheduled and prioritized the “nonnegotiables” so I wouldn’t miss important moments. The bottom line is, these decisions are very personal. You must choose what’s best for your circumstance. And yourself. What’s your vision for the workplace of the future? We must champion younger women by providing effective mentorship, consistent encouragement and meaningful celebration of their success. We must lead by example, confidently speaking up, contributing and taking on additional responsibility, always being mindful of paying it forward for the leaders of tomorrow. If you could give new-to-gaming Ann one piece of advice, based on where you sit today, what would you say to your younger self? There’s a quote from Dr. Seuss that says, “Sometimes you will never know the value of a moment until it becomes a memory.” That resonates with me. I think I would have slowed down a little bit. Perhaps I would have enjoyed those moments that are now just memories. Where did those decades go? At the same time, I’m not sure slowing down is in my DNA. Ann Hoff is president and COO of Excalibur Hotel & Casino, Las Vegas.

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GOODS&SERVICES

AGEM Announces Economic Impact Study Results The Association of Gaming Equipment Manufacturers released results of a comprehensive economic impact study of the gaming manufacturer technology sector.

SCI GAMES SELLING PART OF SOCIAL BUSINESS

cientific Games Corporation announced that it will spin off its social gaming business in a new subsidiary called SciPlay Corporation, and is planning an initial public offering of minority interest in the newly formed division. Scientific Games’ Social Division, formerly part of SG Digital, is now identified as one of four operating divisions—the other three being Gaming, Lottery and Digital. One of SG’s legacy companies, WMS Gaming, was one of the pioneers in the social gaming market with its JackpotParty.com site. The company now known as SciPlay is one of the leading social gaming providers in the industry, with a library of more than 1,800 free-to-play games. According to a press release, the company has filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission proposing an initial public offering of a minority interest in SciPlay. The number of shares to be offered and the price range for the offering have not yet been determined. The social gaming business will now officially be called SciPlay. The company has applied to list its Class A common stock on the NASDAQ Global Select Market under the ticker symbol SCPL.

MOHEGAN SUN IMPLEMENTS DUETTO SOLUTIONS

he global gaming supplier industry generated a total economic impact of $55.8 billion, supported more than 202,000 employees, including 61,700 direct employees, and supported a total of $14.1 billion in wages and salaries during 2018, according to a comprehensive report released by the Association of Gaming Equipment Manufacturers (AGEM). The report, titled “Impact Analysis: Global Gaming Supplier Industry,” was the result of an independent study commissioned by AGEM and conducted by the respected Nevada-based research firm Applied Analysis. The report reflects a recurring update and the most comprehensive review to date of the global gaming supplier industry that analyzes the size and scope of this technology-driven sector, specifically identifying AGEM members’ global reach spanning every regulated gaming market in the world. With 175 member companies based in 23 countries, AGEM is anchored by the world’s largest slot machine companies and AGEM Gold Members AGS, Ainsworth Game Technology, Aristocrat Technologies, Everi, International Game Technology Plc. (IGT), Konami Gaming, Merkur Gaming, Novomatic Group, Scientific Games and Sega Sammy Creation. The AGEM membership also includes companies active in lotteries, systems, table games, online/interactive, sports betting, mobile apps, game development, machine components and support products and services for the gaming industry. Among the highlights of the report, results showed that including direct ($20.7 billion), indirect ($15.9 billion) and induced ($19.2 billion)

