Global Gaming Business, Nov. 2014 by Global Gaming Business

Global Gaming Business Magazine

November 2014 • Vol. 13 • No. 11 • $10

PIT PRODUCTS G2E WRAPUP TRIBAL RECOGNITION LVS CEO SHELDON ADELSON

YouTh

Be Served GGB’s ‘40 Under 40’ for 2015

Tight As

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Why players are fleeing the floor

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nazarian’s north Strip focus makes SlS las Vegas a groundbreaking property

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Who is the iGaming player? Official Publication of the American Gaming Association

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CONTENTS

Vol. 13 • No. 11

november

Global Gaming Business Magazine

COLUMNS 14

32 COVER STORY North Strip Gem

AGA The Totality of Gaming’s Impact Geoff Freeman

Sam Nazarian launches a new resort on the North Strip bones of the old Sahara that promises to make the SLS Las Vegas brand familiar to a mix of tourists, gamblers, conventioneers and local Las Vegas.

Fantini’s Finance Changing Times Frank Fantini

Global Gaming Women The Expanding Network Patricia Becker

By Roger Gros

DEPARTMENTS FEATURES

20 40 Under 40

38 Tight Slots

The Agenda

Dateline

Our annual list of 40 emerging leaders in the gaming industry includes profiles of the first 10 of 40 under-40 gaming differencemakers to be profiled over the coming year.

Casinos have reached the tipping point on pricing, as widespread higher slot holds are beginning to keep players away.

By Stephanie Adkison, Kimberly Arnold, Dave Bontempo, Joe Dimino, Alexis Garber, Roger Gros, Christopher Irwin, Frank Legato, Marjorie Preston and David Rittvo

By Andrew Klebanow

65 Frankly Speaking

42 Recognition Hijacked

66 Goods & Services

Fears of an expansion of Indian gaming are making it difficult for tribes to gain federal recognition, and the feds are looking for solutions.

68 Cutting Edge

GGB iGames Our monthly section highlighting and analyzing the emerging internet gaming markets. Feature 46 Who’s Online A look at the demographics of the online gaming customer smashes many preconceived notions on the iGaming market. By Marco Valerio

iGNA Outlook 50 The iGaming Model Mark Balestra

52 iGames News Roundup

13 Nutshell 62 New Game Review

69 People

By Dave Palermo

54 Pit Tech Technology is making improvements to the operations and profitability of the casino’s stalwart table games. By Dave Bontempo

58 The Industry Gathers Talks by gaming moguls Steve Wynn and Sheldon Adelson added to a Global Gaming Expo 2014 that saw a cavalcade of new games and new technologies.

70 Casino Communications With Sheldon Adelson, Chairman and CEO, Las Vegas Sands Corporation

By Patrick Roberts

NOVEMBER 2014 www.ggbmagazine.com

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THE AGENDA

The Younger Generation Roger Gros, Publisher

here are always many takeaways from G2E, held last month at the Sands Expo Center in Las Vegas. It differs for everyone, particularly if you are focused on one segment of the industry or another. For me, this year was clearly a changing of the guard, so to speak, when it comes to leadership in the casino industry. The impressive list of keynote speakers—mostly the “old guard” in gaming—was led by Las Vegas Sands Chairman and CEO Sheldon Adelson and Wynn Resorts Chairman and CEO Steve Wynn. Yet one day of the conference program was devoted to “millennials” and how to attract them to gaming—either online or offline. And immersed as I was in the Emerging Leaders program at G2E (you’ll see the results of that immersion in our “40 Under 40” feature starting on page 20), it was encouraging to see such enthusiasm and excitement about having the chance to make their mark on the industry. Steve Wynn is a remarkable speaker. He held more than 1,000 people spellbound for almost an hour as he extemporaneously spoke from the podium, claiming he “lost” the speech he had written weeks before. But as a former Wynn employee at the original Golden Nugget in Atlantic City, I recognized his style to plead a lack of preparation and then blow you away with his seemingly off-the-wall observations. I had the honor to interview Sheldon Adelson, who doesn’t really like to give speeches. So I drew up a list of questions, and they were all accepted by his team, even the tough ones on iGaming. My goal was to show his personality and vision for the business—and his humor, which was evident through most of the interview. But when I began to ask the iGaming questions, his passion for the subject became apparent. His arguments against iGaming don’t hold much water, so I wanted to demonstrate where his opposition comes from and why he holds his views. I hope that came across. And when you add the State of the Industry keynotes with operators and manufacturers, you had a complete list of the “leaders” of the industry today. And most of them are approaching or north of 60. Wynn is over 70 and Adelson is over 80. Now I try not to judge people by age, since

I’m north of 60 myself. I know people can be productive well into their 80s. But when it comes to a “succession plan” for the industry, there are always questions about where the “next” Wynn and Adelson are coming from (and Murren, Loveman and many others, for that matter). The man on our cover this month could be one of those visionaries in line to take the place of these leaders. And I think it’s instructional that Sam Nazarian isn’t just a “gaming guy.” Nazarian cut his teeth in the hospitality industry, comprising hotels, nightclubs, restaurants and retail. Only recently has he come to the gaming industry. And his SLS is a crafty blending of all these disciplines, a possible model for gaming resorts of the future. Future leaders of the industry are going to have to have similar diverse experience, because we’re seeing more and more that gaming is morphing into a wider industry that comprises all of those things. Nazarian will turn 40 next year, so maybe he’ll start to imagine a new and different future for gaming. Geoff Freeman, the American Gaming Association CEO who was featured on last year’s 40 Under 40 cover, comes from the travel industry. He’s well-known now for stressing the link between gaming and travel, since many people have to travel to get to their casino destinations. It’s a linkage that can’t be denied. Despite Adelson’s reservations and despite a slow start, iGaming is going to play a huge role in the future of the gaming industry. The most successful online casinos in New Jersey and Nevada have a natural connection to land-based casinos, even beyond the licensing stipulations that require a connection. Those casinos that combine online marketing with their land-based products have proven to be successful. And executives who understand that linkage will become more valuable as the years go on. So while G2E 2014 wasn’t really a “passing of the torch” from one generation to the next, it demonstrated quite clearly that time is fast approaching and for those who are prepared, this can be a very exciting time of transition and growth.

Global Gaming Business NOVEMBER 2014

Vol. 13 • No. 11 • November 2014 Roger Gros, Publisher | rgros@ggbmagazine.com Frank Legato, Editor | flegato@ggbmagazine.com Monica Cooley, Art Director | cooley7@sunflower.com David Coheen, North American Sales & Marketing Director dcoheen@ggbmagazine.com Floyd Sembler, Business Development Manager fsembler@ggbmagazine.com Becky Kingman-Gros, Chief Operating Officer bkingros@ggbmagazine.com Lisa Johnson, Communications Advisor lisa@lisajohnsoncommunications.com Columnists Mark Balestra | Patricia Becker Frank Fantini | Geoff Freeman Contributing Editors Stephanie Adkison | Kimberly Arnold Dave Bontempo | Joe Dimino | Alexis Garber Christopher Irwin | Andrew Klebanow | Dave Palermo Marjorie Preston | David Rittvo | Patrick Roberts Robert Rossiello | Marco Valerio

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

• Mark A. Birtha, Vice President and General Manager, Fiesta Henderson Casino Hotel

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Michael Johnson, Industry Vice President, Global Gaming Expo, Reed Exhibitions

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Director, Maryland Lottery and Gaming Control Agency

• Jim Rafferty, President, Rafferty & Associates

• Thomas Reilly, General Manager, ACSC Product Group Eastern Region Vice President, Bally Systems

• Steven M. Rittvo, President, The Innovation Group

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 921 American Pacific Dr, Suite 304, Henderson, NV 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 2014 Global Gaming Business LLC. Las Vegas, Nev. 89118 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 921 American Pacific Dr, Suite 304, Henderson, NV 89014

Official Publication

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DATELINE ASIA november2014

LocaL Legend

A ban on locals gambling goes by the wayside as Japan gaming legalization progresses

he legislative caucus steering sion to deal with regulations, taxes, liJapan’s casino legalization bill censing and other issues. That session through the National Diet will begins in January. not include a controversial proviThe current special session, which is sion that would have closed off expected to pass the bill, concludes on the industry to the country’s 127 November 30. The bill was introduced million citizens. last December but failed to make it to a Prime Minister Shinzo Abe Reports from Japanese vote in the regular session that ended in media last month held that a locals June, and negotiations continue to progress slowly. ban had been agreed in order to secure support “We would expect the behind-the-scenes jockeyfor the bill from opposition and minority party ing to continue for the time being,” said analyst lawmakers concerned about gambling addiction Grant Govertsen of Union Gaming Research Macau. and other potential adverse social impacts. “While certain majority party members are seemingly But a source close to the talks told Reuters this is not the case. “We confirmed that we will The “Winn” casino in Bavet—a poor imitation of the Bellagio—depends largely on not exclude Japanese nationals,” he said. “We Vietnamese gamblers. agreed that we will make a partial change, to address concerns that have been raised, to say that we will take necessary measures.” One of the changes under consideration is a Singapore-style entrance fee system for domestic players, which if agreed will be included in legislation introduced in the Diet’s next regular ses-

ONLY THE BEST

$20 million in Rolls-Royces ordered for Macau resort

ong Kong tycoon Stephen Hung has placed the largest order Rolls Royce has ever received—a fleet of 30 Phantoms for chauffeuring guests of the financier’s luxury Louis XIII casino hotel slated to open in Macau in 2016. The US$20 million purchase, commissioned by Hung’s Hong Kong-listed Louis XIII Holdings, calls for extra-wide wheelbases and special Graff luxury timepieces inside. News reports have it that two of the Phantoms, fitted with goldplated interior and exterior accents, will be the most expensive ever built.

Brothers in Arms Cambodia considers lifting locals ban uthorities in Cambodia are considering reforms that could open the country’s casinos to the domestic market. Those casinos are currently off-limits to Cambodian nationals, but the prospect of neighboring Vietnam ending its own locals ban has moved the Ministry of Economy and Finance’s Gaming and Casino Department to begin investigating the potential impact on the market if Vietnam follows through. “We have thought about Vietnam legalizing it,” said ministry spokesman Ros Phirun. Cambodia’s largest and most lucrative casino, NagaWorld, which holds a monopoly in Phnom Penh, generates an estimated 40 percent of its massmarket revenues from Vietnamese players. Casinos along the border depend even more heavily on patronage from their larger neighbor. Phirun said legalizing internet gambling is also on the table, and a measure currently at the draft stage would expand the ministry’s policing and regulatory powers over the sector, which thrives as an underground activity.

Global Gaming Business NOVEMBER 2014

pushing for the passage of the IR promotion law this month, we do not believe they currently have the necessary support of key minority parties.” As for the Japanese public, it has been difficult to gauge their views either way, though certainly there has been no groundswell of support. With preparations heating up for the Olympics, Tokyo’s new governor, Yoichi Masuzoe, has said casinos are not a priority, and daily newspaper Asahi Shimbun recently published the results of a telephone poll in which 59 percent of respondents said they oppose legalization. Conversely, recent polling conducted by media giant Nikkei shows nearly 59 percent in favor.

VLADIVOSTOK CASINO DELAYED New investors lining up for the region’s first casino

he investment group developing the first casino in Russia’s Far East says completion of the first phase of the complex has been pushed back from the end of this year to April 2015 because of “unforeseen obstacles.” Summit Ascent Holdings, which is partnering on the project with Lawrence Ho’s Melco International Development and Taiwan-listed machine gaming manufacturer Firich Enterprises, says opening of the Oriental Regent, which will be located near the Pacific port city of Vladivostok, has been slowed by a redesign necessary to bring it up to “international standard” and by delays in getting local approvals for importing foreign workers, materials and equipment. The project also has undergone a significant financial restructuring in response to the imprisonment last November of The previous investor, its local partner, Oleg Drozdov, is Oleg Drozdov, languishing in a Russian prison. whose Elegant City Group originally owned 30 percent. His stake was reduced to 15 percent in April and has been divided further, with half going to a trust to benefit the Drozdov family and the balance split between Firich, whose stake has increased from 20 percent to 25 percent, and a Hong Kong company owned by Russian businessman Peter Sindyukov. Summit Ascent’s stake remains at 60 percent and Melco International continues to hold 5 percent.

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DATELINE TRIBAL november2014

Gunplay at California Casino NIGC closes Chukchansi Gold as tribal members battle

dissenting faction of the Picayune Rancheria of Chukchansi Indian tribe last month attempted to take over the Chukchansi Gold Resort & Casino in Northern California. Armed guards stormed the property and confronted unarmed security guards. The Madera County Sheriff’s Department was called in to separate the factions, and the hotel and casino were closed in a night of chaos. Power was cut to the resort and employees went home, leaving guests to fend for themselves. Some could not access their rooms or retrieve their cars from the valet parking lot, and players were not allowed to cash in their chips after being ushered from the casino. “They threw us all out,” Donn Hansler of Merced told the Fresno Bee. “I ended up getting screwed out of my money.” The next day, U.S. District Judge Lawrence O’Neill acted on an emergency request by the state attorney general, and shut the casino down, with no date scheduled for a possible reopening. The National Indian Gaming Commission followed suit later in the day. The action follows a threat by the NIGC to close the casino by October 27. The NIGC cited unfiled and missing audits. The agency is also fining the Picayune

Rancheria of Chukchansi Indian tribe $100,000 a day for failing to file the documents. The tribe, it says, has failed to file the required documents since 2012. Madera County Sheriff John Anderson said the takeover was the last straw. “When they move the war into the casino, it meant we had to stop this,” Anderson said. “We have not been getting closer to a solution. If anything, we have gotten farther away.” This newest drama appears to be related to an ongoing power struggle between two factions of the tribe, one of which has barricaded itself inside of an office complex on the reservation. One of these groups is composed of Reggie Lewis and Nancy Ayala. They run the casino. The other group, led by Tex McDonald, is operating in the tribal business complex. The confrontation between the two factions centered around the tribal gaming commission offices, where members of the McDonald faction attempted to remove documents, but were stopped by sheriff’s deputies. McDonald’s group said they wanted to comply with the NIGC audit and were simply attempting to get documentation that would satisfy the agency.

NOT OVER YET Arizona Senators lead effort to stop Glendale casino

Gun Lake Safe President signs law ending Michigan tribe’s uncertainty he Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians (Gun Lake Tribe) announced President Barack Obama recently signed a bill reaffirming the trust status of the 147 acres on which the tribe’s Gun Lake Casino was built in Bradley, Michigan two years ago. The law effectively bars any current and future legal challenges to the existence of the casino, including a federal lawsuit filed by former Wayland Township Trustee David Patchak who claimed the tribe did not exist in 1934, when the law allowing federal land trusts was enacted. Michigan’s two U.S. senators, Debbie Stabenow and Carl Levin, sponsored and led the legislation through the Senate, assisted by U.S. Rep. Fred Upton. The Senate approved the legislation on June 19 and the House gave final approval on September 16.

.S. Senators John McCain and Jeff Flake, both from Arizona, are leading the charge in the Senate to pass a law recently adopted by the House that would prevent the Tohono O’odham tribe from building a casino adjacent to the city of Glendale, Arizona. The practice of buying land far from a tribe’s original reservation and putting the land into trust for a casino is known by the pejorative “reservation shopping.” The bill the House passed and McCain and Flake are pushing is the so-called Keep the Promise Act. Besides trying to stop the Glendale casino, McCain has also authored a bill that would stop any tribe from putting land into trust very far from its original homeland. McCain and California Senator Dianne Feinstein are both critics of the practice. After getting BIA approval of the land-into-trust, the Tohono O’odham Nation broke ground on the casino two months ago. Tohono O’odham Nation Chairman Ned Norris Jr. criticized the bill. “If enacted, this legislation will effect a profound injustice upon the Tohono O’odham Nation, one that will besmirch the United States’ honor and set a terrible precedent for its relationship

U.S. Senators John McCain and Jeff Flake

with Indian Country,” he said. He cited the 1986 Gila Bend Indian Reservation Lands Replacement Act that gave the tribe money to replace the 10,000 acres it lost due the inundation caused by a federal dam project. Meanwhile, another potential roadblock to the Tohono O’odham Nation’s Glendale casino has been removed, as City Clerk Pam Hanna rejected two referendums filed by opposition groups. Hanna said the subject matter of the referendums is administrative, not legislative, and therefore, they cannot be placed on the November ballot. The tribe does not need the city’s approval to build the casino on 54 acres of reservation land at Loop 101 and Northern Avenue. The city-tribe agreement will give Glendale $26 million over 20 years in exchange for the city’s support of the project. The referendum would have nullified that agreement.

NOVEMBER 2014 www.ggbmagazine.com

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DATELINE USA november2014

Bright Idea

Wynning Bid in Boston Wynn Resorts bests Mohegan tribe to win the gaming license in greater Boston

teve Wynn and the city of Everett were the winners in the contest for the license for the Boston Metro casino zone, with Suffolk Downs and the Mohegan Tribe as definite losers—and with the city of Boston as a potential loser, at least Steve Wynn in front of a in the mind of its mayor, Martin Walsh. rendering of the The casino resort could open as soon as late Massachusetts property 2017, according to a spokesman for the company. The Massachusetts Gaming Commission awarded the license to Wynn—technically Wynn MA LLC— for its proposed $1.6 billion casino resort proposal with a 3-1 vote. Whether any more casinos are built in the state ultimately depends on the fate of the November 4 ballot measure, Question 3, which would ban casinos. Three commissioners, Gayle Cameron, Bruce Stebbins and Enrique Zuniga, cited Wynn’s financial strength and estimated that it would have the most positive economic benefits for the region. Commission Chairman James McHugh, who voted for the Mohegan project, told reporters, “This has been a really, really difficult decision. The two were very close together. The Wynn applicant had the edge in the economic benefits that it would provide to the community and the region.” Everett Mayor Carlo DeMaria greeted the news ecstatically: “They did choose the right city and the right applicant. Frankly, it’s the right time for Everett.” He added, “People got what they wanted. Imagine being a taxpayer in Massachusetts and getting what you wanted. Government worked today and I thank the commission.” Wynn Massachusetts Senior Vice President Robert DeSalvio said, “This is a great opportunity to clean up that site that has been sitting for so long, and we hope that our project will just be the start of economic development as part of the Lower Broadway Plan.” Mohegan Sun Tribal Gaming Authority CEO Mitchell Etess criticized the decision, saying, “We are extremely disappointed in today’s decision. Mohegan Sun has worked incredibly hard to develop a comprehensive proposal that will deliver the most economic development and revenue for the commonwealth.”

Some developers say Orange County will “kill” other casinos ow did Orange County become the site of six proposed casinos, including the most extravagant proposals, like Genting’s $1.5 billion resort proposed for the city of Tuxedo? New York Governor Andrew Cuomo According to the Goshen-Chester Chronicle, the legislation endorsed by Governor Andrew Cuomo and approved by voters in 2013 mainly focused on building casinos in Sullivan County, the former Borscht Belt set in the Catskill Mountains. The Upstate New York Gaming Economic Development Act was designed to bring new business and jobs to struggling parts of the state. Assemblyman Gary Pretlow, chairman of the Assembly Committee on Racing and Wagering, told the Chronicle, “The real intent has been to uplift Sullivan County. That’s where, in my view, the casinos would be helpful.” Pretlow said “Orange County was never in the mix” when he helped draft the legislation, and the change was made afterward, by the governor. “The legislative intent should have excluded Orange County,” Pretlow said. “We wanted to put it where people were suffering.” State Senator William J. Larkin Jr. said Cuomo “added on Orange County” into the 2013 casino legislation. “None of us requested it,” Larkin said. “It was his decision.” Casino developers outside Orange County say its proximity to New York City would siphon off the patron base and prevent people from traveling farther upstate, especially to the Catskills, in the Hudson Valley further north. Caesars and Genting are considered the strongest candidates for an Orange County license. One Sullivan County official is still confident the Catskills will prevail and win two of the four available casino licenses. County Legislator Ira Steingart, chairman of the Community and Economic Development Committee, told the Mid-Hudson News that the county made the best presentation to the siting committee. “We gave a very compelling argument that it’s not only the right thing, it’s the intent of the law, but it is also right for a revenue stream to the state,” Steingart said.

REVEL SOLD FOR $110 MILLION The owner of Hard Rock Las Vegas and the Atlantis takes over troubled AC property

tlantic City’s shrinking casino market got a big boost as a last-minute buyer emerged for the closed Revel casino, picking up the $2.4 billion resort for just $110 million. Most importantly, the buyers—Brookfield US Holdings LLC, which runs the Hard Rock casino in Las Vegas and the Atlantis Paradise Island casino in the Bahamas— say they want to reopen the property as a casino hotel. The previously announced lead bidder for the property—Glen Straub, a Florida-based developer who initially bid $90 million—says Revel’s attorneys botched the auction, but a legal challenge was rejected by a bank-

Global Gaming Business NOVEMBER 2014

ruptcy court judge. Straub was chosen as backup bidder for the property should Brookfield not be able to close the deal. Brookfield is a Toronto-based asset-management company. The company did not release its specific plans for the property, but did say it would remain a casino. Brookfield spokesman Andrew Willis could not say when the Revel might reopen or whether it would even still be called Revel. But he did confirm that the property will remain a casino hotel. “Our expertise is running casino hotel properties,” Willis said.

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DATELINE EUROPE november2014

Done Deal Codere reaches debt accord M

ultinational Spanish casino operator Codere SA has reached an agreement with creditors to restructure €1.1 billion—US$1.4 billion—of debt, allowing the company to stave off insolvency. According to a Bloomberg report, the company will use the U.K. legal process to implement the deal, which includes issuing €675 million in new bonds and €253 million in new loans, according to a statement from Codere. Jose Antonio Martinez Sampedro will remain as chairman and CEO of the operator. Codere has been negotiating for more than a year with creditors after 10 consecutive quarters of losses, which the company attributes to the recession, high European taxes, tighter regu-

Jose Antonio Martinez Sampedro will remain as chairman and CEO

lations and smoking bans. The creditors will end up with more than a 60 percent stake in the company after the restructuring. Bondholders include Silver Point Capital LP and M&G Investment Management Ltd. Los Angeles-based Canyon Capital Partners LLC is among the holders of Codere’s €127.1 million loan. Codere employs 17,890 and operates more than 1,600 betting shops and 172 gaming halls in Spain, Italy and Latin America.

Open-Door Policy A new casino for British town

new £6 million Grosvenor Casino has opened in the English resort town of Southend-on-Sea with a policy that allows customers to enjoy its non-gaming offerings without having to sign up. The £6 million Grosvenor Casino is located “Southend is our trial of going semi-open door,” a spokeswoman said. “For gaming, we ask people to regis- in the Palace Hotel ter, to be a responsible operator.” The 27,000-square-foot venue opened as part of an extensive renovation of the 109-year-old, Grade II-listed Park Inn Palace Hotel. It offers a sports lounge and a restaurant and bar in addition to live and electronic table games and slots, a poker room and a private salon for high-stakes players. Features also include instructional tables for beginners. “We wanted to start as we mean to go on,” the spokeswoman said. “We want people to enjoy it. Only a small percentage of people have ever been in a casino and everyone has their views on what it is like, but we view it as an entertainment venue.” It is the third casino in Southend, which is on the Thames estuary in Essex about 40 miles east of London. Hundreds attended the opening, and local interests have welcomed the investment, hoping that it will attract other businesses to the retail and leisure space at the seafront Palace complex.

NOT SO FREE

concerns about the ads, which regulatory officials have branded as misleading. There is also mountU.K.’s Big Four will rein in ads ing concern about the impact on minors of aggreseading U.K. bookmakers William Hill, Ladsive gambling advertising on television during live brokes, Coral and Paddy Power are set to intro- sports events. duce a voluntary ban on controversial advertising The English Premier League has stated that programs promising so-called “free bets” and “free- betting was becoming “part of the parcel” of viewmoney” gambling. ing live football, and the Football Association, the The four, founding members of a newly sport’s governing body, has begun its own indelaunched independent gambling advertising stan- pendent study into the impact of betting advertisdards commission known as the Senet Group, ing on football viewers and the protection of hope that the actions taken will alleviate public young audiences.

