Global Gaming Business, September 2015 by Global Gaming Business

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GGB Global Gaming Business Magazine

MESS IN BAHAMAS TRIBAL RECOGNITION PLAYER TRACKING ECHO IN BRISBANE

September 2015 • Vol. 14 • No. 9 • $10

Class Act

Aristocrat boosts innovation with top game design, marketing, acquisition

Higher Education

How colleges and universities are teaching gaming as a discipline

Official Publication of the American Gaming Association

Counting on Cotai Will new supply in Macau result in increased demand?

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CONTENTS

september

Global Gaming Business Magazine

24 COVER STORY

COLUMNS

All In

14 AGA

On the heels of a five-year effort that saw the assembly of a game development and management team that is the envy of the business, a rebirth of gaming operations and a strategic acquisition that added a successful line of Class II games, Aristocrat Leisure Ltd. and its U.S. subsidiary Aristocrat Technologies are riding high.

Meeting Momentum Geoff Freeman

16 Fantini’s Finance Super CEOs Frank Fantini

38 Regulation

By Frank Legato

Testing the Testers

On the cover: Aristocrat CCO Maureen Sweeny and CEO Jamie Odell

Linda Lemieux

DEPARTMENTS

FEATURES

18 Schooling the Industry

4 The Agenda

GGB iGames

The growth of the international casino industry has coincided with the growth of gaming education as the gaming has business matured. By Marjorie Preston

30 Counting on Cotai As investors and operators deal with the unprecedented Macau slump, the building boom in the Cotai Strip area offers hope.

With the $3.5 billion Baha Mar casino resort project at a grinding halt over disputes between the owner and contractor, Bahamian officials look at taking over the project. By Frank Legato and Roger Gros

44 Tracking Success Suppliers of player tracking and casino management systems are expanding their reach to turn spending across a casino resort into a complete player profile. By Dave Bontempo

48 Recognition Quest

6 Dateline

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

13 Nutshell

iGNA Outlook 40 Sports Betting Momentum

54 New Game Review

Sue Schneider

42 iGames News Roundup

By James Rutherford

34 Nightmare in Paradise

Vol. 14 • No. 9

56 Cutting Edge 58 Frankly Speaking 60 Emerging Leaders With DraftKings’ Griffin Finan and Las Vegas Sands’ Jonathan Bell

62 Goods & Services 65 People 66 Casino Communications With John Dinius, Interim General Manager, Sycuan Casino

As some politicians say the Department of the Interior’s tribal recognition policy is too lax, federal officials say the recognition bar remains high. By Dave Palermo SEPTEMBER 2015 www.ggbmagazine.com

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THE AGENDA

A Millennial Moment Roger Gros, Publisher

omething is happening in Atlantic City. You remember Atlantic City? The town where four casinos went belly-up in 2014… where more than 8,000 casino workers lost their jobs… and where property taxes are so high, no one would take the shuttered Revel casino even if it was given to them. Right, that Atlantic City. Something unexpected and flying beneath the radar is giving locals hope. It seems that Atlantic City has suddenly become “hip” with the millennials. Right, when I first heard that, I thought the person explaining how it happened was crazy. But when I began hearing the same thing over and over again, not only from locals but friends from New York and Philadelphia, I realized there was at least a grain of truth there. A childhood friend of mine from Brooklyn told me her 30-something daughter and friends visit Atlantic City on a regular basis to “get away from it all” in New York. It seems AC has become a hot spot for bachelor and bachelorette parties. A casino executive explained that these kids rent a room on the weekend for $300 a night or more and cram eight to 10 friends in one room. Of course, most of them spend the night at the clubs, so rarely are they in the room at the same time. They’re more than willing to pay $15 per cocktail or get expensive bottle service. And believe it or not, they even gamble! Not high rollers by any stretch, but they do throw a few chips down on a blackjack table (not often slot machines, however). So, has Atlantic City won the race to attract the millennials? Maybe so, but what’s the prize? An article by Wall Street executive Steve Rattner published in The New York Times in late July presented some jarring information about the millennial generation, which is currently defined as anyone born after 1980. Someone born in 1994 is currently eligible to enter any casino in the U.S. (This makes me feel really old!) Rattner tells a story of a generation that isn’t nearly as affluent as its predecessors. Their median income is almost $3,500 less than people their age in 1980 (adjusted for inflation, of course).

Their median net worth—$10,400—is almost half that of that of Generation X that peaked in 1995. The cost of college tuition has soared almost 250 percent in that period (versus just 63 percent inflation). So, it’s no wonder that 71 percent of bachelor’s degree recipients graduate in debt (versus only 46 percent in 1995). And that debt averages more than $55,000, versus only $26,500 in 1995. The big problem, says Rattner, is the daunting financial hurdles facing the millennials as they move forward. Most problematic is the federal debt as a percentage of gross domestic product. Right now, it has soared to 74.1 percent, versus less than 40 percent only 15 years ago. By the time millennials reach retirement age, that percentage will be anywhere between 120 percent and 140 percent. Less than half of millennials expect to cash in on Social Security or Medicare. Now, the casino industry clearly can’t solve the problems facing millennials. Rattner says it can only be addressed by reforming entitlement programs and reducing the cost of a college education. So, are these millennials really the future of the casino industry? Well, considering there are no other options, the casino industry needs to understand the economic pressures under which millennials labor. Does that mean 10 people sharing one hotel room while everyone parties all night? Maybe. But marketing executives need to understand not only what millennials want but also how they expect to pay for those things. Packages that will offer millennials value, give them the experiences they desire and keep them connected via all their devices could be a winner. So while Atlantic City seems to have stumbled onto a positive trend for a change, how long will that continue? Millennials will grow up, have children and buy homes (but not nearly as often as their predecessors, according to Rattner). But they will still need to recreate. Casinos need to figure out how to provide these moments for the millennials, but it won’t be easy.

Global Gaming Business SEPTEMBER 2015

Vol. 14 • No. 9 • September 2015 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 Frank Fantini | Geoff Freeman Linda Lemieux | Sue Schneider Contributing Editors Dave Bontempo | Erika Meeske | Dave Palermo Marjorie Preston | Robert Rossiello James Rutherford | Michael Vanaskie

EDITORIAL ADVISORY BOARD Rino Armeni, President, Armeni Enterprises

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

• Julie Brinkerhoff-Jacobs, President, Lifescapes International

• Nicholas Casiello Jr., Shareholder, Fox Rothschild

• Jeffrey Compton, Publisher, CDC E-Reports

• Geoff Freeman, President & CEO, American Gaming Association

• Dean Macomber, President, Macomber International, Inc.

• Stephen Martino, Partner, Duane Morris, Baltimore

• Jim Rafferty, President, Rafferty & Associates

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

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

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

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

• Roy Student, President, Applied Management Strategies

• David D. Waddell, Partner Regulatory Management Counselors PC Casino Connection International LLC. 901 American Pacific Drive, Suite 180 • Henderson, Nevada 89014 702-248-1565 • 702-248-1567 (fax) www.ggbmagazine.com The views and opinions expressed by the writers and columnists of GLOBAL GAMING BUSINESS are not necessarily the views of the publisher or editor. Copyright 2015 Global Gaming Business LLC. Henderson, Nevada 89014 GLOBAL GAMING BUSINESS is published monthly by Casino Connection International, LLC. Printed in Nevada, USA. Postmaster: Send Change of Address forms to: 901 American Pacific Dr, Suite 180, Henderson, NV 89014

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DATELINE USA september2015

Second Time’S a charm

GLPI Chairman Peter Carlino

GLPI buys real estate of Pinnacle Entertainment

hen Gaming and Leisure Properties, Inc. made an offer just a few months back to purchase all of Pinnacle Entertainment, Inc.’s real estate assets, Pinnacle quickly shrugged GLPI off. In July, GLPI came back with a substantially higher offer, this time for $4.75 billion in an all-stock transaction, an offer too nice for Pinnacle to refuse. The transaction came as no shock, as Pinnacle has been in talks regarding a real-estate investment trust split, and GLPI is seen as the gold standard for REITs within the gaming industry, having split from Penn National Gaming in

2013 with much success. The acquisition of property will increase GLPI’s current portfolio of 21 properties across 12 states to a total of 35 casino and hotel assets spread throughout 14 states. GLPI Holdings, Inc., which falls under the umbrella of GLPI, will still own and operate two gaming properties in Baton Rouge, Louisiana and Perryville, Maryland. GLPI is predicting the acquisition will provide an immediate impact, and will deliver low double-digit percentage increase in annual dividend per share in its first full year. The combina-

CAESARS: QUEST CONTINUES Plan would give control to creditors Caesars CEO Mark Frissora

aesars Entertainment Corporation officials say they have reached an “amended restructuring support agreement” with top holders of the more than $18 billion in longterm debt carried by its bankrupt largest unit, Caesars Entertainment Operating Company (CEOC). The debt is the bulk of Caesars Entertainment’s industry-high $22.8 billion in long-term debt. The amended agreement reaffirms support of CEOC’s largest creditors, according to a report in the Las Vegas Review-Journal. The company officials did not reveal any amendments made to the original restructuring plan, which was negotiated over four months late last year with firstlien bondholders. Caesars’ deal with top creditors would slash $10 billion of CEOC’s long-term debt. However, the company still needs to get a good portion of its second-lien bondholders— many of whom are plaintiffs in four lawsuits claiming the restructuring illegally closes them out—for the restructuring to be approved by U.S. Bankruptcy Judge Benjamin A.

Goldgar, and for CEOC to emerge from bankruptcy. The company announced in early July that it has come to an agreement with some of those second-lien creditors to grant equity in two new companies plus another $200 million worth of convertible notes in exchange for second-lien debt holders agreeing to the restructuring plan and dropping their claims against Caesars. The company needs at least half of the second-lien debt holders to agree to the restructuring for it to go forward. The ongoing bankruptcy saga did not hurt second-quarter revenues for Caesars Entertainment. The company reported that its net revenue increased 17.4 percent for the quarter, with net income of $15 million, or 10 cents per share, compared to a net loss a year ago. “We are focused on growing the business, continually improving efficiency and expanding margins,” said Caesars Entertainment CEO Mark Frissora, in his first earnings report since taking the CEO helm from Chairman Gary Loveman July 1. “These results demonstrate our ability to deliver growth while driving operational efficiencies.”

Global Gaming Business SEPTEMBER 2015

tion will be the third largest publicly traded triple-net REIT, while adding $377 million in initial rent revenues to GLPI in the first year after close. Anthony Sanfilippo, chief executive officer of Pinnacle Entertainment, said, “This is a compelling transaction that unlocks the value of Pinnacle’s real estate assets and delivers substantial value to our shareholders.” Peter Carlino, chairman and CEO of GLPI, had similar positive feelings, saying, “Pinnacle’s real estate portfolio brings great properties to GLPI and adds one of the leader gaming operators as a new tenant.”

Urban Withdrawal

Massachusetts casino developer drops out

G Urban Enterprises and its partner Foxwoods abruptly pulled their KG Urban abruptly pulled out of its proposed $650 million proposal to build a casino resort in casino project for New Bed- New Bedford ford out of the running for the Massachusetts southeastern casino license in July. They cited their inability to secure financing as the cause. In a letter to the Massachusetts Gaming Commission, the developers said they had found securing financing “significantly harder” than they had anticipated. The letter concluded, “Given the uncertainty of obtaining viable financing for the project and the time constraints of the license application process, we cannot justify investing any additional funds in the project beyond the significant amount already invested.” The letter said investors had been reluctant to invest because of the very real possibility that the Mashpee Wampanoag tribe could still open a casino in Taunton. With this announcement, suddenly the license for the Bay State’s fourth and final casino appears to be hanging in limbo. At the very least, no more casinos will open before 2018. One bidder remains for the license, Brockton, whose developer Mass Gaming, a subsidiary of Neil Bluhm’s Rush Street Gaming, has already cleared the ethical and financial suitability vetting by the state’s investigators, as well as gaining the approval of the city’s voters. This is all good news for the Mashpee Wampanoag tribe, which was originally intended to be the recipient of the southeastern license, but which failed to meet all of the requirements in time—prompting the commission to open the license to commercial bids.

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DATELINE ASIA september2015

Is Macau stabIlIzIng? 14 consecutive months of decline, but light at the end of the tunnel?

acau’s Gaming Inspection and Coordination Bureau has posted year-on-year gross gaming figures for the month of July. To no one’s surprise, the gaming industry marked its 14th straight month of decline, dropping 34.5 percent to MOP18.62 billion (US$2.33 billion). The accumulated GGR for the past seven months is down 36.7 percent, to MOP140.26 billion. Bernstein Research analyst Vitaly Umansky said the news from the world’s No.1 gaming destination is heartening, despite the decline. “While July is typically expected to have some seasonality uptick from June, we

believe that this month has shown an important sign of stabilization and improvement as the market looks to bottom out,” Umansky said. Sands China gained the most market share and SJM lost the most. “We continue to favor Sands China on the back of its critical mass garnered from the interconnected casino resorts in Cotai, as well as its operational and marketing acumen to weather the challenges in the market,” said Umansky. A report in Bloomberg News cited more relaxed visa rules as one reason for the improved outlook.

GaminG Up in Cambodia Number of casinos in country has risen from 57 to 65 in one year

ambodia saw a 20 percent spike in its share of gaming revenues from January to June of this year, according to Finance Ministry spokesman Ros Phearun. NagaCorp, owners of NagaWorld in Phnom Penh, expect to report a 40 Phearun said the number of lipercent increase in profits censed casinos in the country has risen from 57 to 65, and more Thai nationals are visiting Cambodia to gamble, reported the Cambodia Daily. He added, however, that visitation by Vietnamese gamblers is down, a reflection of the growth of casino gaming in Vietnam. “The amount of casino tax revenue collected is dependent on the situation in the border areas. The proportion of tax revenues from the Cambodia-Thailand border areas is large,” Phearun said. Currently, only holders of foreign passports are allowed to gamble in Vietnam’s casinos. In Thailand, casino gambling is not legal, although there have been recent suggestions that licensing casinos could boost tourism in the country and stop locals going across the border to gamble. Thai Prime Minister General Prayut Chan-o-cha, however, has shown little interest in adding such an initiative to the government’s agenda.

STRETCHING OUT Vietnam resort extends RFC deadline

aguna Lang Co., which issued a request for concepts in May for an integrated entertainment facility in Vietnam’s Thua Thien-Hue Province, has announced it is extending the submission deadline to September 15 due to strong interest in the project. Phase I of the development included a 57-villa Banyan Tree resort, luxury residences, a golf course and other amenities. Phase II includes condominiums and additional villas overlooking the East Sea. Phase IIA may add a gaming facility, according to a release from the company. “With the potential loosening of the country’s gaming law, we’re expecting to attract more foreign investments,” said Andrew Klebanow, a partner at Global Market Advisors, the firm conducting the gaming market assessment for a possible casino. “We believe that this extension is necessary in order to allow parties time to fine-tune their concepts as well as encourage more investors to participate in this RFC process.”

S. Korea OKs Casino Cruises No interest in legalizing locals he government of South Korea has approved casino gaming aboard cruise ships. Several cruise operators have already expressed interest in adding gaming to their ships. The ordinance mandates that any vessels weighing more than 100,000 tons may feature a gaming hall no larger than 2,600 square meters (almost 28,000 square feet). Smaller ships would be limited to 1,300 square meters or less, according to the Casino News Daily. Each casino would be equipped with currency exchange booths as well as computing systems accredited by the Tourism Ministry. The ships are banned from operating on the seas of South Korea, and only foreigners are allowed to board and play. The government predicts that by 2020, up to five operators should add KRW1 trillion (US$851 million) to the country and generate 8,000 jobs. “Several companies have already expressed their interest, and we are expecting the first vessel to cruise as early as next year,” ministry official Han Dong-soo told the Korea Herald. Though Oceans Minister Yoo Ki-june has recommended allowing Koreans to play to increase profits, the Tourism Ministry says such a measure would likely generate “a public backlash.” Currently, Kangwonland Resort casino in remote Jeongseon, Gangwon province, is the only gaming room admitting Korean players. “The ministry is in no talks to push for admission of Koreans to casinos,” Oceans ministry official Han said.

SEPTEMBER 2015 www.ggbmagazine.com

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DATELINE GLOBAL september2015

Echo Brisbane rendering

Upset in BrisBane Echo edges Crown for casino nod J

ames Packer’s Crown Resorts Ltd. has lost its bid to develop a new casino resort in Brisbane, capital of Queensland, Australia. Echo Entertainment Group, which already has a casino in the riverfront city and a monopoly on gaming in the market until 2019, fended off its rival to win the second license. On the news, shares of Echo stock gained 3.5 percent to A$5.01 (US$3.65), its highest level since a June 2011 initial public offering, reported Bloomberg News. The stock has risen 32 percent this year. Echo will hold 50 percent of the Destination Brisbane Consortium. Chow Tai Fook Enterprises Ltd. and Far East Consortium International Ltd. each will have a 25 percent stake. All three will invest capital in the A$1.5 billion ($1.1 billion) Brisbane resort. Echo CEO Matt Bekier said the result “will be an asset for this state that will compete with anything in Macau, Singapore or other destinations around the world.”

Crown Resorts had partnered with Greenland Investment in its proposal. It hoped to repeat the 2013 triumph in which it ended Echo’s monopoly in Sydney by winning the right to develop a new casino on Sydney Harbour, across from Echo’s Star resort. Crown recently received approval to begin construction, with opening slated for 2019, when the Echo agreement expires. According to Reuters, Echo said it will rely on its investment partners to bring high rollers from China to Australia’s third-largest city, giving VIPs a new alternative to Macau and Singapore. Bekier said Echo currently derives about 30 percent of its Sydney revenue from Chinese high rollers. “Chow Tai Fook has very deep relationships with Macau-based junkets,” he added, “and they have a special incentive for bringing additional volume of VIP business to Australia that we don’t currently see.”

Columbian Gold

Sun International opens Cartagena casino outh African resort developer Sun International has opened its $30 million Sun Nao Casino in Cartagena, Colombia. Robert Brassai, the company’s general manager for Panama and Colombia, says the firm chose to expand into Cartagena because of its allure as a tourist destination. Some 3 million tourists visited the city in 2014. The casino is located inside the Nao shopping center with its retail shops, food outlets, entertainment venues and a five-star hotel. It has 220 slot machines and 16 table games and employs 180 people. The property also includes an entertainment lounge and VIP lounge. According to a release from the company, Sun hopes to recoup its investment within five years. Sun International also operates the Monticello in Chile and the Ocean Sun Casino in Panama. Chilean gaming company Dreams and Sun International recently merged to create the largest gaming group in Latin America, the release said.

Global Gaming Business SEPTEMBER 2015

According to the Australian Financial Review, developers were intent on downplaying typical casino glitz in designing the riverfront resort, which is expected to be complete in 2020. “If you take Marina Bay Sands in Singapore, there is a similar sort of concept going on, and that is to downplay the entry to the casino and up-play the entry to the resort,” said Cottee Parker architect Rob Cottee. “That’s what government wanted here.” Destination Brisbane’s Queen’s Wharf project will be built on 7.8 hectares (19 acres) of public real estate with 2,000 apartments, 1,100 hotel rooms and more than 20,000 square meters (215,000 square feet) of retail space.

Try, Try Again Second Gold Coast Casino in the works after original plan rejected by government

he government of Queensland, Australia, has approved a multimil- A planned cruise ship terminal from Chinesebacked ASF Consortium was scrapped but lion-dollar casino project for Wave another casino site was chosen Break Island adjacent to Sea World; a previous $7.5 billion plan, which included a cruise ship terminal, would have created the largest tourism project in the state, but was rejected by the new Labor government when community groups objected, reported the Sydney Morning Herald. State Development Minister Anthony Lynham confirmed the new site would be a five-hectare (12-acre) parcel near Sea World, to be developed by the Chinesebacked ASF Consortium. ASF Project Director Tim Poole said the plans are under way for the resort, which probably will not be complete in time for the Commonwealth Games in April 2018. “Competition is stiff around the world, so we want to build on what the Gold Coast has got to offer,” said Poole. “With this great location on the Spit, we are pretty confident we can come up with something really special.” According to Sky News Australia, shares in the ASF group rose 15 percent after the Queensland government announced the revised Gold Coast plan, and shares of Echo Entertainment, which runs Jupiters casino in the same area, dropped 2 cents per share. Echo plans to invest $345 million to expand and refurbish Jupiters, but Morningstar gaming analyst Brian Han said a new casino on the Gold Coast would be “negative” for Echo.

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DATELINE TRIBAL september2015

GAO KOs NIGC Senators call for more oversight of tribal casinos U

.S. senators critical of tribal gaming are calling for more federal oversight. Some senators are using the most recent General Accounting Office audit of the National Indian Gaming Commission as ammunition. The audit of the $28.5 billion Indian gaming industry suggested that the NIGC’s policy of using training to promote voluntary compliance may be too trusting, and lacks a way to determine whether the ACE (assistance, compliance and enforcement) policy is actually effective. Senator John Barrasso, chairman of the Committee on Indian Affairs, declared at the July hearing, “The commission is not effectively promoting voluntary compliance with federal guidelines related to gaming regulatory standards… “Without an effective approach to monitoring compliance, how can Congress and tribes be assured tribal gaming facilities are adequately protected from internal control weaknesses and

revenue losses due to crime?” Senator John McCain, who co-authored the Indian Gaming Regulatory Act (IGRA) of 1988, said, “If NIGC continues to rely on Indian casinos to voluntarily comply with federal guidelines, then the commission must at least improve its state and tribal training and consultation initiatives and develop metrics that assess their effectiveness.” McCain cited the GAO’s finding that 25 percent of Indian casinos are at “high audit risk,” while questioning NIGC Chairman Jonodev Chaudhuri. McCain seeks increased regulation of the industry. Besides recommending that the NIGC tighten up its procedures for determining the effectiveness of ACE, the GAO said tribes should work more closely with state regulators.