impacts, the global gaming supplier segment generated a total of $55.8 billion of economic output (revenue) in 2018. Including direct ($5.6 billion), indirect ($3.9 billion) and induced ($4.6 billion) impacts, the global gaming supplier segment supports a total of approximately $14.1 billion in annual wages and salaries to 61,715 direct, 54,856 indirect and 85,869 induced employees for a total, with the multiplier effect, of 202,440 employees. Over the past five years, direct employment has grown from 50,594 to 61,715, an increase of 22%. The average direct wage per employee in the industry reached approximately $91,240 in 2018, reflecting a significant premium to the current U.S. average annual wage of $51,960, as listed by the Bureau of Labor Statistics. The industry has an especially strong impact in Nevada and overall employs a broad range of workers, including high-end technical professionals and engineers responsible for hundreds of millions of dollars in research and development expenditures annually. “Existing suppliers are growing and new players are entering the space, and this report accurately reflects a dynamic sector that is focused on innovation for gaming markets throughout the world,” said Marcus Prater, executive director of AGEM. “In summary, the report paints a picture of a healthy overall gaming industry where commercial casinos and tribal properties are capitalizing on advanced technologies and game content from a vast array of creative suppliers to grow their business while providing their customers with new and exciting forms of entertainment.”

evenue solutions provider Duetto announced that Mohegan Gaming & Entertainment is implementing the company’s revenue-enhancement solutions at its flagship Mohegan Sun property in Connecticut and at Mohegan Sun Pocono in Pennsylvania.

Connecticut’s Mohegan Sun

For a complete copy of the report, visit AGEMonline.org/Impact_Report2019. 58

Global Gaming Business MAY 2019

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The properties have implemented Duetto’s cloud-based revenue products—GameChanger for pricing, ScoreBoard for reporting, and the new Duetto Rate Engine to manage hotel profitability at the two properties. With GameChanger, Duetto’s flagship revenue management application, Mohegan Sun has better visibility into total customer value and the ability to shape reinvestment and marketing decisions to attract the most profitable guests. With ScoreBoard, the revenue team has the ability to create intelligent reports and deliver actionable insights to key stakeholders in real time. The Duetto Rate Engine (DRE) will integrate with Mohegan Sun’s booking engine and power Mohegan Sun’s Momentum rewards program.

SYNERGY BLUE APPROVED FOR NEVADA LICENSE

he Nevada Gaming Commission last month approved skill-based slot game manufacturer Synergy Blue for licensing to sell its games in the state. Synergy Blue, majority-owned by the Augustine Band of Cahuilla Indians, has had games on the floor in its Augustine Casino in California for nearly a year. The Augustine tribe, based in the Coachella Valley, is one of the smallest tribes in the U.S. today, with 12 members (seven adults and five children). “I think it’s incredible for a tribe to have a company like this grow and get licensed,” said tribal chairwoman Amanda Vance, according to CDC Gaming Reports. “I believe we were the first (tribal enterprise) to get licensed in Nevada. It’s amazing… We’re going to run with it and make incredible games. Synergy Blue will be known

For more information or to subscribe to the database or monthly report contact Ashley Diem at ADiem@FantiniResearch.com or call +1-302-730-3793 - www.FantiniResearch.com MAY 2019 www.ggbmagazine.com

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worldwide.” During the commission’s meeting prior to licensing, Synergy Blue CEO Georg Washington described skill-based games as a “patent minefield.” “The landscape right now is a daunting one,” Washington said of the gaming floor. “Customers want new experiences. Casinos have to put something new on the floor while not jeopardizing their bread and butter.” The games will be placed in Nevada casinos for trials in the coming months.

IGT LAUNCHES GHOSTBUSTERS 4D IN SPAIN

eading slot manufacturer IGT announced that its Ghostbusters 4D video slot has made its debut in Spain at Casino Barcelona and Casino Peralada. The game, featured on the CrystalCurve TRUE 4D cabinet, combines glasses-free TRUE 3D graphics with mid-air haptic and gesture recognition technologies to create a multi-sensory gaming experience. Players use the technology to

physically interact with the game as they “catch ghosts” in a game designed to place the player inside the 1984 film Ghostbusters.