Global Gaming Business NOVEMBER 2014

Big, Better,

Best

Cyprus envisions casino on a large scale etails of Cyprus’ new casino law have been announced by the government, and requirements include a hotel meeting the “international standard” for five stars and containing at least 500 rooms. The casino portion will be allowed at least 100 table games and 1,000 slot machines. The operator will get to choose where to locate the resort and will be exempt from local planning laws. Additionally, the operator can create four satellite machine gaming venues capped at 50 devices each. The license will run for 30 years and will be exclusive for the first 15. An initial fee will be assessed, but the amount hasn’t been determined yet.

Home-Field Edge Greek court backs OPAP Greek court has ruled that the country’s OPAP betting monopoly is legal, rejecting a decade-long battle by foreign rivals William Hill, Sportingbet and Stanleybet to force open the market to competition. OPAP, one of Europe’s biggest betting operators, will retain the exclusive right to offer lotteries in debt-laden Greece until 2030 and sports betting until 2020, after the court, the Council of State, found that reforms the government has implemented since 2011 ensure the monopoly conforms to exemptions to E.U. free-trade guarantees. OPAP, with a market value of €3.4 billion, has about 5,000 outlets in Greece and Cyprus. It has recently launched scratch-card gambling and is about to launch a new video lottery business. The government sold a 33 percent stake in the group last year as part of a privatization of public assets required by a €240 billion bailout by the European Union and the International Monetary Fund.

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DATELINE GLOBAL november2014 Mexican Commission of Gaming President Fernando Zarate Salgado

ResoRt Casinos in MexiCo’s FutuRe

Casinos will be permitted in new hotels in Cancun, Puerto Penasco and other popular spots.

lawmaker in charge of overseeing Mexico’s gaming reforms said full-scale casinos will be included in the new legislation. “Whether we like it or not, gambling and games of chance are a cultural and historic reality of the Mexican people,” said Fernando Zarate Salgado, president of the gaming commission in the lower house of the Mexican Congress. “In this way, the new federal gaming law will protect the rights and liberties of Mexicans.” The new law will expressly allow casinos in new hotels built in tourist areas such as Cancun, Puerto Penasco, Puerto Progreso and the Baja Peninsula, and these will be granted tax incentives to help boost the economy by driving foreign visitation and spending. The legislation assigns authority for regulating the industry to a new government agency guided by a “consultative council” formed by representatives of government, civil society, educational institutions and the gaming industry, according to Zarate. Zarate said the more than 200 articles contained in the legislation have been hammered out and agreed upon by all seven political parties represented in the Congress. “It’s already negotiated,” he said.

Queensland IPO

Barrier Reef resort may sell shares

Aquis resort casino

ony Fung says he may open up his proposed Australian super-resort to the region’s investors through a partial listing on the Hong Kong Stock Exchange. The financier told the Australian Financial Review an IPO would be a year or more away, and he did not specify how much equity he’s prepared to share, but he said he expects support will be strong. A debt offering may also be part of the package, he said. “As an experienced banker I’ve done many deals,” Fung said. “It’s just common business sense, and with the experience that I have had over the years to be able to identify an opportunity and analyze it to such an extent that I feel comfortable putting money, if you will, where my mouth is.” His A$8 billion Aquis at the Great Barrier Reef, proposed for a coastal strip in the north of Queensland, will feature 7,500 hotels rooms at full build-out and will include a massive casino, multiple entertainment venues, a sports stadium, a golf course and a man-made lake and reef lagoon. The project has been granted preliminary approval for one of three licenses the Queensland government is offering for resort casinos in hopes of rejuvenating a sagging economy by transforming the state into a preferred destination for big-spending Asian travelers and high rollers. The government also has approved a multibillion-dollar mixed-use gaming and leisure complex in Gold Coast backed by Chinese money. Domestic casino rivals Crown Resorts and Echo Entertainment are competing for the third license, which is reserved for the capital of Brisbane. Both have Chinese investment partners. 12

Global Gaming Business NOVEMBER 2014

In attempt to clean up abuses in the current system, permits to run electronic gaming venues and betting parlors will be reduced from 25 years to 10 years and permit holders will be limited to one property per permit. The legislation also requires professional training for all gaming staff and full disclosure of ownership information. No venue will be permitted within 1,500 feet of schools, churches, archaeological zones, historic sites, hospitals, shelters, parks and national or natural reserves. Significantly, the reforms also will recognize internet gambling. “The future of gaming is online, not in the casinos,” Zarate said. Critics say the reforms will lead to a proliferation of casinos and promote criminal activity. Zarate conceded that existing casinos have been covers for other criminal activities like money laundering and drug trafficking, but said that the new rules will bring corruption under control. Meanwhile, Mexico’s Interior Ministry has suspended the licenses of four Mexico City casinos ahead of the expected passage of the new law designed to crack down on lax enforcement of gaming regulations. Caliente Casino, Casino Emotion, Casino Life and Palace Casino reportedly were given one week to prove they have valid permits to operate and have not violated local gaming laws. The ministry and local police are said to be planning similar inspections throughout the city in the coming weeks.

Better in the Bahamas Nation passes web shop legislation he government of the Bahamas has passed a casino gaming bill to regulate web shops, street corner internet gaming parlors patronized by locals who are not permitted to gamble in casinos. Prime Minister Perry Christie said the country could see millions of dollars in additional revenue once the process is complete, reported Caribbean News Now. In fact, previous projections that web shop taxes would generate $12 million annually are out of date, Christie said. According to the latest figures, the government could collect more than twice that amount. During the transition, he said, the government is projected to collect $25 million Prime Minister Perry Christie in penalties, back business license fees and application fees. Moreover, web shop operators must pay business license fees and gaming taxes for six years to make up for revenues lost when they operated unchecked. And web shops that have not been in business for five years or more will pay $250,000 for the years they have been in business. The legislation continues to exclude locals from playing in the nation’s casinos, though they may work in them. However, a provision would allow the minister to override that clause.

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NUTSHELL

“They Airline start-up Bassaka Air has been granted permission from Cambodian authorities to fly Chinese visitors to the country on aircraft leased from NagaCorp, owner of Phnom Penh’s monopoly NagaWorld casino. Bassaka, which is partnered with the state-owned China International Travel Services, is to lease two Airbus A320 jets from Naga to ferry in Chinese tourists. Philippine gaming regulator PAGCOR says it will penalize the local affiliate of Kazuo Okada’s Universal Entertainment if it fails to open its US$2 billion Manila Bay Resorts casino hotel next year as planned. The resort was slated to open its first phase at Manila’s Entertainment City early in 2015, but operating company Tiger Resorts Leisure and Entertainment has since postponed it a year, and that could cost the company a $2.2 million guarantee already paid to PAGCOR. No reasons were given for the delay, but the inability to date of other Universal affiliates to secure majority Philippine ownership of the resort’s landholding is believed to be one obstacle. CAMS, along with GameAccount Network and Betfair Interactive U.S., revealed that the CAMS “Waterfall” process for player age and I.D. verification has yielded a 20 percent increase in player approvals at Betfair gaming sites in New Jersey. The CAMS Waterfall process integrates multiple vendors into the online platform and efficiently passes players down through several vendors in an attempt to verify them. Historical racing machines, also known as Instant Racing, recently became legal at horse and greyhound racetracks in Texas. However, if a track wants to install the machines, it will have to apply to the state, get approval from the Texas Racing Commission and consider manufacturers’ lead times. In addition, a group of nonprofits that gets funding from bingo sued the racing commission and is seeking a court order to block the games, which they claim are “thinly disguised slot machines.” The group’s lobbyist Steve Bresnen said, “In the case of charitable bingo, you get slot machines at racetracks and anybody within 50 miles minimum of a racetrack is out of business.” The Kickapoo Traditional Tribe of Texas, which operates the state’s only casino, also has joined the lawsuit. The Sheraton Macao Hotel Cotai Central had about 54 percent more business from India in the first six months of this year than a year earlier, Trav-

elBiz Monitor reports. The Indian magazine quotes the hotel’s general manager for sales and marketing, Ruth Boston, as saying that India has been the seventh-largest market for the hotel since it opened in September 2012. Macau casino operator Melco Crown Entertainment has increased the salary of co-Chairman and CEO Lawrence Ho from US$2 million to $2.5 million. The company’s first-half report says Ho’s pay was raised in April. Melco Crown reported a net profit of $383.2 million in the first half, a 63 percent increase over the same period last year, on net revenue that was up 4.8 percent to $2.56 billion. Gaming testing company BMM Testlabs released the new “BMM Certified” logo at Global Gaming Expo last month. The new logo can be used by customers on products that have been certified by BMM. Wendy Anderson, chief of staff for BMM International, said, “The new ‘BMM Certified’ logo represents a ‘seal of excellence’ to let regulators and operators know that a manufacturer’s product has been certified by BMM. BMM’s expertise and commitment to quality ensure that customers using this new mark have experienced the highest level of compliance services in the industry.” GameAccount Network, which first entered the Australian market with Simulated Gaming, has partnered with several community clubs, whose names have yet to be released, and plans a joint commercial launch in the first quarter of next year. The consortium will employ the GameStack internet gaming system to deliver Simulated Gaming with the goal of providing real-money gaming once the necessary legislation is passed. CEO Dermot Smurfit stated, “Following on the success of Simulated Gaming in the U.S., we’re delighted to bring our unique Simulated Gaming experience to Australia working closely with an experienced management group from six major Australian community-based clubs.” Procedural disputes are holding up the appointment of three nominees to Saipan’s new Commonwealth Casino Commission. The legislature governing the island, the largest of the U.S. Pacific territory, was scheduled to confirm the appointments, but it was halted by disagreement over whether public hearings should be held. The island authorized its first casino earlier this year and awarded the license to a Hong Kong investment group.

CALENDAR November 5-6: Arizona Indian Gaming Association Expo 2014, Fort McDowell Hotel & Casino, Scottsdale, Arizona. Produced by AIGA. For more information, visit azindiangaming.org.

November 11-12: Malta iGaming Seminar, Hilton Malta, St. Julians, Malta. Produced by the Pentasia Group. For more information, visit MaltaiGamingSeminar.com.

November 5-7: IMGL 2014 Autumn Conference, Florence, Italy. Produced by the International Masters of Gaming Law. For more information, visit gaminglawmasters.com.

November 12-14: CDC Slot Leadership Program, UNLV’s International Gaming Institute, Las Vegas. Produced by CDC Gaming Seminars. For more information, visit cdcgamingseminars.com.

November 10-11: Florida Gaming Congress, Hyatt Regency, Miami. Produced by Spectrum Gaming. For more information, visit floridagamingcongress.com.

December 8-11: The 41st Annual Symposium on Racing & Gaming, Westin La Paloma Resort, Tucson, Arizona. Produced by the University of Arizona Race Track Industry Program. For more information, visit ua.rtip.org.

November 11-13: SAGSE 2014, Costa Salguero, Buenos Aires. Produced by Monographie. For more information, visit monografie.com/sagse_bsas.

Said It”

“You’d have to do a spinal search of the major parties to discover any backbone.” —Tim Costello, Australian anti-gambling campaigner, on the lack of concern about the renewal of the Crown Casinos license in Victoria for its Melbourne property

“There’s this misplaced secular evangelicalism in the way we talk about whether the city can be ‘saved.’ The city is going to be there. It’s not going to fall into a pit. The question is: Will it remain a viable tourist attraction and gaming destination?” —David Schwartz, director, UNLV’s Center for Gaming Research, on opinions about his hometown, Atlantic City

“Come on. Anybody under my age—I’m 41—doesn’t really find slot machines all that attractive. We think it’s a little too much to ask to get these young people to change their behaviors to engage a gambling machine and sit down.” —David Chang, chief marketing officer, Gamblit Gaming, which is creating video games with real-money gaming capabilities

“I would not take their money.” —William J. Larkin Jr., New York state senator, who says he does not accept campaign contributions from casino interests

“Caesars wants everyone who gambles at the company’s casinos to be there for the right reasons to simply have fun. Problem gambling is bad for the casino business.” —Jan Jones Blackhurst, Caesars vice president, explaining her company’s stance on compulsive gambling

“The exciting part of this company is that it comes with 86 million customers. Not 86 million gamblers specifically; 86 million customers.” —Amaya Gaming CEO David Baazov, on his company’s acquisition of Rational Group Ltd., parent of PokerStars and Full Tilt Poker

“It’s a challenge but yeah, I do think that it’s theoretically possible to have a freestanding thoroughbred racetrack. Whether we can get there or not is a big question, but it’s possible.” —Stephen Crosby, chairman of the Massachusetts Gaming Commission, responding to a question as to whether racing in the Bay State can be saved

NOVEMBER 2014 www.ggbmagazine.com

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AMERICAN GAMING ASSOCIATION

The Totality of Gaming’s Impact New study details gaming's quarter-trillion contribution to U.S. economy By Geoff Freeman, President & CEO, American Gaming Association

or the first time in the gaming industry’s history, AGA documented the massive impact of America’s casino gaming industry from coast to coast, and the results were eye-opening. Our industry’s story was strengthened by expanding beyond “gross gaming revenue” and including tribal gaming, equipment manufacturers and the many other vibrant components of gaming. News of our industry’s tremendous impact was covered through exclusive national stories that ran on CNBC and on the Associated Press wire, reaching nearly 250 newspapers and dozens of local news stations across the country.

TOUTING GAMING’S POSITIVE ECONOMIC IMPACT Released as part of AGA’s Get to Know Gaming campaign, which aims to promote the value of gaming, the economic research firm that conducted the study, Oxford Economics, found that the U.S. gaming industry contributes $240 billion—nearly a quarter-trillion—to the U.S. economy, which is equivalent to the total state budgets of New York and Texas combined; supports more than 1.7 million jobs—more than double Washington, D.C.’s total employment— and nearly $74 billion in income; and, generates $38 billion in tax revenues to local, state and federal governments—enough to pay more than half a million teachers’ salaries. Oxford conducted an in-depth analysis on the economic impact, tax revenues and employment figures of commercial casinos, Native American casinos and gaming equipment manufacturers, as well as our industry’s significant ripple effect, which supports local businesses and communities. CONTRIBUTES $240 BILLION TO THE U.S. ECONOMY U.S. casinos, including those owned by Native American tribes, generate total revenues of more than $81 billion. Casino gaming revenues—$67 billion—are 14

now at a historic peak. American gaming equipment manufacturers, who build the table games, slot machines and other products found on the casino floor, produce nearly $6 billion in total revenues. The gaming industry generates more than $14 billion in consumer spending at restaurants, retail stores, hotels and other businesses. The industry also generates approximately $60 billion in payments to suppliers, including many local, and injects $78 billion through gaming employees’ spending.

“

The point of conducting this research is to affirm what we have long known: that our industry’s contributions are tremendous and have been underestimated. Our contributions warrant gaming leaders to have a seat at the table with elected officials to discuss the next generation of gaming policies.

”

SUPPORTS MORE THAN 1.7 MILLION JOBS AND NEARLY $74 BILLION IN INCOME Casinos are one of the largest recreational employers in America. Gaming directly employs approximately 734,000 American workers, generating nearly $33 billion in wages, benefits and tips. Casino purchases from suppliers support another approximately 383,000 jobs, and gaming employees’ spending sustains nearly 595,000 jobs. Overall, the industry supports a total of more than 1.7 million jobs—greater

Global Gaming Business NOVEMBER 2014

than the entire airline industry—and nearly $74 billion in income. GENERATES $38 BILLION IN TAX REVENUES Oxford Economics found that the gaming industry generates nearly $17.3 billion in federal taxes, approximately $11 billion in state and local taxes and almost $10 billion in state and local gaming taxes. The $38 billion-plus injection into public budgets pays for a range of services including public safety, hospitals and schools, among others. OUR MESSAGE TO POLICYMAKERS: WORK WITH GAMING LEADERS So what’s the point? The point of conducting this research is to affirm what we have long known: that our industry’s contributions are tremendous and have been underestimated. Our contributions warrant gaming leaders to have a seat at the table with elected officials to discuss the next generation of gaming policies. These impressive economic impact figures, in combination with results of a poll conducted earlier this year—which showed that voters across the political spectrum view casino gaming more favorably than ever before, and recognize that casino gaming creates jobs, strengthens local businesses and benefits communities—strengthens our call to policymakers. Our message is that in order for the gaming industry to continue serving as an economic engine, policymakers must work with industry leaders to craft policies that help maximize gaming’s ability to innovate, reinvest and contribute to local communities. We encourage you to promote these national findings with your state and local elected officials. Our industry’s nearly quarter-trillion dollar contributions should no longer be underestimated. The AGA will work to unify the voice of the 1.7 million Americans whose jobs depend on gaming to urge policymakers to work with gaming leaders as better partners for creating policies that allow our industry to thrive.

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

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FANTINI’S FINANCE

Changing Times A few trends could change the face of the gaming industry.

hree underlying trends are happening in the U.S. gaming industry that will have significant effects on investor de-

cisions: The supplier side of the industry is piling up debt as it consolidates and removes competitors. The long period of casino expansion that began a quarter century ago has slowed and threatens to grind to a halt, and perhaps even reverse in some places. Other new forms of betting—online and sports betting—have the potential to dramatically expand business opportunities for gaming companies. Associated with online gaming is the rise of social gaming, including the free-play version. In addition, there is a big international question mark: Asia. Is Macau’s run over, or is the city just taking a break until new capacity comes online? Will Japan and/or other countries jump into the integrated casino resort business? • Suppliers: Alex Bumazhny of Fitch Ratings has noted that the four companies with acquisition announcements—Global Cash Access, Aristocrat, GTECH and Scientific Games—will run up their debt to make the purchases. In only two years, the average debt-toEBITDA ratio among them has grown from two to six times in an industry segment that once was virtually debt-free. And this is coming when expectations are that interest rates will rise, driving up the cost of servicing that debt. Of course, each of these companies accompanied their buyout announcements with promises to cut costs to free up cash to pay down debt and get ratios closer to historic levels. In pursuing those goals, the companies are setting up some new dynamics. They are making debt look more attractive than equity for some investors. Another question is whether the companies can achieve their cost savings and still keep a competitive edge in the arms-race environment of today’s game supplier industry, especially as casino industry retrenchment dampens the outlook for future sales.

By Frank Fantini

• Slowing casino growth: Growth of the U.S. gaming industry has slowed, and there are even some signs of regression. The big headlines go to Atlantic City, which is losing four casinos this year, five if Trump Taj Mahal closes, and six since the Sands was imploded to make room for a casino that was never built. But the slowdown and retrenchment doesn’t stop there. Caesars has closed a casino in Tunica. Margaritaville has closed in Biloxi. Massachusetts could repeal its casino law. States that just months ago were hot stops for legislative action to legalize casinos, such as Kentucky and New Hampshire, now look dormant. The notoriously slow start to internet gaming in the U.S. is taking the wind out of the sails of legalization advocates throughout the country. And while all of that is happening, casinos are cutting costs in ways that reduce their number of slot machines and reduce visitation, leading to less slot play, which affects supplier participation lease profits. The potential rollback in gaming can also be seen in lotteries, where the Texas legislature has a commission to study the lottery’s future, including the option to eliminate it. Privatization of state lotteries, a seeming slam-dunk opportunity just last year, looks less promising as the first state to privatize, Illinois, already intends to reverse court in the face of disappointing results. All of these issues interrelate and deserve serious study to understand their investment implications. And those implications aren’t universal. Scientific Games and GTECH can make a case that combining their lottery businesses with their new slot businesses creates revenue synergies, not just cost synergies. New casino opportunities remain, such as MGM Resorts’ casino to rise just outside Washington, D.C. • New forms of betting: Internet betting is off to a very slow start in the U.S., but its potential is great. More American states are likely to legalize, just as more countries today are legalizing, or regulating, as they like to say with the politically laden term. And, while attention in the U.S. is focused on

Global Gaming Business NOVEMBER 2014

legalizing poker and casino games, there already is a stealth online expansion happening as state lotteries dip their toes into online ticket sales. That trend should accelerate, leading, perhaps, to broader forms of online gambling. Sports betting, it seems to us, is inevitable. And when it comes, it could cascade. Sports betting has potential to help brick-and-mortar casinos, but to be really big online as mobile devices and real-time—or in-play, to use the current term—betting proliferates. So there you are: Lots of questions for investors to answer. • Asia: Not long ago, Macau gaming revenues were growing 20 and 30 percent a year. Now, growth has not only slowed, but has declined for several straight months. When the declines started, it was common for observers to say growth will resume when the wave of a half-dozen Cotai mega-resorts start opening late next year. Now, there is some fear that all the new building might create excess capacity and drive down profitability. In other words, there has been a big shift in sentiment. Our take is that there is truth in both views: Las Vegas Sands, Wynn and MGM Resorts certainly have shown capacity constraints, and their new projects should find enough players eager to visit to boost growth. However, all of the new capacity could make for slower growth than the straight-line projections commonly calculated just months ago. Potential proliferation of casino resorts throughout the region also could drain away some Macau growth. Already, the Philippines, whose potential as a competitor has been discounted by many, is showing it can draw VIP junket operators. Ditto NagaWorld in Cambodia. That suggests tougher regional competition for Macau if South Korea, Japan, Vietnam and Australia become bigger competitors for the best players. Frank Fantini is the editor and publisher of Fantini’s Gaming Report. A free 30-day trial subscription is available by calling toll free: 1-866-683-4357 or online at www.gaminginvestments.com.

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LEADING BY EXAMPLE GGB’S EXTRAORDINARY 2015 CLASS OF “40 UNDER 40”

wo years ago at the first reception for G2E’s Emerging Leaders program, a veteran gaming executive bemoaned the state of the gaming industry today. “You missed the boat,” he told the somber audience. “In my day, we were encouraged to be innovative, to have new ideas and implement them quickly. Today, you’re handcuffed by tradition, corporate structure and a lack of imagination.” Fortunately, that message didn’t resonate with the enthusiastic and energetic class of Emerging Leaders. They continued to innovate and explore the industry, and have truly made their mark. This year’s class is no different. The quality of the honorees is evident

in the volume of nominations to the Emerging Leaders program this year. More than 150 people were nominated for the program, co-produced by G2E and the Innovation Group. Five of those nominees were awarded scholarships to attend G2E for free, hotel accommodations and a flight to and from Las Vegas. The “40 Under 40” list was compiled by the GGB Editorial Advisory Board along with the Innovation Group. For anyone with any concern about the future of the industry, all one has to do is peruse the list of the 2015 Class of 40 Under 40. The accomplishments already achieved by these candidates proves that gaming will survive and thrive well into the future, when these folks will be the leaders of the industry.