Table Turnover? Seminole compact provision expires

lorida Governor Rick Scott had until July 24 to respond to a letter from the Seminole Tribe of Florida, requesting that the state enter into informal dispute resolution. Jeri Bustamante, Scott’s press secretary, said, “Staff has met with them and we are in full compliance with procedures outlined” in the agreement. But Seminole spokesman Gary Bitner said, “There have been conversations, but no progress, and the tribe plans to move ahead with the process,” meaning a demand for mediation—and if that doesn’t work, the tribe can sue in another 60 days. Tribal lawyers said “the parties met on July 16, 2015, but did not resolve the dispute.” A 2010 provision granting the Seminoles exclusive rights to blackjack and other banked card games in return for giving the state $1 billion over five years expired on July 31.

Senator John McCain believes that tribal casinos need more regulatory oversight

Global Gaming Business SEPTEMBER 2015

Tribal regulators testifying at the hearing argued that IGRA gives primary responsibility for gaming regulation to the tribes themselves. They note that in 30 years of operating tribal casinos, no connection to organized crime has ever been uncovered. Chaudhuri told senators that the agency has the ability to enforce the laws if ACE proves wanting. “Nothing about our enforcement responsibilities and oversight responsibilities has in any way diminished by the recognition of the benefits of working with tribal regulators on the front end,” he said. Senators zeroed in on the comparative lack of oversight for Class II gaming, which does not require a gaming compact. Although NIGC encouraged voluntary minimum internal controls for Class II casinos, a federal court in 2006 ruled that the agency has no authority to impose them on Class II gaming.

Ken Lawson, secretary of the Florida Department of Business and Professional Regulation, wrote to the tribe noting that although state and tribal officials “continue to enjoy an unprecedented amount of cooperation,” the existing compact requires the tribe to shut down its blackjack tables within 90 days, by October 29, if legislators do not renew the provision. He has asked the tribe to outline its plans for shutting down the games. But the tribe has two legal options to avoid closing the games. One is to declare the state has not negotiated an extension in good faith. The other option is to claim the state broke its guarantee of exclusivity by allowing electronic blackjack and player-banked poker at racetracks in South Florida. Because of that, tribal officials said they can continue to offer blackjack and other banked card games until 2030 and do not have to pay the state anything. Bitner said the tribe would continue to make payments to the state for the card games as a “gesture of good faith.” Legislators, meanwhile, have been called to a special session to redraw congressional districts, and Senate Majority Leader Bill Galvano said, “It is very unlikely that we would expand the call to involve anything else, especially the compact.” But he added there’s still hope that a lawsuit can be avoided. “We’re heading to a point where the state has maximum leverage to negotiate with the tribe,” he said. Last year, Scott worked out a deal with the Seminoles extending the compact, allowing the tribe to add roulette and craps at its South Florida casinos and letting it build a casino on its Fort Pierce reservation. The proposed deal also would have blocked Las Vegas-style casinos in Miami for seven years. In exchange, the Seminoles would have paid the state $2 billion. However, top legislators opposed the proposal and it never was finalized.

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DATELINE EUROPE september2015

Latvian Consolidation OEG buys SIA Garkalns

Cyprus to Choose CasIno LICensee One resort, four satellites I

n September, the country of Cyprus launchs a two-part Tourism Minister process to choose its sole Tiorgos Lakkotrypis says the casinos will integrated casino license have to attract half a holder. According to the million additional Cyprus Mail, the “comtourists each year to petitive, non-discriminabe successful tory and transparent” procedure is outlined in the Operations and Casino Control Legislation of 2015, enacted on July 21. The bill, which passed 29-22, provides for one casino resort and four satellites. Three would only host gambling machines, while the fourth would also include table games. Amendments to the draft law include a ban on granting credit to players, and that state land will not be used for

the construction of the casinos. Entrance criteria have also been introduced for Cypriot players, who would have to secure a special permit after their tax file is checked; membership cards would depend on annual income. The Mail reported that illegal operators would have their proceeds seized and face other penalties including possible jail time and fine. Parliament must also be informed of the selection criteria of the bidders at every step of the process. The selected operator will be able to develop a large casino resort and four smaller satellite locations throughout the island that will be the first-ever casinos in Southern Cyprus. The plan is “to create an integrated resort that competes with the best in the world, and the main facility requires an investment of €500 million (US$550 million).”

astern European casino operator Olympic Entertainment Group has acquired the operations of Latvian casino company SIA Garkalns, as well as its subsidiary, SIA Post-Nevada. The two companies operate 20 slot parlors in Latvia, 10 in the capital of Riga, for a total of 432 slot machines, reported CalvinAyre.com. In 2013, OEG acquired SIA Altea, owner of 17 Latvian slot halls. On completion of the transaction, OEG will own 57 casinos in Latvia. No price was disclosed. In 2014, the Latvian subsidiaries of OEG had revenue of approximately €48 million (US$52.3 million) and employed 679 people.

SBM’s Hotel Paris in Monaco

For Sale: U.K. Bookies

Galaxy Buys

Merger of U.K. bookmakers Ladbrokes and Gala Coral will result in the sale of hundreds of retail outlets

Operator is partly state-owned

.K. bookmakers Ladbrokes and Gala Coral, which have merged to form the nation’s biggest retail bookmaker with 4,000 outlets, may be required to sell off some of their assets to avoid monopoly concerns. The merger must undergo scrutiny by the country’s Competition and Markets Authority. According to SBC News, Irish betting operators Paddy Power and Boylesports are also looking at the new company’s retail inventory in order to expand their own U.K. services and market presence. Both companies operate extensively in the U.K., and international operations will initially account for only about 11 percent of the merged company’s total revenue. According to published reports, the two firms will combine their digital innovation teams to strengthen products, but the firms intend to maintain two trading teams and allow for independent pricing of events and offers. Ladbrokes CEO Jim Mullen will serve as CEO of the merged company and Gala Coral CEO Carl Leaver will serve as executive deputy chairman for a 12-month period. Leaver said his primary responsibility will be to realize synergies from the merger, which he expects will be about £65 million, most of that coming in the second year following the merger, which the companies expect to conclude mid-2016. As a result of the merger, reports the Irish Independent, Ladbrokes will close 51 of its 196 bookies in Eire and lay off 90 of 840 employees. The Irish arm of Ladbrokes, which had sought court protection, is now back in the black with around €3.8 million (US$4.1 million) to pay off debts, along with additional millions in working capital and money for capital expenditure purposes. 12

Global Gaming Business SEPTEMBER 2015

into Monaco

alaxy Entertainment Group Ltd., which just topped the list as the most profitable gaming operator in Macau, has acquired a piece of a Monaco resort company, according to Bloomberg News. The firm controlled by billionaire Lui CheWoo has bought 5 percent of the shares of Societe des Bains de Mer et du Cercle des Etrangers a Monaco, or SBM, the company has confirmed. It did not disclose the third-party seller or the sale price. “We see it as a potential to develop a strategic long-term partnership with them,” Galaxy spokesman Peter Caveny told Bloomberg. In a separate transaction, leading luxury design company LVMH Moet Hennessy Louis Vuitton SE said it would acquire a 5 percent in the Monte Carlo-based company. The government of Monaco owns 34 percent of SBM, which owns the Casino de Monte-Carlo and the Casino Café de Paris, as well as luxury hotels, restaurants and nightclubs, according to its website. Gross gaming revenue is expected to drop 30 percent for the year, according to multiple analyst forecasts.

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NUTSHELL Melco Crown announced that the grand opening date for its $3.2 billion Hollywood-themed Studio City resort on Macau’s Cotai Strip will be October 27. The non-gaming elements include a 300,000-square-foot shopping mall, a 427-foot Ferris wheel, a 300-seat theater and a virtual reality ride called “Batman Dark Flight” based on the DC Comics character. Sensing that political winds in Georgia have shifted regarding gambling in the past few years, officials at MGM Resorts International recently toured property near Centennial Olympic Park and “the Gulch” in downtown Atlanta. The casino giant is considering a $1 billion casino-resort in the city, one of the few major metropolises without a casino. Later, it was suggested that Turner Field, the former Olympic Stadium and now home to the Atlanta Braves baseball team, could be a casino site. The Braves are moving to a suburban Atlanta stadium in two years. A narrow majority of Republican voters voiced support for casino gambling in 2012 and horse racing has gained proponents this year. NYX Gaming Group Limited announced that it has completed its previously announced acquisition of the entire issued share capital of Amaya (Alberta) Inc., formerly Chartwell Technology Inc., and CryptoLogic Limited from Amaya Inc. for an initial purchase price consisting of $110 million in cash, subject to a customary working capital adjustment, and the issuance of $40 million in exchangeable preferred shares of a subsidiary of NYX to Amaya. NYX also entered into a preferred supplier licensing agreement with a subsidiary of Amaya to provide gaming content to Amaya’s real-money casino offering, which will be integrated into the PokerStars and Full Tilt branded casino websites. MGM Resorts International has hired former Nevada Congressman Steven Horsford to assist in the branding of the MGM National Harbor casino, to open next year in Maryland’s Prince George’s County. Horsford’s R&R; Resources+ consultancy was named the agency of record to lead branding efforts for the new casino, and to make sure the operator hires at least half it workforce from the county and contracts with minority-owned businesses, as promised. Although it was more formality than anything else, Nevada regulators have approved both the combination of Golden Gaming with Lakes Entertainment and Joe DiSimone Jr.’s license for Railroad Pass Hotel and Casino near Boulder City. The $341 million merger between

Golden Gaming and Lakes Entertainment was finalized August 1. Blake Sartini, CEO of Golden Gaming, will also be CEO and chairman of the new company, Golden Entertainment. Aristocrat’s VGT subsidiary launched its wide-area Class II Easy Money Jackpot last week at 10 casino locations across Oklahoma. The jackpot is found on eight popular VGT game titles, including 777 Bourbon Street, Crazy Cherry, Hot Red Ruby, King of Coin, Lucky Ducky, Mr. Money Bags, Reel Fever and Smooth as Silk. The progressive jackpot resets at $250,000. Wichita native Phil Ruffin, owner of the Treasure Island Casino Hotel in Las Vegas, recently purchased the Woodlands racetrack in Kansas City, Kansas from owner Howard Grace for an undisclosed amount. The track, which has been shuttered since 2008, offered greyhound, thoroughbred and quarterhorse racing. Ruffin owns two other closed greyhound tracks in Kansas, Wichita Greyhound Park in Park City and Camptown Greyhound Park in Frontenac, which he also hopes to reopen. He would have to apply for new licenses to operate racinos at the locations. Ruffin said he would want the tax rate lowered at Camptown and slots to be approved for Wichita Greyhound Park, which closed in 2007. A panel of the 9th U.S. Circuit Court of Appeals has upheld an injunction that the Coeur d’Alene Tribe of Idaho had sought to quash that prevents it from holding Texas hold ‘em poker tournaments at the tribal casino. That means that the tribe must cease offering the games while the state’s lawsuit moves forward. The state asserts that because poker is illegal in Idaho that the tribe cannot offer it on the reservation. The tribe claimed that the game is actually legal. The Appeals Court agreed with a lower court that poker is illegal. In its second year in operation, Lady Luck Casino Nemacolin at Nemacolin Woodlands Resort in Pennsylvania recorded the highest percentage gain in revenue of any of the state’s casinos. During the 2014-15 fiscal year, Lady Luck, a resort casino limited to 600 slots and 50 table games, generated $34.6 million in revenue—a 23 percent increase over the previous year—and paid $12 million in taxes to state and local government, according to reports released this month by the Pennsylvania Gaming Control Board. The increase did not translate into profit, as the casino recorded a net loss of $16.1 million, including a $9 million impairment charge.

CALENDAR September 29-October 1: Global Gaming Expo (G2E), Sands Expo Center, Las Vegas. Produced by the American Gaming Association and Reed Exhibitions. For more information, visit GlobalGamingExpo.com.

October 12-14: African Gaming Summit & Exhibition, the Emperors Palace, Johannesburg, South Africa. Produced by Eventus International. For more information, visit bigafricasummit.com.

October 5-8: North American Association of State & Provincial Lotteries (NASPL) 2015 Annual Conference, Hilton Anatole, Dallas, Texas. Produced by NASPL. For more information, visit NASPL.org.

October 14-16: IMGL 2015 Autumn Conference, Lima, Peru. Organized by the International Masters of Gaming Law. For more information, visit gaminglawmasters.com.

October 7-9: Japan Gaming Congress 2015, Tokyo. Produced by Clarion Gaming. For more information, visit JapanGamingCongress.com.

October 20-22: EiG Expo 2015, Arena Berlin, Berlin, Germany. Organized by Clarion Events. For more information, visit eigexpo.com.

November 10-12: SAGSE Latin America 2015, Costa Salguero Convention Center, Buenos Aires, Argentina. Produced by Mongrafie S.A. For more information, visit Monografie/SAGSE_bsas. November 17-18: Malta iGaming Seminar (MiGS) 2015, Corinthian Hotel, St. Julian’s, Malta. Produced by MiGS Ltd. and sponsored by the Malta Gaming Authority. For more information, visit maltaigamingseminar.com.

“They

Said It”

“This special law prevents everyone else from competing or even from making an alternative proposal that could be of greater benefit to the state. We believe that everyone should be given an equal opportunity to compete.” —MGM Resorts International President Bill Hornbuckle, commenting on his company’s lawsuit challenging the Connecticut law that would allow its two gaming tribes to have exclusive rights to open a satellite casino in the state

“The welcome mat seemed to be out. We just haven’t found the welcome mat yet, but I’m the eternal optimist, and hoping it’ll feel good when they stop hitting us.” —Steve Wynn, expressing frustration to stockholders over delays that have hit his Wynn Everett project in Massachusetts, as well as a lawsuit by the city of Boston to stop it

“Poker machine venues become for people a place of hope, which is false hope. It’s a place where they go and don’t have to speak the language. They find themselves in an exciting environment. It’s set up to attract all your senses.” —Gabriela Byrne, who operates a problem gambling program in Victoria, Australia

“There are 120 million gambling-mad Chinese, Japanese and Koreans living within two hours’ flying time of this place.” —Craig Ballantyne, chief operating officer of the new Tigre de Cristal complex near Vladivostok, Russia

“The rules in Macau are that Beijing makes the rules, and Galaxy fits exactly in with what Beijing wants Macau to become.” —Investor Stephen Monticelli, founder and president of Mosaic Investments, noting that Galaxy Entertainment Group is a relatively safe Macau investment as Beijing clamps down on junkets

“So our focus is to not be gimmicky and to be honest and offer a real value to local gambling customers—and at the same time be a lifestyle-oriented property.” —Scott Kreeger, SLS president, speaking on what the SLS Las Vegas is doing in hopes of attracting more local customers

“In our view, no amount of control will adequately curb the harm that may be caused to South African citizens by online gambling, hence we reiterate that it must remain a banned activity.” —South Africa Department of Trade and Industry, in a statement on the continued ban on all online games in the country

SEPTEMBER 2015 www.ggbmagazine.com

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AMERICAN GAMING ASSOCIATION

Meeting Momentum

BEST IN THE BUSINESS?

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AGA tackles key issues going into G2E

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By Geoff Freeman, President & CEO, American Gaming Association

ver the past month, the AGA has worked to tell the positive story of gaming, open lines of communication between the industry and regulators and set standards for corporate social responsibility. For the first time, the AGA hosted nearly a dozen gaming academics and experts for a roundtable discussion about the industry. We convened this group to share ideas, present recent work and network with peers in a setting that does not exist anywhere else. Additionally, as part of the AGA’s multi-year public affairs campaign “Get to Know Gaming,” it provided an opportunity to outline the AGA’s policy platform and priorities and to identify potential opportunities for future engagement. The daylong discussion included topics such as gaming history, lotteries and casino gaming, fantasy sports and sports betting, illegal gambling and criminal networks and casino gaming’s impact on national, regional and niche markets. Attendees included professors and Ph.Ds from some of the top colleges and universities in the country. Looking forward, the AGA will continue to expand this network of industry experts—and seek opportunities for the industry and academic research communities to collaborate. Also for the first time, the AGA hosted a gaming regulators roundtable in August. The event brought together regulators from more than a dozen states to communicate with their peers and with the industry. For our industry to keep up with other mainstream forms of entertainment, we must encourage innovation and adapt to our customers’ needs and wants. To do this, it all starts with legislation that frees operators and regulators from the antiquated and burdensome regulations that are currently in place.

Global Gaming Business SEPTEMBER 2015

“

One example of this is a program called “New Jersey First,” which guarantees that any new gaming product submitted to New Jersey regulators prior to any other gaming jurisdiction will be given priority status and tested within 14 days of submission. Nevada also has recognized the need for creating an environment that encourages innovation by allowing skill-based games on casino floors. Both New Jersey and Nevada are great examples of how we appeal to a younger, more tech-savvy customer base. In July, as part of the AGA’s commitment to corporate social responsibility (CSR), the AGA convened a member-only committee comprised of human resources, communications and CSR professionals. Key issue areas included diversity and inclusion, corporate philanthropy and community investment, environmental sustainabil-

For our industry to keep up with other mainstream forms of entertainment, we must encourage innovation and adapt to our customers’ needs and wants.

”

ity, and responsible gaming. The CSR Committee brought AGA members and global thought leaders and subject experts together to discuss and develop best practices for the industry at large. As our industry continues to grow and be more outward facing, it is important that gaming employees fully understand the value of CSR issues. Insight on several AGA campaigns that can be used as tools for CSR were also shared, including Get to Know Gaming, Gaming Votes and Face of Gaming. As our industry comes together at G2E, we look forward to building on these initiatives to provide valuable forums, tools and connections for the entire gaming community.

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

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FANTINI’S FINANCE

Super CEOs What’s the secret to being a successful corporate leader? Timing, vision and luck

ow important is a CEO to the success of a company as an investment? Obviously, a CEO is more important than anyone else in the organization, but he— or she—also can be limited by outside events, as a lot of investors discovered in the 2008-2009 financial meltdown. Sometimes, timing is everything, as TJ Matthews and Patti Hart can attest after taking the helm of IGT at its peak with no more market share to reasonably gain and losing important product monopolies. Then there are entrepreneur CEOs, visionaries with the strength of will and persuasiveness to create from the beginning. Two obvious examples are Steve Wynn and Sheldon Adelson. Investors have had three opportunities to ride from the bottom to the heights with Steve Wynn— with Mirage Resorts, at the Wynn Resorts IPO, and after WYNN stock plunged along with all the others in the financial meltdown of 2008 and 2009. Wynn’s particular vision that he adheres to without deviation is creating the highest-quality resorts in the industry, sparing no detail. Investors who have gone along with him have been well rewarded. WYNN went public in 2002 at $13 a share. The company in recent years has paid dividends that cumulatively have been greater than the initial stock price. And even though WYNN stock has tumbled in a weakened Macau, shares are still eight times the IPO price and the current dividend is a 15 percent yield on that price. Adelson’s vision has been the integrated resort combined with sheer scale at Las Vegas Sands. The stock has traveled a similar trajectory to WYNN, rising and then plunging on Macau. It has not rebounded as much as WYNN, but twice its IPO level, and pays a dividend that yields 8 percent from the IPO, and 4.7 percent at current prices. One of the hallmarks of the visionary CEO is the will to hold true to the vision, regardless of the loud demands of others when outside events cause things to go wrong. Wynn and Adelson are sticking to their respective visions in Macau. The future will tell whether 16

By Frank Fantini

this time they are mistaken. The past suggests their steadfastness will be rewarded.

PINNACLE AND ANTHONY SANFILIPPO Small companies that hit upon hard times offer opportunities for CEOs to make dramatic changes for the better. Consider Anthony Sanfilippo at Pinnacle Entertainment (PNK). On the day Sanfilippo was announced as PNK’s CEO on March 14, 2010, the stock was $8.64. It is now around $40. More important than the return is the way it has been achieved, because Sanfilippo has performed in a way that suggests there’s more to come. Sanfilippo has covered his bases, such as buying into Retama racetrack in San Antonio, both a defensive move if Texas legalizes casinos to compete with PNK’s Louisiana properties, and an offensive move—owning what might be the only casino in a major metro would be a gold mine. He has taken chances, such as investing in the Ho Tram resort in Vietnam, an opportunity that PNK has written off. He has executed on the major acquisition of Ameristar, which promises to contribute to profit growth for a long time to come. And Sanfilippo has shown the ability to be opportunistic, first declaring that PNK would unlock the value of its real estate by creating a REIT, and then being flexible enough to negotiate a good deal when Gaming & Leisure Properties came along and offered to be the REIT vehicle for Pinnacle. It is the GLPI deal that has driven the stock over $40, and PNK says it values the company at $47 a share. It should be mentioned that the Ameristar purchase made PNK that much more of a candidate for a REIT conversion. A few years ago, I wrote that Sanfilippo could be one of the best CEOs ever in the gaming industry. His focus on team-building, positive attitude, commitment to making PNK the best company in the industry, and his early moves such as at Retama and in Vietnam were the convincers for me.

Global Gaming Business SEPTEMBER 2015

It didn’t hurt that he had a track record as a regional leader for Harrah’s and as CEO of Multimedia Games.