KONAMI LAUNCHES KX 43 CABINET

onami Gaming, Inc. announced the market launch of its all-new KX 43 video slot cabinet, backed by a leading library of original game content. KX 43 features a 43inch 4K Ultra HD display, relaxed slant top, standard base width, dual cup holders, dual spin buttons, USB charger, and multi-color attract lighting that stretches the entire length of the cabinet— from the bottom of the base to the top of the topper. Its debut library includes the Reels Up linked progressive series, Triple Sparkle

linked progressive series, and Treasure Ball extended ROM linked progressive. All games feature custom game content from the digital topper down through a specially illuminated touchscreen button dash. KX 43’s Reels Up debut series features four original base game themes and an entirely new symbol-driven Konami game mechanic. Whenever Reels Up arrow symbols appear on reels 1 and 2, reel 3 expands for the chance at greater line wins and potential bonus events such as multipliers, credit prizes and progressive jackpots. Players can achieve even greater wins if Reels Up symbols land on reels 4 and 5, which also expand upward for increasing prize opportunities.

NOMINATIONS 2019 CALL FOR

20th 2 0th A Annual nnual

The GGB The GGB Gaming Gaming & T Technology echnology A Awards w waards are are the the casino casino industry’s industry’s most most prestigious prestigious aawards wards ffor or technology, technology, p roducts and and sservices. ervices. T he honors honors are are d esigned to to rrecognize ecognize products The designed aand nd encourage encourage iinnovation nnovation and and technology technology in in the the rapidly rapidly cchanging hanging casino casino industry. industry. Wi inners will will be be aannounced nnounced in in the the N ovember 2019 2019 iissue ssue of of Global Global Gaming Gaming Winners November B usiness magazine magazine and and aawards wards will will be be presented presented at at Global Global Gaming Gaming E xpo (G2E), (G2E), Business Expo O ctober 14-17, 14-17, 2 019 in in Las Las Vegas. Vegas. October 2019 N omin natio ions are are now now open open iin n the the following following 5 ccategories: ategories: Nominations

•B Best es t C Consumer-Service onsumer-Service T Technology echnology •B Best es t P Productivity-Enhancement roductivity-Enhancement T Technology echnology es t S lot P roduct •B Best Slot Product •B Best es t T Table-Game able-Game P Product roduct o orr IInnovation nnovation est IInteractive nteractive P roduct •B Best Product DEADLINE: D E A D L I N E: A August ugust 16, 16, 2019 2019

Becky Kingman Becky Kingman G Gros ros B Bkingros@ggbmagazine.com kingros@ggbmagazine.com 7 702-248-1565 02-248-1565 ext. ext. 228 22 8

www.ggbmagazine.com www.ggbmagazine.com For F or ddetails etails aand nd ttoo enter enter visit: visit:

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PEOPLE SAN MANUEL BAND NAMES GILL CEO

he San Manuel Band of Mission Indians, which operates San Manuel Casino in Southern CaliforLoren Gill nia, has named Loren Gill its new CEO. He has been the casino’s general manager since 2015. Gill has led the casino during a long period of expansion. He was also in charge of the Yaamava’ expansion project, which is building the casino’s first hotel, an entertainment venue, new dining, retail and convention space. That project broke ground last summer. San Manuel Chairman Lynn Valbuena praised Gill, saying that he “exemplifies the tribe’s vision, mission and values, and is committed to further unifying San Manuel across the enterprise.” She added, “While his career in the gaming industry speaks to his expertise in casino management, it is his passion for and commitment to the tribe that make him the right person to lead our Tribal Government Operations and casino enterprises.” Moving up to Gill’s old job as GM will be Peter Arcero, who has been chief operating officer since last August. Kenji Hall has been promoted to COO.

LIM NAMED GENTING DEPUTY CEO FOR CRUISE SHIPS

im Keong Hui, the 34year-old son of Genting Group Chairman and CEO Lim Kok Thay, has been appointed deputy CEO of the Malaysian gaming giant’s cruise ship Lim Keong Hui arm. Lim will serve for an initial term of three years and receive a director’s fee of US$50,000 for 2018. Lim is also a major shareholder in Genting HK. Lim was recently appointed deputy CEO of Malaysian-listed Genting Bhd., Genting Malaysia Bhd. and Genting Plantations Bhd. in what IAG called “a clear indication of the company’s long-term succession plan.”