Class of 40 Under 40 for 2015 1. Christopher Sherlock, Director of Hotel Operation Initiatives, MGM Resorts International 2. Tonya Roedell, Director of Digital and Professional Services, Aristocrat 3. Joshua Vaught, Director of Casino Operations, Harrah’s Cherokee 4. Honoria Hebert, Director of Compliance, L’Auberge Casino Resort 5. Matimbe Macebele, Board Member, National Gambling Board of South Africa 6. Josef Wager, Executive Director, F&B, Las Vegas Sands 7. Tom Galanis, Director, GameOn Affiliates Limited 8. Griffin Finan, Associate, Ifrah PLLC 9. John Edmunds, Chief Marketing Officer, FutureLogic 10. Andrew Burke, Vice President of Slot Products, AGS 11. Michael Hart, Vice President, Treasury and Risk Management, Isle of Capri Casinos, Inc. 12. Benson Fok, Director of Business Systems, IT Department, SJM Macau 13. Sara Barnett, Chief of Staff, Illinois Lottery 14. Alexander Alvarado, Director of Slot Operations, Penn National Gaming 15. Anshu Kalhan, Investment Professional, Och-Ziff Real Estate 16. Romina Freijomil, CMO, City Center Rosario 17. Roman Carrillo, General Manager, Paiute Palace Casino 18. Jeremy Enke, Director of Acquisition, Pala Interactive 19. Alexander Koch, Corporate Director of Development & Administration, Eureka Casinos 20. Lauren O’Brien, Marketing Manager, Interblock 21. Adam Krejcik, Managing Director, Digital & Interactive Gaming, Eilers Research, LLC 22. Julia Boguslawski, Vice President, Corporate Marketing, Bally Technologies 20

Global Gaming Business NOVEMBER 2014

23. Wendy Carter, Marketing Director, Choctaw Casinos 24. Dan Schrementi, VP of Sales and Marketing, Incredible Technologies 25. Valerie Turner, Casino Manager, Caesars Entertainment 26. Jonathan Bell, Vice President of Casino Credit, Las Vegas Sands 27. Lucy Buckley, Director of Corporate Communications and Strategy, Inspired Gaming Group 28. Alli Bair, Slot Operations Manager, Kansas Star Casino (Boyd Gaming) 29. Johnny Walker, Director of Gaming Operations, Muckleshoot Casino 30. Craig Jacobs, Director of Incident Response & Problem Management, MGM Resorts International 31. Cristina Romero, Partner, Loyra Abogados 32. Israel Stone, Director of Tribal Development, Little River Casino Resort 33. Andy Choy, Chief Gaming Officer, Melco International Development 34. Daniel Saltzberg Koris, Partner, Greenburg Traurig, Mexico City 35. Shaza Sattar, Director Analysis & Business Development, Global Gaming Asset Management 36. Travis Wolfe, Founder, Tribal Gaming Student Association 37. Eric Frank, Associate, Duane Morris LLP 36. Justin Fung, Chairman Australian Operations, Aquis Resort at the Great Barrier Reef 39. Nicole Nollette, Chief of Staff, IGT 40. Chris Grove, Editor/Publisher, Online Poker Report The first five on this list received the G2E Emerging Leaders Scholarships.

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MERGER MANIA Julia Boguslawski Vice President, Corporate Marketing, Bally Technologies

or Julia Boguslawski, education in gaming came quickly and completely. Recruited from a lodging company to become the director of investor relations for Shuffle Master (later SHFL entertainment), Boguslawski quickly became enamored with the industry. “I pretty much loved gaming,” she says. “I had a weekly poker night when I was living in Florida. I hit the Hard Rock in Tampa frequently, so I loved it from a player perspective. As an IR (investor relations) professional, it’s always very helpful if you’re passionate about the product you are promoting. And I fell in love with the company and the product offering.” But it was the purchase of SHFL by Bally Technologies that began the real education for Boguslawski. And with the subsequent purchase of Bally by Scientific Games, she’s ready for Round 2. “It’s a benefit that we’ve been through integrating two companies,” she says. “We learned a lot along the way what works, what we would modify next time. Be mindful of communication throughout the entire process. Everybody feels like it’s déjà vu, but we’ve done it before so we have some kind of comfort level this time.” Boguslawski says that focusing on the vision of the two combined companies is crucial. “We’re going to be aligned with the other company in style and substance, so we need to commit ourselves to reaching those goals,” she says. Pressure is something that Boguslawski deals with on a daily basis. She says after joining Bally, which she describes as a “phenomenal organization,” she didn’t want to make any missteps. “If you have your great leadership in place—and I’ve got great leaders in trade shows, events, communication, corporate marketing—you need to get out of their way and let them do what they do best,” she explains. “I’m here to guide and direct, but I don’t carry the weight of the world on my shoulders. We’re all a team and we work together. We always focus on the finish line and how it’s going to feel when we reach that goal successfully.” Boguslawski made the shift from investor relations to marketing, not a usual career move. But there are similarities in the two, she says. “The positioning of your company, the messaging, the alignment of the message and making sure external audiences know who you are and are able to grasp the value proposition,” she explains. “Those are things that marketing and IR have in common. IR is focused strictly on investors, and that’s a whole different animal. Marketing is customer-focused, and we talk about product, product, product. So it’s different in that respect. Investors ask about strategy, the balance sheet, possible acquisitions and financial concerns.” In marketing, she’s supervising over 25 people versus the two she directed in IR. “I’m lucky to have inherited this fantastic all-star team that have helped to make my life much easier,” she says. She says a background in IR helps her do her job in marketing. “I’m always mindful of every piece of communication that’s out there, that it truly reflects who we are. I worked so closely with legal in my IR role, that I can stand back and be mindful that we’re a public company. Are we being prudent with shareholder money? So I think that’s important.

“And with marketing, I realize that our customers are everything. If they’re not happy we don’t have a viable business model and our shareholders aren’t going to be happy.” She wouldn’t be where she is today without mentors. “Gavin Isaacs (former SHFL CEO and current leader of Scientific Games, which bought Bally), is obviously a great mentor,” she says. “He was the first one to hire me in gaming, and I appreciate so much his passion, enthusiasm and vision. Lyn Fox, who was the CFO at SHFL, was very supportive. He was hands-off but always there for guidance and direction. Katie Lever has been a fantastic mentor, just to have another woman to talk to, who has been a great sounding board for me. And I wouldn’t want to miss my executive coach, Tim Furlong. It’s great to have someone who is outside of everything that is going on. He helps me figure it out for myself.” Boguslawski encourages people who want to advance in the gaming industry to have a fresh perspective. “The best way to do that is the relationships you make in the industry,” she says. “Find mentors, learn and stay humble. You’ll never learn everything about this industry in a lifetime, so every single day you can learn something new. Have respect for people in the industry and you can impact people with your fresh ideas and new perspectives. “Most of all, you have to have passion. If you don’t have passion for the industry don’t be in it. Passion will drive you to make the best decisions for yourself and for the business, and you’ll advance quickly on your passions.” —Roger Gros

SWITCHING HATS Justin Fung Chairman Australian Operations, Aquis Resort at the Great Barrier Reef

ustin Fung didn’t expect to be potentially developing one of the largest integrated resorts in the world, but that is exactly where he finds himself as chairman of Australian operations for the Aquis Resort at the Great Barrier Reef in Australia. Fung, who just moved to Cairns, Australia from his home in Hong Kong, grew up in the United States and attended Duke University, where he majored in history. His next step took him to Loyola Law School in Los Angeles to complete a juris doctorate. After completing the degree, Fung thought he would practice corporate law in the United States or his father’s home of Hong Kong. As luck would have it, a development opportunity presented itself for his family in Cairns, Australia. “While I didn’t expect to be thrown into a casino development position, I could not have asked for a better opportunity to expand my abilities and create a unique IR development,” he said. Fung put his law aspirations on hold to dive right into integrated resort development in Australia, and now splits his time between Hong Kong and Cairns. NOVEMBER 2014 www.ggbmagazine.com

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“40 UNDER 40” Fung credits his father, Tony, as a strong mentor in his career and life. “My father has been a very strong influence in my life, both personally and professionally,” Fung says. His father has instilled a strong work ethic through the creation a very strong and successful real estate development portfolio in Hong Kong. “I have been able to watch and learn from his success and understand that hard, smart work can pay off.” Fung hopes to continue and share in his father’s success with Aquis Casino Development. While Fung did not expect to be in the casino industry, he has taken well to it. Some of the challenges that he has noticed have been the daily changing roles and many hats that must be worn. On some days, Fung is a pure real estate developer, analyzing blueprints and cost schedules, while on other days, he is a lobbyist for his cause, meeting and giving presentations to government groups and local stakeholders. “The varying roles and daily needs can be challenging, but understanding the overarching goals and striving to achieve them helps to create the balance needed to be successful,” he says. Fung’s advice for young leaders in the industry is to be a sponge for information. “Utilize that information as a springboard to create opportunities for yourself and increase your standing in the company,” he says. He also recommends being very flexible—switching from a potential law practice to a real estate developer was different, but by being flexible, Fung has been able to capitalize on the opportunity. —David Rittvo

THE ART OF SLOTS Andrew Burke Vice President of Slot Products, AGS

he pivotal moment in the career of Andrew Burke came when he was queried by one of the giants of the slot industry, Bob Miodunski, who said: “You either want to be a gaming guy or a private equity guy. Which is it?” Burke, who had started his career with San Francisco-based private equity fund Alpine Investors, and Miodunski, the former CEO of Bally parent Alliance Gaming, came to this decisive moment because Alpine, Burke’s company, had only recently purchased an up-and-coming slot manufacturer, American Gaming Systems—now known simply as AGS. AGS Chairman Graham Weaver had lured Miodunski out of retirement because he needed a gaming pro to take the slot-maker, already successful in Class II markets like Oklahoma, into the traditional Class III casino markets. Burke, meanwhile, had become a quick study on the gaming industry after he was assigned to the newly acquired AGS. “I was an analyst; my job was to help find new acquisitions, help complete those acquisitions, and then help streamline company operations,” Burke recalls. “I started working on projects related to AGS almost the first day I walked in the door at Alpine.” By the time Miodunski began building what would become one of the more enviable management teams in gaming, Burke’s answer to the new CEO’s career question was easy: He wanted to be in gaming. Miodunski told him to move to Las Vegas and join the team, and Burke has never looked back. Burke liked gaming so much, in fact, that he wanted to dig much deeper into AGS than with the business-development roles he had played while in San

Global Gaming Business NOVEMBER 2014

Francisco. When Jamie Papp, the former director of product management and performance, left for Caesars Entertainment in 2012, Burke jumped at the job. “They said I didn’t know enough about that position; I said just give me a chance. They gave me a chance.” Miodunski later told him “he couldn’t be prouder of what I had done with it.” By the time Miodunski re-retired and David Lopez became CEO, Burke was well-entrenched on the product side of the business. Lopez promoted Burke to vice president of slot products. “He views me as the CEO of the slot business,” Burke says. “I’m now responsible for making sure we optimize the 9,000 units we have on the route. I’m responsible for rolling out new product, and rolling out that product effectively. I’m responsible for any business development related to the slot division.” (There’s another “CEO” for the company’s nascent table game business, Vice President of Table Products John Hemberger.) One of those business developments would be the acquisition of Colossal Gaming, which Burke directed. Colossal would add its particular brand of oversized slots and quirky games to the Roadrunner platform now bearing fruit for AGS in Class III markets, and would add a new game design force to the company in Colossal cofounder and former CDS chief Steve Weiss, himself a legend in the casino supply sector. Burke names Weiss, with whom he dealt and interacted long before the acquisition, as his most important gaming mentor. “He challenges me to think differently about product strategy, about strategy in the business, every day,” Burke says. “I just really love his passion and the way he thinks about things.” He also names Miodunski, along with Lopez and current AGS COO Ken Bossingham—another slot veteran—as important mentors. “I’ve been fortunate to have really a great group of mentors all through the AGS channel,” says Burke. Burke’s advice for tomorrow’s emerging leaders? “Never say no. If somebody offers you an opportunity to do something, even if it’s not really in your role, do it, and do it absolutely to the best of your ability. And be a sponge. Learn everything about it. “If you can never say no and always take the next challenge and try to learn as much as you can every day, you’re going to be in for success in any career.” —Frank Legato

NUMBERS GUY Andy Choy Chief Gaming Officer, Melco Crown Entertainment

s a statistical analyst and former corporate fixer for Carl Icahn, Andy Choy has a surprisingly pure take on his role in the gaming industry: “We’re in the business,” he says, “of bringing joy to our customers.” Yes, joy. “Our customers save up all week, all month or all year to spend a little time in our facilities, to get away from their worries and daily routines,” says Choy. “Our business is unique in that we provide patrons with authentic winning experiences and the euphoria that comes with them.” The former president and CEO of the Las Vegas Riviera, who joined Melco Crown as chief gaming officer in April, didn’t plan on a career in

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“40 UNDER 40” gaming. After earning his MBA at Stanford, he worked briefly on one of Sir Richard Branson’s few failed business ventures (Virgin Cola, anyone?), then signed on with Icahn to turn around distressed assets in the manufacturing sector. “After a particularly grueling assignment,” Choy recalls, “I was asked to develop strategic options for American Casino and Entertainment Properties. I learned the ins and outs of the industry, and I fell in love with gaming.” He’s racked up an impressive CV, serving as manager at the Venetian Las Vegas and as a senior VP at the Venetian Macao. He credits legendary Sands boss Rob Goldstein for guiding him along the path. “Watching how Rob’s able to inspire and motivate everyone around him has really shaped me as an executive,” says Choy. “He recruited me to LVS after the ACEP sale, sent me out to Macau in 2008, introduced me to the opportunity at the Riviera, and recently helped me to decide to move back to Asia.” Next year, Choy will help launch Melco CEO Lawrence Ho’s $110 million casino in Vladivostok, on Russia’s Pacific coast. The jurisdiction is widely considered more Asian than Russian; the new casino is expected to draw heavily from Japan, China and South Korea. Though his stint at the Riviera ended ingloriously— Choy was ousted in June 2013, as the aged property continued to shed revenue—he’s sanguine about his departure. “The situation wasn’t nearly as scintillating as the media made it out to be. I spent three years executing (a redevelopment plan) when the owners decided to change course and not reinvest in the property. Given the change in direction, it was a win-win for everyone.” From Choy’s perspective, the biggest challenge facing the industry is saturation and over-capacity; after all, it’s still a numbers game. “The vast increase in supply has had a disastrous effect on profit margins. We need to figure out the appropriate investment for given jurisdictions and limit growth so as not to destroy the fundamental economics. The main difference (with) Melco is that it’s only working in jurisdictions with limited supply. ” His advice for operators? “Experiment as much as possible while avoiding large capital outlays. When I left the Riviera, I started a cloud-based mobile marketing platform for casino operators to address this very issue. I basically designed the product I wish someone would have sold to me while I was at the Riv: simple, effective and affordable. With so much new technology out there, you can spend a fortune with nothing to show for it in return. Casino Offer Network is priced as shareware: casinos only pay if they are completely satisfied with the results.” And his advice for newcomers? “Be curious. The fascinating thing about gaming is that there are so many different disciplines—marketing to hospitality to entertainment to development to technology and on and on. The more diverse your experiences, the more opportunity you’ll have to contribute.” Oh, and don’t forget to spread the joy. —Marjorie Preston 24

Global Gaming Business NOVEMBER 2014

FAST TRACK Joshua Vaught Director of Casino Operations, Harrah’s Cherokee

oshua Vaught sought out to quickly establish his place among senior leaders of the gaming industry, and he has succeeded in that goal in less than a decade. Vaught is the director of casino operations at Harrah’s Cherokee in North Carolina, and was the winner of the 2014 Emerging Leaders scholarship award through the Global Gaming Expo. Vaught graduated from Appalachian State University with a bachelor of arts degree in economics, as well as minors in Spanish and biology. With a diverse educational background supporting him, he set out to find a career that would be “fun and exciting.” Vaught is a self-described family man with close ties to his grandparents, so he was reluctant to move away from North Carolina. With this leading priority, his options were limited, as there are few industries in his home area of western North Carolina. By discovering the Harrah’s Cherokee Casino, he was able to stay relatively close to family and enter a career that is now on a fast track upward. Vaught joined Harrah’s Cherokee in 2004 as a member of the Impressment Team. He was promoted to dual rate impressment supervisor in 2005 and then joined the table games department as a table games supervisor in 2006. Within the ensuing eight years, Vaught has worked as relief game manager, transportation manager and casino manager. This year, he was promoted to director of casino operations. Vaught says he loves the gaming business. “The gaming industry is ever-evolving,” he says, “and the most challenging part is that to be successful, in some regard you have to try to be all things to all people. A 25-year-old gaming patron wants and expects a different experience than a 65-year-old gamer. I am challenged every day to make sure the casino, hotel and amenities work in unison to complement each group of patrons while not ostracizing another.” Even after 10 years in the gaming industry and the numerous challengers and hurdles, Vaught says there has not been a single day when he looked back and said, “Wow, what a boring day.” He calls this the ultimate satisfaction. He has not only stayed close to his family, but developed new local relationships through his career. That has allowed him to interact with a wide range of diverse and interesting people, which he says is the best part of his daily job. Vaught also says there was no way he could get to where he is now without the help of the people around him. He specifically notes colleagues Char Carver (table games casino manager) and Adam West (VP of operations). “Carver taught me the importance of creativity and surrounding yourself with great people and having the courage to take risks,” Vaught says. “West taught me organizational skills, critical thinking, and analyzing all sides of a problem to seek resolution.” Vaught has tried to mimic these men in many ways throughout his career, including the pursuit of his MBA, which he is currently in the process of completing at Western Carolina University. Vaught’s advice to future emerging leaders: “First, don’t be afraid or ashamed of your work. If you are willing to learn, have a positive attitude, and work hard, many opportunities will present themselves in a short time.” Second, apply a philosophical approach that applies to not only the gaming industry but life itself: “Practice moderation in all things. You must be passionate without being overbearing, enthusiastic without being insincere, happy without being silly, stern without being militant and confident without being arrogant.” Vaught says people have a greater affinity for leaders who are emotionally stable and adhering to their values. His experience, he says, has shown him that this is the best way to gain the respect of employees and others around you—and that is the mark of a true leader. —Christopher Irwin and Alexis Garber, The Innovation Group

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llison Bair, known by her friends as Alli, happened upon the gaming industry by chance and took it by storm. She graduated from Buena Vista University with a bachelor’s degree in business management in 2004. Although she had never gambled before, when she discovered a casino was being built in the nearby town of Northwood, Iowa, Bair applied for a slot supervisor position “just for fun.” Little did she know this decision would completely change the course of her career. Bair showed true ambition from day one, earning a promotion in just two years, followed by another promotion two years later. In 2011, she was chosen to be part of the opening team for Kansas Star Casino. Excited to be involved in such a large project, she jumped at the opportunity to be part of the new facility. Three years later, she is the slot operations manager for Kansas Star, one of Boyd Gaming’s highest revenue-producing properties. As a young professional, Bair advises up-andcoming gaming professionals to never hold back from accepting a challenge, which she says is one of the qualities that got her where she is today. She also suggests to those who are new to the industry never be afraid to take opportunities, even if they involve relocating or taking on a different position. Bair credits a temporary position in human resources for building her skills in employee relations and conflict resolution, which she uses daily as a slot operations manager. “Those types of challenges, although intimidating at first, are often the most rewarding,” she says, “and will expose you to people and opportunities that can help you to build an amazing career.” Within the last eight years, Bair has been influenced by two people who she calls her greatest mentors. She credits Bruce Peterson, Boyd Gaming corporate director of slots, for motivating her at the start of her gaming career. Peterson, she says, would constantly provide feedback addressing any concerns or ideas in addition to exposing her to as many professional opportunities as possible. “He is the reason why I ended up at Kansas Star in my current position and has always been my biggest cheerleader,” says Bair. The current director of slot operations at Kansas Star, Shane Davis, is Bair’s other mentor. She quickly made herself and her aspirations known to Davis, who took her under his wing to provide advice and

Global Gaming Business NOVEMBER 2014

guidance. “We tackle every project, initiative and challenge together,” she says, “and I feel so fortunate to have someone with his experience so excited to pass his knowledge on to me.” Being a young woman in a male-dominated industry, Bair had to make it known that she was not only strong, but capable. She was able to overcome this obstacle and has developed great relationships with not only her colleagues, but also her guests. These relationships have enabled her to have a positive work atmosphere, where “I laugh more every day than I think most people do in their professional careers.” While Bair has faced some challenges in her gaming career, she eagerly looks forward to what is next for not only her, but also for the industry. She sees the internet and social gaming trends becoming a place where young professionals interested in the gaming industry can dive in and flourish. In 2015, Bair will add new products and themes to Kansas Star’s current slot mix to boost the guest experience. “I also look forward to the Bears winning the Super Bowl, but that one may be a long shot!” —Stephanie Adkison, The Innovation Group

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BUILDING FUTURE John Edmunds Chief Marketing Officer, FutureLogic, Inc. 1 7 5 0 A T T O R N E Y S | 3 6 L O C A T I O N S W O R L D W I D E˚

ohn Edmunds cites the righttime, right-place adage for his 16-year career success. He also brought the right mindset. The 39-year-old chief marketing officer for Glendale, California-based FutureLogic blended several factors into his high industry standing. Edmunds works well with others, listens intently and seeks multiple win-win situations for the parties involved. Before he could apply those principles, however, the Birmingham, England native needed a break. “It was more luck than judgment,” he says. “On leaving Liverpool University in the U.K., I was fortunate enough to get a place on Mars’ Management Training Program, which provided trainees the opportunity to work in different parts of the business,” he recalls. “One of these placements was with Mars Electronics International (MEI), recently acquired by Crane Payment Innovations (CPI), where a business development manager position came up selling coin acceptors and bill validators to operators across northern Europe. “MEI sought to launch their new Cashflow SC bill validator into the European casino gaming market,” Edmunds recalls, “and I was asked to lead the sales efforts. Since then I’ve been having fun in many different roles at both MEI and for the last 10 years at FutureLogic, helping build sales and grow their gaming businesses.” Another major move may be looming. Japan Cash Management recently announced plans to acquire FutureLogic, blending two companies with excellent work ethics. JCM Global is the world’s leading transaction technologies supplier for the banking, retail, kiosk and gaming industries and FutureLogic has been viewed as a hustling newcomer. Once known only as a hardware supplier, it has brought industry-leading TITO printers, along with software solutions like PromoNet, TableXchange and Ticket 2Go into its lineup. The JCMFutureLogic partnership figures to be strong. Edmunds credits two mentors in his journey. Jim Brendel, now CEO of Suzo Happ, helped polish what he considered a diamond-in-the-rough, Edmunds indicates. Eric Meyerhofer, now CEO of

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“40 UNDER 40” Gamblit, helped Edmunds paint a picture of where the industry was going. Meyerhofer was president, CEO and chairman of FutureLogic. Along the way, Edmunds obtained his own set of pointers. One is to listen, understand and learn. Find out what clients need and learn from other peoples’ successes and failures. Another is to be the person who injects energy, drive and urgency into business dealings. Edmunds advises young professionals to prioritize. You can do anything, he says, but not everything. Following through on commitments, thinking win-win-win and making time to think, reflect and get feedback is important, he adds. So is a huge intangible. “When people do business, they should have fun,” he says. “If you are a fun person to be with, if you have the generosity of spirit and the willingness to inject some humor and energy without dominating a conversation, that can be the difference. If you are at a restaurant, or bar, etc., that’s a good time to be that person people want to hang around with. People buy from people they like.” And they will continue to buy from John Edmunds. —Dave Bontempo

SETTING THE BAR Cristina Romero de Alba Partner, Loyra Abogados

t would be inaccurate to describe Cristina Romero de Alba simply as an “emerging leader” of the gaming industry. Despite being only 33, this extraordinary partner of Spain-based Loyra Abogados law firm established her prominent position on the global gaming stage years ago. If you haven’t crossed paths with Romero yet, don’t despair: This international legal adviser seems to be everywhere these days, so you will have the opportunity to meet her soon. Romero’s education, résumé and experience rival that of peers decades her senior. She earned dual degrees in law and business management from the Universidad Carlos III (Madrid), engaged in specialization courses in common law at the London School of Economics and Political Science, holds a master’s in Advisory of Listed Companies from the Instituto de Empresa, and participated in the W50 Program at the UCLA Anderson School of Management. She has been a member of the Madrid Bar since 2006. Romero worked at Credit Suisse in London in 2005-2006 as financial analyst in the Mergers & Acquisitions Department, where she focused on the technology, media and retail sectors. From 2006 to 2011, she worked as senior lawyer in the Finance Department of Clifford Chance, S.L. in Madrid, focusing on capital markets transactions (fixed income, equity, securitization, derivatives, etc.) and regulation of investment and banking services. Looking back on those experiences, she recalls a key moment that changed the direction of her career. “The tipping point for me was the realization that I would not thrive working in a system of hierarchy and standards,” Romero explains. “I was fortunate to gain experience at two global banking and legal firms, to meet amazing people and to learn the true value of work. At some point, though, I realized that I would bring more value in my own system. “Sometimes, you can feel like a man on wire leading your own firm, but at least I know it is authentic and that I am in an environment where I can achieve my best self. The uncertainty is worthwhile, and the journey is more enjoyable 28