BOB EVANS AND CHURCHILL DOWNS Bob Evans might have been the most unsung CEO in the gaming industry during his tenure at Churchill Downs (CHDN). Evans took over a company in 2006 that for years appeared to be run more for the blue bloods in the Sport of Kings than for its shareholders. Evans did more than change that. He transformed Churchill Downs from a horse-racing company to a diversified gaming company, yet one that has protected and nurtured its prize possessions, the Kentucky Derby and its historic namesake racetrack. A stock around $35 a share in Evans’ early CEO days is now around $135 as he has transitioned from executive chairman to plain chairman of the board, and as current CEO Bill Carstanjen has finished his first year at the top. The evidence of the revolutionary change was clear in CHDN’s second-quarter earnings report. Racing comprised just 37 percent of revenue, even though the quarter included Kentucky Derby week. The second biggest source of revenue and EBITDA was Big Fish, the rapidly growing online social gaming company. In the three racing-light quarters of the year, Big Fish will be the Big Fish at CHDN. The third largest producer was casinos, with $28 million in EBITDA just $200,000 shy of the Big Fish contribution. Casino revenue was zero when Evans took over. Though Evans has retired, the management team that created the new Churchill Downs remains. And he will stay as non-executive chairman. We suspect the record of success for shareholders will continue. 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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Back to School: The Changing Face of Casino Education The gaming industry is filled with stories of rank-and-file workers who rose to become the biggest names in the business. But as the industry expands—and becomes more corporate—future leaders may need to log more class time. By Marjorie Preston ill Harrah was a college dropout who worked at the family pool hall. Steve Wynn was an English major who ran a bingo parlor to pay off his father’s gambling debts. Merv Griffin was a game show mogul who started as a band singer; his biggest hit was 1950’s “I’ve Got a Lovely Bunch of Coconuts.” All of them made fortunes in the casino industry without degrees in the field—because when they started, there was no such thing as a gaming degree. That’s all changed. The biggest casino companies are now global corporations that are as stringently regulated as financial institutions. They generate billions in annual revenues, pay billions in taxes, and sometimes employ hundreds of thousands of people in jurisdictions around the world. As the business becomes more businesslike—as Wall Street increasingly intersects with the Strip—casino gaming has become part of the curriculum.

Old School, Updated Five generations ago, Bo Bernhard’s great-great grandfather moved from Texas to Nevada to join the casino industry. He eventually worked his way up to floor manager. But he would not likely make the grade in the industry of today—not with just a fourth-grade education. “Casino resorts are the most complex and most expensive buildings on the

earth in the private sector; they are the most complex to operate on the planet,” says Bernhard, executive director of the International Gaming Institute at the University of Nevada, Las Vegas. For that reason, he says, on-thejob training “increasingly needs to be supplemented by an educational base.” Founded in 1993 as part of the William F. Harrah College of Hotel Administration—yes, that Bill Harrah—IGI combines theory with practice, classroom work with hands-on experience. In order to earn a degree, every student must log 1,000 hours on a casino floor. “It’s not a bookish, ivory-tower approach,” says Bernhard. “Our staunch belief is that real-world education complements the education we provide in the classroom. As a result, I’m very confident that you could hire a UNLV kid and on day one, he’ll know what he’s doing. This is not somebody who will be lost in the sea of a slot floor.” Some 3,000 students at IGI and in the university’s broader hospitality program are introduced to a range of interlocking disciplines: casino management, hotel and resort management, nightclub management, food and beverage management—“pretty much anything under the hospitality umbrella and integrated resort field,” says Bernhard. They also learn business essentials (marketing, auditing), and study industry-specific topics like slot management, responsible gaming practices and more.

“While a certain level of expertise can still be achieved on the floor, the old-school way of making it without a degree has been threatened by the sheer complexity of modern casino operations.” —Bo Bernhard, executive director, International Gaming Institute, University of Nevada, Las Vegas

Global Gaming Business SEPTEMBER 2015

Game Plans Not surprisingly, IGI is putting an increased emphasis on technology—in particular the development of games that will appeal to the children of old-time slot players, a generation of potential customers weaned on smart phones, iPads and other interactive mobile devices. To that end, in 2013 IGI and former Shuffle Master CEO Mark Yoseloff launched UNLV’s Gaming Innovation Program. Yoseloff personally owns some 100 gambling game patents, and has created “some of the most lucrative table games in

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the world,” says Bernhard. He teaches gambling game design alongside guest instructors like Scientific Games’ Roger Snow (the brains behind Four Card Poker and Ultimate Texas Hold ’Em), Andrew Pascal of PlayStudios (former Wynn Las Vegas CEO, creator of the myVEGAS franchise and now James Packer’s Las Vegas lieutenant), and slot king Joe Kaminkow of Aristocrat Technologies. “Innovation is a backbone of what we do, especially as regards to changing consumer tastes,” says Bernhard. “We have at last count 34 patented and patentable gambling game ideas to come out of the program, but even if they never invent a game that ends up on the gaming floor—because let’s face it, most games fail—it’s a tremendous education to look at the world through the innovator’s lens, which is different from the academic lens.” The sheer scope of the available course work reflects shifting priorities in an industry undergoing seismic change. Though the margins from gaming still steer the bus, casino resorts from Las Vegas to Atlantic City and elsewhere are deriving an increasing percentage of revenues from non-gaming attractions. Even Macau is under order to mix up the amenities to bring in a more diversified and hopefully stronger customer base. In short, the gaming industry has become the tourism industry. And the tourism industry generates more than 10 percent of the world’s economy, according to Bernhard. “One out of every 10 dollars or yen or won or rubles is spent on tourism,” he says, “and the single most dynamic, proven and lucrative driver in the private sector of that economic activity is the modern integrated casino resort. Our students are taking gaming as part of an overall integrated resort/hospitality/tourism education, and going on to jobs all over the world.”

The Tribal Perspective But what happens in Vegas doesn’t always apply in Indian Country. In 2001, San Diego State University launched its first hospitality and tourism management program (the program officially became a university school in 2007). It was a good fit for the region; San Diego hosts almost 34 million visitors each year (still a little short of Las Vegas, which hit the coveted 40 million mark in 2014). With its luxury hotels, world-famous zoo and spectacular Pacific coastline, San Diego is a top U.S. travel destination. SDSU’s program features courses in hotel and restaurant management and also has a meetings and events emphasis. And since 2005,

Q&A Bob Ambrose Center for Hospitality & Sport Management, Drexel University, The Dennis Gomes Memorial Casino Training Lab ince 2009, Drexel University in Philadelphia has offered a bachelor’s degree in hospitality management with a concentration in gaming and casino operations. Among the center’s industry partners are Scientific Games, Konami, AGEM, KGM Gaming and a number of casino companies; the Pennsylvania Gaming Control Board also helped the university develop its Dennis Gomes Memorial Casino Training Lab, which was dedicated in 2014. Bob Ambrose, former vice president of slots for Gomes + Cordish Gaming Management, is an instructor and 30-year veteran of the gaming industry.

GGB: Is there a core curriculum in your program that’s mandatory for all students, regardless of their career goals? Ambrose: All students receive a broad overview

of the hospitality industry—gaming of course, but also lodging, travel, food and beverage, event planning and so on. Then students at both the undergrad and graduate level can focus deeper into gaming. When our students graduate, they have a working resume and on-the-job experience through paid co-ops. These students are the future of gaming. What better way to have them see how serious the business of casino operation is than from those that govern the industry? I also work closely with responsible gaming partners so that students can see the complete picture. What careers are they most interested in?

Our students are focused learners of hospitality. Those that take my casino management and related courses definitely have a serious interest for future management roles in casino operations. We also offer a graduate online master’s in hospitality with a concentration in gaming, which is convenient for working professionals. Recently two of my students got their degrees while they were already working as managers in the industry. And they just became more marketable.

You always hear the story of the guy who started at the bottom and through his own initiative ascended to the executive ranks. Is that still true?

The Cinderella stories still happen, but there’s more competition these days. A strong work ethic still applies. Obtaining a degree in hospitality with a concentration in gaming is not going to guarantee that they’ll become a property general manager the day after graduation. A degree is part of the equation; the remainder will continue to be some pretty hard work. How much time do you spend on new technologies like internet gaming, and ways the industry may shift to attract younger patrons?

Gaming educators must be proactive, with instructors that are engaged and on top of the research. It’s a major part of my daily routine. I spend two to three hours every morning reading industry news and industry publications, attending conferences and staying in communication with members of the industry—if I had to give it a percentage, at least 50 percent of the day. It comes easy, since I’m an information junkie anyway. This industry is fluid and changes rapidly. There is a great deal for the students of gaming to learn. I use a textbook for the core of my casino management course, but our partnership with GGB has been one of the key contributors to keeping my course current. The students look for the magazine monthly, and we discuss the topics in class or they’ll write an opinion paper. Some of my students have taken my course as an elective while never setting foot in a casino. Their goals may be in other hospitality disciplines—culinary, lodging, tourism or sport management. With each hospitality discipline they study, they learn the connection within the total hospitality experience. It’s important for them to understand how each segment of all the hospitality models fuse together for the complete customer experience.

SEPTEMBER 2015 www.ggbmagazine.com

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“This is like a family-owned business model. Tribes are large families.... Casino revenues actually helped build that school, or paved that road over there. They feel connected to the outcomes of their day-to-day work.” —Kate Spilde, associate professor at the School of Hospitality and Tourism Management, San Diego State University

we’re shifting from an art to a science, where you can look at the numbers, measure the outcome and make some strategic changes.” “While a certain level of expertise can still be achieved on the floor, the old-school way of making it without a degree has been threatened by the sheer complexity of modern casino operations,” says the UNLV’s Bernard. “I travel constantly, and I’m always amazed as an educator to check into a hotel in downtown Seoul or Beijing or Berlin and have a UNLV graduate walk up to the front desk to say hello.” One thing seems certain: as casino resorts proliferate and consumers have more options, the importance of the hospitality experience cannot be overstated, says Rummy Pandit, executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at the Stockton University of New Jersey. “Many moons ago, customers wanted to go into a casino, gamble and leave, and there are still some people who are only interested in whether they’re winning or not. But more customers today want a different type of experience—to engage in the gaming action, to see a show, to have a nice dinner. They want to go to places where they are recognized, greeted and welcomed back.” Now as ever, he says, “Customer service is a huge part of their decision to return or not.”

it has offered courses through the Sycuan Institute on Tribal Gaming, created with a $5.5 million donation from the Sycuan Band of the Kumeyaay Nation, owner-operators of the Sycuan Casino in El Cajon, California. The institute develops professionals trained specifically in tribal gaming. And there’s a big difference between the commercial and tribal sectors, says Kate Spilde, associate professor at the School of Hospitality and Tourism Management. “A lot of folks being recruited from commercial gaming backgrounds to tribal gaming really didn’t understand the regulatory differences, or the purpose of the gaming revenue for tribal government—there was such a steep learning curve.” Unlike most commercial gaming establishments, she says, “This is like a family-owned business model. Tribes are large families.” Typically, about three-quarters of the students who attend the institute are not tribal members. They learn about the culture and history of tribal gaming along with the regulatory and operational aspects. They also learn about tribal sovereignty, and the delicate interplay among Helping Casinos Help Problem Gamblers tribal, state and federal governments—and even the governments of foreign countries. ith compulsive gambling, as with drug use, Significantly, they grow to understand that “just saying no” seldom works. The Na“this is not just shareholders in some pubtional Center for Responsible Gaming offers a licly traded company,” says Spilde. program that helps casino operators better under“Casino revenues actually helped build stand problem gaming, identify customers who that school, or paved that road over there. may be struggling with the disorder, and, when appropriate, direct those customers to resources that may help. They feel connected to the outcomes of Founded in 1996, the NCRG is funded in part by the gaming industry, equipment manufacturers and their day-to-day work.” vendors, and belies the assumption that gaming operators are predatory and want problem gamblers to keep Prior to graduation, students work two playing. In the words of Alan Feldman, chairman of the organization’s board and MGM’s senior vice president full semesters in the hospitality and gaming for public affairs, “It serves no purpose in any business to have customers who can’t pay their bills. By their sector through a professional center funded very nature, (problem gamblers) will turn into bad debt.” by Marriott. They work “in every departThe EMERGE program (Executive, Management & Employee Responsible Gaming Education) is based ment in the casino—the hotel, the restauon research led by Howard Shaffer, associate professor of psychology at Harvard Medical School. It includes rants, maybe the spa, a poker room, in table the most up-to-date science on gaming addiction and its possible causes—including new information on ongames, slots, just see how the whole resort line gaming—and offers suggestions on how to offer assistance. works as an integrated resort,” Spilde says. By debunking widespread myths about compulsive gambling—for example, that it’s caused by the gam“We want them to see what they like best, bler’s personal weakness, and that certain games are more addictive than others—the program helps casino opso they will stay in the field and succeed.” erators educate their employees about the issue and address it in the workplace. Only 14 percent of problem gamblers ask for help, says Christine Reilly, the NCRG’s senior research direcThe Road Ahead tor. “This is the case for anyone trying to lose weight, stop smoking—you have to resolve the ambivalence. If The gaming industry has always welcomed you go to treatment the first day and are told never to do this again, you’re going to head for the hills. People people with drive, determination and boothave to set goals that are manageable, or it’s very hard to change.” strap initiative, with or without the sheepShould customers ask for help, casino employees can point to resources like an 800 hotline. “But they are skin. Will degrees in gaming be mandatory not trained clinicians,” Reilly warns, and approaching customers who do not seek help can be counterproducfor the Wynns and Harrahs of the future? tive. A good opening may be simply asking, “Are you having a good time?” In those cases, it may be best for “I don’t know,” says Spilde. “It’s part of employees to share their concerns with a supervisor. the lore of the industry, the guy who started For more information about the NCRG’s EMERGE training program, which is customizable for individas a dealer and is now CEO or president. ual casino companies, visit ncrg.org. But with the focus on analytics and market—Marjorie Preston ing and moving online with technology,

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Cashing In T

Having assembled the top development, management and engineering talent in the business, Aristocrat is reaping the benefits of its own reinvention

he past few years have given a wild ride to the industry’s slot-manufacturing sector. The top four slotmakers became the top three—two of those three having merged to form huge, end-to-end casino and lottery suppliers. And then there was Aristocrat. Australia’s Aristocrat Leisure Ltd., the world’s second-oldest producer of slot machines, was not playing the consolidation game. Yes, the company did add highly regarded Tennessee-based Class II supplier Video Gaming Technologies, but that move was more expansion than consolidation, giving Aristocrat a popular product category it never had previously. The plain fact is, while its top rivals were looking outside to grow and diversify their businesses, Aristocrat Leisure and its U.S.-based subsidiary Aristocrat Technologies were strengthening their ability to compete against any and all slot manufacturers—huge or otherwise. Not that the company was in serious need of revamping at any point. While struggling along with all the other slot-makers in the so-called Great Recession, this was, after all, a manufacturer that produced its first slot machine in 1953, and dominated the market in its home Australia long before exploding on the U.S. casino scene in the 1990s, when it created an entirely new gaming category of low-denomination, high-payline games. The company has always been well-equipped to weather economic downturns. In fact, as the most recent recession heightened, Aristocrat CEO Jamie Odell was already positioning the company for its next era. It was not just the economic downturn that prompted the change. Aristocrat had seen glory days immediately after securing its Nevada license in 2000. For half a decade, the company launched innovation after innovation—the Reel Power “ways-to-pay” reel setup, Mr. Cashman mystery-style progressives—that subsequently became part of the slot culture, for all manufacturers. Later in the decade, as competitors chimed in with special features to match those of Aristocrat, results flattened, prompting Odell to re-examine the company’s entire product offering against what else was in the market. In 2009, he announced a five-year turnaround plan that would transform the company’s fortunes. There would be a focus on North America, and on increasing recurring revenue through gaming operations. Aristocrat had built its traditional fan 24

Global Gaming Business SEPTEMBER 2015

By Frank Legato

base on its own in-house brands and signature game style, eschewing expensive licensed entertainment brands. Odell now wanted a piece of the leasedgame revenue on which competitors like IGT thrived. What the industry witnessed in the ensuing five years was nothing less than the reinvention of Aristocrat. The company that was built on its own home-grown brands began tapping the world of entertainment, and even popular literature, in search of recurring revenue. JAWS. Mission: Impossible. Tarzan: Lord of the Jungle. Zorro. Superman the Movie. Before long, Aristocrat ramped up the effort with a landmark game based on the most popular cable TV series in the U.S., The Walking Dead. The game clearly was on, with one of the biggest hits in the slot-maker’s long history. One of the things making Aristocrat’s revival unique was that its new embrace of licensed, recurring-revenue titles did not displace its old game philosophy; it augmented it. The new focus on gaming operations was accompanied by a refocus on the classic Aristocrat game style, the one that made the company king of the pokies. The company launched the “Legends” series of games, which celebrated the most popular of the company’s classic multi-line titles. Those titles, like Buffalo and Pompeii, were still receiving heavy play in the original versions. Aristocrat placed them in dual-game machines, giving

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CCO Maureen Sweeny and CEO Jamie Odell

”

We’ve really tried to build a working environment which allows creative people to focus on great game content, and we do that in a way which works best for their style.”

—Jamie Odell, CEO, Aristocrat

players a choice between the originals, in all their 1990s splendor, and a modern version with all the 21st century graphic bells and whistles. (Almost all picked the new versions.) With the company’s scope of slot product larger, Aristocrat executives decided to go after the best available talent to execute their vision. Competitors watched as the company became the New York Yankees of game-makers. Joe Kaminkow, the longtime IGT game whiz, was brought in to create licensed games. Scott Olive, the man behind the groundbreaking Hyperlink progressive product of the early 2000s, was brought back. Dan Marks, the creative force behind High 5 Games, was brought in for entertainment-based games. Along with proven designers like Ted Hase (the man behind The Walking Dead), Nicholas Bennett and others, the augmented group formed a collection of individual teams in a new studio system that would crank out games in each of a formidable number of categories. “We’ve got a great set of studio heads, and great people who work for them,” says Odell. “We’ve really tried to build a working environment which allows creative people to focus on great game content, and we do that in a way which works best for their style.” While producers of the games have added “enormous value to the company,” Odell says their addition is part of an overall plan “to be a creative com-

pany, to be an ideas company, and to provide a culture and an environment where they really feel that they can be their best. And I’m absolutely delighted with the output of that group—the quality, but also the variety. “That’s really, really important to our customers these days, as we’re trying to appeal to all aspects of demographics in all markets, all corners of the floor.” The last two Global Gaming Expo shows have been a dazzling coming-out party for the new-and-improved Aristocrat. In gaming operations, titles like Batman Classic TV Series, The Rolling Stones and Britney Spears from Kaminkow have been joined by Sons of Anarchy by Hase (the biker show’s producers reportedly asked Hase to design the Anarchy game after seeing The Walking Dead) and other new games to be revealed next month. The new high-profile brands are accompanied by new versions of Aristocrat classics, from Buffalo to Mr. Cashman, and new cabinets and game presentations like the Vervehd, the Feature Top Box, the theatrical Wonder Wheels, the immersive Arc and, most recently, the new core cabinet Helix with its floating LED displays. Awe-inspiring trade show displays are not the only result of Odell’s successful five-year plan. Aristocrat is at the top of its game financially as well. The company more than doubled its EBITDA and nearly doubled cash flow for the first half of 2015, increasing revenue by an astounding 75 percent year-on-year. SEPTEMBER 2015 www.ggbmagazine.com

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Delivering the Product Having transformed the company into a powerful new force in the market, Odell says his focus for the past year has been on delivering the new wealth of product to the worldwide market. “We’ve had a great half,” says Odell, “as we have really focused a lot on our operational delivery. We have great growth in our home market of Australia, where our product is really engaging our customers. “We’re seeing strong performance in our social digital business based out of San Francisco and London, and great growth in North America as well, in the Class III premium gaming operations segment, where we continue to see our floor installed base grow, and good EBITDA and good value for our customers.” Odell says it’s all the culmination of the company’s efforts over the past few years. “I’m delighted that it’s delivering value for both our customers and for our shareholders,” he says. This year, that value comes in the form not only of new games, but in new formats that give the company’s designer dream team a palette matched by few other manufacturers. Games like Britney Spears show off the grandeur of the Arc Double cabinet, with two 42-inch curved LCDs forming a mesmerizing display. Then there’s the Behemoth, a massive 10-foot cabinet housing an 84-inch LCD, a record in the Big Bertha space that is being launched with a super-sized Buffalo Stampede. “Those cabinets are for premium games, and allow us a different platform for our game designers to work upon,” Odell says, “different perspectives and different forms of games. They’re also resonating, and they particularly play out well, with the licensed content that we’ve been acquiring.” It culminates this year with the Helix, which Odell calls Aristocrat’s “core cabinet globally.” With widespread distribution both in North America and other worldwide markets, the cabinet is gaining momentum with operators. “It’s really driven by very powerful technology, which allows us to have high-quality graphics and animation and better sound,” he says. He says the best part is that Aristocrat content on the Helix is significantly outperforming the exact same content on the previous generation of cabinets. “It’s great to be in that position,” Odell says. “That’s the core engine of our global cabinet.” Meanwhile, the content on those cabinets continues to gain followers. Aristocrat’s Buffalo Stampede and other titles consistently top the quarterly gaming survey of Goldman Sachs as the highest-earning games in the business. Moreover, Aristocrat’s newer games are gaining popularity worldwide, notes Maureen Sweeny, Aristocrat’s chief commercial officer. “We’ve released many of our licensed themed games here in the U.S.,” she says, “but just recently, for example, we’ve launched Wonder Wheels with Batman in Europe, in several casinos. And we plan to take that to Asia.”

The VGT Connection With all the technology at Aristocrat’s disposal and the games’ popularity around the world, a few years ago, one would have been hard-pressed to identify any areas of machine gaming that were underserved by the company. Odell could. While competitors like IGT, Bally and Multimedia Games all sold thousands of Class II versions of their games to Native American markets like Oklahoma, California and Wyoming, Aristocrat had never ventured into the electronic bingo space. So, when the opportunity arose to buy VGT, Aristocrat gladly shelled out $1.3 billion to acquire the Class II supplier in a deal that closed in October 2014. Odell says the addition of those Class II recurring revenues from Oklahoma and other VGT strongholds immediately improved Aristocrat’s cash flow, and has been a big part of its surging revenues this year. “We’ve clearly had a highly important and transformational acquisition with 26

Global Gaming Business SEPTEMBER 2015

VGT, which is a fantastic business,” Odell says. “They have really great content, really great people, and we’re delighted at how that business has started up with us.” Odell adds that VGT’s content complements that of Aristocrat. “It really is a great content business,” he says. “In terms of integration, we’ve been looking at areas we can cooperate, we can add value. One of those is a wide-area progressive that Aristocrat Technology has put on top of the VGT games, and in fact, those are being launched now. “It’s a great example of adding value and driving revenue… We’ve got a great leader down there, (VGT President) Jay Sevigny, and Jay was previously with the business, so he knows the customers and staff very well. It’s overall a fantastic leadership team, and it’s been growing strongly and very steadily.” Aristocrat has taken the initial approach to simply encourage the Tennessee-based company to do what it has always done well. “(VGT) hasn’t missed a beat since we took it over, and I couldn’t be more pleased with how that partnership is going,” says Odell, “and how well the VGT team is working with the legacy team at Aristocrat, in terms of looking at customers’ needs, and working the solutions for all customers, across systems, Class III and Class II.” VGT’s inherent strength is also the reason there hasn’t been a rush to have the now-subsidiary produce Class II versions of Aristocrat classics. However, Odell concedes it will happen at some point. “What we acquired with VGT was a very strong Class II mechanical reel business,” Odell says. “And what Aristocrat is, at core, is a very strong Class III video business. So, you can easily do the crossover, and think about, ‘How could we get video content into mechanical reel,’ and vice versa, using the strong platforms that we have in both businesses?”