SIBELLA NAMED TO LEAD RESORTS WORLD LAS VEGAS

in Southern California, he entered the gaming industry in 1989 when he moved to Las Vegas to work for Mirage Resorts, whose chief executive officer was Steve Wynn.

RIVERS GM MOVING TO SISTER PROPERTY

cott Sibella, who recently stepped down as president of MGM Grand, was named Scott Sibella president and COO of Resorts World Las Vegas, a Genting property set to open in 2020. He exited MGM Resorts with a buyout connected to the MGM 2020 program that promises to reduce costs in the company. Although Sibella signed a one-year non-compete, he was able to join Resorts World because it is currently not operating and is set to open in 2020. The $4 billion project will include 3,000 rooms and suites, as well as meeting space and unique non-gaming amenities. Sibella, a graduate of the University of Nevada, Las Vegas, joined MGM in 2010 to run the Mirage before moving to MGM Grand.

MGM’S ALAN FELDMAN TAKES ADVISORY ROLE

lan Feldman, who has been one of MGM’s top executives for nearly 30 years, many of them as corporate Alan Feldman spokesman, announced last month that he will be taking an advisory role beginning June 1. Feldman is executive vice president of global industry affairs for MGM. Through a statement by email and Facebook, he said he will continue to be involved with the company, but noted that his new role is part of the company’s MGM 2020 cost reduction and margin improvement plan that it unveiled in January. “As I begin the next chapter of my career, I will continue to advise MGM Resorts in its bid to secure a license in Japan as well as further developing the company’s global responsible gaming initiatives, both projects I am very passionate about,” Feldman said. The company is offering its top executives sort of a “golden handshake,” and Feldman was the second prominent longtime executive to take them up on it. The first was CFO Dan D’Arrigo, who left the company earlier this month. Feldman has worked for MGM since 2000. For many years he was the company’s corporate spokesman before moving into development. Born

ivers Casino & Resort in Schenectady, New York, announced that General Manager Rob Long is leaving to assume the general manager position at the SugarHouse Casino in Philadelphia. Both properties, along Rob Long with Rivers Casino in Pittsburgh, are owned by Rush Street Gaming. Long joined Rivers in December 2017. Prior to that, he spent 40 years in casino operations, most recently at Bally’s and Resorts casinos in Mississippi. Assistant General Manager Justin Moore has been named acting GM in Schenectady pending a search for Long’s replacement. Moore had served in the same role in 2017, before Long was named to replace original GM Mary Cheeks after her resignation.

GGB

May 2019 Index of Advertisers

AGEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . .57 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Casino Style . . . . . . . . . . . . . . . . . . . . . . . .55 Dickinson Wright . . . . . . . . . . . . . . . . . . . .23 Emerging Leaders 40 Under 40 . . . . . . . . .45 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Fabicash . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Fantini . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 G & T Awards . . . . . . . . . . . . . . . . . . . . . . .60 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 GameCo . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Gaming Support . . . . . . . . . . . . . . . . . . . . .33 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Incredible Technologies . . . . . . . . . . . . . . .35 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Kambi . . . . . . . . . . . . . . . . . . . . . . . . . .14, 15 Konami . . . . . . . . . . . . . . . . . . . . .Back Cover Merkur . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 MGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 Omron Amusement . . . . . . . . . . . . . . . . . .51 RPM Advertising . . . . . . . . . . . . . . . . . . . .10 Scientific Games . . . . . . . . . . . . . . . . . . . . . .7 Subway . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 UNLV GHES . . . . . . . . . . . . . . . . . . . . . . . .47

MAY 2019 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Steven Hill CEO, Las Vegas Convention and Visitors Authority

teve Hill was named CEO of the Las Vegas Convention and Visitors Authority in September 2018. A Las Vegas resident for more than 30 years, Hill founded Silver State Materials in 1987 and supplied concrete and aggregates for many projects in the community. After selling Silver State, Hill was appointed by Governor Brian Sandoval to serve as the first director of the Governor’s Office of Economic Development (GOED) in 2011, where he guided the development of “Moving Nevada Forward,” the plan for diversifying Nevada’s economy. He spoke with GGB Publisher Roger Gros at his offices in Las Vegas in April. To hear a full podcast of this interview, visit GGBMagazine.com. GGB: You had to hit the ground running when you were named to lead the LVCVA because there’s a lot of action, such as the expansion of the convention center, the development of the Raiders stadium and other changes going on in the market. How did you keep up with it immediately?