Global Gaming Business NOVEMBER 2014

when you are establishing your own ceiling… and your own rules.” Romero reflects fondly on the direction she received from key mentors early in her career. “I was lucky enough not to have just one but several mentors along the way, and at every organization,” she says. “Each played a key role in shaping my career and guiding me through difficult environments. Through them, I learned the tricks of the trade, developed ways to alleviate the frustrations associated with new working experiences, and garnered valuable insights about my companies and industries.” Fluent in five (yes, five) languages—Spanish, English, German, Portuguese and French—Romero leads the international practice area of Loyra and is charged with overseeing the firm’s relationships with funds, listed companies, investor base and banks. Internally, she is committed to helping other young professionals achieve similar levels of success. “I try to be honest, accessible and to have a lot of patience,” Romero says. “I apply my own experiences as much as I can, encourage authentic feedback and share examples of real-life situations with staff and clients from the outset. Ultimately, I always try to inspire others and encourage them to uphold their values, motivation and performance.” With Romero’s global industry profile—including involvements with such organizations as the International Association of Gaming Attorneys, International Masters of Gaming Law, Global Gaming Women and G2E Advisory Board—and collaborations with many of the industry’s prominent publications, numerous speaking engagements and her educational roles as academic director of the Gaming Masters Program of the Instituto de Empresa and professor at the school’s LLM Program, it is difficult to believe that anything could ever intimidate her. That may be true now, but she still remembers the nerves she felt speaking at her first gaming conference before she was 30. “I felt so small and unexperienced,” Romero recalls. “But then you go out, you do it, and you get addicted to it!” —Kimberly Arnold, The Innovation Group

CRUISING WITH iGAMING Jeremy Enke Director of Acquisition, Pala Interactive

here is no question that when Jeremy Enke finds something that he likes, he pursues it 110 percent. In the gaming world, Enke became intrigued by the online real-money poker market when it was emerging in the United States in the early 2000s. As a result of his sparked interest in this ever-evolving segment of the gaming industry, he began working directly with operators as an affiliate, quickly building a revenue stream by sending new players to various online gambling sites. “It was then that I realized what a great industry iGaming was, and that I wanted to make a career out of it,” Enke recalls. Like many professionals in the world of gaming, Enke had no idea he would find his calling in this industry. A Concordia University Chicago graduate with bachelor’s degrees in business management and communi-

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“40 UNDER 40” cations, he began working in the sales industry in Chicago following his graduation. During that time, he built experience in marketing, which he then discovered was his passion. His focus shifted to the gaming industry in 2003 while working in pharmaceutical sales, realizing his desire to get involved with an industry where he could create something from the ground up. Since the idea of online poker using real money was freshly taking off at this time, Enke’s wish came true when he became the CEO of Empire Marketing, a marketing agency and consulting company that specializes in poker affiliate marketing. Enke’s desire for building businesses has been put to even more use since then, as he has founded two internet-based companies focusing on online poker: Pokeraffiliateworld.com and Pokeraffiliatelistings.com. In 2013, with more than a decade in gaming industry experience, Enke joined the team of FourCubed, a top leader in the online gaming internet marketing industry. He is able to use his marketing skills as the director of innovative marketing, where he specializes in regulated markets in the United States and Europe. Enke definitely keeps himself busy, as he is also the director of acquisition for Pala Interactive, a California-based company that specializes in iGaming platform development, casino networking and internet wagering. Founded in 2013, Pala Interactive was created in anticipation of upcoming legislation throughout the United States to allow real-money internet wagering. Through his several professional avenues, Enke is able to keep up with the online real-money poker industry, and is considered to be an expert on the topic. Throughout his career, Enke has consistently surrounded himself with other successful marketers and industry executives. The people he has come in contact with throughout the years have collectively become one of the most enjoyable aspects of the industry to him. “Whether at industry conferences or business trips, the gaming industry offers one of the most diverse groups from all across the globe that I have ever seen,” Enke says. Enke learned early in his career of the value provided by those around him. While he cannot select any single person as his most important mentor, he has learned the most from “those who have been able to adapt best to the constantly changing U.S. landscape.” Coincidentally, the changing U.S. landscape is also what Enke considers to be the most challenging part of the gaming industry. “If not for an effective diversification strategy throughout the years of UIGEA and Black Friday, I may not have stayed in the gaming space,” he says. As a successful industry professional who started his career with no gaming experience, Enke naturally has advice for anyone looking to begin and advance their career within the gaming world. “Perseverance is critical to advancement in the gaming industry,” Enke says. “In a constantly changing environment, individuals have to be ready and willing to change with it. Equally important is surrounding yourself with other successful gaming executives and learning the various aspects of the industry.” Enke has successfully accomplished both of the things and is fully engaged on various aspects of the iGaming world—with no intention of slowing down. —Joe Dimino, The Innovation Group

Global Gaming Business NOVEMBER 2014

CENTER OF ACTION Nicole Nollette Chief of Staff, International Game Technology

icole Nollette’s job takes her where few gaming executives under 40 get to go: into the inner sanctum with the top 10 executives of one of the most important companies in the industry. Nollette is chief of staff at leading slot manufacturer International Game Technology, which means she is responsible for making sure all of CEO Patti Hart’s corporate initiatives get done, on time and on budget. She works with the senior management team—Hart and nine of her closest executives and direct reports—to make sure the nuts and bolts of the corporate engine are in perfect working condition. In short, Nollette is the executive officer to Hart’s commanding officer—a relationship for which she was prepared, thanks to five years in the U.S. Navy. After serving as a command duty officer in the Pacific—using her oceanography undergraduate training to advise on weather systems to ensure ship safety—and as officer in charge of the team responsible for the safety of military assets—human and otherwise—in the Mediterranean, she received further preparation for her gaming career on Wall Street as an investment banker and as head of her own gin and vodka company. “To me, the gaming industry is interesting because, like the liquor industry I came from, it’s highly regulated,” Nollette says. “You have to constantly deal with the stress of being able to innovate at the seat of technology but not being able to monetize that because of the regulatory hurdles. I find that challenge very interesting, and unique. You constantly have to come up with creative solutions, and it’s that elegant tension in the gaming industry that I really enjoy.” She also enjoys being at the center of action at IGT. “On a daily basis, I work with the nine executives on Patti’s senior team,” Nollette says. “We deal with product issues, we deal with profitability issues, we deal with all kinds of timing issues. We deal with really everything at a very high level. Vendor issues, reaching out to our customers and partners both in North America and overseas, is a large part of the issues we discuss as a team and drive toward a resolution. “Every day is a new challenge. That’s kind of the blessing and the curse. I certainly enjoy that aspect of my job, but it’s also a challenge, because everything changes every day. The thing that I enjoy is also the most challenging.” Nollette identifies her first CO in the Navy and Hart as her two most important mentors. “For the past two years since I’ve been at IGT, Patti has been fantastic,” she says, “helping me take the foundation I learned in the Navy and mold it to be an effective leader in the corporate sector.” Nollette adds that one of the best aspects of her job relates to IGT’s status as an industry leader. “We are fortunate enough to be large enough that any venue that has slot machines is a customer of ours,” she says. “And so, I get to meet so many different people all over the world, and understand the things that are working for them and not working for them. The breadth of the customer base I’m exposed to is absolutely fantastic.” Her advice to other young leaders is to “keep your goals in mind and not get bogged down in the details. Stay positive, keep your goals in mind.” Of course, it helps if you land the dream job. Says Nollette, “It’s a really interesting job, with great exposure, and I honestly think I have the best job in the business.” —Frank Legato

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SLS Service

SLS Las Vegas seeks to introduce a new dynamic on the north end of the Strip By Roger Gros

Luxury Style Ribbon-cutting ceremony: sbe Hotel Group President Arash Azarbarzin; SLS Las Vegas President and COO Rob Oseland; sbe Founder, Chairman and CEO Sam Nazarian; SLS Las Vegas Creative Director Philippe Starck; sbe President Sam Bakhshandehpour.

as Vegas isn’t very fussy about its history. A building loses its edge or popularity, let’s implode it and start over. It’s happened multiple times in the capital of casinos, and will happen many times again. So when a building somehow escapes the wrecking ball, it should be celebrated, as was the “new” SLS Las Vegas, built into the bones of the “old” Sahara, when it opened in August. But it wasn’t always going to be that way. According to Arash Azarbarzin, the president of sbe Hotel Group at sbe entertainment group, the operator of SLS Las Vegas, most of the hotel was slated to be demolished after sbe and a group of investors purchased the hotel in 2007. “For a moment, we thought we were geniuses and had landed a great deal,”

Global Gaming Business NOVEMBER 2014

he laughs. “Everything was going strong, and as soon as we announced our project, MGM bought the land across the street, and announced they were bringing in an Atlantis. And next door to us, they were planning the world’s largest tower. The Fontainebleau was in full construction, and land prices were going through the roof. “And then, of course, the Great Recession happened. So this journey that took us about five, six years; we went through several different iterations of the design. Our first design was really aggressive. We were adding another thousand rooms and a luxury tower to the property. And then the recession hit, we readjusted the plan, and decided to downscale and do more of an adaptive reuse, even though there’s not one common denominator of the old hotel. It’s a brand

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Sam Nazarian, chairman and CEO of sbe entertainment, at LIFE nightclub during the grand opening, which included a performace by visionary partner, Lenny Kravitz

new asset, even though we paid homage to the Sahara in many different locations.” Sam Nazarian, chairman and CEO of sbe entertainment, says the Sahara was attractive to him particularly because of its challenging location. “We went into the corner of Hollywood and Vine in 2005, when none of us would be caught at Hollywood and Vine at 3 o’clock in the afternoon; forget about 2 o’clock in the morning,” he says. “But we looked at the infrastructure that Hollywood and Vine had, the history that Hollywood and Vine used to have, the access, the connectivity to the valley, to downtown, to the Westside. So we converted an old 1920 15-story office building into 96 condos, and we put one of our Japanese restaurants in there, which is an amazing product, and everyone thought we were crazy. They said, ‘You’re five blocks in the wrong direction.’ Fast forward, Hollywood and Vine now is the center of Hollywood. “We did the same thing when we bought the old Le Meridien Hotel on La Cienega. It was bankrupt; it was built in 1990 as a typical atrium asset. It was across the street from a broken-down body shop and a used car lot. But the bones were great. And now it’s one of the best-performing hotels in L.A. The market around us has changed.” The same is true for the north end of the Las Vegas Strip, says Nazarian. “The north end has a lot of the same characteristics. What excites me the most is the good bones and the accessibility, the monorail, the convention center. I have three points of ingress, with Las Vegas Boulevard, Paradise and the monorail. I have Sahara Boulevard, which connects me right into Summerlin, where I live, which gives me that really great focus for the locals.” The market for SLS Las Vegas is a mix of tourists, gamblers, conventioneers and locals, says Rob Oseland, the president and COO of SLS Las Vegas. “We have appeal to different audiences,” he says. “The most important is that we’re taking the best of the collection of restaurants, hotels and nightlife venues within the sbe family and tucking them up under one roof in Las Vegas, that being kind of a direct positioning difference for us. Sbe also has been very good at catering to the locals market in both South Beach and in Los Angeles, and then we come at it from a different design platform. We are independent; we’re an entrepreneur; we’re not a large commercial entity, so we want to provide a difference in the market.” SLS Las Vegas was designed by Philippe Starck, one of the most iconic designers in hospitality, and Joe Faust, the president of sbe in-house development team Dakota Development carried out the renovations. Like Nazarian, he says

the “bones” of the property were what gave them confidence that Starck’s plans would work. “The adaptive reuse can be fun, but when you have to work with the box, as it is, it can be very challenging,” he says. At the SLS, Faust says it was a combination of reusing and updating existing systems and structures that were in place and completely gutting other sections of the hotel. “The older parts of the hotel had to be taken down to the concrete and steel,” he explains. “But in the newest tower, which was built around 1990, we found we could reuse the plumbing and other systems that were in place because they weren’t in bad shape.”

Signed, Sealed and Delivered One element that had to be completely created is the pool areas. Azarbarzin says it’s the signature of sbe entertainment and its hotels in Miami Beach and Los Angeles, and was crucial in Las Vegas as well. “We completely redesigned the pool,” he says, “and we added cabanas all the way around. We added a small dining venue and a couple of bars, and we added an extra pool, called the LIFE pool, on the roof of the new structure that we put up. So we now have two pools for our guests. One of them is high-energy, and the other one is a bit more mellow, so people can choose and relate as needed.” Another signature of sbe is the nightclubs, especially since the company has partnered with MGM Resorts in Las Vegas to develop nightclubs—the latest being the wildly successful Hyde at Bellagio. SLS Las Vegas has three venues with two brands transferred from sbe properties in Los Angeles. NOVEMBER 2014 www.ggbmagazine.com

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“We’re taking the best of the collection of restaurants, hotels and nightlife venues within the sbe family and tucking them up under one roof in Las Vegas. We are independent; we’re an entrepreneur; we’re not a large commercial entity, so we want to provide a difference in the market.” —Rob Oseland, President and COO, SLS Las Vegas “Sayer’s Club is a brand that we have in Hollywood; it’s our live music venue, where we have performances seven nights a week. People can enjoy a very small, intimate, charming location, and listen to a phenomenal band or DJ that we program for a very small audience. We can only fit a couple hundred people in this venue, so for you to be close enough to touch a band, it doesn’t get any closer than the Sayers Club.” The Foxtail, another L.A. transplant, was first designed to be a casino lounge, but Faust says that changed in the design process. “We decided to close it in and open it onto the pool to have the same effect that Hyde does in Bellagio,” says Faust. “So instead of the fountains, we have the pool, and we can use it as a day club as well.” Finally, there’s the traditional big-box nightclub, LIFE, which seats over 1,000 customers and features the DJs that have become so popular—and wealthy—in Las Vegas. “Most of those guys,” laughs Nazarian, “worked for us in the beginning making a couple of hundred bucks a night.” They’ll do better than that at SLS.

Target Market So who is the typical SLS customer? Nazarian gets very specific. “Our data shows it’s 25 to 55, but the actual direct age is about 41 years old,” he says. “The 41-year-old who still wants service and accountable amenities, but at the same time, wants a product that really has a little bit of forward-thinking and design, and also very good accountable food and beverage. So, every market is a little bit different.” To convey that kind of experience, SLS Las Vegas has partnered with uniqueto-Vegas companies. The retail at SLS is controlled by Los Angeles entrepreneur Fred Segal, whose eponymous stores are legendary in that city. “Fred Segal was a gentleman in the ’60s who was a big Malibu surfer type— 34

Global Gaming Business NOVEMBER 2014

exactly the opposite of me,” Nazarian laughs. “He built two stores with unique products. So if you’re a jeans guy, a sunglasses guy, an accessory guy, he housed them in West Hollywood and Santa Monica—only two locations existed for the last 40 years—and by giving them the overarching Fred Segal brand, it really set off the counterculture to the big-box retail shopping centers.” Nazarian convinced Segal to bring his brands to SLS, which now houses seven Fred Segal stores, with jewelry, clothing, accessories and more. “So we have one retailer and it’s spread out throughout the entire property,” he says. Other sbe partnerships include chefs Jose Andrés, Michael Schwarz and Katsuya Uechi, rocker and designer Lenny Kravitz, photographer Matthew Rolston, and several designers. Oseland says the goal of filling the hotel with sbe customers from Los Angeles, meetings and conventions, gamblers and locals can sometimes be a challenge. “Each one of those has a whole set of different demographics, so that’s kind of the baseline,” he says. “From the casino’s perspective, it’s great that you have a good, healthy hotel and a building that appeals to locals, because of the lack of walk-in traffic that we have at the north end of the Strip. We use restaurants and nightlife as an entertainment destination, so there’s a collection of different people who will come here for our restaurant experience and our nightlife. I would say that our nightlife would tend to skew us a little bit younger in perception, but in reality we’re still late 30s/early 40s, versus the city average, which is in the high 40s.” Oseland believes the locals market has great potential for SLS. “The first advantage is location and accessibility,” he says. “We don’t have all of the congestion that the center Strip does, and we have access off Paradise, Las Vegas Boulevard and Sahara. And then the other is that we’re right-sizing the diversity of our restaurants and our pricing, so it offers value to locals and it offers a lot more value to tourists. And then the casino loyalty platform—Code—is a hy-

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We use a kind of cheesy tagline, ‘It’s a career, not a job.’ If you’re looking for a job, you probably don’t want to work for us. If you’re looking for a career, we’re willing to work with you to make you—and us—better.” —Sam Nazarian, Chairman and CEO, sbe entertainment brid. So we’re not necessarily a Strip program, we’re not necessarily a locals— we’re trying to skew to in-between so it offers value to locals and tourists alike.” Oseland says the price point of SLS is an important aspect of the “value” that the hotel wants to provide for customers. “We can’t really afford to be priced exactly as a locals place, like a Stations Casino, but we can’t be a Wynn place, either,” he says. “We’re trying to find that balance in between where people can come here multiple times and discover our restaurants several times a month, if not a week, and have that kind of diversity. Every property seems to right-size its place to its market, and I would say that for us, we’re trying to appeal to that locals customer, and also appeal to a foodie that’s attracted by José Andrés, who’s willing to pay a premium check average for that experience.”

Service Oriented The third leg of the SLS stool is service, and Nazarian says the key is in having motivated hotel employees. “Our executives, for the most part, all grew up with each other,” he explains. “So, there is a piece of everyone’s DNA within the ultimate assets today. We all have experienced those trendy cool places, or a restaurant that was cool, or a boutique hotel. In many cases, the arrogance of the employees was shocking. It’s like they owned the place and they didn’t want to serve. So that’s one thing we learned. “We set forth to just put our head down very humble, hat in hand, and tried to dissect our side of the business. And we get a chance to really incorporate our DNA of accountable service, but also a culture in which people just are happy to work with us. We use a kind of cheesy tagline, ‘It’s a career, not a job.’ If you’re looking for a job, you probably don’t want to work for us. If you’re looking for a career, we’re willing to work with you to make you—and us—better.” Azarbarzin says that the extraordinary customer service at the better Las Vegas hotels were a goal for SLS, but it’s also something they strive for throughout the entire company. “We didn’t want people to come to this property with a preconceived notion of what a Vegas experience should be, and what is acceptable and what is not,” he says. “We wanted our employees to deliver service levels, and deliver the customer service and the guest experience that not is really that Vegas-specific, but sbe-specific.” 36

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Forgotten Casino? SLS Las Vegas is sbe’s first entry into the casino business. While sbe is familiar with gaming through its partnership with MGM Resorts, its role at SLS Las Vegas is understated but not ignored. Oseland says the gaming floor in SLS is a little smaller—60,000 square feet—than a typical Las Vegas Strip casino. “There’s a change that’s happening within Las Vegas and with casino entertainment,” he says, “and that’s that casinos aren’t the only reason why people are coming to Las Vegas anymore. It’s an evolving market where we’re focused on food and beverage and nightlife and entertainment and hotels and retail. And the casino scale is changing as competitors change regionally and nationally, so there’s fewer gamblers coming to the city and more non-gamblers. So we’ve modified our casino to fall into that change in the economy.” That said, Oseland says gaming is still a primary focus of sbe. “For a long time Las Vegas didn’t have competition, and now that we’ve found we got competition and we’ve got lots of floor space, we want to create and grow utilization. (In Nevada), you see a decrease in the number of slot units trying to increase energy utilization, so we’ve right-sized the casino with that in mind.” The SLS player’s club is multi-dimensional, says Oseland. “It’s not just a gambling club for casinos,” he explains. “It also is tracking non-gaming spend at the SLS Las Vegas, and then it expands it to all of the platform of sbe within Los Angles and in South Beach Miami, so that people who are dining in restaurants and going to hotels and nightclubs can be recognized here in Las Vegas and people in Las Vegas can be recognized in those markets. That’s the real key difference.” Nazarian agrees that the loyalty program at SLS is designed to recognize all players. “We’re not just one vertical; we’re not Hilton HHonors,” he says. “We don’t have just hotels, so the complexity of our loyalty program, at the same time, is the opportunity of our program. We actually re-launched that program because of SLS Las Vegas. We’ll slowly start building that gaming awareness and try to keep it very simple. We’ll position it in a very clean, aspirational four-tier program that gets people in, and then ultimately gives them the ability to be recognized. We’re hoping to be the first loyalty program that will work across four disciplines, so it’s relevant in gaming, hotel, restaurants, and ultimately

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nightlife. It’s something that will be relevant to everybody, but at the same time won’t break the bank of liability on our side.” Gaming is an important part of SLS, says Nazarian, and sbe is going to learn how to do it. “We’re very conscious that we’re not a gaming company,” he says. “But, at the same time, we’re also very conscious that we’re delivering an experience that is consistent, where we’re not just putting a big, brand new nightclub in a place that it was never designed for in the master plan, and that nightlife customer who was spending $30,000 on champagne is walking outside into an old hotel, that has no correlation. Our people—the people staying in our hotel—can’t afford that amenity. Accountability to our investors, and the guest experience will be our differentiation.”

Future Focus SLS Las Vegas is open, but it’s far from the last sbe project. The company has properties under construction or in the planning stages in many cities, including Miami, Philadelphia, in the Bahamas at Baha Mar, New York City, Seattle and Chicago, as well as in Dubai and in China. Despite this vast array of development, Azarbarzin says sbe isn’t trying to be everything to everybody.

“If you try to do it that way, in my opinion, it’s a recipe for disaster,” he says. “Because you can never be good at anything. So we have worked tirelessly to create a paradigm in hospitality that will adhere to this psychographic that enjoys great dining experiences; they’re foodies at heart, they enjoy energy, they enjoy service, they enjoy the ability to not only be recognized in one location, but, if you’re a high roller here in Vegas, you automatically become a high roller in Los Angeles, in Miami, in New York, in every location that we have.” The 39-year-old Nazarian is humbled by the success he’s achieved since his family emigrated from Iran in 1979. He talks about his first discussion with the legendary Kirk Kerkorian, the majority owner of MGM Resorts. “When we bought the Sahara in 2007, one of the first calls I got was from Mr. Kerkorian,” he explains. “And because of my last name, he thought I was Armenian. I didn’t have the heart to tell him I wasn’t, because it was Mr. Kerkorian calling; I was very flattered that he actually reached out to me. Through that call, I met a gentleman named Jim Murren, who at the time was the president and CFO of MGM. And he really just took me in. He was just such a great mentor, and continues to be. “At that time, MGM was building a project called CityCenter, and they really had made a very strong commitment to the space of innovation, design, architecture—it’s the best of the best. That’s what I want SLS Las Vegas to be.”

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THE

POINT Rising slot hold percentages are driving players away, and revenue down By Andrew Klebanow

aming revenues, and in particular slot revenues, continue to decline in most U.S. gaming jurisdictions. This pattern of decline began at the onset of the recession and has continued even as the economy improved. Casino operators often cite increases in gaming supply in adjacent states and a slow economic recovery in their markets as reasons for this decline. While the recession certainly affected discretionary spending during the height of the recession, hitting casino gambling hard, the U.S. economy has largely recovered. Gaming revenues, though, have not. Key macro-economic indexes have returned to pre-recession levels. Two indexes, employment and consumer confidence, have long served as bellwethers for gaming revenue forecasts. In August 2013 the U.S. unemployment rate stood at 7.5 percent, down from 8.2 percent for the prior-year period. By August 2014, the unemployment rate dropped to 6.4 percent. In August 2013, the consumer confidence index stood at 80.3, up from 75.3 in 2012. By August 2014 it rose to 82.0. Despite these positive trends, gaming revenues continue to decline. The casinos in Connecticut offer a telling example. While Foxwoods and Mohegan Sun had to endure the addition of table games at the Twin River racetrack, there were no substantial increases in regional slot machine supply. Casinos have not yet opened in Massachusetts and resort casinos in New York are still three years away. Nevertheless, for the first eight months of 2014, Connecticut slot machine revenues declined 7.3 percent from the prior-year period. This pattern was repeated in jurisdictions throughout the United States.

The question that must be asked is, are there other factors at play? What has changed in regional U.S. casinos to cause this shift? Has the gaming experience changed? Has there been a fundamental change in consumer behavior that is discouraging customers from visiting casinos with the same enthusiasm as in past years? What has changed is the price of those gaming experiences. Slot hold has continued to rise over the past decade. From 2003 to 2013, slot hold in Illinois rose from 6.49 percent to 8.84 percent, a 38.2 percent increase. During the same period Iowaâ&#x20AC;&#x2122;s slot hold rose by 38 percent and Missouri casinos increased hold by 40.5 percent. This trend can be found in jurisdictions throughout the United States. The hold percentage of slot floors in U.S. casinos may have reached a tipping point, and consumers may no longer find sufficient value in the gaming entertainment experience.