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”

Our success has been built on focus, discipline and certainly, willingness to invest in these key titles. In terms of gaming operations, we drove focus early on by doubling our share of the U.S. gaming operations market over five years, and being clear that was our No. 1 strategic goal.” —Maureen Sweeny, Aristocrat’s chief commercial officer

System Strength Another necessary strength of a Class II supplier like VGT also dovetails nicely with that of Aristocrat—the systems space. Aristocrat’s systems business is centered around the popular Oasis 360 system solution, strengthened with Oasis Halo, a suite of software dedicated to developing customer loyalty solutions across an entire enterprise. Sweeny notes that Oasis Halo is designed to reach outside of a casino’s established player base, and outside of the casino games themselves, to build customer loyalty and retention. “Too often, non-carded players slip through the cracks, whether they are gamers or non-gamers,” Sweeny says, “but they also are contributing to the casino’s bottom line in some fashion. Our Halo offering was built to be an enterprise solution, for both the Oasis system and other non-Oasis system operators, to be able to use throughout their operation. “It is a system to identify and reward players and other types of customers, enabling them to build loyalty to the property’s experience. Our mobile concierge application has been launched, allowing our properties to extend the experience beyond the casino’s four walls, also delivering strategic event-driven marketing messages that further build the operator’s brand.” Development in the systems space ties in with Aristocrat’s online offerings, and in particular its development in the social gaming space. The nLive social casino boasts the largest footprint of freeplay sites in North America. Aristocrat’s nLive free play site allows casino websites to offer branded virtual casinos including the most popular Aristocrat titles. Its latest implementation by the Desert Diamond casinos in Arizona is the first time nLive has been incorporated with a non-Aristocrat casino management system. In the real-money iGaming space, Aristocrat recently added its content to sites in New Jersey and Delaware in the U.S., continuing a practice it had honed in European markets. Odell says they are performing well. The online and social areas get a new boost in January, when Pat Ramsey, former CEO of Multimedia Games, takes over as chief digital officer. Ramsey built Multimedia into a Class III powerhouse, and left with its takeover by Global Cash Access. He will oversee the movement of Aristocrat content to new digital channels, an effort that has already begun as Aristocrat is partnering with Taiwanbased International Game Systems on a mobile app to place FA FA FA slots on iOS and Android. “Pat will take over responsibility for driving that entire thinking for us,” says Odell. “We’re focused in that marketplace, there’s plenty going on, and certainly we have the capabilities that we need, and Pat will help us to grow those capabilities further.”

Moving Forward The digital capabilities will help Aristocrat as the company moves forward in a changing casino industry. The company’s strides in North America have combined with a still-solid leadership position in the Asia-Pacific region, where, in 28

Global Gaming Business SEPTEMBER 2015

addition to its home-base leadership in Australia, Aristocrat has always been one of the leaders in Macau and other Southeast Asian markets. Despite the ongoing sluggishness of the Macau market, Sweeny comments that the pending openings on the Cotai Strip promise to keep business brisk for the supplier. “We’re pleased to have achieved strong sales in the new Cotai opening, and we certainly believe we can continue to hold market-leading share across the entire Asia-Pac region,” Sweeny says. “That said, we never take anything for granted, and we are, of course, acutely aware that Macau is an important market—but it is not the whole region. “Asia-Pacific, overall, encompasses a range of unique markets, and our approach is to tailor our products and approach, and work hard to offer the most compelling portfolio with each and every market.” The decline of the VIP market and the rise of mass marketing in Southeast Asia actually works to the benefit of companies like Aristocrat, adds Odell. “As the market stabilizes with the new regulations, the mass market and the premium mass market are getting absolutely more focus from the operators,” he says, “and we’re working with those operators to try and establish a more sustainable, sizeable slot businesses, bearing in mind that market hasn’t really been slot-led since the outset.” Moving forward, Aristocrat will continue its focus on gaming operations, new cabinets and game styles, and spreading its legacy content to new channels. “Our success has been built on focus, discipline and certainly, willingness to invest in these key titles,” says Sweeny. “In terms of gaming operations, we drove focus early on by doubling our share of the U.S. gaming operations market over five years, and being clear that was our No. 1 strategic goal.” Odell adds that while the company’s strategy does not depend on further mergers and acquisitions, the company’s executives keep the radar open for tuck-in deals that may make sense. “From my point of view,” he says, “we have a strong balance sheet, strong cash flows, and we’re always ready to be agile, but we must maintain our very rigorous approach to M&A. We have to make sure it adds value to our shareholders. And as we talked about earlier, we really like businesses which have strong content, strong player affinity, great people and good customer relationships. “So, we’ll continue to look for those, but in the meantime, our focus is just on getting the value that we can out of our existing business.” Odell adds that Aristocrat is working with its casino partners to develop the next generation of casino games, with skill elements and themes to appeal to the Gen X and millennial gamblers. In the end, he says, it’s all about the content. “At the heart of our strategy has always been great content,” says Odell, “and then we work out into which particular segment which content is required. In the U.S., we’ve been acquiring powerful licenses, really building great technology and great platform technology. We have great talent in our studios. But that’s also a similar story around the world, where we see a growth share, in our home markets of Australia, and even in markets like Macau. “It’s been part of the journey we’ve been on the last few years, and at the heart of it has always been that ambition to deliver the industry’s leading game content.”

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The

Macau Problem

As the slump continues in the world’s largest gaming market, casinos look beyond gaming—and beyond Macau itself—for answers By James Rutherford

(

“Last year, I interviewed a (Chinese) billionaire at a six-star hotel in Dubai. Despite the splendor of the hotel, the woman looked depressed and glum. When I asked her why, she told me that there were ‘too many Chinese around.’” — Shaun Rein, founder and managing director, China Market Research Group

using last month for the benefit of the Hong Kong Economic Times, John Au, director of business development for casino giant Galaxy Entertainment Group, wondered: “Do the customers already find Macau boring?” This was a week or so after July’s gaming revenue numbers came out showing the world’s largest casino market in year-on-year decline for the 14th straight month. It was the sixth consecutive month of a fall-off in the triple digits. A US$2.8 billion expansion of the company’s Galaxy Macau flagship had been open about nine weeks at that point—the first installment of more than $20 billion in new casino hotel construction on the neighboring island of Taipa in the resort district known as Cotai, aimed over the next few years at elevating tiny, densely populated Macau, the only place in China where casinos are legal, to the status of a “world center of tourism and leisure,” as the Macau Government Tourist Office likes to think of it. The expansion got Galaxy a slight bump in market share, but there was little to show for its impact on that bigger tourism picture. Citywide visitation, hotel guest numbers and hotel occupancy all were off in June, in line with softness that first emerged last year and was evident in the first quarter, when tourists spent $1.2 billion less than in the same period in 2014, in line with year-on-year declines in visitation, hotel guest arrivals and overnight stays. Through July, gaming revenue is down 37 percent. And it’s gaming that’s most closely watched, since it drives 95 percent of the revenues of the six publicly traded casino concessions. It’s the gauge everyone studies for a read on the preferences and propensities of the mainland Chinese on whom the industry’s fortunes, and the city’s future as a destination, depend. In absolute terms, the haul through the first seven months was characteristically massive—$17.5 billion, the revenue equivalent of almost three Las Vegas Strips. Yet it’s obvious from the scale and duration of the slump that mainlanders aren’t gambling the way they used to. Mostly what’s fallen off is credit-driven VIP play, most of it contributed by wealthy gamblers from neighboring Guangdong province on the Chinese mainland. VIP started to decline last May, and revenue from the sector ended 2014 down more than 30 percent year on year. It was off more than 40 percent through June. VIP drove a 10-year boom that saw gaming citywide peak in 2013 at $45 billion, accounting for 70 percent or more of the market over that time. So the size of the problem is evident. The culprit is a new culture of austerity, probity and discipline within the ruling Communist Party that finds the VIP lifestyle in the crosshairs, perceived as a facilitator of corruption, graft and capital flight. Investigators unleashed by President and CPCC boss Xi Jinping are purging the party, the military and the state-owned companies that dominate the economy. Not surprisingly, high rollers have deserted Macau en masse.

Global Gaming Business SEPTEMBER 2015

)

The scrutiny also is affecting the mass market, making it more difficult to evade the country’s strict limits on currency exports and crimping spending. A locally imposed smoking ban on the public gaming floors isn’t helping either. Nor is a sputtering Chinese economy, which is beginning to feel the pain of the over-investment and under-consumption that fueled the rapid industrialization of the last 30 years. GDP is growing at an official rate of 7 percent, the lowest in six years, and outside experts suspect the real number may be more like 4-5 percent. This is still considerable for the second-largest economy in the world. But public debt has risen to $30 trillion, a lot of it expended on wasteful infrastructure projects to juice growth and prop up moribund state-owned businesses. The financial system is still relatively unsophisticated, and offers few legitimate investment options for a nation populated by the most prolific

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“With the Chinese, the history has been: first you copy, then you adapt, or modify, then you create. The Chinese are at the point where they are sick and tired of just copying; they want to create. So this isn’t just something we’re being confronted with. They’re wrestling with this all over the country.” —Grant Bowie, chief executive of gaming concessionaire MGM China Holdings savers in the world (as they’ve had to be, given that the health care and social welfare systems are appallingly weak). This has tended to foment bubbles: property was the darling for the longest time until prices gave out beneath an eventual glut of supply; more recently, it’s been the stock markets, which soared to such levels over the last year that when the crash came, the plunge in share prices at one point this summer wiped out $3 trillion of paper wealth. Retail investors have been battered. The hit to GDP this year could end up at more than $30 billion, according to some estimates. It’s believed in independent circles that the cost to the government to bail out the markets could surpass $1 trillion.

A ‘Changing Construct’ What does all this mean for Macau? Well, in addition to their fear of Beijing’s watchful eye, if the mainland’s rich are feeling less rich, higher-end cash won’t be picking up the slack. Mass revenue fell from Q1 to Q2, the Galaxy opening notwithstanding, and through June was down more than 30 percent year on year. For a city with Macau’s aspirations, this is worrisome. As of last month, the consensus among investment analysts was that gaming’s total take for the year will fall shy of 2014’s $44 billion by 30 percent—and that’s accounting for the classy new hotel and non-gaming attractions at Galaxy Macau, a relaxation of transit visa rules for mainland visitors that commenced July 1, and the much-anticipated opening on Cotai in October of Melco Crown Entertainment’s $3.2 billion Studio City. Which begs a second question: How much of the downturn can be laid to Macau fatigue? It would not be unexpected, as China’s travel-hungry millions grow more affluent, more mobile and more worldly. In its extensive research into mainland travel patterns and preferences, investment bank CLSA scores today’s Macau a tepid 45 out of 100—15th of 26 destination countries—measured in five categories: hotels, dining, attractions, accessibility and shopping (though it does rate high in the latter two).

“Macau doesn’t have a lot of product to appeal to a larger base of Chinese,” says Vitaly Umansky, Hong Kong-based senior research analyst for gaming for global asset managers Sanford Bernstein. Besides gambling, “there is not much else to do for people looking to travel somewhere for more than one day.” As Galaxy’s John Au said in that early August interview in the Economic Times, “We think that the city needs an adjustment period. We don’t think it’s healthy to attract tourists here by using only gaming elements.” If the bleeding is to stop, in other words, and obviously the concessionaires bulking up big-time on Cotai know this, Macau must become much more than it’s been up to now. Which may prove to be less about building better individual mousetraps and more about integrating with a larger tourism picture encompassing all of the Pearl River Delta—Hong Kong and its international airport, the large neighboring island of Hengqin, the greater Zhuhai metropolitan area on Macau’s border—and from there to all of China and to East Asia beyond. A lot has to happen in terms of roads, bridges and rail, improved communications, and collective marketing, to make this a reality. But it is happening. “We’re seeing a transformation of China,” says Grant Bowie, chief executive of gaming concessionaire MGM China Holdings. “It is not really a Macau issue exclusively. It’s about the whole of Asia, really. It’s a changing construct globally. Everyone is looking at China to carry the world. But they have their own issues. It is going to be really, really challenging for China to transform from an infrastructure-driven economy to a consumption-driven economy. That’s what we do. But we have to be actively and completely engaged in the whole region.”

The ‘Status’ Shift Bowie, whose company operates MGM Macau on the Macau peninsula and is building a $3 billion super-resort slated to open on Cotai the end of next year, sees similarities between the market’s current travails and the slump that followed the global financial crisis of 2008-2009, a period doubly marred by some Macau-related scandals that prompted Beijing to curb travel to the city. “It allowed all the organizations to become efficient,” he says. SEPTEMBER 2015 www.ggbmagazine.com

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Lawrence Ho, Melco Crown co-chairman and CEO

“Visitors are more sophisticated and clear about their preferences, demanding unique and personalized experiences with a high standard of service.” —Ambrose So, executive director and CEO of SJM Holdings

Melco Crown co-Chairman and CEO Lawrence Ho also recalls those years. “We opened City of Dreams in 2009 during the financial tsunami,” he says. “We successfully weathered the tough time, achieved great success for the company and meaningfully contributed to Macau’s tourism and economic diversification.” Needless to add, Bowie and Ho and their counterparts have learned a great deal along the way about the Chinese consumer, and the highly aspirational culture that spawned that consumer, and the rapidly evolving choices in response to a variety of economic and social factors. Deutsche Bank gaming analyst Karen Tang touched on this early in the year when she wrote, “We believe that wealth creation in China is changing from ‘resources and relationship-based’ (as in the coal-mining and property industries) into ‘innovation and entrepreneurial-based’ (as in internet and consumer services).” Companies that earn their bread by staying ahead of this dynamic, like Shanghai-based China Market Research Group, see major changes afoot in how wellheeled mainlanders spend their money. “They no longer gain status by buying expensive handbags,” says Sean Rein, CMR’s founder and manager director. “Rather, they gain status by buying a third or fourth home overseas or by going on a once-in-a-lifetime exotic trip—like winetasting in France”—and sharing their adventures on social media. CMR forecasts Chinese expenditures on luxury goods will drop 2 percent this year. Considering that they are the largest purchasers of luxury products in the world, accounting for around one-third of global sales, this is a big deal. Names of the stature of Prada, Kering (Gucci, Alexander McQueen, Stella McCartney) and Louis Vuitton are feeling the pinch. Chow Tai Fook, the largest jewelry retailer in the world, reported sales down 16 percent in Hong Kong and Macau in the second quarter. A trade group representing Macau retailers says so far this year, sales of high-end products are down between 30 percent and 50 percent. “Many people blame the corruption crackdown, but (it) is really about consumers becoming more sophisticated,” says Rein. “Chinese are no longer buying just to show off. It is more about a mix of investment and showing off, and they are concerned about lifestyle.”

‘Creating’ China In line with this, international travel will continue to see “major growth,” Rein says, but with an important caveat: “Chinese want to go where other Chinese have never been before.” Hotels.com’s “Chinese International Travel Monitor 2014” found that “95 percent of Chinese international travelers say they are more interested in visiting different international destinations than returning to places they have already been.” CLSA cites this in a voluminous report released in January, bolstered by its own extensive polling of repeat travelers within China, to reach conclusions similar to those Rein implies. Hong Kong and Macau will remain top destinations, with proximity, language and cultural affinity still in their favor, but growth rates will pale 32

Global Gaming Business SEPTEMBER 2015

compared with North and Southeast Asia, Western Europe and the United States. Bowie says, “With the Chinese, the history has been: first you copy, then you adapt, or modify, then you create. The Chinese are at the point where they are sick and tired of just copying; they want to create. So this isn’t just something we’re being confronted with. They’re wrestling with this all over the country.” Structurally, politically, what it all adds up to is that the gambling volumes that made Macau a wonder of the world are probably gone forever. This isn’t necessarily a bad thing. There is Cotai, which if it’s about anything is about the opportunity to become something much more—a true “Las Vegas of the East,” as the city often is called, erroneously up to now, capable of retaining repeat visitors and attracting growing numbers of new ones on the strength of its total offering. Ambrose So, executive director and CEO of SJM Holdings, sees “the rise of a discerning middle class in Asia, China especially,” that “has created new demands for the tourism industry. “Visitors are more sophisticated and clear about their preferences,” he notes, “demanding unique and personalized experiences with a high standard of service.” This bodes well for Cotai, where SJM, the city’s only native operator, the successor to the monopoly once enjoyed by Lawrence Ho’s father, the revered Stanley Ho, is spending some $3.9 billion on a Versailles-themed megaresort, Lisboa Palace, that aims to cash in on the country’s infatuation with all things French. So maintains, “The prospects for growth of mainland tourism to Macau are as great as the prospects for continued growth of mainland Chinese tourism in general.” The country sent 100 million travelers into the world last year, more than any country by far. CLSA expects that will double by 2020. “We couldn’t be more bullish overall,” says Aaron Fischer, the bank’s Hong Kong-based head of consumer and gaming research. “Macau will still represent an attractive destination. And with the new resorts, there will be a significant amount of non-gaming attractions. “Remember, Macau benefits from location; it’s on the doorstep of China. That is not going to change. It’s a major advantage. And you look back over the last 10 years, there has been major investment. In three years’ time the total investment in integrated resorts will be $50 billion. No one else is even close.” James Rutherford worked in Macau as a writer and editor covering the gaming industry. He can be contacted at jhrford@gmail.com.

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BahaMess Resort needs $400 million to complete construction By Frank Legato and Roger Gros

The Baha Mar is 90 percent completed, delegation from the govaccording to the owners, but now its ernment of the Bahamas opening is uncertain due to the bankwas in Beijing, China in ruptcy and liquidation proceedings July to foster negotiations between the Chinese government’s conBahamas Prime Minister Perry Christie (l.) struction company and its client, Baha Mar, Ltd., joined Nevada Governor Brian Sandoval that can salvage the relationship between the two and and Genting Chairman K.T. Lim at the restart construction on the $3.5 billion Baha Mar regroundbreaking of Resorts World Las Vegas, fueling speculation that Christie sort on Nassau’s Cable Beach. wants Genting to take over Baha Mar The delegation was formed as a last resort before the Bahamian government takes over the troubled project. The Supreme Court of the Bahamas refused Baha Mar CEO Sarkis Izmirlian contends that to recognize the U.S. bankruptcy petition of Baha his partners in the venture, China State Mar Ltd., which filed for U.S. Chapter 11 bankConstruction and Engineering, have failed to ruptcy protection as a way to finish the delayed megameet budgets, deadlines and quality standards in the construction of Baha Mar resort project. Baha Mar filed for U.S. bankruptcy protection on June 29, citing an inability to pay thousands of employees hired for the mega-resort’s opening, originally expected last Decemthe work of an independent liquidator, is best suited to oversee the restrucber. The resort’s owner blamed its contractor, China State Construction and turing, completion and opening of the resort should Baha Mar, China ConEngineering—and more specifically, that contractor’s subsidiary, China Construction and Exim Bank be unable to reach an out-of-court agreement,” struction America (CCA)—for delays and cost overruns that ultimately stalled said a statement from the government. the project in March, in a dispute over contractor payments. The Chinese state-owned contractor also has opposed the U.S. bankBaha Mar requested that the Bahamian high court recognize the U.S. ruptcy, filing suit in a U.S. court in an attempt to block it. bankruptcy filing, which listed unaudited assets of $3.1 billion and debts of Christie said he will pursue liquidation proceedings to seize control of around $2.7 billion. Baha Mar and complete the project, to protect the jobs of some 2,000 BaThe company is seeking approval of a U.S. Chapter 11 restructuring plan hamian nationals. (The court had yet to appoint a liquidator at press time.) that includes $80 million in new financing to be arranged by Baha Mar CEO “The provisional liquidator would be lawfully bound to have regard to the Sarkis Izmirlian, which would be used to operate during completion of conbest interests of the Bahamian people, Baha Mar employees, Bahamian construction. The U.S. bankruptcy also would protect the company from creditractors, creditors and investors in Baha Mar,” the statement said. tors taking action against the developer in the Bahamas. In a statement, Baha Mar officials called the decision “disappointing,” After delaying a decision for two weeks, the Bahamian court held that and questioned whether it was in the best interest of the employees. “We do completion of the project—which Prime Minister Perry Christie has said is of not believe today’s ruling, for which the government strenuously argued, as“national urgency” as the best hope of reviving the Caribbean nation’s econsures the necessary protection of the assets of Baha Mar, and we do not beomy—should be settled by a Bahamian court. lieve that it is best for the over 2,500 current employees of Baha Mar,” the “Our government has argued firmly that a Bahamian court, supervising operator said.

Global Gaming Business SEPTEMBER 2015

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“For two years now we’ve been telling the bank and senior management of China State Construction that they needed to make changes or we were going to have the problem we are having today. In the past 18 months I have written nine times to the chairman of the Exim bank and to the chairman of China State Construction asking for their help. And not once did they follow our ecommendation. And so there is a failure of the general contractor.” —Sarkis Izmirlian, CEO, Baha Mar Ltd.