Hill: How I keep up with it is, I’ve got a great

team here, and one of the easiest products in the world to sell, and I have a lot of help. So, that’s really the key to being able to operate any organization this size. Let’s talk about the expansion. How many square feet are there in the expansion, and now overall?

The building itself is a total of 1.4 million square feet. It will be 600,000 square feet of exhibition space, and 150,000 square feet of meeting space. And then the rest of the facility is back-of-house support, and that kind of thing. Overall, we currently have 3.2 million total square feet—1.9 million of which is exhibition space. So, the expansion will take us to 4.6 million square feet of total space. And by the time we open, somewhere between 2.4 million and 2.5 million in the exhibition space. 62

Global Gaming Business MAY 2019

In addition to the LVCVA expansion, the Sands Convention Center, Mandalay and MGM have opened expansions, and Caesars is building a 400,000-square-foot convention center behind Harrah’s and the Linq. Do we ever get to the point where there’s too much meeting and convention space here in Vegas?

I suppose that’s possible. But I think what we’re seeing, and what the properties are seeing, is real demand for meetings in Las Vegas. Show managers know that when their shows are in Las Vegas, they get a pretty significant bump in attendance, because people just want to come here. And so, we’ve seen a lot of demand, and we think that what’s being built now responds to that demand. And we’ve actually restructured a little bit here, in anticipation of those expansions coming online. We’ve worked to help the properties fill those facilities, so we’re aware that there is a lot of meeting space. We’re going to have a 30 percent to 35 percent bump in total meeting space in the destination. And we want to make sure that’s all additive, and it doesn’t become something where shows are just shifting around in the destination. The Las Vegas convention center is so big right now; you have just announced you’re talking with Elon Musk about doing kind of a peoplemover system, and that sounds pretty interesting. Give us some of the details of that.

We’re excited about that. One of the things that we’re really focused on here is innovation—both at the convention center and the destination itself. And obviously, the Boring Company project is a really innovative with the use of existing technology. What we’ll have is a set of parallel tunnels. They’ll be one direction each way. Those tunnels have a 12-foot interior diameter, and basically just a road lane at the bottom. So, you can drive anything through those tunnels. What we’re planning to do, though, is operate autonomous vehicles. There will be Tesla Model X’s, or Model 3s, or potentially an autonomous tram that can

“Show managers know that when their shows are in Las Vegas, they get a pretty significant bump in attendance, because people just want to come here.” move people from the expansion hall, the West Hall, back to the Central Hall area, and to the South Hall, and cover easily the entire campus. We’re over a mile and a quarter from one end to the other, once we get the expansion built. We think this is an opportunity to easily move people around the campus, which is important, but also to do it in an innovative and fun way. The year 2020 is going to be a big year for Vegas. How is the arrival of the Las Vegas Raiders going to change what’s happening here?

Being an NFL city makes a statement. I’ve been here 31 years. I’ve had the opportunity to watch Vegas grow and mature. And this is a recognition of that growth. It will just bring a huge amount of excitement. But, on top of that, having the stadium here opens up opportunities that we just haven’t had a place to provide in the past. It’s the one venue size that was not available in Las Vegas, and so, events that are going to attract 45,000, 50,000, 60,000 people, had to skip Vegas, because there was no place to do that. That stadium is going to bring interest from people that we haven’t had the opportunity to draw in the past. And it will make a difference in the community. This is going to be one of the turning points we’ll look back on 30 years from now, and think, “Yeah, that mattered.”

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