SLOT MACHINE PRICING Slot hold is essentially a form of pricing, and, as with all goods and services, there is a certain degree of price elasticity. Prices may be judiciously increased without pushback from consumers. There is a point, though, where pricing becomes inelastic, and at that point consumers decide there is no longer enough value in the product to justify the higher price. That is what appears to be happening to slot machine gaming. To understand how slot machine pricing has changed over the last decade,

BY 2000, TWO TECHNOLOGIES EMERGED THAT CHANGED GAMING: TICKET-IN/TICKET-OUT TECHNOLOGY AND MULTI-LINE, LOW-DENOMINATION VIDEO REEL MACHINES. 38

Global Gaming Business NOVEMBER 2014

CHANGING THE GAMING WORLD ONE 7 AT A TIME

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FROM 2003 TO 2013, SLOT HOLD IN ILLINOIS ROSE FROM 6.49 PERCENT TO 8.84 PERCENT, A 38.2 PERCENT INCREASE. DURING THE SAME PERIOD IOWAâ&#x20AC;&#x2122;S SLOT HOLD ROSE BY 38 PERCENT AND MISSOURI CASINOS INCREASED HOLD BY 40.5 PERCENT. THIS TREND CAN BE FOUND IN JURISDICTIONS THROUGHOUT THE UNITED STATES. it is important to understand how technology coupled with economics has changed in the gaming industry. Throughout the 1990s, demand for casino entertainment outstripped the supply of casinos and slot machines. During that period, casinos offered a reasonable entertainment proposition; slot machine hold hovered in the 5.5-7 percent range. Slot products were comprised primarily of stepper slot machines (mechanical spinning reels), and a variety of video poker products. The latter offered very low hold percentages, and while stepper slot machines had a lower hold percentage than todayâ&#x20AC;&#x2122;s games, their game math could not overcome a certain amount of volatility. It was possible to wager $100 on a dollar slot machine and not get anything in return. By 2000, two technologies emerged that changed gaming: ticket-in/ticketout technology and multi-line, low-denomination video reel machines. TITO allowed for the elimination of coins on the casino floor. Concurrently, multi-line video reel slot machines, commonly referred to as penny games, were introduced in U.S. casinos. These video reels offered game algorithms that moderated machine volatility. They allowed slot players to stay in the action longer. The elimination of coins allowed game manufacturers and casino operators to increase the number of credits wagered and streamline play. These two technologies complemented each other and changed the nature of slot machine gaming. Traditionally, casinos priced lower-denomination games higher than highdenomination games. A nickel slot machine had a higher hold than a dollar machine. This pricing strategy continued with multi-line penny games, despite the fact that their average wagers approached those of traditional dollar machines. As the popularity of these video reel machines increased, casino operators increased the number of these games on the floor, and the overall hold of slot floors gradually increased. Game manufacturers also moved to develop more exciting games with additional bonus rounds and multi-sensory experiences. To support more bonus rounds and their game math, manufacturers gradually increased the slot hold of these games. Today, it is not unusual to find penny games holding in excess of 12 percent, even though their average wager is greater than $4. The culpability of higher slot hold must also be shared with casino operators. On most games, the operator has the option of selecting, within a range, the hold percentage of the game. As casino markets matured from 2004 to 2007, gaming operators needed to find ways to grow revenues. Increasing prices, in the form of higher slot holds, became a go-to strategy. After all, could a customer with $200 to spend really differentiate a machine with an 8 percent hold from one holding 10 percent? And thus was added another layer of pricing. 40

Global Gaming Business NOVEMBER 2014

FREE PLAY Concurrent with the proliferation of video-reel slot machines was the increased use of free play. Free play issued to players in the form of coupons, floor promotions and other means became a way of discounting the price of the game, much like department stores offer coupons on list-price merchandise. Frequent players who used their loyalty cards were assured of rebates each month. The problem is that, as the slot floor hold rose, new players found it increasingly difficult to play to their theoretical potential, and this is the problem that continues today. New visitors often play to their budgets but do not stay in the action long enough to achieve their true theoretical value. They get discouraged, do not receive a rebate offer commensurate with their actual loss, and do not return. Each year there is a smaller universe of new players who are converted to loyalists through free play.

THE SENSE OF WINNING Due to the physical limitations of traditional slot machines (the number of reel strips and the number of stops per reel), there were a finite number of possible outcomes. The total number of outcomes, referred to as the slot cycle, could be as few as 20,000 spins on a three-reel machine. Multi-line slot machines have no such physical limitations. Slot cycles could run over a million pulls. While multi-line games offer reduced volatility, the chances of hitting a top line jackpot is diminished, and that is what customers recognize. They recall that in years past they might have hit dozens of jackpots, and now they only win one or two. It is that sense of winning, the chance of hitting a jackpot, which has been lost. The continued shift to ever higher-hold machines, discounting in the form of free play to an ever shrinking universe of players, and the sense that one can no longer win a jackpot may be driving players to a tipping point where they no longer see value in the gaming experience. And that can spell trouble for casinos. Andrew Klebanow is a partner at Global Market Advisors, a gaming and hospitality consulting firm with offices in Las Vegas, Denver and Bangkok. He specializes in marketing plan and business plan development, feasibility analysis, market research, casino property analysis and player rewards program design. He can be reached at aklebanow@globalmarketadvisors.us.

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Recognizing History

Robert Burns, elder of the Nor Rel Muk Wintu

Tribal federal recognition “held hostage” by casino gambling By Dave Palermo he sun was rising over the remote Trinity Valley in Northeast California one day in April 1852 when a posse of 70 men raided a band of Wintu Indians wrongly suspected of killing a farmer and stealing his cattle. Many of the native men were away hunting and gathering, leaving the posse to slaughter 150 mostly women and children in what became known as the Bridge Gulch Massacre. Descendants of the Nor Rel Muk Wintu who survived the carnage and a torturous era of Indian genocide surrounding the Gold Rush and European settlement still live in picturesque Trinity County. And relations with their non-Indian neighbors have markedly improved. County officials and the Trinity Journal newspaper, founded in 1856, have assisted the Nor Rel Muk Wintu in documenting an application with the Department of Interior seeking federal recognition of their indigenous community. “We want to keep our people together and preserve our identity,” tribal Chairwoman Marilyn Delgado says. “We have a lot of poverty. We have child welfare cases. We’d like to help our people get educated. We want to protect our aboriginal lands. That’s what this is all about.”

pending review of more than 350 responses. The draft regulations, says Interior Assistant Secretary for Indian Affairs Kevin Washburn, are at least partly motivated by a desire to help free a federal Generations of Red Tape recognition policy “hijacked” by tribal government gambling. Unfortunately, the Nor Rel Muk Wintu and 356 other indigenous groups with Efforts by the Wintu and other indigenous communities to achieve federal recognition requests at Interior have learned seeking federal acknowledgment is recognition have faced increasing opposition from politicians and anti-Indian an expensive and arduous process, fraught with bureaucratic red tape and likely groups suspicious the tribes will build casinos. to take decades to complete. “We don’t grant many requests,” says Washburn, an Oklahoma Chickasaw Delgado is, in fact, the third Nor Rel Muk chair to take up a continuous and former dean of the University of New Mexico law school. “Yet when we do campaign for federal recognition that began in 1984. acknowledge a tribe the first question anyone asks seems to be, ‘Does this mean “I’ve been working in federal recognition for 20 years,” tribal attorney Judith that we are going to have gaming in our backyard?’” Shapiro says, “and I have never seen a petition where the people who started it The OFA has recognized 17 groups while rejecting 34 applications since the lived to see the end of it.” office was established in 1978. Tribes can also achieve recognition through ConThat may soon change. gress or the courts. Interior has proposed sweeping reforms to the Office of Federal AcknowlFew of the 356 initial inquires to OFA will see the light of day. Most Indian edgement (OFA) intended to streamline the groups lack the money and legal expertise to pursue petitions, and the odds are process. The deadline for comments on revised long that they will be successful. OFA regulations was September 30, and publicaTribes surviving the rigorous recognition effort who wish to get into the tion of new rules in the Federal Register is gambling business must go through an equally politically arduous, lengthy and expensive Interior process of getting land in trust for a I have never seen a petition casino. “It’s not uncommon for it to take over a decade for a newly recwhere the people who started it ognized tribe to develop a gaming opportunity, if it ever happens at lived to see the end of it. all,” Washburn says. —Tribal attorney Judith Shapiro Most Indian organizations, including the National Congress of

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Global Gaming Business NOVEMBER 2014

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Marilyn Delgado, chairwoman of the Nor Rel Muk Wintu of Trinity County, California

American Indians (NCAI), applaud the proposed reforms. But Washburn’s attempts to fix what Indian law scholars call a “broken” acknowledgement system face opposition from tribes as well. The Cherokee Indians in North Carolina and Oklahoma, some California tribes and other Indian nations contend the revisions will dilute acknowledgement standards and diminish tribal identity. About 45 Indian “splinter” groups are seeking recognition as Cherokees. “We’re not looking at recognizing splinter groups,” says Wisconsin Oneida Larry Roberts, deputy assistant secretary for Indian affairs. “We’re not looking at recognizing groups that just came into existence in the ’60s, ’70s, ’80s, ’90s… when it became more popular to be native.”

Tribal Opposition Officials drafting the reforms believe Indian opposition stems at least partly from wealthy casino tribes fearful newly recognized groups will, indeed, build casinos that encroach on existing markets or diminish Bureau of Indian Affairs funding for grants and program subsidies. “There are tribes out there whose interest in this is a per-cap protection plan,” says attorney Bryan Newland, a citizen of the Bay Mills Indian Community who as Interior counsel worked on the reforms. “They don’t want any tribe to diminish their federal funding by one-tenth or their gaming market by one dollar. “The notion these reforms are lowering the bar is garbage.” There is also criticism from Connecticut, where officials fear three tribes whose efforts at federal recognition were recently rejected by Interior will resubmit petitions under the revised regulations. State officials believe the tribes want to open casinos. Meanwhile, anti-gambling groups contend the revised regulations will result in an explosion of new Indian casinos, growing a $28 billion industry, which today consists of 237 tribes operating 449 casinos in 28 states, according to the National Indian Gaming Commission. The debate over the proposed OFA rules and streamlining of procedures is most volatile in California, home to 110 federally recognized tribes, roughly a third of the 366 tribes in the lower 48 states. Sixty of the California tribes operate casinos generating $7 billion a year. Eighty-one of the 356 letters of intent filed with Interior from Indian groups seeking recognition carry a California postmark. Twenty-seven of the letters date back more than 30 years, however, and only 13 groups have followed up on their initial inquiries. Only one California tribe—the Death Valley Timbi-sha Shoshone Tribe— has achieved recognition through the OFA process. Despite the low percentage of approvals, a report by a former BIA historian solicited by the anti-Indian group Stand Up For California predicts the revised regulations will result in the recognition of 34 tribes, 22 of which will

likely seek casinos. “By making the standards for federal acknowledgement more lenient, the proposed rules increase the likelihood of additional acknowledged tribes,” writes Michael Lawson of MLL Consulting. “Once acknowledged, these tribes will almost certainly seek their own casinos.” Another former OFA anthropologist hired by a group of suburban Los Angeles card clubs warns the revised regulations could allow an urban Indian group seeking to launch a Los Angeles-area casino to resubmit a recently rejected application for recognition. “They are a complete abandonment of any reasonable standard for showing continuous tribal existence and thus eligibility for acknowledgment,” George Roth says of the Washburn revisions. The Tribal Alliance of Sovereign Indian Nations, a coalition of 10 Southern California casinos tribes, in a July 8 letter to Washburn said it had “serious concerns with changes… that would water down the standards” for recognition. Similar sentiment was expressed by the California Tribal Business Alliance (CTBA), a coalition of three casino tribes. “There is no question that the road to federal acknowledgement is one of Native American peoples’ ongoing challenges … but (the proposed regulations) would dilute tribal sovereignty by minimizing tribal identity,” says Robert Smith, CTBA secretary-treasurer and chairman of the Pala Band of Luiseño Indians.

Recognition And Casino Money Proposed OFA regulations would require Indian groups to document community existence and political authority since 1934 rather than 1789 or their first encounter with Europeans, as is currently the case. Most regard the existing rule as being a near-impossible hurdle, particularly for tribes such as the Wintu, which was forced into hiding to avoid California’s genocidal Indian policies. Other draft revisions deal with need for third-party documentation since 1900, the appeal process and procedures for expedited decisions. An NCAI resolution calls the new rules “a matter of long-overdue justice and fairness.” The OFA process, the group said, has “severely deteriorated,” causing decades-long delays and containing “irrational documentation requirements.” “These reforms will not lower the bar for federal recognition,” Washburn says. “This is going to remain a rigorous process with difficult criteria. “We’re trying to make the process more efficient, more transparent, fairer and less expensive. We’re not trying to make it easier.” Critics contend many Indian groups seeking recognition are financed by casino companies. In California, Station Casinos of Las Vegas financed restoration efforts by Graton Rancheria, which recently opened a large casino near San Francisco. Cannery Resorts, another Las Vegas company, helped Tejon Indians near Bakersfield get restored to the recognition rolls. And a potential casino developer is believed to be funding the Mishewal Wappo Indians of Napa Valley in a federal recognition lawsuit. “It makes me wince to hear people on Capitol Hill complain about the NOVEMBER 2014 www.ggbmagazine.com

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It’s not uncommon for it to take over a decade for a “newly recognized tribe to develop a gaming opportunity, if it ever happens at all.

”

—Interior Assistant Secretary for Indian Affairs Kevin Washburn

role casino developers play in the process,” says attorney Heather Sibbison, a specialist in federal recognition. “But the reality is the administrative process is so lengthy, convoluted and expensive, unless you can borrow money from somebody to do it you can’t get it done. The only people willing to lend these tribes money are big casino developers.”

Truth And ‘Fear-Mongering’ “I don’t anticipate that the percentage of petitions being approved will change all that much,” Washburn says of the proposed regulations. “A lot of this is going to involve faster negative decisions.” Attorney George Skibine, a former high-ranking Interior official, says the new regulations will likely increase the list of federally recognized tribes. At least a few will seek casinos. But he and others strongly refute Stand Up For California’s study as grossly exaggerating the potential impact of Washburn’s reforms. “The statistical projections in the report are not supported,” Skibine says. Stand Up For California Director Cheryl Schmit has partnered with MGM Resorts International of Las Vegas, one of the world’s largest commercial casino companies, in opposing tribal acknowledgement efforts in other states. “I don’t see how anyone can arrive at the conclusion 34 more tribes will receive federal recognition,” William Micklin, executive director of the California Association of Tribal Governments, told GamblingCompliance.com. “It’s far outside the bounds of reason.” As is the case with the Cherokee groups, Micklin says, “most of the tribes in California now seeking federal recognition are splinter groups, or factions of existing tribes. “They will never receive recognition.” Newland calls the MLL study “fear-mongering.” MLL’s Lawson and Roth, Newland says, are former BIA ethnologists who viewed the federal recognition process as “pseudo-science” based on “genetics and familial relationships” rather than the historic relationship between tribes and the federal government. “Their paid remarks on this issue speak volumes,” Newland says. “The political relationship between a tribal nation and the United States cannot be described by pseudo-science. The existence of those relationships must be determined by the unique history shared by each tribe and the federal government.” Even if there were an increase in recognized tribes, economists say the Indian casino market nationwide and in California is largely saturated and has not experienced significant growth since the 2008 depression. California has three more licensed casinos than in 2005, according to state and federal regulators. Four casinos have closed and several are struggling. “We’ve reached a level of near-saturation,” Kristi Jackson, CEO of Tribal Fi44

Global Gaming Business NOVEMBER 2014

nancial Advisors, told GamblingCompliance.com, and investment dollars are drying up. “There are groups that will eventually become recognized tribes,” she said. “But it’s a bit sensational to say they are going to get through the process and then get land for gaming. “The process of getting land into trust for gaming is a long, expensive, uphill battle that takes 15 to 20 years or more. It’s next to impossible.” Cities for Self-Reliance Joint Powers Authority—a coalition of six Southern California communities and card rooms—has also expressed opposition to the revisions, largely because of recognition attempts by urban Indians in Orange and Los Angeles counties. “We have seen over the past decade a number of would-be tribes who have made it very clear their objective in federal recognition is a casino in the greater Los Angeles area,” lobbyist Tom Brierton says. Micklin says it is highly unlikely urban Indian groups will be recognized. “Those tribes that think they have a chance, if they are anywhere near an urban area, forget it,” he says. Brierton says his clients are not consoled by the fact the Juaneño Band of Mission Indians of San Juan Capistrano, the Gabrielino Indians of Covina and others have been repeatedly rebuffed in attempts at recognition. “We can’t look at it as something that is not reasonable or likely,” he says.

Gambling ‘Not An Option For Us’ The notion Indian groups are seeking federal recognition for the sole purpose of raking in casino riches has added fuel to the growing public and political perception of Native Americans not as culturally rich communities, but greedy purveyors of gambling. Roughly two-thirds of the 366 tribes in the lower 48 states operate casinos. Nearly 60 others in California and Arizona share in gambling revenues. Two of Alaska’s 200 native villages offer bingo machines and pull-tabs. The likelihood of the Nor Rel Muk Wintu getting into the gambling business is as remote as the picturesque, sparsely populated Trinity Valley, accessible only by narrow, zigzagging roads. Delgado says roadwork necessary to facilitate casino traffic would be very costly. “Because of the winding roads in Trinity County, mitigation efforts would be impossible,” she says. “Gaming is not where we’re at. That’s not why we’re doing this. We don’t even discuss it. It’s not an option for us.” But the Wintu of the Trinity Valley are quickly becoming more the exception than the rule. “It hurts us when other Indian groups are seeking recognition for the purpose of gambling. It really does,” Delgado says. “We’ve been in the process for 30 years. We need help for our people. We need housing. We need education. “It’s not about gambling for us. It’s a bigger issue. We have so many other fights to fight.”

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Shapes of Things Portrait of the American online gambler

oughly one year into the launch of regulated online gaming in the U.S., some demographic data is starting to come into focus. Sources of information are plentiful. Consulting firms such as the Innovation Group and AlixPartners have independently carried out up-to-date nationwide surveys into American gambling behavior. (Their findings inform much of this article.) Then there are the analytics obtained by the iGaming operators themselves, courtesy of users who aren’t asked anything but reveal their digital behavior all the same. For years, the focus on gaming “convergence” has been dominated by the connection, imagined or otherwise, between real-money gambling online and offline. This is still more or less the case, but the impression made on the land-based casino business by free-to-play “social” casinos is becoming too large to ignore. And social casino demographics, as we shall soon see, are in a class of their own. So which batches of iGaming user data and consumer insights should be scrutinized—and to fulfill what purposes? In 2004, the Innovation Group initiated an ambitious research project titled “Portrait of the American Gambler.” It surveyed thousands of respondents across the U.S. and probed deeply into their offline gaming behavior, focusing on the land-based player. Ten years later, the group decided it was time for a redo, so earlier this year, an updated study went out, this time containing plenty of inquiries about real-money online gaming habits and attitudes. Separately, AlixPartners did its own survey on gaming, targeting a large nationwide sample size, and it too picked a lot of brains about how online gaming figures into modern-day American gambling habits. The independent findings by the two firms are illuminating for several reasons. First, they frequently match up. Second, they test numerous generalizations about the average online gambler. And third, they both strongly sug-

Millennials (ages 18-35) 46

gest that the online gambler should become a coveted demographic for U.S. land-based casinos.

What The Data Actually Says So, is it true that the majority of real-money online gamblers are men? Yes. Both studies found that approximately two thirds of U.S. online gamblers are men. While that would be considered a supermajority in Congress, it also reveals that the proportion of female online gamblers is significant, and it shouldn’t be taken for granted that your online gambler will be male all the time. Would you dismiss any one demo that made up 33 percent of your business? Gender-specific differences are also worth keeping in mind, because they indicate which games either sex prefers. The data shows men are a lot more partial to poker and sports betting, whereas women lean more toward casinostyle games. Another common demographic criterion is age. Here, the data challenges widespread generalizations even further. It is neither true that “the average online gambler is a young person,” nor that “almost all online gamers are young people.” We can argue over what you consider “young,” but consumer researchers have their own brackets: millennials (ages 18-35), Generation Xers (35-55) and baby boomers (over 55). AlixPartners puts the average age of the U.S. online gambler at “just under 44 years of age.” Hardly a millennial. That’s because, although numerous online gamblers are millennials, there are enough old-timers in the rest of the population to elevate the mean. The Innovation Group figures that approximately half of all U.S. online gamblers are almost evenly divided into Generation Xers and baby boomers. Census-type data aside, the most powerfully iconoclastic takeaway from

Generation Xers (35-55)

Global Gaming Business NOVEMBER 2014

By Marco Valerio

Baby Boomers (over 55)

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75 percent

of online enthusiasts already belonged to a brick-and-mortar casino rewards program. these surveys is that the online gambler is far from the menace to brick-and-mortar business that he (and a third of the time, she) is typically made out to be. “There’s still a lot of discussion about whether online gaming hampers or helps brick-and-mortar casinos,” says John Bonno, who helped direct the AlixPartners survey into U.S. gaming behavior. “Over the past couple of years, our findings have been very consistent. Online gaming does not negatively impact brick-and-mortar visitation patterns. In fact, it does the opposite. In our survey, online enthusiasts had just about the highest number of average casino visits of any consumer segment we identified.” Those consumer segments included the consistent player, the discerning member, the casual player, the destination player and the online enthusiast. According to Bonno, the online enthusiast had the second-highest average income out of all the five—a datum supported by the Innovation Group’s own findings. “The online gamer has a significantly higher average income than a regular casino gamer,” says Erika Meeske, vice president of research and analytics at the Innovation Group. “If you look at the people who gamble online versus the people who don’t gamble online, we found the difference in average income to be very significant.” In addition, AlixPartners found that 75 percent of online enthusiasts already belonged to a brick-and-mortar casino rewards program. And both AlixPartners and the Innovation Group found the average “daily gambling budget” of online enthusiasts to be much higher than that of any other type of consumer. Meeske herself was surprised by how often iGaming figured in the report. “Our intent was to survey land-based casino gamers,” she says. “We did not expect to find as many online gamers as

there turned out to be. Over 25 percent of the landbased casino gamers we talked to play or have played online. I think that’s a lot higher than it used to be.” Here it should be clarified that neither firm limited the definition of online gaming in its survey to U.S.-regulated online gaming, meaning that respondents may be referring just as easily to U.S.-facing, offshore-based sites. Rather than overlook this, Bonno wanted to see what he could deduce about iGaming attitudes depending on the operator. “We asked respondents whether they think an internet gambling site run by a known casino brand is more trustworthy than an internet gambling site run by an unfamiliar company,” Bonno says. “What we wanted to figure out was how many people in the U.S. are hesitant to gamble online due to legal or regulatory concerns. Our initial thoughts were, could this be an even bigger marketplace if the traditional brick-and-mortar companies got more involved in online gaming and provided a secure site for these would-be online gamers to participate in? “We asked respondents whether they agreed with this statement: An internet gambling site run by a known casino is more trustworthy than an internet gambling site run by an unfamiliar company. Fifty-six percent of respondents either ‘strongly’ or ‘somewhat’ agreed. When we asked them whether they would be more likely to play on an online site run by a well-known brick-and-mortar company, 58 percent said yes.”

Practical Applications As head of online poker for Caesars Interactive Entertainment, Bill Rini manages an internet gambling site that is run by a known casino brand. Rini oversees operations for WSOP.com, which is live for real-money in two U.S. states—Nevada and New Jersey. Due to the uneven nature of stateby-state U.S. iGaming expansion, Rini does not NOVEMBER 2014 www.ggbmagazine.com

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When we asked them whether they would be more likely to play on an online site run by a well-known brick-and-mortar company,

58 percent

said yes.