Almost There Meanwhile, Reuters reported that Baha Mar needs $400 million to complete the project, citing a letter from the developer outlining the shortfall to China’s Export-Import Bank (Exim), the main financier of the project. According to the report, the letter proposed that Baha Mar would fund half of the shortfall with the rest coming from the bank. “We will lend $200 million alongside (Exim) on a 50-50 basis into a new senior facility totaling $400 million that will fund the completion, opening and stabilization of Baha Mar,” Izmirlian wrote to Liu Lange, president of the Chinese bank, according to the report. Christie was copied on the letter. “Assuring the prompt resumption, completion and opening of the development is fundamental to protecting our national interest,” said Christie in a statement. “The most effective way to preserve the livelihood of Baha Mar’s workers, protect investors and realize the project’s great economic promise for all the Bahamas is to ensure the completion and opening of Baha Mar as soon as possible.” The negotiations prompted by the Bahamian government delegation between Baha Mar, China Construction and Exim bank in Beijing did not start well, with the parties exchanging statements blaming each other for the debacle. Before negotiations, CCA issued a press release in which it offered to invest $100 million in the project and provide a guarantee o $175 million to the Exim bank, and called on Baha Mar Ltd. to do the same to finish the project. Baha Mar quickly rejected the offer, saying it wants no part of a resolution that includes the construction company gaining more equity in the project. “CCA in its release cites not a viable proposal on its part but rather a distortion of an old posture that made discussions to negotiate a consensual resolution with it as one of the parties a sham,” Baha Mar said in a statement. “It is why we came forward and made our very viable proposal directly to the Export-Import Bank of China. “It is interesting that when a very viable proposal is put forward by Baha Mar Ltd. to the Export-Import Bank of China, a proposal which provides for a significant equity infusion by the Izmirlian family to complete and open Baha Mar and would utilize Bahamian contractors and a Bahamian workforce to properly finish the work at Baha Mar that CCA failed to do, CCA issues a highly defensive and apparently panicky press release,” Baha Mar said. “CCA should be concerned. No matter how CCA tries to spin it and no matter how often it tries to deflect from its lack of responsibility, it cannot cover up the sad pattern of its failing to perform properly at Baha Mar and other im-

“BML is bankrupt because it repeatedly made mistakes in the development of Baha Mar. Their attempts to place blame on CCA Bahamas are self-serving explanations to deflect attention from their own negligence and mismanagement of the resort’s development.” —CCA Bahamas statement

portant projects in the Bahamas as well… “CCA failed to complete Baha Mar repeatedly on the timetables it set, its work has been called into question, it walked off the job, its failure to perform caused Baha Mar to have to seek Chapter 11 protection and it has been uncooperative in working toward a consensual resolution.”

Sarkis Speaks In an interview with journalist Jeffery Lloyd, Izmirlian said the contractor is solely to blame. “Our general contractor failed to perform,” he said, “and they’ve failed to complete Baha Mar. We’ve had concerns about their performance for years now. We’ve recommended many steps for them to take which they did not take. They have missed every single schedule that they have produced—not me—they have produced. They have missed every single labor projection that they have produced—not me—they have produced. These repeated failures have led us to where we are today.” Just months prior to the second opening date of March 27, CCA was pledging to open on time, according to Izmirlian. “In January they promised the prime minister of the Bahamas that they would be open by March 27,” said Izmirlian. “We had a board meeting where the China State Construction representative voted as a board member to open Baha Mar on March 27 because it would be completed and they didn’t do it. For two years now we’ve been telling the bank and senior management of China State Construction that they needed to make changes or we were going to have the problem we are having today. In the past 18 months I have written nine times to the chairman of the Exim bank and to the chairman of China State Construction asking for their help. And not once did they follow our recommendation. And so there is a failure of the general contractor.” CCA, meanwhile, continued the war of words with its own statement, blaming Baha Mar Ltd.’s failure to develop an adequate master plan for the delays. SEPTEMBER 2015 www.ggbmagazine.com

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“The government’s entire application is misguided and without merit, and the whole process is abusive, oppressive and undertaken in bad faith. We look forward to demonstrating those facts to the court. Moreover, it should be clear to the entire country that the government’s actions do not serve the best interests of the Bahamas and its people.”

Rumors in the Bahamas continue to surface that Christie’s endgame is to turn the property over to Genting of Malaysia. The company operates a small casino on the Bahamian island of Bimini. The ownership of Baha Mar would fold well into the company’s plan to deeply penetrate the U.S. market, where it operates the nation’s highest-earning casino, Resorts World New York at Aqueduct raceway, and has broken ground on Resorts World Las Vegas on the Strip.

—Baha Mar statement on Bahamian goverment liquidation proceedings

“BML is bankrupt because it repeatedly made mistakes in the development of Baha Mar,” the statement said. “Their attempts to place blame on CCA Bahamas are self-serving explanations to deflect attention from their own negligence and mismanagement of the resort’s development. “However, despite their serial missteps and purposeful avoidance of its contractual payment obligations, we are once again offering to provide financial assistance to help save Baha Mar and create thousands of jobs for the Bahamian people.” Izmirlian dismissed those objections. “We can go back and point the finger at each other as to why we missed the December deadline,” he says. “I have arguments and they have arguments. I happen to think mine are real and theirs are made up but be that as it may, why did we miss the March 27 deadline? When they stood in front of the prime minister of the Bahamas in January in Beijing they said Baha Mar will be open on March 27 to receive guests. They didn’t say maybe, they didn’t say Sarkis can’t manage the business, they didn’t say we had changes; they didn’t say all the myriad of excuses they have come up with since then. They said we are going to be open.”

Liquidation Battle In July, Christie sent a delegation to Beijing, China, to foster negotiations between Baha Mar and its Chinese contractor, in a last-ditch effort to jump-start construction and complete the project. No agreement was reached, and the Bahamian government is expected to initiate liquidation proceedings. The statement issued by Baha Mar following the government’s liquidation efforts was direct. “The government’s entire application is misguided and without merit, and the whole process is abusive, oppressive and undertaken in bad faith,” the company said. “We look forward to demonstrating those facts to the court. Moreover, it should be clear to the entire country that the government’s actions do not serve the best interests of the Bahamas and its people. Those interests are best served by the completion and opening of the resort, a process that the Winding Up Petition (the liquidation effort) will 36

Global Gaming Business SEPTEMBER 2015

only undermine and delay. “Moreover, the government’s hastily submitted application contained numerous fatal flaws in procedural terms. Those errors were then compounded by their last-minute announcement that the persons they had proposed to act as provisional liquidators were, in the government’s revised estimation, unsuitable. “Considering the hundreds of Bahamian and international creditors and other parties involved in this situation, it is both necessary and appropriate that we have time to satisfy ourselves that the proposed individuals are truly independent and conflict-free, regardless of the caliber of the firm the government has identified. “We are concerned that the government’s continued actions are only serving to distract the parties from the negotiations that are continuing, where we are making real, if slow progress, and to which we have always been committed. Our unwavering aim is to reach an outcome that enables Baha Mar to complete construction and open the resort to the benefit of the Bahamas.” Rumors in the Bahamas continue to surface that Christie’s endgame is to turn the property over to Genting of Malaysia. The company operates a small casino on the Bahamian island of Bimini. The ownership of Baha Mar would fold well into the company’s plan to deeply penetrate the U.S. market, where it operates the nation’s highest-earning casino, Resorts World New York at Aqueduct raceway, and has broken ground on Resorts World Las Vegas on the Strip. At that groundbreaking, Christie and other Bahamian officials participated in the ceremonies. The Baha Mar project was heralded as the savior of the Bahamas economy when ground was broken in 2010 for what was being called the “Bahamian Riviera,” promising to revive the legendary Cable Beach coastal resort. Four new hotels are being added to the two existing resorts, along with the largest casino in the Caribbean, to be managed by Global Asset Management, made up of former executives in the Las Vegas Sands organization. The completed resort would employ more than 5,000 people in the Bahamas, where the unemployment rate is 16 percent, and boost its gross domestic product by about 12 percent. CCA Bahamas Ltd., the construction manager for the project, estimated the resort could be completed for next year’s winter high season if construction can be resumed quickly.

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REGULATION

Testing the Testers

Why ISTQB accreditation is an important failsafe for the testing industry By Linda Lemieux

STQB is the world’s most successful scheme for certifying software testers. As of March 2015, ISTQB had issued nearly 400,000 certifications in more than 100 countries worldwide, with a growth rate of more than 13,000 certifications per quarter. With a mission to “continually improve and advance the software testing profession by: defining and maintaining a body of knowledge which allows testers to be certified based on best practices; connecting the international software testing community; and encouraging research,” ISTQB positions itself as the industry authority in certifying software testers. So why is this so important, and what does it mean to the global gaming industry, and specifically to the testing and compliance industry? Today’s testing market demands quality, consistency and velocity, and this requires test engineers to be fully trained and competent. ISTQB’s independent, nonprofit status, coupled with its global recognition, code of ethics and high-quality syllabi make them a perfect partner for an independent test lab servicing regulated gaming markets. ISTQB’s certification path takes a tester from Foundation level, through Agile, Advanced and Expert levels—with education, training and testing at every step along the way. It’s easy to realize the benefits of being able to train and qualify staff at the various ISTQB levels and see the benefits that brings to a test lab, as well as the industry at large. ISTQB’s independent testing ensures two main benefits: Importantly, clients and regulators are assured that testers meet and exceed world-class standards, as recognized by an outside and independent body; additionally, ISTQB’s methods ensure a level of competence among testing engineers and highlight a path for improvement. Ongoing education is a big draw in creating a positive company culture, and mapping staff development is of particular importance in most forward-looking gaming organizations. Test labs hire technology and engineering graduates, often providing many years of training and management development. ISTQB can be the next formal internal education step for these engineers, who can be offered career advancement via technical or management streams, allowing them to realize the importance of designing their own career path. ISTQB enables test

Global Gaming Business SEPTEMBER 2015

engineers at all levels to understand the different career options they have available to them, giving access to ongoing education and career progression. SELA International in Canada is just one organization that is partnering with test labs to provide training to test engineers across the world. SELA is the first Canadian ISTQB Accredited Training Provider offering public, online and onsite courses. Small classes led by expert professionals, in hand with a test lab’s in-house curriculum, can combine to create effective and engaging tester training. Training is a powerful tool in supporting and investing in the development of test engineers, particularly via ISTQB training and certifications. Education and certification can lead to increased engagement at a company and in the work an engineer carries out. Testers understand why they are doing certain tasks and how each task fits into the overall testing and certification plan. In QA, test engineers are encouraged to devise new testing techniques which can help to catch defects and improve overall quality. In the highly regulated gaming testing industry, where quality and reliability of results are key, it makes sense to provide added assurance for regulators and manufacturers who are required to use testing, pre-compliance and QA services. ISTQB accreditation ensures that test engineers are following independent and proven standards. With a commitment to training, certification and improvement, ISTQB accreditation is without a doubt an important next step for the testing industry. The benefits to the test lab—and the gaming industry at large—are clear: Independently recognized, world-class, qualified testers result in improved quality of testing, increased product time to market, decreased revocations, and of course, more quality playing time for the patrons and game players. Linda Lemieux is a quality-testing consultant, and has worked in the testing industry for over 30 years, with clients such as IBM, Telemedia and VMC. Lemieux currently consults with BMM Testlabs on QA, planning and project management. BMM Testlabs recently qualified as an ISTQB Platinum Partner in its Canada entity, qualified as the first ISTQB gold partner in Australia/New Zealand, and qualified as a Gold ISTQB partner in North America.

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iGAMING NORTH AMERICA

Sports Betting Momentum What is driving the current move to legalize the wager in the U.S.?

atching the ongoing developments regarding attempts to expand sports betting in the U.S. has been interesting. Given the ferocity of the sports leagues on this issue in the past, I was pretty sure we would never see it in my lifetime. But, times have changed, as well as the publicly stated opinions of at least a few of the leagues. There has been a bevy of legal challenges to the Professional and Amateur Sports Protection Act (PASPA) which we won’t regurgitate here. The latest New Jersey legal maneuver is expected to have a decision imminently following oral arguments in March. But now, for the first time, there may be some momentum building for an actual federal legislative discussion. On April 16 in Las Vegas, Senator John McCain spoke to the participants of the iGaming North America conference, addressing gaming industry folks for the first time on this issue. He acknowledged that, since the passage of PASPA in 1992, the popularity of “sports gaming” has expanded greatly. And while he pointed to the lawsuits filed by Delaware and New Jersey in recent years, he was quick to point out that Congress would play a role in this expansion discussion. McCain anticipates that Congress will, indeed, hold hearings on this topic in the future. And he encouraged industry leaders to join with Congress and the administration to discuss this topic. He pointed to the myriad of issues which will certainly arise as this discussion ensues. He specifically mentioned the concerns about potential corruption of sports as one which will need to be addressed. He was clear that oversight of such expansion would need to be fully debated and that a framework would have to be developed to curb any potential abuses. This attitude was echoed in recent times by National Basketball Association (NBA)

By Sue Schneider

Commissioner Adam Silver. In a New York Times op-ed, Silver stated, “I believe that sports betting should be brought out of the underground and into the sunlight where it can be appropriately monitored and regulated.” Interestingly enough, Silver went on to use some of the same language that McCain did in talking about how these discussions should proceed. He wrote, “In light of these domestic and global trends, the laws on sports betting should be changed. Congress should adopt a federal framework that allows states to authorize betting on professional sports, subject to strict regulatory requirements and technological safeguards.” The pendulum is swinging with other sports organizations. In March, at the MIT Sloan Sports Analytics Conference, Major League Baseball Commissioner Rob Manfred sided with the NBA’s Silver. “I give Adam Silver a lot of credit for starting the debate,” Manfred said. “Without embracing everything he said, certainly the idea of having a federal system to govern gambling—whatever that system is—uniformly at a federal level seems like a pretty good idea to me.” So if, as it appears, there is some will to actually open up the debate on PASPA, two questions remain: • What would a fix to PASPA look like? • Who would provide the leadership in the gaming industry to get this done? On the “how,” personally, I feel that attempting to repeal PASPA would be a true long shot. However, I’ve heard an amendment discussed which might actually have a chance. The original PASPA specified that a state needed to take advantage of this window at that one point in time in 1992. Few did. The fix I’ve heard suggested opened up that provision in the law and suggested that states (under certain criteria) would have the right to take advantage of that opening again. For example, what if the definition was if a state that had legal, regulated gaming in their state for five

Global Gaming Business SEPTEMBER 2015

years (pick a number), they could now legalize it by vote of the legislation, vote of the people, etc.? That’s just one example of a concrete approach to amending the existing law to allow for states’ rights. The question of leadership is more problematic. One would think that the American Gaming Association would be the primary backer of such a coordinated effort. They could do a “think tank” with those sports leagues open to the idea, commercial gaming interests and state policymakers/regulators (via organizations like the National Council on Legislators from Gaming States and North American Gaming Regulators Association). The intent would be to come up with a regulatory framework that meets the needs of the leagues and the states as well as the gaming interests. It could be done. And, in fact, checking in with the AGA, sports betting is now on their radar. Sara Rayme, senior vice president of public affairs for AGA, told me that at a recent board meeting, it was decided that the AGA should study the issue. She expected some review, analysis and a recommended course of action on this issue to be submitted at the November meeting of their board. With any luck, they’ll see fit to join the fray and provide the necessary leadership to move this issue forward. One thing is certain. If and when the industry decides to get involved, it won’t be hard to activate the players. The consumers are voting with their wallets via daily fantasy sports, their local bookies and offshore operators. In fact, the AGA itself estimates that the amount bet illegally in the U.S. is 38 times what is bet legally. The players will need to be a big part of the strategy if this is to move forward. Sue Schneider has a long history in iGaming. She is a co-founder of the iGaming North America conference, and is editor of Gaming Law Review and Economics.

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Your Serve

K, maybe it’s not over. GVC Holdings appeared to have lost a bidding war with 888 Holdings for bwin.party Digital Entertainment, but has come back with a new bid of £1 billion, or about $1.6 billion. Bwin officials had accepted a £900 million bid from 888 over a £908 million bid from GVC— which was partnered with Canadian firm Amaya Gaming in the bidding—and the bidding war had appeared to be over. Bwin officials felt 888’s management could provide a better growth return for investors and reportedly felt GVC’s bid was too complex.

Bwin officials confirmed it received the new bid and said it would respond in due course. No response was reported at press time. Now officials are waiting for 888 to make another offer. 888 declined to comment on whether it planned to raise its offer, though analysts said they expect the company will make another bid. “This is a real statement of intent from GVC,” Davy Research analysts told London’s Fiscal Times. “The proposed premium over the accepted offer by 888 is such that the bwin.party board will probably have no choice but to reconsider its acceptance of the 888 offer. We would be surprised if 888 does not come back with a counter-offer of its own.” GVC said it would finance the new deal through a combination of new GVC shares and a €400 million ($443 million) senior secured loan from private equity firm Cerberus Capital Management, removing Amaya’s involvement and some of the complexity that had worried bwin, the paper reported. GVC also plans to raise £150 million through an equity placing to fund restructuring costs and refinance existing debt at bwin.party. U.S. activist investor Jason Ader, whose SpringOwl vehicle is among bwin’s five biggest shareholders, said GVC’s new offer was still not enough, and he would still prefer 888 if there was no further improvement in the bidding. “If this was a 135p-140p price from GVC, 42

that might be enough for the bwin shareholders to get comfortable with all the uncertainties,” Ader told Reuters. “The 122p price is probably not enough, but it’s enough to get the bwin board’s attention.” He added that the onus is on bwin’s board to push GVC higher and invite 888 to reconsider its own offer.

Five California Tribes Press for Legalized iPoker

espite what they describe as “obstructionist” efforts the stop them, five California tribes are doubling down on their efforts to bring a bill to legalize iPoker to a vote in the legislature this year— in fact, this month. The tribes—San Manuel, Morongo Mission Indians, Rincon, Pala Luiseño Indians and the United Auburn Indian Community—who call themselves “the coalition of the willing,” have partnered with Amaya/PokerStars and several card rooms. They are trying to face down a coalition led by the Pechanga and Agua Caliente bands, a total of nine tribes, who oppose participation by PokerStars as well as by the state’s racetracks. They hope to force a vote before the August 17 summer recess. The racetracks and their allies are progressing in pushing for their inclusion, claiming that they have enough political clout to keep a bill from being passed without them having a seat at the table. Robyn Black, a lobbyist for the racetrack industry, told Online Poker Report, “This is the biggest coalition yet behind internet poker. If we get consumer groups, you’re going to see the coalition grow. If it isn’t a success in 2015, it will be a force in 2016.” “No bill is better than a bad bill. We’re more than happy to not even have internet gaming. We’re fine with that.” —Jeff Grubbe, chairman of the Agua Caliente Band of Cahuilla Indians

Besides opposing racetrack participation, the Pechanga coalition wants to retain a “bad actor” clause that would prevent the participation by PokerStars, which ran afoul of the U.S. Justice Department several years ago when it allowed American residents to play on its offshore casino websites.

Global Gaming Business SEPTEMBER 2015

The two groups have apparently concluded that they can’t reach a compromise, so each is going to try to push through its own plan by brute force. “I don’t think there will be any movement,” Jeff Grubbe, chairman of the Agua Caliente Band of Cahuilla Indians, told Online Poker Report. “No bill is better than a bad bill. We’re more than happy to not even have internet gaming. We’re fine with that.” Some participants in the meetings between the two sides have called them “pointless.” According to lobbyist David Quintana, “Racetracks and PokerStars are insisting they be involved in this. If racetracks agreed to take a revenue share instead of a website license and if PokerStars stepped out of the picture, we would have had iPoker six months ago.”

Mohegan Sun Licensed for Online Play in New Jersey

ohegan Sun has finished its soft-testing period and has been licensed by New Jersey gaming regulators for online play.

The soft test allowed the New Jersey Division of Gaming Enforcement to check the site’s geolocation software, player verification and payment processing. The site is run in partnership with Atlantic City’s Resorts casino, which Mohegan operates. “MTGA is excited to enter into our softlaunch testing period in advance of introducing what we believe will raise the bar in online gaming—MoheganSunCasino.com,” said Bobby Soper, president of MTGA. “Our goal is for MoheganSunCasino.com to become the premier online destination for both serious gamers and those who simply want to relax and have fun.” MoheganSunCasino.com features casino slots, video poker and table games, but does not include online poker.

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Income Access Signs Deal with Caesars Interactive Entertainment

1 8 0 0 A T T O R N E Y S | 3 7 L O C A T I O N S W O R L D W I D E˚

aesars Interactive Entertainment (CIE) has announced an agreement with Income Access, a technology and digital marketing firm for the iGaming industry. The new affiliate program for CIE’s Nevada and New Jersey-facing real-money online poker brand WSOP.com and online casino brands CaesarsCasino.com and HarrahsCasino.com will be powered by the Income Access platform and managed by the company’s affiliate managers. WSOP.com is the leading real-money online poker brand in Nevada. Its New Jersey-facing WSOP.com brand is also one of the leaders in that jurisdiction, where CIE also operates two real-money online casino brands, CaesarsCasino.com and HarrahsCasino.com. As part of its broader marketing strategy, CIE will imminently launch an affiliate program for these four real-money iGaming brands. CIE’s Income Access white label will include the company’s Ad Serving product, which allows operators to manage and optimize their online ad campaigns through sophisticated geo-targeting, time-ofIncome Access day, browser and other CEO Nicky targeting functionality Senyard ideal for the New Jersey and Nevada markets. The CIE affiliate program, which is scheduled to launch later in Q3 2015, will be managed by Income Access’ in-house team of affiliate managers. Since the return of regulated real-money iGaming to the U.S., the team has been instrumental in driving player acquisition for leading brands in the market. “I’m excited for Income Access to partner with a gaming operator that’s as prestigious and innovative as Caesars Interactive Entertainment,” said Nicky Senyard, founder and CEO of Income Access. “Using our platform and dedicated affiliate management, we’re confident that CIE’s online poker and casino brands will be well placed for the future of the New Jersey and Nevada markets.”