”

have the luxury of assuming his average player is this age or that gender. “Nevada skews a little older in general,” Rini says, adding that the New Jersey online gaming demographic tends to be younger. “I know some things would work in Nevada that probably wouldn’t work as well in New Jersey. Demographic reports don’t necessarily tell you what will work and what won’t. They provide you with some information that guides you in a direction.” For Rini, one of those directions is marketing. “In terms of maximizing the marketing return or acquiring new customers, it’s all about figuring out where the customers are going to come from. If you know they skew older, you probably won’t advertise in a lot of places that target younger demographics. Likewise, if you have a younger demo, you shouldn’t advertise in the AARP magazine.” After working in the online poker space for close to a decade, veterans like Rini have concocted some user segments of their own—“entertainment” player, “aspirational” player, “pro,” etc.—that have more to do with behavior displayed through the screen and less to do with average age and income. Rini believes that “at the end of the day, a piece of information is only good if it’s actionable. If you don’t understand online players well enough to know the right questions to ask of the data, the data itself is not going to give you those answers.”

Don’t Forget Social Casino For all of its investments into the real-money WSOP.com and CaesarsCasino.com platforms, Caesars Interactive Entertainment has spent hundreds of millions of dollars securing considerable market share in the field of social casino gaming—an online gaming activity that nets the operator no direct revenue other than what players voluntarily spend on play chips devoid of any redeemable value. This often surprises a lot of observers both within and outside of the traditional gaming industry, but not Andy Caras-Altas. As the founder and CEO of Traffic Generation, Caras-Altas has played a seminal role in encouraging landbased casinos to take greater notice, and subsequently command, of an interactive form of casino gaming that is legally and widely available to all Americans: the social casino. And this “new” form of convergence has begun booming. But demographic research into the identities of social casino gamers yields findings that are almost antithetical to online gambling. Two thirds of social casino gamers are female. The majority are older, in the 45-to-65 age bracket. But what social casino gamers and real-money online gamblers have in common is that they can both be a great boon for brick-and-mortar casinos—a potential around which Caras-Altas has built his business. “It all has to flow back to the land-based property,” he says. “If you are getting players to engage and interact with your brand online, that is beneficial because you are collecting market and mind share. Those players will be more receptive to the various reactivation and retention campaigns of your live property.” Mirroring the findings of Bonno and Meeske, Caras-Altas asserts a signifi48

Global Gaming Business NOVEMBER 2014

If you look at the people who gamble online versus the people who don’t gamble online, we found the difference in average income to be very significant.

“

—Erika Meeske, VP of Research and Analytics, Innovation Group

cant number of social casino players are habitual brick-and-mortar customers— particularly the social casino “high rollers,” the percentage of players who actually pay, and sometimes pay big, to purchase virtual credits and perks on what is otherwise an entirely free-to-play platform. This intrigues Caras-Altas. He wonders how many paying social casino customers are actually real-money online gamblers waiting to happen. “From what we’ve seen by analyzing players who are considerable spenders in the social space, time and time again they say they’ve played in a land-based casino or would like to play in land-based casinos. When asked about real-money online gaming, they say ‘Well, that’s illegal; I can’t do it.’” And just in case you were wondering: Although the majority of social casino gamers are women, the higher up the “spend” pyramid you go, the more men you will find.

Putting It All Together The online gaming space teems with electronic platforms capable of pumping out valuable user data like a fountain. And what these machines can’t find out, periodic consumer research attempts to discover. Operators are in a sweet position to compare how survey data by the likes of AlixPartners and the Innovation Group measures up against what their own analytics are telling them. The hard part isn’t how to get the data, but to figure out what it means and how to put it to use for your product. As those efforts continue in the boardrooms and cubicles of the emerging U.S. iGaming market, the proliferation of new consumer insights about U.S. online gamblers is fulfilling a purpose of its own. “There is still some skepticism about how successful online gaming will be in the U.S.,” Bonno explains. “Some of the operators we deal with point to a lot of the technical challenges in New Jersey and suggest the market isn’t there yet. “But if you look at what consumers are saying—if you look at online enthusiasts and how their visitation patterns to brick-and-mortar casinos are high, how their average daily gaming budgets are high—you will see there is a demand for this.”

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iGAMING NORTH AMERICA

The iGaming Model As more states consider iGaming, casino operators look for the right role of internet gaming in an online mix by Mark Balestra

his was supposed to be the year for internet gambling in the United States. Intra-state legalization arrived with the falling of the first three dominoes— Delaware, Nevada and New Jersey—in late 2013, and the rest was supposed to be history. But instead, as 2014 draws to an end, the industry faces a new campaign for federal prohibition, and concerns abound with the alarming underperformance in the New Jersey market. Yet, perhaps what’s most surprising about industry developments in 2014 is that any of this comes as a surprise. New Jersey—the state where gambling goes to die—has been a catalyst in what is to be a gradual adoption of legalized internet gambling in the United States, but the industry will fall way short of Governor Christie’s projection of $180 million for the fiscal year. Performance can improve, but iGaming cannot really take hold in the United States until the demand for liquidity is answered by multi-state compacts. This reality doesn’t lean heavily on the rest of the dominoes said to be in line, but a few states might have enough gamblers to reach a critical mass without cross-border gambling. Naturally, all eyes turn to California, with its population of 38 million, ongoing legislative efforts to legalize iGaming and a handful of tribes on board with the movement. Banking on California reinvigorating the stalling U.S. iGaming market in the immediate future would be futile, however, in light of perpetual conflict over who, why, where and how it will happen in the Golden State. Meanwhile, as 47 states circle the pool awaiting the next jumper, Sands CEO Sheldon Adelson’s snowballing federal prohibition initiative presents still another reason to take a step or two away from the edge. Adelson’s crusade has

gained momentum, drawing impressive support along the way, and has driven a wedge into the makeup of American Gaming Association, which has consequently withdrawn the enthusiastic support of online gambling it pledged in 2010. History tells us that the hard-fought battle for the expansion of legal gambling doesn’t end after governmental approval. The worst-case scenario for iGaming is what took place in Australia, where the player protection model—the prototype for

‘‘

There was never going to be a watershed moment for the adoption of iGaming in the United States. Nor is there a panacea for overcoming slumping revenues. But despite the obstacles and setbacks, there remain pockets of great opportunity.

modern iGaming regulation—emerged in the late ’90s as a beacon for progress. It looked as though the launch of state-licensed online casinos in 2000 in Australia was going to shift the epicenter of the online gaming boom from the Caribbean Basin to Australia until the federal government abruptly slammed the door on the industry. But unique circumstances led to the demise of iGaming in Australia, where “pokies” could be found at virtually every corner bar and the arrival of internet gambling was accompanied by the government’s growing commitment to addressing what studies had identified as a compulsive gambling epidemic. The industry’s evolution in Europe probably presents a more realistic example of what to expect in the States: slow progress amid lofty expectations curbed by the ever-present deterrents and compromises. Not long after Australia went cold, the United Kingdom opened its doors to online gambling as part of the government’s massive overhaul of gambling policy, but the treasury was unwilling to prescribe tax rates that would enable the jurisdiction to compete with offshore alternatives. The

Global Gaming Business NOVEMBER 2014

same can be said for France. The common thread is the pushback that comes with progress in the gambling business, and it is happening now in the United States. So where does the industry go from here? A deep breath is a good start. There was never going to be a watershed moment for the adoption of iGaming in the United States. Nor is there a panacea for overcoming slumping revenues. But despite the obstacles and setbacks, there remain pockets of great opportunity. Poker will take hold once a multi-jurisdictional model is put in place, but that won’t happen until the political climate becomes friendlier for cross-border gambling. In the meantime, it will be interesting to see how well casino operators can leverage their marketing savvy to grow their online businesses through cross-platform synergies. Further, the exploitation of social media and the proliferation of daily fantasy sports offerings are promising alternatives to rolling out megacasinos online. And amid the latest federal prohibition movement, tribal operators are more than willing to move forward online. Finally, New Jersey’s crack at challenging PASPA means the door isn’t entirely closed on sports betting. Most importantly, the gambling industry as a whole needs to understand that regardless of the political climate for iGaming, technology and interactivity must be a central component in any gambling offering. Instead of looking at the internet as a potential distribution channel for the established gambling product, operators should look at real-money online gambling as a potential component of their established internet strategy. That is, all parts of the gambling experience— promotions, customer service, player rewards, etc.—must be brought online, regardless of whether real-money gambling is allowed. Customers must be engaged in the internet/social media environment. Eventually, revenues from online gambling will come.

”

Mark Balestra is head of Bola Verde Media and a partner in iGaming North America, the most popular U.S. gathering for iGaming.

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Singapore Outlaws Web Gambling

Singapore Pools, the nation’s lottery and bookmaking operation, is exempted under the new online gaming ban

ingapore’s parliament has passed a law making online and remote gambling a crime. “We prohibit gambling, unless it is specifically allowed for by way of a stringently regulated exemption or license. We will adopt a similar approach to remote gambling,” said the government’s Second Minister for Home Affairs S. Iswaren. Penalties for individuals, operators and distributors range from fines of US$4,000 to $400,000 and possible prison terms up to seven years. The ministry also said websites that “provide, facilitate or advertise remote gambling” will be blocked, and financial institutions will be instructed to reject transfers to accounts linked to persons involved in remote gambling activities. Exemptions are possible, though, under certain conditions for nonprofits that contribute to public, social or charitable causes and have a track record of compliance with legal and regulatory requirements. They will not be allowed to offer casino or poker games, however. Singapore Pools, a state-owned lottery and gambling operator, also will be exempted. Singapore Pools is owned by Singapore Totalisator Board, a statutory agency under the Ministry of Finance. It currently markets three lottery games and is the sole legal bookmaker for football and motor sports betting.

Betfair Finds New Online Partner in New Jersey

nlike Ultimate Gaming, Betfair’s New Jersey online gaming site has survived the turmoil of the Trump casinos in At52

lantic City and is now partnered with Caesars Entertainment. In New Jersey, online gambling sites must be partnered with an Atlantic City casino. Betfaircasino had been partnered with the land-based Trump Plaza casino, but the casino closed its doors last month as Trump Entertainment is in bankruptcy. The state then gave Betfair some time to find a new partner. The new deal with Caesars Entertainment allows the U.K.-based company to keep operating. Although Betfair’s online poker services have barely registered in the New Jersey market, the company has been seeing steadily growing revenue from online casino games and slots. Betfair has reported about $5 million in revenue for the year through August. The state allows New Jersey casinos to partner with several online providers. Caesars Entertainment already operates WSOP.com, Harrahscasino.com and Caesarscasino.com in the state through its three Atlantic City casinos. The New Jersey Division of Gaming Enforcement has approved a Data Center Sublicense Agreement that would allow Betfair to partner with Caesars Interactive Entertainment NJ. The deal essentially means Betfair’s computer servers will be moved to Caesars’ Atlantic City properties. Ultimate Gaming, which had been partnered with the Trump Taj Mahal casino, was forced to leave the state. The Taj Mahal is also in bankruptcy and could close in November. Ultimate Gaming closed down operations, saying the casino had not paid them their share of online revenue.

MyVegas Signs with Station, Adds Blackjack

layStudios announced that on the heels of new partnerships with Station Casinos and Royal Caribbean Cruises, it has added blackjack to the existing slot games on its myVegas social gaming application. “Our team took a serious look at what worked well within our mobile myVegas Slots app, and we asked our players what they most en-

Global Gaming Business NOVEMBER 2014

joyed about the traditional blackjack gaming experience,” said Andrew Pascal, president and CEO of PlayStudios. “In the end, we discovered some great opportunities for innovation, and those insights drove the development of myVegas Blackjack.” Previously, myVegas only worked with MGM Resorts International, so the additional partners substantially increase its customer base. In the case of Station, it also signals a new focus on Las Vegas locals. Under Nevada law, poker is the only online game for which players can gamble real money, a fact that has made social gaming offered through land-based casino websites all the more popular. The myVegas app links to casino reward programs, awarding hotel rooms, show tickets and other comps as prizes. Players have to come to the physical property to use their rewards, so social gaming is a way to increase business at the land-based casinos. Rewards are given for MGM properties including the Bellagio, Aria and MGM Grand. The Station partnership gives rewards to players at three of its properties—Red Rock Resort, Green Valley Ranch and Palace Station. Pascal said the company hopes to expand myVegas to other Station properties in the future.

New Jersey Assembly Committee Opposes Federal Online Gaming Ban

he New Jersey state Assembly Tourism and Gaming Committee is hoping to send a message to Congress urging it not to pass a federal ban on online gambling, which is already established in the state. The committee has approved a resolution from Assemblyman Vincent Mazzeo—who represents Atlantic City—saying such a ban would damage the state’s casino industry and infringe on its state’s rights. “A federal prohibition against internet gaming would directly and negatively impact New Jersey by dismantling the investments that the state and Atlantic City casinos have already made to implement and regulate internet gaming, taking away the economic and employment opportunities already realized by the state and its residents, and foreclosing the future potential of

O o s th c

F p

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internet gaming to generate tens of millions of dollars in tax revenue, create high-tech software jobs, and foster valuable business ventures for Atlantic City casinos in this state,” the measure reads. “Internet gaming has begun to yield benefits for our state’s economy, over $80 million has been wagered, and that’s generating sorely needed tax revenue that’s serving as a stimulus for Atlantic City at this critical time,” said Mazzeo in a statement. “We know internet gambling hasn’t reached its full potential, and a federal prohibition against internet gaming would directly and negatively impact Atlantic City. In particular, it would dismantle the investments that we’ve already made and it would eliminate the potential for New Jersey to become a national hub that would generate tens of millions of dollars in tax revenue.” The measure opposes the “Restoration of America’s Wire Act” bill now before both houses of Congress. The bill has been strongly backed by Sheldon Adelson, owner of Las Vegas Sands Corp., who has been personally backing an effort to ban online gaming in the U.S. The resolution now goes before the full Assembly.

E.U. Court Supports Online Gambling Tax

U.S. Lottery: $17.5B in Online Bets?

he General Court of the European Union recently upheld the European Commission’s decision confirming that the Danish government’s lower tax rate for online gambling does comply with E.U. state-aid rules. The court found that the applicants in the cases of Dansk Automat Brancheforening v. Commission and Royal Scandinavian Casino Århus v. Commission did not prove that they were directly and individually affected by the tax measure, paving the way for member states to adopt different tax rates for online gambling in order to compete in the international online gambling market. The court specifically ruled on the issue of whether the applicants, both land-based gambling operators, were affected by the commission’s decision. In each case, the court concluded that “the applicant is therefore not individually concerned by the contested decision,” meaning that implementing an internationally competitive tax structure, that will ensure the public policy objectives of the Danish Gambling Act 2012, clearly complies with E.U. law.

new study could encourage states in the U.S. to rethink reservations about online lottery tickets. Lottovate, the online lottery platform subsidiary of betting operator Tipp24, wants more U.S. lotteries to go digital. Currently, only Illinois, Minnesota and Georgia sell lottery tickets online. Lottovate commissioned the U.K.-based market research firm YouGov to study the potential of online lotteries in the U.S., and found that more than 27 percent of American adults are interested in playing lottery games on their computers or mobile devices. About 41 percent of existing retail lottery players were also interested in online options, and more than 8 percent of U.S. adults who currently don’t play the lottery would play if the online option existed. The research revealed “a clear consumer demand for interactive play and a huge revenue opportunity,” as much as $17.5 billion per year, said Lottovate Managing Director Zuriñe Sáez de Viteri. Those figures don’t jibe with estimates from Morgan Stanley, which originally pegged the online cash gaming industry at $3.5 billion by 2017, but has had to downgrade those expectations to $1.3 billion.

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NO PITFALLS

Technology for table games continues to evolve and get more efficient By Dave Bontempo

asinos feature flashy, eye-opening innovations throughout their properties. But not in the pit. That’s where subtlety reigns. While technological bells and whistles hail industry changes—like signage providing a visual, property-wide advertisement or mobile apps trumpeting the versatility of gambling houses—the pit remains a solid, durable and classic gaming arena. Baccarat, blackjack, roulette and craps still contribute heavily to the bottom line, and baccarat has enjoyed a surge by way of Asian players over the past several years. Safe Bacc eliminates the need for pre-shuffled The pit is the mainstay of the brick-and-mortar gaming world, cards or special markings where activity began and where much of the action remains. New products often reflect this area’s penchant for high-stakes maintenance. Build it better, not brighter. The modern-day pit highlights security innoNot every product must be based in security, however. The company vations, which enable operators to save money by increasing game speed and provides e-table solutions for every type of casino floor. This includes Fusion fraud protection. Hybrid, which combines the thrill of live table-game action with the flexibility, For baccarat, that often means the elimination of pre-shuffled cards. For efficiency and convenience of electronic betting. The product features connecblackjack and poker, it denotes more durable cards that may bend but not rip. In tions with up to four live-dealer games and user-friendly, 22-inch wide-screen the currency realm, security upgrades include infrared or laser details. electronic betting terminals. The pit has long embraced innovations that prompt faster play, like electronic Its modular betting-terminal design offers operators the ability to extend games. But it blends the need for speed with protection against greed from counlive baccarat, roulette and Sic Bo betting beyond the limits of the casino floor, terfeiters. and allows concurrent betting on up to four live games with the touch of a butManufacturers understand this and work directly with casino operators. Custon. From stadium seating to banks of six to intimate clusters of two, the Fusion tom-made products not only help vendors and operators eliminate the middleHybrid can connect up to 220 terminals on one network. man. They enable both parties to juggle their lineups quickly. Fusion Hybrid is equipped with TITO and SAS, and is connected to all This blend of innovation and protection keeps the pit thriving, which pleases known player-tracking systems. Players insert their currency and loyalty cards many traditional players. In their eyes, the pit remains the heartbeat of gaming. into the top of the terminal to begin playing up to four games concurrently. After placing their desired bets using the touchBally Has Your “Bacc” screen betting display, players watch the Las Vegas-based Bally Technologies manufactures, operates and distributes adoutcomes of the live podium game vanced technology-based gaming devices and systems. It has earned more than 80 through a video screen built into awards for gaming innovation over the last four years, including three in GGB’s their terminals or on large LCD recent Gaming & Technology Awards competition. One first-place winner was Safe Bacc, a visionary baccarat security system. It Bally’s Fusion Hybrid combines best-in-class automatic shuffling, card reading and scoring technology into one single solution to increase profits, productivity and security. As the world’s highest-revenue generating casino game, baccarat is ripe for security breaches and requires labor-intensive procedures to operate. This utility product verifies, shuffles and automatically loads cards into the detachable smart-reading shoe. It also feeds updates directly to an operator’s iScore Plus trends display. This system increases game speed and provides a high level of security at the table. Safe Bacc eliminates the need for pre-shuffled cards or special markings. 54

Global Gaming Business NOVEMBER 2014

Bring Your Table Games to Life TCSJOHNHUXLEY introduces Blaze the latest LED gaming surface technology that delivers brilliance and excitement to table games. Make your tables stand out on the gaming floor with stunning game animations projected through a traditional gaming layout or acrylic playing surface. Players and gaming staff will instantly benefit from seeing all winning numbers and sections of the Blaze game layout clearly highlighted. For further impact, animated game attract sequences automatically run until no more bets is signaled by the system. With the improved visibility of winning sections, pit bosses and security staff can also easily monitor game procedures. The flexibility of the system allows casinos to interchange games from a growing games library. Now available for Roulette, Big 6 (Money Wheel) and Sicbo. For further details contact your local sales office.

Blaze Features: • Available for Roulette, Sicbo, Big 6 • Assists dealers’ accuracy • Highlights winning bets for added security • Under layout game animations • Indicators for place your bets, finish betting and no more bets • 7” LCD dealer touch-screen console • Integrates with all TCSJOHNHUXLEY displays and multi-player products • Quick and easy to install • Multi table options available • Low maintenance longlife LED’s

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Gaming Floor Live is a complete network platform and gaming screens surrounding the betting area. table management system Fusion Hybrid increases productivity by allowing nearly unlimited players on one table without extra labor costs. At G2E, Bally demonstrated how its progressive table games will link to a single jackpot using Infinilink, new cutting-edge software that enables specialty increase a table’s hands, spins or dice per hour, improve customer engagement table games with different math models (e.g. Three Card Poker, Ultimate Texas and bet frequency, and overall, improve profits. Hold ‘em, Fortune Pai Gow) to contribute to one casino-wide meter. Gaming Floor Live was launched at G2E with modules including GFL The Infinilink progressive system, offered exclusively on the Game Manager Bonusing, Floor Wide Event and a Mystery Progressive platform that can adapt 2 progressive platform, links a progressive jackpot among many different table to almost any table game. Also on display was GFL Media, featuring e-FXTM games to help operators offer bigger, faster jackpots. table displays, a comprehensive range of display solutions for live gaming. Infinilink works by combining the use of a random number generator with Other new technology displayed by TCSJohnHuxley at the trade show inunderlying hand odds to provide the same chance of winning an Infinilink paycluded the Blaze suite of products featuring the latest LED gaming surface techout regardless of the individual game. nology, which delivers illumination to table games. Unlike traditional Games featuring the Infinilink progressive play the same as they always have. illuminated tables that consist of a light box with many individual light bulbs Players make their progressive wager to qualify for normal and Infinilink payrequiring frequent replacement, the new Blaze LED technology is energy-effiouts, and a portion of their progressive wager goes to the Infinilink meter. The cient, with many thousands of hours operating life, according to the company. hands and rounds selected for Infinilink payouts are completely random. If a “The table gaming space is very exciting right now,” says Burns, “and we’re player makes a progressive wager during one of these randomly selected rounds focused on developing and delivering dynamic table gaming innovations that and hits the randomly selected hand, they win both the regular and Infinilink drive and grow our customers’ businesses.” payouts.

Following the Game Helping casinos keep track of all those progressive bets is a new system product from London-based table game supplier TCSJohnHuxley. Gaming Floor Live is a complete network platform and gaming table management system. An open platform allows a wide range of data gathered from each table to be analyzed in real time, enabling active and proactive management of gaming floors. “Gaming Floor Live provides a groundbreaking solution for operators and their table games,” says Cath Burns, group CEO for TCSJohnHuxley. “For the first time it is possible to provide the same levels of real-time data collection that operators currently enjoy from their slot systems. You only have to think about the multiple vendors’ products there are on a single table that stand alone, unable to connect and interface, to understand how compelling the GFL solution is.” Gaming Floor Live provides a constant flow of gaming data feeds into the system, offering insights to the performance of dealers, tables and game speeds, highlighting areas and processes that can be improved upon in real time. “With over 800 tables already installed in Macau, Gaming Floor Live is maximizing efficiencies on the casino floor and improving dealer speed to increase revenue,” says Burns. Designed as a modular system, Gaming Floor Live is scalable and offers configurations geared to create an increase of the casino floor’s turnover. Using a robust, universal platform with newly developed protocols, enabled equipment from TCSJohnHuxley or other manufacturers can feed data into the system for analysis. According to the company, using this capability and other modules can 56

Global Gaming Business NOVEMBER 2014

Riding High The beat goes on for Gaming Partners International, a leading worldwide provider of casino currency and table game equipment with offices and manufacturing facilities in the Americas, Europe and Asia. GPI directly manufactures to casinos, with products including currency (chips, plaques and jetons), RFID, layouts, dice, cards, gaming furniture and accessories, along with table-game products like European and American roulette wheels. The company’s V-Series augments its B&G brand of gaming currency. It is an American-style, injection-molded chip made from a new chip material formula. The V-Series offers customers an extensive range of configuration possibilities with chip mold designs. (See Cutting Edge, page 68.) GPI now includes LaserTrack in the gold lace of all of its B&G plaques, jetons and J3 jetons. The innovation is, well... special. LaserTrack, according to GPI officials, is a specially developed invisible laser ink that can only be revealed using a special invisible laser from a special device. Customers can include LaserTrack in the inserts of their J3 jetons, which allows for quick identification when the currency is placed in stacks or racks. This provides customers another level of protection. SecuriFilm is an innovative security feature for B&G chip decals. It creates a semi-transparent hologram-like effect that enables quick authentication at the table, and includes an additional covert security feature enabling a higher level of validation. While an innovative security feature, it also adds a stunning visual effect to the chip aesthetics.