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Global Gaming Practice Acquisitions | Financing | IP | Labor | Litigation | Real Estate | Regulatory Learn more at gtlaw.com/gaming GREENBERG TR AURIG, LLP | ATTORNEYS AT LAW | WWW.GTLAW.COM The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee a similar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2015 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Martha A. Sabol, 77 West Wacker Drive, Suite 3100, Chicago, IL 60601, 312.456.8400 or Laura L. McAllister Cox, 2700 Two Commerce Square 2001 Market Street, Philadelphia, PA 19103, 215.988.7800. °These numbers are subject to fluctuation. 25106

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Tracking

Beyond the Casino

How non-gaming activities are rewarded, as well as traditional gambling By Dave Bontempo

layer tracking strengthens the gaming-hotel bond. The rating of non-gambling casino patrons, once considered the low end of the revenue spectrum, changes the assessment mechanism of this multibillion-dollar business. All customers, not simply the classic player, may warrant a profile. MGM Resorts indicates that 70 percent of its revenues originate from nongaming sources, and G2E will host important seminars next month on the integrated resort experience, what the non-gaming patron is worth to properties, and how casinos track customers to optimize revenue management. Witness the proliferation of spas, theaters and restaurants in casino properties. Or how customers are marketed. Limos pick up businessmen whose “gaming table” unfolds within a restaurant. Patrons who sip expensive wine become a new form of high roller. “Vino” has met “Tito.”

Bally VIP features a built-in contact management module that tracks all host communications, enabling hosts to market to existing and prospective players. A host, for example, can greet a customer at check-in or at a gaming station.

Industry Teacher Roy Student champions the “non-gaming side of gaming.” He introduced serverbased gaming to the industry, advises casinos on cutting-edge trends and founded Las Vegas-based Applied Management Strategies, which he runs. Student also helped enable the U.S. market entry for companies from Asia, Europe and South America, in a six-decade career. The intersection of gambler and patron continues to solidify, he says. Student endorses the integration of player and patron tracking into one resort man“Why not create a agement system that rates players and spenders. theoretical win for “Some people think that time is althe non-gaming ready here,” he says. “It is not perfected patron?” yet, but people know it’s coming.” Student knows what’s coming and —Roy Student, what’s gone. He recalls information about President, Applied big players in the 1960s being contained Management on index cards in the pit. A decade later, Student says, he designed the first automated casino management system. The innovation directed properties in maintaining customer time on device. That was only the beginning. “All of a sudden, in 1989, here comes Steve Wynn with the Mirage and there is a different baseline,” Student recalls. “Now there are shopping malls, restau44

Global Gaming Business SEPTEMBER 2015

rants and many things to do that are non-gaming-oriented. “The casino operator is asking about the people coming in who are not gamblers. Who is using the spa? Who is in the gourmet restaurant? Who is watching the white tigers and using my cabanas? I know I am making money off these people, but I don’t know who they are.” Money indeed. Student thinks casinos can reap rewards from a non-gamer’s portfolio. “Why not create a theoretical win for the non-gaming patron?” he inquires. “That would give you a whole new marketing base to figure out which people are coming in, who spends a ton of money, and how to predict them. As a casino, I want to market to that patron as if he was a player. I can send him a limo, book him in a mini-suite, do whatever I can for him because he is so predictable. And he

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is not going to beat me at the table. I am at no risk. “I may know that he is going to rent the cabana for three or four days, and that his wife always goes to the spa. I have a dossier on this customer and have created a whole new data warehouse. “Some of these cabanas can be rented for $250 to $5,000 in one day. The margins are way up over a casino (typically 17 percent). This cabana is an asset you already have; it is sitting there. The margins can be 30 percent to 40 percent.” Student says Las Vegas must continue to know the types of people it serves. The index card group were army veterans who specialized in jewelry and scrap metal. They had worked in the ships and trenches of wartime locations and “had nothing to do but play craps in the Army,” he asserts. When that group died out, they were replaced by the yuppies. And then when the Great Recession came, nothing was sacred, he maintains. “We got murdered,” Student says. “But now, as we are coming out of it, we’re seeing many people from the Midwest who come out for a show, the restaurant and they buy $5,000 bottles of wine. They aren’t classic gamblers, but we have to track these people.” Established forces like Scientific Games and Konami can show hotel and resort entities how knowledge is power. They turned information into a gaming play station.

Product Potpourri For Scientific Games, one of the industry’s premier forces, player tracking involves several realms. “It has evolved into a wide range of marketing,” says Tom Doyle, vice president of product management for Scientific Games. “You are combining the player club with the social media. A player now can sit at the machines with the social media services and have all their secondary wagering, too. The machine turns into a kiosk.” A number of new products convert player tracking information into games people play through Scientific Games’ Bally systems. One is Multiple Buckets, which allows players to have multiple accounts for varied offerings. They can have a bucket for player dollars, comps, club levels, etc. This enables operators to target offers to their customers’ area of preference. And how’s this for an event that goes looking for a gambler? Bally’s Elite Bonusing Suite (EBS) is a set of bonusing tools enabling operators to automate, strengthen and personalize their promotions and player-loyalty programs. BetVIEW is a new application for EBS that enables guests to wager on secondary games without leaving their machines.

“You are on a gaming machine, going along and playing and here comes a pop-up asking if you would like to participate in a casino lotto, casino keno or virtual horse race,” Doyle says. “You say, ‘Sure, I’ll bet $5 of tickets.’ We take $5 of tickets off the game, or apply the same formula to a horse race. You indicate what you want to bet and then we can show you the race. We take over as much or as little of the screen as we want, you watch the race and the screen returns to its original size.” This floor-wide technology can be offered by operators with EBS and Bally’s iVIEW Display Manager (DM) player-user-interface. Scientific Games has taken the concept of iVIEW, once associated with ordering show tickets and drinks, to a heightened revenue stream. Another tracking innovation is Bally VIP. It features a built-in contact management module that tracks all host communications, enabling hosts to market to existing and prospective players. A host, for example, can greet a customer at check-in or at a gaming station. Doyle believes Scientific Games’ next push will occur in the big data area. Player information will be tailored not only to specific games, but to the preference of play. He cites Take ‘n Play, which recently hit the market, as an example of industry flexibility. Players can continue their action even at a restaurant. This innovative technology streams the game content to the tablet screen, which replicates all aspects of game play. The game still takes place on the original machine, but is unavailable to other players. A customer can take his favorite game to any approved site on the property.

In Synk Las Vegas-based Konami Gaming, Inc. is a subsidiary of the Konami Corporation. The company is a leading designer and manufacturer of slot machines and casino management systems for the global gaming market. Its prize contributions include the award-winning casino management system Synkros. The product is best known for its reliability, innovative marketing and powerful analytics tools. It is a leading-edge casino management system, company officials say. And what is trending in this area? Synkros synchronicity. “Synkros Progressive Management, or SPM, is one of our newest products this year,” says Michael Ratner, director of product management systems for Konami. “It’s a single interface within Synkros for defining, configuring,

“We want to deliver player-centric information to those smart phones. Promotional games, loyalty account information, special offers, exclusive rewards, point levels and available comps can all be delivered to players’ smartphones through Synkros, thereby providing that relevant and valuable engagement through their most frequent channels of communication.” —Michael Ratner,

Director of Product Management Systems, Konami Gaming SEPTEMBER 2015 www.ggbmagazine.com

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launching and maintaining system-controlled progressive games.” Ratner says SPM allows casino operators to manage their property’s custom, owned progressives. SPM allows them to create, deploy and manage progressive bonuses across selected base games as an alternative to leased progressive products. All aspects of SPM are controlled within the casino management system. The company also understands its needs for mobility. “Considering the fact that more than two-thirds of U.S. consumers are carrying smart phones, mobile is trending,” Ratner indicates. “We want to deliver player-centric information to those smart phones. Promotional games, loyalty account information, special offers, exclusive rewards, point levels and available comps can all be delivered to players’ smart phones through Synkros, thereby providing that relevant and valuable engagement through their most frequent channels of communication.” SPM allows casinos to provide real-time information on their owned progressive games for players to see, such as the current progressive values, the amount of time since they last hit, and floor maps indicating where each is located. “All the mobile features—promotional games, account details, comp redemption, progressive jackpot specs and more—are available through our SYNKiosk mobile app for Synkros,” he adds. “SYNKiosk-Mobile is a player-facing mobile application that casino properties brand and manage as their central loyalty program app. Players essentially engage with the mobile app similar to how they interact with traditional on-site promo kiosks, but with a convenience and closeness that maximizes engagement and visibility.” Synkros Progressive Management will be demonstrated at G2E. The product is slated for market release after an extensive beta test beginning in March of next year.

Another Side of the Casino Coin Some companies don’t make the games, but crunch numbers to accommodate those who do. Rainmaker and Duetto, for example, focus more on customers’ stay than what they play. The Rainmaker Group is a world leader in automated forecasting and profit optimization software and services for the gaming and hospitality industry. The Atlanta-based company deals with gaming powerhouses like Mohegan Sun and the Cherokee Nation with continual updates for its GuestREV solution. The product is cloud-based, enabling operators to view suggested room rates produced by its own player database and by probabilities incorporated into the software. Mathematical algorithms, price suggestions and an updated view as to what types of players have been booked in which types of rooms is constantly available to an operator. Each guest’s past spending history is available for those deciding what room to offer. “Our system has the flexibility to take in any type of revenue associated to your guests,” says Amar Duggasani, chief strategy officer for Rainmaker. “We can marginalize that revenue, look at the cost structure of that customer more holistically and come up with a rate recommendation. “Let’s say a player base has 100,000 players,” Duggasani says. “We can segment them into certain value levels. You may have a property with 10 value levels, taking into account all the historical data regarding how how often players come in, what games they prefer, what they typically spend, etc. You have a forecast for each night based on what level they have and their value to the casino floor. “Before a solution like ours was developed, either you are a gamer or a nongamer. You might give the gamer a comp and the non-gamer a room rate. Now, the hotel can focus on making sure they allocate their rooms to the right customers, and protect their inventory for high-value guests.” Duggasani says a big property may have such a demand for gaming space on the weekend that it won’t offer rooms to non-gamers, but may find other ways to nurture their business. GuestREV provides information on where dollars are spent. It becomes in46

Global Gaming Business SEPTEMBER 2015

“We see enormous potential in every aspect of pricing at casino hotels and integrated resorts.” —Marco Benvenuti, Chief Analytics and Product Officer, Duetto Research

creasingly valuable in resort areas, bringing spas, golf, entertainment and restaurants into the equation. So does a contribution the gaming world can offer the hotel side. “We find that the casinos have an edge in knowing their players a whole lot better than the hotels do at this point. The hotels are learning tricks from the casinos.” Duggasani says GuestREV went mobile earlier this year, giving operators hands-on information from remote locations.

Changing the Game Operators see the increased significance of non-gaming customers. Duetto offers GameChanger to help them improve revenue strategies for integrated resorts. “We see enormous potential in every aspect of pricing at casino hotels and integrated resorts,” says Marco Benvenuti, chief analytics and product officer for Las Vegas-based Duetto Research. “For example, complimentary rooms: Legacy systems follow a simplistic ‘comp or no comp’ criteria. Isn’t it better to offer a valued guest, who would not otherwise qualify for a free night, a discounted room or some other incentive instead of nothing at all? “The goal is to always get the right guests in the right rooms at the right times, maximizing all potential revenue. GameChanger empowers its users to achieve this.” The product can also be used across departments to leverage valuable intelligence and collaboration to achieve better decision-making, he says. GameChanger observes web-shopping behavior by looking at lost business regrets and denials, social review, air traffic, weather and more. The technology is then able to forecast far enough out that sales and marketing departments can target campaigns to address need periods and pull unnecessary offers. Its smart alert engine also monitors, interprets and highlights areas of need so casinos spend less time collecting data and more time responding to market conditions that maximize potential revenue channels. “The Duetto solution has completely transformed our revenue strategy,” says Kenny Epstein, owner and CEO of El Cortez Hotel and Casino. “Before implementing the system, we didn’t have the visibility to understand where we were giving up margin and profit, and in a competitive market like ours, we could no longer afford that.” A cloud-based, software-as-a-service solution introduced last year, GameChanger is used at more than a dozen hotel casino properties in the U.S. and internationally. Gaming device manufacturers and companies which specialize in data observe a growing market. They can help casino hotels use revenue management software to predict spending patterns, determine room-rate tiers and match a wealthy spender with a luxury room. Vendors also provide game content to operators who show an advanced knowledge of their customers from years of loyalty cards and sophisticated software programs. Slowly, but certainly, the worlds of gaming and non-gaming integrate. As they do, the definition of “player” widens.

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Federal Focus Tribal recognition reforms may not create a casino boom BY DAVE PALERMO

here are some 55,000 Lumbee Indians in North Carolina, yet the Lumbee are not recognized by the federal government as an American Indian tribe. Nor are the landless Little Shell Chippewa Indians who once inhabited Canada, Montana and North and South Dakota. Or the Chinook Indians of Washington state, who in the 1800s helped explorers Lewis and Clark navigate the Pacific Northwest. Seattle, Washington, is named after Chief Seattle of the Duwamish Indians. But that tribe also is not federally recognized. Conversely, the Pamunkey Indians of Virginia were recognized by the U.S. Department of the Interior just last July, 400 years after encountering English settlers at Jamestown. Pocahontas was a member of the tribe. And the Mashpee Wampanoag of Massachusetts, whose ancestors greeted the Pilgrims and partook in what many believe was the first Thanksgiving feast, were finally recognized in 2007.

Recognition Renaissance

The Pamunkey Indians of Virginia, the tribe of the legendary Pocahontas, is federally recognized, but the Duwamish Indians of Washington are not, even though the state’s largest city is named after their legendary leader, Chief Seattle (above)

The complex legal status of indigenous Americans—their ability to maintain their sovereignty and traditions and reacquire and govern ancestral lands lost through European settlement—has long been fraught with federal bureaucratic peril. It’s not unusual for Indian groups to struggle for decades, spending millions of dollars in legal fees and accumulating thousands of pages of historical and genealogical records, before achieving the recognition necessary to establish governments and place land in federal trust. The Shinnecock Nation of New York told McClatchy News Service it spent $33 million over 32 years before getting federal recognition in 2010. The Department of the Interior, at long last, is working to fix what Indian law scholars have long regarded as a “broken” system of federal acknowledgement. But, not unexpectedly, the effort has been commandeered by Indian casino gambling. “Indian gaming, unfortunately, is the 800-pound gorilla in every room, in every discussion, on every Indian policy, including recognition. Mostly recognition,” says Washington, D.C. attorney Arlinda Locklear. 48

Global Gaming Business SEPTEMBER 2015

Long-awaited reforms to Interior’s Section 83 federal acknowledgement process went into effect July 31. But recalcitrant Congress members may withhold funding the streamlined process, and tribes and anti-gambling groups have threatened legal action to thwart certain revisions. The new guidelines for Interior’s Office of Federal Acknowledgement (OFA)—established in 1978 to fix the recognition process—underwent thorough scrutiny after a rule-making draft released in May 2014 elicited a flurry of criticism from tribes and anti-gambling proponents. Although the National Congress of American Indians (NCAI) and other Indian groups applauded the reforms, several tribes challenged the working draft, claiming the guidelines were too lenient and diminished their legal standing as sovereign governments. Others feared increasing the number of federally recognized tribes would cut into already meager Interior appropriations for Indian programs. But a major factor in the debate was the notion the reforms would markedly increase both the number of Indian tribes and, consequently, Indian casinos, burgeoning an already tight $28.5 billion market of some 440 gambling facilities in 28 states.

Gaming Generation

Much outcry came from tribes, card rooms and anti-gambling groups in California, the nation’s largest Indian casino market with 60 tribes generating $7 billion a year. A controversial study by the activist group Stand Up California predicted the draft rules would result in 34 new tribes, most of which would operate casinos and swallow up lands now on the tax rolls. Connecticut officials and California lobbyists for commercial and tribal gambling interests eventually convinced Interior officials to abandon two controversial proposals in the draft. One provision would have required indigenous groups to date their existence to 1934, rather than 1900 as agreed upon in the final rule. Another proposal would have allowed tribes previously denied recognition to re-petition under the new rule. That provision was stricken. Tribal leaders and anti-gambling advocates are somewhat appeased by the final rule published in the June Federal Register, satisfied the guidelines reflect changes suggested during the yearlong public comment process. But they remain concerned.

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“We feel like we now have a fairer, more transparent, more expeditious rule on federal acknowledgement. So we should require people to go through it.” —Interior Assistant Secretary for Indian Affairs Kevin Washburn

“There are a number of substantial improvements in the final rule compared to the initial proposal,” says Tom Brierton, lobbyist for California card rooms and tribes, notably the provision back-dating from 1934 to 1900 the date from which Indian groups need prove continual existence as a tribe. Prior OFR guidelines required tribes to prove existence from their first contact with Europeans, a difficult documentary challenge for indigenous Americans who for generations were forced to hide or deny their Indian heritage. California Indians for decades were forced to flee murderous militias financed by state and local officials. “Interior Assistant Secretary for Indian Affairs Kevin Washburn deserves credit for listening to the many concerns voiced about the initial proposed rule,” Brierton says. “Given the complexity of the issue, I think many tribes are still studying the new rule before they issue a final verdict.” The working draft lowered standards for federal recognition, says attorney George Skibine, a former Interior official. “Now the criteria and the process are not that different,” he says of changes made during the comment period. “The bar for recognition is still set pretty high.” It remains unclear what impact the new acknowledgement rule will have on

the Indian casino industry. Interior believes the impact will be minimal. “We have not substantially changed the criteria,” says Washburn, noting that revisions largely speed up the process and make it more transparent. They do not significantly change evidentiary standards needed for federal recognition. Of the 53 tribes that completed the OFR process since 1978, 35 were rejected and 18 approved. Of the tribes achieving recognition, 11 have had lands placed in trust, nine for casinos. “I don’t anticipate a change to those ratios” under the new rule, Washburn says. “It’s still a tough process. It’s very rigorous.” Aside from the Section 83 process, about a dozen tribes have achieved federal recognition through Congress or the federal courts. Once recognized, acquiring and placing land in trust for casinos under the Indian Gaming Regulatory Act (IGRA) is a separate, expensive and often politicized process that, like federal recognition, can take decades. “Whether to grant federal recognition and whether a tribe is eligible for Indian gaming are two wholly different processes,” Bureau of Indian Affairs

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“We’re not looking at creating tribes. We’re looking at recognizing long-existing tribes.” —Larry Roberts, Deputy Interior Secretary

spokeswoman Nedra Darling says. Cheryl Schmit of Stand Up California says the group’s initial predictions “should probably be scaled back” because of amendments to the Section 83 working draft. “But there are still a number of issues that we need to evaluate in the final rule to understand how these proceedings will ultimately work,” Schmit says. Interior, Indian law scholars and financial experts are sharply critical of the Stand Up California report, claiming it grossly exaggerated the impact draft revisions would have had on a stagnant California casino market that has seen no significant growth since before the 2008 recession. “That’s fear-mongering,” attorney Bryan Newland, who worked on the revisions while serving as counsel for Interior, says of Schmit’s predictions. “The notion these reforms are lowering the bar and a higher percentage of petitioners are going to get recognized is not founded in fact.”

A Burdensome Process There are 567 federally recognized tribes in the United States, of which about 230 are remote Alaska villages unlikely to get into the casino business. Of the approximately 324 tribes in the lower 48 states, about 240 operate casinos with revenues largely funding government services. Roughly 350 indigenous groups have sent inquiries to the OFR since the office was established in 1978, but 265 failed to follow up on the initial letters. Eighty-one of the initial applications were postmarked California, which already has 110 tribes. But only about 14 were followed up and just one California tribe has been recognized through the OFR process. Michigan and North Carolina each produced 21 letters of inquiry, Connecticut 17, Louisiana 15 and Texas 14. But only about a dozen tribes remain under serious consideration for federal recognition. Achieving federal recognition has always been difficult. But the process has gotten even more complex with the emergence in the late 1980s of Indian casinos. Congress, state and local officials have grown suspicious that indigenous groups, often backed by deep-pocketed gambling investors, are seeking recognition solely for the purpose of getting into the casino business. The OFA process initially lasted about two years and required an administrative record of “200, maybe 300 pages,” Locklear says. “Every year since then it’s gotten worse, particularly since IGRA was enacted in ’88,” she says. “By the time the BIA process is over it normally will have taken 20 years and tens of thousands of pages.” A Government Accounting Office study in 2001 concluded: “The basis for BIA’s tribal recognition decisions is not always clear and the length of time involved can be substantial.” Gambling has impacted not only the recognition process, but efforts by existing tribes to reacquire ancestral lands lost over generations of European settlement. Congressional efforts to recognize six Virginia indigenous groups failed in the Senate in 2007 because Capitol Hill refused to believe promises the tribes 50

Global Gaming Business SEPTEMBER 2015

would not pursue casinos. The infamous Carcieri v. Salazar U.S. Supreme Court ruling in 2009 came about because Rhode Island Governor Robert Carcieri didn’t believe the Narragansett Indians wanted to place 31 acres in trust for a housing development. He feared the tribe wanted to use the land for a casino. The Carcieri decision limits Interior’s ability to place land in trust for tribes not “under federal jurisdiction” in 1934, when Congress enacted the Indian Reorganization Act. Efforts to get a congressional fix to the Carcieri decision have predictably been stalled by opposition to Indian gambling. The pushback has come despite the fact that of some 1,900 Interior applications to have land placed in federal trust, only about 20 involved casinos. Tribes use trust lands for community infrastructure and to provide housing, health care, education and other services to tribal citizens. Capitol Hill attorney Heather Sibbison in a recent interview said tribes lacking funds to tackle the recognition process are often forced to turn to casino developers. “The reality in modern times is most tribes don’t make it through the process unless they find developers willing to lend them a bunch of money in exchange for the promise that the tribe will let them run a new gaming facility for them,” Sibbison says. “People complain tribes are backed by big gaming companies as they go through the recognition process,” Newland says. “Well, it became so costly and took so long to go through the process, tribes couldn’t do it unless they had some investor willing to put up millions of dollars.” Several recently recognized and restored tribes—notably the Mashpee Wampanoag, Cowlitz Indian Tribe of Washington state (2000) and Federated Indians of Graton Rancheria in California (2000)—have built or are pursuing casino developments. Senator Richard Blumenthal of Connecticut convinced Interior to excise a provision in the draft regulations to prevent tribes denied recognition from re-petitioning for a second bite of the apple. State officials made no secret of the fact they feared the Eastern Pequots, Golden Hill Paugussetts and Schaghticoke Nation, all denied recognition, would re-petition and, perhaps, build casinos. Two Connecticut tribes—the Mashantucket Pequot Tribal Nation and Mohegan Tribe—operate casinos struggling in a constrained Northeast gambling market. The two tribes are working with the state to develop a third casino. The Tribal Alliance of Sovereign Indian Nations (TASIN), a coalition of 10 Southern California tribes, in a July 8, 2014 letter to Washburn said it had “serious concerns with changes that would water down the standards” for recognition. But tribes and Los Angeles-area card rooms made no secret of the fact they also were concerned urban Indians such as the Juaneño Band of Mission Indians of San Juan Capistrano, the Gabrielino Indians of Covina and others would petition for recognition under the new rule. “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,” Brierton says. Urban gambling resorts would seriously impact surrounding tribal casinos and card rooms. “TASIN has not taken a position on the final rule,” Executive Director Jacob Mejia said in an email.

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‘Splinter’ Groups An Issue Gambling is not an option for many tribes seeking recognition, including the remote Nor Rel Muk Wintu Indians, accessible only by a narrow, winding road through the Klamath Mountains in Northern California. “Gaming is not where we’re at. We don’t even discuss it,” says Marilyn Delgado, the third in a succession of tribal chairs seeking federal recognition. “It’s all about being able to keep our people together,” she says. “We have a huge substance abuse problem. We have a lot of poverty. We have child welfare cases. “We’d like to help our people get educated. We’d like to continue as a government. We want to protect our aboriginal lands as best we can. That’s what this is all about.” The Eastern Band of Cherokee of North Carolina was a major participant in public consultations on the Section 83 revisions. The tribe, which operates the state’s only resort casino, has long opposed recognition of the Lumbee and expresses concern that some 40 Indian groups are also seeking recognition, claiming they are Cherokee descendants. “To be recognized as a tribe is almost sacred,” says Perry Shell of the Eastern Band, which along with the Cherokee Nation and United Keetoowah Band of Oklahoma makes up one of the two largest Indian nations in the United States. The Cherokee and Navajo Nation each have from 280,000 to more than 300,000 members. “Federal recognition is what our people fought for. It’s what we bled for. It’s what a core of us died on the Trail of Tears for,” Shell says of the forced removal of Cherokee from the Carolinas in the early 1800s. “We’re not looking at recognizing splinter groups,” Larry Roberts, Deputy Interior secretary, told attendees at a Section 83 consultation. “We’re not looking

at creating tribes. We’re looking at recognizing long-existing tribes.”

Political Face-Off House Republicans angry that Washburn promulgated the Section 83 revisions against their wishes are threatening to tack a rider onto an Interior appropriations bill to block funding of the reforms. Washburn in turn issued a policy statement that Interior will not use a reaffirmation process or other administrative procedures to federally recognize Indian groups if the reforms are funded. He declined to term the policy statement a threat. “I would call it strategy. And I don’t think it’s illegitimate,” Washburn says. “People have been saying the process is broken for decades. The administration in response to this broken system has been using other, informal processes, including reaffirmations. Now we don’t have to use those processes. “We feel like we now have a fairer, more transparent, more expeditious rule on federal acknowledgement. So we should require people to go through it.” The prohibition against re-petitioning will likely face a federal court challenge. But with what they viewed as the more egregious elements of the draft Section 83 revisions excised, tribes once opposed to the reforms now believe they are in a “win-win” situation. “They are satisfied with the reforms, but they won’t be too disappointed if Congress blocks them and recognition guidelines remain as they were,” says a lobbyist who requested anonymity. “So yes, it’s a win-win.” “Regardless of what verdict tribes ultimately render on the new rule, I don’t think we have heard the last from Congress on this issue,” Brierton says. “Key members still have a number of remaining concerns, so it is not likely this issue will fade from view any time soon.”

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NEW GAME REVIEW by Frank Legato

The Blob

Scientific Games

his game on the Bally V27/27 cabinet is a nod to the 1958 science fiction classic The Blob, in which a giant, growing amoeba from outer space feasts on the citizens of Downingtown, Pennsylvania. The reel symbols include both film-specific images and more general examples of terrified citizens and other icons of cheesy ’50s sci-fi flicks. The base game is a 243-ways-to-win penny video slot featuring a five-level progressive jackpot. The top jackpot is a wide-area progressive in the Bally Cash Connection link, resetting at $1 million. The progressives are won through a comparatively frequent bonus event. The Jackpot Bonus is a mystery event, triggered randomly every 86 spins on average on either a primary-game or free spin. The player picks from a field of 15 meteors until matching three. The player wins the jackpot matching the color of the three meteors, with prizes ranging from a reset of $10 for the Mini to $5,000 for the Grand. If three matching star symbols are revealed during the bonus, the wide-area “Box Office Jackpot” is awarded. Max bet is required for the top progressive. There are two different themed free-spin features, and the player chooses which one when triggering the “U-Choose Free

Games Feature.” Three or more scattered Blob symbols award 10 free games, the player choosing between “The Blob Devoured the Royals” and “Wild Stacks.” In the former, all royal symbols are removed from the reels, increasing the chances for toptier five-of-a-kind jackpots. In the latter, three of the same active symbols on a reel become wild, creating a wild reel. Each of the free game events is retriggered for an additional 10 games if three Blob symbols land. Manufacturer: Scientific Games Platform: Alpha 2 Format: Five-reel, 243-ways-to-win video slot Denomination: .01 Max Bet: 300, 480 Top Award: Progressive; $1 million reset Hit Frequency: 38.95% Theoretical Hold: 12.82%-16.4%

Lucky Honeycomb Konami Gaming

his new game on Konami’s KP3 platform and Podium cabinet features free-spin bonus events augmented by “Honeycomb” stacked wild sym-

bols. The base game is available in 20-line, 30-line or 40line configuration. Part of the “Xtra Rewards” series, it features Konami’s trademark Action Stacked Symbols (clusters of like jackpot symbols) along with the generous free-spin event. The honey symbol is wild in the base game, appearing on all but the first reel. The “Lucky Honeycomb Feature” is a mystery event in the base game. Randomly, extra honey symbols appear on the reels during or after the reel spin. If extra “Honey” and “Comb” symbols land at the same position, they change into a wild symbol. Any three, four or five Comb symbols landing on a primary game spin trigger eight, 13 or 20 free games, re-

Global Gaming Business SEPTEMBER 2015

spectively. According to the manufacturer, the Lucky Honeycomb Feature occurs more frequently during the free games. Manufacturer: Konami Gaming Platform: KP3 Format: Five-reel, 20-line, 30-line or 40line video slot Denomination: .01-5.00 Max Bet: 300, 480 Top Award: 2,000 times line bet Hit Frequency: 29% Theoretical Hold: 4%-18%

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Money Factory

International Game Technology

ith this game package, IGT gives a new look and a compelling multiple-progressive treatment to a collection of its most popular game titles. Money Factory’s library of proven and new themes includes Sumatran Storm, Enchanted Unicorn, Lucky Larry’s Lobstermania and Bighorn Buck$. Money Factory combines a mystery multi-level progressive jackpot bonus with base games in IGT’s “MultiPLAY” format. That means the player spins four sets of reels at once. Each individual game has its own game-specific bonus events and features, but when the Multi-Level Progressive bonus is triggered, players pick icons that have the potential to advance them to the next round, and the next progressive. Each of the Money Factory slots’ base games offers a unique payline structure and bonus rounds, including fan-favorite features such as the treasure chest bonus from the Enchanted Unicorn theme. The game also offers new bonus features, such as the free games bonus in the Bighorn Buck$ theme, where wild symbols have the potential to transform into multipliers. Operators can create a dynamic destination on their floors with the Money Factory slot’s overhead signage, which can be programmed with custom animations. The Money Factory slot’s brilliant lights and sound draw attention to the game’s life-changing jackpot.

Manufacturer: International Game Technology Platform: AVP Format: Five-reel, 40-line or ways-to-pay video slot Denomination: .01 (Operator-Selectable) Max Bet: Various Top Award: $2,500 Hit Frequency: Approximately 50% Theoretical Hold: 3.96%-10.1%

Apex Gorilla Aruze Gaming

his is one of the first group of games on Aruze’s new “Cube-X Innovator” cabinet and game series. The base game is a fivereel, 30-line stepper slot with a free-game bonus event in which all wins are doubled. The game is a straightforward multi-line video slot with an extra feature determining the number of games in the free-spin bonus. Five or more bonus symbols trigger the Gorilla Bonus, which begins with the Free Games Number Selection. A screen appears displaying a roulette wheel, used to determine a number of free spins. The number of bonus symbols appearing on the three-by-five reel set determines how many hidden numbers on the roulette wheel appear to unveil numbers of free spins, ranging from one selection for five bonus symbols to seven selections for 10 symbols. Each selection uncovers a number of free spins, up to a maximum of 100. If all of them have been revealed and no selections are left, the original numbers of spins reappear—meaning with a little luck, the player can be awarded hundreds of free spins. With all wins doubled in the free spins, the result can be lucrative, making the free-spin round the most compelling aspect of the game for players. The bonus retriggers if the bonus symbols land during a free spin.

Manufacturer: Aruze Gaming Platform: Cube X Innovator Format: Five-reel, 30-line stepper slot Denomination: .01 Max Bet: 150, 300, 450, 600 Top Award: 1,000 times line bet Hit Frequency: Approximately 50% Theoretical Hold: 2.08%-12.99%

SEPTEMBER 2015 www.ggbmagazine.com

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CUTTING EDGE by Frank Legato

Modernized Sports Betting Product: BGT Tablet Solution Manufacturer: Best Gaming Technology

GT has recently expanded its retail offering to ride the crest of the tablet wave. The niche product we thought we never needed has unexpectedly transformed how we consume news, social media and television. It’s now about to transform the retail sports betting world too. Running on a Windows operating system, the BGT Tablet software can offer punters over 170,000 markets a week across more than 30 different sports including baseball, soccer, football and racing. The small, table-top design means operators can maximize their space, providing more bet entry points without compromising on quality and content. The nature of the tablet solution means that it is ideally suited to sports bars and smaller betting venues as well as even track-side. The interface differs slightly from BGT’s other products, but is nonetheless parlay and inplay focused. The devices are easily managed through an innovative customer management and back-end system, which allows operators to entice customers with event-specific promotions as well as various sign-up and bet-type

bonuses, as well as providing all financial data and report creation. The BGT system also is easily integrated into existing systems. The product is completely customizable, with cashless options available through the use of a customer account or cash-loaded options for bettors who wish to remain anonymous. Cash recycling options are also available which minimize the risk of human handling errors and also increase security within the venue. The BGT Tablet solution is essentially modernizing the sports betting world, introducing a new generation of self-service betting devices into a traditional environment. It can also offer features that have been previously unavailable in traditional betting environments, such as a comprehensive statistics page provided by BetRadar which keeps bettors informed on previous form, head2heads, goal scorers possessions stats and much more. Also available would be live scoreboards and incredible in-play match visualizations for a range of sports. For more information, visit G2E Booth 5223 or visit best-gaming.com.

One-Stop Redemption Product: DFS-500 Casino Kiosk Manufacturer: DiTronics

t G2E, DiTronics is featuring the new DFS-500 Kiosk, which allows players to redeem slot tickets and break bills as well as access their funds via ATM, cash advance and check cashing transactions. Players can use those funds in customers’ land-based casinos as well as online casinos, for a seamless funds access experience. The DFS-500 Kiosk features include a dual bill validator (multiple ticket pay-off capability can process up to 10 tickets at the same time), greater bill holding capacity (five cassettes/3,000 notes each reduces the need to refill cassettes during busy times), a 17-inch touch-screen and eyecatching multi-color LED illumination. Exclusive DiTronics Vantage Kiosk software provides additional options for enhanced functionality through DiTronics’ proprietary Rewards Center, which includes:

Global Gaming Business SEPTEMBER 2015

• SMART Dispense (patent pending), whereby operators can customize and define the bill break mix by kiosk, by zone or by casino floor; • Jackpot Pay (patent pending), which helps casino operators manage jackpots more efficiently by making one, some, or all ticket redemption kiosks jackpot dispense units; and, • Transaction Rewards (patent pending), which enable the property’s best players to complete their funds access transactions and have their fees comped or receive a discount on fees automatically at the kiosk. In addition, players can also earn points at the DFS-500 Kiosk for doing their transactions at your casino. Since 1998, DiTronics has continually defined the future of funds access with a fully integrated suite of products and services that include ATM and multi-function ticket redemption machines, check guarantee services, cash advance, iGaming, digital wallets and innovative marketing programs for casino operators who require funding solutions for land-based, mobile and online gaming. For more information, visit G2E Booth 3616 or visit ditronics.com.

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FRANKLY SPEAKING by Frank Legato

Skill-Crazy

Global Gaming Business SEPTEMBER 2015

I’m guessing a few lung-tester skill slots in the casino smoking section would rake in the revenue. There also were a lot of machines that awarded money for feats of strength, like the “Dumb Bell Lifter” and the “Bag Punching Machine.” That one had a punching bag and a meter, and you stood in front of it flailing away. There was another version with more advanced technology called the “Pneumatic Punching Machine.” As cool as that is, I don’t think the millennials will go for it. You can’t play it on a phone while swilling Red Bull and checking your Twitter account. But hey, it’s worth considering. The Mills Company was formed not long after the very birth of the slot machine. Herbert Mills was a contemporary of San Franciscan Charles Fey, who in 1899 released the “Liberty Bell,” the three-reel slot machine on which all other slots would be based (which was a surprise to his wife, since Fey had been trying to build a toaster). Fey, by the way, was known as the “Thomas Edison of Slot Machines.” (Thomas Edison himself was known as the “Charles Fey of light bulbs.”) Cowper Manufacturing was around in the 1890s as well. An 1898 sell-sheet for Cowper slot machines proudly announces, “All machines are made by skilled mechanics and not boys.” Wow. That’s a relief. Why don’t today’s slotmakers make the same promise? In the end, skill games for the millennials are probably going to involve smart phones, video game contests, or something else that replicates sitting on the couch with a joystick. But there may indeed be room for lung machines, punching bags and the like. Let’s get creative. Hey, how about a task-oriented slot game for millennials? We’ll call it “Move Your Junk From Your Parents’ House Since You Haven’t Lived There For Years.”

VICT OR R INALD O

he new buzzword in the slot machine industry is skill. Slot-makers, regulators and operators are convinced that we baby boomers are dropping like flies, and that pretty soon, the entire world will be populated solely by people born after 1980. Those people, of course, are known as the “millennials,” or alternatively, as “people who used to live in our houses and play games in our basement.” And as you may have heard, they’re not wild about sitting in front of a screen, watching reels spin and hoping for luck. (Yes, I know. How could you not like that?) No, millennials want to use coordination, dexterity, knowledge or some kind of skill to influence the outcome of their game, just like they used to do with those videogame consoles that we’re still waiting for them to remove from our basements. Therefore, there is a drive—bordering on panic, really—among slot-makers and casino operators to have games for the millennials in place before all of us boomers croak. All of this assumes that there has never been skill involved in a slot machine, other than the silly “stop the reels” thing in North Carolina. But that is simply not the case. I recently was chatting with Ira Warren, owner of Californiabased Coin-Ops, LLC. Coin-Ops deals in antique slot machines, and Warren’s own collection of antique games is astounding. He is currently talking with casinos about adding displays of antique games as an attraction at their properties, which I think is a great idea. Warren pointed out that even the “skill-stop,” the feature on the games in North Carolina, was nothing new when someone, somehow, convinced regulators that you could influence the outcome of a spin by watching the symbols whiz past and stopping each reel with a button. He says the skill-stop was used as early as the 1930s to get slot machines past local authorities as skill games—each of three reels had a button over it, and each reel would spin until the button was pushed. Yes, it was as silly then as it is now. But Warren also has these catalogues from early slot-machine makers like Mills Novelty Company and the Cowper Manufacturing Company, and they’re loaded with skill games. I believe today’s manufacturers can find a lot of helpful hints looking through these catalogues. For instance, Mills had an entire line of machines that were “lung testers.” They all had towers, and you had to blow into a tube to try to light up the highest score on the tower. There was a “Searchlight Grip and Lung Tester,” a “Balloon Lung Tester,” and my personal favorite, the “Hat Blower,” with an “attract mode” sign that read, “Who Blows Best?”

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EMERGING LEADERS Giving Credit Where It’s Due

Sporting Chance Griffin Finan

Jonathan Bell

General Counsel, DraftKings, Inc.

hen Griffin Finan graduated with a juris doctor degree from the Georgetown University Law Center, he did not want to embark on a career as a “typical” lawyer. Finan, who currently severs as general counsel, legislative and regulatory affairs for DraftKings, Inc., wanted to practice law in a more exciting environment than traditional law firms provide. “I did not want a boring law job when I graduated law school,” Finan explains. “I have always been a gamer myself, and working in the gaming industry as a lawyer requires you to tackle new issues all the time. That variety of issues has always interested me.” Finan attended Bates College for his undergraduate degree, studying political science to prepare for his eventual law degree. After graduating from law school in 2012, Finan began his legal career at Ifrah Law, where he advised numerous gaming companies on a variety of legal issues. Additionally and perhaps more importantly, Finan cultivated his expertise on law and regulations governing online gaming, sports betting and fantasy sports during his tenure at Ifrah. These efforts prepared him for his current position at DraftKings. Looking back on how his professional life has progressed thus far, Finan is happy with the career choices he has made. “I truly enjoy how the online gaming industry and the daily fantasy sports industry continue to grow so rapidly,” says Finan. “The growth in the industry is exciting to be a part of and means there is never a boring day at work.” Additionally, Finan enjoys being a part of an industry that is revolutionizing sports from the fans’ point of view. “I truly believe that the daily fantasy sports industry is transforming how fans experience sports,” he explains. “Being a part of that on a daily basis is extremely exciting for me.” Throughout his career, Finan has used an

Vice President of Cage & Casino Operations, Las Vegas Sands

rom a young age, the service industry always interested Jonathan Bell. However, after a visit to Las Vegas in the early ’90s, Bell decided he wanted to pursue a career in the gaming industry. Initially working in casino marketing, Bell transitioned to casino credit in 2002 after developing an affinity for credit and the unique approach that casinos take to issue and approve credit lines. At the Venetian and the Palazzo, that can mean reviewing credit requests from Asia, Latin America and the United States multiple times a day.

“I have always been a gamer myself, and working in the gaming industry as a lawyer requires you to tackle new issues all the time. That variety of issues has always interested me.” innovative approach when seeking guidance and advice from industry veterans. “Twitter has been a great tool for me to connect with more experienced professionals in the gaming world,” states Finan. Twitter has provided a platform for him to effectively and efficiently “learn from their knowledge and experiences.” Finan’s advice to young leaders in the industry is to seek as much exposure as possible. “The best advice I can offer is to read and write as much as you can and talk to as many people as you can that work in the industry,” says Finan. Finan, whose commentary has been featured in both sports and gaming industry publications, has experienced firsthand that this can lead to great opportunities. “Reading and writing about the industry helps you learn the issues that the industry faces and establishes credibility when you are meeting with people in the industry,” he explains. Finan also points to a tactic that has worked well for him as he has progressed in the industry. “I encourage everyone that wants to get in the industry to not be shy, to get on Twitter, and interact with industry leaders and reach out to people to see if they can offer you insight on your career.” —Michael Vanaskie, The Innovation Group

Global Gaming Business SEPTEMBER 2015

“Spend time in your operation listening to and engaging your team—they are the heart of the operation. Leaders and managers are those who listen more and talk less and lead by example, not the loudest guy in the room.”

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PROFITABLE WEST COAST CASINO FOR SALE

“People ask me why I am so fascinated by credit, and I tell them that you are dealing with individuals from numerous countries, all of whom have very unique and diverse backgrounds and credit histories,” he says. “It’s very interesting.” Bell fondly recounts how this job and industry have allowed him to travel the globe and work in Macau for Las Vegas Sands’ first property there as well as assisting with the preopening of the Marina Bay Sands in Singapore and the Sands property in Bethlehem, Pennsylvania. Throughout all of his experiences, Bell most enjoys working with his team members and guests alike. “Giving team members the opportunity to grow and improve themselves is the best part of my job,” Bell says. “I also enjoy the opportunity to know our guests and ensure that we are offering them an unparalleled experience at our resort, and it’s something I take to heart every day.” He adds that it should be no surprise that the gaming industry is evolving from an anti-money-laundering and know-your-customer perspective. “We are consistently working to enhance our operation in that area,” Bell says. “It is a critical component of our operation, and vital to our success.” Bell’s advice to the young emerging leaders who have lofty career aspirations: “Spend time in your operation listening and engaging your team—they are the heart of the operation. Leaders and managers are those who listen more and talk less and lead by example, not the loudest guy in the room.” Ultimately, Bell believes true success comes from being a servant leader and putting others—guests and team members— before yourself. —Erika Meeske, The Innovation Group

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GOODS&SERVICES

Aristocrat’s Helix Upright

SFC PICKS ARISTOCRAT French operator Société Française Itodendependent Casinos (SFC) tapped slot-maker Aristocrat stock a renovation of the gaming floor at its Casino Châtel-Guyon. Aristocrat games now cover more than half of the gaming floor at the casino. Installation of the new games was completed by SFC2A, Aristocrat’s exclusive French distributor. “The injection of fantastic new games at Châtel-Guyon is hosted on a mixture of Helix Upright and Super Screen Slant cabinets, and comprises a broad range of themes from the entertainment-based E*Series and jackpot-driven J*Series, as well as a number of Aristocrat’s inspirational new range of C*Series core games,” said Jorge Lopes, managing director of SFC2A. SFC Managing Director Carlos Ubach added, “With a broad choice of new games on offer and by taking the initiative now to introduce two elegant new cabinet styles to the floor, we are providing our customers with an exciting new variety of spectacular gaming entertainment. “The immediate response has been hugely encouraging, with a significant increase in visitation and player interest across the new banks since the launch…. We will be following this game installation model very closely, with a view to further implementations at our three other casinos, located in Gruissan, Port la Nouvelle and Collioure.”