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Sitting Pretty Seat manufacturers provide the panache of a sleek-looking chair and the flexibility to solve problems. Thatâ&#x20AC;&#x2122;s important in a gaming setting. It is not unheard of for a casino to purchase a string of slot machines with different heights than their predecessors. The new machines make the existing chairs too small. But the seating company can switch out the bases on the original chairs. This averts a lengthy and expensive process of buying and restocking thousands of pieces. Industry stories like these are shared by Gasser Chair, which launched its gaming identity through improvisation. Itâ&#x20AC;&#x2122;s been about six decades since the Youngstown, Ohio-based company eyeballed its way into gaming. Top executive George Gasser, seated next to gaming magnate Bill Harrah in Nevada, witnessed customers taking bar stools over to the slot machines. While that annoyed the bartender, it gave Gasser the idea he passed on to the founder of Harrahâ&#x20AC;&#x2122;s: specified stools for slot players. And the rest has progressed through different eras of seating, gaming expansion and technology. Gasser has a significant presence in the traditional casino industry and has grown with the expansion in tribal gaming and the Asian gaming markets. Gasser is well-known for its Halo base. A patented cold-formed metal base with a proprietary friction-minimizing powder coat provides ease of movement, in all directions on carpeted surfaces. This helps repositioning the stool without having it dig into the carpet, thus saving wear and tear in that area. The company recently unfurled its Coltrane series designed for slots and table games. This series features a molded foam cushion with radiused edges, framing patrons in a comfortable saddle effect. The seat and back are joined by its exclusive Flex-Back technology to provide continued comfort and support. This feature offers an optional integrated hand pull. â&#x20AC;&#x153;Gasser is a true manufacturer of custom seating, while some companies rely on outside sources for component parts which merely require assembly,â&#x20AC;? says Christine Dravis, the companyâ&#x20AC;&#x2122;s gaming accounts manager. â&#x20AC;&#x153;We have capabilities to produce our own molded foam, protective edge and have a hightech, in-house powder coat line. These factors, in conjunction with our design and engineering teams, allow unsurpassed attention to detail.â&#x20AC;? The seating market reflects post-recession caution. Customers want bang for their buck while trying to lure gamblers with upgraded products. Soft, cushioned, durable seating is paramount. Customer comfort is a contributing factor to a casinoâ&#x20AC;&#x2122;s bottom line. While chairs wonâ&#x20AC;&#x2122;t bring money into a property, they can prevent revenue from leaving. â&#x20AC;&#x153;Everybody wants value for what they are buying and they want to feel supported by the quality of the product and the company that will stand behind it,â&#x20AC;? Dravis says. â&#x20AC;&#x153;All your customers want you to understand their individual needs in order to help them establish a memorable experience for their guests.â&#x20AC;?

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G2E Duet The largest gaming show in the world brings thousands of attendees and hundreds of exhibitors to Las Vegas By Patrick Roberts

he dynamic duo of Steve Wynn and Sheldon Adelson captured the attention at last month’s Global Gaming Expo, as each gave electric presentations to more than 1,500 people. Wynn kicked it off on the opening day of the show in traditional Wynn style, spinning yarns and anecdotes that enthralled the audience. The Wynn Resorts chairman didn’t endear himself to the major supporters of the show, the gaming manufacturers. He repeated his often-spoken comments that slot machines and table games are all alike. “It was never the slot machines,” he said. “The machines have no power unto themselves.” “From Bangor, Maine, to Phoenix, they are an hour and half to a slot machine,” Wynn said. “You’ve got to give people something they’re willing to get on an airplane and submit to a body search for. That ain’t a slot machine.” Wynn said all gaming devices are alike, but if you give them an exciting experience, that makes all the difference. “It’s about things that give people a chance to live big,” Wynn said. “If you give it to ‘em, you’re going to be OK.” Nonetheless, Wynn bragged that his casinos, from the Golden Nugget in Downtown Las Vegas through his current Wynn and Encore, have always established new highs in gaming revenues. In a post-speech Q&A, Wynn answered a question about internet gambling. Although he said he agrees with Adelson’s objections to iGaming and its impact on children and problem gamblers, he simply doesn’t see it as a good business. He said members of his team said he had to spend $40 million to $50 million or risk getting “left behind.” Wynn actually had planned a New Jersey iGaming casino via a deal with Caesars until Adelson convinced him to back off. The next day, Adelson, interviewed on stage by GGB Publisher Roger Gros, exhibited even more passion when discussing his opposition to iGaming. He described a childhood with a father addicted to gaming and, as a father, losing a son to drug addiction. “To me, it’s a matter of principle,” he said. “I was raised in a family that suffered from the scourges of uncontrolled gaming. I don’t want people to get abused, because when I look at people like that, I see the faces of my parents.” He said children are so technologically sophisticated these days that they can get around any attempt to block them from online casinos. And as for the contention that it’s already happening and impossible to stop? “Then why don’t we legalize prostitution?” he exploded. “Why don’t we legalize cocaine, and heroin, since people are ‘doing it already?’ That’s not a good reason, just because they are doing it anyway.” Enforcement, not regulation, is the only thing that will stop iGaming, according to the Las Vegas Sands chairman and CEO. And he’d like to see full enforcement, rather than settlements, against 58

Global Gaming Business NOVEMBER 2014

Gaming moguls Steve Wynn and Sheldon Adelson (shown with their wives Andrea and Miriam) sang from the same songbook during their G2E addresses last month

The State of the Industry—Manufacturers Panel (l. to r.): UNLV’s Bo Bernhardt, Novomatic AG CTO Thomas Graf, Aristocrat Leisure Ltd. CEO Jamie Odell, IGT CEO Patti Hart, Amaya Gaming Group CEO David Baazov, Multimedia Games CEO Patrick Ramsey

companies like PokerStars, who are “essentially lawbreakers” and currently up for a license in New Jersey after being sold to Amaya Gaming. “It’s the same organization—just different stakeholders,” he said. The crowd seemed to agree, as they applauded at his closing line: “I just don’t see any compelling reason to put an electronic casino in 318 million hands.” Before the iGaming discussion, Adelson described his success in Macau and Singapore, along with his vision for other parts of Asia. He said he expects the current dip in gross gaming revenues in Macau to reverse itself shortly, and pointed to recent remarks by Chinese leaders that the corruption crackdown is over. “Everything that I’ve seen happen in the last 13 years (since) I first was exposed to Macau is cyclical—it comes and goes,” Adelson said. “It’s like gambling: You start off at a baseline, sometimes you’re up, sometimes you’re down.” Adelson also responded to the speculation the day before at a seminar held at the Meadowlands in northern New Jersey that he may be interested in building an integrated resort there. “Yes,” he simply said, although he indicated he has not given it much thought. In other general sessions, two state-of-the-industry panels focused on the views of suppliers and operators. The director of UNLV’s International Gaming Insti-

THE AMERICAN GAMING ASSOCIATION WOULD LIKE TO THANK THE SPONSORS AND SUPPORTERS OF THE

26TH ANNUAL

HALL OF FAME

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MGM Resorts International Southern Wine & Spirits of Nevada

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BMM North America Inc.

Boyd Gaming Corp.

Association of Gaming Equipment Manufacturers

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Bally Technologies, Inc.

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Penn National Gaming, Inc.

International Game Technology

Scientific Games Corp.

Major, Lindsey & Africa LLC

Pinnacle Entertainment, Inc.

Whittemore Gaming Group

Rifkin, Weiner, Livingston, Levitan & Silver, LLC

Reed Exhibitions

Crowe Dunlevy

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tute, Bo Bernhard, moderated both. The operators’ panel consisted of MGM Resorts Chairman and CEO Jim Murren and Hard Rock International CEO Jim Allen, and discussed the state of the U.S. industry. Most notable in the discussion were references to Atlantic City. Allen wanted nothing in AC for his company, where Murren said he would consider building a new complex on 50 acres MGM owns adjacent to the Borgata, which they co-own with Boyd Gaming. Construction would only begin, warned Murren, if the tax rate in Atlantic City were stabilized and regulatory reform continues in New Jersey. Allen said that his company has the rights to gaming at the Meadowlands, despite Adelson’s interest. He said that any benefit for Atlantic City should be monetized and planned completely. “If you’re going to hand $50 million or $100 million to Atlantic City,” he said, “you might as well just give it to the homeless.” Murren also said MGM Resorts, which sponsors fantasy-sports events, could go a step further by investing in fantasy sports leagues. “It’s obvious what’s happening,” Murren said, noting the growing popularity of fantasy sports. “The more we get this out in the open, the more people understand this is a very healthy, fun way to entertain oneself.”

The State of the Industry—Operators Panel (l. to r.): Hard Rock International Chairman and CEO Jim Allen, UNLV’s Bo Bernhardt, and MGM Resorts Chairman and CEO Jim Murren

In addition to expanding its sports betting in casinos, MGM is looking to expand sports betting in states where it’s not currently allowed. The suppliers’ state-of-the-industry panel on the second day of G2E featured CEOs of several slot manufacturers who assessed the changing slot-sector landscape. International Game Technology CEO Patti Hart, Multimedia Games CEO Patrick Ramsey, Amaya Gaming Group CEO David Baazov, Aristocrat Leisure Ltd. CEO Jamie Odell and Novomatic AG CTO Thomas Graf addressed a full range of issues, including the effect of the recent mergers and acquisitions, the changing customer base and the evolution of game styles. On the mergers, the panel addressed the possible layoffs from synergies as large companies combine by stressing that the health of the industry will ultimately benefit, even if short-term job losses ensue. Odell noted that the recent mergers created $600 million in synergies. “That’s us saying we had $600 million too much in cost,” he said. Added Baazov, “Every industry is cyclical, and we have a fiduciary responsibility… In the long term, it will result in more sustainable jobs.” The overall outcome for the industry, Baazov said, will be a much healthier business. Hart added that new jobs will ultimately be created to replace jobs that are lost. “Gaming in the U.S. and abroad is a creator of jobs,” she said. “When we prune in one place, we plant in another place.” On game style, the panelists stressed that the slot-makers are developing new games to attract the millennial generation. “Young adults are more likely to play slots,” said Baazov. “There needs to be a healthy mix, and slots have to be more entertainment-centric.” Ramsey commented that there is ample room for new game styles without replacing the traditional slots on the floor. “I have yet to put a product in front of Nevada regulators and get rejected,” he said. “Maybe I should push my own team more. Nevada is open to different products.”

Powerful Products

The Hall at Hyde During G2E, the latest induction ceremony for the AGA Hall of Fame was held at the Hyde nightclub at the Bellagio. The inductees were (clockwise) the late Bob Faiss, groundbreaking gaming attorney; Jan Jones Blackhurst, former Las Vegas mayor and longtime public affairs executive at Caesars; Ernie Stevens Jr., the longtime head of the National Indian Gaming Association; and Patty Becker, the first woman appointed to the Nevada Gaming Control Board.

Global Gaming Business NOVEMBER 2014

As always, the slot manufacturers presented new games, systems and cabinets. The highlights of the show included Bejeweled 3D from GTECH—one of five “True 3D” games featuring amazing 3D images. Aristocrat again made its mark with its big-name game designers, who produced such titles as The Big Bang Theory, based on the TV show, and Ted, based on the movie of the same name. Also new from Aristocrat: Game of Thrones, based on the HBO series, and Britney Spears—both on the new “Arc” cabinet, which features two curved 42-inch LCDs. Another new cabinet, “The Behemoth,” has one 84-inch monitor—Aristocrat displayed its hit “Buffalo Stampede” game on this giant format. The company also followed up its hit of last year, The Walking Dead, with Sons of Anarchy, another unlikely slot game based on a hit cable series, on the same Vervehd cabinet and format as last year’s hit. Aristocrat officials say the

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producers of Sons of Anarchy approached them after seeing last year’s Walking Dead slot. IGT’s featured offering for the show was S3000, the next generation of its iconic reel-spinning format. The company debuted new games and classic titles on the new format, which features, among other modernized elements, lighting and sound synchronized over entire banks—a factor prominently displayed at the booth. IGT also debuted two games themed after the afternoon talk show hosted by Ellen DeGeneres. The company also added another skill game to its Reel Edge series, Race Ace, which features a 100 percent skill-based bonus in which players use a control to navigate a car in a virtual race. Bally Technologies debuted Duck Dynasty, based on the TV show; and Zoltan’s Fortune, recreating an old-time fortune-telling machine. Another prominent Bally offering was Dragon Spin, on the Alpha Pro Wave 360—with curved monitors in a 360-degree display featuring a dragon traveling around the screen dropping wild symbols and multipliers. Wonder Woman star Lynda Carter made an appearance at the Bally booth. Carter signed autographs to help Bally celebrate the release of the Wonder Woman video slot, a game on the slot-maker’s Pro Wave cabinet featuring action scenes and music rom the classic 1970s TV show in which she played the comic-book super hero. Konami featured the first slot game to tap into the wealth of intellectual property of the parent company’s video game line, introducing the theme Neo Contra. Another Konami standout was Hammer Festival, a comical game fea-

turing a blue-eyed, loincloth-clad monkey that uses a hammer to whack away progressive jackpot levels and bring higher prizes to the player. The company also launched Rolling Riches, a video dice game that relies on video poker-like strategy. Aruze Gaming launched Player’s Party, the next generation of the community game series launched by the popular Paradise Fishing, with a large common display and shared bonus wheels. Multimedia Games, in addition to staging its National TournEvent of Champions slot tournament—along with a charity celebrity TournEvent—launched standouts including Haunted House After Dark, a follow-up to its popular game giving players a tour through a haunted house picking objects from creepy rooms to reveal bonus awards. WMS Gaming released new games based on recently acquired brands, including Elvis, in which players pick the “era” for the bonus from Memphis Elvis, Hollywood Elvis or Vegas Elvis; and Austin Powers, with lots of funny takes from the popular films. WMS also presented an innovative Elton John-themed game with giant glasses framing monitors for the bonus rounds. Other highlights from the traditional slot area included the “O Circle” format from bingo supplier Ortiz Gaming, the giant Colossal Diamonds from AGS, lineups of U.S.-specific game design from international slot powerhouses Novomatic and Casino Technology, and a new technology from third-party company Spin Games that allows HTML 5 content to be streamed to mobile devices for the first time—allowing gaming content, including 3D images, to be streamed to any mobile device without the need of an app.

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NEW GAME REVIEW by Frank Legato

Inari Riches Konami Gaming

onami’s latest KP3 video slot is in the “Reeleven” series, which features screen formats of 11 independent spinning reels framing a three-by-three middle grid of reel symbols with a standard reel on each end. In Reeleven, two reels of the game screen are traditional reels; that is to say, all of the virtual stops of the game’s program are included, with three stops displayed. The remaining three reels displayed are actually nine reels, each displayed in the space of a single symbol, each with all stops in the program represented. Inari Riches places the traditional reels on the outside in a Japanesethemed game. The game itself features the popular “Xtra Reward” bonus features. The same symbols on the outer reels trigger the “Gigantic Symbol Feature,” in which the nine individual reels are spun to complete a single gigantic symbol like in a puzzle, with each reel holding in place until the spins run out or the symbol is completed. The reel display features a 3D effect in the enhanced video format of the KP3 series.

Manufacturer: Konami Gaming Platform: KP3 Format: Eleven-reel, 20, 30 or 40-line video slot Denomination: .01—5.00 Max Bet: 3,000 Top Award: 800,000 Hit Frequency: Approximately 29% Theoretical Hold: 3.9%—17.8%

Flying Horse

Ainsworth Game Technology

his 50-line or 100-line video slot features expanded reels in a free-spin bonus, with several bonus wild symbol triggers throughout the primary and bonus spins. Counting both primary and bonus games, reels are turned wild through 10 different triggering combinations. The triggers involve the title horse symbols appearing on the top or bottom line of symbols. In the base game, a horse in the blue-bordered top or bottom reel positions on reel 2 turns all symbols on reels 2, 3 and 4 wild. A horse in the center position on reel two turns all symbols on the first three reels wild—a chance for easy five-of-a-kind combinations. Landing on various positions in various areas of the screen, five different triggers lead to various reels being wild.

Global Gaming Business NOVEMBER 2014

Three or more scattered bonus symbols trigger eight free games. A new game array appears for the free games—a doubled screen with 10 reels. The horse symbol again triggers various reel combinations, including two combinations that transform six of the reels into wild reels. The feature can be retriggered for five additional free games. There also is a “Wild Re-Spin” feature. If the horse appears in the redbordered center position of reels 2 or 4, one free game is awarded—if the trigger is on the second reel, all symbols on reels 1, 2, 3, 6, 7 and 8 are wild. If it lands on the fourth, the wild reels are reels 3, 4, 5, 8, 9 and 10 for the one free spin. Manufacturer: Ainsworth Game Technology Platform: A560 Format: Five-reel, 50-line or 100-line video slot Denomination: .01—10.00 Max Bet: 500, 1,000 Top Award: Progressive: $4,500 reset Hit Frequency: Approximately 50% Theoretical Hold: Will meet casino requirements

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Mythos

Aristocrat Technologies

ythical creatures in a magical forest form the theme for this series of video slots in Aristocrat’s “E-Series” ( E for entertainment). Mythos is being released with four initial base games—Savannah Magic, Forest of Wonder, Heavenly Pride and Aquatic Dreams. Each game “takes players on a mystical journey of sweeping grasslands, leafy canopies, celestial clouds and tranquil reefs,” according to the company. Each theme features a four-by-five reel matrix—four rows of symbols, five reels—and five different line configurations. “Mega Symbols” are added to variable reel lengths—forming one symbol to act as stacked symbols across three, four or five reels. “Max Stacks” can be randomly inserted on reels with Mega Symbols. Mythos games have a range of line and denomination configuration options and each has low volatility, providing an entertaining, longer-time-on-device experience for players.

Manufacturer: Aristocrat Technologies Platform: E-Series Format: Five-reel video slot; 10, 30, 40, 50 or 100 lines Denomination: .01— 10.00 Max Bet: 100, 500, 600, 800, 1,000 Top Award: 100,000 Hit Frequency: Approximately 50% Theoretical Hold: 4%— 14%

Rapid Shot Aruze Gaming

ruze Gaming has just launched this fivelevel progressive jackpot series, its first ever to use the Innovator series of mechanical reel-spinning slots. Innovator with Radiant Reels is Aruze’s popular reel-spinning series featuring large reels—at 18.1 inches across, which each reel strip measuring 3.54 inches, they are the largest strips for a five-reel format in the business—backed by multi-colored LED lighting and variable reel speeds, with lighting and colors varying according to game conditions. Radiant Reels spin forward and backward at various speeds, building anticipation before the reel results are displayed. This series is the first to combine Innovator with a five-level link. There are three titles in the series: Rapid Shot Diamond, Rapid Shot Ruby and Rapid Shot Sapphire. All are five-reel, 30-line video slots with a recommended penny denomination. In each variation, progressives are won by a corresponding number of the title gemstone scattered across the 15 reel spots,

ranging from a prize resetting at $50 for six gems to a top progressive resetting at $2,500 for 10 gems. The series features a 60-inch LCD monitor displaying the five levels of jackpots, with dedicated overhead signage. Progressive jackpots can be won with any bet level. The Rapid Shot feature is triggered when the Rapid Shot symbol appears on the middle reel. This triggers one free game, retriggered if the Rapid Shot symbol appears again on the third reel. During the Rapid Shot free game, if six or more diamond, ruby or sapphire symbols appear, the corresponding progressive is won. The Mystery Rapid Shot can be randomly triggered at the end of the Rapid Shot Free Game. No credit award is won with any symbol combination except the “Progressive” symbols. The Mystery Rapid Shot ends when a progressive is awarded. Manufacturer: Aruze Gaming Platform: Innovator Format: Five-reel, 30-line stepper slot Denomination: .01 Max Bet: 150, 300, 450, 600 Top Award: Progressive; $2,500 reset Hit Frequency: Approximately 40% Theoretical Hold: 3.92%—12.91%

NOVEMBER 2014 www.ggbmagazine.com

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GLOBAL GAMING WOMEN

The Expanding Network Global Gaming Women at G2E 2014

t is hard to believe that Global Gaming Women (GGW) was established only three years ago. This year saw so many milestones for this young organization. This year’s Global Gaming Expo included a daylong women’s program organized by GGW. In addition, the Kick Up Your Heels event raised a record amount for scholarships to deserving women of the gaming industry. This success is truly a testament to all of the passion and commitment of those involved. As part of the daylong women’s program, I personally had the opportunity to participate in the “State of the Industry: Women Who Lead” panel. It was a privilege to be in the company of such great women of gaming as moderator Patricia Becker, CEO, Patricia Becker & Associates; and fellow panelists Eileen Moore, regional president, Caesars Entertainment; Cindy Kiser Murphey, president and COO, New York-New York Hotel & Casino; and Renee West, president and COO, Luxor & Excalibur Hotel & Casino. It was the most comfortable and authentic panel I have ever been part of. While the purpose of the panel was to share our experiences as part of the development of the participants in the program, I believe we all left our panel enriched from the experience. I was reminded how important it is to create the opportunity to bring leaders together in this type of a forum and for leaders to make the time to participate. The future leaders of gaming come to these sessions with the expectation that they will get access to senior leaders of our industry and will glean insights that will make a difference in their careers. From the feedback that we received, I believe that was exactly what occurred. The panel responded candidly to tough questions such as, “Give a situation that knocked you down in your career and how you got back up.” The panelists spoke of balancing families and careers, and surviving the loss of parents and divorces while continuing to take on increasing responsibilities within their organizations. This sharing of ideas and personal experi-

by Holly Gagnon, President and CEO Pearl River Resort

ences not only gave insight to the audience on how they might handle future situations, it also gave them hope and exposed them to the camaraderie that has become a mainstay for women in gaming. While the numbers certainly have been small and the network previously has not been formal, women in gaming have somehow sought each other out and have encouraged each other along the way. Eileen Moore tells of when she arrived in Las Vegas and Cindy Kiser Murphey and Renee West immediately embraced her and invited her to

GGW panel at G2E 2014: Cindy Kiser Murphey, President and COO, New York-New York Hotel & Casino; Holly Gagnon, President and CEO, Pearl River Resort; Eileen Moore, Regional President, Caesars Entertainment; Renee West, President and COO, Luxor & Excalibur Hotel & Casino; moderator Patricia Becker, CEO, Patricia Becker & Associates

While the numbers “certainly have been

small and the network previously has not been formal, women in gaming have somehow sought each other out and have encouraged each other along the way.

Global Gaming Business NOVEMBER 2014

”

lunch. This is just one of the many examples of an informal network that has evolved over the years. Now, through the establishment of Global Gaming Women, its establishment of the Global Gaming Network (GGN) and its effort to provide access to leaders through programs such as these, the network will grow rapidly. Our session was only one of several great sessions that included topic such as addressing the gender pay gap, developing your personal brand and the importance of lifelong learning. Several attendees of the daylong session were GGW scholarship award recipients funded from prior Kick Up Your Heels and other GGW fundraising events. In discussion with one woman, she was grateful for the opportunity to attend, as her employer would not have funded this type of training for her. If this day was not rewarding enough, how better to cap it off than by having the opportunity to watch two amazing women, Patricia Becker and Jan Jones Blackhurst, executive vice president of communications, government relations and corporate responsibilities, Caesars Entertainment, be inducted into the American Gaming Association’s Gaming Hall of Fame that evening. It is remarkable to see the contributions these women have made to this industry throughout the years. Personally, it was very rewarding to witness them receive this great honor as I have been fortunate enough to benefit from Jan’s encouragement throughout my career and have had the opportunity to work with Patty through GGW. I truly believe that G2E 2014 marked a tipping point for women in gaming and GGW. Granted, it was years in the making to have a panel comprised of three women leaders that emerged across properties on the Las Vegas Strip and a female CEO from Mississippi, as well as two amazing women inducted to the Gaming Hall of Fame, but the path has been cleared. Through the efforts of many women committed to sustaining this trend, by participating and supporting GGW in various capacities, I am confident that the daylong program will continue to expand and we will see more women rise to senior roles and serve as role models in our industry.