SG SIGNS TWO U.K. DEALS cientific Games Corporation announced it Scompanies has reached an agreement with two casino in the United Kingdom. SG has signed an agreement with the Rank Group Plc. to supply Rank with its Operator Wide Area Progressive System for table games at its casinos in the United Kingdom. It will be the world’s largest table-game widearea progressive jackpot to be offered by a single operator. The Rank Group, which is the largest casino group in Europe, chose Scientific Games as its 62

Atlantis Casino Resort Spa in Reno

preferred business partner to install the WAP system on its blackjack tables. The initial rollout covers 21 tables in 10 casinos across the U.K., with 86 more progressive tables to be installed by the end of this year. Overall, the progressive jackpot will be offered on 107 tables in 53 properties, a world record in table-game progressives. In addition, SG Gaming announced a major new four-year agreement to provide server-based terminals to Talarius adult gaming centers in the U.K. Under the agreement, SG Gaming will provide its fully integrated server-based gaming platform across an additional 92 Talarius adult gaming centers (AGC), taking the total number of SG Gaming’s server-based terminals to around 500 across the Talarius estate. The rollout will begin this month, delivering a range of Clarity and T8 terminals to all sites. The agreement was reached following the completion of a successful trial across a number of sites in the Talarius estate. With SG Gaming terminals already installed in Talarius venues across the U.K., the rollout represents the conversion of these terminals to the server-based gaming platform, along with the installation of arcade customized Clarity terminals and the additional purchase of T8 terminals.

ATLANTIS SELECTS RAINMAKER’S GUESTREV he Rainmaker Group announced that Reno’s TRainmaker Atlantis Casino Resort Spa has implemented profit optimization software solutions including GuestREV, the company’s flagship revenue optimization solution; and GroupREV, the room pricing software tool. GuestREV is built upon proven forecasting and optimization algorithms to provide the most accurate forecasts as well as optimal pricing. It was the first of its kind to factor total guest value into the optimization process, considering potential revenue from gaming, food and beverage, spa and other profit centers along with room revenue. GuestREV also takes demand uncertainty and costs and values into consideration, resulting in top- and bottom-line growth and rapid ROI after implementation. It integrates with leading property management systems as well as in-house and legacy systems. Atlantis will benefit from the complete Rainmaker solution, including GroupREV, which delivers intelligent pricing—compliant with revenue management policy—optimized to capture a sale

Global Gaming Business SEPTEMBER 2015

in seconds. REVcaster, a tool for market-specific hotel price comparison and rate positioning, will give Atlantis an edge in the competitive Reno market, and Rainmaker’s Business Intelligence web-based platform will generate timely and actionable insights that leverage different sources of data to support Atlantis’ profitability goals.

WESTSPIEL PICKS KONAMI lot manufacturer Konami Gaming, through its SAdvantage European distributor DRGT, has introduced its 5 reel-spinning slots and its SeleXion series of multi-game machines in the new Casino Aachen, situated on Germany’s border with Belgium and Holland. The casino is owned by WestSpiel, Germany’s leading casino group. WestSpiel officials have returned glowing reports on the new machines. “Konami is simply a must at our new Casino Aachen,” said Armin Mestermann, technical slots manager for the WestSpiel Group. “It is a distinct advantage that Konami offers both single-game machines and multigame. Furthermore, the support from DRGT is excellent. We are very pleased with the feedback and with the results.” The Advantage 5 is Konami’s single-game, mechanical reel-based slot machine, and SeleXion offers a wide range of multi-game video slot themes with sharp graphics.

Konami’s SeleXion machine

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NOVOMATIC SEEKS CASINOS AUSTRIA SHARES, ANNOUNCES CATALONIA DEAL ustria’s Novomatic Group has submitted A binding offers to the MTB Privatstiftung for that company’s 16.8 percent shares in Casinos Austria AG (CASAG), and to the Leipnik-Lundenburger Invest Beteiligungs AG (LLI) for its 29.6 percent shares in the MEDIAL Beteiligungs GmbH—equating to an indirect equity stake of 11.34 percent in Casinos Austria AG, the monopoly casino operator in Austria. The offers were accepted both by the MTB Privatstiftung as well as by the LLI. The conclusion of both transactions remains subject to various permissions governed by public law as well as by company law and to formal approval requirements. If any further shares should be offered at an acceptable price then Novomatic would also be interested in acquiring them, according to a statement from the company. The parties have agreed not to disclose any purchase price.

In other Novomatic news, the company announced that Novomatic Lottery Solutions (NLS) has been selected as successful bidder in a public competition for a six-year contract by the Catalonian Lottery (Loteria de Catalunya). The contract provides full lottery facility management services for the autonomous region of Catalunya in Spain for both online and instant lottery products and services. The contract will commence on April 1, 2016, and contains an option for an additional two-year extension.

AGA BOOSTS SKILL TRAINING BILL, HOLDS DISCUSSION ew bipartisan legislation introduced last month N in the U.S. House of Representatives would promote programs that many casino gaming companies already implement to help workers boost their language skills, further their education and apply for citizenship. The American Gaming Association applauded the introduction of the New Americans Success Act of 2015 by Rep. Ileana Ros-Lehtinen (R-Florida) and Rep. Tony Cárdenas (D-California) that improves immigrants’ access to English language and

civic programs to help them fully contribute to society and the nation’s economy. “Casinos across the country rely on the many hard-working employees who are new to the United AGA’s Sara Rayme States, and we’re pleased to provide programs that help them succeed,” said Sara Rayme, AGA’s senior vice president of public affairs. “The casino gaming industry is proud to lead the way in supporting workers of all backgrounds and experiences who seek a path to the middle class.” Casino gaming companies provide robust benefits programs that include citizenship assistance, continuing education and language workshops. Oxford Economics, in a report released earlier this year, detailed the various employee benefits programs companies provide. Through one program, for example, employees receive a salary advance to help pay the citizenship application fee, free Rosetta Stone English-as-a-second-language courses and access to free workshops with leading immigra-

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GOODS&SERVICES

tion attorneys and representatives from the United States Customs and Immigration Services field office. In other AGA news, the organization hosted a roundtable discussion in July for nearly a dozen gaming academics and experts. “We convened this group to share ideas, present recent work and network with peers in a setting that does not exist anywhere else,” said Rayme. “Additionally, as part of the AGA’s multi-year public affairs campaign, ‘Get to Know Gaming,’ it provided an opportunity to outline the AGA’s policy platform and priorities and to identify potential opportunities for future engagement.” Attendees included: • Dr. Jay Albanese, Virginia Commonwealth University • Dr. Clyde Barrow, University of Texas – Rio Grand Valley • Dr. James Karmel, Harford Community College • Dr. Joseph Kelly, SUNY College at Buffalo • Dr. Steven Light, University of North Dakota • Rev. Richard McGowan, Boston College • Dr. Alan Meister, Nathan Associates, Inc. • Dean Kathryn Rand, University of North Dakota • Dr. David Schwartz, University of Nevada, Las Vegas • Professor Alan Silver, Ohio University • Dr. Brian Tyrrell, Stockton University The daylong discussion included topics such as gaming history, lotteries and casino gaming, fantasy sports and sports betting, illegal gambling and criminal networks and casino gaming’s impact on national, regional and niche markets. Rayme said the AGA is planning on expanding its network of industry experts.

MALTA iGAMING SEMINAR PLANNED for the seventh annual Malta iGamPby lanning ing Seminar (MiGS) was launched on July 30 Jose Herrera, parliamentary secretary of competitiveness and economic growth, and Joseph Cuschieri, executive chairman of the Malta Gaming Authority (MGA), at the Mistral Suite and Terrace at the Marina Hotel Corinthia Beach resort. This year’s MiGS will be held at the Corinthia Hotel, St. Julian’s November 16-19. “Founded in 2008, today MiGS has become globally recognized as a must-attend conference 64

on the iGaming calendar,” said Jeffrey Buttigieg, director of MiGS and COO of RE/MAX Malta. “Over the last two years, the event has seen a transformation and has matured into a top-10 event, as quoted by Calvinayre.com, a major iGaming online portal. Last year, the event was especially successful as we attracted over 450 delegates to MiGS14, and we started seeing the fruit of our labor during the previous five years.” One of the highlights of the upcoming event in November will be a panel that will include four pioneers of the industry. The event will also expound on a number of ensuing topics, including the latest EU directives, emerging jurisdictions, payment and advocacy, as well as subjects of potential growth including mobile gaming, eSports and others. In 2015, MiGS will be introducing a concept called “fishbowl conversations” which entices the delegates to get closer to the speakers, ask questions and become moderators, therefore providing a new dimension of interactivity and fun to the conference. Buttigieg confirmed that every speaker will be an authority in their field, and the tight-knit networking, which MiGS is renowned for, will continue to be a mainstay of the 2015 event.

IGT RECEIVES CORPORATE SOCIAL RESPONSIBILITY NOD aming supplier International Game TechnolG ogy Plc. announced that it has been awarded certification for its lottery operations by the World Lottery Association (WLA) for the WLA Associate Member Corporate Social Responsibility (CSR) Standards and Certification Framework. “Responsible gaming is fundamental to our business success and our corporate social responsibility initiatives are part of our DNA,” said Robert K. Vincent, IGT senior vice president, human resources and public affairs. “These principles govern the protection of our lottery customers and their players. It also gives us a unique opportunity to work more closely with our responsible gaming stakeholders, refresh our advertising practices, and involve our employees in unique ways to reinforce the company’s commitment to responsibly delivering growth to the lottery industry.” An external appraisal was performed by a WLA-approved assessor, Gaming Laboratories International. GLI provided an informed, complete, and impartial assessment of the company’s lottery operations and completed a Statement of Align-

Global Gaming Business SEPTEMBER 2015

ment reflecting IGT’s compliance with the eight sections of the WLA CSR standards. The eight standards include research, employee programs, product and service development; remote gaming environment, advertising and marketing communications, client awareness, stakeholder engagement, and reporting. IGT also received letters in support of its application from key stakeholders such as customers, problem gambling associations, and world-renowned problem gambling scholars. “We are honored to be recognized by the WLA as an industry leader in CSR and responsible gaming, and we will continue to evaluate and strengthen the technology,” said Vincent.

WIN SYSTEMS CERTIFIED IN CHILE, COLOMBIA in Systems announced that it has obtained W the certificate of compliance from Gaming Laboratories International for Chile and Colombia for its casino management system, WIGOS. Specifically, WIGOS was approved in the jurisdiction of Chile in accordance with the Standards for Ticket-In/Ticket-Out Systems (TITO) and the Standards for Online Monitoring and Control Systems. In the jurisdiction of Colombia, WIGOS has obtained approval in accordance with the technical requirements contained in the new regulations from COLJUEGOS. By satisfying the evaluations of GLI, which guarantee the compliance of WIGOS with the regulations and standards set by the Superintendencia de Casinos de Juego (SCJ) of Chile and the Administradora del Monopolio Rentístico de los Juegos de Suerte y Azar (COLJUEGOS) of Colombia, the casino management system WIGOS is now authorized to operate in these new markets. Eric Benchimol, CEO of Win Systems, said, “In Win, we offer solutions that adapt to our customers’ needs, such as our WIGOS system, which has the flexibility to adapt to the regulations of different countries, which is a clear advantage that puts us ahead of our competitors. WIGOS is the leading casino management system in Latin America, and we are now pleased to be able to offer it to our customers in two important markets such as Colombia and Chile.” Win Systems now has more than 50,000 gaming machines connected to its WIGOS systems in more than 190 casinos in Latin America. The company also is expanding with WIGOS in the United States and Europe.

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PEOPLE SCIENTIFIC GAMES NAMES CLO

cientific Games Corporation announced the appointment of David W. Smail as executive vice president and chief legal officer. Smail will be based at the company’s global corporate headquarters in Las Vegas. Most recently, Smail was executive vice president and general counsel of Morgans Hotel Group Co., where he served as chief legal officer of the hospitality company from David W. Smail 2006 to 2014. Previously, he was executive vice president and group general counsel at Havas S.A., a French-based global advertising and communications services company. Smail succeeds Katie Lever, the company’s executive vice president and general counsel. Isaacs added, “I would like to thank Katie for her outstanding dedication and passion over the last several years as we navigated several significant mergers and complex business transactions. Katie has built an exceptional legal organization, and we wish her the best as she moves on to pursue other professional and personal interests, including a passion for philanthropy.”

SHAKEUP IN MASSACHUSETTS

or the first time since the Massachusetts Gaming Commission was empaneled three and a half years ago, two members have resigned. Commissioner James McHugh, a former state appeals court judge who came out of retirement upon the request of then-Governor Deval Patrick, will return to retirement in September. Executive Director Rick Day resigned in July. Both said they want to spend more time with their families. Day will continue to be a consultant for the commission. McHugh commented, “I think it is time to pick up my postponed retirement.” State Attorney General Maura Healey will get to name McHugh’s successor. She commented, “Moving forward, we will conduct a thorough, deliberative process to select a highly qualified individual to serve as Judge McHugh’s successor.” James McHugh

CHRISTIAN GOODE CHOSEN TO RESURRECT CALIFORNIA CASINO

ormer Resorts World Las Vegas General Manager Christian Goode Christian Goode has been chosen to resurrect the Chukchansi Gold Resort & Casino, which California and federal regulators forced to close last October. Goode, who resigned from Resorts World Las Vegas in January to form his own company Ivory Gaming, worked for gaming giant Genting Berhad for several years. He told the Las Vegas Review-Journal, “We’re interested in investing in start-ups. There are a lot of opportunities on the horizon.” Bringing the Chukchansi Gold Resort & Casino back to life is the first such opportunity for Ivory Gaming. Goode will be COO for the casino, and plans to reopen by early September. Much of that depends on whether the Chukchansi tribe gets state and federal approval for reopening. The casino is located in the Golden State’s gold country, near Yosemite National Park. When it was closed after a violent tribal confrontation in October, it had 1,700 slots and 40 gaming tables, a spa and several eateries.

NEW GM AT HORSESHOE CLEVELAND

cott Lokke has been hired as senior vice president and general manager of the Horseshoe Casino Cleveland Scott Lokke in Ohio. He will oversee a staff of about 1,600. Lokke was hired as the casino’s vice president and assistant general manager last year. He has worked for Caesars Entertainment for the past 11 years, in casinos in St. Louis, Kansas City and Council Bluffs. Before that he worked in the hospitality industry for the Ritz-Carlton Hotel Company and Starwood Hotels and Resorts.

GLI ADDS BUSINESS DEVELOPMENT MANAGER

eading gaming testing company Gaming LaboraGarret Greene tories International has named Garret Greene as business development manager. Greene will be responsible for managing and sup-

porting clients as well as bringing in new companies to GLI. Garret brings six years of experience in the gaming industry. Most recently, he worked as head of regulatory compliance at Paddy Power Plc., a leading global betting and gaming company, where he was responsible for all regulatory affairs within the group, acting as the point of contact for regulatory bodies and ensuring licensing terms and conditions were met within their jurisdictions.

DOWNY RESIGNS NSW TO JOIN STAR

hris Downy, who was named president of the New South Wales Liberal Party in Chris Downy 2012, has resigned to take a casino job. According to the Sydney Morning Herald, the longtime gaming industry supporter, lobbyist and former NSW minister of sport and racing will become general manager of the Star Casino in Sydney. Downy previously held positions with the Australian Wagering Council and the Australasian Casino Association. He is the second official of the NSW to leave for a position in the industry, reports the Herald. Rod Bruce also resigned as chief of staff for former NSW Deputy Premier Andrew Stoner to work for Echo Entertainment.

GGB

September 2015 Index of Advertisers

AGA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51 AGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Ainsworth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Aristocrat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 BEGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .63 BMM International . . . . . . . . . . . . . . . . . . . . . .27 Cadillac Jack . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Casino City Press . . . . . . . . . . . . . . . . . . . . . . .59 Casino Data Imaging CDI . . . . . . . . . . . . . . . . .52 Colliers International . . . . . . . .Inside Back Cover Ditronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49 Everi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Fantini Report . . . . . . . . . . . . . . . . . . . . . . . . . .61 G2E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47, 53 GLI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Greenberg Traurig . . . . . . . . . . . . . . . . . . . . . .43 Innovation Group . . . . . . . . . . . . . . . . . . . . . . .41 Interblock . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 JCM Global . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Konami Gaming . . . . . . . . . . . . . . . . .Back Cover LT Game . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38 Piper Group . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Red Square Gaming . . . . . . . . . . . . . . . . . . . . . .5 RPM Advertising . . . . . . . . . . . . . . . . . . . . . . . .14 Spin Games . . . . . . . . . . . . . . . . . . . . . . . . . . . .29 U.S. Virgin Islands . . . . . . . . . . . . . . . . . . . . . . .39 UNLV Foundation . . . . . . . . . . . . . . . . . . . . . . .57 VGT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22, 23

SEPTEMBER 2015 www.ggbmagazine.com

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CASINO COMMUNICATIONS

John Dinius Interim General Manager, Sycuan Casino

he Sycuan Casino in San Diego started as a small bingo hall in 1983. Since then, it has become an integral part of the community, but with competition coming in the Jamul tribe’s Hollywood Casino, slated to open next year, it was time for a change. Interim General Manager John Dinius has been working at Sycuan for 22 years, and explains how leadership changes at both the casino and the tribe, including his own promotion, inspired a new look at Sycuan’s experience and the future of the casino. He spoke with GGB Publisher Roger Gros from his offices at the Sycuan in August. A full podcast of this interview can be heard at GGBmagazine.com. GGB: Why did Sycuan choose to rebrand at this time? Dinius: Late in 2014, Sycuan experienced some

significant changes in senior leadership. We took that as an opportunity to redefine what the Sycuan experience means for both our guests and our team members. Ultimately, we set out to regain a strong position in the market, as well as prepare for new competition that is coming into our area in mid-2016. We wanted to look at everything we were doing on a daily basis to make sure we were executing and achieving the goals that we had set. What are some of the elements of the rebrand?

We broke our strategic plan into three separate elements: environment, loyalty and branding. The branding focused on the experience the guests have when they come into the Sycuan casino. We faced some challenges over the years, primarily with our air quality. That was our No. 1 complaint. We expanded our non-smoking area, so now we offer the largest non-smoking area in San Diego. We also revamped our entire loyalty program, which makes us the best loyalty program in San Diego. We’ve added live entertainment throughout the casino, a new 66

promotional stage, and a revamped Primrose Room so we can really cater to the high end and Asian customers. How did you revamp your loyalty program?

We commissioned a couple of feasibility studies and market-assessment studies to gain a true understanding of where we stand in the market. We were able to identify a tremendous number of values that drive players to choose one casino over another. And then our management team created goals and tactics to support those value statements from our players. We feel like this is a very thoughtful and deliberate new brand, and we’re already realizing some of the benefits. You’ve been working at Sycuan for almost your entire career. What special perspective does that give you on the rebrand?

I have been working at Sycuan for 22 years. During that time, I’ve seen a number of changes both inside and outside the organization. I’m a San Diego native and feel more connected to the community than I feel most do. This is one of the reasons I’m so proud of the community efforts Sycuan has been well-known for over the past 32 years. Being here for so long, I’ve had the opportunity to develop some longstanding relationships with many of our Sycuan team members. With that, I’ve garnered a lot support and enthusiasm from team members. And adding to that, we operate in a “bottom-up” philosophy, changing the traditional paradigm of top-down management. We implement focus groups from every department to better understand the challenges they face and consider tools they may need to take their service excellence to a new level. By doing that, we gained a tremendous amount of insight from our team members. We implemented those changes not only to make their experience better but also their delivery of excellent customer service for our players. The team has been phenomenal. They are very supportive, and there’s a lot of excitement out here.

Global Gaming Business SEPTEMBER 2015

With competition coming into your primary market, how to you plan to maintain player loyalty?

We acknowledge that everyone is going to want to go and check it out. But we have an experience that exceeds anything that anyone could bring in without knowing the players. Everything we’re doing today is more than just preparing for Jamul. It’s about taking our rightful spot in the marketplace back again. Where does Sycuan stand on iPoker in California?

This is a very dynamic and complex issue, to say the least. We continue to keep our eye on the ball with the iPoker regulation. While we’re doing due diligence behind the scenes, we’re sitting on the sidelines right now. We haven’t taken an active or formal stance. It’s probably dead for this year from a political perspective, but we’re always looking for new businesses, so we’ll continue to keep our eye on it. Tell us about the commitment of the new tribal chairman, Cody Martinez, and the tribal council to the campaign.

This has really been an incredible experience. Chairman Martinez and the entire tribal council have been more engaged and more involved than any tribal council I’ve seen or even heard of. If you’re going to try to do something as cutting edge as we have attempted, you have to have that tribal commitment and buy-in. This is a very young group, they’re very creative and the ideas are free-flowing. They’ve been tremendously supportive. We had four meetings with our 1,700 team members, and all members of the tribal council were present for every meeting. They said some words that truly conveyed the commitment they have not only to the organization but also the team members and the community. It was a demonstration of their total commitment to what we’re doing, and I’m very excited about the future.

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