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FRANKLY SPEAKING by Frank Legato

Pierogis in the News

R RIN ALDO

No one has asked me, but as usual, I have a solution. First, build a big hotel with the casino, and comp every one of the town’s residents for a stay. There are only 900, so you could do it in one night. Next, offer Bishop Schwartz and the Amish community a piece of the action. I can see the directional signs in the casino now: “Today’s Lessons: Craps, Blackjack, and Butter Churning.” “Bishop Dan’s Corn, Pig and Chicken Restaurant: Come Early; Milk Your Own Cow.” “Stop by Jacob’s Barnhouse Buffet. Have thee a lucky day.” “Blue Shirt and Black Hat Day: Triple Points!” OK, I’ll stop. Finally, MGM Resorts International has filed a federal lawsuit over use of its trademark by a company looking to distribute marijuana in a Las Vegas medical dispensary. No, it’s not the lion. Although that would have been cool. It’s “M life,” the brand of the MGM multi-property player’s club card. The dispensary wants to operate under the name “M’Life Wellness.” Remarkably, MGM doesn’t want one of its trademarks affiliated with a weed clinic. MGM wants the weed company to cease and desist. The pot company is fighting to keep the name. It will be interesting to see how this turns out. What if the weed company just decides to use the name of another casino with which it can be associated? Like, say, the Rivers in Pittsburgh? Their player’s card is called “Rush Rewards.” (Please fill in your own joke here. It should contain some reference to eating a giant pierogi.)

VICT O

see that Rivers Casino in Pittsburgh, my hometown, just celebrated National Pierogi Day by having its chefs bake up a pierogi so large it set a new Guinness World Record. Oh, man. Did I miss National Pierogi Day? That’s almost as bad as forgetting International Knish Week. In any event, those who happen to hail from Pittsburgh know how important this new world record is. Pittsburgh and its historic steel mills—and by extension, much of America—was built on pierogis. The mills are now mostly retail centers, condos and empty lots, but the pierogi soldiers on. Pierogis are one of the great ethnic foods that Pittsburghers sorely miss when they move away. The word pierogi is Polish, but pierogis are a favorite delicacy brought to the U.S. from across Eastern Europe, including the ancestral home of my wife’s family, Slovakia. They are dumplings filled with spicy mashed potatoes, cheese, ground meat or other assorted fillings. Ideally, they are then placed in a hot 1930 iron skillet filled with melted butter—although lard is certainly acceptable—and fried, employing the necessary precautions to shield the cook from hot, flying grease. It’s how my wife’s Aunt Margaret makes them. I’m not sure that’s how the chefs at Rivers Casino made their recordsmashing mutant pierogi, but one day last month, they called in the Guinness people to verify that they had just made the World’s Largest Pierogi, a 123-pound, heart-stopping dumpling filled with cheddar cheese-flavored mashed potatoes. Guinness verified that it easily beat out the former recordholder, a puny 110-pound pierogi. Heck, I can eat that in one sitting. They even had to build a special vessel to cook this big dumpling. The result was a blob of baked dough resembling a monument to some alien life form, preserved carefully under glass. My only problem is the “special vessel” they built to cook it. If they were building it anyway, couldn’t they have made anything they wanted? Like, maybe a giant 1930 iron skillet filled with lard? My only other question is who got to eat it. I’m guessing high-end slot players, in a buffet they later described as “better’n anything dahntahn, or even in Sahth Side.” In other news this month, residents of a small town along the New York State Throughway are up in arms about potential plans for a local casino. Well, up in pitchforks, anyway. The protesters staging demonstrations against a possible casino in the town of Tyre are from the local Amish community. They are headed by Bishop Daniel Schwartz, who evidently raises corn, cows and chickens across the highway from the potential casino site. He even gave his first interview to a local paper, saying, “Gambling goes against the teaching of the Bible, and the fruits of gambling are all bad.” The local constabulary, though, really wants the casino, along with the hundreds of permanent jobs that come with it. Local government officials accuse the anti-gaming forces in the local community of using the Amish sort of as human shields for their campaign, since few can argue with new jobs.

NOVEMBER 2014 www.ggbmagazine.com

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GOODS&SERVICES AINSWORTH BREAKS GROUND ON NEW HQ IN LAS VEGAS lot industry legend Len Ainsworth joined Sofficiallocal and state dignitaries in October for the groundbreaking for the new Las Vegas headquarters of Ainsworth North America, the U.S. division of Australian slot manufacturer Ainsworth Game Technologies. Mike Dreitzer, president-North America for Ainsworth, welcomed Nevada Governor Brian Sandoval, Nevada Third District Congressman Joe Heck and other dignitaries to the event, breaking ground for a 291,000-square-foot headquarters building at Jones Boulevard and Sunset Road in Las Vegas. The two-story office, manufacturing and warehouse complex, on 23.7 acres near I-215, is slated to be complete in mid-2016. The design architect is KGA Architecture. The new facility will accommodate 300 employees and provide for future company growth. The project will create 125 direct and indirect construction jobs. State and local dignitaries presented Ainsworth with various certificates of recognition during the ceremony. On awarding the Certificate of Congressional Recognition to Ainsworth, Heck praised the company for its commitment to employ local people at the facility. Ainsworth, 91, the chairman and founder of Ainsworth Game Technologies and of Australia’s Aristocrat Leisure Ltd., has been involved in an effort to bring Ainsworth slots to the North American casino market. “I’m proud to become a permanent part of the community,” Ainsworth told the gathered crowd. “I’ve been coming here since 1960, before many of you were born, and a time when gaming couldn’t even get bank loan. Since then, Nevada has led the way in establishing licensing procedures, keeping questionable people out of the Congressman Joe Heck and Nevada Governor Brian Sandoval help break ground for Ainsworth’s new headquarters

business, and creating a respectable industry. “I’m often asked about the future of gaming and slot machines. I always respond that the first slot machines appeared more than 110 years ago, and I suspect they will be around a lot longer.”

DREXEL OPENS DENNIS GOMES TRAINING LAB hiladelphia’s Drexel University launched the first Pat anformal four-year gaming career training program Eastern university with the ribbon-cutting October 6 of the Dennis Gomes Memorial Casino Training Lab.

ing lab a year ago from the Pennsylvania Gaming Control Board and, said Deutsch, “took this idea and ran with it.” At the ribbon-cutting, Ambrose said the Gaming Lab is meant as a hands-on training center “as Dennis would have wanted it,” referring to the late Gomes, known as a hands-on executive with a strong commitment to education and mentoring. Gomes’ family, including wife Barbara Gomes, son Aaron, daughters Danielle and Gabrielle and Danielle’s son Jake, along with other family members, cut the ribbon on the gaming lab. Aaron Gomes, who worked for his father at Resorts and most recently returned to the U.S. after two years as managing director of Echo’s Jupiters Gold Coast in Australia, is a Drexel alumnus, having earned his MBA there. He said he was proud to have the university be home to a lab dedicated to his father. The elder Gomes had four “passions,” Aaron Gomes said—the gaming industry, education, caring about others and, most importantly, integrity. “I want the lab to represent not only gaming, but integrity,” he said. “That makes Drexel the perfect place.”

IGT MARKS SALES IN U.S. AND ASIA Drexel University officials and the family of late gaming legend Dennis Gomes cut the ribbon on the Dennis Gomes Memorial Casino Training Lab

eading slot manufacturer International Game TechLAsia.nology announced two major sales in the U.S. and

The facility—named for the late gaming legend who fought the mob in Las Vegas and was an innovative chief of Atlantic City’s Trump Taj Mahal, Tropicana and Resorts casinos—is still a work in progress for Drexel. Housed within the university’s Center for Hospitality and Sport Management, the campus facility is still filling out its replica casino, the newest instructional tools being several slots recently donated by Bally Technologies and gaming tables courtesy of the Tropicana. Heading development of the lab has been Bob Ambrose, a longtime casino executive brought in as a gaming and hospitality instructor for the casino training program. Ambrose had been executive director of slot service operations at Tropicana in Atlantic City and gaming and hospitality development executive at Gomes & Cordish Gaming, LLC when tapped for the new post by Dr. Jonathan Deutsch, director of the Drexel University Center for Hospitality and Sport Management. At the ribbon-cutting, Deutsch credited Ambrose with developing a program designed to “mold the next generation of responsible industry leaders.” Deutsch said too many traditional gaming programs are comprised of little more than “textbooks and war stories.” Drexel’s program, he said, will let students “learn by doing.” Ambrose secured approval for the gaming train-

The company said that City of Dreams Manila will install IGT Advantage systems, including the sbX Floor Manager and Service Window, providing a comprehensive patron interaction and floor optimization suite of solutions and applications when the casino opens later this year. An extensive bonusing tool set which includes Xtra Credit, Point Play, Scheduled Return Play and Carded Lucky Time are among the elements that will

Global Gaming Business NOVEMBER 2014

“James Cameron’s Avatar: Treasures of Pandora” video slot

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drive promotion capabilities, in addition to direct player interaction through Message Blast. The IGT Advantage installation at City of Dreams Manila will provide Machine Accounting, Advantage Monitor, Patron Management and the Visual Slot Performance Tool, which deliver valuable up-to-the-minute data on player activity and preferences, giving the operator the option to change content dynamically to optimize floor performance. Plans also include the new EZ Pay Mag product, offering players a card-based cashless option alongside EZ Pay ticketing. City of Dreams Manila has also selected IGT Tournament Manager with 52 IGT video poker machines, transforming what was once a singular terminal play experience into a fully interactive video poker tournament, enabling the casino to host events to further drive player interaction. IGT also announced it had partnered with Arizona’s Desert Diamond Casinos & Entertainment to stage a special event launching the “James Cameron’s Avatar: Treasures of Pandora” video slot at the operator’s Tucson casino. The game offers an immersive, cinematic gaming experience on IGT’s state-of-the-art CrystalCore cabinet. Boasting stunning visuals and impressive surround-sound audio, the Treasures of Pandora video slot features a wide-area progressive and two vertically stacked base games. Players can explore unlocked content, enjoy customizable options and view never-before-seen bonus content simulating a flight to the planet Pandora, the setting of the film.

INNOVATIVE TECHNOLOGY HQ NEARS COMPLETION

GLI LINK INSTALLED IN MEXICO

ith a 71 percent increase in United Kingaming testing company Gaming Laboratories W dom staff members over the past six years, G International announced the recent installaInnovative Technology, a leading provider of cash tion of its patented GLI Link product at the facilities of NYCE, Mexico’s gaming regulatory agency. With GLI Link, suppliers can test against specific casino configurations in their local lab, in their own time zone. Interoperability testing can be performed on any game with virtually any system from any GLI lab in any time zone, in Asia, Europe, Latin America or anywhere on the globe, and GLI can interface devices to a variety of systems that are operating in any major casino in the world. This installation will be placed in the Mexico City IT-Cluster, where NYCE has a functional office with enough infrastructure to serve the entire country through a high-speed connection, embedded security and 24/7/365 service. NYCE engineers have been trained by GLI’s experts, and will have continuous direct contact with GLI to support and fix any kind of trouble. This is the second GLI Link environment available for the Latin American region. The first installation was completed and is available now in GLI’s South America laboratory in La Plata, Argentina.

handling equipment, recently announced its new tate-of-the-art office facility at its U.K. headquarters is almost completed. Development Director Peter Dunlop said, “The new head office building will allow us to continue with our growth and development, encompassing state-of-the-art office facilities, a larger workshop, science lab and development test area to further improve our onsite rapid prototyping facilities. As a market leader in our field it is important to continually innovate.” Established in 1992, ITL has grown internationally by 125 percent over six years, with more than 260 employees. ITL recently completed a factory expansion in China and added office locations in Australia, to handle the Asia-Pacific region, and Italy, in support of the company’s existing European base. As a result, ITL now operates eight worldwide offices covering four continents—Europe, Asia, Australasia and South America, with a trading partner network over 22 countries.

BALLY SCHEDULES MERGER VOTE iversified gaming supplier Bally Technologies D announced hat a special meeting of its stockholders has been scheduled to, among other things, consider and vote on a proposal to approve the previously announced merger agreement with lottery giant Scientific Games, under which Bally would emerge as a wholly owned subsidiary of Scientific Games. The special meeting will be held on November 18. Bally stockholders as of the close of business on October 20, 2014, the record date for the special meeting, will be entitled to notice of and to vote at the special meeting. The merger, which is expected to be completed by the end of calendar 2014, is subject to the approval of a majority of the outstanding shares of Bally’s common stock and the receipt of required gaming approvals, in addition to other customary closing conditions.

NOVEMBER 2014 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Attractive and Secure Product: V-Series Chips Manufacturer: Gaming Partners International

aming Partners International has developed a variety of new and innovative currency products and security feature. The latest is the VSeries of injection-molded American-style gaming chip in the B&G chip line. The V-Series is produced using a new chip material formula that is stronger and more durable. The chips are designed to offer customers an extensive range of configuration possibilities with their chip mold designs. Included in the chip material is ChipShield, an anti-microbial that helps inhibit the growth of stain-causing mildew. The result is a cleaner and more sanitary chip surface. For customers who order chips with four or more injection colors, GPI includes an exclusive infrared security feature in their chips at no additional cost. GPI has also added two new currency security features to its B&G chip line. The first, 3-in-1 UV, is a security taggant that remains invisible under standard UV wavelengths. Because it can be added to plastic injection-molded chip materials, it is easy to validate chips when placed in

Amazing ‘O’ Product: O-Circle Cabinet Manufacturer: Ortiz Gaming

taging an event complete with confetti cannons, multinational bingo supplier Ortiz Gaming used the Global Gaming Expo for an “Amazing Unveiling” of its new cabinet, the O-Circle. The O-Circle is an imposing cabinet that uses a 42-inch curved video monitor. The monitor points toward the player, whose controls are on a table-like button panel designed to provide maximum player comfort. O-Circle is designed for “full player immersion into the game,” according to the company. Using surround-sound and the oversized, curved screen, the format combines unique player experience with superior player comfort. During the “Amazing Unveiling,” Ortiz Gaming spokesman and senior consultant to the president Gary Green announced a variety of updates to their product line, including button changes to the standard cabinet. The highlight of the event was when Ortiz Gaming Founder and Chairman Alejandro Ortiz and President Maurilio Silva uncloaked the new cabinet (pictured). Ortiz Gaming also announced that the prototype O-Circle will be available during the first quarter of 2015. For more information, visit ortizgaming.com.

Global Gaming Business NOVEMBER 2014

stacks or racks. It also offers three levels of authentication, including a forensic verification using scanning electron microscopy. The second currency security innovation added to the chip’s decal, SecuriFilm, creates a semi-transparent, hologram-like effect that enables quick authentication at the table and includes an additional covert security feature enabling a higher level of validation. For more information, visit gpigaming.com.

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PEOPLE MGM PROMOTES THRASHER, FITZGERALD, HOFF

GM Resorts International has announced the promotions of three top executives at major Las Vegas Strip operations. Don Thrasher, longtime president and chief operating officer of Circus Circus Las Don Thrasher Vegas and other Nevada regional operations, has been named as the first president of Park Holdings, LCC, a new entity whose first task will be development of the Park, now under development between the Monte Carlo and New York-New York hotels. Park Eric Fitzgerald Holdings was also created to oversee “the continued revitalization of outdoor areas on the Las Vegas Strip,” according to MGM. Eric Fitzgerald has been named general manager of Circus Circus Las Vegas. Fitzgerald joined the comAnn Hoff pany in 2005 as vice president of hotel operations at Excalibur, and in 2009 assumed the same duties for the Luxor resort. MGM also announced the promotion of Ann Hoff to general manager of Excalibur Hotel and Casino. Hoff’s move marks the creation of a new management team at the resort, which used to operate under a shared executive management team with Luxor. Hoff was formerly vice president of operations at New York-New York, and has also worked for the company in Biloxi, Mississippi.

GAMBLIT INSTALLS YODER IN BUSINESS DEVELOPMENT ROLE

aming technology provider Gamblit Gaming has tapped industry veteran Marcus Yoder to lead and oversee its Regulated Markets Business Development team. According to a statement from the company, Marcus Yoder Yoder will be responsible for “introducing Gamblit to new markets in the gaming space. He will manage rela-

tionships with licensed casino operators, regulators, industry groups and approved casino original equipment manufacturers.” Yoder has 20 years of experience as a technology executive. Most recently he was executive director of business development at IGT, where he was responsible for the expansion of the company’s interactive products in North America.

MARTINO NAMED IMGL REGULATOR OF THE YEAR

aryland Lottery and Gaming Control Director Stephen Martino recently was named Regulator of the Year for the Americas by the International Masters of Gaming Law. The group cited Martino’s role in increasing Maryland’s lottery and gaming revenues by 67 percent during his four years as director. Prior to leading the Stephen Martino Maryland gaming agency, Martino, a former newspaper editor in Louisville, Kentucky, was the executive director of the Kansas Racing and Gaming Commission. The Maryland Lottery and Gaming Control Commission regulates casinos, runs the state lottery and oversees the state’s bingo parlors. Casino operators and problem-gambling support groups laud the agency for its professionalism and fairness. In addition to Martino, IMGL announced Carlos Hernandez, general director of the DGOJ, Ministry of Finance and Public Administrations, Spain, was named Regulator of the Year for Europe; Thomas Russell, commissioner, Pokagon Band Gaming Commission, Arkansas, was named Regulator of the Year for the Indian Countries; and Malcolm Richardson, director of compliance and investigations, Department of Business, Northern Territory Australia, was named Regulator of the Year for Asia/Australasia.

CHAKMAK LEAVING BOYD

oyd Gaming Corporation, in a move to streamline operations and improve earnings performance, announced that Chief Paul Chakmak Operating Officer Paul Chakmak is leaving the company after 10 years. Boyd CEO Keith Smith said in a statement that he will assume Chakmak’s responsibilities. “Given today’s operating environment, we believe that more direct oversight and a streamlined

decision-making process will position us to improve our operating performance going forward, and allow us to execute our growth strategy more quickly and effectively,” Smith said. He also praised Chakmak’s performance. “Paul helped strengthen our financial organization as CFO, and as COO he helped guide our operations through a period of significant expansion,” Smith said.

WILMOTT JOINS PENN NATIONAL BOARD

enn National Gaming recently named as its seventh board member Chief Executive Officer Tim Tim Wilmott Wilmott. He joined regional casino operator Penn National as president and chief operating officer in February 2008 and was named chief executive officer last November. Prior to Penn, Wilmott had served as an executive with Harrah’s Entertainment, now Caesars Entertainment, since 1987. He was chief operating officer at Harrah’s for four years. Penn National operates nearly 30 casinos and racetracks in 18 states and provinces.

GGB

November 2014

Index of Advertisers

Acres 4.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 American Gaming Systems . . . . . . . . . . . . . . .31 Aruze . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Bally Technologies . . . . . . . . . . . . . . . . . . .2, 45 Cole Kepro . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Data Spade . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . .67 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Gaming Support . . . . . . . . . . . . . . . . . . . . . . .57 Gasser Chair . . . . . . . . . . . . . . . . . . . . . . . . . .41 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17, 37 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . .27 IGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Konami Gaming . . . . . . . . . . . . .11, Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Macquarie . . . . . . . . . . . . . . . .Inside Back Cover Multimedia Games . . . . . . . . . . . . . . . . . .18, 19 Ortiz Gaming . . . . . . . . . . . . . . . . . . . . . . . . .29 Red Square Gaming . . . . . . . . . . . . . . . . . . . . .9 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . .26 Spin Games . . . . . . . . . . . . . . . . . . . . . . . . . . .51 TCSJohnHuxley . . . . . . . . . . . . . . . . . . . . . . . .55 WMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

NOVEMBER 2014 www.ggbmagazine.com

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CASINO COMMUNICATIONS

Sheldon Adelson

Chairman and CEO, Las Vegas Sands

s one of the most powerful men in the U.S., Sheldon Adelson transcends the gaming industry. A friend of Israel and conservative political candidates, Adelson also happens to be a transformative character in gaming. His meetings-andconvention-centric business at the Venetian in Las Vegas was surpassed by his massive Cotai Strip in Macau, and bested again by his iconic Marina Bay Sands in Singapore. So his appearance this year at G2E—a day after a keynote speech by his current best friend, Steve Wynn— was a moment to be savored. With nearly 1,000 people in attendance, Adelson sat down for an intimate conversation with GGB Publisher Roger Gros—with Wynn in the front row. The following are some excerpts from the interview. For a full video recap of the presentation, including a passionate defense of his controversial views on iGaming, visit ggbmagazine.com.

GGB: Why did so many people doubt you when you bought the Sands in Las Vegas and began to transform it to a convention center and hotel? And then continued to doubt you as you entered Asia? Adelson: I’ve been in business for 69 years. And after my first dozen businesses I began to realize that they only way you can really get ahead is to do things differently than they were being done. I came to learn that if you do things differently success will follow you like a shadow. When I get into an industry, I study how that industry works and then see if there are opportunities by doing things differently. And I’m a risk-taker, so nobody thought of doing it the way I did. They were satisfied with the status quo and I’m never satisfied with the status quo.

What was your idea when you wanted to develop the Cotai Strip in Macau? If you were looking at the Las Vegas Strip, and you could get a couple of huge helicopters with 70

slings underneath, and you could transport the Strip to Macau, could you succeed? The answer was yes. Steve (Wynn) and Caesars had made great careers out of bringing Asians to Las Vegas, so why not bring Las Vegas to Asia? Well, I couldn’t find any big helicopters, so I just decided to reconstruct it over there. The government thought it was great, but many people thought I was going to fail. But now they are all there. Macau has had some problems recently in the VIP junkets and revenues have slumped. What’s happening now? Since I’ve been in Macau for 15 years, everything has been cyclical. It’s like gambling. Sometimes you’re up, sometimes you’re down. When they tried to limit visas for a while, they never announced when they were cracking down and when they were loosening up. Surprisingly to me, in the last few days they’ve announced that the current crackdown on corruption in China is just about over because they’ve achieved their goals. I think the players that want to stay below the radar might stay away for a few more months, but they’ll come back and play more once they get comfortable. Why did you build something so iconic in Singapore with Marina Bay Sands? Why didn’t you just recreate a Venetian there? Well, the competition had an architectural component to it. They said about 20 percent to 30 percent of the decision would be made on the architecture. And we had a great architect, Moshe Safdie. Actually, the bridge on the top wasn’t in his original plans. When he finished the design I noticed there was no pool. Now you have to have a swimming pool, but we had such a small piece of land, there wasn’t room for one. So I said just put it on the roof. Now I didn’t expect him to build the SkyPark, but that’s what he did and, it is the best. Now I do believe in iconic buildings. When we’re competing with other companies you have to be the best.

Global Gaming Business NOVEMBER 2014

You declined to bid on a casino license in Massachusetts, which some found curious because you are a native of the state. Why didn’t you bid? My business model of an integrated resort works best in the middle of a city or on the edge of a city because we need the other tourism infrastructure to support it. We need restaurants, other hotels, local transportation, airports and more. There was no downtown location in Boston where my business model could work. And besides, I saw the possibility of New Hampshire, Connecticut, Rhode Island and Maine expanding their casino offerings, not to mention New York. So with this kind of competition, I didn’t think my business model would work outside of downtown Boston. In New Jersey, you never wanted to go into Atlantic City, but now that they are considering a casino at the Meadowlands in North Jersey, would you be interested in bidding for that? Yes! (Lengthy pause with laughter) What? It would be a very attractive development. It depends upon what New Jersey wants. But it’s a two-edged sword. One morning you could wake up and the governor of New York would see the money we’re taking at the Meadowlands and open a casino in New York to keep the money there. You’ll still have northern New Jersey. But it’s just a matter of travel time. If you can get there faster, that’s the deciding factor. But could it, for five or six years, give you an excellent return on invested capital? Yes, so we would be interested in that. Is the U.S. gaming market completely saturated? There’s only room for expansion in Texas and South Florida, possibly another casino in Tampa. Again, my model is only successful in a city. I can scale down and be successful in a suburban area, like Bethlehem, which is probably one of the most profitable casinos in a regional market.

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